SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------
SCHEDULE 14D-1
Tender Offer Statement Pursuant to Section 14(d)(1)
of the Securities Exchange Act of 1934
--------------------
CENTURY PROPERTIES FUND XII
(Name of Subject Company)
DEFOREST VENTURES I L.P.
(Bidder)
UNITS OF LIMITED PARTNERSHIP INTEREST
(Title of Class
of Securities)
NONE
(CUSIP Number of Class
of Securities)
--------------------
Michael L. Ashner Copy to:
DeForest Capital I Corporation Mark I. Fisher
100 Jericho Quadrangle Rosenman & Colin
Suite 214 575 Madison Avenue
Jericho, New York 11735-2717 New York, New York 10022-2585
(516) 822-0022 (212) 940-8877
(Name, Address and Telephone Number of
Person Authorized to Receive Notices and
Communications on Behalf of Bidder)
Calculation of Filing Fee
Transaction Amount of
Valuation* Filing Fee
$725,450.79 $145.09
*For purposes of calculating the filing fee only. This amount
assumes the purchase of 5,233 units of limited partnership interest
("Units") of the subject company for $138.63 per Unit in cash.
/ / Check box if any part of the fee is offset as provided by
Rule 0-11(a)(2) and identify the filing with which the
offsetting fee was previously paid. Identify the previous
filing by registration statement number, or the Form or
Schedule and date of its filing.
CUSIP No. None
1. Name of Reporting Person
S.S. or I.R.S. Identification No. of Above Person
DeForest Ventures I L.P.
I.R.S. I.D. No. 11-3230287
2. Check the Appropriate Box if a Member of a Group
(See Instructions)
(a) / /
(b) / /
3. SEC Use Only
4. Sources of Funds (See Instructions)
WC; OO
5. Check Box if Disclosure of Legal Proceedings is
Required Pursuant to Items 2(e) of 2(f) / /
6. Citizenship or Place of Organization
Delaware
7. Aggregate Amount Beneficially Owned by Each Reporting
Person
12,118.3 Units
8. Check Box if the Aggregate Amount in Row (7) Excludes
Certain Shares (See Instructions) / /
9. Percent of Class Represented by Amount in Row (7)
34.62%
10. Type of Reporting Person (See Instructions)
PN
2
Item 1. Security and Subject Company.
(a) The name of the subject company is Century
Properties Fund XII, a California limited partnership (the
"Partnership"), which has its principal executive offices at 5665
Northside Drive, N.W., Suite 370, Atlanta, Georgia 30328.
(b) This Schedule relates to the offer by DeForest
Ventures I L.P., a Delaware limited partnership (the "Purchaser"),
to purchase up to 5,233 outstanding units of limited partnership
interest ("Units") of the Partnership at $138.63 per Unit, net to
the seller in cash, upon the terms and subject to the conditions
set forth in the Offer to Purchase dated June 2, 1995 (the "Offer
to Purchase") and the related Letter of Transmittal, copies of
which are attached hereto as Exhibits (a)(1) and (a)(2),
respectively. The number of Units outstanding is set forth under
"INTRODUCTION" in the Offer to Purchase and is incorporated herein
by reference.
(c) The information set forth under "THE TENDER OFFER --
Section 13. Background of the Offer" of the Offer to Purchase is
incorporated herein by reference.
Item 2. Identity and Background.
(a)-(d) The information set forth under "INTRODUCTION",
"THE TENDER OFFER -- Section 11. Certain Information Concerning
the Purchaser" and Schedule 1 of the Offer to Purchase is
incorporated herein by reference.
(e)-(f) During the last five years, neither the
3
Purchaser, the General Partner nor, to the best of its knowledge,
any of the persons listed in Schedule 1 of the Offer to Purchase
(i) has been convicted in a criminal proceeding (excluding traffic
violations or similar misdemeanors) or (ii) were a party to a civil
proceeding of a judicial or administrative body of competent
jurisdiction and as a result of such proceeding were or are subject
to a judgment, decree or final order enjoining future violations
of, or prohibiting activities subject to, Federal or state
securities laws or finding any violation of such laws.
(g) The information set forth in Schedule 1 of the Offer
to Purchase is incorporated herein by reference.
Item 3. Past Contracts, Transactions or Negotiations with the
Subject Company.
(a) The information set forth in "THE TENDER OFFER --
Section 10. Conflicts of Interest and Transactions with
Affiliates" and "THE TENDER OFFER -- Section 13. Background of the
Offer" of the Offer to Purchase is incorporated herein by
reference. In addition, the information set forth in Note 2 to the
financial statements of the Partnership included in the Form 10-K
of the Partnership for the fiscal year ended December 31, 1994
(such Note being referred to as the "Form 10-K Note"), a copy of
which is attached hereto as Exhibit (g)(i), Note 2 to the financial
statements of the Partnership included in the Form 10-Q of the
Partnership for the three months ended March 31, 1995 (such Note
being referred to as the "Form 10-Q Note"), a copy of which is
attached hereto as Exhibit (g)(ii), and the seventh, eighth and
ninth paragraphs of Item 1. "Business" of Form 10-K of the
4
Partnership for the fiscal year ended December 31, 1994 (the "1994
Form 10-K"), a copy of which is attached hereto as Exhibit
(g)(iii), is incorporated herein by reference.
(b) The information set forth in "THE TENDER OFFER --
Section 13. Background of the Offer" of the Offer to Purchase is
incorporated herein by reference. In addition, the information set
forth in the Form 10-K Note, the Form 10-Q Note and Item 1 of the
1994 Form 10-K is incorporated herein by reference.
Item 4. Source and Amount of Funds or Other Consideration.
(a)-(b) The information set forth in "THE TENDER OFFER
- -- Section 10. Conflicts of Interest and Transactions with
Affiliates" and "THE TENDER OFFER -- Section 12. Source of Funds"
of the Offer to Purchase is incorporated herein by reference.
(c) Not applicable.
Item 5. Purpose of the Tender Offer and Plans or Proposals of the
Bidder.
(a)-(b) The information set forth in "THE TENDER OFFER
- -- Section 8. Future Plans" and "THE TENDER OFFER -- Section 13.
Background of the Offer" of the Offer to Purchase is incorporated
herein by reference.
(c) Not applicable.
(d) The information set forth in "THE TENDER OFFER --
Section 8. Future Plans" of the Offer to Purchase is incorporated
herein by reference.
5
(e)-(g) Not applicable.
Item 6. Interest in Securities of the Subject Company.
(a) The information set forth in "INTRODUCTION" and "THE
TENDER OFFER -- Section 11. Certain Information Concerning the
Purchaser" of the Offer to Purchase is incorporated herein by
reference.
(b) None.
Item 7. Contracts, Arrangements, Understandings or Relationships
with Respect to the Subject Company's Securities.
The information set forth in "THE TENDER OFFER -- Section
11. Certain information concerning the Purchaser" and "THE TENDER
OFFER - Section 12. Source of Funds" of the Offer to Purchase is
incorporated herein by reference.
Item 8. Persons Retained, Employed or to be Compensated.
None.
Item 9. Financial Statements of Certain Bidders.
The information set forth in "THE TENDER OFFER -- Section
11. Certain Information Concerning the Purchaser" and Schedule 2
of the Offer to Purchase is incorporated herein by reference.
Item 10. Additional Information.
(a) None.
(b)-(d) The information set forth in "THE TENDER OFFER
- -- Section 15. Certain Legal Matters" of the Offer to Purchase is
6
incorporated herein by reference.
(e) None.
(f) Reference is hereby made to the Offer to Purchase
and the related Letter of Transmittal, copies of which are attached
hereto as Exhibits (a)(1) and (a)(2), respectively, and which are
incorporated herein in their entirety by reference.
Item 11. Material to be Filed as Exhibits.
(a)(1) Offer to Purchase dated June 2, 1995.
(a)(2) Letter of Transmittal.
(a)(3) Form of Cover Letter, dated June 2, 1995, from
DeForest Ventures I L.P. to Unitholders.
(b)(1) Master Agreement, dated as of November 21,
1994, among DeForest Capital II Corporation,
DeForest Ventures II L.P., NPI-AP Management,
L.P., National Property Investors, Inc. and
Kidder Peabody Mortgage Capital Corporation.
(b)(2) Letter Agreement supplementing the Master
Agreement, dated November 30, 1994, among
DeForest Capital II Corporation, DeForest
Ventures II L.P., NPI-AP Management, L.P.,
National Property Investors, Inc., DeForest
Capital I Corporation, DeForest Ventures I
L.P. and Kidder Peabody Mortgage Capital
Corporation.
(b)(3) Amendment No. 2 to the Master Agreement, dated
as of May 5, 1995, among DeForest Capital I
Corporation, DeForest Ventures I L.P.,
DeForest Capital II Corporation, DeForest
Ventures II L.P., NPI-AP Management, L.P.,
National Property Investors, Inc. and
PaineWebber Real Estate Securities Inc.
(b)(4) Loan Agreement, dated as of November 30, 1994,
between DeForest Capital I Corporation,
DeForest Ventures I L.P. and Kidder Peabody
Mortgage Capital Corporation.
(b)(5) Amendment No. 1 to the Loan Agreement, dated
as of May 5, 1995, among DeForest Ventures I
L.P. and PaineWebber Real Estate Securities
Inc.
7
(c)(1) Agreement, dated December 1, 1994, by and
between Lisle W. Payne and Ventures I relating
to certain distributions which may be received
by Ventures I.
(c)(2) Agreement, dated December 1, 1994, by and
between Janet E. Larson, individually and as
Trustee of the Larson Family Revocable Trust
and Ventures I relating to certain
distributions which may be received by
Ventures I.
(d) None.
(e)-(f) Not applicable.
(g)(i) Note 2 to the financial statements of Century
Properties Fund XII included in the Form 10-K
of Century Properties Fund XII for the fiscal
year ended December 31, 1994.
(g)(ii) Note 2 to the financial statements of Century
Properties Fund XII included in the Form 10-Q
of Century Properties Fund XII for the three
months ended March 31, 1995.
(g)(iii) The seventh, eighth and ninth paragraphs of
Item 1. "Business" of the Form 10-K of Century
Properties Fund XII for the fiscal year ended
December 31, 1994.
8
Signatures
After due inquiry and to the best of my knowledge and belief,
I certify that the information set forth in this statement is true,
complete and correct.
Dated: June 2, 1995
DEFOREST VENTURES I L.P.
By: DeForest Capital I Corporation,
its General Partner
By: /s/ Michael L. Ashner
Name: Michael L. Ashner
Title: President
9
Exhibit Index
Sequentially
Exhibit No. Description Numbered Page
(a)(1) Offer to Purchase dated June 2, 1995. . . . . . .
(a)(2) Letter of Transmittal . . . . . . . . . . . . . .
(a)(3) Form of Cover Letter, dated June 2, 1995,
from DeForest Ventures I L.P. to
Unitholders . . . . . . . . . . . . . . . . . . .
(b)(1) Master Agreement, dated as of November
21, 1994, among DeForest Capital II
Corporation, DeForest Ventures II L.P.,
NPI-AP Management, L.P., National Property
Investors, Inc. and Kidder Peabody Mortgage
Capital Corporation. . . . . . . . . . . . . . .*
(b)(2) Letter Agreement supplementing the Master
Agreement, dated November 30, 1994, among
DeForest Capital II Corporation, DeForest
Ventures II L.P., NPI-AP Management, L.P.,
National Property Investors, Inc., DeForest
Capital I Corporation DeForest Ventures I
L.P. and Kidder Peabody Mortgage Capital
Corporation. . . . . . . . . . . . . . . . . . .*
(b)(3) Amendment No. 2 to the Master Agreement,
dated as of May 5, 1995, among DeForest
Capital I Corporation, DeForest Ventures I
L.P., DeForest Capital II Corporation,
DeForest Ventures II L.P., NPI-AP Management,
L.P., National Property Investors, Inc. and
PaineWebber Real Estate Securities Inc. . . . . .
(b)(4) Loan Agreement, dated as of November 30, 1994,
between DeForest Capital I Corporation,
DeForest Ventures I L.P. and Kidder Peabody
Mortgage Capital Corporation. . . . . . . . . . *
(b)(5) Amendment No. 1 to the Loan Agreement, dated
as of May 5, 1995, among DeForest Ventures I
L.P. and PaineWebber Real Estate Securities
Inc. . . . . . . . . . . . . . . . . . . . . . .
(c)(1) Agreement, dated December 1, 1994, by and
between Lisle W. Payne and Ventures I
relating to certain distributions which
may be received by Ventures I . . . . . . . . . .
(c)(2) Agreement, dated December 1, 1994, by and
between Janet E. Larson, individually and
as Trustee of the Larson Family Revocable
Trust and Ventures I relating to certain
10
distributions which may be received by
Ventures I. . . . . . . . . . . . . . . . . . . .
(d) None.
(e)-(f) Not applicable.
(g)(i) Note 2 to the financial statements of Century
Properties Fund XII included in the Form 10-K
of Century Properties Fund XII for the fiscal
year ended December 31, 1994 . . . . . . . . . .
(g)(ii) Note 2 to the financial statements of Century
Properties Fund XII included in the Form 10-Q
of Century Properties Fund XII for the three
months ended March 31, 1995. . . . . . . . . . .
(g)(iii) The seventh, eighth and ninth paragraphs of
Item 1. "Business" of the Form 10-K of Century
Properties Fund XII for the fiscal year ended
December 31, 1994. . . . . . . . . . . . . . . .
* Incorporated by reference to the Purchaser's Amendment No. 2
to Schedule 14D-1 (Final Amendment) filed November 30, 1994 in
respect of the Purchaser's offer to purchase Units of Limited
Partnership Interest of Century Properties Fund XII.
11
Exhibit (a)(1)
Offer to Purchase
Up to 5,233 Units of Limited Partnership Interest
of
CENTURY PROPERTIES FUND XII
for
$138.63 Per Unit
by
DEFOREST VENTURES I L.P.
THE OFFER, WITHDRAWAL RIGHTS AND THE PRORATION PERIOD WILL EXPIRE AT 12:00
MIDNIGHT, NEW YORK CITY TIME, ON JUNE 30, 1995, UNLESS EXTENDED.
This offer is being made pursuant to the terms of the settlement of a class
action litigation described below. DeForest Ventures I L.P., a Delaware limited
partnership (the "Purchaser"), hereby offers to purchase up to 5,233 of the
outstanding Units of Limited Partnership Interest (the "Units") of Century
Properties Fund XII, a California limited partnership (the "Partnership"), for
$138.63 per Unit, 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 5,233 Units sought pursuant to the Offer
represent approximately 15% of the total Units outstanding as of June 2, 1995.
In order to avoid a termination of the Partnership for federal income tax
purposes, the Purchaser will not purchase Units pursuant to the Offer if, after
giving effect such purchase, 50% or more of the outstanding interests in the
Partnership would have been transferred in the 12-month period preceding the
consummation of the Offer. In order to avoid such a tax termination while at
the same time providing to each tendering Unitholder upon consummation of the
Offer $138.63 (the "Cash Consideration") for each Unit tendered, the Purchaser
has structured the Offer to include a non-recourse loan in the event that more
than 4,816 of the outstanding Units (the "Transfer Limitation") are tendered.
Accordingly, if more than 4,816 of the outstanding Units are tendered, the
aggregate Cash Consideration paid to each tendering Unitholder will represent
(i) the Cash Consideration per Unit payable to purchase the number of Units
tendered by such Unitholder which under the Transfer Limitation the Purchaser is
permitted to purchase ("Purchase Proceeds"), and (ii) the proceeds of a
non-recourse loan ("Loan Proceeds") to such Unitholder (a "Loan") equal to the
Cash Consideration per Unit payable in respect of the Units tendered by such
Unitholder which under the Transfer Limitation the Purchaser is not permitted to
purchase (the "Retained Units"). The Loan will be secured only by the Retained
Units. The acceptance of a Loan will not impose any personal liability on a
tendering Unitholder for the payment of any principal or interest in respect of
such Loan.
The Offer is being made pursuant to the terms of a court approved
Settlement Agreement (the "Settlement Agreement") which governs the terms and
conditions of a settlement (the "Settlement") of the class action litigation
(the "Action") entitled In Re DeForest Tender Offer Securities Litigation (Civil
Action No. 1:94-CV-2983-JEC) filed in the United States District Court for the
Northern District of Georgia, Atlanta Division, (the "Court").
The Offer is not conditioned upon any minimum number of Units being
tendered. If more than 5,233 Units are validly tendered and not withdrawn,
subject to the Transfer Limitation and the delivery of Loan Proceeds (as
hereinafter defined), the Purchaser will accept for purchase on a pro rata basis
5,233 Units, subject to the terms and conditions herein.
A Unitholder must tender all Units owned by such Unitholder in order for
the tender to be valid.
If necessary to effect the terms of the Settlement, and subject to
obtaining the approval of the Court and/or counsel for the settling plaintiffs
in the Action, the Purchaser may amend the Offer or extend the period of time
during which the Offer is open and thereby delay acceptance for payment of, and
the payment for, any Units. Any such extension will be followed by a press
release or public announcement which will be issued no later than 9:00 a.m., New
York City time, on the next business day after the scheduled Expiration Date, in
accordance with Rule 14e-1(d) under the Securities Exchange Act of 1934 (the
"Exchange Act").
-----------------------------
If you have any questions or need additional information, you may contact
the Purchaser at:
DeForest Ventures I L.P.
(404) 916-9055 or (404) 850-9640
June 2, 1995
TABLE OF CONTENTS
Page
INTRODUCTION. . . . . . . . . . . . . . . . . . 1
THE TENDER OFFER. . . . . . . . . . . . . . . . 3
Section 1. Terms of the Offer . . . . . . 3
Section 2. Proration; Acceptance for
Payment and Payment for Units. 4
Section 3. Procedures for Tendering Units 4
Section 4. Withdrawal Rights. . . . . . . 6
Section 5. Extension of Tender Period;
Termination; Amendment . . . . 6
Section 6. Certain Federal Income Tax
Consequences . . . . . . . . . 7
Section 7. Effects of the Offer . . . . . 10
Section 8. Future Plans . . . . . . . . . 11
Section 9. Certain Information Concerning
the Partnership. . . . . . . . 11
Section 10. Conflicts of Interest and
Transactions With Affiliates . 11
Section 11. Certain Information Concerning
the Purchaser. . . . . . . . . 13
Section 12. Source of Funds. . . . . . . . 13
Section 13. Background of the Offer. . . . 16
Section 14. Conditions of the Offer. . . . 21
Section 15. Certain Legal Matters. . . . . 22
Section 16. Fees and Expenses. . . . . . . 22
Section 17. Miscellaneous. . . . . . . . . 22
Exhibit A Form of Note and Security Agreement
Schedule 1 Information with respect to Directors
and Executive Officers of DeForest
Capital
Schedule 2 Financial Statements of the Purchaser
and DeForest Capital
Schedule 3 Subject Partnerships
To the Holders of Units of
Limited Partnership Interest
of Century Properties Fund XII
INTRODUCTION
This offer is being made pursuant to the terms of the settlement of a class
action litigation described below. DeForest Ventures I L.P., a Delaware limited
partnership (the "Purchaser"), hereby offers to purchase up to 5,233 of the
outstanding Units of Limited Partnership Interest (the "Units") of Century
Properties Fund XII, a California limited partnership (the "Partnership"), for
$138.63 per Unit, 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"). Holders of Units ("Unitholders") who tender
their Units will not be obligated to pay any commissions or partnership transfer
fees, which commissions and fees will be borne by the Purchaser. A Unitholder
must tender all Units owned by such Unitholder in order for the tender to be
valid.
In order to avoid a termination of the Partnership for federal income tax
purposes (see "THE TENDER OFFER - Section 6. Certain Federal Income Tax
Consequences" for a discussion of the effects of such a termination), the
Purchaser will not purchase Units pursuant to the Offer if, after giving effect
to such purchase, 50% or more of the outstanding interests in the Partnership
would have been transferred in the 12-month period preceding the consummation of
the Offer. In order to avoid such a tax termination while at the same time
providing to each tendering Unitholder upon consummation of the Offer $138.63
for each Unit tendered (the "Cash Consideration"), the Purchaser has structured
the Offer to include a non-recourse loan in the event that more than 4,816 of
the outstanding Units (the "Transfer Limitation") are tendered. Accordingly, if
more than 4,816 of the outstanding Units are tendered, the aggregate Cash
Consideration paid to each tendering Unitholder will represent (i) the Cash
Consideration per Unit payable to purchase the number of Units tendered by such
Unitholder which under the Transfer Limitation the Purchaser is permitted to
purchase ("Purchase Proceeds"), and (ii) the proceeds of a non-recourse loan
("Loan Proceeds") to such Unitholder (a "Loan") equal to the Cash Consideration
per Unit payable in respect of the Units tendered by such Unitholder which under
the Transfer Limitation the Purchaser is not permitted to purchase (the
"Retained Units"). The Loan will be secured only by the Retained Units. (See
"THE TENDER OFFER - SECTION 1. Terms of the Offer" for further information
relating to the Loans.) The acceptance of a Loan will not impose any personal
liability on a tendering Unitholder for the payment of any principal or interest
in respect of its Loan. Each Loan may be satisfied, at its maturity, by
surrendering to the Purchaser the Retained Units or, at the sole option of the
tendering Unitholder, by a payment in cash equal to the then outstanding balance
of principal and accrued interest in respect of such Loan. In establishing the
number of Units constituting the Transfer Limitation, the Purchaser took into
account the historical transfer volume for Units, as well as the number of Units
acquired by the Purchaser in the Original Tender Offer (as defined below) for
Units, in order to continue to permit the historical level of transfers after
the consummation of the Offer.
The Offer is being made pursuant to the terms of a court approved
Settlement Agreement (the "Settlement Agreement") which governs the terms and
conditions of a settlement (the "Settlement") of the class action litigation
(the "Action") entitled In Re DeForest Tender Offer Securities Litigation (Civil
Action No. 1:94-CV-2983-JEC) filed in the United States District Court for the
Northern District of Georgia, Atlanta Division, (the "Court"). Pursuant to the
Settlement Agreement, Unitholders who tender their Units may also be entitled to
an additional cash payment (the "Residual Settlement Premium"). The per Unit
amount of the Residual Settlement Premium, which is not expected to be material,
is dependent on the amount of attorney's fees awarded by the Court following
expiration of the Offer and will be determined in accordance with the terms of
the Settlement Agreement. (See "THE TENDER OFFER - Section 13. Background of
the Offer".)
The subject matter of the Action relates to tender offers for units of
limited partnership interests in the Partnership and 18 other limited
partnerships (collectively, the "Subject Partnerships") commenced by the
Purchaser and an affiliated purchaser in October 1994 (the "Original Tender
Offers"). (See "THE TENDER OFFER - Section 13. Background of the Offer").
Schedule 3 to this Offer to Purchase sets forth the names of the Subject
Partnerships. As described in the Notice of Class Action and Hearing of
Proposed Settlement previously delivered to Unitholders in connection with the
Action (the "Settlement Notice"), the Settlement, among other things, provides
(i) Unitholders who did not tender their Units in the Original Tender Offer for
Units with the opportunity to sell their Units pursuant to the Offer at a price
equal to the price offered in the Original Tender Offer for Units plus $12.63
(the "Settlement Premium") and (ii) for payment of the Settlement Premium to
each person who tendered Units in the Original Tender Offer for Units. Like the
Original Tender Offer, the Offer will provide Unitholders with an opportunity to
liquidate their investment without the usual transaction costs associated with
market sales.
The Offer is not conditioned upon any minimum number of Units being
tendered. If more than 5,233 Units are validly tendered and not withdrawn,
subject to the Transfer Limitation and the delivery of Loan Proceeds, the
Purchaser will accept for purchase on a pro rata basis 5,233 Units, subject to
the terms and conditions herein.
As discussed herein, the Purchaser is affiliated with the general partners
of the Partnership and, accordingly, the general partners of the Partnership
have certain conflicts of interest with respect to the Offer. The Partnership
has indicated in its statement on Schedule 14D-9 filed with the Securities and
Exchange Commission (the "Commission") that, because of such conflicts, it makes
no recommendation and is remaining neutral as to whether a Unitholder should
accept the Offer. (See "THE TENDER OFFER - Section 13. Background of the
Offer"; and "Section 10. Conflicts of Interest and Transactions with
Affiliates".)
The general partner of the Purchaser is DeForest Capital I Corporation, a
Delaware corporation ("DeForest Capital") which is affiliated with NPI Equity
Investments II, Inc. ("NPI Equity"), the entity which, on December 6, 1993,
assumed management and obtained control of Fox Capital Management Corporation
("FCMC") and Fox Realty Investors ("FRI"), the general partners of the
Partnership (together, the "General Partner"). (See "THE TENDER OFFER - Section
13. Background of the Offer".)
Unitholders who desire liquidity may wish to consider the Offer. However,
each Unitholder must make his or her own decision based upon such Unitholder's
particular circumstances, including the Unitholder's own financial needs, other
investment opportunities and tax position. Each Unitholder should consult with
his or her own advisors, tax, financial or otherwise, in evaluating the terms of
and whether to tender Units pursuant to the Offer.
