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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------
SCHEDULE TO
(Rule 14d-100)
TENDER OFFER STATEMENT UNDER SECTION 14(d)(1) OR 13(e)(1)
OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )*
Aetna Real Estate Associates, L.P., a Delaware Limited Partnership
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(Name of Subject Company (Issuer)*
Oak Investors, LLC, a Delaware limited liability company -
Arlen Capital, LLC, a California Limited Liability Company (Offerors)
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(Names of Filing Persons (Identifying Status as Offeror, Issuer or Other Person)
Limited Partnership Depositary Units
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(Title of Class of Securities)
008161 10 10
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(CUSIP Number of Class of Securities)
Don Augustine, Manager, Arlen Capital, LLC 1650 Hotel Circle North, Suite 200,
San Diego, CA 92101 Tel: (619) 686-2002
with a copy to: Peter R. Pancione, Esq., Gipson Hoffman & Pancione,
1901 Avenue of the Stars, Suite 1100Los Angeles, California 90067
Tel: (310) 556-4660 Fax: 310-556-8945
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(Name, Address and Telephone Numbers of Person
Authorized to Receive Notices and Communications on Behalf of Filing Persons)
CALCULATION OF FILING FEE
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Transaction Amount of Filing Fee
Valuation * $10,000,000 $2,000
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* Set forth the amount on which the filing fee is calculated and state how it
was determined.
* FOR PURPOSES OF CALCULATING THE FILING FEE ONLY. THIS CALCULATION ASSUMES
THE PURCHASE OF 1,000,000 UNITS AT A PURCHASE PRICE OF $10.00 PER UNIT IN
THE PARTNERSHIP. THE AMOUNT OF THE FILING FEE, CALCULATED IN ACCORDANCE
WITH REGULATION O-11 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED,
EQUALS 1/50 OF ONE PERCENT OF THE VALUE OF UNITS ASSUMED TO BE PURCHASED.
|_| Check the box if any part of the fee is offset as provided by Rule
0-11(a)(2) and identify the filing with which the offsetting fee was
previously paid. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
Amount Previously Paid: __________________ Filing Party:_________________
Form or Registration No.: __________________ Date Filed:___________________
|_| Check the box if the filing relates solely to preliminary communications
made before the commencement of a tender offer.
Check the appropriate boxes below to designate any transactions to which
the statement relates:
|X| third-party tender offer subject to Rule 14d-1.
|_| issuer tender offer subject to Rule 13e-4.
|_| going-private transaction subject to Rule 13e-3.
|_| amendment to Schedule 13D under Rule 13d-2.
Check the following box if the filing is a final amendment reporting the
results of the tender offer: |_|
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This Schedule TO relates to a tender offer by Oak Investors, LLC, a
Delaware limited liability company, to purchase 1,000,000 Limited Partnership
Depositary Units ("Units") of Aetna Real Estate Associates, L.P., a Delaware
limited partnership (the "Partnership"), at $10.00 cash per Unit, without
interest thereon upon the terms and subject to the conditions set forth in the
Offer to Purchase dated February 11, 2000 ("Offer to Purchase") and the related
Agreement of Sale.
All information in the Offer to Purchase and Agreement of Sale filed as
Exhibits (a)(1)(i) and (a)(1)(ii) respectively to this Schedule TO are
incorporated herein by this reference in response to all of the Items set forth
in Schedule TO.
The following Items of the Schedule TO contain information that has not
been sent to the Partnership's unit holders.
ITEM 3. IDENTIFY AND BACKGROUND OF THE FILING PERSON.
(c)(3) and (4) During the last five years, neither the Purchaser, nor to
the best of their knowledge, any of their respective executive officers and
directors listed in Schedule 1 of the Offer to Purchase (i) has been convicted
in a criminal proceeding (excluding traffic violations or similar misdemeanors)
or (ii) was a party to a civil proceeding of a judicial or administrative body
of competent jurisdiction and as a result of such proceeding any such person was
or is subject to a judgment, decree or final order enjoining future violations
of, or prohibiting activities subject to, federal or state securities laws or
finding any violation of such laws.
ITEM 5. PAST CONTACTS, TRANSACTIONS, NEGOTIATIONS AND AGREEMENTS.
(b) Attached hereto and incorporated herein by this reference are Exhibits
(d)(1) and (d)(2) to this Schedule TO, Agreements dated August 20, 1998 and
September 30, 1998, between Purchaser and the Partnership.
ITEM 7. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(b) Attached hereto and incorporated herein by this reference is Exhibit
(b), the Form of Promissory note.
ITEM 9. PERSONS/ASSETS, RETAINED, EMPLOYED, COMPENSATED OR USED.
(a) Not Applicable.
ITEM 12. EXHIBITS.
(a)(1)(i) Offer to Purchase dated February 11, 2000
(a)(1)(ii) Agreement of Sale
(a)(1)(iii)Cover Page dated February 11, 2000
(a)(1)(iv) Summary Publication
(b) Form of Promissory Note
(c) Not Applicable
(d)(1) Letter Agreement between Purchaser and the Partnership dated
August 20, 1998.
(d)(2) Letter Agreement between Purchaser and the Partnership dated
September 30, 1998
(e) Not Applicable
(f) Not Applicable
(g) Not Applicable
(h) Not Applicable
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SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
Dated: February 11, 2000 OAK INVESTORS, LLC
By: Arlen Capital, LLC
its Manager
By: /s/ Don Augustine
--------------------------------
Don Augustine, Manager
ARLEN CAPITAL, LLC
By: /s/ Don Augustine
--------------------------------
Don Augustine, Manager
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EXHIBIT INDEX
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Exhibit No. Description
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(a)(1)(i) Offer to Purchase, dated February 11, 2000.
(a)(1)(ii) Agreement of Sale.
(a)(1)(iii) Cover Page, dated February 11, 2000.
(a)(1)(iv) Summary Publication.
(b) Form of Promissory Note
(c) Not Applicable
(d)(1) Letter Agreement between the Purchaser and the
Partnership dated August 20, 1998.
(d)(2) Letter Agreement between the Purchaser and the
Partnership dated September 30, 1998.
(e) Not Applicable.
(f) Not Applicable.
(g) Not Applicable
(h) Not Applicable
</TABLE>
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Exhibit 99.(a)(1)(i)
OFFER TO PURCHASE FOR CASH
LIMITED PARTNERSHIP DEPOSITARY UNITS
OF
AETNA REAL ESTATE ASSOCIATES, L.P.
AT
$10.00 NET CASH PER UNIT
BY
OAK INVESTORS, LLC
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THE OFFER, WITHDRAWAL RIGHTS AND PRORATION PERIOD WILL
EXPIRE AT 12:00 MIDNIGHT, EASTERN TIME, ON
MARCH 17, 2000, UNLESS THE OFFER IS EXTENDED.
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Oak Investors, LLC, a Delaware limited liability company (the
"Purchaser" or "Oak"), hereby offers to purchase up to 1,000,000 Limited
Partnership Depositary Units including any rights attributable to claims,
damages, recoveries, including recoveries from any class action lawsuits, and
causes of action accruing to the ownership of such Limited Partnership
Depositary Units (collectively, "Units") in Aetna Real Estate Associates, L.P.,
a Delaware limited partnership (the "Partnership"), at a purchase price of
$10.00 net cash per Unit, without interest, and less the amount of any cash
distributions declared or paid, including any return of capital made in cash
with respect to the Units after December 15, 1999 (the "Purchase Price"), upon
the terms and subject to the conditions set forth in this Offer to Purchase (the
"Offer to Purchase") and in the related Agreement of Sale, as each may be
supplemented or amended from time to time (which together constitute the
"Offer"). In addition to the Purchase Price of $10.00 per Unit, a Unit Holder of
record on November 30, 1999 will also have received the distribution of $2.75
made by the Partnership in December, 1999 which Distributions were from the sale
of three Partnership Properties. The 1,000,000 Units sought to be purchased
pursuant to the Offer represent, to the best knowledge of the Purchaser,
approximately 7.9% of the Units outstanding as of the date of the Offer.
THE OFFER TO PURCHASE IS NOT CONDITIONED UPON THE VALID TENDER OF ANY
MINIMUM NUMBER OF UNITS. IF MORE THAN 1,000,000 UNITS ARE VALIDLY TENDERED AND
NOT WITHDRAWN, THE PURCHASER WILL ACCEPT FOR PURCHASE UP TO 1,000,000 OF THE
TENDERED UNITS, ON A PRO RATA BASIS, SUBJECT TO THE TERMS AND CONDITIONS HEREIN,
SEE "TENDER OFFER--SECTION 13. CERTAIN CONDITIONS OF THE OFFER."
A HOLDER OF UNITS ("UNIT HOLDER") MAY TENDER ANY OR ALL UNITS OWNED BY
SUCH UNIT HOLDER.
FOR MORE INFORMATION OR FOR FURTHER ASSISTANCE PLEASE CALL:
Arlen Capital, LLC
1-800-891-4105
February 11, 2000
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SUMMARY OF THE OFFER
THE FOLLOWING IS A SUMMARY OF CERTAIN INFORMATION CONTAINED ELSEWHERE
IN THE OFFER TO PURCHASE AND AGREEMENT OF SALE. REFERENCE IS MADE TO, AND THIS
SUMMARY IS QUALIFIED IN ITS ENTIRETY BY, THE MORE DETAILED INFORMATION CONTAINED
ELSEWHERE IN THE OFFER TO PURCHASE AND AGREEMENT OF SALE. UNIT HOLDERS ARE URGED
TO READ THE OFFER TO PURCHASE AND AGREEMENT OF SALE IN THEIR ENTIRETY BEFORE
TENDERING THEIR UNITS.
- The Purchaser, Oak Investors, LLC, a Delaware limited liability
company, is offering to buy your Units. (See Section 11 - Certain Information
Concerning the Purchaser, Schedule 1 and Schedule 3 in the Offer to Purchase.)
- The Purchaser is offering to buy up to 1,000,000 Units. (See the
Introduction Section and Section 1 - Terms of the Offer in the Offer to
Purchase.)
- The Purchaser is offering to pay $10 in cash for each Unit tendered
to it. (See the Introduction Section in the Offer to Purchase.)
- The Purchaser is borrowing the money (up to $10,000,000) to pay for
the Units from Credit Suise First Boston Mortgage Capital, LLC. (See Section 12
- - Source of Funds in the Offer to Purchase.)
- You have until March 17, 2000 to decide whether or not to tender your
Units, unless the Offer is extended. (See the Introduction Section and Section 1
- - Terms of the Offer in the Offer to Purchase.)
- The Offer can be extended at any time, and from time to time, by the
Purchaser. (See Section 5 - Extension of Tender Period; Termination; Amendment
in the Offer to Purchase.)
- If the Offer is extended, the Purchaser will make a public
announcement by press release and by the filing of an amendment to the tender
offer filing with the Securities and Exchange Commission ("Commission"). (See
Section 5 - Extension of Tender Period; Termination; Amendment in the Offer to
Purchase.)
- The Offer is subject to certain conditions, some of which are:
- That the Units tendered to Purchaser will be
transferred to Purchaser.
- All consents, authorizations, orders and approvals,
etc. are obtained.
(See Section 13 - Certain Conditions of the Offer in the Offer to Purchase.)
- Units can be tendered by completing and signing the (i) Agreement of
Sale and (ii) Depositary Receipt For Certificate of Limited Partnership
Interests ("Certificate") which you have in your, or is in your broker's,
possession. ALL OF THE SIGNATURES ON THE (i) AGREEMENT OF SALE AND (ii)
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CERTIFICATE MUST BE MEDALLION GUARANTEED and sent to the Purchaser so that the
Purchaser receives them before March 17, 2000, unless that date is extended
(See Introduction Section and Section 3 - Procedure for Tendering Units).
- Tendered Units can be withdrawn on or before March 17, 2000, unless
the Offer is extended, and then until the new Expiration Date. Unless previously
accepted for payment, tenders may be withdrawn any time after April 11, 2000.
(See Section 4 - Withdrawal Rights in the Offer to Purchase.)
- Units not tendered will continue to have the same ownership
percentage and rights in the Partnership. (See Section 7 - Purpose and Effects
of the Offer.)
- The Units are not traded on an established public market. The Units
may be listed on a Matching Service. The Partnership disclosed that as of
September 30, 1999 the Units had a net asset value of $18.21. The Units' net
asset value may have changed significantly since September 30, 1999 because the
Partnership sold three properties in October, 1999 and paid distributions of
$2.75 per Unit in December, 1999. (See the Introduction Section and Section 7 -
Purpose and Effects of the Offer in the Offer to Purchase.)
- QUESTIONS OR REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES OF THIS
OFFER TO PURCHASe OR THE AGREEMENT OF SALE MAY BE DIRECTED TO ARLEN CAPITAL, LLC
(THE "DEPOSITARY") BY CALLING THE TOLL-FREE INFORMATION LINE: 1-800-891-4105.
---------------------------------------------------
Any Unit Holder desiring to tender any or all of the Unit Holder' s
Units should complete and sign the Agreement of Sale and Certificate in
accordance with the instructions in the Agreement of Sale and mail or deliver a
fully executed original of the Agreement of Sale and Certificate along with any
other required documents to the Purchaser at the address set forth on the back
cover of this Offer to Purchase, or request the Unit Holder's broker, dealer,
commercial bank, credit union, trust company or other nominee to effect the
transaction on their behalf.
NO PERSON HAS BEEN AUTHORIZED TO MAKE ANY RECOMMENDATION OR ANY
REPRESENTATION ON BEHALF OF THE PURCHASER OR TO PROVIDE ANY INFORMATION OTHER
THAN AS CONTAINED HEREIN OR IN THE AGREEMENT OF SALE. NO SUCH RECOMMENDATION,
INFORMATION OR REPRESENTATION MAY BE RELIED UPON AS HAVING BEEN AUTHORIZED.
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TABLE OF CONTENTS
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INTRODUCTION..............................................................................................................1
OFFER TO PURCHASE.........................................................................................................5
Section 1. Terms of the Offer............................................................................................5
Section 2. Proration; Acceptance for Payment and Payment for Units.......................................................5
Section 3. Procedures for Tendering Units................................................................................6
Valid Tender..........................................................................................6
Backup Federal Income Tax Withholding.................................................................7
Tenders by Beneficial Holders.........................................................................7
Signature Guarantees..................................................................................7
Appraisal Rights......................................................................................7
Other Requirements....................................................................................8
Determination of Validity; Rejection of Units; Waiver of Defects;
No Obligation to Give Notice of Defects...........................................................8
Section 4. Withdrawal Rights.............................................................................................8
Section 5. Extension of Tender Period; Termination; Amendment............................................................9
Section 6. Certain Tax Consequences.....................................................................................10
Consequences to Tendering Unit Holders...............................................................10
Consequences to Non-Tendering Unit Holders...........................................................12
Section 7. Purpose and Effects of the Offer.............................................................................12
Purpose of the Offer.................................................................................12
Effect on Trading Market and Price Range of the Units................................................13
Section 8. Future Plans.................................................................................................14
Section 9. Past Contacts and Negotiations With General Partner..........................................................14
Section 10. Certain Information Concerning the Business of the Partnership and Related Matters..........................15
Business.............................................................................................15
Distributions........................................................................................16
Selected Financial Information.......................................................................16
Litigation...........................................................................................17
Section 11. Certain Information Concerning the Purchaser................................................................18
Section 12. Source of Funds.............................................................................................19
Section 13. Certain Conditions of the Offer.............................................................................20
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Section 14. Certain Legal Matters and Required Regulatory Approvals.....................................................21
General..............................................................................................21
Antitrust............................................................................................22
State Takeover Laws..................................................................................22
Section 15. Fees and Expenses...........................................................................................22
Section 16. Miscellaneous...............................................................................................22
SCHEDULE 1............................................................................................................S-1-1
SCHEDULE 2............................................................................................................S-2-1
SCHEDULE 3............................................................................................................S-3-1
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To the Holders of Limited Partnership Depositary Units
of Aetna Real Estate Associates, L.P.
INTRODUCTION
Oak Investors, LLC, a Delaware limited liability company (the
"Purchaser" or "Oak"), hereby offers to purchase up to 1,000,000 Limited
Partnership Depositary Units including any rights attributable to claims,
damages, recoveries, including recoveries from any class action lawsuits, and
causes of action accruing to the ownership of such Limited Partnership
Depositary Units (collectively, "Units") of Aetna Real Estate Associates, L.P.,
a Delaware limited partnership (the "Partnership"), 242 Trunbull Street,
Hartford, Connecticut 06103, Telephone No. (860) 275-2178, at a purchase price
of $10.00 net cash per Unit, without interest, less the amount of any cash
distributions declared or paid, including any cash return of capital, if any,
(collectively hereinafter referred to as "Distributions") made or declared with
respect to the Units after December 15, 1999 (the "Purchase Price"), upon the
terms and subject to the conditions set forth in this Offer to Purchase and
in the related Agreement of Sale (which together constitute the "Offer"). In
addition to the Purchase Price of $10.00 per Unit, a Unit Holder of record on
November 30, 1999 will also have received the distribution of $2.75 per Unit
made by the Partnership in December, 1999 which Distributions were from the
sale of three Partnership properties. The 1,000,000 Units sought to be
purchased pursuant to the Offer represent, to the best knowledge of the
Purchaser, approximately 7.9% of the Units outstanding as of the date of the
Offer.
We encourage you to consider the following factors:
- - Holders of Units ("Unit Holders") who tender their Units will be giving
up the opportunity to participate in any future potential benefits
represented by ownership of Units, including, for example, the right to
participate in any future distributions of cash or property, whether
from operations, the proceeds of a sale of the Partnership's assets or
in connection with any future liquidation of the Partnership. However,
there is no guarantee of future results of the Partnership and
investment in the Partnership.
- - Although the Purchaser cannot predict the future value of the
Partnership's assets on a per Unit basis, the Purchase Price could
differ significantly from the net proceeds that would be recognized on
a per Unit basis from the sale of the Partnership's assets or that may
be realized upon a future liquidation of the Partnership.
- - The tax consequences of the Offer to a particular Unit Holder may be
different from those of other Unit Holders and we urge you to consult
your own tax advisors in connection with the Offer.
- - The Partnership in a Quarterly Report on Form 10-Q dated November 15,
1999 (the "3rd Quarter 10-Q") and filed on the same date with the
Commission stated:
"The Net Asset Value of each of the Partnership's Units, based upon
quarterly independent appraisals, increased to $18.21 at September 30,
1999 from $17.95 at September 30, 1998. The increase in Net Asset Value
per Unit is primarily the result of significant increases in the
appraised values of certain of the Registrant's properties, including
Summit Village Apartments,
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Cross Pointe Centre, Village Square and Powell Street Plaza. The
increase in appraised value of Summit Village is a result of an
increase in projected market rents. The increase in the appraised value
of Cross Pointe Centre and Village Square is primarily due to improved
occupancy and increases in market rent assumptions. Leasing at Village
Square has improved with the conversion from retail to primarily office
use. Powell Street Plaza's increase in appraised value was primarily
due to an increase in projected market rents and the replacement of a
below market leased space. These value increases were partially offset
by the below market leased space. These value increases were partially
offset by the distributions of cash related to the sale of Gateway
Square ($.50 per Unit) and from cash reserves per the Settlement
Agreement ($.20 per Unit.)"
