SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------
Amendment No. 1
To
SCHEDULE 14D-1
Tender Offer Statement Pursuant to Section 14(d)(1)
of the Securities Exchange Act of 1934
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RESOURCES ACCRUED MORTGAGE INVESTORS LP SERIES 86
(Name of Subject Company)
SUTTER OPPORTUNITY FUND, LLC; SUTTER CAPITAL MANAGEMENT, LLC;
MP INCOME FUND 15, LLC; MacKENZIE PATTERSON SPECIAL FUND, L.P.;
MacKENZIE PATTERSON SPECIAL FUND 2, L.P.; MacKENZIE PATTERSON
SPECIAL FUND 4, LLC; MP FALCON FUND, LLC; MP VALUE FUND 4, LLC;
PREVIOUSLY OWNED MORTGAGE PARTNERSHIP INCOME FUND 3, L.P.;
ACCELERATED HIGH YIELD INSTITUTIONAL INVESTORS, LTD.; ACCELERATED
HIGH YIELD INSTITUTIONAL FUND, LTD.; CAL KAN, INC.; MORAGA GOLD, LLC;
C.E. PATTERSON; JAMES HILLMAN; STEVEN GOLD;
THOMAS A. FRAME and MP ACQUISITION COMPANY, LLC
(Bidders)
LIMITED PARTNERSHIP INTERESTS
(Title of Class of Securities)
NONE
(CUSIP Number of Class of Securities)
-----------------------
Copy to:
Glen Fuller Paul J. Derenthal, Esq
MacKenzie Patterson, Inc. Derenthal & Dannhauser
1640 School Street One Post Street, Suite 575
Moraga, California 94556 San Francisco, California 94104
(925) 631-9100 (415) 981-4844
(Name, Address and Telephone Number of
Person Authorized to Receive Notices and
Communications on Behalf of Bidder)
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The Schedule 14D-1 filed as of November 3, 1999 by the above-named bidders is
hereby amended as set forth below. Items not amended remain unchanged, and
capitalized terms are used as defined in the original Schedule.
Item 1. Security and Subject Company.
(b) The Partnership's general partner has advised the Purchasers by
a letter from its counsel (included as Exhibit (a)(5)) that the Partnership's
Agreement of Limited Partnership would prohibit the consummation of the Offer
because the Offer could result in the purchase of such number of Units as might
cause the termination of the Partnership for federal income tax purposes. The
Partnership Agreement prohibits transfers of Units which would cause such a tax
termination. This restriction on transfer was included in the Partnership
Agreement to prevent potential material adverse tax consequences which may have
resulted upon a tax termination under the tax laws applicable to the Partnership
at the time of its formation. Since the adoption of this transfer restriction,
the Internal Revenue Code and the Treasury Regulations thereunder have been
amended and, to the Purchasers' knowledge, would no longer cause any material
adverse tax consequence to the Partnership or its partners upon a tax
termination occurring upon the transfer of 50% or more of the capital and/or
profits interest in the Partnership in any twelve month period. Nevertheless, in
order to assure that the transfers will comply with this restriction, the
Purchasers hereby amend the Offer to reduce the number of Units to be purchased
hereunder to a maximum total equal to the lesser of (i) 165,001 Units, or one
Unit less than 50% of the total number of Units outstanding; or (ii) the maximum
number of Units which may be sold and transferred in compliance with the
Partnership's prohibition against transfers resulting in a termination of the
Partnership for federal income tax purposes. The Partnership's restriction on
transfers of Units would prohibit transfer of more than 50% of the aggregate
interest in capital or profits of the Partnership in any twelve month period.
When the general partner's capital and profits interest is included, an offer to
purchase less than one-half of the outstanding Units should comply with the
restriction and avoid a tax termination of the Partnership. In the event there
have been any other transfers of Units in the last twelve months, the general
partner can so advise the Purchasers, and they will reduce the number of Units
subject to the Offer to equal the maximum number of Units available under the
restriction.
This Schedule will be amended to reflect any such reduction.
The Expiration Date of the Offer is hereby extended to December 10,
1999.
Item 3. Past Contacts, Transactions or Negotiations with the Subject Company.
(a)-(b) See Exhibit (a)(5).
Item 11. Material to be Filed as Exhibits.
(a)(1) Amended Offer to Purchase dated November 3, 1999
(a)(2) Amended Letter of Transmittal
(a)(3) Amended Form of Letter to Unitholders dated November 3, 1999
(a)(5) Letter from Partnership counsel to Purchasers' counsel
(b)-(f) Not applicable.
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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: November 10, 1999
SUTTER OPPORTUNITY FUND, LLC
By SUTTER CAPITAL MANAGEMENT, LLC, Manager
By: /s/ ROBERT DIXON
Robert Dixon, Manager
SUTTER CAPITAL MANAGEMENT, LLC
By: /s/ ROBERT DIXON
Robert Dixon, Manager
MP INCOME FUND 15, LLC
By MacKenzie Patterson, Inc., Manager
By: /s/ C.E. PATTERSON
C.E. Patterson, President
MacKENZIE PATTERSON SPECIAL FUND 4, LLC
By MacKenzie Patterson, Inc., Manager
By: /s/ C.E. PATTERSON
C.E. Patterson, President
MP FALCON FUND, LLC
By MacKenzie Patterson, Inc., Manager
By: /s/ C.E. PATTERSON
C.E. Patterson, President
MP VALUE FUND 4, LLC
By MacKenzie Patterson, Inc., Manager
By: /s/ C.E. PATTERSON
C.E. Patterson, President
MP ACQUISITION COMPANY, LLC
By MacKenzie Patterson, Inc., Manager
By: /s/ C.E. PATTERSON
C.E. Patterson, President
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MacKENZIE PATTERSON SPECIAL FUND, L.P.
By MacKenzie Patterson, Inc., General Partner
By: /s/ C.E. PATTERSON
C.E. Patterson, President
MacKENZIE PATTERSON SPECIAL FUND 2, L.P.
By MacKenzie Patterson, Inc., General Partner
By: /s/ C.E. PATTERSON
C.E. Patterson, President
MORAGA GOLD, LLC
By Moraga Partners, Inc., Member
By: /s/ C.E. PATTERSON
C.E. Patterson, President
By The David B. Gold Trust, Member
By: /s/ STEVEN GOLD
Steven Gold, Manager
PREVIOUSLY OWNED MORTGAGE PARTNERSHIP INCOME FUND 3, L.P.
By MacKenzie Patterson, Inc., General Partner
By: /s/ C.E. PATTERSON
C.E. Patterson, President
ACCELERATED HIGH YIELD INSTITUTIONAL INVESTORS, LTD.
By MacKenzie Patterson, Inc., General Partner
By: /s/ C.E. PATTERSON
C.E. Patterson, President
ACCELERATED HIGH YIELD INSTITUTIONAL FUND, LTD.
By MacKenzie Patterson, Inc., General Partner
By: /s/ C.E. PATTERSON
C.E. Patterson, President
CAL KAN, INC.
By: /s/ C.E. PATTERSON
C.E. Patterson, President
/s/ C.E. PATTERSON
C.E. Patterson
/s/ STEVEN GOLD
Steven Gold
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/s/ THOMAS A. FRAME
Thomas A. Frame
/s/ JAMES HILLMAN
James Hillman
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EXHIBIT INDEX
Exhibit Description Page
(a)(1) Amended Offer to Purchase dated November 3, 1999
(a)(2) Amended Letter of Transmittal
(a)(3) Amended Form of Letter to Unitholders dated November 3, 1999
(a)(5) Letter from Partnership counsel to Purchasers' counsel
Exhibit (a)(1)
<PAGE>
OFFER TO PURCHASE FOR CASH UP TO A MAXIMUM OF 165,001
UNITS OF LIMITED PARTNERSHIP INTEREST
OF
RESOURCES ACCRUED MORTGAGE INVESTORS L.P. - Series 86
AT
$15 per Unit
SUTTER OPPORTUNITY FUND, LLC; SUTTER CAPITAL MANAGEMENT, LLC; MP
INCOME FUND 15, LLC; MacKENZIE PATTERSON SPECIAL FUND, L.P.; MacKENZIE
PATTERSON SPECIAL FUND 2, L.P.; MacKENZIE PATTERSON SPECIAL FUND 4, LLC;
MP FALCON FUND, LLC; MP VALUE FUND 4, LLC; PREVIOUSLY OWNED
MORTGAGE PARTNERSHIP INCOME FUND 3, L.P.; ACCELERATED HIGH YIELD
INSTITUTIONAL INVESTORS, LTD.; ACCELERATED HIGH YIELD INSTITUTIONAL
FUND, LTD.; CAL KAN, INC.; MORAGA GOLD, LLC; C.E. PATTERSON; JAMES
HILLMAN; STEVEN GOLD; THOMAS A. FRAME and MP ACQUISITION COMPANY,
LLC
(collectively the "Purchasers")
THE OFFER, WITHDRAWAL RIGHTS AND PRORATION PERIOD WILL EXPIRE
AT 12:00 MIDNIGHT, PACIFIC STANDARD TIME, ON DECEMBER 10, 1999,
UNLESS THE OFFER IS EXTENDED.
SUTTER OPPORTUNITY FUND, LLC; SUTTER CAPITAL MANAGEMENT, LLC; MP INCOME FUND 15,
LLC; MacKENZIE PATTERSON SPECIAL FUND, L.P.; MacKENZIE PATTERSON SPECIAL FUND 2,
L.P.; MacKENZIE PATTERSON SPECIAL FUND 4, LLC; MP FALCON FUND, LLC; MP VALUE
FUND 4, LLC; PREVIOUSLY OWNED MORTGAGE PARTNERSHIP INCOME FUND 3, L.P.;
ACCELERATED HIGH YIELD INSTITUTIONAL INVESTORS, LTD.; ACCELERATED HIGH YIELD
INSTITUTIONAL FUND, LTD.; CAL KAN, INC.; MORAGA GOLD, LLC; C.E. PATTERSON; JAMES
HILLMAN; STEVEN GOLD; THOMAS A. FRAME and MP ACQUISITION COMPANY, LLC
(collectively the "Purchasers") hereby seek to acquire Units of limited
partnership interest (the "Units") in RESOURCES ACCRUED MORTGAGE INVESTORS L.P.
- - Series 86, a Delaware limited partnership (the
"Partnership"). The Units are collectively referred to as the "Units". The
Purchasers are not affiliated with the Partnership, RAM Funding, Inc., a
Delaware corporation, the Partnership's investment general partner ("Investment
General Partner"), a wholly-owned subsidiary of Presidio Capital Corp.,
Resources Capital Corp., a Delaware corporation, the Partnership's
administrative general partner ("General Partner"), also a wholly-owned
subsidiary of Presidio, or any of their affiliates. The Purchasers hereby offer
to purchase up to 165,001 Units at a purchase price equal to $15 per Unit, less
the amount of any distributions declared or made with respect to the Units
between October 31, 1999 (the "Offer Date") and December 10, 1999, or such other
date to which this Offer may be extended (the "Expiration Date"), in cash,
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 or amended from time to time (which
together constitute the "Offer").
