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SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. __)
Filed by the Registrant / /
Filed by a Party other than the Registrant /X/
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
High Equity Partners L.P. - Series 86
------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
Resources Capital Corp., Administrative General Partner
------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
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RESOURCES CAPITAL CORP.
411 West Putnam Avenue
Greenwich, CT 06830
To The Limited Partners of
High Equity Partners L.P. - Series 86
(the "Partnership")
July 20, 1999
Dear Limited Partner:
We are pleased to provide you with the enclosed Consent Solicitation
Statement. The Statement contains information relating to certain amendments to
the Partnership Agreement of the Partnership that have been approved and found
to be fair, reasonable and adequate and in the best interests of the Partnership
by the California Superior Court as part of the settlement of a class action and
derivative litigation involving the Partnership. Approval of the amendments is
being sought as the first step in implementing the Court-approved settlement. In
general, the amendments would have the effect of:
o Modifying the manner of calculating the partnership asset management
fee payable to the administrative general partner of the Partnership.
For 1999, if the amendments are approved the partnership asset
management fee will be $973,293, a 24.3% reduction from the $1,285,432
that will be paid if the amendments are not approved.
o Modifying the manner of calculating the amount that the general
partners may be required to repay to the Partnership upon liquidation
of the Partnership. This contingent obligation, which has been
disputed by the general partners in the litigation, cannot be
calculated until the Partnership is liquidated. The amendment fixes
the general partners' obligation at $2,861,277 and provides for a 10%
reduction for each full year after 1998 in which a liquidation does
not occur (with an elimination of the obligation after 2008 or in the
event the Partnership is converted into a real estate investment trust
or other public entity). Payment of this obligation also would be
guaranteed by a creditworthy affiliate of the general partners. No
such guaranty currently exists.
If the amendments are approved, limited partners will have the
opportunity to receive the other benefits of the settlement. The general
partners believe that the amendments and other terms of the settlement are in
the best interests of limited partners and the Partnership and recommend you
vote "YES" in favor of the amendments.
The enclosed Statement includes a complete discussion of the
amendments. We urge you to read the enclosed Statement carefully and to return
your signed Consent Form as quickly as possible. A postage-paid return envelope
has been included for your convenience. Consent Forms must be received by August
16, 1999.
If you have any questions about the enclosed material, please
call Georgeson & Company Inc. at (800) 223-2046.
Very truly yours,
RESOURCES CAPITAL CORP.
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HIGH EQUITY PARTNERS L.P. - SERIES 86
CONSENT SOLICITATION STATEMENT
Dated July 20, 1999
This Statement is furnished by the general partners (the "General
Partners") of High Equity Partners L.P. - Series 86, a Delaware limited
partnership (the "Partnership"), to solicit the consent of limited partners of
the Partnership ("Limited Partners") to certain amendments (the "Amendments") to
the Agreement of Limited Partnership of the Partnership (the "Partnership
Agreement"). The Amendments have been approved and found to be fair, reasonable
and adequate and in the best interests of the Partnership by the California
Superior Court (the "Court") as part of a settlement (the "Settlement") of a
class action and derivative litigation involving the Partnership (the "Action").
Consent to the Amendments is being solicited in accordance with the terms of the
Court-approved Stipulation of Settlement (the "Settlement Stipulation") which
governs the terms and conditions of the Settlement in order to implement the
first step of the Settlement. The Amendments, which are more particularly
described under "The Amendments", provide for:
o Modification of the manner of calculating the partnership asset
management fee (the "Partnership Asset Management Fee") payable under
the Partnership Agreement. For 1999, if the Amendments are approved
the Partnership Asset Management Fee will be $973,293, a 24.3%
reduction from the $1,285,432 that will be paid if the Amendments are
not approved.
o Modification of the manner of calculating the amount that the General
Partners may be required to repay to the Partnership upon liquidation
of the Partnership. This contingent obligation, which has been
disputed by the General Partners in the Action, cannot be calculated
until the Partnership is liquidated. If the Amendments are approved,
the contingent obligation of the General Partners would be fixed at
$2,861,277 and be reduced by 10% for each full year after 1998 in
which a liquidation does not occur (with an elimination of the
obligation after 2008 or in the event the Partnership is converted
into a real estate investment trust or other public entity). Payment
of this obligation also would be guaranteed by a creditworthy
affiliate of the General Partners. No such guaranty currently exists.
