SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
- --------------------------------------------------------------------------------
Schedule 14D-1
Tender Offer Statement Pursuant to Section 14(d)(1)
of the Securities Exchange Act of 1934
- --------------------------------------------------------------------------------
MCNEIL REAL ESTATE FUND XX, L.P.
(Name of Subject Company)
BOND PURCHASE, L.L.C.
(Bidder)
UNITS OF LIMITED PARTNERSHIP INTEREST
(Title of Class of Securities)
-------------------------------------------------------------------------------
Bond Purchase, L.L.C.
1100 Main, Suite 2100
Kansas City, MO 64105
Copy to:
Scott M. Herpich
Lathrop & Gage L.C.
2345 Grand Blvd., Suite 2800
Kansas City, MO 64108
(816) 292-2000
(Name, Address and Telephone Number of
Person Authorized to Receive Notices and
Communications on Behalf of Bidder)
Calculation of Filing Fee
- --------------------------------------------------------------------------------
Transaction Amount of
Valuation* Filing Fee
$4,750,732 $951
- --------------------------------------------------------------------------------
*For purposes of calculating the filing fee only. This amount assumes the
purchase of 47,507 units of limited partnership interest ("Units") of the
subject company for $100 per Unit in cash.
[ ] Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the Form
or Schedule and date of its filing.
Amount previously paid: N/A Filing party: N/A Form or
registration no.: N/A Date filed: N/A
(Continued on following pages)
(Page 1 of 7 pages)
<PAGE>
14D-1 Page 2 of 7 Pages
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1. Name of Reporting Person S.S. or I.R.S. Identification No. of Above Person
Bond Purchase, L.L.C.
- --------------------------------------------------------------------------------
2. Check the Appropriate Box if a Member of a Group (See Instructions)
(a) [ ]
(b) [ ]
- --------------------------------------------------------------------------------
3. SEC Use Only
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4. Sources of Funds (See Instructions)
WC
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5. Check Box if Disclosure of Legal Proceedings is Required Pursuant to Item
2(e) or 2(f) [ ]
- --------------------------------------------------------------------------------
6. Citizenship or Place of Organization
Missouri
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7. Aggregate Amount Beneficially Owned by Each Reporting Person
2,004.68 Units of Limited Partnership Interest
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8. Check Box if the Aggregate Amount in Row (7) Excludes Certain Shares (See
Instructions) [ ]
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9. Percent of Class Represented by Amount in Row (7)
4.0%
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10. Type of Reporting Person (See Instructions)
PN
2
<PAGE>
ITEM 1. SECURITY AND SUBJECT COMPANY.
(a) The name of the subject company is McNeil Real Estate Fund XX, L.P., a
California limited partnership (the "Partnership"), which has its principal
executive offices at 13760 Noel Road, Suite 600, LB70, Dallas, Texas 75240.
(b) This Schedule 14D-1 relates to the offer by Bond Purchase, L.L.C., a
Missouri limited liability company (the "Purchaser"), to purchase all of the
issued and outstanding units of limited partnership interest ("Units") of the
Partnership at $100 per Unit less the amount of any distributions declared or
made with respect to the Units between December 31, 1999 and the date of payment
of the purchase price (the "Purchase Price") for the Units by the Purchaser, net
to the seller in cash, without interest thereon, upon the terms and subject to
the conditions set forth in the Offer to Purchase dated January 13, 2000 (the
"Offer to Purchase") and the related Letter of Transmittal, copies of which are
attached hereto as Exhibits (a)(1) and (a)(2), respectively. Information
concerning the number of outstanding Units is set forth in the Introduction to
the Offer to Purchase and is incorporated herein by reference. The information
set forth in Section 13 ("Purchase Price Considerations") of the Offer to
Purchase is incorporated herein by reference.
(c) The information set forth in Section 13 ("Purchase Price Considerations")
of the Offer to Purchase is incorporated herein by reference.
ITEM 2. IDENTITY AND BACKGROUND.
(a)-(d) The information set forth in Section 10 ("Certain Information
Concerning the Purchaser") to the Offer to Purchase is incorporated herein by
reference.
(e) and (f) During the last five years, neither the Purchaser nor, to the
best of its knowledge, any of the persons referred to in Section 10 ("Certain
Information Concerning the Purchaser") of the Offer to Purchase (i) has been
convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors) or (ii) was a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction and as a result of such proceeding
was or is subject to a judgment, decree or final order enjoining future
violations of, or prohibiting activities subject to, Federal or state securities
laws or finding any violation of such laws.
(g) The information set forth in Section 10 ("Certain Information Concerning
the Purchaser") to the Offer to Purchase is incorporated herein by reference.
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT
COMPANY.
(a) - (b) The information set forth in Section 10 ("Certain Information
Concerning the Purchaser") and Section 11 ("Background of the Offer") of the
Offer to Purchase is incorporated herein by reference.
3
<PAGE>
ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a)-(b) The information set forth in Section 12 ("Source of Funds") of the
Offer to Purchase is incorporated herein by reference.
(c) Not applicable.
ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE
BIDDER.
(a)-(b) Not applicable.
(c) The information set forth in Section 8 ("Purpose of the Offer; Future
Plans") of the Offer to Purchase is incorporated herein by reference.
(d) Not applicable.
(e) The information set forth in Section 8 ("Purpose of the Offer; Future
Plans") of the Offer to Purchase is incorporated herein by reference.
(f)-(g) Not applicable.
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
(a)-(b) The information set forth in the Introduction and Section 10
("Certain Information Concerning the Purchaser") of the Offer to Purchase is
incorporated herein by reference.
ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO
THE SUBJECT COMPANY'S SECURITIES.
The information set forth in Section 10 ("Certain Information Concerning the
Purchaser") and Section 11 ("Background of the Offer") of the Offer to Purchase
is incorporated herein by reference.
ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
Not applicable.
ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS.
Not applicable.
ITEM 10. ADDITIONAL INFORMATION.
(a) None.
4
<PAGE>
(b)-(e) The information set forth in Section 15 ("Certain Legal Matters") of
the Offer to Purchase is incorporated herein by reference.
(f) The information set forth in the Offer to Purchase and the related Letter
of Transmittal is incorporated herein in its entirety by reference.
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS.
99.(a)(1) Offer to Purchase dated January 13, 2000.
99.(a)(2) Letter of Transmittal.
99.(a)(3) Cover Letter, dated January 13, 2000, from Bond Purchase, L.L.C.
to the holders of Units.
99.(b) Escrow Agreement dated January 11, 2000, by and between Bond
Purchase, L.L.C. and Assured Quality Title Company.
99.(c) Assignment and Transfer Agreement respecting the purchase of
Units in the Partnership by and between Madison/WP Partnership
Value Fund II, LP, Madison/WP Partnership Value Fund III, LLC,
and Bond Purchase, L.L.C.
99.(d) None.
99.(e) Not applicable.
99.(f) None.
5
<PAGE>
SIGNATURES
After due inquiry and to the best of my knowledge and belief, I certify that
the information set forth in this statement is true, complete and correct.
Dated: January 12, 2000
BOND PURCHASE, L.L.C.
By: /s/ David L. Johnson
Name: David L. Johnson
Title: Member
6
<PAGE>
EXHIBIT INDEX
EXHIBIT
NO. TITLE
99.(a)(1) Offer to Purchase dated January 13, 2000.
99.(a)(2) Letter of Transmittal.
99.(a)(3) Cover Letter, dated January 13, 2000, from Bond Purchase, L.L.C.
to the holders of Units.
99.(b) Escrow Agreement dated January 11, 2000, by and between Bond
Purchase, L.L.C. and Assured Quality Title Company.
99.(c) Assignment and Transfer Agreement respecting the purchase of
Units in the Partnership by and between Madison/WP Partnership
Value Fund II, LP, Madison/WP Partnership Value Fund III, LLC,
and Bond Purchase, L.L.C.
7
<PAGE>
OFFER TO PURCHASE FOR CASH
ALL OF THE ISSUED AND OUTSTANDING UNITS OF
LIMITED PARTNERSHIP INTEREST
of
McNeil Real Estate Fund XX, L.P.
at
$100 NET PER UNIT OF LIMITED PARTNERSHIP INTEREST
by
Bond Purchase, L.L.C.
********************************************************************************
THE OFFER AND THE WITHDRAWAL RIGHTS
PERIOD WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON FEBRUARY 11, 2000,
UNLESS EXTENDED.
********************************************************************************
Bond Purchase, L.L.C., a Missouri limited liability company (the
"Purchaser"), hereby offers to purchase all of the issued and outstanding units
of limited partnership interest (the "Units") of McNeil Real Estate Fund XX,
L.P., a California limited partnership (the "Partnership"), at a purchase price
of $100 per Unit, net to the seller in cash (the "Purchase Price"), without
interest thereon, upon the terms and subject to the conditions set forth in this
Offer to Purchase (the "Offer to Purchase") and in the related Letter of
Transmittal, as each may be supplemented, modified or amended from time to time
(which together constitute the "Offer"). The Purchase Price will be
automatically reduced by the aggregate amount of distributions per Unit, if any,
made or declared by the Partnership after December 31, 1999 and on or prior to
the Expiration Date (as defined in Section 1 ("Terms of the Offer")). In
addition, if a distribution is made or declared after the Expiration Date but
prior to the date on which the Purchaser pays the Purchase Price for the
tendered Units, the Purchaser will offset the amount otherwise due a Limited
Partner (as defined herein) pursuant to the Offer in respect of the tendered
Units which have been accepted for payment but not yet paid for by the amount of
any such distribution. LIMITED PARTNERS WHO TENDER THEIR UNITS WILL NOT BE
OBLIGATED TO PAY ANY COMMISSIONS OR PARTNERSHIP TRANSFER FEES, WHICH COMMISSIONS
AND FEES WILL BE BORNE BY THE PURCHASER.
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THE PURCHASER IS NOT AFFILIATED
WITH THE GENERAL PARTNER OF THE PARTNERSHIP.
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THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, A MINIMUM OF 12,378 UNITS
OF THE PARTNERSHIP BEING VALIDLY TENDERED AND NOT PROPERLY WITHDRAWN PRIOR TO
THE EXPIRATION OF THE OFFER ("THE MINIMUM CONDITION"). THE OFFER IS ALSO
CONDITIONED UPON THE MERGER
<PAGE>
PROPOSAL OF THE GENERAL PARTNER NOT BEING APPROVED BY A MAJORITY OF THE
OUTSTANDING UNITS OF THE PARTNERSHIP. SEE SECTION 9 ("CERTAIN INFORMATION
CONCERNING THE PARTNERSHIP") AND SECTION 14 ("CONDITIONS OF THE OFFER.") A
LIMITED PARTNER MAY TENDER ANY OR ALL UNITS OWNED BY SUCH LIMITED PARTNER;
HOWEVER, BECAUSE OF RESTRICTIONS IN THE PARTNERSHIP AGREEMENT (AS DEFINED IN
SECTION 9), (I) A LIMITED PARTNER MAY NOT MAKE A PARTIAL TENDER OF UNITS OWNED
BY SUCH LIMITED PARTNER IF SUCH LIMITED PARTNER WOULD OTHERWISE RETAIN LESS THAN
TEN (10) UNITS AND (II) TENDERS OF LESS THAN TEN (10) UNITS WILL ONLY BE
ACCEPTED IF ALL OF THE UNITS HELD BY SUCH LIMITED PARTNER ARE TENDERED.
- --------------------------------------------------------------------------------
Before tendering, Limited Partners are urged to consider the following factors:
- - If Limited Partners holding a majority of the outstanding Units of the
Partnership vote in favor of the Partnership's merger proposal (as more
fully described in Section 9 ("Certain Information Concerning the
Partnership-Master Agreement")), the Partnership has estimated that the
Limited Partners will receive $92 per Unit.
- - Although the Purchaser cannot predict the future value of the Partnership's
assets on a per Unit 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 that may be realized upon a future
liquidation of the Partnership.
- - The Purchaser is making the Offer with a view to making a profit.
Accordingly, there may be a conflict between the desire of the Purchaser to
acquire the Units at a low price and the desire of Limited Partners to sell
their Units at a high price.
- - As a result of the Offer, the Purchaser could be in a position to
significantly influence all Partnership decisions on which Limited Partners
may vote, including decisions regarding removal of the General Partner of
the Partnership (McNeil Partners, L.P., a Delaware limited partnership),
merger, extension of the legal existence of the Partnership, sales of
assets and liquidation of the Partnership.
IMPORTANT
Any (i) owner of record of Units (a "Limited Partner"), (ii) beneficial
owner, in the case of Units owned by Individual Retirement Accounts or qualified
plans (a "Beneficial Owner"), or (iii) person who has purchased Units but has
not yet been reflected on the Partnership's books as the record owner of such
Units (an "Assignee"), desiring to tender any or all of such person's Units
should either (1) complete and sign the Letter of Transmittal in accordance with
the instructions in the Letter of Transmittal and mail or deliver (A) the Letter
of Transmittal, (B) certificates evidencing
ii
<PAGE>
tendered Units and (C) any other required documents to Bond Purchase, L.L.C., at
the address set forth below, or (2) request his or her broker, dealer,
commercial bank, trust company or other nominee to effect the transaction for
him or her. Unless the context requires otherwise, references to Limited
Partners in this Offer to Purchase shall be deemed to also refer to Beneficial
Owners and Assignees. Questions or requests for assistance may be directed to
Bond Purchase, L.L.C. at the address and telephone number set forth below.
Requests for additional copies of this Offer to Purchase, the Letter of
Transmittal and other related documents may be directed to Bond Purchase, L.L.C.
NO PERSON HAS BEEN AUTHORIZED TO MAKE ANY RECOMMENDATION OR ANY
REPRESENTATION ON BEHALF OF THE PURCHASER OR TO PROVIDE ANY INFORMATION OTHER
THAN AS CONTAINED HEREIN OR IN THE LETTER OF TRANSMITTAL. NO SUCH
RECOMMENDATION, INFORMATION OR REPRESENTATION MAY BE RELIED UPON AS HAVING BEEN
AUTHORIZED.
EACH LIMITED PARTNER IS URGED TO READ CAREFULLY THE ENTIRE OFFER TO PURCHASE,
THE LETTER OF TRANSMITTAL AND RELATED DOCUMENTS.
FOR ADDITIONAL INFORMATION CALL:
BOND PURCHASE, L.L.C.
1100 Main Street, Suite 2100
Kansas City, MO 64105
TELEPHONE: (816) 421-4670
FACSIMILE: (816) 221-1829
iii
<PAGE>
TABLE OF CONTENTS
Page
INTRODUCTION...................................................................1
THE TENDER OFFER...............................................................5
1. Terms of the Offer........................................................5
2. Acceptance for Payment and Payment for Units..............................5
3. Procedures for Tendering Units............................................6
4. Withdrawal Rights.........................................................9
5. Extension of Tender Period; Termination; Amendment.......................10
6. Certain Federal Income Tax Consequences..................................11
7. Effects of the Offer.....................................................15
8. Purpose of the Offer; Future Plans.......................................16
9. Certain Information Concerning the Partnership...........................18
10. Certain Information Concerning the Purchaser.............................26
11. Background of the Offer..................................................27
12. Source Of Funds..........................................................28
13. Purchase Price Considerations............................................28
14. Conditions of the Offer..................................................29
15. Certain Legal Matters....................................................31
16. Certain Fees and Expenses................................................32
17. Miscellaneous............................................................32
iv
<PAGE>
TO THE HOLDERS OF UNITS OF LIMITED PARTNERSHIP INTEREST OF
MCNEIL REAL ESTATE FUND XX, L.P.:
INTRODUCTION
Bond Purchase, L.L.C., a Missouri limited liability company (the
"Purchaser"), hereby offers to purchase all of the issued and outstanding units
of limited partnership interest (the "Units") of McNeil Real Estate Fund XX,
L.P., a California limited partnership (the "Partnership"), at a purchase price
of $100 per Unit, net to the seller in cash (the "Purchase Price"), without
interest, upon the terms and subject to the conditions set forth in this Offer
to Purchase (the "Offer to Purchase") and in the related Letter of Transmittal,
as each may be supplemented, modified or amended from time to time (which
together constitute the "Offer"). The Purchase Price will be automatically
reduced by the aggregate amount of distributions per Unit, if any, made or
declared by the Partnership after December 31, 1999 and on or prior to the
Expiration Date (as defined in Section 1 ("Terms of the Offer")). In addition,
if a distribution is made or declared after the Expiration Date but prior to the
date on which the Purchaser pays the Purchase Price for the tendered Units, the
Purchaser will offset the amount otherwise due a Limited Partner pursuant to the
Offer in respect of the tendered Units which have been accepted for payment but
not yet paid for by the amount of any such distribution. Limited Partners who
tender their Units will not be obligated to pay any commissions or partnership
transfer fees, which commissions and fees will be borne by the Purchaser.
THE PURCHASER IS NOT AFFILIATED WITH THE GENERAL PARTNER OF THE PARTNERSHIP.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, A MINIMUM OF 12,378 OF THE
OUTSTANDING UNITS OF THE PARTNERSHIP BEING VALIDLY TENDERED AND NOT PROPERLY
WITHDRAWN PRIOR TO THE EXPIRATION DATE (THE "MINIMUM CONDITION"). SEE SECTION 14
("CONDITIONS OF THE OFFER"). A LIMITED PARTNER MAY TENDER ANY OR ALL UNITS OWNED
BY SUCH LIMITED PARTNER; HOWEVER, BECAUSE OF RESTRICTIONS IN THE PARTNERSHIP
AGREEMENT, (I) A LIMITED PARTNER MAY NOT MAKE A PARTIAL TENDER OF UNITS OWNED BY
SUCH LIMITED PARTNER IF SUCH LIMITED PARTNER WOULD OTHERWISE RETAIN LESS THAN
TEN (10) UNITS AND (II) TENDERS OF LESS THAN TEN (10) UNITS WILL ONLY BE
ACCEPTED IF ALL OF THE UNITS HELD BY SUCH LIMITED PARTNER ARE TENDERED.
The Purchaser is making this Offer because it believes that the Units
represent an attractive investment at the price offered. There can be no
assurance, however, that the Purchaser's judgment is correct, and, as a result,
ownership of Units (either by the Purchaser or Limited Partners who retain their
Units) will remain a speculative investment.
In considering the Offer, Limited Partners are urged to consider the
following factors:
1
<PAGE>
- - If Limited Partners holding a majority of the outstanding Units vote in
favor of the Merger Proposal (as defined and more fully described in
Section 9 ("Certain Information Concerning the Partnership-Master
Agreement")), as disclosed in the Definitive Proxy Statement on Schedule
14A filed by the Partnership with the Securities and Exchange Commission on
December 14, 1999 (File No. 000-14007) (the "Proxy Statement"), the
Partnership has estimated that the Limited Partners will receive $92 per
Unit.
- - Although the Purchaser cannot predict the future value of the Partnership's
assets on a per Unit basis, the Purchase Price could differ significantly
from the net proceeds that would be realized on a per Unit basis from a
current sale of the Partnership's properties or that may be realized upon a
future liquidation of the Partnership.
- - The Purchaser is making the Offer with a view to making a profit.
