SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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SCHEDULE 13E-3
RULE 13E-3 TRANSACTION STATEMENT
PURSUANT TO SECTION 13(E) OF THE SECURITIES EXCHANGE ACT OF 1934 AND RULE 13E-3
SIERRA PACIFIC DEVELOPMENT FUND
A California Limited Partnership
(Name of the Issuer)
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JOHN N. GALARDI
(Name of Person Filing Statement)
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LIMITED PARTNERSHIP UNITS
(Title of Class of Securities)
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N/A
(CUSIP Number of Class of Securities)
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HOWARD F. HART
HUGHES HUBBARD & REED LLP
350 SOUTH GRAND AVENUE, 36TH FLOOR
LOS ANGELES, CALIFORNIA 90071
(213) 613-2800
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(Name, Address and Telephone Number of Person Authorized to Receive Notices
and Communications on Behalf of Person(s) Filing Statement)
This statement is filed in connection with (check the appropriate box):
a. / / The filing of solicitation materials or an information statement
subject to Regulation 14A, Regulation 14C or Rule 13e-3(c) under
the Securities Exchange Act of 1934.
b. / / The filing of a registration statement under the Securities Act
of 1933
c. /X/ A tender offer.
d. / / None of the above.
Check the following box if the soliciting materials or information statement
referred to in checking box (a) are preliminary copies:
<PAGE>
Calculation of Filing Fee
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Transaction Valuation* Amount of Filing Fee
- --------------------------------------------------------------------------------
$1,200,000 $240.00
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* Determined pursuant to Rule 0-11(b)(1). Assumes the purchase of 20,000
Units at $60.00 per Unit.
_
|_| 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 the date of its filing.
Amount Previously Paid: Not applicable
Form or Registration No: Not applicable
Filing Party: Not applicable
Date Filed: Not applicable
<PAGE>
This Rule 13e-3 Transaction Statement (this "Transaction Statement") of
John N. Galardi ("Galardi") relates to an offer by Galardi to purchase any and
all of the outstanding limited partnership units (the "Units") of Sierra Pacific
Development Fund, a California limited partnership (the "Company"), upon the
terms and subject to the conditions set forth in the Offer to Purchase, dated
____________, 1999 (the "Offer to Purchase"), and the related Letter of
Transmittal (which together constitute the "Offer"). This Transaction Statement
is intended to satisfy the reporting requirements of Section 13(e) of the
Securities Exchange Act of 1934, as amended (the "Act"). The information in the
Offer to Purchase and the Letter of Transmittal, copies of which are attached
hereto as Exhibits (d)(1) and (d)(2), respectively, including all annexes,
appendices and exhibits thereto, is hereby expressly incorporated herein by
reference and the responses to each item in this Transaction Statement are
qualified in their entirety by the information contained in the Offer to
Purchase and the Letter of Transmittal.
The cross-reference sheet below is being supplied pursuant to General
Instruction F to Schedule 13e-3 and shows the location in the Schedule 14D-1
Tender Offer Statement (the "Tender Offer Statement") filed by Galardi with the
Securities and Exchange Commission contemporaneously herewith of the information
required to be included in response to the items of this Transaction Statement.
The information in the Tender Offer Statement, a copy of which is attached
hereto as Exhibit (d)(3), including all annexes, appendices and exhibits
thereto, is hereby expressly incorporated herein by reference and the responses
to each item in this Transaction Statement are qualified in their entirety by
the information contained in the Tender Offer Statement.
<PAGE>
CROSS REFERENCE SHEET TO SCHEDULE 14D-1 TENDER OFFER STATEMENT
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ITEM IN SCHEDULE 13E-3 LOCATION IN TENDER OFFER STATEMENT
- ---------------------- ----------------------------------
Item 1(a) - (c) Item 1 of the Tender Offer Statement
Item 1(d) Not included in the Tender Offer Statement
Item 1(e) *
Item 1(f) Item 3 of the Tender Offer Statement and Item 6 of
the Tender Offer Statement
Item 2(a) -(g) Item 2 of the Tender Offer Statement
Item 3(a) - (b) Item 3 of the Tender Offer Statement and Item 6 of
the Tender Offer Statement
Item 4(a) Item 1 of the Tender Offer Statement
Item 4(b) *
Item 5(a) - (g) Item 5 of the Tender Offer Statement
Item 6(a) Item 4(a) of the Tender Offer Statement
Item 6(b) Item 8 of the Tender Offer Statement
Item 6(c) *
Item 6(d) *
Item 7(a) Item 5 of the Tender Offer Statement
Item 7(b) *
Item 7(c) Not included in the Tender Offer Statement
Item 8(a) - (b) Not included in the Tender Offer Statement
Item 8(c) - (d) Item 10(b) of the Tender Offer Statement
Item 8(e) Not included in the Tender Offer Statement
Item 8(f) *
Item 9(a) Item 10(b) of the Tender Offer Statement
<PAGE>
ITEM IN SCHEDULE 13E-3 LOCATION IN TENDER OFFER STATEMENT
- ---------------------- ----------------------------------
Item 9(b) - (c) *
Item 10(a) Item 6 of the Tender Offer Statement
Item 10(b) Items 3 and 6 of the Tender Offer Statement
Item 11 Item 3 of the Tender Offer Statement
Item 12(a) - (b) Item 5 of the Tender Offer Statement
Item 13(a) Item 10(b) of the Tender Offer Statement
Item 13(b) Not included in the Tender Offer Statement
Item 13(c) *
Item 14(a) Not included in the Tender Offer Statement
Item 14(b) *
Item 15(a) - (b) Item 8 of the Tender Offer Statement
Item 16 *
Item 17(a) - (c) *
Item 17(d) Item 11(a) of the Tender Offer Statement
Item 17(e)-(f) *
* The Item is inapplicable or the answer thereto is in the negative.
<PAGE>
RULE 13E-3 TRANSACTION STATEMENT
ITEM 1. ISSUER AND CLASS OF SECURITY SUBJECT TO THE TRANSACTION.
(a) The name of the issuer is Sierra Pacific Development Fund, a
California limited partnership (the "Company"), and the address of its principal
executive offices is 5850 San Felipe, Suite 450, Houston, Texas 77057.
(b) This Schedule relates to the offer by John N. Galardi (the "Bidder")
to purchase any and all of the Company's outstanding Limited Partnership Units
(the "Units"), at $60.00 per Unit, net to the seller in cash, all upon the terms
and subject to the conditions set forth in the Offer to Purchase, dated
_______________, 1999 (the "Offer to Purchase"), and the related Letter of
Transmittal (which together constitute the "Offer"), copies of which are
attached hereto as Exhibits (d)(1) and (d)(2), respectively. As of June 17,
1999, the Company had issued and outstanding 29,354 Units and there were
approximately 1,838 holders of record of the Units.
(c) The information set forth on the cover page and under "Introduction"
and "Special Factors - Price Range of Shares; Distributions; Trading Volume" in
Section 9 of the Offer to Purchase is incorporated herein by reference.
(d) The information set forth under "Special Factors - Purpose of the
Offer" in Section 1 of the Offer to Purchase is incorporated herein by
reference.
(e) Not applicable.
(f) The information set forth under "Special Factors - Past Contacts,
Transactions or Negotiations; Transactions and Agreements Concerning the Units"
and "Special Factors - Interest in Units" in Sections 12 and 13, respectively,
of the Offer to Purchase is incorporated herein by reference.
ITEM 2. IDENTITY AND BACKGROUND.
(a) - (f) The information set forth under "Special Factors - Certain
Information Regarding the Offeror" in Section 10 of the Offer to Purchase is
incorporated herein by reference.
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS.
(a) - (b) The information set forth under "Special Factors - Past
Contracts, Transactions or Negotiations; Transactions and Agreements Concerning
the Units" in Section 12 of the Offer to Purchase is incorporated
herein by reference.
ITEM 4. TERMS OF THE TRANSACTION.
(a) The information set forth on the cover page and under "Introduction"
and "Special Factors - Certain Conditions of the Offer" in Section 8 of the
Offer to Purchase is incorporated herein by reference.
<PAGE>
(b) Not applicable.
ITEM 5. PLANS OR PROPOSALS OF THE ISSUER OR AFFILIATE.
(a) - (g) The information set forth under "Special Factors - Purpose of
the Offer" in Section 1 of the Offer to Purchase is incorporated herein by
reference.
ITEM 6. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a) The information set forth under "Special Factors - Source and Amount
of Funds" in Section 11 of the Offer to Purchase is incorporated herein by
reference.
(b) The information set forth under "Special Factors - Persons Retained;
Fees and Expenses" in Section 15 of the Offer to Purchase is incorporated herein
by reference.
(c) Not applicable.
(d) Not applicable.
ITEM 7. PURPOSE(S), ALTERNATIVES, REASONS AND EFFECTS.
(a) The information set forth under "Special Factors - Purpose of the
Offer" in Section 1 of the Offer to Purchase is incorporated herein by
reference.
(b) Not applicable.
(c) The information set forth under "Special Factors - Purpose of the
Offer" in Section 1 of the Offer to Purchase is incorporated herein by
reference.
(d) The information set forth under "Special Factors - Purpose of the
Offer" and "Special Factors - Certain Federal Income Tax Consequences" in
Sections 1 and 2, respectively, of the Offer to Purchase is incorporated herein
by reference.
ITEM 8. FAIRNESS OF THE TRANSACTION.
(a) - (e) The information set forth under "Special Factors - Fairness of
the Transaction; Reports, Opinions, Appraisals and Certain Negotiations; No
Approvals Required; No Appraisal Rights" and "Special Factors - Price Range of
Units; Distributions; Trading Volume" in Sections 3 and 9, respectively, of the
Offer to Purchase is incorporated herein by reference.
(f) Not applicable.
ITEM 9. REPORTS, OPINIONS, APPRAISALS AND CERTAIN NEGOTIATIONS.
(a) The information set forth under "Special Factors - Fairness of the
Transaction; Reports, Opinions, Appraisals and Certain Negotiations; No
Approvals Required; No Appraisal Rights" in Section 3 of the Offer to
Purchase is incorporated herein by reference.
<PAGE>
(b) Not applicable.
(c) Not applicable.
ITEM 10. INTEREST IN SECURITIES OF THE ISSUER.
(a) - (b) The information set forth under "Special Factors - Interest in
Units" in Section 13 of the Offer to Purchase is incorporated herein by
reference.
ITEM 11. CONTRACTS, ARRANGEMENTS OR UNDERSTANDINGS WITH RESPECT TO THE
ISSUER'S SECURITIES.
The information set forth under "Special Factors - Past Contacts,
Transactions or Negotiations; Transactions and Agreements Concerning the Units"
in Section 12 of the Offer to Purchase is incorporated herein by reference.
ITEM 12. PRESENT INTENTION AND RECOMMENDATION OF CERTAIN PERSONS WITH REGARD
TO THE TRANSACTION.
(a) - (b) The information set forth under "Introduction" and "Special
Factors - Purpose of the Offer" in Section 1 of the Offer to Purchase is
incorporated herein by reference.
ITEM 13. OTHER PROVISIONS OF THE TRANSACTION.
(a) - (b) The information set forth under "Special Factors - Fairness of
the Transaction; Reports, Opinions, Appraisals and Certain Negotiations; No
Approvals Required; No Appraisal Rights" in Section 3 of the Offer to Purchase
is incorporated herein by reference
(c) Not applicable.
ITEM 14. FINANCIAL INFORMATION.
(a) The information set forth in the Partnership's Annual Report on Form
10-K for the year ended December 31, 1998; the Partnership's Annual Report on
Form 10-K for the year ended December 31, 1997; and the Partnership's Quarterly
report(s) on Form 10-Q for the quarter(s) ended March 31, 1999 is incorporated
herein by reference.
(b) Not applicable.
ITEM 15. PERSONS AND ASSETS EMPLOYED, RETAINED OR UTILIZED.
(a) - (b) The information set forth under "Introduction" and "Special
Factors - Persons Retained; Fees and Expenses" in Section 15 of the Offer to
Purchase is incorporated herein by reference.
<PAGE>
ITEM 16. ADDITIONAL INFORMATION.
Not applicable.
ITEM 17. MATERIAL TO BE FILED AS EXHIBITS.
(a) Not applicable.
(b) Not applicable.
(c) Not applicable.
(d)(1) Form of Offer to Purchase, dated ___________, 1999.
(d)(2) Form of Letter of Transmittal with Substitute Form W-9.
(d)(3) Instructions for the Requester of Form W-9.
(d)(4) Tender Offer Statement on Schedule 14D-1, dated ___________, 1999.
(e) Not applicable.
(f) Not applicable.
<PAGE>
SIGNATURE
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.
JOHN N. GALARDI
By: /S/ JOHN N. GALARDI
---------------------------------
Name: John N. Galardi
Dated: _____________, 1999
<PAGE>
INDEX TO EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
- ------ -----------
(d)(1) Form of Offer to Purchase, dated ______________, 1999.
(d)(2) Form of Letter of Transmittal with Substitute Form W-9.
(d)(3) Instructions for the Requester of Form W-9.
(d)(4) Tender Offer Statement on Schedule 14D-1, dated ______________,
1999.
EXHIBIT (d)(1)
SIERRA PACIFIC DEVELOPMENT FUND
A CALIFORNIA LIMITED PARTNERSHIP
OFFER TO PURCHASE FOR CASH
ANY AND ALL LIMITED PARTNERSHIP UNITS
AT $60.00 NET PER UNIT
THE OFFER AND WITHDRAWAL RIGHTS EXPIRE AT 5:00 P.M.,
PACIFIC TIME, ON _________, ___________, 1999, UNLESS THE OFFER IS EXTENDED.
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John N. Galardi (the "Offeror"), an affiliate of the Partnership (as
defined below), is offering to purchase any and all the Limited Partnership
Units ("Units") of Sierra Pacific Development Fund, a California Limited
Partnership (the "Partnership"), at $60.00 per Unit, net to the seller in cash,
on the terms and subject to the conditions set forth herein and in the related
Letter of Transmittal (which together constitute the "Offer").
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THE OFFER IS NOT CONDITIONED ON ANY MINIMUM NUMBER OF SHARES BEING TENDERED.
THE OFFER IS, HOWEVER, SUBJECT TO CERTAIN OTHER CONDITIONS. SEE SECTION 8.
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THIS TRANSACTION HAS NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE FAIRNESS OR
MERITS OF SUCH TRANSACTION NOR UPON THE ACCURACY OR ADEQUACY OF THE
INFORMATION CONTAINED IN THIS DOCUMENT. ANY REPRESENTATION
TO THE CONTRARY IS UNLAWFUL.
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NEITHER THE PARTNERSHIP NOR ITS GENERAL PARTNER OR ANY OF THE GENERAL PARTNER'S
DIRECTORS OR EXECUTIVE OFFICERS MAKES ANY RECOMMENDATION TO ANY LIMITED
PARTNER AS TO WHETHER TO TENDER ANY UNITS. EACH LIMITED PARTNER MUST
MAKE OR HER OWN DECISION AS TO WHETHER TO TENDER UNITS AND, IF SO,
HOW MANY UNITS TO TENDER. NO DIRECTOR OR EXECUTIVE OFFICER OF THE
GENERAL PARTNER OR ANY OF ITS AFFILIATES INTENDS TO
TENDER SHARES PURSUANT TO THE OFFER.
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IMPORTANT FACTORS TO CONSIDER
O THE OFFEROR OWNS 50% OF THE CORPORATION WHICH OWNS THE GENERAL PARTNER OF THE
PARTNERSHIP, AND ACCORDINGLY, THE OFFEROR IS AN AFFILIATE OF THE PARTNERSHIP.
O THE INTEREST OF THE OFFEROR, AN AFFILIATE OF THE PARTNERSHIP, IN PURCHASING
UNITS AT THE LOWEST POSSIBLE PRICE MAY CONFLICT WITH THE INTEREST OF LIMITED
PARTNERS IN OBTAINING A HIGHER PRICE.
O THE OFFEROR HAS NOT HAD AN APPRAISAL OF THE PROPERTY PERFORMED, HAS NO
KNOWLEDGE OF ANY CURRENT APPRAISALS AND HAS NOT FORMED A CONCLUSION AS TO THE
CURRENT NET REALIZABLE VALUE OF THE PROPERTY.
O THE PURCHASE PRICE OF $60.00 PER UNIT IS LESS THAN THE MARKET PRICE PAID FOR
CERTAIN UNITS DURING THE FOURTH QUARTER OF 1998.
O THE OFFEROR'S PURCHASE OF UNITS WILL REDUCE THE NUMBER OF LIMITED PARTNERS
AND THE NUMBER OF UNITS THAT MAY OTHERWISE TRADE, THEREBY POSSIBLY ADVERSELY
AFFECTING THE LIQUIDITY AND MARKET VALUE OF THE REMAINING UNITS HELD BY THE
PUBLIC.
O THE NUMBER OF LIMITED PARTNERS MAY BE REDUCED BELOW 300 BY REASON OF THE
OFFER, WHICH WOULD ALLOW THE TERMINATION OF REGISTRATION OF THE UNITS UNDER
THE SECURITIES AND EXCHANGE ACT OF 1934 (THE "EXCHANGE ACT"), WHICH
TERMINATION WOULD SUBSTANTIALLY REDUCE THE INFORMATION REQUIRED TO BE
FURNISHED BY THE PARTNERSHIP TO HOLDERS OF THE UNITS AND WHICH WOULD MAKE
CERTAIN PROVISIONS OF THE EXCHANGE ACT WITH RESPECT TO "GOING PRIVATE"
TRANSACTIONS NO LONGER APPLICABLE TO THE PARTNERSHIP.
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IMPORTANT
Any Limited Partner desiring to tender all or any portion of his or her Units
should complete and sign the Letter of Transmittal or a photocopy thereof in
accordance with the instructions in the Letter of Transmittal, mail or deliver
it and any other required documents to the Offeror at the Partnership.
---------------
NO PERSON HAS BEEN AUTHORIZED TO MAKE ANY RECOMMENDATION ON BEHALF OF THE
PARTNERSHIP AS TO WHETHER LIMITED PARTNERS SHOULD TENDER UNITS PURSUANT TO THE
OFFER. NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS IN CONNECTION WITH THE OFFER OTHER THAN THOSE CONTAINED HEREIN
OR IN THE LETTER OF TRANSMITTAL. IF GIVEN OR MADE, SUCH RECOMMENDATION AND SUCH
INFORMATION AND REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE PARTNERSHIP.
_____________, 1999
<PAGE>
TABLE OF CONTENTS
PAGE
INTRODUCTION 1
SPECIAL FACTORS 2
1. Purpose of the Offer 2
2. Certain Federal Income Tax Consequences 3
3. Fairness of the Transaction; Reports, Opinions, Appraisals and 4
Certain Negotiations; No Approvals Required; No Appraisal Rights
4. Number of Units; Expiration Date; Extension of Offer 6
5. Procedure for Tendering Units 6
6. Withdrawal Rights 7
7. Payment of Purchase Price 8
8. Certain Conditions of the Offer 9
9. Price Range of Units; Distributions; Trading Volume 11
10. Certain Information Concerning the Offeror 12
11. Source and Amount of Funds 13
12. Past Contracts, Transactions or Negotiations; Transactions and 13
Agreements Concerning the Units
13. Interest in Units 14
14. Extension of Tender Period; Termination; Amendments 14
15. Persons Retained; Fees and Expenses 15
16. Miscellaneous 15
Schedule A: Number of Units Purchase by Affiliates of the Partnership, Range
of Prices Paid and Average Purchase Price
Schedule B: Summary of Certain Financial Information
Schedule C: The Property
<PAGE>
TO THE HOLDERS OF LIMITED PARTNERSHIP UNITS OF
SIERRA PACIFIC DEVELOPMENT FUND,
A CALIFORNIA LIMITED PARTNERSHIP:
INTRODUCTION
John N. Galardi (the "Offeror") is offering to purchase any and all of the
Limited Partnership Units ("Units") of Sierra Pacific Development Fund, a
California Limited Partnership (the "Partnership"), at $60.00 per Unit (the
"Purchase Price"), net to the seller in cash, on the terms and subject to the
conditions set forth herein and in the related Letter of Transmittal (which
together constitute the "Offer"). The Offeror is the owner of 50% of the
outstanding capital and voting stock of CGS Real Estate Company, Inc., of which
S-P Properties, Inc., the General Partner of the Partnership, is a wholly-owned
subsidiary. Accordingly, the Offeror is an affiliate of the Partnership. The
address of the principal executive offices of the Partnership is 5850 San
Felipe, Suite 450, Houston, Texas 77057, and its telephone number is (713)
706-6271.
THE OFFER IS NOT CONDITIONED ON ANY MINIMUM NUMBER OF UNITS BEING
TENDERED. THE OFFER IS, HOWEVER, SUBJECT TO CERTAIN OTHER CONDITIONS. SEE
SECTION 8.
Tendering Limited Partners will not be obligated to pay brokerage
commissions, solicitation fees, transfer fees or transfer taxes on the purchase
of Units by the Offeror. HOWEVER, ANY TENDERING LIMITED PARTNER WHO FAILS TO
COMPLETE AND SIGN THE SUBSTITUTE FORM W-9 THAT IS INCLUDED IN THE LETTER OF
TRANSMITTAL MAY BE SUBJECT TO A REQUIRED FEDERAL INCOME TAX BACKUP WITHHOLDING
OF 31% OF THE GROSS PAYMENTS PAYABLE TO SUCH LIMITED PARTNER PURSUANT TO THE
OFFER.
NEITHER THE PARTNERSHIP NOR ITS GENERAL PARTNER NOR ANY OF THE GENERAL
PARTNER'S DIRECTORS OR EXECUTIVE OFFICERS MAKES ANY RECOMMENDATION TO ANY
LIMITED PARTNER AS TO WHETHER TO TENDER ANY UNITS. EACH LIMITED PARTNER MUST
MAKE HIS OR HER OWN DECISION AS TO WHETHER TO TENDER UNITS AND, IF SO, HOW MANY
UNITS TO TENDER. THE OFFEROR HAS BEEN ADVISED THAT NO DIRECTOR OR EXECUTIVE
OFFICER OF THE GENERAL PARTNER OR ANY OF ITS AFFILIATES INTENDS TO TENDER UNITS
PURSUANT TO THE OFFER.
As of June 17, 1999, the Partnership had issued and outstanding 29,354
Units. As of June 17, 1999, there were approximately 1,838 Limited Partners. The
Units are not currently registered for trading on any exchange.
<PAGE>
SPECIAL FACTORS
1. PURPOSE OF THE OFFER.
The Offeror, an affiliate of the Partnership, is making the Offer because
it believes that the purchase of the Units at this time pursuant to the Offer is
economically attractive to the Offeror, and at the same time Limited Partners
who require or desire liquidity are being afforded the opportunity to receive
cash for their Units. Each Limited Partner has the opportunity to make an
individual decision on whether or not to tender Units pursuant to the Offer.
The desire of the Offeror to purchase Units at a price he deems attractive
may be deemed to conflict with the desire of Limited Partners to realize a
higher value for their Units. Accordingly, the interests of the Offeror, an
affiliate of the Partnership, may be deemed to be in conflict with the interests
of the Limited Partners. However, neither the Offeror nor the Partnership is
making any recommendation to Limited Partners to tender Units or any
representation to Limited Partners with respect to the adequacy or fairness of
the price of $60.00 per Unit.