The maximum number of Units to be purchased hereunder may be reduced in the
event the General Partner requires a reduction in order to comply with certain
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restrictions on transfer. See "Section 7. Effects of the Offer - Limitations
on Resales" below for a discussion of the limitation on the maximum number of
Units to be purchased under the Offer. The maximum number of Units to be
purchased is hereinafter referred to as the "Maximum Offer."
Certain of the Purchasers and affiliates of certain of the Purchasers
currently own an aggregate total of 4,312 Units or approximately 1.31% of the
total outstanding Units.
Holders of Units ("Unitholders") are urged to consider the following factors:
- Unitholders who tender their Units will give up the
opportunity to participate in any future benefits from the
ownership of Units, including potential future
distributions by the Partnership, and the purchase price
per Unit payable to a tendering Unitholder by the
Purchasers may be less than the total amount which might
otherwise be received by the Unitholder with respect to the
Unit over the remaining term of the Partnership.
- The Purchasers are making the Offer for investment purposes
and with the intention of making a profit from the
ownership of the Units. In establishing the purchase price
of $15 per Unit, the Purchasers are motivated to establish
the lowest price which might be acceptable to Unitholders
consistent with the Purchasers' objectives. There is no
public market for the Units, and neither the Unit holders
nor the Purchasers have any accurate means for determining
the actual present value of the Units. Although there can
be no certainty as to the actual present value of the
Units, the Purchasers have estimated that the assets of the
Partnership could have an estimated liquidation value of
$18 per Unit. It should be noted, however, that the
Purchasers have not made an independent appraisal of the
Units or the Partnership's assets, and are not qualified to
appraise real estate. Accordingly, there can be no
assurance that this estimate accurately reflects an
approximate value of the Units or that the actual amounts
which may be realized by holders for the Units may not vary
substantially from this estimate.
- As a result of consummation of the Offer, the Purchasers
may be in a position to significantly influence all
Partnership decisions on which Unitholders may vote. The
Purchasers will vote the Units acquired in the Offer in its
own interest, which may be different from or in conflict
with the interests of the remaining Unitholders.
- The Purchasers may accept only a portion of the Units
tendered by a Unitholder in the event more Units than the
Maximum Offer are tendered.
- The Depositary, MacKenzie Patterson, Inc., is an affiliate
of certain of the Purchasers. No independent party will
hold securities tendered until the offer closes and payment
is made.
THE OFFER TO PURCHASE IS NOT CONDITIONED UPON ANY MINIMUM NUMBER OF UNITS BEING
TENDERED. IF MORE UNITS THAN THE MAXIMUM OFFER ARE VALIDLY TENDERED AND NOT
WITHDRAWN, THE PURCHASERS WILL ACCEPT FOR PURCHASE UNITS EQUAL TO THE MAXIMUM
OFFER FROM TENDERING UNITHOLDERS ON A PRO RATA BASIS, SUBJECT TO THE TERMS AND
CONDITIONS HEREIN. A UNITHOLDER MAY TENDER ANY OR ALL UNITS OWNED BY SUCH
UNITHOLDER.
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The Purchasers expressly reserve the right, in their sole discretion, at any
time and from time to time, (i) to extend the period of time during which the
Offer is open and thereby delay acceptance for payment of, and the payment for,
any Units, (ii) upon the occurrence of any of the conditions specified in
Section 13 of this Offer to Purchase, to terminate the Offer and not accept for
payment any Units not theretofore accepted for payment or paid for, or to delay
the acceptance for payment of, or payment for, any Units not theretofore
accepted for payment or paid for, and (iii) to amend the Offer in any respect.
Notice of any such extension, termination or amendment will promptly be
disseminated to Unitholders in a manner reasonably designed to inform
Unitholders of such change in compliance with Rule 14d-4(c) under the Securities
Exchange Act of 1934 (the "Exchange Act"). In the case of an extension of the
Offer, such extension will be followed by a press release or public announcement
which will be issued no later than 9:00 a.m., Eastern Standard Time, on the next
business day after the scheduled Expiration Date, in accordance with Rule
14e-1(d) under the Exchange Act.
November 3, 1999
IMPORTANT
Any Unitholder desiring to tender any or all of such Unitholder's Units should
complete and sign the Letter of Transmittal (a copy of which is enclosed with
this Offer to Purchase, printed on purple paper) in accordance with the
instructions in the Letter of Transmittal and mail, deliver or telecopy the
Letter of Transmittal and any other required documents to MacKenzie Patterson,
Inc. (the "Depositary"), an affiliate of certain of the Purchasers, at the
address or facsimile number set forth below.
MacKenzie Patterson, Inc.
1640 School Street
Moraga, California 94556
Telephone: 800-854-8357
Facsimile Transmission: 925-631-9119
Questions or requests for assistance or additional copies of this Offer to
Purchase or the Letter of Transmittal may be directed to the Purchasers at
1-800-854-8357.
- ---------------------------
NO PERSON HAS BEEN AUTHORIZED TO MAKE ANY RECOMMENDATION OR ANY REPRESENTATION
ON BEHALF OF THE PURCHASERS 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.
- ---------------------------
The Partnership is subject to the information and reporting requirements of the
Exchange Act and in accordance therewith is required to file reports and other
information with the Commission relating to its business, financial condition
and other matters. Such reports and other information are available on the
Commission's electronic data gathering and retrieval (EDGAR) system, at its
internet web site at www.sec.gov, may be inspected at the public reference
facilities maintained by the Commission at Room 1024, Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549, and are available for inspection and
copying at the regional offices of the Commission located in Northwestern Atrium
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661 and at
7 World Trade Center, 13th Floor, New York, New York 10048. Copies of such
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material can also be obtained from the Public Reference Room of the Commission
in Washington, D.C. at prescribed rates.
The Purchasers have filed with the Commission a Tender Offer Statement on
Schedule 14D-1 (including exhibits) pursuant to Rule 14d-3 of the General Rules
and Regulations under the Exchange Act, 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 from
the offices of the Commission in the manner specified above.
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TABLE OF CONTENTS
Page
INTRODUCTION...................................................................6
TENDER OFFER...................................................................9
Section 1. Terms of the Offer...........................................9
Section 2. Proration; Acceptance for Payment and Payment for Units......9
Section 3. Procedures for Tendering Units..............................11
Section 4. Withdrawal Rights...........................................12
Section 5. Extension of Tender Period; Termination; Amendment..........13
Section 6. Certain Federal Income Tax Consequences.....................14
Section 7. Effects of the Offer........................................16
Section 8. Future Plans................................................17
Section 9. The Business of the Partnership.............................17
Section 10. Conflicts of Interest.......................................18
Section 11. Certain Information Concerning the Purchasers...............18
Section 12. Source of Funds.............................................19
Section 13. Conditions of the Offer.....................................19
Section 14. Certain Legal Matters.......................................21
Section 15. Fees and Expenses...........................................22
Section 16. Miscellaneous...............................................22
Schedule I - The Purchasers and Their Respective Principals
5
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To the Unitholders of RESOURCES ACCRUED MORTGAGE INVESTORS L.P. - Series 86
INTRODUCTION
The Purchasers hereby offer to purchase up to a maximum of 165,001
Units at a purchase price of $15 per Unit, less the amount of any distributions
declared or paid with respect to the Units between the Offer Date and the
Expiration Date ("Offer Price"), in cash, without interest, upon the terms and
subject to the conditions set forth in the Offer. Unitholders who tender their
Units will not be obligated to pay any Partnership transfer fees, or any other
fees, expenses or commissions in connection with the tender of Units. The
Purchasers will pay all such costs and all charges and expenses of the
Depositary, an affiliate of certain of the Purchasers, as depositary in
connection with the Offer.
For further information concerning the Purchasers, see Section 11 below
and Schedule I.
None of the Purchasers nor the Depositary is affiliated with the
Partnership, RAM Funding, Inc., a Delaware corporation, the Partnership's
investment general partner ("Investment General Partner"), a wholly-owned
subsidiary of Presidio Capital Corp., Resources Capital Corp., a Delaware
corporation, the Partnership's administrative general partner ("General
Partner"), also a wholly-owned subsidiary of Presidio, or any of their
affiliates.
Unitholders are urged to consider the following factors:
- Unitholders who tender their Units will give up the
opportunity to participate in any future benefits from the
ownership of Units, including potential future distributions
by the Partnership, and the purchase price per Unit payable to
a tendering Unitholder by the Purchasers may be less than the
total amount which might otherwise be received by the
Unitholder with respect to the Unit over the remaining term of
the Partnership.
- The Purchasers are making the Offer for investment purposes
and with the intention of making a profit from the ownership
of the Units. In establishing the purchase price of $15 per
Unit, the Purchasers are motivated to establish the lowest
price which might be acceptable to Unitholders consistent with
the Purchasers' objectives. There is no public market for the
Units, and neither the Unit holders nor the Purchasers have
any accurate means for determining the actual present value of
the Units. Although there can be no certainty as to the actual
present value of the Units, the Purchasers have estimated that
the assets of the Partnership could have an estimated
liquidation value of $18 per Unit. It should be noted,
however, that the Purchasers have not made an independent
appraisal of the Units or the Partnership's assets, and are
not qualified to appraise real estate. Accordingly, there can
be no assurance that this estimate accurately reflects an
approximate value of the Units or that the actual amounts
which may be realized by holders for the Units may not vary
substantially from this estimate.
- As a result of consummation of the Offer, the Purchaser may be
in a position to significantly influence all Partnership
decisions on which Unitholders may vote. The Purchaser will
vote the Units acquired in the Offer in its own interest,
which may be different from or in conflict with the interests
of the remaining Unitholders.
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- The Purchasers may accept only a portion of the Units tendered
by a Unitholder in the event more Units than the Maximum Offer
are tendered.
- The Depositary, MacKenzie Patterson, Inc., is an affiliate of
the Purchasers. No independent party will hold securities
tendered until the offer closes and payment is made.
The Offer will provide Unitholders with an opportunity to liquidate
their investment without the usual transaction costs associated with market
sales. Unitholders may have a more immediate need to use the cash now tied up in
an investment in the Units and wish to sell them to the Purchasers. Unit holders
who sell all of their Units will also eliminate the need to file form K-1
information with their federal tax returns for years after 1999.
Establishment of the Offer Price
The Purchasers have set the Offer Price at $15 per Unit, less the
amount of any distributions declared or made with respect to the Units between
the Offer Date and Expiration Date. In determining the Offer Price, the
Purchasers analyzed a number of quantitative and qualitative factors,
including:(i) the lack of a secondary market for resales of the Units and the
resulting lack of liquidity of an investment in the Partnership; (ii) the
estimated value of the Partnership's real estate asset; and (iii) the costs to
the Purchasers associated with acquiring the Units.
The Partnership made the following statement in its annual report on
Form 10-K for the year ended December 31, 1998: "There is no established public
trading market for the Units of Registrant. There are certain restrictions set
forth in the Partnership Agreement which may limit the ability of a limited
partner to transfer units. Such restrictions could impair the ability of a
limited partner to liquidate its investment in the event of an emergency or for
any other reason." The lack of any public market for the sale of Units means
that Unit holders have limited alternatives if they seek to sell their Units. As
a result of such limited alternatives for Unit holders, the Purchasers may not
need to offer as high a price for the Units as they would otherwise. On the
other hand, the Purchasers take a greater risk in establishing a purchase price
as there is no prevailing market price to be used for reference and the
Purchasers themselves will have limited liquidity for the Units upon
consummation of the purchase.