The General Partners believe that adoption of the Amendments is in the
best interests of the Partnership and the Limited Partners and recommend that
you vote "YES" in favor of the Amendments.
* * * * * * *
Your consent is important. No matter how many units of limited
partnership interest ("Units") in the Partnership you own, the General Partners
recommend that you vote in favor of approving the Amendments by checking the
"YES" box on the enclosed Consent Form. The Amendments are interrelated. By
voting "YES", a Limited Partner is approving both Amendments. By voting "NO", a
Limited Partner is voting against both Amendments.
Your Consent Form should be returned promptly. Your completed and
signed Consent Form must be received no later than August 19, 1999. A
postage-paid return envelope been included for your convenience.
* * * * * * *
If the Amendments are not approved, the Settlement will not be
implemented with respect to the Partnership and the General Partners will
continue to operate the Partnership in accordance with the Partnership
Agreement. See "If the Amendments are Not Approved". The consent of Limited
Partners holding a majority of the Units is required to approve the Amendments.
The principal executive offices of the General Partners and the
Partnership are located at 411 West Putnam Avenue, Greenwich, Connecticut 06830.
The approximate date on which this Statement and the enclosed Consent Form were
first sent or given to the Limited Partners was July 20, 1999.
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CONSIDERATIONS
The terms of the Settlement have been approved by the Court and have
been determined to be fair, reasonable and adequate and in the best interests of
the Partnership. The first step of the Settlement requires the General Partners
to solicit approval of the Amendments in accordance with the terms of the
Partnership Agreement (which requires the consent of holders of a majority of
the outstanding Units). As described below, if the Amendments are approved and
the Settlement is consummated, Limited Partners will have the opportunity to
receive the benefits of the Settlement, including those resulting from the
Amendments.
Reduced Partnership Asset Management Fee. If the Amendments are
approved and the Settlement is consummated, the amount of the Partnership Asset
Management Fee otherwise payable to one of the General Partners will be reduced
by $312,139 to $973,293 for 1999 alone. The Partnership Asset Management Fee is
currently calculated by multiplying 1.05% by "Invested Assets" - defined in the
Partnership Agreement generally as the gross amount of offering proceeds from
the sale of Units which was paid or allocable to acquire or develop Partnership
properties. This method of calculation resulted in the payment to the
Administrative General Partner of a $1,285,432 Partnership Asset Management Fee
for 1998 and, in the absence of the Amendments, would result in the same payment
for 1999. Under the Amendments, the fee for years subsequent to 1999 would be
calculated by multiplying 1.25% by the year-end value of the Partnership's
assets as determined by an independent, nationally recognized appraiser.
General Partners to Pay the Partnership up to $2,861,277. If the
Amendments are approved and the Settlement is consummated, the General Partners
would be obligated to pay the Partnership $2,861,277 if the Partnership were
liquidated in 1999. This payment would be made in respect of an agreement which
may require the return of certain fees. This fixed "give back" obligation, which
(if the Amendments become effective) will be guaranteed by a creditworthy
affiliate of the General Partners, will be reduced by 10% for each full calendar
year after 1998 in which the Partnership is not liquidated and will be
eliminated if the Partnership has not been liquidated by the end of 2008. The
obligation also will be eliminated if the Partnership is converted to a real
estate investment trust (a REIT) or other entity whose shares are publicly
traded. The "give back" obligation of the General Partners under the existing
agreement has been disputed by the General Partners in the Action, is not fixed,
cannot be determined except in connection with a liquidation of the Partnership
and is not guaranteed by any third party.
Offer to Buy Units for not less than $103.05 per Unit. If the
Amendments are approved and the Settlement is consummated, the General Partners
have agreed to arrange for a tender offer to be made for the purchase of up to
39,596 Units (representing approximately 6.7% of the outstanding Units) for not
less than $103.05 per Unit. Such amount represents a 21.2% increase over the
amount offered in a 1998 tender offer for Units. The General Partners have
agreed that the $103.05 offer will be solely for the benefit of Limited Partners
not affiliated with the General Partners by agreeing that Units owned by their
affiliates will not be tendered in the offer.
Reorganization of the Partnership. If the Amendments are approved and
the Settlement is consummated, the General Partners have agreed to use their
best efforts to
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reorganize the Partnership into a REIT or other entity whose shares will be
listed on a national securities exchange or on the NASDAQ National Market
System. Any reorganization of the Partnership would be subject to the approval
of Limited Partners.