Accordingly, there may be a conflict between the desire of the Purchaser to
acquire the Units at a low price and the desire of the Limited Partners to
sell their Units at a high price. Upon the liquidation of the Partnership,
the Purchaser will benefit to the extent the amount per Unit it receives in
the liquidation exceeds the Purchase Price, if any. Therefore, Limited
Partners might receive more value if they hold their Units, rather than
tender, and receive proceeds from the liquidation of the Partnership.
Alternatively, Limited Partners may prefer to receive the Purchase Price
now rather than wait for uncertain future net liquidation proceeds. No
independent person has been retained to evaluate or render any opinion with
respect to the fairness of the Purchase Price and no representation is made
by the Purchaser or any affiliate of the Purchaser as to such fairness.
When the assets of the Partnership are ultimately sold, the return to
Limited Partners could be higher or lower than the Purchase Price. Limited
Partners are urged to consider carefully all of the information contained
herein before accepting the Offer.
- - Pursuant to the terms of the Offer, the Purchaser is expected to acquire,
at a minimum, at least 25% of the Units outstanding and, at a maximum, all
of the Units outstanding, and, as a result, will be in a position to
significantly influence all Partnership decisions on which Limited Partners
may vote. If a sufficient number of Units sought by the Purchaser are
tendered and accepted for payment pursuant to the Offer, the Purchaser
could effectively (i) prevent non-tendering Limited Partners from taking
actions they desire but that the Purchaser opposes and (ii) enable the
Purchaser to take action desired by it but opposed by non- tendering
Limited Partners. Under the Partnership Agreement, Limited Partners holding
a majority of the Units are entitled to take action with respect to a
variety of matters, including: dissolution and winding up of the
Partnership; removal of the General Partner; approval or disapproval of the
sale of all or substantially all of the Partnership's assets; and most
types of amendments to the Partnership Agreement. Depending on the number
of Units obtained by the Purchaser pursuant to the Offer, the Purchaser has
intentions to (i) influence the control and management of the Partnership
and attempt to remove the General Partner, (ii) vote against the Merger
Proposal and (iii) amend that provision of the Partnership Agreement that
requires the General Partner to use commercially reasonable efforts to
complete the
2
<PAGE>
liquidation and termination of the Partnership by December 31, 1999. In any
event, the Purchaser will vote the Units acquired pursuant to the Offer in
its interest, which may, or may not, be in the best interest of
non-tendering Limited Partners.
- - If 50% or more of the total Units in Partnership capital and profits are
sold or exchanged within a twelve (12) month period, the Partnership will
terminate for federal income tax purposes (a "Tax Termination"). Any such
Tax Termination will, among other things, cause the Partnership to start
new depreciable lives for its assets. This generally would decrease the
annual average depreciation deductions allocable to Units not tendered
pursuant to the Offer (thereby increasing the taxable income allocable to
such Units in each such year), but would have no effect on the total
depreciation deductions available over the useful lives of the assets of
the Partnership.
Limited Partners may no longer wish to continue with their investment in the
Partnership for a number of reasons, including:
- - The Purchase Price is greater than the price the Partnership estimates a
Limited Partner will receive if the Limited Partners approve the Merger
Proposal proposed by the General Partner ($92).
- - The Offer will provide Limited Partners with an immediate opportunity to
liquidate their investment in the Partnership without the usual transaction
costs associated with market sales or partnership transfer fees, and the
Purchase Price is greater than the price the Partnership estimates a
Limited Partner will receive pursuant to the Merger Proposal proposed by
the General Partner.
- - Although there are some limited resale mechanisms available to the Limited
Partners wishing to sell their Units, there is no formal trading market for
the Units. The Form 10-K states: "There is no established public trading
market for limited partnership units, nor is one expected to develop."
Accordingly, Limited Partners who desire liquidity may wish to consider the
Offer. The Offer affords a significant number of Limited Partners an
opportunity to dispose of their Units for cash at a price greater than the
price the Partnership estimates a Limited Partner will receive pursuant to
the Merger Proposal proposed by the General Partner. However, the Purchase
Price is not intended to represent either the fair market value of a Unit
or the fair market value of the Partnership's assets on a per Unit basis.
- - General disenchantment with real estate investments.
- - General disenchantment with long-term investments in limited partnerships
because of, among other things, their illiquidity and the inability of
Limited Partners to effectuate management control over the Partnership's
affairs through the annual election of the General Partner. Limited
Partners should note, however, that they do have the right to remove the
General Partner by majority vote.
3
<PAGE>
- - The Offer may be attractive to certain Limited Partners who wish in the
future to avoid the expenses, delays and complications in filing complex
income tax returns which result from an ownership of Units.
- - The Offer provides Limited Partners with the opportunity to liquidate their
Units and to reinvest the proceeds in other investments should they desire
to do so. The Purchaser believes that the Units represent an attractive
investment at the Purchase Price. There can be no assurance, however, that
this judgment is correct. Ownership of Units will remain a speculative
investment.
Following the completion of the Offer, the Purchaser and its affiliates may
acquire additional Units. Any such acquisitions may be made through private
purchases, through one or more future tender offers or by any other means deemed
advisable, and may be at prices higher or lower than the price to be paid for
the Units purchased pursuant to the Offer. See Section 8 ("Purpose of the Offer;
Future Plans").
A Limited Partner may tender any or all of his or her Units; however, because
of restrictions in the Partnership Agreement (i) a Limited Partner may not make
a partial tender of Units owned by such Limited Partner if such Limited Partner
would otherwise retain less than ten (10) Units and (ii) tenders of less than
ten (10) Units will only be accepted if all the Units held by such Limited
Partner are tendered.
According to the Form 10-K, there were 49,512 Units issued and outstanding,
held of record by approximately 4,185 Limited Partners. On December 1, 1999, the
Purchaser was admitted to the Partnership as a Limited Partner having purchased
10 Units from Citadel Secondary Market Fund I, Ltd., a Florida limited
partnership, at a per Unit price of $92. The Purchaser has also signed an
agreement to acquire 1,994.68 Units at a per Unit price of $100 from Madison/WP
Partnership Value Fund II, L.P. and Madison/WP Partnership Value Fund III, LLC.
Except as otherwise indicated, information contained in this Offer to
Purchase is based upon documents and reports publicly filed by the Partnership
with the Securities and Exchange Commission (the "Commission"). Although the
Purchaser has no information that any statements contained in this Offer to
Purchase are untrue, the Purchaser does not take responsibility for the accuracy
or completeness of any information contained in this Offer to Purchase which is
derived from such public documents, or for any failure by the Partnership to
disclose events which may have occurred and may affect the significance or
accuracy of any such information but which are unknown to the Purchaser.
Each Limited Partner must make his or her own decision based on his or her
particular circumstances. Limited Partners should consult with their respective
advisors about the financial, tax, legal and other implications to them of
accepting the Offer. LIMITED PARTNERS ARE URGED TO READ THIS OFFER TO PURCHASE,
THE RELATED LETTER OF
4
<PAGE>
TRANSMITTAL AND THE OTHER ACCOMPANYING MATERIALS CAREFULLY BEFORE DECIDING
WHETHER TO TENDER THEIR UNITS.
THE TENDER OFFER
1. TERMS OF THE OFFER.
Upon the terms of the Offer (including the terms and conditions of any
extension or amendment of the Offer), the Purchaser will accept for payment and
pay for all of the outstanding Units of the Partnership. Such Units must have
been validly tendered on or prior to the Expiration Date (as hereinafter
defined) and not withdrawn in accordance with Section 4 ("Withdrawal Rights").
The term "Expiration Date" shall mean 12:00 midnight, New York City time, on
February 11, 2000, unless the Purchaser, in its sole discretion, shall have
extended the period of time during which the Offer is open, in which event the
term "Expiration Date" shall refer to the latest time and date at which the
Offer, as so extended by the Purchaser, will expire.
IF, PRIOR TO THE EXPIRATION DATE, THE PURCHASER SHALL INCREASE THE PURCHASE
PRICE OFFERED TO LIMITED PARTNERS, SUCH INCREASED PURCHASE PRICE SHALL BE PAID
FOR ALL UNITS ACCEPTED FOR PAYMENT PURSUANT TO THE OFFER, WHETHER OR NOT SUCH
UNITS WERE TENDERED PRIOR TO THE INCREASE IN CONSIDERATION.
The Offer is conditioned upon, among other things, satisfaction of the
Minimum Condition and the Merger Proposal not being approved prior to
consummation of the Offer. See Section 14 (which sets forth in full the
conditions of the Offer). The Purchaser reserves the right (but shall not be
obligated), in its sole discretion, to waive any or all of such conditions,
including the Minimum Condition. If, on the Expiration Date, any or all of such
conditions have not been satisfied or waived, the Purchaser may (i) decline to
purchase any of the Units tendered, terminate the Offer and return all tendered
Units to tendering Limited Partners, (ii) waive all the then unsatisfied
conditions and, subject to complying with applicable rules and regulations of
the Commission, purchase all Units validly tendered, (iii) extend the Offer and,
subject to the right of Limited Partners to withdraw Units until the Expiration
Date, retain the Units that have been tendered during the period or periods for
which the Offer is extended, or (iv) amend the Offer.
2. ACCEPTANCE FOR PAYMENT AND PAYMENT FOR UNITS.
If the number of Units validly tendered and not properly withdrawn on
or prior to the Expiration Date is equal to or greater than 12,378 of the
outstanding Units, the Purchaser will purchase all Units so tendered and not
properly withdrawn, upon the terms and subject to the conditions of the Offer.
Upon the terms and subject to the conditions of the Offer (including, if the
Offer is extended or amended, the terms and conditions of any such extension or
amendment), the Purchaser will
5
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Upon the terms and subject to the conditions of the Offer (including, if the
Offer is extended or amended, the terms and conditions of any such extension or
amendment), the Purchaser will purchase, by accepting for payment, and will pay
for, all Units validly tendered and not withdrawn in accordance with Section 4
on or prior to the Expiration Date as promptly as practicable following the
Expiration Date. In addition, subject to applicable rules of the Commission, the
Purchaser expressly reserves the right to delay acceptance for payment of, or
payment for, Units pending receipt of any additional documentation required by
the Letter of Transmittal. In all cases, payment for Units accepted for payment
pursuant to the Offer will be made only after timely receipt by Bond Purchase,
L.L.C. of (a) the Letter of Transmittal properly completed and duly executed,
with any required signature guarantees, if applicable, (b) certificates
evidencing tendered Units and (c) any other documents required by the Letter of
Transmittal.
The Purchase Price will automatically be reduced by the aggregate amount of
distributions per Unit, if any, made or declared by the Partnership after
December 31, 1999 and on or prior to the Expiration Date. In addition, if a
distribution is made or declared after the Expiration Date but prior to the date
on which the Purchaser pays for tendered Units, the Purchaser will offset the
amount otherwise due to a Limited Partner pursuant to the Offer in respect of
tendered Units which have been accepted for payment but not yet paid for by the
amount of any such distribution. UNDER NO CIRCUMSTANCES WILL THE PURCHASER PAY
INTEREST ON THE PURCHASE PRICE FOR UNITS.
If any tendered Units are not purchased pursuant to the Offer for any reason,
the Letter of Transmittal with respect to such Units will be destroyed by Bond
Purchase, L.L.C., and the certificates representing such Units will be returned
to the Limited Partner by Bond Purchase, L.L.C. If, for any reason whatsoever,
acceptance for payment of or payment for any Units tendered pursuant to the
Offer is delayed or the Purchaser is unable to accept for payment, purchase or
pay for Units tendered pursuant to the Offer, then, without prejudice to the
Purchaser's rights under Section 14 ("Conditions of the Offer"), Bond Purchase,
L.L.C. may, nevertheless, subject to Rule 14e-1(c) under the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), retain tendered Units, and such
Units may not be withdrawn except to the extent that the tendering Limited
Partner is entitled to withdrawal rights as described in Section 4 ("Withdrawal
Rights").
3. PROCEDURES FOR TENDERING UNITS.
Valid Tender. For Units to be validly tendered pursuant to the Offer, a
Letter of Transmittal, properly completed and duly executed, and the
certificates representing the tendered Units, together with any other documents
required by the Letter of Transmittal, must be received by Bond Purchase, L.L.C.
at its address on the back cover page of the Offer to Purchase on or prior to
the Expiration Date. A Limited Partner may tender any or all Units owned by such
Limited Partner; however, because of restrictions in the Partnership Agreement,
(i) a Limited Partner may not make a partial tender of Units owned by such
Limited Partner if such Limited Partner would otherwise retain less than ten
(10) Units and (ii) tenders of less than ten (10) Units will only be accepted if
all of the Units held by such Limited Partner are tendered. See Instruction 1 to
the Letter of Transmittal.
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IN ORDER FOR A TENDERING LIMITED PARTNER TO PARTICIPATE IN THE OFFER, UNITS
MUST BE VALIDLY TENDERED AND NOT WITHDRAWN ON OR PRIOR TO THE EXPIRATION DATE,
WHICH IS 12:00 MIDNIGHT, NEW YORK CITY TIME, ON FEBRUARY 11, 2000, UNLESS
EXTENDED.
THE METHOD OF DELIVERY OF THE LETTER OF TRANSMITTAL AND CERTIFICATES AND ALL
OTHER REQUIRED DOCUMENTS IS AT THE OPTION AND RISK OF THE TENDERING LIMITED
PARTNER AND DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY BOND
PURCHASE, L.L.C. IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT
REQUESTED IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO
ENSURE TIMELY DELIVERY. SEE INSTRUCTION 1 TO THE LETTER OF TRANSMITTAL.
Signature Guarantees. If the Letter of Transmittal is signed by the
registered holder of the Units and payment is to be made directly to that
holder, or if the Units are tendered for the account of a member firm of a
registered national securities exchange, a member of the National Association of
Securities Dealers, Inc. or a commercial bank, savings bank, credit union,
savings and loan association or trust company having an office, branch or agency
in the United States (each an "Eligible Institution"), no signature guarantee is
required on the Letter of Transmittal. However, in all other cases, all
signatures on the Letter of Transmittal must be guaranteed by an Eligible
Institution. See Instruction 2 of the Letter of Transmittal.
Backup Federal Income Tax Withholding. To prevent the possible application of
backup federal income tax withholding of 31% with respect to payment of the
Purchase Price pursuant to the Offer, a tendering Limited Partner must provide
the Purchaser with such Limited Partner's correct taxpayer identification number
or social security number by completing the Substitute Form W-9 included in the
Letter of Transmittal. See Instruction 3 to the Letter of Transmittal.
FIRPTA Withholding. To prevent the withholding of federal income tax in an
amount equal to 10% of the sum of the Purchase Price plus the amount of
Partnership liabilities allocable to each Unit purchased, each Limited Partner
must complete the FIRPTA Affidavit included in the Letter of Transmittal
certifying such Limited Partner's taxpayer identification number and address and
that the Limited Partner is not a foreign person. See Instruction 3 to the
Letter of Transmittal.
Appointment as Proxy; Power of Attorney. By executing and delivering
the Letter of Transmittal, a tendering Limited Partner irrevocably appoints the
Purchaser and the designees of the Purchaser and each of them as such Limited
Partner's proxies, each with full power of substitution, in the manner set forth
in the Letter of Transmittal, to the full extent of such Limited Partner's
rights with respect to the Units tendered by such Limited Partner and accepted
for payment by the Purchaser (and with respect to any and all other Units or
other securities issued or issuable in respect of such Units on or after the
date hereof). All such proxies shall be considered irrevocable and coupled with
an interest in the tendered Units. Such appointment will be effective when, and
only
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to the extent that, the Purchaser accepts such Units for payment. Upon such
acceptance for payment, all prior proxies given by such Limited Partner with
respect to such Units (and such other Units and securities) will be revoked
without further action, and no subsequent proxies may be given nor any
subsequent written consents executed (and, if given or executed, will not be
deemed effective). The Purchaser and its designees will, with respect to the
Units (and such other Units and securities) for which such appointment is
effective, be empowered to exercise all voting and other rights of such Limited
Partner as they in their sole discretion may deem proper at any meeting of
Limited Partners (including any meeting with respect to the Merger Proposal) or
any adjournment or postponement thereof, by written consent in lieu of any such
meeting or otherwise. The Purchaser reserves the right to require that, in order
for Units to be deemed validly tendered, immediately upon the Purchaser's
acceptance of such Units for payment, the Purchaser must be able to exercise
full voting rights with respect to such Units and other securities, including
voting at any meeting of Limited Partners.
In addition, pursuant to such appointment as attorneys-in-fact, the Purchaser
and its designees each will have the power, among other things, (i) to seek to
transfer ownership of such Units on the Partnership's books (and execute and
deliver any accompanying evidences of transfer and authenticity any of them may
deem necessary or appropriate in connection therewith, including, without
limitation, any documents or instruments required to be executed under a
"Transferor's (Seller's) Application for Transfer" created by the NASD, if
required), (ii) to become a record holder of the purchased Unit, to receive any
and all distributions made by the Partnership after the Expiration Date, and to
receive all benefits and otherwise exercise all rights of beneficial ownership
of such Units in accordance with the terms of the Offer, (iii) to execute and
deliver to the Partnership and/or the General Partner (as the case may be) a
change of address form instructing the Partnership to send any and all future
distributions to which the Purchaser is entitled pursuant to the terms of the
Offer in respect of tendered Units to the address specified in such form, and
(iv) to endorse any check payable to or upon the order of such Limited Partner
representing a distribution to which the Purchaser is entitled pursuant to the
terms of the Offer, in each case on behalf of the tendering Limited Partner.
Assignment of Entire Interest in the Partnership. By executing and delivering
the Letter of Transmittal, a tendering Limited Partner irrevocably assigns to
the Purchaser and its assigns all of the right, title and interest of such
Limited Partner in the Partnership with respect to the Units tendered and
purchased pursuant to the Offer, including, without limitation, such Limited
Partner's right, title and interest in and to any and all distributions made by
the Partnership after the Expiration Date in respect of the Units tendered by
such Limited Partner and accepted for payment by the Purchaser, regardless of
the fact that the record date for any such distribution may be a date prior to
the Expiration Date.
Determination of Validity. All questions as to the form of documents and
validity, eligibility (including time of receipt) and acceptance for payment of
any tender of Units will be determined by the Purchaser, in its sole discretion,
whose determination shall be final and binding on all parties. The Purchaser
reserves the absolute right to reject any or all tenders determined by it not to
be in
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proper form, or the acceptance of or payment for which may, in the opinion of
the Purchaser's counsel, be unlawful. The Purchaser also reserves the absolute
right to waive any of the conditions of the Offer or any defect or irregularity
in any tender of Units of any particular Limited Partner whether or not similar
defects or irregularities are waived in the case of other Limited Partners.
Assignee Status. Assignees must provide documentation to Bond Purchase,
L.L.C. which demonstrates, to the satisfaction of the Purchaser, such person's
status as an assignee of a Unit.
The Purchaser's interpretation of the terms and conditions of the Offer
(including the Letter of Transmittal and the instructions thereto) will be final
and binding. No tender of Units will be deemed to have been validly made until
all defects and irregularities with respect to such tender have been cured or
waived. None of the Purchaser, any of its affiliates or assigns, if any, or any
other person will be under any duty to give any notification of any defects or
irregularities in tenders or incur any liability for failure to give any such
notification.
