SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------------------------------------
SCHEDULE 13E-4
AMENDMENT NO. 1 TO THE
ISSUER TENDER OFFER STATEMENT
(Pursuant to Section 13(e)(1) of the Securities Exchange Act of 1934)
NTS-PROPERTIES IV., LTD.
(Name of Issuer)
NTS-PROPERTIES IV., LTD.
(Name of Person Filing Statement)
LIMITED PARTNERSHIP INTERESTS
(Title of Class of Securities)
62942E209
(CUSIP Number of Class of Securities)
J.D. Nichols, Managing General Partner
NTS-Properties Associates IV
10172 Linn Station Road
Louisville, Kentucky 40223
(502) 426-4800
(Name, Address and Telephone Number of Person Authorized to Receive
Notices and Communications on Behalf of Person Filing Statement)
Copy to:
Michael J. Choate, Esq.
Shefsky & Froelich Ltd.
444 North Michigan Avenue, Suite 2500
Chicago, Illinois 60611
(312) 836-4066
November 20, 1998
(Date Tender Offer First Published, Sent or Given to Security Holders)
CALCULATION OF FILING FEE
- --------------------------------------------------------------------------------
| Transaction Valuation: $246,000 (a) | Amount of Filing Fee|
| Limited Partnership Interest at $205 per Interest| $49.20(b) |
- --------------------------------------------------------------------------------
(a) Calculated as the aggregate maximum purchase price for limited
partnership interests.
(b) Calculated as 1/50th of 1% of the Transaction Value.
|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 of Schedule and the date of its filing.
Amount Previously Paid: ______________ $49.20
Form or Registration No.: _____________ Schedule 13E-4, No. 98-000032
Filing Party: ________________________ NTS Properties IV and Orig, LLC
Date Filed: __________________________ November 20, 1998
- --------------------------------------------------------------------------------
1
<PAGE>
Item 1. Security and Issuer.
- -----------------------------
(d) In addition to NTS Properties IV., Ltd. (the "Partnership"), ORIG,
LLC, a Kentucky limited liability company (the "Affiliate") and an affiliate of
the Partnership, is jointly offering to purchase the Interests. The address of
the Affiliate is 10172 Linn Station Road, Louisville, Kentucky, 40223. The
Affiliate is not a co-filer of this Amendment No. 1 to the Issuer Tender Offer
Statement on Schedule 13E-4. Rather, the Affiliate is filing a Tender Offer
Statement on Schedule 14D-1 simultaneously with the filing of this Amendment No.
1 to the Issuer Tender Offer Statement. The members of the Affiliate are J.D.
Nichols and Brian F. Lavin. Mr. Nichols is the general partner of the
NTS-Properties Associates V, general partner of the Partnership (the "General
Partner"). Mr. Nichols is also the managing member of the Affiliate. Mr. Lavin
is the Executive Vice President of the General Partner. The business address of
Mr. Nichols and Mr. Lavin is: 10172 Linn Station Road, Louisville, Kentucky,
40223.
Item 2. Source and Amount of Funds or Other Consideration.
- -----------------------------------------------------------
The General Partner is not offering to purchase Interests pursuant to
the Offer. Therefore, this Item 2 is inapplicable to the General Partner.
Item 4. Interest in Securities of the Issuer.
- ----------------------------------------------
There have not been any transactions involving Interests that were
effected during the past forty (40) business days by the Partnership, the
General Partner, Mr. Nichols or Mr. Lavin, the Affiliate or any other associate
or subsidiary of any such person.
Item 5. Contracts, Arrangements, Understandings or Relationships with Respect
- -------------------------------------------------------------------------------
to the Issuer's Securities.
- ---------------------------
Mr. Nichols and Mr. Lavin, the members of the Affiliate, have executed
a binding Capital Contribution Agreement under which they have agreed to fund
the purchase of Interests by the Affiliate and the Affiliate's proportionate
share of the expenses of the Offer. Mr. Nichols anticipates contributing
approximately 90% of these funds; and Mr. Lavin anticipates contributing
approximately 10% of these funds. The members of the Affiliate anticipate making
these capital contributions immediately upon the expiration of the Offer.
Other than these agreements, the Offerors are not aware of any other
contract, arrangement, understanding or relationship relating, directly or
indirectly, to this Offer (whether or not legally enforceable) between or among
(i) the Partnership, the General Partner or the Affiliate or (ii) any person
controlling the Partnership, the General Partner or the Affiliate or any other
person.
Reference is hereby made to Exhibit (c)(2) to this Schedule which is
incorporated herein by reference.
2
<PAGE>
Item 7. Financial Information
- ------------------------------
(a) Reference is hereby made to the audited financial statements of the
Partnership for the years ended December 31, 1996 and December 31, 1997, filed
with the Securities and Exchange Commission ("Commission") on Form 10-K on March
27, 1997 and March 26, 1998, respectively, which are incorporated herein by
reference. Also, reference is hereby made to the unaudited financial statements
of the Partnership for the three and nine-month periods ended September 30,
1998, filed with the Commission on Form 10-Q on November 16, 1998, which are
incorporated herein by reference.
(b) Reference is hereby made to the financial statements giving the
effect of the Offer on a pro forma basis attached as Exhibit (a)(6) hereto,
which are incorporated herein by reference.
Item 8. Additional Information.
- --------------------------------
(e) The Offer to Purchase dated November 20, 1998 inadvertently
indicated that the General Partner does not own any Interests and that the
aggregate number of Interests owned by all partners, members, affiliates and
associates of the General Partner or the Affiliate is 306 Interests. The General
Partner, however, owns five Interests and Amendment No. 1 to the Offer to
Purchase has been amended to indicate that the aggregate number of Interests
owned by all partners, members, affiliates and associates of the General Partner
or the Affiliate is 311 Interests.
Section 6, "Certain Conditions of the Offer," of the Offer to
Purchase is hereby amended by deleting the phrase "sole judgment" and replacing
it with the phrase "reasonable judgment."
Reference is hereby made to the Offer to Purchase, the Letter
of Transmittal and related documents, and Amendment No. 1 to the Offer to
Purchase, which are incorporated herein by reference.
Item 9. Material to be Filed as Exhibits.
- ------------------------------------------
(a)(1) Form of Offer to Purchase dated November 20, 1998 (including
financial statements giving pro forma effect of the Offer).1
(a)(2) Form of Letter of Transmittal.1
(a)(3) Form of Affidavit and Indemnification Agreement for Missing
Certificate(s) of Ownership.1
(a)(4) Form of Letter to Limited Partners.1
(a)(5) Substitute Form W-9 with Guidelines.1
- --------
1 Filed herein.
3
<PAGE>
(a)(6) Form of Amendment No. 1 to the Offer to Purchase dated January
27, 1999(including amended financial statements giving pro
forma effect of the Offer).2
(a)(7) Press Release by NTS Properties IV., Ltd. and ORIG, LLC dated
January 27, 1999.2
(b) None.
(c)(1) Reference is hereby made to the Amended and Restated Agreement
of Limited Partnership of NTS-Properties IV., Ltd. and ORIG,
LLC, dated as of July 20, 1988, previously filed with the
Securities and Exchange Commission as part of the
Partnership's Registration Statement on Form S-11, No.2-83771,
filed with the Commission on May 16, 1983 and declared
effective on August 1, 1983.
(c)(2) Capital Contribution Agreement dated January 20, 1999 executed
by the members of ORIG, LLC.1
(d) None.
(e) None.
(f) None.
- --------
2 Previously filed as an Exhibit to the Issuer Tender Offer Statement on
Schedule 13E-4, No. 98-000032, filed with the SEC on November 20, 1998.
4
<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.
Date: January 27, 1999 NTS-PROPERTIES IV., Ltd., a Kentucky limited
partnership
By: NTS-PROPERTIES ASSOCIATES IV,
General Partner
By: /s/ J. D. Nichols
----------------------------
J.D. Nichols,
Its: Managing General Partner
5
<PAGE>
EXHIBITS
Exhibit
Number Description
- ------ -----------
(a)(1) Form of Offer to Purchase, dated November 20, 1998
(including financial statements giving pro forma effect of
the Offer).2
(a)(2) Form of Letter of Transmittal.2
(a)(3) Form of Affidavit and Indemnification Agreement for
Missing Certificate(s) of Ownership.2
(a)(4) Form of Letter to Limited Partners.2
(a)(5) Substitute Form W-9 with Guidelines.2
(a)(6) Form of Amendment No. 1 to the Offer to Purchase dated
January 27, 1999 (including amended financial statements
giving pro forma effect of the Offer).1
(a)(7) Press Release by NTS Properties IV., Ltd. and ORIG, LLC
dated January 27, 1999.1
(b) None.
(c)(1) Reference is hereby made to the Amended and Restated
Agreement of Limited Partnership of NTS-Properties IV.,
Ltd., dated as of July 20, 1988, previously filed with the
Securities and Exchange Commission as part of the
Partnership's Registration Statement on Form S-11, No.
2-83771, filed with the Commission on May 16, 1983 and
declared effective on August 1, 1983.
(c)(2) Capital Contribution Agreement dated January 20, 1999
executed by the members of ORIG, LLC.1
(d) None.
(e) None.
(f) None.
- -------------------------
1 Filed herein.
2 Previously filed as an Exhibit to the Issuer Tender Offer Statement
on Schedule 13E-4, No. 98-000032, filed with the SEC on November 20, 1998.
6
<PAGE>
Exhibit (a)(6)
Form of Amendment No. 1 to Offer to Purchase dated January 27, 1999
<PAGE>
[NTS IV letterhead]
To our Limited Partners:
Enclosed for your consideration is Amendment No. 1 to the Offer to
Purchase your limited partnership interests in NTS Properties IV., Ltd. (the
"Amended Offer"). The Amended Offer contains amended unaudited Pro Forma
Financial Statements that restate the unaudited Pro Forma Financial Statements
that were included in the Offer to Purchase dated November 20, 1998 (the
"Original Offer"). The amended unaudited Pro Forma Financial Statements have
been restated to reflect the sales of the University I and University II
properties as if these sales had occurred before December 31, 1997 and September
30, 1998, respectively. Except for the amended unaudited Pro Forma Financial
Statements, none of the terms or conditions of the Amended Offer differ from
those contained in the Original Offer, and the Amended Offer incorporates by
reference all of the information contained in the Original Offer.
The Expiration Date of the Amended Offer remains Friday, February 19,
1999. If you have already tendered your interests, and do not wish to withdraw
your tendered interests, your interests will be accepted by the Offerors
according to the terms of the Original Offer. If, after reviewing the Amended
Offer, you wish to withdraw your tendered Interests, you may do so according to
the terms of the Original Offer.
If you have not yet tendered any or all of your interests, and wish to
do so, please complete and return to NTS Investors Services c/o Gemisys the
following documents that were mailed to you with the Original Offer:
(1) the Letter of Transmittal (blue);
(2) the Substitute Form W-9 (green); and
(3) the Certificate(s) of Ownership for the interests or,
if you are unable to locate the Certificate(s) of
Ownership, complete the Affidavit and Indemnification
Agreement for Missing Certificate(s) of Ownership
(yellow).
On or before the expiration of the Offer return or deliver all of the
above documents to:
NTS INVESTOR SERVICES
C/O GEMISYS
7103 S. REVERE PARKWAY
ENGLEWOOD, CO 80112
For additional information, call: (800) 387-7454
<PAGE>
Amendment No. 1 to the
Offer to Purchase for Cash
by
NTS-Properties IV., Ltd.
and
ORIG, LLC
of Up to
1,200 Limited Partnership Interests
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00
MIDNIGHT, EASTERN STANDARD TIME, ON FRIDAY, FEBRUARY 19, 1999, UNLESS EXTENDED.
NTS-Properties IV., Ltd. is a Kentucky limited partnership (the
"Partnership") that owns, or owns joint venture interests in, certain commercial
and residential rental real estate properties. See Section 10, "Certain
Information About the Partnership." Except as otherwise provided in the
Partnership Agreement (defined below), the Partnership's general partner,
NTS-Properties Associates IV (the "General Partner"), owns a one percent (1%)
interest in the Partnership and the limited partners, in the aggregate, own a
ninety-nine percent (99%) interest in the Partnership. The Partnership and ORIG,
LLC, a Kentucky limited liability company (the "Affiliate"), an affiliate of the
Partnership (the Affiliate and the Partnership are each an "Offeror" and
collectively, the "Offerors"), are offering to purchase for cash upon the terms
and conditions set forth in this Amendment No. 1 to the Offer to Purchase
("Offer to Purchase") and the related Letter of Transmittal ("Letter of
Transmittal," which together with the Offer to Purchase constitutes the "Offer")
in the aggregate up to 1,200 of the Partnership's limited partnership interests
(the "Interests") at a price equal to $205 per Interest (the "Purchase Price").