Certain of the Purchasers and affiliates of certain of the Purchasers
currently own an aggregate total of 4,312 Units or approximately 1.31% of the
total outstanding Units. Of these Units, 280 Units were acquired during the
preceding six months, 80 Units at a price of $12 per Unit, and, within the most
recent month, 200 Units at a price of $15 per Unit.
The Purchasers are offering to purchase Units which are an illiquid
investment and are not offering to purchase the Partnership's underlying assets.
The assets of the Partnership may not be liquidated for an indefinite period of
time. Accordingly, the underlying asset value of the Partnership is only one
factor used by the Purchasers in arriving at the Offer Price. However, in the
absence of trading price information, the Purchasers estimate of the net asset
value of the Partnership may be relevant to Unit holders review of the Offer
Price.
As of March 1, 1999, the Partnership owns (i) one zero-coupon Mortgage
Loan (West Palm) in the original amount of $9,200,000 (restructured during 1997
to a $5,000,000 loan with all interest accruing at 7% per annum and principal
due and payable at maturity in February 2017); (ii) an equity participation
interest in one property (Berkeley) which originally secured another mortgage
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loan; and a hotel located in Richmond, Virginia obtained through foreclosure.
The Offer Price represents the price at which the Purchasers are
willing to purchase Units. No independent person has been retained to evaluate
or render any opinion with respect to the fairness of the Offer Price and no
representation is made by the Purchasers or any affiliate of the Purchasers as
to such fairness. Other measures of the value of the Units may be relevant to
Unitholders. Unitholders 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.
General Background Information
Certain information contained in this Offer to Purchase which relates
to, or represents, statements made by the Partnership or the General Partner,
has been derived from information provided in reports filed by the Partnership
with the Securities and Exchange Commission.
According to publicly available information, there were 330,004 Units
issued and outstanding held by approximately 11,500 Unitholders at March 1,
1999.
Tendering Unitholders will not be obligated to pay transfer fees,
brokerage fees or commissions on the sale of the Units to the Purchasers
pursuant to the Offer. The Purchasers will pay all charges and expenses incurred
in connection with the Offer. The Purchasers desire to purchase all Units
tendered by each Unitholder.
If, prior to the Expiration Date, the Purchasers increase the
consideration offered to Unitholders pursuant to the Offer, such increased
consideration will be paid with respect to all Units that are purchased pursuant
to the Offer, whether or not such Units were tendered prior to such increase in
consideration.
Unitholders are urged to read this Offer to Purchase and the
accompanying Letter of Transmittal carefully before deciding whether to tender
their Units.
TENDER OFFER
Section 1. Terms of the Offer. Upon the terms and subject to the conditions of
the Offer, the Purchasers will accept for payment and pay for Units validly
tendered on or prior to the Expiration Date and not withdrawn in accordance with
Section 4 of this Offer to Purchase. The term "Expiration Date" shall mean 12:00
midnight, Pacific Standard Time, on December 10, 1999, unless and until the
Purchasers shall have extended the period of time for which the Offer is open,
in which event the term "Expiration Date" shall mean the latest time and date on
which the Offer, as so extended by the Purchasers, shall expire.
The Offer is conditioned on satisfaction of certain conditions. See
Section 13, which sets forth in full the conditions of the Offer. The Purchasers
reserve the right (but shall not be obligated), in their sole discretion and for
any reason, to waive any or all of such conditions. If, by the Expiration Date,
any or all of such conditions have not been satisfied or waived, the Purchasers
reserve the right (but shall not be obligated) to (i) decline to purchase any of
the Units tendered, terminate the Offer and return all tendered Units to
tendering Unitholders, (ii) waive all the 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
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Unitholders 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) to amend the Offer.
The Purchasers do not anticipate and have no reason to believe that any
condition or event will occur that would prevent the Purchasers from purchasing
tendered Units as offered herein.
Section 2. Proration; Acceptance for Payment and Payment for Units. If the
number of Units validly tendered prior to the Expiration Date and not withdrawn
is less than or equal to the Maximum Offer, the Purchasers, upon the terms and
subject to the conditions of the Offer, will accept for payment all Units so
tendered. If the number of Units validly tendered prior to the Expiration Date
and not withdrawn exceeds the Maximum Offer, the Purchasers, upon the terms and
subject to the conditions of the Offer, will accept for payment Units so
tendered on a pro rata basis.
In the event that proration is required, because of the difficulty of
immediately determining the precise number of Units to be accepted, the
Purchasers will announce the final results of proration as soon as practicable,
but in no event later than five business days following the Expiration Date. The
Purchasers will not pay for any Units tendered until after the final proration
factor has been determined.
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 extension
or amendment), the Purchasers will accept for payment, and will pay for, Units
validly tendered and not withdrawn in accordance with Section 4, as promptly as
practicable following the Expiration Date. In all cases, payment for Units
purchased pursuant to the Offer will be made only after timely receipt by the
Depositary of a properly completed and duly executed Letter of Transmittal (or
facsimile thereof) and any other documents required by the Letter of
Transmittal.
For purposes of the Offer, the Purchasers shall be deemed to have
accepted for payment (and thereby purchased) tendered Units when, as and if the
Purchasers give oral or written notice to the Depositary of the Purchasers'
acceptance for payment of such Units pursuant to the Offer. Upon the terms and
subject to the conditions of the Offer, payment for Units purchased pursuant to
the Offer will in all cases be made by deposit of the Offer Price with the
Depositary, which will act as agent for the tendering Unitholders for the
purpose of receiving payment from the Purchasers and transmitting payment to
tendering Unitholders.
Under no circumstances will interest be paid on the Offer Price by
reason of any delay in making such payment.
If any tendered Units are not purchased for any reason, the Letter of
Transmittal with respect to such Units not purchased will be of no force or
effect. If, for any reason whatsoever, acceptance for payment of, or payment
for, any Units tendered pursuant to the Offer is delayed or the Purchasers are
unable to accept for payment, purchase or pay for Units tendered pursuant to the
Offer, then, without prejudice to the Purchasers' rights under Section 13 (but
subject to compliance with Rule 14e-1(c) under the Exchange Act), the Depositary
may, nevertheless, on behalf of the Purchasers, retain tendered Units, subject
to any limitations of applicable law, and such Units may not be withdrawn except
to the extent that the tendering Unitholders are entitled to withdrawal rights
as described in Section 4.
If, prior to the Expiration Date, the Purchasers shall increase the
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consideration offered to Unitholders pursuant to the Offer, such increased
consideration shall be paid for all Units accepted for payment pursuant to the
Offer, whether or not such Units were tendered prior to such increase.
Section 3. Procedures for Tendering Units.
Valid Tender. For Units to be validly tendered pursuant to the Offer, a properly
completed and duly executed Letter of Transmittal (a copy of which is enclosed
with this Offer to Purchase, printed on purple paper) with any other documents
required by the Letter of Transmittal must be received by the Depositary at its
address set forth on the back cover of this Offer to Purchase on or prior to the
Expiration Date. A Unitholder may tender any or all Units owned by such
Unitholder.
In order for a tendering Unitholder to participate in the Offer, Units
must be validly tendered and not withdrawn prior to the Expiration Date, which
is 12:00 midnight, Pacific Standard Time, on December 10, 1999, or such date to
which the Offer may be extended.
The method of delivery of the Letter of Transmittal and all other required
documents is at the option and risk of the tendering Unitholder and delivery
will be deemed made only when actually received by the Depositary.
Backup Federal Income Tax Withholding. To prevent the possible application of
31% backup federal income tax withholding with respect to payment of the Offer
Price for Units purchased pursuant to the Offer, a tendering Unitholder must
provide the Depositary with such Unitholder's correct taxpayer identification
number and make certain certifications that such Unitholder is not subject to
backup federal income tax withholding. Each tendering Unitholder must insert in
the Letter of Transmittal the Unitholder's taxpayer identification number or
social security number in the space provided on the front of the Letter of
Transmittal. The Letter of Transmittal also includes a substitute Form W-9,
which contains the certifications referred to above. (See the Instructions 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 Offer Price plus the amount of Partnership
liabilities allocable to each Unit tendered, each Unitholder must complete the
FIRPTA Affidavit included in the Letter of Transmittal certifying such
Unitholder's taxpayer identification number and address and that the Unitholder
is not a foreign person. (See the Instructions to the Letter of Transmittal and
"Section 6. Certain Federal Income Tax Consequences.")
Other Requirements. By executing a Letter of Transmittal as set forth above, a
tendering Unitholder irrevocably appoints the designees of the Purchasers as
such Unitholder's proxies, in the manner set forth in the Letter of Transmittal,
each with full power of substitution, to the full extent of such Unitholder's
rights with respect to the Units tendered by such Unitholder and accepted for
payment by the Purchasers. Such appointment will be effective when, and only to
the extent that, the Purchasers accept such Units for payment. Upon such
acceptance for payment, all prior proxies given by such Unitholder with respect
to such Units will, without further action, be revoked, and no subsequent
proxies may be given (and if given will not be effective). The designees of the
Purchasers will, with respect to such Units, be empowered to exercise all voting
and other rights of such Unitholder as they in their sole discretion may deem
proper at any meeting of Unitholders, by written consent or otherwise. In
addition, by executing a Letter of Transmittal, a Unitholder also assigns to the
Purchasers all of the Unitholder's rights to receive distributions from the
Partnership with respect to Units which are accepted for payment and purchased
pursuant to the Offer, other than those distributions declared or paid during
the period commencing on the Offer Date and terminating on the Expiration Date.
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Determination of Validity; Rejection of Units; Waiver of Defects; No Obligation
to Give Notice of Defects. All questions as to the validity, form, eligibility
(including time of receipt) and acceptance for payment of any tender of Units
pursuant to the procedures described above will be determined by the Purchasers,
in their sole discretion, which determination shall be final and binding. The
Purchasers reserve the absolute right to reject any or all tenders if not in
proper form or if the acceptance of, or payment for, the absolute right to
reject any or all tenders if not in proper form or if the acceptance of, or
payment for, the Units tendered may, in the opinion of the Purchasers' counsel,
be unlawful. The Purchasers also reserve the right to waive any defect or
irregularity in any tender with respect to any particular Units of any
particular Unitholder, and the Purchasers' interpretation of the terms and
conditions of the Offer (including the Letter of Transmittal and the
Instructions thereto) will be final and binding. Neither the Purchasers, the
Depositary, nor any other person will be under any duty to give notification of
any defects or irregularities in the tender of any Units or will incur any
liability for failure to give any such notification.