The Purchaser's acceptance for payment of Units tendered pursuant to the
procedures described above will constitute a binding agreement between the
tendering Limited Partner and the Purchaser upon the terms and subject to the
conditions of the Offer.
4. WITHDRAWAL RIGHTS.
Tenders of Units made pursuant to the Offer are irrevocable, except that
Units tendered pursuant to the Offer may be withdrawn at any time prior to the
Expiration Date and, unless theretofore accepted for payment as provided in this
Offer to Purchase, may also be withdrawn at any time after March 13, 2000.
For a withdrawal to be effective, a written or facsimile transmission notice
of withdrawal must be timely received by Bond Purchase, L.L.C. at the address
set forth on the back cover of this Offer to Purchase. Any such notice of
withdrawal must specify the name(s) of the person(s) who tendered the Units to
be withdrawn, the number of Units to be withdrawn and the name(s) of the
registered holder(s) of the Units, if different from that of the person(s) who
tendered such Units. Such notice of withdrawal must also be signed by the same
person(s) who signed the Letter of Transmittal in the same manner as the Letter
of Transmittal was signed (including any signature guarantees, if applicable).
If the Units are held in the name of two or more persons, all such persons must
sign the notice of withdrawal. Any Units properly withdrawn will be deemed not
validly tendered for purposes of the Offer, but may be re-tendered at any
subsequent time prior to the Expiration Date by following the procedures
described in Section 3 ("Procedures for Tendering Units").
If, for any reason whatsoever, acceptance for payment of any Units tendered
pursuant to the Offer is delayed, or the Purchaser is unable to accept for
payment or pay for Units tendered pursuant to the Offer, then, without prejudice
to the Purchaser's rights set forth herein, Bond Purchase, L.L.C. may,
nevertheless, retain tendered Units and such Units may not be withdrawn except
to the extent
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that the tendering Limited Partner is entitled to and duly exercises withdrawal
rights as described herein. The reservation by the Purchaser of the right to
delay the acceptance or purchase of or payment for Units is subject to the
provisions of Rule 14e-1(c) under the Exchange Act, which requires the Purchaser
to pay the consideration offered or return Units tendered by or on behalf of
Limited Partners promptly after the termination or withdrawal of the Offer.
All questions as to the form and validity (including time of receipt) of
notices of withdrawal will be determined by the Purchaser, in its sole
discretion, whose determination shall be final and binding. None of the
Purchaser, any of its affiliates, Bond Purchase, L.L.C. or any other person will
be under any duty to give any notification of any defects or irregularities in
any notice of withdrawal or incur any liability for failure to give any such
notification.
5. EXTENSION OF TENDER PERIOD; TERMINATION; AMENDMENT.
If, on the Expiration Date, any or all of such conditions set forth in
Section 14 ("Conditions of the Offer") have not been satisfied or waived, the
Purchaser may (i) decline to purchase any of the Units tendered, terminate the
Offer and return all tendered Units to tendering Limited Partners, (ii) extend
the Offer and, subject to the right of Limited Partners to withdraw Units until
the Expiration Date, retain the Units that have been tendered during the period
or periods for which the Offer is extended, or (iii) amend the Offer.
If the Purchaser decreases the number of Units being sought or increases the
consideration to be paid for any Units pursuant to the Offer and the Offer is
scheduled to expire at any time before the expiration of a period of 10 business
days from, and including, the date that notice of such increase or decrease is
first published, sent or given in the manner specified below, the Offer will be
extended until, at a minimum, the expiration of such period of 10 business days.
If the Purchaser makes a material change in the terms of the Offer (other than a
change in price, percentage or minimum number of securities sought) or in the
information concerning the Offer, or waives a material condition of the Offer,
the Purchaser will extend the Offer, if required by applicable law, for a period
sufficient to allow Limited Partners to consider the amended terms of the Offer.
If the Purchaser extends the period of time during which the Offer is open,
delays acceptance for payment of or payment for Units or is unable to accept for
payment or pay for Units pursuant to the Offer for any reason, then, without
prejudice to the Purchaser's rights under the Offer, the Purchaser may retain
all Units tendered, and such Units may not be withdrawn except as otherwise
provided under Section 4 ("Withdrawal Rights"). The reservation by the Purchaser
of the right to delay acceptance for payment of or payment for Units is subject
to applicable law, which requires that the Purchaser pay the consideration
offered or return the Units deposited by or on behalf of Limited Partners
promptly after the termination or withdrawal of the Offer.
Any extension, termination or amendment of the Offer will be followed as
promptly as practicable by a public announcement thereof. Without limiting the
manner in which the Purchaser may choose to make any public announcement, the
Purchaser will have no obligation (except as
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otherwise required by applicable law) to publish, advertise or otherwise
communicate any such public announcement other than by making a release to the
Dow Jones News Service. In the case of an extension of the Offer, the Purchaser
will make a public announcement of such extension no later than 9:00 a.m., New
York City time, on the next business day after the previously scheduled
Expiration Date.
6. CERTAIN FEDERAL INCOME TAX CONSEQUENCES.
The following summary is a general discussion of certain federal income tax
consequences of a sale of Units pursuant to the Offer assuming that the
Partnership is a partnership for federal income tax purposes and that it is not
a "publicly traded partnership" as defined in Section 7704 of the Internal
Revenue Code of 1986, as amended (the "Code"). This summary is based on the
Code, applicable Treasury Regulations thereunder, administrative rulings,
practice and procedures and judicial authority as of the date of the Offer. All
of the foregoing are subject to change, and any such change could affect the
continuing accuracy of this summary. This summary does not discuss all aspects
of federal income taxation that may be relevant to a particular Limited Partner
in light of such Limited Partner's specific circumstances or to certain types of
Limited Partners subject to special treatment under the federal income tax laws
(for example, foreign persons, dealers in securities, banks, insurance companies
and tax-exempt organizations), nor does it discuss any aspect of state, local,
foreign or other tax laws. Sales of Units pursuant to the Offer will be taxable
transactions for federal income tax purposes, and may also be taxable
transactions under applicable state, local, foreign and other tax laws. EACH
LIMITED PARTNER SHOULD CONSULT HIS OR ITS TAX ADVISOR AS TO THE PARTICULAR TAX
CONSEQUENCES TO SUCH LIMITED PARTNER OF SELLING UNITS PURSUANT TO THE OFFER.
Consequences to a Tendering Limited Partner. In general, a Limited Partner
will recognize gain or loss on a sale of Units pursuant to the Offer equal to
the difference between (i) the Limited Partner's "amount realized" on the sale
and (ii) the Limited Partner's adjusted tax basis in the Units sold. The "amount
realized" with respect to a Unit will be equal to the sum of the amount of cash
received by the Limited Partner for the Unit sold pursuant to the Offer plus the
amount of Partnership liabilities allocable to the Unit (as determined under
Code Section 752). Thus, the Limited Partner's taxable gain and tax liability
resulting from a sale of a Unit could exceed the cash received upon such sale.
If the Limited Partner acquired Units for cash, the Limited Partner's initial
tax basis in such Units is generally equal to the Limited Partner's cash
investment in the Partnership increased by the Limited Partner's share of
Partnership liabilities at the time the Limited Partner acquired such Units. The
Limited Partner's initial tax basis generally has been increased by (i) the
Limiter Partner's share of Partnership income and gains, and (ii) any increases
in the Limited Partner's share of Partnership liabilities, and has been
decreased (but not below zero) by (i) the Limited Partner's share of Partnership
cash distributions, (ii) any decreases in the Limited Partner's share of
Partnership liabilities, (iii) the Limited Partner's share of Partnership
losses, and (iv) the Limited Partner's share of nondeductible Partnership
expenditures that are not chargeable to capital. For purposes of
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determining the Limited Partner's adjusted tax basis in Units immediately prior
to a disposition of such Units, the Limited Partner's adjusted tax basis in such
Units will include the Limited Partner's allocable share of Partnership income,
gain or loss for the taxable year of disposition. If the Limited Partner's
adjusted tax basis is less than the Limited Partner's share of Partnership
liabilities (e.g., as a result of the effect of net loss allocations and/or
distributions exceeding the cost of such Unit), the Limited Partner's gain
recognized with respect to a Unit pursuant to the Offer will exceed the cash
proceeds realized upon the sale of such Unit.
The gain or loss recognized by a Limited Partner on a sale of a Unit pursuant
to the Offer generally will be treated as a capital gain or loss if the Unit was
held by the Limited Partner as a capital asset. Recent changes to the tax laws
modified applicable capital gain rates and holding periods. Gain with respect to
Units held for more than one year will be taxed, for federal income tax
purposes, at a maximum long-term capital gain rate of 20 percent. Gain with
respect to Units held one year or less will be taxed at ordinary income rates.
If the amount realized with respect to a Unit that is attributable to the
Limited Partner's share of "unrealized receivables" of the Partnership exceeds
the tax basis attributable to those assets, such excess will be treated as
ordinary income. Among other things, "unrealized receivables" include
depreciation recapture for certain types of property. It should also be noted
that the Taxpayer Relief Act of 1997 imposed depreciation recapture of
previously deducted straight line depreciation with respect to real property at
a rate of 25 percent (assuming eligibility for long-term capital gain
treatment). A portion of the gain realized by a Limited Partner with respect to
a disposition of the Units may be subjected to this 25 percent rate to the
extent that the gain is attributable to depreciation recapture inherent in the
properties of the Partnership.
Capital losses are deductible only to the extent of capital gains, except
that taxpayers who are natural persons may deduct up to $3,000 per year of
capital losses in excess of the amount of their capital gains against ordinary
income. Excess capital losses generally can be carried forward to succeeding
years (a "C" corporation's carry-forward period is five years and an individual
taxpayer can carry forward such losses indefinitely).
If a Limited Partner tenders a Unit in the Offer, the Limited Partner will be
allocated a share of Partnership taxable income or loss for the year of tender
with respect to any Units sold. The Limited Partner will not receive any future
distributions on Units tendered on or after the date on which such Units are
accepted for purchase and, accordingly, the Limited Partner may not receive any
distributions with respect to such accreted income. Such allocation and any
Partnership cash distributions to you for that year will affect the Limited
Partner's adjusted tax basis in such Unit and, therefore, the amount of the
Limited Partner's taxable gain or loss upon a sale of a Unit pursuant to the
Offer.
Under Code Section 469, individuals, S corporations and certain closely-held
corporations generally are able to deduct "passive activity losses" in any year
only to the extent of the person's passive activity income for that year.
Substantially all post-1986 losses of Limited Partner from the Partnership are
passive activity losses. Limited Partner may have "suspended" passive activity
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losses from the Partnership (i.e., post-1986 net taxable losses in excess of
statutorily permitted "phase-in" amounts and which have not been used to offset
income from other passive activities). The benefits estimated to be realized by
each seller of a Unit assumes that all of the seller's losses from the
Partnership have been suspended and not utilized.
If a Limited Partner sells less than all of its Units pursuant to the Offer,
a passive loss recognized by that Limited Partner can be currently deducted
(subject to the other applicable limitations) to the extent of the Limited
Partner's passive income from the Partnership for that year plus any other net
passive activity income for that year, and any gain recognized by a Limited
Partner upon the sale of Units can be offset by the Limited Partner's current or
"suspended" passive activity losses (if any) from the Partnership and other
sources. If, on the other hand, a Limited Partner sells 100 percent of its Units
pursuant to the Offer, any "suspended" passive activity losses from the
Partnership and any passive activity losses recognized upon the sale of the
Units will be offset first against any net passive activity income from the
Limited Partner's other passive activity investments, and the balance of any net
passive activity losses attributable to the Partnership will no longer be
subject to the passive activity loss limitation and, therefore, will be
deductible by such Limited Partner from its other "ordinary" income (subject to
any other applicable limitations).
Limited Partners (other than tax-exempt persons, corporations and certain
foreign individuals) who tender Units may be subject to 31 percent backup
withholding unless those Limited Partners provide a taxpayer identification
number ("TIN") and are certain that the TIN is correct or properly certify that
they are awaiting a TIN. A Limited Partner may avoid backup withholding by
properly completing and signing the Letter of Transmittal. If a Limited Partner
who is subject to backup withholding does not include its TIN, the Purchaser
will withhold 31 percent from payments to such Limited Partner.
A Limited Partner who tenders Units must file an information statement with
his federal income tax return for the year of the sale which provides the
information specified in Treasury Regulation Section 1.751-1(a)(3). The selling
Limited Partner must also notify the Partnership of the date of the transfer and
the names, addresses and tax identification numbers of the transferors and
transferee within 30 days of the date of the transfer (or, if earlier, January
15 of the following calendar year) (See IRS Form 8308).
Consequences to a Non-Tendering and a Partially-Tendering Limited Partner.
Code Section 708 provides that if there is a sale or exchange of 50% or more of
the total interest in capital and profits of a partnership within any 12-month
period, such partnership terminates for United States federal income tax
purposes. It is possible that the Purchaser's acquisition of Units pursuant to
the Offer alone or in combination with other transfers of interests in the
Partnership could result in such a termination of the Partnership. If the
Partnership is deemed to terminate for tax purposes, the following Federal
income tax events will be deemed to occur: the terminated partnership will be
deemed to have contributed all of its assets (subject to its liabilities) to a
new partnership in exchange for an interest in the new partnership and,
immediately thereafter, the old partnership will
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be deemed to have distributed interests in the new partnership to the remaining
Limited Partners in proportion to their respective interests in the old
partnership in liquidation of the old partnership.
A remaining Limited Partner will generally not recognize any gain or loss
upon the deemed distribution or upon the deemed contribution and the capital
accounts of the remaining Limited Partners in the old partnership will carry
over intact into the new partnership. A termination may change (and possibly
shorten) a remaining Limited Partner's holding period with respect to its
retained units in the Partnership for United States federal income tax purposes.
The new partnership's adjusted tax basis in its assets will be the same as
the old partnership's basis in such assets immediately before the termination. A
termination may also subject the assets of the new partnership to depreciable
lives in excess of those currently applicable to the old partnership. This would
generally decrease the annual average depreciation deductions allocable to the
remaining Limited Partners for a number of years following consummation of the
Offer (thereby increasing the taxable income allocable to their Units in each
such year), but would have no effect on the total depreciation deductions
available over the useful lives of the assets of the Partnership.
Elections as to certain tax matters previously made by the old partnership
prior to termination will not be applicable to the new partnership unless the
new partnership chooses to make the same elections.
Additionally, upon a termination for tax purposes, the old partnership's
taxable year will close for all Limited Partners. In the case of a remaining
Limited Partner or a partially tendering Limited Partner reporting on a tax year
other than a calendar year, the closing of the Partnership's taxable year may
result in more than 12 months' taxable income or loss of the old partnership
being includible in such Limited Partner's taxable income for the year of
termination.
Consequences to a Tax-Exempt Limited Partner. Although certain entities are
generally exempt from federal income taxation, such tax-exempt entities
(including individual retirement accounts (each an "IRA")) are subject to
federal income tax on any "unrelated business taxable income" ("UBTI"). UBTI
generally includes, among other things, income (other than, in the case of
property which is not "debt-financed property", interest, dividends, real
property rents not dependent upon income or profits, and gain from disposition
of non-inventory property) derived by certain trusts (including IRAs) from a
trade or business or by certain other tax-exempt organizations from a trade or
business, the conduct of which is not substantially related to the exercise of
such organization's charitable, educational or other exempt purpose and income
to the extent derived from debt-financed property. Subject to certain
exceptions, "debt-financed property" is generally any property which is held to
produce income and with respect to which there is an "acquisition indebtedness"
at any time during the taxable year. Acquisition indebtedness is generally
indebtedness incurred by a tax-exempt entity directly or through a partnership:
(i) in acquiring or improving a property; (ii) before acquiring or improving a
property if the indebtedness would not have been incurred but for such
acquisition or improvement; or (iii) after acquiring or improving a property if
the indebtedness would not have been incurred but for such acquisition or
improvement
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and the incurrence of such indebtedness was reasonably foreseeable at the time
of the acquisition or improvement.
To the extent the Partnership holds debt financed property or inventory or
other assets as a dealer, a tax-exempt Limited Partner (including an IRA) could
realize UBTI on the sale of a Partnership interest. In addition, a tax-exempt
Limited Partner will realize UBTI upon the sale of a Unit, if such Limited
Partner held its Units as inventory or otherwise as dealer property, or acquired
its Units with acquisition indebtedness. However, any UBTI recognized by a
tax-exempt Limited Partner as a result of a sale of a Unit, in general, may be
offset by such Limited Partner's net operating loss carryover (determined
without taking into account any amount of income or deduction which is excluded
in computing UBTI), subject to applicable limitations.
EACH TAX-EXEMPT LIMITED PARTNER SHOULD CONSULT ITS TAX ADVISOR AS TO THE
PARTICULAR TAX CONSEQUENCES TO SUCH LIMITED PARTNER OF SELLING OR NOT SELLING
UNITS PURSUANT TO THE OFFER.
7. EFFECTS OF THE OFFER.
Effect on Trading Market; Registration Under Section 12(g) of the Exchange
Act. If a substantial number of Units are purchased pursuant to the Offer, the
result will be a reduction in the number of Limited Partners. In the case of
certain kinds of equity securities like the Units, a reduction in the number of
security holders might be expected to result in a reduction in the liquidity and
volume of activity in the trading market for the security. The Form 10-K states:
"There is no established public trading market for limited partnership units,
nor is one expected to develop." Therefore, the Purchaser does not believe a
reduction in the number of Limited Partners will materially further restrict the
Limited Partners' ability to find purchasers for their Units through secondary
market transactions.
Partnership Profiles, Inc. tracks recent trades in certain limited
partnership interests. A recent issue of Partnership Spectrum indicates that 25
Units traded in the period from April 1, 1999 through September 30, 1999 at per
Unit prices between $72.51 and $74.08. Sales may be conducted which are not
reported by Partnership Profiles and the prices of sales through other channels
may differ from those reported by Partnership Profiles. The Purchaser does not
know whether the information provided by Partnership Profiles is accurate or
complete.
The Units are currently registered under the Exchange Act. Such registration
may be terminated upon application to the Commission if the Units are not listed
on a national securities exchange and there are fewer than 300 record holders.
Termination of registration under the Exchange Act would substantially reduce
the information required to be furnished by the Partnership to its Unitholders
and to the Commission and would make inapplicable to the Partnership certain
provisions of the Exchange Act, such as the short-swing profit recovery
provisions of Section 16(b), the requirements to furnish proxy statements in
connection with Unitholders' meetings pursuant to
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<PAGE>
Section 14(a), and the requirements of Rule 13e-3 under the Exchange Act with
respect to "going private" transactions. Furthermore, if the Purchaser acquires
a substantial number of Units, the ability of "affiliates" of the Partnership
and persons holding "restricted securities" of the Partnership to dispose of
such securities pursuant to Rule 144 or 144A promulgated under the Securities
Act of 1933, as amended, may be impaired or eliminated. The Purchaser may cause
the Partnership to apply for termination of registration of the Units under the
Exchange Act following the consummation of the Offer, depending upon the number
of Units tendered.