BACKGROUND
The Action
The Action was commenced as a class action by certain limited partners
in the Partnership, Integrated Resources High Equity Partners, Series 85 ("HEP
85") and High Equity Partners L.P. - Series 88 ("HEP 88"; and together with the
Partnership and HEP 85, the "HEP Partnerships"). The complaint in the Action
alleged, among other things, various state law class and derivative claims
against the General Partners, the general partners of the other HEP Partnerships
and certain related parties, including claims for breach of fiduciary duty;
breach of contract; unfair and fraudulent business practices; negligence;
dissolution, accounting, receivership and removal of general partner; fraud; and
negligent misrepresentation. The General Partners and the other defendants in
the Action at all times considered the Action to be without merit and vigorously
defended the Action.
In early 1996, a settlement proposal was submitted to the Court but the
Court declined to approve it, indicating that it did not consider that
settlement proposal to be fair.
After further negotiations, in January 1999 the parties agreed on the
terms of the present Settlement and entered into the Settlement Stipulation.
In February 1999, Limited Partners were mailed a Court-approved notice
of the Settlement which contained a detailed description of the terms of the
Settlement and notified Limited Partners of a hearing that was held on April 29,
1999 to consider approval of the terms of the Settlement. All Limited Partners,
including those who had opted out of the Action, were furnished notice and given
an opportunity to be heard at the hearing. Prior to the hearing, an expert
appointed by the Court to assist it in evaluating the Settlement advised the
Court that in his view the Settlement was fair, reasonable and adequate in light
of the circumstances of the Action. Following the hearing, the Court approved
the Settlement and all the transactions contemplated thereby and found them to
be fair, reasonable and adequate and in the best interests of the settlement
class and the HEP Partnerships.
The General Partners continue to believe that the Action is without
merit and, if for any reason the final settlement of the Action pursuant to the
Settlement Stipulation is not consummated, intend to vigorously defend the
Action.
The Settlement
The Settlement Stipulation provides for a settlement of the Action on
the following terms. Consummation of the Settlement is conditioned on approval
of the Amendments as well as the Related Amendments discussed below. While this
condition may be waived by the General Partners, it will not be waived with
respect to the Partnership if the Amendments are not approved.
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The Amendments. The Amendments provide for (a) modification of the
method of calculating the Partnership Asset Management Fee so that the fee for
each year would be 1.25% of the gross assets of the Partnership, (b) fixing the
1999 Partnership Asset Management Fee at an amount $312,139 less than the amount
that would be paid for 1999 under the existing formula and (c) fixing the amount
(the "Fee Give Back Amount") that the General Partners would be liable for upon
liquidation of the Partnership as repayment of certain fees received by the
General Partners and their affiliates, which Fee Give Back Amount would be
reduced by 10% for each full calendar year after 1998 in which a liquidation
does not occur (with a complete elimination of the Fee Give Back Amount after
2008 or in the event the Partnership is converted into a REIT or other public
entity).
Amendments to Partnership Agreements of other HEP Partnerships.
Pursuant to the Settlement Stipulation, the general partners of the other HEP
Partnerships will solicit consents to amend the partnership agreements of those
HEP Partnerships (the "Related Amendments") to reflect amendments substantially
identical to the Amendments.
Guarantee of the Fee Give Back Amount. Upon the approval of Limited
Partners of the Amendment and the consummation of the Settlement, Presidio
Capital Corp. ("Presidio"), an affiliate of the General Partners, will guarantee
payment of the Fee Give Back Amount. See "Effect of Amendments."
Tender Offers. Within 90 days after the Amendments and Related
Amendments are approved, the General Partners will make, or cause to be made, a
tender offer to all owners of Units to purchase no fewer than 39,596 Units at a
price of not less than $103.05 per Unit. Similar offers will also be made to the
limited partners of the other HEP Partnerships. The tender offers are required
to be made in accordance with applicable federal securities law which provides,
among other things, for the disclosure to Limited Partners of certain required
information, a minimum offering period of 20 business days, withdrawal rights
during the duration of the tender offer and pro ration rights in the event that
more than the maximum number of Units sought to be purchased are tendered. In
order to effectuate the provisions of the Settlement, affiliates of the General
Partners have agreed not to tender any Units owned by them.
