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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14D-1/A
TENDER OFFER STATEMENT PURSUANT TO SECTION 14(d)(1) OF
THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. 3)
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DAMSON/BIRTCHER REALTY INCOME FUND II
A PENNSYLVANIA LIMITED PARTNERSHIP
(NAME OF SUBJECT COMPANY)
GRAPE INVESTORS, LLC
A DELAWARE LIMITED LIABILITY COMPANY
ARLEN CAPITAL ADVISORS, LLC
(BIDDER)
LIMITED PARTNERSHIP INTERESTS
(TITLE OF CLASS OF SECURITIES)
None
(CUSIP Number of Class of Securities)
Don Augustine, Manager
Arlen Capital Advisors, LLC
1650 Hotel Circle North - Suite 200
San Diego, California 92108
(619) 686-2002
(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications on Behalf of Bidder)
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AMENDMENT NO. 3 TO SCHEDULE 14D-1
This Amendment No. 3 amends the Offer to Purchase on Schedule 14D-1 filed with
the Securities and Exchange Commission on April 21, 1998 (the "Schedule 14D-1")
by Grape Investors, LLC, a Delaware limited partnership (the "Purchaser"),
relating to the Offer by the Purchaser to purchase up to 5,000 limited
partnership interests ("Interests") in Damson/Birtcher Realty Income Fund II, a
Pennsylvania Limited Partnership (the "Partnership"), for a purchase price of
$2,350 for each .01 percent interest, upon the terms and conditions set forth in
the Offer to Purchase dated April 21, 1998, as amended by Amendment No. 1, dated
May 29, 1998 and Amendment No. 2, date June 8, 1998 (collectively, the "Offer to
Purchase") and the related Agreement of Sale (which, together with any
supplements or amendments, collectively constitute the "Offer"). Capitalized
terms not otherwise defined herein shall have the meaning ascribed to them in
the Schedule 14D-1 and the Offer to Purchase.
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ITEM 1. SECURITY AND SUBJECT COMPANY
Items 1(a) and 1(b) are hereby supplemented and amended to include the
information set forth in the "Introduction" of the Supplement to the Offer to
Purchase, a copy of which is attached as Exhibit (a)(6) (the "Supplement") is
hereby supplemented and amended to include the information set forth on page 1
of the Supplement, which information is incorporated herein by reference.
Item 1(b) is further supplemented and amended to include the information
set forth in Section 7 ("Purpose and Effect of the Offer") of the Supplement,
which information is incorporated herein by reference.
ITEM 2. IDENTITY AND BACKGROUND
Items 2(a)-(d) and 2(g) are hereby supplemented and amended to include the
information set forth in the "Introduction," Section 11 ("Certain Information
Concerning the Purchaser"), and Section 12 ("Source and Amount of Funds") of the
Supplement, which information is incorporated herein by reference.
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY
Item 3(b) is hereby supplemented and amended to include the information set
forth in Section 9 ("Past Contacts and Negotiations with General Partner") of
the Supplement, which information is incorporated herein by reference.
ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
Item 4 (a) is hereby supplemented and amended to include the information
set forth in Section 12 ("Source and Amount of Funds") of the Supplement, which
information is incorporated herein by reference.
ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDER
Items 5(a)-(g) are hereby supplemented and amended to include the
information set forth in the "Introduction," Section 7 ("Purpose and Effect of
the Offer") and Section 8 ("Future Plans") of the Supplement, which information
is incorporated herein by reference.
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY
Items 6(a)-(b) are hereby supplemented and amended to include the
information set forth in the "Introduction" and Section 11 ("Certain Information
Concerning the Purchaser") of the Supplement, which information is incorporated
herein by reference.
ITEM 8. PERSONS RELATED, EMPLOYED OR TO BE COMPENSATED
Item 8 is hereby supplemented and amended to include the information set
forth in the "Introduction" and Section 15 ("Fees and Expenses") of the
Supplement, which information is incorporated herein by reference.
ITEM 10. ADDITIONAL INFORMATION
Items 10(b)-(c) are hereby supplemented and amended to include the
information set forth in the "Introduction," Section 7 ("Purpose and Effect of
the Offer") and Section 14 ("Certain Legal Matters and Regulatory Approvals") of
the Supplement, which information is incorporated herein by reference.
Item 10(f) is hereby supplemented and amended as follows: the information
set forth in the Supplement which is attached hereto as Exhibit (a) (6) is
incorporated in its entirety herein by reference.
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ITEM 11. MATERIAL TO BE FILED AS EXHIBITS
Item 11 is hereby supplemented and amended by adding the following, copies
of which are attached hereto as exhibits:
(a)(6) Supplement to Offer to Purchase dated June 19, 1998.
(a)(7) Cover Letter, dated June 19, 1998 from Purchaser to Limited
Partners.
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify that the
information set forth in this statement is true, complete and correct.
Dated: June 19, 1998 GRAPE INVESTORS, LLC
By: Arlen Capital Advisors, LLC
its Manager
By: /s/ DON AUGUSTINE
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Don Augustine, Manager
ARLEN CAPITAL ADVISORS, LLC
By: /s/ DON AUGUSTINE
-----------------------------------
Don Augustine, Manager
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SUPPLEMENT TO THE
OFFER TO PURCHASE INTERESTS
OF
DAMSON / BIRTCHER REALTY INCOME FUND II
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THIS OFFER WILL EXPIRE AT 12:00 MIDNIGHT, PACIFIC TIME,
ON JULY 8, 1998, UNLESS THE OFFER IS EXTENDED.
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Grape Investors, LLC, a Delaware limited liability company ("Grape" or the
"Purchaser"), hereby supplements and amends its offer to purchase up to 5,000
Limited Partnership Interests ("Interests") in Damson / Birtcher Realty Income
Fund II, a Delaware Limited Partnership (the "Partnership"). Included in the
definition of "Interests" are any and all rights associated with Seller's
Interest, including, without limitation, any rights of such Seller in any
proceeds from the settlement of any class action lawsuit by the Limited Partners
of the Partnership, which lawsuit relates to the Partnership or its General
Partner. If any lawsuit is settled after the Expiration Date, but before the
Purchaser has issued payment for Seller's Interest, then Purchaser will be
entitled to receive the proceeds from such settlement; Seller will not receive
additional consideration for such proceeds; and Seller will not be able to
withdraw its tender offer of Interests after the Expiration Date. SEE SECTION
4 - WITHDRAWAL RIGHTS.
