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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14D-1/A
TENDER OFFER STATEMENT PURSUANT TO SECTION 14(d)(1) OF THE SECURITIES EXCHANGE
ACT OF 1934
(AMENDMENT NO. 3)
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DAMSON/BIRTCHER REALTY INCOME FUND I
A PENNSYLVANIA LIMITED PARTNERSHIP
(NAME OF SUBJECT COMPANY)
GRAPE INVESTORS, LLC
A DELAWARE LIMITED LIABILITY COMPANY
ARLEN CAPITAL ADVISORS, LLC
(Bidder)
LIMITED PARTNERSHIP INTERESTS
(TITLE OF CLASS OF SECURITIES)
None
(CUSIP Number of Class of Securities)
Don Augustine, Manager
Arlen Capital Advisors, LLC
1650 Hotel Circle North - Suite 200
San Diego, California 92108
(619) 686-2002
(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications on Behalf of Bidder)
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AMENDMENT NO. 3 TO SCHEDULE 14D-1
This Amendment No. 3 amends the Offer to Purchase on Schedule 14D-1 filed
with the Securities and Exchange Commission on April 21, 1998 (the "Schedule
14D-1") by Grape Investors, LLC, a Delaware limited partnership (the
"Purchaser"), relating to the Offer by the Purchaser to purchase up to 10,000
limited partnership interests ("Interests") in Damson/Birtcher Realty Income
Fund I, a Pennsylvania Limited Partnership (the "Partnership"), for a
purchase price of $2,445 for each .01 percent interest, upon the terms and
conditions set forth in the Offer to Purchase dated April 21, 1998, as
amended by Amendment No. 1, dated May 29, 1998 and Amendment No. 2, date June
8, 1998 (collectively, the "Offer to Purchase") and the related Agreement of
Sale (which, together with any supplements or amendments, collectively
constitute the "Offer"). Capitalized terms not otherwise defined herein
shall have the meaning ascribed to them in the Schedule 14D-1 and the Offer
to Purchase.
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ITEM 1. SECURITY AND SUBJECT COMPANY
Items 1(a) and 1(b) are hereby supplemented and amended to include the
information set forth in the "Introduction" of the Supplement to the Offer to
Purchase, a copy of which is attached as Exhibit (a)(6) (the "Supplement")
is hereby supplemented and amended to include the information set forth on
page 1 of the Supplement, which information is incorporated herein by
reference.
Item 1(b) is further supplemented and amended to include the information
set forth in Section 7 ("Purpose and Effect of the Offer") of the Supplement,
which information is incorporated herein by reference.
ITEM 2. IDENTITY AND BACKGROUND
Items 2(a)-(d) and 2(g) are hereby supplemented and amended to include
the information set forth in the "Introduction," Section 11 ("Certain
Information Concerning the Purchaser"), and Section 12 ("Source and Amount of
Funds") of the Supplement, which information is incorporated herein by
reference.
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY
Item 3(b) is hereby supplemented and amended to include the information
set forth in Section 9 ("Past Contacts and Negotiations with General
Partner") of the Supplement, which information is incorporated herein by
reference.
ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
Item 4 (a) is hereby supplemented and amended to include the information
set forth in Section 12 ("Source and Amount of Funds") of the Supplement,
which information is incorporated herein by reference.
ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDER
Items 5(a)-(g) are hereby supplemented and amended to include the
information set forth in the "Introduction," Section 7 ("Purpose and Effect
of the Offer") and Section 8 ("Future Plans") of the Supplement, which
information is incorporated herein by reference.
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY
Items 6(a)-(b) are hereby supplemented and amended to include the
information set forth in the "Introduction" and Section 11 ("Certain
Information Concerning the Purchaser") of the Supplement, which information
is incorporated herein by reference.
ITEM 8. PERSONS RELATED, EMPLOYED OR TO BE COMPENSATED
Item 8 is hereby supplemented and amended to include the information set
forth in the "Introduction" and Section 15 ("Fees and Expenses") of the
Supplement, which information is incorporated herein by reference.
ITEM 10. ADDITIONAL INFORMATION
Items 10(b)-(c) are hereby supplemented and amended to include the
information set forth in the "Introduction," Section 7 ("Purpose and Effect
of the Offer") and Section 14 ("Certain Legal Matters and Regulatory
Approvals") of the Supplement, which information is incorporated herein by
reference.
Item 10(f) is hereby supplemented and amended as follows: the
information set forth in the Supplement which is attached hereto as Exhibit
(a) (6) is incorporated in its entirety herein by reference.
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ITEM 11. MATERIAL TO BE FILED AS EXHIBITS
Item 11 is hereby supplemented and amended by adding the following,
copies of which are attached hereto as exhibits:
(a)(6) Supplement to Offer to Purchase dated June 19, 1998.
(a)(7) Cover Letter, dated June 19, 1998 from Purchaser to Limited
Partners.
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.
Dated: June 19, 1998 GRAPE INVESTORS, LLC
By: Arlen Capital Advisors, LLC
its Manager
By: /s/ DON AUGUSTINE
-----------------------------
Don Augustine, Manager
ARLEN CAPITAL ADVISORS, LLC
By: /s/ DON AUGUSTINE
----------------------------
Don Augustine, Manager
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SUPPLEMENT TO THE
OFFER TO PURCHASE INTERESTS
OF
DAMSON / BIRTCHER REALTY INCOME FUND I
THIS OFFER WILL EXPIRE AT 12:00 MIDNIGHT, PACIFIC TIME,
ON JULY 8, 1998, UNLESS THE OFFER IS EXTENDED.
Grape Investors, LLC, a Delaware limited liability company ("Grape" or
the "Purchaser"), hereby supplements and amends its offer to purchase up to
10,000 Limited Partnership Interests ("Interests") in Damson / Birtcher
Realty Income Fund I, a Delaware Limited Partnership (the "Partnership").