Following the consummation of the Offer, except as discussed below, it is
expected that the business and operations of the Partnership will be continued
by the Partnership substantially as they are currently being conducted. The
Partnership has informed the Offeror that, except as discussed below, it has no
plans or proposals which relate to or would result in: (a) the acquisition by
any person of additional securities of the Partnership or the disposition of
securities of the Partnership; (b) an extraordinary transaction, such as a
merger, reorganization or liquidation, involving the Partnership; (c) a sale or
transfer of a material amount of assets of the Partnership; (d) any change in
the present management of the Partnership; (e) any material change in the
present distribution policy or capitalization or indebtedness of the
Partnership; or (f) any other material change in the Partnership's structure or
business. Except as discussed below, the Offeror has no plans or proposals which
relate to or would result in: (a) the acquisition by any person of additional
securities of the Partnership or the disposition of securities of the
Partnership; (b) an extraordinary transaction, such as a merger, reorganization
or liquidation, involving the Partnership; (c) a sale or transfer of a material
amount of assets of the Partnership; (d) any change in the present management of
the Partnership; (e) any material change in the present distribution policy or
capitalization or indebtedness of the Partnership; or (f) any other material
change in the Partnership's structure or business. An affiliate of the Offeror
(and the Partnership) is considering an initial public offering of the
affiliate's securities, and the affiliate may wish to acquire all or part of the
Partnership and/or all or part of its assets, subsequent to the affiliate's
initial public offering. However, there can be no assurance that any such
initial public offer will occur and there can be no assurance that such
affiliate will attempt to acquire any portion of the Partnership or its assets.
Additionally, the Partnership is considering other possible sales or
dispositions of the Partnership's properties.
The Offeror's purchase of Units pursuant to the Offer will reduce the
number of Limited Partners and the number of Units that might otherwise trade,
<PAGE>
and depending on the number of Units so purchased, could adversely affect the
liquidity and market value of the remaining Units held by the public, although
there is currently no established trading market for the Units.
The Units are currently registered under the Securities Exchange Act of
1934, as amended (the "Exchange Act"). Registration of the Units under the
Exchange Act may be terminated upon application of the Partnership to the
Securities and Exchange Commission (the "Commission") if the Units are held by
fewer than 300 Limited Partners. It is possible that the number of Limited
Partners will be reduced below 300 by reason of the Offer and termination of
registration of the Units under the Exchange Act would substantially reduce the
information required to be furnished by the Partnership to holders of the Units
and would make certain provisions of the Exchange Act, such as the requirements
of Rule 13e-3 thereunder with respect to "going private" transactions, no longer
applicable in respect of the Partnership.
The Partnership has paid no dividends with respect to the Units since
January 1, 1994, and there are currently no plans to pay any dividends with
respect to the Units. Neither the Partnership nor the Offeror has made any
public offering of Units since January 1, 1996, nor has either the Partnership
or the Offeror purchased any Units since January 1, 1997, except for 2,300 Units
purchased by the Offeror for $27.50 per Unit pursuant to an Offer to Purchase
dated October 17, 1997.
Following the expiration of the Offer, the Offeror may, in its sole
discretion, determine to purchase any remaining Units through privately
negotiated transactions, open market purchases or otherwise, on such terms and
at such prices as the Offeror may determine from time to time, the terms of
which purchases or offers could differ from those of the Offer, except that the
Offeror will not make any such purchases of Units until the expiration of at
least ten business days after the termination of the Offer. Any possible future
purchases of Units by the Offeror will depend on many factors.
Purchases of Units by the Offeror will, in addition to the effects
described above, have the effect of increasing the Offeror's interest in the
Partnership's net book value and net earnings.
2. CERTAIN FEDERAL INCOME TAX CONSEQUENCES.
The sale of Units by a Limited Partner pursuant to the Offer will be
treated for federal income tax purposes as a taxable sale of such tendered
Units. However, the specific federal income tax consequences to a Limited
Partner resulting from a sale of Units will depend on a number of factors
related to such Limited Partner's individual tax situation, including such
Limited Partner's adjusted basis in his or her Units, whether such Limited
Partner is subject to the limitation on utilization of "passive activity
losses," whether such Limited Partner has suspended "passive activity losses"
attributable to his or her ownership of Units, whether such Limited Partner
disposes of all of his or her Units pursuant to the Offer (which would generally
allow such Limited Partner to utilize in the year of sale any suspended "passive
activity losses" attributable to his or her ownership of Units) and whether such
Limited Partner would be able to utilize currently any capital losses resulting
from the sale of such Units pursuant to the Offer. The Company expects that a
Limited Partner who acquired his or her Units in the original offering and who
sells Units pursuant to the Offer will generally recognize an ordinary loss of
<PAGE>
$2.32 per Unit attributable to Partnership operations for 1999 through the
estimated date of sale and a capital gain attributable to the sale of his or her
Units equal to the sum of (i) approximately $12.41 per Unit and (ii) such
Limited Partner's distributive share per Unit of syndication expenses of the
Partnership (generally costs incurred by Partnership's in connection with the
sale of Units in the original offering). Although the Partnership was unable to
claim syndication expenses as a deductible expense for federal income tax
purposes, each Limited Partner who acquired his or her Units in the original
offering continues to have his or her share of such expenses reflected in the
adjusted basis of his or her Units. The federal income tax impact could be
significantly different, however, for a Limited Partner who acquired his or her
Units after the original offering. To the extent that a Limited Partner who is
subject to the "passive activity loss" restrictions has not previously utilized
such losses to offset passive activity income from other sources (and sells all
of his or her Units), such suspended losses will generally become available to
such Limited Partner in the year of sale. Any capital loss recognized by a
Limited Partner from the sale of Units may be applied to offset capital gains
from other sources. In addition, capital losses in excess of capital gains may
be used to offset up to $3,000 of ordinary income in any taxable year ($1,500
for a married individual filing a separate return). Any capital losses that are
not used currently may be carried forward and used in subsequent years (subject
to the same limitations).
THE FOREGOING TAX DISCUSSION IS INTENDED FOR GENERAL INFORMATIONAL
PURPOSES ONLY. THE TAX CONSEQUENCES OF A SALE PURSUANT TO THE OFFER MAY VARY
DEPENDING UPON, AMONG OTHER THINGS, THE PARTICULAR TAX CIRCUMSTANCES OF THE
TENDERING LIMITED PARTNER. NO INFORMATION IS PROVIDED HEREIN AS TO THE STATE,
LOCAL OR FOREIGN TAX CONSEQUENCES OF A SALE OF UNITS PURSUANT TO THE OFFER. EACH
LIMITED PARTNER IS URGED TO CONSULT HIS OR HER OWN TAX ADVISER TO DETERMINE THE
PARTICULAR FEDERAL, STATE, LOCAL AND FOREIGN TAX CONSEQUENCES OF A SALE OF UNITS
PURSUANT TO THE OFFER.
3. FAIRNESS OF THE TRANSACTION; REPORTS, OPINIONS, APPRAISALS AND CERTAIN
NEGOTIATIONS; NO APPROVALS REQUIRED; NO APPRAISAL RIGHTS.
The Offeror reasonably believes that the terms of the Offer are fair to
unaffiliated Limited Partners for the following reasons: (i) the Purchase Price
reflects the most recently reported third party trading price of the Units,<F1>
(ii) the Partnership is not currently making any distributions, and (iii) the
Offer provides a mechanism whereby Limited Partners who desire liquidity are
being afforded the opportunity to receive cash for their Units. The price of
$60.00 per Unit was determined by the Offeror as the price which he believed
represented an attractive price for him economically. In determining this price,
he considered the following factors:
- ------------------------
<F1>
Determined on the basis of the trades reported in THE PARTNERSHIP SPECTRUM, as
discussed in more detail in Section 9 below.
<PAGE>
(a) that there is not a liquid market for the Units;
(b) that the Offeror may have to hold the Units for a lengthy period of
time;
(c) that the Partnership is not currently making any distributions and
there is no assurance that the Partnership will resume making any distributions;
and
(d) the Offeror's personal expectations that the value of the
Partnership's property will increase in the future.
The Offeror did not obtain any appraisals or valuations in connection with
his determination of the Purchase Price.
Although the Purchase Price is less than the prices paid by an affiliate
for certain Units during the fourth quarter of 1998, as set forth in Schedule A
hereof, the Offeror believes that the Purchase Price is fair. The Offeror has
not had an appraisal of the property performed, has no knowledge of any current
appraisals and has not formed any conclusion as to the current net realizable
value of the property. The Offeror does, however, believe that the price of
$60.00 per Unit represents an attractive investment to him compared to the value
he expects the Units to have in the future. Since January 1, 1996, the Offeror
has not sought or obtained any report, appraisal or opinion with respect to the
value of the Units and neither the Partnership nor is the Offeror aware of any
such report, appraisal or opinion that may have prepared by any other person.
Additionally, neither the Partnership nor is the Offeror aware of any other firm
offers made by any person unaffiliated with the Partnership during the preceding
eighteen months (i) for the merger or consolidation of the Partnership with such
person, (ii) for the sale or other transfer of all or any substantial part of
the assets of the Partnership or (iii) for Units which would enable the holder
of the Units to exercise control of the Partnership.
The Offeror is not aware of any license or regulatory permit that appears
to be material to the Partnership's business that might be adversely affected by
its acquisition of Units as contemplated in the Offer or of any approval or
other action by any government or governmental, administrative or regulatory
authority or agency, domestic or foreign, that would be required for the
Offeror's acquisition or ownership of Units pursuant to the Offer. Should any
such approval or other action be required, the Offeror currently contemplates
that it will seek such approval or other action.
There is no vote of Limited Partners required in connection with the Offer
and there are no appraisal rights available to Limited Partners in connection
with the Offer. The General Partner of the Partnership has informed the Offeror
that the Partnership has not retained, and does not intend to retain, an
unaffiliated representative to act solely on behalf of unaffiliated Limited
Partners or to prepare a report or an opinion with respect to the fairness of
the Offer.
Certain historical financial information regarding the Partnership and
certain information regarding its property is set forth on Scheduled B and C
hereto. This information has been derived from publicly available reports of the
Partnership filed with the Securities and Exchange Commission.
<PAGE>
The scheduled termination date for the Partnership is December 31, 2030,
although it was initially expected to terminate upon the sale of all of its
properties, and those sales were expected to commence after approximately five
years. The Offeror understands that the General Partner, however, has elected
not to sell the remaining property at this time because it does not believe that
the value it could obtain for the property at this time is attractive and has
not determined when it may do so. Limited Partners have the right under the
Partnership's partnership agreement to remove the General Partner by a majority
vote.
4. NUMBER OF UNITS; EXPIRATION DATE; EXTENSION OF THE OFFER.
On the terms and subject to the conditions described herein and in the
Letter of Transmittal, the Offeror will purchase any and all Units that are
validly tendered on or prior to the Expiration Date (and not properly withdrawn
in accordance with Section 6) at the Purchase Price. The later of 5:00 p.m.,
Pacific time, on _________, __________, 1999, or the latest time and date to
which the Offer is extended, is referred to herein as the "Expiration Date." The
Offer is not conditioned on any minimum number of Shares being tendered.
If (i) the Offeror increases or decreases the price to be paid for Units
or decreases the number of Units being sought and (ii) the Offer is scheduled to
expire at any time earlier than the expiration of a period ending on the tenth
business day from, and including, the date that notice of such increase or
decrease is first published, sent or given in the manner described in Section
14, the Offer will be extended until the expiration of ten business days from
the date of publication of such notice.
The Offeror also expressly reserves the right, in its sole discretion, at
any time or from time to time, to extend the period of time during which the
Offer is open by giving oral or written notice of such extension to the
Partnership and making a public announcement thereof. See Section 14. There can
be no assurance, however, that the Offeror will exercise its right to extend the
Offer.
For purposes of the Offer, a "business day" means any day other than a
Saturday, Sunday or federal holiday and consists of the time period from 12:01
a.m. through 12:00 midnight, New York City time.
Copies of this Offer to Purchase and the Letter of Transmittal are being
mailed to Limited Partners.
5. PROCEDURE FOR TENDERING UNITS.
PROPER TENDER OF UNITS. To tender Units validly pursuant to the Offer, a
properly completed and duly executed Letter of Transmittal or photocopy thereof,
together with any required signature guarantees and any other documents required
by the Letter of Transmittal, must be received by the Depositary (the
"Depositary") at the address set forth in the Letter of Transmittal.
<PAGE>
FEDERAL BACKUP WITHHOLDING. TO AVOID FEDERAL INCOME TAX BACKUP WITHHOLDING
EQUAL TO 31% OF THE GROSS PAYMENTS MADE PURSUANT TO THE OFFER, EACH TENDERING
LIMITED PARTNER MUST NOTIFY THE OFFEROR OF SUCH LIMITED PARTNER'S CORRECT
TAXPAYER IDENTIFICATION NUMBER AND PROVIDE CERTAIN OTHER INFORMATION BY PROPERLY
COMPLETING THE SUBSTITUTE FORM W-9 INCLUDED IN THE LETTER OF TRANSMITTAL.
FOREIGN LIMITED PARTNERS MAY BE REQUIRED TO SUBMIT A PROPERLY COMPLETED FORM
W-8, CERTIFYING NON-UNITED STATES STATUS, IN ORDER TO AVOID BACKUP WITHHOLDING.
IN ADDITION, FOREIGN STOCKHOLDERS MAY BE SUBJECT TO 30% (OR LOWER TREATY RATE)
WITHHOLDING ON GROSS PAYMENTS RECEIVED PURSUANT TO THE OFFER. FOR A DISCUSSION
OF CERTAIN FEDERAL INCOME TAX CONSEQUENCES TO TENDERING LIMITED PARTNERS, SEE
SECTION 2. EACH LIMITED PARTNER IS URGED TO CONSULT WITH HIS OR HER OWN TAX
ADVISER.
DETERMINATIONS OF VALIDITY. All questions as to the Purchase Price, the
form of documents and the validity, eligibility (including time of receipt) and
acceptance for payment of any tender of Units will be determined by the Offeror,
in its sole discretion, and its determination shall be final and binding. The
Offeror reserves the absolute right to reject any or all tenders of Units that
it determines are not in proper form or the acceptance for payment of or payment
for Units that may, in the opinion of the Offeror's counsel, be unlawful. The
Offeror also reserves the absolute right to waive any defect or irregularity in
any tender of Units. Neither the Offeror, the Partnership, or any other person
will be under any duty to give notice of any defect or irregularity in tenders,
nor shall any of them incur any liability for failure to give any such notice.
RULE 14E-4. It is a violation of Rule 14e-4 promulgated under the Exchange
Act for a person to tender Units for his or her own account unless the person so
tendering (i) has a net long position equal to or greater than the amount of
Units tendered and (ii) will cause such Units to be delivered in accordance with
the terms of the Offer. The tender of Units pursuant to the procedures described
above will constitute the tendering Limited Partner's representation and
warranty that (i) such Limited Partner has a net long position in the Units
being tendered within the meaning of Rule 14e-4 promulgated under the Exchange
Act, and (ii) the tender of such Units complies with Rule 14e-4. The Offeror's
acceptance for payment of Units tendered pursuant to the Offer will constitute a
binding agreement between the tendering Limited Partner and the Offeror on the
terms and subject to the conditions of the Offer.
6. WITHDRAWAL RIGHTS.
Tenders of Units made pursuant to the Offer may be withdrawn at any time
prior to the Expiration Date. Thereafter, such tenders are irrevocable, except
that they may be withdrawn after ___________, 1999, unless theretofore accepted
for payment as provided in this Offer to Purchase. If the Offeror extends the
period of time during which the Offer is open, is delayed in accepting for
payment or paying for Units or is unable to accept for payment or pay for Units
pursuant to the Offer for any reason, then, without prejudice to the Offeror's
rights under the Offer, the Offeror may retain all Units tendered, and such
Units may not be withdrawn except as otherwise provided in this Section 6,
subject to Rule 14e-1(c) under the Exchange Act, which provides that the person
making the tender offer shall either pay the consideration offered, or return
the tendered securities promptly after the termination or withdrawal of the
tender offer.
<PAGE>
To be effective, a written or facsimile transmission notice of withdrawal
must be timely received by the Depositary at its address set forth in the Letter
of Transmittal and must specify the name of the person who tendered the Units to
be withdrawn and the number of Units to be withdrawn. Withdrawals may not be
rescinded, and Units withdrawn will thereafter be deemed not validly tendered
for purposes of the Offer. However, withdrawn Units may be retendered by again
following the procedures described in Section 5 at any time prior to the
Expiration Date.
All questions as to the form and validity (including time of receipt) of
any notice of withdrawal will be determined by the Offeror, in its sole
discretion, which determination shall be final and binding. Neither of the
Offeror, the Partnership, nor any other person will be under any duty to give
notification of any defect or irregularity in any notice of withdrawal or incur
any liability for failure to give any such notification.
7. PAYMENT OF PURCHASE PRICE.
On the terms and subject to the conditions of the Offer (including, if the
Offer is extended or amended, the terms and conditions of any extension or
amendment), the Offeror will accept for payment, and will pay for, Units validly
tendered and not withdrawn in accordance with the Offer, as promptly as
practicable following the Expiration Date. In all cases, payment for Units
purchased pursuant to the Offer will be made only after timely receipt by the
Depositary of a properly completed and duly executed Letter of Transmittal and
any other documents required by the Letter of Transmittal.
For purposes of the Offer, the Offeror shall be deemed to have accepted
for payment (and thereby purchased) tendered Units when, as and if the Offeror
gives oral or written notice to the Partnership of the Offeror's acceptance for
payment of such Units pursuant to the Offer. On the terms and subject to the
conditions of the Offer, payment for Units purchased pursuant to the Offer will
in all cases be made by deposit of the Purchase Price with the Depositary, which
will act as agent for the tendering Limited Partners for the purpose of
receiving payment from the Offeror and transmitting payment to tendering Limited
Partners. Under no circumstances will interest be paid on the Purchase Price by
reason of any delay in making such payment.
If any tendered Units are not accepted for payment pursuant to the terms
and conditions of the Offer, the Letter of Transmittal with respect to such
Units not purchased will be destroyed by the Depositary. If, for any reason
whatsoever, acceptance for payment of, or payment for, any Units tendered
pursuant to the Offer is delayed or the Offeror is unable to accept for payment,
purchase or pay for Units tendered pursuant to the Offer, then, without
prejudice to the Offeror's rights under the Offer (but subject to compliance
with Rule 14e-1(c) under the Exchange Act), the Offeror may retain tendered
Units, subject to any limitations of applicable law, and such Units may not be
withdrawn, except to the extent that the tendering Limited Partners are entitled
to withdrawal rights as described in the Offer.
If, prior to the Expiration Date, the Offeror shall increase the
consideration offered to Limited Partners 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.
<PAGE>
The Offeror reserves the right to transfer or assign, at any time and from
time to time, in whole or in part, to one or more affiliates, the right to
purchase Units tendered pursuant to the Offer, but no such transfer or
assignment will relieve the Offeror of its obligations under the Offer or
prejudice the rights of tendering Limited Partners to receive payments for Units
validly tendered and accepted for payment pursuant to the Offer.
8. CERTAIN CONDITIONS OF THE OFFER.
Notwithstanding any other provisions of the Offer, the Offeror will not be
required to accept for payment or pay for any Units tendered, and may terminate
or amend the Offer or may postpone (subject to the requirements of the Exchange
Act for prompt payment for or return of Units) the acceptance for payment of or
payment for Units tendered, if at the Expiration Date, as it may be extended,
any of the following events shall have occurred (or shall have been determined
by the Offeror in its sole judgment to have occurred) regardless of the
circumstances giving rise thereto (including any action or omission to act by
the Offeror):
(a) there shall have been threatened, instituted or pending any
action or proceeding by any government or governmental, regulatory or
administrative agency or authority or tribunal or any other person,
domestic or foreign, or before any court, authority, agency or tribunal
that (i) challenges or seeks to challenge the acquisition of Units
pursuant to the Offer or otherwise in any manner relates to or affects the
Offer or (ii) in the sole judgment of the Offeror, could materially and
adversely affect the business, condition (financial or other), income,
operations or prospects of the Partnership, or otherwise materially impair
in any way the contemplated future conduct of the business of the
Partnership or materially impair the contemplated benefits of the Offer to
the Offeror;
(b) there shall have been any action threatened, pending or taken,
or approval withheld, withdrawn or abrogated or any statute, rule,
regulation, judgment, order or injunction threatened, proposed, sought,
promulgated, enacted, entered, amended, enforced or deemed to be
applicable to the Offer or the Partnership, by any legislative body,
court, authority, agency or tribunal which, in the Offeror's sole
judgment, would or might directly or indirectly (i) make the acceptance
for payment of, or payment for, some or all of the Units illegal or
otherwise restrict or prohibit consummation of the Offer, (ii) delay or
restrict the ability of the Offeror, or render the Offeror unable, to
accept for payment or pay for some or all of the Units, (iii) imposes or
seeks to impose limitations on the ability of the Offeror to acquire or
hold or to exercise full rights of ownership of the Units, (iv) materially
impair the contemplated benefits of the Offer to the Offeror or (v)
materially affect the business, condition (financial or other), income,
operations or prospects of the Partnership, or otherwise materially impair
in any way the contemplated future conduct of the business of the
Partnership;
(c) it shall have been publicly disclosed or the Offeror shall have
learned that any person or "group" (within the meaning of Section 13(d)(3)
<PAGE>
of the Exchange Act) has acquired or proposes to acquire beneficial
ownership of more than 5% of the outstanding Units;
(d) there shall have occurred (i) any general suspension of trading
in, or limitation on prices for, securities on any national securities
exchange or in the over-the-counter market, (ii) any significant decline
in the general level of market prices of equity securities in the United
States or abroad, (iii) any change in the general political, market,
economic or financial condition in the United States or abroad that could
have a material adverse effect on the Partnership's business, condition
(financial or other), income, operations or prospects, (iv) the
declaration of a banking moratorium or any suspension of payments in
respect of banks in the United States or any limitation on, or any event
which, in the Offeror's sole judgment, might affect, the extension of
credit by lending institutions in the United States, (v) the commencement
of a war, armed hostilities or other international or national crisis
directly or indirectly involving the United States or (vi) in the case of
any of the foregoing existing at the time of the commencement of the
Offer, in the Offeror's sole judgment, a material acceleration or
worsening thereof;
(e) a tender or exchange offer with respect to some or all of the
Units (other than the Offer) or a merger, acquisition or other business
combination proposal for the Partnership, shall have been proposed,
announced or made;
(f) there shall have occurred any event or events that have
resulted, or may in the sole judgment of the Offeror result, in an actual
or threatened change in the business, condition (financial or other),
income, operations, stock ownership or prospects of the Partnership; or
materially impair the contemplated benefits of the Offer;
(g) there shall have occurred any decline in the S&P Composite 500
Stock Index by an amount in excess of 15% measured from the close of
business on ___________, 1999; or
(h) the Offeror shall not have received the approval of the
Partnership to the assignment to the Offeror of the Units tendered
pursuant to the Offer;
and, in the reasonable judgment of the Offeror, such event or events make it
undesirable or inadvisable to proceed with the Offer or with such acceptance for
payment or payment.
Any of the foregoing conditions may be waived by the Offeror, in whole or
in part, at any time and from time to time in its sole discretion. The failure
by the Offeror at any time to exercise any of the foregoing rights shall not be
deemed a waiver of any such right and each such right shall be deemed an ongoing
right which may be asserted at any time and from time to time. Any determination
by the Offeror concerning the events described above will be final and binding
on all parties.
<PAGE>
9. PRICE RANGE OF UNITS; DISTRIBUTIONS; TRADING VOLUME.
The Units are not listed on any national securities exchange or quoted in
the over-the-counter market, and there is no established public trading market
for the Units. Secondary sales activity for the Units has been extremely limited
and sporadic. The Partnership monitors transfers of the Units because the
admission of the transferee as a substitute limited partner requires the consent
of the General Partner under the Partnership Agreement. However, neither the
Partnership nor the Offeror has information regarding the prices at which all
secondary sales transactions in the Units have been effectuated. Various
organizations offer to purchase and sell limited partnership interests (such as
the Units) in secondary sales transactions. Various publications such as The
Partnership Spectrum summarize and report information (on a monthly, bimonthly
or less frequent basis) regarding secondary sales transactions in limited
partnership interests (including the Units), including the prices at which such
secondary sales transactions are effectuated.