Significant Influence on All Limited Partner Voting Decisions by the
Purchaser. The Purchaser will have the right to vote each Unit purchased
pursuant to the Offer. Pursuant to the terms of the Offer, the Purchaser is
expected to acquire, at a minimum, at least 25% of the Units outstanding and, at
a maximum, all of the Units outstanding, and, as a result, will be in a position
to significantly influence all Partnership decisions on which Limited Partners
may vote. This could effectively (i) prevent non-tendering Limited Partners from
taking actions they desire but that the Purchaser opposes and (ii) enable the
Purchaser to take action desired by it but opposed by non- tendering Limited
Partners. Under the Partnership Agreement, Limited Partners holding the majority
of the Units are entitled to take action with respect to a variety of matters,
including: dissolution and winding up of the Partnership; removal of the General
Partner; approve or disapprove the sale of all or substantially all of the
Partnership's assets; and most types of amendments to the Partnership Agreement.
Depending on the number of Units obtained by the Purchaser pursuant to the
Offer, the Purchaser has intentions to (i) influence the control and management
of the Partnership and attempt to remove the General Partner, (ii) vote against
the Merger Proposal and (iii) amend that provision of the Partnership Agreement
that requires the General Partner to use commercially reasonable efforts to
complete the liquidation and termination of the Partnership by December 31,
1999. In any event, the Purchaser will vote the Units acquired pursuant to the
Offer in its interest, which may, or may not, be in the best interest of
non-tendering Limited Partners. See Section 8 ("Purpose of the Offer; Future
Plans").
8. PURPOSE OF THE OFFER; FUTURE PLANS.
Purpose of the Offer. The purpose of the Offer is to enable the Purchaser to
acquire a significant interest in the Partnership for investment purposes based
on its expectation that there may be underlying value in the Property. Depending
on the number of Units acquired by the Purchaser pursuant to the Offer, the
Purchaser will likely attempt to remove the General Partner and/or the Property
Manager.
Pursuant to the terms of the Partnership Agreement, the Partnership: (i) pays
property management fees to the Property Manager for property management
services (the "Property Management Fee"); (ii) pays a disposition fee to an
affiliate of the General Partner for brokerage services performed in connection
with the sale of the Partnership's properties (the "Disposition Fee"); (iii)
reimburses the Property Manager for its costs, including overhead, of
administering the Partnership's affairs; and (iv) pays an asset management fee
to the General Partner (the "Asset Management Fee"). According to information
provided in the Partnership's Form 10-Q for the
16
<PAGE>
quarter ended September 30, 1999 (the "Form 10-Q"), the total amount of such
fees and expenses payable to the General Partner, the Property Manager and their
affiliates totaled $368,695 as of September 30, 1999.
If the General Partner is removed, the Partnership Agreement provides that
(i) any portion of the Property Management Fee, Asset Management Fee or
Disposition Fee payable pursuant to the terms of the Partnership Agreement which
is then accrued and due, but not yet paid, (ii) any expenses which are required
to be reimbursed to the General Partner and its Affiliates pursuant to the terms
of the Partnership Agreement, and (iii) any unpaid loans or advances (together
with any accrued but unpaid interest) shall be paid by the Partnership to the
General Partner, Property Manager or their affiliates, as applicable, in cash,
within 30 days of the date of removal as stated in the written notice of removal
of the General Partner.
The Master Agreement (as defined in Section 9) provides that in certain
circumstances (including, if a person who is not an affiliate of the Partnership
makes an acquisition proposal for the Partnership) the Partnership may be
subject to a "break-up fee." If the break-up fee is applicable, according to the
information obtained from the Form 10-Q, the Partnership's pro rata portion of
the break-up fee would be approximately $179,226.
The Partnership Agreement currently provides that the General Partner shall
use its commercially reasonable efforts to complete the liquidation and
termination of the Partnership by December 31, 1999. It is the Purchaser's
current intention to consider attempting to amend this provision of the
Partnership Agreement, if it acquires sufficient Units, and not immediately
liquidate and terminate the Partnership. The purchase of the Units will allow
the Purchaser to benefit from any of the following: (a) any cash distributions
from Partnership operations in the ordinary course of business; (b) any
distributions of net proceeds from the sale of any properties; and (c) any
distributions of net proceeds from the liquidation of the Partnership.
Future Plans. Depending on the number of Units obtained by the Purchaser
pursuant to the Offer, the Purchaser has intentions to (i) influence the control
and management of the Partnership and attempt to remove the General Partner,
(ii) vote against the Merger Proposal and (iii) amend that provision of the
Partnership Agreement that requires the General Partner to use commercially
reasonable efforts to complete the liquidation and termination of the
Partnership by December 31, 1999.
Following the completion of the Offer, the Purchaser and its affiliates may
acquire additional Units. Any such acquisition may be made through private
purchases, through one or more future tender offers or by any other means deemed
advisable, and may be at prices higher or lower than the price to be paid for
the Units purchased pursuant to the Offer.
17
<PAGE>
9. CERTAIN INFORMATION CONCERNING THE PARTNERSHIP.
Information included herein concerning the Partnership is derived from the
Partnership's publicly-filed reports. Additional financial and other information
concerning the Partnership is contained in the Partnership's Annual Reports on
Form 10-K, Quarterly Reports on Form 10-Q and other filings with the Commission.
Such reports and other documents may be examined and copies may be obtained from
the offices of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549,
and at the Commission's web site at http://www.sec.gov. Copies should be
available by mail upon payment of the Commission's customary charges by writing
to the Commission's principal offices at 450 Fifth Street, N.W., Washington,
D.C. 20549. The Purchaser disclaims any responsibility for the information
included in such reports and extracted in this Offer to Purchase.
The Partnership's Assets And Business. The Partnership, formerly known as
Southmark Income Investors, Ltd., was organized on July 19, 1984 as a limited
partnership under the provisions of the California Revised Limited Partnership
Act to invest in, hold, manage and dispose of mortgage loans, real estate and
real estate-related investments. The general partner of the Partnership is
McNeil Partners, L.P. (the "General Partner"), a Delaware limited partnership,
an affiliate of Robert A. McNeil ("McNeil"). The General Partner was elected at
a meeting of limited partners on March 30, 1992, at which time an amended and
restated partnership agreement (the "Partnership Agreement") was adopted. Prior
to March 30, 1992, the general partner of the Partnership was Southmark
Investment Group, Inc. (the "Original General Partner"), a Nevada corporation
and a wholly-owned subsidiary of Southmark Corporation ("Southmark"). The
principal place of business for the Partnership and the General Partner is 13760
Noel Road, Suite 600, LB70, Dallas, Texas, 75240.
On September 28, 1984, the Partnership registered with the Securities and
Exchange Commission under the Securities Act of 1933 (File No. 2-92376) and
commenced a public offering for the sale of $30,000,000 of limited partnership
units. The Units represent equity interests in the Partnership and entitle the
holders thereof to participate in certain allocations and distributions of the
Partnership. The sale of Units closed on September 27, 1985, with 49,528 Units
sold at $500 each, or gross proceeds (net of discounts of $57,546) of
$24,706,454 to the Partnership. In 1994 and 1993, 12 and 4 Units were
relinquished, respectively, leaving 49,512 Units outstanding at December 31,
1998.
The Partnership has been engaged in the servicing of mortgage loans,
including equity and revenue participation loans, and the ownership, operation
and management of revenue-producing properties acquired through foreclosure. In
July 1990, the Partnership foreclosed on Park Spring Apartments (renamed
Sterling Springs Apartments) in settlement of the related mortgage loan. In
September 1991, the Partnership foreclosed on Holiday Inn-Jacksonville (renamed
Cherokee Inn) in partial settlement of the related mortgage loan and later sold
the property in January 1993. In May 1993, the Partnership foreclosed on 1130
Sacramento Condominiums in settlement of the related mortgage loan and later
sold the property in August 1997. In 1998, the Partnership's mortgage loan
investments secured by Idlewood and Lakeland nursing homes and the Partnership's
mortgage loan
18
<PAGE>
investments affiliate secured by Fort Meigs Plaza were repaid in full by the
respective borrowers. At December 31, 1998, the Partnership operated one
revenue-producing property-Sterling Springs Apartments (the "Property").
The following table contains information with respect to the Property as of
December 31, 1998. The buildings and the land on which the Property is located
are owned by the Partnership in fee, subject to a first lien deed of trust as
described in the Form 10-K.
<TABLE>
<S> <C> <C> <C> <C> <C>
1998
Net Basis Property Date
Property Description of Property Debt Taxes Acquired
- -------- ----------- ----------- ---- ----- --------
Sterling Springs Apartments
Austin, TX 172 units $ 2,848,199 $ 2,613,312 $ 142,490 7/90
=========== =========== =========
</TABLE>
Sterling Springs Apartments is owned by Sterling Springs Fund XX Limited
Partnership, which is wholly-owned by the Partnership.
The following table sets forth the Property's occupancy rate and rent per
square foot for the last five years:
<TABLE>
<S> <C> <C> <C> <C> <C>
1998 1997 1996 1995 1994
---- ---- ---- ---- ----
Sterling Springs
Occupancy Rate 97% 97% 91% 99% 95%
Rent Per Square Foot $9.94 $9.50 $9.28 $9.10 $8.37
</TABLE>
Occupancy rate represents all units leased divided by the total number of units
of the Property as of December 31 of the given year. Rent per square foot
represents all revenue, except interest, derived from the property's operations
divided by the leasable square footage of the Property.
The Partnership does not directly employ any personnel. The General Partner
conducts the business of the Partnership directly and through its affiliates.
The Partnership reimburses affiliates of the General Partner for such services
rendered in accordance with the Partnership Agreement.
Master Agreement. The Partnership has entered into a Master Agreement, dated
as of June 24, 1999 (the "Master Agreement"). The Master Agreement provides,
among other things, that (i) the General Partner will contribute all of its
general partner interests in the Partnership to a newly formed limited liability
company directly or indirectly wholly owned by WXI/McN Realty L.L.C., a Delaware
limited liability company (the "Acquirer"), and this subsidiary will be
appointed as the new general partner of the Partnership and (ii) a separate
newly formed limited partnership directly or indirectly wholly owned by the
Acquirer will merge with and into the Partnership with the Partnership
continuing as the surviving limited partnership, and each limited partner of the
19
<PAGE>
Partnership (other than limited partners who validly exercise dissenters' rights
in connection with the merger) will receive cash merger consideration of
approximately $63.00 for each limited partner unit held by that limited partner
in the Partnership, together with that limited partner's allocable share, if
any, of a special distribution in cash if the Partnership participates in the
transaction and has a positive net working capital balance calculated in
accordance with the terms of the Master Agreement on the closing date of the
transaction, all as more fully described in the Proxy Statement (the "Merger
Proposal"). In the Proxy Statement, the Partnership estimates that each Limited
Partner will receive an aggregate of $92.00 per Unit if the Merger Proposal is
approved. The Partnership has scheduled a meeting of the Limited Partners to
vote on the Merger Proposal on January 21, 2000.
Litigation. Class and derivative actions were previously brought against the
Partnership by, among other parties, Limited Partners of the Partnership. In
these actions, plaintiffs allege that McNeil Investors, Inc., and its affiliate
McNeil Real Estate Management, Inc. ("McREMI") and three of their senior
officers and/or directors (collectively, the "Defendants") breached their
fiduciary duties and certain obligations under various partnership agreements
(including the Partnership Agreement). Plaintiffs alleged, among other things,
that Defendants rendered the Units highly illiquid and artificially depressed
the prices that were available for Units on the resale market. Plaintiffs also
alleged that Defendants engaged in a course of conduct to prevent the
acquisition of Units by Carl Icahn by disseminating purportedly false,
misleading and inadequate information. Plaintiffs further alleged that
Defendants acted to advance their own personal interests at the expense of the
Partnership's public Limited Partners by failing to sell Partnership properties
and failing to make distributions to Limited Partners.
On September 15, 1998, the parties signed a Stipulation of Settlement. As
structured, the Stipulation of Settlement provided for the payment of over $35
million in distributions and the commitment to market various McNeil-affiliated
partnerships (including the Partnership) for sale through a fair and impartial
bidding process overseen by a national investment banking firm. To ensure the
integrity of that process, Defendants agreed, among other things, to involve
plaintiff's counsel in oversight of that process, and plaintiff's counsel
retained an independent advisor to represent the interests of limited partners
of the partnerships in the event of a transaction.
The execution of the Master Agreement was a result of the terms of the
Stipulation of Settlement.
On July 23, 1999, High River Limited Partnership and two other affiliates of
Carl C. Icahn (Unicorn Associates Corporation and Longacre Corporation), filed a
complaint for damages against the General Partner and certain of its affiliates
alleging that the defendants improperly interfered with tender offers made by
High River for Units in the Partnership and other affiliated partnerships in
which the General Partner serves as General Partner (the "McNeil Partnerships"),
by, among other things, filing purportedly frivolous litigation to delay High
River's offers, issuing purportedly false and misleading statements opposing the
offers and purportedly forcing High River itself to file litigation to enforce
its rights. High River also alleged that as a result the defendants caused High
River to incur undue expense and that the defendants ultimately prevented High
River from
20
<PAGE>
acquiring a greater number of limited partner units. Plaintiffs also alleged
that the defendants improperly excluded High River from participating in the
auction process for the sale of the McNeil Partnerships, and otherwise took
steps to prevent its participation in the auction. In addition, plaintiffs also
sued the defendants based on their status as opt-outs from the Stipulation of
Settlement. Plaintiffs sought undisclosed damages and an accounting.
On July 30, 1999, defendants filed an answer to the High River complaint,
denying each and every material allegation contained in the High River complaint
and asserting several affirmative defenses. On December 7, 1999, the parties
entered into a settlement agreement (the "Settlement Agreement") to settle and
dispose of all claims, demands and causes of action existing as of the date of
the Settlement Agreement and arising out of, connected with or incidental to the
dealings between the parties to the Settlement Agreement, including all claims,
demands and causes of action reflected in the Schofield litigation or the High
River litigation, as well as all prior disputes arising out of events in the
years leading up to the execution of the Master Agreement.
On December 7, 1999, concurrently with the execution of the Settlement
Agreement, the plaintiffs dismissed, with prejudice, as to all parties, with
each party bearing its own costs and attorneys' fees, the High River litigation
as well as any appeal of the Final Order and Judgment in the Schofield
litigation.
In consideration of the dismissal of the High River litigation and any appeal
of the Final Order and Judgment in the Schofield litigation, the mutual general
releases and covenant not to sue described below and the other matters described
in the Settlement Agreement, McNeil Partners, McREMI, McNeil Investors, Robert
A. McNeil and Carole J. McNeil will make a cash settlement payment to High River
at the closing of the transactions contemplated by the Master Agreement,
provided that the Settlement Agreement has not been terminated as provided
below.
The McNeil Partnerships and their subsidiaries have no liability or
obligation with respect to the settlement payment. Moreover, Robert A. McNeil
and Carole J. McNeil have agreed that notwithstanding that they may be entitled
to indemnification pursuant to the provisions of the limited partnership
agreements governing the McNeil Partnerships, neither they, nor their
affiliates, will seek or accept from any McNeil Partnership, or any subsidiary
corporation or subsidiary partnership of a McNeil Partnership, payment or
reimbursement of any portion of the settlement payment or related legal fees.
The Settlement Agreement provides for mutual general releases by the parties.
Each of the parties has also agreed not to initiate, file or pursue any action,
claim, suit or proceeding against the other that concerns any of the matters
which are the subject of the releases. The releases and covenant not to sue also
apply to the respective predecessors, successors, present and former affiliates,
subsidiaries, parents, assigns, officers, directors, equity holders, partners,
members, controlling persons, employees, attorneys, financial advisors,
investment bankers and agents of the parties and, with some exceptions in the
case of WXI/McN Realty.
21
<PAGE>
The Settlement Agreement terminates in its entirety on the date which is the
earliest to occur of:
- June 30, 2000, if the closing of the transactions contemplated by the
Master Agreement has not occurred on or prior to June 30, 2000;
- the termination of the Master Agreement in its entirety; and
- the termination of the Master Agreement with respect to the last
participating McNeil Partnership.
The Settlement Agreement does not constitute an admission of damages,
wrongdoing or liability by any party.
The Partnership Agreement provides that the Partnership shall provide broad
indemnity to the General Partner and its affiliates from and against a wide
range of expenses and damages. Notwithstanding the terms of the Settlement
Agreement, it is possible that the Partnership Agreement will require
indemnification of the General Partner and its affiliates for expenses and
damages incurred in connection with the aforementioned litigation.
On December 13, 1999, Bond Purchase filed a lawsuit against the Partnership
and several affiliated entities demanding access to the books and records,
including lists of equity holders, of the entities. Bond Purchase has also
recently filed lawsuits in connection with other McNeil-affiliated partnerships.
Selected Financial Data. Set forth below is a summary of certain financial
data for the Partnership which has been excerpted from the Form 10-K and the
Form 10-Q. More comprehensive financial and other information is included in
such reports and other documents filed by the Partnership with the Commission,
and the following summary is qualified in its entirety by reference to such
reports and other documents and all the financial information and related notes
contained therein.