A tender of Units pursuant to any of the procedures described above
will constitute a binding agreement between the tendering Unitholder and the
Purchasers upon the terms and subject to the conditions of the Offer, including
the tendering Unitholder's representation and warranty that (i) such Unitholder
owns the Units being tendered within the meaning of Rule 14e-4 under the
Exchange Act and (ii) the tender of such Unit complies with Rule 14e-4. Rule
14e-4 requires, in general, that a tendering security holder actually be able to
deliver the security subject to the tender offer, and is of concern particularly
to any Unitholders who have granted options to sell or purchase the Units, hold
option rights to acquire such securities, maintain "short" positions in the
Units (i.e., have borrowed the Units) or have loaned the Units to a short
seller. Because of the nature of limited partnership interests, the Purchasers
believe it is unlikely that any option trading or short selling activity exists
with respect to the Units. In any event, a Unit holder will be deemed to tender
Units in compliance with Rule 14e-4 and the Offer if the holder is the record
owner of the Units and the holder (i) delivers the Units pursuant to the terms
of the Offer, (ii) causes such delivery to be made, (iii) guarantees such
delivery, (iv) causes a guaranty of such delivery, or (v) uses any other method
permitted in the Offer (such as facsimile delivery of the Transmittal Letter).
Section 4. Withdrawal Rights. Except as otherwise provided in this Section 4,
all tenders of Units pursuant to the Offer are irrevocable, provided 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 on or after January 10,
2000.
For withdrawal to be effective, a written or facsimile transmission
notice of withdrawal must be timely received by the Depositary at the address or
the facsimile number set forth in the attached Letter of Transmittal. Any such
notice of withdrawal must specify the name of the person who tendered the Units
to be withdrawn and must be signed by the person(s) who signed the Letter of
Transmittal in the same manner as the Letter of Transmittal was signed.
If purchase of, or payment for, Units is delayed for any reason or if
the Purchasers are unable to purchase or pay for Units for any reason, then,
without prejudice to the Purchasers' rights under the Offer, tendered Units may
be retained by the Depositary on behalf of the Purchasers and may not be
withdrawn except to the extent that tendering Unitholders are entitled to
withdrawal rights as set forth in this Section 4, subject to Rule 14e-1(c) under
the Exchange Act, which provides that no person who makes a tender offer shall
fail to pay the consideration offered or return the securities deposited by or
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on behalf of security holders promptly after the termination or withdrawal of
the tender offer.
All questions as to the form and validity (including time of receipt)
of notices of withdrawal will be determined by the Purchasers, in their sole
discretion, which determination shall be final and binding. Neither the
Purchasers, the Depositary, nor any other person will be under any duty to give
notification of any defects or irregularities in any notice of withdrawal or
will incur any liability for failure to give any such notification.
Any Units properly withdrawn will be deemed not to be validly tendered
for purposes of the Offer. Withdrawn Units may be re-tendered, however, by
following the procedures described in Section 3 at any time prior to the
Expiration Date.
Section 5. Extension of Tender Period; Termination; Amendment. The Purchasers
expressly reserve the right, in their sole discretion, at any time and from time
to time, (i) to extend the period of time during which the Offer is open and
thereby delay acceptance for payment of, and the payment for, any Units by
giving oral or written notice of such extension to the Depositary, (ii) upon the
occurrence or failure to occur of any of the conditions specified in Section 13,
to delay the acceptance for payment of, or payment for, any Units not heretofore
accepted for payment or paid for, or to terminate the Offer and not accept for
payment any Units not theretofore accepted for payment or paid for, by giving
oral or written notice of such termination to the Depositary, and (iii) to amend
the Offer in any respect (including, without limitation, by increasing or
decreasing the consideration offered or the number of Units being sought in the
Offer or both or changing the type of consideration) by giving oral or written
notice of such amendment to the Depositary. Any extension, termination or
amendment will be followed as promptly as practicable by public announcement,
the announcement in the case of an extension to be issued no later than 9:00
a.m., Eastern Standard Time, on the next business day after the previously
scheduled Expiration Date, in accordance with the public announcement
requirement of Rule 14d-4(c) under the Exchange Act. Without limiting the manner
in which the Purchasers may choose to make any public announcement, except as
provided by applicable law (including Rule 14d-4(c) under the Exchange Act), the
Purchasers will have no obligation to publish, advertise or otherwise
communicate any such public announcement, other than by issuing a release to the
Dow Jones News Service. The Purchasers may also be required by applicable law to
disseminate to Unitholders certain information concerning the extensions of the
Offer and any material changes in the terms of the Offer.
If the Purchasers extend the Offer, or if the Purchasers (whether
before or after its acceptance for payment of Units) are delayed in their
payment for Units or are unable to pay for Units pursuant to the Offer for any
reason, then, without prejudice to the Purchasers' rights under the Offer, the
Depositary may retain tendered Units on behalf of the Purchasers, and such Units
may not be withdrawn except to the extent tendering Unitholders are entitled to
withdrawal rights as described in Section 4. However, the ability of the
Purchasers to delay payment for Units that the Purchasers have accepted for
payment is limited by Rule 14e-1 under the Exchange Act, which requires that the
Purchasers pay the consideration offered or return the securities deposited by
or on behalf of holders of securities promptly after the termination or
withdrawal of the Offer.
If the Purchasers make a material change in the terms of the Offer or
the information concerning the Offer or waive a material condition of the Offer,
the Purchasers will extend the Offer to the extent required by Rules 14d-4(c),
14d-6(d) and 14e-1 under the Exchange Act. The minimum period during which an
offer must remain open following a material change in the terms of the offer or
information concerning the offer, other than a change in price or a change in
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percentage of securities sought, will depend upon the facts and circumstances,
including the relative materiality of the change in the terms or information.
With respect to a change in price or a change in percentage of securities
sought (other than an increase of not more than 2% of the securities sought),
however, a minimum ten business day period is generally required to allow for
adequate dissemination to security holders and for investor response. As used in
this Offer to Purchase, "business day" means any day other than a Saturday,
Sunday or a federal holiday, and consists of the time period from 12:01 a.m.
through 12:00 midnight, Pacific Standard Time.
Section 6. Certain Federal Income Tax Consequences. THE FEDERAL INCOME TAX
DISCUSSION SET FORTH BELOW IS INCLUDED HEREIN FOR GENERAL INFORMATION ONLY AND
DOES NOT PURPORT TO ADDRESS ALL ASPECTS OF TAXATION THAT MAY BE RELEVANT TO A
PARTICULAR UNITHOLDER. For example, this discussion does not address the effect
of any applicable foreign, state, local or other tax laws other than federal
income tax laws. Certain Unitholders (including trusts, foreign persons,
tax-exempt organizations or corporations subject to special rules, such as life
insurance companies or S corporations) may be subject to special rules not
discussed below. This discussion is based on the Internal Revenue Code of 1986,
as amended (the "Code"), existing regulations, court decisions and Internal
Revenue Service ("IRS") rulings and other pronouncements. EACH UNITHOLDER
TENDERING UNITS SHOULD CONSULT SUCH UNITHOLDER'S OWN TAX ADVISOR AS TO THE
PARTICULAR TAX CONSEQUENCES TO SUCH UNITHOLDER OF ACCEPTING THE OFFER, INCLUDING
THE APPLICATION OF THE ALTERNATIVE MINIMUM TAX AND FEDERAL, FOREIGN, STATE,
LOCAL AND OTHER TAX LAWS.
The following discussion is based on the assumption that the
Partnership is treated as a partnership for federal income tax purposes and is
not a "publicly traded partnership" as that term is defined in the Code.
Gain or Loss. A taxable Unitholder will recognize a gain or loss on the sale of
such Unitholder's Units in an amount equal to the difference between (i) the
amount realized by such Unitholder on the sale and (ii) such Unitholder's
adjusted tax basis in the Units sold. The amount realized by a Unitholder will
include the Unitholder's share of the Partnership's liabilities, if any (as
determined under Code section 752 and the regulations thereunder). If the
Unitholder reports a loss on the sale, such loss generally could not be
currently deducted by such Unitholder except against such Unitholder's capital
gains from other investments. In addition, such loss would be treated as a
passive activity loss. (See "Suspended Passive Activity Losses" below.)
The adjusted tax basis in the Units of a Unitholder will depend upon
individual circumstances. (See also "Partnership Allocations in Year of Sale"
below.) Each Unitholder who plans to tender hereunder should consult with the
Unitholder's own tax advisor as to the Unitholder's adjusted tax basis in the
Unitholder's Units and the resulting tax consequences of a sale.
If any portion of the amount realized by a Unitholder is attributable
to such Unitholder's share of "unrealized receivables" or "substantially
appreciated inventory items" as defined in Code section 751, a corresponding
portion of such Unitholder's gain or loss will be treated as ordinary gain or
loss. It is possible that the basis allocation rules of Code Section 751 may
result in a Unitholder's recognizing ordinary income with respect to the portion
of the Unitholder's amount realized on the sale of a Unit that is attributable
to such items while recognizing a capital loss with respect to the remainder of
the Unit.
A tax-exempt Unitholder (other than an organization described in Code
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Section 501(c)(7) (social club), 501(c)(9) (voluntary employee benefit
association), 501(c)(17) (supplementary unemployment benefit trust), or
501(c)(20) (qualified group legal services plan)) should not be required to
recognize unrelated trade or business income upon the sale of its Units pursuant
to the Offer, assuming that such Unitholder does not hold its Units as a
"dealer" and has not acquired such Units with debt financed proceeds.
Partnership Allocations in Year of Sale. A tendering Unitholder will be
allocated the Unitholder's pro rata share of the annual taxable income and
losses from the Partnership with respect to the Units sold for the period
through the date of sale, even though such Unitholder will assign to the
Purchasers their rights to receive certain cash distributions with respect to
such Units. Such allocations and any Partnership distributions for such period
would affect a Unitholder's adjusted tax basis in the tendered Units and,
therefore, the amount of gain or loss recognized by the Unitholder on the sale
of the Units.
Possible Tax Termination. The Code provides that if 50% or more of the capital
and profits interests in a partnership are sold or exchanged within a single
12-month period, such partnership generally will terminate for federal income
tax purposes. It is possible that the Partnership could terminate for federal
income tax purposes as a result of consummation of the Offer. Although the
likelihood is remote, as the Maximum Offer is to be calculated as an amount
which will not cause such a termination, a tax termination of the Partnership
could have an effect on a corporate or other non-individual Unitholder whose tax
year is not the calendar year, as such a Unitholder might recognize more than
one year's Partnership tax items in one tax return, thus accelerating by a
fraction of a year the effects from such items.
Suspended "Passive Activity Losses". A Unitholder who sells all of the
Unitholder's Units would be able to deduct "suspended" passive activity losses
from the Partnership, if any, in the year of sale free of the passive activity
loss limitation. As a limited partner of the Partnership, which was engaged in
real estate activities, the ability of a Unitholder, who or which is subject to
the passive activity loss rules, to claim tax losses from the Partnership was
limited. Upon sale of all of the Unitholder's Units, such Unitholder would be
able to use any "suspended" passive activity losses first against gain, if any,
on sale of the Unitholder's Units and then against income from any other source.
