<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14D-1
TENDER OFFER STATEMENT PURSUANT TO SECTION 14(d)(1) OF THE SECURITIES
EXCHANGE ACT OF 1934
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COURTYARD BY MARRIOTT II LIMITED PARTNERSHIP
A DELAWARE LIMITED PARTNERSHIP
(NAME OF SUBJECT COMPANY)
PALM INVESTORS, LLC
A DELAWARE LIMITED LIABILITY COMPANY
ARLEN CAPITAL, LLC
A CALIFORNIA LIMITED LIABILITY COMPANY
(BIDDER)
UNITS OF LIMITED PARTNERSHIP INTERESTS
(TITLE OF CLASS OF SECURITIES)
None
(CUSIP Number of Class of Securities)
Arlen Capital, LLC
Don Augustine, Manager
1650 Hotel Circle North * Suite 200
San Diego, California 92108
(619) 686-2002
(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications on Behalf of Bidder)
With a copy to:
Peter R. Pancione, Esq.
Gipson Hoffman & Pancione
1901 Avenue of the Stars * Suite 1100
Los Angeles, California 90067
Telephone: (310) 556-4660
Facsimile: (310) 556-8945
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CALCULATION OF FILING FEE
<TABLE>
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TRANSACTION VALUATION* AMOUNT OF FILING FEE
<S> <C>
$1,875,000 $375
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</TABLE>
<PAGE>
* FOR PURPOSES OF CALCULATING THE FILING FEE ONLY. THIS CALCULATION ASSUMES
THE PURCHASE OF 25 UNITS AT A PURCHASE PRICE OF $75,000 PER UNIT IN THE
PARTNERSHIP. THE AMOUNT OF THE FILING FEE, CALCULATED IN ACCORDANCE WITH
WITH REGULATION 0-11 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 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: NOT APPLICABLE FILING PARTY: NOT APPLICABLE
FORM OF REGISTRATION NO.: NOT APPLICABLE DATE FILED: NOT APPLICABLE
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CUSIP NO. NONE Page 2 of 8 Pages
- ------------------ ---------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1. Names of Reporting Persons
S.S. or I.R.S. Identification Nos. of Above Persons
Palm Investors, LLC - IRS Identification No.: 33-0741043
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2. Check the Appropriate Box if a Member of a Group (See Instructions) (a)
(b)
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3. SEC Use Only
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4. Sources of Funds (See Instructions)
WC
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5. Check if Disclosure of Legal Proceedings is Required Pursuant to Items
2(e) or 2(f)
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6. Citizenship or Place of Organization
State of Delaware
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7. Aggregate Amount Beneficially Owned By Each Reporting Person
72.5
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8. Check if the Aggregate in Row (7) Excludes Certain Units (See
Instructions)
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9. Percent of Class Represented by Amount in Row (7)
Approximately 4.94%
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10. Type of Reporting Persons (See Instructions)
OO
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<PAGE>
- ------------------ ---------------------
CUSIP NO. NONE Page 3 of 8 Pages
- ------------------ ---------------------
- --------------------------------------------------------------------------------
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1. Names of Reporting Persons
S.S. or I.R.S. Identification Nos. of Above Persons
Arlen Capital, LLC - IRS Identification No: 33-0713478
- --------------------------------------------------------------------------------
2.0. Check the Appropriate Box if a Member of a Group (See Instructions) (a)
(b)
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3. SEC Use Only
- --------------------------------------------------------------------------------
4. Sources of Funds (See Instructions)
AF
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5. Check if Disclosure of Legal Proceedings is Required Pursuant to Items
2(e) or 2(f)
- --------------------------------------------------------------------------------
6. Citizenship or Place of Organization
State of California
- --------------------------------------------------------------------------------
7. Aggregate Amount Beneficially Owned By Each Reporting Person
72.5 Units
- --------------------------------------------------------------------------------
8. Check if the Aggregate in Row (7) Excludes Certain Units (See
Instructions)
- --------------------------------------------------------------------------------
9. Percent of Class Represented by Amount in Row (7)
Approximately 4.94%
- --------------------------------------------------------------------------------
10. Type of Reporting Persons (See Instructions)
CO
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
ITEM 1. SECURITY AND SUBJECT COMPANY
(a) The name of the subject company is Courtyard by Marriott II Limited
Partnership, a Delaware limited Partnership, and the address of its business
offices is 10400 Fernwood, Bethesda, Maryland 20817.
