SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------------------------------------
SCHEDULE TO
Tender Offer Statement under Section 14(d)(1) or 13(e)(1)
of the Securities Exchange Act of 1934
NTS-Properties IV
(Name of Subject Company (issuer))
NTS-Properties IV (Offeror and Issuer)
ORIG, LLC (Offeror and Affiliate of Issuer)
J.D. Nichols (Bidder and Affiliate of Issuer)
Brian F. Lavin (Bidder and Affiliate of Issuer)
(Names of Filing Persons(identifying status as offeror, issuer or other person))
LIMITED PARTNERSHIP INTERESTS
(Title of Class of Securities)
62942E209
(CUSIP Number of Class of Securities)
J.D. Nichols, Managing General Partner of
NTS-Properties Associates IV and Managing Member
of ORIG, LLC
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
filing persons)
Copy to:
Michael J. Choate, Esq.
Shefsky & Froelich Ltd.
444 North Michigan Avenue, Suite 2500
Chicago, Illinois 60611
(312) 836-4066
Calculation of Filing Fee
--------------------------------------------------------------------------------
| Transaction Valuation: $41,000 | Amount of Filing Fee |
| 200 Limited Partnership Interests | $8.20 (b) |
| at $205.00 per Interest (a) | |
--------------------------------------------------------------------------------
(a) Calculated as the aggregate maximum purchase price for limited partnership
interests.
(b) Calculated as 1/50th of 1% of the Transaction Value.
[ ] Check the box if any part of the fee is offset as provided by Rule
0-11(a)(2) and identify the filing with which the offsetting fee was
previously paid. Identify the previous filing by registration statement
number, or the form or Schedule and the date of its filing.
Amount Previously Paid: Not Applicable
Form or Registration No.: Not Applicable
Filing Party: Not Applicable
Date Filed: Not Applicable
[ ] Check the box if the filing relates solely to preliminary communications
made before the commencement of a tender offer.
Check the appropriate boxes below to designate any transactions to which the
statement relates:
[X] third-party tender offer subject to Rule 14d-1.
[X] issuer tender offer subject to Rule 13e-4.
[ ] going private transaction subject to Rule 13e-3.
[ ] amendment to Schedule 13D under Rule 13d-2.
Check the following box if the filing is a final amendment reporting the results
of the tender offer: [ ]
<PAGE>
This Schedule TO relates to an Offer to Purchase dated September 22,
2000 (the "Offer") by NTS-Properties IV, a Kentucky limited partnership (the
"Partnership") and ORIG, LLC ("ORIG"), a Kentucky limited liability company and
affiliate of the Partnership (each an "Offeror" and collectively, the
"Offerors"), to purchase up to 200 limited partnership interests in the
Partnership. Information in the Offer to Purchase is incorporated herein by
reference.
Item 2. Subject Company Information
(a) The name of the subject company is NTS-Properties IV. The
Partnership's principal executive offices are located at 10172 Linn Station
Road, Louisville, Kentucky 40223 and its telephone number is (502) 426-4800.
(b) The subject class of equity securities is the limited partnership
interests ("Interests") in the Partnership. As of August 31, 2000, the
Partnership had 24,214 outstanding Interests held by 1,882 holders of record.
(c) There is currently no established trading market for the Interests.
Item 3. Identity and Background of Filing Persons.
(a) The Partnership is both the subject company and a Filing Person.
The remaining Filing Persons are ORIG, J.D. Nichols and Brian F. Lavin. Mr.
Nichols and Mr. Lavin are the managing members of ORIG and affiliates of the
Partnership, by virtue of the relationships described in the table below. Each
of the Filing Persons are considered Bidders as that term is defined in Rule
14d-1(g)(2) of the Securities Exchange Act of 1934 (the "Act"), but only the
Offerors will purchase Interests pursuant to the Offer. The following table
names each person specified in Instruction C to Schedule TO. The business
address and telephone number of each person specified in the following table is
10172 Linn Station Road, Louisville, Kentucky 40223, (502) 426-4800.
Name Position / Relationship to Subject Company
---- ------------------------------------------
NTS-Properties Associates IV General Partner of the Partnership
NTS Capital Corporation Corporate General Partner of NTS-
Properties Associates IV
NTS Corporation Sole Shareholder of NTS Capital Corporation
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<PAGE>
J.D. Nichols Chairman of the Board and Sole Director of
NTS Capital Corporation and NTS Corporation,
Managing General Partner of NTS-Properties
Associates IV and Managing Member of ORIG, LLC
Brian F. Lavin President and Chief Operating Officer of NTS
Capital Corporation and NTS Corporation and
Managing Member of ORIG, LLC
Gregory A. Wells Senior Vice President and Chief Financial
Officer of NTS Capital Corporation and NTS
Corporation
(b) The principal business of ORIG is to invest in entities that own
commercial and residential real estate. During the past five years, ORIG has not
been the subject of any criminal proceedings. During the past five years, ORIG
was not a party to a judicial or administrative proceeding that resulted in a
judgment, decree or final order enjoining future violations of, or prohibiting
activities subject to, federal or state securities laws or finding any
violations of such laws.
NTS-Properties Associates IV, a Kentucky limited partnership, is the
general partner of the Partnership (the "General Partner"). During the past five
years, the General Partner has not been the subject of any criminal proceedings.
During the past five years, the General Partner was not a party to a judicial or
administrative proceeding that resulted in a judgment, decree or final order
enjoining future violations of, or prohibiting activities subject to, federal or
state securities laws or finding any violations of such laws.
NTS Capital Corporation, a Kentucky corporation, is the corporate
general partner of the General Partner. During the past five years, NTS Capital
Corporation has not been the subject of any criminal proceedings. During the
past five years, NTS Capital Corporation was not a party to a judicial or
administrative proceeding that resulted in a judgment, decree or final order
enjoining future violations of, or prohibiting activities subject to, federal or
state securities laws or finding any violations of such laws.
NTS Corporation, a Kentucky corporation, is the sole shareholder of NTS
Capital Corporation. During the past five years, NTS Corporation has not been
the subject of any criminal proceedings. During the past five years, NTS
Corporation was not a party to a judicial or administrative proceeding that
resulted in a judgment, decree or final order enjoining future violations of, or
prohibiting activities subject to, federal or state securities laws or finding
any violations of such laws.
3
<PAGE>
(c) J.D. Nichols:
------------
(1)-(2) During the past 5 years, Mr. Nichols has served as
Chairman of the Board of Directors of NTS Development Company, a real
estate development corporation and a wholly-owned subsidiary of NTS
Corporation. Mr. Nichols is the Chairman of the Board of NTS Capital
Corporation, the corporate general partner of the General Partner. Mr.
Nichols is the Chairman of the Board of NTS Corporation, the Sole
Shareholder of NTS Capital Corporation and NTS Development Company.
Mr. Nichols also serves as the managing general partner of the General
Partner, and is a managing member of ORIG. The address of NTS
Development Company, NTS Capital Corporation, NTS Corporation and
NTS-Properties Associates IV is 10172 Linn Station Road, Louisville,
Kentucky 40223.
(3) Mr. Nichols has not been the subject of any criminal
proceedings.
(4) During the past five years, Mr. Nichols was not a party to a
judicial or administrative proceeding that resulted in a judgment,
decree or final order enjoining future violations of, or prohibiting
activities subject to, federal or state securities laws or finding any
violations of such laws.
(5) Mr. Nichols is a citizen of the United States.
Brian F. Lavin:
--------------
(1)-(2) Since February, 1999, Mr. Lavin has served as President
and Chief Operating Officer of NTS Development Company, NTS Capital
Corporation and NTS Corporation. From July, 1997 through February,
1999, Mr. Lavin served as Executive Vice President of NTS Development
Company and NTS Capital Corporation. Mr. Lavin is also a managing
member of ORIG. The address of NTS Development Company, NTS Capital
Corporation, NTS Corporation and the General Partner is 10172 Linn
Station Road, Louisville, Kentucky 40223. Prior to July, 1997, Mr.
Lavin served as the Executive Vice President of Paragon Group, Inc.
The address of Paragon Group, Inc., is 7557 Rambler Road, Dallas,
Texas, 75231.
(3) Mr. Lavin has not been the subject of any criminal
proceedings.
(4) During the past five years, Mr. Lavin was not a party to a
judicial or administrative proceeding that resulted in a judgment,
decree or final order enjoining future violations of, or prohibiting
activities subject to, federal or state securities laws or finding any
violations of such laws.
(5) Mr. Lavin is a citizen of the United States.
4
<PAGE>
Gregory A. Wells:
----------------
(1)-(2) Since July, 1999, Mr. Wells has served as Senior
Vice President and Chief Financial Officer of NTS Development
Company, NTS Capital Corporation and NTS Corporation. The address
of NTS Development Company, NTS Capital Corporation and NTS
Corporation is 10172 Linn Station Road, Louisville, Kentucky
40223. From May, 1998 through July, 1999, Mr. Wells served as
Chief Financial Officer of Hokanson Companies, Inc. From January,
1995 until May, 1998, Mr. Wells served as Vice President and
Treasurer of Hokanson Construction. The principal business of
Hokanson Construction is construction of commercial buildings and
residences and the principal business of Hokanson Companies, Inc.
is property management. The address of Hokanson Construction and
Hokanson Companies, Inc. is 107 North Pennsylvania Street,
Indianapolis, Indiana 46204.
(3) Mr. Wells has not been the subject of any criminal
proceedings.
(4) During the past five years, Mr. Wells was not a party to
a judicial or administrative proceeding that resulted in a
judgment, decree or final order enjoining future violations of,
or prohibiting activities subject to, federal or state securities
laws or finding any violations of such laws.
(5) Mr. Wells is a citizen of the United States.
Item 5. Past contracts, transactions, negotiations and agreements.
(a) NTS Development Company, an affiliate of the General Partner,
directs the management of the Partnership's properties pursuant to a written
agreement (the "Management Agreement") between NTS Development Company and the
Partnership. Under the Management Agreement, NTS Development Company establishes
rental policies and rates and directs the marketing activity of leasing
personnel. It also coordinates the purchase of equipment and supplies,
maintenance activity and the selection of all vendors, suppliers and independent
contractors.
Under the Management Agreement, the Partnership agreed to pay NTS
Development Company a management fee is equal to 5% of gross revenues from
residential properties and 6% of gross revenues from commercial properties. Also
under the Management Agreement, the Partnership agreed to pay NTS Development
Company a repair and maintenance fee equal to 5.9% of costs incurred which
relate to capital improvements. The Partnership paid NTS Development Company the
following fees for the six months ended June 30, 2000 and for the year ended
December 31, 1999. These charges include items which have been expensed as
operating expenses - affiliated or professional and administrative expenses and
items which have been capitalized as other assets or as land, buildings and
amenities.
5
<PAGE>
Six Months Year
Ended Ended
06/30/00 12/31/99
-------- --------
Property
Management
Fee $93,564 $186,264
Repair and
Maintenance Fee 22,819 21,620
------ ------
$116,383 $207,884
======== ========
The Management Agreement also requires the Partnership to purchase all
insurance relating to the managed properties, to pay the direct out-of-pocket
expenses of NTS Development Company in connection with the operation of the
properties, including the cost of goods and materials used for and on behalf of
the Partnership, and to reimburse NTS Development Company for the salaries,
commissions, fringe benefits, and related employment expenses of on-site
personnel. The Partnership also paid NTS Development Company the following
amounts for expenses, in addition to the fees described in the preceding table,
for the six months ended June 30, 2000 and for the year ended December 31, 1999.
These charges included items which have been expensed as operating expenses -
affiliated or professional and administrative expenses and items which have been
capitalized as other assets or as land, building and amenities.
Six Months Year
Ended Ended
06/30/00 1999
-------- ----
Leasing $ 48,824 $ 148,888
Administrative 96,129 208,739
Property
Management
Costs 142,064 340,261
Other 4,000 13,804
----- ------
$291,017 $711,692
======== ========
The initial term of the Management Agreement was five years, and
thereafter for succeeding one-year periods, unless canceled by either party upon
sixty days written notice. As of the date of this Offer, the Management
Agreement is still in effect.
6
<PAGE>
In connection with the retirement of Richard L. Good, the former Vice
Chairman of NTS Capital Corporation, and under an agreement dated as of January
1, 1999, JDN Financial Holdings, LLC, a Delaware limited liability company owned
by J.D. Nichols, acquired the equity interests of Richard L. Good in various
entities affiliated with the Partnership, including NTS Corporation, NTS-
Properties Associates VI, NTS-Properties Associates VII, NTS-Properties Plus
Associates, and interests in private limited partnerships with ownership
interests in real estate. In consideration for his equity interests in the
foregoing entities, Richard L. Good received (i) monetary consideration equal to
his salary and bonus in the amount of approximately $529,000, (ii) various
promissory notes in the net amount of approximately $1,600,000, payable monthly
through February 29, 2012 at the current interest rate of 5.09% per annum, and
(iii) equity interests in real and personal property, including 50% of the
equity interest in National Aquatics, Inc. and 70% of the equity interest in
NTS/Sabal Office Limited Partnership.
On February 25, 2000, Mr. Nichols made a capital contribution of
$100,000 to NTS Financial Partnership, a Kentucky general partnership ("NTS
Financial") and an affiliate of the Partnership.
On September 17, 1999, Mr. Nichols received a return of capital from
NTS Financial in the amount of $50,000, and used such funds to make a capital
contribution to ORIG. On February 25, 2000, Mr. Nichols received a return of
capital from NTS Financial in the amount of $100,000, and used such funds to
make a capital contribution to ORIG.
In the past two years, Mr. Nichols has received the following returns of
capital from NTS Financial on the dates set forth in the table below. Mr.
Nichols used these funds to pay third party obligations.
Return of
Date Capital
---- -------
June 30, 2000 $119,155
March 29, 2000 $165,000
January 5, 2000 $164,122
October 18, 1999 $100,000
October 15, 1999 $225,739
June 30, 1999 $119,155
In the past two years, Mr. Nichols has received the following returns
of capital from NTS Financial on the dates set forth in the table below. Mr.
Nichols used such funds to make a capital contribution to ORIG to purchase
limited partnership interests in the entities listed below.
7
<PAGE>
Return of
Date Capital Limited Partnership
---- ------- -------------------
January 4, 2000 $220,000 NTS-Properties V
December 28, 1999 $320,000 NTS-Properties VI
December 21, 1999 $191,750 NTS-Properties VII, Ltd.
December 15, 1999 $404,897 The Partnership and NTS-Properties III
October 7, 1999 $852,000 NTS-Properties VII, Ltd.
April 5, 1999 $109,000 NTS-Properties III
March 11, 1999 $ 96,000 The Partnership
February 24, 1999 $137,000 The Partnership
March 11, 1999 $ 96,000 NTS-Properties VII, Ltd.
In the past two years, Mr. Nichols has also received the following funds
from NTS Financial, which were not a return of capital, but were undistributed
profits from private affiliates of NTS Financial. These funds were used to pay
taxes.
Date Distribution
---- ------------
January 18, 2000 $251,000
April 19, 1999 $715,000
January 1, 1999 $297,500
January 1, 1999 $ 56,000
Since January 1, 1998, Mr. Nichols has personally guaranteed various loans
made to various publicly and privately-held affiliates of the Partnership. As of
August 31, 2000, Mr. Nichols had outstanding personal guaranties totaling
approximately $27,198,000. Mr. Nichols has guaranteed the payment of
approximately $215,000 of notes payable of NTS Corporation. Mr. Nichols has
guaranteed the payment of approximately $17,700,000 of loans of various
affiliates. In October, 1998, Mr. Nichols and Mr. Lavin each personally
guaranteed $3,250,000 of a loan made to a privately-held affiliate of the
Partnership secured by a property, the book value of which is $10,000,000. Mr.
Nichols also guaranteed, as an indemnitor, that the conditions of certain surety
bonds will be met. The outstanding commitments of the surety bonds aggregated
$3,283,000 at December 31, 1999. In December, 1999, Mr. Nichols and Mr. Lavin
each personally guaranteed a
8
<PAGE>
$2,000,000 loan to ORIG from Community Trust Bank, N.A. in the following
amounts: (1) Mr. Nichols guaranteed 75% of all indebtedness of ORIG or
$1,500,000, whichever is less; and (2) Mr. Lavin guaranteed 25% of all
indebtedness of ORIG or $500,000, whichever is less. This loan was repaid using
the proceeds of a $6,000,000 loan to ORIG from the Bank of Louisville. Mr.
Nichols and Mr. Lavin each personally guaranteed up to $6,000,000 of the
obligations under the loan from the Bank of Louisville for which each of them is
jointly and severally liable.
In addition to the guaranties described above, on March 31, 1989 NTS
Guaranty Corporation, owned 100% by Mr. Nichols and an affiliate of the
Partnership, guaranteed certain obligations of NTS Mortgage Income Fund, which
is also an affiliate of the Partnership. On September 20, 1988, Mr. Nichols
issued a $10,000,000 demand note to NTS Guaranty Corporation, which may be used
to satisfy the guaranty. The obligations of NTS Guaranty Corporation under the
guaranty are expressly limited to the assets of NTS Guaranty Corporation, its
ability to draw upon the $10,000,000 demand note and Mr. Nichols' ability to
answer the demand.
(b) During the past two years, ORIG has participated in joint tender offers
with (i) the Partnership to purchase Interests and (ii) limited partnerships
that are affiliates of the Partnership to purchase the limited partnership
interests of those partnerships. The following table sets forth the results of
these tender offers:
<TABLE>
Limited
Partnership Limited
Interests Partnership
Total Purchased by Interests
Purchase Subject Price per Interests the Subject Purchased
Date Partnership Interest Purchased Partnership by ORIG
---- ----------- --------- --------- ----------- -------
<S> <C> <C> <C> <C> <C>
December NTS- $250 729 500 229
31, 1998 Properties III
December NTS- $250 938 500 438
8, 1999 Properties III
February NTS- $205 1,259 600 659
19, 1999 Properties IV
December NTS- $205 2,245 500 1,745
8, 1999 Properties IV
February The $205 2,458 600 1,858
5, 1999 Partnership
December The $230(*) 1,196 250 946
31, 1999 Partnership
9
<PAGE>
Limited
Partnership Limited
Interests Partnership
Total Purchased by Interests
Purchase Subject Price per Interests the Subject Purchased
Date Partnership Interest Purchased Partnership by ORIG
---- ----------- --------- --------- ----------- -------
<S> <C> <C> <C> <C> <C>
January NTS- $350 2,103 750 1,353
18, 1999 Properties VI
September NTS- $370 2,801 500 2,301
30, 1999 Properties VI
December NTS- $380 1,085 250 835
23, 1999 Properties VI
August NTS- $380 3,685 100 3,585
15, 2000 Properties VI
March NTS- $6 25,794 10,000 15,794
12, 1999 Properties VII,
Ltd.
November 30, NTS- $6 41,652 10,000 31,652
1999 Properties VII,
Ltd.
August 15, NTS- $6 39,220 2,500 36,720
2000 Properties VII,
Ltd.
</TABLE>
Mr. Nichols disclaims beneficial ownership of 10% of all of the Interests in the
Partnership that are owned by ORIG, and disclaims 10% of all of the limited
partnership interests in limited partnerships affiliated with the Partnership
that are owned by ORIG.
Mr. Lavin disclaims beneficial ownership of 90% of all of the Interests in the
Partnership that are owned by ORIG, and disclaims 90% of all of the limited
partnership interests in limited partnerships affiliated with the Partnership
that are owned by ORIG.
* The original offering price was $215 per interest which was increased to $230
per interest on December 20, 1999.
In addition to the above tender offers involving ORIG, on September 30,
1999, NTS- Properties V purchased 2,523 limited partnership interests of
NTS-Properties V from limited partners for $205 per interest pursuant to an
offer to purchase interests.
10
<PAGE>
The Partnership's affiliates, BKK Financial, Inc., an Indiana corporation
("BKK"), and Ocean Ridge Investments, Ltd., a Florida limited partnership
("Ocean Ridge"), have purchased Interests from time to time. Mr Nichols' wife,
Barbara Nichols, is the sole limited partner of Ocean Ridge. BKK is the general
partner of Ocean Ridge. Since March, 1995 Ocean Ridge and BKK purchased 326
Interests at prices ranging from $130 to $205 per Interest. All of these
Interests are currently owned by Ocean Ridge. Mr. Nichols and Mr. Lavin disclaim
beneficial ownership of each of these Interests. The General Partner owns five
Interests. Mr. Nichols and Mr. Lavin disclaim beneficial ownership of each of
these Interests.
ORIG purchased Interests in the Partnership and also purchased limited
partnership interests in limited partnerships affiliated with the Partnership
pursuant to an Agreement, Bill of Sale and Assignment dated February 10, 2000,
by and among ORIG and four investors in the Partnership and partnerships
affiliated with the Partnership (the "Purchase Agreement") for an aggregate
purchase price of $900,000. ORIG paid these investors a premium above the
purchase price previously offered for limited partnership interests pursuant to
prior tender offers because this purchase allowed ORIG to purchase a substantial
number of limited partnership interests without incurring the significant
expenses involved with a tender offer. Pursuant to the Purchase Agreement, ORIG
purchased the following Interests in the Partnership and limited partnership
interests in limited partnerships affiliated with the Partnership:
o An aggregate of 565 limited partnership interests in the Partnership
from three of the investors for total consideration of $136,629, or an
average price of $241.82 per interest.
o An aggregate of 135 limited partnership interests in NTS-Properties III
from two of the investors for total consideration of $38,676, or an
average price of $286.49 per interest.
o An aggregate of 1,604 limited partnership interests in NTS-Properties V
from three of the investors for total consideration of $425,949, or an
average price of $265.55 per interest.
o An aggregate of 675 limited partnership interests in NTS-Properties VI
from two of the investors for total consideration of $281,128, or
$416.49 per interest.
o An aggregate of 2,251 Interests in NTS-Properties VII, Ltd. from one of
the investors for total consideration of $15,082, or an average price
of $6.70 per Interest.
o An aggregate of 2,536 limited partnership interests in NTS-Properties
Plus, Ltd., from three of the investors for total consideration of
$2,536, or an average purchase price of $1.00 per interest.
11
<PAGE>
Item 6. Purposes of the transaction and plans or proposals.
(c)(1) Neither the Offerors, the General Partner, NTS Capital Corporation,
Mr. Nichols nor Mr. Lavin has any plans or proposals that relate to or would
result in an extraordinary corporate transaction, such as a merger,
reorganization or liquidation involving the Partnership.
(c)(2) Neither the Offerors, the General Partner, NTS Capital Corporation,
Mr. Nichols nor Mr. Lavin has any plans, proposals or negotiations that relate
to or would result in an any purchase, sale or transfer of a material amount of
assets of the Partnership.
(c)(3) Neither the Offerors, the General Partner, NTS Capital Corporation,
Mr. Nichols nor Mr. Lavin has any plans, proposals or negotiations that relate
to or would result in any material change in the present distribution policy or
indebtedness or capitalization of the Partnership.
(c)(4) Neither the Offerors, the General Partner, NTS Capital Corporation,
Mr. Nichols nor Mr. Lavin has any plans or proposals that relate to or would
result in any other material change in the Partnership's management.
(c)(5) Neither the Offerors, the General Partner, NTS Capital Corporation,
Mr. Nichols nor Mr. Lavin has any plans, proposals or negotiations that relate
to or would result in any other material change in the Partnership's structure
or business.
(c)(6) Item (c)(6) of this Item 6 is not applicable to the Partnership
because its securities are not listed on a national securities exchange and are
not authorized to be quoted on an inter-dealer quotation system of a registered
national securities association.
(c)(7) Neither the Offerors, the General Partner, NTS Capital Corporation,
Mr. Nichols nor Mr. Lavin has any plans, proposals or negotiations that relate
to or would result in a class of equity securities of the Partnership becoming
eligible for termination of registration pursuant to Section 12(g)(4) of the
Act.
(c)(8) Neither the Offerors, the General Partner, NTS Capital Corporation,
Mr. Nichols nor Mr. Lavin has any plans, proposals or negotiations that relate
to or would result in the suspension of the Partnership's obligation to file
reports under Section 15(d) of the Act.
(c)(9) Neither the Offerors, the General Partner, NTS Capital Corporation,
Mr. Nichols nor Mr. Lavin has any plans, proposals or negotiations that relate
to or would result in the acquisition by any person of additional Interests of
the Partnership, or the disposition of Interests of the Partnership.
(c)(10) Neither the Offerors, the General Partner, NTS Capital Corporation,
Mr. Nichols nor Mr. Lavin has any plans, proposals or negotiations that relate
to or would result in any changes
12
<PAGE>
in the Partnership's governing instruments that could impede the acquisition or
control of the Partnership.
Item 8. Interest in securities of the subject company.
(a) Each of the affiliates beneficially own 3,514, or 14.5% of the
outstanding Interests, (i) 3,183 of which are owned by ORIG, (ii) 326 of which
are owned by Ocean Ridge, and (iii) five of which are owned by the General
Partner. ORIG disclaims beneficial ownership of 331 of these Interests. Ocean
Ridge disclaims beneficial ownership of 3,188 of these Interests. The General
Partner disclaims beneficial ownership of 3,509 of these Interests. Mr. Nichols
disclaims beneficial ownership of 649 of these Interests. Mr. Lavin disclaims
beneficial ownership of 3,196 of these Interests. The address of each of these
persons is 10172 Linn Station Road, Louisville, Kentucky 40223.
Item 9. Persons/assets, retained, employed, compensated or used.
None.
Item 11. Additional information.
(a) None.
(b) None.
Item 12. Material to be filed as Exhibits.
(a)(1) Form of Offer to Purchase dated September 22, 2000 (including
financial statements giving pro forma effect of the Offer).
(a)(2) Form of Letter of Transmittal.
(a)(3) Form of Affidavit and Indemnification Agreement for Missing
Certificate(s) of Ownership.
(a)(4) Form of Letter to Limited Partners.