Foreign Unitholders. Gain realized by a foreign Unitholder on a sale of a Unit
pursuant to the Offer will be subject to federal income tax. Under Section 1445
of the Code, the transferee of a partnership interest held by a foreign person
is generally required to deduct and withhold a tax equal to 10% of the amount
realized on the disposition. The Purchasers will withhold 10% of the amount
realized by a tendering Unitholder from the purchase price payment to be made to
such Unitholder unless the Unitholder properly completes and signs the FIRPTA
Affidavit included as part of the Letter of Transmittal certifying the
Unitholder's TIN, that such Unitholder is not a foreign person and the
Unitholder's address. Amounts withheld would be creditable against a foreign
Unitholder's federal income tax liability and, if in excess thereof, a refund
could be obtained from the Internal Revenue Service by filing a U.S. income tax
return.
Section 7. Effects of the Offer.
Limitations on Resales. The Partnership's General Partner has advised the
Purchasers by a letter from its counsel that the Partnership's Agreement of
Limited Partnership would prohibit the consummation of the Offer if it would
result in the purchase of such number of Units as might cause the termination of
the Partnership for federal income tax purposes. The Partnership Agreement
prohibits transfers of Units which would cause such a tax termination. This
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restriction on transfer was included in the Partnership Agreement to prevent
potential material adverse tax consequences which may have resulted upon a tax
termination under the tax laws applicable to the Partnership at the time of
its formation. Since the adoption of this transfer restriction, the Internal
Revenue Code and the Treasury Regulations thereunder have been amended and, to
the Purchasers' knowledge, would no longer cause any material adverse tax
consequence to the Partnership or its partners upon a tax termination occurring
upon the transfer of 50% or more of the capital and/or profits interest in the
Partnership in any twelve month period. Nevertheless, in order to assure that
the transfers will comply with this restriction, the Purchasers hereby amend the
Offer to reduce the number of Units to be purchased hereunder to a maximum total
equal to the lesser of (i) 165,001 Units, or one Unit less than 50% of the total
number of Units outstanding; or (ii) the maximum number of Units which may be
sold and transferred in compliance with the Partnership's prohibition against
transfers resulting in a termination of the Partnership for federal income tax
purposes. The Partnership's restriction on transfers of Units would prohibit
transfer of more than 50% of the aggregate interest in capital or profits of the
Partnership in any twelve month period. When the general partner's capital and
profits interest is included, an offer to purchase less than one-half of the
outstanding Units should comply with the restriction and avoid a tax termination
of the Partnership. In the event there have been any other transfers of Units in
the last twelve months, the general partner can so advise the Purchasers, and
they will reduce the number of Units subject to the Offer to equal the maximum
number of Units available under the restriction. The Offer will be amended
appropriately to reflect any such reduction. Based on the absence of any trading
market for the Units, the Purchasers believe any such reduction in the Maximum
Offer would be nominal.
Effect on Trading Market. According to the Partnership, there is no established
public trading market for the Units and, therefore, a reduction in the number
of Unitholders should not materially further restrict the Unitholders' ability
to find purchasers for their Units on any secondary market.
Voting Power of Purchasers. Depending on the number of Units acquired by the
Purchasers pursuant to the Offer, the Purchasers may have the ability to exert
certain influence on matters subject to the vote of Unitholders, though the
maximum number of Units sought hereunder would not give the Purchasers a
controlling voting interest. Furthermore, affiliates of the General Partner
control a substantial block of Units and would have greater voice in and vote of
Units than would the Purchasers.
Other Potential Effects. The Units are registered under the Exchange Act, which
requires, among other things that the Partnership furnish certain information to
its Unitholders and to the Commission and comply with the Commission's proxy
rules in connection with meetings of, and solicitation of consents from,
Unitholders. Registration and reporting requirements could be terminated by the
Partnership if the number of record holders falls below 300, or below 500 if the
Partnership's total assets are below $10 million for three consecutive preceding
fiscal years. The Partnership reported total assets in excess of $8.7 million as
of its most recent fiscal year end, assets in excess of $13 million as of its
prior fiscal year end, and a total of 11,500 limited partners. The Purchasers
do not expect to acquire a number of Units pursuant to the Offer that would
reduce the number of record Unit holders below 300. Accordingly, the Purchasers
do not believe that the purchase of Units pursuant to the Offer will result
in the Units becoming eligible for deregistration under the Exchange Act.
Section 8. Future Plans. Following the completion of the Offer, the Purchasers,
or their affiliates, may acquire additional Units. Any such acquisitions
may be made through private purchases, one or more future tender offers or by
any other means deemed advisable or appropriate. Any such acquisitions may be at
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a consideration higher or lower than the consideration to be paid for the
Units purchased pursuant to the Offer. The Purchasers are seeking to purchase
any and all outstanding Units. Accordingly, the Purchasers may seek to make
further purchases on the open market at prevailing prices, or solicit Units
pursuant to one or more future tender offers at the same price, a higher price
or, if the Partnership's circumstances change, at a lower price. Alternatively,
the Purchasers may discontinue any further purchases of Units after termination
of the Offer, regardless of the number of Units purchased.
The Purchasers are acquiring the Units pursuant to the Offer primarily
for investment purposes. Depending on the number of Units purchased, the
Purchasers may seek control of the Partnership. The Purchasers reserve the right
to exercise their discretion in all matters subject to a limited partner vote,
including, but not limited to, any vote to cause the sale of the Partnership's
properties and the liquidation and dissolution of the Partnership.
Section 9. The Business of the Partnership. Information included herein
concerning the Partnership is derived from the Partnership's publicly-filed
reports and the filed information relating to the tender offer by an affiliate
of the General Partner. Information concerning the Partnership, its assets,
operations and management is contained in its Annual Reports on Form 10-K and
Quarterly Reports on Form 10-Q and other filings with the Securities and
Exchange Commission. Such reports and filings are available on the Commission's
EDGAR system, at its internet website at www.sec.gov, and are available for
inspection at the Commission's principal office in Washington, D.C. and at its
regional offices in New York, New York and Chicago, Illinois. The Purchasers
have relied on such information to the extent information is presented herein
concerning the Partnership, and expressly disclaim any responsibility for the
information included in such reports and extracted in this Offer.
Section 10. Conflicts of Interest. The Depositary is affiliated with certain
Purchasers. Therefore, by virtue of this affiliation, the Depositary may have
inherent conflicts of interest in acting as Depositary for the Offer. The
Depositary's role is administrative only, and any conflict of interest should
not be deemed material to Unit holders.
Section 11. Certain Information Concerning the Purchasers. The Purchasers are
SUTTER OPPORTUNITY FUND, LLC (SOF); SUTTER CAPITAL MANAGEMENT, LLC (SCM); MP
INCOME FUND 15, LLC (MPIF15); MacKENZIE PATTERSON SPECIAL FUND, L.P. (MPSF);
MacKENZIE PATTERSON SPECIAL FUND 2, L.P. (MPSF 2); MacKENZIE PATTERSON SPECIAL
FUND 4, LLC (MPSF 4); MP FALCON FUND, LLC (MPFF); MP VALUE FUND 4, LLC (MPVF 4);
PREVIOUSLY OWNED MORTGAGE PARTNERSHIP INCOME FUND 3, L.P. POMPIF 3); ACCELERATED
HIGH YIELD INSTITUTIONAL INVESTORS, LTD. (AHYII); ACCELERATED HIGH YIELD
INSTITUTIONAL FUND, LTD. (AHYIF); CAL KAN, INC. (CK); C.E. PATTERSON
(PATTERSON); MORAGA GOLD, LLC (MG); JAMES HILLMAN (HILLMAN); STEVEN GOLD (GOLD);
THOMAS A. FRAME (FRAME) and MP ACQUISITION COMPANY, LLC (MPAC). For information
concerning the Purchasers and their respective principals, please refer to
Schedule I attached hereto. The principal business of each of the Purchasers is
investment in securities, particularly real estate-based securities. The
principal business address of SOF and SCM is 595 Market Street, Suite 2100, San
Francisco, California 94105; the principal business address for GOLD is Four
Embarcadero, Suite 3610, San Francisco, California 94111; the principal business
address for FRAME is 4518 Glencannon Drive, Suisun, California 94585; the
principal business address for HILLMAN is #1 Kaiser Plaza, Ste 405, Oakland, CA
94612; and the principal business address for all other Purchasers is 1640
School Street, Moraga, California 94556.
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The Purchasers have made binding commitments to contribute and have
available sufficient amounts of liquid capital necessary to fund the acquisition
of all Units subject to the Offer, the expenses to be incurred in connection
with the Offer, and all other anticipated costs of the Purchasers. The
Purchasers are not public companies and have not prepared audited financial
statements. Set forth below is summary of total net assets and total current
assets ( defined for this purpose as cash, cash equivalents and marketable
securities) for each of the entity Purchasers (numbers are expressed in
thousands of dollars and are rounded to the nearest thousand):
................................................................................
Purchaser Net Current
- --------- Assets Assets
------ ------
SOF 2,066 1,895
MPIF15 50 50
MPSF 1,812 882
MPSF 2 1,185 332
MPSF 4 2,589 2,150
MPFF 3,153 1,277
MPVF 4 1,100 734
POMPIF 3 1,575 333
AHYII 1,143 329
AHYIF 2,351 527
CK 1,168 101
MPAC 1,262 474
MG 0 0
- -------- ------ ------
Total 19,454 9,084
In addition to the entity Purchasers, PATTERSON, GOLD, HILLMAN and
FRAME, as individual Purchasers, have an aggregate net worth in excess of $30
million and liquid assets in excess of $10 million.
Certain of the Purchasers and affiliates of certain of the Purchasers
currently own an aggregate total of 4,312 Units or approximately 1.31% of the
total outstanding Units. Of these Units, 280 Units were acquired during the
preceding six months, 80 Units at a price of $12 per Unit, and, within the most
recent month, 200 Units at a price of $15 per Unit.
Except as otherwise set forth herein, (i) neither the Purchasers nor,
to the best knowledge of the Purchasers, the persons listed on Schedule I nor
any affiliate of the Purchasers beneficially owns or has a right to acquire any
Units, (ii) neither the Purchasers nor, to the best knowledge of the Purchasers,
the persons listed on Schedule I nor any affiliate of the Purchasers, or any
director, executive officer or subsidiary of any of the foregoing has effected
any transaction in the Units within the past 60 days, (iii) neither the
Purchasers nor, to the best knowledge of the Purchasers, the persons listed on
Schedule I nor any affiliate of the Purchasers 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,
consents or authorizations, (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 any of the Purchasers or, to the best
knowledge of the Purchasers, the persons listed on Schedule I, or any affiliate
of the Purchasers on the one hand, and the Partnership or its affiliates, on the
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other hand, and (v) there have been no contracts, negotiations or
transactions between the Purchasers, or to the best knowledge of the Purchasers
any affiliate of the Purchasers on the one hand, the persons listed on Schedule
I, 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.
Section 12. Source of Funds. The Purchasers expect that approximately $2,475,015
would be required to purchase all outstanding Units, if tendered, and an
additional $35,000 may be required to pay related fees and expenses. The
Purchasers anticipate funding all of the purchase price and related expenses
through their existing liquid capital reserves.