This Offer is being made to all limited partners of the Partnership ("Limited
Partners") and is generally not conditioned upon any minimum amount of Interests
being tendered, but is subject to certain conditions described herein.
Limited Partners tendering all or any portion of their Interests are
subject to certain risks including:
o The Purchase Price of $205 per Interest may
not equate to the fair market value or the
liquidation value of the Interest.
o Neither the General Partner, on behalf of
the Partnership, nor the Affiliate has
retained an independent third party to
evaluate the fairness of the Offer.
o Conflicts in establishing the Purchase Price
exist between tendering Limited Partners and
the Partnership, the General Partner and
non-tendering Limited Partners.
o Negative tax consequences may exist for any
Limited Partner tendering its Interests.
o The General Partner makes no recommendation
regarding whether Limited Partners should
tender or retain their Interests.
Limited Partners continuing to hold all or any portion of their
Interests are subject to certain risks including:
o The Partnership may not make future cash
distributions to Limited Partners.
o The percentage ownership of Interests held
by persons controlling, controlled by
or under common control with the General
Partner or its affiliates will increase as a
result of the Offer.
o The recent sale of a property by a joint
venture in which the Partnership is a
partner may decrease the Partnership's
future operating revenues.
o The Partnership has no current plans to
liquidate its assets and to distribute the
proceeds to its Limited Partners.
o General economic risks are associated with
investments in real estate.
o The Partnership's financial condition may be
adversely affected by a downturn in
the business of any tenant occupying a
significant portion of a Partnership
property or a tenant's decision not to renew
its lease.
See "RISK FACTORS."
-----------------------------------------------------
<PAGE>
THE OFFER IS NOT CONDITIONED UPON ANY MINIMUM NUMBER OF INTERESTS BEING
TENDERED; PROVIDED, HOWEVER, NO TENDER WILL BE ACCEPTED FROM A LIMITED PARTNER
IF, AS A RESULT OF THE TENDER, THE LIMITED PARTNER WOULD CONTINUE TO BE A
LIMITED PARTNER AND WOULD HOLD FEWER THAN FIVE (5) INTERESTS. THE OFFER IS
CONDITIONED UPON, AMONG OTHER THINGS, THE ABSENCE OF CERTAIN CONDITIONS
DESCRIBED IN SECTION 6, "CERTAIN CONDITIONS OF THE OFFER."
-----------------------------------------------------
IMPORTANT
Any Limited Partner wishing to tender all or any portion of his, her or
its Interests should complete and sign the enclosed Letter of Transmittal in
accordance with the instructions in the Offer to Purchase and Letter of
Transmittal and deliver it together with the Certificate(s) of Ownership for the
Interests being tendered (or if the Certificate(s) of Ownership for the
Interests is (are) lost, stolen, misplaced or destroyed, the Affidavit and
Indemnification Agreement for Missing Certificate(s) of Ownership executed by
the Limited Partner attesting to such fact), the Substitute Form W-9 and any
other required documents to the Partnership. A Limited Partner having Interests
registered in the name of a broker, dealer, commercial bank, trust company or
other nominee must contact that broker, dealer, commercial bank, trust company
or other nominee if he, she or it desires to tender such Interests.
-----------------------------------------------------
Questions and requests for assistance or for additional copies of this
Offer to Purchase, the Letter of Transmittal or any other documents relating to
this Offer may be directed to NTS Investor Services c/o Gemisys at (800)
387-7454.
The date of this Amendment No. 1 to the Offer to Purchase is January 27, 1999
2
<PAGE>
NEITHER THE OFFERORS NOR THE PARTNERSHIP'S GENERAL PARTNER MAKE ANY
RECOMMENDATION TO ANY LIMITED PARTNER REGARDING WHETHER TO TENDER OR REFRAIN
FROM TENDERING INTERESTS. EACH LIMITED PARTNER MUST MAKE HIS, HER OR ITS OWN
DECISION REGARDING WHETHER TO TENDER INTERESTS, AND, IF SO, THE PORTION OF SUCH
LIMITED PARTNER'S INTERESTS TO TENDER.
NO PERSON HAS BEEN AUTHORIZED TO MAKE ANY RECOMMENDATION ON BEHALF OF
THE OFFERORS REGARDING WHETHER LIMITED PARTNERS SHOULD TENDER OR REFRAIN FROM
TENDERING INTERESTS PURSUANT TO THE OFFER. NO PERSON HAS BEEN AUTHORIZED TO GIVE
ANY INFORMATION OR TO MAKE ANY REPRESENTATION IN CONNECTION WITH THE OFFER OTHER
THAN THOSE CONTAINED HEREIN OR IN THE LETTER OF TRANSMITTAL. ANY RECOMMENDATION
OR INFORMATION, IF GIVEN OR MADE, MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE OFFERORS OR THE GENERAL PARTNER.
THIS TRANSACTION HAS NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE FAIRNESS OR MERITS OF SUCH
TRANSACTION OR UPON THE ACCURACY OR ADEQUACY OF THE INFORMATION CONTAINED IN
THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
3
<PAGE>
TABLE OF CONTENTS
INTRODUCTION...................................................................5
SUMMARY OF CERTAIN INFORMATION.................................................8
RISK FACTORS...................................................................9
THE OFFER.....................................................................12
Section 1. Background and Purposes of the Offer........................12
Section 2. Offer to Purchase and Purchase Price; Proration;
Expiration Date; Determination of Purchase Price............13
Section 3. Procedure for Tendering Interests...........................15
Section 4. Withdrawal Rights...........................................16
Section 5. Purchase of Interests; Payment of Purchase Price............16
Section 6. Certain Conditions of the Offer.............................17
Section 7. Cash Distribution Policy....................................19
Section 8. Effects of the Offer........................................20
Section 9. Source and Amount of Funds..................................20
Section 10. Certain Information About the Partnership...................21
Section 11. Certain Federal Income Tax Consequences.....................24
Section 12. Transactions and Arrangements Concerning Interests..........27
Section 13. Extensions of Tender Period; Terminations; Amendments.......27
Section 14. Fees and Expenses...........................................28
Section 15. Address; Miscellaneous......................................28
Supplement No. 1 to the Offer to Purchase The Partnership's
Financial Statements Giving Pro Forma Effect of the Offer...30
4
<PAGE>
To Holders of Limited Partnership
Interests of NTS-Properties IV., Ltd.
INTRODUCTION
NTS-Properties IV., Ltd. is a Kentucky limited partnership (the
"Partnership") that owns, or owns joint venture interests in, certain commercial
and residential rental real estate properties. See Section 10, "Certain
Information About the Partnership." Except as otherwise provided in the
Partnership Agreement (defined below), the Partnership's general partner,
NTS-Properties Associates IV (the "General Partner") owns a one percent (1%)
interest in the Partnership and the limited partners own, in the aggregate, a
ninety-nine percent (99%) interest in the Partnership. The Partnership and ORIG,
LLC, a Kentucky limited liability company (the "Affiliate"), an affiliate of the
Partnership (the Partnership and the Affiliate are each an "Offeror" and,
collectively, the "Offerors"), hereby offer to purchase up to 1,200 of the
Partnership's limited partnership interests (the "Interests") at a purchase
price of $205 per Interest (the "Purchase Price") in cash to the seller upon the
terms and subject to the conditions set forth in this Amendment No. 1 to the
Offer to Purchase ("Offer to Purchase") and in the related "Letter of
Transmittal" (together the "Offer to Purchase" and "Letters of Transmittal"
constitute the "Offer"). (As used herein, the term "Interest" or "Interests," as
the context requires, refers to the limited partnership interests in the
Partnership and portions thereof that constitute the class of equity security
that is the subject of this Offer or the limited partnership interests or
portions thereof that are tendered by the limited partner to the Offerors
pursuant to the Offer.) This Offer is being made to all limited partners in the
Partnership ("Limited Partners") and is generally not conditioned upon any
minimum amount of Interests being tendered, except as described herein. The
Interests are not traded on any established trading market and are subject to
certain restrictions on transferability set forth in the Amended and Restated
Agreement of Limited Partnership of NTS-Properties IV., Ltd. dated July 20, 1988
(the "Partnership Agreement"). The Partnership or the Affiliate, each in its
sole discretion, may purchase more than 600 Interests, but neither has any
current intention to do so.
The Purchase Price should not be viewed as equivalent to the fair
market value or the liquidation value of an Interest. As of September 30, 1998
and December 31, 1997, the book value of each Interest was approximately $142.43
and $144.44, respectively. The Purchase Price offered by the Offerors has been
determined by the Partnership, in its sole discretion, based on: (i) recent
sales of Interests by Limited Partners to third parties in secondary market
transactions; (ii) recent repurchases of interests by the Partnership; and (iii)
recent purchases of Interests by the Partnership's affiliate, Ocean Ridge
Investments Ltd., a Florida limited liability partnership ("Ocean Ridge").
Subject to the conditions set forth in the Offer, the Partnership will
purchase the first 600 Interests which are tendered and received by the
Partnership by, and not withdrawn prior to, 12:00 Midnight, Eastern Standard
Time, on Friday , February 19, 1999, subject to any extension of the Offer by
the Offerors (the "Expiration Date"). If more than 600 Interests are tendered,
the Affiliate will purchase up to an additional 600 Interests which are tendered
and received by the Partnership by, and not withdrawn prior to the Expiration
Date. If, on the Expiration Date, the Offerors
5
<PAGE>
determine that more than 1,200 Interests have been tendered during the Offer,
each Offeror may: (i) accept the additional Interests permitted to be accepted
pursuant to Rule 13e-4(f)(1) promulgated under the Securities Exchange Act of
1934 ("Exchange Act"), as amended; or (ii) extend the Offer, if necessary, and
increase the amount of Interests that the Offeror is offering to purchase to an
amount that the Offeror believes to be sufficient to accommodate the excess
Interests tendered as well as any Interests tendered during the extended Offer.
If the Offer is oversubscribed and the Offerors do not act in
accordance with (i) or (ii), above, or if the Offerors act in accordance with
(i) and (ii), above, but the Offer remains oversubscribed, then the Offerors
will accept Interests tendered prior to or on the Expiration Date for payment on
a pro rata basis ("Proration"). In the event of Proration, the number of
Interests purchased from a Limited Partner will be equal to a fraction of the
Interests tendered, the numerator of which will be the total number of Interests
the Offerors are willing to purchase and the denominator of which will be the
total number of Interests properly tendered. Any fractional interests resulting
from this calculation will be rounded down to the nearest whole number.
Fractions of Interests will not be purchased. The Partnership will notify, in
writing, all Limited Partners from whom the Offerors will purchase fewer than
the number of Interests tendered by the Limited Partner. For any Interest
tendered but not purchased by the Offerors, a book entry will be made on the
Partnership's books to reflect the Limited Partner's ownership of the Interests
not purchased. The Partnership will not issue a new Certificate of Ownership for
the Interests not purchased by the Offerors, except upon written request of the
Limited Partner.
The Offer is generally not conditioned upon any minimum number of
Interests being tendered. The Offer, however, is conditioned upon, among other
things, the absence of certain adverse conditions described in Section 6,
"Certain Conditions of the Offer." In particular, the Offer will not be
consummated, if in the opinion of the General Partner, there is a reasonable
likelihood that purchases under the Offer would result in termination of the
Partnership (as a partnership) under Section 708 of the Internal Revenue Code of
1986, as amended (the "Code"), or termination of the Partnership's status as a
partnership for federal income tax purposes under Section 7704 of the Code.
Further, the Offerors will not purchase Interests if the purchase of Interests
would result in Interests being owned by fewer than three hundred (300) holders
of record. See Section 6, "Certain Conditions of the Offer."
All purchases of Interests pursuant to the Offer will be effective as
of the Expiration Date. Each Limited Partner who tenders Interests pursuant to
the Offer will receive the Purchase Price and cash distributions declared prior
to the Expiration Date, if any. Limited Partners will not be entitled to receive
cash distributions declared and payable after the Expiration Date, if any, on
any Interests tendered and accepted by the Offerors.
The tender of an Interest will be treated as a sale of the Interest for
federal and most state income tax purposes which will result in the Limited
Partner recognizing gain or loss for income tax purposes. Limited Partners are
urged to review carefully all the information contained in or referred
6
<PAGE>
to in this Offer including, without limitation, the information presented herein
in Section 11, "Certain Federal Income Tax Consequences."