Included in the definition of "Interests" are any and all rights associated
with Seller's Interest, including, without limitation, any rights of such
Seller in any proceeds from the settlement of any class action lawsuit by the
Limited Partners of the Partnership, which lawsuit relates to the Partnership
or its General Partner. If any lawsuit is settled after the Expiration Date,
but before the Purchaser has issued payment for Seller's Interest, then
Purchaser will be entitled to receive the proceeds from such settlement;
Seller will not receive additional consideration for such proceeds; and
Seller will not be able to withdraw its tender offer of Interests after the
Expiration Date. SEE SECTION 4- WITHDRAWAL RIGHTS.
Grape will pay a purchase price of $2,445 for each .01 percent interest
in the Partnership, or $250 per Interest (per $1,000 originally invested in
the Partnership) net to the seller in cash, without interest, less the amount
of any distributions declared or paid from any source by the Partnership with
respect to the Interests after February 28, 1998 (without regard to the
record date), whether such distributions are classified as a return on, or a
return of, capital ("Purchase Price"), upon the terms and subject to the
conditions set forth in the Offer to Purchase dated April 21, 1998, as
amended by Amendment No. 1 dated May 29, 1998, and Amendment No. 2 dated June
8, 1998 (collectively, the "Offer to Purchase"), this Supplement
("Supplement") and in the Agreement of Sale, as each may be supplemented or
amended from time to time (which together constitute the "Offer").
Capitalized terms used but not otherwise defined in this Supplement shall
have the meanings ascribed to them in the Offer to Purchase.
INTRODUCTION
The first paragraph of the "Special Factors" in the "Introduction" of the
Offer to Purchase is hereby supplemented and amended as follows:
- The Partnership's Annual Report for 1997 filed with the Securities and
Exchange Commission ("SEC") on Form 10-K filed with the SEC ("10-K")
reports net assets in liquidation as of December 31, 1997 of
$32,026,000 or $3,296 per Interest ($1,000 original investment). The
Partnership filed a Form 14D-9 on May 6, 1998 which was amended with a
Form 14D-9/A filed on May 19, 1998 (collectively, the "14D-9") in
which it disclosed that it had accepted an offer on April 30, 1998 to
purchase all of the Partnership's Properties for $39,140,000 (the
"Pending Purchase"), subject to the negotiation of a definitive
purchase and sale agreement. The Partnership stated , "Although there
can be no assurance that the proposed sale of the properties will be
completed, if the sale is completed at the stated price, the limited
partners will receive total aggregate sales proceeds of $350 per
$1,000 originally invested in the Partnership."
The seventh paragraph of the "Special Factors" in the "Introduction" of the
Offer to Purchase is hereby supplemented and amended as follows:
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- If the Purchaser is successful in purchasing more than 4 percent of
the outstanding Interests, then, when added to Purchaser's existing
Interests, Purchaser will own more than 10 percent of the outstanding
Interests, which will put Purchaser a position to exert a strong
influence upon the General Partner and the operation of the
Partnership. Purchaser intends to actively encourage the General
Partner to pursue an expeditious negotiation of the purchase and sale
agreement for the Pending Purchase and closing of the sale of the
Partnership Properties, and if the General Partner does not execute a
purchase agreement and complete the closing in a timely manner,
Purchaser will consider taking appropriate action which may include
attempting to replace the General Partner, encouraging a sale of some
or all of the Partnership assets to another purchaser, and potentially
dissolving the Partnership, if such a sale of assets requires a
dissolution of the Partnership in accordance with the Partnership
Agreement. (See Section 8 - "Future Plans")
The paragraph titled "Purchase Price" in the "Introduction" of the Offer is
hereby supplemented and amended as follows:
PURCHASE PRICE
When you consider the illiquid market (which is essentially nothing more
than a "matching service" that attempts to bring buyers and sellers
together), the secondary cost of selling commissions, payment of the
transfer fee, your annual cost of tax reporting, and the cost of a trustee
if Interests are held in an IRA or pension plan, the sale of your Interests
for $2,445 for each .01 percent interest in the Partnership, or $350 per
Interest (per $1,000 originally invested in the Partnership), rather than
the $350 per Interest that the General Partner projects "if the sale is
completed at the stated price." You may prefer to receive cash from our
Offer rather than delaying to see whether the General Partner is able to
negotiate a definitive purchase and sale agreement, complete its due
diligence, and close the Proposed Purchase transaction.
The paragraph titled "No Transfer Fee" in the "Introduction of the Offer is
hereby supplemented and amended to read as follows:
NO TRANSFER FEE
Grape will be responsible for paying the $25 transfer fee, despite the
General Partner's letter which implied that you would have to pay the
transfer fee.
The last sentence of the fourth full paragraph in the "Introduction" of the
Offer is hereby supplemented and amended to read as follows:
Purchaser intends to actively encourage the General Partner to pursue an
expeditious negotiation of the purchase and sale agreement for the Pending
Purchase and closing of the sale of the Partnership Properties, and if the
General Partner does not execute a purchase agreement and complete the closing
in a timely manner, Purchaser will consider taking appropriate action which may
include attempting to replace the General Partner, encouraging a sale of some or
all of the Partnership assets to another purchaser, and potentially dissolving
the Partnership, if such a sale of assets requires a dissolution of the
Partnership in accordance with the Partnership Agreement. (See Section 8 -
"Future Plans")
The fifth full paragraph in the "Introduction" of the Offer is hereby
supplemented and amended to read as follows:
The Offer is not conditioned upon the valid tender of any minimum number of the
Interests. If more than 10,000 Interests are tendered and not withdrawn, the
Purchaser will accept up to 10,000 of the tendered Interests on a pro rata
basis, subject to the terms and conditions herein. See "Tender Offer--Section
13. Certain Conditions of the Offer." The Purchaser expressly reserves the
right, in its sole discretion and for any reason to waive any or all of the
conditions of the Offer, although the Purchaser does not presently intend to do
so.