(b) The information set forth in the "Introduction" of the Offer to
Purchase is incorporated herein by reference.
This Schedule 14D-1 relates to a tender offer by Palm Investors, LLC, a
Delaware limited liability company ("Purchaser"), to purchase 25 Units of
Limited Partnership Interests ("Units") of Courtyard by Marriott II Limited
Partnership, a Delaware limited partnership (the "Partnership"), at $75,000 per
Unit, without interest thereon, upon the terms and subject to the conditions set
forth in the Offer to Purchase dated April 13, 1999, and the related Agreement
of Sale (which together constitute the "Offer"), which are attached to and filed
with this Schedule 14D-1 as Exhibits (a)(1) and (a)(2), respectively, and
incorporated herein by reference. This Schedule 14D-1 is being filed on behalf
of Purchaser.
(c) The information set forth in the "Introduction" and Section 7
("Purpose and Effect of the Offer") of the Offer to Purchase is incorporated
herein by reference.
ITEM 2. IDENTITY AND BACKGROUND
(a)-(d) and (g) The information set forth in the "Introduction," Section
11 ("Certain Information Concerning the Purchaser"), Section 12 ("Source and
Amount of Funds") and Schedule 1 of the Offer to Purchase is incorporated herein
by reference.
(e)-(f) 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.
(g) The information set forth in Schedule 1 to the Offer to Purchase is
incorporated herein by this reference.
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY
(a) Not applicable.
<PAGE>
(b) The information set forth in Section 9 ("Past Contacts and
Negotiations with General Partners") of the Offer to Purchase is incorporated
herein by this reference.
ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
(a) The information set forth in Section 12 ("Source and Amount of
Funds") of the Offer to Purchase is incorporated herein by reference.
(b) Not applicable.
(c) Not applicable.
ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDER
(a)-(g) The information set forth in the "Introduction," Section 7
("Purpose and Effects of the Offer") and Section 8 ("Future Plans") of the Offer
to Purchase are incorporated herein by reference.
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY
(a)-(b) The information set forth in the "Introduction" and Section 11
("Certain Information Concerning the Purchaser") of the Offer to Purchase are
incorporated herein by reference.
ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH
RESPECT TO THE SUBJECT COMPANY'S SECURITIES
The information set forth in Section 9 ("Past Contracts and Negotiations
With the General Partner") is incorporated herein by reference.
ITEM 8. PERSONS RELATED, EMPLOYED OR TO BE COMPENSATED
The information set forth in the "Introduction" and Section 15 ("Fees and
Expenses") of the Offer to Purchase are incorporated herein by reference.
ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS
Not applicable.
ITEM 10. ADDITIONAL INFORMATION
(a) The information set forth in Section 9 ("Past Contracts and
Negotiations with
<PAGE>
the General Partner") is incorporated herein by reference.
(b)-(c) The information set forth in the "Introduction," Section 7
("Purpose and Effects of the Offer") and Section 14 ("Certain Legal Matters and
Regulatory Approvals") of the Offer to Purchase are incorporated herein by
reference.
(d) Not applicable.
(e) Not applicable.
(f) Reference hereby is made to the Offer to Purchase and the related
Agreement of Sale, copies of which are attached hereto as Exhibits (a)(1) and
(a)(2), respectively, which are incorporated in their entirety herein by
reference.
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS
<TABLE>
<S> <C>
(a)(1) - Offer to Purchase, dated April 13, 1999.