The Offeror has been informed that the Partnership estimates, based solely
on the transfer records of the Partnership, that the number of Units transferred
in sales transactions (I.E., excluding transactions believed to be between
related parties, family members or the same beneficial owner) was as follows:
<TABLE>
<CAPTION>
Number of Total Percentage of Number of
Year Units Transferred Units Outstanding Transactions
---- ----------------- ----------------- ------------
<S> <C> <C> <C>
1997 863 2.94% 89
1998 5,546 18.89% 539
1999 through 6/17 50 0.17% 10
</TABLE>
The information set forth below is extracted from sections of the
January/February 1998, March/April 1998, May/June 1998, July/August 1998,
September/October 1998, November/December 1998, January/February 1999, and
March/April 1999 issues of "The Partnership Spectrum" under the caption
"Secondary Spectrum." The Partnership Spectrum, a periodical published by
Partnership Profiles, Inc., summarizes secondary market prices for public
limited partnerships based on actual transactions during the reporting periods
listed on the tables below. The following secondary-market firms provided high
and low price data to The Partnership Spectrum for some or all of the reporting
periods: American Partnership Board - (800) 736-9797, DCC Securities - (800)
945-0440, Fox & Henry/Secondary Income Funds (800) 578-6289/(630) 325-4445,
Frain Asset Management - (800) 654-6110/(813) 397-2701, MacKenzie-Patterson,
Inc. - (800) 854-8357, National Partnership Exchange - (800) 356-2739/(813)
636-9299, Pacific Partnership Group - (800) 727-7244/(818) 591-3707, Partnership
Marketing Company - (888) 824-8600/(707) 824-8600, A-1 Partnership Service
Network. - (800) 483-0776/(813) 596-9898.
IN EVALUATING WHETHER OR NOT TO TENDER THEIR UNITS IN THE OFFER, LIMITED
PARTNERS MAY WISH TO CONTACT THESE FIRMS OR OTHER FIRMS INVOLVED IN SECONDARY
SALES OF INTERESTS IN LIMITED PARTNERSHIPS.
<PAGE>
The information regarding sale transactions in Units from the Partnership
Spectrum is as follows:
<TABLE>
<CAPTION>
REPORTING PERIOD PER UNIT TRANSACTION PRICE<F2> NO. OF UNITS
---------------- --------------------------- ------------
<S> <C> <C>
January/February 1998 N/A -
March/April 1998 N/A -
May/June 1998 N/A -
July/August 1998 N/A -
September/October 1998 N/A -
November/December 1998 $60.00 18
January/February 1999 N/A -
March/April 1999 N/A -
</TABLE>
The information from The Partnership Spectrum contained above is provided
without verification by the Offeror and is subject to the following
qualifications in The Partnership Spectrum: "Limited partnership investments are
generally illiquid, long-term investments. Sellers of such investments are often
considered distressed for various reasons and find it necessary to accept
discounted sales prices. As a result, the above price information may not
reflect the intrinsic valued of a limited partnership interest. In some cases,
discounts from original purchase prices result from a partnership having already
liquidated, financed or refinanced a portion of its investment portfolio."
Transaction data has been provided by the firms listed above and has not been
verified by The Partnership Spectrum.
10. CERTAIN INFORMATION CONCERNING THE OFFEROR.
John N. Galardi, the Offeror, is the owner of 50% of the outstanding
capital and voting stock and a director of CGS Real Estate Company, Inc., of
which S-P Properties, Inc., the General Partner of the Partnership, is a
wholly-owned subsidiary. The Offeror is the Chairman and founder of Galardi
Group, Inc., a privately-held operation encompassing more than 500 restaurants,
including Wienerschnitzel, the largest privately-held hot dog chain in the
United States. The Offeror's business address is 415 E. Hyman, Suite 203, Aspen,
Colorado 81611. During the past five years, the Offeror has also served on the
- ------------------------
<F2>
The Per Unit Transaction Price reflects the weighted average price of the units
sold in the relevant period.
<PAGE>
board of directors of American Franchise Group located in Fort Lauderdale,
Florida. The Offeror is a citizen of the United States.
During the past five years, the Offeror has not been convicted in a
criminal proceeding (excluding traffic violations or similar misdemeanors), nor
has the Offeror been a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction and as a result of such proceeding
was or is subject to a judgment, decree or final order enjoining future
violations of, or prohibiting or mandating activities subject to, federal or
state securities laws or finding any violation with respect to such laws.
11. SOURCE AND AMOUNT OF FUNDS.
Assuming that the Offeror purchases 10,000 Units pursuant to the Offer at
the Purchase Price, the total amount required by the Offeror to purchase such
Units will be approximately $600,000, exclusive of fees and other expenses. The
source of these funds will be the Offeror's personal funds.
12. PAST CONTRACTS, TRANSACTIONS OR NEGOTIATIONS; TRANSACTIONS AND AGREEMENTS
CONCERNING THE UNITS.
The Offeror has not been a party to any contract, transaction or
negotiation since January 1, 1997 with the Partnership where the aggregate
amount of such transaction was not less than 1% of the Partnership's
consolidated revenues. Except as disclosed herein in connection with the Offer,
the Offeror has not been a party to contacts, negotiations or transactions with
the Partnership concerning a merger, consolidation or acquisition of the
Partnership, a tender offer or acquisition of securities of the Partnership
(other than pursuant to an Offer to Purchase dated October 17, 1997), an
election of a new general partner of the Partnership, or a sale or other
transfer of a material amount of assets of the Partnership. Additionally, the
Offeror is not a party to any contract, arrangement, understanding or
relationship, directly or indirectly, with any other person with respect to any
securities of the Partnership, has not been a party to any contract, transaction
or negotiation with any person with respect to the Units, including any
contract, arrangement, understanding or relationship concerning the transfer or
the voting of any Units, joint ventures, loan or option arrangements, puts or
calls, guaranties of loans, guaranties of loans, guaranties against loss or the
giving or withholding of proxies, consents or authorizations and is not aware of
any contacts or negotiations between the Partnership and any of its affiliates,
or between the Partnership (including its affiliates) and any person not
affiliated with the Partnership concerning a merger, consolidation or
acquisition of the Partnership; a tender offer or acquisition of securities of
the Partnership, an election of a new general partner of the Partnership, or a
sale or other transfer of a material amount of assets of the Partnership.
Schedule A hereto sets forth the number of Units purchased by the Offeror
or other affiliates of the Partnership (including the directors of the General
Partner) since January 1, 1997, the range of prices paid for such Units and the
average purchase price paid for each quarterly period since January 1, 1997.
<PAGE>
13. INTEREST IN UNITS.
The Offeror beneficially owns 2,300 Units, representing 7.8% of the total
outstanding Units as of June 17, 1999. Except as disclosed in Schedule A,
neither the Partnership, the Offeror nor any person affiliated with either the
Partnership or the Offeror has engaged in any transactions with respect to the
Units within the 60 days immediately preceding the date of the Offer.
14. EXTENSION OF TENDER PERIOD; TERMINATION; AMENDMENTS.
The Offeror expressly reserves the right, in its sole discretion and at
any time or from time to time, to extend the period of time during which the
Offer is open by giving oral or written notice of such extension to the
Partnership. There can be no assurance, however, that the Offeror will exercise
its right to extend the Offer. During any such extension, all Units previously
tendered will remain subject to the Offer, except to the extent that such Units
may be withdrawn as set forth in Section 7. The Offeror also expressly reserves
the right, in its sole discretion, (i) to terminate the Offer and not accept for
payment any Units not theretofore accepted for payment or, subject to Rule
14e-1(c) under the Exchange Act, which requires the Offeror either to pay the
consideration offered or to return the Units tendered promptly after the
termination or withdrawal of the Offer, to postpone payment for Units upon the
occurrence of any of the conditions specified in Section 9 hereof by giving oral
or written notice of such termination to the Partnership and making a public
announcement thereof and (ii) at any time or from time to time, to amend the
Offer in any respect. Amendments to the Offer may be effected by public
announcement. Without limiting the manner in which the Offeror may choose to
make public announcement of any termination or amendment, the Offeror shall have
no obligation (except as otherwise required by applicable law) to publish,
advertise or otherwise communicate any such public announcement, other than by
making a release to the Dow Jones News Service, except in the case of an
announcement of an extension of the Offer, in which case the Offeror shall have
no obligation to publish, advertise or otherwise communicate such announcement
other than by issuing a notice of such extension by press release or other
public announcement, which notice shall be issued no later than 9:00 a.m.,
Pacific time, on the next business day after the previously scheduled Expiration
Date. Material changes to information previously provided to Limited Partners in
this Offer or in documents furnished subsequent thereto will be disseminated to
Limited Partners in compliance with Rule 14d-6(d) promulgated under the Exchange
Act.
If the Offeror materially changes the terms of the Offer or the
information concerning the Offer, or if it waives a material condition of the
Offer, the Offeror will extend the Offer to the extent required by Rules
14d-6(d) and Rule 14e-1(a) under the Exchange Act. Those rules require that the
minimum period during which an offer must remain open following material changes
in the terms of the offer or information concerning the offer (other than a
change in price, change in dealer's soliciting fee or change in percentage of
securities sought) will depend on the facts and circumstances, including the
relative materiality of such terms or information. In a published release, the
Commission has stated that in its view, an offer should remain open for a
minimum of five business days from the date that notice of such a material
change is first published, sent or given. The Offer will continue or be extended
for at least ten business days from the time the Offeror publishes, sends or
<PAGE>
gives to holders of Units a notice that it will (a) increase or decrease the
price it will pay for Units or (b) decrease the number of Units it seeks.
15. PERSONS RETAINED; FEES AND EXPENSES.
The Offeror has retained the Depositary to act as the tender agent as in
connection with the Offer. The Depositary will receive reasonable compensation
for its services and will also be reimbursed for certain out-of-pocket expenses.
The Offeror has agreed to indemnify the Depositary against certain liabilities,
including certain liabilities under the federal securities laws, in connection
with the Offer. The Depositary has not been retained to, and will not, make
solicitations or recommendations in connection with the Offer.
The Offeror does not intend to retain the services of any officer,
employee or class of employees of the Partnership in connection with the Offer.
Similarly, the Offeror does not intend to use any corporate asset of the
Partnership in connection with the conduct or consummation of the Offer.
The Offeror will not pay any solicitation fees to any broker, dealer,
bank, trust company or other person for any Units purchased in connection with
the Offer. The Offeror will reimburse such persons for customary handling and
mailing expenses incurred in connection with the Offer.
The Offeror will pay all transfer fees or transfer taxes, if any, payable
on account of the acquisition of the Units by the Offeror pursuant to the Offer.
The expenses incurred, or estimated to be incurred, by the Offeror in
connection with the Offer are set forth below. The Offeror will be responsible
for paying all such expenses.
<TABLE>
<CAPTION>
<S> <C>
Printing and Mailing Fees...................... $ 10,000
Filing Fees.................................... 240
Legal, Accounting and Miscellaneous............ 10,000
------
Total.......................................... $ 20,240
======
</TABLE>
16. MISCELLANEOUS.
The Partnership is subject to the informational requirements of the
Exchange Act and in accordance therewith files reports and other information
with the Commission relating to its business, financial condition and other
matters. The Offeror has filed a Rule 13e-3 Transaction Statement on Schedule
13e-3 and a Transaction Statement on Tender Offer Statement on Schedule 14D-1
with the Commission, which includes certain additional information relating to
the Offer. Such reports, as well as such other material, may be inspected and
copies may be obtained at the Commission's Public Reference Section at Room
<PAGE>
1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and
should also be available for inspection and copying at the regional offices of
the Commission located at 7 World Trade Center, 13th Floor, New York, New York
10048, and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661. Copies of such material may be obtained by mail, upon payment of
the Commission's customary fees, from the Commission's Public Reference Section
at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549.
The Commission maintains a Web site that contains reports, proxy and information
statements and other materials that are filed through the Commission's
Electronic Data Gathering, Analysis, and Retrieval system. This Web site can be
accessed at http://www.sec.gov. The Offeror's Schedule 13e-3 and Schedule 14D-1
may not be available at the Commission's regional offices.
The Offer is being made to all Limited Partners. The Offeror is not aware
of any state where the making of the Offer is prohibited by administrative or
judicial action pursuant to a valid state statute. If the Offeror becomes aware
of any valid state statute prohibiting the making of the Offer, the Offeror will
make a good faith effort to comply with such statute. If, after such good faith
effort, the Offeror cannot comply with such statute, the Offer will not be made
to, nor will tenders be accepted from or on behalf of, holders of Units in such
state.
__________, 1999 JOHN N. GALARDI
<PAGE>
SCHEDULE A
----------
<TABLE>
<CAPTION>
Period Number of Units Purchased Range of Prices Average
by Affiliates of the Paid Purchase
Partnership Price
<S> <C> <C> <C>
1/1/97 to 3/31/97 54 $20.00 $20.00
4/1/97 to 6/30/97 50 $20.00 $20.00
7/1/97 to 9/30/97 14 $20.00 $20.00
10/1/97 to 12/31/97 340 $25.00 $25.00
1/1/98 to 3/31/98 281 $25.00 to 40.00 $27.22
4/1/98 to 6/30/98 85 $27.50 $27.50
7/1/98 to 9/30/98 1,268 $27.50 to $60.00 $43.75
10/1/98 to 12/31/98 597 $27.50 to $95.00 $57.36
1/1/99 to 3/31/99 18 $60.00 $60.00
4/1/99 to present 4 $27.50 $27.50
</TABLE>
<PAGE>
SCHEDULE B
----------
SUMMARY OF CERTAIN FINANCIAL INFORMATION
The following sets forth certain summarized financial information for the
Partnership. This information should be read in conjunction with the
Partnership's annual, quarterly reports and other filed with the Securities and
Exchange Commission.
<TABLE>
<CAPTION>
OPERATING DATA:
For the Three Months
For the Year Ended December 31, Ended March 31,
------------------------------- -----------------------
1998 1997 1996 1999 1998
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Revenues $919,614 $757,755 $755,644 $214,772 $203,881
Net Income (loss) (81,827) (287,313) (301,960) (34,035) (47,577)
Net Income (loss)
per Unit $(2.79) $(9.79) $(10.29) $(1.16) $(1.62)
Cash distributions 0 0 0 0 0
</TABLE>
<TABLE>
<CAPTION>
BALANCE SHEET DATA:
As of December 31, As of March 31,
--------------------- ---------------------
1998 1997 1999
---- ---- ----
<S> <C> <C> <C>
Cash and cash
equivalents $ 83,408 $ 87,192 $ 84,538
Total assets 3,267,524 3,436,450 3,276,788
</TABLE>
<PAGE>
SCHEDULE C
----------
THE PROPERTY
DESCRIPTION OF THE PROPERTY
- ---------------------------
The Partnership owns, in fee simple, a 90.67% interest in Sierra Creekside, a
commercial office building located in San Ramon, California. The building
consists of 47,800 rentable square feet and was 96% occupied at December 31,
1998. The average effective annual rent per square foot at December 31, 1998 was
$18.57.
The Property is encumbered by a mortgage lien in favor of Home Federal Savings
of San Francisco with a principal balance of $1,720,324 at December 31, 1998.
The mortgage bears interest at 3.5% above the 11th District Cost of Funds Index
with a minimum of 9% and a maximum of 14% (9% at December 31, 1996). The loan
term has a term of 120 months with a maturity date of July 1, 2005. Payments are
amortized over a 240 month period with a remaining principal balance of
$1,316,055 due at maturity assuming no payment has been made on principal in
advance of its due date. The note is subject to prepayment penalties of 1% to 3%
if more than 20% of the outstanding balance is prepaid during the first four
calendar years of the loan.
The real estate tax obligation for 1998 was approximately 2% of the assessed
value, or $____________.
SUMMARY OF SIGNIFICANT TENANTS/LEASES
- -------------------------------------
Four of the Property's 17 tenants occupy ten percent or more of rentable
space. The principal businesses of these significant tenants are banking,
mortgage administration, insurance and billing/collections services. Details
of the leases are as follows:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------
PERCENT OF
PERCENT OF EFFECTIVE EFFECTIVE GROSS
SQUARE FEET RENTABLE RENT PER RENT PER ANNUAL EXPIRATION
TENANT OCCUPIED SQUARE FEET SQUARE FOOT ANNUM RENT OF LEASE
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
American
Savings Bank 7,189 15% 19.39 $139,401 16% June 2002
- -----------------------------------------------------------------------------------------
Perfect Service
Builders 4,831 10% 22.80 $110,147 13% June 2004
- -----------------------------------------------------------------------------------------
State Farm
Mutual 5,071 11% 14.98 $75,964 9% Sept. 2000
- -----------------------------------------------------------------------------------------
Pen-Cal
Administrators 7,331 15% 16.69 $122,355 14% Jan. 2000
- -----------------------------------------------------------------------------------------
Tenants
Occupying less
than 10% sq ft 21,457 45% 18.83 $404,011 48% Various
- -----------------------------------------------------------------------------------------
Total Rented
Space 45,879 96% 18.57 $851,878 100%
- -----------------------------------------------------------------------------------------
</TABLE>
<PAGE>
SUMMARY OF LEASES BY EXTENSION
- ------------------------------
One of the 17 tenants is on a month to month lease; the other 16 are on leases
scheduled to expire over the next five years as indicated in the table below.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------
YEAR OF EXPIRATION 1999 2000 2001 2002 2003 2004 TOTALS
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Number of Tenants 2 5 4 2 2 1 16
- --------------------------------------------------------------------------------------------
Percent of total 12% 29% 23% 12% 12% 6% 94%
tenants
- --------------------------------------------------------------------------------------------
Total area (sq. 2,364 16,641 8,356 7,738 3,957 4,831 43,887
ft.)
- --------------------------------------------------------------------------------------------
Annual Rent $41,776 $280,939 $162,140 $150,535 $81,559 $110,147 $827,096
- --------------------------------------------------------------------------------------------
Percent gross
annual rent 5% 33% 19% 18% 10% 13% 98%
- --------------------------------------------------------------------------------------------
</TABLE>
EXHIBIT (d)(2)
LETTER OF TRANSMITTAL
TO PURCHASE LIMITED PARTNERSHIP UNITS
OF
SIERRA PACIFIC DEVELOPMENT FUND
A CALIFORNIA LIMITED PARTNERSHIP
TENDERED PURSUANT TO THE OFFER TO PURCHASE
DATED _____________, 1999
OF JOHN N. GALARDI
==============================================================================
| DESCRIPTION OF LIMITED PARTNERSHIP UNITS ("UNITS") TENDERED |
| |
| NAME(S) AND ADDRESS(ES) OF UNITS TENDERED |
| REGISTERED HOLDER(S) |
| _______________________________________* |
| |
| * Unless otherwise indicated, it will be |
| assumed that all Units held by a |
| TENDERING registered holder are being |
| tendered. See Instruction 2. |
==============================================================================
==============================================================================
| THIS OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., PACIFIC TIME, ON |
| _________, _________, 1999, UNLESS THE OFFER IS EXTENDED. |
==============================================================================
This Letter of Transmittal is to be executed and returned to Gemisys Corporation
(the "Depositary") at one of the following addresses:
<TABLE>
<CAPTION>
BY MAIL OR OVERNIGHT BY HAND: BY FACSIMILE FOR INFORMATION
COURIER
<S> <C> <C> <C>
Gemisys Corporation Gemisys Corporation Gemisys Corporation Gemisys
7103 South Revere Parkway 7103 South Revere Fax: (303) 705-6171 Corporation
Englewood, Colorado 80112 Parkway Attention: Investor Tel: (303)
Attention: Investor Englewood, Colorado Services 705-3261
Services / Sierra Pacific 80112
Development Fund Attention: Investor
Services / Sierra
Pacific Development Fund
</TABLE>
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR
TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE NUMBER OTHER THAN THE ONE LISTED
ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY BEFORE COMPLETING THE
LETTER OF TRANSMITTAL
Ladies and Gentlemen:
The undersigned hereby tenders to John N. Galardi, an individual (the "Bidder"),
the above-described Limited Partnership Units (the "Units") for Sierra Pacific
Development Fund (the "Partnership") pursuant to the Bidder's offer to purchase
at a price per Unit of $60.00, net to the seller in cash, in accordance with the
terms and subject to the conditions set forth in the Offer to Purchase, dated
__________, 1999 (the "Offer to Purchase"), receipt of which is hereby
acknowledged, and in this Letter of Transmittal (which together constitute the
"Offer").
Subject to, and effective upon, acceptance for payment of and payment for the
Units tendered herewith in accordance with the terms and subject to the
conditions of the Offer (including, if the Offer is extended or amended, the
terms and conditions of any such extension or amendment), the undersigned hereby
sells, assigns and transfers to, or upon the order of, the Bidder all right,
title and interest in and to all the Units that are being tendered hereby (and
any and all other Units or other securities issued or issuable in respect
thereof on or after ___________, 1999 (collectively, "Distributions")) and
constitutes and appoints the Depositary the true and lawful agent and
attorney-in-fact of the undersigned with respect to such Units and all
Distributions, with full power of substitution (such power of attorney being
deemed to be an irrevocable power coupled with an interest), to (a) transfer
<PAGE>
ownership of such Units and all Distributions to or upon the order of the
Bidder, (b) present such Units and all Distributions for registration and
transfer on the books of the Partnership and (c) receive all benefits and
otherwise exercise all rights of beneficial ownership of such Units and all
Distributions, all in accordance with the terms of the Offer.
The undersigned hereby represents and warrants that the undersigned (i) has
received and reviewed the Offer to Purchase and (ii) has full power and
authority to tender, sell, assign and transfer the Units tendered hereby and all
Distributions and that, when and to the extent the same are accepted for payment
by the Bidder, the Bidder 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 the same will not be subject to any adverse claims. The
undersigned will, upon request, execute and deliver any additional documents
deemed by the Depositary or the Bidder to be necessary or desirable to complete
the sale, assignment and transfer of the Units tendered hereby and all
Distributions. In addition, the undersigned shall promptly remit and transfer to
the Depositary for the account of the Bidder any and all other Units or other
securities issued to the undersigned on or after _____________, 1999 in respect
of Units tendered hereby, accompanied by appropriate documentation of transfer,
and pending such remittance or appropriate assurance thereof, the Bidder shall
be entitled to all rights and privileges as owner of any such other Units or
other securities and may withhold the entire consideration of deduct from the
consideration the amount of value thereof as determined by the Bidder, in its
sole discretion.
The undersigned (i) has been advised that the Bidder is the owner of 50%
of the outstanding capital and voting stock and a director of CGS Real Estate
Company, Inc., of which S-P Properties, Inc., the General Partner of the
Partnership, is a wholly-owned subsidiary, and that the General Partner of the
Partnership makes no recommendation as to whether or not the undersigned should
tender his or her Units in the Offer and (ii) has made his or her own decision
to tender the Units.