The Net Asset Value of each of the Partnership's Units may have changed
significantly since September 30, 1999 because the Partnership sold
three of its properties in October, 1999 and paid distributions of
$2.75 per Unit in December, 1999.
- - The Purchaser is making the Offer with a view towards making a profit.
Accordingly, there may be a conflict between the desire of the
Purchaser to acquire the Units at a low price and the desire of the
Unit Holders to sell the Units at a high price. No independent person
has been retained to evaluate or render any opinion with respect to the
fairness of the $10.00 Purchase Price and no representation is made as
to such fairness. Other measures of value may be relevant to a Unit
Holder and all Unit Holders are urged to carefully consider all of the
information contained in the Offer to Purchase and Agreement of Sale
and to consult with their own advisors (tax, financial or otherwise) in
evaluating the terms of the Offer before deciding whether to tender
their Units.
- - The Purchaser is not using an independent Depository to process the
Offer, but is using its Manager, Arlen Capital, LLC ("Arlen") as such.
There is, therefore, a conflict of interest between Arlen's duties as
Depository and Arlen's duties as the Manager of the Purchaser. Arlen
has committed that it will, if faced with any such conflict, act in the
best interests of the selling Unit Holders. Arlen will also have
possession of the selling Unit Holders Agreements of Sale, which it has
agreed to hold for the benefit of the selling Unit Holders' until the
sale of Units represented by such Agreements of Sale has been
completed.
Unit Holders may no longer wish to continue with their investment in the
Partnership and might consider accepting the Offer for one or more of the
following reasons:
- - There is no established public trading market for the Units. The
Partnership's Units may be listed on certain matching services (the
"Matching Programs") currently maintained by various broker- dealers.
These Matching Programs are computerized listing systems that put
individuals who wish to sell listed securities in contact with persons
who wish to buy such securities. Neither the broker-dealers nor the
General Partners are required to list the Partnership's Units on the
Matching Program. There can be no assurance that any Units listed on
the Matching Program will be sold. (See the Partnership's Annual Report
on Form 10-K for the fiscal year ended December 31, 1998 ("the 1998
10-K")). Unit Holders who desire resale liquidity may wish to consider
the Offer. The Offer affords a significant number of Unit Holders with
an opportunity to dispose of their Units for cash, which otherwise
might not be available to them. The Purchase Price is not intended to
represent either the fair market value of a Unit or the Partnership's
assets on a per Unit basis.
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- - The Offer may be attractive to certain Unit Holders who wish in the
future to avoid the continued additional expense, delay and
complication in filing income tax returns which result from the
ownership of the Units.
- - The Offer provides Unit Holders with the opportunity to liquidate their
Units and to reinvest the proceeds in other investments should they
desire to do so.
- - The Offer will provide Unit Holders with an immediate opportunity to
liquidate their investment in the Partnership without the usual
transaction costs associated with secondary market sales.
If you wish to sell some or all of your Units now, please read carefully
the Offer to Purchase and the Agreement of Sale. All you need to do is (1)
sign your Depositary Receipt For Certificate of Limited Partnership Interests
("Certificate") which you or your broker should have possession of, (2) have
the signature on the Certificate Medallion Guaranteed, (3) complete the
Agreement of Sale in accordance with the instructions provided therein, (4)
have your signature on the Agreement of Sale Medallion Guaranteed, and (5)
return both the Certificate and the Agreement of Sale to the Purchaser in the
pre-addressed return envelope. If you desire to accept this Offer, please
carefully follow the instructions on the Agreement of Sale. Errors will delay
and possibly prevent acceptance of your tender of the Units.
If, prior to the Expiration Date, the Purchaser increases the consideration
offered to Unit Holders 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.
The Offer is being made by the Purchaser as a speculative investment based
upon the belief that the Units represent an attractive investment at the price
offered based upon, in part, the expected liquidation of the Partnership's
assets. The purpose of the Offer is to allow the Purchaser to benefit from any
one combination of the following: (i) any cash distributions from Partnership
operations in the ordinary course of business; (ii) distributions, if any, of
net proceeds from the liquidation of any properties after the Partnership has
satisfied its liabilities; (iii) any cash from any redemption of the Units by
the Partnership; and (iv) sale of the Units.
The Offer is not conditioned upon the valid tender of any minimum number of
the Units. If more than 1,000,000 Units, are validly tendered and not withdrawn,
the Purchaser will accept up to 1,000,000 of the tendered Units for purchase on
a pro rata basis, subject to the terms and conditions herein. See "Tender
Offer--Section 13. Certain Conditions of the Offer." The Purchaser expressly
reserves the right to terminate the Offer at anytime and to waive any or all of
the conditions of the Offer, although the Purchaser does not presently intend to
waive any such conditions.
The Partnership is subject to the information and reporting requirements
of the Securities Exchange Act of 1934, as amended ("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 System (EDGAR), at its internet
website at www.sec.gov.com and may be inspected at the public reference
facilities maintained by the Commission
3
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at room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549,
and is 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 material can also be obtained from the Public
Reference Room of the Commission in Washington, D.C. at prescribed rates.
The Purchaser has filed with the Commission a Tender Offer Statement on
Schedule TO (including exhibits) pursuant to Rule 14d-3 of the General Rules
and Regulations under the Exchange Act, which provides certain additional
information with respect to the Offer. Such Statements and any amendments
thereto, including exhibits, may be inspected and copies may be obtained from
the Commission in the manner specified above.
According to publicly available information, there were 12,724,547 Units
issued and outstanding at December 31, 1998, held by approximately 18,000 Unit
Holders. The Purchaser currently owns 653,820 Units which is approximately 5.14%
of the outstanding Units.
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 and other information filed with
the Commission by the Partnership and General Partner.
Unit Holders are urged to read this Offer to Purchase and the accompanying
Agreement of Sale carefully before deciding whether to tender their Units.
4
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OFFER TO PURCHASE
SECTION 1. TERMS OF THE OFFER. Upon the terms and subject to the conditions
of the Offer, the Purchaser will accept for payment and pay for up to 1,000,000
Units that are 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, Eastern Time, on March 17, 2000,
unless and until the Purchaser shall have extended the period of time for which
the Offer is open, in which event the term "Expiration Date" shall mean the
latest date on which the Offer, as so extended by the Purchaser shall expire.
Subject to any approval rights of the General Partner under the terms of
the Partnership Agreement, the Purchaser reserves the right to transfer or
assign, (in whole or in part from time to time), to one or more of the
Purchaser's affiliates, the right to purchase all or any portion of the Units
tendered pursuant to the Offer. Any such transfer or assignment will not relieve
the Purchaser of its obligations under the Offer or prejudice the rights of
tendering Unit Holders to receive payment for Units validly tendered and
accepted for payment pursuant to the Offer.
The Offer is conditioned on satisfaction of certain conditions. See "Tender
Offer--Section 13. Certain Conditions of the Offer," which sets forth in full
the conditions of the Offer. The Purchaser reserves the right (but shall not be
obligated) to waive any or all of such conditions. If any or all of such
conditions have not been satisfied or waived by the Expiration Date, the
Purchaser reserves the right (but shall not be obligated) to (i) decline to
purchase any of the Units tendered, (ii) terminate the Offer and return all
tendered Units to tendering Unit Holders, (iii) waive all the unsatisfied
conditions and, subject to complying with applicable rules and regulations of
the Commission, purchase all Units validly tendered, (iv) extend the Offer and,
subject to the right of Unit Holders 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 (v) to otherwise amend the Offer.
The Offer to Purchase and the related Agreement of Sale are being mailed at
the Purchaser's expense to Unit Holders or beneficial owners of Units (in case
of Individual Retirement Accounts (IRA) and qualified plans).
SECTION 2. PRORATION; ACCEPTANCE FOR PAYMENT AND PAYMENT FOR UNITS. If not
more than 1,000,000 Units are validly tendered and not properly withdrawn prior
to the Expiration Date the Purchaser, upon the terms and subject to the
conditions of the Offer, will accept for payment all such Units so tendered.
If more than 1,000,000 Units are validly tendered and not properly
withdrawn on or prior to the Expiration Date, the Purchaser, upon the terms and
subject to the conditions of the Offer, will accept for payment 1,000,000 Units
so tendered, on a pro rata basis with appropriate adjustments to avoid tenders
of fractional Units and purchases that would violate transfer restrictions
contained in the Partnership's Revised Limited Partnership Agreement
("Partnership Agreement").
In the event that proration is required, because of the difficulty of
immediately determining the precise number of Units to be accepted, the
Purchaser will announce the final results of proration as soon as practicable,
but in no event later than five to ten business days following the Expiration
Date. Subject to the Purchaser's obligations under Rule 14e-1(c) under the
Exchange Act to pay Unit Holders the
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Purchase Price in respect of Units tendered or to return those Units promptly
after termination or withdrawal of the Offer, the Purchaser will not pay for any
Units tendered until after the final proration results have 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 Purchaser will accept for payment, and will pay for, Units
validly tendered and not withdrawn in accordance with Section 4 below, as
promptly as practicable following the Expiration Date. Upon written notification
by the Partnership that the Units purchased by the Purchaser have been approved
for transfer to it or that the selling Unit Holder's address has been changed to
Purchaser's address, the Purchaser will pay for the Units. In all cases, payment
for Units purchased pursuant to the Offer will be made only after the Expiration
Date and timely receipt by the Purchaser of a properly completed and duly
executed Agreement of Sale Certificate and any other documents required by the
Agreement of Sale.
For purposes of the Offer, the Purchaser shall be deemed to have accepted
for payment (and thereby purchased) tendered Units when, as and if the Purchaser
gives oral or written notice to the Depositary of the Purchaser's 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 the deposit of the Purchase Price with the Depositary
who will act as agent for the purpose of receiving payment from the Purchaser
and transmitting payment to the tendering Unit Holders. Under no circumstances
will interest be paid on the Purchase Price for any Unit by reason of any delay
in making such payment.
If any tendered Units are not purchased for any reason, the Agreement of
Sale 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, then, without prejudice to the
Purchaser's rights under Section 13 (but subject to compliance with Rule
14e-1(c) under the Exchange Act), the Purchaser may retain tendered Units,
subject to any limitations of applicable law, and such Units may not be
withdrawn except to the extent that the tendering Unit Holders are entitled to
withdrawal rights as described in Section 4.
If, prior to the Expiration Date, the Purchaser shall increase the
consideration offered to Unit Holders 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.
The Purchaser reserves the right to transfer or assign, at any time and
from time to time, in whole or in part, to one or more affiliates or direct or
indirect subsidiaries of the Purchaser, the right to purchase Units tendered
pursuant to the Offer, but no such transfer or assignment will relieve the
Purchaser of its obligations under the Offer or prejudice the rights of
tendering Unit Holders to receive payment for Units validly tendered and
accepted for payment pursuant to the Offer.
SECTION 3. PROCEDURES FOR TENDERING UNITS.
VALID TENDER. For Units to be validly tendered pursuant to the Offer, a
properly completed and duly executed Agreement of Sale and Certificate must be
received by the Purchaser at its address set forth on
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the back cover of this Offer to Purchase on or prior to the Expiration Date. A
Unit Holder may tender any or all Units owned by such Unit Holder.
In order for a tendering Unit Holder to participate in the Offer, Units
must be validly tendered and not withdrawn prior to the Expiration Date, which
is 12:00 midnight, Eastern Time, on March 17, 2000, unless extended.
Although the Purchaser has included a pre-addressed envelope with this
Offer for the convenience of Unit Holders, the method of delivery of the
Agreement of Sale and Certificate is at the option and sole risk of the
tendering Unit Holder, and the delivery will be deemed made only when
actually received by the Purchaser. If delivery is by mail, registered mail
with return receipt requested is recommended. In all cases, sufficient time
should be allowed to ensure timely delivery.
BACKUP FEDERAL INCOME TAX WITHHOLDING. To prevent the possible application
of backup federal income tax withholding with respect to payment of the Purchase
Price for Units purchased pursuant to the Offer, a tendering Unit Holder must
verify such Unit Holder's correct taxpayer identification number or social
security number, as applicable, and make certain certifications that the Unit
Holder is not subject to backup federal income tax withholding.
The Unit Holder is required to certify in the Agreement of Sale, under
penalties of perjury, that (i) the tax identification number shown on the
Agreement of Sale is the Unit Holder's correct taxpayer identification number;
and (ii) the Unit Holder is not subject to backup withholding either because the
Unit Holder has not been notified by the Internal Revenue Service (the "IRS")
that the Unit Holder is subject to backup withholding as a result of failure to
report all interest or dividends, or the IRS has notified the Unit Holder that
the Unit Holder is no longer subject to backup withholding.
The Unit Holder is also required to certify in the Agreement of Sale, under
penalties of perjury, that the Unit Holder, if an individual, is not a
nonresident alien for purposes of U.S. income taxation, and if not an
individual, is not a foreign corporation, foreign partnership, foreign trust, or
foreign estate (as those terms are defined in the Internal Revenue Code and
Income Tax Regulations). The Unit Holder understands that this certification may
be disclosed to the IRS by the Purchaser and that any false statements contained
herein could be punished by fine, imprisonment, or both.
TENDERS BY BENEFICIAL HOLDERS. Tenders of Units made by beneficial holders
of Units will be deemed an instruction to brokers, dealers, commercial banks,
trust companies, custodian and similar persons or entities whose names, or the
names of whose nominees, appear as the registered owner of such Units, to tender
such Units on behalf of such beneficial holder. A tender of Units can only be
made by the registered owner of such Units.
SIGNATURE GUARANTEES. The signature(s) on the (i) Agreement of Sale and
(ii) the Certificate must be Medallion Guaranteed by a commercial bank, savings
bank, credit union, savings and loan association or trust company having an
office, branch or agency in the United States, a brokerage firm that is a member
firm of a registered national securities exchange or a member of the National
Association of Securities Dealers, Inc., as provided in the Agreement of Sale.
APPRAISAL RIGHTS. Unit Holders will not have any appraisal or dissenter's
rights with respect to or in connection with the Offer.
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OTHER REQUIREMENTS. By executing and delivering the Agreement of Sale, a
tendering Unit Holder irrevocably appoints the Purchaser and/or designees of the
Purchaser and each of them as such Unit Holder's proxies, with full power of
substitution, in the manner set forth in this Agreement of Sale.
By executing and delivering the Agreement of Sale, a tendering Unit
Holder also irrevocably assigns to the Purchaser and its assignees, all of
the right, title and interest, free and clear of all liens and encumbrances
of any kind, of such Units in the Partnership tendered and purchased pursuant
to the Offer, including, without limitation, such Unit Holder's right, title
and interest in and to any and all Distributions made by the Partnership
after December 15, 1999 in respect of the Units tendered by such Unit Holder
and accepted for payment by the Purchaser, regardless of the fact that the
record date for any such Distribution may be a date prior to December 15,
1999. The Purchaser will seek to be admitted to the Partnership as an
assignee and/or a substitute limited partner upon consummation of the
purchase of Unit Holder's Units pursuant to the Offer and it is the intention
of the Unit Holder that upon consummation of the purchase of Unit Holder's
Units pursuant to the Offer that the Purchaser succeed to the Unit Holder's
interest as an assignee and/or a substitute limited partner of the
Partnership in such Unit Holder's place.
By executing an Agreement of Sale as set forth above, a tendering Unit
Holder also agrees that notwithstanding any provisions of the Partnership's
Partnership Agreement which provide that any transfer is not effective until a
date subsequent to the date of any transfer of Units under the Offer, the
Purchase Price shall be reduced by any Distributions with respect to the Units
after December 15, 1999.
DETERMINATION OF VALIDITY; REJECTION OF UNITS; WAIVER OF DEFECTS; NO
OBLIGATION TO GIVE NOTICE OF DEFECTS. All questions as to the form of documents
and validity, eligibility (including time of receipt) and acceptance for payment
of any tender of Units will be determined by the Purchaser, in its sole
discretion, which determination will be final and binding on all parties. The
Purchaser reserves the absolute right to reject any or all tenders determined by
it not to be in proper form or the acceptance of or payment for which may, in
the opinion of the Purchaser or Purchaser's counsel, be unlawful. The Purchaser
also reserves the absolute right to waive any of the conditions of the Offer or
any defect or irregularity in any tender of Units of any particular Unit Holder
whether or not similar defects or irregularities are waived in the case of other
Unit Holders.
The Purchaser's interpretation of the terms and conditions of the Offer
(including the Agreement of Sale and the instructions thereto) will be final and
binding. No tender of Units will be deemed to have been validly made until all
defects and irregularities with respect to such tender have been cured or
waived. Neither the Purchaser nor any of its affiliates or assigns, if any, or
any other person will be under any duty to give any notification of any defects
or irregularities in tenders or incur any liability for failure to give any such
notification.
The Purchaser's acceptance for payment of Units tendered pursuant to any of
the procedures described above will constitute a binding agreement between the
tendering Unit Holder and the Purchaser upon the terms and subject to the
conditions of the Offer.
SECTION 4. WITHDRAWAL RIGHTS. Except as otherwise provided in this Section
4, tenders of Units made pursuant to the Offer are irrevocable. Units tendered
pursuant to the Offer may be withdrawn at any time on or prior to the Expiration
Date and, unless previously accepted for payment as provided herein,
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may also be withdrawn at any time after April 11, 2000 (or such later date as
may apply in case the Offer is extended).
If, for any reason whatsoever, acceptance for payment of any Units tendered
pursuant to the Offer is delayed, or the Purchaser is unable to accept for
payment or pay for Units tendered pursuant to the Offer, then, without prejudice
to the Purchaser's rights set forth herein, the Purchaser may retain tendered
Units and such Units may not be withdrawn, except to the extent that the
tendering Unit Holder is entitled to and duly exercises withdrawal rights as
described in this Section 4. Any such delay will be by an extension of the Offer
to the extent required by law.
In order for a withdrawal to be effective, a written notice of withdrawal
must be timely received by the Depositary at its address set forth on the last
page of this Offer to Purchase. Any such notice of withdrawal must specify the
name of the person who tendered the Units to be withdrawn, with the signature of
such person Medallion Guaranteed in the same manner as the signature in the
Agreement of Sale, the number of Units to be withdrawn, and (if the Agreement of
Sale has been delivered) the name of the Unit Holder as set forth in the
Agreement of Sale. Withdrawals of Units may not be rescinded. Any Units properly
withdrawn will be deemed not validly tendered for purposes of the Offer, but may
be retendered at any subsequent time prior to the Expiration Date by following
any of the procedures described in Section 3.
All questions as to the form and validity (including time of receipt) of
notices of withdrawal will be determined by the Purchaser, in its sole
discretion, whose determination will be final and binding. Neither the Purchaser
nor any of its affiliates or assigns, if any, or any other person will be under
any duty to give any notification of any defects or irregularities in any notice
of withdrawal or incur any liability for failure to give any such notification.
SECTION 5. EXTENSION OF TENDER PERIOD; TERMINATION; AMENDMENT. The
Purchaser expressly reserves the right, in its 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, (ii) to terminate the Offer
and not accept for payment any Units not therefore accepted for payment or paid
for, by giving oral or written notice of such termination, upon the failure to
satisfy any of the conditions specified in Section 13, (iii) to delay the
acceptance for payment of, or payment for, any Units not heretofore accepted for
payment or paid for, by giving oral or written notice of such termination or
delay, and (iv) 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) by giving oral or written notice of
such amendment. 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 Time, on the next
business day after the previously scheduled Expiration Date, in accordance with
the public announcement requirement of Rule 14e-1(d) under the Exchange Act.