Section 13. Conditions of the Offer. Notwithstanding any other term of the
Offer, the Purchasers shall not be required to accept for payment or to pay for
any Units tendered if all authorizations, consents, orders or approvals of, or
declarations or filings with, or expirations of waiting periods imposed by, any
court, administrative agency or commission or other governmental authority or
instrumentality, domestic or foreign, necessary for the consummation of the
transactions contemplated by the Offer shall not have been filed, occurred or
been obtained on or before the Expiration Date.
The Purchasers shall 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 Expiration Date, any of the following conditions exists:
(a) 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 or payment for any Units by the Purchasers, (ii)
imposes or confirms limitations on the ability of the Purchasers effectively to
exercise full rights of ownership of any Units, including, without limitation,
the right to vote any Units acquired by the Purchasers pursuant to the Offer or
otherwise on all matters properly presented to the Partnership's Unitholders,
(iii) requires divestiture by the Purchasers of any Units, (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 prospectus of the Purchasers or the
Partnership;
(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, other than the application of the waiting period provisions of the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, which might,
directly or indirectly, result in any of the consequences referred to in clauses
(i) through (v) of paragraph (a) above;
(c) any change or development shall have occurred or been threatened
since the date hereof, in the business, properties, assets, liabilities,
financial condition, operations, results of operations or prospects of the
Partnership, which, in the reasonable judgment of the Purchasers, is or may be
materially adverse to the Partnership, or the Purchasers shall have become aware
of any fact that, in the reasonable judgment of the Purchasers, does or may have
a material adverse effect on the value of the Units;
18
<PAGE>
(d) there shall have occurred (i) any general suspension of trading in,
or limitation on prices for, securities on any national securities exchange or
in the over-the-counter market in the United States, (ii) a declaration of
a banking moratorium or any suspension of payments in respect of banks in the
United States, (iii) any limitation by any governmental authority on, or other
event which might affect, the extension of credit by lending institutions or
result in any imposition of currency controls in the United States, (iv) a
commencement of a war or armed hostilities or other national or international
calamity directly or indirectly involving the United States, (v) a material
change in United States or other currency exchange rates or a suspension of a
limitation on the markets thereof, or (vi) in the case of any of the foregoing
existing at the time of the commencement of the Offer, a material acceleration
or worsening thereof; or
(e) it shall have been publicly disclosed or the Purchasers shall have
otherwise learned that (i) more than fifty percent of the outstanding Units have
been or are proposed to be acquired by another person (including a "group"
within the meaning of Section 13(d)(3) of the Exchange Act), or (ii) any person
or group that prior to such date had filed a Statement with the Commission
pursuant to Sections 13(d) or (g) of the Exchange Act has increased or proposes
to increase the number of Units beneficially owned by such person or group as
disclosed in such Statement by two percent or more of the outstanding Units.
The foregoing conditions are for the sole benefit of the Purchasers and
may be asserted by the Purchasers regardless of the circumstances giving rise to
such conditions or may be waived by the Purchasers in whole or in part at any
time and from time to time in their sole discretion. Any termination by the
Purchasers concerning the events described above will be final and binding upon
all parties.
Section 14. Certain Legal Matters.
General. Except as set forth in this Section 14, the Purchasers are not aware of
any filings, approvals or other actions by any domestic or foreign governmental
or administrative agency that would be required prior to the acquisition of
Units by the Purchasers pursuant to the Offer. Should any such approval or other
action be required, it is the Purchasers' present intention that such additional
approval or action would be sought. While there is no present intent to delay
the purchase of Units tendered pursuant to the Offer pending receipt of any such
additional approval or the taking of any such action, 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 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, any of
which could cause the Purchasers to elect to terminate the Offer without
purchasing Units thereunder. The Purchasers' obligation to purchase and pay for
Units is subject to certain conditions, including conditions related to the
legal matters discussed in this Section 14.
Antitrust. The Purchasers do not believe that the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, is applicable to the acquisition of Units
pursuant to the Offer.
Margin Requirements. The Units are not "margin securities" under the regulations
of the Board of Governors of the Federal Reserve System and, accordingly, such
regulations are not applicable to the Offer.
19
<PAGE>
State 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 which are incorporated in such states or which have
substantial assets, security holders, principal executive offices or principal
places of business therein. These laws are directed at the acquisition of
corporations and not partnerships. The Purchasers, therefore, do not believe
that any anti-takeover laws apply to the transactions contemplated by the Offer.
Although the Purchasers have not attempted to comply with any state
anti-takeover statutes in connection with the Offer, the Purchasers reserve the
right to challenge the validity or applicability of any state law allegedly
applicable to the Offer and nothing in this Offer nor any action taken in
connection herewith is intended as a waiver of such right. If any state
anti-takeover statute is applicable to the Offer, the Purchasers 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 Purchasers
may not be obligated to accept for purchase or pay for any Units tendered.
Section 15. Fees and Expenses. The Purchasers have retained MacKenzie Patterson,
Inc., an affiliate of certain Purchasers, to act as Depositary in connection
with the Offer. The Purchasers will pay the Depositary reasonable and customary
compensation for its services in connection with the Offer, plus reimbursement
for out-of-pocket expenses, and will indemnify the Depositary against certain
liabilities and expenses in connection therewith, including liabilities under
the federal securities laws. The Purchasers will also pay all costs and expenses
of printing, publication and mailing of the Offer and all costs of transfer.
Section 16. Miscellaneous. THE OFFER IS NOT BEING MADE TO (NOR WILL TENDERS BE
ACCEPTED FROM OR ON BEHALF OF) UNITHOLDERS IN ANY JURISDICTION IN WHICH THE
MAKING OF THE OFFER OR THE ACCEPTANCE THEREOF WOULD NOT BE IN COMPLIANCE WITH
THE LAWS OF SUCH JURISDICTION. THE PURCHASERS ARE NOT AWARE OF ANY JURISDICTION
WITHIN THE UNITED STATES IN WHICH THE MAKING OF THE OFFER OR THE ACCEPTANCE
THEREOF WOULD BE ILLEGAL.
No person has been authorized to give any information or to make any
representation on behalf of the Purchasers 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.
November 3, 1999
SUTTER OPPORTUNITY FUND, LLC; SUTTER CAPITAL MANAGEMENT, LLC; MP INCOME
FUND 15, LLC; MacKENZIE PATTERSON SPECIAL FUND, L.P.; MacKENZIE PATTERSON
SPECIAL FUND 2, L.P.; MacKENZIE PATTERSON SPECIAL FUND 4, LLC; MP FALCON FUND,
LLC; MP VALUE FUND 4, LLC; PREVIOUSLY OWNED MORTGAGE PARTNERSHIP INCOME FUND 3,
L.P.; ACCELERATED HIGH YIELD INSTITUTIONAL INVESTORS, LTD.; ACCELERATED HIGH
YIELD INSTITUTIONAL FUND, LTD.; CAL KAN, INC.; MORAGA GOLD, LLC; C.E. PATTERSON;
JAMES HILLMAN; STEVEN GOLD; THOMAS A. FRAME and MP ACQUISITION COMPANY, LLC
20
<PAGE>
SCHEDULE I
THE PURCHASERS AND THEIR RESPECTIVE PRINCIPALS
The Purchasers are SUTTER OPPORTUNITY FUND, LLC (SOF); SUTTER CAPITAL
MANAGEMENT, LLC (SCM); MP INCOME FUND 15, LLC (MPIF15); MacKENZIE PATTERSON
SPECIAL FUND, L.P. (MPSF); MacKENZIE PATTERSON SPECIAL FUND 2, L.P. (MPSF 2);
MacKENZIE PATTERSON SPECIAL FUND 4, LLC (MPSF 4); MP FALCON FUND, LLC (MPFF); MP
VALUE FUND 4, LLC (MPVF 4); PREVIOUSLY OWNED MORTGAGE PARTNERSHIP INCOME FUND 3,
L.P. (POMPIF 3); ACCELERATED HIGH YIELD INSTITUTIONAL INVESTORS, LTD. (AHYII);
ACCELERATED HIGH YIELD INSTITUTIONAL FUND, LTD. (AHYIF); CAL KAN, INC. (CK);
C.E. PATTERSON (PATTERSON); MORAGA GOLD, LLC (MG); JAMES HILLMAN (HILLMAN);
STEVEN GOLD (GOLD); THOMAS A. FRAME (FRAME) and MP ACQUISITION COMPANY, LLC
(MPAC). The General Partner of each of MPSF, MPSF 2, POMPIF 3, AHYII, and AHYIF,
is MacKenzie Patterson, Inc. The Manager of each of MPIF15, MPSF 4, MPFF, MPVF
4, and MPAC is MacKenzie Patterson, Inc. The Manager of SOF is SCM and the
manager of SCM is Robert Dixon.
The names of the directors and executive officers of MacKenzie
Patterson, Inc. are set forth below. Each of the Purchasers is managed or
advised by affiliates of MacKenzie Patterson, Inc. The Purchasers have jointly
made the offer and are jointly and severally liable for satisfying its terms.
Other than the foregoing, the Purchasers' relationship consists of an informal
agreement to share the costs associated with making the offer and to allocate
any resulting purchases of Units among them in such manner and proportions as
they may determine in the future. Each individual Purchaser is a citizen of the
United States of America. AHYII and AHYIF are Florida partnerships, CK is a
Kansas corporation and each of the other entities is organized in California.
MacKenzie Patterson, Inc.
C.E. Patterson is President of MacKenzie Patterson, Inc. He is the
co-founder and President of Patterson Financial Services, Inc. In 1981, Mr.
Patterson founded PFS with Berniece A. Patterson, as a financial planning firm.
Mr. Patterson founded Patterson Real Estate Services, a licensed California Real
Estate Broker, in 1982. As President of PFS, Mr. Patterson is responsible for
all investment counseling activities. He supervises the analysis of investment
opportunities for the clients of the firm. He is a trustee of Consolidated
Capital Properties Trust, a liquidating trust formed out of the bankruptcy court
proceedings involving Consolidated Capital Properties, Ltd. Mr. Patterson is
also an officer and controlling shareholder of Cal-Kan, Inc., an executive
officer and controlling shareholder of Moraga Partners, Inc., and trustee of the
Pat Patterson Western Securities, Inc. Profit Sharing Plan. Mr. Patterson,
through his affiliates, manages a number of investment and real estate
partnerships.
Berniece A. Patterson is a director of MacKenzie Patterson, Inc. In 1981,
Ms. Patterson and C.E. Patterson established Patterson Financial Services, Inc.
She serves as Chair of the Board and Vice President of PFS. Her responsibilities
with PFS include oversight of administrative matters and monitoring of past
projects underwritten by PFS. Ms. Patterson is Chief Executive Officer of an
affiliate, Pioneer Health Care Services, Inc., and is responsible for the
day-to-day operations of three nursing homes and over 300 employees.
21
<PAGE>
Christine Simpson is vice president of MacKenzie Patterson, Inc. and is
responsible for the day-to-day management of research, and securities purchases
and sales on behalf of the entities managed by MacKenzie Patterson, Inc. Ms.
Simpson has been employed by MacKenzie Patterson, Inc. since 1990.