The undersigned understands that, notwithstanding any other provisions of
the Offer and subject to the applicable rules of the Securities and Exchange
Commission, the Bidder will not be required to accept for payment or pay for any
Units tendered, and may terminate or amend the Offer or may postpone the
acceptance for payment of or payment for Units tendered, if at any time on or
after ____________, 1999, and before acceptance for payment of or payment for
any such Units, any of the following events shall have occurred (or shall have
been determined by the Bidder in its sole judgment to have occurred) regardless
of the circumstances giving rise thereto (including any action or omission to
act by the Bidder):
(a) there shall have been threatened, instituted or pending any action or
proceeding by any government or governmental, regulatory or administrative
agency or authority or tribunal or any other person, domestic or foreign, or
before any court, authority, agency or tribunal that (i) challenges or seeks
to challenge the acquisition of Units pursuant to the Offer or otherwise in
any manner relates to or affects the Offer or (ii) in the sole judgment of
the Bidder, could materially and adversely affect the business, condition
(financial or other), income, operations or prospects of the Partnership, or
otherwise materially impair in any way the contemplated future conduct of the
business of the Partnership or materially impair the contemplated benefits of
the Offer to the Bidder;
(b) there shall have been any action threatened, pending or taken, or
approval withheld, withdrawn or abrogated or any statute, rule, regulation,
judgment, order or injunction threatened, proposed, sought, promulgated,
enacted, entered, amended, enforced or deemed to be applicable to the Offer
or the Partnership, by any legislative body, court, authority, agency or
tribunal which, in the Bidder's sole judgment, would or might directly or
indirectly (i) make the acceptance for payment of, or payment for, some or
all of the Units illegal or otherwise restrict or prohibit consummation of
the Offer, (ii) delay or restrict the ability of the Bidder, or render the
Bidder unable, to accept for payment or pay for some or all of the Units,
(iii) imposes or seeks to impose limitations on the ability of the Bidder to
acquire or hold or to exercise full rights of ownership of the Units, (iv)
materially impair the contemplated benefits of the Offer to the Bidder or (v)
materially affect the business, condition (financial or other), income,
operations or prospects of the Partnership, or otherwise materially impair in
any way the contemplated future conduct of the business of the Partnership;
(c) it shall have been publicly disclosed or the Bidder shall have learned
that any person or "group" (within the meaning of Section 13(d)(3) of the
Exchange Act) has acquired or proposes to acquire beneficial ownership of
more than 5% of the outstanding Units;
(d) there shall have occurred (i) any general suspension of trading in, or
limitation on prices for, securities on any national securities exchange or
in the over-the-counter market, (ii) any significant decline in the general
level of market prices of equity securities in the United States or abroad,
(iii) any change in the general political, market, economic or financial
condition in the United States or abroad that could have a material adverse
effect on the Partnership's business, condition (financial or other), income,
<PAGE>
operations or prospects, (iv) the declaration of a banking moratorium or any
suspension of payments in respect of banks in the United States or any
limitation on, or any event which, in the Bidder's sole judgment, might
affect, the extension of credit by lending institutions in the United States,
(v) the commencement of a war, armed hostilities or other international or
national crisis directly or indirectly involving the United States or (vi) in
the case of any of the foregoing existing at the time of the commencement of
the Offer, in the Bidder's sole judgment, a material acceleration or
worsening thereof;
(e) a tender or exchange offer with respect to some or all of the Units
(other than the Offer) or a merger, acquisition or other business combination
proposal for the Partnership, shall have been proposed, announced or made;
(f) there shall have occurred any event or events that have resulted, or
may in the sole judgment of the Bidder result, in an actual or threatened
change in the business, condition (financial or other), income, operations,
stock ownership or prospects of the Partnership; or materially impair the
contemplated benefits of the Offer;
(g) there shall have occurred any decline in the S&P Composite 500 Stock
Index by an amount in excess of 15% measured from the close of business on
____________, 1999; or
(h) the Offeror shall not have received the approval of the Partnership to
the assignment to the Offeror of the Units tendered pursuant to the Offer;
and, in the sole judgment of the Bidder, such event or events make it
undesirable or inadvisable to proceed with the Offer or with such acceptance for
payment or payment. Any of the foregoing conditions may be waived by the Bidder,
in whole or in part, at any time and from time to time in its sole discretion.
The failure by the Bidder at any time to exercise any of the foregoing rights
shall not be deemed a waiver of any such right and each such right shall be
deemed an ongoing right which may be asserted at any time and from time to time.
Any determination by the Bidder concerning the events described above will be
final and binding on all parties.
The undersigned hereby irrevocably appoints John N. Galardi, the attorney and
proxy of the undersigned, with full power of substitution, to vote in such
manner as such attorney and proxy or his substitute shall, in his sole
discretion, deem proper, and otherwise act (including pursuant to written
consent) with respect to all of the Units tendered hereby which have been
accepted for payment by the Company prior to the time of such vote or action
(and any and all non-cash distribution, other Units, securities, issued or
issuable in respect thereof on or after ______________, 1999), which the
undersigned is entitled to vote, at any meeting (whether annual or special and
whether or not an adjourned meeting) of limited partners of the Partnership, or
with respect to which the undersigned is empowered to act in connection with
action by written consent in lieu of any such meeting or otherwise. This proxy
is irrevocable and is grant in consideration of, and is effective upon, the
acceptance for payment of such Units by the Bidder, in accordance with the terms
of the Offer. Such acceptance for payment shall revoke any other proxy granted
by the undersigned at any time with respect to such Units (and any non-cash
distribution, other Units or securities) and no subsequent proxies will be given
(and if given, will be deemed not to be effective) with respect thereto by the
undersigned. The Bidder reserves the right to require that in order for Units to
be properly tendered, immediately upon acceptance of such Units for purchase by
the Bidder, the Bidder is able to exercise full voting rights with respect to
such Units.
All authority herein conferred or agreed to be conferred shall not be affected
by, and shall survive the death or incapacity of the undersigned, and any
obligation of the undersigned hereunder shall be binding upon the heirs,
personal representatives, successors and assigns of the undersigned. Except as
stated in the Offer, this tender is irrevocable.
The undersigned understands that tenders of Units pursuant to any one of the
procedures described in the Offer to Purchase and in the instructions hereto
will constitute the undersigned's acceptance of the terms and conditions of the
Offer, including the undersigned's representation and warranty that (i) the
undersigned has a net long position in the Units being tendered within the
meaning of Rule 14e-4 promulgated under the Securities Exchange Act of 1934, as
amended, and (ii) the tender of such Units complies with Rule 14e-4. The
Bidder's acceptance for payment of Units tendered pursuant to the Offer will
constitute a binding agreement between the undersigned and the Bidder upon the
terms and subject to the conditions of the Offer.
Please issue the payment for the Units in the name(s) of the undersigned.
Similarly, unless otherwise indicated under "Special Delivery Instructions,"
please mail the check for the Purchase Price of any Units purchased to the
undersigned at the address shown below the undersigned's signature(s).
<PAGE>
------------------------------------------------------------------------------
| |
|TENDER OF UNITS IN OFFER |
| |
|The Undersigned tenders Units in the Offer on the terms described above. |
| |
|SIGN HERE IMPORTANT: COMPLETE AND SIGN THE |
| SUBSTITUTE FORM W-9 (SEE INSTRUCTION 8) |
| |
| SIGNATURE(S)________________________________________________________________ |
| |
| |
| SIGNATURE(S)________________________________________________________________ |
| |
| |
| MEDALLION GUARANTEE ________________________________________________________ |
| |
| |
| DATE: ________________________ TELEPHONE NUMBER: (___)_______ |
| |
|(Must be signed by registered holder(s) as name(s) appear(s) under|
|registration above. If signature is by trustees, executors, administrators,|
|guardians, attorneys-in-fact, agent, officers of corporations or others acting|
|in a fiduciary or representative capacity, please provide the following|
|information. See Instruction 3). |
| |
|NAME (S)_____________________________________________________________________ |
| (please print) |
| |
|NAME (S)_____________________________________________________________________ |
| (please print) |
| |
|CAPACITY (FULL TITLE)________________________________________________________ |
| |
| |
|Address______________________________________________________________________ |
| |
|_____________________________________________________________________________ |
| (Include Zip Code) |
| |
|Area Code and Telephone No.__________________________________________________ |
------------------------------------------------------------------------------
------------------------------------------------------------------------------
| SPECIAL MAILING INSTRUCTIONS |
|------------------------------------------------------------------------------|
| |
|To be completed ONLY if payment is to be issued to the registered holder(s)|
|but mailed to OTHER than the address of record. (See Instruction 5). |
|------------------------------------------------------------------------------|
| |
|Mail payment to:_____________________________________________________________ |
|------------------------------------------------------------------------------|
| |
|Name:________________________________________________________________________ |
| (Must be same as registered holder(s)) |
| |
|______________________________________________________________________________|
| |
|Address:______________________________________________________________________|
| |
| ____________________________________________________________________________|
| (Please print) Zip Code |
------------------------------------------------------------------------------
<PAGE>
------------------------------------------------------------------------------
| | PART 1 - PLEASE PROVIDE YOUR | Tax Identification Number |
|SUBSTITUTE | TIN IN THE BOX AT RIGHT AND | (Social Security Number or|
| | CERTIFY BY SIGNING AND | Employer Identification |
|Form W-9 | DATING BELOW. | Number) |
| | | _________________________|
| | | |
| |----------------------------------------------------------|
| | |
|Department of the |PART 2 - Check the box if you are not subject to backup|
|Treasury Internal |withholding because (1) you have not been notified that|
|Revenue Service |you are subject to backup withholding as a result of|
| |failure to report all interest or dividends or (2) the|
| |Internal Revenue Service has notified you that you are no|
| |longer subject to backupwithholding. |_| |
| ----------------------------------------------------------|
| |
|Payer's Request Certification - Under penalties of PART 3 |
|for Taxpayer perjury, I certify that the |
|Identification information provided on this form is Awaiting TIN |_| |
|Number (TIN) true, correct and complete. |
| |
|Signature______________________________________ Date________________________ |
------------------------------------------------------------------------------
NOTE: FAILURE TO COMPLETE AND RETURN THE SUBSTITUTE FORM W-9 MAY RESULT IN
BACKUP WITHHOLDING OF 31% OF ANY CASH PAYMENT MADE TO UNITHOLDERS. PLEASE REVIEW
THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON
SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS. IF THE BOX IN PART 3 OF THE
SUBSTITUTE FORM W-9 IS CHECKED, THE CERTIFICATE BELOW MUST BE COMPLETED.
------------------------------------------------------------------------------
| CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER |
| |
| I certify under penalties of perjury that a taxpayer identification|
|number has not been issued to me, and either (a) I have mailed or delivered an|
|application to receive a taxpayer identification number to the appropriate|
|Internal Revenue Service Center or Social Security Administration Office or|
|(b) I intend to mail or deliver an application in the near future. I|
|understand that if I do not provide a taxpayer identification number by the|
|time of payment, 31% of any cash payment made to me will be withheld, but that|
|such amount will be refunded to me if I then provide a Taxpayer Identification|
|Number within sixty (60) days. |
| |
|Signature______________________________________ Date________________________ |
------------------------------------------------------------------------------
<PAGE>
INSTRUCTIONS
Forming Part of the Terms and Conditions of the Offer
1. DELIVERY OF LETTER OF TRANSMITTAL. A properly completed and duly
executed Letter of Transmittal and any other documents required by this Letter
of Transmittal, must be received by the Depositary at its address set forth
herein on or prior to the First Expiration Date (as defined in the Offer to
Purchase}.
The method of delivery of this Letter of Transmittal and all other
required documents, is at the option and risk of the tendering Unitholder and
the delivery will be deemed made only when actually received by the Depositary.
If delivery is by mail, registered mail with return receipt requested, properly
insured, is recommended. In all cases, sufficient time should be allowed to
assure timely delivery.
No alternative, conditional or contingent tenders will be accepted, and no
fractional Units will be accepted for payment or purchased. All tendering
Unitholders, by execution of this Letter of Transmittal, waive any right to
receive any notice of the acceptance of their Units for payment.
2. PARTIAL TENDERS. If fewer than all the Units held by a Unitholder are
to be tendered, (i) fill in the number of Units which are to be tendered in the
section entitled "Number of Units Tendered" and (ii) the Unitholder must hold at
least five Units after such tender. Accordingly, a Unitholder should not tender
if, as a result of such tender, the tendering holder (other than one
transferring all of his or her Units) will hold less than five Units. All Units
held by a Unitholder will be deemed to have been tendered unless otherwise
indicated.
3. SIGNATURES ON LETTER OF TRANSMITTAL.
(a) If this Letter of Transmittal is signed by the registered holder(s) of
the Units, the signature(s) must correspond exactly with the Unitholder's
registration.
(b) If any of the Units are owned of record by two or more joint owners,
all such owners must sign this Letter of Transmittal.
(c) If any Units are registered in different names, it will be necessary
to complete, sign and submit as many separate Letters of Transmittal as there
are different registrations.
(d) If this Letter of Transmittal is signed by a trustee, executor,
administrator, guardian, attorney-in-fact, officer of a corporation or other
person acting in a fiduciary or representative capacity, such person should so
indicate when signing, and if requested, proper evidence satisfactory to the
Company of such person's authority so to act must be submitted.
4. STOCK TRANSFER TAXES. Except as set forth in this Instruction 4, the
Company will pay or cause to be paid any stock transfer taxes with respect to
the transfer and sale of Units to it or its order pursuant to the Offer. If
payment of the purchase price is to be made to any person other than the
registered holder, the amount of any stock transfer taxes (whether imposed on
the registered holder or such other person) payable on account of the transfer
to such person will be deducted from the purchase price unless satisfactory
evidence of the payment of such taxes or exemption therefrom is submitted.
5. SPECIAL MAILING INSTRUCTIONS. If payment for the Units is to be issued
to the registered holder(s) but mailed to other than the address of record, the
section entitled "Special Mailing Instructions" must be completed.
6. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Requests for assistance
may be directed to, or additional copies of the Offer to Purchase and this
Letter of Transmittal may be obtained from, the Depositary or the Soliciting
Agent at their respective addresses set forth below.
7. IRREGULARITIES. All questions as to the validity, form, eligibility
(including time of receipt) and acceptance of any tender of Units will be
determined by the Company, in its sole discretion, and its determination shall
be final and binding. The Company reserves the absolute right to reject any or
all tenders of any particular Units (i) determined by it not to be in the
appropriate form or (ii) the acceptance for purchase of Units which may, in the
opinion of the Company's counsel, be unlawful.
8. SUBSTITUTE FORM W-9. The tendering Unitholder is required to provide
the Depositary with a correct Taxpayer Identification Number ("TIN") on
Substitute Form W-9 which is provided in the Letter of Transmittal and to
indicate that the Unitholder is not subject to backup withholding by checking
the box in Part 2 of the form. Failure to provide the information on the
Substitute Form W-9 may subject the tendering Unitholder to 31 % federal income
tax withholding on the payment of the purchase price. To prevent backup
<PAGE>
withholding, each tendering Unitholder must provide his or her correct TIN by
completing the Substitute Form W-9, certifying that the TIN provided is correct
and that (i) the Unitholder has not been notified by the Internal Revenue
Service that he or she is subject to backup withholding as a result of failure
to report all interest or dividends or (ii) the Internal Revenue Service has
notified the Unitholder that he or she is no longer subject to backup
withholding, or certify that such Unitholder is exempt from backup withholding.
If the Unitholder does not have a TIN, he or she should consult the Guidelines
for Certification of Taxpayer Identification Number on Substitute Form W-9 for
instructions on applying for a TIN, check the box in Part 3 of the Substitute
Form W-9 and complete the Certificate of Awaiting Taxpayer Identification
Number. If the Unitholder provides his or her TIN to the Depositary within 60
days of the date the Depositary receives the Letter of Transmittal, any amounts
withheld during such 60-day period will be refunded to the Unitholder by the
Depositary.
WHAT TAXPAYER IDENTIFICATION NUMBER TO GIVE THE DEPOSITARY
The Unitholder is required to give the Depositary the social security
number or employer identification number of the record holder of the Units. If
the Units are in more than one name or are not in the name of the actual owner,
consult the Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9 for additional guidelines on which number to report.
Certain Unitholders (including, among others, all corporations and certain
foreign individuals) are not subject to these backup withholding and reporting
requirements. In order for a foreign individual to qualify as an exempt
recipient, that Unitholder must submit a statement, signed under penalties of
perjury, attesting to that individual's exempt status. Such statements can be
obtained from the Depositary. See the Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9 for additional information.
IMPORTANT: THIS LETTER OF TRANSMITTAL. TOGETHER WITH ALL OTHER REQUIRED
DOCUMENTS, MUST BE RECEIVED BY THE DEPOSITARY ON OR PRIOR TO THE EXPIRATION
DATE.
THE DEPOSITARY
GEMISYS CORPORATION
7103 South Revere Parkway
Englewood, Colorado 80112
(303) 705-3261
EXHIBIT (d)(3)
Department of the Treasury Internal Revenue Service
Instructions for the Requester of Form W-9 (Rev. November 1998)
Request for Taxpayer Identification Number and Certification
SECTION REFERENCES ARE TO THE INTERNAL REVENUE CODE UNLESS OTHERWISE NOTED.
These instructions supplement the instructions on the Form W-9 (Rev. December
1996) for the requester.
CHANGE TO NOTE
ELECTRONIC SUBMISSION OF FORMS W-9.
Requesters may establish a system for payees to submit Forms W-9 electronically,
including by fax. A requester is anyone required to file an information return.
A payee is anyone required to provide a taxpayer identification number (TIN) to
the requester. Generally, the electronic system must --
o Ensure the information received is the information sent, and document all
occasions of user access that result in the submission.
o Make it reasonably certain the person accessing the system and submitting the
form is the person identified on Form W-9.
o Provide you with the same information as the paper Form W-9.
o Require as the final entry in the submission an electronic signature by the
payee whose name is on Form W-9 that authenticates and verifies the
submission.
o Be able to supply a hard copy of the electronic Form W-9 if the Internal
Revenue Service requests it.
NOTE: FOR FORMS W-9 THAT ARE NOT REQUIRED TO BE SIGNED, THE ELECTRONIC SYSTEM
NEED NOT PROVIDE FOR AN ELECTRONIC SIGNATURE OR A PERJURY STATEMENT.
Additional requirements may apply. See Announcement 98-27, 1998-15 I.R.B. 30.
INDIVIDUAL TAXPAYER IDENTIFICATION NUMBER (ITIN)
Form W-9 (or an acceptable substitute) is used by persons required to file
information returns with the IRS to get the payee's correct TIN. For
individuals, the TIN is generally a social security number (SSN).
However, in some cases, individuals who become U.S. resident aliens for
tax purposes are not eligible to obtain an SSN. This includes certain resident
aliens who must receive information returns but who cannot obtain an SSN.
These individuals must apply for an ITIN on Form W-7, Application for IRS
Individual Taxpayer Identification Number, unless they have an application
pending for an SSN. Individuals who have an ITIN must provide it on Form W-9.
<PAGE>
SUBSTITUTE FORM W-9
You may develop and use your own Form W-9 (a substitute Form W-9) if its
content is substantially similar to the IRS's official Form W-9 and it satisfies
certain certification requirements.
You may incorporate a substitute Form W-9 into other business forms you
customarily use, such as account signature cards, provided the certifications
that (1) the payee's TIN is correct and (2) the payee is not subject to backup
withholding due to failure to report interest and dividend income, shown on the
official Form W-9, are clearly set forth. You may not:
1. Use a substitute Form W-9 that requires the payee, by signing, to agree
to provisions unrelated to the required certifications: or
2. Imply that a payee may be subject to backup withholding unless the
payee agrees to provisions on the substitute form that are unrelated to the
required certifications.
A substitute Form W-9 that contains a separate signature line just for the
certifications satisfies the requirement that the certifications be clearly set
forth.
If a single signature line is used for the required certifications and
other provisions, the certifications must be highlighted, boxed, printed in
bold-face type, or presented in some other manner that causes the language to
stand out from all other information contained on the substitute form.
Additionally, the following statement must be presented in the same manner as in
the preceding sentence and must appear immediately above the single signature
line: "The Internal Revenue Service does not require your consent to any
provision of this document other than the certifications required to avoid
backup withholding."
If you use a substitute form, the instructions do not have to be furnished
to the payee. The payee only needs to be instructed orally or in writing to
strike out the language of the certification that relates to payee
underreporting, if the payee is subject to backup withholding due to notified
payee underreporting. However, you are encouraged to provide instructions
relevant to the account, especially if the payee requests them.
TIN APPLIED FOR
For interest and dividend payments and certain payments with respect to readily
tradable instruments, If the payee returns a properly completed Form W-9 with
"Applied For" written in Part I (i.e., an "awaiting TIN" certificate), the payee
must give you a TIN within 60 calendar days to avoid backup withholding. You may
use one of the following rules to backup withhold during this 60-day period.
NOTE: THE 60-DAY EXEMPTION FROM BACKUP WITHHOLDING DOES NOT APPLY TO ANY PAYMENT
OTHER THAN INTEREST, DIVIDENDS, AND CERTAIN PAYMENTS MADE WITH RESPECT TO
READILY TRADABLE INSTRUMENTS. THEREFORE, ANY OTHER PAYMENT, SUCH AS NONEMPLOYEE
COMPENSATION, IS SUBJECT TO BACKUP WITHHOLDING EVEN IF THE PAYEE HAS APPLIED FOR
AND IS AWAITING A TIN.
<PAGE>
RESERVE RULE.--If a payee withdraws more than $500 at one time during the 60-day
period, you must backup withhold on any reportable payments made during the
period, unless the payee reserves 31% of all reportable payments made to the
account during the period.
ALTERNATIVE RULE (OPTION 1).--You must backup withhold on any reportable
payments if the payee makes a withdrawal from the account after the close of 7
business days after you receive the awaiting-TIN certificate. Treat as
reportable payments all cash withdrawals in an amount up to the reportable
payments made from the day after you receive the awaiting-TIN certificate to the
day of withdrawal.
ALTERNATIVE RULE (OPTION 2).--You must backup withhold on any reportable
payments made to the payee's account, regardless of whether the payee makes any
withdrawals. Backup withholding under this option must begin no later than 7
business days after you receive the awaiting-TIN certificate.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Even if the payee does not provide TIN in the manner required, you are not
required to backup withhold on any payments you make if the payee is:
1. An organization exempt from tax under section 501(a), an IRA, or a
custodial account under section 403(b)(7), if the account satisfies the
requirements of section 401(f)(2).
2. The United States or any of its agencies or instrumentalities.
3. A state, the District of Columbia, a possession of the United States,
or any of their political subdivisions or instrumentalities.
4. A foreign government or any of its political subdivisions, agencies, or
instrumentalities.
5. An international organization or any of its agencies or
instrumentalities.
OTHER PAYEES THAT MAY BE EXEMPT FROM BACKUP WITHHOLDING INCLUDE:
6. A corporation.
7. A foreign central bank of issue.
8. A dealer in securities or commodities required to register in the
United States, the District of Columbia, or a possession of the United States.
9. A futures commission merchant registered with the Commodity Futures
Trading Commission.
10. A real estate investment trust.
<PAGE>
11. An entity registered at all times during the tax year under the
Investment Company Act of 1940.
12. A common trust fund operated by a bank under section 584(a).
13. A financial institution.
14. A middleman known in the investment community as a nominee or who is
listed in the most recent publication of the American Society of Corporate
Secretaries, Inc., Nominee List.
15. A trust exempt from tax under section 664 or described in section
4947.
INTEREST AND DIVIDEND PAYMENTS.--All listed payees are exempt except the payee
in item (9).
BROKER TRANSACTIONS.--All payees listed in items (1) through (13) are exempt. A
person registered under the Investment Advisors Act of 1940 who regularly acts
as a broker is also exempt.
PAYMENTS REPORTABLE UNDER SECTIONS 6041 AND 6041A.
These payments are generally exempt from backup withholding only if made to
payees listed in items (1) through (7). However, the following payments made to
a corporation and reportable on Form 1099-MISC are not exempt from withholding:
o Medical and health care payments.
o Attorneys' fees.
o Payments for services paid by a Federal executive agency.