The $126 purchase price in the Original Tender Offer for Units (the
"Original Purchase Price") was determined as a result of the Purchaser's own
independent analysis. The Settlement Premium was determined and agreed to as
part of the Settlement. No independent person has been retained to evaluate or
render any opinion with respect to the fairness of the Cash Consideration.
Unitholders are urged to consider carefully all of the information contained
herein before accepting the Offer. (See "THE TENDER OFFER - Section 13.
Background of the Offer".)
According to information supplied by the Partnership, of the 35,000 Units
issued and outstanding, 22,882 of such Units are held by 2,558 Unitholders who
are not affiliated with the Purchaser. The Purchaser and its affiliates own
12,118 Units, constituting approximately 35% of the Units outstanding.
Certain information contained in this Offer to Purchase which relates to
the Partnership, or represents statements made by the General Partner, has been
derived from information provided to the Purchaser by the General Partner.
Unitholders are urged to read this Offer to Purchase, the accompanying
Letter of Transmittal and the Note and Security Agreement annexed hereto as
Exhibit A carefully before deciding whether to tender their Units.
2
THE TENDER OFFER
Section 1. Terms of the Offer. Upon the terms of the Offer, and subject
to the Transfer Limitation, the Purchaser will 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, New York City time, on June 30, 1995, unless, in order to effect the
Settlement, and subject to obtaining the approval of the Court and/or counsel
for the settling plaintiffs in the Action, the Purchaser extends the period of
time during which the Offer is open. In the event the Offer is so extended, the
term "Expiration Date" shall mean the latest time and date on which the Offer,
as extended by the Purchaser, shall expire.
If, prior to the Expiration Date, the Purchaser 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.
The Offer is conditioned on satisfaction of certain conditions. See
Section 14, which sets forth in full the conditions of the Offer. The Purchaser
reserves the right (but shall not be obligated), in its sole discretion, to
waive any or all of such conditions. If, on or prior to the Expiration Date,
any or all of such conditions have not been satisfied or waived, the Purchaser
may (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, or make a Loan with respect to, all
Units validly tendered, or (iii) subject to obtaining the approval of the Court
and/or counsel for the settling plaintiffs in the Action, 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.
If up to 4,816 Units are validly tendered and not withdrawn, upon
consummation of the Offer, all Units tendered will be purchased for $138.63 per
Unit. Subject to the proration requirements of Section 2, if more than 4,816
Units are validly tendered and not withdrawn, each tendering Unitholder will
receive $138.63 for each Unit tendered in a combination of Purchase Proceeds
and Loan Proceeds. The number of Units with respect to which a Unitholder will
receive Purchase Proceeds will be determined by multiplying the number of Units
tendered by such Unitholder by a fraction the numerator of which is 4,816 and
the denominator of which is the total number of Units tendered pursuant to the
Offer and not withdrawn. The balance payable to such Unitholder will be paid as
Loan Proceeds.
Each Loan will bear interest at the rate of 9% per annum. Interest and
principal will not be due and payable prior to the scheduled maturity date of
the Loan, except that the Loan shall become due upon certain bankruptcy events
of the Unitholder and, in certain circumstances, on the demand of the
Purchaser. Any distributions in respect of the Retained Units are required to
be applied to pay outstanding amounts of interest and principal. Each Loan will
mature by its terms on January 2, 1996, and will be payable by payment of cash
in the principal amount of the Loan plus accrued interest thereon. If the
Purchaser does not receive a cash payment in repayment of a Loan within 15 days
from the date the Loan is due, the Purchaser will apply the Retained Units held
in respect of such Loan against the amount due in full satisfaction of the
Loan. EXCEPT THROUGH THE APPLICATION OF ANY DISTRIBUTIONS IN RESPECT OF
RETAINED UNITS (AS DISCUSSED BELOW), THE LOANS WILL NOT BE PREPAYABLE. THE
ACCEPTANCE OF A
LOAN WILL NOT IMPOSE ANY PERSONAL LIABILITY ON A TENDERING UNITHOLDER FOR THE
PAYMENT OF ANY PRINCIPAL OR INTEREST IN RESPECT OF ITS LOAN. EACH LOAN MAY BE
SATISFIED, AT ITS MATURITY, BY SURRENDERING TO THE PURCHASER THE RETAINED UNITS
OR, AT THE SOLE OPTION OF THE TENDERING UNITHOLDER, BY A PAYMENT IN CASH EQUAL
TO THE THEN OUTSTANDING BALANCE OF PRINCIPAL AND ACCRUED INTEREST IN RESPECT OF
SUCH LOAN.
Any distribution payable to a Unitholder in respect of the Retained Units
will be applied at the time such distribution is made first to accrued interest
on the Loan and then to the principal amount of the Loan and
3
any amounts remaining after such application will be remitted to the
Unitholder. Each Unitholder will agree not to exercise its voting rights with
respect to the Retained Units in favor of a dissolution of the Partnership or in
any manner inconsistent with the terms of the Loan. Each Unitholder who tenders
Units in accordance with the Offer, and does not withdraw such tender in
accordance with the terms of Section 4, shall have irrevocably elected to
receive the proceeds of the Loan if more than 4,816 Units are validly tendered
and not withdrawn, and to be bound by the terms of the Loan, including the
repayment thereof, the pledge of the Unitholder's Retained Units to secure such
repayment, the application of distributions made in respect of the Retained
Units and the limitation on voting rights as described above.
The terms and conditions of the Loan are set forth in the form of Note and
Security Agreement attached hereto as Exhibit A, which Exhibit is incorporated
by reference herein in its entirety.
Section 2. Proration; Acceptance for Payment and Payment for Units. If
the number of Units validly tendered on or prior to the Expiration Date and not
withdrawn is 5,233 or less, subject to the Transfer Limitation and the delivery
of Loan Proceeds, the Purchaser will accept for payment, subject to the terms
and conditions of the Offer, all Units so tendered.
If the number of Units validly tendered on or prior to the Expiration Date
and not withdrawn exceeds 5,233, subject to the Transfer Limitation and the
delivery of Loan Proceeds, the Purchaser will accept for payment, subject to the
terms and conditions of the Offer, Units so tendered on a pro rata basis (with
such adjustments to avoid purchase of fractional Units).
The Purchaser will deliver the Cash Consideration for Units validly
tendered and not withdrawn in accordance with Section 4 as promptly as
practicable following the Expiration Date. In all cases, Cash Consideration
will be delivered only after timely receipt by Purchaser of a properly completed
and duly executed Letter of Transmittal (or facsimile thereof), duly executed
signature page for the Note and Security Agreement and any other documents
required by the Letter of Transmittal. (See "Section 3. Procedures for
Tendering Units".) Under no circumstances will interest be paid on the Cash
Consideration 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 will be destroyed by the Purchaser.
However, Retained Units will be held by the Purchaser subject to the terms of a
Unitholder's Loan. If for any reason acceptance for payment of, or payment for,
any Units tendered pursuant to the Offer is delayed or the Purchaser is unable
to accept for payment, purchase or pay for Units tendered pursuant to the Offer,
then, without prejudice to the Purchaser's rights under Section 14, the
Purchaser may retain tendered Units 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; provided, however, that the Purchaser is required,
pursuant to Rule 14e-1(c) under the Exchange Act, to pay Unitholders the Cash
Consideration in respect of Units tendered or return such Units promptly after
termination or withdrawal of the Offer.
Section 3. Procedures for Tendering Units.
Valid Tender. To validly tender Units, a properly completed and duly
executed Letter of Transmittal (or facsimile thereof), duly executed signature
page for the Note and Security Agreement and any other documents required by the
Letter of Transmittal, must be received by the Purchaser on or prior to the
Expiration Date. A Unitholder must tender all Units owned by such Unitholder in
order for the tender to be valid.
Signature Requirements. If the Letter of Transmittal and signature page
for the Note and Security Agreement is signed by the registered holder of the
Units and payment is to be made directly to that holder, then no notarization or
signature guarantee is required on the Letter of Transmittal. Similarly, if the
Units are tendered for the account of a member firm of a registered national
securities exchange, a member of the National Association of Securities Dealers,
Inc. or a commercial bank, savings bank, credit union, savings and loan
association or trust company having an office, branch or agency in the United
States (each an "Eligible
4
Institution"), no notarization or signature guarantee is required on the
Letter of Transmittal. However, in all other cases, all signatures on the
Letter of Transmittal and signature page for the Note and Security Agreement
must either be notarized or guaranteed by an Eligible Institution.
In order for a tendering Unitholder to participate in the Offer, Units must
be validly tendered and not withdrawn on or prior to the Expiration Date, which
is 12:00 Midnight, New York City time, on June 30, 1995.
The method of delivery of the Letter of Transmittal, signature page for the
Note and Security Agreement 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 Purchaser.
A tendering Unitholder will be notified after the Expiration Date as to the
number of such Unitholder's Units, if any, which were not purchased but which
are being held by the Purchaser as Retained Units for a Loan to such
Unitholder. Such notice will also provide the principal amount of any such
Loan.
Backup Federal Income Tax Withholding. To prevent the possible application
of backup federal income tax withholding with respect to payment of the Cash
Consideration and the Residual Settlement Premium, a tendering Unitholder must
provide the Purchaser with such Unitholder's correct taxpayer identification
number by completing the Substitute Form W-9 included in the Letter of
Transmittal. (See the Instructions to the Letter of Transmittal and
"Section 6. Certain Federal Income Tax Consequences".)
FIRPTA Withholding. To prevent the withholding of federal income tax in an
amount equal to 10% of the sum of the Cash Consideration plus the Residual
Settlement Premium 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, a tendering
Unitholder irrevocably appoints the designees of the Purchaser 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 of such Unitholder's rights
with respect to the Units tendered by such Unitholder and accepted for payment
by the Purchaser. Such appointment will be effective when, and only to the
extent that, the Purchaser accepts 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 Purchaser
will, as 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. The Purchaser reserves the
right to require that, in order for Units to be deemed validly tendered,
immediately upon the Purchaser's acceptance for payment of such Units, the
Purchaser must be able to exercise full voting rights with respect to such
Units, including voting at any meeting of Unitholders then scheduled. In
addition, by executing a Letter of Transmittal, a Unitholder also assigns to the
Purchaser all of the Unitholder's rights to receive distributions from the
Partnership with respect to Units which are purchased pursuant to the Offer.
(See "Section 6. Certain Federal Income Tax Consequences" and "Section 9.
Certain Information Concerning the Partnership".)
By executing a Letter of Transmittal, a Unitholder irrevocably agrees to
accept the proceeds of a Loan in respect of its Retained Units on the terms and
conditions set forth in the Note and Security Agreement. Such Unitholder also
directs the Partnership to deliver any and all distributions payable on the
Retained Units to the Purchaser for credit against amounts outstanding in
respect of the Loan, and the Purchaser may, in the name and behalf of such
Unitholder, execute and deliver to the Partnership a written confirmation of
such direction. In addition, by executing a Letter of Transmittal, a Unitholder
appoints the designees of the Purchaser as its attorney-in-fact (such
appointment being coupled with an interest, and irrevocable) to execute and
cause to be
5
filed and recorded any and all documents on behalf of the Unitholder and to
take any and all other actions reasonably deemed necessary by the Purchaser to
perfect or continue the perfection of the security interest in the Retained
Units that secures any Loan made to such Unitholder. FURTHERMORE, BY
EXECUTING A LETTER OF TRANSMITTAL, A UNITHOLDER WHO HAS PREVIOUSLY REQUESTED
EXCLUSION FROM THE SETTLEMENT WILL BE DEEMED TO HAVE REVOKED SUCH REQUEST AND
THEREUPON BE BOUND BY THE SETTLEMENT AND ALL ORDERS AND FINAL JUDGMENTS RENDERED
IN THE ACTION.
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
Purchaser, in its sole discretion, which determination shall be final and
binding. The Purchaser reserves the absolute right to reject any or all tenders
if not in proper form (including, without limitation, the proper execution of
the Note and Security Agreement) or if the acceptance of, or payment for, the
Units tendered may, in the opinion of the Purchaser's counsel, be unlawful. The
Purchaser also reserves the right to waive any defect or irregularity in any
tender with respect to any particular Units of any particular Unitholder, and
the Purchaser's 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 Purchaser 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
Purchaser on the terms set forth in the Offer.
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 already accepted for payment as provided in this
Offer to Purchase, may also be withdrawn at any time after June 30, 1995.
For withdrawal to be effective, a written or facsimile transmission notice
of withdrawal must be timely received by the Purchaser at the address set forth
on the back cover of this Offer to Purchase. 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
Purchaser is unable to purchase or pay for Units for any reason, then, without
prejudice to the Purchaser's rights under the Offer, tendered Units may be
retained by the Purchaser and may not be withdrawn except to the extent that
tendering Unitholders are entitled to withdrawal rights as set forth in this
Section 4; provided, however, that the Purchaser is required, pursuant to Rule
14e-1(c) under the Exchange Act, to pay Unitholders the Cash Consideration in
respect of Units tendered or return such Units promptly after termination or
withdrawal of the Offer.
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 any of the procedures described in Section 3 at any time prior to the
Expiration Date.
Section 5. Extension of Tender Period; Termination; Amendment. If
necessary to effect the terms of the Settlement, and subject to obtaining the
approval of the Court and/or counsel for the settling plaintiffs in the Action,
the Purchaser may amend the Offer or extend the period of time during which the
Offer is open and thereby delay acceptance for payment of, and the payment for,
any Units. Any such extension will be followed by a press release or public
announcement which will be issued no later than 9:00 a.m., New York City time,
on the next business day after the scheduled Expiration Date, in accordance with
Rule 14e-1(d) under the Exchange Act.
6
If the Purchaser extends the Offer, or if the Purchaser (whether before or
after its acceptance for payment of Units) is delayed in its payment for Units
or is unable to pay for Units pursuant to the Offer for any reason, then,
without prejudice to the Purchaser's rights under the Offer, the Purchaser may
retain tendered Units and such Units may not be withdrawn except to the extent
tendering Unitholders are entitled to withdrawal rights as described in Section
4; provided, however, that the Purchaser is required, pursuant to Rule 14e-1(c)
under the Exchange Act, to pay Unitholders the Cash Consideration in respect of
Units tendered or return such Units promptly after termination or withdrawal of
the Offer.
If the Purchaser makes a material change in the terms of the Offer (which
change may only be made with approval of the Court and/or counsel for the
settling plaintiffs in the Action) or if there is a material change in the
information concerning the Offer, the Purchaser will extend the Offer and
disseminate additional tender offer materials to the extent required by Rules
14d-4(c) and 14d-6(d) 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 will depend upon the facts and
circumstances, including the relative materiality of the change in the terms or
information. In the Commission's view, an offer should remain open for a
minimum of five business days from the date the material change is first
published, sent or given to securityholders, and if material changes are made
with respect to information that approaches the significance of price or the
percentage of securities sought, a minimum of ten business days may be required
to allow for adequate dissemination to securityholders 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, New York City time.
Section 6. Certain Federal Income Tax Consequences. The following summary
is a general discussion of certain federal income tax consequences of a sale of
Units pursuant to the Offer. This summary is based on the Internal Revenue Code
of 1986, as amended (the "Code"), applicable Treasury regulations thereunder,
administrative rulings, practice and procedures and judicial authority as of the
date of the Offer. All of the foregoing are subject to change, and any such
change could affect the continuing accuracy of this summary. This summary does
not discuss all aspects of federal income taxation that may be relevant to a
particular Unitholder in light of such Unitholder's specific circumstances or to
certain types of Unitholders subject to special treatment under the federal
income tax laws (for example, foreign persons, dealers in securities, banks,
insurance companies and tax-exempt organizations), nor does it discuss any
aspect of state, local, foreign or other tax laws. Sales of Units pursuant to
the Offer will be taxable transactions for federal income tax purposes, and may
also be taxable transactions under applicable state, local, foreign and other
tax laws. EACH UNITHOLDER SHOULD CONSULT HIS OR ITS TAX ADVISOR AS TO THE
PARTICULAR TAX CONSEQUENCES TO SUCH UNITHOLDER OF SELLING UNITS AND RECEIVING A
LOAN PURSUANT TO THE OFFER.
A taxable Unitholder will recognize gain or loss on a sale of Units
pursuant to the Offer equal to the difference between (i) the Unitholder's
"amount realized" on the sale and (ii) the Unitholder's adjusted tax basis in
the Units sold. The amount of a Unitholder's adjusted tax basis in Units sold
pursuant to the Offer will vary depending upon the Unitholder's particular
circumstances, and will be affected by both allocations of Partnership income,
gain or loss and any cash distributions made to a Unitholder for 1995 with
respect to such Units. The "amount realized" with respect to a Unit sold
pursuant to the Offer will be a sum equal to the amount of cash received by the
Unitholder for the Unit plus the amount of Partnership liabilities allocable to
the Unit (as determined under Code Section 752). If a Unitholder receives a
Loan pursuant to the Offer and later transfers ownership of the Retained Units
to the Purchaser in satisfaction of the Loan, the unpaid balance (including
accrued and unpaid interest) of such Loan would be includible in the
Unitholder's amount realized on such subsequent sale, but interest accrued on
the Loan may be non-deductible as personal interest. (See the discussion of
certain tax aspects of the Loan below.) However, assuming no principal payments
are made on a Loan prior to maturity, the amount of interest is anticipated to
be only approximately $53 per $1,000 loaned.
Based on the results of Partnership operations through December 31, 1994,
and without giving effect to Partnership operations or transactions since that
time, it is estimated that, depending on the Unitholder's date
7
of entry into the Partnership, a taxable Unitholder who or which sells Units
pursuant to the Offer that were acquired by such Unitholder at the time of the
Partnership's original offering of Units will recognize a loss for federal
income tax purposes of between $68.77 per Unit for those admitted in October
1977 and $250.57 per Unit for those admitted in August 1978 less, in each
case, the amount of the Residual Settlement Premium. It also is estimated
that such Unitholder has "suspended" passive activity losses (i.e., post-1986
net taxable losses in excess of statutorily provided "phase-in" amounts) from
the Partnership of $195 per Unit (subject to reduction to the extent such
Unitholder utilized any of such losses to offset passive activity income from
other investments). Once the Unitholder sells all his Units, such losses
should no longer be subject to the passive activity loss limitation, and
therefore should be deductible by such Unitholder from his other income
subject to any other applicable limitations. However, if a Unitholder is
unable to sell all of his Units pursuant to the Offer, such losses will not be
deductible (except to the extent of the Unitholder's passive activity income
from other sources) until the Retained Units are transferred to the Purchaser
upon maturity of the Unitholder's Loan in 1996 or are otherwise sold. (See
the discussion of the passive activity loss limitation below and "Section 7.
Effects on the Offer".) Tendering Unitholders will be allocated a pro rata
share of the Partnership's taxable income or loss with respect to Units sold
pursuant to the Offer through the effective date of the sale, even though such
Unitholders will assign to the Purchaser their right to receive cash
distributions with respect to such Units.
The gain or loss recognized by a Unitholder on a sale of a Unit pursuant to
the Offer generally will be treated as a capital gain or loss if the Unit was
held by the Unitholder as a capital asset. Such capital gain or loss will be
treated as long-term capital gain or loss if the tendering Unitholder's holding
period for the Unit exceeds one year. Under current law, long-term capital
gains of individuals and other non-corporate taxpayers are taxed at a maximum
marginal federal income tax rate of 28%, whereas the maximum marginal federal
income tax rate for other income of such persons is 39.6%. Capital losses are
deductible only to the extent of capital gains, except that non-corporate
taxpayers may deduct up to $3,000 of capital losses in excess of the amount of
their capital gains against ordinary income. Excess capital losses generally
can be carried forward to succeeding years (a corporation's carryforward period
is five years and a non-corporate taxpayer can carry forward such losses
indefinitely); in addition, corporations, but not non-corporate taxpayers, are
allowed to carry back excess capital losses to the three preceding taxable
years.
If any portion of the amount realized by a Unitholder is attributable to
"unrealized receivables" (which includes depreciation recapture) or
"substantially appreciated inventory" as defined in Code Section 751, then a
portion of the Unitholder's gain or loss may be ordinary rather than capital.
It is possible that the basis allocation rules of Code Section 751 may result in
a Unitholder's recognizing ordinary income with respect to such items while
recognizing a larger capital loss with respect to the remainder of the Unit,
even though such Unitholder has an overall loss on the sale.
The portion of the Residual Settlement Premium that is received by a
Unitholder with respect to the Retained Units, if any, will be taxable to a
Unitholder as ordinary income even if the Unitholder later transfers the
Retained Units in satisfaction of the Loan and even if such transfer results in
the Unitholder's recognition of a capital loss.
If tendering Unitholders receive Loans, they will be allocated a pro rata
share of the Partnership's taxable income or loss for all of 1995 with respect
to the Retained Units even though any cash distributions with respect to such
Units will be applied against the Loans. Amounts so applied might not be
deductible, and, if the Retained Units are transferred to Purchaser in 1996 at
a loss, such loss would not offset the taxable income (if any) allocated to a
Unitholder in 1995 on account of the Retained Units. (See the discussion of
certain tax aspects of the Loans below.)
Under Code Section 469, a non-corporate taxpayer or personal service
corporation can deduct passive activity losses in any year only to the extent
of such person's passive activity income for such year, and closely held
corporations may not offset such losses against so-called "portfolio" income.
A loss recognized by a Unitholder upon a sale of a Unit pursuant to the Offer
can be currently deducted (subject to other applicable limitations) to the
extent of such Unitholder's taxable income from the Partnership for that year,
and gain
8
recognized by a Unitholder upon such sale can be offset by such Unitholder's
passive activity losses (if any) from the Partnership. If a Unitholder
disposes of all his Units pursuant to the Offer, such Unitholder generally
will be able to deduct his remaining passive activity losses (if any) from the
Partnership that could not previously be deducted by such Unitholder due to
the foregoing limitation. However, if more than 4,816 Units are tendered
pursuant to the Offer, a tendering Unitholder will be unable to sell all of
his Units in 1995 upon consummation of the Offer. In that event, a tendering
Unitholder with "suspended" passive activity losses from the Partnership will
be unable to deduct such losses until the Retained Units are transferred to
the Purchaser in satisfaction of the Unitholder's Loan in 1996, or are
otherwise sold. Unitholder sells his unsold Units. (See "Section 7. Effects
of the Offer.")
A taxable Unitholder (other than corporations and certain foreign indiv
iduals) who tenders Units may be subject to 31% backup withholding unless the
Unitholder provides a taxpayer identification number ("TIN") and certifies that
the TIN is correct or properly certifies that he is awaiting a TIN. A
Unitholder may avoid backup withholding by properly completing and signing the
Substitute Form W-9 included as part of the Letter of Transmittal. If a
Unitholder who is subject to backup withholding does not properly complete and
sign the Substitute Form W-9, the Purchaser will withhold 31% from payments to
such Unitholder.
Gain 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 Purchaser will withhold 10% of the amount realized by a
tendering 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.
If Loans are made to Unitholders, amounts withheld by the Purchaser from
payments to a Unitholder with respect to the Retained Units will be applied
against the principal balance of the Unitholder's Loan, and, if such Loan is
later satisfied by the Unitholder's transfer of the Retained Units, will be paid
by the Purchaser to the Internal Revenue Service at that time.
If more than 4,816 Units are validly tendered and not withdrawn, only a
pro rata portion of the tendered Units will be treated by the Purchaser as
purchased pursuant to the Offer. The excess of the Cash Consideration paid to
each tendering Limited Partner over the amounts attributable to the purchased
Units will be received as the proceeds of nonrecourse Loans secured by a pledge
of the Retained Units. The Purchaser intends to treat the Loans as debt
instruments for federal income tax purposes. Nevertheless, a taxing authority
may assert that 100% of the tendered Units must be treated as sold pursuant to
the Offer. If such an assertion were to prevail, all Units tendered would be
treated for income tax purposes as having been sold in 1995, and the Partnership
would be treated as having terminated for income tax purposes when the Loans
were made. The effect of a tax termination on the Partnership and, therefore,
on non-tendering Unitholders and tendering Unitholders as to the Retained Units,
would include a reduction in the Partnership's depreciable tax basis in its
properties and a lengthening of the period of time over which the Partnership
recognizes depreciation deductions for tax purposes. A termination of the
Partnership for income tax purposes also could have the adverse effect on
Unitholders whose tax year differs from the calendar year of the inclusion of
more than one year of the Partnership's tax items in one tax return of such
Unitholders. In addition, a tax termination could have the adverse effect on
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 be required under Code Section 751
(discussed above).
Assuming that the Loans are respected as debt for tax purposes, it is
unclear whether a Unitholder will be entitled to deduct interest accruing
thereon before such interest is paid, which would be at maturity of the Loan or
in the event cash distributions are made with respect to the Retained Units.
The deductibility of interest paid by a Unitholder will depend on how the
Unitholder uses the Loan proceeds (i.e., whether the Unitholder
9
uses the Loan proceeds to pay personal expenses or make additional
investments, and, if the latter, whether such investments are "passive
activity" or "portfolio" investments). Personal interest is generally
nondeductible, and there are limitations on the deductibility of investment
interest and interest allocable to passive activities. Unitholders should
consult their tax advisors concerning the application of these rules and
limitations to their particular circumstances.