1. SECTION 1 - TERMS OF THE OFFER.
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Section 1 of the Offer to Purchase is hereby supplemented and amended to
amend and restate the first paragraph in Section 1 as follows:
The term "Expiration Date" shall mean 12:00 midnight, Pacific Time, on June
30, 1998 unless and until the Purchaser shall have extended the period of time
for which the Offer is open, in which event the term "Expiration Date" shall
mean the latest date on which the Offer, as so extended by the Purchaser, shall
expire.
Section 1 of the Offer to Purchase is hereby supplemented and amended to
amend and restate the second paragraph in Section 1 as follows:
The Offer is conditioned on satisfaction of certain conditions. See
"Tender Offer--Section 13. Certain Conditions of the Offer," which sets forth in
full the conditions of the Offer. The Purchaser will not be required to accept
for payment or pay for any Interests tendered unless, on or before the
Expiration Date, Purchaser shall have received (or waived):
(i) from the Seller, a properly completed and duly executed Agreement
of Sale; and
(ii) from the Partnership, confirmation to Purchaser's reasonable
satisfaction that, upon purchase of the Interests: (a) the
Purchaser will be entitled to receive all distributions,
from any source, from the Partnership after February 28,
1998; and (b) the Partnership will change Seller's address
to Purchaser's address.
2. SECTION 2 - PRORATION; ACCEPTANCE FOR PAYMENT AND PAYMENT FOR UNITS.
Section 2 of the Offer to Purchase is hereby supplemented and amended to
amend and restate the second paragraph in Section 2 as follows:
If more than 10,000 Interests are validly tendered and not properly
withdrawn on or prior to the Expiration Date, the Purchaser, upon the terms and
subject to the conditions of the Offer, will accept for payment 10,000Interests
so tendered, on a pro rata basis.
7. SECTION 7 - PURPOSE AND EFFECTS OF THE OFFER
Section 7 of the Offer to Purchase is hereby supplemented and amended to
amend and restate the entire subsection titled "Purposes of the Offer" in
Section 7 as follows:
PURPOSE OF THE OFFER. The Purchaser is making the Offer for investment
purposes with a view towards making a profit. The Purchaser's intent is to
acquire the Interests at a discount to the value that the Purchaser might
ultimately realize from owning the Interests. No independent person has been
retained by Grape to evaluate or render any opinion with respect to the fairness
of the Purchase Price and no representation is made as to such fairness.
The Purchaser established the Purchase Price based on its own independent
subjective analysis of the Partnership, which included a subjective valuation of
the properties and other assets owned by the Partnership and by a subjective
determination of the financial condition of the Partnership. The Purchaser
derived the Purchase Price per Interest from its analysis of financial
information which was available from information in the Annual Report on Form
10-K filed with the SEC ("10-K") and the Quarterly Report on Form 10-Q ("10-Q").
The Partnership's 1997 Annual Report Form 10-K filed with the SEC reports
net assets in liquidation as of December 31, 1997 of $32,026,000 or $3,296 per
Interest ($1,000 original investment). The Partnership's Form 14D-9 filed on
May 6, 1998 which was amended with a Form 14D-9/A filed on May 19, 1998
(collectively, the "14D-9") disclosed that it had accepted an offer on April 30,
1998 to purchase all of the Partnership's Properties
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for $39,140,000 (the "Pending Purchase"), subject to, among other things,
the negotiation of a definitive purchase and sale agreement.
In its letter to the Limited Partners dated May 6, 1998, which was filed as
an exhibit to the 14D-9, the General Partner stated the following with respect
to the Pending Purchase and Grape's Offer dated April 21, 1998:
- "The purchase offer is subject to certain CUSTOMARY contingencies,
including due diligence review by the purchaser and negotiation of a
definitive purchase and sale agreement." (ITALICS ADDED).
- "The General Partner's estimates are based upon a variety of assumptions
that are subject to significant uncertainties and contingencies. Such
estimates are inherently imprecise and there can be no assurance they can
be realized. There can be no assurance as to when or at what price
properties will be sold.
- In the event the properties are not sold pursuant to the purchase offer,
the timing of property sales and distributions of sale proceeds are and
will be determined solely by the General Partner. Accordingly, limited
partners who do not accept the Offer may not receive any distribution of
sale proceeds for a significant period of time following the Offer.
- The General Partner's estimate of sales proceeds from the purchase offer
does not take into account Partnership cash reserves, operating expenses or
net income or net loss of the Partnership for any period prior to the time
the remaining properties are sold, which could affect the amount of sales
proceeds available for distribution. Therefore, the actual proceeds to be
received by the limited partners may vary materially, up or down, from the
estimate."
In determining the Purchase Price to be offered for the Interests, the
Purchaser considered both the "net assets in liquidation" value disclosed in
the 1997 10-K, and the Pending Purchase price disclosed in the 14D-9,
together with a subjective analysis of the likelihood of whether the Pending
Purchase will actually close when a purchase and sale agreement has not yet
been negotiated. In this subjective analysis, Purchaser considered several
factors, including: (i) the illiquid nature of the investment (due to its
trading on an informal market which is essentially a "matching service");
(ii) despite the Partnership's "acceptance" of an offer to purchase the
Partnership's properties, Purchaser's belief in the uncertainty as to whether
the Partnership will actually be able to negotiate a definitive purchase and
sale agreement; (iii) whether, upon such purchaser's completion of its due
diligence on the properties, the amount to be paid for the properties (and
therefore, the amount to be distributed to Limited Partners) will be as high
as the Partnership is currently projecting; and (iv) various other
uncertainties regarding the Proposed Purchase of the Partnership's
properties.
It is Purchaser's intention to acquire the Interests at a Purchase Price
which will allow Purchaser to make a profit from its ownership of the Interests.