If the Purchaser makes a material change in the terms of the Offer or the
information concerning the Offer or waives a material condition of the Offer,
the Purchaser will extend the Offer to the extent required by Rules 14d-4(c) and
14d-6(d) 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 of
information concerning the offer, other than a change in price or a change in
percentage of securities sought, will
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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, "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, Eastern Time.
SECTION 6. CERTAIN TAX CONSEQUENCES.
The following is a summary of certain federal income tax consequences of a
sale of Units pursuant to the Offer assuming that the Partnership is a
partnership for federal income tax purposes and that it is not a "publicly
traded partnership" as defined in Section 7704 of the Internal Revenue Code of
1986, as amended (the "Code"). This summary is based on the Code, applicable
Treasury Regulations thereunder, administrative rulings, practice and procedures
and judicial authorities as of the date of the Offer. All of the foregoing are
subject to change, and any such change could affect the continuing accuracy of
this summary. This summary does not address all aspects of federal income
taxation that may be relevant to a particular Unit Holder in light of such Unit
Holder's specific circumstances, or that may be relevant to Unit Holders subject
to special treatment under the federal income tax laws (for example, foreign
persons, dealers in securities, banks, insurance companies and tax-exempt
entities), nor does it address any aspect of state, local, foreign or other tax
laws. Sales of Units pursuant to the Offer will be taxable transactions for
federal income tax purposes, and may also be taxable transactions under
applicable state, local, foreign and other tax laws. EACH UNIT HOLDER SHOULD
CONSULT HIS OR HER TAX ADVISOR AS TO THE PARTICULAR TAX CONSEQUENCES TO SUCH
UNIT HOLDER OF SELLING UNITS PURSUANT TO THE OFFER, INCLUDING, WITHOUT
LIMITATION, FEDERAL, STATE AND LOCAL TAX CONSEQUENCES.
CONSEQUENCES TO TENDERING UNIT HOLDER. A Unit Holder will recognize gain or
loss on a sale of Units pursuant to the Offer equal to the difference between
(i) the Unit Holder's "amount realized" on the sale and (ii) the Unit Holder's
adjusted tax basis in the Units sold. The "amount realized" with respect to a
Unit sold pursuant to the Offer will be a sum equal to the amount of cash
received by the Unit Holder for the Unit plus the amount of Partnership
liabilities allocable to the Unit (as determined under Code Section 752). The
amount of a Unit Holder's adjusted tax basis in Units sold pursuant to the Offer
will vary depending upon the Unit Holder's particular circumstances and will be
affected by allocations of Partnership taxable income or loss to a Unit Holder
with respect to such Units, and distributions to a Unit Holder. In this regard,
tendering Unit Holders will be allocated a pro rata share of the Partnership's
taxable income or loss with respect to Units sold pursuant to the Offer through
the last day of the month preceding the effective date of the sale.
Subject to Code Section 751 (discussed below), the gain or loss recognized
by a Unit Holder on a sale of a Unit pursuant to the Offer generally will be
treated as a capital gain or loss if the Unit was held by the Unit Holder as a
capital asset. Changes to the federal income tax laws in recent years modified
applicable capital gain rates and holding periods. Gain with respect to Units
held for more than one year will be taxed at long-term capital gain rates not
exceeding 20 percent. Gain with respect to Units held one year or less will be
taxed at ordinary income rates, up to a maximum rate of 39.6 percent. To the
extent of depreciation recapture of previously deducted straight-line
depreciation with respect to real property, a maximum rate of 25 percent is
imposed (assuming eligibility for long-term capital gain
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treatment). A portion of the gain realized by a Unit Holder with respect to the
disposition of the Units may be subject to this maximum 25 percent rate to the
extent that the gain is attributable to depreciation recapture inherent in the
properties of the Partnership.
Capital losses are deductible only to the extent of capital gains, except
that non-corporate taxpayers may deduct up to $3,000 of capital losses in excess
of the amount of their capital gains against ordinary income. Excess capital
losses generally can be carried forward to succeeding years (a corporation's
carry forward period is five years and non-corporate taxpayer can carry forward
such capital losses indefinitely). In addition, corporations (but not
non-corporate taxpayers) are allowed to carry back excess capital losses to the
three preceding taxable years.
A portion of Unit Holder's gain or loss on a sale of a Unit pursuant to the
Offer may be treated as ordinary income or loss. Such portion will be determined
by allocating a Unit Holder's amount realized for a Unit between amounts
received in exchange for all or a part of the Unit Holder's interest in the
Partnership attributable to "Section 751 items" and non-Section 751 items.
Section 751 items include "inventory items" and "unrealized receivables"
(including depreciation recapture) as defined in Code Section 751. The
difference between the portion of the Unit Holders amount realized that is
allocable to Section 751 items and the portion of the Unit Holder's adjusted tax
basis in the Units sold that is so allocable will be treated as ordinary income
or loss. The difference between the Unit Holder's remaining amount realized and
adjusted tax basis will be treated as capital gain or loss assuming the Units
were held by the Unit Holder as a capital asset.
Under Code Section 469, a non-corporate taxpayer or personal service
corporation can deduct passive activity losses in any taxable year only to the
extent of such person's passive activity income for such year. Closely held
corporations may offset passive activity losses against passive activity income
and active income, but may not offset such losses against portfolio income. If a
Unit Holder is subject to these restrictions and has unused passive losses from
prior years, such losses will generally become available upon a sale of Units,
provided the Unit Holders sells all of his or her Units. If a Unit Holder does
not sell all of his or her Units, the deductibility of such losses would
continue to be subject to the passive activity loss limitation until the Unit
Holder sell his or her remaining Units.
Gain realized by a foreign Unit Holder on a sale of a Unit pursuant to the
Offer will be subject to federal income tax. Under Code 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 Purchaser will withhold 10% of the amount
realized by a tendering Unit Holder form the Purchase Price payable to such Unit
Holder unless the Unit Holder properly completes and signs the Agreement of Sale
certifying the accuracy of the Unit Holder's TIN and address, and that such Unit
Holder is not a foreign person. Amounts withheld are creditable against a
foreign Unit Holder's federal income tax liability. If amounts withheld are in
excess of such liability, a refund can be obtained.
A Unit Holder who tenders Units must file an information statement with his
or her federal income tax return for the year of the sale which provides the
information specified in Treasury Regulation Section 1.751-1(a)(3). The selling
Unit Holder must also notify the Partnership of the date of the transfer and the
names, addresses and tax identification numbers of the transferors and
transferees within 30 days of the date of the transfer (or, if earlier, January
15 of the following calendar year).
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CONSEQUENCES TO A NON-TENDERING UNIT HOLDER. The Purchaser anticipates that
a Unit Holder who does not tender his or her Units will not realize any material
federal income tax consequences as a result of the decision not to tender.
SECTION 7. PURPOSE AND EFFECTS OF THE OFFER.
PURPOSE OF THE OFFER. The Purchaser is making the Offer for investment
purposes only (See Section 8 -- "Future Plans" and Section 9 -- "Past Contracts
and Negotiations With General Partner") with a view towards making a profit. The
Purchaser's intent is to acquire the Units at a discount to the value that the
Purchaser might ultimately realize from owning the Units.
The Offer is being made by the Purchaser as a speculative investment based
upon the belief that the Units represent an attractive investment at the price
offered based upon, in part, the remaining assets of the Partnership. The
purpose of the Offer is to allow the Purchaser to benefit from any one
combination of the following: (i) any cash distributions from Partnership
operations in the ordinary course of business; (ii) distributions, if any, of
net proceeds from the liquidation of any properties after the Partnership has
satisfied its liabilities; (iii) any cash from any redemption of the Units by
the Partnership; and (iv) sale of the Units.
The Purchaser established the Purchase Price of $10.00 per Unit based on a
number of factors, including (i) the illiquid nature of the investment and (ii)
the costs to the Purchaser associated with acquiring the Units ("Factors").
The Purchase Price represents the price at which the Purchasers are
willing to purchase Units. No independent person has been retained by the
Purchaser to evaluate or render any opinion with respect to the fairness of
the Purchase Price to the Seller's and no representation is made as to such
fairness. The Purchaser urges those Unitholders that are considering
tendering their Units pursuant to the Offer to first consult with their own
advisors (e.g., tax, financial or otherwise) in evaluating the terms of the
Offer before deciding whether or not to tender Units.
The Purchaser is offering to purchase Units which are a relatively illiquid
investment and are not offering to purchase the Partnership's underlying assets.
Consequently, the Purchaser does not believe that the underlying asset value of
the Partnership is solely determinative in arriving at the Purchase Price.
Nevertheless, using publicly available information concerning the Partnership
contained in the 1998 10-K and the 3rd Quarter 10-K the Purchaser used an
estimated asset value to derive an estimated market value for the Units solely
for purposes of formulating their Offer.
In determining the estimated value of the Units the Purchaser considered
the Factors set forth above and (i) the Net Asset Value calculated by the
Partnership based on the Partnership's appraisals, (ii) the estimated current
net operating income in accordance with the Partnership's financial
statements, (iii) the Partnership's current assets exclusive of its
properties, which amount was then reduced by (z) the Purchaser's estimate of
the hypothetical costs to liquidate properties and the Partnership.
Other measures of value may be relevant to a Unit Holder and all Unit
Holders are urged to carefully consider all of the information contained in the
Offer to Purchase and Agreement of Sale and to consult
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with their own advisors (tax, financial or otherwise) in evaluating the terms of
the Offer before deciding whether to tender Units. The Offer is being made as a
speculative investment by the Purchaser based on its belief that there is
inherent underlying value in the assets of the Partnership.
The General Partner disclosed in its 1998 10-K filed with the Commission
the following information with regard to trading of Units:
There is no established public trading market for the Units. The
Partnership's Units are listed on certain matching services (the
"Matching Programs") currently maintained by various broker-dealers.
These Matching Programs are computerized listing systems that put
individuals who wish to sell listed securities in contact with persons
who wish to buy such securities. Neither the broker-dealers nor the
General Partners are required to list the Partnership's Units on the
Matching Program. There can be no assurance that any Units listed on
the Matching Program will be sold.
CERTAIN RESTRICTIONS ON TRANSFER OF UNITS. The Partnership Agreement
restricts transfers of Units if a transfer, (a) when considered with all other
transfers during the same applicable twelve month period, would cause a
termination of the Partnership for federal or applicable state income tax
purposes, (b) would prevent the Partnership from being taxed as a partnership
for federal income tax purposes, (c) if state Blue Sky laws would be violated,
and if prior required government regulatory consent was not obtained, or (d) if
any transferor or transferee would hold fewer than the number of Units as
established by the Partnership's General Partner or holds fractional Units.
In determining the number of Units for which the Offer is made
(representing approximately 7.9% of the outstanding Units), the Purchaser took
these restrictions into account and has conditioned the Offer on not violating
such restrictions. See "Tender Offer--Section 13. Certain Conditions of the
Offer." The foregoing are hereafter referred to as the "Transfer Restrictions."
EFFECT ON TRADING MARKET AND PRICE RANGE OF THE UNITS. If a substantial
number of Units are purchased pursuant to the Offer, the result will be a
reduction in the number of Unit Holders. In the case of certain kinds of equity
securities, a reduction in the number of security-holders might be expected to
result in a reduction in the liquidity and volume of activity in the trading
market for the security. In this case, however, there is a limited trading
market for the Units and, therefore, the Purchaser does not believe a reduction
in the number of Unit Holders will materially further restrict the Unit Holders'
ability to find purchasers for their Units.
The Units are registered under Section 12(g) of the Exchange Act, which
means, among other things, that the Partnership is required to file periodic
reports with the Commission and to comply with the Commission's proxy rules. The
Purchaser does not expect or intend that consummation of the Offer will cause
the Units to cease to be registered under Section 12(g) of the Exchange Act.
Currently, there are approximately 18,000 Unit Holders. If the Units were to be
held by fewer than 300 persons, the Partnership could apply to de-register the
Units under the Exchange Act. Because the Units are widely held, however, the
Purchaser expects that even if it purchases the maximum number of Units in the
Offer, after that purchase the Units will be held of record by substantially
more than 300 persons.
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The successful purchase of 7.9% of the outstanding Units by the Purchaser
will cause the Purchaser to own approximately 13.00% of the outstanding Units.
The Purchaser may then be a position to exert a strong influence upon the
General Partner and the operation of the Partnership.
SECTION 8. FUTURE PLANS. The Purchaser is acquiring the Units pursuant to
the Offer for investment purposes only, has no current intentions to change
current management or operations of the Partnership and has no current plans for
any extraordinary transactions involving the Partnership.
The Purchaser believes that current market conditions are such that a
sale of the Partnership's properties would be in the best interests of the
Unit Holders. Purchaser has sought, and may in the future seek, to encourage
the Partnership to have the Partnership's properties sold and have the
Partnership liquidated and dissolved. If the Partnership does not sell its
properties in a timely manner, the Purchaser may seek the Partnership to
cause a vote of Unit Holders to sell the properties, or remove the General
Partner, and elect a new general partner who will sell the properties. See
Section 9 ("Past Contacts and Negotiations With General Partner").
The Purchaser and its affiliates may acquire additional Units through
private purchases, one or more future tender offers or by any other means deemed
advisable. Such future purchases will also be for investment purposes only and
may be at prices higher or lower than the Purchase Price.
SECTION 9. PAST CONTACTS AND NEGOTIATIONS WITH GENERAL PARTNER.
Purchaser initiated a request for the list of Limited Partners of the
Partnership in the summer of 1998, and after executing a standstill agreement
dated August 20, 1998 received the list of Limited Partners from the Partnership
in a timely manner. From then to present Purchaser has had continuous
discussions by telephone, letter, and memorandum with the Partnership pursuant
to matters pertaining to the transfer of Units from sellers to Purchaser.
Pursuant to a Confidentiality Agreement dated September 30, 1998 between
Purchaser and the Partnership, Purchaser obtained appraisals of the properties
owned by the Partnership dated as of June 30, 1998, which appraisals have since
been superceded (See "Introduction We encourage you to consider the following
factors").
Commencing in June and July 1999, Purchaser initiated and had several
telephone conversations with the Partnership's General Partners, advising them
that Purchaser was very dissatisfied with regard to the efforts of the General
Partners to market all of the properties owned by the Partnership. Purchaser
advised the General Partners it was aware of several substantial purchasers that
were interested in purchasing the entire portfolio and that Purchaser had been
advised that there was little or no interest evidenced by the General Partners.
In a telephone conversation it initiated sometime in June or July of 1999,
Purchaser advised the General Partners that Purchaser was so dissatisfied with
the actions of the General partners that Purchaser was contemplating forming a
group of Limited Partners that would own more than 10% of the issued and
outstanding Units to cause the Partnership to call a meeting of the Limited
Partners for the purpose of removing the General Partners to facilitate the sale
of the Partnership's properties.
Mark Marcucci, as an officer of one of the General Partners, indicated that
a substantial amount of money would be due to the General Partners if the
Limited Partners removed the General Partners as
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provided for in the Partnership Agreement and referred to as "Removal
Compensation." Purchaser, having reviewed the provisions of the Partnership
Agreement, concluded that if the General Partners were removed, the General
Partners would be entitled to no Removal Compensation, and telephonically
discussed this matter with Mr. Marcucci. In that regard, Purchaser forwarded a
memorandum on August 2, 1999 to Mr. Marcucci indicating the basis for its belief
that no Removal Compensation would be due upon the removal of the General
Partners, which memorandum was not responded to.
Purchaser, on August 30, 1999, telephoned Mr. Marcucci and asked for
comments on the memorandum of August 2, 1999. Mr. Marcucci indicated he had
misplaced the memorandum, had not reviewed it, nor had he had his outside
counsel review and he requested another copy. Purchaser sent Mr. Marcucci
another copy of the memorandum, but as of this date has heard nothing from Mr.
Marcucci.
Purchaser is considering forming a group of Limited Partners that would own
more than 10 percent of the issued and outstanding Units to cause the
Partnership to call a meeting of Limited Partners for purpose of removing the
General Partners to facilitate the sale of the Partnership's properties, which
can be done by a majority vote of the Unit Holders.
Purchaser, pursuant to four separate limited tender offers between November
1, 1998 and May 12, 1999, at a price of $12.50 per Unit, acquired a total of
480,684 Units, which is approximately 3.77% of the issued and outstanding Units
of the Partnership.
SECTION 10. CERTAIN INFORMATION CONCERNING THE BUSINESS OF THE PARTNERSHIP
AND RELATED MATTERS.
BUSINESS. The following information was extracted from the Partnership's
1998 10-K and the 3rd Quarter 10-Q (collectively the "Reports"), which Reports
were filed with the Commission. The Purchaser did not prepare any of the
information contained in such Reports and extracted in this Offer and the
Purchaser makes no representation as to the accuracy or completeness of such
information.
The Partnership was organized on September 11, 1986 under the laws of
Delaware. The Partnership is engaged in the business of investing in income
producing apartment complexes, office buildings, shopping centers and other
commercial real estate ("Properties"). The Partnership's business offices are
located at 242 Trumbull Street, Hartford, Connecticut 06103.
For information concerning the properties owned by the Partnership, please
refer to Schedule 2 attached hereto, which is incorporated herein by reference.
15
<PAGE>
DISTRIBUTIONS. The Partnership disclosed in its 1998 10-K, that it made
distributions as follows:
<TABLE>
<CAPTION>
Year Ending Distributions Per
December 31 Unit
----------- ----
<S> <C>
1994 $0.91
1995 $0.72
1996 $0.72
1997 $0.72
1998 $0.72
</TABLE>
Set forth below is a summary of certain financial information with respect
to the Partnership, which has been excerpted or derived from the Partnership's
1998 10-K and 3rd Quarter 10-Q. More comprehensive financial and other
information is included in such Reports and other documents filed by the
Partnership with the Commission, and the following summary is qualified in its
entirety by reference to such reports and other documents and all the financial
information and related notes contained therein. Such Reports and other
documents may be examined and copies may be obtained from the offices of the
Commission at the addresses set forth in the "Introduction." The Purchaser
disclaims any responsibility for the information included in such Reports and
documents, and extracted in this Offer to Purchase.
Selected Financial Information
(In Thousands of Dollars, Except Per Unit Amounts)
<TABLE>
<CAPTION>
Years Ended December 31
-----------------------
1998 1997 1996 1995 1994
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Revenue $30,589 $29,597 $29,030 $28,438 $26,454
Operating Income before Impairment of 7,894 6,793 5,711 5,002 4,144
Investment in Real Estate
Impairment of Investment in Real Estate 9.,007 -- -- 4,408 --
Operating Income (Loss) (1,113) 6,793 5,711 594 4,144
Gain (Loss) on Sale of Property -- -- -- (23) 355
Cash and Cash Equivalents 12,597 10,833 9,133 8,971 9,373
Total Assets (Historical Cost Basis) 193,184 203,416 205,750 209,334 217,854
Total Assets (Current Value Basis) 236,917 218,719 204,222 199,709 195,916
</TABLE>
16
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C>
Rental Income 29,716 28,604 28,242 27,455 25,831
Interest Income 538 404 336 367 301
Earnings (Loss) per Weighted Average Unit (.09) .53 .44 .04 .35
Cash Distributions per Unit .72 .72 .72 .72 .91
Net Asset Value per Unit 18.12 16.71 15.59 15.24 14.96
</TABLE>
<TABLE>
<CAPTION>
Nine Months Ended
-----------------
September 30
------------
(in thousands, except per Unit amounts)
(unaudited)
1999 1998
---- ----
<S> <C> <C>
Revenue $24,316 $23,170
Net income 6,582 6,103
Total assets 184,528 203,090
Earnings per Unit .51 .48
Distributions per Unit 1.24 .54
Net Asset Value per Unit 18.21 17.95
</TABLE>
The foregoing summary is qualified in its entirety by reference to such
Reports and all of the financial information and related notes contained
therein.