If a Loan is treated as indebtedness incurred by a tax-exempt Limited
Partner to acquire or improve property, income from such property will be
taxable to the tax-exempt Unitholder as unrelated debt-financed income within
the meaning of Code Section 514. Tax-exempt Unitholders should consult their
tax advisors with respect to the tax consequences of tendering Units pursuant to
the Offer.
A taxable Unitholder who satisfies a Loan by transferring the Retained
Units to the Purchaser will recognize gain or loss upon such transfer under the
rules discussed above, with the then outstanding Loan balance (including any
accrued and unpaid interest) being treated as an amount realized by the
Unitholder on the transfer of the Retained Units.
Section 7. Effects of the Offer.
Limitations on Resales. Pursuant to authority contained in the Partnership
Agreement, the General Partner restricts transfers of Units if a transfer, when
considered with all other transfers during the same applicable twelve-month
period, would cause a termination of the Partnership for federal or applicable
state income tax purposes (which termination may occur when 50% or more of the
Units are transferred in a twelve-month period). If the secondary market in
private transactions were to become more active, sales of Units on the secondary
market for the twelve-month period following completion of the Offer may be
limited. The Partnership will not process any requests for recognition of
substitution of Unitholders upon a transfer of Units during such twelve-month
period which the General Partner believes may cause a tax termination. In
determining the Transfer Limitation, the Purchaser took this restriction into
account so as to permit transfers of up to 349 of the outstanding Units to occur
prior to January 1996 without violating this restriction.
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.
Control of all Unitholder Voting Decisions by Purchaser; Effect of
Affiliation with General Partner. Like Units acquired in the Original Tender
Offer for Units, the Purchaser will have the right to vote each Unit purchased
pursuant to the Offer. As a result of the Original Tender Offer for Units, the
Purchaser is in a position to significantly influence all voting decisions with
respect to the Partnership. Consummation of the Offer may further enhance such
voting influence. Accordingly, the Purchaser could (i) prevent non-tendering
Unitholders from taking action they desire but that the Purchaser opposes and
(ii) take action desired by the Purchaser but opposed by non-tendering
Unitholders. Under the Partnership Agreement, Unitholders holding a majority of
the Units are entitled to take action with respect to a variety of matters.
When voting on such matters, the Purchaser will vote Units owned and acquired by
it in its interest, which, because of its affiliation with the General Partner,
will also likely be in the interest of the General Partner. However, in
connection with the Original Tender Offers, the Purchaser has agreed for the
benefit of non-tendering Unitholders, and the Purchaser hereby reaffirms such
agreement, that (i) it will vote its Units against any proposal (including a
proposal by the Purchaser, the General Partner and any affiliates thereof) to
increase the existing fees and other compensation presently received by the
General Partner and any of its affiliates from the Partnership, and (ii) with
respect to any other matter proposed by the Purchaser, the General Partner or
any of their affiliates, the Purchaser will vote its Units in proportion to the
votes cast by other Unitholders. Except for the foregoing, no other limitations
are imposed on the Purchaser's right to vote each Unit purchased, including any
vote on the removal of the General Partner.
10
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.
Purchase of Units pursuant to the Offer will not result in the Units becoming
eligible for deregistration under the Exchange Act.
Section 8. Future Plans. The Purchaser is acquiring the Units pursuant to
the Offer in connection with the Settlement and otherwise for investment
purposes. Subject to the limitation on resales discussed in Section 7,
following the completion of the Offer, the Purchaser may acquire additional
Units. Any such acquisition may be made through private purchases or by any
other means deemed advisable; provided, however, as part of the Settlement, the
Purchaser has agreed not to initiate or participate (as a member of any group or
as an investor or creditor of the tender offer(s)) in any tender offer for Units
for a period of 24 months following the Expiration Date, except in response to a
tender offer by a party who is not an affiliate of the Purchaser. Any such
acquisition may be at a price higher or lower than the price to be paid for the
Units purchased pursuant to the Offer. Neither the Purchaser nor the General
Partner has any present plans or intentions with respect to a liquidation, sale
of assets or refinancing of any of the Partnership's properties. However, the
Purchaser believes that consistent with its fiduciary obligations the General
Partner will continue to review any opportunities such as sales or refinancings
and will seek to maximize returns to investors in the Units. The General
Partner's stated intentions are to manage the Partnership's assets to maximize
capital appreciation, improve property operations and reduce Partnership debt.
See "Section 10. Conflicts of Interest and Transactions with Affiliates" for
certain information concerning the General Partner's potential conflict of
interest with respect to sales or refinancings.
Section 9. Certain Information Concerning the Partnership. The
Partnership was organized on April 19, 1977, under the laws of the State of
California. Its principal executive offices are located at 5665 Northside
Drive, N.W., Suite 370, Atlanta, Georgia 30328. Its telephone number is (404)
916-9050.
The Partnership's primary business is real estate related operations.
Unitholders are referred to the financial and other information included in
the Partnership's Annual Report on Form 10-K for the fiscal year ended December
31, 1994, and the Partnership's Quarterly Report on Form 10-Q for the three
months ended March 31, 1995. Such reports and other documents may be examined
and copies may be obtained from the offices of the Commission at 450 Fifth
Street, N.W., Washington, D.C 20549, and at the regional offices of the
Commission located in the Northwestern Atrium Center, 500 Madison Street, Suite
1400, Chicago, Illinois 60661, and 7 World Trade Center, New York, New York
10048. Copies should be available by mail upon payment of the Commission's
customary charges by writing to the Commission's principal offices at 450 Fifth
Street, N.W., Washington, D.C. 20549.
Section 10. Conflicts of Interest and Transactions with Affiliates. The
General Partner, the Purchaser and their affiliates have conflicts of interest
with respect to the Offer as set forth below.
Conflicts of Interest With Respect to the Offer. The General Partner has a
conflict of interest with respect to the Offer, including as a result of its
affiliation with the Purchaser. (See "Section 13. Background of the Offer".)
Voting by the Purchaser. As a result of the Original Tender Offers, the
Purchaser is in a position to significantly influence all Partnership decisions
on which Unitholders may vote. Consummation of the Offer may further enhance
such voting influence. However, the Purchaser has agreed, for the benefit of
non-tendering Unitholders that (i) it will vote its Units against any proposal
(including a proposal by the Purchaser, the General Partner and any affiliates
thereof) to increase the existing fees and other compensation presently received
by the General Partner and any of its affiliates from the Partnership, and (ii)
with respect to any other matter proposed by the Purchaser, the General Partner
or any of their affiliates, the Purchaser will vote its Units in proportion to
the votes cast by other Unitholders. Except for the foregoing, no other
limitations are imposed on the
11
Purchaser's right to vote each Unit purchased, including any vote on the
removal of the General Partner. (See "Section 7. Effects of the Offer".)
Repayment of Tender Offer Loan. A loan (the "Original DeForest Loan") was
obtained by the Purchaser in connection with the Original Tender Offers. (See
"Section 13. Background of the Offer".) On May 8, 1995, following the
expiration of the draw down period for the Original Deforest Loan, the agreement
governing the Original DeForest Loan (the "Original Loan Agreement") was amended
(as amended, the "Amended Loan Agreement") to provide for additional debt
financing (such additional debt financing together with the Original DeForest
Loan being referred to herein as, the "Amended DeForest Loan") for the purchase
of units by the Purchaser in the Settlement Tender Offers (as defined in Section
13). The Purchaser services the Amended DeForest Loan with Purchaser Cash Flow
and Tender Cash Flow (as defined in Section 12). One of several possible
sources of Tender Cash Flow is the Purchaser's distributable portion of the
proceeds of any sales or refinancings of Partnership properties attributable to
Units owned by the Purchaser. Consequently, a conflict of interest may exist
for the General Partner in determining whether and when to sell and/or refinance
the Partnership's properties. Any such conflict, however, may be mitigated by
the fact that (i) proceeds from the sale or refinancing of properties owned by
other Subject Partnerships may be available to the Purchaser (see "Section 12.
Source of Funds."), (ii) there exist other repayment sources, including capital
contributions from the Purchaser's partners, (iii) certain of the Purchaser's
partners have agreed to advance funds to the Purchaser in order to enable the
Purchaser to make timely interest payments, and (iv) the Purchaser may be able
to refinance all or a portion of the Amended DeForest Loan.
Distributions upon Sales or Refinancings. As mentioned above, one source
of Tender Cash Flow is the Purchaser's distributable portion of the proceeds of
any sales or refinancings of Partnership properties attributable to Units owned
by the Purchaser. The Amended Loan Agreement provides that the Purchaser is
required to make a prepayment on the Amended DeForest Loan of an amount equal to
75% (100% in the case of a refinancing) of the Purchaser's distributable portion
of the proceeds of such sale or refinancing, whether or not distributed by the
Partnership. Consequently, unless the Purchaser otherwise has funds available
to make such a required prepayment, a conflict of interest may exist for the
General Partner in determining whether and when to cause the Partnership to
distribute the proceeds of any such sale or refinancing to the Partnership's
partners.
Transactions with Affiliates. The General Partner of the Partnership, an
affiliate of the Purchaser, owns a 1% interest in the Partnership and thus
receives, as a continuing interest in the Partnership, an amount equal to a 1%
allocation of the Partnership's profits, and 1% of distributions. The General
Partner and its affiliates are also entitled to be reimbursed for certain
expenses and to receive certain fees pursuant to the terms of the Partnership
Agreement; however, as a result of the Settlement, the General Partners and
their affiliates will no longer be entitled to receive a portion of such expense
reimbursements to the extent such expenses exceed the amount reimbursed during
the 1994 fiscal year, subject to increases for inflation. (See "Section 13.
Background of the Offer" for a discussion of the material terms of the
Settlement.)
For information as to the amounts paid to the General Partner and its
affiliates during the last three fiscal years and the three months ended March
31, 1995, see Note 2 to the Financial Statements of the Partnership in the Form
10-K of the Partnership for the fiscal year ended December 31, 1994 and Note 2
to the Financial Statements of the Partnership in the Form 10-Q of the
Partnership for the three months ended March 31, 1995.
In connection with NPI Equity's acquisition of management and control of
the Partnership, NPI Equity and certain principals of National Property
Investors, Inc. ("NPI"), an affiliate of NPI Equity, agreed to indemnify FRI,
FCMC and certain of the former individual general partners of FRI for 25% of the
out-of-pocket costs, expenses and liabilities, if any, that may be incurred by
them in connection with the restoration of any deficit balance in the General
Partner's capital account upon the dissolution of the Partnership subsequent to
the sale of all of the Partnership's properties. (See "Section 13. Background
of the Offer" for a description of the transaction pursuant to which NPI Equity
acquired control of the Partnership.)
12
As part of the Settlement, the General Partners have agreed to provide the
Partnership with a $450,000 credit line. (See "Section 13. Background of the
Offer" for a discussion of the material terms of the Settlement.)
Section 11. Certain Information Concerning the Purchaser. The Purchaser
was organized for the purpose of acquiring the Units in the Original Tender
Offers. The principal executive office of the Purchaser and DeForest Capital is
at 5665 Northside Drive, N.W., Suite 370, Atlanta, Georgia 30328. DeForest
Capital was organized for the purpose of acting as the general partner of the
Purchaser.
For certain information concerning the directors and executive officers of
DeForest Capital, the general partner of the Purchaser, see Schedule 1 to this
Offer to Purchase.
For certain financial information concerning the Purchaser and DeForest
Capital, see Schedule 2 to this Offer to Purchase.
The Purchaser has entered into agreements with Lisle Payne and Janet
Larson, two former affiliates of FRI (the "Former Affiliates"), pursuant to
which the Purchaser has agreed to pay to the Former Affiliates the portion of
any distribution received by the Purchaser or its affiliates on account of the
Units owned by the Purchaser or its affiliates which are attributable to capital
contributions by such Former Affiliates to restore the deficit in a general
partner's capital account. (See "Section 13. Background of the Offer" for a
discussion of the General Partner's capital account restoration obligations.)
Pursuant to each such agreement, the Purchaser will receive approximately
$60,000 per year from each Former Affiliate until February 1998.
Except as otherwise set forth herein, (i) neither the Purchaser, DeForest
Capital, to the best of Purchaser's knowledge, the persons listed on Schedule 1
nor any affiliate of the foregoing beneficially owns or has a right to acquire
any Units, (ii) neither the Purchaser, DeForest Capital, to the best of
Purchaser's knowledge, the persons listed on Schedule 1, nor any affiliate
thereof or director, executive officer or subsidiary of DeForest Capital has
effected any transaction in the Units within the past 60 days, (iii) neither the
Purchaser, DeForest Capital, to the best of Purchaser's knowledge, any of the
persons listed on Schedule 1, nor any director or executive officer of DeForest
Capital 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, (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 Purchaser, DeForest Capital
or, to the best of Purchaser's knowledge, the persons listed on Schedule 1, 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
Purchaser, DeForest Capital or, to the best of Purchaser's knowledge, the
persons listed on Schedule 1, on the one hand, 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.
QAL Associates and QALA II Associates, each an affiliate of the Purchaser
with an address at 100 Jericho Quadrangle, Suite 214, Jericho, New York 11753,
own 15 and 30 Units, respectively.
Section 12. Source of Funds. As described in Section 13, in connection
with the Original Tender Offers, the Purchaser obtained the Original DeForest
Loan in the original principal amount of $21,223,858, and DeForest II (as
defined in Section 13) obtained a loan (the "Original NPI Loan", and together
with the Original DeForest Loan, the "Original Loans") in the original principal
amount of $13,250,690, in each case from Kidder Peabody Mortgage Capital
Corporation ("Kidder"). Kidder subsequently assigned the Original Loans to
PaineWebber Real Estate Securities Inc. (the "Lender"), the successor in
interest to Kidder. On May 8, 1995, following the expiration of the draw down
period for the Original Loans, the Original Loans were amended to provide for
additional debt financing to be used in connection with consummation of the
Settlement, including consummation of the Settlement Tender Offers. The
aggregate principal amount of the Amended DeForest
13
Loan and the "Amended NPI Loan" (defined as the Original NPI Loan as increased
by the additional debt financing allocated to DeForest II) may not exceed $55
million. Subject to such limitation and to reduction by the amount of
additional debt financing allocated to DeForest II in connection with
consummation of the Settlement by DeForest II, the maximum increase in the
principal amount of the Original DeForest Loan will be approximately
$19,019,000, of which approximately $14,655,000 is available for the
Settlement Tender Offers.
Approximately $725,451 in the aggregate would be required by the Purchaser
to purchase or make a Loan with respect to the 5,233 Units sought pursuant to
the Offer, if tendered. The Purchaser may obtain up to approximately $667,642
of such aggregate amount from the additional debt financing subject to reduction
dependent upon the amount of the additional debt financing allocated to DeForest
II to consummate the other Settlement Tender Offers and the success of the
Purchaser in the other Settlement Tender Offers. Any funds required by the
Purchaser to consummate the Offer and the other Settlement Tender Offers in
excess of the amount available to it from the additional debt financing will be
obtained from the Purchaser's partners.
The Amended DeForest Loan and the Amended NPI Loan (together, the "Amended
Loans") are governed by the terms of the Amended Loan Agreement. Except as
indicated below, the terms of the Amended Loans, including the covenants of the
respective borrowers and the terms relating to interest and maturity, are not
materially different from the terms which governed the Original Loans prior to
execution of the Amended Loan Agreement. Any changes in such terms are
generally reflective of the increased principal amount of the Amended Loans as
well as the additional collateral for the Amended Loans to be acquired by the
respective borrowers in the Settlement Tender Offers and to be pledged to the
Lender.
The Amended DeForest Loan and the Amended NPI Loan are cross-defaulted and
cross-collateralized. The Amended DeForest Loan and the Amended NPI Loan are
each due and payable on November 21, 1995. However, the respective borrowers
have the right to extend the Amended Loans for two consecutive one-year periods
provided that the Amended Loans are not in default. Interest on each Amended
Loan accrues monthly and is payable in arrears at a rate per annum equal to 250
basis points over LIBOR through November 21, 1995, 350 basis points over LIBOR
through November 21, 1996 (if extended through such date) and 450 basis points
over LIBOR through November 21, 1997 (if extended through such date). As of May
16, 1995 the LIBOR rate was 6.0625% per annum.
The Lender is also entitled to additional interest on the Amended Loans in
the form of a residual fee. Payment of the Lender's additional interest,
however, is subordinate to the prior return of the aggregate capital
contributions received by the Purchaser and DeForest II, together with a 15% per
annum return thereon. The residual fee consists of the greater of 20% or a
specified percentage of Tender Cash Flow until the Lender has received a 17% per
annum rate of return. The specified percentage to be received by the Lender
will be based upon the actual monthly outstanding balance of the Amended Loans
and the period of time during which the Amended Loans were outstanding, and will
continue to be paid to the Lender after its receipt of a 17% per annum rate of
return. "Tender Cash Flow" is the amount to be received by the Purchaser with
respect to the units of limited partnership interest acquired in the Original
Fox Tender Offers and acquired or held by the Purchaser in connection with the
Settlement Tender Offers (together with the units of limited partnership
interest acquired by DeForest II in the Original NPI Tender Offers and the
Settlement Tender Offers, the "Tendered Units"), whether in the form of
distributions from the NPI Partnerships or as proceeds from the sale or other
disposition of such Tendered Units.
Although the Amended Loans are prepayable at any time without premium or
penalty, a prepayment is required upon the occurrence of certain events. The
Purchaser is required to prepay the outstanding principal amount of the Amended
DeForest Loan utilizing Purchaser Cash Flow (as defined herein), if any,
remaining after its application to the payment of interest on the Amended
Loans. Further, whether or not distributed to the Purchaser, 75% (increased
from 60% in connection with entering into the Amended Loan Agreement) of the
Purchaser's distributable portion of the net proceeds of a sale (and 100% of the
net proceeds of a refinancing) of a property owned by a Fox Partnership is
required to be applied in prepayment of the Amended DeForest Loan. (See
"Section 10. Conflicts of Interest and Transactions With Affiliates" for a
discussion of
14
certain potential conflicts of interest resulting from the Purchaser's
obligation to prepay the Amended DeForest Loan with the proceeds of sales or
refinancings of Partnership properties.) "Purchaser Cash Flow" means the cash
revenues, with certain exceptions, to be received by NPI-AP Management, L.P.
("NPI-AP Management"), an affiliate of the Purchaser, and by certain other
entities affiliated with NPI less allowable operating expenses. Each of NPI-AP
and NPI have guaranteed the Amended Loans.
As collateral security for the Amended Loans, among other things, the
Purchaser and DeForest II have pledged and collaterally assigned the Tendered
Units (or upon acquisition thereof pursuant to the Settlement Tender Offers will
pledge and collaterally assign Tendered Units) to the Lender, and their
respective partners have pledged all partnership interests in the borrowers. As
additional collateral security, all outstanding shares of the common stock of
NPI Equity (and its parent NPI) and all partnership interests in NPI-AP
Management have been pledged to the Lender by the holders thereof.
The Amended Loan Agreement contains customary affirmative and negative
reporting and operational covenants. The Amended Loan Agreement also provides
that certain actions (i.e., bankruptcy or insolvency and default under mortgage
indebtedness) by Subject Partnerships having in the aggregate an Attributed Net
Value (as defined below) of more than 20% of the Attributed Net Value of all
Subject Partnerships constitute a default under the Amended Loans. "Attributed
Net Value" of any Subject Partnership represents the purchase price actually
paid by the Purchaser or DeForest II for Tendered Units of a Subject Partnership
multiplied by the number of Tendered Units actually acquired at such price.
The Purchaser and DeForest II have timely made all required payments of
principal and interest on the Original Loans. The Purchaser anticipates that,
over the remaining course of the Amended Loans or any refinancing thereof, the
allocable share of sale or refinancing proceeds to be received by it or by
DeForest II on account of Tendered Units, together with the Purchaser Cash Flow
available to service the Amended Loans, will continue to be sufficient to retire
the principal balance of the Amended Loans or any replacement loans. However,
it is the Purchaser's belief that unless properties owned by one or more of the
Subject Partnerships are sold or refinanced, repayment of the Amended Loans will
be dependent upon the ability of the Purchaser or DeForest II to obtain
replacement financing. (See "Section 10. Conflicts of Interest and
Transactions with Affiliates" for a discussion of certain potential conflicts of
interest resulting from consummation of the Original DeForest Loan.) There are
84 individual properties owned by the Subject Partnerships. Neither the General
Partner nor the Purchaser is aware of any property owned by a Subject
Partnership which is contemplated for current sale other than the following:
(i) Century Properties Fund XIV has entered into contracts for the
sale of its Greenbriar Plaza and Duck Creek properties for purchase prices
of $1,060,000 and $2,240,000 respectively. The anticipated net proceeds
to the partnership from these sales is expected to be approximately
$925,000 from the Greenbriar Plaza sale and 1,950,000 from the Duck Creek
sale. The sales are subject to customary closing conditions, including
title, survey and environmental review;
(ii) Century Properties Growth Fund XXII has entered into a contract
for the sale of its Monterey Village property for a purchase price of
$10,500,000 with anticipated net proceeds to the partnership of
approximately $3,200,000. The sale is contingent upon the buyer's
satisfactory completion of its due diligence review;
(iii) MRI Business Properties Fund, Ltd. II ("MRI II") has entered
into a contract for the sale of its Marriott Riverwalk property for a
purchase price of $49,600,000 with anticipated net proceeds to the
partnership of approximately $30,000,000, and has entered into a
non-binding letter of intent for the sale of its Marriott Somerset property
for $25,000,000 with anticipated net proceeds to the partnership of
approximately $2,500,000. The sale of the Marriott Riverwalk is subject to
customary closing conditions, and the sale of the Marriott Somerset will be
contingent upon the buyer's satisfactory completion of its due diligence
review. MRI II is also currently marketing its interests in both its
Holiday Inn Crowne Plaza property and its Radisson South property; and
15
(iv) MRI Business Properties Fund, Ltd. III ("MRI III") has entered
into a contract for the sale of its Embassy Suites property for a purchase
price of $19,600,000 with anticipated net proceeds to the partnership of
approximately $19,500,000. The sale is contingent upon the buyer's
satisfactory completion of its due diligence review. MRI III is also
currently marketing its interest in its Holiday Inn Crowne Plaza property.
In addition, neither the Purchaser nor Deforest II has made any plans or
arrangements to refinance the Amended Loans. Assuming all of the foregoing
properties which are under contract or subject to letters of intent are sold for
the purchase prices indicated and the proceeds of such sales are distributed by
the respective partnerships, the Purchaser's share of such proceeds on account
of units currently owned in such partnerships, together with the Purchaser's
share of the proceeds from the April 1995 sale of Plumtree Apartments by Century
Properties Fund XV, would aggregate approximately $17,950,000 .
Section 13. Background of the Offer.
Acquisition of Control. On December 6, 1993, NPI Equity, a wholly-owned
subsidiary of NPI, an affiliate of the Purchaser, assumed management and
obtained control of the General Partner of the Partnership, the respective
general partners of the other Subject Partnerships set forth on Schedule 3 under
the heading "Fox Partnerships" (together with the Partnership, the "Fox
Partnerships"), and certain other affiliated partnerships, by being appointed as
substitute managing partner of FRI, a general partner of the Partnership and the
direct or indirect general partner of certain of the other Fox Partnerships and
such other affiliated partnerships, and by entering into a voting trust
agreement with the beneficial owners of the outstanding shares of stock of FCMC,
another general partner of the Partnership and the direct or indirect general
partner of certain of the other Fox Partnerships and such other affiliated
partnerships. Three of the eleven former individual general partners of FRI are
limited partners of the Purchaser.
In connection with the acquisition by NPI Equity of management and control
of the Fox Partnerships and such other affiliated partnerships, NPI Realty
Advisors, Inc. ("NPI Realty"), an affiliate of NPI Equity, acquired for cash and
notes an aggregate of approximately $10,800,000 of loans made by FRI and/or
FCMC to the Fox Partnerships and such other affiliated partnerships (the
"Partnership Advances") for the outstanding balance of such loans. All of the
Partnership Advances have since been repaid by the borrower thereof from, among
other sources, the proceeds of the sales of certain properties of the Fox
Partnerships and such other affiliated partnerships.
On October 12, 1994, NPI sold one-third of its stock to an affiliate of
Apollo Real Estate Advisors, L.P. ("Apollo"). (See the seventh, eighth and
ninth paragraphs of Item 1. of the Partnership's Form 10-K for the fiscal year
ended December 31, 1994 for additional information with respect to this
transaction.) Certain individual beneficial owners of NPI and an entity
affiliated with Apollo formed both the Purchaser and DeForest Capital on
September 30, 1994 for the purpose of making the Original Tender Offers.
The Original Tender Offers. On October 17, 1994, the Purchaser commenced
the Original Tender Offers for units of limited partnership interest in the Fox
Partnerships (the "Original Fox Tender Offers"), and the Purchaser's affiliate,
DeForest Ventures II L.P. ("DeForest II"), commenced the Original Tender Offers
(the "Original NPI Tender Offers") for units of limited partnership interest in
the Subject Partnerships set forth on Schedule 3 under the heading "NPI
Partnerships" (the "NPI Partnerships"). The Original NPI Tender Offers and the
Original Fox Tender Offers were consummated on November 18, 1994 and November
29, 1994, respectively.