As of September 30, 1998, the General Partner owned 5, and the
Affiliate did not own any, of the Partnership's outstanding Interests. All
partners, members, affiliates and associates of the General Partner or the
Affiliate beneficially owned, or were in the process of acquiring, an aggregate
of 311 Interests, representing approximately 1.2% of the Partnership's 25,309
outstanding Interests. Although the Offer is being made to all Limited Partners,
the Partnership has been advised that none of the partners, members, affiliates
or associates of the General Partner or the Affiliate intend to tender any
Interests pursuant to the Offer. Assuming the Offer is fully subscribed, the
General Partner, the Affiliate and partners, members, affiliates and associates
of the General Partner or the Affiliate, will own, after the Offer, an aggregate
of 911 Interests representing approximately 3.7% of the Partnership's
outstanding Interests.
7
<PAGE>
SUMMARY OF CERTAIN INFORMATION
------------------------------
The following is a summary of certain information contained elsewhere
in this Offer. The summary does not purport to be complete and is qualified in
its entirety by reference to the more detailed information contained elsewhere
in this Offer and related documents. Capitalized terms used but not defined in
this summary are defined elsewhere in this Offer. Limited Partners are urged to
read all documents constituting this Offer in their entirety.
Offerors The Partnership, a Kentucky limited
partnership, and the Affiliate, a
Kentucky limited liability company,
invite all of the Partnership's
Limited Partners to tender their
Interests upon the terms and subject
to the conditions set forth in this
Offer.
Purchase Price $205 per Interest in cash.
Expiration Date The Offer expires on Friday,
February 19, 1999 at 12:00 Midnight,
Eastern Standard Time unless the
Offer is otherwise extended by the
Offerors in accordance with the
provisions set forth herein. ALL
INTERESTS BEING TENDERED MUST BE
RECEIVED BY THE PARTNERSHIP AT THE
ADDRESS SET FORTH IN SECTION 15,
"ADDRESS; MISCELLANEOUS," ON OR
BEFORE THE EXPIRATION DATE.
Offer Conditions The Offerors will purchase in the
aggregate up to 1,200 Interests. The
first 600 Interests tendered will be
purchased by the Partnership; up to
an additional 600 Interests tendered
will be purchased by the Affiliate.
If the Offer is oversubscribed,first
the Partnership may purchase
additional Interests, and then the
Affiliate may purchase additional
Interests, each in its sole
discretion. If the Offer remains
oversubscribed, Interests will be
purchased on a pro rata basis.
This Offer is being made to all
Limited Partners and is not
conditioned upon a minimum amount of
Interests being tendered; provided
however, no tender will be accepted
from a Limited Partner if, as a
result of the tender, the Limited
Partner would continue to be a
Limited Partner and would hold fewer
than five (5) Interests. The Offer
is subject to certain terms and
conditions set forth in the Offer.
8
<PAGE>
RISK FACTORS
------------
Limited Partners Tendering All or Any Portion of Their Interests Are
---------------------------------------------------------------------
Subject to Certain Risks:
- -------------------------
Purchase Price May Be Less Than Fair Market Value and Liquidation
----------------------------------------------------------------------
Value Per Interest. The Interests are not traded on a recognized stock exchange
- ------------------
or trading market and a readily identifiable, liquid market for the Interests
does not exist. The Offerors are aware of certain secondary market transactions
by which Interests were transferred at a price equal to $166.13 per Interest
(including commissions and other mark-ups) by Limited Partners to third parties
during the period from January 1, 1997 to April 30, 1998. Additionally, the
Partnership has repurchased 1,380 interests, and its affiliates, Ocean Ridge and
B.K.K. Financial, Inc., an Indiana corporation ("BKK"), have purchased 306
Interests during the period from March 1, 1995 to September 30, 1998 at prices
ranging from $130 to $205 per Interest. As of September 30, 1998 and December
31, 1997, the book value of each Interest was approximately $142.43 and $144.44,
respectively. Neither these secondary market transactions nor the Purchase Price
necessarily reflects the value that Limited Partners would realize from holding
the Interests until termination or liquidation of the Partnership, which could
result in greater or lesser value. The Offerors have not obtained an opinion
from an independent third party regarding the fairness of the Purchase Price.
Furthermore, the Offerors did not obtain an appraisal of the Partnership's
assets in establishing the Purchase Price.
Negative Tax Consequences May Exist for Any Limited Partner Tendering
-----------------------------------------------------------------------
Interests. Limited Partners tendering and selling Interests pursuant to this
- ---------
Offer generally will recognize a gain or loss on the tender of his, her or its
Interests for federal and most state income tax purposes. The amount of gain or
loss realized will be, in general, the excess of the Purchase Price minus the
Limited Partner's adjusted tax basis in the Interests sold. Generally, the sale
of Interests held by a Limited Partner for more than twelve (12) months will
result in long-term capital gain or loss. Due to the complexity of tax issues,
Limited Partners are advised to consult their tax advisors with respect to their
individual tax situations before tendering their Interests pursuant to the
Offer. See Section 10, "Certain Information About the Partnership" and Section
11, "Certain Federal Income Tax Consequences."
Conflict of Interest. A conflict of interest exists between Limited
--------------------
Partners who are tendering their Interests and the Partnership, the General
Partner and non-tendering Limited Partners. Tendering Limited Partners would
prefer a higher Purchase Price; the Partnership, the General Partner and
non-tendering Limited Partners would prefer a lower Purchase Price.
General Partner Makes No Recommendation to Limited Partners. The
-----------------------------------------------------------------
General Partner makes no recommendation regarding whether Limited Partners
should tender or retain their Interests. Limited Partners should make their own
decisions regarding whether to tender their Interests based upon their own
individual situation.
9
<PAGE>
Limited Partners Who Do Not Tender All or Any Portion of Their
-----------------------------------------------------------------------
Interests Are Subject to Certain Risks:
- ---------------------------------------
The Partnership May Not Make Future Cash Distributions. The amount of
-------------------------------------------------------
funds required by the Partnership to fund the Offer is estimated to be
approximately $143,000 ($123,000 to purchase 600 Interests plus approximately
$20,000 for its proportionate share of the expenses associated with
administering the Offer; the expenses of the Offer will be apportioned between
the Offerors based on the number of Interests purchased by each Offeror). The
Partnership intends to fund these monies from its cash reserves. The use of the
Partnership's cash reserves to fund the Offer will have the effect of: (i)
reducing the existing cash available for future needs or contingencies and (ii)
reducing or eliminating the interest income that the Partnership earns on its
cash reserves. There can be no assurance that the Partnership will be able to
fund its future needs or contingencies, which may have a material adverse effect
on the Partnership's business or financial condition.
Increased Voting Control by Affiliates of the Partnership. If the Offer
---------------------------------------------------------
is fully subscribed, the percentage ownership of Interests held by persons
controlling, controlled by or under common control with the Partnership will
increase. As of September 30, 1998, the General Partner owned 5, and the
Affiliate did not own any, of the Partnership's outstanding Interests. All
partners, members, affiliates and associates of the General Partner or the
Affiliate beneficially owned, or were in the process of acquiring, in the
aggregate 311 Interests, representing approximately 1.2% of the Partnership's
25,309 outstanding Interests. Although this Offer is made to all Limited
Partners, the Partnership has been advised that none of the partners, members,
affiliates or associates of the General Partner or the Affiliate intend to
tender any Interests pursuant to the Offer. Assuming the Offer is fully
subscribed, the General Partner, the Affiliate, and partners, members,
affiliates and associates of the General Partner or the Affiliate, will own,
after the Offer, an aggregate of 911 Interests representing approximately 3.7%
of the Partnership's 24,709 outstanding Interests, an increase of 2.5%. In
addition, other persons controlling, controlled by or under common control with
the Partnership, by virtue of the decreased number of outstanding Interests,
will have a greater percentage of the outstanding Interests. The increase in
ownership of Interests will enable these entities or individuals to have a
greater influence on certain matters voted on by Limited Partners, including
removal of the General Partner and termination of the Partnership.
Sale of University II May Decrease Future Revenues. On October 6, 1998,
--------------------------------------------------
the Lakeshore/University II Joint Venture ("L/U II Joint Venture") (in which the
Partnership owns an 18% interest) closed the sale of the University Business
Center Phase II ("University II") to Silver Cities Properties, Ltd. ("Silver
Cities"), an affiliate of one of the L/U II Joint Venture's tenants. Silver
Cities purchased the property for $8,975,000. University II accounted for 4.96%
of the Partnership's revenues as of September 30, 1998. The L/U II Joint Venture
intends to use the proceeds of the sale of University II to develop Lakeshore
Business Center Phase III, a 3.77 acre parcel of vacant land owned by the L/U II
Joint Venture. The L/U II Joint Venture intends to build a 40,000 square foot
office service building on this property. There can be no assurances that the
L/U II Joint Venture's reinvestment of the proceeds of the sale of University II
will generate
10
<PAGE>
revenues equivalent to those generated by University II. If the reinvestment of
the proceeds of the University II sale by the L/U II Joint Venture does not
generate equivalent revenues, the Partnership's future operating revenues will
be decreased. See Section 10, "Certain Information About the Partnership".
Partnership Has No Current Plans to Liquidate. The Partnership has no
----------------------------------------------
current plan to liquidate its assets and to distribute the proceeds to its
Limited Partners nor does the Partnership contemplate resuming distributions to
the Limited Partners. Therefore, Limited Partners who do not tender their
Interests may not be able to realize any return on or of their investment in the
foreseeable future.
Reliance on Certain Tenants. The Partnership's financial condition and
---------------------------
ability to fund future cash needs including its ability to make future cash
distributions, if any, may be adversely affected by the bankruptcy, insolvency
or a downturn in business of any tenant occupying a significant portion of any
Partnership property or by a tenant's decision not to renew its lease. Failure
to release the space vacated by significant tenants on a timely basis and on
terms and conditions acceptable to the Partnership could have a material adverse
effect on the Partnership's results of operation and financial condition.
General Economic Risks Associated with Investments in Real Estate. All
-----------------------------------------------------------------
real property investments are subject to some degree of risk. Generally, equity
investments in real estate are illiquid and, therefore, the Partnership's
ability to promptly vary its portfolio in response to changing economic,
financial and investment conditions is limited. Real estate investments are also
subject to changes in economic conditions as well as other factors affecting
real estate values, including: (i) possible federal, state or local regulations
and controls affecting rents, prices of goods, fuel and energy consumption and
prices, water and environmental restrictions; (ii) increased labor and material
costs; and (iii) the attractiveness of the property to tenants in the
neighborhood. For a detailed discussion of the risks associated with investment
in real estate, refer to the "Risk Factors" set forth in the Partnership's
prospectus dated August 1, 1983.
11
<PAGE>
THE OFFER
Section 1. Background and Purposes of the Offer. The purpose of the
Offer is to provide Limited Partners who desire to liquidate their investment in
the Partnership with a method for doing so. With the exception of isolated
transactions, no established secondary trading market for the Interests exists
and pursuant to the Partnership Agreement, transfers of Interests are subject to
certain restrictions, including the prior approval of the General Partner. The
General Partner believes that there are certain Limited Partners who desire
immediate liquidity, while other Limited Partners may not need or desire
liquidity and would prefer the opportunity to retain their Interests. The
General Partner believes that the Limited Partners should be entitled to make a
choice between immediate liquidity and continued ownership and, thus, believes
that the Offer being made hereby accommodates the differing goals of both groups
of Limited Partners. Those Limited Partners who tender their Interests pursuant
to the Offer are, in effect, exchanging certainty and liquidity for the
potentially higher return of continued ownership of their Interests. The
continued ownership of Interests, however, entails the risk of loss of all or a
portion of the Limited Partner's investment. See "Risk Factors."
Neither the Offerors nor the General Partner has any current plans or
proposals that relate to or would result in: (i) an extraordinary corporate
transaction, such as a merger, reorganization or liquidation, involving the
Partnership; (ii) any change in the identity of the General Partner or in the
management of the Partnership, including, but not limited to, any plans or
proposals to change the number or term of the General Partner(s), to fill any
existing vacancy for the General Partner, or to change any material term of the
management agreement between the General Partner and the Partnership; (iii) any
material change in the present distribution policy, indebtedness or
capitalization of the Partnership; (iv) any other material change in the
structure or business of the Partnership; or (v) any change in the Partnership
Agreement or other actions that may impede the acquisition of control of the
Partnership by any person. The General Partner, however, may explore and pursue
any of these options in the future.