22
<PAGE>
BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
September 30, December 31,
1999 1998
------------- ------------
ASSETS
<S> <C> <C>
Real estate investment:
Land.................................................. $ 392,000 $ 392,000
Buildings and improvements............................ 4,059,990 3,981,407
--------- ---------
4,451,990 4,373,407
Less: Accumulated depreciation....................... (1,696,013) (1,525,208)
----------- -----------
2,755,977 2,848,199
Cash and cash equivalents................................. 1,710,453 3,070,785
Cash segregated for security deposits..................... 34,066 28,773
Accounts receivable....................................... 5,602 6,603
Escrow deposits........................................... 134,336 180,267
Deferred borrowing costs, net of accumulated
amortization of $88,882 and $76,154 at
September 30, 1999 and December 31, 1998,
respectively.......................................... 72,612 85,340
Prepaid expenses and other assets......................... 10,174 5,500
------ -----
$ 4,723,220 $ 6,225,467
=========== ===========
LIABILITIES AND PARTNERS' EQUITY (DEFICIT)
Mortgage note payable, net................................ $ 2,570,101 $ 2,613,312
Accounts payable and other accrued expenses............... 60,559 52,848
Accrued property taxes.................................... 107,19 142,490
Payable to affiliates..................................... 368,695 376,849
Security deposits and deferred rental revenue............. 35,563 27,702
------ ------
3,142,112 3,213,201
========= =========
Partners' equity (deficit):
Limited partners - 60,000 limited
partnership units authorized;
49,512 limited partnership units
issued and outstanding at September 30,
1999 and December 31, 1998......................... 1,864,297 3,296,145
General Partner....................................... (283,189) (283,879)
--------- ---------
1,581,108 3,012,266
--------- ---------
$ 4,723,220 $ 6,225,467
=========== ===========
</TABLE>
23
<PAGE>
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
---------------------------- ----------------------------
<S> <C> <C> <C> <C>
1999 1998 1999 1998
---------- ---------- ---------- ----------
Revenue:
Rental revenue...................... $ 350,079 $ 320,966 $ 998,464 $ 967,846
Interest income on mortgage
loan investments................. -- 42,092 -- 180,872
Interest income on mortgage
loan investments--affiliate...... -- -- -- 108,214
Other interest income............... 18,518 93,607 70,672 178,719
Gain on extinguishment of
mortgage loan investment......... -- -- -- 1,025,833
---------- ---------- ---------- ----------
Total revenue.................... 368,597 456,665 1,069,136 2,461,484
---------- ---------- ------------ ------------
Expenses:
Interest ........................... 59,714 60,677 180,166 182,975
Depreciation........................ 56,919 57,626 170,805 176,863
Property taxes...................... 35,826 41,046 107,478 118,984
Personnel costs..................... 37,120 37,242 16,007 111,316
Utilities........................... 17,125 23,175 56,928 63,350
Repairs and maintenance............. 25,407 30,005 85,669 87,283
Property management
fees - affiliates................ 16,376 15,944 48,131 45,976
Other property operating
expenses......................... 14,493 20,835 44,717 57,127
General and administrative.......... 16,840 39,384 54,874 202,584
General and administrative -
affiliates....................... 47,717 30,412 135,318 161,538
---------- ---------- ------------ ------------
Total expenses................... 327,537 356,346 1,000,093 1,207,996
---------- ---------- ------------ ------------
Net income.............................. $ 41,060 $ 100,319 $ 69,043 $1,253,488
======= ======== ======== =========
</TABLE>
24
<PAGE>
<TABLE>
<S> <C> <C>
Net income allocable
to limited partners................. $ 40,650 $ 99,316 $ 68,353 $1,240,953
Net income allocable
to General Partner.................. 410 1,003 690 12,535
---------- ---------- ------------ ------------
Net income.............................. $ 41,060 $ 100,319 $ 69,043 $1,253,488
======= ======== ======== =========
Net income per limited
partnership unit.................... $ .82 $ 2.00 $ 1.38 $ 25.06
======= ======== ======== =========
Distributions per limited
partnership unit.................... $ -- $ 116.14 $ 30.30 $ 146.08
======= ======== ======== =========
</TABLE>
<TABLE>
Statements of Years Ended December 31,
-----------------------------------------------------------------
<CAPTION>
<S> <C> <C> <C> <C> <C>
Operations 1998 1997 1996 1995 1994
- ----------- ---- ---- ---- ---- ----
Rental revenue $ 1,290,193 $ 1,279,458 $ 1,413,050 $ 1,405,346 $ 1,172,233
Interest income 516,148 539,573 524,791 568,970 591,791
Gain on extinguishment
of mortgage loan
investment 1,025,833 - - - -
Gain on disposition of
real estate - 1,962,280 - - -
Net income 1,258,637 2,239,792 116,736 64,116 88,909
Net income per limited
partnership unit $ 25.17 $ 44.78 $ 2.33 $ 1.28 $ 1.78
============= =========== ============ ============= =============
Distributions per limited
partnership unit $ 146.08 $ 65.64 $ 24.24 $ 5.05 $ 5.05
============ =========== =========== ============= =============
</TABLE>
<TABLE>
As of December 31,
<CAPTION>
----------------------------------------------------------------------
Balance Sheets 1998 1997 1996 1995 1994
- -------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Real estate investments,
net $ 2,848,199 $ 2,983,609 $ 5,457,587 $ 5,726,377 $ 5,938,194
Mortgage loan
investments, net - 6,868,788 4,138,453 4,271,336 4,418,306
Total assets 6,225,467 12,112,244 13,189,106 14,345,949 14,484,111
Mortgage note payable,
net 2,613,312 2,666,814 2,715,909 2,760,961 2,802,303
Partners' equity 3,012,266 8,986,219 9,996,414 11,079,628 11,265,513
</TABLE>
25
<PAGE>
10. CERTAIN INFORMATION CONCERNING THE PURCHASER.
The Purchaser. The Purchaser is a Missouri limited liability company that was
formed on November 15, 1995. The principal office of the Purchaser is 1100 Main,
Suite 2100, Kansas City, Missouri 64105. Mr. Johnson is the owner of 86% of the
Purchaser, is the managing member of Purchaser and is the person that manages
the Purchaser's affairs.
Since 1994, Mr. Johnson has been Chairman, Chief Executive Officer, and a
majority shareholder of Maxus Properties, Inc., a Missouri corporation ("Maxus")
that specializes in commercial property management. Mr. Johnson is also a vice
president of KelCor, Inc., a Missouri corporation ("KelCor") that specializes in
the acquisition of commercial real estate and the purchase of loans and
apartments from lending institutions and agencies of the federal government. Mr.
Johnson and his wife own all of the issued and outstanding stock of KelCor. Mr.
Johnson is a citizen of the United States whose business address is 1100 Main,
Suite 2100, Kansas City, Missouri 64105.
The Purchaser's business consists of purchasing interests in real estate
partnerships, notes and tax-exempt bonds.
General. Except as otherwise set forth in this Offer to Purchase, (i) neither
the Purchaser, and to the best of Purchaser's knowledge, Mr. Johnson, nor any
affiliate of the foregoing beneficially owns or has a right to acquire any
Units, (ii) neither the Purchaser, and to the best of Purchaser's knowledge, Mr.
Johnson, nor any affiliate of the foregoing has effected any transaction in the
Units within the past 60 days, (iii) neither the Purchaser, and to the best of
Purchaser's knowledge, Mr. Johnson, nor any affiliate of the foregoing has any
contract, arrangement, understanding or relationship with any other person with
respect to any securities of the Partnership, including, but not limited to,
contracts, arrangements, understandings or relationships concerning the transfer
or voting thereof, joint ventures, loan or option arrangements, puts or calls,
guarantees of loans, guarantees against loss or the giving or withholding of
proxies, (iv) there have been no transactions or business relationships which
would be required to be disclosed under the rules and regulations of the
Commission between the Purchaser, or, to the best of Purchaser's knowledge, Mr.
Johnson, on the one hand, and the Partnership or its affiliates, on the other
hand, and (v) except as otherwise stated in this Offer to Purchase, there have
been no contacts, negotiations or transactions between the Purchaser, or, to the
best of Purchaser's knowledge, Mr. Johnson, on the one hand, and the Partnership
or its affiliates, on the other hand, concerning a merger, consolidation or
acquisition, tender offer or other acquisition of securities, an election of
directors or a sale or other transfer of a material amount of assets.
The Purchaser was admitted as a Limited Partner of the Partnership on
December 1, 1999, after having purchased 10 Units from Citadel Secondary Market
Fund I, Ltd., a Florida limited partnership at a per Unit price of $92. The
Purchaser has also signed an agreement
26
<PAGE>
to acquire 1,994.68 Units at a per Unit price of $100 from Madison/WP
Partnership Value Fund II, L.P. and Madison/WP Partnership Value Fund III, LLC.
Bond Purchase has recently conducted a number of mini tender offers for
interests in entities affiliated with the General Partner. On October 15, 1999,
Bond Purchase made a tender offer, which expired on November 20, 1999, for up to
2,000 current income units, or approximately 8.0% of the outstanding current
income units, in McNeil Real Estate Fund XXI, L.P. at a price of $105 per
current income unit. On October 11, 1999, Bond Purchase offered to purchase up
to 30 limited partner units, or approximately 33.3% of the outstanding limited
partner units, in McNeil Midwest Properties I, L.P. at a price of $26,500 per
limited partner unit in cash. The offer expired on December 31, 1999. On
September 17, 1999, Bond Purchase, offered to purchase up to eleven limited
partner units, or approximately 34.4% of the outstanding limited partner units,
in Regency North Associates, L.P. at a price of $77,000 per limited partner unit
in cash. The offer expired on October 15, 1999. On October 18, 1999, Bond
Purchase offered to purchase up to three additional limited partner units in
Regency North Associates, L.P. at a price of $77,000 per limited partner unit in
cash. The offer expired on November 15, 1999.
The Purchaser and its affiliates currently own units in several partnerships
affiliated with the General Partner and the Partnership. On December 13, 1999,
Bond Purchase filed a lawsuit against the Partnership and several affiliated
entities demanding access to the books and records, including lists of equity
holders, of the entities. Bond Purchase has also recently filed lawsuits in
connection with other partnerships affiliated with the General Partner and the
Partnership.
Since the week of December 20, 1999, the Purchaser has had settlement
discussions with the General Partner concerning the Purchaser's (and the
Purchaser's affiliates') ownership interests in various partnerships affiliated
with the General Partner and the Partnership, including the Partnership. The
Purchaser indicated its interest in purchasing ownership interests in some of
such partnerships at prices higher than those that would be paid pursuant to the
terms of the Master Agreement. The Purchaser and the General Partner have not
been able to reach an agreement on settlement terms.
11. BACKGROUND OF THE OFFER.
Except as otherwise set forth in this Offer to Purchase, the Purchaser, and
to the best of Purchaser's knowledge, Mr. Johnson and affiliates of the
foregoing have had no contacts or correspondence with the Partnership or its
affiliates regarding the Partnership. Mr. Johnson and Bond Purchase have
requested access to the books and records of the Partnership. The Purchaser and
Mr. Johnson have corresponded with affiliates of the Partnership with respect to
the Purchaser's ownership of limited partnership units in other limited
partnerships that are affiliates of the Partnership.
27
<PAGE>
On December 13, 1999, Bond Purchase filed a lawsuit against the Partnership
and several affiliated entities demanding access to the books and records,
including lists of equity holders, of the entities. Bond Purchase has also
recently filed lawsuits in connection with other partnerships affiliated with
the General Partner and the Partnership.
Since the week of December 20, 1999, the Purchaser has had settlement
discussions with the General Partner concerning the Purchaser's (and the
Purchaser's affiliates') ownership interests in various partnerships affiliated
with the General Partner and the Partnership, including the Partnership. The
Purchaser indicated its interest in purchasing ownership interests in some of
such partnerships at prices higher than those that would be paid pursuant to the
terms of the Master Agreement. The Purchaser and the General Partner have not
been able to reach an agreement on settlement terms.
12. SOURCE OF FUNDS.
The Purchaser expects that approximately $4,750,000 (exclusive of fees and
expenses) would be required to purchase the Units sought pursuant to the Offer,
if tendered. The Purchaser has escrowed $4,751,000 from its working capital to
fund the Purchase Price of the Units sought pursuant to the Offer. The Purchaser
transferred $4,751,000 into an escrow with Assured Quality Title Company. The
escrowed funds will be released only (i) to fund the Purchase Price for the
purchase of Units tendered upon consummation of the Offer or (ii) upon the
termination of the Offer if on the Expiration Date any or all of the conditions
of the Offer have not been satisfied or waived.
13. PURCHASE PRICE CONSIDERATIONS. The Purchaser has set the Purchase Price
at $100 net per Unit (subject to adjustment as set forth in this Offer to
Purchase). In establishing the Purchase Price, the Purchaser reviewed certain
publicly available information including among other things: (i) the Partnership
Agreement, (ii) the Form 10-K and (iii) the Form 10-Q. The Purchaser determined
the Purchase Price pursuant to its independent analysis of the Partnership and
the Property. The Purchaser did not obtain current independent valuations on
appraisals of the assets. Based on that information, the Purchaser considered
several factors, some of which are discussed below.
Trading History of the Units. Secondary market sales activity for the Units,
including privately negotiated sales, has been limited and highly sporadic. The
Form 10-K states that "There is no established public trading market for limited
partnership units, nor is one expected to develop." At present, privately
negotiated sales and sales through intermediaries are the only means available
to a Unit Holder to liquidate an investment in Units (other than this Offer, the
Merger Proposal or other occasional offers by other partnership investors, if
any) because the Units are not listed or traded on any exchange or quoted on any
NASDAQ list or system.
28
<PAGE>
Partnership Profiles, Inc. tracks recent trades in certain limited
partnership interests. A recent issue of Partnership Spectrum indicates that 25
Units traded in the period from April 1, 1999 through September 30, 1999 at per
Unit prices between $72.51 and $74.08. Sales may be conducted which are not
reported by Partnership Profiles and the prices of sales through other channels
may differ from those reported by Partnership Profiles. The Purchaser does not
know whether the information provided by Partnership Profiles is accurate or
complete.
The Purchase Price represents the price at which the Purchaser is willing to
purchase Units. No independent person has been retained to evaluate or render
any opinion with respect to the fairness of the Purchase Price and no
representation is made by the Purchaser or any affiliate of the Purchaser as to
such fairness. The Purchaser did not attempt to obtain current independent
valuations or appraisals of the underlying assets owned by the Partnership.
Other measures of the value of the Units may be relevant to Limited Partners.
Limited Partners are urged to consider carefully all of the information
contained herein and consult with their own advisors, tax, financial or
otherwise, in evaluating the terms of the Offer before deciding whether to
tender Units.
14. CONDITIONS OF THE OFFER.
Notwithstanding any other provisions of the Offer, the Purchaser shall not be
required to accept for payment, purchase or pay for, subject to Rule 14e-1(c)
under the Exchange Act, any tendered Units (whether or not any Units have
theretofore been accepted for payment or paid for pursuant to the Offer), and
may terminate the Offer as to any Units not then paid for, if (i) the Minimum
Condition has not been satisfied or (ii) the Merger Proposal has been approved
by Limited Partners holding a majority of the outstanding Units prior to
consummation of the Offer. Furthermore, notwithstanding any other term of the
Offer, the Purchaser will not be required to accept for payment or pay for any
Units not theretofore accepted for payment or paid for and may terminate or
amend the Offer as to such Units if, at any time on or after the date of the
Offer and before the acceptance of such Units for payment or the payment
therefore, any of the following conditions exist:
(a) there shall have been threatened, instituted or pending any action,
proceeding, application, audit, claim or counterclaim by any government or
governmental authority, commission or agency, domestic or foreign, or by any
other person or before any court or governmental, regulatory or administrative
agency, authority or tribunal, domestic, foreign or supranational, which: (i)
makes illegal, delays or otherwise directly or indirectly restrains or prohibits
the making of the Offer or the acceptance for payment, purchase of or payment
for any Units by the Purchaser; (ii) imposes or confirms limitations on the
ability of the Purchaser effectively to exercise full rights of both legal and
beneficial ownership of the Units; (iii) requires divestiture by the Purchaser
of any Units; (iv) causes any material diminution in the reasonable judgment of
the Purchaser of the value of the Units or the benefits to be derived by the
Purchaser as a result of the transactions contemplated by the
29
<PAGE>
Offer; (v) might be reasonably expected to materially adversely affect the
business, properties, assets, liabilities, financial condition, operations,
results of operations or prospects of the Purchaser, or the Partnership; or (vi)
seeks to impose any material condition to the Offer unacceptable to the
Purchaser;
(b) there shall be any action taken, or any statute, rule, regulation or
order proposed, enacted, enforced, promulgated, issued or deemed applicable to
the Offer by any federal or state court, government or governmental authority or
agency which might, directly or indirectly, result in any of the consequences
referred to in paragraph (a) above;
(c) any change or development shall have occurred or been threatened or
disclosed in the business, properties, assets, liabilities, financial condition,
operations, results of operations or prospects, capitalization, partners' equity
of the Partnership, which is or may be materially adverse to the Partnership;
(d) the General Partner of the Partnership shall have failed or refused to
take all action that the Purchaser deems necessary for the Purchaser to be the
registered owner of the Units tendered and accepted for payment hereunder
simultaneously with the consummation of the Offer, in accordance with the
Partnership Agreement and applicable law;
(e) the Partnership shall have (i) issued, or authorized or proposed the
issuance of, any partnership interests of any class, or any securities
convertible into, or rights, warrants or options to acquire, any such interests
or other convertible securities, (ii) issued or authorized or proposed the
issuance of any other securities, in respect of, in lieu of, or in substitution
for, all or any of the presently outstanding Units, (iii) declared or paid any
Distribution, other than in cash, on any of the Units, or (iv) the Partnership,
its subsidiary or the General Partner shall have authorized, recommended,
proposed or announced its intention to propose any merger, consolidation,
liquidation or business combination transaction, acquisition of assets,
disposition of assets or material change in its capitalization, or any
comparable event (other than the Merger Proposal) not in the ordinary course of
business; or
(f) the General Partner shall have modified, or taken any step or steps to
modify, in any way, the procedures or regulations applicable to the registration
of Units or transfers of Units on the books and records of the Partnership or
the admission of transferees of Units as registered owners and as Limited
Partners.
The foregoing conditions are for the sole benefit of the Purchaser and its
affiliates and may be (but need not be) asserted by the Purchaser regardless of
the circumstances giving rise to such conditions or may be waived by the
Purchaser in whole or in part at any time. Any determination by the Purchaser
concerning the events described above will be final and binding upon all
parties.
30
<PAGE>
15. CERTAIN LEGAL MATTERS.
Except as set forth in this Offer to Purchase, based on its review of
publicly available filings by the Partnership with the Commission and other
publicly available information regarding the Partnership, the Purchaser is not
aware of any licenses or regulatory permits that would be material to the
business of the Partnership, taken as a whole, and that might be adversely
affected by the Purchaser's acquisition of Units as contemplated herein, or any
filings, approvals or other actions by or with any domestic or foreign
governmental authority or administrative or regulatory agency that would be
required prior to the acquisition of Units by the Purchaser pursuant to the
Offer as contemplated herein, other than the filing of a Tender Offer Statement
on Schedule 14D-1 (which has been filed) and any required amendments thereto.
Should any such approval or other action be required, there can be no assurance
that any such additional approval or action, if needed, would be obtained
without substantial conditions or that adverse consequences might not result to
the Partnership's business, or that certain parts of the Partnership's or the
Purchaser's business might not have to be disposed of or held separate or other
substantial conditions complied with in order to obtain such approval or action
in the event that such approvals were not obtained or such actions were not
taken.
Appraisal Rights. Limited Partners will not have appraisal rights as a result
of the Offer.
State Anti-Takeover Laws. A number of states have adopted anti-takeover laws
which purport, to varying degrees, to be applicable to attempts to acquire
securities of corporations or other entities which are incorporated or organized
in such states or which have substantial assets, security holders, principal
executive officers or principal places of business therein. Although the
Purchaser has not attempted to comply with any state anti-takeover statutes in
connection with the Offer, the Purchaser reserves the right to challenge the
validity or applicability or any state law allegedly applicable to the Offer and
nothing in this Offer to Purchase nor any action taken in connection therewith
is intended as a waiver of such right. If any state anti-takeover statute is
applicable to the Offer, the Purchaser might be unable to accept for payment or
purchase Units tendered pursuant to the Offer or be delayed in continuing or
consummating the Offer. In such case, the Purchaser may not be obliged to accept
for purchase or pay for any Units tendered.
ERISA. By executing and returning the Letter of Transmittal, a Limited
Partner will be representing that either (a) the Limited Partner is not a plan
subject to Title I of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), or Section 4975 of the Code, or an entity deemed to hold
"plan assets" within the meaning of 29 C.F.R. Section 2510.3-101 of any such
plan; or (b) the tender and acceptance of Units pursuant to the Offer will not
result in a nonexempt prohibited transaction under Section 406 of ERISA or
Section 4975 of the Code.
31
<PAGE>
Margin Requirements. The Units are not "margin securities" under the
regulations of the Board of Governors of the Federal Reserve System and,
accordingly, those regulations generally are not applicable to the Offer.