Original Tender Offer Financing. The Purchaser purchased the Units
tendered in the Original Tender Offer for Units as well as the units of limited
partnership interest tendered in the other Original Fox Tender Offers, in part,
with the proceeds of the $21,223,858 Original DeForest Loan. The balance of
the purchase price for such units was obtained through capital contributions
from the Purchaser's partners. The Lender also provided the $13,250,690
Original NPI Loan to DeForest II in connection with DeForest II's purchase of
units
16
in the Original NPI Tender Offers. As of May 8, 1995, the outstanding
principal balance of the Original DeForest Loan and the Original NPI Loan, was
$21,223,858 and $12,403,079, respectively. As discussed in Section 12,
prior to execution of the Amended Loan Agreement, the Original Loans were
governed by terms not materially different from the terms governing the
Amended Loans (see "Section 12. Source of Funds" for a discussion of the terms
of the Amended Loans.)
The Action. The Action consolidates two of the litigations filed in
response to the Original Tender Offers. The following sets forth certain
background information relating to such litigations:
The Ruben Action. On November 7, 1994, Plaintiffs Bonnie L. Ruben and
Sidney Finkel (the "Original Ruben Plaintiffs") filed their original complaint
(the "Ruben Action") with the Court entitled Bonnie L. Ruben, et. al. v.
DeForest Ventures I L.P., et. al. (Civil Action No 1:94CV-2983-JEC), alleging
claims relating to the Original Fox Tender Offers on behalf of the limited
partners in the Fox Partnerships. The complaint included claims for violation
of Section 14(e) of the Securities Exchange Act of 1934 against the tender
offerors, for breach of fiduciary duties by the General Partners of the Fox
Partnerships, for breach of the Partnership Agreements of the Fox Partnerships,
and for aiding and abetting such breaches. The Original Ruben Plaintiffs moved
for a temporary restraining order and a preliminary injunction to enjoin the
Original Fox Tender Offers. On November 18, 1994, following a hearing, the
Court denied the Original Ruben Plaintiffs' motion for a temporary restraining
order enjoining the Original Fox Tender Offers and other matters, and scheduled
a hearing on the Original Ruben Plaintiffs' preliminary injunction motion for
November 28, 1994. On November 22, 1994, the Original Ruben Plaintiffs withdrew
their motion for a preliminary injunction. On December 29, 1994, the Original
Ruben Plaintiffs, joined by Plaintiff Robert Lewis (collectively, the "Ruben
Plaintiffs"), filed their First Amended Complaint, alleging claims related both
to the Original Fox Tender Offers and the Original NPI Tender Offers, on behalf
of limited partners in the Fox Partnerships and the NPI Partnerships,
respectively.
The Andrews Action. On December 16, 1994, a complaint (the "Andrews
Action") was filed in the Court by Plaintiff James Andrews and others (the
"Andrew Plaintiffs") with the Court entitled James Andrews, et. al. v. Fox
Capital Management Corp., et al., (Civil Action No 1:94CV-3351-JEC), alleging
similar claims to those alleged in the Ruben Action.
By order of the Court, dated February 23, 1995, the Ruben Action and the
Andrews Action were consolidated.
The Settlement also settles the two other class actions which were filed in
response to the Original Tender Offers. The following sets forth certain
background information relating to such litigations:
The Whiteside Action. On November 3, 1994, a complaint (the
"Whiteside Action") was filed in the Superior Court of the State of California
in and for the County of San Mateo entitled Whiteside, et al. v. Fox Capital
Management Corp. (Case No. 390018), alleging claims under California state law
in connection with the Original Fox Tender Offers on behalf of certain limited
partners in the Fox Partnerships, and an amended complaint was filed in that
action on December 28, 1994, alleging claims related both to the Original Fox
Tender Offers and to the Original NPI Tender Offers, on behalf of certain
limited partners of the Fox Partnerships and the NPI Partnerships,
respectively. The court in the Whiteside Action denied plaintiff's motions for
a temporary restraining order and a preliminary injunction to enjoin the
Original Fox Tender Offers.
The Vernon Action. On November 22, 1994, a complaint (the "Vernon
Action") was filed in the Illinois Circuit Court entitled Vernon v. DeForest
Ventures I L.P., et. al. (No. 94 CH 0150592) containing allegations similar to
those contained in the Action.
Each defendant in the Action has at all times denied the allegations of
wrongdoing and the merits of any and all claims asserted in the Action and in
the Whiteside and Vernon Actions.
17
The Settlement. After extensive arm's-length negotiations between counsel
for the Plaintiffs in the various litigations and counsel for the Defendants,
the parties to the litigations entered into an Amended Stipulation of Settlement
dated as of March 14, 1995. As described in the Settlement Notice, the
Settlement provides that in full and final disposition of all claims with
respect to any transaction or occurrence constituting the subject matter of the
Action, the following consideration was provided with respect to the Fox
Partnerships:
Monetary Payment to Class Members who tendered in the Original Tender
Offers. Each unitholder who tendered units of limited partnership interest in
the Original Fox Tender Offers will receive a payment equal to the sum of the
Settlement Premium plus the Residual Settlement Premium in the Settlement Tender
Offer applicable to such unitholder's Fox Partnership. Accordingly, unitholders
who tendered units in the Original Fox Tender Offers, and unitholders who tender
units in the Settlement Tender Offers relating to the same Fox Partnership, will
have received the same consideration with respect to tendered units which are
purchased pursuant to such Offers.
Settlement Tender Offers. The Purchaser was required to make the Offer,
and similar tender offers (together with the Offer, the "Settlement Tender
Offers") were required to be made with respect to the other Subject
Partnerships.
Establishment of Credit Line. The respective general partners of the Fox
Partnerships, or their affiliates, will provide a credit line to each Fox
Partnership in an amount determined by multiplying $150,000 by the number of
properties owned directly or indirectly by such Fox Partnership, with interest
at the lesser of the prime rate plus 1% or the interest rate permitted under the
respective partnership agreement of the Fox Partnerships for short term loans to
such Fox Partnership by its general partners. The principal amount of such
loans will be payable on the earliest to occur of either the sale or refinancing
of any property owned by the applicable Fox Partnership or upon liquidation of
such Fox Partnership. Interest on such loans will be payable out of first
available cash flow or upon sale or refinancing of any property owned by the
applicable Fox Partnership.
Limitation on Expense Reimbursement. The annual amount of general and
administrative expenses (other than that portion attributable to outside legal
and accounting fees) which is reimbursable to the respective general partners of
each Fox Partnership from such Fox Partnership may not exceed the amount
reimbursed to such general partners during the 1994 fiscal year, subject to
increases for inflation.
Prohibition on Roll-up Transactions. The respective general partners of
the Fox Partnerships will adopt a policy of prohibiting the Fox Partnerships
from entering into a Roll-up Transaction in which such general partners or their
affiliates are a party prior to December 31, 1999, unless such transaction is
approved by a majority of the limited partnership interests held by
non-affiliates of such general partners. A Roll-up Transaction is defined to
mean (i) any merger or consolidation of a Fox Partnership with any other entity
if as a result thereof limited partners of such partnership will be issued
securities in any other entity in exchange for, or as a distribution with
respect to, the units of such partnership; or (ii) any sale of all or
substantially all of the assets of a Fox Partnership to another entity if as a
result thereof limited partners of such partnership will be issued securities in
any other entity in exchange for, or as a distribution with respect to, the
units of such partnership; or (iii) any transaction involving an exchange of
units of a Fox Partnership for securities in any other entity whether through a
voluntary exchange or otherwise; or (iv) any other similar transaction or series
of transactions, if, as a result of a transaction or any series of related
transactions, any of the limited partners of such partnership will be issued
securities in any other entity in exchange for, or as a distribution with
respect to, the units in such partnership; or (v) any sale of all or
substantially all of the assets of a Fox Partnership or termination and
dissolution of a Fox Partnership, if in either case, the general partner of such
partnership or any of its affiliates has a material financial interest in such
transaction (other than in its capacity as a general or limited partner in such
partnership).
Elimination of Fees. The respective general partners of the Fox
Partnerships and their affiliates will not be entitled to any subordinated
incentive fees otherwise payable pursuant to the respective partnership
agreements of the Fox Partnerships.
18
No Additional Tender Offers. Neither the Purchaser nor any of its
affiliates will initiate or participate in (as a member of any group or as an
investor in or creditor of the tender offeror(s)) any tender offer for the
outstanding units of one or more of the Subject Partnerships after completion of
the Settlement Tender Offers for a period of 24 months following the completion
of the Settlement Tender Offers, except in response to a tender offer by a party
who is not an affiliate of the Purchaser.
At a May 19, 1995 hearing on the Settlement, the Court approved the
Settlement and entered an order (the "Order") determining that the terms of the
Settlement were fair, reasonable and adequate and dismissing the Action with
prejudice. Unless an appeal is filed, the Court's order will become final,
binding and non-appealable on June 19, 1995.
Payment of Settlement Expenses. Depending on the number of units tendered
in the Settlement Tender Offers, the Subject Partnerships will be obligated to
pay a portion of Class Members' counsel's fees. In the case of the Partnership,
such payment will not exceed $17,900.
Establishment of Cash Consideration. The Purchaser has set the Cash
Consideration at $138.63 per Unit as compared to the Original Purchase Price of
$126 per Unit in the Original Tender Offer for Units. As discussed above, the
Cash Consideration was determined in connection with the Settlement and
represents the price offered in the Original Tender Offer increased by the
Settlement Premium. (See "Section 13. Background of the Offer".)
As discussed in the Offer to Purchase relating to the Original Tender Offer
for Units, the Original Purchase Price was established by analyzing a number of
both quantitative and qualitative factors which existed at the time of the
Original Tender Offers, including: (i) secondary market activity with respect to
the Units; (ii) the lack of liquidity of, and lack of current income derived
from, an investment in the Partnership; (iii) an estimate of the underlying
value of the Partnership's assets; (iv) the costs to the Purchaser associated
with acquiring the Units in the Original Tender Offer; and (v) the
administrative costs of continuing to own the Partnership's assets through a
publicly registered limited partnership.
Secondary sales activity has been very limited and sporadic. Since the
Original Tender Offers, according to information obtained from trade
publications that report on public real estate limited partnerships, Units that
were transferred in the secondary market were sold at prices approximating the
Original Purchase Price.
Set forth below is updated information with respect to the underlying value
of the Partnership's assets.
The Purchaser is offering to purchase Units which are a relatively illiquid
investment and which do not presently generate current income and is not
offering to purchase the Partnership's underlying assets. Consequently, the
Purchaser does not believe that the underlying asset value of the Partnership is
determinative in arriving at the Cash Consideration. Nevertheless, the
Purchaser derived an estimated net value (the "Derived Value") for the
Partnership's assets. In determining the Derived Value, the Purchaser first
calculated the "Adjusted Value" of each of the Partnership's properties. The
Adjusted Value was determined by subtracting a replacement reserve (the
"Replacement Reserve") from a property's earnings before interest, depreciation
and amortization ("EBIDA") for the twelve month period commencing on April 1,
1994 and ending March 31, 1995, which earnings were based upon the Partnership's
actual operating results. This amount was then divided by a capitalization rate
(the "Cap Rate") to determine the property's Adjusted Value. The Replacement
Reserve used in calculating the Adjusted Value for the Partnership's apartment
complex was $400.00 per apartment unit and the Replacement Reserve for the
Partnership's commercial properties was $.65 per square foot. The Cap Rate used
in calculating the Adjusted Value was 9.75% for the Partnership's apartment
complex and 11% for the Partnership's commercial properties. The Adjusted Value
of one of the Partnership's commercial properties was then reduced by an amount
equal to $7.00 per square foot of vacant space to provide for tenant
improvements and leasing commissions.
19
The Purchaser believes that the Replacement Reserve and Cap Rates utilized
by it are within a range of reserves and capitalization rates currently employed
in the marketplace. The utilization of different replacement reserves and
capitalization rates could also be appropriate. Unitholders should be aware
that the use of lower replacement reserves and/or capitalization rates would
result in higher Adjusted Values for the Partnership's properties.
The following table applies the method used by the Purchaser to determine
the Adjusted Value.
Year Replacement Adjusted
Property Built EBIDA Reserve Cap Rate Adjustments Value
Country Club 1978 $709,000 $72,150 11.00% $38,584 $5,750,961
Plaza
Indian River 1979 $415,000 $56,550 11.00% $ -- $3,258,636
Plaza
Parkside 1979 $161,000 $37,600 9.75% -- $1,265,641
Apartments
To determine the Derived Value of the Partnership's assets, the Purchaser
then added to the aggregate Adjusted Value the net amount of all cash and cash
equivalents of the Partnership at March 31, 1995, which net amount equaled
$1,290,000. Finally, the Adjusted Value was reduced by subtracting
approximately $3,057,000 of long term debt of the Partnership outstanding at
March 31, 1995. The resulting Derived Value of the Partnership's assets was
approximately $8,508,238 or $241 per Unit (based upon the percentage of capital
distributions to which Unitholders are entitled).
The Purchaser believes that realization by the Partnership of the Derived
Value may be impacted by several factors affecting real estate assets generally,
including: (i) the reduced availability of real estate financing for commercial
properties, resulting from various factors including the present condition of
financial institutions, and (ii) the continued sale of properties acquired by
financial institutions and government agencies. In addition, no deduction was
made in calculating the Derived Value on account of closing costs which would be
incurred upon the sale by the Partnership of its properties, including brokerage
commissions, title costs, legal fees and transfer taxes. No Partnership
properties or assets have been identified for sale, and neither the General
Partner nor the Purchaser has any present plans or intentions with respect to
liquidation of the Partnership.
Unitholders should also be aware that, in connection with Apollo's decision
to make an investment in the Purchaser and its affiliates, Apollo retained an
independent third party to conduct an equity analysis of, among other entities,
the Partnership as of June 30, 1994. The foregoing analysis estimated the
equity value of the Partnership at an amount equivalent to $320 per Unit.
However, Unitholders are advised that this valuation was not prepared with a
view toward public disclosure (including disclosure in this Offer) and that
Apollo does not as a matter of course make public its internal valuations. The
fact that Apollo commissioned this evaluation of the Partnership in connection
with its decision to make an investment in the Purchaser and its affiliates
should not be considered as an indication that either Apollo or the Purchaser
considers this valuation as an accurate indicator of the net amount the
Partnership could realize for its assets.
The Partnership Agreement provides, among other things, that upon
dissolution of the Partnership subsequent to the sale of all of the
Partnership's properties, the General Partner is required to contribute capital
to the Partnership in an amount equal to any deficit then existing in its
capital account. Through ownership of Units by the Purchaser, an affiliate of
the General Partner, the potential liability of the General Partner and its
affiliates is effectively reduced. Although there was a deficit in the capital
account of the General Partner of $431,389 as of the end of the Partnership's
last fiscal year (equal to $12.33 per Unit), such amount is subject to future
reduction through allocation of a portion of the taxable gain, if any, that
results from the sale by the Partnership of its properties under the Partnership
Agreement. Consequently, the ultimate amount, if any, of
20
the deficit and the date on which it would be paid are indeterminable.
Accordingly, the Purchaser has attributed no value to this obligation in
establishing the Cash Consideration.
Pursuant to the Settlement Agreement, it was agreed that the Cash
Consideration would be $138.63 reflecting the price offered in the Original
Tender Offer increased by the Settlement Premium. The Cash Consideration
represents the price at which the Purchaser is willing to purchase Units. No
independent person has been retained to evaluate or render any opinion with
respect to the fairness of the Cash Consideration and no representation is made
by the Purchaser or any affiliate of the Purchaser as to such fairness. The
Purchaser did not attempt to obtain current independent valuations or appraisals
of the underlying properties and other assets owned by the Partnership; however,
the Purchaser is aware of the equity analysis referred to above. As indicated
above, the Purchaser does not believe that such valuations or appraisals should
be determinative as to the Purchaser's establishment of the Cash Consideration.
Other measures of the value of the Units may be relevant to 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.
Partnership Makes No Recommendation. The Partnership has indicated in its
Statement on Schedule 14D-9 filed with the Commission that it makes no
recommendation and is remaining neutral as to whether Unitholders should tender
their Units pursuant to the Offer because the General Partner of the Partnership
is subject to an inherent conflict of interest resulting from the General
Partner's affiliation with the Purchaser.
Section 14. Conditions of the Offer. Notwithstanding any other term of
the Offer, the Purchaser 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. Furthermore, notwithstanding any other term of the Offer, the
Purchaser 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 acceptance of such Units for payment or the payment therefor, 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 Purchaser, (ii)
imposes or confirms limitations on the ability of the Purchaser effectively to
exercise full rights of ownership of any Units, including, without limitation,
the right to vote any Units acquired by the Purchaser pursuant to the Offer or
otherwise on all matters properly presented to the Partnership's Unitholders,
or (iii) requires divestiture by the Purchaser of any Units;
(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, which might, directly or indirectly, result in any of the
consequences referred to in clauses (i) through (iii) of paragraph (a) above;
or
(c) the Order shall not have become final, binding and non-appealable.
The foregoing conditions are for the sole benefit of the Purchaser and may
be asserted by the Purchaser regardless of the circumstances giving rise to such
conditions or may be waived by the Purchaser in whole or in part at any time and
from time to time in its sole discretion. Any determination by the Purchaser
concerning the events described above will be final and binding upon all
parties.
21
Section 15. Certain Legal Matters.
General. Except as set forth in this Section 15, the Purchaser is 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 Purchaser pursuant to the Offer. Should any such
approval or other action be required, it is the Purchaser's 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 Purchaser to elect to terminate
the Offer without purchasing Units thereunder. The Purchaser's obligation to
purchase and pay for Units is subject to certain conditions, including
conditions related to the legal matters discussed in this Section 15.
Antitrust. The Purchaser does not believe that the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended, is applicable to the acquisition
of Units contemplated by 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, securityholders, principal executive offices or principal
places of business therein. Although the Purchaser has not attempted to comply
with any state anti-takeover statutes in connection with the Offer, the
Purchaser reserves the right to challenge the validity or applicability of any
state law allegedly applicable to the Offer and nothing in this Offer to
Purchase 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
Purchaser 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 Purchaser may not be obligated to accept for purchase or pay for
any Units tendered.
Section 16. Fees and Expenses. The Purchaser will not pay any fees or
commissions to any broker, dealer or other person for soliciting tenders of
Units pursuant to the Offer. The Purchaser will pay all costs and expenses of
printing and mailing the Offer.
Section 17. Miscellaneous. The Purchaser is not aware of any jurisdiction
in which the making of the Offer is not in compliance with applicable law. If
the Purchaser becomes aware of any jurisdiction in which the making of the Offer
would not be in compliance with applicable law, the Purchaser will make a good
faith effort to comply with any such law. If, after such good faith effort, the
Purchaser cannot comply with any such law, the Offer will not be made to (nor
will tenders be accepted from or on behalf of) the holders of Units residing in
such jurisdiction.
No person has been authorized to give any information or to make any
representation on behalf of the Purchaser 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.
22
The Purchaser has filed with the Commission a Schedule 14D-1, pursuant to
Rule 14d-3 under the Exchange Act, furnishing certain additional information
with respect to the Offer, and may file amendments thereto. The Schedule 14D-1
and any amendments thereto, including exhibits, may be inspected and copies may
be obtained at the same places and in the same manner as set forth in Section 9
hereof (except that they will not be available at the regional offices of the
Commission).
DEFOREST VENTURES I L.P.
June 2, 1995
23
Exhibit A
NOTE AND SECURITY AGREEMENT
, 1995
Loan # [ ]
The undersigned borrower (the "Borrower"), for value received,
promises to pay to DeForest Ventures I L.P., a Delaware limited
partnership (the "Lender"), the Principal Amount of this Note as
determined pursuant to Section 1 below, and accrued interest
thereon, on the terms and conditions herein set forth.
This Note evidences a non-recourse loan (the "Loan") made by
the Lender to the Borrower in connection with the offer to purchase
(the "Offer") units of limited partnership interest ("Units") of
Century Properties Fund XII, a California limited partnership (the
"Partnership"), made by the Lender pursuant to that certain Offer
to Purchase dated June 2, 1995 and the accompanying Letter of
Transmittal. The Borrower tendered Units in the Offer, certain of
which, after application of the proration provisions of the Offer
(the "Proration Provisions"), were accepted for purchase (the
"Purchased Units") and certain of which (the "Retained Units"),
after application of the Proration Provisions, were not accepted
for purchase and are pledged hereby as collateral for the Loan
evidenced by this Note.
1. Principal Amount. The principal amount (the "Principal
Amount") of this Note shall be that amount which is equal to the
number of Retained Units multiplied by $138.63. The Principal
Amount of this Note shall be due and payable on January 2, 1996
(the "Maturity Date"), and shall not be prepayable except through
the application of "Distributions" (as defined below) in accordance
with Section 7 of this Note.
2. Interest. This Note shall bear interest at a rate per
annum of 9%. Interest on this Note shall accrue from the date of
this Note (which shall be the date which is two days after the
Expiration Date (as defined in the Offer) of the Offer) and shall
be payable in arrears on the Maturity Date. Interest shall not be
prepayable except through the application of Distributions in
accordance with Section 7 of this Note. Interest will be computed
on the basis of a 365-day year and the actual number of days
elapsed.
3. Payment of Principal and Interest. The Principal Amount
of this Note, and accrued interest thereon, may be paid, at the
election of the Borrower, EITHER (i) by delivery to the Lender on
or after the Maturity Date but not later than January 17, 1996 of
a certified check made payable to the Lender in an amount (the
"Cash Payment Amount") equal to the sum of (x) the Principal
Amount, plus (y) the amount of accrued interest on the Principal
Amount through the date of payment, minus (z) the amount of all
Distributions applied on or prior to the date of payment in
accordance with Section 7 of this Note, OR (ii) by transferring
ownership of the Retained Units to the Lender. In order for the
Borrower to elect to make payment pursuant to the preceding clause
(i), the Lender must receive the Cash Payment Amount on or prior to
January 17, 1996. If the Cash Payment Amount is not so received by
the Lender on or prior to such date, the Borrower shall be deemed
to have elected the payment option set forth in clause (ii) above.
4. Non-recourse. Anything contained herein to the contrary
notwithstanding, no recourse shall be had for the payment of the
Loan evidenced by this Note or for any claim based thereon or
otherwise in respect thereof or for the payment or performance of
any other obligation based on or in respect of the Loan, and no
personal liability shall be asserted or enforceable, against (i)
the Borrower or (ii) any officer, director, partner, shareholder or
affiliate of the Borrower, and the enforcement of any judgment for
breach by the Borrower of its obligations hereunder shall be made
only against the Collateral. The foregoing provisions of this
Section shall not prevent recourse to the Collateral or constitute
a waiver, release or discharge of the Loan evidenced by this Note
or impair in any manner any right, remedy or recourse the Lender
may have against Borrower for actual fraud.
5. Security Interest. In order to secure the due and punc-
tual payment of all amounts due hereunder and performance of all
other obligations of the Borrower under this Note, the Borrower
hereby grants to the Lender a first priority security interest in
all of the Borrower's right, title and interest in and to the
Retained Units and all proceeds thereof (together, the
"Collateral"). The Borrower represents and warrants that it owns
and has full power and authority to pledge the Collateral and that,
other than this pledge, the Collateral is free and clear of all
liens, restrictions, charges, encumbrances, conditional sales
agreements or other obligations relating to the sale or transfer
thereof and is not subject to any adverse claims. The Lender will
have all the rights of a secured party under the Uniform Commercial
Code (as in effect in all applicable jurisdictions) with respect to
the Collateral. The Borrower irrevocably appoints the designees of
the Lender as the Borrower's attorney-in-fact to execute and cause
to be filed or recorded any and all documents on behalf of the
Borrower as may be necessary to perfect or continue the perfection
of the security interest herein granted, including, without
limitation, filing Uniform Commercial Code financing statements
with respect to the Collateral on behalf of the Borrower, or
without the signature of the Borrower, to the extent permitted by
law.
6. Delivery and Transfer of Collateral. Letters of Trans-
mittal regarding the tendered Units have heretofore been delivered
to the Lender. The Lender shall have the right at any time upon
the occurrence of a failure by Borrower to make any payments
2
hereunder when due (a "Default"), to endorse, assign or otherwise
transfer to or register in the name of the Lender any or all of the
Collateral. If the Lender has not timely received the Cash Payment
Amount from the Borrower as provided in Section 3 of this Note then
the Lender may endorse, assign or otherwise transfer the Retained
Units to the Lender and cause the Retained Units to be registered
in the name of the Lender. The Borrower hereby agrees with the
Lender that the Partnership shall make an appropriate notation on
the Partnership's Unit register which evidences the delivery and,
when applicable, the transfer of the Collateral. If requested by
the Lender, the Borrower will execute and deliver any assignment or
other instrument reasonably requested by the Lender to confirm the
validity of any action taken by the Lender pursuant to the
provisions of this Section 6. The Borrower hereby agrees promptly
to notify the Lender in writing prior to changing its address,
principal place of business or chief executive office or name.