Grape will pay a purchase price of $2,350 for each .01 percent interest in
the Partnership, or $450 per Interest (per $1,000 originally invested in the
Partnership) net to the seller in cash, without interest, less the amount of any
distributions declared or paid from any source by the Partnership with respect
to the Interests after February 28, 1998 (without regard to the record date),
whether such distributions are classified as a return on, or a return of,
capital ("Purchase Price"), upon the terms and subject to the conditions set
forth in the Offer to Purchase dated April 21, 1998, as amended by Amendment No.
1 dated May 29,1998, and Amendment No. 2 dated June 8, 1998 (collectively, the
"Offer to Purchase"), this Supplement ("Supplement") and in the Agreement of
Sale, as each may be supplemented or amended from time to time (which together
constitute the "Offer"). Capitalized terms used but not otherwise defined in
this Supplement shall have the meanings ascribed to them in the Offer to
Purchase.
INTRODUCTION
The first paragraph of the "Special Factors" in the "Introduction" of the Offer
to Purchase is hereby supplemented and amended as follows:
* The Partnership's Annual Report for 1997 filed with the Securities and
Exchange Commission ("SEC") on Form 10-K filed with the SEC ("10-K")
reports net assets in liquidation as of December 31, 1997 of
$27,394,000 or $527 per Interest ($1,000 original investment). The
Partnership filed a Form 14D-9 on May 6, 1998 which was amended with a
Form 14D-9/A filed on May 19, 1998 (collectively, the "14D-9") in
which it disclosed that it had accepted an offer on April 30, 1998 to
purchase all of the Partnership's Properties for $33,680,000 (the
"Pending Purchase"), subject to the negotiation of a definitive
purchase and sale agreement. The Partnership stated , "Although there
can be no assurance that the proposed sale of the properties will be
completed, if the sale is completed at the stated price, the limited
partners will receive total aggregate sales proceeds of $640 per
$1,000 originally invested in the Partnership."
The seventh paragraph of the "Special Factors" in the "Introduction" of the
Offer to Purchase is hereby supplemented and amended as follows:
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* If the Purchaser is successful in purchasing more than 5.48 percent
of the outstanding Interests, then, when added to Purchaser's existing
Interests, Purchaser will own more than 10 percent of the outstanding
Interests, which will put Purchaser a position to exert a strong
influence upon the General Partner and the operation of the
Partnership. Purchaser intends to actively encourage the General
Partner to pursue an expeditious negotiation of the purchase and sale
agreement for the Pending Purchase and closing of the sale of the
Partnership Properties, and if the General Partner does not execute a
purchase agreement and complete the closing in a timely manner,
Purchaser will consider taking appropriate action which may include
attempting to replace the General Partner, encouraging a sale of some
or all of the Partnership assets to another purchaser, and potentially
dissolving the Partnership, if such a sale of assets requires a
dissolution of the Partnership in accordance with the Partnership
Agreement. (See Section 8 - "Future Plans")
The paragraph titled "Purchase Price" in the "Introduction" of the Offer is
hereby supplemented and amended as follows:
PURCHASE PRICE
When you consider the illiquid market (which is essentially nothing more
than a "matching service" that attempts to bring buyers and sellers
together), the secondary cost of selling commissions, payment of the
transfer fee, your annual cost of tax reporting, and the cost of a trustee
if Interests are held in an IRA or pension plan, the sale of your Interests
for $2,350 for each .01 percent interest in the Partnership, or $450 per
Interest (per $1,000 originally invested in the Partnership), rather than
the $640 per Interest that the General Partner projects "if the sale is
completed at the stated price." You may prefer to receive cash from our
Offer rather than delaying to see whether the General Partner is able to
negotiate a definitive purchase and sale agreement, complete its due
diligence, and close the Proposed Purchase transaction.
The paragraph titled "No Transfer Fee" in the "Introduction of the Offer is
hereby supplemented and amended to read as follows:
NO TRANSFER FEE
Grape will be responsible for paying the $25 transfer fee, despite the
General Partner's letter which implied that you would have to pay the
transfer fee.
The last sentence of the fourth full paragraph in the "Introduction" of the
Offer is hereby supplemented and amended to read as follows:
Purchaser intends to actively encourage the General Partner to pursue an
expeditious negotiation of the purchase and sale agreement for the Pending
Purchase and closing of the sale of the Partnership Properties, and if the
General Partner does not execute a purchase agreement and complete the closing
in a timely manner, Purchaser will consider taking appropriate action which may
include attempting to replace the General Partner, encouraging a sale of some or
all of the Partnership assets to another purchaser, and potentially dissolving
the Partnership, if such a sale of assets requires a dissolution of the
Partnership in accordance with the Partnership Agreement. (See Section 8 -
"Future Plans")
The fifth full paragraph in the "Introduction" of the Offer is hereby
supplemented and amended to read as follows:
The Offer is not conditioned upon the valid tender of any minimum number of the
Interests. If more than 5,000 Interests are tendered and not withdrawn, the
Purchaser will accept up to 5,000 of the tendered Interests on a pro rata basis,
subject to the terms and conditions herein. See "Tender Offer--Section 13.
Certain Conditions of the Offer." The Purchaser expressly reserves the right,
in its sole discretion and for any reason to waive any or all of the conditions
of the Offer, although the Purchaser does not presently intend to do so.
1. SECTION 1 - TERMS OF THE OFFER.
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Section 1 of the Offer to Purchase is hereby supplemented and amended to
amend and restate the first paragraph in Section 1 as follows:
The term "Expiration Date" shall mean 12:00 midnight, Pacific Time, on June
30, 1998 unless and until the Purchaser shall have extended the period of time
for which the Offer is open, in which event the term "Expiration Date" shall
mean the latest date on which the Offer, as so extended by the Purchaser, shall
expire.