Reorganization of each HEP Partnership. Upon approval of the Amendments
and the Related Amendments, the general partners of each HEP Partnership will
use their best efforts to reorganize that HEP Partnership into a separate real
estate investment trust or other entity whose shares will be listed on a
national securities exchange or on the NASDAQ National Market System. The
reorganizations will be made in accordance with applicable federal securities
law which provides, among other things, for the preparation of a detailed
disclosure document containing a comprehensive description of the proposed
reorganization. In addition, the reorganization of each HEP Partnership requires
approval by the holders of a majority of the outstanding units of that HEP
Partnership.
Full and Complete Consideration to the Settlement Class. Under the
Settlement, the foregoing consideration is in full and complete settlement of
the Action and all claims released pursuant to the Settlement Stipulation.
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Discharge of Claims. The Settlement Stipulation provides for a general
release of the defendants in the Action
and of certain related persons.
Attorneys' Fees and Expenses. As part of the Settlement, the defendants
in the Action agreed to pay $875,000 (35%) of the $2,500,000 of attorneys' fees
and reimbursement of expenses awarded by the Court to counsel for the class
plaintiffs and to certain other attorneys who appeared in the Action on behalf
of limited partners in the HEP Partnerships. $541,667 (21.667%) of such fees and
expenses will be paid by each of the HEP Partnerships.
THE AMENDMENTS
Set forth below is a description of the Amendments. The summary is
qualified in its entirety by the exact text of the Amendments which is included
in the form of Amendment to Amended and Restated Agreement of Limited
Partnership attached hereto as Appendix A.
1. Paragraph 9.4 of the Partnership Agreement currently provides
that as compensation for services rendered in managing the
affairs of the Partnership, the Administrative General Partner
shall be entitled to receive an amount per annum equal to 1.05%
of Invested Assets, which are defined as the amount of gross
proceeds from the original sale of Units that were actually paid
or allocable to the purchase, development, construction and/or
improvement of properties acquired by the Partnership. In
accordance with the Court-approved Settlement, Section 9.4 of the
Partnership Agreement will be amended to provide that the annual
amount of the Partnership Asset Management Fee will equal 1.25%
of the appraised "gross asset value" of all assets of the
Partnership as of the last day of the period in respect of which
the Partnership Asset Management Fee is payable, and to provide
that the Partnership Asset Management Fee for 1999 shall be
$312,139 less than an amount equal to 1.05% of Invested Assets.
The foregoing provisions equate to a payment of $973,293 for
1999. Paragraph 9.4 also will be amended to provide that the
"gross asset value" of the Partnership's assets will be
determined by an independent appraiser of national reputation
selected by the General Partners.
2. Paragraph 9.1 of the Partnership Agreement will be amended by
adding a new paragraph 9.1.4 to fix the obligation of the General
Partners to return certain fees. The new paragraph 9.1.4 provides
that (a) the Fee Give Back Amount payable by the General Partners
upon a liquidation of the Partnership shall be a fixed amount
($2,861,277 as of December 31, 1998) that will be reduced by 10%
each full calendar year after 1998, with the result that, upon a
liquidation of the Partnership on or after December 31, 2008, the
Fee Give Back Amount shall be zero and (b) that following any
transaction in which the Partnership is reorganized into a REIT
or other entity whose shares are listed on a national securities
exchange or on the NASDAQ National Market System, the General
Partners and their affiliates shall have no liability or
obligation to pay any Fee Give Back Amount.
Except as set forth above and on Appendix A, the Partnership Agreement
will remain unchanged.
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REASON FOR AMENDMENTS
The Amendments are being sought pursuant to the Settlement Stipulation.
It is a condition to the consummation of the Settlement that the Amendments and
the Related Amendments be approved by limited partners of each HEP Partnership
(including limited partners who are affiliated with the applicable general
partners) holding a majority of the outstanding units in that HEP Partnership.
If the Amendments are not adopted, the Partnership Agreement will remain
unchanged, the Settlement will not be implemented with respect to the
Partnership and the General Partners will continue to operate the Partnership in
accordance with the Partnership Agreement.
EFFECT OF AMENDMENTS
The current method by which the Partnership Asset Management Fee is
calculated is an amount equal to 1.05% of the Invested Assets of the
Partnership. The Invested Assets are equal to the amount of gross proceeds from
the original sale of Units that were actually paid or allocable to the purchase,
development, construction and/or improvement of properties acquired by the
Partnership. As a result of the amendment to Paragraph 9.4 of the Partnership
Agreement, the Partnership Asset Management Fee will be equal to 1.25% of the
"appraised" gross asset value of the assets of the Partnership, as determined by
an independent appraiser of national reputation selected by the General
Partners. For 1999, if the Amendments are approved and become effective, the
Partnership Asset Management Fee will be $973,293, which is $312,139 less than
$1,285,432 determined under the present formula. For subsequent years, the
amount of the Partnership Asset Management Fee will be dependent on the
appraised value of the assets of the Partnership. All other fees and
reimbursements provided for in the Partnership Agreement will continue in
effect.