GROSS PROCEEDS; ATTORNEYS. Reportable gross proceeds paid to attorneys (under
section 6045(f), even if the attorney is a corporation, are not exempt from
backup withholding.
BARTER EXCHANGE TRANSACTIONS AND PATRONAGE DIVIDENDS.
Only payees listed in items (1) through (5) are exempt from backup withholding
on these payments.
PAYMENTS EXEMPT FROM BACKUP WITHHOLDING
Payments that are not subject to information reporting also are not subject to
backup withholding. For details, see sections 6041, 6041A, 6042, 6044, 6045
6049, 6050A, and 6050N, and their regulations.
DIVIDENDS AND PATRONAGE DIVIDENDS that generally are exempt from backup
withholding include:
o Payments to nonresident aliens subject to withholding under section 1441.
<PAGE>
o Payments to partnerships not engaged in a trade or business in the United
States and that have at least one nonresident alien partner.
o Payments of patronage dividends not paid in money.
o Payments made by certain foreign organizations.
o Section 404(k) payments made by an ESOP.
INTEREST PAYMENTS that generally are exempt from backup withholding include:
o Payments of interest on obligations issued by individuals. However, if you
pay $600 or more of interest in the course of your trade or business to a
payee, you must report the payment. Backup withholding applies to the
reportable payment if the payee has not provided a TIN or has provided an
incorrect TIN.
o Payments of tax-exempt interest (including exempt-interest dividends under
section 852).
o Payments described in section 6049(b)(5) to nonresident aliens.
o Payments on tax-free covenant bonds under section 1451.
o Payments made by certain foreign organizations.
o Mortgage interest paid to you.
OTHER TYPES OF PAYMENTS that generally are exempt from backup withholding
include:
o Wages.
o Distributions from a pension, annuity, profit-sharing or stock bonus plan, or
an IRA.
o Distributions from an owner-employee plan.
o Certain surrenders of life insurance contracts.
o Gambling winnings, if withholding is required under section 3402(q). However,
if withholding is not required under section 3402(q), backup withholding
applies if the payee fails to furnish a TIN.
o Real estate transactions reportable under section 6045(e).
o Canceled debts reportable under section 6050P.
o Distributions from a medical savings account and long-term care benefits.
o Fish purchases for cash reportable under section 6050R.
JOINT FOREIGN PAYEES
If the first payee listed on an account gives you Form W-8, Certificate of
Foreign Status, or a similar statement signed under penalties of perjury, backup
withholding applies unless:
1. Every joint payee provides the statement regarding foreign status; or
2. Any one of the joint payees who has not established foreign status
gives you a TIN.
If any one of the joint payees who has not established foreign status
gives you a TIN, that number is the TIN that must be used for purposes of backup
withholding and information reporting.
<PAGE>
NAMES AND TLNS TO USE FOR INFORMATION REPORTING
Show the full name and address as provided on Form W-9 on the information return
filed with the IRS and on the copy furnished to the payee. If you made payments
to more than one payee or the account is in more than one name, enter on the
first name line ONLY the name of the payee whose TIN is shown on the information
return. Show the names of any other individual payees in the area below the
first name line, if desired.
SOLE PROPRIETORS.--You must show the individual's name on the first name line.
On the second name line, you may enter the business name or "doing business as
(DBA)" if provided. You may not enter only the business name. For the TIN, you
may enter either the individual's SSN or the employer identification number
(EIN) of the business. However, the IRS prefers that you show the SSN.
ADDITIONAL INFORMATION
For more information on backup withholding, get PUB. 1679, A Guide to Backup
Withholding, or PUB. 1281, Backup Withholding on Missing and Incorrect
Names/TINs.
NOTICES FROM THE IRS
The IRS will send you a notice if the payee's name and TIN on the information
return you filed do not match the IRS's records. You may have to send a "B"
notice to the payee to solicit another TIN. See Pubs. 1679 and 1281 for copies
of the two types of "B" notices.
EXHIBIT (d)(4)
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
SIERRA PACIFIC DEVELOPMENT FUND
A California Limited Partnership
(Name of Subject Company)
-------------
JOHN N. GALARDI
(Bidder)
-------------
LIMITED PARTNERSHIP UNITS
(Title of Class of Securities)
-------------
N/A
(CUSIP Number of Class of Securities)
-------------
------------------
----------------
HOWARD F. HART
HUGHES HUBBARD & REED LLP
350 SOUTH GRAND AVENUE, 36TH FLOOR
LOS ANGELES, CALIFORNIA 90071
(213) 613-2800
-------------
(Name, Address and Telephone Number of Person Authorized to Receive
Notices and Communications on Behalf of Bidder)
<PAGE>
Calculation of Filing Fee
- --------------------------------------------------------------------------------
Transaction Valuation* Amount of Filing Fee
- --------------------------------------------------------------------------------
$1,200,000 $240.00
- --------------------------------------------------------------------------------
* Determined pursuant to Rule 0-11(b)(1). Assumes the purchase of 20,000
Units at $60.00 per Unit.
[X] 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 the date of its filing.
Amount Previously Paid: $240.00 paid contemporaneously with this filing.
Form or Registration No: Rule 13e-3 Transaction Statement on Schedule 13E-3
Filing Party: John N. Galardi
Date Filed: ______________, 1999
<PAGE>
SCHEDULE 14D-1 TENDER OFFER STATEMENT
ITEM 1. SECURITY AND SUBJECT COMPANY.
(a) The name of the issuer is Sierra Pacific Development Fund, a
California limited partnership (the "Company"), and the address of its principal
executive offices is 5850 San Felipe, Suite 450, Houston, Texas 77057.
(b) This Schedule relates to the offer by John N. Galardi (the "Bidder")
to purchase any and all of the Company's outstanding Limited Partnership Units
(the "Units"), at $60.00 per Unit, net to the seller in cash, all upon the terms
and subject to the conditions set forth in the Offer to Purchase, dated
______________, 1999 (the "Offer to Purchase"), and the related Letter of
Transmittal (which together constitute the "Offer"), copies of which are
attached hereto as Exhibits (d)(1) and (d)(2), respectively. As of June 17,
1999, the Company had issued and outstanding 29,354 Units and there were
approximately 1838 holders of record of the Units.
(c) The information set forth on the cover page and under "Introduction"
and "Special Factors - Price Range of Shares; Distributions; Trading Volume" in
Section 9 of the Offer to Purchase is incorporated herein by reference.
ITEM 2. IDENTITY AND BACKGROUND.
(a)-(g) The information set forth under "Special Factors - Certain
Information Regarding the Offeror" in Section 10 of the Offer to Purchase is
incorporated herein by reference.
ITEM 3. PAST CONTRACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT
COMPANY.
(a)-(b) The information set forth under "Special Factors - Past Contracts,
Transactions or Negotiations; Transactions and Agreements Concerning the Units"
in Section 12 of the Offer to Purchase is incorporated
herein by reference.
ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a) The information set forth under "Special Factors - Source and Amount
of Funds" in Section 11 of the Offer to Purchase is incorporated herein by
reference.
(b) Not applicable.
(c) Not applicable.
ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDER.
(a)-(g) The information set forth under "Special Factors - Purpose of the
Offer" in Section 1 of the Offer to Purchase is incorporated herein by
reference.
<PAGE>
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
(a)-(b) The information set forth under "Special Factors - Interest in
Units" in Section 13 of the Offer to Purchase is incorporated herein by
reference.
ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO THE SUBJECT COMPANY'S SECURITIES.
The information set forth under "Special Factors - Past Contracts,
Transactions or Negotiations; Transactions and Agreements Concerning the Units"
in Section 12 of the Offer to Purchase is incorporated herein by reference.
ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The information set forth under "Introduction" and "Special Factors
Persons Retained; Fees and Expenses" in Section 15 of the Offer to Purchase is
incorporated herein by reference.
ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS.
Not applicable.
ITEM 10. ADDITIONAL INFORMATION.
(a) The information set forth under "Special Factors - Past Contracts,
Transactions or Negotiations; Transactions and Agreements Concerning the Units"
in Section 12 of the Offer to Purchase is incorporated herein by reference.
(b) The information set forth under "Special Factors - Fairness of the
Transaction; Reports, Opinions, Appraisals and Certain Negotiations; No
Approvals Required; No Appraisal Rights" in Section 3 of the Offer to
Purchase is incorporated herein by reference.
(c) Not applicable.
(d) Not applicable.
(e) Not applicable.
(f) Not applicable.
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS.
(a)(1) Form of Offer to Purchase, dated ______________, 1999.
(a)(2) Form of Letter of Transmittal with Substitute Form W-9.
(a)(3) Instructions for the Requester of Form W-9.
(b) Not applicable.
<PAGE>
(c) Not applicable.
(d) Not applicable.
(e) Not applicable.
(f) Not applicable.
<PAGE>
SIGNATURE
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.
JOHN N. GALARDI
By: /S/ JOHN N. GALARDI
--------------------------------
Name: John N. Galardi
Dated: ______________, 1999
<PAGE>
INDEX TO EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
- ------ -----------
(a)(1) Form of Offer to Purchase, dated ______________, 1999.
(a)(2) Form of Letter of Transmittal with Substitute Form W-9.
(a)(3) Instructions for the Requester of Form W-9.
<PAGE>
EXHIBIT (a)(1)
SIERRA PACIFIC DEVELOPMENT FUND
A CALIFORNIA LIMITED PARTNERSHIP
OFFER TO PURCHASE FOR CASH
ANY AND ALL LIMITED PARTNERSHIP UNITS
AT $60.00 NET PER UNIT
THE OFFER AND WITHDRAWAL RIGHTS EXPIRE AT 5:00 P.M.,
PACIFIC TIME, ON _________, ___________, 1999, UNLESS THE OFFER IS EXTENDED.
---------------
John N. Galardi (the "Offeror"), an affiliate of the Partnership (as
defined below), is offering to purchase any and all the Limited Partnership
Units ("Units") of Sierra Pacific Development Fund, a California Limited
Partnership (the "Partnership"), at $60.00 per Unit, net to the seller in cash,
on the terms and subject to the conditions set forth herein and in the related
Letter of Transmittal (which together constitute the "Offer").
---------------
THE OFFER IS NOT CONDITIONED ON ANY MINIMUM NUMBER OF SHARES BEING TENDERED.
THE OFFER IS, HOWEVER, SUBJECT TO CERTAIN OTHER CONDITIONS. SEE SECTION 8.
---------------
THIS TRANSACTION HAS NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE FAIRNESS OR
MERITS OF SUCH TRANSACTION NOR UPON THE ACCURACY OR ADEQUACY OF THE
INFORMATION CONTAINED IN THIS DOCUMENT. ANY
REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
---------------
NEITHER THE PARTNERSHIP NOR ITS GENERAL PARTNER OR ANY OF THE GENERAL PARTNER'S
DIRECTORS OR EXECUTIVE OFFICERS MAKES ANY RECOMMENDATION TO ANY LIMITED PARTNER
AS TO WHETHER TO TENDER ANY UNITS. EACH LIMITED PARTNER MUST MAKE HIS OR HER OWN
DECISION AS TO WHETHER TO TENDER UNITS AND, IF SO, HOW MANY UNITS TO TENDER.
NO DIRECTOR OR EXECUTIVE OFFICER OF THE GENERAL PARTNER OR ANY OF ITS
AFFILIATES INTENDS TO TENDER SHARES PURSUANT TO THE OFFER.
---------------
IMPORTANT FACTORS TO CONSIDER
O THE OFFEROR OWNS 50% OF THE CORPORATION WHICH OWNS THE GENERAL PARTNER OF THE
PARTNERSHIP, AND ACCORDINGLY, THE OFFEROR IS AN AFFILIATE OF THE PARTNERSHIP.
O THE INTEREST OF THE OFFEROR, AN AFFILIATE OF THE PARTNERSHIP, IN PURCHASING
UNITS AT THE LOWEST POSSIBLE PRICE MAY CONFLICT WITH THE INTEREST OF LIMITED
PARTNERS IN OBTAINING A HIGHER PRICE.
O THE OFFEROR HAS NOT HAD AN APPRAISAL OF THE PROPERTY PERFORMED, HAS NO
KNOWLEDGE OF ANY CURRENT APPRAISALS AND HAS NOT FORMED A CONCLUSION AS TO THE
CURRENT NET REALIZABLE VALUE OF THE PROPERTY.
O THE PURCHASE PRICE OF $60.00 PER UNIT IS LESS THAN THE MARKET PRICE PAID FOR
CERTAIN UNITS DURING THE FOURTH QUARTER OF 1998.
O THE OFFEROR'S PURCHASE OF UNITS WILL REDUCE THE NUMBER OF LIMITED PARTNERS
AND THE NUMBER OF UNITS THAT MAY OTHERWISE TRADE, THEREBY POSSIBLY ADVERSELY
AFFECTING THE LIQUIDITY AND MARKET VALUE OF THE REMAINING UNITS HELD BY THE
PUBLIC.
O THE NUMBER OF LIMITED PARTNERS MAY BE REDUCED BELOW 300 BY REASON OF THE
OFFER, WHICH WOULD ALLOW THE TERMINATION OF REGISTRATION OF THE UNITS UNDER
THE SECURITIES AND EXCHANGE ACT OF 1934 (THE "EXCHANGE ACT"), WHICH
TERMINATION WOULD SUBSTANTIALLY REDUCE THE INFORMATION REQUIRED TO BE
FURNISHED BY THE PARTNERSHIP TO HOLDERS OF THE UNITS AND WHICH WOULD MAKE
CERTAIN PROVISIONS OF THE EXCHANGE ACT WITH RESPECT TO "GOING PRIVATE"
TRANSACTIONS NO LONGER APPLICABLE TO THE PARTNERSHIP.
---------------
IMPORTANT
Any Limited Partner desiring to tender all or any portion of his or her
Units should complete and sign the Letter of Transmittal or a photocopy
thereof in accordance with the instructions in the Letter of Transmittal,
mail or deliver it and any other required documents to the Offeror at the
Partnership.
---------------
NO PERSON HAS BEEN AUTHORIZED TO MAKE ANY RECOMMENDATION ON BEHALF OF THE
PARTNERSHIP AS TO WHETHER LIMITED PARTNERS SHOULD TENDER UNITS PURSUANT TO THE
OFFER. NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS IN CONNECTION WITH THE OFFER OTHER THAN THOSE CONTAINED HEREIN
OR IN THE LETTER OF TRANSMITTAL. IF GIVEN OR MADE, SUCH RECOMMENDATION AND SUCH
INFORMATION AND REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE PARTNERSHIP.
_____________, 1999
<PAGE>
TABLE OF CONTENTS
PAGE
INTRODUCTION............................................................ 1
SPECIAL FACTORS......................................................... 2
1. Purpose of the Offer.............................................. 2
2. Certain Federal Income Tax Consequences........................... 3
3. Fairness of the Transaction; Reports, Opinions,
Appraisals and Certain Negotiations; No Approvals
Required; No Appraisal Rights..................................... 4
4. Number of Units; Expiration Date; Extension of the Offer.......... 6
5. Procedure for Tendering Units..................................... 6
6. Withdrawal Rights................................................. 7
7. Payment of Purchase Price......................................... 8
8. Certain Conditions of the Offer................................... 9
9. Price Range of Units; Distributions; Trading Volume............... 11
10. Certain Information Concerning the Offeror........................ 12
11. Source and Amount of Funds........................................ 13
12. Past Contracts, Transactions or Negotiations;
Transactions and Agreements Concerning the Units.................. 13
13. Interest in Units................................................. 14
14. Extension of Tender Period; Termination; Amendments............... 14
15. Persons Retained; Fees and Expenses............................... 15
16. Miscellaneous..................................................... 15
Schedule A: Number of Units Purchased by Affiliates of the Partnership,
Range of Prices Paid and Average Purchase Price
Schedule B: Summary of Certain Financial Information
Schedule C: The Property
<PAGE>
TO THE HOLDERS OF LIMITED PARTNERSHIP UNITS OF
SIERRA PACIFIC DEVELOPMENT FUND,
A CALIFORNIA LIMITED PARTNERSHIP:
INTRODUCTION
John N. Galardi (the "Offeror") is offering to purchase any and all of the
Limited Partnership Units ("Units") of Sierra Pacific Development Fund, a
California Limited Partnership (the "Partnership"), at $60.00 per Unit (the
"Purchase Price"), net to the seller in cash, on the terms and subject to the
conditions set forth herein and in the related Letter of Transmittal (which
together constitute the "Offer"). The Offeror is the owner of 50% of the
outstanding capital and voting stock of CGS Real Estate Company, Inc., of which
S-P Properties, Inc., the General Partner of the Partnership, is a wholly-owned
subsidiary. Accordingly, the Offeror is an affiliate of the Partnership. The
address of the principal executive offices of the Partnership is 5850 San
Felipe, Suite 450, Houston, Texas 77057, and its telephone number is (713)
706-6271.
THE OFFER IS NOT CONDITIONED ON ANY MINIMUM NUMBER OF UNITS BEING
TENDERED. THE OFFER IS, HOWEVER, SUBJECT TO CERTAIN OTHER CONDITIONS. SEE
SECTION 8.
Tendering Limited Partners will not be obligated to pay brokerage
commissions, solicitation fees, transfer fees or transfer taxes on the purchase
of Units by the Offeror. HOWEVER, ANY TENDERING LIMITED PARTNER WHO FAILS TO
COMPLETE AND SIGN THE SUBSTITUTE FORM W-9 THAT IS INCLUDED IN THE LETTER OF
TRANSMITTAL MAY BE SUBJECT TO A REQUIRED FEDERAL INCOME TAX BACKUP WITHHOLDING
OF 31% OF THE GROSS PAYMENTS PAYABLE TO SUCH LIMITED PARTNER PURSUANT TO THE
OFFER.
NEITHER THE PARTNERSHIP NOR ITS GENERAL PARTNER NOR ANY OF THE GENERAL
PARTNER'S DIRECTORS OR EXECUTIVE OFFICERS MAKES ANY RECOMMENDATION TO ANY
LIMITED PARTNER AS TO WHETHER TO TENDER ANY UNITS. EACH LIMITED PARTNER MUST
MAKE HIS OR HER OWN DECISION AS TO WHETHER TO TENDER UNITS AND, IF SO, HOW MANY
UNITS TO TENDER. THE OFFEROR HAS BEEN ADVISED THAT NO DIRECTOR OR EXECUTIVE
OFFICER OF THE GENERAL PARTNER OR ANY OF ITS AFFILIATES INTENDS TO TENDER UNITS
PURSUANT TO THE OFFER.
As of June 17, 1999, the Partnership had issued and outstanding 29,354
Units. As of June 17, 1999, there were approximately 1,838 Limited Partners. The
Units are not currently registered for trading on any exchange.
<PAGE>
SPECIAL FACTORS
1. PURPOSE OF THE OFFER.
The Offeror, an affiliate of the Partnership, is making the Offer because
it believes that the purchase of the Units at this time pursuant to the Offer is
economically attractive to the Offeror, and at the same time Limited Partners
who require or desire liquidity are being afforded the opportunity to receive
cash for their Units. Each Limited Partner has the opportunity to make an
individual decision on whether or not to tender Units pursuant to the Offer.
The desire of the Offeror to purchase Units at a price he deems attractive
may be deemed to conflict with the desire of Limited Partners to realize a
higher value for their Units. Accordingly, the interests of the Offeror, an
affiliate of the Partnership, may be deemed to be in conflict with the interests
of the Limited Partners. However, neither the Offeror nor the Partnership is
making any recommendation to Limited Partners to tender Units or any
representation to Limited Partners with respect to the adequacy or fairness of
the price of $60.00 per Unit.
Following the consummation of the Offer, except as discussed below, it is
expected that the business and operations of the Partnership will be continued
by the Partnership substantially as they are currently being conducted. The
Partnership has informed the Offeror that, except as discussed below, it has no
plans or proposals which relate to or would result in: (a) the acquisition by
any person of additional securities of the Partnership or the disposition of
securities of the Partnership; (b) an extraordinary transaction, such as a
merger, reorganization or liquidation, involving the Partnership; (c) a sale or
transfer of a material amount of assets of the Partnership; (d) any change in
the present management of the Partnership; (e) any material change in the
present distribution policy or capitalization or indebtedness of the
Partnership; or (f) any other material change in the Partnership's structure or
business. Except as discussed below, the Offeror has no plans or proposals which
relate to or would result in: (a) the acquisition by any person of additional
securities of the Partnership or the disposition of securities of the
Partnership; (b) an extraordinary transaction, such as a merger, reorganization
or liquidation, involving the Partnership; (c) a sale or transfer of a material
amount of assets of the Partnership; (d) any change in the present management of
the Partnership; (e) any material change in the present distribution policy or
capitalization or indebtedness of the Partnership; or (f) any other material
change in the Partnership's structure or business. An affiliate of the Offeror
(and the Partnership) is considering an initial public offering of the
affiliate's securities, and the affiliate may wish to acquire all or part of the
Partnership and/or all or part of its assets, subsequent to the affiliate's
initial public offering. However, there can be no assurance that any such
initial public offer will occur and there can be no assurance that such
affiliate will attempt to acquire any portion of the Partnership or its assets.
Additionally, the Partnership is considering other possible sales or
dispositions of the Partnership's properties.
The Offeror's purchase of Units pursuant to the Offer will reduce the
number of Limited Partners and the number of Units that might otherwise trade,
<PAGE>
and depending on the number of Units so purchased, could adversely affect the
liquidity and market value of the remaining Units held by the public, although
there is currently no established trading market for the Units.
The Units are currently registered under the Securities Exchange Act of
1934, as amended (the "Exchange Act"). Registration of the Units under the
Exchange Act may be terminated upon application of the Partnership to the
Securities and Exchange Commission (the "Commission") if the Units are held by
fewer than 300 Limited Partners. It is possible that the number of Limited
Partners will be reduced below 300 by reason of the Offer and termination of
registration of the Units under the Exchange Act would substantially reduce the
information required to be furnished by the Partnership to holders of the Units
and would make certain provisions of the Exchange Act, such as the requirements
of Rule 13e-3 thereunder with respect to "going private" transactions, no longer
applicable in respect of the Partnership.
The Partnership has paid no dividends with respect to the Units since
January 1, 1994, and there are currently no plans to pay any dividends with
respect to the Units. Neither the Partnership nor the Offeror has made any
public offering of Units since January 1, 1996, nor has either the Partnership
or the Offeror purchased any Units since January 1, 1997, except for 2,300 Units
purchased by the Offeror for $27.50 per Unit pursuant to an Offer to Purchase
dated October 17, 1997.
Following the expiration of the Offer, the Offeror may, in its sole
discretion, determine to purchase any remaining Units through privately
negotiated transactions, open market purchases or otherwise, on such terms and
at such prices as the Offeror may determine from time to time, the terms of
which purchases or offers could differ from those of the Offer, except that the
Offeror will not make any such purchases of Units until the expiration of at
least ten business days after the termination of the Offer. Any possible future
purchases of Units by the Offeror will depend on many factors.
Purchases of Units by the Offeror will, in addition to the effects
described above, have the effect of increasing the Offeror's interest in the
Partnership's net book value and net earnings.