Based upon this intention, and the subjective factors listed above, the
Purchaser believes that the Purchase Price for the Interests should be $350 per
Interest (per $1,000 originally invested in the Partnership), or $2,445 per .01
percent interest in the Partnership, which represents a discount of 14.6 percent
to the Partnership's estimate of its "net assets in liquidation" value disclosed
in the 1997 10-K, and which represents a discount of 29 percent to the General
Partner's estimate of proceeds to the Limited Partners of $350 per Interest.
Section 7 of the Offer to Purchase is hereby supplemented and amended to
amend and restate the paragraph entitled "Certain Restrictions on Transfer of
Interests" in Section 7 as follows:
CERTAIN RESTRICTIONS ON TRANSFER OF INTERESTS. The Partnership Agreement
restricts the transfer of Interests if a transfer, when considered with all
other transfers during the same applicable twelve-month period, would cause a
termination of the Partnership, for federal or state income tax purposes.
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Section 7 of the Offer to Purchase is hereby supplemented and amended to
amend and restate the last sentence in the paragraph entitled "Effect of Sales
Through 'Matching Service' and Price Range of the Interests" in Section 7 as
follows:
Purchaser intends to actively encourage the General Partner to pursue an
expeditious negotiation of the purchase and sale agreement for the Pending
Purchase and closing of the sale of the Partnership Properties, and if the
General Partner does not execute a purchase agreement and complete the
closing in a timely manner, Purchaser will consider taking appropriate action
which may include attempting to replace the General Partner, encouraging a
sale of some or all of the Partnership assets to another purchaser, and
potentially dissolving the Partnership, if such a sale of assets requires a
dissolution of the Partnership in accordance with the Partnership Agreement.
(See Section 8 -"Future Plans").
8. SECTION 8 - "FUTURE PLANS"
Section 8 of the Offer to Purchase is hereby supplemented and amended to
amend and restate the second paragraph in Section 8 as follows:
Purchaser intends to actively encourage the General Partner to pursue an
expeditious negotiation of the purchase and sale agreement for the Pending
Purchase and closing of the sale of the Partnership Properties, and if the
General Partner does not execute a purchase agreement and complete the
closing in a timely manner, Purchaser will consider taking appropriate
action which may include attempting to replace the General Partner,
encouraging a sale of some or all of the Partnership assets to another
purchaser, and potentially dissolving the Partnership, if such a sale of
assets requires a dissolution of the Partnership in accordance with the
Partnership Agreement.
9. SECTION 9 - PAST CONTACTS AND NEGOTIATIONS WITH THE GENERAL PARTNER
Section 9 of the Offer to Purchase is hereby supplemented and amended to
amend and restate the entire section following the third paragraph in Section 9
as follows:
On August 28, 1996, Purchaser filed an action entitled GRAPE INVESTORS,
LLC ET AL. V. DAMSON/BIRTCHER PARTNERS, ET AL., in the Superior Court of the
State of California, in the County of Orange, Case No. 768309 (the "Action").
On August 29, 1996, counsel for the Partnership, after a discussion with
counsel for the Purchaser, had sent to him a courtesy copy of the complaint
and motion for preliminary injunction and supporting papers and documents
seeking to have the Interests acquired pursuant to the tender offer
transferred to Purchaser. From September 5, 1996 to September 24, 1996,
correspondence and conversations took place between counsel for the Purchaser
and counsel for the Partnership in an attempt to resolve the Action. On
September 24, 1996, the Action was settled, and Partnership agreed that the
Purchaser would be admitted as an assignee (but not as a substituted limited
partner) of the Interests it had acquired in its tender offer in the
Partnership. Various conversations and correspondence between counsel for
the Partnership and counsel for the Purchaser took place between September
24, 1996 and March, 1997, attempting to document the terms of the Settlement
Agreement. In March 1997, the Settlement Agreement was finally documented
and the only substantive term of the Settlement Agreement provides that all
Interests which Grape submitted to the Partnership's transfer agent would be
assigned immediately and the address of beneficial assignee of record would
be changed to Grape's address. Grape was admitted as an assignee but not a
substitute limited partner which means, as those terms are defined in the
Partnership Agreement, that Grape is entitled to the same economic rights of
ownership in the Partnership, but not to certain other rights such as a right
to inspect the records, or certain voting rights.
On October 3, 1996, Purchaser sent a letter to the Partnership
indicating that they had a potential buyer for the Partnership's property,
which letter was not responded to. No potential purchase price was included
in such letter, and as the Partnership did not respond to such communication
from Purchaser, no further information was obtained by Partnership regarding
the details of any potential offer to purchase.
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On October 21, 1996, Purchaser commenced a second limited tender offer to
buy an additional 2 percent of the interest in the Partnership at a purchase
price of $1075 per .01 percent interest in the Partnership, (offer was
communicated by letter from Purchaser to the Partnership's General Partner),
which offer expired on November 22, 1996.
On January 23, 1997, counsel for the Purchaser forwarded a letter to
counsel for the Partnership requesting certain information regarding
distributions and the method of payment to Purchaser. Telephone conversations
between those parties also took place regarding that matter and on January 26,
1997, counsel for the Partnership confirmed the method in which distributions
were to be made to Purchaser.
On May 13, 1997, counsel for the Purchaser by letter to counsel for the
Partnership requested that the Partnership respond to letter from Argent
Ventures, LLC, which response was received. On May 16, 1997, counsel for the
Purchaser requested that Purchaser be given access to appraisals of Partnership
properties; a follow-up letter on May 28, 1997 was sent to counsel for the
Partnership by counsel for the Purchaser requesting such information. On June
4, 1997, counsel for the Purchaser furnished to counsel for the Purchaser, not
the actual appraisals, but only a list of the appraised values and the dates of
the appraisals, which were dated January 1, 1993. This information was not used
by Purchaser for any purpose, since it did not give recent information on the
properties of the Partnerships.