(a)(5) Substitute Form W-9 with Guidelines.
(b) Loan Agreement dated August 15, 2000, between ORIG, LLC and
the Bank of Louisville.
(d) None.
(g) None.
(h) None.
Item 13. Information required by Schedule 13E-3.
Not Applicable.
13
<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: September 22, 2000 NTS-PROPERTIES IV, a Kentucky limited Partnership
By: NTS-PROPERTIES ASSOCIATES IV
General Partner
/s/ J.D. Nichols
By: ----------------------------------------
J.D. Nichols, Managing General Partner
ORIG, LLC, a Kentucky limited liability company.
By: /s/ J.D. Nichols
-----------------------------
J.D. Nichols, Managing Member
/s/ J.D. Nichols
----------------------------
J. D. Nichols, individually
/s/ Brian F. Lavin
----------------------------
Brian F. Lavin, individually
14
<PAGE>
EXHIBITS
Exhibit
Number Description
------ -----------
(a)(1) Form of Offer to Purchase dated September 22, 2000
(including financial statements giving pro forma
effect of the Offer).
(a)(2) Form of Letter of Transmittal.
(a)(3) Form of Affidavit and Indemnification Agreement for Missing
Certificate(s) of Ownership.
(a)(4) Form of Letter to Limited Partners.
(a)(5) Substitute Form W-9 with Guidelines.
(b) Loan Agreement dated August 15, 2000, between ORIG, LLC and
Bank of Louisville.
(d) None.
(g) None.
(h) None.
<PAGE>
Exhibit (a)(1)
Form of Offer to Purchase dated September 22, 2000
(including financial statements giving pro forma effect of the Offer).
<PAGE>
Offer to Purchase for Cash by
NTS-Properties IV and ORIG, LLC
of up to 200
Limited Partnership Interests
of NTS-Properties IV
at $205 per Interest
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, EASTERN
STANDARD TIME, ON FRIDAY, DECEMBER 22, 2000, UNLESS THE OFFER IS EXTENDED.
A summary of the principal terms of the offer appears on pages ii and
iii. You should read this entire document carefully before deciding whether to
tender your limited partnership interests.
If you tender all or any portion of your interests you will be subject
to certain risks including:
o The purchase price may be less than the fair market value and liquidation
value of the interests.
o As a result of your tender you may suffer negative tax consequences.
o There is a conflict of interest between limited partners who tender
interests in the Offer, limited partners who do not tender, and the
general partner of the partnership, which creates a risk that the purchase
price will be less than the fair value of the interests.
If you continue to hold all or any portion of your interests you will
be subject to certain risks including:
o There is no developed market for the interests, which may prevent you
from being able to liquidate your investment or receive fair value for
your investment.
o Cash distributions have been suspended and may be permanently eliminated.
o The partnership is using its cash reserves to fund its portion of the offer
to purchase which will reduce existing cash available for future needs and
contingencies.
o The partnership may not be able to pay for necessary capital improvements to
partnership properties.
o The offer to purchase may result in increased voting control by affiliates
of the partnership.
o The partnership has no current plans to liquidate.
o If tenants occupying some of the partnership's properties experience
financial difficulties or do not renew their leases, this could harm the
partnership's financial operations.
o There are significant general economic risks associated with investments in
real estate.
See "RISK FACTORS."
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.
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.
The date of this Offer to Purchase is September 22, 2000.
<PAGE>
SUMMARY TERM SHEET
o THE OFFERORS. ORIG, LLC and NTS-Properties IV are making this tender
offer. ORIG is a Kentucky limited liability company, affiliated with
your general partner and NTS- Properties IV, that regularly engages in
real estate-related activities including acquiring, developing,
renovating and rehabilitating, financing and divesting properties. NTS-
Properties IV is a Kentucky limited partnership that owns and owns
joints venture interests in commercial real estate properties.
o OUR OFFER. We are offering to purchase up to 200 of the partnership's
outstanding interests that are not owned by our affiliates. Currently,
there are 24,214 interests outstanding, including those interests owned
by our affiliates.
o OUR OFFERING PRICE. We will purchase interests in the offer in cash for
$205 per interest. See Section 2.
o FACTORS IN DETERMINING OUR OFFERING PRICE. Your general partner
determined the offering price in its sole discretion. In determining
the offering price per interest your general partner considered, among
other things, the following:
o The per interest price paid to limited partners in previous
transactions, such as tender offers and secondary market
transactions. See Section 2.
o The absence of a trading market for the interests. See Section
2.
o ADDITIONAL PURCHASES. If more than 200 interests are tendered, we may
purchase additional interests, in our sole discretion. If the offer
remains oversubscribed, we will purchase your interests on a pro rata
basis. See Section 2
o CONDITIONS OF THE OFFER. We are offering to purchase outstanding
interests from all limited partners and our offer is not generally
conditioned on your tendering any minimum number of your interests. We
will not, however, accept your tender if, as a result of the tender,
you would continue to be a limited partner and would hold fewer than
five (5) interests. There are a number of other conditions to our
offer, including the absence of certain changes in your partnership,
the absence of certain changes in the financial markets and the absence
of competing tender offers. See Sections 2 and 6.
o RIGHT TO EXTEND THE EXPIRATION DATE. The offer expires on Friday,
December 22, 2000 at 12:00 Midnight, Eastern Standard Time, but we may
extend the expiration date by providing you with a written notice of
the extension. See Section 2.
ii
<PAGE>
o SUBSEQUENT OFFERING PERIOD. We do not anticipate having a subsequent
offering period after the expiration date of the initial offering
period (including any extensions). See Section 2.
o HOW TO TENDER YOUR INTERESTS. To tender your interests, complete and
sign the accompanying letter of transmittal included in these
materials, and send it to NTS Investor Services c/o Gemisys via mail or
facsimile at the address or facsimile number set forth in Section 16 of
this offer to purchase by Friday, December 22, 2000 at 12:00 Midnight,
Eastern Standard Time. See Section 3.
o WITHDRAWAL RIGHTS. If you tender you can withdraw your interests at
any time before the expiration date, including any extensions, or the
date we pay for your interests, whichever is later. See Section 4.
o HOW TO WITHDRAW. To withdraw your interests, you must send a written
notice of withdrawal which must be received by, on or before the
expiration date, NTS Investor Services c/o Gemisys via mail or
facsimile at the address or facsimile number set forth in Section 16 of
this offer to purchase. If you file a notice of withdrawal it must
specify your name and the amount of interests that you are withdrawing.
See Section 4.
o PAYMENT FOR YOUR INTERESTS. If you tender your interests and we accept
your tender, we will pay the price of any of your interests which we
purchase with a check. We will deliver all checks by first class U.S.
Mail deposited in the mailbox within five business days after the
expiration date. See Section 5.
o TAX CONSEQUENCES. Your sale of interests in this offer will be a
taxable transaction for federal income tax purposes. The consequences
to each of you may vary, and you should consult your tax advisor to
determine the precise tax consequences to you. See Section 12.
o AVAILABILITY OF FUNDS. We currently have funds available under a line
of credit that are sufficient to enable us to purchase all of the
interests sought in our offer. See Section 9.
iii
<PAGE>
-----------------------------------------------------
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.
LIMITED PARTNERS TENDERING ALL OR ANY PORTION OF THEIR INTERESTS ARE
SUBJECT TO CERTAIN RISKS. SEE "RISK FACTORS" BEGINNING ON PAGE 4.
THE OFFER IS NOT CONDITIONED ON THE TENDER OF ANY MINIMUM NUMBER OF
INTERESTS; PROVIDED, HOWEVER, WE WILL NOT ACCEPT YOUR TENDER IF, AS A RESULT OF
THE TENDER, YOU 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 OF THIS OFFER TO PURCHASE.
WE ARE NOT MAKING ANY RECOMMENDATION TO YOU REGARDING WHETHER TO TENDER
OR REFRAIN FROM TENDERING YOUR INTERESTS. EACH OF YOU MUST MAKE YOUR OWN
DECISION REGARDING WHETHER TO TENDER INTERESTS, AND, IF SO, HOW MANY OF YOUR
INTERESTS TO TENDER.
WE HAVE NOT AUTHORIZED ANY PERSON TO MAKE ANY RECOMMENDATION ON OUR
BEHALF REGARDING WHETHER YOU SHOULD TENDER OR REFRAIN FROM TENDERING YOUR
INTERESTS PURSUANT TO THE OFFER. WE HAVE NOT AUTHORIZED ANY PERSON 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 US OR THE GENERAL PARTNER.
-----------------------------------------------------------------------
iv
<PAGE>
TABLE OF CONTENTS
SUMMARY TERM SHEET............................................................ii
INTRODUCTION...................................................................1
RISK FACTORS...................................................................4
THE OFFER......................................................................9
Section 1. Background and Purposes of the Offer..............................9
Section 2. Offer to Purchase and Purchase Price; Proration; Expiration Date;
Determination of Purchase Price..................................10
Section 3. Procedure for Tendering Interests................................12
Section 4. Withdrawal Rights................................................13
Section 5. Purchase of Interests; Payment of Purchase Price.................14
Section 6. Certain Conditions of the Offer..................................14
Section 7. Cash Distribution Policy.........................................17
Section 8. Effects of the Offer.............................................17
Section 9. Source and Amount of Funds.......................................17
Section 10. Certain Information About the Partnership........................20
Section 11. Certain Transactions with Affiliates.............................24
Section 12. Certain Federal Income Tax Consequences..........................28
Section 13. Transactions and Arrangements Concerning Interests...............30
Section 14. Extensions of Tender Period; Terminations; Amendments............31
Section 15. Fees and Expenses................................................31
Section 16. Address; Miscellaneous...........................................31
Appendix A
The Partnership's Financial Statements Giving
Pro Forma Effect of the Offer.......................................A-1
Balance Sheets......................................................A-2
Statement of Operations.............................................A-3
Appendix B
ORIG's Balance Sheets...............................................B-1
v
<PAGE>
To Holders of Limited Partnership Interests of
NTS-Properties IV
INTRODUCTION
NTS-Properties IV (the "Partnership") and ORIG, LLC ("ORIG") hereby
offer to purchase up to 200 limited partnership interests of the Partnership
that are owned by limited partners who are not affiliates of the Partnership or
ORIG 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 "Offer
to Purchase" and in the related "Letter of Transmittal." Together the "Offer to
Purchase" and "Letters of Transmittal" constitute the "Offer." As used in this
Offer to Purchase, the term "Interest" or "Interests," refers to the limited
partnership interests in the Partnership. As used in this Offer, the terms "we",
"us" or "our" as the context requires, refer to the Partnership and ORIG
collectively.
This Offer is generally not conditioned upon any minimum amount of
Interests being tendered, except as described in this Offer to Purchase. The
Interests are not traded on any established trading market and are subject to
restrictions on transferability which are described in the Amended and Restated
Agreement of Limited Partnership of NTS-Properties IV (the "Partnership
Agreement").
You should not view the Purchase Price as equivalent to the fair market
value or the liquidation value of an Interest. As of June 30, 2000 and December
31, 1999, the book value of each Interest was approximately $145.67 and $143.00,
respectively. NTS-Properties Associates IV, a Kentucky limited partnership (the
"General Partner"), determined the Purchase Price in its sole discretion, based
on:
o the response to our tender offer of $205 per Interest which began on July
27, 1999 and ended on December 8, 1999;
o the response to our tender offer of $205 per Interest which began on
November 20, 1998 and ended on February 19, 1999;
o sales of Interests by limited partners to third parties in secondary market
transactions from February,1995 through April, 2000;
o repurchases of Interests by the Partnership, outside of the tender
offers described above, in 1996, 1997 and1998 at prices ranging from
$150 to $205 per Interest;
o purchases of Interests by ORIG, outside of the tender offers described
above, in 1999 and 2000 at $205 per Interest;
o purchases of Interests from three limited partners by ORIG on February 10,
2000 at an average price of $241.82 per Interest; and
o purchases of Interests by the Partnership's affiliates, BKK Financial Inc.,
an Indiana corporation ("BKK") and Ocean Ridge Investments Ltd., a Florida
limited liability partnership ("Ocean Ridge"), in 1995, 1996, 1998 and 1999
at prices ranging from $130 to $205 per Interest.
We are aware of an offer to purchase Interests by a third-party offeror
for $153.37 per Interest in June, 1999. We are not, however, aware of the other
material terms of this third-party offer.
1
<PAGE>
Neither we nor the General Partner have obtained an opinion from an independent
third party regarding the fairness of the Purchase Price.
Subject to the conditions set forth in the Offer, the Partnership will
purchase the first 100 Interests which are tendered and received by the
Partnership by, and not withdrawn prior to, 12:00 Midnight, Eastern Standard
Time, on December 22, 2000, subject to any extension of the Offer by us (the
"Expiration Date"). If more than 100 Interests are tendered, ORIG will purchase
up to an additional 100 Interests which are tendered and received by the
Partnership by, and not withdrawn prior to, the Expiration Date. If, on the
Expiration Date, we determine that more than 200 Interests have been tendered
during the Offer, each of us may: (i) accept the additional Interests in
accordance with 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 we are offering to purchase to an
amount that we believe is sufficient to accommodate the excess Interests
tendered as well as any Interests tendered during the extended Offer.
If the Offer is oversubscribed and we do not act in accordance with (i)
or (ii), above, or if we act in accordance with (i) and (ii), above, but the
Offer remains oversubscribed, then we will accept Interests tendered by limited
partners prior to or on the Expiration Date for payment on a pro rata basis
("Proration"). If you tender Interests and we pro rate, the number of Interests
that we purchase from you will be equal to the number of Interests which you
properly tender multiplied by a fraction, the numerator of which will be the
total number of Interests we are willing to purchase in the Offer and the
denominator of which will be the total number of Interests properly tendered by
all limited partners participating in the Offer. Any fractional Interests
resulting from this calculation will be rounded down to the nearest whole
number. We will not purchase fractions of Interests. If you tender and if we
will purchase fewer than the number of Interests that you tender, the
Partnership will notify you in writing. For any Interest that you tender but we
do not purchase, a book entry will be made on the Partnership's books to reflect
your ownership of the Interests not purchased. The Partnership will not issue a
new Certificate of Ownership for the Interests that we do not purchase, unless
you make a written request instructing the Partnership to do so.
The Offer is generally not conditioned on the tender of any minimum
number of Interests. 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, we will not consummate the
Offer, 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, we 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 of the Interests that we purchase pursuant to the Offer will be
effective as of the Expiration Date. If you accept the offer and tender
Interests, you will receive the Purchase Price and
2
<PAGE>
any cash distributions declared and payable before the Expiration Date. You will
not be entitled to receive any cash distributions declared and payable after the
Expiration Date on any Interests tendered and accepted by us.
The tender and acceptance of an Interest will be treated as a sale of
the Interest for federal and most state income tax purposes, which will result
in you recognizing gain or loss for income tax purposes. We urge you to review
carefully all the information contained in or referred to in this Offer
including, without limitation, the information presented in Section 11, "Certain
Federal Income Tax Consequences."
As of August 31, 2000, the General Partner owned five (5) of the
Partnership's outstanding Interests and ORIG owned 3,183 of the Partnership's
24,214 outstanding Interests. All partners, members, affiliates and associates
of the General Partner or ORIG beneficially owned a total of 3,514 Interests,
representing approximately 14.5% of the Partnership's 24,214 outstanding
Interests. Although we are making this Offer to all limited partners, we have
been advised that neither the General Partner nor any of the partners, members,
affiliates or associates of the General Partner intends to tender any Interests
pursuant to the Offer. Assuming the Offer is fully subscribed, the General
Partner, ORIG, and partners, members, affiliates and associates of the General
Partner or ORIG, will own, after the Offer, a total of 3,614 Interests,
representing approximately 15% of the Partnership's 24,114 outstanding
Interests.
3
<PAGE>
RISK FACTORS
------------
If You Tender All or Any Portion of Your Interests You are Subject to Risks
Including the Following:
The purchase price may be less than the fair market value and
liquidation value of the Interests. The Interests are not traded on a recognized
stock exchange or trading market. There is no active, liquid market for the
Interests, and it is unlikely that this type of market will develop in the near
future. We are aware of the following transactions in or offers for Interests:
o purchases by us of 2,245 Interests in our tender offer of $205 per
Interest which began on July 27, 1999 and ended on December 8, 1999;
o purchases by us of 1,259 Interests in our tender offer of $205 per
Interest which began on November 20, 1998 and ended on February 19,
1999;
o secondary market transactions in which Interests were transferred at
prices, including commissions and mark-ups, ranging from $4.00 to
$243.00 per Interest by limited partners to third parties during the
period from February, 1995 through April, 2000;
o repurchases by the Partnership, outside of the tender offers described
above, of 4,436 Interests at prices ranging from $150 to $205 during
the period from March, 1996 through September, 1998;
o purchases of Interests by ORIG, outside of the tender offers described
above, of 545 Interests in 1999 and 2000 for $205 per Interest;
o the purchase of 565 Interests from three limited partners by ORIG on
February 10, 2000 at an average price of $241.82 per Interest; and
o purchases by BKK and Ocean Ridge of 326 Interests at prices ranging
from $130 to $205 per Interest during the period from March, 1995
through June, 1999.
As of June 30, 2000 and December 31, 1999, the book value of each
Interest was approximately $145.67 and $143.00, respectively.
The Purchase Price per Interest in this Offer was determined by the
General Partner, in its sole discretion, based on the purchase price paid to
limited partners in the transactions described above. The purchase price per
Interest in any of the transactions described above and the Purchase Price in
this Offer may not reflect the value of the Interests. If you were to hold your
Interests until termination or liquidation of the Partnership, you might receive
greater or lesser value than the Purchase Price for your Interests.
4
<PAGE>
You may suffer negative tax consequences. If you sell Interests in this
Offer you generally will recognize a gain or loss on the sale of your Interests
for federal and most state income tax purposes. The amount of gain or loss
realized will be, in general, the excess of the amount you realize from selling
your Interests minus the adjusted tax basis in the Interests you sell. The
amount that you realize from the sale of your Interests is generally the sum of
the Purchase Price plus your share of Partnership liabilities. When you sell
Interests which you have held for more than twelve (12) months, the sale will
typically result in long-term capital gain or loss. Due to the complexity of tax
issues, you are advised to consult your tax advisors with respect to your
individual tax situation before selling your Interests in the Offer. See Section
12 of this Offer to Purchase.
There is a conflict of interest between limited partners who tender
their Interests in the Offer, limited partners who do not tender, and the
General Partner, which creates a risk that the Purchase Price will be less that
the fair value of the Interests. A conflict of interest exists between limited
partners who tender their Interests and the Partnership, the General Partner and
limited partners who are not tendering their Interests. Limited partners
tendering their Interests would prefer a higher Purchase Price; the Partnership,
the General Partner and limited partners who are not tendering their Interests
would prefer a lower Purchase Price. As a result of these conflicts of interest,
there is a risk that the Purchase Price is less than the fair value of the
Interests.
The General Partner Makes No Recommendation to Limited Partners. The
General Partner makes no recommendation regarding whether you should tender or
retain your Interests. You should make your own decisions regarding whether to
tender your Interests based upon your own individual situation.
5
<PAGE>
IF You Do Not Tender All or Any Portion of Your Interests You Are Subject to
Risks Including the Following:
There is no developed market for the Interests, which may prevent you
from being able to liquidate your investment or receive fair value. The Purchase
Price per Interest was determined by the General Partner in its sole discretion
and may not reflect the price per Interest if the Interests were listed on an
exchange or of the proceeds that you may receive if the Partnership was
liquidated or dissolved. Although the Interests are transferable, subject to
certain limitations set forth in the Partnership Agreement, we do not anticipate
that any active, liquid market will develop. You may not be able to liquidate
your investment on favorable terms, if at all.
Cash distributions have been suspended and may be permanently
eliminated. As of January 1, 1997, the Partnership suspended payment of cash
distributions to limited partners due to insufficient cash being generated from
the Partnership's operations. There can be no assurance that the Partnership
will ever resume distributions or be able to fund its future needs or
contingencies, which may harm the Partnership's business or financial condition.
The Partnership is using cash reserves to fund the Offer, which will
reduce existing cash available for future needs and contingencies. The amount of
funds required by the Partnership to fund the Offer is estimated to be
approximately $25,500 ($20,500 to purchase 100 Interests plus approximately
$5,000 for its proportionate share of the expenses associated with administering
the Offer. The expenses of the Offer will be apportioned between the Partnership
and ORIG based on the number of Interests purchased by each of us. 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 of Interests held by persons controlling,
controlled by or under common control with the Partnership will increase. As of
August 31, 2000, the General Partner owned five (5) of the Partnership's
outstanding Interests and ORIG owned 3,183 of the Partnership's outstanding
Interests. The General Partner, ORIG, and all partners, members, affiliates and
associates of the General Partner or ORIG beneficially own, in the aggregate,
3,514 Interests, representing approximately 14.3% of the Partnership's 24,214
outstanding Interests. Although this Offer is made to all limited partners, we
have been advised that none of the General Partner, or any of the partners,
members, affiliates or associates of the General Partner intend to tender any
Interests pursuant to the Offer. Assuming the Offer is fully subscribed, the
General Partner, ORIG, and partners, members, affiliates and associates of the
General Partner or ORIG, will own, after the Offer, a total of 3,614 Interests,
representing approximately 15% of the Partnership's 24,114 outstanding
Interests, an increase of .7% of the outstanding Interests. In addition, other
persons controlling, controlled by or under common control with the Partnership,
by virtue of the decreased number of outstanding Interests, will own
6
<PAGE>
a greater percentage of the outstanding Interests. Thus, these entities or
individuals will have a greater influence on certain matters voted on by limited
partners, including removal of the General Partner and termination of the
Partnership.
The Partnership may not be able to pay for necessary capital
improvements to Partnership properties. Some of the Partnership's properties
require capital improvements to operate optimally. The Partnership expects to
make the capital improvements to certain Partnership properties over the next
year and anticipates funding these improvements using cash flow from operations,
cash reserves or additional financing if necessary. However, the anticipated
sources of funding may not be sufficient to make the necessary improvements. If
the cash flow from operations and cash reserves prove to be insufficient, the
Partnership might have to fund the capital improvements by borrowing money. If
the Partnership is unable to borrow money on favorable terms, or at all, it may
not be able to make necessary capital improvements which could, in the future,
harm the Partnership's financial condition.
The Partnership has no current plan to liquidate. Under the agreement
of limited partnership, the Partnership is to terminate on December 31, 2028,
unless terminated sooner as allowed under the agreement. The Partnership has no
current plan to sell its assets and to distribute the proceeds to its limited
partners, nor does the Partnership contemplate resuming distributions to the
limited partners. Therefore, if you do not tender your Interests you may not
receive any return on or any distribution relating to your investment in the
Partnership in the foreseeable future.
If tenants occupying some of the Partnership's properties experience
financial difficulties or do not renew their leases, this could harm the
Partnership's financial operations. The Partnership's financial condition and
ability to fund future cash needs, including its ability to make future cash
distributions, if any, may be harmed by the bankruptcy, insolvency or a downturn
in business of any tenant occupying a significant portion of any of the
Partnership's properties or by a tenant's decision not to renew its lease. If
the Partnership cannot re-lease the space vacated by significant tenants on a
timely basis and on favorable terms and conditions, this could damage the
Partnership's results of operations and financial condition. See Section 10 of
this Offer to Purchase.
There are significant 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:
o possible federal, state or local regulations and controls
affecting rents, prices of goods, fuel and energy consumption
and prices, water and environmental restrictions;
o increased labor and material costs; and
7
<PAGE>
o 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.
8
<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 some or all of
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 under the Partnership Agreement transfers of Interests
are subject to restrictions, including the prior approval of the General
Partner. The General Partner believes that some limited partners 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 limited partners should be entitled to make a
choice between immediate liquidity and continued ownership and, thus, believes
that this Offer accommodates the differing goals of both groups of limited
partners. Limited partners who tender their Interests in 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 current value of
their investment. See Risk Factors - "General Economic Risks Associated with
Investments in Real Estate."
Neither we nor the General Partner has any current plans or proposals
that relate to or would result in:
o an extraordinary corporate transaction, such as a merger, reorganization
or liquidation, involving the Partnership;
o a sale or transfer of a material amount of assets of the Partnership;
o 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;
o any change in the indebtedness or capitalization of the Partnership;
o any other material change in the structure or business of the
Partnership; or
o 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. As of January 1, 1997, the Partnership suspended payment
of cash distributions to limited partners due to insufficient cash
being generated from the Partnership's operations. See Section 7 of
this Offer to Purchase.
If you do not tender your Interests or tender only a portion of your
Interests, the Interests we purchase in the Offer will have the effect of
increasing your proportionate interest in the Partnership,
9
<PAGE>
and will also increase the proportionate interest of ORIG and other affiliates
of the General Partner that own Interests. If you retain your Interests you will
be subject to increased risks including but not limited to: (1) reduction in the
Partnership's cash reserves, which may affect 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 ORIG, and persons controlling the
affiliates, which will increase the influence that affiliates of the General
Partner and persons controlling the affiliates have on certain matters voted on
by limited partners, including removal of the General Partner and termination of
the Partnership. Any Interests 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 ORIG will be held by ORIG.
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.
The Offer is the third tender offer made by us for Interests. We
purchased a total of 1,259 Interests on February 19, 1999 for $205 per Interest,
in our first tender offer. The Partnership purchased 600 of these Interests.
ORIG purchased 659 of these Interests. We purchased a total of 2,245 Interests
on December 8, 1999 for $205 per Interest, in our second tender offer. The
Partnership purchased 500 of these Interests. ORIG purchased 1,745 of these
Interests. The General Partner is considering 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.
Section 2. Offer to Purchase and Purchase Price; Proration; Expiration
Date; Determination of Purchase Price.