Sutter Capital Management, LLC
Sutter Capital Management, LLC is a California limited liability company
formed in 1998 to serve as the manager for Sutter Opportunity Fund, LLC. The
managing member and controlling interest holder in Sutter Capital Management,
LLC is Robert E. Dixon. Mr. Dixon is a Canadian citizen.
Mr. Dixon received his Bachelors degree in economics from the University of
California at Los Angeles in 1992. He worked for Lehman Brothers in equity sales
and trading during 1993 and 1994. In October 1994, he joined MacKenzie
Patterson, Inc. as a securities research analyst. In June 1996, Mr. Dixon left
MacKenzie Patterson, Inc. to go into business buying and selling securities for
his own account and that of the entity he controls, Sutter Opportunity Fund, in
which he has been engaged since that date. Mr. Dixon was a registered
representative of North Coast Securities from 1994 through 1997.
Cal Kan, Inc.
Cal Kan, Inc. is a Kansas corporation owned by C. E. Patterson and Thomas
A. Frame. Mr. Patterson and Mr. Frame are also each an executive officer and
director of Cal Kan, Inc. Information regarding Mr. Patterson is set forth
above.
Thomas A. Frame has been the president of Paradigm Investment Corporation,
a real estate limited partnership secondary market firm, since 1986. In 1973,
Mr. Frame was a co-founder of Transcentury Real Estate Masters, Oakland,
California, a residential and commercial real estate brokerage firm. In 1973 he
also co-founded, and has since then been a partner in, Transcentury Property
Management Company, which as syndicated privately-placed real estate limited
partnerships owning multi-family residential properties. He is a trustee of
Consolidated Capital Properties Trust, a liquidating trust formed out of the
bankruptcy court proceedings involving Consolidated Capital Properties, Ltd. Mr.
Frame is co-owner and an executive officer and director of Cal Kan, Inc. Mr.
Frame, through his affiliates, manages over $6 million dollars in investor
capital and is currently managing a total of 1,150 residential units in four
states.
Moraga Gold, LLC
The members of Moraga Gold, LLC are Moraga Partners, Inc. and the David B.
Gold Trust. Information concerning Moraga Partners, Inc. is set forth below.
The David B. Gold Trust is a private trust of which Barbara Lurie is the
trustee and Steven Gold is responsible for certain investments. The sole
beneficiary of the trust is a nonprofit charitable foundation. The business
address of the trust is Four Embarcadero, Suite 3610, San Francisco, California
94111. Barbara Lurie has been employed for the last five years as a physician by
the University of California, San Francisco and the University of Minnesota.
Steven Gold, a California attorney, has been self-employed during the last five
years analyzing investments for his own account and for that of the trust. In
addition, he has participated in starting a number of business ventures,
including T/O devices, an import/export company.
22
<PAGE>
Moraga Partners, Inc.
Moraga Partners, Inc. is a California corporation owned by C. E. Patterson.
Mr. Patterson is also an executive officer and director of Moraga Partners, Inc.
Information regarding Mr. Patterson is set forth above.
C.E. Patterson
Information regarding Mr. Patterson is set forth above under MacKenzie
Patterson, Inc.
Thomas A. Frame
Information regarding Mr. Frame is set forth above under Cal Kan, Inc..
Steven Gold
Information regarding Mr. Gold is set forth above under Moraga Gold, LLC.
James Hillman
Mr. Hillman graduated from the University of Michigan in 1961, and received
his J.D. from Northwestern School of Law in 1964. After being admitted to the
bar in both California and the U.S. District Court, Mr. Hillman began investing
in various real estate entities. Currently Mr. Hillman is President of Peregrine
Funding, a real estate investment firm based in Oakland, California.
31
Exhibit (a)(2)
<PAGE>
LETTER OF TRANSMITTAL
THE OFFER, WITHDRAWAL RIGHTS AND PRORATION PERIOD WILL
EXPIRE AT 12:00 MIDNIGHT, PACIFIC STANDARD TIME, ON
December 10, 1999 (THE "Expiration Date") UNLESS
EXTENDED.
Deliver to: MacKenzie Patterson, Inc.
1640 School Street
Moraga, California 94556
Via Facsimile: (925) 631-9119
For assistance: (800) 854-8357
(PLEASE INDICATE CHANGES OR CORRECTIONS TO THE
ADDRESS PRINTED TO THE LEFT)
To participate in the Offer, a duly executed copy of this Letter of
Transmittal and any other documents required by this Letter of Transmittal must
be received by the Depositary on or prior to the Expiration Date. 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. The method of
delivery of all documents is at the election and risk of the tendering
Unitholder. Please use the pre-addressed, postage-paid envelope provided.
This Letter of Transmittal is to be completed by holders of Units of
limited partnership interest in RESOURCES ACCRUED MORTGAGE INVESTORS L.P. -
Series 86, a Delaware limited partnership(the "Partnership"), pursuant to the
procedures set forth in the Offer to Purchase (as defined below). Capitalized
terms used herein and not defined herein have the meanings ascribed to such
terms in the Offer to Purchase.
PLEASE CAREFULLY READ THE ACCOMPANYING INSTRUCTIONS
Gentlemen:
The undersigned hereby tenders to SUTTER OPPORTUNITY FUND, LLC; SUTTER
CAPITAL MANAGEMENT, LLC; MP INCOME FUND 15, LLC; MacKENZIE PATTERSON SPECIAL
FUND, L.P.; MacKENZIE PATTERSON SPECIAL FUND 2, L.P.; MacKENZIE PATTERSON
SPECIAL FUND 4, LLC; MP FALCON FUND, LLC; MP VALUE FUND 4, LLC; PREVIOUSLY OWNED
MORTGAGE PARTNERSHIP INCOME FUND 3, L.P.; ACCELERATED HIGH YIELD INSTITUTIONAL
INVESTORS, LTD.; ACCELERATED HIGH YIELD INSTITUTIONAL FUND, LTD.; CAL KAN, INC.;
MORAGA GOLD, LLC; C.E. PATTERSON; JAMES HILLMAN; STEVEN GOLD; THOMAS A. FRAME;
and MP ACQUISITION COMPANY, LLC (collectively the "Purchasers") all of the Units
of limited partnership interest ("Units") in the Partnership held by the
undersigned as set forth above (or, if less than all such Units, the number set
forth below in the signature box), at a purchase price equal to $15 per Unit,
less the amount of any distributions made or declared with respect to the Units
between the Offer Date and the Expiration Date, and upon the other terms and
subject to the conditions set forth in the Offer to Purchase, dated November 3,
1999 (the "Offer to Purchase") and in this Letter of Transmittal, as each may be
supplemented or amended from time to time (which together constitute the
"Offer"). Receipt of the Offer to Purchase is hereby acknowledged. The
undersigned recognizes that, if more Units than the Maximum Offer (as defined in
the Offer) are validly tendered prior to or on the Expiration Date and not
properly withdrawn, the Purchasers will, upon the terms of the Offer, accept for
payment from among those Units tendered prior to or on the Expiration Date Units
equal to the Maximum Offer on a pro rata basis, with adjustments to avoid
purchases of certain fractional Units, based upon the number of Units validly
tendered prior to the Expiration Date and not withdrawn. Subject to and
effective upon acceptance for payment of any of the Units tendered hereby,
the undersigned hereby sells, assigns and transfers to, or upon the order of,
Purchasers all right, title and interest in and to such Units which are
purchased pursuant to the Offer. The undersigned hereby irrevocably constitutes
<PAGE>
and appoints the Purchasers as the true and lawful agent and attorney-in-fact
and proxy of the undersigned with respect to such Units, with full power of
substitution (such power of attorney and proxy being deemed to be an irrevocable
power and proxy coupled with an interest), to deliver such Units and transfer
ownership of such Units, on the books of the Partnership, together with all
accompanying evidences of transfer and authenticity, to or upon the order of the
Purchasers and, upon payment of the purchase price in respect of such Units by
the Purchasers, to exercise all voting rights and to receive all benefits and
otherwise exercise all rights of beneficial ownership of such Units all in
accordance with the terms of the Offer. Subject to and effective upon the
purchase of any Units tendered hereby, the undersigned hereby requests that each
of the Purchasers be admitted to the Partnership as a "substitute Limited
Partner" under the terms of the Partnership Agreement of the Partnership. Upon
the purchase of Units pursuant to the Offer, all prior proxies and consents
given by the undersigned with respect to such Units will be revoked and no
subsequent proxies or consents may be given (and if given will not be deemed
effective). In addition, by executing this Letter of Transmittal, the
undersigned assigns to the Purchasers all of the undersigned's rights to receive
distributions from the Partnership with respect to Units which are purchased
pursuant to the Offer, other than distributions declared or paid through the
Expiration Date and to change the address of record for such distributions on
the books of the Partnership. Upon request, the Seller will execute and deliver,
and irrevocably directs any custodian to execute and deliver, any additional
documents deemed by the Purchaser to be necessary or desirable to complete the
assignment, transfer and purchase of such Units.
The undersigned hereby represents and warrants that the undersigned owns
the Units tendered hereby within the meaning of Rule 13d-3 under the Securities
Exchange Act of 1934, as amended, and has full power and authority to validly
tender, sell, assign and transfer the Units tendered hereby, and that when any
such Units are purchased by the Purchasers, the Purchasers will acquire good,
marketable and unencumbered title thereto, free and clear of all liens,
restrictions, charges, encumbrances, conditional sales agreements or other
obligations relating to the sale or transfer thereof, and such Units will not be
subject to any adverse claim. Upon request, the undersigned will execute and
deliver any additional documents deemed by the Purchasers to be necessary or
desirable to complete the assignment, transfer and purchase of Units tendered
hereby.
The undersigned understands that a tender of Units to the Purchasers will
constitute a binding agreement between the undersigned and the Purchasers upon
the terms and subject to the conditions of the Offer. The undersigned recognizes
the right of the Purchasers to effect a change of distribution address to
MacKenzie Patterson, Inc. at 1640 School Street, Moraga, California, 94556. The
undersigned recognizes that under certain circumstances set forth in the Offer
to Purchase, the Purchasers 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 Purchasers. 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,
successors and assigns of the undersigned. Except as stated in the Offer to
Purchase, this tender is irrevocable.
===============================================================================
SIGNATURE BOX
(Please complete Boxes A, B, C and D on the following page as necessary)
===============================================================================
- ----------------------------------------------------------------------------
Please sign exactly as your name is printed (or corrected) above, and insert
your Taxpayer Identification Number or Social Security Number in
the space provided below your X______________________________
signature. For joint owners, (Signature of Owner) Date
each joint owner must sign.
(See Instructions 1) The
signatory hereto hereby certifies X_______________________________
under penalties of perjury the (Signature of Owner) Date
statements in Box B, Box C and,
if applicable, Box D. If the
2
<PAGE>
undersigned is tendering less Taxpayer I.D. or Social # ________________
than all Units held, the number Telephone No. (day) __________
of Units tendered is set forth (eve.)__________
below. Otherwise, all Units held
by the undersigned are tendered hereby.