2. CERTAIN FEDERAL INCOME TAX CONSEQUENCES.
The sale of Units by a Limited Partner pursuant to the Offer will be
treated for federal income tax purposes as a taxable sale of such tendered
Units. However, the specific federal income tax consequences to a Limited
Partner resulting from a sale of Units will depend on a number of factors
related to such Limited Partner's individual tax situation, including such
Limited Partner's adjusted basis in his or her Units, whether such Limited
Partner is subject to the limitation on utilization of "passive activity
losses," whether such Limited Partner has suspended "passive activity losses"
attributable to his or her ownership of Units, whether such Limited Partner
disposes of all of his or her Units pursuant to the Offer (which would generally
allow such Limited Partner to utilize in the year of sale any suspended "passive
activity losses" attributable to his or her ownership of Units) and whether such
Limited Partner would be able to utilize currently any capital losses resulting
from the sale of such Units pursuant to the Offer. The Company expects that a
Limited Partner who acquired his or her Units in the original offering and who
sells Units pursuant to the Offer will generally recognize an ordinary loss of
<PAGE>
$2.32 per Unit attributable to Partnership operations for 1999 through the
estimated date of sale and a capital gain attributable to the sale of his or her
Units equal to the sum of (i) approximately $12.41 per Unit and (ii) such
Limited Partner's distributive share per Unit of syndication expenses of the
Partnership (generally costs incurred by Partnership's in connection with the
sale of Units in the original offering). Although the Partnership was unable to
claim syndication expenses as a deductible expense for federal income tax
purposes, each Limited Partner who acquired his or her Units in the original
offering continues to have his or her share of such expenses reflected in the
adjusted basis of his or her Units. The federal income tax impact could be
significantly different, however, for a Limited Partner who acquired his or her
Units after the original offering. To the extent that a Limited Partner who is
subject to the "passive activity loss" restrictions has not previously utilized
such losses to offset passive activity income from other sources (and sells all
of his or her Units), such suspended losses will generally become available to
such Limited Partner in the year of sale. Any capital loss recognized by a
Limited Partner from the sale of Units may be applied to offset capital gains
from other sources. In addition, capital losses in excess of capital gains may
be used to offset up to $3,000 of ordinary income in any taxable year ($1,500
for a married individual filing a separate return). Any capital losses that are
not used currently may be carried forward and used in subsequent years (subject
to the same limitations).
THE FOREGOING TAX DISCUSSION IS INTENDED FOR GENERAL INFORMATIONAL
PURPOSES ONLY. THE TAX CONSEQUENCES OF A SALE PURSUANT TO THE OFFER MAY VARY
DEPENDING UPON, AMONG OTHER THINGS, THE PARTICULAR TAX CIRCUMSTANCES OF THE
TENDERING LIMITED PARTNER. NO INFORMATION IS PROVIDED HEREIN AS TO THE STATE,
LOCAL OR FOREIGN TAX CONSEQUENCES OF A SALE OF UNITS PURSUANT TO THE OFFER. EACH
LIMITED PARTNER IS URGED TO CONSULT HIS OR HER OWN TAX ADVISER TO DETERMINE THE
PARTICULAR FEDERAL, STATE, LOCAL AND FOREIGN TAX CONSEQUENCES OF A SALE OF UNITS
PURSUANT TO THE OFFER.
3. FAIRNESS OF THE TRANSACTION; REPORTS, OPINIONS, APPRAISALS AND CERTAIN
NEGOTIATIONS; NO APPROVALS REQUIRED; NO APPRAISAL RIGHTS.
The Offeror reasonably believes that the terms of the Offer are fair to
unaffiliated Limited Partners for the following reasons: (i) the Purchase Price
reflects the most recently reported third party trading price of the Units,<F1>
(ii) the Partnership is not currently making any distributions, and (iii) the
Offer provides a mechanism whereby Limited Partners who desire liquidity are
being afforded the opportunity to receive cash for their Units. The price of
$60.00 per Unit was determined by the Offeror as the price which he believed
- ------------------------
<F1>
Determined on the basis of the trades reported in THE PARTNERSHIP SPECTRUM, as
discussed in more detail in Section 9 below.
<PAGE>
represented an attractive price for him economically. In determining this price,
he considered the following factors:
(a) that there is not a liquid market for the Units;
(b) that the Offeror may have to hold the Units for a lengthy period of
time;
(c) that the Partnership is not currently making any distributions and
there is no assurance that the Partnership will resume making any distributions;
and
(d) the Offeror's personal expectations that the value of the
Partnership's property will increase in the future.
The Offeror did not obtain any appraisals or valuations in connection with
his determination of the Purchase Price.
Although the Purchase Price is less than the prices paid by an affiliate
for certain Units during the fourth quarter of 1998, as set forth in Schedule A
hereof, the Offeror believes that the Purchase Price is fair. The Offeror has
not had an appraisal of the property performed, has no knowledge of any current
appraisals and has not formed any conclusion as to the current net realizable
value of the property. The Offeror does, however, believe that the price of
$60.00 per Unit represents an attractive investment to him compared to the value
he expects the Units to have in the future. Since January 1, 1996, the Offeror
has not sought or obtained any report, appraisal or opinion with respect to the
value of the Units and neither the Partnership nor is the Offeror aware of any
such report, appraisal or opinion that may have prepared by any other person.
Additionally, neither the Partnership nor is the Offeror aware of any other firm
offers made by any person unaffiliated with the Partnership during the preceding
eighteen months (i) for the merger or consolidation of the Partnership with such
person, (ii) for the sale or other transfer of all or any substantial part of
the assets of the Partnership or (iii) for Units which would enable the holder
of the Units to exercise control of the Partnership.
The Offeror is not aware of any license or regulatory permit that appears
to be material to the Partnership's business that might be adversely affected by
its acquisition of Units as contemplated in the Offer or of any approval or
other action by any government or governmental, administrative or regulatory
authority or agency, domestic or foreign, that would be required for the
Offeror's acquisition or ownership of Units pursuant to the Offer. Should any
such approval or other action be required, the Offeror currently contemplates
that it will seek such approval or other action.
There is no vote of Limited Partners required in connection with the Offer
and there are no appraisal rights available to Limited Partners in connection
with the Offer. The General Partner of the Partnership has informed the Offeror
that the Partnership has not retained, and does not intend to retain, an
unaffiliated representative to act solely on behalf of unaffiliated Limited
Partners or to prepare a report or an opinion with respect to the fairness of
the Offer.
<PAGE>
Certain historical financial information regarding the Partnership and
certain information regarding its property is set forth on Scheduled B and C
hereto. This information has been derived from publicly available reports of the
Partnership filed with the Securities and Exchange Commission.
The scheduled termination date for the Partnership is December 31, 2030,
although it was initially expected to terminate upon the sale of all of its
properties, and those sales were expected to commence after approximately five
years. The Offeror understands that the General Partner, however, has elected
not to sell the remaining property at this time because it does not believe that
the value it could obtain for the property at this time is attractive and has
not determined when it may do so. Limited Partners have the right under the
Partnership's partnership agreement to remove the General Partner by a majority
vote.
4. NUMBER OF UNITS; EXPIRATION DATE; EXTENSION OF THE OFFER.
On the terms and subject to the conditions described herein and in the
Letter of Transmittal, the Offeror will purchase any and all Units that are
validly tendered on or prior to the Expiration Date (and not properly withdrawn
in accordance with Section 6) at the Purchase Price. The later of 5:00 p.m.,
Pacific time, on _________, __________, 1999, or the latest time and date to
which the Offer is extended, is referred to herein as the "Expiration Date." The
Offer is not conditioned on any minimum number of Shares being tendered.
If (i) the Offeror increases or decreases the price to be paid for Units
or decreases the number of Units being sought and (ii) the Offer is scheduled to
expire at any time earlier than the expiration of a period ending on the tenth
business day from, and including, the date that notice of such increase or
decrease is first published, sent or given in the manner described in Section
14, the Offer will be extended until the expiration of ten business days from
the date of publication of such notice.
The Offeror also expressly reserves the right, in its sole discretion, at
any time or from time to time, to extend the period of time during which the
Offer is open by giving oral or written notice of such extension to the
Partnership and making a public announcement thereof. See Section 14. There can
be no assurance, however, that the Offeror will exercise its right to extend the
Offer.
For purposes of the Offer, a "business day" means any day other than a
Saturday, Sunday or federal holiday and consists of the time period from 12:01
a.m. through 12:00 midnight, New York City time.
Copies of this Offer to Purchase and the Letter of Transmittal are being
mailed to Limited Partners.
5. PROCEDURE FOR TENDERING UNITS.
PROPER TENDER OF UNITS. To tender Units validly pursuant to the Offer, a
properly completed and duly executed Letter of Transmittal or photocopy thereof,
<PAGE>
together with any required signature guarantees and any other documents required
by the Letter of Transmittal, must be received by the Depositary (the
"Depositary") at the address set forth in the Letter of Transmittal.
FEDERAL BACKUP WITHHOLDING. TO AVOID FEDERAL INCOME TAX BACKUP WITHHOLDING
EQUAL TO 31% OF THE GROSS PAYMENTS MADE PURSUANT TO THE OFFER, EACH TENDERING
LIMITED PARTNER MUST NOTIFY THE OFFEROR OF SUCH LIMITED PARTNER'S CORRECT
TAXPAYER IDENTIFICATION NUMBER AND PROVIDE CERTAIN OTHER INFORMATION BY PROPERLY
COMPLETING THE SUBSTITUTE FORM W-9 INCLUDED IN THE LETTER OF TRANSMITTAL.
FOREIGN LIMITED PARTNERS MAY BE REQUIRED TO SUBMIT A PROPERLY COMPLETED FORM
W-8, CERTIFYING NON-UNITED STATES STATUS, IN ORDER TO AVOID BACKUP WITHHOLDING.
IN ADDITION, FOREIGN STOCKHOLDERS MAY BE SUBJECT TO 30% (OR LOWER TREATY RATE)
WITHHOLDING ON GROSS PAYMENTS RECEIVED PURSUANT TO THE OFFER. FOR A DISCUSSION
OF CERTAIN FEDERAL INCOME TAX CONSEQUENCES TO TENDERING LIMITED PARTNERS, SEE
SECTION 2. EACH LIMITED PARTNER IS URGED TO CONSULT WITH HIS OR HER OWN TAX
ADVISER.
DETERMINATIONS OF VALIDITY. All questions as to the Purchase Price, the
form of documents and the validity, eligibility (including time of receipt) and
acceptance for payment of any tender of Units will be determined by the Offeror,
in its sole discretion, and its determination shall be final and binding. The
Offeror reserves the absolute right to reject any or all tenders of Units that
it determines are not in proper form or the acceptance for payment of or payment
for Units that may, in the opinion of the Offeror's counsel, be unlawful. The
Offeror also reserves the absolute right to waive any defect or irregularity in
any tender of Units. Neither the Offeror, the Partnership, or any other person
will be under any duty to give notice of any defect or irregularity in tenders,
nor shall any of them incur any liability for failure to give any such notice.
RULE 14E-4. It is a violation of Rule 14e-4 promulgated under the Exchange
Act for a person to tender Units for his or her own account unless the person so
tendering (i) has a net long position equal to or greater than the amount of
Units tendered and (ii) will cause such Units to be delivered in accordance with
the terms of the Offer. The tender of Units pursuant to the procedures described
above will constitute the tendering Limited Partner's representation and
warranty that (i) such Limited Partner has a net long position in the Units
being tendered within the meaning of Rule 14e-4 promulgated under the Exchange
Act, and (ii) the tender of such Units complies with Rule 14e-4. The Offeror's
acceptance for payment of Units tendered pursuant to the Offer will constitute a
binding agreement between the tendering Limited Partner and the Offeror on the
terms and subject to the conditions of the Offer.
6. WITHDRAWAL RIGHTS.
Tenders of Units made pursuant to the Offer may be withdrawn at any time
prior to the Expiration Date. Thereafter, such tenders are irrevocable, except
that they may be withdrawn after ___________, 1999, unless theretofore accepted
for payment as provided in this Offer to Purchase. If the Offeror extends the
period of time during which the Offer is open, is delayed in accepting for
payment or paying for Units or is unable to accept for payment or pay for Units
pursuant to the Offer for any reason, then, without prejudice to the Offeror's
rights under the Offer, the Offeror may retain all Units tendered, and such
Units may not be withdrawn except as otherwise provided in this Section 6,
subject to Rule 14e-1(c) under the Exchange Act, which provides that the person
making the tender offer shall either pay the consideration offered, or return
<PAGE>
the tendered securities promptly after the termination or withdrawal of the
tender offer.
To be effective, a written or facsimile transmission notice of withdrawal
must be timely received by the Depositary at its address set forth in the Letter
of Transmittal and must specify the name of the person who tendered the Units to
be withdrawn and the number of Units to be withdrawn. Withdrawals may not be
rescinded, and Units withdrawn will thereafter be deemed not validly tendered
for purposes of the Offer. However, withdrawn Units may be retendered by again
following the procedures described in Section 5 at any time prior to the
Expiration Date.
All questions as to the form and validity (including time of receipt) of
any notice of withdrawal will be determined by the Offeror, in its sole
discretion, which determination shall be final and binding. Neither of the
Offeror, the Partnership, nor any other person will be under any duty to give
notification of any defect or irregularity in any notice of withdrawal or incur
any liability for failure to give any such notification.
7. PAYMENT OF PURCHASE PRICE.
On the terms and subject to the conditions of the Offer (including, if the
Offer is extended or amended, the terms and conditions of any extension or
amendment), the Offeror will accept for payment, and will pay for, Units validly
tendered and not withdrawn in accordance with the Offer, as promptly as
practicable following the Expiration Date. In all cases, payment for Units
purchased pursuant to the Offer will be made only after timely receipt by the
Depositary of a properly completed and duly executed Letter of Transmittal and
any other documents required by the Letter of Transmittal.
For purposes of the Offer, the Offeror shall be deemed to have accepted
for payment (and thereby purchased) tendered Units when, as and if the Offeror
gives oral or written notice to the Partnership of the Offeror's acceptance for
payment of such Units pursuant to the Offer. On the terms and subject to the
conditions of the Offer, payment for Units purchased pursuant to the Offer will
in all cases be made by deposit of the Purchase Price with the Depositary, which
will act as agent for the tendering Limited Partners for the purpose of
receiving payment from the Offeror and transmitting payment to tendering Limited
Partners. Under no circumstances will interest be paid on the Purchase Price by
reason of any delay in making such payment.
If any tendered Units are not accepted for payment pursuant to the terms
and conditions of the Offer, the Letter of Transmittal with respect to such
Units not purchased will be destroyed by the Depositary. If, for any reason
whatsoever, acceptance for payment of, or payment for, any Units tendered
pursuant to the Offer is delayed or the Offeror is unable to accept for payment,
purchase or pay for Units tendered pursuant to the Offer, then, without
prejudice to the Offeror's rights under the Offer (but subject to compliance
with Rule 14e-1(c) under the Exchange Act), the Offeror may retain tendered
Units, subject to any limitations of applicable law, and such Units may not be
withdrawn, except to the extent that the tendering Limited Partners are entitled
to withdrawal rights as described in the Offer.
<PAGE>
If, prior to the Expiration Date, the Offeror shall increase the
consideration offered to Limited Partners 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 Offeror reserves the right to transfer or assign, at any time and from
time to time, in whole or in part, to one or more affiliates, the right to
purchase Units tendered pursuant to the Offer, but no such transfer or
assignment will relieve the Offeror of its obligations under the Offer or
prejudice the rights of tendering Limited Partners to receive payments for Units
validly tendered and accepted for payment pursuant to the Offer.
8. CERTAIN CONDITIONS OF THE OFFER.
Notwithstanding any other provisions of the Offer, the Offeror will not be
required to accept for payment or pay for any Units tendered, and may terminate
or amend the Offer or may postpone (subject to the requirements of the Exchange
Act for prompt payment for or return of Units) the acceptance for payment of or
payment for Units tendered, if at the Expiration Date, as it may be extended,
any of the following events shall have occurred (or shall have been determined
by the Offeror in its sole judgment to have occurred) regardless of the
circumstances giving rise thereto (including any action or omission to act by
the Offeror):
(a) there shall have been threatened, instituted or pending any
action or proceeding by any government or governmental, regulatory or
administrative agency or authority or tribunal or any other person,
domestic or foreign, or before any court, authority, agency or tribunal
that (i) challenges or seeks to challenge the acquisition of Units
pursuant to the Offer or otherwise in any manner relates to or affects the
Offer or (ii) in the sole judgment of the Offeror, could materially and
adversely affect the business, condition (financial or other), income,
operations or prospects of the Partnership, or otherwise materially impair
in any way the contemplated future conduct of the business of the
Partnership or materially impair the contemplated benefits of the Offer to
the Offeror;
(b) there shall have been any action threatened, pending or taken,
or approval withheld, withdrawn or abrogated or any statute, rule,
regulation, judgment, order or injunction threatened, proposed, sought,
promulgated, enacted, entered, amended, enforced or deemed to be
applicable to the Offer or the Partnership, by any legislative body,
court, authority, agency or tribunal which, in the Offeror's sole
judgment, would or might directly or indirectly (i) make the acceptance
for payment of, or payment for, some or all of the Units illegal or
otherwise restrict or prohibit consummation of the Offer, (ii) delay or
restrict the ability of the Offeror, or render the Offeror unable, to
accept for payment or pay for some or all of the Units, (iii) imposes or
seeks to impose limitations on the ability of the Offeror to acquire or
hold or to exercise full rights of ownership of the Units, (iv) materially
impair the contemplated benefits of the Offer to the Offeror or (v)
materially affect the business, condition (financial or other), income,
operations or prospects of the Partnership, or otherwise materially impair
<PAGE>
in any way the contemplated future conduct of the business of the
Partnership;
(c) it shall have been publicly disclosed or the Offeror shall have
learned that any person or "group" (within the meaning of Section 13(d)(3)
of the Exchange Act) has acquired or proposes to acquire beneficial
ownership of more than 5% of the outstanding Units;
(d) there shall have occurred (i) any general suspension of trading
in, or limitation on prices for, securities on any national securities
exchange or in the over-the-counter market, (ii) any significant decline
in the general level of market prices of equity securities in the United
States or abroad, (iii) any change in the general political, market,
economic or financial condition in the United States or abroad that could
have a material adverse effect on the Partnership's business, condition
(financial or other), income, operations or prospects, (iv) the
declaration of a banking moratorium or any suspension of payments in
respect of banks in the United States or any limitation on, or any event
which, in the Offeror's sole judgment, might affect, the extension of
credit by lending institutions in the United States, (v) the commencement
of a war, armed hostilities or other international or national crisis
directly or indirectly involving the United States or (vi) in the case of
any of the foregoing existing at the time of the commencement of the
Offer, in the Offeror's sole judgment, a material acceleration or
worsening thereof;
(e) a tender or exchange offer with respect to some or all of the
Units (other than the Offer) or a merger, acquisition or other business
combination proposal for the Partnership, shall have been proposed,
announced or made;
(f) there shall have occurred any event or events that have
resulted, or may in the sole judgment of the Offeror result, in an actual
or threatened change in the business, condition (financial or other),
income, operations, stock ownership or prospects of the Partnership; or
materially impair the contemplated benefits of the Offer;
(g) there shall have occurred any decline in the S&P Composite 500
Stock Index by an amount in excess of 15% measured from the close of
business on ___________, 1999; or
(h) the Offeror shall not have received the approval of the
Partnership to the assignment to the Offeror of the Units tendered
pursuant to the Offer;
and, in the reasonable judgment of the Offeror, such event or events make it
undesirable or inadvisable to proceed with the Offer or with such acceptance for
payment or payment.
Any of the foregoing conditions may be waived by the Offeror, in whole or
in part, at any time and from time to time in its sole discretion. The failure
by the Offeror at any time to exercise any of the foregoing rights shall not be
deemed a waiver of any such right and each such right shall be deemed an ongoing
right which may be asserted at any time and from time to time. Any determination
<PAGE>
by the Offeror concerning the events described above will be final and binding
on all parties.
9. PRICE RANGE OF UNITS; DISTRIBUTIONS; TRADING VOLUME.
The Units are not listed on any national securities exchange or quoted in
the over-the-counter market, and there is no established public trading market
for the Units. Secondary sales activity for the Units has been extremely limited
and sporadic. The Partnership monitors transfers of the Units because the
admission of the transferee as a substitute limited partner requires the consent
of the General Partner under the Partnership Agreement. However, neither the
Partnership nor the Offeror has information regarding the prices at which all
secondary sales transactions in the Units have been effectuated. Various
organizations offer to purchase and sell limited partnership interests (such as
the Units) in secondary sales transactions. Various publications such as The
Partnership Spectrum summarize and report information (on a monthly, bimonthly
or less frequent basis) regarding secondary sales transactions in limited
partnership interests (including the Units), including the prices at which such
secondary sales transactions are effectuated.
The Offeror has been informed that the Partnership estimates, based solely
on the transfer records of the Partnership, that the number of Units transferred
in sales transactions (I.E., excluding transactions believed to be between
related parties, family members or the same beneficial owner) was as follows:
<TABLE>
<CAPTION>
Number of Total Percentage of Number of
Year Units Transferred Units Outstanding Transactions
---- ----------------- ----------------- ------------
<S> <C> <C> <C>
1997 863 2.94% 89
1998 5,546 18.89% 539
1999 through 6/17 50 0.17% 10
</TABLE>
The information set forth below is extracted from sections of the
January/February 1998, March/April 1998, May/June 1998, July/August 1998,
September/October 1998, November/December 1998, January/February 1999, and
March/April 1999 issues of "The Partnership Spectrum" under the caption
"Secondary Spectrum." The Partnership Spectrum, a periodical published by
Partnership Profiles, Inc., summarizes secondary market prices for public
limited partnerships based on actual transactions during the reporting periods
listed on the tables below. The following secondary-market firms provided high
and low price data to The Partnership Spectrum for some or all of the reporting
periods: American Partnership Board - (800) 736-9797, DCC Securities - (800)
945-0440, Fox & Henry/Secondary Income Funds (800) 578-6289/(630) 325-4445,
Frain Asset Management - (800) 654-6110/(813) 397-2701, MacKenzie-Patterson,
Inc. - (800) 854-8357, National Partnership Exchange - (800) 356-2739/(813)
636-9299, Pacific Partnership Group - (800) 727-7244/(818) 591-3707, Partnership
Marketing Company - (888) 824-8600/(707) 824-8600, A-1 Partnership Service
Network. - (800) 483-0776/(813) 596-9898.
<PAGE>
IN EVALUATING WHETHER OR NOT TO TENDER THEIR UNITS IN THE OFFER, LIMITED
PARTNERS MAY WISH TO CONTACT THESE FIRMS OR OTHER FIRMS INVOLVED IN SECONDARY
SALES OF INTERESTS IN LIMITED PARTNERSHIPS.
The information regarding sale transactions in Units from the Partnership
Spectrum is as follows:
<TABLE>
<CAPTION>
REPORTING PERIOD PER UNIT TRANSACTION PRICE<F2> NO. OF UNITS
---------------- --------------------------- ------------
<S> <C> <C>
January/February 1998 N/A -
March/April 1998 N/A -
May/June 1998 N/A -
July/August 1998 N/A -
September/October 1998 N/A -
November/December 1998 $60.00 18
January/February 1999 N/A -
March/April 1999 N/A -
</TABLE>
The information from The Partnership Spectrum contained above is provided
without verification by the Offeror and is subject to the following
qualifications in The Partnership Spectrum: "Limited partnership investments are
generally illiquid, long-term investments. Sellers of such investments are often
considered distressed for various reasons and find it necessary to accept
discounted sales prices. As a result, the above price information may not
reflect the intrinsic valued of a limited partnership interest. In some cases,
discounts from original purchase prices result from a partnership having already
liquidated, financed or refinanced a portion of its investment portfolio."
Transaction data has been provided by the firms listed above and has not been
verified by The Partnership Spectrum.
10. CERTAIN INFORMATION CONCERNING THE OFFEROR.
John N. Galardi, the Offeror, is the owner of 50% of the outstanding
capital and voting stock and a director of CGS Real Estate Company, Inc., of
which S-P Properties, Inc., the General Partner of the Partnership, is a
wholly-owned subsidiary. The Offeror is the Chairman and founder of Galardi
Group, Inc., a privately-held operation encompassing more than 500 restaurants,
- ------------------------
<F2>
The Per Unit Transaction Price reflects the weighted average price of the units
sold in the relevant period.