Section 1 of the Offer to Purchase is hereby supplemented and amended to
amend and restate the second paragraph in Section 1 as follows:
The Offer is conditioned on satisfaction of certain conditions. See
"Tender Offer--Section 13. Certain Conditions of the Offer," which sets forth in
full the conditions of the Offer. The Purchaser will not be required to accept
for payment or pay for any Interests tendered unless, on or before the
Expiration Date, Purchaser shall have received (or waived):
(i) from the Seller, a properly completed and duly executed Agreement
of Sale; and
(ii) from the Partnership, confirmation to Purchaser's reasonable
satisfaction that, upon purchase of the Interests: (a) the
Purchaser will be entitled to receive all distributions,
from any source, from the Partnership after February 28,
1998; and (b) the Partnership will change Seller's address
to Purchaser's address.
2. SECTION 2 - PRORATION; ACCEPTANCE FOR PAYMENT AND PAYMENT FOR UNITS.
Section 2 of the Offer to Purchase is hereby supplemented and amended to
amend and restate the second paragraph in Section 2 as follows:
If more than 5,000 Interests are validly tendered and not properly
withdrawn on or prior to the Expiration Date, the Purchaser, upon the terms and
subject to the conditions of the Offer, will accept for payment 5,000 Interests
so tendered, on a pro rata basis.
4. SECTION 4 - WITHDRAWAL RIGHTS.
Section 4 of the Offer to Purchase is hereby supplemented and amended to
amend and restate the second paragraph in Section 4 as follows:
General Partner disclosed in its Annual Report 10-K filed with the
Securities and Exchange Commission that a limited partner named Bigelow /
Diversified Secondary Partnership Fund 1990 filed a purported class action
lawsuit on March 25, 1997, in the Court of Common Pleas of Philadelphia County
("Bigelow Lawsuit") against the Partnership and various other parties. SEE
SECTION 10 - CERTAIN INFORMATION CONCERNING THE BUSINESS OF THE PARTNERSHIP AND
RELATED MATTERS. If the Bigelow Lawsuit is settled after the Expiration Date,
but before the Purchaser has issued payment for Seller's Interest, then
Purchaser will be entitled to receive such proceeds, Seller will not receive
additional consideration for such proceeds, and Seller will not be able to
withdraw its tender of Interests after the Expiration Date. If any other
lawsuit is filed between the date of this Offer and the Expiration Date, then
Seller may withdraw its Offer at any time prior to the Expiration Date.
However, if such lawsuit is settled after the Expiration Date, but before the
Purchaser has issued payment for Seller's Interest, then Purchaser will be
entitled to receive such proceeds, Seller will not receive additional
consideration for such proceeds, and Seller will not be able to withdraw its
tender of Interests after the Expiration Date.
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7. SECTION 7 - PURPOSE AND EFFECTS OF THE OFFER
Section 7 of the Offer to Purchase is hereby supplemented and amended to
amend and restate the entire subsection titled "Purposes of the Offer" in
Section 7 as follows:
PURPOSE OF THE OFFER. The Purchaser is making the Offer for investment
purposes with a view towards making a profit. The Purchaser's intent is to
acquire the Interests at a discount to the value that the Purchaser might
ultimately realize from owning the Interests. No independent person has been
retained by Grape to evaluate or render any opinion with respect to the fairness
of the Purchase Price and no representation is made as to such fairness.
The Purchaser established the Purchase Price based on its own independent
subjective analysis of the Partnership, which included a subjective valuation of
the properties and other assets owned by the Partnership and by a subjective
determination of the financial condition of the Partnership. The Purchaser
derived the Purchase Price per Interest from its analysis of financial
information which was available from information in the Annual Report on Form
10-K filed with the SEC ("10-K") and the Quarterly Report on Form 10-Q ("10-Q").
The Partnership's 1997 Annual Report Form 10-K filed with the SEC reports
net assets in liquidation as of December 31, 1997 of $27,394,000 or $527 per
Interest ($1,000 original investment). The Partnership's Form 14D-9 filed on
May 6, 1998 which was amended with a Form 14D-9/A filed on May 19, 1998
(collectively, the "14D-9") disclosed that it had accepted an offer on April 30,
1998 to purchase all of the Partnership's Properties for $33,680,000 (the
"Pending Purchase"), subject to, among other things, the negotiation of a
definitive purchase and sale agreement.
In its letter to the Limited Partners dated May 6, 1998, which was filed as
an exhibit to the 14D-9, the General Partner stated the following with respect
to the Pending Purchase and Grape's Offer dated April 21, 1998:
* "The purchase offer is subject to certain CUSTOMARY contingencies,
including due diligence review by the purchaser and negotiation of a
definitive purchase and sale agreement." (ITALICS ADDED).
* "The General Partner's estimates are based upon a variety of assumptions
that are subject to significant uncertainties and contingencies. Such
estimates are inherently imprecise and there can be no assurance they can
be realized. There can be no assurance as to when or at what price
properties will be sold.
* In the event the properties are not sold pursuant to the purchase offer,
the timing of property sales and distributions of sale proceeds are and
will be determined solely by the General Partner. Accordingly, limited
partners who do not accept the Offer may not receive any distribution of
sale proceeds for a significant period of time following the Offer.
* The General Partner's estimate of sales proceeds from the purchase offer
does not take into account Partnership cash reserves, operating expenses or
net income or net loss of the Partnership for any period prior to the time
the remaining properties are sold, which could affect the amount of sales
proceeds available for distribution. Therefore, the actual proceeds to be
received by the limited partners may vary materially, up or down, from the
estimate."
In determining the Purchase Price to be offered for the Interests, the
Purchaser considered both the "net assets in liquidation" value disclosed in the
1997 10-K, and the Pending Purchase price disclosed in the 14D-9, together with
a subjective analysis of the likelihood of whether the Pending Purchase will
actually close when a purchase and sale agreement has not yet been negotiated.