______________ Units
=============================================================================
BOX A
=============================================================================
Medallion Signature Guarantee
(Required for all Sellers)
(See Instruction 1)
Name and Address of Eligible Institution: ____________________________________
Authorized Signature _____________________________ Title _________________
Name ________________________________ Date _______________,199___
===============================================================================
===============================================================================
BOX B
SUBSTITUTE FORM W-9
(See Instruction 3 - Box B)
- -------------------------------------------------------------------------------
The person signing this Letter of Transmittal hereby certifies the
following to the Purchasers under penalties of perjury:
(i) The TIN set forth in the signature box on the front of
this Letter of Transmittal is the correct TIN of the Unitholder, or if this box
[ ] is checked, the Unitholder has applied for a TIN. If the Unitholder has
applied for a TIN, a TIN has not been issued to the Unitholder, and either: (a)
the Unitholder has mailed or delivered an application to receive a TIN to the
appropriate IRS Center or Social Security Administration Office, or (b) the
Unitholder intends to mail or deliver an application in the near future (it
being understood that if the Unitholder does not provide a TIN to the Purchasers
within sixty (60) days, 31% of all reportable payments made to the Unitholder
thereafter will be withheld until a TIN is provided to the Purchasers); and
(ii) Unless this box [ ] is checked, the Unitholder is not
subject to backup withholding either because the Unitholder: (a) is exempt from
backup withholding, (b) has not been notified by the IRS that the Unitholder is
subject to backup withholding as result of a failure to report all interest or
dividends, or (c) has been notified by the IRS that such Unitholder is no longer
subject to backup withholding.
Note: Place an "X" in the box in (ii) if you are unable to certify that the
Unitholder is not subject to backup withholding.
===============================================================================
===============================================================================
BOX C
FIRPTA AFFIDAVIT
(See Instruction 3 - Box C)
- -------------------------------------------------------------------------------
Under Section 1445(e)(5) of the Internal Revenue Code and Treas. Reg.
1.1445-11T(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
3
<PAGE>
interest is a foreign person. To inform the Purchasers that no withholding is
required with respect to the Unitholder's interest 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 Unitholder, 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 Unitholder's
U.S. social security number (for individuals) or employer identification number
(for non-individuals) is correctly printed in the signature box on the front of
this Letter of Transmittal; and (iii) the Unitholder's home address (for
individuals), or office address (for non-individuals), is correctly printed (or
corrected) on the front of this Letter of Transmittal. If a corporation, the
jurisdiction of incorporation is
--------------.
The person signing this Letter of Transmittal understands that this
certification may be disclosed to the IRS by the Purchasers and that any false
statements contained herein could be punished by fine, imprisonment, or both.
===============================================================================
===============================================================================
BOX D
SUBSTITUTE FORM W-8
(See Instruction 4 - Box D)
- -------------------------------------------------------------------------------
By checking this box [ ], the person signing this Letter of
Transmittal hereby certifies under penalties of perjury that the Unitholder is
an "exempt foreign person" for purposes of the backup withholding rules under
the U.S. federal income tax laws, because the Unitholder:
(i) Is a nonresident alien individual or a foreign corporation,
partnership, estate or trust;
(ii) If 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.
===============================================================================
INSTRUCTIONS
Forming Part of the Terms and Conditions of the Offer
1. Tender, Signature Requirements; Delivery. After carefully reading and
completing this Letter of Transmittal, in order to tender Units a Unitholder
must sign at the "X" on the bottom of the first page of this Letter of
Transmittal and insert the Unitholder's correct Taxpayer Identification Number
or Social Security Number ("TIN") in the space provided below the signature. The
signature must correspond exactly with the name printed (or corrected) on the
front of this Letter of Transmittal without any change whatsoever. If this
Letter of Transmittal is signed by the registered Unitholder of the Units a
Medallion signature guarantee on this Letter of Transmittal is required.
Similarly, if Units are tendered for the account of a member firm of a
registered national security exchange, a member firm 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"), a Medallion signature
guarantee is required. In all other cases, signatures on this Letter of
Transmittal must be Medallion guaranteed by an Eligible Institution, by
completing the Signature guarantee set forth in BOX A of this Letter of
Transmittal. If any tendered Units are registered in the names of two or more
joint holders, all such holders must sign this Letter of Transmittal. If this
Letter of Transmittal is signed by trustees, administrators, guardians,
attorneys-in-fact, officers of corporations, or others acting in a fiduciary or
representative capacity, such persons should so indicate when signing and must
4
<PAGE>
submit proper evidence satisfactory to the Purchasers of their authority to so
act. For Units to be validly tendered, a properly completed and duly executed
Letter of Transmittal, together with any required signature guarantees in BOX A,
and any other documents required by this Letter of Transmittal, must be received
by the depositary prior to or on the Expiration Date at its address or facsimile
number set forth on the front of this Letter of Transmittal. No alternative,
conditional or contingent tenders will be accepted. All tendering Unitholders by
execution of this Letter of Transmittal waive any right to receive any notice of
the acceptance of their tender.
2. Transfer Taxes. The Purchasers will pay or cause to be paid all transfer
taxes, if any, payable in respect of Units accepted for payment pursuant to the
Offer.
3. U.S. Persons. A Unitholder who or which is a United States citizen or
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 Internal Revenue Code and Income Tax Regulations,
should complete the following:
Box B - Substitute Form W-9. In order to avoid 31% federal income tax
backup withholding, the Unitholder must provide to the Purchasers the
Unitholder's correct Taxpayer Identification Number or Social Security
Number ("TIN") in the space provided below the signature line and
certify, under penalties of perjury, that such Unitholder is not
subject to such backup withholding. The TIN that must be provided is
that of the registered Unitholder indicated on the front of this Letter
of Transmittal. If a correct TIN is not provided, penalties may be
imposed by the Internal Revenue Service ("IRS"), in addition to the
Unitholder being subject to backup withholding. Certain Unitholders
(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.
Box C - FIRPTA Affidavit. To avoid potential withholding of tax
pursuant to Section 1445 of the Internal Revenue Code, each Unitholder
who or which is a United States Person (as defined Instruction 3 above)
must certify, under penalties of perjury, the Unitholder's TIN and
address, and that the Unitholder 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.
4. Box D - Foreign Persons. In order for a Unitholder who is a foreign
person (i.e., not a United States Person as defined in 3 above) to qualify as
exempt from 31% backup withholding, such foreign Unitholder must certify, under
penalties of perjury, the statement in BOX D of this Letter of Transmittal
attesting to that foreign person's status by checking the box preceding such
statement. However, such person will be subject to withholding of tax under
Section 1445 of the Code.
5. Additional Copies of Offer to Purchase and Letter of Transmittal.
Requests for assistance or additional copies of the Offer to Purchase and this
Letter of Transmittal may be obtained from the Purchasers by calling
800-854-8357.
5
Exhibit (a)(3)
<PAGE>
November 3, 1999
TO: UNIT HOLDERS OF RESOURCES ACCRUED MORTGAGE INVESTORS L.P. - Series 86
SUBJECT: OFFER TO PURCHASE UNITS
Dear Unit Holder:
As described in the enclosed Offer to Purchase and related Letters of
Transmittal (the "Offer"), The Purchasers are offering to purchase up to 165,001
Units of limited partnership interest (the "Units") in RESOURCES ACCRUED
MORTGAGE INVESTORS L.P. - Series 86, a Delaware limited partnership(the
"Partnership") at a purchase price equal to:
$15 per Unit
The Purchasers are in the business of acquiring real estate securities such as
units of the Partnership with the view of holding such securities for the long
term. Management of the Partnership has given no indication of when and if the
Partnership may liquidate and make distributions to partners, so the Purchasers
assume that the assets will be held and operated for the indefinite future, at
least for the next several years. Based upon the limited amount of information
available to the Purchasers, we believe that the prospects for long term
appreciation of the Partnership's assets is good, and because the Purchasers are
prepared to hold the Units indefinitely, we believe that units in the
Partnership represent an attractive investment.
We recognize that partners in the Partnership may not wish to hold
their investment for an indefinite period in order to realize a higher
value than the $15 we are offering. If you count yourself in this
group, please avail yourself of the opportunity to sell.
The Purchasers are interested in owning any or all of the assets in the
Partnership. In the month of October, we contacted the general partners of the
Partnership indicating that we were interested in purchasing the entire
Partnership and orally offered to purchase the general partner interest in
conjunction with an offer to all partners to purchase their units.
In spite of our offer to work with the existing general partners
towards the ultimate liquidation of the Partnership's properties at
values well above those values previously estimated by the general
partners, the general partners advised us that they had no interest in
entertaining any offer, and we received no response to our written
proposal.
Thus, the Purchasers have determined that we must go directly to the investors
to allow the Partners to determine for themselves whether they would like to
liquidate their investment now rather than at some unknown point in the future
chosen at the discretion of the general partners. The general partner advised us
that they believe they are doing a good job managing the assets, though they
have failed to make regular distributions to Partners and have given no
indication as to when they might wind up the business of the Partnership and
liquidate.
The Offer will provide you with an opportunity to liquidate all, or a portion
of, your investment in RESOURCES ACCRUED MORTGAGE INVESTORS L.P. - Series 86
without the usual transaction costs associated with market sales or partnership
transfer fees.
After carefully reading the enclosed Offer, if you elect to tender your Units,
mail (using the enclosed pre-addressed, postage paid envelope) or telecopy a
duly completed and executed copy of the Letter of Transmittal (the purple form)
and Change of Address forms, and any other documents required by the Letter of
Transmittal, to the Depositary for the Offer at:
MacKenzie Patterson, Inc.,
1640 School Street
Moraga, California 94556
Telecopy: (925) 631-9119
<PAGE>
If you have any questions or need assistance, please call the Depository at
800-854-8357.
This Offer expires (unless extended) December 10, 1999
2
Exhibit (a)(5)
<PAGE>
November 5, 1999
Paul J. Derenthal
Derenthal & Dannhauser
One Post Street, Suite 575
San Francisco, California 94104
Dear Mr. Derenthal:
This letter is written on behalf of our client, Resources Accrued Mortgage
Investors L.P. Series 86 (the "Partnership"), in response to your letter to
Allan B. Rothschild, dated November 2, 1999.
Pursuant to Schedule 14D-1 filed with the Securities and Exchange Commission
your clients have offered (the "Offer") to purchase any and all outstanding
units of limited partnership interest ("Units") of the Partnership. The
provisions of the Partnership's Agreement of Limited Partnership prohibit the
assignment of Units that "would, in the opinion of counsel for the Partnership,
result in the termination of the Partnership" under the Internal Revenue Code
and provide that any such purported assignment "shall be void and deemed
ineffectual and shall not bind or be recognized by the Partnership." Your
clients have specifically acknowledged in the Offer that "the Partnership could
terminate for federal income tax purposes as a result of the consummation of the
Offer."
The provisions of the Partnership's Agreement of Limited Partnership prevent the
Offer from being fully consummated in accordance with its terms. Accordingly,
the Partnership is not required to comply with your request purportedly made
pursuant to Rule 14d-5(a).
Very truly yours,
/s/ MARK I. FISHER
Mark I. Fisher
cc: Mr. Glen Fuller
Michael Ashner
Allan B. Rothschild, Esq.