<PAGE>
including Wienerschnitzel, the largest privately-held hot dog chain in the
United States. The Offeror's business address is 415 E. Hyman, Suite 203, Aspen,
Colorado 81611. During the past five years, the Offeror has also served on the
board of directors of American Franchise Group located in Fort Lauderdale,
Florida. The Offeror is a citizen of the United States.
During the past five years, the Offeror has not been convicted in a
criminal proceeding (excluding traffic violations or similar misdemeanors), nor
has the Offeror been a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction and as a result of such proceeding
was or is subject to a judgment, decree or final order enjoining future
violations of, or prohibiting or mandating activities subject to, federal or
state securities laws or finding any violation with respect to such laws.
11. SOURCE AND AMOUNT OF FUNDS.
Assuming that the Offeror purchases 10,000 Units pursuant to the Offer at
the Purchase Price, the total amount required by the Offeror to purchase such
Units will be approximately $600,000, exclusive of fees and other expenses. The
source of these funds will be the Offeror's personal funds.
12. PAST CONTRACTS, TRANSACTIONS OR NEGOTIATIONS; TRANSACTIONS AND AGREEMENTS
CONCERNING THE UNITS.
The Offeror has not been a party to any contract, transaction or
negotiation since January 1, 1997 with the Partnership where the aggregate
amount of such transaction was not less than 1% of the Partnership's
consolidated revenues. Except as disclosed herein in connection with the Offer,
the Offeror has not been a party to contacts, negotiations or transactions with
the Partnership concerning a merger, consolidation or acquisition of the
Partnership, a tender offer or acquisition of securities of the Partnership
(other than pursuant to an Offer to Purchase dated October 17, 1997), an
election of a new general partner of the Partnership, or a sale or other
transfer of a material amount of assets of the Partnership. Additionally, the
Offeror is not a party to any contract, arrangement, understanding or
relationship, directly or indirectly, with any other person with respect to any
securities of the Partnership, has not been a party to any contract, transaction
or negotiation with any person with respect to the Units, including any
contract, arrangement, understanding or relationship concerning the transfer or
the voting of any Units, joint ventures, loan or option arrangements, puts or
calls, guaranties of loans, guaranties of loans, guaranties against loss or the
giving or withholding of proxies, consents or authorizations and is not aware of
any contacts or negotiations between the Partnership and any of its affiliates,
or between the Partnership (including its affiliates) and any person not
affiliated with the Partnership concerning a merger, consolidation or
acquisition of the Partnership; a tender offer or acquisition of securities of
the Partnership, an election of a new general partner of the Partnership, or a
sale or other transfer of a material amount of assets of the Partnership.
Schedule A hereto sets forth the number of Units purchased by the Offeror
or other affiliates of the Partnership (including the directors of the General
<PAGE>
Partner) since January 1, 1997, the range of prices paid for such Units and the
average purchase price paid for each quarterly period since January 1, 1997.
13. INTEREST IN UNITS.
The Offeror beneficially owns 2,300 Units, representing 7.8% of the total
outstanding Units as of June 17, 1999. Except as disclosed in Schedule A,
neither the Partnership, the Offeror nor any person affiliated with either the
Partnership or the Offeror has engaged in any transactions with respect to the
Units within the 60 days immediately preceding the date of the Offer.
14. EXTENSION OF TENDER PERIOD; TERMINATION; AMENDMENTS.
The Offeror expressly reserves the right, in its sole discretion and at
any time or from time to time, to extend the period of time during which the
Offer is open by giving oral or written notice of such extension to the
Partnership. There can be no assurance, however, that the Offeror will exercise
its right to extend the Offer. During any such extension, all Units previously
tendered will remain subject to the Offer, except to the extent that such Units
may be withdrawn as set forth in Section 7. The Offeror also expressly reserves
the right, in its sole discretion, (i) to terminate the Offer and not accept for
payment any Units not theretofore accepted for payment or, subject to Rule
14e-1(c) under the Exchange Act, which requires the Offeror either to pay the
consideration offered or to return the Units tendered promptly after the
termination or withdrawal of the Offer, to postpone payment for Units upon the
occurrence of any of the conditions specified in Section 9 hereof by giving oral
or written notice of such termination to the Partnership and making a public
announcement thereof and (ii) at any time or from time to time, to amend the
Offer in any respect. Amendments to the Offer may be effected by public
announcement. Without limiting the manner in which the Offeror may choose to
make public announcement of any termination or amendment, the Offeror shall have
no obligation (except as otherwise required by applicable law) to publish,
advertise or otherwise communicate any such public announcement, other than by
making a release to the Dow Jones News Service, except in the case of an
announcement of an extension of the Offer, in which case the Offeror shall have
no obligation to publish, advertise or otherwise communicate such announcement
other than by issuing a notice of such extension by press release or other
public announcement, which notice shall be issued no later than 9:00 a.m.,
Pacific time, on the next business day after the previously scheduled Expiration
Date. Material changes to information previously provided to Limited Partners in
this Offer or in documents furnished subsequent thereto will be disseminated to
Limited Partners in compliance with Rule 14d-6(d) promulgated under the Exchange
Act.
If the Offeror materially changes the terms of the Offer or the
information concerning the Offer, or if it waives a material condition of the
Offer, the Offeror will extend the Offer to the extent required by Rules
14d-6(d) and Rule 14e-1(a) under the Exchange Act. Those rules require that the
minimum period during which an offer must remain open following material changes
in the terms of the offer or information concerning the offer (other than a
change in price, change in dealer's soliciting fee or change in percentage of
securities sought) will depend on the facts and circumstances, including the
<PAGE>
relative materiality of such terms or information. In a published release, the
Commission has stated that in its view, an offer should remain open for a
minimum of five business days from the date that notice of such a material
change is first published, sent or given. The Offer will continue or be extended
for at least ten business days from the time the Offeror publishes, sends or
gives to holders of Units a notice that it will (a) increase or decrease the
price it will pay for Units or (b) decrease the number of Units it seeks.
15. PERSONS RETAINED; FEES AND EXPENSES.
The Offeror has retained the Depositary to act as the tender agent as in
connection with the Offer. The Depositary will receive reasonable compensation
for its services and will also be reimbursed for certain out-of-pocket expenses.
The Offeror has agreed to indemnify the Depositary against certain liabilities,
including certain liabilities under the federal securities laws, in connection
with the Offer. The Depositary has not been retained to, and will not, make
solicitations or recommendations in connection with the Offer.
The Offeror does not intend to retain the services of any officer,
employee or class of employees of the Partnership in connection with the Offer.
Similarly, the Offeror does not intend to use any corporate asset of the
Partnership in connection with the conduct or consummation of the Offer.
The Offeror will not pay any solicitation fees to any broker, dealer,
bank, trust company or other person for any Units purchased in connection with
the Offer. The Offeror will reimburse such persons for customary handling and
mailing expenses incurred in connection with the Offer.
The Offeror will pay all transfer fees or transfer taxes, if any, payable
on account of the acquisition of the Units by the Offeror pursuant to the Offer.
The expenses incurred, or estimated to be incurred, by the Offeror in
connection with the Offer are set forth below. The Offeror will be responsible
for paying all such expenses.
<TABLE>
<CAPTION>
<S> <C>
Printing and Mailing Fees.................... $ 10,000
Filing Fees.................................. 240
Legal, Accounting and Miscellaneous.......... 10,000
------
Total........................................ $ 20,240
======
</TABLE>
16. MISCELLANEOUS.
The Partnership is subject to the informational requirements of the
Exchange Act and in accordance therewith files reports and other information
with the Commission relating to its business, financial condition and other
matters. The Offeror has filed a Rule 13e-3 Transaction Statement on Schedule
13e-3 and a Transaction Statement on Tender Offer Statement on Schedule 14D-1
with the Commission, which includes certain additional information relating to
the Offer. Such reports, as well as such other material, may be inspected and
copies may be obtained at the Commission's Public Reference Section at Room
1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and
should also be available for inspection and copying at the regional offices of
<PAGE>
the Commission located at 7 World Trade Center, 13th Floor, New York, New York
10048, and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661. Copies of such material may be obtained by mail, upon payment of
the Commission's customary fees, from the Commission's Public Reference Section
at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549.
The Commission maintains a Web site that contains reports, proxy and information
statements and other materials that are filed through the Commission's
Electronic Data Gathering, Analysis, and Retrieval system. This Web site can be
accessed at http://www.sec.gov. The Offeror's Schedule 13e-3 and Schedule 14D-1
may not be available at the Commission's regional offices.
The Offer is being made to all Limited Partners. The Offeror is not aware
of any state where the making of the Offer is prohibited by administrative or
judicial action pursuant to a valid state statute. If the Offeror becomes aware
of any valid state statute prohibiting the making of the Offer, the Offeror will
make a good faith effort to comply with such statute. If, after such good faith
effort, the Offeror cannot comply with such statute, the Offer will not be made
to, nor will tenders be accepted from or on behalf of, holders of Units in such
state.
__________, 1999 JOHN N. GALARDI
<PAGE>
SCHEDULE A
----------
<TABLE>
<CAPTION>
Period Number of Units Purchased Range of Prices Average
by Affiliates of the Paid Purchase
Partnership Price
<S> <C> <C> <C>
1/1/97 to 3/31/97 54 $20.00 $20.00
4/1/97 to 6/30/97 50 $20.00 $20.00
7/1/97 to 9/30/97 14 $20.00 $20.00
10/1/97 to 12/31/97 340 $25.00 $25.00
1/1/98 to 3/31/98 281 $25.00 to 40.00 $27.22
4/1/98 to 6/30/98 85 $27.50 $27.50
7/1/98 to 9/30/98 1,268 $27.50 to $60.00 $43.75
10/1/98 to 12/31/98 597 $27.50 to $95.00 $57.36
1/1/99 to 3/31/99 18 $60.00 $60.00
4/1/99 to present 4 $27.50 $27.50
</TABLE>
<PAGE>
SCHEDULE B
----------
SUMMARY OF CERTAIN FINANCIAL INFORMATION
The following sets forth certain summarized financial information for the
Partnership. This information should be read in conjunction with the
Partnership's annual, quarterly reports and other filed with the Securities and
Exchange Commission.
<TABLE>
<CAPTION>
OPERATING DATA:
For the Three Months
For the Year Ended December 31, Ended March 31,
------------------------------- -----------------------
1998 1997 1996 1999 1998
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Revenues $919,614 $757,755 $755,644 $214,772 $203,881
Net Income (loss) (81,827) (287,313) (301,960) (34,035) (47,577)
Net Income (loss)
per Unit $(2.79) $(9.79) $(10.29) $(1.16) $(1.62)
Cash distributions 0 0 0 0 0
</TABLE>
<TABLE>
<CAPTION>
BALANCE SHEET DATA:
As of December 31, As of March 31,
--------------------- ---------------------
1998 1997 1999
---- ---- ----
<S> <C> <C> <C>
Cash and cash
equivalents $ 83,408 $ 87,192 $ 84,538
Total assets 3,267,524 3,436,450 3,276,788
</TABLE>
<PAGE>
SCHEDULE C
----------
THE PROPERTY
DESCRIPTION OF THE PROPERTY
- ---------------------------
The Partnership owns, in fee simple, a 90.67% interest in Sierra Creekside, a
commercial office building located in San Ramon, California. The building
consists of 47,800 rentable square feet and was 96% occupied at December 31,
1998. The average effective annual rent per square foot at December 31, 1998 was
$18.57.
The Property is encumbered by a mortgage lien in favor of Home Federal Savings
of San Francisco with a principal balance of $1,720,324 at December 31, 1998.
The mortgage bears interest at 3.5% above the 11th District Cost of Funds Index
with a minimum of 9% and a maximum of 14% (9% at December 31, 1996). The loan
term has a term of 120 months with a maturity date of July 1, 2005. Payments are
amortized over a 240 month period with a remaining principal balance of
$1,316,055 due at maturity assuming no payment has been made on principal in
advance of its due date. The note is subject to prepayment penalties of 1% to 3%
if more than 20% of the outstanding balance is prepaid during the first four
calendar years of the loan.
The real estate tax obligation for 1998 was approximately 2% of the assessed
value, or $____________.
SUMMARY OF SIGNIFICANT TENANTS/LEASES
- -------------------------------------
Four of the Property's 17 tenants occupy ten percent or more of rentable space.
The principal businesses of these significant tenants are banking, mortgage
administration, insurance and billing/collections services. Details of the
leases are as follows:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------
PERCENT OF
PERCENT OF EFFECTIVE EFFECTIVE GROSS
SQUARE FEET RENTABLE RENT PER RENT PER ANNUAL EXPIRATION
TENANT OCCUPIED SQUARE FEET SQUARE FOOT ANNUM RENT OF LEASE
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
American 7,189 15% 19.39 $139,401 16% June 2002
Savings Bank
- -----------------------------------------------------------------------------------------
Perfect Service 4,831 10% 22.80 $110,147 13% June 2004
Builders
- -----------------------------------------------------------------------------------------
State Farm 5,071 11% 14.98 $75,964 9% Sept. 2000
Mutual
- -----------------------------------------------------------------------------------------
Pen-Cal 7,331 15% 16.69 $122,355 14% Jan. 2000
Administrators
- -----------------------------------------------------------------------------------------
Tenants 21,457 45% 18.83 $404,011 48% Various
Occupying less
than 10% sq ft
- -----------------------------------------------------------------------------------------
Total Rented 45,879 96% 18.57 $851,878 100%
Space
- -----------------------------------------------------------------------------------------
</TABLE>
<PAGE>
SUMMARY OF LEASES BY EXTENSION
- ------------------------------
One of the 17 tenants is on a month to month lease; the other 16 are on leases
scheduled to expire over the next five years as indicated in the table below.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------
YEAR OF EXPIRATION 1999 2000 2001 2002 2003 2004 TOTALS
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Number of Tenants 2 5 4 2 2 1 16
- --------------------------------------------------------------------------------------------
Percent of total 12% 29% 23% 12% 12% 6% 94%
tenants
- --------------------------------------------------------------------------------------------
Total area (sq. 2,364 16,641 8,356 7,738 3,957 4,831 43,887
ft.)
- --------------------------------------------------------------------------------------------
Annual Rent $41,776 $280,939 $162,140 $150,535 $81,559 $110,147 $827,096
- --------------------------------------------------------------------------------------------
Percent gross
annual rent 5% 33% 19% 18% 10% 13% 98%
- --------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
EXHIBIT (a)(2)
LETTER OF TRANSMITTAL
TO PURCHASE LIMITED PARTNERSHIP UNITS
OF
SIERRA PACIFIC DEVELOPMENT FUND
A CALIFORNIA LIMITED PARTNERSHIP
TENDERED PURSUANT TO THE OFFER TO PURCHASE
DATED _____________, 1999
OF JOHN N. GALARDI
==============================================================================
| DESCRIPTION OF LIMITED PARTNERSHIP UNITS ("UNITS") TENDERED |
| |
| NAME(S) AND ADDRESS(ES) OF UNITS TENDERED |
| REGISTERED HOLDER(S) |
| _______________________________________* |
| |
| * Unless otherwise indicated, it will be |
| assumed that all Units held by a |
| TENDERING registered holder are being |
| tendered. See Instruction 2. |
==============================================================================
==============================================================================
| |
| THIS OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., PACIFIC TIME, ON |
| _________, _________, 1999, UNLESS THE OFFER IS EXTENDED. |
| |
==============================================================================
This Letter of Transmittal is to be executed and returned to Gemisys Corporation
(the "Depositary") at one of the following addresses:
<TABLE>
<CAPTION>
BY MAIL OR OVERNIGHT BY HAND: BY FACSIMILE FOR INFORMATION
COURIER
<S> <C> <C> <C>
Gemisys Corporation Gemisys Corporation Gemisys Corporation Gemisys
7103 South Revere Parkway 7103 South Revere Fax: (303) 705-6171 Corporation
Englewood, Colorado 80112 Parkway Attention: Investor Tel: (303)
Attention: Investor Englewood, Colorado Services 705-3261
Services / Sierra Pacific 80112
Development Fund Attention: Investor
Services / Sierra
Pacific Development Fund
</TABLE>
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR
TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE NUMBER OTHER THAN THE ONE LISTED
ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY BEFORE COMPLETING
THE LETTER OF TRANSMITTAL
Ladies and Gentlemen:
The undersigned hereby tenders to John N. Galardi, an individual (the "Bidder"),
the above-described Limited Partnership Units (the "Units") for Sierra Pacific
Development Fund (the "Partnership") pursuant to the Bidder's offer to purchase
at a price per Unit of $60.00, net to the seller in cash, in accordance with the
terms and subject to the conditions set forth in the Offer to Purchase, dated
__________, 1999 (the "Offer to Purchase"), receipt of which is hereby
acknowledged, and in this Letter of Transmittal (which together constitute the
"Offer").
<PAGE>
Subject to, and effective upon, acceptance for payment of and payment for the
Units tendered herewith in accordance with the terms and subject to the
conditions of the Offer (including, if the Offer is extended or amended, the
terms and conditions of any such extension or amendment), the undersigned hereby
sells, assigns and transfers to, or upon the order of, the Bidder all right,
title and interest in and to all the Units that are being tendered hereby (and
any and all other Units or other securities issued or issuable in respect
thereof on or after ___________, 1999 (collectively, "Distributions")) and
constitutes and appoints the Depositary the true and lawful agent and
attorney-in-fact of the undersigned with respect to such Units and all
Distributions, with full power of substitution (such power of attorney being
deemed to be an irrevocable power coupled with an interest), to (a) transfer
ownership of such Units and all Distributions to or upon the order of the
Bidder, (b) present such Units and all Distributions for registration and
transfer on the books of the Partnership and (c) receive all benefits and
otherwise exercise all rights of beneficial ownership of such Units and all
Distributions, all in accordance with the terms of the Offer.
The undersigned hereby represents and warrants that the undersigned (i) has
received and reviewed the Offer to Purchase and (ii) has full power and
authority to tender, sell, assign and transfer the Units tendered hereby and all
Distributions and that, when and to the extent the same are accepted for payment
by the Bidder, the Bidder 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 the same will not be subject to any adverse claims. The
undersigned will, upon request, execute and deliver any additional documents
deemed by the Depositary or the Bidder to be necessary or desirable to complete
the sale, assignment and transfer of the Units tendered hereby and all
Distributions. In addition, the undersigned shall promptly remit and transfer to
the Depositary for the account of the Bidder any and all other Units or other
securities issued to the undersigned on or after _____________, 1999 in respect
of Units tendered hereby, accompanied by appropriate documentation of transfer,
and pending such remittance or appropriate assurance thereof, the Bidder shall
be entitled to all rights and privileges as owner of any such other Units or
other securities and may withhold the entire consideration of deduct from the
consideration the amount of value thereof as determined by the Bidder, in its
sole discretion.
The undersigned (i) has been advised that the Bidder is the owner of 50%
of the outstanding capital and voting stock and a director of CGS Real Estate
Company, Inc., of which S-P Properties, Inc., the General Partner of the
Partnership, is a wholly-owned subsidiary, and that the General Partner of the
Partnership makes no recommendation as to whether or not the undersigned should
tender his or her Units in the Offer and (ii) has made his or her own decision
to tender the Units.
The undersigned understands that, notwithstanding any other provisions of
the Offer and subject to the applicable rules of the Securities and Exchange
Commission, the Bidder will not be required to accept for payment or pay for any
Units tendered, and may terminate or amend the Offer or may postpone the
acceptance for payment of or payment for Units tendered, if at any time on or
after ____________, 1999, and before acceptance for payment of or payment for
any such Units, any of the following events shall have occurred (or shall have
been determined by the Bidder in its sole judgment to have occurred) regardless
of the circumstances giving rise thereto (including any action or omission to
act by the Bidder):
(a) there shall have been threatened, instituted or pending any action or
proceeding by any government or governmental, regulatory or administrative
agency or authority or tribunal or any other person, domestic or foreign, or
before any court, authority, agency or tribunal that (i) challenges or seeks
to challenge the acquisition of Units pursuant to the Offer or otherwise in
any manner relates to or affects the Offer or (ii) in the sole judgment of
the Bidder, could materially and adversely affect the business, condition
(financial or other), income, operations or prospects of the Partnership, or
otherwise materially impair in any way the contemplated future conduct of the
business of the Partnership or materially impair the contemplated benefits of
the Offer to the Bidder;
(b) there shall have been any action threatened, pending or taken, or
approval withheld, withdrawn or abrogated or any statute, rule, regulation,
judgment, order or injunction threatened, proposed, sought, promulgated,
enacted, entered, amended, enforced or deemed to be applicable to the Offer
or the Partnership, by any legislative body, court, authority, agency or
tribunal which, in the Bidder's sole judgment, would or might directly or
indirectly (i) make the acceptance for payment of, or payment for, some or
all of the Units illegal or otherwise restrict or prohibit consummation of
the Offer, (ii) delay or restrict the ability of the Bidder, or render the
Bidder unable, to accept for payment or pay for some or all of the Units,
(iii) imposes or seeks to impose limitations on the ability of the Bidder to
acquire or hold or to exercise full rights of ownership of the Units, (iv)
materially impair the contemplated benefits of the Offer to the Bidder or (v)
materially affect the business, condition (financial or other), income,
operations or prospects of the Partnership, or otherwise materially impair in
any way the contemplated future conduct of the business of the Partnership;
<PAGE>
(c) it shall have been publicly disclosed or the Bidder shall have learned
that any person or "group" (within the meaning of Section 13(d)(3) of the
Exchange Act) has acquired or proposes to acquire beneficial ownership of
more than 5% of the outstanding Units;
(d) there shall have occurred (i) any general suspension of trading in, or
limitation on prices for, securities on any national securities exchange or
in the over-the-counter market, (ii) any significant decline in the general
level of market prices of equity securities in the United States or abroad,
(iii) any change in the general political, market, economic or financial
condition in the United States or abroad that could have a material adverse
effect on the Partnership's business, condition (financial or other), income,
operations or prospects, (iv) the declaration of a banking moratorium or any
suspension of payments in respect of banks in the United States or any
limitation on, or any event which, in the Bidder's sole judgment, might
affect, the extension of credit by lending institutions in the United States,
(v) the commencement of a war, armed hostilities or other international or
national crisis directly or indirectly involving the United States or (vi) in
the case of any of the foregoing existing at the time of the commencement of
the Offer, in the Bidder's sole judgment, a material acceleration or
worsening thereof;
(e) a tender or exchange offer with respect to some or all of the Units
(other than the Offer) or a merger, acquisition or other business combination
proposal for the Partnership, shall have been proposed, announced or made;
(f) there shall have occurred any event or events that have resulted, or
may in the sole judgment of the Bidder result, in an actual or threatened
change in the business, condition (financial or other), income, operations,
stock ownership or prospects of the Partnership; or materially impair the
contemplated benefits of the Offer;
(g) there shall have occurred any decline in the S&P Composite 500 Stock
Index by an amount in excess of 15% measured from the close of business on
____________, 1999; or
(h) the Offeror shall not have received the approval of the Partnership to
the assignment to the Offeror of the Units tendered pursuant to the Offer;
and, in the sole judgment of the Bidder, such event or events make it
undesirable or inadvisable to proceed with the Offer or with such acceptance for
payment or payment. Any of the foregoing conditions may be waived by the Bidder,
in whole or in part, at any time and from time to time in its sole discretion.
The failure by the Bidder at any time to exercise any of the foregoing rights
shall not be deemed a waiver of any such right and each such right shall be
deemed an ongoing right which may be asserted at any time and from time to time.