Antitrust. Under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended (the "HSR Act"), and the rules and regulations that have been
promulgated thereunder by the Federal Trade Commission (the "FTC"), certain
acquisition transactions may not be consummated until certain information and
documentary material has been furnished for review by the Antitrust Division of
the Department of Justice and the FTC and certain waiting period requirements
have been satisfied. The Purchaser does not believe any filing is required under
the HSR Act with respect to its acquisition of Units contemplated by the Offer.
16. CERTAIN FEES AND EXPENSES.
The Purchaser will not pay any fees or commissions to any broker, dealer or
other person for soliciting tenders of Units pursuant to the Offer. The
Purchaser is acting as depositary in connection with the Offer. The Purchaser
will pay all costs and expenses of printing and mailing the Offer and its legal
fees and expenses.
17. MISCELLANEOUS.
The Offer is being made to all Limited Partners, Beneficial Owners and
Assignees, all to the extent known by the Purchaser. The Purchaser is not aware
of any state in which the making of the Offer is prohibited by administrative or
judicial action pursuant to a state statute. If the Purchaser becomes aware of
any state where the making of the Offer is so prohibited, the Purchaser will
make a good faith effort to comply with any such statute or seek to have such
statute declared inapplicable to the Offer. If, after such good faith effort,
the Purchaser cannot comply with any applicable statute, the Offer will not be
made to (nor will tenders be accepted from or on behalf of) Limited Partners in
such state.
Pursuant to Rule 14d-3 of the General Rules and Regulations under the
Exchange Act, the Purchaser has filed with the Commission a Tender Offer
Statement on Schedule 14D-1, together with exhibits, furnishing certain
additional information with respect to the Offer. Such statement and any
amendments thereto, including exhibits, may be inspected and copies may be
obtained at the same places and in the same manner as set forth with respect to
information concerning the Partnership in Section 9 ("Certain Information
Concerning the Partnership").
32
<PAGE>
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATION ON BEHALF OF THE PURCHASER NOT CONTAINED HEREIN OR IN THE LETTER
OF TRANSMITTAL AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST
NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED.
Bond Purchase, L.L.C.
January 13, 2000
33
<PAGE>
Questions and requests for assistance may be directed to Bond Purchase,
L.L.C. at the address and telephone number listed below. Additional copies of
this Offer to Purchase, the Letter of Transmittal and other tender offer
materials may be obtained from Bond Purchase, L.L.C. as set forth below, and
will be furnished promptly at the Purchaser's expense. The Letter of Transmittal
and any other required documents should be sent or delivered by each Limited
Partner to Bond Purchase, L.L.C. at its address set forth below. To be
effective, a duly completed and signed Letter of Transmittal as well as
Certificates representing any Units being tendered must be received by Bond
Purchase, L.L.C. at the address set forth below before 12:00 midnight, New York
City Time, on February 11, 2000.
By Mail/Hand or Overnight Delivery
Bond Purchase, L.L.C.
1100 Main Street, Suite 2100
Kansas City, MO 64105
By Facsimile
(816) 221-1829
For Additional Information Call
(816) 421-4670
34
LETTER OF TRANSMITTAL
TO
TENDER UNITS OF LIMITED PARTNERSHIP INTEREST
OF
MCNEIL REAL ESTATE FUND XX, L.P.
PURSUANT TO THE OFFER TO PURCHASE DATED JANUARY 13, 2000
BY
BOND PURCHASE, L.L.C.
- --------------------------------------------------------------------------------
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL
EXPIRE AT MIDNIGHT, NEW YORK CITY TIME, ON
FEBRUARY 11, 2000, (THE "EXPIRATION DATE") UNLESS
EXTENDED.
- --------------------------------------------------------------------------------
BOND PURCHASE, L.L.C.
By Mail, Overnight Courier or By Hand:
1100 Main Street, Suite 2100
Kansas City, Missouri 64105
<TABLE>
- -----------------------------------------------------------------------------------
DESCRIPTION OF UNITS TENDERED
- -----------------------------------------------------------------------------------
Name(s) and Address(es) of Registered |
Holder(s) (Please indicate changes or |Units in McNeil Real Estate Fund XX, L.P.
corrections to the name, address and |
tax identification number printed |
below.)
- --------------------------------------------------------------------------------
<C> <C>
| 1. Total | 2. Number of |
| Number of | Units |
| Units | Tendered |
| Owned | for Cash |
| ( ) | ( ) |
- --------------------------------------------------------------------------------
</TABLE>
To participate in the offer, you must send a duly completed and executed copy
of this Letter of Transmittal, the certificates representing the Units, and any
other documents required by this Letter of Transmittal so that such documents
are received by Bond Purchase, L.L.C. on or prior to February 11, 2000, unless
extended. The method of delivery of this Letter of Transmittal and all other
required documents is at your option and risk, and delivery will be deemed made
only when actually received by Bond Purchase, L.L.C. If delivery is by mail,
registered mail with return receipt requested is recommended. In all cases,
sufficient time should be allowed to assure timely delivery. Delivery of this
Letter of Transmittal or any other required documents to an address other than
as set forth above does not constitute valid delivery.
<PAGE>
PLEASE SEND THE CERTIFICATE ORIGINALLY ISSUED TO
REPRESENT YOUR INTEREST IN THE PARTNERSHIP TO
BOND PURCHASE, L.L.C.
WITH THIS LETTER OF TRANSMITTAL
For information or assistance in connection with the offer or the completion
of this Letter of Transmittal, please contact Bond Purchase, L.L.C. at
1-816-421-4670.
The instructions accompanying this Letter of Transmittal should be read
carefully before this Letter of Transmittal is completed.
<TABLE>
<S> <S>
---------------------------------------------------- ----------------------------------------------------
| SPECIAL PAYMENT INSTRUCTIONS | | SPECIAL DELIVERY INSTRUCTIONS |
| (See Instructions 1 and 9) | | (See Instructions 1 and 9) |
| | | |
|To be completed ONLY if the consideration price of| |To be completed ONLY if the consideration for the |
|Units accepted for payment is to be issued in the | |purchase price of Units accepted for payment is |
|name of someone other than the undersigned. | |to be issued in the name of someone other than the |
| | |undersigned or to the undersigned at an address |
|[ ] Issue consideration to: | |other than that shown above. |
| | | |
|Name _____________________________________________ | |[ ] Mail consideration to: |
| (Please type or Print) | | |
| | |Name_____________________________________________ |
|Address __________________________________________ | | (Please Type or Print) |
| | | |
|__________________________________________________ | |Address___________________________________________ |
| (Include Zip Code) | | |
| | |__________________________________________________ |
| | | (Include Zip Code) |
| __________________________________________________ | | |
| (Tax Identification or Social Security No.) | | __________________________________________________ |
| (See Substitute Form W-9) | | (Tax Identification or Social Security No.) |
| | | (See Substitute Form W-9) |
---------------------------------------------------- ----------------------------------------------------
</TABLE>
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
2
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tender(s) to Bond Purchase, L.L.C., a Missouri limited
liability company (the "Purchaser"), the number of units of limited partnership
interest ("Units") of McNeil Real Estate Fund XX, L.P., a California limited
partnership (the "Partnership"), specified below, pursuant to the Purchaser's
offer to purchase up to 24,000 of the issued and outstanding Units at a purchase
price of $100 per Unit, net to the seller in cash (the "Purchase Price"),
without interest thereon, provided, however, that the Purchaser will not accept
any Units the acceptance of which would result in a sale or exchange of 50% or
more of the total interest in capital and profits of the Partnership within any
12-month period, as determined by the Purchaser, and upon the other terms and
subject to the conditions set forth in the Offer to Purchase dated January 13,
2000 (the "Offer to Purchase") and this Letter of Transmittal ("the "Letter of
Transmittal," which, together with the Offer to Purchase and any supplements,
modifications or amendments thereto, constitute the "Offer"), all as more fully
described in the Offer to Purchase. The Purchase Price will be automatically
reduced by the aggregate amount of distributions per Unit, if any, made or
declared by the Partnership after December 31, 1999 and on or prior to 12:00
midnight, New York City time, on February 11, 2000 (the "Expiration Date"). In
addition, if a distribution is made or declared after the Expiration Date but
prior to the date on which the Purchaser pays the Purchase Price for the
tendered Units, the Purchaser will offset the amount otherwise due a holder of
Units pursuant to the Offer in respect of tendered Units which have been
accepted for payment but not yet paid for by the amount of any such
distribution. LIMITED PARTNERS WHO TENDER THEIR UNITS WILL NOT BE OBLIGATED TO
PAY ANY COMMISSIONS OR PARTNERSHIP TRANSFER FEES, WHICH COMMISSIONS OR
PARTNERSHIP TRANSFER FEES WILL BE BORNE BY THE PURCHASER. Receipt of the Offer
to Purchase is hereby acknowledged. Capitalized terms used but not defined
herein have the respective meanings ascribed to them in the Offer to Purchase.
By executing and delivering this Letter of Transmittal, a tendering Limited
Partner irrevocably appoints the Purchaser and designees of the Purchaser and
each of them as such Limited Partner's proxies, with full power of substitution,
in the manner set forth in this Letter of Transmittal to the full extent of such
Limited Partner's rights with respect to the Units tendered by such Limited
Partner and accepted for payment by the Purchaser (and with respect to any and
all other Units or other securities issued or issuable in respect of such Units
on or after the date hereof). All such proxies shall be considered irrevocable
and coupled with an interest in the tendered Units. Such appointment will be
effective when, and only to the extent that, the Purchaser accepts such Units
for payment. Upon such acceptance for payment, all prior proxies given by such
Limited Partner with respect to such Units (and such other Units and securities)
will be revoked without further action, and no subsequent proxies may be given
nor any subsequent written consents executed (and, if given or executed, will
not be deemed effective). The Purchaser and its designees will, with respect to
the Units (and such other Units and securities) for which such appointment is
effective, be empowered to exercise all voting and other rights of such Limited
Partner as they in their sole discretion may deem proper at any meeting of
Limited Partners (including any meeting with respect to the Merger Proposal) or
any adjournment or postponement thereof, by written consent in lieu of any such
meeting or otherwise. The Purchaser reserves the right to require that, in order
for a Unit to be deemed validly tendered, immediately upon the Purchaser's
acceptance of such Units for payment, the Purchaser must be able to exercise
3
<PAGE>
full voting rights with respect to such Unit and other securities, including
voting at any meeting of Limited Partners.
By executing and delivering this Letter of Transmittal, a tendering Limited
Partner also irrevocably constitutes and appoints the Purchaser and its
designees as the Limited Partner's attorneys-in-fact, each with full power of
substitution to the extent of the Limited Partner's rights with respect to the
Units tendered by the Limited Partner and accepted for payment by the Purchaser.
Such appointment will be effective when, and only to the extent that, the
Purchaser accepts the tendered Units for payment. Upon such acceptance for
payment, all prior powers of attorney granted by the Limited Partner with
respect to such Unit will, without further action, be revoked, and no subsequent
powers of attorney may be granted (and if granted will not be effective).
Pursuant to such appointment as attorneys-in- fact, the Purchaser and its
designees each will have the power, among other things, (i) to seek to transfer
ownership of such Units on the Partnership books maintained by the transfer
agent and registrar for the Partnership (and execute and deliver any
accompanying evidences of transfer and authenticity any of them may deem
necessary or appropriate in connection therewith), (ii) to receive any and all
distributions made by the Partnership after the Expiration Date, and to receive
all benefits and otherwise exercise all rights of beneficial ownership of such
Units in accordance with the terms of the Offer, (iii) to execute and deliver to
the general partner of the Partnership (the "General Partner") a change of
address form instructing the General Partner to send any and all future
distributions to which the Purchaser is entitled pursuant to the terms of the
Offer in respect of tendered Units to the address specified in such form, (iv)
to endorse any check payable to or upon the order of such Limited Partner
representing a distribution to which the Purchaser is entitled pursuant to the
terms of the Offer, in each case on behalf of the tendering Limited Partner, and
(v) if legal title to the Units is held through an IRA or KEOGH or similar
account, the Limited Partner understands that this Letter of Transmittal must be
signed by the custodian of such IRA or KEOGH account and the Limited Partner
hereby authorizes and directs the custodian of such IRA or KEOGH to confirm this
Letter of Transmittal. This Power of Attorney shall not be affected by the
subsequent mental disability of the Limited Partner, and the Purchaser shall not
be required to post bond in any nature in connection with this Power of
Attorney.
By executing and delivering the Letter of Transmittal, a tendering Limited
Partner irrevocably assigns to the Purchaser and its assigns all of the right,
title and interest of such Limited Partner in the Partnership with respect to
the Units tendered and purchased pursuant to the Offer, including, without
limitation, such Limited Partner's right, title and interest in and to any and
all distributions made by the Partnership after the Expiration Date in respect
of the Units tendered by such Limited Partner and accepted for payment by the
Purchaser, regardless of the fact that the record date for any such distribution
may be a date prior to the Expiration Date.
By executing and returning this Letter of Transmittal, the undersigned
represents that either (a) the undersigned is not a plan subject to Title I of
the Employee Retirement Income Security Act of 1974, as amended ("ERISA") or
Section 4975 of the Internal Revenue Code of 1986, as amended (the "Code"), or
an entity deemed to hold "plan assets" within the meaning of 29 C.F.R.
4
<PAGE>
Section 2510.3-101 of any such plan; or (b) the tender and acceptance of Units
pursuant to the Offer will not result in a nonexempt prohibited transaction
under Section 406 of ERISA or Section 4975 of the Code.
By executing this Letter of Transmittal, the undersigned hereby represents
and warrants to Purchaser that it (i) has received and reviewed the Offer to
Purchase and (ii) owns the Units and has full power and authority to validly
sell, assign, transfer, convey and deliver to Purchaser the Units, and that
effective when the Units are accepted for payment by Purchaser, the undersigned
hereby conveys to Purchaser and will hereby 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 the Units will not be subject to
any adverse claim. The undersigned further represents and warrants that it is a
"United States person," as defined in Section 7701(a)(30) of the Internal
Revenue Code of 1986, as amended.
All authority herein conferred or agreed to be conferred shall survive the
death or incapacity of the undersigned, and any obligations of the undersigned
shall be binding upon the heirs, personal representatives, trustees in
bankruptcy, legal representatives, and successors and assigns of the
undersigned.
The undersigned further represents and warrants that, to the extent a
certificate evidencing the Units tendered hereby (the "original certificate") is
not delivered by the undersigned together with this Letter of Transmittal, (i)
the undersigned represents and warrants to the Purchaser that the undersigned
has not sold, transferred, conveyed, assigned, pledged, deposited or otherwise
disposed of any portion of the Units, (ii) the undersigned has caused a diligent
search of its records to be taken and has been unable to locate the original
certificate, (iii) if the undersigned shall find or recover the original
certificate evidencing the Units, the undersigned will immediately and without
consideration surrender it to the Purchaser; and (iv) the undersigned shall at
all times indemnify, defend, and save harmless the Purchaser and the
Partnership, its successors, and its assigns from and against any and all
claims, actions, and suits whether groundless or otherwise, and from and against
any and all liabilities, losses, damages, judgments, costs, charges, counsel
fees, and other expenses of every nature and character by reason of honoring or
refusing to honor the original certificate when presented by or on behalf of a
holder in due course of a holder appearing to or believed by the partnership to
be such, or by issuance or delivery of a replacement certificate, or the making
of any payment, delivery, or credit in respect of the original certificate
without surrender thereof, or in respect of the replacement certificate.
The undersigned recognizes that, if proration is required pursuant to the
terms of the Offer will accept for payment from among those Units validly
tendered on or prior to the Expiration Date and not properly withdrawn, the
maximum number of Units permitted pursuant to the Offer (including the maximum
amount possible without causing a Tax Termination of the Partnership) on a pro
rata basis, based upon the number of Units validly tendered prior to the
Expiration Date and not properly withdrawn; however, because of restrictions in
the Partnership Agreement (i) a Limited Partner may not make a partial tender of
Units owned by such Limited Partner if such Limited Partner would otherwise
retain less than ten (10) Units and (ii) tenders of less than ten (10) Units
will only be accepted if all the Units held by such Limited Partner are
tendered.
The undersigned understands that a tender of Units to the Purchaser will
constitute a binding
5
<PAGE>
agreement between the undersigned and the Purchaser upon the terms and subject
to the conditions of the Offer. The undersigned recognizes that under certain
circumstances set forth in Section 2 ("Proration; Acceptance for Payment and
Payment for Units") and Section 14 ("Conditions of the Offer") of the Offer to
Purchase, the Purchaser may not be required to accept for payment any of the
Units tendered hereby. In such event, the undersigned understands that any
Letter of Transmittal for Units not accepted for payment will be destroyed by
the Purchaser. Except as stated in Section 4 ("Withdrawal Rights") of the Offer
to Purchase, this tender is irrevocable, provided Units tendered pursuant to the
Offer may be withdrawn at any time prior to the Expiration Date.
6
<PAGE>
- --------------------------------------------------------------------------------
Signature Box
(See Instruction 2)
Please sign exactly as your name is printed on the form of this Letter of
Transmittal. For joint owners, each joint owner must sign. (See Instruction 2)
TRUSTEES, EXECUTORS, ADMINISTRATORS, GUARDIANS, ATTORNEYS-IN-FACT, OFFICERS
OF A CORPORATION OR OTHER PERSONS ACTING IN A FIDUCIARY OR REPRESENTATIVE
CAPACITY, PLEASE COMPLETE THIS BOX AND SEE INSTRUCTION 2.
The signatory hereto hereby tenders the Units indicated in this Letter of
Transmittal to the Purchaser pursuant to the terms of the Offer, and certifies
under penalties of perjury that the statements in Box A, Box B and, if
applicable, Box C and Box D are true.
X ___________________________________________________________________________
(Signature of Owner)
X ___________________________________________________________________________
(Signature of Joint Owner)
Name and Capacity (if other than individuals):_________________________________
Title: ________________________________________________________________________
Address: ______________________________________________________________________
(City) (State) (zip)
Area Code and Telephone No. (Day): ____________________________________________
(Evening): _______________________________________
Signature(s) Guarantee Required For All Signatures
(See Instruction 2)
Name and Address of Eligible Institution: ____________________________________
______________________________________________________________________________
______________________________________________________________________________
Authorized Signature: X______________________________________________________
Name: ________________________________________________________________________
Title:_____________________________________ Date: _________________________
- --------------------------------------------------------------------------------
7
<PAGE>
TAX CERTIFICATIONS
(See Instruction 3)
By signing the Letter of Transmittal in the Signature Box, the Limited
Partner certifies as true under penalty of perjury, the representations in Boxes
A, B and C below. Please refer to the attached instructions for completing this
Letter of Transmittal and Boxes A, B and C below.