7. Distributions. The Borrower agrees that all
distributions, income, profits or proceeds paid or payable to the
Borrower in respect of the Collateral ("Distributions") shall be
applied by the Lender first to reduce the amounts owing hereunder
in respect of accrued interest hereon and second, if any
Distributions remain unapplied, to reduce the Principal Amount
hereof. The Lender shall remit all amounts remaining after such
applications to the Borrower.
8. Voting Rights. So long as no Default has occurred here-
under, the Borrower shall be entitled to exercise any and all
voting and other consensual rights pertaining the Collateral for
any purpose not inconsistent with the terms or purpose of this
Note; provided, however, that the Borrower shall not in any way
exercise such rights in favor of a dissolution of the Partnership
or in any manner which may have an adverse affect on the value of
the Collateral or on the Lender's rights hereunder.
9. Default; Acceleration. Upon the occurrence of a Default,
all rights of the Borrower to exercise voting and other consensual
rights shall cease without any action or the giving of any notice
and such rights shall thereupon be vested in the Lender. Upon the
commencement of any bankruptcy or similar proceeding (whether
voluntary or involuntary) with respect to the Borrower, the
insolvency of the Borrower or any assignment by the Borrower for
the benefit of its creditors, the Principal Amount and all accrued
interest hereon shall automatically and immediately become due and
payable by the Borrower.
10. Prepayment. Other than through the application of
Distributions, this Note may not be prepaid in whole or in part.
11. Joint and Several Liability. If this Note is signed by
more than one Borrower, the obligations of each such Borrower
hereunder shall be joint and several obligations of each such
Borrower.
3
12. Notices. Except as otherwise expressly provided herein,
all notices and other communications provided for hereunder shall
be in writing and shall be delivered personally, by telecopier or
by express courier service by registered or certified mail, return
receipt requested, postage prepaid, as follows:
(a) If to the Lender:
DeForest Ventures I L.P.
5665 Northside Drive, N.W.
Suite 370
Atlanta, Georgia 30328-5805
(b) If to the Borrower, to the same address to which copies
of the Offer were sent, unless another address is specified in a
notice delivered to the Lender pursuant to Section 6 of this Note.
All such notices and communications shall, when mailed or
personally delivered, be effective upon receipt, or when
telegraphed, telexed, or cabled, be effective upon confirmation of
receipt by addressee or when sent by overnight courier, be
effective one day after delivery to such courier, except that
notices and communications to the Lender shall not be effective
until received by the Lender.
13. Miscellaneous.
(a) The Borrower hereby waives diligence, presentment,
demand, protest, notice of the acceptance of this Note and all
other notices of any kind relating to the enforcement of this Note.
No delay or omission on the part of the Lender in exercising any
right hereunder shall operate as a waiver of any such right or of
any other right hereunder and a waiver of any such right on any one
occasion shall not be construed as a bar to or waiver of any such
right on any future occasion.
(b) The Borrower agrees to pay on demand all costs and
expenses (including legal costs and attorneys' fees) incurred or
paid by the Lender in enforcing this Note.
(c) This Note shall be governed by and construed in
accordance with the laws of the State of New York, without giving
effect to the conflict of laws provisions thereof.
(d) If any one or more of the provisions contained in this
Note shall be invalid, illegal or unenforceable in any respect
under any applicable law, the validity, legality and enforceability
of the remaining provisions contained herein shall not in any way
be affected or impaired.
(e) The provisions of this Note may, from time to time, be
amended, or compliance with any agreement or condition contained
4
herein waived, with the written consent of the Lender and the
Borrower.
(f) This Note shall inure to the benefit of any successor or
assign of the Lender and any other holder of this Note.
(g) Upon request of the Lender, the Borrower shall execute
and deliver any and all documents and instruments as the Lender may
deem necessary to effectuate the terms of, and to carry out the
intent of, this Note.
(h) This Note may be executed in any number of counterparts,
each of which together shall constitute a single instrument.
(i) Nothing set forth in this Note shall be construed as a
commitment by the Lender to make any advance or loan to or for the
benefit of the Borrower other than the Loan to be made with respect
to the Retained Units upon consummation of the Offer.
5
NOTE AND SECURITY AGREEMENT SIGNATURE PAGE
WITNESSETH, the undersigned hereby executes this Note and
Security Agreement as of the date first above written.
BORROWER/1/
-------------------------------------
-------------------------------------
-------------------------------------
-------------------------------------
-------------------------------------
-------------------------------------
-------------------------------------
-------------------------------------
-------------------------------------
-------------------------------------
- ---------------------
/1/ Each Borrower must sign exactly as such Borrower's name appears on the face
of the Letter of Transmittal.
6
Schedule 1
DIRECTORS AND EXECUTIVE OFFICERS
Set forth below is the name, current business address, present principal
occupation, and employment history for at least the past five years of each
director and executive officer of DeForest Capital. Except for Mr.
Koenigsberger, who is a citizen of Guatemala, each person listed below is a
citizen of the United States.
Present Principal Occupation or Employment;
Material Occupation, Position, Office
or Employment for the Past Five Years
Michael L. Ashner. Since October 1994, Mr. Ashner has been a Director,
President and Co-Chairman of DeForest Capital and DeForest Capital II
Corporation ("DeForest Capital II"), the general partner of the NPI Purchaser.
Since June 1994, Mr. Ashner has been a Director, President and Co-Chairman of
NPI, and since December 1984 has been a Director and President of NPI Equity.
Mr. Ashner has also been a Director and executive officer of NPI Property
Management Corporation ("NPI Management"), the general partner of NPI-AP
Management, L.P., since April 1984, and is currently NPI Management's Chairman.
Since 1981, Mr. Ashner has also served as President of Exeter Capital
Corporation, a firm which has organized and administered real estate limited
partnerships. Mr. Ashner's business address is 100 Jericho Quadrangle, Suite
214, Jericho, New York 11753.
Martin Lifton. Since October 1994, Mr. Lifton has been a Director and
Chairman of DeForest Capital and DeForest Capital II, and since June 1994 has
been a Director and Chairman of NPI. Since November 1991, Mr. Lifton has been a
Director and executive officer of NPI Equity, and is currently NPI Equity's
Chairman. Mr. Lifton has also been a Director and/or executive officer of NPI
Management since November 1991, and is currently a Director and NPI Management's
Co-Chairman. Mr. Lifton has also served as Chairman and President of The Lifton
Company, a real estate investment firm, since January 1985, and as Chairman of
The Bank of Great Neck, a Great Neck, New York bank, since March 1986. Mr.
Lifton's business address is 100 Jericho Quadrangle, Suite 214, Jericho, New
York 11753.
W. Edward Scheetz. Mr. Scheetz has been a Director of DeForest Capital,
DeForest Capital II, NPI and NPI Equity since October 1994. Since May 1993, Mr.
Scheetz has been a limited partner of Apollo Real Estate Advisors, L.P.
("Apollo"), the managing general partner of Apollo Real Estate Investment Fund,
L.P., a private investment fund. Mr. Scheetz has also served as a Director of
Roland International, Inc. ("Roland"), a real estate investment company, since
January 1994, as a Director of Capital Apartment Properties, Inc. ("CAP"), a
multi-family residential real estate investment trust, since January 1994 and as
a Director of Southwest Realty Corp. ("SRC"), an office portfolio real estate
investment trust since January 1995. From 1989, to May 1993, Mr. Scheetz was a
principal of Trammell Crow Ventures, a national real estate investment firm.
Mr. Scheetz' business address is 1301 Avenue of the Americas, 38th floor, New
York, New York 10019.
Ricardo Koenigsberger. Mr. Koenigsberger has been a Director of DeForest
Capital, DeForest Capital II, NPI and NPI Equity since October 1994. Since
October 1990, Mr. Koenigsberger has been an associate of Apollo and of Lion
Advisors, L.P., which acts as financial advisor to and representative for
certain institutional investors with respect to securities investments. For
more than one year prior thereto, Mr. Koenigsberger was an associate with Drexel
Burnham Lambert Incorporated. Mr. Koenigsberger's business address is 1301
Avenue of the Americas, 38th floor, New York, New York 10019.
1
Arthur N. Queler. Mr. Queler has been a Director, Executive Vice
President, Secretary and Treasurer of DeForest Capital and DeForest Capital II
since October 1994, and of NPI since June 1994. Mr. Queler has been a Director
and executive officer of NPI Equity and NPI Management since December 1984 and
April 1984, respectively. Mr. Queler has also served as President of ANQ
Securities, Inc., a NASD registered broker-dealer firm which has been
responsible for supervision of licensed brokers and coordination with a
nationwide broker-dealer network for the marketing of NPI investment programs,
since 1983. Mr. Queler's business address is 5665 Northside Drive, N.W., Suite
370, Atlanta, Georgia 30328.
Lee S. Neibart. Mr. Neibart has been a Director of DeForest Capital,
DeForest Capital II, NPI and NPI Equity since October 1994. Mr. Neibart has
directed portfolio management for Apollo since 1993. From 1989 to 1993, Mr.
Neibart also served as Executive Vice President and Chief Operating Officer of
the Robert Martin Company, a private real estate development and management firm
based in Westchester County, New York, and from 1982 to 1985 Mr. Neibart served
as President of the New York Chapter of the National Association of Industrial
Office Parks, a professional real estate organization. Mr. Neibart is also a
Director of Roland, a Director of CAP and a Director of SRC. Mr. Neibart's
business address is 1301 Avenue of the Americas, 38th floor, New York, New York
10019.
G. Bruce Lifton. Since October 1994, Mr. Lifton has been a Director and
Vice President of DeForest Capital and DeForest Capital II. Mr. Lifton has also
been Vice President of NPI and NPI Equity since January 1991 and November 1991,
respectively, and a Director and Vice President of NPI Management since June
1994. Mr. Lifton has also served as Vice President of The Lifton Company since
September 1986. Mr. Lifton is a son of Martin Lifton and the brother of Steven
Lifton. Mr. Lifton's business address is 5665 Northside Drive, N.W., Suite 370,
Atlanta, Georgia 30328.
Steven Lifton. Mr. Lifton has been a Vice President of DeForest Capital
and DeForest Capital II since October 1994 and of NPI Management since June
1994. Since June 1994, Mr. Lifton has been a Director and Vice President of
NPI. Mr. Lifton has been Vice President of NPI Equity since November 1991 and
a Director since October 1994. Mr. Lifton has also served as Senior Vice
President of The Lifton Company since September 1984 and as a Director of The
Bank of Great Neck since March 1986. Steven Lifton is a son of Martin Lifton
and the brother of G. Bruce Lifton. Mr. Lifton's business address is 100
Jericho Quadrangle, Suite 214, Jericho, New York 11753.
2
Schedule 2
FINANCIAL STATEMENTS OF THE PURCHASER AND DEFOREST CAPITAL
INDEPENDENT AUDITORS' REPORT
The Partners
DeForest Ventures I L.P.
We have audited the accompanying balance sheet of DeForest Ventures
I L.P., as of May 15, 1995, and the statements of income, changes
in partners' capital and of cash flows for the periods from
September 30, 1994 (inception) to December 31, 1994 and January 1,
1995 to May 15, 1995. These financial statements are the
responsibility of the Partnership's management. Our responsibility
is to express an opinion on these financial statements based on our
audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of
DeForest Ventures I L.P., as of May 15, 1995, and the results of
its operations and its cash flows for the periods September 30,
1994 (inception) to December 31, 1994 and January 1, 1995 to May
15, 1995, in conformity with generally accepted accounting
principles.
Tauber & Balser, P.C.
Atlanta, Georgia
May 26, 1995
F-1
DEFOREST VENTURES I L.P.
BALANCE SHEET
MAY 15, 1995
ASSETS
Investments in limited partnerships . . . . . . . . . . . $ 36,425,000
Cash. . . . . . . . . . . . . . . . . . . . . . . . . . . 407,000
Other assets. . . . . . . . . . . . . . . . . . . . . . . 818,000
Restricted cash . . . . . . . . . . . . . . . . . . . . . 4,364,000
------------
$ 42,014,000
============
LIABILITIES AND PARTNERS' EQUITY
Note payable. . . . . . . . . . . . . . . . . . . . . . . $ 25,689,000
Accounts payable and accrued expenses . . . . . . . . . . 1,183,000
Accrued litigation settlement . . . . . . . . . . . . . . 4,350,000
Other liability . . . . . . . . . . . . . . . . . . . . . 123,000
Partners' equity. . . . . . . . . . . . . . . . . . . . . 10,669,000
------------
$ 42,014,000
============
SEE NOTES TO FINANCIAL STATEMENTS
F-2
DEFOREST VENTURES I L.P.
STATEMENTS OF INCOME
JANUARY 1, 1995 TO MAY 15, 1995 AND
SEPTEMBER 30, 1994 (INCEPTION) TO DECEMBER 31, 1994
1995 1994
---- ----
REVENUES:
Income from investments
in partnerships . . . . . . . . . $ 100,000 $ 405,000
Interest. . . . . . . . . . . . . . 23,000 117,000
----------- ---------
123,000 522,000
EXPENSES:
Interest . . . . . . . . . . . . . . 1,371,000 306,000
General, administrative,
and other. . . . . . . . . . . . . 389,000 106,000
----------- ---------
1,760,000 412,000
----------- ---------
NET INCOME (LOSS) . . . . . . . . . . $(1,637,000) $ 110,000
=========== =========
- --------------------------------------------------------------------------------
DEFOREST VENTURES I L.P.
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
JANUARY 1,1995 TO MAY 15, 1995 AND
SEPTEMBER 30, 1994 (INCEPTION) TO DECEMBER 31, 1994
GENERAL LIMITED
PARTNER PARTNERS TOTAL
------- -------- -----
PARTNERS' CAPITAL, BEGINNING . . $ - $ - $ -
CAPITAL CONTRIBUTED. . . . . . . 119,000 11,781,000 11,900,000
NET INCOME . . . . . . . . . . . 1,000 109,000 110,000
-------- ----------- -----------
PARTNERS' CAPITAL,
DECEMBER 31, 1994. . . . . . . 120,000 11,890,000 12,010,000
CAPITAL CONTRIBUTED. . . . . . . - 296,000 296,000
NET INCOME . . . . . . . . . . . (16,000) (1,621,000) (1,637,000)
-------- ----------- -----------
PARTNERS' CAPITAL,
MAY 15, 1995 $104,000 $10,565,000 $10,669,000
======== =========== ===========
SEE NOTES TO FINANCIAL STATEMENTS
F-3
DEFOREST VENTURES I L.P.
STATEMENTS OF CASH FLOWS
JANUARY 1, 1995 TO MAY 15, 1995 AND
SEPTEMBER 30, 1994 (INCEPTION) TO DECEMBER 31, 1994
1995 1994
---- ----
Cash flows from operating activities:
Net income . . . . . . . . . . . . . . . . $(1,637,000) $ 110,000
----------- -----------
Adjustments:
Undistributed earnings from partnership
investments . . . . . . . . . . . . . . . (100,000) (404,000)
Amortization . . . . . . . . . . . . . . . 101,000 29,000
Changes in:
Other assets . . . . . . . . . . . . . . (5,000) -
Accounts payable and other liabilities . 999,000 306,000
----------- -----------
Total adjustments. . . . . . . . . . . . . 995,000 (69,000)
----------- -----------
Net cash provided (used) by operating
activities. . . . . . . . . . . . . . . . (642,000) 41,000
----------- -----------
Cash flows from investing activities:
Cash payments for investments
in partnerships. . . . . . . . . . . . . (606,000) (30,963,000)
Cash payments for organizational costs . . - (200,000)
Cash restricted for investments. . . . . . (4,364,000) -
----------- -----------
Net cash used in investing activities. . . . (4,970,000) (31,163,000)
----------- -----------
Cash flows from financing activities:
Proceeds from notes payable. . . . . . . . 4,466,000 21,224,000
Proceeds from capital contributions. . . . 296,000 11,900,000
Cash payments for loan fees. . . . . . . . (44,000) (701,000)
----------- -----------
Net cash provided from financing
activities. . . . . . . . . . . . . . . . . 4,718,000 32,423,000
----------- -----------
Net increase (decrease) in cash
and equivalents . . . . . . . . . . . . . . (894,000) 1,301,000
Cash, beginning. . . . . . . . . . . . . . . 1,301,000 -
----------- -----------
Cash, ending . . . . . . . . . . . . . . . . $ 407,000 $ 1,301,000
=========== ============
Supplemental disclosures of cash flow information:
Cash paid during the period for interest. . . $ 554,000 $ 151,000
=========== ============
Non-cash financing and investing activities:
In 1995, accrued litigation settlement of $4,350,000 increased
investments in limited partnerships.
SEE NOTES TO FINANCIAL STATEMENTS
F-4
DEFOREST VENTURES I L.P.
NOTES TO FINANCIAL STATEMENTS
MAY 15, 1995
NOTE 1 - ORGANIZATION
DeForest Ventures I L.P., a Delaware Limited Partnership
("DeForest"), was formed on September 30, 1994 for the purpose of
acquiring limited partnership units in various affiliated limited
partnerships (the "Limited Partnerships"). The general partner of
DeForest is DeForest Capital I Corporation ("DeForest Capital").
Concurrently with this transaction, DeForest Ventures II L.P.
("DeForest II"), a Delaware Limited Partnership, was formed for the
purpose of acquiring limited partnership units in various other
affiliated limited partnerships.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Investment in Limited Partnerships:
Investment in limited partnership units are carried at the sum of
the per unit purchase price plus acquisition costs adjusted for
DeForest's share of earnings or losses.
Income recognition:
Income or loss on the limited partnership units owned are
recognized quarterly based on the reported income or loss of the
respective Limited Partnerships.
NOTE 3 - INVESTMENT IN LIMITED PARTNERSHIPS
DeForest holds limited partner units in various Limited
Partnerships that are accounted for on the equity method.
DeForest's cost was approximately equal to its share of the net
assets.
F-5
DEFOREST VENTURES I L.P.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
MAY 15, 1995
NOTE 3 - INVESTMENT IN LIMITED PARTNERSHIPS (CONTINUED)
Summary financial information of the Limited Partnerships as of the
quarter ended March 31, 1995 are as follows (000's omitted):
Land and buildings . . . . . . . . . . . . . $ 444,037
Other assets . . . . . . . . . . . . . . . . 48,905
Notes payable - real estate. . . . . . . . . (347,554)
Other liabilities. . . . . . . . . . . . . . (17,874)
---------
Net assets . . . . . . . . . . . . . . . . . $ 127,514
=========
DeForest share of net assets . . . . . . . . $ 36,425
=========
Net income for period. . . . . . . . . . . . $ 974
=========
DeForest share of net income . . . . . . . . $ 100
=========
The limited partnerships are:
Percentage Carrying
owned value
---------- --------
Century Properties Fund XII . . . . . . . 34% $ 1,955,000
Century Properties Fund XIII. . . . . . . 38 4,132,000
Century Properties Fund XIV . . . . . . . 37 3,484,000
Century Properties Fund XV. . . . . . . . 38 5,128,000
Century Properties Fund XVI . . . . . . . 31 689,000
Century Properties Fund XVII. . . . . . . 29 2,062,000
Century Properties Fund XVIII . . . . . . 24 461,000
Century Properties Fund XIX . . . . . . . 23 1,371,000
Century Properties Fund XXII. . . . . . . 18 1,357,000
MRI Business Properties Fund, Ltd. . . . 27 4,503,000
MRI Business Properties Fund, Ltd. II . . 29 7,526,000
MRI Business Properties Fund, Ltd. III. . 25 4,757,000
-----------
$36,425,000
The limited partnerships are engaged in the business of owning and
operating commercial and residential real estate.
F-6
DEFOREST VENTURES I L.P.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
MAY 15, 1995
NOTE 4 - RESTRICTED CASH
Under the terms of the loan agreement, funds advanced are deposited
to a restricted account and are used only for the acquisition of
limited partnership units and associated costs. The balance at May
15, 1995 represents the expected outlay necessary to comply with
the settlement of the litigation described in Note 7.
The restricted cash is invested in short-term highly liquid
investments, consisting of U.S. Government securities. The
carrying amount approximates fair value because of the short-term
maturity of these investments.
NOTE 5 - NOTE PAYABLE
DeForest and DeForest II obtained loans of $21,224,000 and
$13,251,000, respectively, which were used to fund the acquisition
of units in the Limited Partnerships. Under the terms of the
loans, interest at a rate per annum of 250 basis points over LIBOR
is payable monthly. As of May 15, 1995 the LIBOR rate was 6.0625%.
The lender is also entitled to additional interest on the amended
loans in the form of a residual fee. Payment of the residual fee
is subordinate to the return of capital contributions together with
a 15% return thereon. The additional interest is calculated on a
formula basis and has been accrued to achieve a minimum 17% per
annum effective rate of return. The formula could result in
additional interest greater than a 17% per annum return.
Principal is payable upon receipt of proceeds from sales of
properties in the Limited Partnerships. The loans are cross
defaulted and cross-collateralized with all the tendered limited
partnership units. The obligation of DeForest II at May 15, 1995
was $13,709,000. All outstanding common stock and partnership
interests of certain affiliates are pledged as additional
collateral. The loans are due November 21, 1995, with a right to
extend for two consecutive one-year periods. The basis points over
LIBOR increase 100 points with each extension.
On May 8, 1995, the loans were amended to provide for the
additional debt financing to be used in connection with the
consummation of the settlement of the litigation described in Note
7. As amended, the lender has agreed to provide up to an aggregate
of an additional $20,525,452 of financing to DeForest and DeForest
II.
F-7
DEFOREST VENTURES I L.P.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
MAY 15, 1995
NOTE 6 - RELATED PARTIES
Shareholders who control DeForest Capital also control the managing
general partner of all of the Limited Partnerships.
NOTE 7 - LITIGATION
On May 19, 1995, a settlement was approved by the U.S. District
Court for the Northern District of Georgia for a class action for
claims relating to tender offers made for the purchase of limited
partnership units in the Limited Partnerships. Pursuant to the
terms of the settlement, in consideration for dismissal and release
of all claims made in the class action, among other things,
DeForest will pay additional amounts to each unit holder who
tendered their units of the Limited Partnerships. Total payments
to be made under the settlement are approximately $4,350,000, which
has been accrued by DeForest. In addition, a second tender offer
will be made to all holders of limited partnership units in the
Limited Partnerships who had not previously sold their shares at
prices in excess of the initial tender price. Unless an appeal is
filed, the Court's order will become final, binding, and non-appealable
on June 19, 1995.
F-8
Independent Auditors' Report
Board of Directors
DeForest Capital I Corporation
We have audited the accompanying balance sheet of DeForest Capital
I Corporation, as of May 15, 1995. This financial statement is the
responsibility of the Company's management. Our responsibility is
to express an opinion on this financial statement based on our
audit.
We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statement is free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit
provides a reasonable basis for our opinion.
In our opinion, the financial statement referred to above present
fairly, in all material respects, the financial position of
DeForest Capital I Corporation, as of May 15, 1995, in conformity
with generally accepted accounting principles.
Tauber & Balser, P.C.
Atlanta, Georgia
May 26, 1995
F-9
DEFOREST CAPITAL I CORPORATION
BALANCE SHEET
MAY 15, 1995
ASSET
Investment in DeForest Ventures I L.P. . . . . . . $ 104,000
===========
STOCKHOLDERS' EQUITY
Capital stock, par value $.01,
7,500 shares authorized, 600
issued and outstanding . . . . . . . . . . . . . $ 6
Additional paid in capital . . . . . . . . . . . . 1,118,994
Notes receivable from stockholders. . . . . . . . . (1,000,000)
Deficit . . . . . . . . . . . . . . . . . . . . . . (15,000)
-----------
$ 104,000
===========
- --------------------------------------------------------------------------------
DEFOREST CAPITAL I CORPORATION
NOTES TO FINANCIAL STATEMENT
MAY 15, 1995
NOTE 1 - ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICY
DeForest Capital I Corporation ("DeForest Capital I"), a Delaware
Corporation, was incorporated on September 30, 1994 and serves as
the general partner of DeForest Ventures I L.P. ("DeForest").
DeForest was formed for the purpose of acquiring limited
partnership units in various limited partnerships (the "Limited
Partnerships").
NOTE 2 - STOCKHOLDERS' EQUITY
Shareholders of DeForest Capital I have contributed $119,000 in
cash and $1,000,000 in negotiable demand promissory notes.
NOTE 3 - RELATED PARTIES
Shareholders who control DeForest Capital I also control the
general partners of all of the Limited Partnerships.
F-10
NOTE 4 - INVESTMENT IN DEFOREST I
DeForest has a 1% investment as the general partner in DeForest I
that is accounted for on the equity method. The investment is
carried at cost, adjusted for its share or earnings or losses.