Offer to Purchase and Purchase Price. We will, upon the terms and
----------------------------------------
subject to the conditions of the Offer described below, purchase a total of up
to 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 if
you decide to tender we will not accept your tender if, as a result of your
tender, you would continue to be a limited partner and would hold fewer than
five (5) Interests. The Partnership will purchase the first 100 Interests which
are tendered and received by the Partnership by, and not withdrawn prior to, the
Expiration Date. If more than 100 Interests are tendered and received by the
Partnership as a result of this Offer, ORIG will purchase up to an additional
100 Interests which are tendered by, and not withdrawn prior to, the Expiration
Date.
If, on the Expiration Date, we determine that more than 200 Interests
have been tendered during the Offer, each of us 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 we are offering to purchase to an amount
that we believe is sufficient to accommodate the excess Interests tendered as
well as any Interests tendered during the extended Offer.
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Proration. If the Offer is oversubscribed and we do not act in
---------
accordance with (i) or (ii), above, or if we act in accordance with (i) and
(ii), above, but the Offer remains oversubscribed, then we will accept Interests
tendered on or before the Expiration Date for payment on a pro rata basis. If
you tender in the Offer and we prorate, the number of Interests we purchase from
you will be equal to a fraction of the total number of Interests tendered by all
limited partners in this Offer, the numerator of which will be the total number
of Interests that we are willing to purchase and the denominator of which will
be the total number of Interests properly tendered by all limited partners
participating in the Offer.
Your partnership agreement prohibits the Partnership from making a
repurchase if as a result of the repurchase a limited partner would continue to
be a limited partner but hold fewer than five Interests. As a result, as
discussed below, we will not accept tenders which would reduce a limited
partner's ownership to fewer than five Interests. In the event of a proration,
this restriction could prevent us from purchasing the same percentage of
tendered Interests from all tendering limited partners, as required by SEC
regulations. To avoid this result, we will not prorate, but will instead
purchase all tendered Interests in excess of 200, if proration would result in
any limited partner owning fewer than five Interests.
We will round any fractional Interests resulting from any proration
calculation down to the nearest whole number. We will not purchase fractions of
Interests. The Partnership will notify, in writing, limited partners from whom
we will purchase fewer than the number of Interests which they originally
tendered. For any Interest that a limited partner tenders but we do not
purchase, a book entry will be made on the Partnership's books to reflect
ownership of the Interests not purchased. The Partnership will not issue a new
Certificate of Ownership for the Interests that we do not purchase, unless a
limited partner makes a written request instructing the Partnership to do so.
THIS OFFER IS NOT CONDITIONED ON ANY MINIMUM NUMBER OF INTERESTS BEING
TENDERED; PROVIDED, HOWEVER, WE WILL NOT ACCEPT YOUR TENDER IF, AS A RESULT OF
THE TENDER, YOU 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 December 22, 2000 unless and until we 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 us,
expires. The Partnership may extend the Offer, in its sole discretion, by
providing you with written notice of the extension; provided, however, that if
the Offer is oversubscribed, we may, each in our sole discretion, extend the
Offer by providing you with written notice of the extension. We do not intend to
allow limited partners to tender Interests after the Expiration Date, including
any extensions. For a description of how we may extend or terminate the Offer,
see Section 14 of this Offer to Purchase.
Determination of Purchase Price. The Purchase Price represents the price at
--------------------------------
which we are willing to purchase Interests. Your approval is not required and
was not sought regarding the
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determination of the Purchase Price. No special committee of ours or of the
limited partners has approved this Offer and no special committee or independent
person has been retained to act on behalf of us. Neither we 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 us was determined by the General Partner
in its sole discretion based on:
o the response to our tender offer of $205 per Interest which began on
July 27, 1999 and ended on December 8, 1999;
o the response to our tender offer of $205 per Interest which began on
November 20, 1998 and ended on February 19, 1999;
o sales of Interests by limited partners to third parties in secondary
market transactions from February,1995 through April, 2000;
o repurchases of Interests by the Partnership, outside of the tender
offers described above, in 1996, 1997 and1998 at prices ranging from
$150 to $205 per Interest;
o purchases of Interests by ORIG, outside of the tender offers described
above, in 1999 and 2000 at $205 per Interest;
o purchases of Interests from three limited partners by ORIG on February
10, 2000 at an average price of $241.82 per Interest; and
o purchases of Interests by the Partnership's affiliates, BKK and Ocean
Ridge, in 1995, 1996, 1998 and 1999 at prices ranging from $130 to $205
per Interest.
We are aware of an offer to purchase Interests by a third-party offeror
for $153.37 per Interest in June, 1999.
In determining the Purchase Price, the General Partner did not estimate
or project the liquidation value per Interest or consider the book value per
Interest and did not appraise the value of the Partnership's assets.
Section 3. Procedure for Tendering Interests. If you wish to tender
Interests in this Offer you 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 you tender or if your Certificate(s) of Ownership
for the Interests is (are) lost, stolen, misplaced or destroyed, you must
execute and submit the Affidavit and Indemnification Agreement for Missing
Certificate(s) of Ownership 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 of this Offer to Purchase. If your Interests are held in an
IRA/custodial account, all forms should be signed and forwarded to the custodian
to obtain a signature guarantee and the Certificate of Ownership for the
Interests. There are no fees or other charges payable by limited partners who
tender Interests in connection with the Offer.
THE LETTER OF TRANSMITTAL, SUBSTITUTE FORM W-9, AND CERTIFICATE(S) OF OWNERSHIP
FOR THE INTERESTS BEING TENDERED (OR AFFIDAVIT, IF APPLICABLE)
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AND ANY OTHER REQUIRED DOCUMENTS MUST BE RECEIVED BY THE PARTNERSHIP ON OR
BEFORE THE EXPIRATION DATE. WE WILL NOT ACCEPT INTERESTS RECEIVED BY THE
PARTNERSHIP AFTER THE EXPIRATION DATE.
Method of Delivery. YOU 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). WE RECOMMEND THAT YOU SUBMIT ALL
DOCUMENTS BY REGISTERED MAIL RETURN RECEIPT REQUESTED AND PROPERLY INSURED OR BY
AN OVERNIGHT COURIER SERVICE. YOU 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 16 OF THIS OFFER TO PURCHASE.
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. If the
Offer is oversubscribed, however, we may decide to purchase Interests in excess
of the initial 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 ORIG
will be determined by each respective party, in its sole discretion. Each
determination, whether made by the Partnership or ORIG, will be final and
binding. The Partnership or ORIG, 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 ORIG. In any event, tenders will not be deemed to have been made
until all defects or irregularities have been cured or waived. We are neither
under any duty nor will we incur any liability for failure to notify you of any
defects, irregularities or rejections contained in your tenders.
Section 10(b) of the Exchange Act and Rule 14e-4 promulgated thereunder
require that a person tendering Interests on his, her or its behalf, 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.
If you tender your Interests pursuant to any of the procedures described in this
Offer to Purchase you accept the terms and conditions of the Offer, and
represent and warrant that (i) you own the Interests being tendered within the
meaning of Rule 14e-4; and (ii) the tender complies with Rule 14e-4.
Section 4. Withdrawal Rights. If you tender Interests in this Offer,
you may withdraw your tender at any time before the Expiration Date or the date
we accept Interests, whichever is later. 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 Section 16 of this
Offer to Purchase on or before the Expiration Date. Any notice of withdrawal
must specify your name and the amount of Interests that you are withdrawing.
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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 ORIG, each in its sole
discretion, for any Interests purchased by the Partnership or ORIG, as the case
may be, in excess of the initial 200 Interests. All determinations made by the
Partnership or ORIG 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 of this Offer to Purchase prior to the Expiration Date. Tenders made
pursuant to the Offer which are not otherwise withdrawn in accordance with this
Section 4 will be irrevocable.
Section 5. Purchase of Interests; Payment of Purchase Price. If you
tender Interests under the Offer, upon the terms and subject to the conditions
of the Offer, we will pay you $205 per Interest for each Interest you properly
tender. We will pay you the Purchase Price with a check from either the
Partnership or ORIG depending on which of us purchases your Interests. We will
deliver your check by first class U.S. Mail deposited in the mailbox within five
(5) business days after the Expiration Date. Under no circumstances will we pay
you interest on the Purchase Price, regardless of any extension of the Offer or
any delay in making payment. In the event of Proration as set forth in Section 2
of this Offer to Purchase, we 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.
Interests will be deemed purchased at the time of acceptance by us, 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 from these laws. Interests purchased by
ORIG will be held by ORIG. 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 to Purchase, we will not be required to purchase or pay
for any Interests tendered and may terminate the Offer as provided in Section 14
of this Offer to Purchase 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;
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(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 ORIG 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 ORIG, by any government or governmental, regulatory
or administrative authority or agency or tribunal, domestic or foreign,
which, in our reasonable judgment, would or might directly or indirectly:
(i) delay or restrict the ability of the Partnership or ORIG, or
render the Partnership or ORIG 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 ORIG,
taken as a whole, or otherwise materially impair in any way the
contemplated future conduct of the business of the Partnership or
ORIG;
(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 our reasonable judgment, might affect, the
extension of credit by banks or other lending institutions in the
United States;
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(v) (A) any significant change, in our 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 our reasonable judgment, 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 our 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;
(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; or
(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 the date of this Offer
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 1% of the outstanding Interests or shall have been granted any option
or right to acquire beneficial ownership of more than 1% 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;
which, in our reasonable judgment, in any such case and regardless of the
circumstances (including any action by us) giving rise to such event, makes it
inadvisable to proceed with the Offer or with such purchase or payment. The
conditions described above are for our sole benefit and may be asserted by us on
our respective behalf regardless of the circumstances giving rise to any such
condition (including any action or inaction by us) or may be waived by us in
whole or in part. Our 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 us concerning the events described in this Section 6
shall be final and binding on all parties. As of the date hereof, we believe
that neither paragraph (a) nor paragraph (b) of this Section 6 will prohibit the
consummation of the Offer.
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Section 7. Cash Distribution Policy. The Partnership began operations
in August, 1984 and anticipated providing limited partners with 8%
non-cumulative distributions. Distributions to limited partners were suspended
effective January 1, 1997 due to insufficient cash being generated from the
Partnership's operations. Although the Partnership is not obligated to make
future cash distributions, it may do so in the future. See Section 10, "Certain
Information About the Partnership." If you tender your Interests pursuant to the
Offer, you will not be entitled to receive any cash distributions declared and
payable, if any, after the Expiration Date, on any Interests which you tender
and we accept. 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.
Section 8. Effects of the Offer. In addition to the effects of the
Offer on limited partners who tender their Interests and limited partners who do
not tender their Interests 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:
If the Offer is fully subscribed, the Partnership will use
approximately $25,500 to purchase 100 Interests and pay costs associated with
the Offer. This will have the effect of: (i) reducing the cash available to fund
future needs and contingencies or to make future distributions; and (ii)
reducing or eliminating the interest income that the Partnership would have been
able to earn had it invested this cash in interest bearing investments.
Financial statements giving pro forma effect of the Offer, assuming the purchase
by the Partnership of Interests at $205 per Interest, are attached to this Offer
to Purchase as Appendix A.
Upon completion of the Offer, we 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
you than the terms of this Offer. Rule 13e-4 promulgated under the Exchange Act
prohibits us 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 us 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 condition and general economic market conditions.
Section 9. Source and Amount of Funds. The total amount of funds
required to complete this Offer is approximately $51,000 (including $41,000 to
purchase 200 Interests plus approximately $10,000 for expenses related to
administering the Offer). The Partnership expects to pay approximately $20,500
to purchase 100 Interests and approximately $5,000 for its proportionate share
of expenses related to administering the Offer, and expects to fund these
payments with its cash reserves. The expenses of the Offer will be apportioned
between us based on the number of Interests purchased by each of us. As of June
30, 2000 and December 31, 1999 the Partnership had unrestricted cash and cash
equivalents of $423,745 and $607,512, or $17.50 and $25.09 per Interest,
respectively. If the Offer is oversubscribed and the Partnership, in its sole
17
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discretion, decides to purchase Interests in excess of 100 Interests, the
Partnership will fund these additional purchases and expenses, if any, from its
cash reserves.
ORIG expects to pay approximately $20,500 to purchase 100 Interests and
approximately $5,000 for its proportionate share of expenses related to
administering the Offer, and expects to fund these payments with the proceeds
from a loan from the Bank of Louisville described below. If the Offer is
oversubscribed and ORIG, in its sole discretion, decides to purchase Interests
in excess of 100 Interests, ORIG will fund these additional purchases and
expenses, if any, from the loan.
ORIG will also use the loan proceeds to fund the purchase of limited
partnership interests of affiliated partnerships. The loan proceeds could also
be used to return capital contributions previously made by Mr. J.D. Nichols and
Mr. Brian F. Lavin, the members of ORIG, to ORIG.
On December 28, 1999, ORIG and Community Trust Bank entered into a Business
Loan Agreement under which Community Trust Bank agreed to provide a $2,000,000
revolving line of credit to ORIG at an interest rate of prime plus .25% per
annum for a term ending on January 28, 2005. The line of credit was secured by:
(1) the Interests of the Partnership held by ORIG; and (2) limited partnership
interests in partnerships affiliated with the Partnership which are held by
ORIG. Mr. Nichols and Mr. Lavin agreed to guarantee the indebtedness of ORIG
with respect to Community Trust Bank pursuant to Commercial Guaranties executed
by each of them on December 28, 1999. Mr. Nichols guaranteed 75% of all
indebtedness of ORIG or $1,500,000, whichever is less, and Mr. Lavin guaranteed
25% of all indebtedness of ORIG or $500,000, whichever is less. Under the terms
of the Business Loan Agreement, ORIG will repay the proceeds of the revolving
line of credit. Beginning on April 28, 2000, ORIG began making 20 consecutive
quarterly interest payments with respect to accrued interest on the unpaid
principal balance. ORIG repaid this loan with the proceeds of the loan described
below.
On August 15, 2000, ORIG and the Bank of Louisville, a Kentucky banking
corporation, entered into a Loan Agreement under which the Bank of Louisville
agreed to provide a $6,000,000 revolving line of credit to ORIG evidenced by
three separate promissory notes issued by ORIG in favor of the bank in the
original principal amount of $2,000,000 each (the "Loan Agreement"). The terms
of the three separate notes are described below:
o Revolving Credit Note A bears interest at the prime rate, as announced by
the Bank of Louisville from time to time, plus .25% per year for a term
ending on August 31, 2005. ORIG will pay the interest rate described in
Revolving Credit Note A for any outstanding balance owing under the
revolving line of credit if, and only if, the outstanding balance is
$2,000,000 or less.
o Revolving Credit Note B bears interest at the prime rate, as announced by
the Bank of Louisville from time to time, plus .50% per year for a term
ending on August 31, 2005. ORIG will pay the interest rate described in
Revolving Credit Note B for any outstanding
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balance owing under the revolving line of credit if, and only if, the
outstanding balance is greater than $2,000,000 but less than $4,000,000.
o Revolving Credit Note C bears interest at the prime rate, as announced by
the Bank of Louisville from time to time, plus 1% per year for a term
ending on August 31, 2005. ORIG will pay the interest rate described in
Revolving Credit Note C for any outstanding balance owing under the
revolving line of credit if, and only if, the outstanding balance is
greater than $4,000,000.
The line of credit from the Bank of Louisville is secured by:
o Interests of the Partnership which are currently held or subsequently
acquired by ORIG, including any distributions which the Partnership issues
to ORIG with respect to the Interests and any proceeds from the sale of the
Interests held by ORIG;
o limited partnership interests in partnerships affiliated with the
Partnership which are currently held or subsequently acquired by ORIG,
including any distributions which the partnerships issue to ORIG with
respect to the interests held by ORIG and any proceeds from the sale of the
interests held by ORIG; and
o the personal guaranties of Mr. Nichols and Mr. Lavin of all indebtedness of
ORIG with respect to the Bank of Louisville under the $6,000,000 line of
credit pursuant to two separate Guaranty Agreements, each dated August 15,
2000 among the Bank of Louisville and each of Mr. Nichols and Mr. Lavin
(the "Guaranty Agreements"). Mr. Nichols and Mr. Lavin are jointly and
severally liable under each of their respective Guaranty Agreements.
Under the terms of the Loan Agreement, ORIG will repay the proceeds of
the revolving line of credit as follows:
o On September 1, 2000, ORIG began making consecutive monthly payments of all
accrued and unpaid interest on the outstanding principal balance.
o The entire outstanding principal balance owing under the revolving line of
credit is due and payable on August 31, 2005.
ORIG intends to use funds from cash distributions from the Partnership
and affiliated partnerships and from capital contributions to ORIG by Mr.
Nichols and Mr. Lavin to make these payments.
In addition to using the proceeds of the revolving line of credit to
fund the purchase of Interests and ORIG's proportionate share of expenses of the
Offer, Mr. Nichols and Mr. Lavin may fund the purchase of Interests by ORIG and
ORIG's proportionate share of the expenses of the Offer
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from capital contributions pursuant to the terms of a Capital Contribution
Agreement dated as of January 20, 1999 by and between Mr. Nichols and Mr. Lavin.
Section 10. Certain Information About the Partnership
Certain Information About the Partnership.
------------------------------------------
The Partnership was formed in May, 1983 under the laws of the State of
Kentucky. NTS- Properties Associates IV, a Kentucky limited partnership, is the
Partnership's General Partner. Mr. J.D. Nichols is the managing general partner
of NTS-Properties Associates IV. NTS Capital Corporation is the corporate
general partner of NTS-Properties Associates IV. NTS Capital Corporation is
controlled by Mr. Nichols, its Chairman of the Board and Mr. Brain F. Lavin, its
President and Chief Operating Officer.
The Partnership's net income or loss and cash distributions are
allocated according to the terms of the Partnership Agreement. Under the
Partnership Agreement, Net Cash Receipts (as defined in the Partnership
Agreement) that are made available for distribution are distributed 99% to the
limited partners and 1% to the General Partner until limited partners have
received the 8% Preferred Distribution (as defined in the Partnership
Agreement), then to the General Partner until it has received the General
Partner Subordinated Distribution (as defined in the Partnership Agreement),
then 90% to the limited partners and 9% to the General Partner as its
Partnership management fee and 1% to the General Partner as its distributive
Partnership share. Net Cash Proceeds (as defined in the Partnership Agreement)
are distributed 99% to the limited partners and 1% to the General Partner until
the limited partners have received cash distributions from all sources equal to
their Original Capital (as defined in the Partnership Agreement), plus the
amount of any deficiency in the 8% Cumulative Distribution as of the end of the
calendar quarter next preceding the date of such distribution. Thereafter, any
remaining Net Cash Proceeds are distributed 75% to limited partners and 25% to
the General Partner.
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
93% at June 30, 2000.
o Plainview Point Office Center Phases 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 Phases I
and II was 75% at June 30, 2000.
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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 98% at June 30, 2000.
o A joint venture interest in The Willows of Plainview Phase II,
a 144-unit luxury apartment complex in Louisville, Kentucky,
constructed by a joint venture between the Partnership and
NTS-Properties V, a Maryland limited partnership and an
affiliate of the General Partner of the Partnership
("NTS-Properties V"). The Partnership's percentage interest in
the joint venture was 10% at June 30, 2000. The occupancy
level at The Willows of Plainview Phase II was 94% at June 30,
2000.
o A joint venture interest in Golf Brook Apartments, a 195-unit
luxury apartment complex in Orlando, Florida, constructed by a
joint venture between the Partnership and NTS-Properties VI, a
Maryland limited partnership and an affiliate of the General
Partner of the Partnership, ("NTS-Properties VI"). The
Partnership's percentage interest in the joint venture was 4%
at June 30, 2000. The occupancy level at Golf Brook Apartments
was 94% at June 30, 2000.
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 a joint venture
between the Partnership and NTS-Properties VI. The
Partnership's percentage interest in the joint venture was 5%
at June 30, 2000. The occupancy level at Plainview Point III
Office Center was 91% at June 30, 2000.
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 (the "Blankenbaker Joint
Venture") between the Partnership, 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 June 30, 2000. The
occupancy level at Blankenbaker Business Center 1A was 100% at
June 30, 2000.
o A joint venture interest in the three properties owned by
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 and of the Partnership. The
Partnership's percentage interest in the L/U II Joint Venture
was 12% at June 30, 2000.
A description of the properties owned by the L/U II Joint Venture
appears below:
21
<PAGE>
o 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
75% at June 30, 2000.
o 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 June 30, 2000.
o Lakeshore Business Center Phase III-a 40,000 square foot
office center currently under construction on approximately
3.77 acres of land adjacent to the Lakeshore Business Center
development.
In the next 12 months, the General Partner expects the Partnership's
liquidity to decrease as a result of the Partnership's efforts in leasing its
commercial properties and joint venture properties. At this time, the future
leasing and tenant improvement costs which will be required to renew the current
leases or obtain new tenants are unknown. It is anticipated, however, that the
cash flow from operations and cash reserves will be sufficient to meet the needs
to the Partnership.
In January, 2000, the L/U II Joint Venture began to construct Lakeshore
Business Center Phase III. The construction cost is currently estimated to be
$4,300,000 and is being funded by a capital contribution of $1,737,000 from
NTS-Properties V in December of 1999 and approximately $2,680,000 of debt
financing. As of June 30, 2000, the L/U II Joint Venture has incurred
approximately $1,761,000 in expenses for the construction of Lakeshore Business
Center Phase III. The construction of Lakeshore Business Center Phase III should
be completed by October, 2000.
As of June 30, 2000, the L/U II Joint Venture has agreed to make tenant
improvements at Lakeshore Business Center Phases I and II which will cost
approximately $66,000. The Partnership's share of the costs of this project is
approximately $7,900 and will be funded from cash flows from operations. The L/U
II Joint Venture has also agreed to make tenant improvements at Lakeshore
Business Center Phases III which will cost approximately $45,700. The
Partnership's share of the costs of this project is approximately $5,500 and
will be funded from cash flows from operations. The construction on these
projects has begun and is expected to be completed during the third quarter of
2000.
The L/U II Joint Venture anticipates replacing the roofs at Lakeshore
Business Center Phase I, which will cost approximately $200,000. The
Partnership's share of this project is approximately $23,860 and will be funded
from cash flows from operations.
The Partnership has no other material obligations for renovations or
capital improvements to its properties or joint venture properties, as of June
30, 2000.
22
<PAGE>
On July 1, 1999, NTS-Properties V contributed $1,737,000 to the L/U II
Joint Venture to cover a portion of the costs to be incurred from the
construction of Lakeshore Business Center Phase III. The other partners in the
L/U II Joint Venture, including the Partnership, did not make capital
contributions at that time. As a result, the Partnership's percentage of
ownership in the L/U II Joint Venture declined from 18% to 12%, as of July 1,
1999. On July 1, 2000, NTS-Properties V contributed an additional $500,000 to
the L/U II Joint Venture. The other partners in the L/U II Joint Venture,
including the Partnership, did not make capital contributions at that time. As a
result, the Partnership's percentage of ownership in the L/U II Joint Venture
declined from 12% to 11%, as of July 1, 2000.
The Partnership's properties are encumbered by the following mortgages:
Loan Balance
at 06/30/2000: Encumbered Property: Due:
------------- -------------------- ----
$ 1,569,983 Commonwealth Business Center Phase I 10/01/04
$ 1,801,677 Willows of Plainview Phase I 01/05/13
$ 1,715,110 Willows of Plainview Phase I 01/05/13
Properties owned by joint ventures in which the Partnership is a
partner are encumbered by the following mortgages:
Loan Balance
at 06/30/2000: Encumbered Property: Due:
------------- ------------------- ----
$ 294,669* Willows of Plainview Phase II 01/05/13
$ 175,989* Willows of Plainview Phase II 01/05/13
$ 876,508* Blankenbaker Business Center 1A 11/15/05
$ 559,495* Lakeshore Business Center Phase I 08/01/08
$ 520,029* Lakeshore Business Center Phase II 08/01/08
*This amount represents the Partnership's proportionate interest in the
mortgages payable as of June 30, 2000.
The Partnership's ratio of earnings to fixed charges was 1.42 for the
three months ended June 30, 2000, 1.00 for the year ended December 31, 1999 and
1.3:1 for the year ended December 31, 1998.
For more detailed financial information about the Partnership, see
"Appendix A: The Partnership's Financial Statements Giving Pro Forma Effect of
the Offer."
23
<PAGE>
Section 11. Certain Transactions with Affiliates.
NTS Development Company, an affiliate of the General Partner, directs
the management of the Partnership's properties pursuant to a written agreement
(the "Management Agreement") between NTS Development Company and the
Partnership. Under the Management Agreement, NTS Development Company establishes
rental policies and rates and directs the marketing activity of leasing
personnel. It also coordinates the purchase of equipment and supplies,
maintenance activity and the selection of all vendors, suppliers and independent
contractors.
Under the Management Agreement, the Partnership agreed to pay NTS
Development Company a management fee is equal to 5% of gross revenues from
residential properties and 6% of gross revenues from commercial properties. Also
under the Management Agreement, the Partnership agreed to pay NTS Development
Company a repair and maintenance fee equal to 5.9% of costs incurred which
relate to capital improvements. The Partnership paid NTS Development Company the
following fees for the six months ended June 30, 2000 and for the year ended
December 31, 1999. These charges include items which have been expensed as
operating expenses - affiliated or professional and administrative expenses and
items which have been capitalized as other assets or as land, buildings and
amenities.
Six Months Year
Ended Ended
06/30/00 12/31/99
-------- --------
Property
Management
Fee $93,564 $186,264
Repair and
Maintenance Fee 22,819 21,620
------- -------
$116,383 $207,884
======== ========
The Management Agreement also requires the Partnership to purchase all
insurance relating to the managed properties, to pay the direct out-of-pocket
expenses of NTS Development Company in connection with the operation of the
properties, including the cost of goods and materials used for and on behalf of
the Partnership, and to reimburse NTS Development Company for the salaries,
commissions, fringe benefits, and related employment expenses of on-site
personnel. The Partnership also paid NTS Development Company the following
amounts for expenses, in addition to the fees described in the preceding table,
for the six months ended June 30, 2000 and for the year ended December 31, 1999.