In this subjective analysis, Purchaser considered several factors, including:
(i) the illiquid nature of the investment (due to its trading on an informal
market which is essentially a "matching service"); (ii) despite the
Partnership's "acceptance" of an offer to purchase the
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Partnership's properties, Purchaser's belief in the uncertainty as to whether
the Partnership will actually be able to negotiate a definitive purchase and
sale agreement; (iii) whether, upon such purchaser's completion of its due
diligence on the properties, the amount to be paid for the properties (and
therefore, the amount to be distributed to Limited Partners) will be as high as
the Partnership is currently projecting; and (iv) various other uncertainties
regarding the Proposed Purchase of the Partnership's properties.
It is Purchaser's intention to acquire the Interests at a Purchase Price
which will allow Purchaser to make a profit from its ownership of the Interests.
Based upon this intention, and the subjective factors listed above, the
Purchaser believes that the Purchase Price for the Interests should be $450 per
Interest (per $1,000 originally invested in the Partnership), or $2,350 per .01
percent interest in the Partnership, which represents a discount of 14.6 percent
to the Partnership's estimate of its "net assets in liquidation" value disclosed
in the 1997 10-K , and which represents a discount of 29.6 percent to the
General Partner's estimate of proceeds to the Limited Partners of $640 per
Interest.
Section 7 of the Offer to Purchase is hereby supplemented and amended to
amend and restate the paragraph entitled "Certain Restrictions on Transfer of
Interests" in Section 7 as follows:
CERTAIN RESTRICTIONS ON TRANSFER OF INTERESTS. The Partnership Agreement
restricts the transfer of Interests if a transfer, when considered with all
other transfers during the same applicable twelve-month period, would cause a
termination of the Partnership, for federal or state income tax purposes.
Section 7 of the Offer to Purchase is hereby supplemented and amended to
amend and restate the last sentence in the paragraph entitled "Effect of Sales
Through 'Matching Service' and Price Range of the Interests" in Section 7 as
follows:
Purchaser intends to actively encourage the General Partner to pursue an
expeditious negotiation of the purchase and sale agreement for the Pending
Purchase and closing of the sale of the Partnership Properties, and if the
General Partner does not execute a purchase agreement and complete the closing
in a timely manner, Purchaser will consider taking appropriate action which may
include attempting to replace the General Partner, encouraging a sale of some or
all of the Partnership assets to another purchaser, and potentially dissolving
the Partnership, if such a sale of assets requires a dissolution of the
Partnership in accordance with the Partnership Agreement. (See Section 8 -
"Future Plans").
8. SECTION 8 - "FUTURE PLANS"
Section 8 of the Offer to Purchase is hereby supplemented and amended to
amend and restate the second paragraph in Section 8 as follows:
Purchaser intends to actively encourage the General Partner to pursue an
expeditious negotiation of the purchase and sale agreement for the Pending
Purchase and closing of the sale of the Partnership Properties, and if the
General Partner does not execute a purchase agreement and complete the closing
in a timely manner, Purchaser will consider taking appropriate action which may
include attempting to replace the General Partner, encouraging a sale of some or
all of the Partnership assets to another purchaser, and potentially dissolving
the Partnership, if such a sale of assets requires a dissolution of the
Partnership in accordance with the Partnership Agreement.
9. SECTION 9 - PAST CONTACTS AND NEGOTIATIONS WITH THE GENERAL PARTNER
Section 9 of the Offer to Purchase is hereby supplemented and amended to
amend and restate the entire section following the third paragraph in Section 9
as follows:
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On August 28, 1996, Purchaser filed an action entitled GRAPE INVESTORS, LLC
ET AL. V. DAMSON/BIRTCHER PARTNERS, ET AL., in the Superior Court of the State
of California, in the County of Orange, Case No. 768309 (the "Action"). On
August 29, 1996, counsel for the Partnership, after a discussion with counsel
for the Purchaser, had sent to him a courtesy copy of the complaint and motion
for preliminary injunction and supporting papers and documents seeking to have
the Interests acquired pursuant to the tender offer transferred to Purchaser.
From September 5, 1996 to September 24, 1996, correspondence and conversations
took place between counsel for the Purchaser and counsel for the Partnership in
an attempt to resolve the Action. On September 24, 1996, the Action was
settled, and Partnership agreed that the Purchaser would be admitted as an
assignee (but not as a substituted limited partner) of the Interests it had
acquired in its tender offer in the Partnership. Various conversations and
correspondence between counsel for the Partnership and counsel for the Purchaser
took place between September 24, 1996 and March, 1997, attempting to document
the terms of the Settlement Agreement. In March 1997, the Settlement Agreement
was finally documented and the only substantive term of the Settlement Agreement
provides that all Interests which Grape submitted to the Partnership's transfer
agent would be assigned immediately and the address of beneficial assignee of
record would be changed to Grape's address. Grape was admitted as an assignee
but not a substitute limited partner which means, as those terms are defined in
the Partnership Agreement, that Grape is entitled to the same economic rights of
ownership in the Partnership, but not to certain other rights such as a right to
inspect the records, or certain voting rights.
On October 3, 1996, Purchaser sent a letter to the Partnership indicating
that they had a potential buyer for the Partnership's property, which letter was
not responded to. No potential purchase price was included in such letter, and
as the Partnership did not respond to such communication from Purchaser, no
further information was obtained by Partnership regarding the details of any
potential offer to purchase.
On October 21, 1996, Purchaser commenced a second limited tender offer to
buy an additional 2.2 percent of the interest in the Partnership at a purchase
price of $890 per .01 percent interest in the Partnership, (offer was
communicated by letter from Purchaser to the Partnership's General Partner),
which offer expired on November 22, 1996.
On January 23, 1997, counsel for the Purchaser forwarded a letter to
counsel for the Partnership requesting certain information regarding
distributions and the method of payment to Purchaser. Telephone conversations
between those parties also took place regarding that matter and on January 26,
1997, counsel for the Partnership confirmed the method in which distributions
were to be made to Purchaser.