The purchase of Interests pursuant to the Offer will have the effect of
increasing the proportionate interest in the Partnership of Limited Partners
(including affiliates of the General Partner that own Interests) who do not
tender their Interests or tender only a portion of their Interests. Limited
Partners retaining their Interests may be subject to increased risks including
but not limited to: (1) reduction in the Partnership's cash reserves, which may
impact the Partnership's ability to fund its future cash requirements, thus
having a material adverse effect on the Partnership's financial condition; and
(2) increased voting control by the affiliates of the General Partner (including
the Affiliate) and members of the affiliates. See "Risk Factors." Interests that
are tendered to the Partnership in connection with this Offer will be retired,
although the Partnership may issue new interests from time to time in compliance
with the federal and state securities laws or any exemptions therefrom.
Interests purchased by the Affiliate will be held by the Affiliate. Neither the
Partnership nor the General Partner has plans to offer for sale any other
additional interests, but each reserves the right to do so in the future.
12
<PAGE>
The General Partner intends to consider the desirability of the
Partnership making future tender offers to purchase interests following
completion of the Offer, but is not required to make any future offers. Although
the Partnership and its affiliates have from time to time purchased interests,
this is the first tender offer made by the Partnership or the Affiliate for
interests. See Section 2, "Offer to Purchase and Purchase Price; Expiration
Date; Determination of Purchase Price."
Section 2. Offer to Purchase and Purchase Price; Proration;
Expiration Date; Determination of Purchase Price.
Offer to Purchase and Purchase Price. The Offerors will, upon the terms
------------------------------------
and subject to the conditions of the Offer, described below, purchase in the
aggregate up to 1,200 Interests that are properly tendered by, and not withdrawn
prior to, the Expiration Date at a price equal to $205 per Interest; provided
however, that no tender will be accepted from a Limited Partner if, as a result
of the tender, the Limited Partner would continue to be a Limited Partner and
would hold fewer than five (5) Interests. The Partnership will purchase the
first 600 Interests which are tendered and received by the Partnership by, and
not withdrawn prior to, the Expiration Date. If more than 600 Interests are
tendered and received by the Partnership as a result of this Offer, the
Affiliate will purchase up to an additional 600 Interests which are tendered by,
and not withdrawn prior to, the Expiration Date.
If, on the Expiration Date, the Offerors determine that more than 1,200
Interests have been tendered during the Offer, each Offeror may: (i) accept the
additional Interests permitted to be accepted pursuant to Rule 13e-4(f)(1)
promulgated under the Exchange Act, as amended; or (ii) extend the Offer, if
necessary, and increase the amount of Interests that the Offeror is offering to
purchase to an amount that the Offeror believes to be sufficient to accommodate
the excess Interests tendered as well as any Interests tendered during the
extended Offer.
Proration. If the Offer is oversubscribed and the Offerors do not act
---------
in accordance with (i) or (ii), above, or if the Offerors act in accordance with
(i) and (ii), above, but the Offer remains oversubscribed, then the Offerors
will accept Interests tendered prior to or on the Expiration Date for payment on
a pro rata basis. In the event of Proration, the number of Interests purchased
from a Limited Partner will be equal to a fraction of the Interests tendered,
the numerator of which will be the total number of Interests the Offerors are
willing to purchase and the denominator of which will be the total number of
Interests properly tendered. Any fractional interests resulting from this
calculation will be rounded down to the nearest whole number. Fractions of
Interests will not be purchased. The Partnership will notify, in writing, all
Limited Partners from whom the Offerors will purchase fewer than the number of
Interests tendered by the Limited Partner. For any Interest tendered but not
purchased by the Offerors, a book entry will be made on the Partnership's books
to reflect the Limited Partner's ownership of the Interests not purchased. The
Partnership will not issue a new Certificate of Ownership for Interests not
purchased by the Offerors, except upon written request of the Limited Partner.
13
<PAGE>
THIS OFFER IS NOT CONDITIONED UPON ANY MINIMUM AMOUNT OF INTERESTS
BEING TENDERED; PROVIDED, HOWEVER, NO TENDER WILL BE ACCEPTED FROM A LIMITED
PARTNER IF, AS A RESULT OF THE TENDER, THE LIMITED PARTNER WOULD CONTINUE TO BE
A LIMITED PARTNER AND WOULD HOLD FEWER THAN FIVE (5) INTERESTS.
Expiration Date. The term "Expiration Date" means 12:00 Midnight,
----------------
Eastern Standard Time, on Friday, February 19, 1999, unless and until the
Offerors extend the period of time for which the Offer is open, in which event
"Expiration Date" will mean the latest time and date at which the Offer, as
extended by the Offerors, expires. The Partnership may extend the Offer, in its
sole discretion, by providing the Limited Partners with written notice of the
extension; provided however, that if the Offer is oversubscribed, the
Partnership or the Affiliate may, each in its sole discretion, extend the Offer
by providing the Limited Partners with written notice of the extension. For a
description of how the Offer may be extended or terminated, see Section 13,
"Extensions of Tender Period; Terminations; Amendments."
Determination of Purchase Price. The Purchase Price represents the
---------------------------------
price at which the Offerors are willing to purchase Interests. No Limited
Partner approval is required or was sought regarding the determination of the
Purchase Price. No special committee of the Partnership, the Affiliate or the
Limited Partners has approved this Offer and no special committee or independent
person has been retained to act on behalf of the Partnership or the Affiliate.
Neither the Offerors nor the General Partner has obtained an opinion from an
independent third party regarding the fairness of the Purchase Price.
The Purchase Price offered by the Offerors was determined by the
Partnership in its sole discretion based on: (i) the value of recent sales of
Interests by Limited Partners to third parties in secondary market transactions;
(ii) the value of recent repurchases of interests by the Partnership; and (iii)
the value of recent purchases of Interests by Ocean Ridge. The General Partner
is aware of certain sales of Interests made at a price equal to $166.13 per
Interest (including commissions and other mark-ups) by certain Limited Partners
to third parties during the period from January 1, 1997 to April 30, 1998. The
Partnership has repurchased interests, and Ocean Ridge and BKK have purchased
Interests, in secondary market transactions and through the Partnership's
Interest Repurchase Program, at prices ranging from $130 to $205 per Interest
during the period from March 1, 1995 to September 30, 1998. The information
regarding transactions between Limited Partners and third parties is based on
the General Partner's knowledge and may not reflect all transactions that have
taken place during the time periods set forth above. As of September 30, 1998
and December 31, 1997, the book value of each Interest was approximately $142.43
and $143.66, respectively.
In determining the Purchase Price, the Partnership did not consider the
liquidation value per Interest or the book value per Interest and did not
appraise the value of its assets.
14
<PAGE>
Section 3. Procedure for Tendering Interests. Limited Partners that
wish to tender Interests pursuant to this Offer must submit a properly completed
and duly executed Letter of Transmittal and Substitute Form W-9, together with
the Certificate(s) of Ownership for the Interests being tendered or if the
Certificate(s) of Ownership for the Interests is (are) lost, stolen, misplaced
or destroyed, the Affidavit and Indemnification Agreement for Missing
Certificate(s) of Ownership executed by the Limited Partner attesting to such
fact (the "Affidavit"), and any other required documents to NTS Investor
Services c/o Gemisys at the address listed in Section 15, "Address;
Miscellaneous." THE LETTER OF TRANSMITTAL, SUBSTITUTE FORM W-9, AND
CERTIFICATE(S) OF OWNERSHIP FOR THE INTERESTS BEING TENDERED (OR AFFIDAVIT, IF
APPLICABLE) AND ANY OTHER REQUIRED DOCUMENTS MUST BE RECEIVED BY THE PARTNERSHIP
ON OR BEFORE THE EXPIRATION DATE. NEITHER THE PARTNERSHIP NOR THE AFFILIATE WILL
ACCEPT INTERESTS RECEIVED BY THE PARTNERSHIP AFTER THE EXPIRATION DATE.
Method of Delivery. LIMITED PARTNERS ASSUME ANY RISK ASSOCIATED WITH
------------------
THE METHOD FOR DELIVERING THE LETTER OF TRANSMITTAL, SUBSTITUTE FORM W-9 AND
CERTIFICATE(S) OF OWNERSHIP FOR THE INTERESTS (OR THE AFFIDAVIT). THE
PARTNERSHIP RECOMMENDS THAT LIMITED PARTNERS SUBMIT ALL DOCUMENTS VIA REGISTERED
MAIL RETURN RECEIPT REQUESTED AND PROPERLY INSURED OR BY AN OVERNIGHT COURIER
SERVICE. LIMITED PARTNERS MAY CONFIRM RECEIPT OF A LETTER OF TRANSMITTAL BY
CONTACTING NTS INVESTOR SERVICES C/O GEMISYS AT THE ADDRESS AND TELEPHONE NUMBER
LISTED IN SECTION 15, "ADDRESS; MISCELLANEOUS."
Determination of Validity. All questions regarding the validity, form,
-------------------------
eligibility (including time of receipt) and acceptance for payment of any
Interests will be determined by the Partnership, in its sole discretion.
Notwithstanding the foregoing, if the Offer is oversubscribed, the Partnership
and the Affiliate may each decide to purchase Interests in excess of the initial
1,200 Interests. In that case, all questions regarding the validity, form or
eligibility (including time of receipt) and acceptance for payment of any
additional Interests purchased by either the Partnership or the Affiliate will
be determined by each respective party in its sole discretion. Each
determination, whether made by the Partnership or the Affiliate, will be final
and binding. The Partnership or the Affiliate, if applicable, has the absolute
right to waive any of the conditions of the Offer or any defect or irregularity
in any tender, or in the related transmittal documents. Unless waived, any
defects or irregularities must be cured within the time period established by
the Partnership or the Affiliate. In any event, tenders will not be deemed to
have been made until all defects or irregularities have been cured or waived.
The Offerors are neither under any duty nor will they incur any liability for
failure to notify any tendering Limited Partner of any defects, irregularities
or rejections contained in the tenders.
15
<PAGE>
Section 10(b) of the Securities Exchange Act of 1934 (the "Exchange
Act") and Rule 14e-4 promulgated thereunder require that a person tendering
Interests on his, her or its behalf, must own the Interests tendered. Section
10(b) and Rule 14e-4 provide a similar restriction applicable to the tender or
guarantee of a tender on behalf of another person.
The tender of Interests pursuant to any of the procedures described
herein constitutes acceptance by the tendering Limited Partner of the terms and
conditions of the Offer, including a representation and warranty that (i) the
tendering Limited Partner owns the Interests being tendered within the meaning
of Rule 14e-4; and (ii) the tender complies with Rule 14e-4.
Section 4. Withdrawal Rights. Any Limited Partner tendering Interests
pursuant to this Offer may withdraw the tender at any time prior to the
Expiration Date. For a withdrawal to be effective, it must be in writing and
received by NTS Investor Services c/o Gemisys via mail or facsimile at the
address or facsimile number set forth in the Section 15, "Address;
Miscellaneous" on or before the Expiration Date. Any notice of withdrawal must
specify the name of the person withdrawing the tender and the amount of
Interests previously tendered that are being withdrawn.
All questions as to form and validity of the notice of withdrawal will
be determined by the Partnership, in its sole discretion. If the Offer is
oversubscribed, all questions as to form and validity of the notice of
withdrawal will be determined by the Partnership or the Affiliate, each in its
sole discretion, for any Interests purchased by the Partnership or the
Affiliate, as the case may be, in excess of the initial 1,200 Interests. All
determinations made by the Partnership or the Affiliate will be final and
binding. Interests properly withdrawn will not thereafter be deemed to be
tendered for purposes of the Offer. However, withdrawn Interests may be
retendered by following the procedures set forth in Section 3, "Procedure for
Tendering of Interests" prior to the Expiration Date. Tenders made pursuant to
the Offer which are not otherwise withdrawn in accordance with this Section 4,
"Withdrawal Rights," will be irrevocable.
Section 5. Purchase of Interests; Payment of Purchase Price. Upon the
terms and subject to the conditions of the Offer, the Offerors will pay $205 per
Interest to each Limited Partner properly tendering its Interests. The Purchase
Price will be paid in the form of a check from the purchasing Offeror to each
Limited Partner. All monies due to each Limited Partner will be delivered to the
Limited Partner by first class U.S. Mail deposited in the mailbox within five
(5) business days after the Expiration Date. Under no circumstances will
interest be paid on the Purchase Price to be paid by the Offerors for Interests
tendered, regardless of any extension of the Offer or any delay in making
payment. In the event of Proration as set forth in Section 2, "Offer to Purchase
and Purchase Price; Proration; Expiration Date; Determination of Purchase
Price," the Offerors may not be able to determine the proration factor and pay
for those Interests that have been accepted for payment, and for which payment
is otherwise due, until approximately five (5) business days after the
Expiration Date.