These charges included items which have been expensed as operating expenses -
affiliated or professional and administrative expenses and items which have been
capitalized as other assets or as land, building and amenities.
24
<PAGE>
Six Months Year
Ended Ended
06/30/00 1999
-------- ----
Leasing $ 48,824 $ 148,888
Administrative 96,129 208,739
Property
Management
Costs 142,064 340,261
Other 4,000 13,804
----- ------
$291,017 $711,692
======== ========
The initial term of the Management Agreement was five years, and
thereafter for succeeding one-year periods, unless canceled by either party upon
sixty days written notice. As of the date of this Offer, the Management
Agreement is still in effect.
In connection with the retirement of Richard L. Good, the former Vice
Chairman of NTS Capital Corporation, and under an agreement dated as of January
1, 1999, JDN Financial Holdings, LLC, a Delaware limited liability company owned
by J.D. Nichols, acquired the equity interests of Richard L. Good in various
entities affiliated with the Partnership, including NTS Corporation, NTS-
Properties Associates VI, NTS-Properties Associates VII, NTS-Properties Plus
Associates, and interests in private limited partnerships with ownership
interests in real estate. In consideration for his equity interests in the
foregoing entities, Richard L. Good received (i) monetary consideration equal to
his salary and bonus in the amount of approximately $529,000, (ii) various
promissory notes in the net amount of approximately $1,600,000, payable monthly
through February 29, 2012 at the current interest rate of 5.09% per annum, and
(iii) equity interests in real and personal property, including 50% of the
equity interest in National Aquatics, Inc. and 70% of the equity interest in
NTS/Sabal Office Limited Partnership.
On February 25, 2000, Mr. Nichols made a capital contribution of
$100,000 to NTS Financial Partnership, a Kentucky general partnership ("NTS
Financial") and an affiliate of the Partnership. In the past two years, Mr.
Nichols has received returns of capital totaling $150,000 from NTS Financial
which Mr. Nichols used to make capital contributions to ORIG.
In the past two years, Mr. Nichols has received returns of capital
totaling $893,170 from NTS Financial which Mr. Nichols used to pay third party
obligations, and returns of capital totaling $2,426,647 from NTS Financial which
Mr. Nichols used to make a capital contribution to ORIG to purchase Interests in
the Partnership and also to purchase limited partnership interests in
partnerships affiliated with the Partnership.
25
<PAGE>
In the past two years, Mr. Nichols also received undistributed profits
from private affiliates of NTS Financial totaling $1,319,500 which Mr. Nichols
used to pay taxes.
Since January 1, 1998, Mr. Nichols has personally guaranteed various loans
made to various publicly and privately-held affiliates of the Partnership. As of
August 31, 2000, Mr. Nichols had outstanding personal guaranties totaling
approximately $27,198,000. Mr. Nichols has guaranteed the payment of
approximately $215,000 of notes payable of NTS Corporation. Mr. Nichols has
guaranteed the payment of approximately $17,700,000 of loans of various
affiliates. In October, 1998, Mr. Nichols and Mr. Lavin each personally
guaranteed $3,250,000 of a loan made to a privately-held affiliate of the
Partnership secured by a property, the book value of which is $10,000,000. Mr.
Nichols also guaranteed, as an indemnitor, that the conditions of certain surety
bonds will be met. The outstanding commitments of the surety bonds aggregated
$3,283,000 at December 31, 1999. In December, 1999, Mr. Nichols and Mr. Lavin
each personally guaranteed a $2,000,000 loan to ORIG from Community Trust Bank,
N.A. in the following amounts: (1) Mr. Nichols guaranteed 75% of all
indebtedness of ORIG or $1,500,000, whichever is less; and (2) Mr. Lavin
guaranteed 25% of all indebtedness of ORIG or $500,000, whichever is less. This
loan was repaid using the proceeds of a $6,000,000 loan to ORIG from the Bank of
Louisville. Mr. Nichols and Mr. Lavin each personally guaranteed up to
$6,000,000 of the obligations under the loan from the Bank of Louisville for
which each of them is jointly and severally liable.
In addition to the guaranties described above, on March 31, 1989 NTS
Guaranty Corporation, owned 100% by Mr. Nichols and an affiliate of the
Partnership, guaranteed certain obligations of NTS Mortgage Income Fund, which
is also an affiliate of the Partnership. On September 20, 1988, Mr. Nichols
issued a $10,000,000 demand note to NTS Guaranty Corporation, which may be used
to satisfy the guaranty. The obligations of NTS Guaranty Corporation under the
guaranty are expressly limited to the assets of NTS Guaranty Corporation, its
ability to draw upon the $10,000,000 demand note and Mr. Nichols' ability to
answer the demand.
During the past two years, ORIG has participated in joint tender offers
with: (i) the Partnership to purchase Interests and (ii) limited partnerships
that are affiliates of the Partnership to purchase the limited partnership
interests of those partnerships. The following table sets forth the results of
these tender offers:
<TABLE>
Limited
Partnership Limited
Interests Partnership
Total Purchased by Interests
Purchase Subject Price per Interests the Subject Purchased
Date Partnership Interest Purchased Partnership by ORIG
---- ----------- --------- --------- ----------- -------
<S> <C> <C> <C> <C> <C>
December NTS- $250 729 500 229
31, 1998 Properties III
26
<PAGE>
Limited
Partnership Limited
Interests Partnership
Total Purchased by Interests
Purchase Subject Price per Interests the Subject Purchased
Date Partnership Interest Purchased Partnership by ORIG
---- ----------- --------- --------- ----------- -------
<S> <C> <C> <C> <C> <C>
December NTS- $250 938 500 438
8, 1999 Properties III
February NTS- $205 1,259 600 659
19, 1999 Properties IV
December NTS- $205 2,245 500 1,745
8, 1999 Properties IV
February The $205 2,458 600 1,858
5, 1999 Partnership
December The $230(*) 1,196 250 946
31, 1999 Partnership
January NTS- $350 2,103 750 1,353
18, 1999 Properties VI
September NTS- $370 2,801 500 2,301
30, 1999 Properties VI
December NTS- $380 1,085 250 835
23, 1999 Properties VI
August NTS- $380 3,685 100 3,585
15, 2000 Properties VI
March NTS- $6 25,794 10,000 15,794
12, 1999 Properties VII,
Ltd.
November 30, NTS- $6 41,652 10,000 31,652
1999 Properties VII,
Ltd.
August 15, NTS- $6 39,220 2,500 36,720
2000 Properties VII,
Ltd.
</TABLE>
* The original offering price was $215 per interest which was increased to $230
per interest on December 20, 1999.
In addition to the above tender offers involving ORIG, on September 30,
1999, NTS- Properties V purchased 2,523 limited partnership interests of
NTS-Properties V from limited partners for $205 per interest pursuant to an
offer to purchase interests.
27
<PAGE>
The Partnership's affiliates, BKK and Ocean Ridge have purchased
Interests from time to time. Mr. Nichols' wife, Barbara Nichols, is the sole
limited partner of Ocean Ridge. BKK is the general partner of Ocean Ridge. Since
March, 1995, BKK and Ocean Ridge purchased 326 Interests at prices ranging from
$130 to $205 per Interest. All of these Interests are currently owned by Ocean
Ridge.
ORIG purchased Interests in the Partnership and also purchased limited
partnership interests in limited partnerships affiliated with the Partnership
pursuant to an Agreement, Bill of Sale and Assignment dated February 10, 2000,
by and among ORIG and four investors in the Partnership and partnerships
affiliated with the Partnership (the "Purchase Agreement") for a total purchase
price of $900,000. ORIG paid these investors a premium above the purchase price
previously offered for limited partnership interests in prior tender offers
because this purchase allowed ORIG to purchase a substantial number of limited
partnership interests without incurring the significant expenses involved with a
tender offer. Under the Purchase Agreement, ORIG purchased a total of 565
limited partnership interests in the Partnership from three of the investors for
total consideration of $136,628.30, or an average price of $241.82 per interest.
Section 12. 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. This summary is for general information only. The actual tax treatment of
a tender of Interests may vary depending upon your particular situation. Some
limited partners (including, but not limited to, insurance companies, tax-exempt
entities, 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 limited partners 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 this discussion. We urge you to consult your own tax advisors as to
the particular tax consequences of a tender of your 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 you should not treat 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 laws. The purchase of Interests pursuant to the Offer will be deemed a
sale of the Interests by limited partners who tender their Interests. If you
tender in the Offer, the payment for your Interests will be in complete
liquidation of that portion of your
28
<PAGE>
ownership in the Partnership represented by the purchased Interests. You or any
other recipient of such payments will be taxed to the extent of any gain
recognized in connection with such sale. In general, and subject to the
recapture rules of the Code Section 751 discussed below, if you tender you will
recognize capital gain or loss at the time your Interests are purchased by us to
the extent that the sum of money distributed to you plus your share of
Partnership liabilities exceeds your adjusted basis in the purchased Interests.
Upon the sale of your Interests pursuant to the Offer, you will be deemed to
have received money in the form of any cash payments to you and to the extent
you are relieved from your proportionate share of Partnership liabilities, if
any, to which the Partnership's assets are subject. You will thus be required to
recognize gain upon the sale of your Interests if the amount of cash you
received, plus the amount you are deemed to have received as a result of being
relieved of your proportionate share of Partnership liabilities (if any),
exceeds your adjusted basis in the purchased Interests. The income taxes payable
upon the sale must be determined by you on the basis of your own particular tax
circumstances.
The adjusted basis of your Interests is calculated by your initial
basis and making certain additions and subtractions thereto. Your initial basis
is the amount paid for an Interest ($1,000 per Interest if you purchased in the
initial offering), increased by your share of 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 you. Basis is generally
reduced by cash distributions, decreases in your share of liabilities and by the
share of Partnership losses allocated to the Interest.
If you tender Interests in the Offer you will be allocated a pro rata
share of the Partnership's taxable income or loss for 2000 with respect to the
Interests sold in accordance with the provisions of the Partnership Agreement
concerning transfers of Interests. This allocation will affect your adjusted tax
basis in your Interests and, therefore, the amount of your taxable gain or loss
upon a sale of Interests pursuant to this Offer.
In determining the tax consequences of accepting the Offer, our
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 liabilities (together, the
"Selling Price"). The taxable gain (or loss) to be incurred as a consequence of
accepting the Offer is determined by subtracting the adjusted basis of the
purchased Interest from the Selling Price.
You must determine your own adjusted tax basis because the basis will
vary depending upon when you purchased the Interests and the amount of
distributions you have received for each Interest, which varies depending upon
the date on which you were admitted to the Partnership.
A taxable gain, if any, on the disposition of Interests must be
allocated between ordinary income, unrecaptured Section 1250 gain and long-term
capital gain. You will realize long term capital gain or loss on such sale, if:
(1) you are not a "dealer" in securities; (2) you have 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
29
<PAGE>
substantially in value") you 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 (generally, depreciation
deductions in excess of straight-line depreciation in the case of real property
and all allowable depreciation to date in the case of other property) constitute
"unrealized receivables." Thus, gain, if any, recognized by limited partners who
sell Interests will be ordinary income in an amount not to exceed your share of
the Partnership's depreciation deductions that are "unrealized receivables." It
is unclear whether, for Interests held for twelve (12) months or longer, with
respect to real property, the amount of gain attributable to depreciation not
taxed as ordinary income is taxed as unrecaptured Section 1250 gain or long-term
capital gain. 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 limited
partners tendering Interests would recognize ordinary income, in an amount equal
to your 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.
Ordinary income recognized in 1999 is taxed at a stated maximum rate of
39.6% for federal income tax purposes. In the case of real property, the amount
of gain not taxed as ordinary income attributable to depreciation, i.e.,
unrecaptured Section 1250 gain, is taxed at a maximum rate of 25%. Net capital
gains are taxed for federal income tax purposes at a stated maximum rate of 20%
for gain from property held longer than twelve (12) months, i.e., long-term
capital gain. 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.
Back-up Withholding. 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 his, her or its 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 your convenience, a
Substitute Form W-9 is enclosed with this Offer to Purchase. Some limited
partners, including corporations, may not be subject to the withholding and
reporting requirements.
Section 13. Transactions and Arrangements Concerning Interests. Based
upon the Partnership's and ORIG's records and information provided to the
Partnership by the General Partner and affiliates of the General Partner,
neither the Partnership, General Partner, ORIG nor, to the best of the
Partnership's knowledge, any controlling person of the Partnership, the General
Partner, or ORIG, has effected any transactions in the Interests during the
sixty (60) business days prior to the date hereof except as follows:
30
<PAGE>
ORIG purchased Interests in the Partnership and also purchased
limited partnership interests in limited partnerships affiliated with
the Partnership in July, and August 2000. ORIG purchased 10 Interests
in July 2000 and 45 Interests in August 2000 at $205 per Interest.
Section 14. Extensions of Tender Period; Terminations; Amendments. The
Partnership has, or, if the Offer is oversubscribed, we have, the right at any
time and from time to time, to extend the period of time during which the Offer
is open by giving each of you written notice of the extension. 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 us, except to the extent
that such Interests may be withdrawn as set forth in Section 4 of this Offer to
Purchase.
If the Offer is oversubscribed, we have the right to purchase
additional Interests. If either of us decides, in our 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. We 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 of this Offer to Purchase by giving you written notice of the
termination and making a public announcement of the termination; 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, which
in the case of an extension will 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 we may choose to make any
public announcement, except as provided by applicable law (including Rule
13e-4(e)(2) under the Exchange Act), we have no obligation to publish, advertise
or otherwise communicate any public announcement, other than by issuing a
release to the Dow Jones News Service.
Section 15. Fees and Expenses. We will not pay any fees or commissions
to any broker, dealer or other person for soliciting tenders of Interests
pursuant to the Offer. We will reimburse brokers, dealers, commercial banks and
trust companies for customary handling and mailing expenses incurred in
forwarding the Offer to their customers.
Section 16. 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
31
<PAGE>
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 you or your broker,
dealer, commercial bank, trust company or other nominee as follows:
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 residing in any jurisdiction in which the Offer
or its acceptance would not comply with the securities or Blue Sky laws of such
jurisdiction. We are not aware of any jurisdiction in which the Offer or tenders
pursuant to the Offer would not be in compliance with the laws of that
jurisdiction. We reserve the right to exclude limited partners in any
jurisdiction in which it is asserted that the Offer cannot lawfully be made. We
believe such exclusion is permissible under applicable laws and regulations,
provided that we make a good faith effort to comply with any state law deemed
applicable to the Offer.
We have filed a Tender Offer Statement under sections 14(d)(1) and
13(e)(1) of the Securities Exchange Act of 1934 on Schedule TO with the
Securities and Exchange Commission ("Commission") which includes certain
information relating to the Offer summarized herein. Copies of these statements
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 16 of this
Offer to Purchase 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
September 22, 2000
32
<PAGE>
Appendix A
The Partnership's Financial Statements Giving
Pro Forma Effect of the Offer
The Partnership's financial statements for the years ended December 31,
1998 and December 31, 1999 and the six months ended June 30, 2000 are
incorporated herein by reference. These financial statements are contained in
the Partnership's Annual Reports on Form 10-K and Quarterly Report on Form 10-Q
filed with the Securities and Exchange Commission pursuant to the Securities
Exchange Act of 1934. The following unaudited pro forma balance sheets and
statements of operations of the Partnership are presented to give effect of the
Offer as if it was fully subscribed and completed as of June 30, 2000 and
December 31, 1999. The pro forma financial statements contain certain financial
information for the fiscal year ended December 31, 1999 extracted or derived
from the Partnership's Annual Report on Form 10-K and certain financial
information for the quarter ended June 30, 2000 extracted or derived from the
Partnership's Quarterly Report on Form 10-Q. The Annual and Quarterly Reports
contain more comprehensive financial information than the information contained
herein. The information extracted from the Annual and Quarterly Reports is
qualified in its entirety by reference to the reports and the financial
statements (including the notes) contained in the reports. The pro forma
financial statements present the quarterly and annual reports of the Partnership
giving effect of the Offer as if the Offer was fully subscribed and completed as
of June 30, 2000 and December 31, 1999, respectively. 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 year ended December 31, 1999 or the quarter ended June
30, 2000, nor do they purport to represent the future financial position of the
Partnership.
A-1
<PAGE>
<TABLE>
NTS-PROPERTIES IV
-----------------
Unaudited Proforma
------------------
BALANCE SHEETS
--------------
<CAPTION>
Actual Tender Proforma
As of As of
June 30, 2000 June 30, 2000
------------- -------------
ASSETS
------
<S> <C> <C>
Cash and equivalents $ 423,745 $ 403,245
Cash and equivalents - restricted 130,623 130,623
Investment securities -- --
Accounts receivable 167,765 167,765
Land, buildings and amenities, net 10,384,071 10,384,071
Other assets 323,468 323,468
---------- ----------
$11,429,672 $11,409,172
========== ==========
LIABILITIES AND PARTNERS' EQUITY
--------------------------------
Mortgages payable $ 7,513,460 $ 7,513,460
Distributions payable -- --
Accounts payable 166,049 166,049
Security deposits 65,918 65,918
Other liabilities 157,621 157,621
---------- ----------
7,903,048 7,903,048
PARTNERS' EQUITY 3,526,624 3,506,124
---------- ----------
$11,429,672 $11,409,172
========== ==========
</TABLE>
A-2
<PAGE>
<TABLE>
NTS-PROPERTIES IV
-----------------
Unaudited Proforma
------------------
STATEMENT OF OPERATIONS
-----------------------
<CAPTION>
Tender Tender
Actual for three Actual for the Proforma for Proforma for
months ended year ended three months the year ended
June 30, December 31, ended June 30, December 31,
2000 1999 2000 1999
------------------- ------------------ ------------------ -----------------
REVENUES
--------
<S> <C> <C> <C> <C>
Rental income $ 823,180 $ 3,261,445 $ 823,180 $ 3,261,445
Rental income - affiliated -- -- -- --
Gain on sale of asset -- 11,256 -- 11,256
Interest and other income 8,197 45,018 8,197 45,018
--------- --------- ---------- ---------
831,377 3,317,719 831,377 3,317,719
--------- --------- ---------- ---------
EXPENSES
--------
Operating expenses 174,658 718,387 174,658 718,387
Operating expenses - affiliated 106,390 517,548 106,390 517,548
Write-off of unamortized land
improvements and amenities -- -- -- --
Loss on disposal of assets 3,140 55,262 3,140 55,262
Interest expense 145,317 656,235 145,317 656,235
Management fees 48,304 186,264 48,304 186,264
Real estate taxes 48,343 203,348 48,343 203,348
Professional and administrative
expenses 31,117 142,009 31,117 142,009
Tender offer costs -- -- 5,000 5,000
Professional and administrative
expenses - affiliated 30,360 158,042 30,360 158,042
Depreciation and amortization 177,694 683,315 177,694 683,315
--------- --------- ---------- ---------
765,323 3,320,410 770,323 3,325,410
--------- --------- ---------- ---------
Net loss $ 66,054 $ (2,691) $ 61,054 $ (7,691)
========= ========= ========== =========
Net loss allocated to the Limited
Partners $ 65,393 $ (2,664) $ 60,443 $ (7,614)
========= ========= ========== =========
Net loss per Limited Partnership
Unit $ 2.70 $ (0.11) $ 2.51 $ (0.31)
========= ========= ========== =========
Weighted average number of
Limited Partnership Units 24,209 24,778 24,109 24,678
========= ========= ========== =========
</TABLE>
A-3
<PAGE>
Appendix B
ORIG's Balance Sheets
The following are the unaudited balance sheets of ORIG. The balance
sheets contain certain financial information for the year ended December 31,
1999 and the eight months ended August 31, 2000.
B-1
<PAGE>
<TABLE>
ORIG, LLC
---------
BALANCE SHEETS
--------------
(UNAUDITED)
---------
<CAPTION>
For Year Ended December 31, 1999 and Eight Months Ended August 31, 2000.
Year Ended Eight Months Ended
ASSETS December 31, 1999 August 31, 2000
------ ----------------- ----------------
<S> <C> <C>
Cash $ 5,574 $ 40
Investments (Stated at Cost)
NTS Properties III 274,500 336,176
NTS Properties IV 492,820 675,369
NTS Properties V 380,890 1,061,679
NTS Properties VI 1,649,620 3,308,248
NTS Properties VII 284,676 521,578
NTS Properties Plus 10,300 16,866
NTS Mortgage Income Fund -- 5,383
----------- ------------
Total Investments 3,092,806 5,925,299
Tender Offer Acquisition Costs 119,711 217,508
----------- ------------
TOTAL ASSETS $ 3,218,092 $ 6,142,847
------------ =========== ============
LIABILITIES
-----------
Accrued Interest - Bank of Louisville -- 7,811
Notes Payable - Bank of Louisville $ -- $ 2,648,074
EQUITY
------
Equity
Capital Contributions 3,160,675 3,512,475
Retained Earnings - Prior Year -- 57,417
Retained Earnings - Current Year 57,417 (82,930)
----------- ------------
3,218,092 3,486,962
----------- ------------
TOTAL LIABILITIES AND EQUITY $ 3,218,092 $ 6,142,847
---------------------------- =========== ============
</TABLE>
B-2
<PAGE>
Exhibit (a)(2)
Form of Letter of Transmittal
<PAGE>
LETTER OF TRANSMITTAL
Regarding the Interests in
NTS - PROPERTIES IV
Tendered Pursuant to the Offer to Purchase Dated September 22, 2000
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT, AND THIS LETTER OF TRANSMITTAL
MUST BE RECEIVED BY THE PARTNERSHIP BY, 12:00 MIDNIGHT EASTERN STANDARD TIME ON
FRIDAY, DECEMBER 22, 2000 (THE "EXPIRATION DATE"), UNLESS THE OFFER IS EXTENDED
BY OFFERORS.
[Investor Name] If applicable:
[Address] [Custodian]
[City, State, Zip] [Address]
[Tax I.D. #] [City, State, Zip]
[# of Interests] [Account #]
I am a limited partner of NTS-Properties IV. I hereby tender my limited
partnership interests or portion thereof, as described and specified below, to
the Offerors, NTS-Properties IV (the "Partnership"), and the Partnership's
affiliate, ORIG, LLC, (the "Affiliate" and the Partnership are each an "Offeror"
and collectively the "Offerors") upon the terms and conditions set forth in the
Offer to Purchase, dated September 22, 2000 (collectively, the "Offer to
Purchase" and "Letter of Transmittal" constitute the "Offer").
THIS LETTER OF TRANSMITTAL IS SUBJECT TO ALL THE TERMS AND CONDITIONS SET FORTH
IN THE OFFER TO PURCHASE, INCLUDING, BUT NOT LIMITED TO, THE ABSOLUTE RIGHT OF
THE OFFERORS TO REJECT ANY AND ALL TENDERS DETERMINED BY THEM, IN THEIR SOLE
DISCRETION, NOT TO BE IN THE APPROPRIATE FORM.
I hereby represent and warrant that I have full authority to sell my interests,
or portion thereof, to the Offerors, and that the Offerors will acquire good
title, free and clear of any adverse claim. Upon request, I will execute and
deliver any additional documents necessary to complete the sale of my interests
in accordance with the terms of the Offer. In the event of my death or
incapacity, all authority and obligation shall be placed with my heirs, personal
representatives and successors.
I hereby appoint NTS-Properties Associates IV (without posting of a bond) as my
attorney-in-fact with respect to my interests, with full power of substitution
(such power of attorney being deemed to be an irrevocable power coupled with an
interest), to: (1) transfer ownership of my interests on the Partnership's books
to the respective Offeror, (2) change the address of record of my interests
prior to or after completing the transfer, (3) execute and deliver lost
certificate indemnities and all other transfer documents, (4) direct any
custodian or trustee holding record title to the interests to do what is
necessary, including executing and delivering a copy of this Letter of
Transmittal, and (5) upon payment by the respective Offeror of the purchase
price, to receive all benefits and cash distributions and otherwise exercise all
rights of beneficial ownership of my interests hereby tendered.
(Over)
<PAGE>
INSTRUCTIONS TO TENDER INTERESTS
Please complete the following steps to tender your interests:
o Complete Part 1. by inserting the number of interests you wish to tender.
o Complete Part 2. by providing your telephone number(s).
o Complete Part 3. by providing the appropriate signature(s). (Note: if your
account is held by a Trustee or Custodian, sign below and forward this form
to the Trustee or Custodian at the address noted on the first page of this
Letter of Transmittal to complete the remaining steps). All signatures must
be notarized by a Notary Public.
o Return your original Certificate(s) of Ownership for the interests with
this form. If you are unable to locate your Certificate(s) of
Ownership, complete the Affidavit and Indemnification Agreement for
Missing Certificate(s) of Ownership.
PART 1. NUMBER OF INTERESTS IN THE PARTNERSHIP TO BE TENDERED:
[ ] I tender my entire interest in the Partnership of_______ interests for a
price of $205.00 per interest.
[ ] I tender _______ interests, representing only a portion of my interest
in the Partnership, for a price of $205.00 per interest.
PART 2. TELEPHONE NUMBER(S).
My telephone numbers are: (___)________ [Daytime] and (___)_________ [Evening]
PART 3. SIGNATURE(S).
FOR INDIVIDUALS/JOINT OWNERS:
Print Name of limited partner Print Name of joint owner
Signature of limited partner Signature of joint owner
Sworn to me this ___ day Sworn to me this ___ day
of __________, 2000. of ____________, 2000.
Notary Public Notary Public
FOR CUSTODIAL/TRUSTEE/IRA ACCOUNTS:
Print Name of Signatory Signature
Sworn to me this ____ day
of __________, 2000.