On May 13, 1997, counsel for the Purchaser by letter to counsel for the
Partnership requested that the Partnership respond to letter from Argent
Ventures, LLC, which response was received. On May 16, 1997, counsel for the
Purchaser requested that Purchaser be given access to appraisals of Partnership
properties; a follow-up letter on May 28, 1997 was sent to counsel for the
Partnership by counsel for the Purchaser requesting such information. On June
4, 1997, counsel for the Purchaser furnished to counsel for the Purchaser, not
the actual appraisals, but only a list of the appraised values and the dates of
the appraisals, which were dated January 1, 1993. This information was not used
by Purchaser for any purpose, since it did not give recent information on the
properties of the Partnerships.
On June 18, 1997, Purchaser commenced a tender offer registered for 10,000
interests at a purchase price of $1,645 for each .01 percent interest in the
Partnership and amended such tender offer by amendment filed on August 8, 1997.
On October 2, 1997, Purchaser filed an amendment to increase the purchase price
to $2,089 for each .01 percent interest in the Partnership. The Schedule 14D-1
and amendments, and Offer to Purchase are on file with the SEC. Purchaser
acquired a total additional .93 percent interest in the Partnership in the
tender offer filed pursuant to Schedule 14D-1, making the total interest of
Purchaser in the Partnership approximately 4.52 percent.
On December 30, 1997, Purchaser sent a letter to General Partner requesting
a meeting to review, among other things, the progress of the Partnership toward
selling the Partnership properties, and indicating that if Purchaser was not
satisfied with the progress being made toward immediate liquidation of the
Partnership, that
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Purchaser intended to contact the other Limited Partners to assemble a group of
Limited Partners with the purpose of calling a meeting to vote on the
replacement of the General Partner to pursue a sale of the Partnership
properties through a controlled auction. On January 9, 1998, Purchaser received
a response from the General Partner confirming a meeting on January 28, 1998.
On January 28, 1998, Purchaser met with General Partner to discuss the
issues raised in the Purchaser's December 30, 1997 letter. During the meeting,
the General Partner indicated that it intended to be more communicative in
future public filings with regard to the marketing efforts being made toward a
potential sale of the Partnership properties. The General Partner offered to
disclose information regarding its marketing efforts and appraisals on the
properties to Purchaser if Purchaser agreed to enter into a standstill agreement
which would prohibit Purchaser from acquiring additional Interests in the
Partnership. Purchaser declined to enter into the standstill agreement with
General Partner.
On April 21, 1998, Purchaser filed with the SEC a tender offer pursuant to
Schedule 14D-1 for limited partnership interests in Damson Birtcher Realty Fund
I, an affiliate of the Partnership.
10. SECTION 10 - CERTAIN INFORMATION CONCERNING THE BUSINESS OF THE PARTNERSHIP
AND RELATED MATTERS
Section 10 of the Offer to Purchase is hereby supplemented and amended as
follows:
As disclosed in the Partnership's 10-K, a limited partner named Bigelow /
Diversified Secondary Partnership Fund 1990 filed a purported class action
lawsuit on March 25, 1997, in the Court of Common Pleas of Philadelphia County
against the Partnership and various other parties.
On May 6, 1998, the Partnership filed a Schedule 14D-9 in response to
Purchaser's tender offer to disclose that on April 30, 1998, the Partnership had
accepted an offer to purchase all of the Partnership's Properties for
$33,680,000 (the "Pending Purchase"). According to the Partnership, the
accepted offer anticipates closing in approximately 60-90 days, and is subject
to certain "customary contingencies", including the negotiation of a definitive
purchase and sale agreement, and due diligence review. The Partnership stated,
"Although there can be no assurance that the proposed sale of the properties
will be completed, if the sale is completed at the stated price, the limited
partners will receive total aggregate sales proceeds of $640 per $1,000
originally invested in the Partnership."
11. SECTION 11 - CERTAIN INFORMATION CONCERNING THE PURCHASER
Section 11 of the Offer to Purchase is hereby supplemented and amended to
amend and restate the first sentence in the first paragraph of Section 11 as
follows:
The Purchaser is a Delaware Limited Liability Company which was organized
on June 12, 1996 for the purpose of acquiring the Interests in the Partnership,
pursuant to the Offer and pursuant to previous limited tender offers and the
previous tender offer filed pursuant to Schedule 14D-1 as disclosed in Section
9.
12. SECTION 12 - SOURCE AND AMOUNTS OF FUNDS
Section 12 of the Offer to Purchase is hereby supplemented and amended to
amend and restate Section 12 in its entirety as follows:
The Purchaser expects that approximately $2,000,000 (exclusive of fees and
expenses) will be required to purchase 5,000 Interests (approximately 10 percent
of the outstanding Interests), if tendered. The Purchaser will obtain all of
those funds from binding commitments for capital contributions from its members.
Each member has a net worth substantially in excess of its individual commitment
for its percentage of the total $2,000,000 (exclusive of fees and expenses)
required to purchase the 5,000 Interests. Purchaser has met all of its
obligations
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to purchase in previous limited tender offers and tender offers filed pursuant
to Schedule 14D-1 disclosed in Section 9 by the same binding commitments for
capital contributions from the same members.
13. SECTION 13 - CERTAIN CONDITIONS OF THE OFFER
Section 13 of the Offer to Purchase is hereby supplemented and amended to
amend and restate all paragraphs except the last paragraph of Section 13 as
follows:
The Purchaser will not be required to accept for payment or pay for any
Interests tendered unless, on or before the Expiration Date, Purchaser shall
have received (or waived):
(i) from the Seller, a properly completed and duly executed Agreement
of Sale; and
(ii) from the Partnership, confirmation to Purchaser's reasonable
satisfaction that, upon purchase of the Interests: (a) the
Purchaser will be entitled to receive all distributions, from any
source, from the Partnership after February 28, 1998; and (b) the
Partnership will change Seller's address to Purchaser's address.