16
<PAGE>
Interests will be deemed purchased at the time of acceptance by the
Offerors but in no event earlier than the Expiration Date. Interests purchased
by the Partnership will be retired, although the Partnership may issue new
interests from time to time in compliance with the registration requirements of
federal and state securities laws or exemptions therefrom.
Interests purchased by the Affiliate will be held by the Affiliate.
Neither the Partnership nor the General Partner has plans to offer for sale any
other additional interests, but each reserves the right to do so in the future.
Section 6. Certain Conditions of the Offer. Notwithstanding any other
provision of this Offer, the Offerors will not be required to purchase or pay
for any Interests tendered and may terminate the Offer as provided in Section
13, "Extensions of Tender Period; Terminations; Amendments" or may postpone the
purchase of, or payment for, Interests tendered if any of the following events
occur prior to the Expiration Date:
(a) there is a reasonable likelihood that consummation of the
Offer would result in the termination of the Partnership (as a
partnership) under Section 708 of the Code;
(b) there is a reasonable likelihood that consummation of the
Offer would result in termination of the Partnership's status as a
partnership for federal income tax purposes under Section 7704 of the
Code;
(c) as a result of the Offer, there would be fewer than three
hundred (300) holders of record, pursuant to Rule 13e-3 promulgated
under the Exchange Act;
(d) there shall have been instituted or threatened or shall be
pending any action or proceeding before or by any court or
governmental, regulatory or administrative agency or instrumentality,
or by any other person, which: (i) challenges the making of the Offer
or the acquisition by the Partnership or the Affiliate of Interests
pursuant to the Offer or otherwise directly or indirectly relates to
the Offer; or (ii) in the Partnership's reasonable judgment (determined
within five (5) business days prior to the Expiration Date), could
materially affect the business, condition (financial or other), income,
operations or prospects of the Partnership, taken as a whole, or
otherwise materially impair in any way the contemplated future conduct
of the business of the Partnership or materially impair the Offer's
contemplated benefits to the Partnership;
(e) there shall have been any action threatened or taken, or
approval withheld, or any statute, rule or regulation proposed, sought,
promulgated, enacted, entered, amended, enforced or deemed to be
applicable to the Offer or the Partnership or the Affiliate, by any
government or governmental, regulatory or administrative authority or
agency or tribunal, domestic or foreign, which, in the Offerors'
reasonable judgment, would or might directly or indirectly:
17
<PAGE>
(i) delay or restrict the ability of the Partnership
or the Affiliate, or render the Partnership or the Affiliate
unable, to accept for payment or pay for some or all of the
Interests;
(ii) materially affect the business, condition
(financial or other), income, operations, or prospects of the
Partnership or the Affiliate, taken as a whole, or otherwise
materially impair in any way the contemplated future conduct
of the business of the Partnership or the Affiliate;
(f) there shall have occurred:
(i) the declaration of any banking moratorium or
suspension of payment in respect of banks in the United States;
(ii) any general suspension of trading in, or
limitation on prices for, securities on any United States
national securities exchange or in the over-the-counter
market;
(iii) the commencement of war, armed hostilities or
any other national or international crises directly or
indirectly involving the United States;
(iv) any limitation (whether or not mandatory) by any
governmental, regulatory or administrative agency or authority
on, or any event which, in the Offerors' reasonable judgment,
might affect, the extension of credit by banks or other
lending institutions in the United States;
(v) (A) any significant change, in the Offerors'
reasonable judgment, in the general level of market prices of
equity securities or securities convertible into or
exchangeable for equity securities in the United States or
abroad or (B) any change in the general political, market,
economic, or financial conditions in the United States or
abroad that (1) could have a material adverse effect on the
business condition (financial or other), income, operations or
prospects of the Partnership, or (2) in the reasonable
judgment of the Offerors, makes it inadvisable to proceed with
the Offer; or
(vi) in the case of the foregoing existing at the
time of the commencement of the Offer, in the Offerors'
reasonable judgment, a material acceleration or worsening
thereof;
(g) any change shall occur or be threatened in the business,
condition (financial or otherwise), or operations of the Partnership,
that, in the Partnership's reasonable judgment, is or may be material
to the Partnership;
18
<PAGE>
(h) a tender or exchange offer for any or all of the Interests
of the Partnership, or any merger, business combination or other
similar transaction with or involving the Partnership, shall have been
proposed, announced or made by any person;
(i) (i) any entity, "group" (as that term is used in Section
13(d)(3) of the Exchange Act) or person (other than entities, groups or
persons, if any, who have filed with the Commission on or before
November 18, 1998 a Schedule 13G or a Schedule 13D with respect to any
of the Interests) shall have acquired or proposed to acquire beneficial
ownership of more than 5% of the outstanding Interests; or (ii) such
entity, group, or person that has publicly disclosed any such
beneficial ownership of more than 5% of the Interests prior to such
date shall have acquired, or proposed to acquire, beneficial ownership
of additional Interests constituting more than 2% of the outstanding
Interests or shall have been granted any option or right to acquire
beneficial ownership of more than 2% of the outstanding Interests; or
(iii) any person or group shall have filed a Notification and Report
Form under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 or
made a public announcement reflecting an intent to acquire the
Partnership or its assets; or
(j) the General Partner determines that it is not in best
interest of the Partnership to purchase Interests pursuant to the
Offer;
which, in the reasonable judgment of the Offerors, in any such case and
regardless of the circumstances (including any action of the Partnership or the
Affiliate) giving rise to such event, makes it inadvisable to proceed with the
Offer or with such purchase or payment. The foregoing conditions are for the
sole benefit of the Partnership and the Affiliate and may be asserted by the
Partnership or the Affiliate on their respective behalf regardless of the
circumstances giving rise to any such condition (including any action or
inaction by the Partnership or the Affiliate) or may be waived by the
Partnership or the Affiliate in whole or in part. The Offerors' failure 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 Partnership
or the Affiliate concerning the events described in this Section 6, "Certain
Conditions of the Offer" shall be final and binding on all parties. As of the
date hereof, the Offerors believe that neither paragraph (a) nor paragraph (b)
of this Section 6, "Certain Conditions of the Offer" will prohibit the
consummation of the Offer.
Section 7. Cash Distribution Policy. The Partnership commenced
operations in August, 1984 and anticipated providing Limited Partners with 8%
non-cumulative distributions. Distributions were suspended effective January 1,
1997. Although the Partnership is not obligated to make future cash
distributions, it may do so in the future. Limited Partners that tender the
Interests pursuant to the Offer will not be entitled to receive any cash
distributions made, if any, after the Expiration Date, on any Interests which
are tendered and accepted by the Offerors. There can be no assurance that the
Partnership will make any distributions in the future to Limited Partners who
continue to own Interests following completion of the Offer. See Section 10,
"Certain Information About the Partnership."
19
<PAGE>
Section 8. Effects of the Offer. In addition to the effects of the
Offer on tendering and non-tendering Limited Partners and upon the General
Partner as set forth in the "Risk Factors" of this Offer to Purchase, the Offer
will affect the Partnership in several other respects:
The Partnership will use some or all of its existing cash reserves to
purchase Interests. The use of the Partnership's cash reserve will have the
effect of: (i) reducing the cash available to fund future needs and
contingencies and (ii) reducing or eliminating the Partnership's present
interest income earned on such cash reserves. Financial statements giving pro
forma effect of the Offer, assuming the purchase by the Partnership of 600
Interests at $205 per Interest, are attached hereto as Appendix A.
Upon completion of the Offer, the Offerors may consider purchasing any
interests not purchased in the Offer. Any such purchases may be on the same
terms as the terms of this Offer or on terms which are more favorable or less
favorable to Limited Partners than the terms of this Offer. Rule 13e-4
promulgated under the Exchange Act prohibits the Offerors from purchasing any
Interests, other than pursuant to the Offer, until at least ten (10) business
days after the Expiration Date. Any possible future purchases by the Partnership
will depend on many factors, including but not limited to, the market price of
Interests, the results of the Offer, the Partnership's business and financial
position and general economic market conditions.
Section 9. Source and Amount of Funds. The total amount of funds
required to complete this Offer is approximately $286,000 (including $246,000 to
purchase 1,200 Interests plus approximately $40,000 for expenses related to
administering the Offer). The Partnership expects to fund monies required to
complete its purchases and to pay its portion of expenses (approximately
$123,000 to purchase 600 Interests and approximately $20,000 for its
proportionate share of expenses related to administering the Offer; the expenses
of the Offer will be apportioned between the Offerors based on the number of
Interests purchased by each Offeror) from its cash reserves. As of December 31,
1997 and September 30, 1998 the Partnership had unrestricted cash and cash
equivalents equal to $276,145 and $268,841, respectively. If the Offer is
oversubscribed and the Partnership, in its sole discretion, decides to purchase
Interests in excess of 600 Interests, the Partnership will fund these additional
purchases and expenses, if any, from its cash reserves.
The Affiliate expects to fund monies required to complete its purchases
and to pay its portion of expenses (approximately $123,000 to purchase 600
Interests and approximately $20,000 for its proportionate share of expenses
related to administering the Offer; the expenses of the Offer will be
apportioned between the Offerors based on the number of Interests purchased by
each Offeror) from cash contributions to be made to the Affiliate by its
members. If the Offer is oversubscribed and the Affiliate, in its sole
discretion, decides to purchase Interests in excess of 600 Interests, the
Affiliate will fund these additional purchases and expenses, if any, from these
cash contributions.
20
<PAGE>
Section 10. Certain Information About the Partnership
Certain Information About the Partnership. The Partnership was formed
------------------------------------------
in May 1983 under the laws of the Commonwealth of Kentucky. The general partner
is NTS-Properties Associates IV, a Kentucky limited partnership. Except as
otherwise provided in the Partnership Agreement, NTS-Properties Associates IV
owns a one percent (1%) interest in the Partnership and the limited partners
own, in the aggregate, a ninety-nine percent (99%) interest in the Partnership.
The Partnership owns the following properties and joint venture interests:
o Commonwealth Business Center Phase I, a business center with
approximately 57,000 net rentable ground floor square feet and
approximately 24,000 net rentable mezzanine square feet in
Louisville, Kentucky, constructed by the Partnership. The
occupancy level at Commonwealth Business Center Phase I was
89% at September 30, 1998.
o Plainview Point Office Center Phase I and II, an office center
with approximately 56,000 net rentable square feet in
Louisville, Kentucky, acquired complete by the Partnership.
The occupancy level at Plainview Point Office Center Phase I
and II was 67% at September 30, 1998.
o The Willows of Plainview Phase I, a 118-unit luxury apartment
complex in Louisville, Kentucky, constructed by the
Partnership. The occupancy level at The Willows of Plainview
Phase I was 93% at September 30, 1998.
o A joint venture interest in The Willows of Plainview Phase II,
a 144-unit luxury apartment complex in Louisville, Kentucky,
constructed by the joint venture between the Partnership and
NTS-Properties V, a Maryland limited partnership, an affiliate
of the General Partner of the Partnership ("NTS-Properties
V"). The Partnership's percentage interest in the joint
venture was 10% at September 30, 1998. The occupancy level at
The Willows of Plainview Phase II was 89% at September 30,
1998.
o A joint venture interest in Golf Brook Apartments, a 195-unit
luxury apartment complex in Orlando, Florida, constructed by
the joint venture between the Partnership and NTS-Properties
VI, a Maryland limited partnership, an affiliate of the
General Partner of the Partnership, ("NTS-Properties VI"). The
Partnership's percentage interest in the joint venture was 4%
at September 30, 1998. The occupancy level at Golf Brook
Apartments was 96% at September 30, 1998.
o A joint venture interest in Plainview Point III Office Center,
an office center with approximately 62,000 net rentable square
feet in Louisville, Kentucky, constructed by the joint venture
between the Partnership and NTS-Properties VI. The
21
<PAGE>
Partnership's percentage interest in the joint venture was 5%
at September 30, 1998. The occupancy level at Plainview Point
III Office Center was 100% at September 30, 1998.
o A joint venture interest in Blankenbaker Business Center 1A, a
business center with approximately 50,000 net rentable ground
floor square feet and approximately 50,000 net rentable
mezzanine square feet located in Louisville, Kentucky,acquired
complete by a joint venture between NTS-Properties Plus Ltd.
and NTS-Properties VII, Ltd., affiliates of the General
Partner of the Partnership. The Partnership's percentage
interest in the joint venture was 30% at September 30, 1998.