(a)(2) - Agreement of Sale.
(a)(3) - Cover Letter, dated April 13, 1999, from Purchaser to Unit
Holders.
(a)(4) - Summary Publication.
(b) - Not applicable.
(c)(1) - Not applicable.
(d) - Not applicable.
(e) - Not applicable.
(f) - Not applicable.
</TABLE>
<PAGE>
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: April 13, 1999 PALM 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
<PAGE>
EXHIBIT INDEX
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<CAPTION>
Exhibit No. Description
- ----------- -----------
<S> <C>
(a)(1) - Offer to Purchase, dated April 13, 1999.
(a)(2) - Agreement of Sale.
(a)(3) - Cover Letter, dated April 13, 1999
from Purchaser to Limited Partners.
(a)(4)- Summary Publication.
(b) - Not applicable.
(c)(1) - Not applicable.
(d) - Not applicable.
(e) - Not applicable.
(f) - Not applicable.
</TABLE>
<PAGE>
OFFER TO PURCHASE FOR CASH
UNITS OF LIMITED PARTNERSHIP INTERESTS
OF
COURTYARD BY MARRIOTT II LIMITED PARTNERSHIP
AT
$75,000 NET PER UNIT
BY
PALM INVESTORS, LLC
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THE OFFER, WITHDRAWAL RIGHTS AND PRORATION PERIOD WILL EXPIRE AT
12:00 MIDNIGHT, EASTERN TIME, ON
MAY 14, 1999, UNLESS THE OFFER IS EXTENDED.
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Palm Investors, LLC, a Delaware limited liability company (the "Purchaser"
or "Palm"), hereby offers to purchase up to 25 Units of limited partnership
interests including any rights attributable to claims, damages, recoveries,
including recoveries from any class action, derivative action or any other types
of lawsuits, and causes of action accruing to the ownership of such units of
limited partnership interests ("Units") in Courtyard by Marriott II Limited
Partnership, a Delaware limited partnership (the "Partnership"), at a purchase
price of $75,000 net 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 April 13, 1999 and prior to the Expiration Date
(as hereinafter defined) but excluding the $1,500 distribution to be made by the
Partnershpi in April/May, 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"). The 25 Units
sought to be purchased pursuant to the Offer represent, to the best knowledge of
the Purchaser, approximately 1.7% 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 25 UNITS ARE VALIDLY TENDERED AND NOT WITHDRAWN,
THE PURCHASER WILL ACCEPT FOR PURCHASE UP TO 25 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:
<PAGE>
Arlen Capital, LLC
1-800-891-4105
April 13, 1999
<PAGE>
IMPORTANT
Any Unit Holder desiring to tender any or all of his/her Units should
complete and sign the Agreement of Sale in accordance with the instructions in
the Agreement of Sale and mail or deliver a fully executed original of the
Agreement of Sale 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
his/her broker, dealer, commercial bank, credit union, trust company or other
nominee to effect the transaction on their behalf.
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
"DEPOSITORY") BY CALLING THE TOLL-FREE INFORMATION LINE: 1-800-891-4105.
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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.