Furthermore, the Purchaser will not be required to accept for payment or
pay for any Interests tendered if, on or after the date of the Offer and before
the Expiration Date, Purchaser a preliminary or permanent injunction or other
order of any federal or state court, government or governmental authority or
agency shall have been issued and shall remain in effect which (i) makes
illegal, delays or otherwise directly or indirectly restrains or prohibits the
making of the Offer or the acceptance for payment of any Interests by the
Purchasers, (ii) requires divestiture by the Purchasers of any Interests, (iv)
causes any material diminution of the benefits to be derived by the Purchasers
as a result of the transactions contemplated by the Offer, or (v) might
materially adversely affect the business, properties, assets, liabilities,
financial condition, operations, results of operations or prospects of the
Purchasers or the Partnership.
8
<PAGE>
GRAPE INVESTORS, LLC
- ------------------------------------------------------------------------------
June 19, 1997
Mr. a;dkfs Investor ID#: _________
Mrs. a;dlka
Address
Address;
City, Town
a;ldkf
Dear Limited Partner:
Grape Investors, LLC ("Grape") wishes to inform you that it has supplemented and
amended its offer to purchase Damson Birtcher Realty Income Fund II Interests
dated April 21, 1998 ("Original Offer") in response to customary review by the
Securities and Exchange Commission ("SEC"). A copy of the Supplement to the
Offer to Purchase dated June 19, 1998 ("Supplement") is enclosed with this
letter. Pursuant to SEC requirements, Grape's offer has been extended to July
8, 1998 ("Expiration Date"). GRAPE'S PURCHASE PRICE PER INTEREST HAS NOT
CHANGED.
Payment for Interests tendered pursuant to the Original Offer or pursuant to the
Supplement dated June 18, 1998 will be made within 10 business days following
the Expiration Date provided Grape has received from you a properly completed
and duly executed Agreement of Sale and assurances from the General Partner that
the Seller's address will be changed to the Purchaser's address pursuant to the
terms of the Offer.
Grape is offering to pay a purchase price of $2,350 for each .01 percent
interest or $450 per Interest (per $1,000 originally invested in the
Partnership) in Damson Birtcher Realty Income Fund II (the "Partnership").
-----------------------------------------------------------------------
According to the records provided to us by the General Partner,
you currently own [XXX]% of the outstanding Interests in
DAMSON BIRTCHER REALTY INCOME FUND II
We are offering to purchase Interests for
$[XXX] CASH
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PLEASE REVIEW CAREFULLY THE "SPECIAL FACTORS" SET FORTH ON
THE REVERSE SIDE OF THIS LETTER
AND THE SUPPLEMENT ENCLOSED WITH THIS LETTER.
NO ADDITIONAL PAPERWORK IS REQUIRED FOR THOSE LIMITED PARTNERS
WHO HAVE ALREADY TENDERED
THEIR INTERESTS TO GRAPE AND WISH TO COMPLETE THE TRANSACTION.
If you wish to tender some or all of your Interests and have not already done
so, all you need to do is complete the Agreement of Sale in accordance with the
instructions and return it to Grape in the pre-addressed return envelope.
Please call us at (800) 891-4105 if you have any questions. Thank you for your
consideration of our offer.
GRAPE INVESTORS, LLC
- ------------------------------------------------------------------------------
<PAGE>
BEFORE SELLING YOUR INTERESTS TO GRAPE, PLEASE CONSIDER THE FOLLOWING SPECIAL
FACTORS:
* The Partnership's Annual Report for 1997 filed with the SEC on Form
10-K ("10-K") reports net assets in liquidation as of December 31,
1997 of $27,394,000 or $527 per Interest ($1,000 original investment).
The Partnership filed a Form 14D-9 on May 6, 1998 which was amended
with a Form 14D-9/A filed on May 19, 1998 (collectively, the "14D-9")
in which it disclosed that it had accepted an offer on April 30, 1998
to purchase all of the Partnership's Properties for $33,680,000 (the
"Pending Purchase"), subject to the negotiation of a definitive
purchase and sale agreement. The Partnership stated , "Although there
can be no assurance that the proposed sale of the properties will be
completed, if the sale is completed at the stated price, the limited
partners will receive total aggregate sales proceeds of $640 per
$1,000 originally invested in the Partnership."
* No independent person has been retained to evaluate or render any
opinion with respect to the fairness of Grape's offer and no
representation is made as to such fairness or other measures of value
that may be relevant to the Limited Partners. We urge you to consult
your own financial and tax advisors in connection with Grape's offer.
* Although Grape cannot predict the future value of the Partnership
assets on a per Interest basis, the purchase price could differ
significantly from the net proceeds that would be realized from a
current sale of the Properties owned by the Partnership or from that
which may be realized upon future liquidation of the Partnership.
* Grape is making the offer with a view to making a profit.
Accordingly, there is a conflict between Grape's desire to acquire
your Interests at a low price and your desire to sell your Interests
at a high price. Grape's intent is to acquire the Interests at a
discount to the value Grape might ultimately realize from owning the
Interests.
* The tax consequences of the Offer to a particular Limited Partner may
be different from those of other Limited Partners and we urge you to
consult your own tax advisor in connection with the Offer.
* Limited Partners who sell their Interests will be giving up the
opportunity to participate in any future potential benefits
represented by ownership of Interests, including the right to
participate in any future distribution of cash or property.
* If the Purchaser is successful in purchasing more than 5.48 percent
of the outstanding Interests, then, when added to Purchaser's existing
Interests, Purchaser will own more than 10 percent of the outstanding
Interests, which will put Purchaser a position to exert a strong
influence upon the General Partner and the operation of the
Partnership. Purchaser intends to actively encourage the General
Partner to pursue an expeditious negotiation of the purchase and sale
agreement for the Pending Purchase and closing of the sale of the
Partnership Properties, and if the General Partner does not execute a
purchase agreement and complete the closing in a timely manner,
Purchaser will consider taking appropriate action which may include
attempting to replace the General Partner, encouraging a sale of some
or all of the Partnership assets to another purchaser, and potentially
dissolving the Partnership, if such a sale of assets requires a
dissolution of the Partnership in accordance with the Partnership
Agreement.