The occupancy level at Blankenbaker Business Center 1A was
100% at September 30, 1998.
o A joint venture interest in the Lakeshore/University II Joint
Venture ("L/U II Joint Venture"). The L/U II Joint Venture was
formed on January 23, 1995 among the Partnership and
NTS-Properties V, NTS-Properties Plus Ltd. and NTS/Fort
Lauderdale, Ltd., affiliates of the General Partner of the
Partnership. The Partnership's percentage interest in the
joint venture was 18% at September 30, 1998.
A description of the properties owned by the L/U II Joint
Venture appears below:
-- Lakeshore Business Center Phase I - a
business center with approximately 103,000
net rentable square feet located in Fort
Lauderdale, Florida, acquired complete by
the joint venture. The occupancy level of
Lakeshore Business Center Phase I was 94% at
September 30, 1998.
-- Lakeshore Business Center Phase II - a
business center with approximately 97,000
net rentable square feet located in Fort
Lauderdale, Florida, acquired complete by
the joint venture. The occupancy level of
Lakeshore Business Center Phase II was 82%
at September 30, 1998.
-- Lakeshore Business Center Phase III-
approximately 3.77 acres of undeveloped land
adjacent to the Lakeshore Business Center
development, which is zoned for commercial
development. The L/U II Joint Venture
intends to build and develop a 40,000 square
foot office service building on this
property.
The Partnership has a fee title interest in each of the properties that
it owns. The joint ventures in which the Partnership is a partner have fee title
interests in each of the properties that
22
<PAGE>
they own. In the opinion of the Partnership's management, the properties are
adequately covered by insurance.
On October 6, 1998, the L/U II Joint Venture sold University II to
Silver Cities, an affiliate of Full Sail, a tenant of the L/U II Joint Venture,
for $8,975,000 (of which $1,615,500, or 18%, is anticipated to be attributable
to the Partnership). As of September 30, 1998, the carrying value of University
II on the balance sheet of the Partnership was approximately $842,892. The
Partnership estimates that the sale of University II will create recognizable
taxable capital gain and ordinary income to the Partnership for 1998. The
recognizable capital gain taxable to Limited Partners as a result of the sales
of University II is preliminarily estimated to be $21.64 per Interest;
recognizable ordinary income taxable to Limited Partners as a result of the
sales of University II is preliminarily estimated to be $5.04 per Interest.
These preliminary estimates are subject to change.
Simultaneous to the closing of University II, the L/U II Joint Venture
paid in full outstanding debt (including interest and pre-payment penalties) on
University II in the amount of approximately $5,835,047.
Full Sail previously occupied 83% of the net rentable area of
University II. As of September 30, 1998, University II contributed approximately
4.96% of the Partnership's operating revenues. The Partnership has been informed
that the L/U II Joint Venture intends to use the proceeds of the sale of
University II to develop Lakeshore Business Center Phase III, a 3.77 acres
parcel of vacant land owned by the L/U II Joint Venture. The L/U II Joint
Venture plans to build a 40,000 square foot office service building on this
property. The cost of development of Lakeshore Business Center Phase III has not
yet been determined. See Section 11, "Certain Federal Income Tax Consequences."
As of September 30, 1998, the Partnership had a commitment for
approximately $30,000 of tenant finish improvements at Plainview Point Office
Center Phases I and II. The commitment is the result of an expansion of
approximately 6,400 square feet by a current tenant. The tenant is expected to
take occupancy of the expansion space during the first quarter of 1999.
As of September 30, 1998, Lakeshore Business Center Phase I had a
commitment for approximately $98,000 of tenant finish improvements resulting
from a 3,049 square foot expansion of a current tenant. The Partnership's
proportionate share of the commitment is approximately $18,000 or 18%. The
project is expected to be completed during the first quarter of 1999.
The source of funds for the commitments at Plainview Point Office
Center Phases I and II and Lakeshore Business Center Phase I is expected to be
cash flow from operations and/or cash reserves.
The Partnership also anticipates a demand on future liquidity as a
result of a planned renovation of the community's clubhouse at The Willows of
Plainview. At this time, the cost and extent of the renovation has not been
determined. The cost of the common clubhouse renovation
23
<PAGE>
will be shared proportionately by Phase I and II of The Willows of Plainview.
The source of funds for this project will be cash flow from operations and/or
cash reserves.
Section 11. Certain Federal Income Tax Consequences.
Certain Federal Income Tax Consequences of the Offer. The following is
-----------------------------------------------------
a general summary under currently applicable law of certain federal income tax
considerations generally applicable to the sale of Interests pursuant to the
Offer. The following summary is for general information only, and the tax
treatment described herein may vary depending upon each Limited Partner's
particular situation. Certain Limited Partners (including, but not limited to,
insurance companies, tax-exempt organizations, financial institutions or
broker/dealers, foreign corporations, and persons who are not citizens or
residents of the United States) may be subject to special rules not discussed
below. In addition, the summary does not address the federal income tax
consequences to all categories of Interest holders, nor does it address the
federal income tax consequences to persons who do not hold the Interests as
"capital assets," as defined by the Internal Revenue Code of 1986, as amended
(the "Code"). No ruling from the Internal Revenue Service ("IRS") will be sought
with respect to the federal income tax consequences discussed herein; thus,
there can be no assurance that the IRS will agree with the conclusions stated
herein. Limited Partners are urged to consult their own tax advisors as to the
particular tax consequences of a tender of their Interests pursuant to the
Offer, including the applicability and effect of any state, local, foreign or
other tax laws, any recent changes in applicable tax laws and any proposed
legislation. The following information is intended as a general statement of
certain tax considerations, and Limited Partners should not construe this as
legal or tax advice.
Sale of Interests Pursuant to the Offer. The receipt of cash for
-------------------------------------------
Interests pursuant to the Offer will be a taxable transaction for federal income
tax purposes and may also be a taxable transaction under applicable state, local
and other tax laws. The purchase of Interests pursuant to the Offer will be
deemed a sale of the Interests by the tendering Limited Partner. The payment for
a Limited Partner's Interests may be in complete liquidation of that portion of
the Limited Partner's ownership in the Partnership represented by the purchased
Interests. The recipient of such payments is taxable to the extent of any gain
or loss recognized in connection with such sale. In general, and subject to the
recapture rules of the Code Section 751 discussed below, a holder will recognize
capital gain or loss at the time his or her Interests are purchased by the
Partnership to the extent that the money distributed to him or her exceeds his
or her adjusted basis in the purchased Interests. Upon a sale of an Interest
pursuant to the Offer, a Limited Partner will be deemed to have received money
in the form of any cash payments to him or her and to the extent he or she is
relieved from his or her proportionate share of liabilities, if any, to which
the Partnership's assets are subject. A Limited Partner will thus be required to
recognize gain upon the sale of his or her Interests if the amount of cash he or
she received, plus the amount he or she is deemed to have received as a result
of being relieved of his or her proportionate share of Partnership nonrecourse
liabilities (if any), exceeds the adjusted basis of the Limited Partner in the
purchased Interests. The income taxes payable upon the sale must be determined
by each Limited Partner on the basis of his or her own financial interests.
24
<PAGE>
The adjusted basis of a Limited Partner's Interests is calculated by
taking his or her initial basis and making certain additions and subtractions
thereto. A Limited Partner's initial basis is the amount paid for each Interest
$1,000 per Interest for those who purchased in the initial offering), increased
by a Limited Partner's proportionate share of nonrecourse liabilities, if any,
to which the Partnership's assets are subject and by the share of Partnership
taxable income, capital gains and other income items allocated to the Interest.
There was nonrecourse debt attributed to the Interests in the approximate amount
of $10,378,291 as of September 30, 1998 (this amount was subsequently decreased
by approximately $930,393 as a result of repayments of debt in connection with
the sales of University II). Basis is reduced by cash distributions and by the
share of Partnership losses allocated to the Interest.
A selling Limited Partner will be allocated a pro rata share of the
Partnership's taxable income or loss for 1998 with respect to the Interests sold
in accordance with the provisions of the Partnership Agreement concerning
transfers of Interests. Such allocation will affect the Limited Partner's
adjusted tax basis in his or her Interests and, therefore, the amount of the
Limited Partner's taxable gain or loss upon a sale of Interests pursuant to this
Offer. For individuals, trusts and estates the income allocated will be treated
as ordinary income which could be taxed at a rate as high as 39.6% for federal
income tax purposes, while the corresponding reduction in taxable gain upon the
sale of the Interests will result in tax savings of no more than 28% of the
reduction in taxable gain. The Partnership's net income for the nine month
period ended September 30, 1998 was $13,108.
In determining the tax consequences of accepting the Offer, the
Partnership's payments for Interests will be deemed to be equal to the $205 cash
payment per Interest plus a pro rata share of the Partnership's nonrecourse debt
(together, the "Selling Price"). The taxable gain (or loss) to be incurred as a
consequence of accepting the Offer is determined by subtracting the Selling
Price from the adjusted basis of the purchased Interest.
Each Limited Partner must determine his or her own adjusted tax basis
because it will vary depending upon when the Limited Partner purchased the
Interests and the amount of distributions received for each Interest, which
varies depending upon the date on which the Limited Partner was admitted to the
Partnership.
A taxable gain, if any, on the disposition of Interests must be
allocated between ordinary income and long term capital gain. Long term capital
gain or loss will be realized on such sale by a Limited Partner if: (1) he or
she is not a "dealer" in securities; (2) he or she has held the Interests for
longer than twelve (12) months; and (3) the Partnership has no Section 751
assets. To the extent that a portion of the gain realized on the sale of an
Interest is attributable to Section 751 assets (i.e., "unrealized receivables"
and "inventory items of the Partnership which have appreciated substantially in
value") a Limited Partner will recognize ordinary income, and not a capital
gain, upon the sale of the Interest. For purposes of Code Section 751, certain
depreciation deductions claimed by the Partnership (recapturable cost recovery
allowance) are treated as if they were an "unrealized receivable." Thus, gain,
if any, recognized by a Limited Partner who sells an Interest will be ordinary
income in an amount not to exceed his or her share of the Partnership's
recapturable
25
<PAGE>
cost recovery allowance. Furthermore, if the Partnership were deemed to be a
"dealer" in real estate for federal income tax purposes, the property held by
the Partnership might be treated as "inventory items of the Partnership which
have appreciated substantially in value" for purposes of Code Section 751 and a
Limited Partner tendering his or her Interest would recognize ordinary income,
in an amount equal to his or her share of the appreciation in value of the
Partnership's real estate inventory. The General Partner does not believe it has
operated the Partnership's business in a manner as to make the Partnership a
"dealer" for tax purposes.
For taxable Limited Partners the amount of recapturable cost recovery
allowance per Interest purchased by a Limited Partner in the original offering
is estimated to be $133.18 as of September 30, 1998, subject to further
adjustment for tax exempt use property rules. Therefore, a maximum of $133.18 of
the taxable gain per Interest will be considered to be ordinary income with the
balance of the taxable gain considered to be capital gain for federal income tax
purposes for the Limited Partners who hold their Interests as capital assets.
Ordinary income recognized in 1998 is taxed at a stated maximum rate of 39.6%
for federal income tax purposes. Net capital gains are taxed for federal income
tax purposes at a stated maximum rate of 20% for Interests held at least twelve
(12) months. The tax rates may actually be somewhat higher, depending on the
taxpayer's personal exemptions and amount of adjusted gross income. A taxable
loss, if any, on the disposition of Interests will be recognized as a capital
loss for federal income tax purposes for Limited Partners who hold their
Interests as capital assets.
The Partnership estimates that the sales of University II will create
recognizable taxable capital gain and ordinary income to the Partnership for
1998. The recognizable capital gain taxable to Limited Partners as a result of
the sale of University II is preliminarily estimated to be approximately $21.64
per Interest. Recognizable ordinary income taxable to Limited Partners as a
result of the sale of University II is preliminarily estimated to be $5.04 per
Interest. These preliminary estimates are subject to change. From the date the
Partnership was formed through December 31, 1997, the Partnership has incurred
cumulative losses of approximately $84 per Interest. Through September 30, 1998,
the Partnership has incurred aggregate losses, after taking into account any
gain on the sale of University II, of approximately $62.36 per Interest. These
estimates are subject to change. Each Limited Partner's cumulative taxable
income or loss in an Interest will vary based on his or her period of ownership.
Each Limited Partner is encouraged to consult with his or her individual tax
advisor regarding whether he or she has losses which can be used to offset
taxable income resulting from the sale of University II.
Tax exempt Limited Partners subject to unrelated business taxable
income (UBTI) should consult their tax advisor to determine what amount, if any,
of the above recapturable cost recovery allowance should be reported as UBTI.