The General Partners have agreed that if the Partnership is reorganized
into a REIT or otherwise restructured, neither they nor their affiliates will
propose or implement a fee compensation arrangement for the surviving entity
that results in fees for the performance of the services covered by the
Partnership Asset Management Fee that are greater than the amounts provided for
in the Amendments.
The General Partners may be obligated to repay certain fees to the
Partnership. The foregoing obligation has been disputed by the General Partners
in the Action and in any event may be determined only at the time of liquidation
of the Partnership. If the Amendments are approved and become effective, this
contingent obligation of the General Partners would be fixed in the form of the
Fee Give Back Amount at $2,861,277 as of December 31, 1998. Such amount would be
reduced by 10% for each full calendar year after 1998, and prorated for any
calendar year in which a liquidation occurs other than on December 31. In the
event liquidation occurs on or after December 31, 2008 or upon a reorganization
of the Partnership into a REIT or other public entity, the General Partners
would have no liability to pay any Fee Give Back Amount. A liquidation is
defined as a sale of all or substantially all of the Partnership's properties
for cash or property that is distributed to its partners.
If the Amendments are approved and become effective, (i) Presidio will
guarantee the General Partners' obligation to pay the Fee Give Back Amount, (ii)
until the obligations to pay
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the Fee Give Back Amount are fulfilled, Presidio will not permit its net worth
(without including as a liability in the calculation certain subordinated debt)
to be less than the aggregate Fee Give Back Amount from time to time and (iii)
Presidio may substitute one or more third parties to fulfill its obligations
under (i) and (ii) above, as long as such third party or parties, together with
Presidio, in the aggregate, satisfy the net worth obligation in (ii) and so long
as Presidio continues to be secondarily liable under the guarantee. The Presidio
guaranty will also cover obligations of the general partners of HEP 85 and HEP
88 similar to the obligations of the General Partners' to pay the Fee Give Back
Amount. The aggregate amount of all such obligations initially will be
$8,250,000. Presidio, which is the parent of the General Partners, currently has
a net worth substantially in excess of $8,250,000.
REQUIREMENTS FOR ADOPTION OF THE AMENDMENTS
Section 16.2.4 of the Partnership Agreement provides that the Limited
Partners, by vote of more than 50% of the outstanding Units, shall have the
right to amend the Partnership Agreement. Pursuant to Section 16.4 of the
Partnership Agreement, a Limited Partner shall be entitled to cast one vote for
each Unit he owns.
The General Partners hereby solicit the consent of Limited Partners to
amend the Partnership Agreement in accordance with the terms of the Amendments
by adoption of the Amendments to the Agreement of Limited Partnership attached
hereto as Appendix A.
Limited Partners at the close of business on July 20, 1999 (the "Record
Date") will be entitled to one vote for each Unit then held. On the Record Date,
there were 588,010 Units outstanding held by 10,888 Limited Partners, including
80,539 Units (13.7% of the outstanding Units) owned by an affiliate of the
General Partners.
The Amendments will be approved at such time as Limited Partners
holding a majority of the outstanding Units shall have consented to the
Amendments but in no event prior to August 4, 1999. The Amendments are
interrelated. Each Limited Partner must either vote "YES" with respect to the
both Amendments or vote "NO" with respect to both Amendments. A Limited Partner
must vote all of the Units held by him in the same way. He cannot vote separate
Units held by him in the Partnership in differing ways. A signed Consent Form
which is returned without a vote will be deemed a "YES" vote.
Each Limited Partner is requested to complete and execute the enclosed
Consent Form in accordance with the instructions contained therein and to return
the Consent Form in the enclosed, self-addressed, postage pre-paid envelope as
soon as possible, but in no event later than August 19, 1999. Such date may be
extended from time to time in the sole discretion of the General Partners until
September 18, 1999. The Consent Form also may be returned by facsimile to
Georgeson & Company Inc. at (212) 440-9009.
A Consent Form may only be revoked by delivery to the Partnership of a
later-dated Consent Form in the form enclosed or a dated and executed revocation
that specifically refers to the Consent Form to be revoked. To be effective,
such revocation must be received by the
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Partnership prior to the time that signed unrevoked Consent Forms voting in
favor of the Amendments and representing a majority of the Units outstanding
have been delivered to the General Partners.