On June 18, 1997, Purchaser commenced a tender offer registered for 20,000
interests at a purchase price of $1,467 for each .01 percent interest in the
Partnership and amended such tender offer by amendment filed on August 8, 1997.
On October 2, 1997, Purchaser filed an amendment to increase the purchase price
to $1,956 for each .01 percent interest in the Partnership. The Schedule 14D-1
and amendments, and Offer to Purchase are on file with the SEC. Purchaser
acquired a total additional .93 percent interest in the Partnership in the
tender offer filed pursuant to Schedule 14D-1, making the total interest of
Purchaser in the Partnership approximately 5.29 percent.
On December 30, 1997, Purchaser sent a letter to General Partner requesting
a meeting to review, among other things, the progress of the Partnership toward
selling the Partnership properties, and indicating that if Purchaser was not
satisfied with the progress being made toward immediate liquidation of the
Partnership, that Purchaser intended to contact the other Limited Partners to
assemble a group of Limited Partners with the purpose of calling a meeting to
vote on the replacement of the General Partner to pursue a sale of the
Partnership properties through a controlled auction. On January 9, 1998,
Purchaser received a response from the General Partner confirming a meeting on
January 28, 1998.
On January 28, 1998, Purchaser met with General Partner to discuss the
issues raised in the Purchaser's December 30, 1997 letter. During the meeting,
the General Partner indicated that it intended to be more communicative in
future public filings with regard to the marketing efforts being made toward a
potential sale of the Partnership properties. The General Partner offered to
disclose information regarding its marketing efforts and appraisals on the
properties to Purchaser if Purchaser agreed to enter into a standstill agreement
which would prohibit Purchaser from acquiring additional Interests in the
Partnership. Purchaser declined to enter into the standstill agreement with
General Partner.
On April 21, 1998, Purchaser filed with the SEC a tender offer pursuant to
Schedule 14D-1 for limited partnership interests in Damson Birtcher Realty Fund
II, an affiliate of the Partnership.
10. SECTION 10 - CERTAIN INFORMATION CONCERNING THE BUSINESS OF THE PARTNERSHIP
AND RELATED MATTERS
Section 10 of the Offer to Purchase is hereby supplemented and amended as
follows:
On May 6, 1998, the Partnership filed a Schedule 14D-9 in response to
Purchaser's tender offer to disclose that on April 30, 1998, the Partnership had
accepted an offer to purchase all of the Partnership's Properties for
$39,140,000 (the "Pending Purchase"). According to the Partnership, the
accepted offer anticipates closing in
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approximately 60-90 days, and is subject to certain "customary
contingencies", including the negotiation of a definitive purchase and sale
agreement, and due diligence review. The Partnership stated , "Although
there can be no assurance that the proposed sale of the properties will be
completed, if the sale is completed at the stated price, the limited partners
will receive total aggregate sales proceeds of $350 per $1,000 originally
invested in the Partnership."
11. SECTION 11 - CERTAIN INFORMATION CONCERNING THE PURCHASER
Section 11 of the Offer to Purchase is hereby supplemented and amended to
amend and restate the first sentence in the first paragraph of Section 11 as
follows:
The Purchaser is a Delaware Limited Liability Company which was organized
on June 12, 1996 for the purpose of acquiring the Interests in the Partnership,
pursuant to the Offer and pursuant to previous limited tender offers and the
previous tender offer filed pursuant to Schedule 14D-1 as disclosed in Section
9.
12. SECTION 12 - SOURCE AND AMOUNTS OF FUNDS
Section 12 of the Offer to Purchase is hereby supplemented and amended to
amend and restate Section 12 in its entirety as follows:
The Purchaser expects that approximately $2,500,000 (exclusive of fees and
expenses) will be required to purchase 10,000 Interests (approximately 10
percent of the outstanding Interests), if tendered. The Purchaser will obtain
all of those funds from binding commitments for capital contributions from its
members. Each member has a net worth substantially in excess of its individual
commitment for its percentage of the total $2,500,000 (exclusive of fees and
expenses) required to purchase the 10,000 Interests. Purchaser has met all of
its obligations to purchase in previous limited tender offers and tender offers
filed pursuant to Schedule 14D-1 disclosed in Section 9 by the same binding
commitments for capital contributions from the same members.
13. SECTION 13 - CERTAIN CONDITIONS OF THE OFFER
Section 13 of the Offer to Purchase is hereby supplemented and amended to
amend and restate all paragraphs except the last paragraph of Section 13 as
follows:
The Purchaser will not be required to accept for payment or pay for any
Interests tendered unless, on or before the Expiration Date, Purchaser shall
have received (or waived):
(i) from the Seller, a properly completed and duly executed Agreement
of Sale; and
(ii) from the Partnership, confirmation to Purchaser's reasonable
satisfaction that, upon purchase of the Interests: (a) the
Purchaser will be entitled to receive all distributions, from any
source, from the Partnership after February 28, 1998; and (b)
the Partnership will change Seller's address to Purchaser's
address.
Furthermore, the Purchaser will not be required to accept for payment or
pay for any Interests tendered if, on or after the date of the Offer and before
the Expiration Date, Purchaser a preliminary or permanent injunction or other
order of any federal or state court, government or governmental authority or
agency shall have been issued and shall remain in effect which (i) makes
illegal, delays or otherwise directly or indirectly restrains or prohibits the
making of the Offer or the acceptance for payment of any Interests by the
Purchasers, (ii) requires divestiture by the Purchasers of any Interests, (iv)
causes any material diminution of the benefits to be derived by the Purchasers
as a result of the transactions contemplated by the Offer, or (v) might
materially adversely affect the business, properties, assets, liabilities,
financial condition, operations, results of operations or prospects of the
Purchasers or the Partnership.