Foreign Limited Partners.Gain realized by a foreign Limited Partner on
------------------------
a sale of Interests pursuant to this Offer will be subject to federal income
tax. Under Code Section 1445 and related regulations, the transferee of a
partnership interest held by a foreign person is generally required to deduct
and withhold a tax equal to 10% of the amount realized on the disposition. The
Partnership
26
<PAGE>
or the Affiliate, as the case may be, will withhold 10% of the amount realized
by a tendering foreign Limited Partner. Amounts withheld would be creditable
against a foreign Limited Partner's federal income tax liability, and if in
excess thereof, a refund could be obtained from the IRS by filing a U.S.
income tax return.
To prevent back-up federal income tax withholding equal to 31% of the
payments made pursuant to the Offer, each Limited Partner (except a foreign
Limited Partner) who does not otherwise establish an exemption from such
withholding must notify the Partnership of the Limited Partner's correct
taxpayer identification number (or certify that such taxpayer is awaiting a
taxpayer identification number) and provide certain other information by
completing a Substitute Form W-9 to the Partnership. (For each Limited Partner's
convenience, a Substitute Form W-9 is enclosed herein). Certain Limited
Partners, including corporations, are not subject to the withholding and
reporting requirements. Foreign Limited Partners are subject to other
requirements.
Retirement Plan Investors. Qualified pension, profit sharing and stock
-------------------------
bonus plans and IRA's (collectively "Qualified Plans") are generally exempt from
taxation except to the extent that their UBTI, determined in accordance with
Code Sections 511-514, exceeds $1,000 in any taxable year. Code Section
512(b)(5) provides generally that UBTI does not include gains or losses from the
disposition of property other than inventory or property held primarily for sale
to customers in the ordinary course of business. However, Treasury Regulation
1.1245-6(b) provides that Code Section 1245 overrides the nonrecognition
provisions of subtitle A of the Code, including Code Section 512(b)(5), if
applicable; furthermore Code Section 12(b)(4) provides that notwithstanding Code
Section 512(b)(5), a portion of the gain from the sale of "debt-financed
property" (as defined in Section 514) may be treated as UBTI. Because a portion
of the Partnership's assets are "debt financed," a portion of the gain, if any,
recognized by a Qualified Plan on the sale of an interest may be UBTI. If a
Qualified Plan is not a "dealer" in securities, the remaining portion of any
gain from the sale of Interests will not be UBTI unless the Partnership is
deemed to be a "dealer" in real estate. The General Partner does not believe the
Partnership's business has been operated in such a manner as to make it a
dealer, but there is no assurance that the IRS may not contend that the
Partnership is a dealer. If the Partnership obtains financing to purchase
Interests, the IRS may contend that each nonredeeming Limited Partner has
acquired an interest in debt-financed property, in addition to the current
debt-financed property of the Partnership. See Section 9, "Source and Amount of
Funds."
Section 12. Transactions and Arrangements Concerning Interests. Based
upon the Partnership's and Affiliate's records and information provided to the
Partnership by the General Partner and affiliates of the General Partner,
neither the Partnership, General Partner, the Affiliate nor, to the best of the
Partnership's knowledge, any controlling person of the Partnership, the General
Partner, or the Affiliate, has effected any transactions in the Interests during
the forty (40) business days prior to the date hereof.
Section 13. Extensions of Tender Period; Terminations; Amendments. The
Partnership has, or, if the Offer is oversubscribed, each Offeror has, the right
at any time and from time to time, to extend the period of time during which the
Offer is open by giving written notice of
27
<PAGE>
the extension to each Limited Partner. If there is any extension, all Interests
previously tendered and not purchased or withdrawn will remain subject to the
Offer and may be purchased by the Offerors, except to the extent that such
Interests may be withdrawn as set forth in Section 4, "Withdrawal Rights."
If the Offer is oversubscribed, each Offeror has the right to purchase
additional Interests. If either Offeror decides, in its sole discretion, to
increase the amount of Interests being sought and, at the time that the notice
of such increase is first published, sent or given to holders of Interests, 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 such notice
is first so published, sent or given, then the Offer will be extended until the
expiration of such period of ten (10) business days.
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, Eastern Standard Time. The Offerors have the right:
(i) to terminate the Offer and not to purchase or pay for any Interests not
previously purchased or paid for upon the occurrence of any of the conditions
specified in Section 6, "Certain Conditions of the Offer," by giving written
notice of such termination to the Limited Partners and making a public
announcement thereof; or (ii) at any time and from time to time, to amend the
Offer in any respect. All extensions, delays in payment or amendments will be
followed by public announcements thereof, such announcements in the case of an
extension to be issued no later than 9:00 a.m. Eastern Standard Time, on the
next business day after the previously scheduled Expiration Date. Without
limiting the manner in which the Offerors may choose to make any public
announcement, except as provided by applicable law (including Rule 13e- 4(e)(2)
under the Exchange Act), the Offerors have no obligation to publish, advertise
or otherwise communicate any such public announcement, other than by issuing a
release to the Dow Jones News Service.
Section 14. Fees and Expenses. The Offerors will not pay any fees or
commissions to any broker, dealer or other person for soliciting tenders of
Interests pursuant to the Offer. The Offerors will reimburse brokers, dealers,
commercial banks and trust companies for customary handling and mailing expenses
incurred in forwarding the Offer to their customers.
Section 15. Address; Miscellaneous.
Address. All executed copies of the Letter of Transmittal, Substitute
-------
Form W-9 and the Certificate(s) of Ownership for the Interests being tendered
(or the Affidavit) must be sent via mail or overnight courier service to the
address set forth below. Manually signed facsimile copies of the Letter of
Transmittal will not be accepted. The Letter of Transmittal, Substitute Form W-9
and Certificate(s) of Ownership for the Interests being tendered (or the
Affidavit) should be sent or delivered by each Limited Partner or such Limited
Partner's broker, dealer, commercial bank, trust company or other nominee as
follows:
28
<PAGE>
By Mail, Hand Delivery or Overnight Mail/Express:
NTS Investor Services
c/o Gemisys
7103 S. Revere Parkway
Englewood, CO 80112
Any questions, requests for assistance, or requests for additional
copies of this Offer to Purchase, the Letter of Transmittal or any other
documents relating to this Offer also may be directed to NTS Investor Services
c/o Gemisys at the above-listed address or at: (800)387-7454 or by facsimile at:
(303) 705- 6171.
Miscellaneous. The Offer is not being made to, nor will tenders be
accepted from, Limited Partners in any jurisdiction in which the Offer or its
acceptance would not comply with the securities or Blue Sky laws of such
jurisdiction. Neither Offeror is aware of any jurisdiction in which the Offer or
tenders pursuant thereto would not be in compliance with the laws of such
jurisdiction. The Offerors reserve the right to exclude Limited Partners in any
jurisdiction in which it is asserted that the Offer cannot lawfully be made. The
Offerors believe such exclusion is permissible under applicable laws and
regulations, provided the Offerors make a good faith effort to comply with any
state law deemed applicable to the Offer.
The Offerors have filed an Issuer Tender Offer Statement on Schedule
13E-4 with the Securities and Exchange Commission ("Commission") which includes
certain information relating to the Offer summarized herein. A copy of this
statement may be obtained from the Partnership by contacting NTS Investor
Services c/o Gemisys at the address and phone number set forth in this Section
15, "Address; Miscellaneous" or from the public reference office of the
Commission at Judiciary Plaza, 450 Fifth Street, N.W., Washington D.C. 20549.
The Commission also maintains a site on the World Wide Web at http://www.sec.gov
that contains reports electronically filed by the Partnership with the
Commission.
NTS-Properties IV., Ltd.
January 27, 1999
29
<PAGE>
Supplement No. 1 to the Offer to Purchase
The Partnership's Financial Statements Giving
Pro Forma Effect of the Offer
The following unaudited pro forma balance sheet and income statement of
the Partnership are presented to give effect of the Offer as if it was fully
subscribed and completed before September 30, 1998 and December 31, 1997 and to
give effect to the sale of University Business Center Phase I and II (the
"University Sale") as if the University Sale had occurred before September 30,
1998 and December 31, 1997. Each pro forma statement contains certain financial
information extracted or derived from the Partnership's Quarterly Report on Form
10-Q for the quarter ended September 30, 1998 and its Annual Report on Form 10-K
for the fiscal year ended December 31, 1997, respectively, as well as pro forma
adjustments and pro forma financial statements (i) reflecting the University
Sale and (ii) giving effect of the Offer as if it was fully subscribed. The
Quarterly and Annual Reports contain more comprehensive financial information
than the information contained herein and were filed with the Securities and
Exchange Commission ("Commission") pursuant to the Securities Exchange Act of
1934. The information extracted from the Quarterly and Annual Reports is
qualified in its entirety by reference to the reports and the financial
statements (including the notes) contained in the reports. The information
presented in these pro forma financial statements is based on certain
assumptions made by the Partnership in its good faith judgment, such as, the
amount of expenses it will incur in administering the Offer. These unaudited pro
forma statements are not necessarily indicative of what the Partnership's actual
financial condition would have been for the quarter ended September 30, 1998 and
the year ended December 31, 1997, nor do they purport to represent the future
financial position of the Partnership.
30
<PAGE>
<TABLE>
NTS-PROPERTIES IV
PRO FORMA BALANCE SHEET
AS OF SEPTEMBER 30, 1998
(UNAUDITED)
As Reported September 30, 1998
<CAPTION>
Proforma
Historical Adjustments Proforma
---------- ----------- --------
ASSETS
<S> <C> <C> <C>
Cash and equivalent $ 268,841 $ 461,927 (4a) $ 730,768
Cash and equivalents - restricted 219,084 (17,552) (4b) 201,532
Investment securities 357,382 -- 357,382
Accounts receivable 183,956 (3,800) (4c) 180,156
Land, buildings and amenities, net 12,623,280 (776,181) (4c) 11,847,099
Asset held for sale 297,251 -- 297,251
Other assets 372,054 (26,662) (4c) 345,392
------------ ------------ -----------
$ 14,321,848 $ (362,268) $13,959,580
============ ============= ===========
LIABILITIES AND PARTNERS' EQUITY
Mortgages and note payable $ 10,201,039 $ (915,504) (4d) $ 9,285,535
Accounts payable - operations 105,745 -- 105,745
Accounts payable - construction 82,819 -- 82,819
Security deposits 81,080 (4,674) (4c) 76,406
Other liabilities 246,349 (18,816) (4c) 227,533
------------ ------------- -----------
10,717,032 (938,994) 9,778,038
Commitments and Contingencies
Partners' equity 3,604,816 576,726 (4e) 4,181,542
------------ ------------ -----------
$ 14,321,848 $ (362,268) $13,959,580
============ ============= ===========
</TABLE>
See notes and assumptions to unaudited pro forma financial statements.
<PAGE>
<TABLE>
NTS-PROPERTIES IV
PRO FORMA STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998
(UNAUDITED)
As Reported September 30, 1998
<CAPTION>
Proforma
Historical Adjustments(4f) Proforma
---------- --------------- --------
REVENUES:
<S> <C> <C> <C>
Rental income $ 2,719,620 $ (136,320) $ 2,583,300
Interest and other income 35,206 (349) 34,857
----------- ---------- ----------
2,754,826 (136,669) 2,618,157
EXPENSES:
Operating expenses 605,873 (13,273) 592,600
Operating expenses -
affiliated 347,189 (9,732) 337,457
Write-off of unamortized land
improvements and amenities 11,333 (30) 11,303
Amortization of capitalized
leasing costs 11,187 -- 11,187
Interest expense 621,815 (57,105)(4g) 564,710
Management fees 157,823 (8,496) 149,327
Real estate taxes 161,237 (14,292) 146,945
Professional and administrative
expenses 79,131 -- 79,131
Professional and administrative
expenses - affiliated 119,816 -- 119,816
Depreciation and amortization 626,314 (49,232) 577,082
----------- ---------- - ---------
2,741,718 (152,160) 2,589,558
----------- ---------- ----------
Net income before extraordinary
item $ 13,108 $ 15,491 $ 28,599
========== ========== ==========
Net income allocated to the
limited partners before
extraordinary item $ 12,977 $ 15,336 $ 28,313
=========== ========== ==========
Net income per limited
partnership unit before
extraordinary item $ .50 $ .58 $ 1.08
=========== ========== ==========
Weighted average number of
limited partnership units 26,123 26,123
=========== ==========
</TABLE>
See notes and assumptions to unaudited pro forma financial statements.