The enclosed Consent Form may be used only to indicate your vote as a
Limited Partner in the Partnership. The enclosed Consent Form will not be
effective with respect to units of limited partnership owned in other HEP
Partnerships.
Approval of the Related Amendments is being sought by the other HEP
Partnerships and consummation of the Settlement is conditioned on approval of
the Amendments as well as the Related Amendments. Accordingly, unless this
condition is waived by the General Partners, the Settlement will not be
consummated and the Amendments will not be effective unless both the Amendments
are adopted by the Limited Partners and the limited partners of the other HEP
Partnerships adopt the Related Amendments.
The Amendments will apply prospectively from and after the date they
become effective. All Limited Partners will be bound by the Amendments, if they
become effective, whether or not they vote in favor of the Amendments. Limited
Partners do not have a statutory or contractual right to elect to be paid the
fair value of their Units in connection with the proposal described in this
Statement.
IF AMENDMENTS ARE NOT APPROVED
If the Amendments are not approved, the Settlement will not be
implemented with respect to the Partnership and the General Partners will
continue to operate the Partnership in accordance with the Partnership
Agreement. As a result, the Action will not be resolved in accordance with the
existing Settlement, thus requiring either renegotiation of the Settlement or
further litigation of the Action. Because the Settlement will not be
implemented, Limited Partners will not have the opportunity to realize the
benefits of the other elements of the Settlement.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
As of July 20, 1999, (i) no officer or director of any General Partner
or of any direct or indirect parent of any General Partner owned any Units and
(ii) Millenium Funding III Corp. ("Millenium"), a wholly-owned subsidiary of
Presidio, owned 80,539 Units (13.7% of the outstanding Units). Millenium may
also be deemed to beneficially own an additional 16,375 Units (2.8% of the
outstanding Units) which it has the right to acquire pursuant to an existing
arrangement.
The following table sets forth certain information known to Presidio
with respect to beneficial ownership of the Class A shares of Presidio as of
March 31, 1999 (except as otherwise noted) by: (a) each person or entity who
beneficially owns 5% or more of the Class A Shares; (b) each director and
executive officer of Presidio; and (c) all directors and executive officers of
Presidio as a group. To the knowledge of Presidio, each of such shareholders has
sole voting and investment power as to the shares shown unless otherwise noted.
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All outstanding shares of Presidio are owned by Presidio Capital
Investment Company, LLC ("PCIC"), a Delaware limited liability company. The
interests in PCIC (and beneficial ownership in Presidio) are held as follows:
Percentage Ownership
in PCIC and Percentage
Beneficial Ownership
Name of Beneficial Owner in Presidio
------------------------ -----------
Five Percent Holders:
---------------------
Northstar Presidio Capital Holding Corp.(1) 71.93%
AG Presidio Investors, LLC(2) 14.12%
DK Presidio Investors, LLC(3) 8.45%
Stonehill Partners, L.P.(4) 5.50%
The holdings of the directors and executive officers of Presidio are as
follows:
Directors and Executive Officers:
---------------------------------
David Hamamoto(5) 71.93%
W. Edward Scheetz(5) 71.93%
All directors and executive officers
as a group 71.93%
- ----------
(1) NorthStar Presidio Capital Holding Corp. ("NS Presidio") is a Delaware
corporation whose address is c/o NorthStar Capital Investment Corp., 527
Madison Avenue, 16th Floor, New York, New York 10022. NS Presidio has three
shareholders: (1) NorthStar Partnership L.P., a Delaware limited
partnership whose address is c/o NorthStar Capital Investment Corp., 527
Madison Avenue, 16th Floor, New York, New York 10022, holds 99% of the
common stock (non-voting); (2) David T. Hamamoto holds 0.5% of the common
stock (voting); and (3) W. Edward Scheetz holds 0.5% of the common stock
(voting).
(2) Each of Angelo, Gordon & Co., L.P., as sole manager of AG Presidio
Investors, LLC, and John M. Angelo and Michael L. Gordon, as general
partners of the general partner of Angelo, Gordon & Co., L.P., may be
deemed to own beneficially the securities owned by AG Presidio Investors,
LLC. Each of Messrs. Angelo and Gordon disclaims such beneficial ownership.
The business address for such persons is c/o Angelo, Gordon & Co., L.P.,
245 Park Avenue, 26th Floor, New York, New York 10167.
(3) M.H. Davidson & Company, as sole manager of DK Presidio Investors, LLC, may
be deemed to own beneficially the securities owned by DK Presidio
Investors, LLC. The business address for such persons is c/o M.H. Davidson
& Company, 885 Third Avenue, New York, New York 10022.