Title of Signatory
Notary Public
Return or Deliver: (1) this Letter of Transmittal; (2) your original
Certificate(s) of Ownership for the interests, or if you are unable to locate
your Certificate(s) of Ownership, the Affidavit and Indemnification Agreement
for Missing Certificate(s) of Ownership; and (3) the Substitute Form W-9 on or
before the Expiration Date to:
NTS INVESTOR SERVICES
C/O GEMISYS
7103 S. REVERE PARKWAY
ENGLEWOOD, CO 80112
For additional information, call: (800) 387-7454.
<PAGE>
Exhibit (a)(3)
Form of Affidavit and Indemnification Agreement for
Missing Certificate(s) of Ownership
<PAGE>
AFFIDAVIT AND INDEMNIFICATION AGREEMENT
FOR MISSING CERTIFICATE(S) OF OWNERSHIP
State of ______________
County of _____________
_____________________________________
_____________________________________
_____________________________________ (The "Investor")
being duly sworn, deposes and says:
1. The Investor is of legal age and is the true and lawful, present and
sole, record and beneficial owner of _________ (insert number of interests)
limited partnership interests (the "Interests") of NTS-Properties IV, (the
"Partnership"). The Interests were represented by the following Certificate(s)
of Ownership (the "Certificate(s)") issued to the Investor:
Certificate(s) No. Number of Interests Date Issued
------------------ ------------------- -----------
The Certificate(s) was (were) lost, stolen, destroyed or misplaced under the
following circumstances:
_____________________________________________________________ and after diligent
search, the Certificate(s) could not be found.
2. Neither the Certificate(s) nor any interest therein has at any time
been sold, assigned, endorsed, transferred, pledged, deposited under any
agreement or other disposed of, whether or not for value, by or on behalf of the
investor. Neither the Investor nor anyone acting on the Investor's behalf has at
any time signed any power of attorney, any stock power or other authorization
with respect to the Certificate(s) and no person or entity of any type other
than the Investor has or has asserted any right, title, claim or interest in or
to the Certificate(s) or to the Interests represented thereby.
3. The Investor hereby requests, and this Affidavit and Indemnification
Agreement is made and given in order to induce the Partnership, (i) to refuse to
recognize any person other than the Investor as the owner of the Certificate(s)
and (ii) to refuse to make any payment, transfer, registration, delivery or
exchange called for by the Certificate(s) to any person other than the Investor
and to refuse the Certificates or to make the payment, transfer, registration,
delivery or exchange called for by the Certificate(s) without the surrender
thereof or cancellation.
4. If the Investor or the representative or the assigns of the Investor
should find or recover the Certificate(s), the Investor will immediately
surrender and deliver the same to the Partnership for cancellation without
requiring any consideration thereof.
5. The Investor agrees in consideration of the issuance to the Investor
of a new certificate in substitution for the Certificate(s), to indemnify and
hold harmless the Partnership, each general partner of the Partnership, each
affiliate of the Partnership and any person, firm or corporation now or
hereafter acting as the transfer agent, registrar, trustee, depositary,
redemption, fiscal or paying agent of the Partnership, or in any other capacity
and their respective successors and assigns, from and against any and all
liabilities, losses, damages, costs and expenses of every nature (including
reasonable attorney's fees) in connection with, or arising out of, the lost,
stolen, destroyed or mislaid Certificate(s) without the surrender thereof and,
whether or not: (a) based upon or arising out of the honoring of, or refusing to
honor, the Certificate(s) when presented to anyone, (b) or based upon or arising
from inadvertence, accident, oversight or neglect on the part of the
Partnership, its affiliates or any general Partner of the Partnership, agents,
clerk, or employee of the Partnership or any general partner of the Partnership
and/or the omission or failure to inquire into
(Over)
<PAGE>
contest or litigate the right of any applicant to receive payment, credit,
transfer, registration, exchange or delivery in respect of the Certificate(s)
and/or the new instrument or instruments issued in lieu thereof, (c) and/or
based upon or arising out of any determination which the Partnership, its
affiliates or any general partner thereof may in fact makes as to the merits of
any such claim, right, or title, (d) and/or based upon or arising out of any
fraud or negligence on the part of the Investor in connection with reporting the
loss of the Certificate(s) and the issuance of new instrument or instruments in
lieu thereof, (e) and/or based upon or arising out of any other matter or thing
whatsoever it may be.
6. The Investor agrees that all notices, requests, demands and other
communications under this Affidavit and Indemnification Agreement shall be in
writing and shall be mailed to the party to whom notice is to be given by
certified or registered mail, postage prepaid; if intended for the Partnership
shall be addressed to Gemisys, 7103 S. Revere Pkwy., Englewood, CO 80112 Attn.:
NTS Investor Services, or such other address as the Partnership shall have given
notice to the Investor at the address set forth at the end of this Affidavit and
Indemnification Agreement or at such other address as the Investor shall have
given prior notice to the Partnership in a manner herein provided.
7. No waiver shall be deemed to be made by the Partnership or its
affiliates of any of its rights hereunder unless the same shall be in writing,
and each waiver, if any, shall be a waiver only with respect to the specific
instance involved and shall in no way impair the rights of the Partnership or
its affiliates or the obligations of the Investor in any other respect at any
other time.
8. The provisions of this Affidavit and Indemnification Agreement shall
be binding upon and inure to the benefit of the successors and assigns of the
Partnership and its affiliates and the Investor.
9. This Affidavit and Indemnification Agreement shall be governed
by and construed in accordance with the laws of the State of Kentucky.
Investor Signature
(Please sign exactly as name appears on certificate)
Investor Signature
(if held jointly)
Name
Address
Sworn to me this ____ day of
________________, 2000.
Notary Public
My commission expires:____/____/
<PAGE>
Exhibit (a)(4)
Form of Letter to Limited Partners
<PAGE>
[NTS letterhead]
September 22, 2000
Account Name 1
Account Name 2
Address
City, State Zip
To our Limited Partners:
Enclosed for your review is an Offer to Purchase your limited
partnership interests. Please read all of the enclosed material carefully before
deciding to tender your interests.
------------------------------------------------------------
| You currently own ____ interests. The Partnership |
| is offering to purchase your interests for $205.00 |
| per interest, or a total of $__________, subject to |
| the terms of the Offer. |
| |
| Payment will be made within five business days of the |
| expiration of the Offer. |
------------------------------------------------------------
We invite your attention to the following:
o This Offer is being made to all limited partners.
o Up to 100 interests may be purchased by the Partnership and an additional
100 interests may be purchased by the Partnership's affiliate, ORIG, LLC.
If more than 200 Interests are tendered, the Partnership may decide to
purchase more than 100 interests and ORIG may decide to purchase more than
100 interests or the Partnership and ORIG may decide to purchase less than
all of the interests tendered on a pro rata basis.
o The Offer will expire at 12:00 midnight, Eastern Standard Time on December
22, 2000, unless the Offer is extended.
After reading the Offer to Purchase (white), if you wish to tender any
or all of your interests, complete and return to NTS Investor Services c/o
Gemisys, before December 22, 2000, the following:
(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).
NTS INVESTOR SERVICES
C/O GEMISYS
7103 S. REVERE PARKWAY
ENGLEWOOD, CO 80112
For additional information, call: (800) 387-7454
<PAGE>
Exhibit (a)(5)
Substitute Form W-9 with Guidelines
<PAGE>
Substitute Form W-9
o Purpose of the Substitute Form W-9
Each tendering Limited Partner is required to provide to the
Partnership its correct Taxpayer Identification Number ("TIN") on Substitute
Form W-9 which is provided below, and to certify whether the Limited Partner is
subject to backup withholding of federal income tax. If the Partnership is not
provided with the correct TIN, the Limited Partner may be subject to a $500
penalty imposed by the Internal Revenue Service (the "IRS"). In addition,
failure to provide the information on Substitute Form W-9 may subject the
tendering Limited Partner to 31% federal income tax withholding on the payment
of the purchase price of all Interests purchased by the Offerors from the
Limited Partner pursuant to this Offer.
o Instructions for filling out the Substitute Form W-9
Each tendering Limited Partner must fill out the Substitute Form W-9
below by: (1) inserting their TIN; (2) certifying whether the Limited Partner is
subject to backup withholding of federal income tax; and (3) signing the form.
If the tendering Limited Partner is an individual, the TIN is the
Limited Partner's social security number.
If the tendering Limited Partner has been notified by the IRS that the
Limited Partner is subject to backup withholding, the Limited Partner must cross
out item (2) of the "Certification" box of Substitute Form W-9, unless the
Limited Partner has since been notified by the IRS that the Limited Partner is
no longer subject to backup withholding. If backup withholding applies, the
Partnership is required to withhold 31% of any payments made to the Limited
Partner. Backup withholding is not an additional tax. Rather, the tax liability
of persons subject to backup withholding will be reduced by the amount of tax
withheld. If withholding results in an overpayment of taxes, a refund may be
obtained from the IRS.
If the tendering Limited Partner has not been issued a TIN and has
applied for one or intends to apply for one in the near future, the Limited
Partner should write "Applied For" in the space provided for the TIN in Part I
of the Substitute Form W-9, and sign and date the Substitute Form W-9. If
"Applied For" is written in Part I and the Partnership is not provided with a
TIN within 60 days, the Partnership will withhold 31% on all payments of the
purchase price to the Limited Partner until a TIN is provided to the
Partnership.
Certain Limited Partners (including, among others, all corporations and
certain foreign individuals) are not subject to these backup withholding and
reporting requirements. In order for a foreign individual to qualify as an
exempt recipient, the individual must submit an Internal Revenue Form W-8,
signed under penalties of perjury, attesting to such individual's exempt status.
A Form W-8 may be obtained from NTS Investor Services c/o Gemisys at the address
and telephone number provided in Section 15, "Address; Miscellaneous" of the
Offer to Purchase.
For complete instructions on how to fill out Substitute Form W-9, refer
to the Guidelines enclosed.
(OVER)
<PAGE>
________________________________________________________________________________
SUBSTITUTE | Part I -- Taxpayer Identification |
FORM W-9 | Number -- For all accounts, enter | ___________________
| your TIN in the box at right. | Social Security No.
| (For most individuals, this is |
Department of the | your social security number.) |
Treasury | Certify by signing and dating | OR
Internal Revenue | below. |
Service | | ___________________
| | Employer
Payer's Request | | Identification No.
for Taxpayer | |
Identification | |
Number (TIN) | |
| | (If awaiting a TIN
| | write "Applied For"
| | in the space above).
____________________|___________________________________|_______________________
Part II -- For payees exempt from backup withholding, see the enclosed
Guidelines and complete as instructed therein.
________________________________________________________________________________
Certification -- Under penalties of perjury, I certify that:
(1) The number shown on this form is my correct Taxpayer Identification Number
(or I am waiting for a number to be issued to me). and
(2) I am not subject to backup withholding either because (a) I am exempt from
backup withholding, (b) I have not been notified by the Internal Revenue Service
(the "IRS") that I am subject to backup withholding as a result of failure to
report all interest or dividends, or (c) the IRS has notified me that I am no
longer subject to backup withholding.
Certificate Instructions -- You must cross out item (2) above, if you have been
notified by the IRS that you are subject to backup withholding because of under
reporting interest or dividends on your tax return. However, if after being
notified by the IRS that you were subject to backup withholding you received
another notification from the IRS that you are no longer subject to backup
withholding, do not cross out item (2). (Also see instructions in the enclosed
Guidelines.)
________________________________________________________________________________
SIGNATURE __________________________________ DATE _________________ , ________
________________________________________________________________________________
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
Guidelines for Determining the Proper Identification Number to Give the Payer. -
Social Security numbers have nine digits separated by two hyphens, e.g.,
000-00-0000. Employer identification numbers have nine digits separated by only
one hyphen, e.g., 00-0000000. The table below will help determine the number to
give the payer.
Give the SOCIAL
For this type of account: SECURITY
number of -
------------------------------------ --------------------------
1. An individual's account The individual
2. Two or more individuals The actual owner of
(joint account) the account or, if
combined funds, the
first individual on the
account(1)
3. Husband and wife (joint The actual owner of
account) the account or, if joint
funds, either person(1)
4. Custodian account of a The minor(2)
minor (Uniform Gift to Minors
Act)
5. Adult and minor (joint The adult or, if the
account) minor is the only
contributor, the
minor(1)
6. Account in the name of The ward, minor, or
guardian or committee for a incompetent person(3)
designated ward, minor, or
incompetent person
7. a. A revocable savings trust The grantor-trustee(1)
account (in which grantor
is also trustee)
b. Any "trust" account that The actual owner(1)
is not a legal or valid trust
under State law
Give the EMPLOYER
For this type of account: IDENTIFICATION
number of -
------------------------------------ --------------------------
8. Sole proprietorship account The owner(4)
9. A valid trust, estate, or The legal entity (do
pension trust not furnish the
identifying number of
the personal
representative or
trustee unless the
legal entity itself is not
designated in the
account title)(5)
10. Corporate account The corporation
11. Religious, charitable, or The organization
12. Partnership account held in The partnership
13. Association, club, or other The organization
14. A broker or registered The broker or nominee
15. Account with the Department The public entity
of Agriculture in the name of
a public entity (such as a
State or local government,
school district, or prison) that
receives agricultural program
payments
------------------------------------ --------------------------
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Circle the ward's, minor's or incompetent person's name and furnish such
person's social security number.
(4) Show the name of the owner. If the owner does not have an employer
identification number, furnish the owner's social security number.
(5) List first and circle the name of the legal trust, estate or pension trust.
Note: If no name is circled when there is more than one name, the number will be
considered to be that of the first name listed.
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
Page 2
Obtaining a Number
If you do not have a taxpayer identification number or you do not know your
number, obtain Form SS-5, Application for a Social Security Number Card (for
individuals), or Form SS-4, Application for Employer Identification Number (for
businesses and all other entities), at an office of the Social Security
Administration or the Internal Revenue Service.
To complete Substitute Form W-9, if you do not have a tax payer identification
number, write "Applied For" in the space for the taxpayer identification number
in Part 1, sign and date the Form, and give it to the requester. Generally, you
will then have 60 days to obtain a taxpayer identification number and furnish it
to the requester. If the requester does not receive your taxpayer identification
number within 60 days, backup withholding, if applicable, will begin and will
continue until you furnish your taxpayer identification number to the requester.
Payees Exempt from Backup Withholding Penalties
Payees specifically exempted from backup withholding on ALL payments include the
following:*
o A corporation.
o A financial institution.
o An organization exempt from tax under section 501(a), or an individual
retirement plan, or a custodial account under section 403(b)(7).
o The United States or any agency or instrumentality thereof.
o A State, the District of Columbia, a possession of the United States,
or any political subdivision or instrumentality thereof.
o A foreign government or a political subdivision, agency or
instrumentality thereof.
o An international organization or any agency or instrumentality
thereof.
o A registered dealer in securities or commodities registered in the
United States or a possession of the United States.
o A real estate investment trust.
o A common trust fund operated by a bank under section 584(a).
o An entity registered at all times during the tax year under the
Investment Company Act of 1940.
o A foreign central bank of issue.
Payments of dividends and patronage dividends not generally subject to backup
withholding include the following:
o Payments to nonresident aliens subject to withholding under section
1441.
o Payments to partnerships not engaged in a trade or business in the
United States and which have at least one nonresident partner.
o Payments of patronage dividends where the amount received is not paid
in money.
----------
* Unless otherwise noted herein, all references below to section numbers or to
regulations are references to the Internal Revenue Code and the regulations
promulgated thereunder.
o Payments made by certain foreign organizations.
o Payments made to a nominee.
Payments of interest not generally subject to backup withholding include the
following:
o Payments of interest on obligations issued by individuals. Note: You
may be subject to backup withholding if (i) this interest is $600 or
more, (ii) the interest is paid in the course of the payer's trade or
business and (iii) you have not provided your correct taxpayer
identification number to the payer.
o Payments of tax-exempt interest (including exempt interest dividends
under section 852).
o Payments described in section 6049(b)(5) to nonresident aliens.
o Payments on tax-free covenant bonds under section 1451.
o Payments made by certain foreign organizations.
o Payments made to a nominee.
Exempt payees described above should file a Substitute Form W-9 to avoid
possible erroneous backup withholding. FILE THIS FORM WITH THE PAYER, FURNISH
YOUR TAXPAYER IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM,
SIGN AND DATE THE FORM AND RETURN IT TO THE PAYER.
Certain payments other than interest, dividends, and patronage dividends that
are not subject to information reporting are also not subject to backup
withholding. For details, see the regulations under sections 6041, 6041A(a),
6045, and 6050A.
Privacy Act Notice.- Section 6109 requires most recipients of dividends,
interest, or other payments to give taxpayer identification numbers to payers
who must report the payments to the IRS. The IRS uses the numbers for
identification purposes and to help verify the accuracy of your tax return.
Payers must be given the numbers whether or not recipients are required to file
tax returns. Payers must generally withhold 31% of taxable interest, dividends,
and certain other payments to a payee who does not furnish a taxpayer
identification number to a payer. Certain penalties may also apply.
Penalties
(1) Penalty for Failure to Furnish Taxpayer Identification Number.-If you fail
to furnish your taxpayer identification number to a payer, you are subject to a
penalty of $50 for each such failure unless your failure is due to reasonable
cause and not to willful neglect.
(2) Civil Penalty for False Statements With Respect to Withholding.-If you make
a false statement with no reasonable basis which results in no imposition of
backup withholding, you are subject to a penalty of $500. (3) Criminal
Penalty for Falsifying Information.-If you falsify certifications or
affirmations, you are subject to criminal penalties including fines and/or
imprisonment.
FOR ADDITIONAL INFORMATION
CONTACT YOUR TAX CONSULTANT OR THE
INTERNAL REVENUE SERVICE
<PAGE>
Exhibit (b)
Loan Agreement Dated
August 15, 2000,
between
ORIG, LLC
and
The Bank of Louisville
<PAGE>
LOAN AGREEMENT
dated as of August 15, 2000
between
BANK OF LOUISVILLE
as the Lender
and
ORIG, LLC
as the Borrower
and joined by
J. D. NICHOLS
and
BRIAN LAVIN
as the Guarantors
<PAGE>
TABLE OF CONTENTS
SECTION I DEFINITIONS..................................................1
SECTION II REVOLVING CREDIT LOAN........................................5
2.01 Amount of Revolving Credit...................................5
2.02 Term of the Revolving Credit.................................5
2.03 Revolving Credit Loans.......................................5
2.04 The Revolving Credit Notes...................................8
2.05 Interest on Revolving Credit Loans...........................8
2.06 Minimum Principal Balance....................................9
2.07 Notation of Disbursements and Payments.......................9
2.08 Principal and Interest Payments..............................9
2.09 Mandatory Prepayments........................................9
2.10 Optional Principal Payments..................................9
2.11 Application of Payments.....................................10
2.12 Application of Principal Payments...........................10
2.13 Purposes of Loans...........................................10
2.14 Certain limitations on Revolving Credit Loan Advances.......10
SECTION III SECURITY FOR THE LOANS......................................11
3.01 Right of Offset.............................................11
3.02 Security Interest in Partnership Interests..................11
3.03 Guaranties..................................................11
SECTION IV CONDITIONS PRECEDENT........................................11
4.01 Conditions Precedent to the first Revolving Credit Loan.....11
4.02 Conditions Preceding to Subsequent Revolving Credit Loans...13
SECTION V GENERAL COVENANTS...........................................13
5.01 Insurance...................................................13
5.02 Taxes and Other Payment Obligations.........................15
5.03 Financial Statements........................................15
5.04 Financial Records...........................................16
5.05 Properties..................................................16
5.06 Existence and Good Standing.................................16
5.07 Notice Requirements.........................................17
5.08 Revolving Credit Notes and Other Borrower Documents.........17
5.09 Compliance with Law.........................................17
5.10 Liens.......................................................17
5.11 Limit on Indebtedness, Guarantees, Etc......................18
5.12 Articles of Organization and Operating Agreement............18
5.13 Mergers, Sales, Transfers and Other Dispositions of Assets..18
5.14 Loans.......................................................19
- i -
<PAGE>
5.15 No Change in Ownership......................................19
5.16 Payment of Distributions....................................19
5.17 ERISA Compliance............................................19
5.18 Joinder of Subsidiaries.....................................20
SECTION VI REPRESENTATIONS AND WARRANTIES..............................20
6.01 Organization and Existence..................................20
6.02 Right to Act................................................20
6.03 No Conflicts................................................21
6.04 Authorization...............................................21
6.05 Enforceable Agreements......................................21
6.06 Contingent Obligations......................................21
6.07 Litigation..................................................21
6.08 Financial Statements........................................21
6.09 Compliance with Contractual Obligations, Laws and Judgments.22
6.10 Investment Company..........................................22
6.11 Tax Returns.................................................22
6.12 No Undisclosed Liabilities or Guaranties....................22
6.13 Title to Properties.........................................22
6.14 Trademarks and Permits......................................22
6.15 No Defaults.................................................23
6.16 Employee Benefit Plans......................................23
6.17 No Material Adverse Conditions..............................23
6.18 Regulations Q and U.........................................23
6.19 Environmental Matters.......................................23
6.20 No Public Utility Holding Company...........................24
6.21 No Subsidiaries.............................................24
6.22 Disclosure..................................................24
SECTION VII EVENTS OF DEFAULT...........................................24
7.01 Failure to Pay..............................................24
7.02 No Notice Required..........................................24
7.03 Notice Required.............................................24
7.04 Falsity of Representation or Warranty.......................25
7.05 Judgments...................................................25
7.06 Adverse Financial Change....................................25
7.07 Other Obligations...........................................25
7.08 Dissolution or Termination of Existence.....................25
7.09 Solvency....................................................25
SECTION VIII REMEDIES UPON DEFAULT.......................................26
8.01 Right to Offset.............................................26
8.02 Enforcement of Rights.......................................26
8.03 Rights Under Security Instruments...........................27
8.04 Cumulative Remedies.........................................27
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<PAGE>
SECTION IX FEES AND EXPENSES...........................................27
9.01 Transaction Expenses........................................27
9.02 Enforcement Expenses........................................27
SECTION X MISCELLANEOUS PROVISIONS....................................28
10.01 Business Days...............................................28
10.02 Term of this Agreement......................................28
10.03 No Waivers..................................................28
10.04 Course of Dealing...........................................28
10.05 Certain Waivers by the Borrower and the Guarantors..........28
10.06 Severability................................................28
10.07 Time of the Essence.........................................28
10.08 Benefit and Binding Effect..................................28
10.09 Further Assurances..........................................29
10.10 Incorporation by Reference..................................29
10.11 Entire Agreement; No Oral Modifications.....................29
10.12 Headings....................................................29
10.13 Governing Law...............................................29
10.14 Assignments.................................................29
10.15 Multiple Counterparts.......................................29
10.16 Notices.....................................................30
10.17 Survival of Covenants.......................................31
10.18. Consent to Jurisdiction.....................................31
10.20 JURY TRIAL WAIVER.........................................31-A
10.21 ACKNOWLEDGMENT............................................31-A
- iii -
<PAGE>
LOAN AGREEMENT
--------------
This is a Loan Agreement (this "Agreement") dated as of August 15, 2000, between
BANK OF LOUISVILLE
a Kentucky banking corporation
500 W. Broadway
Louisville, Kentucky 40202 (the "Lender")
and
ORIG, LLC
a Kentucky limited liability company
10172 Linn Station Road 200
Louisville, Kentucky 40223
Attn: Neil Mitchell (the "Borrower")
and joined in by
J. D. NICHOLS
10172 Linn Station Road 200
Louisville, Kentucky 40223 ("Nichols")
and
BRIAN LAVIN
10172 Linn Station Road 200
Louisville, Kentucky 40223 ("Lavin")
Recitals
--------
The Lender intends to provide to the Borrower, and the Borrower would like
to avail itself of the Revolving Credit Loan subject to the terms and conditions
of this Agreement.
NOW, THEREFORE, the parties agree as follows:
SECTION I
---------
Definitions
-----------
As used in this Agreement, the following terms shall have the following
meanings and the meanings assigned to them shall be equally applicable to both
the singular and plural forms of the terms defined:
<PAGE>
"Affiliate" shall mean any Person (a) who directly or indirectly
through one or more intermediaries controls, or is controlled by, or is under
common control with, a Person, or (b) five percent (5%) or more of the equity
interests of whom is beneficially owned or held by such Person or a subsidiary
of such Person. The term "control" means the possession, directly or indirectly,
of the power to direct or cause the direction of the management and policies of
a Person, whether through the ownership of equity interest, by contract or
otherwise.
"Borrower" shall mean ORIG, LLC, together with all existing, as well as
future Subsidiaries of ORIG, LLC.
"Borrower Documents" shall mean, collectively, this Agreement, the
Revolving Credit Notes, the Pledge Agreement, the Guaranty Agreements and any
and all other documents to be executed and/or delivered by the Borrower and/or
the Guarantors which relate to this Agreement.
"Business Day" shall mean any day other than a Saturday or Sunday or
legal holiday on which commercial banks are authorized or required to be closed
for business in the Commonwealth of Kentucky.
"Closing Date" shall mean August 15, 2000.
"Collateral" shall mean any and all of the property of the Borrower in
which the Borrower grants the Lender a security interest.
"CPA Firm" shall mean the Borrower's firm of certified public
accountants which regularly performs accounting services for the Borrower,
provided that such firm is reasonably satisfactory to the Lender in the Lender's
discretion.
"Distribution" shall mean any amount of money or other property
declared or paid, or set apart for the purpose of payment of, any distribution
on or in respect of any capital, income or other interest in the Borrower
(including, without limitation, any "membership interest" or similar interest
under any operating agreement) and/or the purchase, retirement, reacquisition or
redemption of any capital, income, membership or other interest (including,
without limitation, any "membership interest" or similar interest under any
operating agreement) and/or any distribution by way of reduction of capital.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time. Section references to ERISA are to ERISA as in effect
on the date of this Agreement and any subsequent provisions of ERISA amendatory
thereof, supplemental thereto or substituted therefor.
"Event of Default" shall mean any one of the occurrences which are
Events of Default under Section VII of this Agreement.