LITIGATION. In November 1996, the Partnership and its general partners,
Aetna/AREA Corporation and AREA GP Corporation (the "General Partners"), were
named as defendants in two purported class action lawsuits filed in the Chancery
Court of Delaware in New Castle County, entitles Bobbit v. Aetna Real Estate
Associates, L.P., et al and Estes v. Aetna Real Estate Associates, L.P., et al
(collectively, the "Complaints"). The Complaints alleged, among other things,
that management fees that had been paid to the General Partners were excessive
and that a standstill agreement with a then tender offeror which had the effect
of limiting the number of Partnership Units that would be the subject of any
tender offer was unlawful.
17
<PAGE>
On March 15, 1999, the parties entered into a Stipulation and Agreement
of Compromise, Settlement and Release (the "Settlement Agreement"), which was
filed with and subject to approval by the Delaware Chancery Court. The Court
approved the Settlement Agreement on May 19, 1999, and no appeal was filed
within the applicable period.
Upon the approval by the court of the Settlement Agreement, the
Applicable Percentage, as defined in Section 6.6 of the Partnership Agreement,
used to calculate the Investment Portfolio Fee per quarter which is paid to the
General Partners, was reduced by 0.0625% ( the "First Reduction"). The First
Reduction was effective on June 19, 1999 (the "Final Date") and was applied
retroactively to March 15, 1999, the date of the execution of the Settlement
Agreement. The First Reduction will result in a 0.25% reduction of the annual
Investment Portfolio Fee otherwise provided in the Partnership Agreement.
Effective on the second anniversary of the Final Date, the Applicable Percentage
will be reduced by an additional 0.0625% per quarter (the "Second Reduction').
The First and Second Reductions will apply cumulatively so that the annual
Investment Portfolio Fee from the second anniversary of the Final Date through
the termination of the Partnership will be a total of 0.50% below the annual
Investment Portfolio Fee otherwise provided in the Partnership Agreement. The
Investment Portfolio Fee reduction for the period from March 15, 1999 through
March 31, 1999 of $27,144 was recognized in the Partnership's consolidated
financial statements during the nine months ended September 30, 1999.
As discussed above, pursuant to the terms of the Settlement Agreement,
the Partnership made a special cash distribution out of Partnership cash
reserves on April 14, 1999 of $2,544,909 ($0.20 per Unit) to Limited Partners
and $25,706 to the General Partners.
As part of the Settlement Agreement the plaintiff's attorneys were paid
fees and out-of-pocket expenses totaling $2,195,757 during the nine months ended
September 30, 1999. In addition, legal expenses on behalf of the Partnership and
the General Partners amounting to $275,893 were accrued at September 30, 1999.
The total legal expense of the litigation for the nine months ended September
30, 1999 aggregated $2,471,650.
SECTION 11. CERTAIN INFORMATION CONCERNING THE PURCHASER.
The Purchaser is a Delaware limited liability company which was
organized for the purpose of acquiring the Units in the Partnership. The Manager
of the Purchaser is Arlen Capital, LLC, a California limited liability company
("AC"), which is controlled by its two members, Don Augustine and Lynn T. Wells.
AC is engaged in financial and business consulting, and making opportunistic
investments which include making tender offers on public and private real estate
limited partnerships. The Purchaser's and AC's offices are located at 1650 Hotel
Circle North, Suite 200, San Diego, California 92108 telephone no. (619)
686-2002. For certain information concerning the members of AC, see Schedule 1
to this Offer to Purchase.
On January 12, 2000 the Purchaser purchased, with its working
capital, 15,304 Units for $129,252 in negotiated transactions using the
telephone and U.S. mail. Payment for the Units was made by check. The
Purchaser owns 653,820 Units which is approximately 5.14% of the issued and
outstanding Units.
18
<PAGE>
See Schedule 3 - the Purchaser's Financial Statements for financial
information regarding the Purchaser.
Except as otherwise set forth herein, (i) neither the Purchaser nor, to
the best knowledge of the Purchaser, any of the persons listed on Schedule 1, or
any affiliate of the Purchaser beneficially owns or has a right to acquire any
Units; (ii) neither the Purchaser nor, to the best knowledge of the Purchaser,
any of the persons listed on Schedule 1, or any affiliate of the Purchaser or
any member, director, executive officer, or subsidiary of any of the foregoing
has effected any transaction in the Units; (iii) neither the Purchaser nor, to
the best knowledge of the Purchaser, any of the persons listed on Schedule 1 or
any affiliate of the Purchaser 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
SEC between any of the Purchasers, or, to the best knowledge of the Purchaser,
any of the persons listed on Schedule 1 or any affiliate of the Purchaser, on
the one hand, and the Partnership or affiliates, on the other hand; and (v)
there have been no contracts, negotiations, or transactions between the
Purchaser or to the best knowledge of the Purchaser, any of the persons listed
on Schedule 1 or any affiliate of the Purchaser, on the one hand, and the
Partnership or its affiliates, on the other hand, concerning a merger,
consolidation or acquisition, tender offer (other than as described in Section 8
of this Offer) or other acquisition of securities, an election or removal of the
General Partner, or a sale or other transfer of a material amount of assets.
SECTION 12. SOURCE OF FUNDS. The Purchaser expects that approximately
$10,000,000 (exclusive of fees and expenses) will be required to purchase
1,000,000 Units (approximately 7.9% of the 12,724,547 Units outstanding), if
tendered. The Purchaser is not a public company.
Credit Suisse First Boston Mortgage Capital, LLC, a Delaware limited
liability company ("CS") has made an oral commitment to loan the Purchaser up
to $10,000,000 to purchase the Units pursuant to a promissory note (the
"Note"), which will be due and payable on April 30, 2001. Interest on the
Note is payable at the rate of 10% per annum (the "Loan Rate"), payable
monthly out of Net Revenues (as defined in the Note); provided, however, that
if Net Revenues are not sufficient to pay the Loan Rate ("Monthly
Shortfall"), such Monthly Shortfall shall be aggregated with any Monthly
Shortfall from prior months, and such Monthly Shortfall bear interest at the
Loan Rate, compounded monthly. In addition, Purchaser will be required to pay
to CS monthly after the Loan Rate, Monthly Shortfall and interest thereon
have been paid (a) any Net Revenues remaining, which will reduce the
principal sum of the Note and (b) as additional interest, the Applicable
Percentage (as hereafter defined) of the Net Revenues remaining after payment
of the monthly interest and reduction of principal. Applicable Percentage
means 75%, until the internal rate of return (i.e., the rate per annum at
which all payments due CS through the determination date must be discounted
to cause the present value of such payments as of the date of the Note to
equal the amount of monies advanced to Purchaser under the Note or from any
source by CS or its affiliates) equals 25%; and thereafter 50%. The Note will
be secured by a Pledge and Security Agreement and will be guaranteed by
Arlen. The Note will be repaid from the proceeds of any distributions made by
the Partnership and from the sale or other disposition of the Units by
Purchaser.
19
<PAGE>
There are no material conditions to the financing and Purchaser has no
alternative financing plans.
SECTION 13. CERTAIN CONDITIONS OF THE OFFER. Notwithstanding any other
provisions of the Offer, the Purchaser will not be required to accept for
payment or, subject to any applicable rules or regulations of the Commission,
including Rule 14e-1(c) under the Exchange Act (relating to the Purchaser's
obligation to pay for or return tendered Units promptly after the expiration or
termination of the Offer), to pay for any Units tendered, and may postpone the
acceptance for payment or, subject to the restriction referred to above, payment
for any Units tendered, and may amend or terminate the Offer if (i) the
Purchaser shall not have confirmed to its reasonable satisfaction that, upon
purchase of the Units pursuant to the Offer, the Purchaser will have full rights
to ownership as to all such Units and that the Purchaser will become a
registered owner on the books and records of the Partnership, (ii) the Purchaser
shall not have confirmed to its reasonable satisfaction that, upon the purchase
of the Units pursuant to the Offer, the Transfer Restrictions will have been
satisfied, or (iii) 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
purchase contemplated by the Offer shall not have been filed, occurred or been
obtained. Furthermore, notwithstanding any other term of the Offer, the
Purchaser will not be required to accept for payment or pay for any Units not
theretofore accepted for payment or paid for and may terminate or amend the
Offer as to such Units if, at any time on or after the date of the Offer and
before the Expiration Date any of the following conditions exist:
(a) the acceptance by the Purchaser of Units tendered and not withdrawn
pursuant to the Offer or the transfer of such Units to the Purchaser violates
restrictions in the Partnership Agreement which prohibit any transfer of Units
which would cause a termination of the Partnership or would cause the
Partnership to be taxed as a "publicly traded partnership" under the Internal
Revenue Code;
(b) there shall have been threatened, instituted or pending any action
or proceeding before any court or governmental agency or other regulatory or
administrative agency or commission or by any other person, challenging the
acquisition of any Units pursuant to the Offer or otherwise directly or
indirectly relating to the Offer, or otherwise, in the reasonable judgment of
the Purchaser, adversely affecting the Purchaser or the Partnership;
(c) any statute, rule or regulation shall have been proposed, enacted,
promulgated or deemed applicable to the Offer, or any action or order shall have
been proposed, entered into or taken, by any government, governmental agency, or
other regulatory or administrative agency or authority, which, in the reasonable
judgment of the Purchaser, might (i) result in a delay in the ability of the
Purchaser or render the Purchaser unable, to purchase or pay for some or all of
the tendered Units, (ii) make such purchase or payment illegal, or (iii)
otherwise adversely affect the Purchaser or the Partnership;
(d) any change shall have occurred or be threatened in the business,
financial condition, results of operations, tax status or prospects of the
Partnership which, in reasonable the judgment of the Purchaser, is or may be
adverse to the Partnership, or the Purchaser shall have become aware of any
facts which, in the reasonable judgment of the Purchaser, have or may have
adverse significance with respect to the value of the Units;
20
<PAGE>
(e) there shall have occurred (i) any general suspension of, or
limitation on prices for or trading in, securities in the over-the-counter
market or on the New York Stock Exchange, Inc., (ii) a declaration of a banking
moratorium or any suspension of payment in respect of banks in the United States
or any limitation by federal or state authorities on the extension of credit by
lending institutions or (iii) the commencement of a war, armed hostilities or
other international or national calamity directly or indirectly involving the
United States; or, in the case of any of the foregoing existing at the time of
the commencement of the Offer, a material acceleration or worsening thereof;
(f) a tender or exchange offer for some or all of the Units is made, or
publicly proposed to be made or amended, by another person;
(g) the Partnership shall have (i) issued, or authorized or proposed
the issuance of, any partnership interests of any class, or any securities
convertible into, or rights, warrants or options to acquire, any such interests
or other convertible securities, (ii) issued or authorized or proposed the
issuance of any other securities, in respect of, in lieu of, or in substitution
for, all or any of the presently outstanding Units, (iii) declared or paid any
distribution, other than in cash, on any of its partnership interests, (iv)
authorized, proposed or announced its intention to propose any merger,
consolidation or business combination transaction, acquisition of assets,
disposition of assets or material change in its capitalization, or any
comparable event not in the ordinary course of business, or (v) proposed or
effected any amendment to the Partnership's Agreement of Limited Partnership;
(h) the failure to occur of any necessary approval or authorization by
any Federal or state authorities necessary to consummation of the Purchaser of
all or any part of the Units to be acquired hereby, which in the reasonable
judgment of the Purchaser in any such case, and regardless of the circumstances
(including any action of the Purchaser) giving rise thereto, makes it
inadvisable to proceed with such purchase or payment; or
(i) the Purchaser or any of its affiliates and the Partnership shall
have agreed that the Purchaser shall amend or terminate the Offer or postpone
the payment for the Units pursuant thereto.
The foregoing conditions are for the sole benefit of the Purchaser and
its affiliates and may be asserted by the Purchaser regardless of the
circumstances (including, without limitation, any action or inaction by the
Purchaser or any of its affiliates) giving rise to such condition, or may be
waived by the Purchaser, in whole or in part, from time to time in its sole
discretion. The failure by the Purchaser at any time to exercise the foregoing
rights will not be deemed a waiver of such rights, which rights will be deemed
to be ongoing and may be asserted at any time and from time to time. Any
determination by the Purchaser concerning the events described in this Section
13 will be final and binding upon all parties.
SECTION 14. CERTAIN LEGAL MATTERS AND REQUIRED REGULATORY APPROVALS.
GENERAL. Except as set forth in this Offer to Purchase, based on its
review of publicly available filings by the Partnership with the Commission and
other publicly available information regarding the Partnership, the Purchaser is
not aware of any licenses or regulatory permits that would be material to the
business of the Partnership, taken as a whole, and that might be adversely
affected by the Purchaser's
21
<PAGE>
acquisition of Units as contemplated herein, or any filings, approvals or other
actions by or with any domestic, foreign or governmental authority or
administrative or regulatory agency that would be required prior to the
acquisition of Units by the Purchaser pursuant to the Offer as contemplated
herein. Should any such approval or other action be required, there can be no
assurance that any such additional approval or action, if needed, would be
obtained without substantial conditions or that adverse consequences might not
result to the Partnership's business, or that certain parts of the Partnership's
or the Purchaser's business might not have to be disposed of or held separate or
other substantial conditions complied with in order to obtain such approval. The
Purchaser's obligation to purchase and pay for Units is subject to certain
conditions. See "Offer to Purchase -- Section 13. Certain Conditions of the
Offer."
ANTITRUST. Under the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended (the "HSR Act"), and the rules and regulations that have been
promulgated thereunder by the Federal Trade Commission (the "FTC"), certain
acquisition transactions may not be consummated until certain information and
documentary material has been furnished for review by the Antitrust Division of
the Department of Justice (the "Antitrust Division") and the FTC and certain
waiting period requirements have been satisfied. The Purchaser does not
currently believe any filing is required under the HSR Act with respect to its
acquisition of Units contemplated by the offer.
Based upon an examination of publicly available information relating to
the business in which the Partnership is engaged, the Purchaser believes that
the acquisition of Units pursuant to the Offer would not violate the antitrust
laws. Nevertheless, there can be no assurance that a challenge to the Offer on
antitrust grounds will not be made, or, if such challenge is made, what the
result will be.
STATE TAKEOVER LAWS. The Purchaser has not attempted to comply with any
state takeover statutes in connection with the Offer. The Purchaser reserves the
right to challenge the validity or applicability of any state law allegedly
applicable to the Offer and nothing in the Offer, nor any action taken in
connection herewith, is intended as a waiver of that right. In the event that
any state takeover statute is found applicable to the Offer, the Purchaser might
be unable to accept for payment or purchase Units tendered pursuant to the Offer
or be delayed in continuing or consummating the Offer. In such case, the
Purchaser may not be obligated to accept for purchase, or pay for, any Units
tendered.
SECTION 15. FEES AND EXPENSES. The Purchaser will pay all expenses of
the Offer, including the fees and expenses of Arlen Capital, LLC, the
Depositary. The Purchaser will not pay any fees or commissions to any broker,
dealer or other person for soliciting tenders of Units pursuant to the Offer.
Brokers, dealers, commercial banks and trust companies and other nominees, if
any, will, upon request and prior approval of the Purchaser, be reimbursed by
the Purchaser for reasonable and customary clerical and mailing expenses
incurred by them in forwarding materials to their customers.
SECTION 16. MISCELLANEOUS. THE OFFER IS NOT BEING MADE TO (NOR WILL
TENDERS BE ACCEPTED FROM OR ON BEHALF OF) UNIT HOLDERS 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 PURCHASER IS NOT AWARE OF ANY
JURISDICTION WITHIN THE UNITED STATES IN WHICH THE MAKING OF THE OFFER OR THE
ACCEPTANCE THEREOF WOULD BE ILLEGAL.
22
<PAGE>
In any jurisdiction where the securities, blue sky or other laws
require the Offer to be made by a licensed broker or dealer, the Purchaser will
engage one or more registered brokers or dealers that are licensed under the
laws of such jurisdiction to make the Offer. The Purchaser has filed with the
Commission the Schedule TO, together with exhibits, pursuant to Rule 14d-3 of
the General Rules and Regulations under the Exchange Act, furnishing certain
information with respect to the Offer, and may file amendments thereto. Such
Schedule TO and any amendments thereto, including exhibits, may be examined
and copies may be obtained from the Commission as set forth above in
"Introduction."
No person has been authorized to give any information or to make any
representation on behalf of the Purchaser not contained in this Offer to
Purchase or in the Agreement of Sale and, if given or made, any such information
or representation must not be relied upon as having been authorized. Neither the
delivery of the Offer to Purchase nor any purchase pursuant to the Offer shall,
under any circumstances, create any implication that there has been no change in
the affairs of the Purchaser or the Partnership since the date as of which
information is furnished or the date of this Offer to Purchase.
Oak Investors, LLC
February 11, 2000
23
<PAGE>
SCHEDULE 1
INFORMATION REGARDING THE MANAGERS
OF ARLEN CAPITAL, LLC
Set forth in the table below are the names of the members of Arlen
Capital, LLC and their present principal occupations and five (5) year
employment histories. Each individual is a citizen of the United States and the
business address of each person is 1650 Hotel Circle North, Suite 200, San
Diego, California 92108, telephone no. (619) 686-2002.
Present Principal Occupation or Employment
Name and Five-Year Employment History
Don Augustine Member and Manager of Arlen Capital LLC. President of
Arlen Capital, Inc., a California corporation, its
predecessor entity since 1989.
Lynn T. Wells Member and Manager of Arlen Capital LLC. Vice
President of Arlen Capital, Inc., a California
corporation, its predecessor entity since 1989.
Arlen Capital, LLC and its predecessor entity, Arlen Capital, Inc.
("AC"), have been providing business and financial consulting services since
1989. AC principals have an extensive background in the capital markets, real
estate securities, and real estate markets. Commencing in 1996, AC and its
affiliates have been in the business of making opportunistic investments, which
include a number of tender offers on public and private real estate limited
partnerships.
S-1-1
<PAGE>
SCHEDULE 2
PROPERTIES OWNED BY THE PARTNERSHIP
The following information on the Properties owned by the Partnership was
extracted from the Partnership's 1998 10-K and the 3rd Quarter 10-Q. The
Purchaser did not prepare any of the information contained in such reports and
extracted below and the Purchaser makes no representations as to the accuracy or
completeness of such information.
As of October 31, 1999, the Partnership held 9 investments in the Properties
listed below. The information for each property is as of December 31, 1998.