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[LETTERHEAD]
June 19, 1997
Mr. a;dkfs Investor ID#: _________
Mrs. a;dlka
Address
Address;
City, Town
a;ldkf
Dear Limited Partner:
Grape Investors, LLC ("Grape") wishes to inform you that it has supplemented
and amended its offer to purchase Damson Birtcher Realty Income Fund I
Interests dated April 21, 1998 ("Original Offer") in response to customary
review by the Securities and Exchange Commission ("SEC"). A copy of the
Supplement to the Offer to Purchase dated June 19, 1998 ("Supplement") is
enclosed with this letter. Pursuant to SEC requirements, Grape's offer has
been extended to July 8, 1998 ("Expiration Date"). GRAPE'S PURCHASE PRICE
PER INTEREST HAS NOT CHANGED.
Payment for Interests tendered pursuant to the Original Offer or pursuant to
the Supplement dated June 18, 1998 will be made within 10 business days
following the Expiration Date provided Grape has received from you a properly
completed and duly executed Agreement of Sale and assurances from the General
Partner that the Seller's address will be changed to the Purchaser's address
pursuant to the terms of the Offer.
Grape is offering to pay a purchase price of $2,445 for each .01 percent
interest or $250 per Interest (per $1,000 originally invested in the
Partnership) in Damson Birtcher Realty Income Fund I (the "Partnership").
---------------------------------------------------------------
According to the records provided to us by the General Partner,
you currently own [XXX]% of the outstanding Interests in
DAMSON BIRTCHER REALTY INCOME FUND I
We are offering to purchase Interests for
$[XXX] CASH
---------------------------------------------------------------
PLEASE REVIEW CAREFULLY THE "SPECIAL FACTORS" SET FORTH ON THE REVERSE SIDE OF
THIS LETTER AND THE SUPPLEMENT ENCLOSED WITH THIS LETTER.
NO ADDITIONAL PAPERWORK IS REQUIRED FOR THOSE LIMITED PARTNERS WHO HAVE ALREADY
TENDERED THEIR INTERESTS TO GRAPE AND WISH TO COMPLETE THE TRANSACTION.
If you wish to tender some or all of your Interests and have not already done
so, all you need to do is complete the Agreement of Sale in accordance with
the instructions and return it to Grape in the pre-addressed return envelope.
Please call us at (800) 891-4105 if you have any questions. Thank you for
your consideration of our offer.
GRAPE INVESTORS, LLC
<PAGE>
BEFORE SELLING YOUR INTERESTS TO GRAPE, PLEASE CONSIDER THE FOLLOWING SPECIAL
FACTORS:
- The Partnership's Annual Report for 1997 filed with the Securities and
Exchange Commission ("SEC") on Form 10-K filed with the SEC ("10-K")
reports net assets in liquidation as of December 31, 1997 of
$32,026,000 or $3,296 per Interest ($1,000 original investment). The
Partnership filed a Form 14D-9 on May 6, 1998 which was amended with a
Form 14D-9/A filed on May 19, 1998 (collectively, the "14D-9") in
which it disclosed that it had accepted an offer on April 30, 1998 to
purchase all of the Partnership's Properties for $39,140,000 (the
"Pending Purchase"), subject to the negotiation of a definitive
purchase and sale agreement. The Partnership stated , "Although there
can be no assurance that the proposed sale of the properties will be
completed, if the sale is completed at the stated price, the limited
partners will receive total aggregate sales proceeds of $350 per
$1,000 originally invested in the Partnership."
- No independent person has been retained to evaluate or render any
opinion with respect to the fairness of Grape's offer and no
representation is made as to such fairness or other measures of value
that may be relevant to the Limited Partners. We urge you to consult
your own financial and tax advisors in connection with Grape's offer.
- Although Grape cannot predict the future value of the Partnership
assets on a per Interest basis, the purchase price could differ
significantly from the net proceeds that would be realized from a
current sale of the Properties owned by the Partnership or from that
which may be realized upon future liquidation of the Partnership.
- Grape is making the offer with a view to making a profit.
Accordingly, there is a conflict between Grape's desire to acquire
your Interests at a low price and your desire to sell your Interests
at a high price. Grape's intent is to acquire the Interests at a
discount to the value Grape might ultimately realize from owning the
Interests.
- The tax consequences of the Offer to a particular Limited Partner may
be different from those of other Limited Partners and we urge you to
consult your own tax advisor in connection with the Offer.
- Limited Partners who sell their Interests will be giving up the
opportunity to participate in any future potential benefits
represented by ownership of Interests, including the right to
participate in any future distribution of cash or property.
- If the Purchaser is successful in purchasing more than 4 percent of
the outstanding Interests, then, when added to Purchaser's existing
Interests, Purchaser will own more than 10 percent of the outstanding
Interests, which will put Purchaser a position to exert a strong
influence upon the General Partner and the operation of the
Partnership. Purchaser intends to actively encourage the General
Partner to pursue an expeditious negotiation of the purchase and sale
agreement for the Pending Purchase and closing of the sale of the
Partnership Properties, and if the General Partner does not execute a
purchase agreement and complete the closing in a timely manner,
Purchaser will consider taking appropriate action which may include
attempting to replace the General Partner, encouraging a sale of some
or all of the Partnership assets to another purchaser, and potentially
dissolving the Partnership, if such a sale of assets requires a
dissolution of the Partnership in accordance with the Partnership
Agreement.
<PAGE>
AGREEMENT OF SALE
The undersigned Limited Partner (the "Seller") does hereby sell, assign,
transfer, convey and deliver (the "Sale") to Grape Investors, LLC, a Delaware
limited liability company ("Grape" or the "Purchaser"), all of the Seller's
right, title and interest in "Interests" (as defined in the Partnership
Agreement) of Damson / Birtcher Realty Income Fund I, a Pennsylvania limited
partnership (the "Partnership") being sold pursuant to this Agreement of Sale
("Agreement") and the Offer dated April 21, 1998 (the "Offer") for a
purchase price of $2,445 for each .01 percent interest in the Partnership,
less the amount of any distributions declared or paid from any source by the
Partnership with respect to the Interests after February 28, 1998, without
regard to the record date or whether such distributions are classified as a
return on, or a return of, capital. Included in the definition of
"Interests" are any proceeds which any Seller may receive after February 28,
1998 from the settlement of any class action lawsuit by the Limited Partners
of the Partnership, which lawsuit relates to the Partnership or its General
Partner.