[INTENTIONALLY LEFT BLANK]
<PAGE>
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.. . . . . . . . . . . . . . . . . . . . .7
Valid Tender . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
Backup Federal Income Tax Withholding. . . . . . . . . . . . . . . . . .7
Tenders by Beneficial Holders. . . . . . . . . . . . . . . . . . . . . .8
Signature Guarantees . . . . . . . . . . . . . . . . . . . . . . . . . .8
Appraisal Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . .8
Other Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . .8
Determination of Validity; Rejection of Units; Waiver of Defects;
No Obligation to Give Notice of Defects. . . . . . . . . . . . . . . . .9
Section 4. Withdrawal Rights. . . . . . . . . . . . . . . . . . . . . . . . . . . .9
Section 5. Extension of Tender Period; Termination; Amendment . . . . . . . . . . 10
Section 6. Certain Tax Consequences . . . . . . . . . . . . . . . . . . . . . . . 10
Section 7. Purpose and Effects of the Offer.. . . . . . . . . . . . . . . . . . . 13
Purpose of the Offer . . . . . . . . . . . . . . . . . . . . . . . . . 13
Effect on Trading Market and Price Range of the Units. . . . . . . . . 14
Section 8. Future Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 9. Past Contacts and Negotiations With General Partner. . . . . . . . . . 16
Section 10. Certain Information Concerning the Business of the Partnership and
Related Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Distributions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 11. Certain Information Concerning the Purchaser . . . . . . . . . . . . . 21
Section 12. Source of Funds. . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
<PAGE>
Section 13. Certain Conditions of the Offer. . . . . . . . . . . . . . . . . . . . 22
Section 14. Certain Legal Matters and Required Regulatory Approvals. . . . . . . . 25
General. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Antitrust. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
State Takeover Laws. . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 15. Fees and Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 16. Miscellaneous. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SCHEDULE 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .S-1-1
SCHEDULE 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .S-2-1
</TABLE>
<PAGE>
To the Holders of Units of Limited Partnership Interests
of Courtyard by Marriott II Limited Partnership
INTRODUCTION
Palm Investors, LLC, a Delaware limited liability company (the "Purchaser"
or "Palm"), hereby offers to purchase up to 25 Units of limited partnership
interests including any rights attributable to claims, damages, recoveries,
including recoveries from any class action, derivative action or any other types
of lawsuits, and causes of action accruing to the ownership of such units of
limited partnership interests ("Units") of Courtyard by Marriott II Limited
Partnership, a Delaware limited partnership (the "Partnership"), at a purchase
price of $75,000 net 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 April 13, 1999 and prior to the Expiration Date (as
hereinafter defined) but excluding the $1,500 distribution to be made by the
Partnershp in April/May, 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"). The 25 Units sought
to be purchased pursuant to the Offer represent, to the best knowledge of the
Purchaser, approximately 1.71% 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 distribution 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.
- - Unit Holders should note that the most recent reported trading activity
in the Units occurred from January 1, 1999 to February 28, 1999. The
average
<PAGE>
weighted price for Units reported in the limited and sporadic secondary
market during the two month period was $70,000 encompassing two Units
(as reported by Partnership Spectrum, a third party publication). Such
secondary market selling prices, however, do not take into account
commissions charged by secondary market makers effectuating such sales
which the Purchaser believes, based on a one Unit sales transaction,
range from 5% to 8% of the sales proceeds (which would result in a
reduction of the net proceeds to the seller of approximately $3,500 to
approximately $5,600).
- - 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.
- - 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 $75,000 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.
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 currently no established public trading market for the Units
and it is not anticipated that a public trading market for the Units
will develop. (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. Although there are some limited resale mechanisms available to
the Unit Holders wishing to sell their Units, there is no formal or
organized trading market for the Units.
- - The Offer may be attractive to certain Unit Holders who wish in the
future to
<PAGE>
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 enclosed Offer to Purchase and the Agreement of Sale. All you need to do is
complete the Agreement of Sale in accordance with the instructions provided
therein, sign where indicated, have your signature Medallion Guaranteed and
return it 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; (iv) the consolidation of the Partnership into a publicly
traded entity; or (v) sale of the Units.
The Offer is not conditioned upon the valid tender of any minimum number of
the Units. If more than 25 Units, are validly tendered and not withdrawn, the
Purchaser will accept up to 25 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
Securities and Exchange Commission ("Commission") relating to its business,
financial condition and
<PAGE>
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 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 14D-1 (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 the 1998 10-K, there were 1,470 Units issued and outstanding
at December 31, 1998, held by approximately 1,480 Unit Holders. The Purchaser
currently owns 72.5 Units which is approximately 4.9% 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.