(footnotes continued on next page)
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(footnotes continued from previous page)
- ----------
(4) Includes shares of PCIC beneficially owned by Stonehill Offshore Partners
Limited and Stonehill Partners, L.P. John A. Motulsky is a managing general
partner of Stonehill Partners, L.P., a managing member of the investment
advisor to Stonehill Offshore Partners Limited, and a general partner of
Stonehill Institutional Partners L.P. Mr. Motulsky disclaims beneficial
ownership of the shares these entities hold. The business address for such
persons is c/o Stonehill Investment Corporation, 110 East 59th Street, New
York, New York 10022.
(5) The business address for such persons is 527 Madison Avenue, 16th Floor,
New York, New York 10022.
MISCELLANEOUS
The cost of mailing, assembling and mailing the enclosed form of
Consent, this Statement and other materials that may be sent to Limited Partners
in connection with this solicitation shall be borne by the Partnership. It is
estimated that total expenditures relating to the solicitation made hereby,
including legal fees, filing fees with the Securities and Exchange Commission,
printing and mailing fees and proxy solicitation fees, will be approximately
$60,000. Certain directors, officers and employees of the General Partners may
solicit the execution and return of Consents by mail, telephone, telegraph and
personal interview. Such directors, officers and employees will not be
additionally compensated, but may be reimbursed for out-of-pocket expenses in
connection with such solicitation. In addition, the Partnership has retained the
services of Georgeson & Company Inc. (the "Information Agent"), an outside
solicitation firm, to aid in the solicitation of Consents for an aggregate fee
of $20,000 (which amount is included in the above estimate) plus out-of-pocket
expenses.
For additional information, please contact the Information Agent at
(800) 223-2064.
10
<PAGE>
APPENDIX A
AMENDMENT TO
AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP OF
HIGH EQUITY PARTNERS L.P. - SERIES 86
The amended and restated agreement of limited partnership (the
"Agreement") of High Equity Partners L.P. - Series 86, a Delaware limited
partnership, is hereby amended as follows:
1. Paragraph 9.4 of the Agreement is amended in its entirety to read as
follows:
9.4 Partnership Asset Management Fee. As compensation for
services rendered in managing the affairs of the Partnership, the
Administrative General Partner shall be entitled to receive the
Partnership Asset Management Fee, which shall be an amount per
annum equal to 1.25% of the Gross Asset Value of the Partnership
as of the last day of the period in respect of which the
Partnership Asset Management Fee is payable (which amount shall
be prorated for any partial year) (it being understood that,
notwithstanding anything to the contrary in this Paragraph 9.4,
the Partnership Asset Management Fee payable for calendar year
1999 shall be $312,139 less than an amount equal to 1.05% of
Invested Assets). The Partnership Asset Management Fee shall be
paid quarterly. For purposes of this Paragraph 9.4, the term
"Gross Asset Value" on a particular date means the gross asset
value of all assets owned by the Partnership on that date, as
determined by an appraisal of such assets by an independent
appraiser of national reputation selected by the General
Partners.
2. Paragraph 9.1 of the Agreement is amended by adding a new Paragraph
9.1.4 to read as follows:
9.1.4 If the Partnership is liquidated prior to December 31,
2008, the General Partners shall, at the time of the liquidation,
and in lieu and satisfaction of all other obligations the General
Partners and their affiliates might then or thereafter have under
or by reason of Paragraph 9 hereof, pay the Partnership an amount
(the "Fee Give Back Amount") equal to $2,861,277 (the "Original
Fee Give Back Amount"), reduced by 10% of the Original Fee Give
Back Amount for each full calendar year after 1998, and prorated
for any calendar year in which such liquidation occurs other than
on December 31 of that year. If the Partnership is liquidated on
or after December 31, 2008, neither the General Partners nor
their affiliates shall have any liability or obligation to pay
any Fee Give Back Amount. For purposes of this Paragraph 9.1.4,
the term "liquidation" means a sale of all or substantially all
the property owned by the Partnership for cash or property that
is distributed to the Partners, but does not include any
<PAGE>
transaction in which the Partnership is reorganized into a
separate, publicly traded real estate investment trust or other
entity whose shares are listed on a national securities exchange
or on the NASDAQ National Market System (a "Reorganization") and,
in addition, does not include any transaction following a
Reorganization, whether by the successor to the Partnership in
the Reorganization or otherwise. For the avoidance of doubt, it
is hereby understood and agreed that, following a Reorganization,
the General Partners and their affiliates shall have no liability
or obligation to pay any Fee Give Back Amount.