PAYMENT FOR SUCH PURCHASE WILL BE MADE WITHIN 10 BUSINESS DAYS FOLLOWING THE
"EXPIRATION DATE" SET FORTH IN THE OFFER, PROVIDED GRAPE HAS RECEIVED AND
ACCEPTED A PROPERLY COMPLETED AND DULY EXECUTED AGREEMENT OF SALE AND
RECEIVED ASSURANCES FROM THE GENERAL PARTNER THAT THE SELLER'S ADDRESS WILL
BE CHANGED TO THE PURCHASER'S ADDRESS PURSUANT TO THE TERMS AND CONDITIONS OF
THE OFFER. IF MORE THAN 10,000 INTERESTS ARE TENDERED TO GRAPE PRIOR TO
GRAPE'S PAYMENT FOR SUCH INTERESTS, GRAPE WILL ACCEPT UP TO 10,000 INTERESTS
ON A PRO RATA BASIS WITH APPROPRIATE ADJUSTMENTS AS GRAPE DEEMS NECESSARY.
The Seller hereby represents and warrants to the Purchaser that the Seller
owns such Interests and has full power and authority to validly sell, assign,
transfer, convey, and deliver to the Purchaser the Interests, and that when
any such Interests are accepted for payment by the Purchaser, the Purchaser
will acquire good, marketable and unencumbered title thereto, free and clear
of all options, liens, restrictions, charges, encumbrances, conditional sales
agreements, or other obligations relating to the sale or transfer thereof,
and such Interests will not be subject to any adverse claim. The Seller
represents and warrants that the Seller is a "United States person" as
defined in Section 7701(a)(30) of the Internal Revenue Code of 1986, as
amended, or if the Seller is not a United States person, the Seller does not
own beneficially or of record more than 5 percent of the outstanding
Interests.
Such Sale shall include, without limitation, all rights in, and claims to,
any Partnership profits and losses, cash distributions, voting rights and
other benefits of any nature whatsoever, distributable or allocable to such
Interests under the Partnership's Partnership Agreement. Upon the execution
of this Agreement by the Seller, Purchaser shall have the right to receive
all benefits and cash distributions and otherwise exercise all rights of
beneficial ownership of such Interests.
Seller, upon execution of this Agreement and the mailing of payment by the
Purchaser to Seller, hereby irrevocably constitutes and appoints Purchaser as
its true and lawful agent and attorney-in-fact with respect to Interests with
full power of substitution. This power of attorney is an irrevocable power,
coupled with an interest of the Seller to Purchaser, to (i) execute, swear
to, acknowledge, and file any document relating to the assignment of the
Interests on the books of the Partnership that are maintained with respect to
the Interests and on the Partnership's books maintained by the General
Partner of the Partnership, or amend the books and records of the Partnership
as necessary or appropriate for the assignment of the Interests, (ii) vote or
act in such manner as any such attorney-in-fact shall, in its sole
discretion, deem proper with respect to the Interests, (iii) deliver the
Interests and transfer ownership of the Interests on the books of the
Partnership that are maintained with respect to the Interests and on the
Partnership's books, maintained by the Partnership's General Partner, (iv)
endorse on the Seller's behalf any and all payments received by Purchaser
from the Partnership for any period on or after February 28, 1998, which are
made payable to the Seller, in favor of Purchaser, (v) execute on the
Seller's behalf, any applications for transfer and any distribution
agreements required by the National Association of Securities Dealers, Inc.'s
Notice to Members 96-14 to give effect to the transaction contemplated by
this Agreement, and (vi) receive all distributions and amend the books and
records of the Partnership, including Seller's address and records, to direct
all distributions to Purchaser as of the effective date of this Agreement.
Purchaser shall not be required to post bond of any nature in connection with
this power of attorney.
SELLER DOES HEREBY DIRECT AND INSTRUCT THE PARTNERSHIP AND THE GENERAL
PARTNER IMMEDIATELY UPON THEIR RECEIPT OF THIS AGREEMENT OF SALE (i) TO AMEND
THE BOOKS AND RECORDS OF THE PARTNERSHIP TO CHANGE THE SELLER'S ADDRESS OF
RECORD FOR PURPOSES OF MAILING DISTRIBUTIONS TO GRAPE INVESTORS, LLC, C/O
ARLEN CAPITAL, 1650 HOTEL CIRCLE NORTH, SUITE 200, SAN DIEGO, CALIFORNIA
92108, AND; (ii) TO FORWARD ALL DISTRIBUTIONS AND ALL OTHER INFORMATION
RELATING THEREIN TO BE RECEIVED BY SELLER TO GRAPE INVESTORS, LLC TO THE
ADDRESS SET FORTH IN (i) ABOVE.
Seller does hereby release and discharge the General Partner and their
officers, shareholders, employees and agents from all actions, causes of
actions, claims or demands Seller has, or may have, against the General
Partner that result from the General Partner's reliance on this Agreement or
any of the terms and conditions contained herein. Seller does hereby
indemnify and hold harmless the Partnership from and against all claims,
demands, damages, losses, obligations and responsibilities arising, directly
or indirectly, out of a breach of any one or more representations and
warranties set forth herein.