<PAGE>
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
25 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 May 14, 1999,
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 at any time. 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 25 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 25 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 25 Units so tendered, on a pro
rata basis with
<PAGE>
appropriate adjustments to avoid tenders of fractional Units and purchases
that would violate transfer restrictions contained in the Partnership's
Amended and Restated Agreement of Limited Partnership ("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 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. 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 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 Depository 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
Depository 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.
<PAGE>
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 must be received by the
Purchaser at its address set forth on 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 May 14, 1999.
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 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,
<PAGE>
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 Agreement of Sale 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.
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 assigns, all of the right,
title and interest, free and clear of all liens and encumbrances of any kind, of
such Unit Holder in the Partnership with respect to the Units 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 April 13, 1999 and prior to the Expiration Date, but
excluding the $1,500 distribution to be made by the Partnership in April/May,
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 April 13, 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
<PAGE>
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 April 13,
1999 and prior to the Expiration Date, excluding the $1,500 distribution to
be made by the Partnership in April/May, 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, may also be
withdrawn at any time after June 13, 1999 (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
<PAGE>
timely received by the Depository 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,
by giving oral or written notice of such termination upon the failure to satisfy
any of the conditions specified in Section 13, to delay the acceptance for
payment of, or payment for, any Units not heretofore accepted for payment or
paid for, by giving oral or written notice of such termination or delay, and
(iii) to amend the Offer in any respect (including, without limitation, by
increasing or decreasing the consideration offered or the number of Units being
sought in the Offer or both) 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 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
<PAGE>
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 Us, 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
<PAGE>
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 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
<PAGE>
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).
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") 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; (iv) the consolidation of the Partnership into a publicly
traded entity; or (v) sale of the Units.
The Purchaser established the Purchase Price of $75,000 per Unit based on a
number of factors, including (i) the prices of recent secondary market resales
of the Units; (ii) the illiquid nature of the investment; and (iii) 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
<PAGE>
Seller's and no representation is made as to such fairness. The Purchaser
urges those Unit Holders that are considering tendering their Units pursuant
to the Offer to first consult with their own advisors (e.g., tax, financial)
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 determinative in arriving at the
Purchase Price. Nevertheless, using publicly available information concerning
the Partnership contained in the 1998 10-K and other public reports, 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 their estimated value of the Units, the Purchaser first
calculated the estimated current net operating income in accordance with the
Partnership's financial statements. Then, in consideration of the Factors
discussed above, the Purchaser determined the appropriate capitalization rate
for the Partnership's net operating income. The resulting net asset value of
the Partnership's properties was added to the Partnership's net current assets
and the Partnership's total estimated asset value was then reduced by the
Purchaser's estimate of the hypothetical costs to liquidate the portfolio plus
the Purchaser's estimated acquisition and transfer costs.
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 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.
RESTRICTIONS ON TRANSFER. The Partnership Agreement generally restricts
the transfer or assignment of a Unit as follows: (a) the Unit is not transferred
on the first day of an Accounting Period (generally a four week period), (b) the
transfer would cause a termination of the Partnership for tax purposes under
Section 708 of the Code, (c) the transfer does not comply with federal or state
securities laws, (d) the transfer would result in the holding of a fraction of a
Unit (other than a one-half Unit), (e) the transfer would result in the
Partnership being taxed as a corporation and not as a partnership, (f) the
transfer would result in the Partnership not being able to obtain a liquor
license for one of its Hotels or (g) the transfer would cause the Partnership
assets to be characterized as "plan assets" as defined by the Department of
Labor Regulations. The foregoing are hereafter referred to as the "Transfer
Restrictions."
In determining the number of Units for which the Offer is made
(representing approximately 1.7% 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."
<PAGE>
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 Partnership disclosed in its 1998 10-K that there is currently no
established public trading market for the Units, and it is not anticipated that
a public trading market for the Units will develop.
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 1,480 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.