Summary financial information of DeForest I as of May 15, 1995 is
as follows (000's omitted):
Investment in limited partnerships . . . $ 37,813
Cash . . . . . . . . . . . . . . . . . . 407
Cash, restricted for investments . . . . 4,364
Other assets . . . . . . . . . . . . . . 818
Note payable . . . . . . . . . . . . . . (25,689)
Accrued litigation settlement. . . . . . (4,350)
Other liabilities. . . . . . . . . . . . (1,306)
--------
Net assets . . . . . . . . . . . . . . . $ 10,669
========
NOTE 5 - LITIGATION
On May 19, 1995, a settlement was approved by the U.S. District
Court for the Northern District of Georgia for a class action for
claims relating to tender offers made for the purchase of limited
partnership units in the Limited Partnerships. Pursuant to the
terms of the settlement, in consideration for dismissal and release
of all claims made in the class action, among other things,
DeForest will pay additional amounts to each unit holder who
tendered their units of the Limited Partnerships. In addition, a
second tender offer will be made to all holders of limited
partnership units in the Limited Partnerships who had not
previously sold their shares at prices in excess of the initial
tender price. Unless an appeal is filed, the Court's order will
become final, binding, and non-appealable on June 19, 1995.
F-11
Schedule 3
Subject Partnerships
NPI PARTNERSHIPS
National Property Investors II
National Property Investors III
National Property Investors 4
National Property Investors 5
National Property Investors 6
National Property Investors 7
National Property Investors 8
FOX PARTNERSHIPS
Century Properties Fund XII
Century Properties Fund XIII
Century Properties Fund XIV
Century Properties Fund XV
Century Properties Fund XVI
Century Properties Fund XVII
Century Properties Fund XVIII
Century Properties Fund XIX
Century Properties Growth Fund XXII
MRI Business Properties Fund, Ltd.
MRI Business Properties Fund, Ltd. II
MRI Business Properties Fund, Ltd. III
The Letter of Transmittal, signature page for the Note and Security
Agreement and any other required documents should be sent or delivered by each
Unitholder or his broker, dealer, commercial bank, trust company or other
nominee to the Purchaser at its address set forth below:
DEFOREST VENTURES I L.P.
By Hand, Mail (insured or registered
recommended) or Overnight Delivery:
DeForest Ventures I L.P.
c/o Gemisys
7103 South Revere Parkway
Englewood, CO 80112
For Telephone Information:
(404) 916-9055 or (404) 850-9640
Any questions or requests for assistance or for additional copies of this
Offer to Purchase, the Letter of Transmittal and other tender offer materials
may be directed to the Purchaser at the telephone number and address listed
above. You may also contact your broker for assistance concerning the Offer.
To confirm delivery of your Letter of Transmittal and related documents, please
contact the Purchaser.
Exhibit (a)(2)
CENTURY PROPERITES FUND XII
LETTER OF TRANSMITTAL
Taxpayer Identification Number
THE OFFER, WITHDRAWAL RIGHTS AND PRORATION
PERIOD WILL EXPIRE AT 12:00 MIDNIGHT, NEW
YORK CITY TIME, ON JUNE 30, 1995 (the
"Expiration Date") UNLESS EXTENDED.
Deliver to: DeForest Ventures I L.P.
c/o Gemisys
7103 South Revere Parkway
Englewood, CO 80112
For assistance (404) 916-9055 or
call: (404) 850-9640
To participate in the Offer, a duly executed copy of this Letter of
Transmittal, the attached signature page to the Note and Security Agreement and
any other documents required by this Letter of Transmittal must be received by
the Purchaser on or prior to the Expiration Date. Delivery of this Letter of
Transmittal or any other required documents to an address other than as set
forth above does not constitute valid delivery. The method of delivery of all
documents is at the election and risk of the tendering Unitholder. Please use
the pre-addressed, postage-paid envelope provided.
This Letter of Transmittal is to be completed by Unitholders of Century
Properties Fund XII, a California limited partnership (the "Partnership"),
pursuant to the procedures set forth in the Offer to Purchase (as defined
below). Capitalized terms used herein and not defined herein have the meanings
ascribed to such terms in the Offer to Purchase.
PLEASE CAREFULLY READ THE ACCOMPANYING INSTRUCTIONS
Gentlemen:
The undersigned hereby tenders to DeForest Ventures I L.P., a Delaware
limited partnership (the "Purchaser"), the number of units ("Units") of limited
partnership interest in the Partnership set forth above at $138.63 per Unit upon
the terms and subject to the conditions set forth in the Offer to Purchase,
dated June 2, 1995 (the "Offer to Purchase"), and this Letter of Transmittal
(which together constitute the "Offer"). Receipt of the Offer to Purchase is
hereby acknowledged. By executing this Letter of Transmittal, the undersigned
hereby revokes all previous requests, if any, for exclusion from the Settlement
and acknowledges that the undersigned shall be bound by the Settlement and all
orders and final judgments rendered in the Action.
The undersigned recognizes that, if more than 5,233 Units are validly
tendered prior to or on the Expiration Date and not properly withdrawn, the
Purchaser will, upon the terms of the Offer and subject to the delivery of Loan
Proceeds, accept for payment from among those Units tendered prior to or on the
Expiration Date 5,233 Units on a pro rata basis, with adjustments to avoid
purchases of certain fractional Units, based upon the number of Units validly
tendered prior to the Expiration Date and not withdrawn. The undersigned agrees
that, if more than 4,816 Units are validly tendered prior to or on the
Expiration Date and not properly withdrawn, subject to the proration
requirements and other terms of the Offer, the undersigned will receive from the
Purchaser, $138.63 for each Unit tendered in a combination of Purchase Proceeds
and Loan Proceeds, all as described in the Offer to Purchase.
Subject to and effective upon acceptance for payment of any of the Units
tendered hereby, the undersigned hereby sells, assigns and transfers to, or upon
the order of, Purchaser all right, title and interest in and to such Units which
are purchased pursuant to the Offer. The undersigned hereby irrevocably
constitutes and appoints the Purchaser as the true and lawful agent and
attorney-in-fact of the undersigned with respect to such Units, with full power
of substitution (such power of attorney being deemed to be an irrevocable power
coupled with an interest), to deliver such Units and transfer ownership of such
Units on the books of the Partnership, together with all accompanying evidences
of transfer and authenticity, to or upon the order of the Purchaser and, upon
payment of the purchase price in respect of such Units by the Purchaser, to
receive all benefits and otherwise exercise all rights of beneficial ownership
of such Units all in accordance with the terms of the Offer. Subject to and
effective upon the purchase of any Units tendered hereby, the undersigned hereby
requests that the Purchaser be admitted to the Partnership as a "substitute
Limited Partner" under the terms of the Partnership Agreement of the
Partnership. Upon the purchase of Units pursuant to the Offer, all prior
proxies and consents given by the undersigned with respect to such Units will be
revoked and no subsequent proxies or consents may be given (and if given will
not be deemed effective). In addition, by executing this Letter of Transmittal,
the undersigned assigns to the Purchaser all of the undersigned's rights to
receive distributions from the Partnership with respect to Units which are
purchased pursuant to the Offer.
By validly tendering Units hereby, the undersigned agrees to receive a Loan
in respect of Retained Units if more than 4,816 Units are validly tendered prior
to or on the Expiration Date and not properly withdrawn and the Offer is
consummated. The undersigned agrees to be bound by the terms of any such Loan,
including the terms of repayment and the pledge of the Retained Units to secure
repayment of the Loan. The undersigned acknowledges that the complete terms of
the Note and Security Agreement are set forth in Exhibit A to the Offer to
Purchase. The undersigned directs the Partnership to deliver any and all
distributions payable on the Retained Units to the Purchaser for credit against
amounts outstanding in respect of the Loan and the Purchaser may, in the name
and on behalf of the undersigned, execute and deliver to the Partnership a
written confirmation of such direction. In addition, by executing this Letter
of Transmittal, the undersigned appoints the designees of the Purchaser as its
attorney-in-fact (such appointment being coupled with an interest, and
irrevocable) to execute and cause to be filed and recorded any and all documents
on behalf of the undersigned and to take any and all other actions reasonably
deemed necessary by the Purchaser to perfect or continue the perfection of the
security interest in the Retained Units that secures any Loan made to the
undersigned.
The undersigned hereby represents and warrants that the undersigned owns
the Units tendered hereby within the meaning of Rule 13d-3 under the Securities
Exchange Act of 1934, as amended, and has full power and authority to validly
tender, sell, assign and transfer the Units tendered hereby, and that when any
such Units are purchased by the Purchaser, the Purchaser will acquire good,
marketable and unencumbered title thereto, free and clear of all liens,
restrictions, charges, encumbrances, conditional sales agreements or other
obligations relating to the sale or transfer thereof, and such Units will not be
subject to any adverse claim. The undersigned further represents and warrants
that any Retained Units will, when pledged to secure a Loan to the undersigned,
be free and clear of all liens, restrictions, charges, encumbrances, conditional
sales agreements or other obligations relating to the sale or transfer thereof,
and such Retained Units will not be subject to any adverse claim, other than the
pledge to secure the Loan. Upon request, the undersigned will execute and
deliver any additional documents deemed by the Purchaser to be necessary or
desirable to complete the assignment, transfer, purchase or pledge of Units
tendered hereby.
The undersigned understands that a tender of Units to the Purchaser will
constitute a binding agreement between the undersigned and the Purchaser upon
the terms and subject to the conditions of the Offer. The undersigned
recognizes that under certain circumstances set forth in the Offer to Purchase,
the Purchaser may not be required to accept for payment any of the Units
tendered hereby. In such event, the undersigned understands that any Letter of
Transmittal for Units not accepted for payment will be destroyed by the
Purchaser. All authority herein conferred or agreed to be conferred shall
survive the death or incapacity of the undersigned and any obligations of the
undersigned shall be binding upon the heirs, personal representatives,
successors and assigns of the undersigned. Except as stated in the Offer to
Purchase, this tender is irrevocable.
TO TENDER UNITS, SIGN AT THE "X" BELOW IN BOX A AND SIGN THE ATTACHED
NOTE AND SECURITY AGREEMENT SIGNATURE PAGE. TO AVOID WITHHOLDING ON
AMOUNTS PAYABLE WITH RESPECT TO UNITS, COMPLETE BOXES B, C AND D, AS
APPLICABLE (SEE INSTRUCTIONS 3A, 3B AND 4, RESPECTIVELY).
Do Not Return Certificates With This Letter of Transmittal
BOX A
SIGN HERE TO TENDER
Certification - Under penalties of perjury, the undersigned hereby certifies the
following:
(1) The TIN shown in the Substitute Form W-9 (Box B) is the correct TIN of
the Unitholder who is submitting this Letter of Transmittal (and who is required
by law to provide such TIN), or such Unitholder is waiting for a TIN to be
issued and either (a) has mailed or delivered an application to receive a TIN to
the appropriate IRS Center or Social Security Administration Office or (b)
intends to mail or deliver an application in the near future (it being
understood that if such Unitholder does not provide a TIN to the Purchaser
within sixty (60) days, 31% of all reportable payments made to the Unitholder
thereafter will be withheld until a TIN is provided to the Purchaser); and
(2) The Unitholder who is submitting this Letter of Transmittal and who is
required by law to provide such TIN is not subject to backup withholding either
because such Unitholder (a) is exempt from backup withholding, or (b) has not
been notified by the IRS that such Unitholder is subject to backup withholding
as a result of a failure to report all interest or dividends or (c) the IRS has
notified such Unitholder that such Unitholder is no longer subject to backup
withholding. (See Instruction 3(A))
If the undersigned is unable to certify that the Unitholder submitting this
Letter of Transmittal is not subject to backup withholding, such Unitholder
should so indicate by striking through certification (2) above.
(3) The undersigned has completed the FIRPTA Affidavit (Box C) or the
Substitute Form W-8 (Box D), as applicable, and the information provided by the
undersigned therein is true and accurate. (See Instructions 3(B) and 4)
SIGNATURE(S) OF UNITHOLDER(S)
All registered Unitholders must sign exactly as name(s) appear(s) above. (Attach
additional sheets, if necessary)
(Signature)--X---------------------------------------------------------
(Signature)--X-------------------------------------Date-----------------, 1995
If signing as a trustee, executor, administrator, guardian,
attorney-in-fact, officer of a corporation or other person acting in a fiduciary
or representative capacity, please provide the following information and see
Instruction 1.
Name(s) and Capacity----------------------------------------------------------
Address-----------------------------------------------------------------------
Area Code and Telephone No.---------------------------------------------------
Notarization of Signature
(If required. See Instruction 1)
STATE OF
--------------------------------------)
) ss.:
COUNTY OF
--------------------------------------)
On this-----day of---------------, 1995, before me came personally
- ----------------------------- ------------------------------, to me known to be
the person who executed the foregoing Letter of Transmittal.
--------------------------------
Notary Public
OR
Signature Guarantee
(If required. See Instruction 1)
Name and Address of Eligible Institution
---------------------------------------
Authorized Signature Name
--------------------- --------------------------
Title Date , 1995
--------------- -----------------
BOX B
SUBSTITUTE FORM W-9
(Attach additional copies for joint Unitholders)
(See Instruction 3(A))
Please provide the TIN of the Unitholder submitting this Letter of Transmittal
or, if such Unitholder is awaiting a TIN, check the "Awaiting TIN" box.
Social Security Number or
Employer Identification Number
------------------------------------
Awaiting TIN [ ]
BOX C
FIRPTA AFFIDAVIT (For U.S. Persons)
(Attach additional copies for joint Unitholders)
(See Instruction 3(B))
Under Section 1445(e)(5) of the Internal Revenue Code and Treas. Reg.
1.I445-11T(d), a transferee must withhold tax equal to 10% of the amount
realized with respect to certain transfers of an interest in a partnership in
which 50% or more of the value of the gross assets consists of U.S. real
property interests and 90% or more of the value of the gross assets consist of
U.S. real property interests plus cash or cash equivalents, if the holder of the
partnership interest is a foreign person. To inform the Purchaser that no
withholding is required with respect to the Unitholder's interest in the
Partnership, the person signing this Letter of Transmittal hereby certifies the
following under penalties of perjury:
(1) The Unitholder, if an individual, is not a nonresident alien for
purposes of U.S. income taxation, and if not an individual, is not a foreign
corporation, foreign partnership, foreign trust, or foreign estate (as those
terms are defined in the Internal Revenue Code and Income Tax Regulations);
(2) The Unitholder's U.S. social security number (for individuals) or
employer identification number (for non-individuals) is
- ------------------------------------------;
(3) The Unitholder's home address (for individuals), or office address and
(if applicable) place of incorporation (for non-individuals)
is
---------------------------------------------------------------------------
- ------------------------------------------------------------------------------.
The person submitting this Letter of Transmittal understands that this
certification may be disclosed to the IRS by the Purchaser and that any false
statements contained herein could be punished by fine, imprisonment, or both.
BOX D
SUBSTITUTE FORM W-8
(Attach additional copies for joint Unitholders)
(See Instruction 4)
By checking this box [ ], the person submitting this Letter of Transmittal
certifies that the Unitholder is an "exempt foreign person" for purposes of the
backup withholding rules under the U.S. federal income tax laws, because the
Unitholder:
(1) Is a nonresident alien individual or a foreign corporation,
partnership, estate or trust;
(2) If an individual, has not been and plans not to be present in the U.S.
for a total of 183 days or more during the calendar year; and
(3) Neither engages, nor plans to engage, in a U.S. trade or business that
has effectively connected gains from transactions with a broker or barter
exchange.
INSTRUCTIONS
Forming Part of the Terms and Conditions of the Offer
1. Tender, Signature Requirements; Delivery. After carefully reading and
completing this Letter of Transmittal, in order to tender Units a Unitholder
must sign at the "X" in Box A of this Letter of Transmittal. The signature must
correspond exactly with the name printed on the front of this Letter of
Transmittal without any change whatsoever. If this Letter of Transmittal is
signed by the registered Unitholder of the Units, no notarization or signature
guarantee on this Letter of Transmittal is required. Similarly, if Units are
tendered for the account of a member firm of a registered national security
exchange, a member firm of the National Association of Securities Dealers, Inc.
or a commercial bank, savings bank, credit union, savings and loan association
or trust company having an office, branch or agency in the United States (each
an "Eligible Institution"), no notarization or signature guarantee is required.
In all other cases, signatures on this Letter of Transmittal must either be
notarized or guaranteed by an Eligible Institution, by completing the
Notarization or Signature Guarantee set forth in BOX A of this Letter of
Transmittal. If any tendered Units are registered in the names of two or more
joint holders, all such holders must sign this Letter of Transmittal. If this
Letter of Transmittal is signed by trustees, administrators, guardians,
attorneys-in-fact, officers of corporations, or others acting in a fiduciary or
representative capacity, such persons should so indicate when signing and must
submit proper evidence satisfactory to the Purchaser of their authority to so
act. For Units to be validly tendered, a properly completed and duly executed
Letter of Transmittal (or facsimile thereof), together with any required
notarizations or signature guarantees in BOX A, the attached signature page to
the Note and Security Agreement and any other documents required by this Letter
of Transmittal, must be received by the Purchaser prior to or on the Expiration
Date at its address set forth on the front of this Letter of Transmittal. No
alternative, conditional or contingent tenders will be accepted. All tendering
Unitholders by execution of this Letter of Transmittal waive any right to
receive any notice of the acceptance of their tender.
2. Transfer Taxes. The Purchaser will pay or cause to be paid all transfer
taxes, if any, payable in respect of Units accepted for payment pursuant to the
Offer.
3. U.S. Persons. A Unitholder who or which is a United States citizen or
resident alien individual, a domestic corporation, a domestic partnership, a
domestic trust or a domestic estate (collectively, "United States persons") as
those terms are defined in the Internal Revenue Code and Income Tax Regulations,
should complete the following:
(A) Substitute Form W-9. In order to avoid 31% federal income tax backup
withholding on payments to the Unitholder, the tendering Unitholder must provide
to the Purchaser the Unitholder's correct Taxpayer Identification Number ("TIN")
by completing the Substitute Form W-9 set forth in BOX B of this Letter of
Transmittal, and, by signing in Box A, must certify under penalties of perjury,
that such Unitholder is not subject to such backup withholding. If a correct
TIN is not provided, penalties may be imposed by the Internal Revenue Service
("IRS") in addition to the Unitholder being subject to backup withholding.
Certain Unitholders (including, among others, all corporations) are not subject
to backup withholding. Backup withholding is not an additional tax. If
withholding results in an overpayment of taxes, a refund may be obtained from
the IRS.
The TIN that must be provided on the Substitute Form W-9 is that of the
registered Unitholder indicated on the front of this Letter of Transmittal. If
the tendering Unitholder has applied for but has not been issued a TIN or
intends to apply for a TIN in the near future, the Unitholder should check the
"Applied For" box in Box B of this Letter of Transmittal. If the "Applied For"
box is checked in the Substitute Form W-9 and the Purchaser is not provided with
the Unitholder's TIN within 60 days, the Purchaser will withhold 31% of all
subsequent payments, if any, to the Unitholder until such TIN is provided to the
Purchaser.
(B) FIRPTA Affidavit. To avoid potential withholding of tax pursuant to
Section 1445 of the Internal Revenue Code in an amount equal to 10% of the
amounts payable to the Unitholder plus the amount of any liabilities of the
Partnership allocable to each Unit tendered, a Unitholder who or which is a
United States person must complete the FIRPTA Affidavit contained in BOX C of
this Letter of Transmittal stating, under penalties of perjury, such
Unitholder's TIN and address, and that such Unitholder is not a foreign person.
Tax withheld under Section 1445 of the Internal Revenue Code is not an
additional tax. If withholding results in an overpayment of tax, a refund may
be obtained from the IRS.
4. Foreign Persons. In order for a Unitholder who or which is a foreign person
(i.e., a person who is not a United States person as defined in 3 above) to
qualify as exempt from 31% backup withholding, such foreign Unitholder must
certify, under penalties of perjury, the statement in BOX D of this Letter of
Transmittal attesting to that foreign person's status by checking the box
preceding such statement. In any event, the Purchaser intends to withhold from
a foreign Unitholder 10% of the amounts payable to the Unitholder plus the
amount of liabilities of the Partnership allocable to each Unit tendered,
pursuant to Section 1445 of the Internal Revenue Code. Backup withholding and
tax withheld under Section 1445 of the Internal Revenue Code are not additional
taxes. If withholding results in an overpayment of tax, a refund may be
obtained from the IRS.
5. Additional Copies of Offer to Purchase and Letter of Transmittal. Requests
for assistance or additional copies of the Offer to Purchase and this Letter of
Transmittal may be obtained from the Purchaser by calling (404) 916-9055 or
(404) 850-9640.
NOTE AND SECURITY AGREEMENT SIGNATURE PAGE
WITNESSETH, the undersigned hereby executes this Note and Security
Agreement as of the date first above written.
BORROWER/1/
-------------------------------------
-------------------------------------
-------------------------------------
-------------------------------------
-------------------------------------
-------------------------------------
-------------------------------------
-------------------------------------
-------------------------------------
-------------------------------------
- ---------------
/1/ Each Borrower must sign exactly as such Borrower's name appears on the face
of the Letter of Transmittal.
Exhibit (a)(3)
DEFOREST VENTURES I L.P.
5665 NORTHSIDE DRIVE, N.W., SUITE 370
ATLANTA, GEORGIA 30328
June 2, 1995
Dear Limited Partner:
As described in the enclosed Offer to Purchase and related Letter of
Transmittal (the "Offer"), DeForest Ventures I L.P. is offering to purchase
Units of Limited Partnership Interest of the Partnership identified in the
Offer.
The Offer is being made in accordance with the settlement of a class action
lawsuit brought against, among others, DeForest Ventures I L.P. We suggest that
you review the enclosed Offer to Purchase for information pertaining to the
settlement of the class action.
Please note that in order to tender any of your Units in the Partnership,
you must tender all of your Units in the Partnership - no partial tenders will
be accepted.
We suggest that you review the enclosed Offer with your personal financial
and tax advisor. After carefully reading the enclosed Offer, if you elect to
tender your Units, mail (using the enclosed pre-addressed, postage-paid
envelope) a duly completed and executed copy of the Letter or Transmittal, the
Note and Security Agreement signature page and any documents required by the
Letter of Transmittal to:
DeForest Ventures I L.P.
c/o Gemisys
7103 South Revere Parkway
Englewood, Colorado 80112
If you have any questions, please call DeForest Ventures I L.P. at the
number set forth in the Offer.
DEFOREST VENTURES I L.P.
Exhibit (b)(3)
Amendment No. 2 dated as of May 5, 1995 to the
Master Agreement dated as of November 21, 1994 among the
Credit Parties signatory thereto and PaineWebber Real
Estate Securities Inc. (as heretofore amended, the "Master
Agreement"). Capitalized terms used herein and not
otherwise defined shall have the meanings assigned to them
in the Master Agreement.
W I T N E S S E T H :
WHEREAS, certain of the Credit Parties have
entered into (x) the Amended Stipulation of Settlement
dated as of March 13, 1995 among the named plaintiffs in
those certain lawsuits styled as Ruben v. Deforest Ventures
I L.P., et al., Civil Action No. 1:94-CV-2983-JEC in the
United States District Court for the Northern District of
Georgia, Atlanta Division, Andrews v. Fox Capital
Management Corporation, et al., Civil Action No. 1:94-CV-3351-JEC,
in the United States District Court for the
Northern District of Georgia, Atlanta Division, Vernon v.
DeForest Ventures I, L.P., et al., No. 94 CH 0150592 in the
Circuit Court of Cook County, Illinois and Whiteside v. Fox
Capital Management Corp., No. 390018, in the California
Superior Court in and for the County of San Mateo
(collectively, the "Litigation") and certain of the
defendants in the Litigation and (y) the Supplemental
Agreement dated as of March 14, 1995 related thereto (the
Amended Stipulation of Settlement as supplemented by such
Supplemental Agreement, the "Amended Stipulation");
WHEREAS, the Amended Stipulation provides for the
compromise and settlement of the Litigation and all claims
that have been or could have been asserted therein as to
all Released Parties (as defined therein) and the dismissal
on the merits and with prejudice of the Litigation as to
all defendants therein, in each case on the terms and
conditions set forth therein;
WHEREAS, the Amended Stipulation provides, inter
alia, that (i) additional payments will be made to Persons
who sold LP Units pursuant to the Tender Offers commenced
in October of 1994 and (ii) second Tender Offers will be
made to all members of the Fox Class and the NPI Class (as
each term is defined in the Amended Stipulation) who have
not previously sold all of their LP Units, such second
Tender Offers to be at the offer prices set forth in the
Amended Stipulation;
WHEREAS, the Availability Period has expired and
the Credit Parties have requested that Lender extend
additional financing to Fox Borrower and NPI Borrower in
order to finance certain of the payments required to be
made pursuant to the Amended Stipulation;
WHEREAS, certain of the NPI Principals, Apollo,
and/or their respective Affiliates have agreed to make
capital contributions to Fox Borrower and NPI Borrower in
order to fund those payments required to be made pursuant
to the Amended Stipulation which will not be made from the
proceeds of such additional financing; and
WHEREAS, Lender is willing to make such
additional financing available to Fox Borrower and NPI
Borrower on the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the premises
and intending to be legally bound hereby, the parties
hereto agree as follows:
SECTION 1. Section 1 of the Master Agreement is
hereby amended by (x) deleting the following definitions:
"Advance Date", "Appraised Value", "Availability Period",
"Capital Event Proceeds", "Collateral Release Date",
"Contribution Agreement", "Fox Loan", "Fox Note", "Loan
Documents", "NPI Loan", "NPI Net Cash Flow", "NPI Note",
"Related Documents", "Residual Fee Buy-Out Amount", "Tender
Offer Documents" and "Tender Offers" and (y) inserting the
following definitions in the appropriate alphabetical
order:
"Advance Date" shall have the meaning provided in
Section 2.1.4.