All authority herein conferred or agreed to be conferred shall survive the
death or incapacity of the Seller and any obligations of the Seller shall be
binding upon the heirs, personal representatives, successors and assigns of
the undersigned. THIS AGREEMENT IS IRREVOCABLE AND MAY NOT BE WITHDRAWN
FOLLOWING THE EXPIRATION DATE, BUT MAY BE WITHDRAWN PRIOR THERETO. Upon
request, the Seller will execute and deliver any additional documents deemed
by the Purchaser or the Partnership to be necessary or desirable to complete
the assignment, transfer and purchase of such Interests.
The Seller hereby certifies, under penalties of perjury, that (i) the tax
identification number shown on this form is the Seller's correct Taxpayer
Identification Number; and (ii) Seller is not subject to backup withholding
either because Seller has not been notified by the Internal Revenue Service
(the "IRS") that Seller is subject to backup withholding as a result of
failure to report all interest or dividends, or the IRS has notified Seller
that Seller is no longer subject to backup withholding.
The Seller hereby also certifies, under penalties of perjury, that the
Seller, if an individual, is not a nonresident alien for purposes of U.S.
income taxation, and if not an individual, is not a foreign corporation,
foreign partnership, foreign trust, or foreign estate (as those terms are
defined in the Internal Revenue Code and Income Tax Regulations). The Seller
understands that this certification may be disclosed to the IRS by the
Purchaser and that any false statements contained herein could be punished by
fine, imprisonment, or both.
The undersigned recognizes that, if proration is required pursuant to the
terms of the Offer, the Purchaser will accept for payment from among those
Interests validly tendered on or prior to the Expiration Date and not
properly withdrawn, the maximum number of Interests permitted pursuant to the
Offer on a pro rata basis. The undersigned understands that a tender of
Interests to the Purchaser will constitute a binding agreement between the
<PAGE>
undersigned and the Purchaser upon the terms and subject to the conditions of
the Offer. The undersigned recognizes that under certain circumstances set
forth in the Offer to Purchase, the Purchaser may not be required to accept
for payment any of the Interests tendered hereby. In such event, the
undersigned understands that any Agreement for Interests not accepted for
payment will be destroyed by the Purchaser.
This Agreement shall be governed by and construed in accordance with the laws
of the State of California. Seller waives any claim that California or the
Southern District of California is an inconvenient forum, and waives any
right to trial by jury.
The undersigned Seller (including any joint owner(s)) owns and wishes to
assign the number of Interests set forth below. By its own or its Authorized
Signatory's signature below, the Seller hereby assigns its entire right,
title and interest in the Interests to the Purchaser.
By executing this Agreement the Seller hereby acknowledges to the General
Partner that the Seller desires to assign the Seller's Interests referenced
herein and hereby directs the General Partner to take all such actions as are
necessary to accomplish such assignment, and appoints the General Partner the
agent and attorney-in-fact of the Limited Partner, to execute, swear to,
acknowledge and file any document or amend the books and records of the
Partnership as necessary or appropriate for the assignment or the withdrawal
of the Limited Partner.
IN WITNESS WHEREOF the Limited Partner has executed, or caused its Authorized
Signatory to execute, this Agreement.
Print Name of Limited Partner (as it appears on the
investment)
------------------------------------------------------------------
Print Name and Capacity of Authorized Signatory (if other than
above)
-----------------------------------------------------------------------
- -------------------------------- -----------------------------
Seller's Signature Joint Seller's Signature
MEDALLION GUARANTEE MEDALLION GUARANTEE
(Medallion Guarantee for EACH (Medallion Guarantee for EACH
Seller's signature) Seller's signature)
<TABLE>
<S><C>
ACCEPTED:
---------
Home Telephone Number PURCHASER/GRAPE INVESTORS, LLC
- ------------------------------------
Office Telephone Number By: Its Manager, Arlen Capital, LLC
- ------------------------------------
Mailing Address
- ------------------------------------
City, State, Zip Code By:
- ------------------------------------ ----------------------------------
State of Residence Authorized Representative
- ------------------------------------
Social Security/Tax ID No.
- ------------------------------------
Date YOU MUST MAIL EXECUTED ORIGINAL TO PURCHASER:
- ------------------------------------
$2,445.00 Sales Price for each .01 percent interest Grape Investors, LLC
- ------------------------------------ in the Partnership 1650 Hotel Circle North, Suite 200
San Diego, California 92108
Percent Interest to be Sold OR
-----------
/ / Check here if you wish to sell ALL of your Interests
PLEASE CALL US AT (800) 891-4105 IF YOU HAVE ANY QUESTIONS REGARDING THE SALE OF YOUR INTERESTS.
- ----------------------------------------------------------------------------------------------------------------------------------
INSTRUCTIONS TO COMPLETE AGREEMENT OF SALE
ALL SIGNATURES MUST BE MEDALLION GUARANTEED
BENEFICIAL OWNER OF RECORD SHOULD: DEATH
- --------------------------------- -----
1. COMPLETE and SIGN Agreement. If any owner is deceased, please enclose a certified copy
2. Have Signature Medallion Guaranteed by your Bank or Broker. of Death Certificate. If Ownership is OTHER than Joint
3. Indicate Number of Interests Owned and/or To Be Sold. Tenants With Right of Survivorship, please provide Letter of
4. Return Agreement in Envelope Provided. Testamentary or Administration current within 60 days showing
your beneficial ownership or executor capacity (in addition
to copy of Death Certificate).
JOINT OWNERSHIP CORPORATION
- --------------- -----------
Please have ALL owners of record sign Agreement, and Corporate resolution required showing authorized signatory.
SEPARATELY Medallion Guarantee each signature.
IRA/KEOGH TRUST, PROFIT SHARING OR PENSION PLAN
- --------- -------------------------------------
1. Beneficial owner must sign Agreement. Please provide title, signature, and other applicable pages
2. Provide Custodian information (i.e. Name, Company Name, of Trust Agreement
Address, Phone No. and Account No.) showing authorized signatory.
3. Grape will obtain the Medallion Guarantee of Custodian
Signature.
- ----------------------------------------------------------------------------------------------------------------------------------
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