Partnership Spectrum, a third party publication reported that during the
period January 1, 1999 through Februray 28, 1999 that trades at an average
weighted price of $70,000 per Unit, encompassing two Units, took place. Such
secondary market selling prices, however, do not take into account commissions
charged by secondary market makers effectuating such sales which the Purchaser
believes, based on a one Unit sales transaction, range from 5% to 8% of the
sales proceeds (which would result in a reduction of net proceeds to the seller
of approximately $3,500 to approximately $5,600).
The successful purchase of 1.7% of the outstanding Units by the Purchaser
will cause the Purchaser to own approximately 6.64% 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
<PAGE>
Partnership's properties or a consolidation of the Partnership or its
properties with one or more public entities would be in the best interests of
the Unit Holders. Purchaser has sought to encourage the Partnership to have
the Partnership's properties sold, or combine with a public entity or form a
public entity. 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 first requested the list of Limited Partners of the
Partnership in mid-1998, and received the list of Limited Partners from the
Partnership in a timely manner. From mid-1998 to June 1998 Purchaser has had
continuous discussions by telephone, letter, and memorandum with the
Partnership and its General Partner regarding matters pertaining to the
transfer of Units from sellers to Purchaser.
Purchaser, pursuant to four separate limited tender offers, acquired a
total of 71.5 Units, which is approximately 4.9% of the issued and outstanding
Units of the Partnership. On December 3, 1997, Purchaser commenced the first
limited tender offer for 70 Units at a price of $70,000 per Unit, pursuant to
which Purchaser acquired 14.5 Units, which offer expired on January 16, 1998.
On January 23, 1998, Purchaser commenced a second limited tender offer for an
additional 50 Units at a purchase price of $71,000 per Unit, pursuant to which
Purchaser acquired three Units, which offer expired on February 20, 1998.
Purchaser commenced a third limited tender offer on February 5, 1998 for an
additional 55 Units at a purchase price of $85,000 per Unit, pursuant to which
Purchaser acquired 37 Units, which offer expired on March 6, 1998. On August
12, 1998, Purchaser commenced its fourth limited tender offer for an additional
18 Units at a purchase price of $100,000 per Unit, pursuant to which Purchaser
acquired 17 Units, which offer expired on September 11, 1998.
Members of the Purchaser met with executives of the Partnership and the
Host Marriott Corporation ("Host Marriott") on January 22, 1998 and February 26,
1998, and had several telephone conversations to discuss the Partnership's
proposed consolidation of six limited partnerships, including the Partnership,
into a Real Estate Investment Trust (REIT) sponsored by Host Marriott. The
proposed consolidation was terminated by the Partnership.
On or about May 8, 1998, the Purchaser had a telephone conversation with
the
<PAGE>
Partnership and reviewed (i) certain administrative matters concerning
Purchaser's past and possible future tender offers; and (ii) costs of the
present class action lawsuit and how to minimize the costs of such lawsuit
and (iii) whether the Partnership had any additional information regarding
the matter of the consolidation of the Partnership into a REIT or a similar
transaction involving combining the Partnership assets, other than that
information that the Partnership had reported in its letter to all Limited
Partners dated April 16, 1998; the Partnership indicated that it had nothing
definitive to report regarding the consolidation other than the information
reported in the April 16, 1998 letter. On October 1, 1998, the proposed
consolidation was terminated by the Partnership.
In December 1998, the Purchaser introduced the General Partner to a
potential purchaser of the Partnership Properties. Recent conversations with
the General Partner indicate that, although no action has been taken, both
parties are still showing preliminary interest.
On February 24, 1999, the Purchaser and another Unit Holder met with the
General Partner to discuss the disposition of the Hotels and/or the possible
consolidation of the Partnership with an affiliated Partnership, Courtyard by
Marriott Limited Partnership into a publicly traded entity listed on the New
York Stock Exchange. The Purchaser prepared and presented to the Partnership a
financial analysis, based on publicly available information, regarding the
consolidation and/or sale of the Hotels.