3. Except as otherwise provided above, the Agreement shall remain in full
force and effect.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
___________, 1999.
GENERAL PARTNERS:
RESOURCES HIGH EQUITY INC.
By:
--------------------------
RESOURCES CAPITAL CORP.
By:
--------------------------
PRESIDIO AGP CORP.
By:
--------------------------
<PAGE>
HIGH EQUITY PARTNERS L.P. - SERIES 86
c/o Georgeson & Co. Inc.
Wall Street Station
P.O. Box 1100
New York, NY 10269-0646
Dear Limited Partner,
Enclosed is a consent solicitation statement with respect to certain
amendments to the Agreement of Limited Partnership of the Partnership. The
amendments have been approved and found to be fair, reasonable and adequate and
in the best interests of the Partnership by the California Superior Court as
part of a settlement of a class action and derivative litigation involving the
Partnership.
Consent to the amendments is being solicited in accordance with the
terms of the Court-approved Stipulation of Settlement which governs the terms
and conditions of the settlement in order to implement the first step of the
settlement. If the amendments are approved, Limited Partners will have the
opportunity to receive the other benefits of the settlement. The General
Partners believe that the amendments and other terms of the settlement are in
the best interests of Limited Partners and the Partnership and recommend you
vote "YES" in favor of the amendments.
Your vote is important to us. Please take the time to complete and return the
enclosed consent form.
PLEASE DETACH CONSENT CARD HERE
- --------------------------------------------------------------------------------
HIGH EQUITY PARTNERS L.P. - SERIES 86
CONSENT SOLICITED BY RESOURCES CAPITAL CORP.
CONSENT EXPIRATION DATE: August 19, 1999
The undersigned, a holder of units (the "Units") of limited partnership interest
in High Equity Partners L.P. - Series 86, a Delaware limited partnership (the
"Partnership"), hereby acknowledges receipt of the Consent Solicitation
Statement, dated July 20, 1999, authorizing amendments to the Partnership
Agreement as set forth in Appendix A thereto (a) to modify the method of
calculating the Partnership Asset Management Fee, (b) fixing the 1999
Partnership Asset Management Fee and (c) fixing the amount, and providing for a
reduction in the amount, that the general partners of the Partnership would be
liable for upon liquidation of the Partnership.
The Amendments have been approved and found to be fair, reasonable and adequate
and in the best interests of the Partnership by the California Superior Court,
and the General Partners of the Partnership recommend you vote "YES" in favor of
the Amendments.
PLEASE MARK, SIGN, DATE AND RETURN THIS CONSENT PROMPTLY USING THE ENCLOSED
PRE-PAID ENVELOPE. IF YOU HAVE ANY QUESTIONS, PLEASE CALL GEORGESON & COMPANY
INC., WHO IS ASSISTING US WITH THIS CONSENT SOLICITATION, AT 1-800-223-2064.
(CONTINUED, AND TO BE SIGNED AND DATED ON THE OTHER SIDE)
(SEE OTHER SIDE)
<PAGE>
PLEASE DETACH CONSENT CARD HERE
- --------------------------------------------------------------------------------
/X/ Please mark votes
as in this example
This consent, when properly executed, will be voted in the manner directed
below. If no specification is made on this card, this consent will be voted
"YES" in favor of the Amendments.
The undersigned, a holder of units (the "Units") of limited
partnership interest in High Equity Partners L.P. - Series 86,
a Deleware limited partnership (the "Partnership"), does
hereby vote, with respect to all Units in the Partnership owned
by the undersigned as follows:
YES NO ABSTAIN
/ / / / / /
Please mark here for change of address / /
Date: , 1999
-------------------
---------------------------------------------
Signature
---------------------------------------------
Signature (if held jointly)
IMPORTANT: Please sign exactly as name
appears hereon. When Units are held by joint
tenants, both should sign. When signing as
an attorney, as executor, administrator,
trustee or guardian, please give full title
as such, if a corporation, please sign in
name by President or other authorized
officer. If a partnership, please sign in
partnership name.