"GAAP" shall mean generally accepted accounting principles applied on a
basis consistent with prior periods.
-2-
<PAGE>
"Guarantors" shall mean Nichols and Lavin.
"Guaranty Agreements" shall mean, collectively, (a) the Guaranty
Agreement dated as of August 15, 2000 among the Lender, the Borrower, and (b)
the Guaranty Agreement dated as of August 15, 2000, among the Lender, the
Borrower and Lavin. "Guaranty Agreement" shall mean either of the Guaranty
Agreements.
"Indebtedness" shall mean all obligations, contingent or otherwise,
which, in accordance with GAAP, should be classified on the Person's balance
sheet as liabilities.
"Loan" shall mean any Revolving Credit Loan, and "Loans" shall mean all
of the Revolving Credit Loans, collectively.
"Note" shall mean any of the Revolving Credit Notes and any note or
notes delivered in renewal, replacement, substitution extension or novation of
any of them.
"NTS III" shall mean NTS-Properties III, a limited partnership
organized under the laws of the State of Georgia.
"NTS IV" shall mean NTS-Properties IV, a limited partnership organized
under the laws of the Commonwealth of Kentucky.
"NTS V" shall mean NTS-Properties V, a Maryland Limited Partnership, a
limited partnership organized under the laws of the State of Maryland.
"NTS VI" shall mean NTS-Properties VI, a Maryland Limited Partnership,
a limited partnership organized under the laws of the State of Maryland.
"NTS VII" shall mean NTS-Properties VII, Ltd., a limited partnership
organized under the laws of the State of Florida.
"NTS Plus" shall mean NTS-Properties Plus, Ltd., a limited partnership
organized under the laws of the State of Florida.
"Partnership" shall mean any of NTS III, NTS IV, NTS V, NTS VI, NTS
VII, and/or NTS Plus, and "Partnerships" shall mean all of them or any
combination of them.
"Partnership Interests" shall mean all general and/or limited
partnership interest or interests of the Borrower from time to time in any one
or more of the Partnerships to the maximum extent permitted by law, including
Florida Statutes ss. 620.102, Georgia Code Ann. ss. 14-9-101, Kentucky Revised
Statutes ss. 362.401 and Maryland Code Ann. ss. 10-101, and shall include
without limitation the right to profits, distributions, return of capital,
partner loans or advances, and all rights to vote for, consent or otherwise
approve any matter. The Partnership Interests of the Borrower on the date of
this Agreement are described on Schedule 1(P) to this Agreement. Partnership
Interests in one or more of the Partnerships acquired after the date of this
Agreement are not described on Schedule 1(P) (although they may be described in
one or
-3-
<PAGE>
more Supplements to Pledge Agreements), but such failure to be described on
Schedule 1(P) does not derogate from those interests in the Partnerships being
Partnership Interests.
"Partnership Notice and Assignment" shall mean a notice to a
Partnership of the pledge of a Partnership Interest or Partnership Interests,
together with the acknowledgement by the Partnership of that pledge,
satisfactory in all respects to the Lender and generally in the form of Annex E
-------
to this Agreement.
"Prime Rate" shall mean the rate of interest announced by the Lender
from time to time as its Prime Rate, as that Prime Rate may change from time to
time, provided, however, the Prime Rate is not necessarily the best or lowest
rate offered by the Lender to its customers.
"Person" shall mean any individual, partnership, limited liability
company, association, trust, corporation or other entity.
"Plan" or "Plans" means, at any time, an employee pension or benefit
plan which is covered by Title IV of ERISA and is either (a) maintained by the
Borrower, or (b) maintained pursuant to a collective bargaining agreement or
similar arrangement under which more than one employee makes contributions and
to which the Borrower is making and accruing an obligation to make contributions
or has within the preceding five plan years made contributions.
"Pledge Agreement" shall mean the Pledge Agreement dated as of August
15, 2000, between the Borrower and the Lender, satisfactory to the Lender in its
discretion, and substantially in the form attached hereto as Annex B, as it may
be amended from time to time.
"Request for Advance" shall mean a request, written or oral, in such
form and with such information as the Lender may request or require, from the
Borrower for an advance under the Revolving Credit Loan.
"Revolving Credit" shall mean the Revolving Credit made available by
the Lender to the Borrower under Section II of this Agreement.
"Revolving Credit Notes" shall mean collectively the three promissory
notes issued by the Borrower to the order of the Lender with respect to the
Revolving Credit Loan in the face principal amount of Two Million Dollars
($2,000,000.00) each (for a total of Six Million Dollars ($6,000,000.00)), and
substantially in the form of Annexes A-1 though A-3 attached hereto, and all
notes delivered in renewal, replacement, substitution, extension or novation
thereof. "Revolving Credit Note" shall mean any of the Revolving Credit Notes.
"Subsidiary" shall mean, any Person of which the Borrower, directly or
indirectly, through one or more intermediaries, owns a Majority. Without
limiting the foregoing, if a Majority of any Person is owned, directly or
indirectly, by a Subsidiary, such Person is, itself, a Subsidiary. "Majority"
shall mean more than fifty percent (50%) of (a) the voting stock or interests
(by number of votes), and/or (b) the equity in, or equity interests of, such
Person.
-4-
<PAGE>
"Supplement to Pledge Agreement" shall have the meaning given it in the
Pledge Agreement.
"Termination Date" shall mean August 31, 2005.
"Uniform Commercial Code" shall mean the Uniform Commercial Code as in
effect from time to time in the Commonwealth of Kentucky.
"Unmatured Default" shall mean the happening of any material breach
under this Agreement, including but not limited to failure to pay any
installment of principal or interest of the Revolving Credit Note when due, or a
breach of the financial covenants under this Agreement, or other similar
material breach the happening of which, together with the giving of any required
notice or the passage of any required period of time, would constitute an Event
of Default.
SECTION II
----------
Revolving Credit Loan
---------------------
The Lender hereby establishes the Revolving Credit Loan in favor of the
Borrower as follows:
2.01 Amount of Revolving Credit. The total principal amount available
----------------------------
under the Revolving Credit shall be Six Million Dollars and 00/100
($6,000,000.00).
2.02 Term of the Revolving Credit. The Revolving Credit is effective as
-----------------------------
of the date of this Agreement, and shall continue in effect until the
Termination Date, unless the Revolving Credit is sooner extended or terminated
as provided in this Agreement. On the Termination Date, the Revolving Credit
shall terminate and all Revolving Credit Loans shall mature and be payable in
full.
2.03 Revolving Credit Loans.
-----------------------
(a) The Borrower may request and the Lender may advance
Revolving Credit Loans during the term of Revolving Credit. Unless sooner
terminated, advances under the Revolving Credit will be available until the
maturity of the Revolving Credit on the Termination Date, after which the
Borrower shall not be entitled to obtain any additional advances under the
Revolving Credit.
(b) The Lender shall have the right, at its option, in its own
discretion, to terminate the Revolving Credit upon the occurrence of any Event
of Default by giving notice to the Borrower of such termination. Any termination
of the Revolving Credit shall not release the Borrower from its obligations
under this Agreement or any of the other Borrower Documents, nor shall it
terminate this Agreement or any of the other Borrower Documents. The provisions
of this Agreement and the other Borrower Documents shall continue in full force
and effect for the entire term of this Agreement as provided in Section 10.02.
-5-
<PAGE>
(c) Subject to the terms and conditions of this Agreement, so
long as the Revolving Credit remains in effect and is not terminated, and no
Unmatured Default or Event of Default has occurred, the Lender agrees to make
Revolving Credit Loans as the Borrower may request from time to time in
accordance with the provisions of this Agreement generally, and this Section II
in particular, provided that after giving effect to any requested Revolving
Credit Loan, the principal balance of all Revolving Credit Loans outstanding at
any one time shall not exceed the amount of the Revolving Credit as provided in
Section 2.01. Principal borrowed under the Revolving Credit and then repaid may
be reborrowed, subject to the other terms, provisions and conditions of this
Agreement and the other Borrower Documents.
(d) The Lender is under no duty to extend the period of the
Revolving Credit beyond the Termination Date. Before, at or after the
termination of the Revolving Credit, the Lender may (at its discretion, with no
obligation to do so) extend the term of the Revolving Credit, on a basis and
with terms and conditions satisfactory to the Lender. Any such extension must be
done in a writing signed by the Lender and specifically providing for an
extension of the Revolving Credit in order to be binding. If any extension of
the period of the Revolving Credit were to occur, the Pledge Agreement, and the
other Borrower Documents would remain in effect and continue to apply to the
Revolving Credit Notes, as extended (or to renewal or replacement notes for the
Revolving Credit Notes, or their replacement), until those Revolving Credit
Notes, as extended, renewed or replaced, have been paid in full.
(e) Each Revolving Credit Loan shall be subject to the
following terms and conditions, in addition to any other terms and conditions
provided in this Agreement:
(1) Each Revolving Credit Loan shall be in connection
with the acquisition of and payment for specific Partnership Interests, and
shall be in an amount no greater than the actual, out-of-pocket costs to the
Borrower to acquire those specific Partnership Interests.
(2) Before the Borrower enters into a binding contract
to acquire Partnership Interests, it shall (A) advise the Lender of its desire
to do so; (B) provide the Lender with such information as the Lender may desire
with respect to the particular Partnership Interests to be acquired and the
price that the Borrower would pay to acquire those Partnership Interests; and
(C) refrain from entering into a binding contract to acquire those Partnership
Interests until and unless the Lender shall, in its discretion, have approved
the aggregate cost to the Borrower of acquiring those Partnership Interests.
(3) Whenever the Borrower desires to obtain an
Revolving Credit Loan, it shall deliver to the Lender a Request for Advance
either orally or in writing, unless waived by the Lender in writing, on or
before the day on which it wishes to have the advance made available, together
with such other information with respect to that advance and its purpose as the
Lender may request. Without limiting the foregoing, each Request for Advance
shall specify the amount of the advance under the Revolving Credit Loan
requested and the date on which the Borrower desires the advance to be made
available.
-6-
<PAGE>
(4) Together with a Request for Advance, the Borrower
shall deliver to the Lender (A) a Supplement to Pledge Agreement in such form
and such information as the Lender may require to confirm that the Partnership
Interests to be acquired with the proceeds (in whole or in part) of that
Revolving Credit Loan shall become subject to the Pledge Agreement; (B)
Partnership Notices and Assignments with respect to all of the Partnership
Interests to be acquired with the proceeds (in whole or in part) of that
Revolving Credit Loan; (C) UCC-3 Amendments to Financing Statements describing
the Partnership Interests to be acquired (in whole or in part) with proceeds
from the Revolving Credit Loan as additional collateral for the obligations
secured by the Pledge Agreement; and (D) evidence satisfactory to the Lender
that the Partnership Interests to be acquired with proceeds (in whole or in
part) of that Revolving Credit Loan are or will be (upon completion of the
acquisition) owned by the Borrower free from any interest, claim, lien, charge,
encumbrance and/or security interest of any Person other than the Lender.
Without limiting the foregoing clause (D), such evidence shall include, but not
be limited to, (I) in the case of the Borrower's acquisition of Partnership
Interests which, when aggregated with all previous acquisitions of Partnership
Interests from the same Person, directly or indirectly, have an aggregated
acquisition cost of $25,000 or greater, (a) a search or searches of such public
records in the name of the Borrower as the Lender may specify, in its
discretion, disclosing no lien, charge, interest, encumbrance and/or security
interest in favor of any Person, other than the Lender, and (b) a search or
searches of such public records in the name of the Person from whom the Borrower
acquired or would acquire the Partnership Interests as the Lender may specify,
in its discretion, disclosing no lien, charge, interest, encumbrance and/or
security interest in favor of any Person, and (II) in all cases, delivery of any
and all certificates and/or other writings evidencing and/or representing such
Partnership Interests, together with an assignment in blank in form and
substance satisfactory to the Lender and its counsel in their discretion.
(5) The Borrower shall not be entitled to obtain any
Revolving Credit Loan if any Event of Default or Unmatured Default shall exist
or would exist upon the making of the Revolving Credit Loan requested, even if
the Lender does not elect to terminate the Revolving Credit as a result of such
Event of Default or Unmatured Default.
(6) The Borrower shall not be entitled to obtain any
Revolving Credit Loan if immediately after the advance requested were made, the
aggregate of all of the Revolving Credit Loans would exceed the maximum amount
permitted under Section 2.01.
(7) All Revolving Credit Loans shall be made in strict
compliance with the terms and provisions of this Agreement unless the Lender
elects in its discretion to waive any of those terms and conditions (which the
Lender shall not be required to do). The waiver of any terms and/or conditions
with respect to any one advance shall not constitute a course of dealing or a
waiver of the same or any other terms or conditions with respect to any other
requested advance.
(8) Each request by the Borrower for a Revolving Credit
Loan shall constitute the making of the following representations and warranties
by the Borrower and the Guarantors to the Lender:
-7-
<PAGE>
(A) That the Borrower is then, and at
the time the advance will be made will be, entitled under this Agreement to
obtain that Revolving Credit Loan; and
(B) All of the covenants, agreements,
representations and warranties made by the Borrower and the Guarantors in this
Agreement, and in the other Borrower Documents, are true, correct and complete
in all material respects and have been complied with in all material respects as
of such date (subject to only two changes of circumstances which (x) are fully
disclosed by the Borrower to the Lender in writing, describing the changed
circumstances, and (y) do not result in any violation of any condition,
provision, promise and/or covenant of this Agreement, or otherwise result in an
Unmatured Default or an Event of Default).
2.04 The Revolving Credit Notes.
---------------------------
(a) The Revolving Credit Loans shall be evidenced by and
payable in accordance with the terms of the Revolving Credit Notes and on the
terms of this Agreement. In the event of any disagreement between the terms of
the executed Revolving Credit Notes and this Agreement, the terms of the
Revolving Credit Notes shall prevail.
(b) The first Two Million Dollars ($2,000,000) of Revolving
Credit Loans shall be allocated to and evidenced by Revolving Credit Note A. The
principal balance of Revolving Credit Loans will be credited against and
evidenced by Revolving Credit Note B if, but only if, and only to the extent the
aggregate principal balance of all Revolving Credit Loans outstanding at one
time exceeds Two Million Dollars ($2,000,000), but is less than Four Million
Dollars ($4,000,000). The outstanding principal balance of Revolving Credit
Loans shall be credited against and evidenced by Revolving Credit Note C if, but
only if, and only to the extent the aggregate principal balance of all Revolving
Credit Loans outstanding at one time equals or exceeds Four Million Dollars
($4,000,000). Accordingly, the first Two Million Dollars ($2,000,000), or
portion thereof, of Revolving Credit Loans outstanding at any one time shall be
credited against and evidenced by Revolving Credit Note A; at such time as the
outstanding principal balance of the Revolving Credit Loans is greater than Two
Million Dollars ($2,000,000), but less than Four Million Dollars ($4,000,000),
Revolving Credit Loans made at such time shall be credited against and evidenced
by Revolving Credit Note B; and at such time as the outstanding principal
balance of all Revolving Credit Loans outstanding at one time equals or exceeds
Four Million Dollars ($4,000,000), Revolving Credit Loans made at such time
shall be credited against and evidenced by Revolving Credit Note C.
2.05 Interest on Revolving Credit Loans.
-----------------------------------
(a) The principal balance of the Revolving Credit Loans
outstanding from time to time shall bear interest from the date of the Revolving
Credit Notes until all principal and interest on the Revolving Credit Loans
shall have been paid in full.
(b) The outstanding principal balance of Revolving Credit
Loans from time to time evidenced by Revolving Credit Note A shall bear interest
at an annual rate equal to one quarter percent (1/4%), plus the Prime Rate as
that Prime Rate may change from time to time.
-8-
<PAGE>
The outstanding principal balance of Revolving Credit Loans from time to time
evidenced by Revolving Credit Note B shall bear interest at an annual rate equal
to one-half percent (1/2%), plus the Prime Rate as that Prime Rate may change
from time to time. The outstanding principal balance of Revolving Credit Loans
from time to time evidenced by Revolving Credit Note C shall bear interest at an
annual rate equal to one percent (1%), plus the Prime Rate as that Prime Rate
may change from time to time.
(c) All interest on the Revolving Credit Loan shall be
calculated on the basis of the actual number of days elapsed over an assumed
year of three-hundred sixty days (360).
2.06 Minimum Principal Balance. If, for any reason, after the making of
--------------------------
the first Revolving Credit Loan the principal balance of the Revolving Credit
Notes is reduced below one thousand dollars ($1,000.00), then, at the option of
the Lender the Revolving Credit may be terminated by the Lender without
necessity of notice to the Borrower.
2.07 Notation of Disbursements and Payments. Disbursements of, and
-----------------------------------------
payments of principal with respect to, Revolving Credit Loans shall be evidenced
by notations by the Lender on its electronic data processing equipment, showing
the date and amount of each advance and each payment of principal. The principal
amount outstanding under the Revolving Credit Notes from time to time shall also
be recorded by the Lender on that electronic data processing equipment. The
aggregate amount of all disbursements of Revolving Credit Loans made and shown
on the Lender's electronic data processing equipment, over all of the payments
of principal made by the Borrower and recorded on the Lender's electronic data
processing equipment, shall be prima facie evidence of the outstanding principal
balance due under the Revolving Credit Notes.
2.08 Principal and Interest Payments. Commencing on September 1, 2000,
--------------------------------
and continuing on the first (1st) day of each calendar month occurring through
and including August 1, 2005, the Borrower shall pay to the Lender all accrued
and unpaid interest on the Revolving Credit Loans. On the Termination Date, the
Borrower shall pay to the Lender all of the outstanding principal balance of,
and all accrued but unpaid interest on, the Revolving Credit Loans.
2.09 Mandatory Prepayments. If the Borrower sells, transfers or
-----------------------
otherwise disposes of any of the Partnership Interests, then the Borrower shall
make a prepayment of the Revolving Credit Loans in an amount calculated in
accordance with this Section. The amount of the prepayment shall be not less
than the amount of proceeds of the Revolving Credit Loan or Loans which the
Borrower received and applied (in whole or in part) towards the acquisition of
the Partnership Interest or Partnership Interests sold, transferred, or
otherwise disposed of. Mandatory prepayments under this Section shall be applied
in accordance with Section 2.10 of this Agreement.
2.10 Optional Principal Payments. The Borrower may make optional
------------------------------
prepayments of principal of the Revolving Credit Loan from time to time. Each
prepayment shall be accompanied by written statement that it is in prepayment of
the Revolving Credit Loan.
-9-
<PAGE>
2.11 Application of Payments. The Lender shall apply all payments of
-------------------------
Revolving Credit Loans received when no Event of Default has occurred and is
continuing first to any late fees or other charges, then to accrued but unpaid
interest, and then to principal. The Lender may apply all payments of Revolving
Credit Loans received after an Event of Default has occurred and is continuing
among late fees and other charges, interest and principal as the Lender may
determine, in its discretion.
2.12 Application of Principal Payments. Unless otherwise agreed by the
----------------------------------
Lender and the Borrower in writing, all payments of principal, whether mandatory
or optional, received by the Lender when no Event of Default has occurred and is
continuing shall be applied first to the principal of Revolving Credit Loans
evidenced by Revolving Credit Note C until all of the Revolving Credit Loans
evidenced thereby shall have been paid in full, then to the principal of
Revolving Credit Loans evidenced by Revolving Credit Note B, until all of the
Revolving Credit Loans evidenced thereby shall have been paid in full, then to
the principal of Revolving Credit Loans evidenced by Revolving Credit Note A.
All payments of principal on Revolving Credit Loans, whether mandatory or
optional, received by the Lender after an Event of Default has occurred and is
continuing may be applied by the Lender among Revolving Credit Notes A, B and C
as the Lender may determine, in its discretion.
2.13 Purposes of Loans. The Borrower shall use the proceeds of all Loan
------------------
solely to acquire Partnership Interests, provided, that, the Borrower may not
apply any proceeds from any Revolving Credit Loan to the purchase of any
Partnership Interests unless the Borrower shall first have advised the Lender of
the specific Partnership Interests that the Borrower intends to acquire with the
proceeds of that Revolving Credit Loan, and the Lender shall, in its discretion,
have approved the purchase price of those Partnership Interests.
2.14 Certain limitations on Revolving Credit Loan Advances.
------------------------------------------------------
Without limiting Section 2.13,
(a) the Borrower may not use any proceeds of any Revolving
Credit Loan to acquire any Partnership Interest or Partnership Interests from
(1) any Affiliate of the Borrower, (2) either Guarantor, and/or (3) any member
of the family of either of the Guarantors (for purposes of this provision,
"family" means (A) mother or father of the subject Person, (B) any brother or
sister (or brother-in-law or sister-in-law) of such mother or father, (C) any
son or daughter (or son-in-law or daughter-in-law) of any such brother or sister
of such mother or father, and (D) any son or daughter (or son-in-law or
daughter-in-law) and/or grandson or granddaughter (and/or grandson-in-law or
granddaughter-in-law) of such Person).
(b) the Borrower shall not use the proceeds of any Revolving
Credit Loan to pay any interest that has accrued on the Revolving Credit Loans.
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<PAGE>
SECTION III
-----------
Security for the Loans
----------------------
The Revolving Credit Notes and the Revolving Credit Loans evidenced
thereby, as well as all of the Borrower's obligations under all of the Borrower
Documents are and shall be secured by and entitled to the benefits of all of the
following:
3.01 Right of Offset. The right of offset provided in Section VIII
----------------
of this Agreement.
3.02 Security Interest in Partnership Interests. A first priority
-------------------------------------------
perfected security interest in the Partnership Interests pursuant to the Pledge
Agreement.
3.03 Guaranties. The guaranties of the Guarantors pursuant to the
-----------
Guaranty Agreements.
SECTION IV
----------
Conditions Precedent
--------------------
4.01 Conditions Precedent to the first Revolving Credit Loan. The
------------------------------------------------------------
Lender's obligation to provide the Borrower with the Revolving Credit and the
first Revolving Credit Loan shall be conditioned upon the fulfillment of all the
following conditions in form and substance, and in appropriate cases through
documents, in each case satisfactory to the Lender and its counsel in their
discretion:
(a) Resolutions. The Borrower shall have furnished the Lender
------------
with certified copies of appropriate resolutions of the Borrower (1) authorizing
the execution of the following documents: this Agreement, the Revolving Credit
Notes, the Pledge Agreement, financing statements and any other documents,
instruments and agreements referred to herein which are required to be executed
and/or delivered by the Borrower and (2) authorizing consummation of the
transactions contemplated by, and performance of this Agreement.
(b) Articles of Organization and Operating Agreement. The
--------------------------------------------------
Borrower shall have furnished the Lender with a copy of the Borrower's Articles
of Organization and Operating Agreement and all amendments to each.
(c) Certificates of Existence. The Borrower shall have
----------------------------
furnished the Lender with a certificate of existence of recent date issued by
the Secretary of State of the Commonwealth of Kentucky, certifying that it is
duly organized and validly existing under the laws of the Commonwealth of
Kentucky. The Borrower shall also have furnished the Lender with certificates of
existence with respect to the Partnerships from appropriate offices in Georgia,
Kentucky, Maryland and Florida.
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<PAGE>
(d) Opinion of Counsel for the Borrower and the Guarantors.
----------------------------------------------------------
The Borrower and the Guarantors shall have furnished the Lender, at the
Borrower's expense, with the legal opinion of Greenebaum, Doll & McDonald PLLC,
as counsel for the Borrower, addressed to the Lender, dated the date of this
Agreement, addressing the matters set forth in Annex C, and otherwise
satisfactory to the Lender and its counsel.
(e) Certificates of Incumbency of the Borrower. The Borrower
-------------------------------------------
shall have furnished the Lender with a certificate of its secretary certifying
the names of the officers of the Borrower authorized to sign the Borrower
Documents, together with the true signatures of such officers.
(f) Executed Documents. The Borrower shall have duly executed
-------------------
and shall have delivered to the Lender each of the following documents in
subparagraphs (1) through (5), and the Guarantors shall have executed and
delivered to the Lender the documents set forth in paragraphs (1) and (4) below:
(1) this Agreement;
(2) the three Revolving Credit Notes;
(3) the Pledge Agreement;
(4) the Guaranty Agreements; and
(5) such UCC-1 financing statements or other
documents for filing with public officials with respect to the Pledge Agreement
as the Lender may request.
(g) Partnership Notices and Acknowledgements. The Borrower
-------------------------------------------
shall have caused each Partnership to have countersigned and delivered to the
Lender Partnership Notices and Acknowledgements with respect to each, every and
all of the Partnership Interests described on Schedule 1(P) to this Agreement.
(h) Representations and Warranties. Each and every
-----------------------------------
representation and warranty made by or on behalf of the Borrower at the time of
or after the execution of this Agreement relating to the Borrower Documents or
the transactions contemplated thereby shall be true, complete and correct in all
material respects on and as of the date such Loan is to be made.
(i) No Defaults. There shall exist no Event of Default or
-------------
Unmatured Default which has not been cured to the Lender's satisfaction.
(j) No Change in the Borrower's Condition. There shall have
---------------------------------------
been no material adverse change in the condition, financial or otherwise of the
Borrower from that existing on the date of the financial statements described in
Section 6.08 of this Agreement.
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<PAGE>
(k) Recordings and Filings. The Lender shall have received
------------------------
evidence satisfactory to it that all financing statements or other instruments,
as the Lender may reasonably request, have been executed and delivered by the
Borrower and filed or recorded in such public offices as the Lender may request
to perfect and maintain the perfection of the security interests which secure
the Loan, and to release any security interests, financing statements and/or
other liens or encumbrances on any of the Collateral other than such interests,
liens or encumbrances in favor of the Lender.
(l) Counsel Fees. The Borrower shall have paid the Lender's
-------------
counsel fees and expenses in accordance with Section 9.01 of this Agreement.