"Amended Stipulation" shall have the meaning
provided in Amendment No. 2 and without giving effect to
any amendment, restatement, replacement, supplement or
modification thereto made without the prior written consent
of Lender.
"Amended Stipulation Effective Date" shall mean
the "Effective Date" as defined in the Amended Stipulation.
"Amendment No. 2" shall mean Amendment No. 2 to
the Master Agreement dated as of May 5, 1995.
"Appraised Value" shall mean, as of any
Determination Date, with respect to any Individual
2
Property, the price that would be paid if such Individual
Property was sold as of such Determination Date on an
orderly basis as determined by three independent appraisal
firms, one chosen by NPI Corp., one chosen by Lender and
one chosen by the other selected appraisers. The cost of
such appraisals shall be shared on a 50%/50% basis by the
NPI Parties and Lender if the NPI Parties exercise their
right under Section 3.3.2(b) to elect a Residual Fee Buy-Out,
and the cost of such appraisals shall be borne solely
by Lender if Lender exercises its right under Section
3.3.2(b) to elect to require the NPI Parties to make a
Residual Fee Buy-Out.
"Availability Period" shall mean the period
commencing on the Closing Date and ending on August 31,
1995.
"Capital Event Proceeds" shall mean for any
Borrower for any period, (i) distributions received by such
Borrower, the NPI Entities or the holders of the Affiliate
Units during such period in respect of the LP Units owned
by such Borrower, by the NPI Entities or by such holders
during such period and in respect of general partnership
interests in the Tender Offer Partnerships related to such
Borrower (other than any such amounts which are
distributable to PRA pursuant to FRI Partnership Agreement
or the shareholders of FCMC but including amounts
distributable by FRI to NPI Equity II and "Disposition
Compensation" (as defined in the FRI Partnership
Agreement)), (ii) proceeds received by such Borrower, the
NPI Entities or such holder during such period from the
sale or other disposition of such LP Units and general
partnership interests during such period and (iii) the
Aggregate Refinancing Amount and the Aggregate Liquidation
Amount for the Deemed Distribution Date occurring during
such period in respect of the properties owned by the
Tender Offer Partnerships related to such Borrower,
provided that Capital Event Proceeds shall not include (x)
Fox Deficit Distributions or (y) prior to the occurrence of
a Default or an Event of Default, the distributions in
respect of, or the sale proceeds of, the Affiliate Units.
It is understood that distributions received by NPI
Borrower in respect of the "Retained Units" (as such term
is defined in the Second Tender Offer Documents) shall
constitute Capital Event Proceeds.
"Classes" shall have the meaning provided in the
Amended Stipulation.
3
"Collateral Release Date" shall mean the first
date on which the aggregate outstanding principal amount of
the Loans is less than 35% of the aggregate outstanding
principal amount of the Loans on the Availability Period
Closing Date.
"Court" shall mean the United States District
Court for the Northern District of Georgia, Atlanta
Division.
"Escrow Account" shall mean an account of [NPI-AP
Management] established at Bankers Trust Co. pursuant to
the Escrow Agreement.
"Escrow Agreement" shall mean the Escrow
Agreement, dated on or about the date hereof, among and
between the Borrowers, NPI-AP Management and Bankers Trust
Company, as Escrow Agent, substantially in the form of
Exhibit BB attached hereto and without giving effect to any
amendment, restatement, replacement, supplement or
modification thereto made without the prior written consent
of Lender.
"Escrow Funding Advance" shall mean the Loan
Advance the proceeds of which are utilized to fund the
deposit of the October Tender Offers Premium into the
Escrow Account, provided that the aggregate principal
amount of such Loan Advance shall not exceed $5,610,860.
"Extension Effective Date" shall have the meaning
provided in Section 2.1.5.
"Fox Credit Lines" shall have the meaning
provided in Section 6.1(k).
"Fox Credit Lines Pledge" shall have the meaning
provided in Section 6.1(k).
"Fox Loan" shall mean the loan evidenced by the
Fox Note, to be advanced to Fox Borrower by Lender pursuant
to the Fox Loan Agreement and to be secured by the Security
Documents and the other Loan Documents, provided that the
maximum aggregate original principal amount of the Fox Loan
shall in no event exceed the difference between $55,000,000
and the original principal amount of the NPI Loan.
"Fox Note" shall mean, collectively, (i) the
Promissory Note dated the Fox Initial Loan Advance Date,
1
made by Fox Borrower to Lender and (ii) each additional
Promissory Note made by Fox Borrower to Lender dated each
subsequent Advance Date and delivered pursuant to Section
2.05 of the Fox Loan Agreement in connection with future
advances, each substantially in the form of Exhibit H
annexed hereto and evidencing the Fox Loan, as the same may
be amended, restated, replaced, supplemented or otherwise
modified from time to time.
"Litigation" shall have the meaning provided in
Amendment No. 2.
"Loan Agreement Amendments" shall mean the
amendment to each of the Fox Loan Agreement and the NPI
Loan Agreement, substantially in the form of Annex A to
Amendment No. 2.
"Loan Documents" shall mean, collectively, this
Agreement, the Loan Agreements, the Notes, the Pledges, the
Borrower Guaranties, the Guaranty, the Assignment of
Management Agreements, the Environmental Indemnity, the Fox
Credit Lines Pledge, the Supplemental Letter, the PRA
Consent and the Fox Investor Repurchase Agreement, and
every other document or instrument executed and/or
delivered in connection with the Loans or otherwise
pursuant to the Loan Documents, in each case, as the same
may be amended, restated, replaced, supplemented or
otherwise modified from time to time.
"NPI Loan" shall mean the loan evidenced by the
NPI Note, to be advanced to NPI Borrower by Lender pursuant
to the NPI Loan Agreement and to be secured by the Security
Documents and the other Loan Documents, provided that the
maximum aggregate original principal amount of the Fox Loan
and the NPI Loan shall in no event exceed $55,000,000.
"NPI Net Cash Flow" shall mean, for any period,
and without duplication, (a) all cash revenues (including
expense reimbursables) received by the Credit Parties
during such period (including, without limitation, (x) the
distributions in respect of general partnership interests
in the Operating Partnerships (other than the Tender Offer
Partnerships), (y) property management fees and asset
management fees and (z) repayments of the Fox Credit Lines)
other than (i) revenues which constitute Capital Event
Proceeds, (ii) the portion of the management fees payable
to PD Associates pursuant to the PD Agreements to the
extent that such portion does not exceed $780,000 in any
calendar year or $65,000 in any Payment Period, (iii) after
2
the Collateral Release Date, the revenues from (x) the
Non-Tender Offer Collateral and (y) the general partnership
interests in the Operating Partnerships which are not
Tender Offer Partnerships, (iv) the Fox Deficit
Distributions, (v) the Fox Borrower Special Contributions,
(vi) the Fox Borrower Advances and (vii) amounts paid in
respect of the general partnership interests in the Fox
Tender Offer Partnerships to FRI or FCMC which are
distributable to PRA pursuant to the FRI Partnership
Agreement or to the shareholders of FCMC, less (b) the Pro
Rata Portion of the Approved Operating Expenses paid in
cash by the Credit Parties during such period (including
reasonable compensation to the NPI Principals not to exceed
in the aggregate amounts provided for in the NPI Principal
Employment Agreements).
"NPI Note" shall mean, collectively, (i) the
Promissory Note dated the date hereof made by NPI Borrower
to Lender and (ii) each additional Promissory Note made by
NPI Borrower to Lender dated each subsequent Advance Date
and delivered pursuant to Section 2.05 of the NPI Loan
Agreement in connection with future advances, each
substantially in the form of Exhibit N annexed hereto and
evidencing the NPI Loan, as the same may be amended,
restated, replaced, supplemented or otherwise modified from
time to time.
"October Tender Offer Documents" shall mean,
collectively, the Offers to Purchase the LP Units of the
Tender Offer Partnerships dated October 17, 1994.
"October Tender Offers" shall mean, collectively,
the offers to purchase LP Units made pursuant to the
October Tender Offer Documents.
"October Tender Offers Premium" shall have the
meaning provided in the Amended Stipulation.
"Related Documents" shall mean, collectively,
the NPI Formation Documents, the Fox Formation Documents,
the Management Agreements, the Amended Stipulation, the Fox
Credit Lines, the Escrow Agreement and the Individual
Property Management Agreements.
"Related Fees and Expenses" shall mean the fees
and expenses which the Credit Parties incur in connection
with the Amended Stipulation including, without limitation,
the fees and expenses incurred in connection with the
Second Tender Offers, the fees and expenses of plaintiffs'
3
counsel required to be paid pursuant to the terms of the
Amended Stipulation and the fees and expenses incurred in
connection with Amendment No. 2, which fees and expenses
shall not be payable to the NPI Principals, Apollo or any
Affiliate of either, except that Fox Borrower may reimburse
NPI-AP Management or NPI Corp. for up to $100,000 of
expenses incurred in connection with the Amended
Stipulation.
"Residual Fee Buy-Out" shall have the meaning
provided in Section 3.3.2.
"Residual Fee Buy-Out Amount" shall mean an
amount equal to (x) 90% of the Residual Participation
Amount calculated as of the Determination Date multiplied
by (y) the Participation Percentage.
"Residual Fee Buy-Out Date" shall have the
meaning provided in Section 3.3.2.
"Residual Fee Buy-Out Notice" shall have the
meaning provided in Section 3.3.2.
"Second Tender Offer Documents" shall mean,
collectively, the offers to purchase for the Second Tender
Offers, each of which offers to purchase shall be
satisfactory in form and substance to Lender.
"Second Tender Offers" shall mean, collectively,
the offers to purchase LP Units made by the Borrowers
pursuant to the Second Tender Offer Documents which offers
to purchase are made pursuant to, and on the terms set
forth in, the Amended Stipulation.
"Supplemental Letter" shall have the meaning
provided in Section 2.1.5.
"Tender Offer Documents" shall mean,
collectively, the October Tender Offer Documents and the
Second Tender Offer Documents.
"Tender Offers" shall mean, collectively, the
October Tender Offers and the Second Tender Offers.
SECTION 2. Section 2.1.4 of the Master Agreement
is hereby amended by:
(i) inserting the phrase "on which LP Units
are to be acquired pursuant to a Tender Offer"
4
following the words "Advance Date" in each place such
words appear in Section 2.1.4(a) and 2.1.4(b);
(ii) inserting the following provision at the
end Section 2.1.4(b):
In furtherance and not in limitation of the
foregoing, on the Advance Date on which LP Units
in the NPI Tender Offer Partnerships are acquired
pursuant to the Second Tender Offers, amendments
to such UCC-1 financing statements adding the
"Retained Units" (as such term is defined in the
Second Tender Offer Documents) to the Collateral
described therein shall have been duly executed,
delivered and filed by the NPI Borrower.
(iii) inserting the phrase ", provided that the
opinions described in clauses (iii) and (iv) need not
be delivered in connection with any Advance Date
occurring after January 1, 1995" at the end of Section
2.1.4(h);
(iv) inserting the following new provisions at
the end thereof:
(j) Extension Effective Date. On each
Advance Date occurring after January 1, 1995, the
Extension Effective Date shall have occurred.
(k) Amended Stipulation Effective Date. In
the case of each Advance made after January 1,
1995 other than the Escrow Funding Advance, (x)
the Court shall have entered the Final Order as
contemplated by the Amended Stipulation and
Lender shall have received a true and complete
copy thereof certified as such by an authorized
officer of NPI Corp. which Final Order shall be
satisfactory in form and substance to Lender and
(y) the Amended Stipulation Effective Date shall
have occurred and Lender shall have received an
Officer's Certificate from NPI Corp. certifying
that the conditions set forth in this Section
2.1.4(k) have been satisfied.
(l) Equity Contributions. In the case of
each Advance made after January 1, 1995 other
than the Escrow Funding Advance, the Credit
Parties shall have received the following capital
contributions after the Extension Effective Date
5
from the NPI Principals, Apollo and/or their
Affiliates (other than the Credit Parties) and
such capital contributions shall have been
contributed to the Borrowers: (i) in the event
that (x) the aggregate number of the LP Units in
any NPI Tender Offer Partnership tendered in the
Tender Offers exceeds (y) 49% of the total number
of such LP Units, a capital contribution in an
amount equal to the number of tendered LP Units
which exceed 49% multiplied by the offer price
for such LP Units as set forth in the Second
Tender Offers, such capital contribution to be
made on or before the date such excess LP Units
are acquired pursuant to the Second Tender Offer;
(ii) in the event that the amount required to
fund (x) the funding of the Escrow Account, (y)
the acquisition of LP Units pursuant to the
Second Tender Offers and (z) the aggregate amount
of the Related Fees and Expenses exceeds
$20,525,452, a capital contribution in the amount
of such excess, such capital contribution to be
made on the date of the acquisition of LP Units
pursuant to the Second Tender Offers and on each
later date on which such Related Fees and
Expenses are payable; and (iii) in the event that
the Related Fees and Expenses which are actually
incurred exceed $1,000,000, a capital
contribution in the amount equal to such excess,
such capital contribution to be made on the date
of the acquisition of LP Units pursuant to the
Second Tender Offers and on each later date on
which such excess Related Fees and Expenses are
payable.
(m) Use of Proceeds Certificate. On each
Advance Date occurring after January 1, 1995,
Lender shall have received an Officer's
Certificate of NPI Corp. setting forth in
reasonable detail and accompanied by reasonable
supporting documentation (i) the amount of the
October Tender Offers Premium, (ii) the number of
LP Units which have been tendered pursuant to the
Second Tender Offers, if any, (iii) the amount of
the Related Fees and Expenses, and (iv) a
calculation of the amount of any capital
contributions required to be made to the
Borrower(s) in order to satisfy the condition set
forth in Section 2.1.4(l).
6
(n) Notes. On each Advance Date occurring
after January 1, 1995, Notes evidencing the Loan
Advances then being made shall be delivered by
the relevant Borrower as contemplated by Section
2.05 of the respective Loan Agreement.
SECTION 3. Section 2.1 of the Master Agreement
is hereby amended by adding a new Section 2.1.5 which shall
read as follows:
2.1.5 Conditions Precedent to Extension
Effective Date. The Lender shall execute and deliver
the Loan Agreement Amendments on the date (the
"Extension Effective Date") on which each of the
following conditions precedent shall be satisfied:
(a) Approval Order, Etc. The Court shall
have entered the Approval Order (as defined in,
and contemplated by, the Amended Stipulation),
and Lender shall have received a true and
complete copy of the Amended Stipulation, such
Approval Order and the Notice described in the
Amended Stipulation, in each case certified as
such by a duly authorized officer of NPI Corp.
(b) Notice. The Notice shall have been
mailed to the members of the Classes as
contemplated by the Amended Stipulation.
(c) Exclusion Elections. Members of the
Classes representing an aggregate of 5% or more
of either the number of Class members or the
units held by the Class members shall not have
submitted valid, timely and proper requests for
exclusion from the Classes in accordance with the
provisions of the Amended Stipulation, the
Approval Order and the Notice delivered pursuant
thereto.
(d) Escrow Agreement. The Borrowers and
Bankers Trust Company shall have executed and
delivered the Escrow Agreement. In addition,
Lender shall have received evidence satisfactory
to it that the deposit of amounts into the Escrow
Account established under the Escrow Agreement
conforms to the terms of the Amended Stipulation.
(e) Legal Opinions. On the Extension
Effective Date, Lender shall have received legal
7
opinions from each of (i) Rosenman & Colin,
counsel to the NPI Parties and (ii) Post &
Heymann, special counsel to the Credit Parties,
addressed to Lender and dated the Extension
Effective Date, covering the matters set forth in
Exhibits Z-1 and Z-2, respectively, and such
other matters incident to the transactions
contemplated herein as Lender may request.
(f) Confirmations. All parties to the Loan
Documents shall have consented in writing to
Amendment No. 2 and confirmed that their
respective obligations under the Loan Documents
to which they are party continue in full force
and effect.
(g) Supplemental Letter. Each Borrower
shall have duly authorized and executed and
delivered a Supplemental Letter in substantially
the form of Exhibit AA hereto (the "Supplemental
Letter") and shall have fulfilled its obligations
thereunder.
(h) Proceedings. All corporate and other
proceedings taken or to be taken in connection
with the transactions contemplated by this
Agreement and the other Loan Documents and all
documents incidental thereto shall be
satisfactory in form and substance to Lender, and
Lender shall have received all such counterpart
originals or certified copies of such documents
as Lender may reasonably request.
SECTION 4. Section 2.2 of the Master Agreement
is hereby amended by (i) designating the existing provision
as subsection "(a)", (ii) inserting the phrase "advanced
prior to January 1, 1995" immediately after the word
"Loans" in the first line thereof and (iii) adding a new
subsection (b) which shall read as follows:
(b) The proceeds of the Loans advanced on and
after January 1, 1995 shall be used by the Borrowers
to (i) fund the deposit of the October Tender Offers
Premium into the Escrow Account, provided that the
aggregate principal amount thereof does not exceed
$5,610,860, (ii) fund the acquisition of LP Units
pursuant to the Second Tender Offers, provided that
(x) the proceeds of the Loans shall not be used to
fund the acquisition of LP Units in any Tender Offer
8
Partnership to the extent that the LP Units in such
Tender Offer Partnership acquired in the Tender Offers
exceed 49% of the total LP Units in such Tender Offer
Partnership and (y) the aggregate principal amount of
the Loans the proceeds of which are utilized as
contemplated by this clause (ii) shall not exceed
$13,914,592 and (iii) to pay Related Fees and
Expenses, provided that the aggregate principal amount
of the Loans the proceeds of which are utilized as
contemplated by this clause (iii) shall not exceed
$1,000,000.
SECTION 5. Section 3.3.1 of the Master Agreement
is hereby amended by (i) deleting the "and" at the end of
clause (a) thereof, (ii) adding the phrase "made prior to
January 1, 1995" after the words "Loan Advances" in the
first line of clause (b) thereof, (iii) deleting the "." at
the end of clause (b) thereof and inserting "; and" in lieu
thereof and (iv) inserting a new clause (c) which shall
read as follows:
(c) on the date of each Loan Advance made after
January 1, 1995, an amount equal to 1% of the
aggregate principal amount of the Loan Advances
incurred on such date.
SECTION 6. Section 3.3.2 of the Master Agreement
is hereby amended by (i) inserting an "(a)" immediately
prior to the existing provisions and (ii) deleting the
portion thereof commencing with the phrase ", provided that
the NPI Parties may buy-out" and inserting the following
provision in lieu thereof:
, provided that the NPI Parties may, and Lender may
require the NPI Parties to, buy-out the obligation of
the NPI Parties to pay the Residual Fee as provided in
Section 3.3.2(b) (the "Residual Fee Buy-Out").
(b) The NPI Parties may exercise their right to
elect a Residual Fee Buy-Out on any Payment Date to
occur more than 18 months after the Loan Satisfaction
Date, and Lender may exercise its right to elect to
require the NPI Parties to make a Residual Fee Buy-Out
on any Payment Date occurring more than 18 months
after the Loan Satisfaction Date. In each case such
election shall be exercised by the party making such
election giving written notice to the other party
which written notice (a "Residual Fee Buy-Out Notice")
shall specify (x) that such notice is a Residual Fee
9
Buy-Out Notice being delivered pursuant to this
Section 3.3.2(b) and (y) the date (which shall not be
less than 60 days or more than 90 days following the
delivery of such notice) on which the Residual Fee
Buy-Out is to occur (the "Residual Fee Buy-Out Date").
Promptly after the delivery of the Residual Fee Buy-Out
Notice, Lender and NPI Parties shall cooperate in
order to determine the Residual Fee Buy-Out Amount as
of a date (the "Determination Date") which is 90 days
prior to the Residual Fee Buy-Out Date, including by
promptly selecting appraisers to determine the
Appraised Value. On the Residual Fee Buy-Out Date,
the NPI Parties shall pay Lender an amount equal to
(m) the Residual Fee Buy-Out Amount less (n) the
amount of the Residual Fee actually paid to Lender
during the period commencing on the Determination Date
and ending on the Residual Fee Buy-Out Date. Upon
such payment the NPI Parties shall have no further
obligation to pay the Residual Fee to Lenders (it
being understood that the NPI Parties shall continue
to have such obligation during the period commencing
on the date of the Residual Fee Buy-Out Notice and
ending on the date Lender receives the full amount of
the Residual Fee Buy-Out Amount).
SECTION 7. Section 4.1 of the Master Agreement
is hereby amended by adding the following provisions at the
end thereof:
(jj) Amended Stipulation. Upon the occurrence
of the Amended Stipulation Effective Date, the
Litigation and all claims that have been or could have
been asserted therein shall be finally and fully
compromised and settled as to all Released Parties (as
defined in the Amended Stipulation) and the Litigation
shall be dismissed on the merits and with prejudice as
to all Defendants (as defined in the Amended
Stipulation), in each case as provided in the Amended
Stipulation. Each Credit Party, Lender, Kidder and
each affiliate thereof constitutes a Released Party
under the Amended Stipulation.
(kk) Adequate Funds. The funds available to be
borrowed after the Extension Effective Date under the
Loan Agreements, when added to additional capital
contributions to be made to the Credit Parties by the
NPI Principals, Apollo and/or their respective
affiliates (other than the Credit Parties), are
sufficient to pay the amounts required to be paid by
10
the Credit Parties under the Amended Stipulation and
the Related Fees and Expenses, assuming the maximum
number of L.P. Units are tendered pursuant to the
Second Tender Offers.
SECTION 8. Section 5.1(a) of the Master
Agreement is hereby amended by (i) deleting the phrase "The
NPI Parties shall notify Lender, not less than 30 days
prior to the estimated date of consummation thereof," from
clause (xvi) thereof and inserting "Not less than 30 days
prior to the estimated date of consummation thereof,
notice" in lieu thereof, (ii) deleting the "and" from the
end of clause (xvi) thereof, (iii) adding the following
provisions following clause (xvi) thereof:
(xvii) Section 16 Reports. Promptly upon
determining that any Credit Party is, or may be,
required to file any reports or amendments thereto
pursuant to the Section 16 of the Securities Exchange
Act of 1934, notice of such requirement and a copy of
the report or amendment thereto required to be filed,
provided that such notice and copy will be provided no
later than the third day prior to the date on which
such report or amendment thereto is required to be
filed;
(xviii) Amended Stipulation. Promptly upon
receipt or delivery, as the case may be, thereof,
copies of all notices, motions and other
communications delivered to or by any Credit Party (or
its counsel) pursuant to the Amended Stipulation or
the Escrow Agreement; and
and (iv) redesignating the existing clause (xvii) thereof
as clause "(xix)".
SECTION 9. The NPI Parties agree that an
Independent Director for each of DFC I and DFC II as
contemplated by Section 5.1(l) of the Master Agreement
shall be designated by no later than the thirtieth day
following the written request of the Lender.
SECTION 10. Section 6.1(f) of the Master
Agreement is hereby amended by (x) deleting the "and"
before clause "(ii)" of the first sentence thereof and
inserting a "," in lieu thereof and (y) inserting the
following at the end of the first sentence thereof "and
(iii) the lines of credit required to be provided to the
11
Fox Tender Offer Partnerships pursuant to the Amended
Stipulation".
SECTION 11. Section 6.1(k) of the Master
Agreement is hereby amended by (x) deleting the "and" at
the end of clause (iii) thereof, (y) deleting the "." at
the end of clause (iv) thereof and inserting "; and" in
lieu thereof and (z) adding the following clause at the end
thereof;
"(v) after the Amended Stipulation Date, the
Credit Parties may make advances to the Fox
Partnerships to the extent required by the Amended
Stipulation (the "Fox Credit Lines"), provided that
each such advance shall be made pursuant to a written
agreement which is satisfactory in form and substance
to Lender and all of such Credit Parties' rights
thereunder are pledged to Lender to secure the
Obligations pursuant to a pledge agreement (the "Fox
Credit Lines Pledge") which shall be satisfactory in
form and substance to Lender."
SECTION 12. Section 6 of the Master Agreement is
hereby amended by adding a new Section 6.1(p) which shall
read as follows:
"(p) Escrow Account. The Credit Parties shall
not withdraw any amounts from the Escrow Account other
than (x) after the occurrence of the Amended Stipula-
tion Effective Date and then such amounts as are with-
drawn shall be applied strictly in accordance with the
Amended Stipulation and (y) to repay the Loans when
required pursuant to Section 3.02 of the Loan Agree-
ments."