Although the General Partner indicated that the consolidation was certain
worth considering, it was estimated it would take nine to 18 months to obtain
regulatory approval and complete the consolidation. The General Partner
indicated that before starting that process there may be an opportunity to sell
the Hotels. It was agreed to defer the discussion of a consolidation into a
public entity for 90 days while the General Partner evaluated whether there were
any potential buyers of the Hotels.
At the February 24, 1999 meeting, the various class action and mass action
lawsuits in which the Partnership and the General Partner are defendants were
reviewed. The Purchaser advised the General Partner that it intended to
commence a derivative lawsuit against the General Partner. The parties mutually
agreed to work toward a business settlement of the lawsuit.
That meeting concluded with the parties agreeing to meet again in early
April 1999 to review the General Partner's progress in selling the Hotels and
review the possibilities of business solutions to the lawsuits. Purchaser
subsequently advised the General Partner that it would not attend the April 1999
meeting.
LITIGATION. The Partnership and the General Partner are subject to class
action and mass action lawsuits for fraud, breach of contract and breach of
fiduciary duty. Purchaser, on March 12, 1999, intervened in the class action
lawsuit titled WHITEY FORD, ET AL. V. HOST MARRIOTT CORPORATION, ET AL., Case
No. 96-CI-08237 285th Judicial District
<PAGE>
Court of Bexar County, Texas and in such suit made additional allegations of
breach of fiduciary obligations against the General Partner regarding the
Partnership's 1993 and 1995 restructuring and refinancing.
On April 1, 1999, the Purchaser, on behalf of the Partnership, commenced
a derivative action titled EQUITY RESOURCES FUND X, ET AL., V. CBM ONE
CORPORATION, ET AL., No. 99-CI-04765, 150th Judicial District of Bexas
County, Texas, against the General Partner for breach of fiduciary duty
regarding the Partnership's Management Agreement with Host Marriott and the
Partnership's ground leases with Marriott International, Inc. ("MII")
alleging, among other things, that such agreements and leases are not
commercially fair and reasonable.
The Purchaser has in the past had, and will continue to have, contacts with
the General Partner with regard to (i) the litigation matters set forth above
directly and through its attorneys, and (ii) matters pertaining to transfer of
Units.
SECTION 10. CERTAIN INFORMATION CONCERNING THE BUSINESS OF THE PARTNERSHIP
AND RELATED MATTERS.
BUSINESS. The following information was extracted from the 1998 10-K 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 August 31, 1987 under the laws of
Delaware. The Partnership is engaged solely in the business of owning and
operating hotels. The Partnership's business offices are located at 10400
Fernwood, Bathesda, Maryland 20817.
The Partnership was formed to acquire and own 70 Courtyard by Marriott
hotels (the "Hotels") and the respective fee or leasehold interest in the land
on which the Hotels are located. The Hotels are located in 29 states and
contain a total of 10,331 guest rooms as of December 31, 1998. The Partnership
commenced operations on October 30, 1987 and will terminate on December 31,
2087, unless earlier dissolved.
The sole general partner of the Partnership is CBM Two, LLC, a Delaware
limited lability company (the "General Partner)), a wholly-owned subsidiary of
Host Marriott Corporation ("Host Marriott").
The Partnership is engaged solely in the business of owning and operating
hotels and therefore is engaged in one industry segment.
The Hotels are operated as part of the Courtyard by Marriott system, which
includes over 343 hotels worldwide in the moderately-priced segment of the U.S.
lodging industry. The Hotels are managed by Courtyard Management Corporation
(the
<PAGE>
"Manager"), a wholly-owned subsidiary of Marriott International, Inc.
("MII"). As part of the refinancing in March 1997, the two Operating
Agreements were converted into a single management agreement (the "Management
Agreement"). The Management Agreement as restated December 30, 1996. The
Manager can extend the Management Agreement for up to 35 successive one year
periods. The Hotels have the right to use the Courtyard by Marriott name
pursuant to the Management Agreement and, if the Management Agreement is
terminated or not renewed, the Partnership would lose that right for all
purposes (except as part of the Partnership's name).