(m) Results of Records Searches. The Borrower shall have
------------------------------
delivered to the Lender results of searches of the records of such public
offices as the Lender may require with respect to liens, encumbrances or other
interests with respect to all existing Partnership Interests, disclosing no
liens, encumbrances or interests with respect to all existing Partnership
Interests other than those in favor of the Lender.
(n) Evidence of Ownership. The Borrower shall have delivered
----------------------
to the Lender evidence satisfactory to the Lender of the Borrower's ownership of
the Partnership Interests described on Schedule 1(P) to this Agreement. Without
limiting the generality of the preceding sentence, the Borrower shall have
delivered to the Lender any and all certificates and/or other writings
evidencing and/or representing those Partnership Interests, together with
assignments in blank in form and substance satisfactory to the Lender and its
counsel in their discretion.
(o) Compliance with Section 2.03. The Borrower shall have
-------------------------------
complied with Section 2.03 of this Agreement in all respects regarding such
Revolving Credit Loan.
4.02 Conditions Preceding to Subsequent Revolving Credit Loans. The
-------------------------------------------------------------
Lender's obligation to provide the Borrower with Revolving Credit Loans after
the first Revolving Credit Loan shall be conditioned upon the fulfillment of the
conditions in Sections 4.01(g) with respect to the Partnership Interests being
acquired, in whole or in part with the proceeds of such Revolving Credit Loan or
Loans, and upon fulfillment of the conditions in Sections 4.01 (h), (i), (j),
(k), (n) and (o) with respect to such Revolving Credit Loans.
SECTION V
---------
General Covenants
-----------------
During the term of this Agreement, the Borrower shall comply with all
of the following provisions:
5.01 Insurance. The Borrower shall maintain insurance as follows:
----------
(a) Liability Insurance. The Borrower at its own cost and
---------------------
expense, shall procure, maintain and carry in full force and effect general
liability, public liability, workers'
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<PAGE>
compensation liability, environmental hazard liability and property damage
insurance with respect to the actions and operations of the Borrower to such
extent, in such amounts and with such deductibles as are carried by prudent
businesses similarly situated, but in any event not less than the amounts of
coverage per person and per occurrence, and with the deductibles, as are
provided in the Borrower's insurance in effect on the date of this Agreement.
Without limiting the foregoing, such insurance shall insure against any
liability for loss, injury, damage or claims caused by or arising out of or in
connection with the operation of the Borrower's business including injury to or
death of the Borrower's employees, agents or any other persons and damage to or
destruction of public or private property.
(b) Physical Damage Insurance. The Borrower at its own cost
----------------------------
and expense, shall insure all of its insurable properties to such extent,
against such hazards (including, without limitation, environmental hazards), in
the amount of coverage and with such deductibles as are carried by prudent
businesses similarly situated, but in any event insuring against such hazards
and with such coverages and deductibles as are provided in the Borrower's
insurance in effect on the date of this Agreement, and in any event in amounts
of coverage not less than the insurable value of the property insured. Without
limiting the foregoing, such insurance shall name the Lender as an additional
insured and shall provide for payment of the proceeds thereof to the Borrower
and to the Lender as their interests may appear.
(c) General Insurance Requirements.
------------------------------
(1) All insurance which the Borrower is required to
maintain shall be satisfactory to the Lender in form, amount and insurer. Such
insurance shall provide that any loss thereunder shall be payable
notwithstanding any action, inaction, breach of warranty or condition, breach of
declarations, misrepresentation or negligence of the Borrower. Each policy shall
contain an agreement by the insurer that, notwithstanding lapse of a policy for
any reason, or right of cancellation by the insurer or any cancellation by the
Borrower such policy shall continue in full force for the benefit of the Lender
for at least thirty (30) days after written notice thereof to the Lender and the
Borrower, and no alteration in any such policy shall be made except upon thirty
(30) days written notice of such proposed alteration to the Lender and the
Borrower and written approval by the Lender. At or before the making of the
first Loan, the Borrower shall provide the Lender with certificates evidencing
its due compliance with the requirements of this Section.
(2) Prior to the expiration date of any policy of
insurance maintained pursuant to this Agreement, the Borrower shall provide the
Lender with a certificate of insurance evidencing the acquisition of a new
policy, or an extension or renewal of an existing policy, evidencing the
Borrower's due compliance with this Section.
(3) If the Borrower fails to acquire any policy of
insurance required to be maintained pursuant to this Section, or fails to renew
or replace any such policy at least ten (10) days prior to the expiration
thereof, or fails to keep any such policy in full force and effect, the Lender
shall have the option (but not the obligation) to pay the premiums on any such
policy of insurance or to take out new insurance in amount, type, coverage and
terms satisfactory to the Lender, after first notifying the Borrower of the
Lender's intent to pay it. Any amounts paid
-14-
<PAGE>
therefor by the Lender shall be immediately due and payable to the Lender by the
Borrower upon demand. No exercise by the Lender of such option shall in any way
affect the provisions of this Agreement, including the provision that failure by
the Borrower to maintain the prescribed insurance shall constitute an Event of
Default.
5.02 Taxes and Other Payment Obligations.
------------------------------------
(a) The Borrower shall pay and discharge, or cause to be paid
and discharged, before any of them become in arrears, all taxes, assessments,
governmental charges, levies, and claims for labor, materials or supplies which
if unpaid might become a lien or charge upon any of their property, and all of
their other debts, obligations and liabilities.
(b) The Borrower may refrain from paying any amount it would
be required to pay pursuant to subparagraph (a) of this Section 5.02 if the
validity or amount thereof is being contested in good faith by appropriate
proceedings timely instituted which shall operate to prevent the collection or
enforcement of the obligation contested, provided that if the Borrower is
engaged in such a contest, it shall have set aside on its books appropriate
reserves with respect thereto. If the validity or amount of any such obligations
in excess of One Hundred Thousand Dollars ($100,000.00) shall be contested
pursuant to the provisions of this subparagraph, the Borrower shall notify the
Lender immediately upon the institution of the proceedings contesting the
obligation.
5.03 Financial Statements. The Borrower shall deliver to the Lender:
---------------------
(a) Annual Statements of the Borrower. As soon as available,
-----------------------------------
and in any event within one hundred twenty (120) days after the end of each
fiscal year, the Borrower shall furnish to the Lender an audited balance sheet,
income statement, statement of cash flows, for such fiscal year, prepared by the
Borrower or the CPA Firm. Together with such annual financial statements, if the
CPA Firm prepared the annual financial statements, the Borrower shall furnish
the Lender with the CPA Firm's statement that the CPA Firm has reviewed the
provisions of this Agreement and nothing has come to the CPA Firm's attention to
cause it to believe that any Event of Default or Unmatured Default exists as of
the date of the statement, or, if such is not the case, specifying such Event of
Default or Unmatured Default and the nature thereof, and the action the Borrower
has taken or will take to correct it.
(b) Annual Statements of the Guarantors. On or before June 1
-------------------------------------
of each year, each Guarantor shall provide their financial statements to the
Lender as at the preceding December 31, in such form, with such detail and of
such scope as the Lender may determine in its discretion.
(c) Additional Financial Information. The Borrower shall
--------------------------------
deliver to the Lender:
(1) Promptly upon receipt thereof, all detailed
reports, management letters and the like, if any (excluding working drafts),
submitted to the Borrower by the CPA Firm if the CPA Firm audited the books of
the Borrower.
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<PAGE>
(2) Within thirty (30) days after the respective dates
of filing the corporate federal income tax returns of the Borrower for each
year, a written statement signed by the CPA Firm that the firm has prepared or
reviewed the federal income tax returns of the Borrower for such year and in the
firm's opinion the provisions for federal taxes based on the income of the
Borrower, as recorded in the accounts, represents an adequate estimate of the
liability of the Borrower for federal taxes based on income.
(3) Promptly upon their becoming available, copies of
all financial statements, reports, notices of meetings and proxy statements
which the Borrower shall send to its members.
(4) Within thirty (30) days after the filing thereof in
the office of the Secretary of State of the Commonwealth of Kentucky, certified
copies of all amendments to the Borrower's Articles of Organization and
Operating Agreement.
(5) Such additional information with respect to the
Borrower's financial condition (including, without limitation, information
regarding the Collateral) as may be reasonably requested by the Lender from time
to time.
(e) All financial statements required under this Agreement
shall be prepared on a consolidated and consolidating basis (regardless whether
permitted or required under GAAP) for the Borrower and any Subsidiary which the
Borrower acquires or forms at any time.
5.04 Financial Records. The Borrower shall maintain a standard modern
-------------------
system of accounting in which full, true and correct entries shall be made of
all dealings or transactions in relation to its business and affairs in
accordance with GAAP applied on a basis consistent with prior years and, without
limitation, making appropriate accruals for estimated contingent losses and
liabilities.
5.05 Properties. The Borrower shall maintain its plants and other fixed
-----------
assets in good condition, subject only to normal wear and tear, and make all
necessary and proper repairs, renewals and replacements. The Borrower shall
comply with all material leases and other material agreements in order to
prevent loss or forfeiture, unless compliance is being contested in good faith
by appropriate proceedings timely instituted which shall operate to prevent
enforcement of the loss or forfeiture. The Lender shall have the right to
inspect the Borrower's plants and other fixed assets at all reasonable times,
and from time to time.
5.06 Existence and Good Standing. The Borrower shall preserve its
------------------------------
existences in good standing and shall be and remain qualified to do business and
in good standing in all states and countries in which failure to so qualify
would have a material adverse effect upon the Borrower.
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<PAGE>
5.07 Notice Requirements.
--------------------
(a) Default. The Borrower shall cause its chief officer, or in
--------
his absence an officer of the Borrower designated by it, to notify the Lender in
writing within three (3) Business Days, after the Borrower, or any of the
Borrower's members or officers, has notice of any Event of Default or Unmatured
Default or has notice that any representation or warranty made in this
Agreement, or in any related document or instrument, for any reason was not true
and complete and not misleading in any material respect when made. Such notice
shall specify the nature of such Event of Default or Unmatured Default and the
action the Borrower has taken or will take to correct it.
(b) Material Litigation. The Borrower promptly shall notify
---------------------
the Lender in writing of the institution or existence of any litigation or
administrative proceeding to which the Borrower may be or become a party which
might involve any material risk of any judgment or liability which (1) would be
in excess of One Hundred Thousand Dollars ($100,000.00), or (2) would otherwise
result in any material adverse change in the Borrower's business, assets or
condition, financial or otherwise.
(c) Other Information. From time to time, upon request by the
------------------
Lender, the Borrower shall furnish to the Lender such information regarding the
Borrower's business, assets and condition, financial or otherwise, as the Lender
may reasonably request. The Lender shall have the right during reasonable
business hours to examine all of the Borrower's business and financial books and
records and to make notes and abstracts therefrom, to make an independent
examination of the Borrower's books and records for the purpose of verifying the
accuracy of reports delivered by the Borrower and ascertaining compliance with
this Agreement.
5.08 Revolving Credit Notes and Other Borrower Documents. The Borrower
----------------------------------------------------
shall pay the Revolving Credit Notes in accordance with their respective terms,
and the Borrower shall comply with the provisions of the other Borrower
Documents.
5.09 Compliance with Law. The Borrower shall comply in all material
---------------------
respects with (a) all valid and applicable statutes, rules and regulations of
the United States of America, of the States thereof and their counties,
municipalities and other subdivisions and of any other jurisdiction applicable
to the Borrower, including, but not limited to all applicable state and federal
environmental laws and ERISA; (b) the valid and applicable orders, judgments and
decrees of all courts or administrative agencies with jurisdiction over the
Borrower; or its business; and (c) the applicable provisions of licenses issued
to the Borrower except where compliance therewith shall be currently contested
in good faith by appropriate proceedings, timely instituted, which shall operate
to stay any order with respect to such non-compliance.
5.10 Liens. Except for security interests previously granted by the
------
Borrower to the Lender contemporaneously with the execution of this Agreement
(including, without limitation, those permitted in Section 5.02(b) and those
disclosed in Section 6.13 of this Agreement), and except for liens permitted in
this Agreement, the Borrower shall not (a) create or incur or suffer to be
created or incurred or to exist any encumbrance, mortgage, pledge, lien, charge,
restriction or other security interest of any kind upon any of the Collateral,
whether owned or held on the
-17-
<PAGE>
date of this Agreement or acquired thereafter, or upon the proceeds therefrom,
or (b) transfer any Collateral or the proceeds therefrom for the purpose of
subjecting the same to payment of indebtedness or performance of any other
obligation except payments made in accordance with Section 5.02 of this
Agreement or payments made to the Lender in accordance with the terms and
provisions of this Agreement, or (c) acquire, or agree or have an option to
acquire, any Collateral upon conditional sale or other title retention or
purchase money security agreement, device or arrangement, or (d) sell or
transfer, assign, or pledge any Collateral, with or without recourse. The
Borrower may incur or create, or suffer to be incurred or created or to exist,
the following liens without violating the provisions of this Section 5.10:
(1) Statutory liens to secure claims for labor, material or
supplies to the extent that payment thereof shall not at the time be required to
be made in accordance with Section 5.02 of this Agreement.
(2) Deposits or pledges made in connection with, or to secure
payment of, workers' compensation, unemployment insurance, old age pensions or
other social security, or in connection with contests, to the extent that
payment thereof shall not at that time be required to be made in accordance with
Section 5.02 of this Agreement.
(3) Statutory liens for taxes or assessments or governmental
charges or levies if payment shall not at the time be required to be made in
accordance with Section 5.02 of this Agreement.
(4) Statutory liens (and contractual liens that provide to the
secured party no greater rights than equivalent statutory liens) to secure
payment of rent or lease payments with respect to leases of real property to the
extent that such payments shall not at the time be required to be made in
accordance with Section 5.02 of this Agreement.
5.11 Limit on Indebtedness, Guarantees, Etc. The Borrower shall not, in
---------------------------------------
the absence of prior written consent from the Lender, incur, assume, guarantee,
or otherwise be or become liable in respect of any Indebtedness except for those
matters described in Schedule 6.12 to this Agreement, if after giving pro forma
effect to the Indebtedness, the Indebtedness would result in an Unmatured
Default or an Event of Default.
5.12 Articles of Organization and Operating Agreement. Without the
----------------------------------------------------
Lender's prior written consent, which shall not be withheld or delayed
unreasonably, the Borrower shall not make any changes in or amendments to its
Articles of Organization or Operating Agreement.
5.13 Mergers, Sales, Transfers and Other Dispositions of Assets.
-------------------------------------------------------------
Without the Lender's prior written consent, which shall not be withheld
unreasonably, the Borrower shall not:
(a) Be a party to any consolidation, reorganization (including
without limitation those types referred to in Section 368 of the United States
Internal Revenue Code of 1986, as amended), "stock-swap" or merger;
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<PAGE>
(b) Sell or otherwise transfer any material part of either its
tangible or intangible assets (except for assets that are worn out or no longer
used or useful in the Borrower's business), provided that Lender shall not
withhold its consent if Borrower demonstrates to the satisfaction of the Lender,
pursuant to pro forma financial statements and other relevant information based
on assumptions acceptable to the Lender that after giving effect to the proposed
sale or transfer no Event of Default or Unmatured Event of Default shall exist
under this Agreement;
(c) Purchase all or a substantial part of the capital
stock or assets of any corporation or other business enterprise;
(d) Effect any change in its capital structure; or
(e) Liquidate or dissolve or take any corporate action
with a view toward liquidation or dissolution.
5.14 Loans. The Borrower shall not make any loan or advance any funds
------
whatsoever to any business, entity, party or individual, except advances not to
exceed Five Hundred Thousand Dollars ($500,000.00), in the aggregate at any one
time outstanding.
5.15 No Change in Ownership. The Borrower shall not permit the
--------------------------
ownership interest of the Guarantors (and/or any Person who becomes an owner of
an interest in the Borrower upon the death of one of the Guarantors through
bequest or devise) to be reduced to less than one hundred percent (100%) of the
outstanding membership interests of the Borrower.
5.16 Payment of Distributions. In any fiscal year, the Borrower shall
--------------------------
not pay out any Distributions in excess of the Borrower's Net Income for that
fiscal year and in no event shall the Borrower pay out any Distribution while
any Unmatured Default or Event of Default is in existence.
5.17 ERISA Compliance.
-----------------
(a) Relationship of Vested Benefits to Pension Plan Assets.
---------------------------------------------------------
The Borrower will at all times maintain the qualified status of its Plans. The
Borrower will not at any time terminate any Plan unless on the date of such
termination the present value of all employee benefits vested under such Plan
does not exceed the present value of the assets allocable to such vested
benefits.
(b) Valuations. All assumptions and methods used to determine
-----------
the actuarial valuation of vested employee benefits under Plans at any time
maintained by the Borrower and the present value of assets of such Plans shall
be reasonable in the good faith judgment of the Borrower and shall comply with
all requirements of law in all material respects.
(c) Prohibited Actions. Neither the Borrower nor any Plan at
-------------------
any time maintained by the Borrower will:
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<PAGE>
(1) engage in any "prohibited transactions" (as such
term is defined in Section 406 or Section 2003(a) of ERISA);
(2) incur any "accumulated funding deficiency" (as such
term is defined in Section 302 of ERISA) whether or not waived; or
(3) terminate any such Plan in a manner which could
result in the imposition of a Lien on the property of the Borrower pursuant to
Section 4006 of ERISA.
5.18 Joinder of Subsidiaries. If the Borrower creates or acquires any
-------------------------
Subsidiary, the Borrower shall cause such subsidiary to execute and deliver to
the Lender an agreement (a "Joinder Agreement") substantially in the form
attached as Annex D pursuant to which such Subsidiary shall join as a Borrower
hereunder and under each document to which the Borrower is named as a party. The
Borrower shall cause the Joinder Agreement to be delivered to the Lender within
five (5) Business Days after the date of the filing of such Subsidiary's
articles of incorporation if the Subsidiary is a corporation, the date of the
filing of its certificate of limited partnership if it is a limited partnership,
or the date of its organization if it is an entity other than a corporation or a
limited partnership.
SECTION VI
----------
Representations and Warranties
------------------------------
To induce the Lender to enter into this Agreement and the Lender to
make the Revolving Credit Loan, the Borrower and the Guarantors represent and
warrant to the Lender as follows, (which warranties and representations shall be
deemed to be remade and restated in full (subject only to changes of
circumstances which (1) are fully disclosed by the Borrower to the Lender in
writing, describing the changed circumstances, and (2) do not result in any
violation of any condition, provision, promise and/or covenant of this
Agreement, or otherwise result in an Unmatured Default or an Event of Default)
whenever an advance under the Revolving Credit Loan is requested by the
Borrower):
6.01 Organization and Existence. The Borrower is a limited liability
---------------------------
company duly organized, validly existing, and in good standing under the laws of
the Commonwealth of Kentucky. The Borrower has all necessary power and authority
to carry on its business conducted on the date of this Agreement. The Borrower
is qualified to do business as a foreign limited partnership, and is in good
standing, in all states and in all foreign countries in which it owns any
property or carries on substantial activities or is otherwise required to be so
qualified, and is duly authorized, qualified and licensed under all laws,
regulations, ordinances or orders of public authorities to carry on its business
in the places and in the manner conducted on the date of this Agreement.
6.02 Right to Act. No registration with or consent or approval of any
-------------
governmental agency of any kind is required for the execution, delivery,
performance and enforceability of the Borrower Documents. The Borrower has full
power and authority, corporate and otherwise, to execute, deliver and perform
the Borrower Documents.
-20-
<PAGE>
6.03 No Conflicts. The Borrower's execution, delivery and performance
-------------
of the Borrower Documents do not, and will not, (a) violate any existing
provision Articles of Organization or Operating Agreement of the Borrower or any
law, rule, regulation, or judgment, order or decree applicable to the Borrower
or (b) otherwise constitute a default, or result in the imposition of any lien
under (1) any material existing contract or other obligation binding upon the
Borrower or its property, with or without the passage of time or the giving of
notice or both; (2) any law, rule or regulation applicable to the Borrower or
its business; or (3) any judgment, order or decree of any court or
administrative agency applicable to the Borrower or its business.
6.04 Authorization. The execution, delivery and performance by the
--------------
Borrower of the Borrower Documents has been duly authorized, and the Borrower
Documents have been duly executed and delivered.
6.05 Enforceable Agreements. This Agreement and the other Borrower
------------------------
Documents are legally valid and binding obligations of the Borrower, enforceable
against the Borrower in accordance with their respective terms, except as such
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or other laws relating to or limiting creditors rights or equitable
principals generally.
6.06 Contingent Obligations. The Borrower does not have any material
------------------------
contingent obligations, material liabilities for taxes, material long-term
leases or unusual material forward or long-term commitments, which have not been
disclosed to the Lender.
6.07 Litigation. Except for those matters described in the financial
-----------
statements referenced in Section 6.08 of this Agreement or otherwise disclosed
in writing by the Borrower to Lender, there is no litigation, at law or in
equity, or any proceeding before any federal, state or municipal court, board or
other governmental or administrative agency pending, or to the knowledge of the
Borrower, threatened which is likely to involve any material judgment or
liability against the Borrower or which might otherwise result in any material
adverse change in the Borrower's business, assets or condition, financial or
otherwise. No judgment, decree or order of any federal, state or municipal
court, board or other governmental or administrative agency has been issued
against the Borrower or any of its assets which has, or will likely have, a
material adverse effect on the Borrower's business, assets or condition,
financial or otherwise.
6.08 Financial Statements. The Borrower's financial statements dated
----------------------
April 30, 2000, have been furnished to the Lender. Those financial statements
are true and complete in all material respects, have been prepared in accordance
with GAAP, do not omit reference to any material contingent liabilities of any
kind not otherwise disclosed by Borrower to the Lender in writing, and fairly
present the financial condition of the Borrower as of the date of those
financial statements. Nichols' financial statements dated December 31, 1999, and
Lavin's financial statements dated March 31, 2000, have been furnished to the
Lender. Those financial statements are true and complete in all material
respects, do not omit reference to any material contingent liabilities of any
kind not otherwise disclosed by Borrower to the Lender in writing and fairly
present the financial condition of the Nichols and Lavin, respectively, as of
the date of the financial statements.
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6.09 Compliance with Contractual Obligations, Laws and Judgments.
------------------------------------------------------------
(a) The Borrower is not in default in the payment,
performance, observance or fulfillment of any of the material obligations,
covenants or conditions contained in any lease, indenture, mortgage, deed of
trust, promissory note, agreement or undertaking to which it is a party or by
which its assets are bound.
(b) The Borrower has not violated any applicable statute,
regulation or ordinance of the United States of America or of any state,
municipality or any other subdivision, jurisdiction or agency thereof, in any
respect materially and adversely affecting the Borrower's business, property,
assets, operations or conditions, financial or otherwise.
(c) The Borrower is not in default with respect to any
judgment, order, writ, injunction, decree or demand of any court, arbitrator or
governmental agency or body.
6.10 Investment Company. The Borrower is not an "investment company"
-------------------
or a company "controlled" by an "investment company", within the meaning of the
Investment Company Act of 1940, as amended.
6.11 Tax Returns. The Borrower has filed all tax returns which are
-------------
required to be filed and has paid, or made adequate provision for the payment
of, all taxes which have or may become due pursuant to such returns or pursuant
to assessments received. The Borrower knows of no material additional
assessments for which adequate reserves have not been established, and the
Borrower has made adequate provision for all current taxes.
6.12 No Undisclosed Liabilities or Guaranties. The Borrower does not
-------------------------------------------
have any material liabilities, direct or contingent, except as disclosed or
referred to in the financial statements referred to in Section 5.03 of this
Agreement or otherwise disclosed to Lender in writing or incurred by Borrower
after such date and not prohibited by the express terms of this Agreement, nor
has the Borrower guaranteed, or otherwise become responsible for, the material
obligations of any person, firm or corporation, other than as set out on
Schedule 10.12 of this Agreement or otherwise not in contravention of any of the
Borrower Documents.
6.13 Title to Properties. The Borrower has good and marketable title to
--------------------
all of its property and assets of all character, free and clear of all
mortgages, liens, interests, and encumbrances except (a) encumbrances granted to
the Lender, (b) minor irregularities in title which do not materially interfere
with the use and enjoyment by the Borrower of such properties and assets in the
normal course of business as presently conducted, or materially impair the value
thereof for such business, (c) those encumbrances described on Schedule 6.13 to
this Agreement, and (d) any other encumbrances permitted under the express terms
of the Borrower Documents.
6.14 Trademarks and Permits. The Borrower possesses adequate licenses,
-----------------------
patents, copyrights, trademarks and trade names to conduct their businesses as
now conducted. Neither the Borrower nor any of its officers, directors or
employees has received notice or has knowledge of any claim that the Borrower
has violated any other person's license, patent, copyright,
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trademark or trade name, or that the Borrower's licenses, patents, copyrights,
trademarks or trade names are currently being infringed. The Borrower has all
governmental permits, certificates, consents and franchises necessary to carry
on their businesses as now conducted and to own or lease and operate their
properties as now owned, leased or operated. All such governmental permits,
certificates, consents and franchises are valid, and in effect, and the Borrower
is not in violation thereof, and none of them contains any term, provision,
condition or limitation more burdensome than generally applicable to persons
engaged in the same or similar business.
6.15 No Defaults. The Borrower is not in default in the payment or
-------------
performance of any of its obligations or in the performance of any mortgage,
indenture, lease, contract or other agreement, instrument or undertaking to
which it is a party or by which it or any of its assets may be bound, which
default would have a material adverse effect on the business operations, assets
or condition, financial or otherwise, of the Borrower, taken as a whole. No
Unmatured Default or Event of Default hereunder or under the other Borrower
Documents has occurred and is continuing. The Borrower is not in default under
any order, award or decree of any court, arbitrator or governmental authority
binding upon or affecting it or by which any of its assets may be bound or
affected which default would have a material adverse effect on the business of
such Borrower. The Borrower is not subject to any order, award or decree which
is likely to materially adversely affect the ability of the Borrower to carry on
its business as currently conducted or the ability of the Borrower to perform
its obligations under this Agreement and/or the other Borrower Documents to
which it is a party.