<TABLE>
<CAPTION>
(in thousands)
Historical
Property Cost (1)
- -------- -------------
<S> <C>
Lincoln Square Apartments 13,721
Summit Village 37,747
Village Square 7,157
Marina Bay Industrial Park 11,306
Town Center Business Park 45,187
Oakland Pointe Shopping Center 10,228
Windmont Apartments 8,162
Powell Street Plaza 32,231
Westgate Distribution Center 14,156
-------------
Total 194,603
=============
</TABLE>
(1) Historical cost is before accumulated depreciation and may not equal
cash invested because of certain adjustments based on the application
of generally accepted accounting principles. For historical cost
purposes, properties are recorded at the lower of cost, net of
impairment write-downs, or estimated fair value.
The Partnership determines the current value of each of its Investments in
Properties quarterly based on independent appraisals of the underlying real
estate using generally accepted valuation techniques. These appraisals are used
to determine Net Asset Value per Unit on a quarterly basis and to prepare the
Partnership's current value financial statements.
Each appraisal is based on numerous assumptions, limiting conditions and
valuation techniques utilized by the independent appraisers retained by the
Partnership. Two of the many assumptions utilized by the appraisers are the
terminal capitalization rate and the discount rate. The terminal capitalization
rate is used to estimate the reversionary proceeds to be received from the
assumed sale of an investment at the
S-2-1
<PAGE>
end of a typical holding period. The discount rate is used to determine the net
present value of the estimated annual cash flows of an investment, including the
residual proceeds, over the holding period. Terminal capitalization rates
utilized in the appraisals of the Investments in Properties at December 31, 1998
ranged from 8.5% to 11.00%.
Discount rates utilized in the appraisals of the Investments in Properties at
December 31, 1998 ranged from 10.75% to 13.00%.
CURRENT PROPERTIES
A brief description of all Investments in Properties is set forth below. Neither
the Partnership, if it owns a Property directly, nor any joint venture or
partnership in which the Partnership has invested, have incurred any debt to
acquire or maintain any of the Properties.
LINCOLN SQUARE APARTMENTS
The Partnership owns Lincoln Square Apartments, a 240-unit apartment project on
a 12.7-acre site located in Arlington Heights, Illinois. As of December 31,
1998, the project was 99% leased and occupied.
SUMMIT VILLAGE
The Partnership owns Summit Village, a 366-unit apartment complex built in two
phases on a 6.2-acre site in the Rosslyn area of Arlington County, Virginia.
Historical leasing and occupancy information with respect to Summit Village for
the five most recent years is as follows:
<TABLE>
<CAPTION>
Leased Occupied
------ --------
<S> <C> <C>
12/31/94 99% 98%
12/31/95 99% 99%
12/31/96 98% 98%
12/31/97 99% 99%
12/31/98 99% 99%
</TABLE>
The current leases generally have terms of seven or twelve months at monthly
rental rates ranging from $1,082 to $1,442 per unit.
The Arlingon County market includes approximately 13 Class A apartment
communities with almost 5,000 units. Two new competitive high-rise apartment
buildings have recently been added. Meridian at Ballstorn Apartments with 435
units have just completed lease-up and Courthouse Hill Apartments with 564 units
has just begun lease-up, with minimal impact on Summit Village rents and
occupancy.
S-2-2
<PAGE>
MARINA BAY INDUSTRIAL PARK
The Partnership owns a controlling general partnership interest in a limited
partnership that owns the Marina Bay Industrial Park, a 165,780 square foot
industrial park located in Richmond, California on an 8.6-acre site. The Marina
Bay Industrial Park is a four-building complex that includes a rehabilitated
industrial distribution building (approximately 103,680 square feet) and three
newer research/development/light industrial buildings (approximately 62,100
square feet). As of December 31, 1998, the complex was 100% leased and occupied.
VILLAGE SQUARE
The Partnership owns Village Square in Hazelwood, Missouri, a community shopping
center that was converted to primarily back office use during 1998. It contains
approximately 207,304 square feet of net rentable area on approximately 20 acres
of land. As of December 31, 1998, the property was 89% leased and 58% occupied.
A strategy for converting Village Square to non-traditional retail and back
office space was implemented to capitalize on market demand and to generate
better lease-up.
TOWN CENTER BUSINESS PARK
The Partnership owns a controlling interest in a general partnership which owns
and operates Town Center Business Park, totaling approximately 457,500 square
feet of net rentable area on approximately 28 acres in Santa Fe Springs,
California. Town Center Business Park was developed in two phases. Phase I
consists of a three-story office building and six industrial buildings totaling
approximately 323,100 rentable square feet. Phase II consists of a two-story
office/service building and two industrial buildings containing approximately
134,400 square feet.
During 1999, sixteen leases covering 20% of the space in Town Center Business
Park are scheduled to expire. Three tenants totaling 35,925 square feet have
already renewed. One tenant occupying 4,733 square feet is vacating at the end
of its lease term and lease negotiations are underway with a potential tenant.
Renewal negotiations have begun with six tenants totaling 30,161 square feet.
The remaining six tenants, comprising 4% of the space, expire in the latter part
of the year, and these tenants will be contacted in the first and second
quarters to commence renewal discussions. Also, the Partnership completed an
office and an industrial lease for two new tenants in early 1999 for 1.4% of
space in Town center Business Park.
Town Center Business Park has no single tenant which occupies 10% or more of the
rentable square footage. During 2000 and 2001, nineteen and eight leases,
respectively, are scheduled to expire covering 23% and 16%, respectively, of the
space in Town Center Business Park.
S-2-3
<PAGE>
Historical leasing and occupancy information with respect to Town Center
Business Park for the five most recent years is as follows:
<TABLE>
<CAPTION>
Leased Occupied
------ --------
<S> <C> <C>
12/31/94 76% 74%
12/31/95 84% 72%
12/31/96 85% 83%
12/31/97 93% 92%
12/31/98 93% 89%
</TABLE>
Average annualized rental rates for December 1998 were $11.16 per square foot as
compared to $11.12 and $10.49 per square foot for December 1997 and 1996,
respectively.
OAKLAND POINTE SHOPPING CENTER
The Partnership owns a portion of the Oakland Pointe Shopping Center, a shopping
center containing approximately 434,150 square feet located on 49.8 acres in
Pontiac, Michigan. The portion owned by the Partnership (the "Oakland Project")
contains approximately 213,350 square feet of rentable area on approximately
32.1 acres. As of December 31, 1998, the Oakland Project was approximately 89%
leased and occupied.
WINDMONT APARTMENTS
The Partnership owns Windmont Apartments, a 178-unit apartment complex which is
located on 6.8 acres in DeKalb County, Georgia. As of December 31, 1998, the
complex was approximately 92% leased and 90% occupied.
POWELL STREET PLAZA
The Partnership owns Powell Street Plaza, a shopping center with approximately
169,551 square feet of rentable space, located on approximately 12.9 acres in
Emeryville, California.
Certain governmental agencies in California, led by the Alameda County Health
Care Services Agency (the "Agency"), delivered a letter (the "Request Letter")
to the Partnership on June 4, 1993 requiring that it remediate certain soil and
ground water contamination by petroleum hydrocarbons existing on the Powell
Street property. The contamination is the result of a use of the property prior
to its acquisition by the Partnership in 1990. Pursuant to the agreement under
which the Partnership acquired Powell Street Plaza, the Partnership has made a
demand on the former owner from which it acquired the property (the "Former
Owner") to remediate the contamination. The Former Owner has agreed to respond
to the governmental agencies. The Former Owner prepared a site characterization
and submitted a remediation plan to the Alameda County Healthcare Services
Agency, which have been approved. On October 15,
S-2-4
<PAGE>
1997 the Agency determined the site was low risk and agreed to close the case
pending an approved Long-term Site Management Plan. The Partnership is
monitoring the process and anticipates that all costs of complying with the
Request Letter will be borne by the Former owner. The Partnership has hired its
own consultant to analyze the extent of the pollution.
During 1999, one lease expires covering 5% of the space, and during 2000 there
are two leases scheduled to expire totaling 2% of the space. one lease expires
in 2001 covering 4% of the space in Powell Street Plaza. Powell Street Plaza has
two tenants with leases covering 10% or more of the rentable square footage of
the property. The first lease, for 27,275 square feet, expires in 2009 and
provided annual base rent of $382,017 (14% of total rent) in 1998. The lease
contains two consecutive five-year options to renew. The second lease, for
25,025 square feet, expires in 2003 and provided annual base rent of $298,555
(11% of total rent) in 1998. The lease contains four consecutive five-year
options to renew.-
Historical leasing and occupancy information with respect to Powell Street Plaza
for the five most recent years is as follows:
<TABLE>
<CAPTION>
Leased Occupied
------ --------
<S> <C> <C>
12/31/94 100% 100%
12/31/95 100% 100%
12/31/96 91% 91%
12/31/97 98% 95%
12/31/98 100% 100%
</TABLE>
Average annualized base rental rates for December 1998 were $17.27 per square
foot as compared to $17.26 and $16.54 per square foot for December 1997 and
1996, respectively.
During 1996, a 450,000 square foot power center opened about one mile from
Powell Street. Tenants at the new center include Home Depot, Sportmart and
Toys-R-Us. The only direct competition is with Powell Street Plaza's Copeland
Sports.
WESTGATE DISTRIBUTION CENTER
The Partnership owns Westgate Distribution Center, which consists of three
warehouse/distribution buildings totaling approximately 324,200 rentable square
feet on 15.6 acres in Corona, California. As of December 31, 1998, the buildings
were 100% leased and occupied.
S-2-5
<PAGE>
SCHEDULE 3
OAK INVESTORS, LLC FINANCIAL STATEMENTS
S-3-1
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Independent Auditor's Report............................................................................ 1
Statement of Net Assets................................................................................. 2
Statement of Operations................................................................................. 3
Statement of Changes in Net Assets...................................................................... 4
Notes to Financial Statements........................................................................... 5-11
</TABLE>
S-3-2
<PAGE>
INDEPENDENT AUDITOR'S REPORT
To the Members of
OAK INVESTORS, LLC:
We have audited the accompanying statement of net assets of Oak Investors, LLC
(a Delaware Limited Liability Company) as of December 31, 1998, and the related
statements of operations and changes in net assets for the year then ended.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Oak Investors, LLC as of
December 31, 1998, and the results of its operations for the year then ended, in
conformity with generally accepted accounting principles.
HARLAN & BOETTGER, LLP
San Diego, California
February 10, 1999
-1-
S-3-3
<PAGE>
OAK INVESTORS, LLC
STATEMENT OF NET ASSETS
DECEMBER 31,1998
<TABLE>
<S> <C>
ASSETS
Investments: (Note B)
Aetna Rental Estates Associates, LP (cost $1,984,420) $2,045,334
----------
Total Investments 2,045,334
Cash 164,577
----------
TOTAL ASSETS 2,209,911
==========
LIABILITIES
Notes payable (Note D) 2,150,000
Accrued interest (Note D) 35,466
Accounts payable-related party (Note C) 37,200
----------
TOTAL LIABILITIES 2,222,666
----------
NET ASSETS (Note E) $ (12,755)
==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
-2-
S-3-4
<PAGE>
OAK INVESTORS, LLC
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED
DECEMBER 31,1998
<TABLE>
<S> <C>
INVESTMENT INCOME
Net partnership income $22,600
Interest 6,474
---------
TOTAL INVESTMENT INCOME 29,074
---------
EXPENSES
Management fees 37,200
Interest 35,466
Legal and accounting 33,289
Travel and entertainment 6,344
Other 648
---------
TOTAL EXPENSES 112,947
---------
NET INVESTMENT INCOME (LOSS) (83,873)
---------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net unrealized gain on investment 60,914
---------
NET GAIN ON INVESTMENTS 60.914
---------
NET DECREASE IN NET ASSETS FROM OPERATIONS $ (22,959)
=========
</TABLE>
The accompanying notes are an integral part of these financial statements.
-3-
S-3-5
<PAGE>
OAK INVESTORS, LLC
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED
DECEMBER 31,1998
<TABLE>
<S> <C>
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment income (loss) $ (83,873)
Net unrealized gain on investment 60,914
---------
NET DECREASE IN NET ASSETS FROM OPERATIONS (22,959)
CAPITAL CONTRIBUTED (NOTE E) 10,204
MEMBER DISTRIBUTIONS (NOTE E)
---------
NET DECREASE IN NET ASSETS (12,755)
NET ASSETS:
BEGINNING OF YEAR
---------
END OF YEAR $ (12,755)
=========
</TABLE>
The accompanying notes are an integral part of these financial statements.
-4-
S-3-6
<PAGE>
OAK INVESTORS, LLC
NOTES TO FINANCIAL STATEMENTS
A. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION AND NATURE OF OPERATIONS
Oak Investors, LLC (the "Company") was formed as a limited liability
company on December 6, 1996 in the state of Delaware under the name
Noble House Investors, LLC. On January 11, 1997, the Company filed an
amendment with the state of Delaware to change the name to Oak
Investors, LLC. The Operating Agreement was adopted June 18, 1998. The
Operating Agreement was then amended on November 16, 1998 to authorize
the issuance of a second promissory note for $8,000,000. Under the
terms of the Operating Agreement, the Company was formed to purchase
outstanding limited partnership interests (the "Units") of Aetna Rental
Real Estate Associates, LP. The partnership owns commercial real estate
throughout the United States.
The liability of the Company's members is limited to the members'
enforceable obligation to make their capital contributions and to
return any prohibited or illegal distributions. The term of the Company
commences on the date of formation and continues until December 31,
2019, unless the Company is dissolved sooner in accordance with the
provision of the Operating Agreement or state statute.
The Company is managed by Arlen Capital, LLC (the "Manager"), which is
controlled fifty (50) percent by Don Augustine and fifty (50) percent
by Lynn Wells. Arlen Capital, LLC is also a Member of the Company. The
Manager is reimbursed for all reasonable direct costs and expenses of
the Company's operations and receives a servicing fee and management
fee as set forth in Article 4 of the Operating Agreement (Note C).
ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities, disclosure of contingent assets and liabilities, and
reported amounts of revenues and expenses. Actual results could differ
from those estimates. Significant estimates consist of investments and
income/loss from partnerships. It is reasonably possible that the
estimates will change in the near term. The effect of such a change
could be material to the financial statements.
Provision for Income Taxes
As a limited liability company, all taxable income and tax benefits are
passed through to the Members. Accordingly, there is no provision for
state or federal income taxes.
-5-
S-3-7
<PAGE>
OAK INVESTORS, LLC
NOTES TO FINANCIAL STATEMENTS
(CONTINUED)
INVESTMENTS
The Company's method of accounting for investments, in accordance with
generally accepted accounting principles, is the fair value method.
Fair value of investments is determined by published quotes. Changes in
the fair value of limited partnership investments result in increases
or decreases to the carrying value of equity investments. Adjustments
to fair values are reflected as "Net unrealized gains/(losses) on
investments" in the accompanying Statement of Operations.
B. INVESTMENTS
The Company's investments consist of the following at December 31,
1998:
<TABLE>
<CAPTION>
Number of Unrealized Estimated
Units Cost Gain/(loss) Fair Value
--------- ---------- ----------- ----------
<S> <C> <C> <C> <C>
Aetna Rental Real
Estate Associates, LPS 152,865 $1,984,420 $60,914 $2,045,334
========= ========== =========== ==========
</TABLE>
Certain costs related to the tender offers for the Units (legal fees,
management fees, mailing costs, filing costs) are capitalized and
included in the cost of the Units owned. As of December 31, 1998,
$102,401 in costs associated with tendering for the Units have been
capitalized. Additionally, the cost of the Units is adjusted for
distributions the Company receives from the limited partnership and the
Company's distributive share of the limited partnership's income or
loss.
C. MANAGEMENT FEES
The Operating Agreement stipulates the following:
Arlen Capital, LLC is entitled to certain management fees and
reimbursement of overhead expenses from the Company. The fees and
expense reimbursements are calculated as follows:
DIRECT EXPENSES
The Company reimburses the Manager for all of the reasonable direct
costs and expenses of the Company's operations and due diligence and
organizational expenses of the Company; provided,
-6-
S-3-8
<PAGE>
OAK INVESTORS, LLC
NOTES TO FINANCIAL STATEMENTS
(CONTINUED)
such amounts do not exceed the budget approved by the Manager and a
certain Member.
SERVICING FEE
The Company pays the Manager a Servicing Fee in an amount equal to the
following:
$2.00 multiplied by the number of limited partners in the targeted
limited partnerships prior to the commencement of the tender offer.
$1.00 multiplied by the number of limited partners in the targeted
limited partnerships upon purchasing one (1) percent of the outstanding
limited partnership interests, or other economic interests.
$1.00 multiplied by the number of limited partners in the targeted
limited partnerships upon purchasing two and-a-half (2.5) percent of
the outstanding limited partnership interests, or other economic
interests.
$1.00 multiplied by the number of limited partners in the targeted
limited partnerships if a second mailing is made to the limited
partners of the targets.
MANAGEMENT FEE
The Company pays the Manager a management fee equal to 2 % of the
amount of the Company's capital invested. The management fee is paid as
follows: (a)(i) 1 % of capital invested within 30 days subsequent to
the termination of the initial tender offer, and (ii) to the extent
additional capital of the Company is invested subsequent to the
termination of the initial tender offer, I % of the amount of such
additional investment shall be paid within thirty (30) days after the
termination of such subsequent tender offer, and (b) an additional I %,
payable quarterly, with the first installment being due on that date
which is one year from the initial expiration date of the initial
tender offer of the Company and the remaining three installments due
each quarterthereafter; provided, however, that the obligations of the
Company to pay the additional I % management fee shall terminate upon
the first to occur of the dissolution and termination of the Company or
the date of the last quarterly payment due thereunder.
Total fees and reimbursed expenses paid to Arlen Capital, LLC amounted
to $104,590 for the year ended December 31, 1998. Included in accounts
payable-related party at December 31, 1998 are management fees
amounting to $37,200 payable to Arlen Capital, LLC.
-7-
S-3-9
<PAGE>
OAK INVESTORS, LLC
NOTES TO FINANCIAL STATEMENTS
(CONTINUED)
D. NOTES PAYABLE
On June 8, 1998, the Company entered into a $500,000 promissory note
with Credit Suisse First Boston Mortgage Capital, LLC ("Credit
Suisse"). The note requires monthly interest payments at 10% per annum.
All unpaid interest and principal is due in full on April 30, 2000. The
note is secured by a UCC-1 filing on substantially all Company assets
and a Pledge and Security Agreement between the Members. Monthly
interest payments shall be made if there are "Net Revenues" available.
Net Revenues are the amount by which gross revenues (cash received
excluding capital contributions) and cash on hand exceeds operating
expenses in a month. If Net Revenues exceeds the monthly interest
payment, all Net Revenues are to be paid for prior unpaid interest and
to reduce the outstanding principal. Upon full payment of interest and
principal, the Company shall pay additional interest from an applicable
percentage of the remaining Net Revenues. The applicable percentage is
defined as 75 % until the lenders internal rate of return is 25 %, and
thereafter 50 %. On November 16, 1998, the Company and Credit Suisse
entered into a second promissory note for $8,000,000. All primary terms
of the second note are identical to the original note. At December 31,
1998, the Company had $6,400,000 available to borrow under the notes.
Included in the Statement of Net Assets at December 31, 1998, is
accrued interest of $35,466 on the notes.