<PAGE>
DAMSON/BIRTCHER REALTY INCOME FUND II
AGREEMENT OF SALE
The undersigned Limited Partner (the "Seller") does hereby sell, assign,
transfer, convey and deliver (the "Sale") to Grape Investors, LLC, a Delaware
limited liability company ("Grape" or the "Purchaser"), all of the Seller's
right, title and interest in "Interests" (as defined in the Partnership
Agreement) of Damson / Birtcher Realty Income Fund II, a Delaware limited
partnership (the "Partnership") being sold pursuant to this Agreement of Sale
("Agreement") and the Offer dated April 21, 1998 (the "Offer") for a purchase
price of $2,350 for each .01 percent interest in the Partnership, without regard
to the record date or whether such distributions are classified as a return on,
or a return of, capital. Included in the definition of "Interests" are any
proceeds which any Seller may receive after February 28, 1998 from the
settlement of any class action lawsuit by the Limited Partners of the
Partnership, which lawsuit relates to the Partnership or its General Partner.
PAYMENT FOR SUCH PURCHASE WILL BE MADE WITHIN 10 BUSINESS DAYS FOLLOWING THE
"EXPIRATION DATE" SET FORTH IN THE OFFER, PROVIDED GRAPE HAS RECEIVED AND
ACCEPTED A PROPERLY COMPLETED AND DULY EXECUTED AGREEMENT OF SALE AND RECEIVED
ASSURANCES FROM THE GENERAL PARTNER THAT THE SELLER'S ADDRESS WILL BE CHANGED TO
THE PURCHASER'S ADDRESS PURSUANT TO THE TERMS AND CONDITIONS OF THE OFFER. IF
MORE THAN 5,000 INTERESTS ARE TENDERED TO GRAPE PRIOR TO GRAPE'S PAYMENT FOR
SUCH INTERESTS, GRAPE WILL ACCEPT UP TO 5,000 INTERESTS ON A PRO RATA BASIS WITH
APPROPRIATE ADJUSTMENTS AS GRAPE DEEMS NECESSARY.
The Seller hereby represents and warrants to the Purchaser that the Seller owns
such Interests and has full power and authority to validly sell, assign,
transfer, convey, and deliver to the Purchaser the Interests, and that when any
such Interests are accepted for payment by the Purchaser, the Purchaser will
acquire good, marketable and unencumbered title thereto, free and clear of all
options, liens, restrictions, charges, encumbrances, conditional sales
agreements, or other obligations relating to the sale or transfer thereof, and
such Interests will not be subject to any adverse claim. The Seller represents
and warrants that the Seller is a "United States person" as defined in Section
7701(a)(30) of the Internal Revenue Code of 1986, as amended, or if the Seller
is not a United States person, the Seller does not own beneficially or of record
more than 5 percent of the outstanding Interests.
Such Sale shall include, without limitation, all rights in, and claims to, any
Partnership profits and losses, cash distributions, voting rights and other
benefits of any nature whatsoever, distributable or allocable to such Interests
under the Partnership's Partnership Agreement. Upon the execution of this
Agreement by the Seller, Purchaser shall have the right to receive all benefits
and cash distributions and otherwise exercise all rights of beneficial ownership
of such Interests.
Seller, upon execution of this Agreement and the mailing of payment by the
Purchaser to Seller, hereby irrevocably constitutes and appoints Purchaser as
its true and lawful agent and attorney-in-fact with respect to Interests with
full power of substitution. This power of attorney is an irrevocable power,
coupled with an interest of the Seller to Purchaser, to (i) execute, swear to,
acknowledge, and file any document relating to the assignment of the Interests
on the books of the Partnership that are maintained with respect to the
Interests and on the Partnership's books maintained by the General Partner of
the Partnership, or amend the books and records of the Partnership as necessary
or appropriate for the assignment of the Interests, (ii) vote or act in such
manner as any such attorney-in-fact shall, in its sole discretion, deem proper
with respect to the Interests, (iii) deliver the Interests and transfer
ownership of the Interests on the books of the Partnership that are maintained
with respect to the Interests and on the Partnership's books, maintained by the
Partnership's General Partner, (iv) endorse on the Seller's behalf any and all
payments received by Purchaser from the Partnership for any period on or after
February 28, 1998, which are made payable to the Seller, in favor of Purchaser,
(v) execute on the Seller's behalf, any applications for transfer and any
distribution agreements required by the National Association of Securities
Dealers, Inc.'s Notice to Members 96-14 to give effect to the transaction
contemplated by this Agreement, and (vi) receive all distributions and amend the
books and records of the Partnership, including Seller's address and records, to
direct all distributions to Purchaser as of the effective date of this
Agreement. Purchaser shall not be required to post bond of any nature in
connection with this power of attorney.
SELLER DOES HEREBY DIRECT AND INSTRUCT THE PARTNERSHIP AND THE GENERAL PARTNER
IMMEDIATELY UPON THEIR RECEIPT OF THIS AGREEMENT OF SALE (i) TO AMEND THE BOOKS
AND RECORDS OF THE PARTNERSHIP TO CHANGE THE SELLER'S ADDRESS OF RECORD FOR
PURPOSES OF MAILING DISTRIBUTIONS TO GRAPE INVESTORS, LLC, C/O ARLEN CAPITAL,
1650 HOTEL CIRCLE NORTH, SUITE 200, SAN DIEGO, CALIFORNIA 92108, AND; (ii) TO
FORWARD ALL DISTRIBUTIONS AND ALL OTHER INFORMATION RELATING THEREIN TO BE
RECEIVED BY SELLER TO GRAPE INVESTORS, LLC TO THE ADDRESS SET FORTH IN (i)
ABOVE.
Seller does hereby release and discharge the General Partner and their officers,
shareholders, employees and agents from all actions, causes of actions, claims
or demands Seller has, or may have, against the General Partner that result from
the General Partner's reliance on this Agreement or any of the terms and
conditions contained herein. Seller does hereby indemnify and hold harmless the
Partnership from and against all claims, demands, damages, losses, obligations
and responsibilities arising, directly or indirectly, out of a breach of any one
or more representations and warranties set forth herein.