6.16 Employee Benefit Plans. Except as have been otherwise disclosed in
-----------------------
writing to the Lender, any Plans in existence are in substantial compliance with
ERISA, no Plan is insolvent or in reorganization, no Plan has an accumulated or
waived funding deficiency within the meaning of Section 412 of the Code, the
Borrower has not incurred any material liability (including any material
contingent liability) to or on account of a Plan pursuant to Sections 4062,
4063, 4064, 4201 or 4204 of ERISA, no proceedings have been instituted to
terminate any Plan, and no condition exists which presents a material risk to
the Borrower of incurring a liability to or on account of a Plan pursuant to any
of the foregoing sections of ERISA.
6.17 No Material Adverse Conditions. There is no fact known to the
----------------------------------
Borrower (other than matters of a general economic or political nature) which
materially adversely affects the business, property, assets or financial
condition of the Borrower which has not been disclosed to the Lender or set
forth in the other documents, certificates and statements furnished to the
Lender by or on behalf of the Borrower prior to the date hereof in connection
with the transactions contemplated hereby.
6.18 Regulations Q and U. The Borrower is not engaged principally, or
--------------------
as one of the Borrower's important activities, in the business of extending
credit for the purpose of purchasing or carrying margin stock (within the
meaning of Regulation Q of the Board of Governors of the Federal Reserve
System), and will not use the proceeds of the Loans so as to violate Regulation
U as it may be amended or interpreted from time to time by the Board of
Governors of the Federal Reserve System.
6.19 Environmental Matters. Except as otherwise disclosed in
------------------------
writing to the Lender,
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<PAGE>
the Borrower fully complies with all federal, state and local environmental
laws, rules, regulations, ordinances and other requirements including, without
limitation, those which relate to the production, storage, disposal or use of
any and all hazardous or toxic wastes, and including, without limitation, the
provisions of 42 U.S.C.ss.ss.9601 et seq. (CERCLA, Super Fund); and 42
U.S.C.ss.ss.6901 et seq. (RCRA). --------
-------
6.20 No Public Utility Holding Company. The Borrower is not a
----------------------------------
"holding company," or a "subsidiary company" of a "holding company," or an
affiliate of either, within the meaning of the Public Utility Holding Company
Act of 1935, as amended.
6.21 No Subsidiaries. The Borrower has no Subsidiaries.
----------------
6.22 Disclosure. Neither this Agreement, nor any agreement, document,
-----------
certificate or statement furnished to the Lender by or on behalf of the Borrower
in connection with the transactions contemplated by this Agreement contains any
untrue statement of any material fact or, except in the case of budgets and
forward financial forecasts, omits to state any material fact necessary to make
the statements contained herein or therein not misleading as of the time the
Borrower makes the statement; provided however, that the Borrower has an
immediate and continuing obligation to supplement any of the foregoing if it
should subsequently contain an untrue statement of any material fact or omits to
state any material fact necessary to make the statements contained herein or
therein not misleading. There is no fact known to the Borrower which materially
and adversely affects, or in the future is likely to materially and adversely
affect, the Borrower's business, operations, affairs or condition, financial or
otherwise, which has not been disclosed to the Lender.
SECTION VII
-----------
Events of Default
-----------------
The occurrence of any one or more of the following shall constitute an
Event of Default under this Agreement (an "Event of Default"):
7.01 Failure to Pay. If the Borrower shall fail to pay in full any
----------------
installment of principal or interest on any of the Notes, or payments required
by this Agreement, within five (5) days after such payment first became due.
7.02 No Notice Required. If the Borrower with respect to the following
-------------------
provisions shall fail to observe, perform or comply with any term, obligation,
covenant, agreement, condition or other provision contained in Sections 5.02,
5.04, 5.07, 5.10, 5.12, 5.13, 5.15, or 5.18 of this Agreement, or any Event of
Default occurs under any of the other Borrower Documents.
7.03 Notice Required. If the Borrower with respect to any term,
-----------------
obligation, covenant, agreement, condition or other provision (other than those
referred to in Sections 9.01 or 9.02 hereof) contained or referred to in any of
the Borrower Documents shall fail to observe, perform or comply with those
provisions, and such failure shall not have been fully corrected within thirty
(30) days after the Lender has given written notice thereof to such obligor.
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<PAGE>
7.04 Falsity of Representation or Warranty. If any representation or
---------------------------------------
warranty or other statement of fact contained in any of the Borrower Documents
or in any writing, certificate, report or statement at any time furnished the
Lender by or on behalf of the Borrower pursuant to or in connection with this
Agreement shall have been false or misleading in any material respect or which
shall omit a material fact, whether or not made with knowledge, at the time it
was made.
7.05 Judgments. If a final judgment or judgments for the payment of
----------
money in excess of the sum of One Hundred Thousand Dollars ($100,000.00), in the
aggregate, or with respect to property with a value in excess of such amount,
shall be rendered against the Borrower and such judgment or judgments shall
remain unsatisfied for a period of thirty (30) consecutive days after the entry
thereof and within that thirty (30) days has not been (a) stayed pending appeal,
or (b) discharged.
7.06 Adverse Financial Change. If there should be any material adverse
--------------------------
change in the financial condition of the Borrower as determined in Lender's
discretion, from its financial condition as shown on the financial statements
referred to in Section 6.08 of this Agreement, and such adverse change is not
fully corrected to Lender's reasonable satisfaction within sixty (60) days after
notice with respect thereto from the Lender.
7.07 Other Obligations. Subject to the exception contained in Section
------------------
5.02(b) of this Agreement, if the Borrower shall fail to observe, perform or
comply with the terms, obligations, covenants, agreements, conditions or other
provisions of any agreement, document or instrument (including leases) other
than this Agreement and the other Borrower Documents which (a) the Lender or any
of its Affiliates has entered into with the Borrower and which involves any
Indebtedness to the Lender and/or any of its Affiliates in any amount or (b) any
other Person has entered into with the Borrower and/or any of its Affiliates
which involves Indebtedness (or in the case of leases, in total lease
obligations under any single lease) in any single instance exceeding Five
Hundred Thousand Dollars ($500,000.00).
7.08 Dissolution or Termination of Existence. If the Borrower, either
----------------------------------------
Guarantor and/or any Affiliate of the Borrower takes any action that is intended
to result in the termination, dissolution or liquidation of the Borrower.
7.09 Solvency.
---------
(a) If the Borrower or either Guarantor shall (1) have an
order of relief entered in any proceeding filed by it under the federal
bankruptcy laws (as in effect on the date of this Agreement or as they may be
amended from time to time); (2) admit its inability to pay its debts generally
as they become due; (3) become insolvent in that its total assets are in the
aggregate worth less than all of its liabilities or it is unable to pay its
debts generally as they become due; (4) make a general assignment for the
benefit of creditors; (5) file a petition, or admit (by answer, default or
otherwise) the material allegations of any petition filed against it, in
bankruptcy under the federal bankruptcy laws (as in effect on the date of this
Agreement or as they may be amended from time to time), or under any other law
for the relief of debtors, or for
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<PAGE>
the discharge, arrangement or compromise of their debts; or (6) consent to the
appointment of a receiver, conservator, trustee or liquidator of all or part of
its assets.
(b) If a petition shall have been filed against the Borrower
or either Guarantor in proceedings under the federal bankruptcy laws (as in
effect on the date of this Agreement, or as they may be amended from time to
time), or under any other laws for the relief of debtors, or for the discharge,
arrangement or compromise of their debts, or an order shall be entered by any
court of competent jurisdiction appointing a receiver, conservator, trustee or
liquidator of all or part of the Borrower's assets, and such petition or order
is not dismissed or stayed within sixty (60) consecutive days after entry
thereof.
SECTION VIII
------------
Remedies Upon Default
---------------------
Notwithstanding anything to the contrary, if any Event of Default
occurs under Section 7.09 of this Agreement, the Revolving Credit shall
automatically terminate (if not previously terminated or expired), and the
entire unpaid balance of all Revolving Credit Loans and Revolving Credit Notes,
and all other obligations of the Borrower under and/or in connection with the
Borrower Documents, shall automatically, without requirement of any presentment,
demand or notice of any kind (all of which are hereby waived by the Borrower),
become immediately due and payable in full. Also notwithstanding any other
provision of this Agreement, if any other Event of Default under this Agreement
occurs, the Lender, in its individual discretion, and without notice to the
Borrower, may terminate the Revolving Credit, in which case the Lender shall be
under no further obligation to grant any Revolving Credit Loans to the Borrower.
In addition, upon the occurrence of any Event of Default, and at any time
thereafter, unless all Events of Default have been waived in a writing signed by
the Lender specifically providing the waiver, the Lender shall have all of the
following rights and remedies and it may exercise one or more of them, singly or
in conjunction with others.
8.01 Right to Offset. The Lender shall have the right to set off
-----------------
against, or appropriate and apply toward the payment of, the obligations of the
Borrower to that Lender, pursuant to this Agreement or as evidenced by the
Revolving Credit Notes whether such obligations shall have matured in due course
or by acceleration, any and all deposit balances and other sums and indebtedness
then held or owed by that Lender to or for the credit or account of the Borrower
and/or either Guarantor. For such purpose the Borrower and each Guarantor hereby
pledges to and grants a security interest in such deposit balances, other sums
and indebtedness of the Lender to secure all of the Borrower's obligations under
this Agreement and the Revolving Credit Notes. Such offsets following an Event
of Default may occur without notice to or demand upon the Borrower, either
Guarantor or any other Person, all of such notices and demands being hereby
waived.
8.02 Enforcement of Rights. The Lender shall have the right, to proceed
----------------------
to protect and enforce its rights by suit in equity, action at law or other
appropriate proceedings either for specific performance of any covenant or
condition contained in any of the Borrower Documents, or in aid of the exercise
of any power granted in any of the Borrower Documents.
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<PAGE>
8.03 Rights Under Security Instruments. The Lender shall also have all
----------------------------------
rights and remedies granted it under the Pledge Agreement, the Guaranty
Agreements and any and all other Borrower Documents securing or intending to
secure the Borrower's obligations under the Revolving Credit Notes, or any other
indebtedness or obligation of the Borrower under the Borrower Documents.
8.04 Cumulative Remedies. All of the rights and remedies of the Lender
--------------------
upon occurrence of an Event of Default shall be cumulative to the greatest
extent permitted by law, may be exercised successively or concurrently, from
time to time, and shall be in addition to all of those rights and remedies
afforded the Lender at law, or in equity, or in bankruptcy. Notwithstanding the
foregoing, the Lender shall be entitled to recover from the cumulative exercise
of all remedies an amount no greater than the sum of (a) the aggregate
outstanding principal amount of the Loan, (b) all accrued but unpaid interest
with respect to the aggregate principal amount of the Loan, (c) any other
amounts that the Borrower is required by this Agreement to pay to the Lender
(for example, and without limitation, the reimbursement of expenses and legal
fees, and late charges), and (d) any costs, expenses or damages which the Lender
is otherwise permitted to recover by the terms of this Agreement. Any exercise
of any right or remedy shall not be deemed to be an election of that right or
remedy to the exclusion of any other right or remedy.
SECTION IX
----------
Fees and Expenses
-----------------
9.01 Transaction Expenses. The Borrower shall pay to the Lender upon
----------------------
demand all out-of-pocket expenses incurred by the Lender in connection with the
transactions contemplated by this Agreement, including, but not limited to the
Lender's reasonable attorneys' fees incurred in preparing, negotiating and
closing the Borrower Documents and any and all costs and fees incurred in
connection with the recording or filing of any documents or instruments, and/or
in searches of, any public office, pursuant to or as a consequence of this
Agreement, or to perfect or protect any security for the Loans. The Borrower
shall also pay to the Lender, promptly following the Lender's request, all
out-of-pocket expenses incurred by the Lender from time to time in the
administration of the Loans, including, without limitation, any out-of-pocket
expenses (including, but not limited to, attorneys' fees) incurred by the Lender
if any of the Borrower Documents should be amended, extended and/or renewed from
time to time, or if additional Borrower Documents are prepared.
9.02 Enforcement Expenses. If any Event of Default shall occur under
----------------------
this Agreement, or any default shall occur under any of the Borrower Documents
or any related documents, the Borrower shall pay to the Lender, to the extent
allowable by applicable law, such amounts as shall be sufficient to reimburse
the Lender fully for all of its costs and expenses incurred in enforcing and/or
protecting its rights and remedies under the Borrower Documents and any related
documents, including without limitation its reasonable attorneys' fees and court
costs. Such amounts shall be deemed to be included in the obligations secured by
the Security Agreement.
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<PAGE>
SECTION X
---------
Miscellaneous Provisions
------------------------
10.01 Business Days. If any provision of this Agreement or any of the
---------------
other Borrower Documents requires that the Borrower make any payment, or
otherwise perform any act, on a day on which the Lender is not open for
business, then that payment or action shall be deemed to be due on the first day
thereafter that the Lender is open for business.
10.02 Term of this Agreement. The term of this Agreement shall commence
-----------------------
as of the date hereof, and continue until all Loans and accrued but unpaid
interest thereon shall have been paid in full and the Borrower shall have paid
or performed all of its obligations hereunder.
10.03 No Waivers. Failure or delay by the Lender in exercising any
------------
rights shall not be deemed to be or operate as a waiver of that right, nor shall
any right be exclusive of any other right referred to in this Agreement, or in
any other related document, or available at law or in equity, by statute or
otherwise. Any single or partial exercise of any right shall not preclude the
further exercise of that right. Every right of the Lender shall continue in full
force and effect until such right is specifically waived in a writing signed by
the Lender.
10.04 Course of Dealing. No course of dealing between the Borrower, the
------------------
Guarantors and the Lender shall operate as a waiver of any of the Lender's
rights under any of the Borrower Documents.
10.05 Certain Waivers by the Borrower and the Guarantors. The Borrower
---------------------------------------------------
and each Guarantor hereby waives, to the extent permitted by applicable law, (a)
all presentments, demands for performances, notices of nonperformance (except to
the extent specifically required by this Agreement or any other of the Borrower
Documents), protests, notices of protest and notices of dishonor in connection
with the Notes (b) any requirement of diligence or promptness on the part of the
Lender in enforcement of rights under the provisions of any of the Borrower
Documents, and (c) any requirement of marshaling assets or proceeding against
persons or assets in any particular order.
10.06 Severability. If any part, term or provision of this Agreement is
-------------
held by any court to be unenforceable or prohibited by any law applicable to
this Agreement, the rights and obligations of the parties shall be construed and
enforced with that part, term or provision limited so as to make it enforceable
to the greatest extent allowed by law, or, if it is totally unenforceable, as if
this Agreement did not contain that particular part, term or provision.
10.07 Time of the Essence. Time shall be of the essence in the
--------------------
performance of all of the Borrower's and the Guarantors' obligations under the
Borrower Documents.
10.08 Benefit and Binding Effect. This Agreement shall inure to the
----------------------------
benefit of the Lender, its successors and assigns, and all obligations of the
Borrower and the Guarantors shall bind their heirs, executors, successors and,
if and to the extent assignment is otherwise permitted by this Agreement,
assigns.
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<PAGE>
10.09 Further Assurances. The Borrower shall sign such financing
--------------------
statements or other documents or instruments as the Lender may request from time
to time more fully to create, perfect, continue, maintain or terminate the
rights and security interests intended to be granted or created pursuant to this
Agreement, the Security Agreement, and any other Borrower Documents.
10.10 Incorporation by Reference. All schedules, annexes or other
-----------------------------
attachments to this Agreement are incorporated into this Agreement as if set out
in full at the first place in this Agreement that reference is made thereto.
10.11 Entire Agreement; No Oral Modifications. This Agreement, the
-------------------------------------------
schedules and annexes hereto, and the documents and instruments referred to
herein constitute the entire agreement of the parties with respect to the
subject matter hereof, and supersede all prior understandings with respect to
the subject matter hereof. No change, modification, addition or termination of
this Agreement or any of the Borrower Documents shall be enforceable unless in
writing and signed by the party against whom enforcement is sought.
10.12 Headings. The headings used in this Agreement are included for
---------
ease of reference only and shall not be considered in the interpretation or
construction of this Agreement.
10.13 Governing Law. This Agreement and the related documents and
---------------
instruments shall be governed by and construed in accordance with the laws of
the Commonwealth of Kentucky without regard to conflicts of laws unless, except
to the extent that the laws of any other state, province or country where the
Collateral is located require that the laws of such other state, province or
country shall govern the creation, perfection or enforcement of the Lender's
rights and security interests in such Collateral.
10.14 Assignments. Neither the Borrower nor either Guarantor may assign
------------
any rights under this Agreement to any other party. Any attempted assignment
shall be a default under this Agreement and shall be null and void.
10.15 Multiple Counterparts.
----------------------
(a) This Agreement may be signed by each party upon a separate
copy, and in such case one counterpart of this Agreement shall consist of enough
of such copies to reflect the signature of each party.
(b) This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, and it shall not be
necessary in making proof of this Agreement or the terms thereof to produce or
account for more than one of such counterparts.
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<PAGE>
10.16 Notices.
--------
(a) Any requirement of the Uniform Commercial Code or other
applicable law of reasonable notice shall be met if such notice is given at
least ten (10) Business Days before the time of sale, disposition or other event
or thing giving rise to the requirement of notice.
(b) Except as provided in subsection (c) below, all notices or
communications under this Agreement shall be in writing and shall be
hand-delivered, sent by courier, or mailed to the parties addressed to the
addresses as follows and any notice so addressed and (1) hand-delivered, shall
be deemed to have been given when so delivered, or (2) mailed by registered or
certified mail, return receipt requested, shall be deemed to have been given
when mailed, or (3) delivered to a recognized small package overnight courier
service to the address of the intended recipient with shipping prepaid, shall be
deemed to have been given when so delivered to such courier. Addresses for
notices are as follows:
(1) If to the Lender: BANK OF LOUISVILLE
500 W. Broadway
Louisville, Kentucky 40202
with a courtesy copy to: BROWN, TODD & HEYBURN PLLC
400 West Market Street, 32nd Floor
Louisville, Kentucky 40202-3363
Attn: Charles R. Keeton, Esq.
(2) If to the Borrower: ORIG, LLC
10172 Linn Station Road 200
Louisville, Kentucky 40223
Attn: Neil Mitchell
with a courtesy copy to: GREENBAUM DOLL & MCDONALD PLLC
3300 National City Tower
Louisville, Kentucky 40202
Attn: Tandy C. Patrick, Esq.
(3) If to the Guarantor: J. D. NICHOLS
10172 Linn Station Road 200
Louisville, Kentucky 40223
with a courtesy copy to: GREENBAUM DOLL & MCDONALD PLLC
3300 National City Tower
Louisville, Kentucky 40202
Attn: Tandy C. Patrick, Esq.
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<PAGE>
(4) If to the Guarantor: BRIAN LAVIN
10172 Linn Station Road 200
Louisville, Kentucky 40223
with a courtesy copy to: GREENBAUM DOLL & MCDONALD PLLC
3300 National City Tower
Louisville, Kentucky 40202
Attn: Tandy C. Patrick, Esq.
(c) The parties may at any time, and from time to time,
change the address or addresses to which notice shall be mailed by written
notice setting forth the changed address or addresses.
10.17 Survival of Covenants. All covenants, agreements, warranties and
----------------------
representations made by the Borrower herein shall survive the making of each
Revolving Credit Loan and the execution and delivery of the Borrower Documents,
and shall be deemed to be remade and restated by the Borrower each time the
Borrower requests a Revolving Credit Loan.
10.18. Consent to Jurisdiction. THE BORROWER AND THE GUARANTORS CONSENT
------------------------
TO ONE OR MORE ACTIONS BEING INSTITUTED AND MAINTAINED IN THE JEFFERSON COUNTY,
KENTUCKY, CIRCUIT COURT AND/OR THE UNITED STATES DISTRICT COURT FOR THE WESTERN
DISTRICT OF KENTUCKY (AT LENDER'S DISCRETION) TO ENFORCE THIS AGREEMENT AND/OR
ONE OR MORE OF THE OTHER BORROWER DOCUMENTS, AND WAIVE ANY OBJECTION TO ANY SUCH
ACTION BASED UPON LACK OF PERSONAL OR SUBJECT MATTER JURISDICTION OR IMPROPER
VENUE. THE PARTIES AGREE THAT ANY PROCESS OR OTHER LEGAL SUMMONS IN CONNECTION
WITH ANY SUCH ACTION OR PROCEEDING MAY BE SERVED BY MAILING A COPY THEREOF BY
CERTIFIED MAIL, OR ANY SUBSTANTIALLY SIMILAR FORM OF MAIL, ADDRESSED TO THE
ADDRESSES PROVIDED IN THE PREAMBLE TO THIS AGREEMENT. THE BORROWER AND THE
GUARANTORS ALSO AGREE THAT NONE OF THEM SHALL COMMENCE OR MAINTAIN ANY ACTION IN
ANY COURT, ADMINISTRATIVE AGENCY OR OTHER TRIBUNAL OTHER THAN THE JEFFERSON
COUNTY, KENTUCKY, CIRCUIT COURT OR THE UNITED STATES DISTRICT COURT FOR THE
WESTERN DISTRICT OF KENTUCKY WITH RESPECT TO THIS AGREEMENT, ANY OTHER OF THE
BORROWER DOCUMENTS, ANY OF THE TRANSACTIONS PROVIDED FOR OR CONTEMPLATED IN ANY
OF THE BORROWER DOCUMENTS, OR ANY CAUSE OF ACTION OR ALLEGED CAUSE OF ACTION
ARISING OUT OF OR IN CONNECTION WITH ANY DEBTOR AND CREDITOR RELATIONSHIP AMONG
THE PARTIES THAT MAY EXIST FROM TIME TO TIME.
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<PAGE>
10.20 JURY TRIAL WAIVER. THE BORROWER AND EACH GUARANTOR HEREBY WAIVES
------------------
ITS RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING
OUT OF THIS AGREEMENT, THE REVOLVING CREDIT NOTES, THE PLEDGE AGREEMENT, THE
GUARANTY AGREEMENTS AND/OR ANY OTHER OF THE BORROWER DOCUMENTS. THIS WAIVER IS
INTENDED TO APPLY TO ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT THAT
RELATE TO THE SUBJECT MATTER OF THIS TRANSACTION, INCLUDING, WITHOUT LIMITATION,
CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW
AND STATUTORY CLAIMS. THE BORROWER AND EACH GUARANTOR ACKNOWLEDGES THAT THIS
WAIVER IS A MATERIAL INDUCEMENT FOR THE LENDER TO ENTER INTO A BUSINESS
RELATIONSHIP, AND THAT THE LENDER HAS ALREADY RELIED ON THIS WAIVER IN ITS
DEALINGS WITH THE BORROWER AND THE GUARANTORS. THE BORROWER AND EACH GUARANTOR
FURTHER WARRANTS AND REPRESENTS THAT EACH HAS REVIEWED THIS WAIVER WITH ITS
LEGAL COUNSEL, AND THAT EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL
RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. THIS WAIVER IS IRREVOCABLE,
MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THIS WAIVER
SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS
OF THIS AGREEMENT, THE REVOLVING CREDIT NOTES, THE PLEDGE AGREEMENT, THE
GUARANTY AGREEMENTS AND/OR THE OTHER BORROWER DOCUMENTS. IN THE EVENT OF
LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO TRIAL BY THE
COURT.
10.21 ACKNOWLEDGEMENT. THE BORROWER ACKNOWLEDGES THAT IT HAS RECEIVED A
----------------
COPY OF THIS AGREEMENT AND EACH OF THE OTHER BORROWER DOCUMENTS, AS FULLY
EXECUTED BY THE PARTIES THERETO. THE BORROWER ACKNOWLEDGES THAT IT (A) HAS READ
THIS AGREEMENT AND THE OTHER BORROWER DOCUMENTS OR HAS CAUSED SUCH DOCUMENTS TO
BE EXAMINED BY ITS REPRESENTATIVES OR ADVISORS; (B) IS THOROUGHLY FAMILIAR WITH
THE TRANSACTIONS CONTEMPLATED IN THIS AGREEMENT AND THE OTHER BORROWER
DOCUMENTS; AND (C) HAS HAD THE OPPORTUNITY TO ASK SUCH QUESTIONS TO
REPRESENTATIVES OF THE LENDER, AND RECEIVE ANSWERS THERETO, CONCERNING THE TERMS
AND CONDITIONS OF THE TRANSACTIONS CONTEMPLATED IN THIS AGREEMENT AND THE OTHER
BORROWER DOCUMENTS AS IT DEEMS NECESSARY IN CONNECTION WITH THE ITS DECISION TO
ENTER INTO THIS AGREEMENT.
[THIS BALANCE OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
31-A
<PAGE>
IN WITNESS WHEREOF, the parties have signed this Agreement as of the
date set forth in the preamble hereto, but actually on the dates set forth
below.
Lender:
BANK OF LOUISVILLE
By /s/ Richard Bean
----------------------------------------
Richard Bean, Senior Vice President
Date: August 15, 2000
Borrower:
ORIG, LLC
By /s/ J.D. Nichols
----------------------------------------
J. D. Nichols, Manager
Date: August 15, 2000
/s/ J.D. Nichols
------------------------------------------
J. D. NICHOLS
Date: August 15, 2000
/s/ Brian Lavin
------------------------------------------
BRIAN LAVIN
Date: August 15, 2000
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<PAGE>
Annexes
Annexes A-1 - A-3 Forms of Revolving Credit Notes in favor of the
Lender
Annex B Form of Pledge Agreement
Annex C Paragraphs for Opinion of Counsel for the Borrower
and Guarantor
Annex D Form of Joinder Agreement
Annex E Form of Partnership Notice and Acknowledgement
Schedules
Schedule 1(P) Partnership Interests
Schedule 10.12 Permitted Liabilities
Schedule 10.13 Permitted Encumbrances
<PAGE>