E. MEMBERS' EQUITY (DEFICIT)
<TABLE>
<CAPTION>
Decrease in
Beginning Net Assets Ending
Members' Capital Distributions from Members'
Equity Contributed to Members Operations Deficit
------ ----------- ---------- ---------- -------
<S> <C> <C> <C> <C>
$________ $10,204 $________ $(22,959) $(12,755)
</TABLE>
The Operating Agreement stipulates the following:
FORMULA FOR DISTRIBUTION TO MEMBERS
Payments of cash for distribution to Members by the Company, are made
at such times and in such amounts as determined by the Manager and a
majority-in-interest of the members.
Distributions are allocated and paid in the following manner:
-8-
S-3-10
<PAGE>
OAK INVESTORS, LLC
NOTES TO FINANCIAL STATEMENTS
(CONTINUED)
First, 100% is paid as a distribution to the Members and Economic
Interest Holders pro rata in accordance with their percentage interests
until the Members and Economic Interest Holders have received their
priority return, which is an amount equal to a 10 % per annum
compounded monthly on their total capital contributions.
Second, 100% is paid as a distribution to the Members and Economic
Interest Holders pro rata in accordance with their percentage
interests, until the Members and Economic Interest Holders have
received an amount equal to their total capital contributions.
Third, 75 % is paid as a distribution to the Members and Economic
Interest Holders pro rata in accordance with their percentage
interests, and 25 % is paid as a distribution to the Manager.
Then, 50% is paid as a distribution to the Members and Economic
Interest Holders pro rata in accordance with their percentage
interests, and 50% is paid as a distribution to the Manager.
There were no distributions paid to Members during the year ended
December 31, 1998.
F. ALLOCATION OF PROFITS AND LOSSES
The Operating Agreement stipulates the following:
PROFITS
Excepting any special or curative allocations, profits are allocated in
the following manner and order of priority:
First, to the extent any losses have been previously allocated to the
Members or Economic Interest Holders and have not been previously
recouped under this paragraph, the profits are allocated to such
Persons in the same percentage that the losses were previously
allocated with the most recent fiscal year's losses being recouped
first;
Second, additional profits shall be allocated 100% to the Members and
Economic Interest Holders in an amount equal to the excess (the
"Priority Excess"), if any, of
-9-
S-3-11
<PAGE>
OAK INVESTORS, LLC
NOTES TO FINANCIAL STATEMENTS
(CONTINUED)
(i) the sum of
(A) the cumulative Priority Return and;
(B) the cumulative losses previously allocated
over
(ii) the cumulative profits previously allocated
Amounts allocated under this paragraph shall be allocated among the
Members and Economic Interest Holders in accordance with the ratio of
the Priority Excess for each such person over the aggregate amount of
the Priority Excess for all such persons as of the date of such
allocation.
Third, additional profits shall be allocated 75 % among the Members and
holders of Economic Interests in an amount equal to the excess (the
"Second Priority Excess"), if any, of
(i) the sum of
(A) the cumulative Second Priority Return and;
(B) the cumulative losses previously allocated
over
(ii) the cumulative profits previously allocated
and 25 % to the Manager.
Amounts allocated under this paragraph shall be allocated among the
Members and Economic Interest Holders in accordance with the ratio of
the Second Priority Excess for each such person over the aggregate
amount of the Second Priority Excess for all such persons as of the
date of such allocation.
Any additional profits shall be allocated 50% to the Members or
Economic Interest Holders in accordance with their percentage
interests, and 50% to the Manager.
-10-
S-3-12
<PAGE>
OAK INVESTORS, LLC
NOTES TO FINANCIAL STATEMENTS
(CONTINUED)
LOSSES
Excepting any special or curative allocations, losses are allocated in
the following manner and order of priority:
First, to the extent any profits have been previously allocated to the
Members or Economic Interest Holders and have not been previously
offset by allocations of losses under this paragraph, losses are
allocated to such Persons in the same percentage that the profits were
previously allocated with the most recent fiscal year's profits being
offset first;
Any additional losses are allocated 100% to the Members or Economic
Interest Holders in accordance with their percentage interests.
Losses allocated pursuant to the previous two paragraphs shall not
exceed the maximum amount of losses that can be so allocated without
causing any Member or Economic Interest Holder to have an adjusted
capital account deficit at the end of any fiscal year. In the event
some but not all of the Members or Economic Interest Holders would have
an adjusted capital account deficit as a consequence of an allocation
of losses pursuant to such paragraphs, the limitations set forth in
this paragraph shall be applied on a Member or an Economic Interest
Holder by Member or an Economic Interest Holder basis so as to allocate
the maximum permissible losses to each Member or an Economic Interest
Holder under Regulations Section 1.704 (b)(2)(ii)(d).
G. CONCENTRATIONS OF CREDIT RISK
The Company maintains its cash in bank deposit accounts at a financial
institution. The balances, at times, may exceed federally insured
limits. The Company has not experienced any losses in such accounts and
believe they are not exposed to any significant credit risk on cash and
cash equivalents.
Accounts are guaranteed by the Federal Deposit Insurance Corporation
(FDIC) up to $100,000. A summary of total insured and uninsured cash
balances follows:
<TABLE>
<S> <C>
Total cash in bank deposit accounts $ 175,278
Portion insured by FDIC (100,000)
---------
Uninsured Cash Balances $ 75,278
=========
</TABLE>
-11-
S-3-13
<PAGE>
OAK INVESTORS, LLC
BALANCE SHEET
SEPTEMBER 30, 1999
(UNAUDITED)
ASSETS
<TABLE>
<S> <C> <C>
CURRENT ASSETS
WFB Regular Checking $39,963.62
------------
TOTAL CURRENT ASSETS 39,963.62
INVESTMENT ASSETS
AETNA RE 7,645,747.75
Seaboard Ins Premium 5,676.05
Distributions (354,161.72)
Market-to-Market 60,914.31
Income From Partnership 24,200.00
Capitalized Costs of Offering 181,238.79
------------
TOTAL INVESTMENT ASSETS 7,563,615.18
-------------
TOTAL ASSETS $7,603,578.80
=============
</TABLE>
S-3-14
<PAGE>
OAK INVESTORS, LLC
BALANCE SHEET
SEPTEMBER 30, 1999
(UNAUDITED)
LIABILITIES AND EQUITY
<TABLE>
<S> <C> <C>
CURRENT LIABILITIES
Accounts Payable $ 637,200.00
Note Payable 6,950,000.00
-------------
TOTAL CURRENT LIABILITIES 7,587,200.00
LONG TERM LIABILITIES
Accrued Interest Expense 35,465.75
-------------
TOTAL LONG TERM LIABILITIES 35,465.75
-------------
TOTAL LIABILITIES 7,622,665.75
EQUITY
Credit Suisse First Boston 204.00
Arlen Capital 10,000.00
Member Distribution (22,958.90)
UNDISTRIBUTED EARNINGS (LOSS) (6,332.05)
-------------
TOTAL EQUITY (19,086.95)
-------------
TOTAL LIABILITIES AND EQUITY $7,603,578.80
=============
</TABLE>
S-3-15
<PAGE>
OAK INVESTORS, LLC
STATEMENT OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, 1999
(UNAUDITED)
<TABLE>
<S> <C>
REVENUE
Interest Income $4,162.28
-------------
TOTAL REVENUE 4,162.28
-------------
GROSS PROFIT 4,162.28
EXPENSES:
EXPENSES
SDC-Research Fees 14.24
Legal 3,592.36
Accounting 6,075.00
Outside Services 165.00
Bank Charges 322.73
License-Fees 325.00
TOTAL EXPENSES 10,494.33
-------------
TOTAL EXPENSES 10,494.33
-------------
NET INCOME FROM OPERATIONS (6,332.05)
-------------
EARNINGS BEFORE INCOME TAX (6,332.05)
-------------
NET INCOME (LOSS) (6,332.05)
=============
</TABLE>
S-3-16
<PAGE>
Any questions or requests for assistance or for delivery of additional copies
of this Offer to Purchase or the Agreement of Sale may be directed to the
Depositary at the telephone number and address set forth below.
Arlen Capital, LLC
1650 Hotel Circle North, Suite 3000
San Diego, California 92108
Telephone: 1-800-891-4105
<PAGE>
Exhibit 99.(a)(1)(ii)
AGREEMENT OF SALE
The undersigned Limited Partner, and/or Assignee Holder or Unit Holder (the
"Seller") does hereby sell, assign, transfer, convey and deliver (the "Sale")
to Oak Investors, LLC, a Delaware limited liability company ("Oak" or the
"Purchaser"), all of the Seller's right, title and interest in Limited
Partnership Depositary Units including any rights attributable to claims,
damages, recoveries, including recoveries from class action lawsuits, and
causes of action accruing to the ownership of such Limited Partnership
Depositary Units ("Units") in Aetna Real Estate Associates, L.P., a Delaware
limited partnership (the "Partnership") being sold pursuant to this Agreement
of Sale ("Agreement") and the Offer to Purchase dated February 11, 2000,
(which together with this Agreement constitute the "Offer") for a purchase
price of $10.00 per Unit, less the amount of any distributions declared or
paid from any source by the Partnership with respect to the Units after
December 15, 1999, without regard to the record date or whether such
distributions are classified as a return on, or a return of, capital.
The Seller hereby represents and warrants to the Purchaser that the Seller owns
such Units and has full power and authority to validly sell, assign, transfer,
convey, and deliver to the Purchaser such Units, and that when any such Units
are accepted for payment by the Purchaser, the Purchaser will acquire good,
marketable and unencumbered title thereto, free and clear of all options, liens,
restrictions, charges, encumbrances, conditional sales agreements, or other
obligations relating to the sale or transfer thereof, and such Units will not be
subject to any adverse claim. The Seller further represents and warrants that
the Seller is a "United States person" as defined in Section 7701(a)(30) of the
Internal Revenue Code of 1986, as amended, or if the Seller is not a United
States person, the Seller does not own beneficially or of record more than five
percent of the outstanding Units.
Such sale shall include, without limitation, all rights in, and claims to, any
Partnership profits and losses, cash distributions, voting rights and other
benefits of any nature whatsoever, distributable or allocable to such Units
under the Partnership Agreement. Upon the execution of this Agreement by the
Seller, Purchaser shall have the right to receive all benefits and cash
distributions and otherwise exercise all rights of beneficial ownership of such
Units.
Seller, by executing this Agreement, hereby irrevocably constitutes and appoints
Purchaser as its true and lawful agent and attorney-in-fact with respect to the
Units with full power of substitution. This power of attorney is an irrevocable
power, coupled with an interest of the Seller to Purchaser, to (i) execute,
swear to, acknowledge, and file any document relating to the transfer of the
ownership of the Units on the books of the Partnership that are maintained with
respect to the Units and on the Partnership's books maintained by the General
Partner of the Partnership, or amend the books and records of the Partnership as
necessary or appropriate for the withdrawal of the Seller as a Unit Holder
and/or Limited Partner of the Partnership, (ii) vote or act in such manner as
any such attorney-in-fact shall, in its sole discretion, deem proper with
respect to the Units, (iii) deliver the Units and transfer ownership of the
Units on the books of the Partnership that are maintained with respect to the
Units and on the Partnership's books, maintained by the Partnership's General
Partner, (iv) endorse on the Seller's behalf any and all payments received by
Purchaser from the Partnership for any period on or after December 15, 1999,
which are made payable to the Seller, in favor of Purchaser, (v) execute on the
Seller's behalf, any applications for transfer and any distribution allocation
agreements required by the National Association of Securities Dealers, Inc.'s
Notice to Members 96-14 to give effect to the transaction contemplated by this
Agreement, and (vi) receive all benefits and distributions and amend the books
and records of the Partnership, including Seller's address and record, to direct
distributions to Purchaser as of the effective date of this Agreement and
otherwise exercise all rights of beneficial owner of the Units. Purchaser shall
not be required to post bond of any nature in connection with this power of
attorney.
Seller does hereby direct and instruct the Partnership and the General Partner
immediately upon their receipt of this Agreement of Sale (i) to amend the books
and records of the Partnership to change the Seller's address of record to Oak
Investors, LLC, c/o Arlen Capital, 1650 Hotel Circle North, Suite 200, San
Diego, California 92108, and (ii) to forward all distributions and other
information to be received by Seller to Oak Investors, LLC to the address set
forth in (i) above.
Seller and Purchaser do hereby release and discharge the General Partner and its
affiliates and each of their respective officers, directors, shareholders,
employees, and agents from all actions, causes of actions, claims or demands
Seller or Purchaser have, or may have, against any such person that result from
such party's reliance on this Agreement or any of the terms and conditions
contained herein. Seller and Purchaser do hereby indemnify and hold harmless the
Partnership and the General Partner and its affiliates and each of their
respective officers, directors, shareholders, employees, and agents from and
against all claims, demands, damages, losses, obligations, and responsibilities
arising, directly or indirectly, out of a breach of any one or more of their
respective representatives and warranties set forth herein.
All authority herein conferred or agreed to be conferred shall survive the death
or incapacity of the Seller and any obligations of the Seller shall be binding
upon the heirs, personal representatives, successors and assigns of the
undersigned. Upon request, the Seller will execute and deliver any additional
documents deemed by the Purchaser or the Partnership to be necessary or
desirable to complete the assignment, transfer and purchase of such Units. Oak
reserves the right to amend or extend the offer at any time without further
notice to the Limited Partners.
The Seller hereby certifies, under penalties of perjury, that (i) the tax
identification number shown on this form is the Seller's correct Taxpayer
Identification Number, and (ii) Seller is not subject to backup withholding
either because Seller has not been notified by the Internal Revenue Service (the
"IRS") that Seller is subject to backup withholding as a result of failure to
report all interest or dividends, or the IRS has notified Seller that Seller is
no longer subject to backup withholding.
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<PAGE>
The Seller also certifies, under penalties of perjury, that the Seller, if any
individual, is not a nonresident alien for purposes of U.S. income taxation, and
if not an individual, is not a foreign corporation, foreign partnership, foreign
trust, or foreign estate (as those terms are defined in the Internal Revenue
Code and Income Tax Regulations). The Seller understands that this certification
may be disclosed to the IRS by the Purchaser and that any false statements
contained herein could be punished by fine, imprisonment, or both.
This Agreement shall be governed by and construed in accordance with the laws of
the State of California. Seller waives any claim that California or the Southern
District of California is an inconvenient forum, and waives any right to trial
by jury.
The undersigned Seller (including any joint owner(s)) owns and wishes to assign
the number of Units set forth below. By its own or its Authorized Signatory's
signature below, the Seller hereby assigns its entire right, title and interest
to the Units to the Purchaser.
ATTACHED HERETO IS THE DEPOSITARY RECEIPT FOR CERTIFICATE OF LIMITED PARTNERSHIP
INTERESTS ("CERTIFICATE") REPRESENTING THE UNITS SOLD, WHICH HAS BEEN SIGNED BY
THE UNIT HOLDER AND WHICH SIGNATURE HAS BEEN MEDALLION GUARANTEED.
By executing this Agreement the Seller hereby acknowledges to the General
Partner that the Seller desires to withdraw as a Unit Holder as to the Units
referenced herein and hereby directs the General Partner to take all such
actions as are necessary to accomplish such withdrawal, and appoints the General
Partner the agent and attorney-in-fact of the Limited Partner, to execute, swear
to, acknowledge and file any document or amend the books and records of the
Partnership as necessary or appropriate for the withdrawal of the Unit Holder.
IN WITNESS WHEREOF the Unit Holder has executed, or caused its Authorized
Signatory to execute, this Agreement.
Print Name of Unit Holder (as it appears on the investment). __________________
Print Name and Capacity of Authorized Signatory (if other than above). _________
<TABLE>
<S> <C>
___________________________________ ___________________________________
Seller's Signature Joint Seller's Signature
MEDALLION GUARANTEE MEDALLION GUARANTEE
(Medallion Guarantee for each Seller's signature) (Medallion Guarantee for each Seller's signature)
</TABLE>
<TABLE>
<S> <C> <C>
Investor I.D. Number
___________________________________
Home Telephone Number
___________________________________
Office Telephone Number
___________________________________ -----------------------------------
Mailing Address
___________________________________ ---FOR INTERNAL USE ONLY___________
City, State, Zip Code
___________________________________ ACCEPTED:
Social Security/Tax ID No. OAK INVESTORS, LLC
___________________________________ By: Its Manager, Arlen Capital, LLC
Date
___________________________________ By: ______________________________
$10 Sales Price per Unit Authorized Signator
___________________________________ -----------------------------------
_____ Number of Units to be sold
OR
/ / Check here if you wish to sell ALL
your units
</TABLE>
Please call us at (800)891-4105 if you have any questions regarding the sale of
your Units.
2
<PAGE>
- --------------------------------------------------------------------------------
INSTRUCTIONS TO COMPLETE
AGREEMENT OF SALE
AND DEPOSITARY RECEIPT FOR CERTIFICATE OF LIMITED PARTNERSHIP
1. Complete ALL requested information and sign the Agreement of Sale
("Agreement ").
2. Have ALL signatures on the Agreement of Sale MEDALLION GUARANTEED. A
medallion guarantee can be obtained at most banks or through your broker.
Please be advised, a medallion guarantee is not a notary.
3. Please provide your original Aetna Depositary Receipt for Certificate of
Limited Partnership Interest ("Certificate"). Complete the back upper
portion of the Certificate and have each signature MEDALLION GUARANTEED. If
you do not have your Certificate, please send a signed and dated letter
indicating that you no longer have it.
4. Return the Agreement and Certificate in the enclosed envelope or via
overnight mail.
- --------------------------------------------------------------------------------
IN ADDITION TO THE ABOVE REQUESTED INFORMATION,, PLEASE PROVIDE ALL APPLICABLE
DOCUMENTATION AS FOLLOWS:
JOINT TENANTS:
Please have All owners of record sign the Agreement and have a separate
medallion guarantee affixed for each signature. If a party is deceased, please
enclose a CERTIFIED DEATH CERTIFICATE.
TENANTS IN COMMON OR COMMUNITY PROPERTY:
Please have ALL owners of record sign the Agreement and have a separate
medallion guarantee affixed for each signature. If a party is deceased, see
requirements for "Death of Sole Owner."
DEATH OF SOLE OWNER:
1. Executor(s) or Administrator(s) must sign the Agreement and obtain a
medallion guarantee.
2. Please also provide the following:
- Certified Death Certificate
- Certified Letters of Testamentary or Administration dated within
six months.
- Affidavit of Domicile with medallion guarantee
- Inheritance Tax Waiver, if required in your state
IRA/KEOGH:
1. Beneficial owner must sign the Agreement and obtain a medallion guarantee.
2. Please provide COMPANY NAME OF CUSTODIAN and ACCOUNT NUMBER OF IRA. This
information will be used solely to obtain the necessary signature and
medallion guarantee from your custodian and will help ensure proper deposit
of your proceeds.
TRUST, PROFIT SHARING PLAN OR PENSION PLAN:
Attach title page, signature page and any successor trustee page or amendment
showing authorized signatory. Please print or type the words "I hereby certify
that this is a true copy of the original and is still in full force and effect"
on the signature page, sign, date and have a medallion guarantee affixed.
CORPORATION:
A Corporate Resolution listing the name of the officer signing the Agreement and
dated within six months with a medallion guarantee and Corporate Seal. If no
Corporate Seal is available, please type the words "We do not have a Corporate
Seal" on the Resolution.