- --------------------------------------------------------------------------------
BOX A
SUBSTITUTE FORM W-9
(See Instruction 3)
The Limited Partner hereby certifies the following to the Purchaser under
penalties of perjury:
(i) The Taxpayer Identification No. ("TIN") printed (or corrected) on the
front of this Letter of Transmittal is the correct TIN of the Limited
Partner, unless the Units are held in an Individual Retirement Account
("IRA"), or if box C is checked, the Limited Partner has applied for a
TIN. If the Limited Partner has applied for a TIN, a TIN has not been
issued to the Limited Partner, and either (a) the Limited Partner has
mailed or delivered an application to receive a TIN to the appropriate IRS
Center or Social Security Administration Office, or (b) the Limited
Partner intends to mail or deliver an application in the near future (it
being understood that if the Limited Partner does not provide a TIN to the
Purchaser, 31% of all reportable payments made to the Limited Partner will
be withheld); and
(ii) Unless this box [ ] is checked, the Limited Partner is not subject to
back-up withholding either because the Limited Partner, (a) is exempt from
back-up withholding; (b) has not been notified by the IRS that such
Limited Partner is subject to back-up withholding as a result of a failure
to report all interest or dividends; or (c) has been notified by the IRS
that such Limited Partner is no longer subject to back-up withholding.
Note: Place an "X" in the box in (ii) above, only if you are unable to certify
that the Limited Partner is not subject to back-up withholding.
- --------------------------------------------------------------------------------
8
<PAGE>
- --------------------------------------------------------------------------------
BOX B
FIRPTA AFFIDAVIT
(See Instruction 3)
- --------------------------------------------------------------------------------
Under Section 1445(e)(5) of the Internal Revenue Code and Treas. Reg. 1.
1445-1(d), a transferee must withhold tax equal to 10% of the amount realized
with respect to certain transfers of an interest in a partnership if 50% or more
of the value of its gross assets consists of U.S. real property interests and
90% or more of the value of its gross assets consists of U.S. real property
interests plus cash equivalents, and the holder of the partnership interest is a
foreign person. To inform the Purchaser that no withholding is required with
respect to the Limited Partner's Units in the Partnership, the person signing
this Letter of Transmittal hereby certifies the following under penalties of
perjury:
(i) Unless this box [ ] is checked, the Limited Partner, if an individual,
is a U.S. citizen or a resident alien for purposes of U.S. income
taxation, and if other than an individual, is not a foreign
corporation, foreign partnership, foreign estate or foreign trust (as
those terms are defined in the Internal Revenue Code and Income Tax
Regulations);
(ii) The Limited Partner's U.S. social security number (for individuals) or
employer identification number (for non-individuals) is correct as
furnished in the blank provided for that purpose on the front of the
Letter of Transmittal;
(iii) The Limited Partner's home address (for individuals), or office address
(for nonindividuals), is correctly printed (or corrected) on the front
of this Letter of Transmittal.
The person signing this Letter of Transmittal understands that this
certification may be disclosed to the IRS by the Purchaser and that any false
statements contained herein could be punished by fine, imprisonment, or both.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BOX C
SUBSTITUTE FORM W-8
(See Instruction 4)
By checking this box [ ], the person signing this Letter of Transmittal
hereby certifies under penalties of perjury that the Limited Partner is an
"exempt foreign person" for purposes of the Back-up Withholding rules under the
U.S. Federal income tax laws, because the Limited Partner has the following
characteristics:
(i) Is a nonresident alien individual or a foreign corporation,
partnership, estate or trust;
(ii) Is an individual, has not been and plans not to be present in the U.S.
for a total of 183 days or more during the calendar year; and
(iii) Neither engages, nor plans to engage, in a U.S. trade or business that
has effectively connected gains from transactions with a broker or
barter exchange.
- --------------------------------------------------------------------------------
9
<PAGE>
INSTRUCTIONS FOR COMPLETING LETTER OF TRANSMITTAL
Forming Part of the Terms and Conditions of the Offer
=======================================================================
FOR ASSISTANCE IN COMPLETING THE LETTER OF TRANSMITTAL, CALL:
Bond Purchase, L.L.C. AT 1-816-421-4670
=======================================================================
1. Delivery of Letter of Transmittal. For convenience in responding to the
Offer, a self-addressed, postage-paid envelope had been enclosed with the
Offer to Purchase. However, to ensure receipt of the Letter of Transmittal,
it is suggested that you use an overnight courier or, if the Letter of
Transmittal is to be delivered by United States mail, that you use
certified or registered mail, return receipt requested. To be effective, a
duly completed and signed Letter of Transmittal (or facsimile thereof) and
certificates evidencing tendered Units must be received by Bond Purchase,
L.L.C. at the address (or facsimile number) set forth below before the
Expiration Date, 12:00 Midnight, New York City Time on February 11, 2000,
unless extended. LETTERS OF TRANSMITTAL WHICH HAVE BEEN DULY EXECUTED, BUT
WHERE NO INDICATION IS MARKED IN THE "NUMBER OF UNITS TENDERED" COLUMN,
SHALL BE DEEMED TO HAVE TENDERED ALL UNITS PURSUANT TO THE OFFER. Because
of restrictions in the Partnership Agreement, (i) a Limited Partner may not
make a partial tender of Units owned by such Limited Partner if such
Limited Partner would otherwise retain less than ten (10) Units and (ii)
tenders of less than ten (10) Units will only be accepted if all of the
Units held by such Limited Partner are tendered.
By Mail/hand Delivery or Bond Purchase, L.L.C.
Overnight Courier: 1100 Main Street, Suite 2100
Kansas City, Missouri 64105
By Facsimile: (816) 221-1829
For Additional Information Call: (816) 421-4670
The method of delivery of the Letter of Transmittal, certificates
evidencing tendered units and all other required documents is at the option
and sole risk of the tendering Limited Partner, and the delivery will be
deemed made only when actually received by Bond Purchase, L.L.C. In all
cases, sufficient time should be allowed to assure timely delivery. If
tendering by facsimile, please mail the original copy of the Letter of
Transmittal (along with certificates evidencing tendered units) to Bond
Purchase, L.L.C. at the address listed above.
10
<PAGE>
All tendering holders of Units, by execution of this Letter of Transmittal
or facsimile hereof, waive any right to receive any notice of the
acceptance of their Units for payment.
2. Signatures. All Limited Partners must sign in the Signature Box of this
Letter of Transmittal. If the Units are held in the names of two or more
persons, all such persons must sign the Letter of Transmittal. When signing
as a general partner, corporate officer, attorney-in-fact, executor,
custodian, administrator or guardian, please give full title and send
proper evidence of authority satisfactory to the Purchaser with this Letter
of Transmittal. With respect to most trusts, the Partnership will generally
require only the named trustee to sign the Letter of Transmittal. For Units
held in a custodial account for minors, only the signature of the custodian
will be required.
For IRA custodial accounts, the beneficial owner should return the executed
Letter of Transmittal to Bond Purchase, L.L.C. as specified in Instruction
1 herein. Such Letter of Transmittal will then be forwarded by Bond
Purchase, L.L.C. to the custodian for additional execution. Such Letter of
Transmittal will not be considered duly completed until after it has been
executed by the custodian.
If any tendered Units are registered in different names, it will be
necessary to complete, sign and submit as many separate Letters of
Transmittal as there are different registrations of certificates. If the
Letter of Transmittal is signed by the registered holder of the Units
tendered herewith and payment is to be made directly to that holder, then
no signature guarantee is required on the Letter of Transmittal. Similarly,
if the Units are tendered for the account of a member firm of a registered
national securities exchange, a member of the National Association of
Securities Dealers, Inc. or a commercial bank, savings bank, credit union,
savings and loan association or trust company having an office, branch or
agency in the United States (each an "Eligible Institution"), no signature
guarantee is required on the Letter of Transmittal. However, in all other
cases, all signatures on the Letter of Transmittal must be guaranteed by an
Eligible Institution.
3. U.S. Persons. A Limited Partner who or which is a United States citizen OR
a resident alien individual, a domestic corporation, a domestic
partnership, a domestic trust or a domestic estate (collectively, "United
States Persons") as those terms are defined in the Code and Income Tax
Regulations, should follow the instructions below with respect to
certifying Boxes A and B.
Taxpayer Identification Number. To avoid 31% federal income tax backup
withholding, the Limited Partner must furnish his, her or its TIN in the
blank provided for that purpose on the back of the Letter of Transmittal
and certify under penalties of perjury Box A, B and, if applicable, Box C.
When determining the TIN to be furnished, please refer to the following
note as a guideline:
11
<PAGE>
NOTE: INDIVIDUAL ACCOUNTS should reflect their own TIN. JOINT ACCOUNTS
should reflect the TIN of the person whose name appears first. TRUST
ACCOUNTS should reflect the TIN assigned to the Trust. IRA CUSTODIAL
ACCOUNTS should reflect the TIN of the custodian. CUSTODIAL ACCOUNTS
FOR THE BENEFIT OF MINORS should reflect the TIN of the minor.
CORPORATIONS OR OTHER BUSINESS ENTITIES should reflect the TIN
assigned to that entity. If you need additional information, please
see the attached copy of the Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9.
Substitute Form W-9 - Box A.
(i) In order to avoid 31% federal income tax backup withholding, the
Limited Partner must provide to the Purchaser in the blank provided for
that purpose on the back of the Letter of Transmittal the Limited Partner's
correct TIN and certify, under penalties of perjury, that such Limited
Partner is not subject to such backup withholding. The TIN being provided
on the Substitute Form W-9 is that of the registered Limited Partner as
indicated on the back of the Letter of Transmittal. If a correct TIN is not
provided, penalties may be imposed by the IRS, in addition to the Limited
Partner being subject to backup withholding. Certain Limited Partners
(including, among others, all corporations) are not subject to backup
withholding. Backup withholding is not an additional tax. If withholding
results in an overpayment of taxes, a refund may be obtained from the IRS.
(ii) Do not check the box in Box A, Part (ii), unless you have been
notified by the IRS that you are subject to backup withholding.
FIRPTA Affidavit - Box B. To avoid withholding of tax pursuant to Section
1445 of the Code, each Limited Partner who or which is a United States
Person (as defined in Instruction 3 above) must certify, under penalties of
perjury, the Limited Partner's TIN and address, and that the Limited
Partner is not a foreign person. Tax withheld under Section 1445 of the
Internal Revenue Code is not an additional tax. If withholding results in
an overpayment of tax, a refund may be obtained from the IRS. Check the box
in Box B, Part (ii) only if you are not a U.S. Person, as described
therein.
4. Foreign Persons - Box C. In order for a Limited Partner who is a foreign
person (i.e., not a United States Person as defined in Instruction 3 above)
to qualify as exempt from 31% backup withholding, such foreign Limited
Partner must certify, under penalties of perjury, the statement in Box C of
this Letter of Transmittal attesting to that foreign person's status by
checking the box in such statement. UNLESS SUCH BOX IS CHECKED, SUCH
FOREIGN PERSON WILL BE SUBJECT TO 31% WITHHOLDING OF TAX UNDER SECTION 1445
OF THE CODE.
5. Conditional Tenders. No alternative, conditional or contingent tenders will
be accepted.
12
<PAGE>
6. Validity of Letter of Transmittal. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance of a Letter of
Transmittal will be determined by the Purchaser and such determination will
be final and binding. The Purchaser's interpretation of the terms and
conditions of the Offer (including these instructions for the Letter of
Transmittal) also will be final and binding. The Purchaser will have the
right to waive any irregularities or conditions as to the manner of
tendering. Any irregularities in connection with tenders must be cured
within such time as the Purchaser shall determine unless waived by it. The
Letter of Transmittal will not be valid unless and until any irregularities
have been cured or waived. The Purchaser is under no duty to give
notification of defects in a Letter of Transmittal and will incur no
liability for failure to give such notification.
7. Assignee Status. Assignees must provide documentation to Bond Purchase,
L.L.C. which demonstrates, to the satisfaction of the Purchaser, such
person's status as an assignee.
8. Inadequate Space. If the space provided herein is inadequate, the numbers
of Units and any other information should be listed on a separate schedule
attached hereto and separately signed on each page thereof in the same
manner as this Letter of Transmittal is signed.
9. Special Payment and Delivery Instructions. If consideration is to be issued
in the name of a person other than the person signing the Signature box of
the Letter of Transmittal or if consideration is to be sent to someone
other than such signer or to an address other than that set forth on the
Letter of Transmittal in the box entitled "Description of Units Tendered,"
the appropriate boxes on the Letter of Transmittal should be completed.
Questions and requests for assistance may be directed to Bond Purchase,
L.L.C. at its address and telephone number listed below. Additional copies of
the Offer to Purchase, the Letter of Transmittal and other tender offer
materials may be obtained from Bond Purchase, L.L.C. as set forth below, and
will be furnished promptly at the Purchaser's expense. You may also contact your
broker, dealer, commercial bank, trust company or other nominee for assistance
concerning the Offer.
Bond Purchase, L.L.C.
1100 Main Street, Suite 2100
Kansas City, Missouri 64105
Call (816) 421-4670
13
<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: i.e.,
000-00-0000. Employer identification numbers have nine digits separated by only
one hyphen: i.e., 00-0000000. The table below will help determine the number to
give the payer.
<TABLE>
<S> <S>
FOR THIS TYPE OF ACCOUNT: GIVE THE TAXPAYER
IDENTIFICATION NUMBER OF
1. An individual account The individual
2. Two or more individuals (joint The actual owner of the account or,
account) if combined funds, the first individual
on the account
3. Custodian account of a minor (Uniform The minor(2)
Gift to Minors Act)
4.a. The usual revocable savings trust account The grantor-trustee(1)
(grantor is also trustee)
4.b. So-called trust account that is not a legal The actual owner(l)
or valid trust under state law
5. Sole proprietorship account The owner(3)
6. A valid trust, estate or pension trust The legal entity (Do not furnish the
identifying number of the personal
representative or trustee unless the
legal entity itself is not designated
in the account title.)(4)
7. Corporate The corporation
8. Association, club, religious, charitable, The organization
educational or other tax-exempt
organization
9. Partnership The partnership
10. A broker or registered nominee The broker or nominee
</TABLE>
14
<PAGE>
11. Account with the Department of The public entity
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. If
only one person on a joint account has an SSN, that person's number must
be furnished.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Show your individual name. You may also enter your business name. You may
use your social security number or employer identification number.
(4) 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.
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 the local office of the Social Security
Administration or the Internal Revenue Service and apply for a number.
Payees Exempt from Back-up Withholding
Payees specifically exempted from back-up withholding on ALL payments include
the following:
- A corporation.
- A financial institution.
- An organization exempt from tax under section 501(a) of the Internal
Revenue Code of 1986, as amended (the "Code"), or an individual
retirement plan.
- The United States or any agency or instrumentality thereof.
- A State, the District of Columbia, a possession of the United States, or
any subdivision or instrumentality thereof.
15
<PAGE>
- A foreign government, a political subdivision of a foreign government,
or any agency or instrumentality thereof. An international organization
or any agency or instrumentality thereof.
- A registered dealer in securities or commodities registered in the U.S.
or a possession of the U.S. A real estate investment trust.
- A common trust fund operated by a bank under section 584(a) of the Code.
- An exempt charitable remainder trust or a non-exempt trust described in
section 4947(a)(1). An entity registered at all times under the
Investment Company Act of 1940.
- A foreign central bank of issue.
- A futures commission merchant registered with the Commodity Futures
Trading Commission.
Payments of dividends and patronage dividends not generally subject to
back-up withholding include the following:
- Payments to nonresident aliens subject to withholding under section 1441
of the Code.
- Payments to Partnerships not engaged in a trade or business in the U.S.
and which have at least one nonresident partner.
- Payments of patronage dividends where the amount received is not paid in
money.
- Payments made by certain foreign organizations.
- Payments made to an appropriate nominee.
- Section 404(k) payments made by an ESOP.
Payments of interest not generally subject to back-up withholding include
the following:
- Payments of interest on obligations issued by individuals. NOTE: You may
be subject to back-up withholding if this interest is $600 or more and
is paid in the course of the payer's trade or business and you have not
provided your correct taxpayer identification number to the payer.
Payments of tax exempt interest (including exempt interest dividends
under section 852 of the Code).
16
<PAGE>
- Payments described in section 6049(b)(5) of the Code to nonresident
aliens. Payments on tax-free covenant bonds under section 1451 of the
Code.
- Payments made by certain foreign organizations. Payments of mortgage
interest to you.
- Payments made to an appropriate nominee.
Penalties
(1) Penalty for failure to furnish taxpayer identification number--If you
fail to furnish your correct 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 information with respect to withholding--If you
make a false statement with no reasonable basis that results in no imposition of
back-up withholding, you are subject to a penalty of $500.
(3) Criminal penalty for falsifying information--Willfully falsifying
certifications or affirmations may subject you to criminal penalties including
fines and/or imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL
REVENUE SERVICE.
17
<PAGE>
BOND PURCHASE, L.L.C.
1100 Main Street, Suite 2100
Kansas City, Missouri 64105
Call (816) 421-4670
18
Bond Purchase, L.L.C.
1100 Main Street, Suite 2100
Kansas City, MO 64105
January 13, 2000
$100 PER UNIT OFFER TO PURCHASE
To Limited Partners in McNeil Real Estate Fund XX, L.P.:
BOND PURCHASE, L.L.C., A MISSOURI LIMITED LIABILITY COMPANY (THE
"PURCHASER"), IS OFFERING TO PURCHASE ALL OF THE OUTSTANDING UNITS OF LIMITED
PARTNERSHIP INTEREST (THE "UNITS") IN McNEIL REAL ESTATE FUND XX, L.P. (THE
"PARTNERSHIP") FOR A CASH PURCHASE PRICE OF $100 PER UNIT, NET TO THE SELLER,
UPON THE TERMS AND SUBJECT TO THE CONDITIONS SET FORTH IN THE ATTACHED OFFER TO
PURCHASE DATED JANUARY 13, 2000 AND THE RELATED LETTER OF TRANSMITTAL (WHICH
TOGETHER CONSTITUTE THE "OFFER").
Unless extended by the Purchaser, the Offer is effective until midnight, New
York City time, on February 11, 2000. The Offer is conditioned upon a minimum of
12,378 of the outstanding Units being tendered. A Limited Partner may tender any
or all of his or her Units; however, because of restrictions in the Partnership
Agreement (i) a Limited Partner may not make a partial tender of Units owned by
such Limited Partner if such Limited Partner would otherwise retain less than
ten (10) Units and (ii) tenders of less than ten (10) Units will only be
accepted if all the Units held by such Limited Partner are tendered.
The materials included in this package include important information
concerning the Purchaser, the terms and conditions to the Offer, tax
implications and instructions for tendering your Units. It is important that you
take some time to read carefully the enclosed Offer to Purchase and the Letter
of Transmittal in order to evaluate the Offer being made by the Purchaser.
In reviewing the Offer, please note:
- If Limited Partners holding a majority of the outstanding Units of the
Partnership vote in favor of the Partnership's merger proposal (as more
fully described in Section 9 of the Offer to Purchase ("Certain
Information Concerning the Partnership-Master Agreement")), the
Partnership has estimated that the Limited Partners will receive $92 per
Unit.
<PAGE>
- No Commissions and No Transfer Fees.
The Purchaser will pay any transfer fees charged by the Partnership in
connection with transferring the ownership of your Units pursuant to the
Offer and you will not incur any commissions in connection with tendering
your Units pursuant to the Offer.
- No More K-1 Reporting Costs if You Sell All of Your Units.
If you sell all of your Units you will avoid the expense, delay, and
complications in filing complex tax returns which result from an ownership
of Units.
You must decide whether to tender your Units based on your own particular
circumstances, including your judgment of the value of your Units taking into
account their upside potential and risks. You should consult with your advisors
about the financial, tax, legal and other implications to you of accepting the
Offer.