SECTION 13. As collateral security for the
Obligations, including without limitation, the payment of
principal and interest on the Loans, each Borrower and
NPI-AP Management hereby pledges and assigns to Lender a
continuing Lien upon and security interest in and to (A)
all of its respective right, title and interest in, under
and to the Escrow Agreement, and (B) all of its respective
right, title and interest in and to all deposits (and any
earnings thereon) made from time to time in the Escrow
Account, together with all cash and non-cash proceeds
thereof.
12
SECTION 14. Schedule VII to the Master Agreement
is hereby amended by adding the following agreement
thereto:
The Amended Stipulation limits the rights of NPI
Corp. to cause the Fox Partnerships to enter into a
Roll-Up Transaction (as defined in the Amended
Stipulation).
SECTION 15. The Master Agreement is hereby
amended by adding as Exhibits Y, Z-1, Z-2 and AA thereto
the documents set out as Annexes A, C-1, C-2 and D to this
Amendment, respectively.
SECTION 16. The LP Unit Pledge to which NPI
Borrower is party is hereby amended by adding the following
phrase at the end of the definition of "Pledged Units" set
forth in Section 1.1 thereof:
"provided that Pledged Units shall include all of
Pledgor's right, title and interest in, to and under
the "Loans" secured by the "Retained Units" (as each
such term is defined in the Second Tender Offer
Documents) (including, without limitation, the
security interest in such Retained Units, and once
such Retained Units are acquired by Pledgors, such
Retained Units).
SECTION 17. Except as expressly amended hereby,
the terms and conditions of the Master Agreement shall
continue in full force and effect. This Amendment is
limited precisely as written and shall not be deemed to be
a waiver of, or amendment or modification to, any other
term or condition of the Master Agreement or any of the
other Loan Documents or prejudice any right or remedies
which the Lender may now have or may have in the future
under or in connection with the Master Agreement or any of
the other Loan Documents.
SECTION 18. This Amendment shall become
effective upon the execution and delivery of a copy hereof
(whether the same or different copies) by each of the
Credit Parties and Lender.
SECTION 19. This Amendment may be executed in
any number of counterparts and by the different parties
hereto on separate counterparts, each of which when
executed and delivered, shall be an original, but all of
13
which shall together constitute one and the same
instrument.
SECTION 20. From and after the date hereof, any
reference to the Master Agreement in the Loan Documents
shall be deemed to refer to, and include, the Master
Agreement as amended hereby.
SECTION 21. This Amendment and the rights and
obligations of the parties hereto shall be construed in
accordance with and governed by the laws of the State of
New York.
14
DEFOREST CAPITAL I CORPORATION
By
Name: Michael L. Ashner
Title: President
DEFOREST VENTURES I L.P.
By DeForest Capital I Corporation,
its General Partner
By
Name: Michael L. Ashner
Title: President
DEFOREST CAPITAL II CORPORATION
By
Name: Michael L. Ashner
Title: President
DEFOREST VENTURES II L.P.
By DeForest Capital II
Corporation, its General Partner
By
Name: Michael L. Ashner
Title: President
NPI-AP MANAGEMENT, L.P.
By NPI Property Management
Corporation, a general partner
By
Name: Michael L. Ashner
Title: Chairman
NATIONAL PROPERTY INVESTORS, INC.
By
Name: Michael L. Ashner
Title: President
PAINEWEBBER REAL ESTATE
SECURITIES INC.
By------------------------
Name:
Title:
Exhibit (b)(5)
Amendment No. 1 dated as of May 5, 1995 to the
Loan Agreement (as heretofore amended, the "Loan
Agreement") dated as of November 30, 1994 between DEFOREST
VENTURES I L.P., a Delaware limited partnership (the
"Borrower") and PAINEWEBBER REAL ESTATE SECURITIES INC.
(the "Lender"). Capitalized terms used herein without
definition shall have the respective meanings ascribed to
them in the Loan Agreement.
W I T N E S S E T H :
WHEREAS, the Borrower and the Lender are parties
to the Loan Agreement and to the Master Agreement referred
to therein;
WHEREAS, the Borrower, the Lender and the other
Credit Parties have duly authorized, executed and delivered
Amendment No. 2 to the Master Agreement which provides,
inter alia, that on the Extension Effective Date Lender
shall (x) execute and deliver this Amendment and (y)
pursuant to the Loan Agreement as amended by this
Amendment, and subject to the terms and conditions set
forth herein and in the Master Agreement, make additional
Loans to the Borrower in order to finance certain of the
Borrower's obligations under the Amended Stipulation and to
pay Related Fees and Expenses.
NOW, THEREFORE, in consideration of the premises
and intended to be legally bound hereby, the parties hereto
agree as follows:
SECTION 1. The second WHEREAS clause of the Loan
Agreement is hereby amended by deleting "38.5%" set forth
therein and inserting "49%" in lieu thereof.
SECTION 2. Section 1.01 of the Loan Agreement is
hereby amended by deleting the words "in the maximum
original principal amount of up to $21,223,858" from the
definition of "Loan."
SECTION 3. Section 2.01 of the Loan Agreement is
hereby amended by deleting clause (i) thereof, renumbering
clauses (ii), (iii) and (iv) thereof as clauses (i), (ii)
and (iii), respectively, and revising new clause (iii) to
read as follows: "(iii) in no event shall the aggregate
principal amount of the Loans hereunder and the loans under
the NPI Loan Agreement exceed $55,000,000."
SECTION 4. Section 2.05 of the Loan Agreement is
hereby amended by adding the following provision at the end
thereof:
On each Advance Date, the Borrower shall deliver to
Lender a new Note, dated such Advance Date, in the
original principal amount equal to the Loan Advance
then being made, and otherwise conforming with the
terms of the Loan Agreement; provided, that at the end
of the Availability Period, the Borrower shall, at the
direction of the Lender, execute and deliver a new,
consolidated Note against the delivery of all Notes
then existing, in the principal amount equal to the
principal amount of all Loans then outstanding, and
otherwise in conformity with the terms of this
Agreement.
SECTION 5. Section 2.07 of the Loan Agreement is
hereby amended by deleting the phrase "paragraph (b) below"
set forth in the first sentence thereof and inserting the
phrase "clause (i) of the next sentence" in lieu thereof.
SECTION 6. Section 3.02 of the Loan Agreement is
hereby amended by deleting the last sentence thereof and
inserting the following sentence in lieu thereof:
In addition, (x) the Loan shall be repaid in full on
the Maturity Date and (y) the Loan shall be repaid on
the date indicated below by an amount equal to the
portion of the Loan which constitutes the Escrow
Funding Advance if any of the following occurs: (m)
the Final Judgment shall have not been entered on or
before May 30, 1995, such portion of the Loan shall be
repaid on May 30, 1995 or (n) the Amended Stipulation
Effective Date shall have not occurred on or before
August 31, 1995, such portion of the Loan shall be
repaid on August 31, 1995.
SECTION 7. Except as expressly amended hereby,
the terms and conditions of the Loan Agreement shall
continue in full force and effect. This Amendment is
limited precisely as written and shall not be deemed to be
a waiver of, or amendment or modification to, any other
term or condition of the Loan Agreement or any other Loan
Document or prejudice any right or remedies which the
2
undersigned may now have or may have in the future under or
in connection with the Loan Agreement or any other Loan
Document.
SECTION 8. This Amendment shall become effective
upon the execution and delivery of a copy hereof (whether
the same or different copies) by the Borrower and Lender.
SECTION 9. This Amendment may be executed in any
number of counterparts and by the different parties hereto
on separate counterparts, each of which when executed and
delivered, shall be an original, but all of which shall
together constitute one and the same instrument.
SECTION 10. From and after the date hereof, any
reference to the Loan Agreement in the Loan Documents shall
be deemed to refer to, and include, the Loan Agreement as
amended hereby.
SECTION 11. This Amendment and the rights and
obligations of the parties hereto shall be construed in
accordance with and governed by the laws of the State of
New York.
3
DEFOREST VENTURES I L.P.
By DeForest Capital I Corporation,
its General Partner
By /s/ Michael L. Ashner
Name: Michael L. Ashner
Title: President
PAINEWEBBER REAL ESTATE
SECURITIES INC.
By /s/ William W. Evans
Name: William W. Evans
Title: Managing Director
Exhibit (c)(1)
AGREEMENT
Agreement, dated as of December 1, 1994, by and between LISLE
W. PAYNE ("Payne") and DEFOREST VENTURES I L.P. (the
"Partnership"), a Delaware limited partnership.
W I T N E S S E T H :
The parties to this Agreement are desirous of making certain
provisions with respect to certain cash distributions which may be
received by the Partnership or any Affiliate of the Partnership
with respect to limited partnership units in the Investment
Partnerships (as hereinafter defined).
NOW, THEREFORE, the parties hereto hereby agree as follows:
FIRST: For purposes of this Agreement:
A. "Affiliate" of a person shall mean any person or
entity controlling, controlled by or under common control with
such person.
B. "Deficit Capital Account Distribution" shall mean
the amount of any distribution received by the Partnership or
any Affiliate of the Partnership with respect to Units which
is attributable to a Deficit Capital Contribution. Without
limiting the foregoing, all distributions which are received
by the Partnership or any Affiliate of the Partnership after
any Deficit Capital Contribution is made shall be conclusively
presumed to be Deficit Capital Account Distributions up to an
aggregate amount equal to the amount of all Deficit Capital
Contributions through the date of determination multiplied by
a fraction, the numerator of which is the number of Units and
the denominator of which is the total number of Units issued
by the Investment Partnership. For example, if the
Partnership and Affiliates own 40 Units out of 100 Units
outstanding, and Deficit Capital Contributions of $100 are
made, the next $40 of distributions received by the
Partnership and/or Affiliates will constitute Deficit Capital
Account Distributions.
C. "Deficit Capital Contribution" shall mean the
aggregate amounts contributed, directly or indirectly, by
Emmet J. Cashin, Jr., Jarold A. Evans, Janet E. Larson
individually and as Trustee of the Larson Family Revocable
Trust, W. Patrick McDowell, the Payne Group and the NPI Group
to an Investment Partnership to restore, in whole or in part,
the deficit balance in the capital account of a general
partner of such Investment Partnership.
D. "Investment Partnership" shall mean each of Century
Properties Fund XII, Century Properties Fund XIII, Century
Properties Fund XIV, Century Properties Fund XV, Century
Properties Fund XVI, Century Properties Fund XVII, Century
Properties Fund XVIII, Century Properties Fund XIX, Century
Properties Growth Fund XXII, MRI Business Properties Fund,
2
Ltd., MRI Business Properties Fund, Ltd. II and MRI Business
Properties Fund, Ltd. III.
E. "NPI Group" shall mean any or all of NPI Equity
Investments II, Inc., Michael L. Ashner, Martin Lifton and
Arthur Queler and Affiliates of any one or more of the
foregoing persons or entities.
F. "Payne Employment Agreement" shall mean the
Employment and Deferred Compensation Agreement, dated March 1,
1988, among Fox Realty Investors, Fox Capital Management
Corporation and Payne, and the Assignment and Assumption
thereof, dated December 6, 1993, executed by the foregoing
parties and Portfolio Realty Associates, L.P.
G. "Payne Group" shall mean Robert Fiddaman, William
Lawrence, Paul Marsili, Michael Murphy, Payne, David Pettis,
William Stark and Harry Tempest.
H. "Payne Group Percentage" shall mean the percentage
of a Deficit Capital Contribution provided, directly or
indirectly, by members of the Payne Group.
I. "Units" shall mean limited partnership units in the
Investment Partnerships held or hereafter acquired by the
Partnership or any Affiliate of the Partnership.
SECOND: The Partnership agrees that, in the event it or an
Affiliate of the Partnership receives a Deficit Capital Account
3
Distribution, it will, as promptly as practical following receipt
thereof (but in no event later than 30 days following the making of
the distribution), pay to Payne for the benefit of the Payne Group,
or cause such Affiliate to pay to Payne for the benefit of the
Payne Group, an amount equal to the product of the Deficit Capital
Account Distribution and the Payne Group Percentage.
THIRD: A. Payne hereby assigns to the Partnership all
amounts hereafter payable to Payne pursuant to the provisions of
Sections 5.1 and 5.3 of the Payne Employment Agreement and the
Partnership agrees to assume all of the obligations of Payne under
the Payne Employment Agreement related to the payment of the
foregoing amounts.
B. Payne agrees not to amend the provisions of the Payne
Employment Agreement without the prior written consent of the
Partnership.
FOURTH: The parties hereto acknowledge that nothing
contained in this Agreement shall be deemed to modify, reduce or
eliminate any liability of any party under the Indemnification and
Reimbursement Agreement, dated as of December 6, 1993, by and among
various Affiliates of the Partnership, Payne and certain other
parties.
FIFTH: A. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective heirs,
administrators, successors and assigns.
4
B. All communications hereunder shall be in writing and shall
be sent by registered or certified mail, return receipt requested,
by hand delivery, by facsimile or by overnight courier service,
addressed to the parties hereto at their addresses set forth below,
or such other addresses as they may designate by like notice:
(1) To Payne:
c/o Jackson Street Partners
50 California Street, Suite 1420
San Francisco, California 94111
Facsimile No.: (415) 981-5608
with a copy to:
Heller Ehrman White & McAuliffe
333 Bush Street
San Francisco, California 94104-308
Attention: Daniel E. Titlebaum
Facsimile No.: (415) 772-6268
(2) To the Partnership:
100 Jericho Quadrangle
Suite 214
Jericho, New York 11753
Attention: Michael L. Ashner, Esq.
Facsimile No.: (516) 433-277
with a copy to:
Rosenman & Colin
575 Madison Avenue
New York, New York 10022
Attention: Mark I. Fisher, Esq.
Facsimile No.: (212) 940-7079
C. This Agreement may be executed in any number of counter-
parts, each of which shall be deemed to be an original but all of
which together shall constitute one agreement.
D. This Agreement constitutes the entire understanding
5
between the parties hereto and no waiver or modification of the
terms hereof shall be valid unless in writing signed by the party
to be charged and only to the extent therein set forth.
E. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York applicable to
contracts made and to be performed in that state, without regard to
conflict of law principles.
IN WITNESS WHEREOF, this Agreement has been executed as of the
1st day of December, 1994.
DEFOREST VENTURES I L.P.
By: DeForest Capital I Corporation,
General Partner
By:
-------------------------
Michael L. Ashner,
President
------------------------------
Lisle W. Payne
6
ACKNOWLEDGED AND APPROVED:
The undersigned hereby acknowledge
and approve the assignment and
assumption of rights and obligations
under the Payne Employment Agreement
provided for in Article THIRD of
this Agreement:
Portfolio Realty Associates, L.P.
By: Portfolio Associates, Inc.
By:
------------------------------
Jarold A. Evans,
Authorized Officer
FOX CAPITAL MANAGEMENT CORPORATION
By:
-------------------------------
7
Exhibit (c)(2)
AGREEMENT
Agreement, dated as of December 1, 1994, by and between JANET
E. LARSON, individually ("Larson") and as TRUSTEE of the LARSON
FAMILY REVOCABLE TRUST (the "Larson Trust") and DEFOREST VENTURES
I L.P. (the "Partnership"), a Delaware limited partnership.
W I T N E S S E T H :
The parties to this Agreement are desirous of making certain
provisions with respect to certain cash distributions which may be
received by the Partnership or any Affiliate of the Partnership
with respect to limited partnership units in the Investment
Partnerships (as hereinafter defined).
NOW, THEREFORE, the parties hereto hereby agree as follows:
FIRST: For purposes of this Agreement:
A. "Affiliate" of a person shall mean any person or
entity controlling, controlled by or under common control with
such person.
B. "Deficit Capital Account Distribution" shall mean the
amount of any distribution received by the Partnership or any
Affiliate of the Partnership with respect to Units which is
attributable to a Deficit Capital Contribution. Without
limiting the foregoing, all distributions which are received
by the Partnership or any Affiliate of the Partnership after
any Defict Capital Contribution is made shall be conclusively
presumed to be Deficit Capital Account Distributions up to an
aggregate amount equal to the amount of all Deficit Capital
Contributions through the date of determination multiplied by
a fraction, the numerator of which is the number of Units and
the denominator of which is the total number of Units issued
by the Investment Partnership. For example, if the
Partnership and Affiliates own 40 Units out of 100 Units
outstanding, and Deficit Capital Contributions of $100 are
made, the next $40 of distributions received by the
Partnership and/or Affiliates will constitute Deficit Capital
Account Distributions.
C. "Deficit Capital Contribution" shall mean the
aggregate amounts contributed, directly or indirectly, by
Emmet J. Cashin, Jr., Jarold A. Evans, Larson, the Larson
Trust, W. Patrick McDowell, the Payne Group and the NPI Group
to an Investment Partnership to restore, in whole or in part,
the deficit balance in the capital account of a general
partner of such Investment Partnership.
D. "Investment Partnership" shall mean each of Century
Properties Fund XII, Century Properties Fund XIII, Century
Properties Fund XIV, Century Properties Fund XV, Century
Properties Fund XVI, Century Properties Fund XVII, Century
Properties Fund XVIII, Century Properties Fund XIX, Century
Properties Growth Fund XXII, MRI Business Properties Fund,
2
Ltd., MRI Business Properties Fund, Ltd. II and MRI Business
Properties Fund, Ltd. III.
E. "Larson Employment Agreement" shall mean the
Employment and Deferred Compensation Agreement, dated March 1,
1988, among Fox Realty Investors, Fox Capital Management
Corporation, Larson and the Larson Trust, and the Assignment
and Assumption thereof, dated December 6, 1993, executed by
the foregoing parties and Portfolio Realty Associates, L.P.
F. "Larson Percentage" shall mean the percentage of a
Deficit Capital Contribution provided, directly or indirectly,
by Larson and/or the Larson Trust.
G. "NPI Group" shall mean any or all of NPI Equity
Investments II, Inc., Michael L. Ashner, Martin Lifton and
Arthur Queler and Affiliates of any one or more of the
foregoing persons or entities.
H. "Payne Group" shall mean Robert Fiddaman, William
Lawrence, Paul Marsili, Michael Murphy, Lisle W. Payne, David
Pettis, William Stark and Harry Tempest.
I. "Units" shall mean limited partnership units in the
Investment Partnerships presently held or hereafter acquired
by the Partnership or any Affiliate of the Partnership.
SECOND: The Partnership agrees that, in the event it or any
Affiliate of the Partnership receives a Deficit Capital Account
3
Distribution, it will, as promptly as practical following receipt
thereof (but in no event later than 30 days following the making of
the distribution), pay to Larson, or cause such Affiliate to pay to
Larson, an amount equal to the product of the Deficit Capital
Account Distribution and the Larson Percentage.
THIRD: A. Larson and the Larson Trust hereby assign to the
Partnership all amounts hereafter payable to Larson and the Larson
Trust pursuant to the provisions of Sections 5.1 and 5.2 of the
Larson Employment Agreement and the Partnership agrees to assume
all of the obligations of Larson and the Larson Trust under the
Larson Employment Agreement related to the payment of the foregoing
amounts.
B. Larson and the Larson Trust agree not to amend the
provisions of the Larson Employment Agreement without the prior
written consent of the Partnership.
FOURTH: A. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective heirs,
administrators, successors and assigns.
B. All communications hereunder shall be in writing and shall
be sent by registered or certified mail, return receipt requested,
by hand delivery, by facsimile or by overnight courier service,
addressed to the parties hereto at their addresses set forth below,
or such other addresses as they may designate by like notice:
4
(1) To Larson and the Larson Trust:
Janet E. Larson
92 Selby Lane
Atherton, California 94025
with a copy to:
Wilson, Sonsini, Goodrich & Rosati
650 Page Mill Road
Palo Alto, California 94306
Attention: Francis S. Currie, Esq.
Facsimile No.: (415) 493-6811
(2) To the Partnership:
100 Jericho Quadrangle
Suite 214
Jericho, New York 11753
Attention: Michael L. Ashner, Esq.
Facsimile No.: (516) 433-277
with a copy to:
Rosenman & Colin
575 Madison Avenue
New York, New York 10022
Attention: Mark I. Fisher, Esq.
Facsimile No.: (212) 940-7079
C. This Agreement may be executed in any number of counter-
parts, each of which shall be deemed to be an original but all of
which together shall constitute one agreement.
D. This Agreement constitutes the entire understanding
between the parties hereto and no waiver or modification of the
terms hereof shall be valid unless in writing signed by the party
to be charged and only to the extent therein set forth.
E. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York applicable to
5
contracts made and to be performed in that state, without regard to
conflict of law principles.
IN WITNESS WHEREOF, this Agreement has been executed as of the
1st day of December, 1994.
DEFOREST VENTURES I L.P.
By: DeForest Capital I Corporation,
General Partner
By:
-------------------------
Michael L. Ashner,
President
------------------------------
Janet E. Larson
------------------------------
Janet E. Larson, Trustee
Larson Family Revocable Trust
ACKNOWLEDGED AND APPROVED:
The undersigned hereby acknowledge
and approve the assignment and
assumption of rights and obligations
under the Larson Employment Agreement
provided for in Article THIRD of
this Agreement:
Portfolio Realty Associates, L.P.
By: Portfolio Associates, Inc.
By:
------------------------------
Jarold A. Evans,
Authorized Officer
FOX CAPITAL MANAGEMENT CORPORATION
By:
-------------------------------
6
Exhibit (g)(i)
CENTURY PROPERTIES FUND XII
(A Limited Partnership)
NOTE 2 TO
FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
2. TRANSACTIONS WITH THE GENERAL PARTNERS AND AFFILIATES
In accordance with the Partnership Agreement, the Partnership may be
charged by the general partners and affiliates for services provided to the
Partnership. From March 1988 to December 1992 such amounts were assigned
pursuant to a services agreement by the general partners and affiliates to
Metric Realty Services, L.P. ("MRS"), which performed partnership management and
other services for the Partnership.
On January 1, 1993, Metric Management, Inc. ("MMI"), successor to MRS, a
company which is not affiliated with the general partners, commenced providing
certain property and portfolio management services to the Partnership under a
new services agreement. As provided in the new services agreement effective
January 1, 1993, no reimbursements were made to the general partner and
affiliates after December 31, 1992. Subsequent to December 31, 1992,
reimbursements were made to MMI. On December 16, 1993, the services agreement
with MMI was modified and, as a result thereof, MGP began directly providing
cash management and other Partnership services on various dates commencing
December 23, 1993. On March 1, 1994, NPI Management commenced providing certain
property management services. Related party expenses for the years ended
December 31, 1994, 1993 and 1992 were as follows:
1994 1993 1992
---- ---- ----
Property management fees $ 20,000 $ - $155,000
Reimbursement of Expenses:
Partnership accounting and
investor services 132,000 - 166,000
Professional services 12,000 - -
-------- -------- --------
Total $164,000 $ - $321,000
======== ======== ========
Property management fees are included in operating expenses. Reimbursed
expenses are primarily included in general and administrative expenses.
In accordance with the Partnership Agreement, the general partners were also
allocated their continuing interest representing a one percent share in the
Partnership's income before gain on property dispositions, taxable income and
cash distributions and a ten percent share in the Partnership's net loss (loss
before gain on property dispositions) and taxable loss. Gain from sale of
Partnership properties is allocated first to the general partners to the extent
of the deficit in their capital accounts.
Exhibit (g)(ii)
CENTURY PROPERTIES FUND XII
NOTE 2 TO
NOTES TO FINANCIAL STATEMENTS
FORM 10-Q - MARCH 31, 1995
2. Transactions with Related Parties
(a) An affiliate of NPI, Inc. received reimbursement of administrative
expenses amounting to $36,000 and $34,000 during the three months ended March
31, 1995 and 1994, respectively. These reimbursements are included in general
and administrative expenses.
(b) An affiliate of NPI, Inc. is entitled to receive a management fee equal
to 5% of the annual gross receipts from certain properties it manages. For the
three months ended March 31, 1995 and 1994, affiliates of NPI, Inc. received
$6,000 and $2,000, respectively. These fees are included in operating expenses.
Exhibit (g)(iii)
CENTURY PROPERTIES FUND XII
(A limited partnership)
PART I
Item 1. Business.
On August 10, 1994, NPI, Inc., entered into an agreement with an
affiliate of Apollo Real Estate Advisors, L.P. ("Apollo") to sell to
Apollo up to one-third of the stock of NPI, Inc. In addition, Apollo
obtained general and limited partnership interests in NPI-AP Management,
L.P. ("NPI-AP"). NPI Property Management Corporation ("NPI Management"),
an affiliate of the Managing General Partner, became the managing general
partner of NPI-AP.
On October 12, 1994, NPI, Inc. sold one-third of its stock to
Apollo. Apollo is entitled to designate three of the seven directors of
the Managing General Partner and NPI Equity II. In addition, the approval
of certain major actions on behalf of Registrant requires the affirmative
vote of at least five directors of the Managing General Partner.
On October 12, 1994, affiliates of Apollo acquired (i) one-third of
the stock of the respective general partners of DeForest Ventures I L.P.
("DeForest I") and DeForest Ventures II L.P. and (ii) an additional equity
interest in NPI-AP (bringing its total equity interest in such entity to
one-third). NPI-AP is a limited partner of DeForest I which was formed for
the purpose of making tender offers (the "Tender Offers") for limited
partnership interests in Registrant as well as 11 affiliated limited
partnerships.