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<PAGE>
Exhibit 99.(a)(1)(iii)
OFFER TO PURCHASE
1,000,000 UNITS
OF
AETNA REAL ESTATE ASSOCIATES, L.P.
FOR
$10.00 PER/UNIT*
(Subject to the terms and conditions of the Offer)
Oak Investors, LLC
c/o Arlen Capital, LLC
1650 Hotel Circle North, Suite 200
San Diego, California 92108
Oak Investors, LLC is not an affiliate of the Partnership or
the General Partner of the Partnership.
-
Please read carefully the enclosed Offer to Purchase.
-
*IN ADDITION TO THE PURCHASE PRICE OF $10.00 PER UNIT, A UNIT HOLDER OF RECORD
ON NOVEMBER 30, 1999 WILL ALSO HAVE RECEIVED THE DISTRIBUTION OF $2.75 PER UNIT
MADE BY THE PARTNERSHIP IN DECEMBER, 1999 WHICH RESULTED FROM THE SALE OF THREE
PARTNERSHIP PROPERTIES, AND WHICH DECREASED THE NET ASSET VALUE OF UNITS.
-
To accept the Offer, please carefully follow the enclosed Instructions
and return your duly executed (i) Agreement of Sale and (ii) Depositary Receipt
for Certificate of Limited Partnership Interests in the envelope provided.
If you have any questions or need assistance in completing the Agreement of
Sale, please call the Arlen Capital, LLC at 1-800-891-4105
February 11, 2000
<PAGE>
Exhibit 99.(a)(1)(iv)
THIS ANNOUNCEMENT IS NEITHER AN OFFER TO PURCHASE, NOR A SOLICITATION OF AN
OFFER TO SELL THE SECURITIES. THE OFFER IS MADE ONLY BY THE OFFER TO PURCHASE
AND THE RELATED AGREEMENT OF SALE AND IS NOT BEING MADE (NOR WILL TENDERS BE
ACCEPTED FROM) HOLDERS OF UNITS IN ANY JURISDICTION WHICH THE OFFER OR THE
ACCEPTANCE THEREOF WILL NOT BE IN COMPLIANCE WITH THE SECURITIES LAWS OF SUCH
JURISDICTION; IN THOSE JURISDICTIONS WHERE SECURITIES LAWS REQUIRE THE OFFER TO
BE MADE BY A LICENSED BROKER OR DEALER, THE OFFER SHALL BE DEEMED TO BE MADE ON
BEHALF OF THE PURCHASER ONLY BY ONE OR MORE REGISTERED BROKERS OR DEALERS
LICENSED UNDER THE LAWS OF SUCH JURISDICTION.
NOTICE OF OFFER TO PURCHASE FOR CASH
UP TO 1,000,000 LIMITED PARTNERSHIP DEPOSITARY UNITS (THE "UNITS")
OF AETNA REAL ESTATE ASSOCIATES, L.P. (THE "PARTNERSHIP")
BY OAK INVESTORS, LLC, A DELAWARE LIMITED LIABILITY COMPANY
(THE "PURCHASER")
The Purchaser is offering to purchase for cash up to 1,000,000 Units held by
the Unit Holders of the Partnership (the "Unit Holders") at $10.00 per
Unit upon the terms and subject to the conditions set forth in the
Purchaser's Offer to Purchase and in the related Agreement of Sale (which
together constitute the "Offer" and the "Tender Offer Documents").
THE OFFER AND WITHDRAWAL RIGHTS EXPIRE AT 12:00 MIDNIGHT, EASTERN TIME, ON MARCH
17, 2000, UNLESS THE OFFER IS EXTENDED.
Funding for the purchase of the Units will be provided through loans
made to the Purchaser.
The Offer will expire at 12:00 midnight, Eastern Time on March 17,
2000, and unless and until the Purchaser, in its sole discretion, shall have
extended the period of time for which the Offer is open (such date and time,
as extended the "Expiration Date").
If the Purchaser makes a material change in the terms of the Offer, or
if they waive a material condition to the Offer, the Purchaser will extend the
Offer and disseminate additional tender offer materials to the extent required
by Rules 14d-4(c) and 14d-6(d) under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"). The minimum period during which an offer must
remain open following any material change in the terms of the Offer, other than
a change in price or a change in percentage of securities sought will depend
upon the facts and circumstances including the materiality of the change with
respect to a change in price or, subject to certain limitations, a change in the
percentage of securities sought. A minimum of ten business days from the date of
such change is generally required to allow for adequate dissemination to Unit
Holders. Accordingly, if prior to the Expiration Date, the Purchaser increases
(other than increases of not more than two percent of the outstanding Units) or
decreases the number of Units being sought, or increases or decreases the
consideration offered pursuant to the Offer, and if the Offer is scheduled to
expire at any time earlier than the period ending on the tenth business day from
the date that notice of such increase or decrease is first published, sent or
given to Unit Holders, the Offer will be extended at least until the expiration
of such tenth business day. For purposes of the Offer, a "business day" means
any day other than a Saturday, Sunday or federal holiday and consists of the
time period from 12:01 a.m. through 12:00 midnight, Eastern Time.
In all cases payment for the Units purchased pursuant to the Offer will
be made only after timely receipt of the Agreement of Sale, properly completed
and duly executed, with any required signature guarantees, and any other
documents required by such Agreement of Sale.
Tenders of Units made pursuant to the Offer are irrevocable, except
that Unit Holders who tender their Units in response to the Offer will have the
right to withdraw their tendered Units at any time prior to the Expiration Date
by sending a written notice of withdrawal to the Purchaser specifying the name
of the person who tendered the Units to be withdrawn. In addition, tendered
Units may be withdrawn at any time after April 11, 2000, unless the tender has
theretofore been accepted for payment as provided above.
If tendering Unit Holders tender more than the number of Units that the
Purchaser seeks to purchase pursuant to the Offer, the Purchaser will take into
account the number of Units so tendered and take up and pay for as nearly as may
be pro rata, disregarding fractions, according to the number of Units tendered
by each tendering Unit Holder during the period during which the Offer remains
open.
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<PAGE>
The terms of the Offer are more fully set forth in the formal Tender
Offer Documents which are available from the Purchaser. The Offer contains terms
and conditions and the information required by Rule 14d-6(e)(l)(vii) under the
Exchange Act which are incorporated herein by reference.
THE TENDER OFFER DOCUMENTS CONTAIN IMPORTANT INFORMATION WHICH SHOULD
BE READ CAREFULLY BEFORE ANY DECISION IS MADE WITH RESPECT TO THE OFFER.
The Tender Offer Documents may be obtained by written request as set
forth below.
The Tender Offer Documents and, if required, other relevant materials
will be mailed to record holders of Units or persons who are listed as
participants in a clearing agency's security position listing, for subsequent
transmittal to beneficial owners of Units.
FOR COPIES OF THE TENDER OFFER DOCUMENTS CALL THE DEPOSITARY TOLL FREE AT
1-800-891-4105 OR MAKE A WRITTEN REQUEST ADDRESSED TO ARLEN CAPITAL, LLC, 1650
HOTEL CIRCLE NORTH, SUITE 200, SAN DIEGO, CALIFORNIA 92108.
February 11, 2000
2
<PAGE>
Exhibit 99.(b)
PROMISSORY NOTE
$10,000,000.00 _____________, 2000
New York, New York
FOR VALUE RECEIVED, OAK INVESTORS, LLC, a Delaware limited
liability company ("Borrower"), hereby promises to pay to CREDIT SUISSE FIRST
BOSTON MORTGAGE CAPITAL LLC, a Delaware limited liability company having an
address at 11 Madison Avenue, New York, New York 10010 and its successors and
assigns ("Lender"), by wire transfer to Bankers Trust NYC, ABA No. 021-001-033,
for the account of Credit Suisse First Boston Mortgage Capital LLC, Account No.
01-001-355, Reference No.___________________/Michael J. Arman, or to order or in
such other manner, to such other account or at such other place as Lender may
from time to time designate to Borrower in writing, the principal sum of Ten
Million and 00/100 Dollars ($10,000,000.00) or such lesser amount as may have
been advanced hereunder (the "Principal Sum"), in lawful money of the United
States of America, together with interest on said Principal Sum, or so much
thereof as shall be outstanding hereunder from time to time, to be computed from
the date hereof at the rates and in the amounts hereinafter set forth. The
Principal Sum shall be reduced by any payments in reduction of principal made by
Borrower from time to time.
Borrower hereby covenants with Lender as follows:
SECTION 1. As used in this Note the following terms shall have
the meanings provided for below:
"Business Day" shall mean each Monday, Tuesday,
Wednesday, Thursday and Friday which is not a day on which banking institutions
in the City of New York are authorized or obligated by law or executive order to
close.
"Event of Default" shall have the meaning ascribed
thereto in Section 17.
"Gross Revenues" shall mean for any calendar month,
the gross amount of all revenues actually received by Borrower during such
calendar month for or with respect to its operations and assets, including,
without limitation, amounts released from Permitted Reserves and which are not
applied toward satisfying the cost or contingency for which the same had been
reserved. Gross Revenues shall exclude the capital contributions and loans made
by the members of Borrower pursuant to the LLC Agreement.
1
<PAGE>
2
"LLC Agreement" shall mean that certain Operating
Agreement of Borrower, by and between PTG Holdings, Inc., a Delaware
corporation, and Arlen Capital, LLC, a California limited liability company.
"Loan Documents" shall have the meaning ascribed
thereto in Section 5 below.
"Loan Rate" shall mean ten percent (10%) per annum,
but in no event in excess of the maximum permissible interest rate then in
effect in the State of New York.
"Maturity Date" shall have the meaning ascribed
thereto in Section 3 below.
"Net Revenues" shall mean for any calendar month,
the amount by which (i) the sum of (x) Gross Revenues and (y) cash on hand,
exceeds (ii) Operating Expenses for, or on account of, such calendar month.
"Operating Expenses" shall mean for any calendar
month, all of the reasonable direct costs and expenses of Borrower's operations
(including, without limitation, due diligence expenses and organizational
expenses of Borrower); provided, however, that such amounts shall not exceed the
amounts set forth in a budget approved by Lender, without the prior written
consent of Lender. Operating Expenses shall exclude all payments of interest,
additional interest, principal and other sums due under this Note.
"Permitted Reserves" shall mean all reserves
approved by Lender which, if paid currently, would constitute Operating
Expenses.
"Sale Date" shall mean the date the entirety of the
Units are sold by Borrower.
"Subordinate Note" shall mean those certain
Promissory Notes dated June 8, 1998 and November 16, 1998, as amended, made by
Borrower to the order of Lender in the original principal amount of $500,000.00
and $8,000,000 respectively.
"Units" shall mean the partnership interests or
other economic interests of the Target (as defined in the LLC Agreement) which
have been acquired by Borrower from time to time.
SECTION 2. INTEREST RATE. Borrower shall pay to Lender,
monthly in arrears, base interest on the unpaid balance of the Principal Sum
calculated on the basis of a year of 360 days for the actual number of days
elapsed (i) from the date hereof through and until the Maturity Date, at the
Loan Rate, and (ii) from and after the Maturity Date
2
<PAGE>
3
and until the Principal Sum and all other sums then due and payable under this
Note have been paid in full, at a rate equal to the lesser of (x) six hundred
(600) basis points per annum above the Loan Rate and (y) the maximum lawful
non-usurious contract rate of interest allowed by applicable law (the "Default
Rate").
SECTION 3. MATURITY DATE. The entire unpaid balance of the
Principal Sum, together with all interest accrued and unpaid thereon (including
the aggregate Monthly Shortfall, and interest thereon), and all other sums then
due and payable to Lender under this Note and under the Loan Documents (as
hereinafter defined) shall be due and payable in full on April 30, 2001;
provided, however, that mandatory prepayment of all or a portion of this Note
may be required under certain circumstances as provided herein; and provided,
further, that upon the occurrence of an Event of Default (as hereinafter
defined), at the option of Lender, the entire unpaid balance of the Principal
Sum, together with all interest accrued and unpaid thereon (including the
aggregate Monthly Shortfall, and interest thereon) and all other sums then due
and payable hereunder or under the Loan Documents, shall become immediately due
and payable (April 30, 2001, or such earlier date to which the maturity of this
Note is accelerated following the occurrence of an Event of Default or
otherwise, shall be referred to as the "Maturity Date").
SECTION 4. INTEREST AND PRINCIPAL PAYMENTS; FUNDING LOSSES;
CHANGES IN LAW. The Principal Sum and interest thereon shall be paid by Borrower
to Lender in accordance with the further provisions of this Section 4.
4.1 (a) On the eleventh day of the month immediately
following the date of this Note, and on the eleventh day of each of the
succeeding months thereafter to and including the Maturity Date (each, a
"Payment Date"), Borrower shall pay to Lender interest on the Principal Sum at
the rate set forth in Section 2 hereof. Borrower covenants and agrees that it
shall use and apply an amount equal to the Net Revenues to pay interest at the
interest rate due in accordance with the terms hereof, provided, however, that
if and to the extent that, in any calendar month, the Net Revenues are
insufficient to pay in full the installment of interest then due under this Note
(the "Monthly Debt Service") in accordance with the terms of the first sentence
of this Section 4.1 (the amount of such deficiency being hereinafter referred to
as the"Monthly Shortfall"), then Borrower's failure to pay the Monthly Shortfall
on the due date therefor shall not constitute an Event of Default hereunder or
under the Loan Documents; provided, further, that Borrower shall in no event be
relieved of its obligation to pay (i) so much of the scheduled installment of
interest at the interest rate then payable hereunder which is equal to the
available Net Revenues, and (ii) the Monthly Shortfall, it being understood and
agreed that such Monthly Shortfall shall be aggregated with the Monthly
Shortfall, if any, for all prior months and such sum shall itself, together with
the Monthly Shortfall for all such prior months, bear interest at the interest
rate then payable hereunder, compounded monthly. In the event that Net Revenues
for a particular month exceed interest at the interest rate then due hereunder
for such month on the sum of (x) the Principal Sum plus (y) the aggregate
Monthly Shortfall (the amount of such excess,
3
<PAGE>
4
the "Monthly Excess") and there exists a Monthly Shortfall for any prior
month(s), Borrower shall pay to Lender the amount of such Monthly Excess in
reduction of the aggregate Monthly Shortfall remaining unpaid, together with
accrued and unpaid interest thereon at the interest rate then due hereunder,
compounded monthly. On the Maturity Date, or any earlier date of acceleration
pursuant to this Note or any of the Loan Documents, Borrower shall pay the
aggregate unpaid Monthly Shortfall and interest thereon, together with all then
unpaid principal and other sums due under this Note.
(b) In addition to the monthly payments
required to be made by Borrower to Lender under the provisions of Section 4.1(a)
above, commencing on the eleventh day of the month immediately following the
date of this Note, and on the eleventh day of each of the succeeding months
thereafter, to and including the Maturity Date, Borrower shall pay to Lender, on
account of and in reduction of the Principal Sum and all other sums then due and
payable to Lender under this Note and under the Loan Documents, until paid, all
Net Revenues for the immediately preceding calendar month remaining after
payment in full of all sums required to be paid under Section 4.1(a) above and
under Section 4.1(a) of the Subordinate Note. Each such monthly payment shall be
accompanied by a certificate showing Borrower's calculation of Net Revenues, as
aforesaid, with appropriate back-up documentation.
4.2 For purposes of making payments hereunder, but
not for purposes of calculating interest accrual periods, if the eleventh (11th)
day of a given month is not a Business Day, the amounts due on the Payment Date
for such month shall be due on the next succeeding Business Day. All amounts due
under this Note shall be payable without setoff, counterclaim or any other
deduction whatsoever.
4.3 On the Maturity Date, Borrower shall pay to
Lender the entire unpaid balance of the Principal Sum, together with all accrued
and unpaid interest thereon (including, without limitation, the aggregate
Monthly Shortfall, and interest thereon).
SECTION 5. SECURITY. This Note is secured by, INTER ALIA, (i)
a certain Security and Pledge Agreement of even date herewith by and between
Borrower, as Pledgor, and Lender, as Pledgee (the "Security Agreement"), (ii) a
certain Pledge and Security Agreements dated June 18, 1998 by and between PTG
Holdings, Inc. ("PTG") and Arlen Capital, LLC ("Arlen"), as Pledgors, and
Lender, as Pledgee, as amended by First Amendment to Pledge Agreement dated
November 16, 1998 by and among said parties (as so amended, the "Pledge"), (iii)
a certain Pledge and Security Agreement dated November 16, 1998 by and among
said parties, and (iv) one or more UCC-1 financing statements naming Lender as
the secured party thereunder (the Security Agreement, the Pledge and all other
loan agreements, documents and instruments executed and delivered by Borrower,
PTG or Arlen in connection with this Note, if any, as the same may be modified,
amended, supplemented, restated or replaced, collectively, the "Loan
Documents").
4
<PAGE>
5
SECTION 6. OPTIONAL ACCELERATION BY LENDER. Notwithstanding
any provision in this Note to the contrary, the entire unpaid balance of the
Principal Sum, together with all interest accrued and unpaid thereon and all
other sums, if any, then due and payable by Borrower to Lender hereunder or
under the Loan Documents, shall become due and payable, at Lender's election (i)
upon the Sale of the Units, or any portion thereof, without the prior written
consent of Lender, (ii) upon the dissolution of Borrower, and/or (iii) upon the
occurrence of any other Event of Default.
SECTION 7. PREPAYMENT BY BORROWER. The outstanding Principal
Sum evidenced by this Note may be prepaid in whole, but not in part, only upon
and simultaneously with a sale of the Units for which the prior written consent
of Lender shall have been received by Borrower (an "Approved Sale"), upon at
least ten (10) days' prior written notice to Lender, provided that Borrower pays
to Lender at the same time (i) all interest accrued and unpaid on the Principal
Sum to and including the date of such payment, (ii) all other sums, if any, then
due and payable by Borrower to Lender hereunder and under the Loan Documents.
Any prepayment prior to April 30, 2001 on a date other than a Payment Date
shall, in all events, include interest through the following Payment Date.
SECTION 8. LATE CHARGE. If payments of principal and/or
interest, or any other amounts due under this Note are not timely made or remain
overdue (determined, in the case of the Monthly Shortfall, if any, only after
taking into consideration the provisions of Section 4.1(a) above), Borrower
shall pay to Lender, promptly on demand, in order to compensate Lender for
expenses incurred by reason of such late payment (and in addition to all other
sums payable hereunder), a late payment fee equal to four percent (4%) of each
delinquent payment. Such late payment fee shall be in addition to, and shall in
no way limit, any and all other rights and remedies provided for in this Note or
in the Loan Documents which secure this Note, as well as any and all remedies
provided by law.
SECTION 9. BORROWER'S WAIVERS. Borrower, for itself and its
successors and assigns and any endorsers and guarantors of this Note from time
to time, hereby waives presentment for payment, demand, notice of dishonor,
protest, notice of protest and any other notice Borrower may lawfully waive and
any and all lack of diligence or delays in the collection or enforcement hereof,
and waives and renounces all rights to the benefits of any statute of
limitations and any moratorium, appraisal, exemption and homestead rights now
provided or which may hereafter be provided by any federal or state statute,
including, but not limited to, exemptions provided or allowed under the
Bankruptcy Reform Act of 1978, as amended, both as to itself and as to all of
its property, whether real or personal, against the enforcement and collection
of the obligations evidenced by this Note and any and all extensions, renewals
and modifications hereof. Borrower consents to any extension of time of payment
hereof, release of all or any part of the security for the payment of this
obligation, and release of any party liable for payment of this obligation, by
Lender, from time to time, and any such extension or
5
<PAGE>
6
release may be made without notice to any party and without discharging any
party's liability hereunder.