If you desire additional information regarding the Offer or need assistance
in tendering your Units, you may call Bond Purchase, L.L.C. at 1-816- 421-4670.
Informed and courteous agents are available to assist you.
Bond Purchase, L.L.C.
2
ESCROW AGREEMENT
THIS Escrow Agreement (the "Agreement") is made and entered into as of this
11th day of January, 2000, by and between Bond Purchase, L.L.C., a Missouri
limited liability company ("Bond Purchase") and Assured Quality Title Company, a
Missouri corporation located at 1001 Walnut, Kansas City, Missouri 64106
("Assured").
WHEREAS, Bond Purchase is contemporaneously making a tender offer (the
"Tender Offer") to purchase limited partnership units ("Units") of McNeil Real
Estate Fund XX, L.P., a California limited partnership ("McNeil XX"), pursuant
to certain terms and conditions more specifically described in that certain
Offer to Purchase dated January 13, 2000 (the "Offer to Purchase"); and
WHEREAS, pursuant to the terms of the Offer to Purchase, Bond Purchase
intends to utilize its own working capital (the "Bond Purchase Capital") to fund
the purchase of Units; and
WHEREAS, to provide adequate assurances to the limited partners of McNeil
XX that Bond Purchase has sufficient funds available to consummate the Tender
Offer, Assured has agreed to act as escrow agent and escrow the Bond Purchase
Capital for payment of the purchase of Units pursuant to the Tender Offer; and
WHEREAS, Bond Purchase desires to appoint Assured as escrow agent ("Escrow
Agent") and make arrangements for the delivery and possession of the Escrow Fund
(as defined below); and
WHEREAS, Assured is willing to act as such Escrow Agent for purposes of
receiving, holding and distributing the Escrow Fund in accordance with the
provisions of this Agreement.
NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
expressly acknowledged, the parties agree as follows:
1. ESTABLISHMENT OF ESCROW FUND. Bond Purchase hereby agrees to deposit
Four Million Seven Hundred Fifty-One Thousand Dollars ($4,751,000) (the "Escrow
Fund") with the Escrow Agent, which hereby acknowledges receipt thereof as the
Escrow Fund.
1
<PAGE>
2. APPOINTMENT OF ESCROW AGENT.
(a) Bond Purchase hereby appoints Assured as Escrow Agent under this
Agreement, and Assured accepts such appointment, for the purpose of receiving,
holding, investing and distributing the Escrow Fund in the manner hereinafter
described for the benefit of Bond Purchase.
(b) Escrow Agent shall be entitled to a reasonable administration fee (the
"Administration Fee") and reimbursement for reasonable out-of-pocket expenses
incurred in connection with the performance of its duties under this Agreement.
Responsibility for such Administration Fee and expenses shall be borne by Bond
Purchase, and such Administration Fee and expenses may be paid directly from
proceeds of the Escrow Fund.
(c) Escrow Agent may conclusively rely and shall be protected in acting or
refraining from acting upon any document, instrument, certificate, instruction
or signature believed by it to be genuine and may assume and shall be protected
in assuming that any person purporting to give any notice or instructions in
accordance with this Agreement or in connection with any transaction to which
this Agreement relates has been duly authorized to do so. Escrow Agent shall not
be obligated to make any inquiry as to the authority, capacity, existence or
identity of any person purporting to have executed any such document or
instrument or have made any such signature or purporting to give any such notice
or instructions.
(d) In the event that Escrow Agent shall be uncertain as to its duties or
rights hereunder or shall receive instructions with respect to the Escrow Fund
which, in its sole opinion, are in conflict with either other instructions
received by it or any provision of this Agreement, it shall, without liability
of any kind, be entitled to hold the Escrow Fund, pending the resolution of such
uncertainty to Escrow Agent's sole satisfaction, by final judgment of a court or
courts of competent jurisdiction or otherwise, or Escrow Agent, at its option,
may, in final satisfaction of its duties hereunder, deposit the Escrow Fund with
the clerk of any other court of competent jurisdiction.
(e) Escrow Agent undertakes to perform only such duties as are expressly
set forth herein and shall not be bound in any way by any agreement between Bond
Purchase and any third party (whether or not Escrow Agent has knowledge
thereof).
(f) Escrow Agent shall not be liable for any action taken by it in good
faith and believed by it to be authorized or within the rights or powers
conferred upon it by this Agreement (provided that Escrow Agent shall be liable
for its gross negligence or willful misconduct), and may consult with counsel of
its own choice and shall have full and
2
<PAGE>
complete authorization and protection for any action taken or suffered by it
hereunder in good faith and in accordance with the opinion of such counsel.
3. INDEMNIFICATION. Bond Purchase agrees to indemnify Escrow Agent, its
directors, officers, agents and employees and any person who "controls" the
Escrow Agent within the meaning of Section 15 of the Securities Act of 1933, as
amended (collectively, the "Indemnified Parties") against, and hold them
harmless from, any and all loss, liability, cost, damage and expense, including,
without limitation, costs of investigation and reasonable counsel fees and
expenses, which any of the Indemnified Parties may suffer or incur by reason of
any action, claim or proceeding brought against any of the Indemnified Parties,
arising out of or relating in any way to this Agreement, other than any action,
claim or proceeding to the extent resulting from the gross negligence or willful
misconduct of such Indemnified Party. The provisions of this Section 3 shall
survive the termination of this Agreement.
4. INVESTMENT OF ESCROW FUND. Escrow Agent shall invest the Escrow Fund in
an interest bearing account designated in writing by Bond Purchase.
5. DISTRIBUTION OF ESCROW FUND. The Escrow Agent shall distribute the
Escrow Fund as follows:
(a) In the event that Bond Purchase desires or is obligated to consummate
the Tender Offer, Bond Purchase shall execute, and deliver to Escrow Agent, (i)
a certificate stating that Bond Purchase is consummating the Tender Offer and
needs to draw on the Escrow Fund to fund payment to the tendering limited
partners of McNeil XX (the "Consummation Certificate").
(b) Upon receipt of the Certificate by Escrow Agent, Escrow Agent shall, as
soon as is reasonably practical, distribute that portion of the Escrow Fund to
Bond Purchase that is equal to the amount required by Bond Purchase to
consummate the Tender Offer (the "Payment Amount").
(c) After distribution of the Payment Amount, any and all amounts remaining
in the Escrow Fund shall be distributed to Bond Purchase by Escrow Agent as soon
as is reasonably practicable.
(d) In the event the Tender Offer is terminated on or after the expiration
date of the Tender Offer as a result of any or all of the conditions of the
Offer not having been satisfied or waived, Bond Purchase shall execute and
deliver to Escrow Agent a certificate stating that Bond Purchase has terminated
the Tender Offer as a result of any or all of the
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conditions of the Offer not being satisfied or waived (the "Termination
Certificate"). Upon receipt of the Termination Certificate, Escrow Agent shall,
as soon as is reasonably practicable, distribute the Escrow Fund to Bond
Purchase, less any reasonable out-of-pocket expenses previously incurred by
Escrow Agent in connection with fulfilling its obligations under this Agreement.
(e) All interest earned with respect to the Escrow Fund ("Earnings") shall
be added to the Escrow Fund and held, invested and distributed as provided
herein. The Earnings shall constitute taxable income of Bond Purchase when
received or earned by the Escrow Fund. Escrow Agent shall prepare and timely
file appropriate information returns and statements as required by law reporting
the Earnings as taxable income to Bond Purchase.
6. NOTICES. All notices and other communications hereunder shall be given
to Bond Purchase at 1100 Main Street, Suite 2100, Kansas City, Missouri 64105
and to Escrow Agent at 1001 Walnut, Kansas City, Missouri 64106.
7. CONFIDENTIALITY. Until such time as Bond Purchase's Schedule 14d-1 in
connection with the Tender Offer is filed with the Securities and Exchange
Commission:
(a) Any confidential or proprietary matters or information (including any
information concerning the Tender Offer) obtained by any party to this Agreement
respecting another party to this Agreement, or any of such party's affiliates,
during the course of preparing, documenting or administering the escrow
contemplated hereby; the existence of this Agreement and the Tender Offer; and
the terms of this Agreement and the Tender Offer (except for information that is
generally available to the public other than as a result of a disclosure by the
recipient or his or its representatives or otherwise available to the recipient
on a non-confidential basis), will be kept in strict confidence by the recipient
and will not be disclosed by the recipient to any third party without the prior
written consent of the other parties to this Agreement; provided, however, that
all or any portion of such information may be disclosed by the recipient (i) to
the extent required by applicable law or (ii) to any third party professional
adviser, attorney, accountant or lender associated with the recipient who needs
to know such confidential information to assist the recipient in connection with
the escrow; the recipient shall inform such third parties of the confidential
nature of such information and direct such third parties to treat such
information in a manner consistent with this Section 7(a); and
(b). Escrow Agent shall not issue any public announcement concerning the
escrow or the Tender Offer without the prior written approval of Bond Purchase,
unless in the opinion of any of the parties' legal counsel an announcement is
required to be made to
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comply with the requirements of applicable law or regulation, in which event a
facsimile transmission of the text of any such arrangement will be sent to the
other parties as soon as possible before or, only if necessary, after making
such announcement.
8. MISCELLANEOUS.
(a) This Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of Missouri, without giving effect to its
conflicts of law provisions.
(b) The headings contained herein are for reference purposes only and shall
not in any way affect the meaning or interpretation of this Agreement.
(c) This Agreement and the respective rights and obligations of the parties
hereunder shall not be assignable by any party hereto without the prior written
consent of the other parties.
(d) This Agreement represents the entire understanding and agreement
between the parties hereto with respect to the subject matter hereof, and
supersedes all prior negotiations and understandings relating to the subject
matter hereof.
(e) The failure of any party at any time or from time to time to require
performance of the terms of this Agreement, shall in no manner affect the right
to enforce the same, and a waiver by any party of any breach of any provision of
this Agreement shall not be construed to be a waiver by such party of any breach
of any other provision, or of a later breach of this Agreement.
(f) This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original and all of which together shall constitute one
and the same instrument.
(g) This Agreement shall inure to the benefit of and be binding upon, Bond
Purchase and Escrow Agent, and their respective personal representatives,
agents, heirs, successors and assigns.
(h) Nothing in this Agreement, expressed or implied, is intended to confer
upon any party, other than the parties hereto, and their respective heirs,
personal representatives, successor and assigns, any rights, remedies,
obligations or liabilities under or by reason of this Agreement, except as
expressly provided herein.
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(i) No change, modification or termination of any of the terms, provisions
or conditions of this Agreement shall be effective unless made in writing and
signed by Bond Purchase, Tramor and Escrow Agent, whereupon such change,
modification or termination shall be binding upon all parties to this Agreement.
(j) This Agreement and the obligations of the Escrow Agent hereunder shall
terminate when the Escrow Funds and all Earnings thereon have been distributed
as provided herein.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement effective
as of the day and year first above written.
BOND PURCHASE, L.L.C.
By: /s/ David L. Johnson
David L. Johnson, Member
ASSURED QUALITY TITLE COMPANY
By: /s/ Jose L. Evans
Name: Jose L. Evans
Title: President
RECEIPT
The Escrow Agent hereby acknowledges receipt of the Escrow Fund in the
amount of Four Million Seven Hundred Fifty-One Thousand Dollars ($4,751,000) and
agrees to serve as Escrow Agent under this Agreement.
January 12, 2000 ASSURED QUALITY TITLE COMPANY
By: /s/ Jose L. Evans
Name: Jose L. Evans
Title: President
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ASSIGNMENT AND TRANSFER AGREEMENT
THIS ASSIGNMENT AND TRANSFER AGREEMENT (the "Agreement") is executed
and delivered as of January 3, 2000 between Madison Partnership Liquidity
Investors 34, LLC, Madison/WP Partnership Value Fund III, LLC, ISA Partnership
Liquidity Investors, and Investment Services of America, LLC (each an "Assignor"
and together the "Assignors") and Bond Purchase, LLC, a Missouri limited
liability company ("Assignee").
RECITALS
WHEREAS, the Assignors possess 1,995.667 units of limited partnership
interests in McNeil Real Estate Fund XX, LP (the "Partnership");
WHEREAS, Assignee desires to purchase all of each Assignor's right,
title and interest in those units (the "Units") and each Assignor desires to so
assign and transfer its Units;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties agree as follows:
1. Assignment. Assignors hereby assign, transfer and convey the
Units to Assignee.
2. Payment. Assignee shall pay to Ashby & Geddes, P.A., as escrow
agent ("Escrow Agent"), the amount of $199,566.70 (the "Payment"), such Payment
to be received by wire transfer on or before January 7, 2000 (or such later date
as Assignors may provide). The Payment shall be distributed by the Escrow Agent
to the Assignors upon Escrow Agent's receipt of an executed original of this
Agreement from Assignors, which Assignee has agreed is sufficient
documentation to evidence each Assignor's assignment of its Units to Assignee
hereunder (the "Documentation"), and such Documentation shall then be forwarded
to Assignee. Upon receipt of the Payment by Assignors, Assignors agree to
provide Assignee with a duly executed revocable proxy voting against the
proposed partnership merger described in the proxy statement dated December 14,
1999, and a power of attorney/proxy, the form of which has previously been
provided by Assignee.
<PAGE>
3. Confirmation and Transfer. Not withstanding anything to the
contrary, the parties agree that neither this Agreement nor the transaction
contemplated hereby effects the actual transfer of the Units on the books and
records of the Partnership. Assignee further acknowledges that, pursuant to the
terms of the Partnership's governing documents, such transfer may require the
approval and/or confirmation of the Partnership's General Partner
("Confirmation"). The parties therefore agree that this Agreement is not
contingent upon any such Confirmation. All efforts to be made regarding, and all
costs associated with, Confirmation (including but not limited to payment of all
applicable transfer fees) shall be the sole responsibility of Assignee.
4. Distributions and Benefits. Notwithstanding anything to the contrary
herein, all distributions and other benefits related to the Units (together, the
"Distributions") and actually paid on or before January 3, 2000 (regardless of
when such Distribution was declared) shall be retained by the Assignors, with
all Distributions paid after that date being hereby assigned to Assignee. All
efforts to be made regarding, and all costs associated with, the Distributions
shall be the responsibility of the party to which they are hereby retained or
assigned. Any Distributions which are received by one party but which are due to
the other party under the terms of this Agreement shall paid over to the proper
party as soon as reasonably possible after such receipt. This Agreement is not
contingent upon Assignee's receipt or recovery of any Distributions.
5. Release and Indemnification. Assignee releases the Assignors, their
members, partners, officers, directors, employees and agents, their successors
and assigns, from all claims and causes of action arising from or in connection
with, whether directly or indirectly, the Units ("Claims"). Assignee further
indemnifies Assignors, their members, partners, officers, directors, employees
and agents, their successors and assigns, and agrees to hold them harmless from
all such Claims and to defend and bear the cost of same, including the payment
of Assignors' reasonable attorney's fees. Notwithstanding the foregoing,
Assignee's release and indemnity
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obligations under this paragraph shall not extend to damages incurred as a
result of Assignors' breach of this Agreement.
6. Representations of Assignors. Each of the Assignors hereby warrants,
represents and agrees as follows:
(a) It is an entity duly formed, validly existing and in good
standing under the laws of the State of Delaware.
(b) It is the sole owner of its interest in the Units, has the
power and authority to assign its Units under the terms of
this Agreement, and has not made any other assignment of its
Units, which are being assigned free and clear of all liens
and encumbrances;
(c) This Agreement has been duly executed by it and, when executed
and delivered by all parties, will constitute its legal, valid
and binding obligations enforceable against it in accordance
with this Agreement's terms.
(d) No litigation, investigation or proceeding by or before any
court, arbitrator, governmental authority or otherwise is
pending or, to its knowledge, threatened by or against it as
would materially affect this Agreement.
(e) All representations and warranties hereby made shall survive
the execution and delivery of this Agreement. No
representation or warranty contains or will contain any untrue
statement of material fact or omits or will omit any material
fact, necessary to make the statements contained therein not
misleading.
7. Representations of Assignee. The Assignee hereby warrants,
represents and agrees as follows:
(a) Assignee is a limited liability company duly formed, validly
existing and in good standing under the laws of the State of
Missouri.
(b) This Agreement has been duly executed by the Assignee and,
when executed and delivered by both parties, will constitute a
legal, valid and binding obligation of the Assignee
enforceable against it in accordance with this Agreement's
terms.
(c) No litigation, investigation or proceeding by or before any
court, arbitrator, governmental authority or otherwise is
pending or, to Assignee's knowledge, threatened by or against
the Assignee as would materially affect this Agreement.
(d) All representations and warranties hereby made shall survive
the execution and delivery of this Agreement. No
representation or warranty contains or will contain any untrue
statement of material fact or omits or will omit any material
fact, necessary to make the statements contained therein not
misleading.
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8. Other Documents. The parties agree to execute such other documents
and to undertake such other tasks as are reasonably related to effectuation of
the transaction contemplated by this Agreement.
9. Counterparts. This Agreement may be executed in counterparts,
each of which when so executed shall be deemed to be an original, and all of
which together shall be one and the same instrument.
10. Severability. If any terms or Provisions of this Agreement or the
application thereof to any person or circumstance shall, to any extent, be
invalid or unenforceable, the remainder of this Agreement and its application
shall not be affected thereby and each term shall be valid and be enforced to
the fullest extent permitted by law.
11. No Waiver. The failure of a party to seek redress for any violation
of, or to insist upon the strict performance of, any term of condition of this
Agreement shall not prevent a subsequent act that would have originally
constituted a violation of this Agreement from having all the force and effect
of any original violation and shall not constitute or be construed as a waiver
of such term or condition. All rights and remedies that any of the parties may
have at law, in equity or otherwise upon breach of any term or condition of this
Agreement shall be distinct, separate and cumulative and no one of them shall be
deemed to be in exclusion of any other.
12. Entire Agreement. This Agreement contains the entire agreement
between the parties. No modification of this Agreement shall be binding unless
such modification shall be in writing and signed by the parties hereto.
13. Governing Laws. This Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware. Exclusive jurisdiction for
all claim causes of action and disputes arising from or in connection with this
Agreement ("Disputes") shall be vested in the
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courts of the State of Delaware. The prevailing party in any Dispute shall be
awarded its attorney's fees in connection with that Dispute.
14. Headings. The, headings used in this Agreement are for convenience
only and shall not be used to interpret or construe its provisions.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the date first written above.
Bond Purchase, LLC
By: /s/ David L. Johnson
Name: David L. Johnson
Title: Member
Madison Partnership Liquidity Investors 34, LLC
By: /s/ Ronald Dickerman
Name: Ronald Dickerman
Title: Managing Director
Madison/WP Partnership Value Fund III, LLC
By: /s/ Ronald Dickerman
Name: Ronald Dickerman
Title: Managing Director
ISA Partnership Liquidity Investors
By: Madison Realty Partners 7, LLC,
its General Partner
By: /s/ Ronald Dickerman
Name: Ronald Dickerman
Title: Managing Director
Investment Services of America, LLC
By: /s/ Ronald Dickerman
Name: Ronald Dickerman
Title: Managing Director
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