Any determination by the Bidder concerning the events described above will be
final and binding on all parties.
The undersigned hereby irrevocably appoints John N. Galardi, the attorney and
proxy of the undersigned, with full power of substitution, to vote in such
manner as such attorney and proxy or his substitute shall, in his sole
discretion, deem proper, and otherwise act (including pursuant to written
consent) with respect to all of the Units tendered hereby which have been
accepted for payment by the Company prior to the time of such vote or action
(and any and all non-cash distribution, other Units, securities, issued or
issuable in respect thereof on or after ______________, 1999), which the
undersigned is entitled to vote, at any meeting (whether annual or special and
whether or not an adjourned meeting) of limited partners of the Partnership, or
with respect to which the undersigned is empowered to act in connection with
action by written consent in lieu of any such meeting or otherwise. This proxy
is irrevocable and is grant in consideration of, and is effective upon, the
acceptance for payment of such Units by the Bidder, in accordance with the terms
of the Offer. Such acceptance for payment shall revoke any other proxy granted
by the undersigned at any time with respect to such Units (and any non-cash
distribution, other Units or securities) and no subsequent proxies will be given
(and if given, will be deemed not to be effective) with respect thereto by the
undersigned. The Bidder reserves the right to require that in order for Units to
be properly tendered, immediately upon acceptance of such Units for purchase by
the Bidder, the Bidder is able to exercise full voting rights with respect to
such Units.
All authority herein conferred or agreed to be conferred shall not be affected
by, and shall survive the death or incapacity of the undersigned, and any
obligation of the undersigned hereunder shall be binding upon the heirs,
personal representatives, successors and assigns of the undersigned. Except as
stated in the Offer, this tender is irrevocable.
The undersigned understands that tenders of Units pursuant to any one of the
procedures described in the Offer to Purchase and in the instructions hereto
will constitute the undersigned's acceptance of the terms and conditions of the
Offer, including the undersigned's representation and warranty that (i) the
undersigned has a net long position in the Units being tendered within the
meaning of Rule 14e-4 promulgated under the Securities Exchange Act of 1934, as
amended, and (ii) the tender of such Units complies with Rule 14e-4. The
Bidder's acceptance for payment of Units tendered pursuant to the Offer will
<PAGE>
constitute a binding agreement between the undersigned and the Bidder upon the
terms and subject to the conditions of the Offer.
Please issue the payment for the Units in the name(s) of the undersigned.
Similarly, unless otherwise indicated under "Special Delivery Instructions,"
please mail the check for the Purchase Price of any Units purchased to the
undersigned at the address shown below the undersigned's signature(s).
------------------------------------------------------------------------------
| |
| TENDER OF UNITS IN OFFER |
| |
|THE UNDERSIGNED TENDERS UNITS IN THE OFFER ON THE TERMS DESCRIBED ABOVE. |
| |
|SIGN HERE IMPORTANT: COMPLETE AND SIGN THE |
| SUBSTITUTE FORM W-9 (SEE INSTRUCTION 8) |
| |
| SIGNATURE(S)________________________________________________________________ |
| |
| |
| SIGNATURE(S)________________________________________________________________ |
| |
| |
| MEDALLION GUARANTEE ________________________________________________________ |
| |
| |
| DATE: ________________________ TELEPHONE NUMBER: (___)_______ |
| |
|(Must be signed by registered holder(s) as name(s) appear(s) under|
|registration above. If signature is by trustees, executors, administrators,|
|guardians, attorneys-in-fact, agent, officers of corporations or others acting|
|in a fiduciary or representative capacity, please provide the following|
|information. See Instruction 3). |
| |
|NAME (S)_____________________________________________________________________ |
| (please print) |
| |
|NAME (S)_____________________________________________________________________ |
| (please print) |
| |
|CAPACITY (FULL TITLE)________________________________________________________ |
| |
| |
|Address______________________________________________________________________ |
| |
|_____________________________________________________________________________ |
| (Include Zip Code) |
| |
|Area Code and Telephone No.__________________________________________________ |
------------------------------------------------------------------------------
------------------------------------------------------------------------------
| SPECIAL MAILING INSTRUCTIONS |
|------------------------------------------------------------------------------|
| |
|To be completed ONLY if payment is to be issued to the registered holder(s)|
|but mailed to OTHER than the address of record. (See Instruction 5). |
|------------------------------------------------------------------------------|
| |
|Mail payment to:_____________________________________________________________ |
|------------------------------------------------------------------------------|
| |
|Name:________________________________________________________________________ |
| (Must be same as registered holder(s)) |
| |
|______________________________________________________________________________|
| |
|Address:______________________________________________________________________|
| |
| ____________________________________________________________________________|
| (Please print) Zip Code |
------------------------------------------------------------------------------
<PAGE>
------------------------------------------------------------------------------
| | PART 1 - PLEASE PROVIDE YOUR | Tax Identification Number |
|SUBSTITUTE | TIN IN THE BOX AT RIGHT AND | (Social Security Number or|
|Form W-9 | CERTIFY BY SIGNING AND | Employer Identification |
| | DATING BELOW. | Number) |
| | | _________________________|
| | | |
| |----------------------------------------------------------|
| | |
|Department of the |PART 2 - Check the box if you are not subject to backup|
|Treasury Internal |withholding because (1) you have not been notified that|
|Revenue Service |you are subject to backup withholding as a result of|
| |failure to report all interest or dividends or (2) the|
| |Internal Revenue Service has notified you that you are no|
| |longer subject to backupwithholding. |_| |
| ----------------------------------------------------------|
| |
|Payer's Request Certification - Under penalties of PART 3 |
|for Taxpayer perjury, I certify that the |
|Identification information provided on this form is Awaiting TIN |_| |
|Number (TIN) true, correct and complete. |
| |
|Signature______________________________________ Date________________________ |
------------------------------------------------------------------------------
NOTE: FAILURE TO COMPLETE AND RETURN THE SUBSTITUTE FORM W-9 MAY RESULT IN
BACKUP WITHHOLDING OF 31% OF ANY CASH PAYMENT MADE TO UNITHOLDERS. PLEASE REVIEW
THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON
SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS. IF THE BOX IN PART 3 OF THE
SUBSTITUTE FORM W-9 IS CHECKED, THE CERTIFICATE BELOW MUST BE COMPLETED.
------------------------------------------------------------------------------
| CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER |
| |
| I certify under penalties of perjury that a taxpayer identification|
|number has not been issued to me, and either (a) I have mailed or delivered an|
|application to receive a taxpayer identification number to the appropriate|
|Internal Revenue Service Center or Social Security Administration Office or|
|(b) I intend to mail or deliver an application in the near future. I|
|understand that if I do not provide a taxpayer identification number by the|
|time of payment, 31% of any cash payment made to me will be withheld, but that|
|such amount will be refunded to me if I then provide a Taxpayer Identification|
|Number within sixty (60) days. |
| |
|Signature______________________________________ Date________________________ |
------------------------------------------------------------------------------
<PAGE>
INSTRUCTIONS
Forming Part of the Terms and Conditions of the Offer
1. DELIVERY OF LETTER OF TRANSMITTAL. A properly completed and duly
executed Letter of Transmittal and any other documents required by this Letter
of Transmittal, must be received by the Depositary at its address set forth
herein on or prior to the First Expiration Date (as defined in the Offer to
Purchase}.
The method of delivery of this Letter of Transmittal and all other
required documents, is at the option and risk of the tendering Unitholder and
the delivery will be deemed made only when actually received by the Depositary.
If delivery is by mail, registered mail with return receipt requested, properly
insured, is recommended. In all cases, sufficient time should be allowed to
assure timely delivery.
No alternative, conditional or contingent tenders will be accepted, and no
fractional Units will be accepted for payment or purchased. All tendering
Unitholders, by execution of this Letter of Transmittal, waive any right to
receive any notice of the acceptance of their Units for payment.
2. PARTIAL TENDERS. If fewer than all the Units held by a Unitholder are
to be tendered, (i) fill in the number of Units which are to be tendered in the
section entitled "Number of Units Tendered" and (ii) the Unitholder must hold at
least five Units after such tender. Accordingly, a Unitholder should not tender
if, as a result of such tender, the tendering holder (other than one
transferring all of his or her Units) will hold less than five Units. All Units
held by a Unitholder will be deemed to have been tendered unless otherwise
indicated.
3. SIGNATURES ON LETTER OF TRANSMITTAL.
(a) If this Letter of Transmittal is signed by the registered holder(s) of
the Units, the signature(s) must correspond exactly with the Unitholder's
registration.
(b) If any of the Units are owned of record by two or more joint owners,
all such owners must sign this Letter of Transmittal.
(c) If any Units are registered in different names, it will be necessary
to complete, sign and submit as many separate Letters of Transmittal as there
are different registrations.
(d) If this Letter of Transmittal is signed by a trustee, executor,
administrator, guardian, attorney-in-fact, officer of a corporation or other
person acting in a fiduciary or representative capacity, such person should so
indicate when signing, and if requested, proper evidence satisfactory to the
Company of such person's authority so to act must be submitted.
4. STOCK TRANSFER TAXES. Except as set forth in this Instruction 4, the
Company will pay or cause to be paid any stock transfer taxes with respect to
the transfer and sale of Units to it or its order pursuant to the Offer. If
payment of the purchase price is to be made to any person other than the
registered holder, the amount of any stock transfer taxes (whether imposed on
the registered holder or such other person) payable on account of the transfer
to such person will be deducted from the purchase price unless satisfactory
evidence of the payment of such taxes or exemption therefrom is submitted.
5. SPECIAL MAILING INSTRUCTIONS. If payment for the Units is to be issued
to the registered holder(s) but mailed to other than the address of record, the
section entitled "Special Mailing Instructions" must be completed.
6. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Requests for assistance
may be directed to, or additional copies of the Offer to Purchase and this
Letter of Transmittal may be obtained from, the Depositary or the Soliciting
Agent at their respective addresses set forth below.
7. IRREGULARITIES. All questions as to the validity, form, eligibility
(including time of receipt) and acceptance of any tender of Units will be
determined by the Company, in its sole discretion, and its determination shall
be final and binding. The Company reserves the absolute right to reject any or
all tenders of any particular Units (i) determined by it not to be in the
appropriate form or (ii) the acceptance for purchase of Units which may, in the
opinion of the Company's counsel, be unlawful.
8. SUBSTITUTE FORM W-9. The tendering Unitholder is required to provide
the Depositary with a correct Taxpayer Identification Number ("TIN") on
Substitute Form W-9 which is provided in the Letter of Transmittal and to
indicate that the Unitholder is not subject to backup withholding by checking
the box in Part 2 of the form. Failure to provide the information on the
Substitute Form W-9 may subject the tendering Unitholder to 31 % federal income
tax withholding on the payment of the purchase price. To prevent backup
withholding, each tendering Unitholder must provide his or her correct TIN by
completing the Substitute Form W-9, certifying that the TIN provided is correct
and that (i) the Unitholder has not been notified by the Internal Revenue
Service that he or she is subject to backup withholding as a result of failure
<PAGE>
to report all interest or dividends or (ii) the Internal Revenue Service has
notified the Unitholder that he or she is no longer subject to backup
withholding, or certify that such Unitholder is exempt from backup withholding.
If the Unitholder does not have a TIN, he or she should consult the Guidelines
for Certification of Taxpayer Identification Number on Substitute Form W-9 for
instructions on applying for a TIN, check the box in Part 3 of the Substitute
Form W-9 and complete the Certificate of Awaiting Taxpayer Identification
Number. If the Unitholder provides his or her TIN to the Depositary within 60
days of the date the Depositary receives the Letter of Transmittal, any amounts
withheld during such 60-day period will be refunded to the Unitholder by the
Depositary.
WHAT TAXPAYER IDENTIFICATION NUMBER TO GIVE THE DEPOSITARY
The Unitholder is required to give the Depositary the social security
number or employer identification number of the record holder of the Units. If
the Units are in more than one name or are not in the name of the actual owner,
consult the Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9 for additional guidelines on which number to report.
Certain Unitholders (including, among others, all corporations and certain
foreign individuals) are not subject to these backup withholding and reporting
requirements. In order for a foreign individual to qualify as an exempt
recipient, that Unitholder must submit a statement, signed under penalties of
perjury, attesting to that individual's exempt status. Such statements can be
obtained from the Depositary. See the Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9 for additional information.
IMPORTANT: THIS LETTER OF TRANSMITTAL. TOGETHER WITH ALL OTHER REQUIRED
DOCUMENTS, MUST BE RECEIVED BY THE DEPOSITARY ON OR PRIOR TO THE EXPIRATION
DATE.
THE DEPOSITARY
GEMISYS CORPORATION
7103 South Revere Parkway
Englewood, Colorado 80112
(303) 705-3261
<PAGE>
EXHIBIT (a)(3)
Department of the Treasury Internal Revenue Service
Instructions for the Requester of Form W-9 (Rev. November 1998)
Request for Taxpayer Identification Number and Certification
SECTION REFERENCES ARE TO THE INTERNAL REVENUE CODE UNLESS OTHERWISE NOTED.
These instructions supplement the instructions on the Form W-9 (Rev. December
1996) for the requester.
CHANGE TO NOTE
ELECTRONIC SUBMISSION OF FORMS W-9.
Requesters may establish a system for payees to submit Forms W-9 electronically,
including by fax. A requester is anyone required to file an information return.
A payee is anyone required to provide a taxpayer identification number (TIN) to
the requester. Generally, the electronic system must --
o Ensure the information received is the information sent, and document all
occasions of user access that result in the submission.
o Make it reasonably certain the person accessing the system and submitting the
form is the person identified on Form W-9.
o Provide you with the same information as the paper Form W-9.
o Require as the final entry in the submission an electronic signature by the
payee whose name is on Form W-9 that authenticates and verifies the
submission.
o Be able to supply a hard copy of the electronic Form W-9 if the Internal
Revenue Service requests it.
NOTE: FOR FORMS W-9 THAT ARE NOT REQUIRED TO BE SIGNED, THE ELECTRONIC SYSTEM
NEED NOT PROVIDE FOR AN ELECTRONIC SIGNATURE OR A PERJURY STATEMENT.
Additional requirements may apply. See Announcement 98-27, 1998-15 I.R.B. 30.
INDIVIDUAL TAXPAYER IDENTIFICATION NUMBER (ITIN)
Form W-9 (or an acceptable substitute) is used by persons required to file
information returns with the IRS to get the payee's correct TIN. For
individuals, the TIN is generally a social security number (SSN).
However, in some cases, individuals who become U.S. resident aliens for
tax purposes are not eligible to obtain an SSN. This includes certain resident
aliens who must receive information returns but who cannot obtain an SSN.
These individuals must apply for an ITIN on Form W-7, Application for IRS
Individual Taxpayer Identification Number, unless they have an application
pending for an SSN. Individuals who have an ITIN must provide it on Form W-9.
<PAGE>
SUBSTITUTE FORM W-9
You may develop and use your own Form W-9 (a substitute Form W-9) if its
content is substantially similar to the IRS's official Form W-9 and it satisfies
certain certification requirements.
You may incorporate a substitute Form W-9 into other business forms you
customarily use, such as account signature cards, provided the certifications
that (1) the payee's TIN is correct and (2) the payee is not subject to backup
withholding due to failure to report interest and dividend income, shown on the
official Form W-9, are clearly set forth. You may not:
1. Use a substitute Form W-9 that requires the payee, by signing, to agree
to provisions unrelated to the required certifications: or
2. Imply that a payee may be subject to backup withholding unless the
payee agrees to provisions on the substitute form that are unrelated to the
required certifications.
A substitute Form W-9 that contains a separate signature line just for the
certifications satisfies the requirement that the certifications be clearly set
forth.
If a single signature line is used for the required certifications and
other provisions, the certifications must be highlighted, boxed, printed in
bold-face type, or presented in some other manner that causes the language to
stand out from all other information contained on the substitute form.
Additionally, the following statement must be presented in the same manner as in
the preceding sentence and must appear immediately above the single signature
line: "The Internal Revenue Service does not require your consent to any
provision of this document other than the certifications required to avoid
backup withholding."
If you use a substitute form, the instructions do not have to be furnished
to the payee. The payee only needs to be instructed orally or in writing to
strike out the language of the certification that relates to payee
underreporting, if the payee is subject to backup withholding due to notified
payee underreporting. However, you are encouraged to provide instructions
relevant to the account, especially if the payee requests them.
TIN APPLIED FOR
For interest and dividend payments and certain payments with respect to readily
tradable instruments, If the payee returns a properly completed Form W-9 with
"Applied For" written in Part I (i.e., an "awaiting TIN" certificate), the payee
must give you a TIN within 60 calendar days to avoid backup withholding. You may
use one of the following rules to backup withhold during this 60-day period.
NOTE: THE 60-DAY EXEMPTION FROM BACKUP WITHHOLDING DOES NOT APPLY TO ANY PAYMENT
OTHER THAN INTEREST, DIVIDENDS, AND CERTAIN PAYMENTS MADE WITH RESPECT TO
<PAGE>
READILY TRADABLE INSTRUMENTS. THEREFORE, ANY OTHER PAYMENT, SUCH AS NONEMPLOYEE
COMPENSATION, IS SUBJECT TO BACKUP WITHHOLDING EVEN IF THE PAYEE HAS APPLIED FOR
AND IS AWAITING A TIN.
RESERVE RULE.--If a payee withdraws more than $500 at one time during the 60-day
period, you must backup withhold on any reportable payments made during the
period, unless the payee reserves 31% of all reportable payments made to the
account during the period.
ALTERNATIVE RULE (OPTION 1).--You must backup withhold on any reportable
payments if the payee makes a withdrawal from the account after the close of 7
business days after you receive the awaiting-TIN certificate. Treat as
reportable payments all cash withdrawals in an amount up to the reportable
payments made from the day after you receive the awaiting-TIN certificate to the
day of withdrawal.
ALTERNATIVE RULE (OPTION 2).--You must backup withhold on any reportable
payments made to the payee's account, regardless of whether the payee makes any
withdrawals. Backup withholding under this option must begin no later than 7
business days after you receive the awaiting-TIN certificate.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Even if the payee does not provide TIN in the manner required, you are not
required to backup withhold on any payments you make if the payee is:
1. An organization exempt from tax under section 501(a), an IRA, or a
custodial account under section 403(b)(7), if the account satisfies the
requirements of section 401(f)(2).
2. The United States or any of its agencies or instrumentalities.
3. A state, the District of Columbia, a possession of the United States,
or any of their political subdivisions or instrumentalities.
4. A foreign government or any of its political subdivisions, agencies, or
instrumentalities.
5. An international organization or any of its agencies or
instrumentalities.
OTHER PAYEES THAT MAY BE EXEMPT FROM BACKUP WITHHOLDING INCLUDE:
6. A corporation.
7. A foreign central bank of issue.
8. A dealer in securities or commodities required to register in the
United States, the District of Columbia, or a possession of the United States.
<PAGE>
9. A futures commission merchant registered with the Commodity Futures
Trading Commission.
10. A real estate investment trust.
11. An entity registered at all times during the tax year under the
Investment Company Act of 1940.
12. A common trust fund operated by a bank under section 584(a).
13. A financial institution.
14. A middleman known in the investment community as a nominee or who is
listed in the most recent publication of the American Society of Corporate
Secretaries, Inc., Nominee List.
15. A trust exempt from tax under section 664 or described in section
4947.
INTEREST AND DIVIDEND PAYMENTS.--All listed payees are exempt except the payee
in item (9).
BROKER TRANSACTIONS.--All payees listed in items (1) through (13) are exempt. A
person registered under the Investment Advisors Act of 1940 who regularly acts
as a broker is also exempt.
PAYMENTS REPORTABLE UNDER SECTIONS 6041 AND 6041A.
These payments are generally exempt from backup withholding only if made to
payees listed in items (1) through (7). However, the following payments made to
a corporation and reportable on Form 1099-MISC are not exempt from withholding:
o Medical and health care payments.
o Attorneys' fees.
o Payments for services paid by a Federal executive agency.
GROSS PROCEEDS; ATTORNEYS. Reportable gross proceeds paid to attorneys (under
section 6045(f), even if the attorney is a corporation, are not exempt from
backup withholding.
BARTER EXCHANGE TRANSACTIONS AND PATRONAGE DIVIDENDS.
Only payees listed in items (1) through (5) are exempt from backup withholding
on these payments.
Payments Exempt From Backup Withholding
<PAGE>
Payments that are not subject to information reporting also are not subject to
backup withholding. For details, see sections 6041, 6041A, 6042, 6044, 6045
6049, 6050A, and 6050N, and their regulations.
DIVIDENDS AND PATRONAGE DIVIDENDS that generally are exempt from backup
withholding include:
o Payments to nonresident aliens subject to withholding under section 1441.
o Payments to partnerships not engaged in a trade or business in the United
States and that have at least one nonresident alien partner.
o Payments of patronage dividends not paid in money.
o Payments made by certain foreign organizations.
o Section 404(k) payments made by an ESOP.
INTEREST PAYMENTS that generally are exempt from backup withholding include:
o Payments of interest on obligations issued by individuals. However, if you
pay $600 or more of interest in the course of your trade or business to a
payee, you must report the payment. Backup withholding applies to the
reportable payment if the payee has not provided a TIN or has provided an
incorrect TIN.
o Payments of tax-exempt interest (including exempt-interest dividends under
section 852).
o Payments described in section 6049(b)(5) to nonresident aliens.
o Payments on tax-free covenant bonds under section 1451.
o Payments made by certain foreign organizations.
o Mortgage interest paid to you.
OTHER TYPES OF PAYMENTS that generally are exempt from backup withholding
include:
o Wages.
o Distributions from a pension, annuity, profit-sharing or stock bonus plan, or
an IRA.
o Distributions from an owner-employee plan.
o Certain surrenders of life insurance contracts.
o Gambling winnings, if withholding is required under section 3402(q). However,
if withholding is not required under section 3402(q), backup withholding
applies if the payee fails to furnish a TIN.
o Real estate transactions reportable under section 6045(e).
o Canceled debts reportable under section 6050P.
o Distributions from a medical savings account and long-term care benefits.
o Fish purchases for cash reportable under section 6050R.
JOINT FOREIGN PAYEES
If the first payee listed on an account gives you Form W-8, Certificate of
Foreign Status, or a similar statement signed under penalties of perjury, backup
withholding applies unless:
<PAGE>
1. Every joint payee provides the statement regarding foreign
status; or
2. Any one of the joint payees who has not established foreign status
gives you a TIN.
If any one of the joint payees who has not established foreign status
gives you a TIN, that number is the TIN that must be used for purposes of backup
withholding and information reporting.
NAMES AND TLNS TO USE FOR INFORMATION REPORTING
Show the full name and address as provided on Form W-9 on the information return
filed with the IRS and on the copy furnished to the payee. If you made payments
to more than one payee or the account is in more than one name, enter on the
first name line ONLY the name of the payee whose TIN is shown on the information
return. Show the names of any other individual payees in the area below the
first name line, if desired.
SOLE PROPRIETORS.--You must show the individual's name on the first name line.
On the second name line, you may enter the business name or "doing business as
(DBA)" if provided. You may not enter only the business name. For the TIN, you
may enter either the individual's SSN or the employer identification number
(EIN) of the business. However, the IRS prefers that you show the SSN.
ADDITIONAL INFORMATION
For more information on backup withholding, get PUB. 1679, A Guide to Backup
Withholding, or PUB. 1281, Backup Withholding on Missing and Incorrect
Names/TINs.
NOTICES FROM THE IRS
The IRS will send you a notice if the payee's name and TIN on the information
return you filed do not match the IRS's records. You may have to send a "B"
notice to the payee to solicit another TIN. See Pubs. 1679 and 1281 for copies
of the two types of "B" notices.