<PAGE>
NTS-PROPERTIES IV
NOTES AND ASSUMPTIONS TO UNAUDITED PRO FORMA FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998
1. On October 6, 1998, the Lakeshore/University II Joint Venture ("L/U II")
Joint Venture and NTS-Properties V, affiliates of the General Partner of
NTS- Properties IV ("the Partnership"), sold University Business Center
Phases I and II office buildings to Silver City Properties, Ltd. ("the
Purchaser"), an affiliate of Full Sail Recorders, Inc., for an aggregate
purchase price of $17,950,000 ($8,975,000 for Phase I and $8,975,000 for
Phase II). University Business Center Phase II was owned by the L/U II
Joint Venture of which the Partnership owned an 18% interest as of
September 30, 1998. Portions of the proceeds from this sale were
immediately used to pay the remainder of the outstanding debt (including
interest and prepayment penalties) on these properties. The Partnership
will use the remainder of the proceeds from this sale for development costs
associated with Lakeshore Business Center Phase III which is to be
constructed on land owned by the L/U II Joint Venture.
2. The Partnership operates and reports on a calendar year basis. The
unaudited pro forma financial statements present the financial position and
results of operations of the Partnership as of and for the nine months
ended September 30, 1998, giving effect for the transaction summarized in
Note 1 above. The unaudited pro forma financial statements should be read
in conjunction with the audited financial statements as of and for the
three years in the period ended December 31, 1997 included in the
Partnership's annual report on Form 10-K for 1997.
3. The accompanying unaudited pro forma balance sheet as of September 30, 1998
has been prepared as if the sale of University Business Center Phase II had
been effective September 30, 1998. The unaudited pro forma statement of
operations for the nine months ended September 30, 1998 has been prepared
as if the sale of University Business Center Phase II had been effective
January 1, 1997. In the opinion of management, all adjustments necessary to
present fairly such pro forma financial statements have been made. The pro
forma financial statements are for information purposes only and are not
necessarily indicative of the financial condition or results of operations
that would have occurred if the sale had been consummated as of January 1,
1997.
4. Explanation of Pro Forma Adjustments:
a) represents the partnership's share of the cash received from the
sale of university business center phase ii less closing costs and
the repayment of the mortgage payable which was secured by the
business center net of the funds released by the mortgage company as
discussed below in note 4b.
b) Represents the Partnership's share of the return of funds held
by the mortgage company for property taxes upon the repayment of
the mortgage discussed above. See note 4a.
<PAGE>
c) Represents adjustments to eliminate the Partnership's share of the
assets and liabilities of University Business Center Phase II as
follows. The adjustment to accounts receivable represents the
elimination of accrued income which is attributable to the recognition
of scheduled and specified rent increases over the lease term on a
straight-line basis for financial reporting purposes. The adjustment
to land, buildings and amenities represents the elimination of the
Partnership's share of land, buildings and amenities associated with
University Business Center Phase II. The adjustment to other assets
represents the write-off of unamortized loan costs which are amortized
on a straight-line basis over the term of the loan and the write-off
of unamortized leasing commissions which are amortized on a
straight-line basis over the applicable lease term. The write-off
of loan costs was the result of the early extinguishment of debt. The
adjustment to security deposits represents the elimination of the
security deposit liability which was assumed by the Purchaser.
The adjustment to other liabilities represents the elimination of
accrued property taxes. The property taxes for the current year are
to be paid by the Purchaser in accordance with the contract.
d) Represents the Partnership's share of the repayment of the mortgage
payable which was secured by University Business Center Phase II.
e) Represents the Partnership's share of the gain on the sale of
University Business Center Phase II partially offset by expenses
incurred as a result of the early extinguishment of debt
(see discussion above).
f) Represents adjustment to eliminate the Partnership's share of the
revenues and expenses of University Business Center Phase II.
g) Represents adjustment to eliminate the interest expense associated
with the mortgage payable secured by University Business Center
Phase II.
<PAGE>
<TABLE>
NTS-PROPERTIES IV
PRO FORMA STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
(UNAUDITED)
As Reported December 31, 1997
<CAPTION>
Proforma
Historical Adjustments (4a) Proforma
---------- ---------------- --------
REVENUES:
<S> <C> <C> <C>
Rental income $ 3,616,883 $ (148,254) $3,468,629
Interest and other income 91,714 (283) 91,431
----------- ----------- ----------
3,708,597 (148,537) 3,560,060
EXPENSES:
Operating expenses 813,091 (29,517) 783,574
Operating expenses -
affiliated 398,950 (14,902) 384,048
Amortization of capitalized
leasing costs 20,951 -- 20,951
Interest expense 855,488 (79,997)(4b) 775,491
Management fees 208,837 (11,638) 197,199
Real estate taxes 224,345 (19,142) 205,203
Professional and administrative
expenses 102,345 -- 102,345
Professional and administrative
expenses - affiliated 150,715 -- 150,715
Depreciation and amortization 905,921 (100,819) 805,102
----------- ----------- ----------
3,680,643 (256,015) 3,424,628
----------- ----------- ----------
Net income before extraordinary
item $ 27,954 $ 107,478 $ 135,432
=========== =========== ==========
Net income allocated to the
limited partners before
extraordinary item $ 27,674 $ 106,403 $ 134,077
=========== =========== ==========
Net income per limited
partnership unit before
extraordinary item $ 1.03 $ 3.98 $ 5.01
=========== =========== ==========
Weighted average number of
limited partnership units 26,708 26,708
=========== ==========
</TABLE>
<PAGE>
NTS-PROPERTIES IV
NOTES AND ASSUMPTIONS TO UNAUDITED PRO FORMA FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 1997
1. On October 6, 1998, the Lakeshore/University II Joint Venture ("L/U II")
Joint Venture and NTS Properties V, affiliates of the General Partner of
the Partnership, sold University Business Center Phases I and II office
buildings to Silver City Properties, Ltd. ("the Purchaser"), an affiliate
of Full Sail Recorders, Inc., for an aggregate purchase price of
$17,950,000 ($8,975,000 for Phase I and $8,975,000 for Phase II).
University Business Center Phase II was owned by the L/U II Joint Venture
of which the Partnership owned an 18% interest as of September 30, 1998.
Portions of the proceeds from this sale were immediately used to pay the
remainder of the outstanding debt (including interest and prepayment
penalties) on these properties. The Partnership will use the remainder of
the proceeds from this sale for development costs associated with Lakeshore
Business Center Phase III which is to be constructed on land owned by the
L/U II Joint Venture.
2. The Partnership operates and reports on a calendar year basis. The
unaudited pro forma statement of operations presents the financial position
and results of operations of the Partnership for the year ended December
31, 1997 giving effect for the transaction summarized in Note 1 above. The
unaudited pro forma financial statements should be read in conjunction with
the audited financial statements as of and for the three years in the
period ended December 31, 1997 included in the Partnership's annual report
on Form 10-K for 1997.
3. The statement of operations for the year ended December 31, 1997 has been
prepared as if the sale of University Business Center Phase II had been
effective January 1, 1997. In the opinion of management, all adjustments
necessary to present fairly such pro forma financial statements have been
made. The pro forma financial statements are for information purposes only
and are not necessarily indicative of results of operations that would have
occurred if the acquisition had been consummated as of January 1, 1997.
4. Explanation of Pro Forma Adjustments:
a) Represents adjustment to eliminate the Partnership's share of
the revenues and expenses of University Business Center Phase
II.
b) Represents adjustment to eliminate the interest expense
associated with the mortgage payable secured by University
Business Center Phase II.
<PAGE>
EXHIBIT (a)(7)
Press Release by NTS Properties IV., Ltd. and ORIG, LLC
dated January 27, 1999.
<PAGE>
NTS-PROPERTIES IV., LTD AND ORIG, LLC ANNOUNCE
AMENDMENT TO TENDER OFFER
Louisville, Ky. January 27, 1999. NTS-Properties IV., Ltd. and ORIG, LLC
announced today that they have amended the currently outstanding issuer tender
offer for NTS-Properties IV., Ltd. Limited Partnership Interests. The original
issuer tender offer for up to 1,200 Limited Partnership Interests commenced on
November 20, 1998 and is scheduled to expire on February 19, 1999.
Until February 19, 1999, NTS-Properties IV., Ltd. and ORIG, LLC will
accept in the aggregate up to 1,200 Limited Partnership Interests tendered
pursuant to the terms and conditions of the Offer at the same price of $205 per
Interest.
<PAGE>
EXHIBIT (c)(2)
Capital Contribution Agreement
dated January 20, 1999 executed
by the Members of ORIG, LLC.
<PAGE>
CAPITAL CONTRIBUTION AGREEMENT
This Capital Contribution Agreement (the "Agreement") is made as of the
20th day of January, 1999 by and between J.D. Nichols ("Nichols") and Brian F.
Lavin ("Lavin"), being all of the members of ORIG, LLC, a Kentucky limited
liability company ("ORIG"). Nichols and Lavin are individually referred to as a
"Member" and collectively referred to as the "Members".
RECITALS:
WHEREAS, ORIG has filed with the Securities and Exchange Commission
offers to purchase (the "Tender Offers") limited partnership interests
("Interests") jointly with each of the following limited partnerships: (i)
NTS-Properties III, a Georgia limited partnership; (ii) NTS-Properties IV.,
Ltd., a Kentucky limited partnership; (iii) NTS-Properties V, a Maryland limited
partnership; (iv) NTS Properties VI, a Maryland limited partnership; and (v)
NTS-Properties VII, a Florida limited partnership (collectively, the
"Partnerships");
WHEREAS, pursuant to the terms and conditions of the Tender Offers,
ORIG anticipates accepting and purchasing Interests in each of the Partnerships;
WHEREAS, pursuant to the terms and conditions of the Tender Offers,
ORIG will be required to pay any and all of ORIG's expenses incurred in
connection with the Tender Offers (including, but not limited to, ORIG's
proportionate share of the legal, accounting, printing and mailing expenses
relating to the Tender Offers) (the "Expenses");
WHEREAS, the Members desire to make cash capital contributions to ORIG
(the "Capital Contributions") sufficient for ORIG to purchase the Interests and
to pay the Expenses; and
WHEREAS, each Member desires to receive membership interests in ORIG
proportionate to the Member's Capital Contributions.
NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties agree as follows:
1. Aggregate Capital Contributions: On or prior to the expiration of each of the
-------------------------------
Tender Offers, the Members shall make Capital Contributions, which, in the
aggregate, are sufficient for ORIG to purchase all Interests accepted by ORIG
pursuant to the Tender Offers and to pay any and all of the Expenses.
2. Individual Capital Contributions: On or prior to the expiration of each of
----------------------------------
the Tender Offers, each Member shall make a Capital Contribution to ORIG in an
amount to be unanimously agreed upon by the Members. The Members agree that upon
expiration of all of the Tender Offers, the approximate percentages of the
aggregate Capital Contributions shall be: (i) Nichols -- 90%; and (ii) Lavin --
10%, unless otherwise agreed to in writing by the Members.
<PAGE>
3. Disagreement: If the Members cannot agree upon the amounts of the Capital
------------
Contributions to be made by each Member upon the expiration of each Tender
Offer, Nichols hereby agrees to make all Capital Contributions necessary to
enable ORIG to fulfill its obligations pursuant to the Tender Offers.
4. Membership Interest: At all times, each Member shall have a membership
--------------------
interest in ORIG calculated by dividing the Capital Contributions made by the
individual Member by the total of all Capital Contributions made by the Members.
5. Miscellaneous:
-------------
a. Assignability. This Agreement shall not be assignable by any of the
-------------
parties hereto without the prior written consent of all of the other parties.
b. Governing Law. The laws of the State of Kentucky will govern all
--------------
questions concerning the construction, validity and interpretation of this
Agreement and the performance of the obligations imposed by this Agreement.
c. Entire Agreement. This Agreement and other documents delivered or to
----------------
be delivered pursuant to this Agreement contain or will contain the entire
agreement among the parties hereto with respect to the transactions contemplated
herein and supersede all previous oral and written agreements.
d. Amendment. This Agreement may be amended, modified, or supplemented
---------
only by written agreement of all of the Members.
e. Counterparts.This Agreement may be executed in several counterparts,
------------
each of which shall be deemed an original, but all of which together shall
constitute one and the same Agreement.
f. Further Assurances. The parties will, from time to time, upon the
-------------------
reasonable request of any other party, execute, acknowledge and deliver in
proper form such further instruments and perform such further acts as may be
reasonably necessary or desirable to give effect to the transactions
contemplated by this Agreement.
g. Recitals:The recitals set forth above are incorporated by reference
--------
herein and made a part hereof as if fully set forth herein.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused their signature to
be set forth below as of the day and year first written above.
/s/ J.D. Nichols
---------------------------------------
J.D. Nichols, a Member
/s/ Brian F. Lavin
---------------------------------------
Brian F. Lavin, a Member
Being all of the Members of ORIG, LLC
<PAGE>