SECTION 10. NO WAIVER BY LENDER. No failure on the part of
Lender to exercise, and no delay in exercising, and no course of dealing with
respect to, any right, power or privilege under this Note shall operate as a
waiver thereof, nor shall any single or partial exercise of any right, power or
privilege under this Note preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The remedies provided herein
are cumulative and not exclusive of any remedies provided by law.
SECTION 11. WAIVER OF TRIAL BY JURY. BORROWER WAIVES AND
COVENANTS THAT BORROWER WILL NOT ASSERT (WHETHER AS PLAINTIFF, DEFENDANT OR
OTHERWISE), ANY RIGHT TO TRIAL BY JURY IN ANY FORUM IN RESPECT OF ANY ACTION
BROUGHT ON, UNDER OR BY VIRTUE OF THIS NOTE OR IN ANY WAY CONNECTED TO THIS
NOTE.
SECTION 12. GOVERNING LAW. The provisions of this Note shall
be governed by and construed and interpreted in accordance with the substantive
laws of the State of New York applicable to agreements made and to be performed
entirely within such State.
SECTION 13. SEVERABILITY. The invalidity, illegality or
unenforceability of any provision of this Note shall not affect or impair the
validity, legality or enforceability of the remainder of this Note, and to this
end, the provisions of this Note are declared to be severable.
SECTION 14. NOTICES. Any notice, demand, consent, approval,
request, direction or other communication (any "Notice") required or permitted
hereunder or under any other documents in connection herewith shall be in
writing and shall be directed as follows:
If to Borrower: OAK INVESTORS, LLC
c/o Arlen Capital, LLC
1650 Hotel Circle North, Suite 200
San Diego, CA 92108
Attn: Don Augustine
Telephone No.: 619-686-2002
Facsimile No.: 619-686-2056
with a copy to:
PTG Holdings, Inc.
11 Madison Avenue
New York, NY 10010-3629
6
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7
Attention: Mr. David Loo
Telephone No.: (212) 325-3974
Facsimile No.: (212) 325-8064
If to Lender: CREDIT SUISSE FIRST BOSTON
MORTGAGE CAPITAL LLC
11 Madison Avenue
New York, New York 10010
Attn: Richard Ortiz
Telephone No.: (212) 325-3042
Facsimile No. (212) 325-8064
or to such changed address or changed telephone or facsimile number as a party
hereto shall designate to the other parties hereto from time to time in writing,
provided, however, that notices of change of address, or telephone or facsimile
number shall only be effective upon receipt.
Notices shall be (i) personally delivered (including delivery by
Federal Express or other comparable nation-wide overnight courier service) to
the offices set forth above, in which case they shall be deemed delivered on the
date of delivery (or the first Business Day thereafter if delivered on Saturday,
Sunday or a legal holiday) to said offices; (ii) sent by certified mail, return
receipt requested, in which case they shall be deemed delivered three (3) days
after the date of deposit in the U.S. Mail; or (iii) sent by means of a
facsimile transmittal machine, in which case they shall be deemed delivered (x)
on the Business Day so sent, if so sent prior to 4:00 p.m. (based upon the
recipient's time) of the Business Day so sent, and (y) on the Business Day
following the day so sent, if so sent on a non-Business Day or on or after 4:00
p.m. (based upon the recipient's time) of the Business Day so sent (unless
actually received by the addressee on the day so sent), provided that any notice
sent by facsimile shall be accompanied by a confirmatory notice sent within 48
hours by one of the other methods for the giving of notice set forth in this
Section 14.
SECTION 15. SUCCESSORS AND ASSIGNS. The provisions of this
Note shall bind Borrower and its successors and assigns and inure to the benefit
of Lender and its successors and assigns.
SECTION 16. MISCELLANEOUS.
16.1 This Note may not be changed, amended, modified or
discharged orally, but only by an instrument signed by Borrower and Lender, and
may be waived only by an instrument in writing signed by the party waiving
compliance.
16.2 If any attorney is engaged: (i) to collect or
attempt to collect the Principal Sum, the interest thereon or any other payment
due Lender hereunder or under the Loan Documents, whether or not legal
proceedings are thereafter instituted by Lender; (ii) to represent Lender in any
bankruptcy, reorganization, receivership or other proceedings
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8
affecting creditors' rights and involving a claim under this Note; (iii) to
protect the lien of the Loan Documents; (iv) to represent Lender in any other
proceedings whatsoever in connection with this Note or the Loan Documents
following an Event of Default, including post judgment proceedings to enforce
any judgment; or (v) in connection with seeking an out-of- court workout or
settlement of any of the foregoing, then Borrower shall pay to Lender all
reasonable costs, attorneys' fees and expenses in connection therewith, in
addition to all other amounts due hereunder.
16.3 Anything in this Note to the contrary
notwithstanding, in no event shall Borrower be obligated to make any payment of
interest or late charges, and in no event shall Lender be entitled to receive
payment of any such interest or charges, if and to the extent that such payment
would violate any usury laws of the State of New York applicable to this Note.
If payment of any such interest or charges is made by Borrower and received by
Lender and such payment is in violation of such usury laws, the portion of such
payment which exceeds the maximum allowable by or under such usury laws shall
not be or be deemed to be interest or late charges, but instead shall be applied
in reduction of the Principal Sum.
SECTION 17. EVENTS OF DEFAULT. Any of the following shall
constitute an "Event of Default" under this Note: (i) if Borrower shall fail to
make any payment under this Note as and when due hereunder, (ii) the occurrence
of any default under the Pledge or the Security Agreement or (iii) the
occurrence of any other default under the Loan Documents, after giving effect to
any applicable grace or cure period.
SECTION 18. EXCULPATION OF LENDER. Borrower agrees that the
obligations, if any, of Lender under or with respect to this Note do not
constitute personal obligations of the members, officers or employees of Lender
(collectively, the "Released Parties"), and shall not create or involve any
claim against, or any personal liability on the part of, any of the Released
Parties and that Borrower or any persons claiming by or under Borrower shall
look solely to the assets of Lender for satisfaction of any liability of the
Released Parties or any of them to Borrower.
SECTION 19. EXCULPATION OF BORROWER'S MEMBERS. Lender agrees
that the obligations of Borrower under or with respect to this Note do not
constitute personal obligations of the members, managers, officers or employees
of Borrower or any members, managers, officers or employees of Borrower's
Manager (collectively, the "Borrower Released Parties"), and shall not create or
involve any claim against, or any personal liability on the part of, any of the
Borrower Released Parties and that Lender or any persons claiming by or under
Lender shall look solely to the assets of Borrower for satisfaction of any
liability of the Borrower Released Parties or any of them to Lender. The
provisions of this Section shall not, however, (i) constitute a waiver, release
or impairment of any obligation evidenced or secured by this Note, or (ii)
affect the validity or enforceability of any guaranty securing this Note or any
rights or remedies of Lender thereunder.
SECTION 20. CONSENT TO JURISDICTION; PROCESS. BORROWER HEREBY
IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY NEW YORK
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9
STATE OR FEDERAL COURT SITTING IN NEW YORK COUNTY OVER ANY SUIT, ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS NOTE. LENDER MAY IN ITS SOLE
DISCRETION, ELECT THE STATE OF NEW YORK, NEW YORK COUNTY, OR THE UNITED STATES
OF AMERICA, FEDERAL DISTRICT COURT HAVING JURISDICTION OVER NEW YORK COUNTY, AS
THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING. BORROWER HEREBY IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION IT MAY NOW OR
HEREAFTER HAVE TO SUCH VENUE AS BEING AN INCONVENIENT FORUM. IN ANY SUIT, ACTION
OR PROCEEDING AGAINST BORROWER, SERVICE OF PROCESS MAY BE MADE BY REGISTERED OR
CERTIFIED MAIL, POSTAGE PREPAID, TO ITS ADDRESS SET FORTH IN SECTION 14 HEREOF.
NOTHING IN THIS SECTION SHALL AFFECT LENDER'S RIGHT TO SERVE PROCESS IN ANY
MANNER PERMITTED BY LAW, OR LIMIT LENDER'S RIGHT TO BRING PROCEEDINGS AGAINST
BORROWER IN THE COURTS OF ANY OTHER JURISDICTION.
IN WITNESS WHEREOF, Borrower has executed and delivered this
Note as of the day and year first set forth above.
OAK INVESTORS, LLC,
a Delaware limited liability company
By: Arlen Capital, LLC, Manager
By:
----------------------------------
Name: Don Augustine
Title: Manager
STATE OF CALIFORNIA )
) ss.:
COUNTY OF SAN DIEGO )
On the day of , 2000, before me personally
came Don Augustine, to me known, who, being by me duly sworn, did depose and say
that he has an address at 1650 Hotel Circle North - Suite 200, San Diego,
California 92108, that he is the Manager of Arlen Capital, LLC, a California
limited liability company which is the Manager for Oak Investors, LLC, the
Delaware limited liability company described in and which executed the foregoing
instrument; that the execution of the foregoing instrument by Arlen Capital, LLC
was duly authorized according to the Limited Liability Company Agreement of Oak
Investors, LLC; and that he has the authority to and did execute the foregoing
instrument as the act and deed of Arlen Capital, LLC, as Manager of said limited
liability company.
[notary stamp]
-----------------------------
Notary Public
9
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Exhibit 99.(d)(1)
AETNA REAL ESTATE ASSOCIATES, L.P.
3 World Financial Center - 29th Floor
New York, NY 10285
August 20, 1998
PERSONAL AND CONFIDENTIAL
- -------------------------
Oak Investors LLC
Cedar Partners, L.P.
1650 Hotel Circle North, Suite 200
San Diego, California 92108
Attn: Don Augustine
Dear Mr. Augustine:
The purpose of this letter is to set forth our understanding with regard to any
proposed acquisition of outstanding units of limited partnership interests
("Units") of Aetna Real Estate Associates, L.P., a Delaware limited partnership
(the "Partnership"), from the holders of Units (each a "Unitholder" and
collectively, the "Unitholders") by Oak Investors LLC, Cedar Partners, L.P.,
Arlen Capital, LLC, Don Augustine or any person who is an Affiliate (as defined
under Rule 405 of the Securities Act of 1993, as amended) (collectively, "you").
In response to your request and in consideration of the agreements set forth in
this letter agreement, the Partnership agrees to provide you a current list of
the names and addresses of and the number of units owned by each of the
Unitholders in a computer readable form reasonably requested by you. The
Partnership shall provide the list within two business days from the date of
this letter. Upon your receipt of the list of partners, you shall take all
required action to dismiss with prejudice the action captioned OAK INVESTORS LLC
AND CEDAR PARTNERS L.P. V. AETNA REAL ESTATE ASSOCIATES L.P. AND AREA GP
CORPORATION filed in the Court of Chancery of the State of Delaware in and for
New Castle County. You agree that you may only use the list to acquire Units or
contact Unitholders for a purpose reasonably related to your interest as a
Unitholder and you may not sell or otherwise release the list to others or use
the list for any other purpose.
You shall not, without the prior written consent of the Partnership, disclose to
any third party, other than a party acting as your agent on your behalf pursuant
to the terms of this Agreement, the list of Unitholders' names, addresses and
numbers of Units held that was provided to you by the Partnership.
You represent and warrant that on the date hereof you beneficially own at least
17,805 Units. You also agree that you will notify the Partnership at least two
business days before initiating any
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Oak Investors LLC
Cedar Partners, L.P.
August 20, 1998
Page 2
communication with all or substantially all of the Unitholders and provide a
draft copy of such communication (if written) with such notice. Further, you
will provide a final copy to the Partnership of any such communication on the
same date that such communication is first sent or given to Unitholders. The
Partnership will not respond, comment or otherwise communicate with the
Unitholders concerning Oak Investors LLC's communications for a period of two
business days from the date the Partnership receives such communication from
Oak.
You hereby represent, warrant and covenant to the Partnership that any tender
offer to purchase Units commenced by you will be conducted in compliance with
all applicable laws and regulations.
You understand that the general partners of the Partnership may consider from
time to time selling all or substantially all of the assets of the Partnership
or entering into any other transaction determined by the general partners to be
in the best interests of the Unitholders and the Partnership. The result of any
such transaction might be the dissolution and liquidation of the Partnership in
accordance with the partnership agreement. Accordingly, in order to avoid
disrupting any transaction determined by the general partners to be in the best
interests of the Unitholders and the Partnership, including settlement of any
litigation, and any required vote of Unitholders, you agree that, prior to the
two-year anniversary of the date of this letter agreement, all Units obtained by
you pursuant to any means will be voted by you on all issues in the same manner
and in the same proportion as all other Unitholders who vote on any such
proposal.
We each hereby acknowledge that we are aware, and that we will advise our
respective Affiliates of our respective responsibilities under the securities
laws. We each agree that the other of us or our respective Affiliates, as the
case may be, shall be entitled to equitable relief, including injunctive relief
and specific performance, and in the event of any breach of the provisions of
this letter agreement, in addition to all other remedies available at law or in
equity.
In case any provision in or obligation under this letter agreement shall be
invalid, illegal or unenforceable in any jurisdiction, the validity, legality
and enforceability of the remaining provisions or obligations, or of such
provisions or obligation in any other jurisdiction, shall not in any way be
affected or impaired thereby.
This letter agreement shall be governed by the laws of the State of Delaware
without giving effect to principles of conflicts of law thereof. This letter
agreement may be executed in counterparts, each of which shall be deemed an
original, but all of which together constitute one and the same instrument.
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Oak Investors LLC
Cedar Partners, L.P.
August 20, 1998
Page 3
If you agree with the foregoing, please sign and return two copies of this
letter agreement, which will constitute our agreement with respect to the
subject matter of this agreement.
Very truly yours,
AETNA REAL ESTATE ASSOCIATES, L.P.
By: AREA GP Corporation
Its: General Partner
By: /s/ Mark Marcucci
-------------------------------
Name: Mark Marcucci
Title: President
By: AREA GP Corporation
Its: General Partner
By: /s/ Daniel R. Leary 8/25/98
-------------------------------
Name: Daniel R. Leary
Title: President
Confirmed and agreed to as of
the date first above written:
OAK INVESTORS LLC
By: /s/ Don Augustine
--------------------------
Name: Don Augustine
Title: Manager
CEDAR PARTNERS, L.P.
By: Arlen Capital, LLC
Its: General Partner
By: /s/ Don Augustine
--------------------------
Name: Don Augustine
Title: Manager
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Exhibit 99.(d)(2)
AETNA REAL ESTATE ASSOCIATES, L.P.
c/o Aetna/AREA Corporation
242 Trurnbull Street
Hartford, CT 06150
September 30, 1998
Oak Investors LLC
1650 Hotel Circle North, Suite 200
San Diego, California 92108
Attn: Don Augustine
Dear Mr. Augustine:
We have made available, and shall continue to make available to you and
your authorized representatives and agents certain information regarding Aetna
Real Estate Associates, L.P. (the "Partnership"), including, without limitation,
third-party appraisals of the propoerties owned by the Partnership. Such
information, whether furnished in writing, by any electronic means or otherwise,
regardless of whether specifically identified as confidential, and all analyses,
calculations, studies or other documents or records referring to such
information shall hereinafter be referred to as the "Confidential Information."
As used in this Agreement, "you" means the signatory to this Agreement and all
affiliates of the signatory.
As a condition to the Confidential Information being furnished to you,
you agree to comply with the terms of this letter agreement, including the
procedures set forth herein regarding the maintenance of the confidentiality of
the Confidential Information. You may disclose the Confidential Information to
your directors, officers, employees, agents and consultants (collectively,
"Representatives") who, you determine, in the exercise of reasonable judgement,
need to know such Confidential Information, provided that such persons are made
aware of the confidentiality of the Confidential Information. You shall assume
responsibility for the breach of this letter agreement by your Representatives.
The term "Confidential Information" does not apply to information which
(i) is or becomes generally available to the public other than as a result of
disclosure by you or your Representatives in breach of this letter agreement;
(ii) was available to you on a non-confidential basis, prior to its disclosure
by the Partnership to you pursuant hereto, from a source other than the
Partnership or its employees or agents; (iii) becomes available to you on a
non-confidential basis after the date hereof from a source other than the
Partnership or its employees or agents provided that you do not know that such
source is prohibited from disclosing such information to you by a contractual or
other legal obligation.
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Mr. Don Augustine
September 30, 1998
Page 2
You agree not to disclose to any person other than your Representatives
the Confidential Information. In addition, you agree not to disclose any
Confidential Information or the source of any Confidential Information to any
unitholders of the Partnership other than your affiliates which are bound by the
terms of this letter agreement. For purposes of this letter agreement, the term
"person" means any corporation, limited liability company, partnership, estate,
trust, individual or other entity.
This letter agreement and the obligations hereunder shall terminate
only at such time and to the extent that any Confidential Information ceases to
be confidential as expressly provided for herein.
It is further understood and agreed that no failure or delay by the
Partnership in exercising any right, power or privilege hereunder shall operate
as a waiver hereof, nor shall any single or partial exercise thereof preclude
any other or further exercise thereof or the exercise of any other right, power
or privilege hereunder. It is also agreed that the Partnership shall be entitled
to equitable relief, including an injunction and specific performance, in the
event of any breach of the provisions of this Agreement. Neither this paragraph
nor any other provision of this Agreement can be waived or amended except by the
Partnership's written consent, which consent shall specifically refer to this
paragraph (or such other provision) and explicitly make such waiver or
amendment.
This letter agreement shall be governed by and construed in accordance
with the laws of the State of Delaware, without regard to any choice of law
rules thereof or any other jurisdiction or any presumption or construction
against the party causing this letter agreement to be drafted.
This letter agreement embodies the entire agreement and understanding
between the Partnership and you relating to the matters provided for herein and
supersedes any and all prior agreements, arrangements and understandings
relating to the matters provided for herein, except that the agreement dated as
of August 20, 1998 relating to the list of unitholders of the Partnership
remains in full force and effect and nothing in this letter shall be construed
as altering such agreement. No alteration, waiver, amendment, change or
supplement hereof shall be binding or effective unless the same is set forth in
a written instrument signed by a duly authorized representative of each of the
Partnership and you.
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Mr. Don Augustine
September 30, 1998
Page 3
If you are in agreement with the foregoing, please sign and return one
copy of this Agreement to us, whereupon this letter agreement shall become a
binding agreement between the Partnership and you. This Agreement may be
executed in several counterparts, all of which together shall constitute one and
the same agreement.
Very truly yours,
AETNA REAL ESTATE ASSOCIATES, L.P.
By: Aetna/AREA GP Corporation
Its: General Partner
By:_______________________________
Name: Daniel R. Leary
Title: President
OAK INVESTORS LLC
By: ARLEN CAPITAL
Its: Manager
By: /s/ Lynn T. Wells
------------------------
Name: Lynn T. Wells
Title: Manager
3