All authority herein conferred or agreed to be conferred shall survive the death
or incapacity of the Seller and any obligations of the Seller shall be binding
upon the heirs, personal representatives, successors and assigns of the
undersigned. THIS AGREEMENT IS IRREVOCABLE AND MAY NOT BE WITHDRAWN FOLLOWING
THE EXPIRATION DATE, BUT MAY BE WITHDRAWN PRIOR THERETO. Upon request, the
Seller will execute and deliver any additional documents deemed by the Purchaser
or the Partnership to be necessary or desirable to complete the assignment,
transfer and purchase of such Interests.
The Seller hereby certifies, under penalties of perjury, that (i) the tax
identification number shown on this form is the Seller's correct Taxpayer
Identification Number; and (ii) Seller is not subject to backup withholding
either because Seller has not been notified by the Internal Revenue Service (the
"IRS") that Seller is subject to backup withholding as a result of failure to
report all interest or dividends, or the IRS has notified Seller that Seller is
no longer subject to backup withholding.
The Seller hereby also certifies, under penalties of perjury, that the Seller,
if an individual, is not a nonresident alien for purposes of U.S. income
taxation, and if not an individual, is not a foreign corporation, foreign
partnership, foreign trust, or foreign estate (as those terms are defined in the
Internal Revenue Code and Income Tax Regulations). The Seller understands that
this certification may be disclosed to the IRS by the Purchaser and that any
false statements contained herein could be punished by fine, imprisonment, or
both.
The undersigned recognizes that, if proration is required pursuant to the terms
of the Offer, the Purchaser will accept for payment from among those Interests
validly tendered on or prior to the Expiration Date and not properly withdrawn,
the maximum number of Interests permitted pursuant to the Offer on a pro rata
basis. The undersigned understands that a tender of Interests to the Purchaser
will constitute a binding agreement between the undersigned and the Purchaser
upon the terms and subject to the conditions of the Offer. The undersigned
recognizes that under certain circumstances set forth in the Offer to Purchase,
the Purchaser may not be required to accept for payment any of the Interests
tendered hereby. In such event, the
<PAGE>
DAMSON/BIRTCHER REALTY INCOME FUND II
undersigned understands that any Agreement for Interests not accepted for
payment will be destroyed by the Purchaser. This Agreement shall be governed
by and construed in accordance with the laws of the State of California.
Seller waives any claim that California or the Southern District of
California is an inconvenient forum, and waives any right to trial by jury.
The undersigned Seller (including any joint owner(s)) owns and wishes to assign
the number of Interests set forth below. By its own or its Authorized
Signatory's signature below, the Seller hereby assigns its entire right, title
and interest in the Interests to the Purchaser.
By executing this Agreement the Seller hereby acknowledges to the General
Partner that the Seller desires to assign the Seller's Interests referenced
herein and hereby directs the General Partner to take all such actions as are
necessary to accomplish such assignment, and appoints the General Partner the
agent and attorney-in-fact of the Limited Partner, to execute, swear to,
acknowledge and file any document or amend the books and records of the
Partnership as necessary or appropriate for the assignment or the withdrawal of
the Limited Partner.
IN WITNESS WHEREOF the Limited Partner has executed, or caused its Authorized
Signatory to execute, this Agreement.
Print Name of Limited Partner (as it appears on the investment)
-----------------------------------------
Print Name and Capacity of Authorized Signatory (if other than above)
-----------------------------------------
- ---------------------------------- ----------------------------------
Seller's Signature Joint Seller's Signature
MEDALLION GUARANTEE MEDALLION GUARANTEE
(Medallion Guarantee for EACH Seller's (Medallion Guarantee for EACH
signature) Seller's signature)
ACCEPTED:
---------
Home Telephone Number PURCHASER/GRAPE INVESTORS, LLC
- -------------------
Office Telephone Number By: Its Manager, Arlen Capital,
- ------------------- LLC
Mailing Address
- -------------------
City, State, Zip Code By:
- ------------------- -------------------------------
State of Residence Authorized Representative
- -------------------
Social Security/Tax ID
- ------------------- No.
Date YOU MUST MAIL EXECUTED ORIGINAL TO
- ------------------- PURCHASER:
$2,350.00 Sales Price for each .01
- ------------------- percent interest Grape Investors, LLC
in the Partnership 1650 Hotel Circle North,
Suite 200
San Diego, California 92108
Percent Interest to be Sold OR
--------------
/ / Check here if you wish to sell ALL of your Interests
PLEASE CALL US AT (800) 891-4105 IF YOU HAVE ANY QUESTIONS REGARDING
THE SALE OF YOUR INTERESTS.
- --------------------------------------------------------------------------------
INSTRUCTIONS TO COMPLETE AGREEMENT OF SALE
ALL SIGNATURES MUST BE MEDALLION GUARANTEED
BENEFICIAL OWNER OF RECORD SHOULD: DEATH
1. COMPLETE and SIGN Agreement. If any owner is deceased, please
2. Have Signature Medallion Guaranteed enclose a certified copy of Death
by your Bank or Broker. Certificate. If Ownership is OTHER
3. Indicate Number of Interests Owned than Joint Tenants With Right of
and/or To Be Sold. Survivorship, please provide Letter
4. Return Agreement in Envelope Provided. of Testamentary or Administration
current within 60 days showing your
beneficial ownership or executor
capacity (in addition to copy of
Death Certificate).
JOINT OWNERSHIP
Please have ALL owners of record sign CORPORATION
Agreement, and SEPARATELY Medallion Corporate resolution required
Guarantee each signature. showing authorized signatory.
IRA/KEOGH TRUST, PROFIT SHARING OR PENSION
PLAN
1. Beneficial owner must sign Agreement. Please provide title, signature,
2. Provide Custodian information and other applicable pages of Trust
(i.e. Name, Company Name, Agreement showing authorized
Address, Phone No. and Account No.) signatory.
3. Grape will obtain the Medallion
Guarantee of Custodian Signature.
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