The objective of the Courtyard by Marriott system, including the Hotels, is
to provide consistently superior lodging at a fair price with an appealing,
friendly and contemporary residential character. Courtyard by Marriott hotels
have fewer guest rooms than traditional, full-service hotels, containing
approximately 150 guest rooms, including approximately 12 suites, as compared to
full-service Marriott hotels which typically contain 350 or more guest rooms.
Each Courtyard by Marriott hotel is designed around a courtyard area
containing a swimming pool (indoor pool in northern climates), walkways,
landscaped areas and a gazebo. Each Hotel generally contains a small lobby, a
restaurant with seating for approximately 50 guests, a lounge, a hydrotherapy
pool, a guest laundry, an exercise room and two small meeting rooms. The hotels
do not contain as much public space and related facilities as full-service
hotels.
Courtyard by Marriott hotels are designed for business and vacation
travelers who desire high quality accommodations at moderate prices. Most of
the Hotels are located in suburban areas near office parks or other commercial
activities. Courtyard by Marriott hotels provide large, high quality guest
rooms which contain furnishings comparable in quality to hose in full-service
Marriott hotels. Each guest room contains a large, efficient work desk, remove
control television, a television entertainment package, in-room coffee and tea
services and other amenities. Approximately 70% of the guest rooms contain
kind-size beds.
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>
1996 $ 7,500
1997 $ 9,000
1998 $ 6,500
</TABLE>
<PAGE>
Set forth below is a summary of certain financial information with respect
to the Partnership, which has been excerpted or derived from the 1998 10-K.
More comprehensive financial and other information is included in such report
and other documents filed by the Partnership with the Commission, and the
following summary is qualified in its entirety by reference to such report and
other documents and all the financial information and related notes contained
therein. Such report 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 report and documents, and extracted in this Offer to Purchase.
<PAGE>
Selected Financial Information
(In Thousands of Dollars, Except Per Unit Amounts)
<TABLE>
<CAPTION>
FISCAL YEAR Fiscal Year Fiscal Year
ENDED 12/31/98 Ended 12/31/97 Ended 12/31/96
-------------- -------------- --------------
<S> <C> <C> <C>
Revenues $284,251 $275,021 $263,707
Net Income $ 16,950 $ 15,691 $ 10,541
Net Income per Unit $ 10,954 $ 10,140 $ 6,812
</TABLE>
<TABLE>
<CAPTION>
Balance Sheet Data (in AS OF As of As of
thousands): 12/31/95 12/31/97 12/31/96
-------- -------- --------
<S> <C> <C> <C>
Total Assets $528,340 $536,715 $547,099
Total Liabilities $552,230 $567,412 $579,040
Total Partners Deficit ($23,890) ($30,697) ($ 31,941)
Units Outstanding 1,470 1,470 1,470
</TABLE>
<PAGE>
The foregoing summary is qualified in its entirety by reference to such
Report and all of the financial information and related notes contained
therein.
For information concerning the properties owned by the Partnership, please
refer to Schedule 2 attached hereto, which is incorporated herein by reference.
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. For certain
information concerning the members of AC, see Schedule 1 to this Offer to
Purchase. The Purchaser owns 72.5 Units which is approximately 4.94% of the
issued and outstanding Units.
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
Commission 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
<PAGE>
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
$1,875,000 (exclusive of fees and expenses) will be required to purchase 25
Units (approximately 1.7% of the 1,470 Units outstanding), if tendered. The
Purchaser is not a public company. The Purchaser will use its cash on hand to
purchase the Units. The Offer is not contingent on obtaining financing.
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 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;
<PAGE>
(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 the reasonable 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;
(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; or
(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
<PAGE>
of the Purchaser) giving rise thereto, makes it inadvisable to proceed with
such purchase or payment.
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.
<PAGE>
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 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.
<PAGE>
SECTION 15. FEES AND EXPENSES. The Purchaser will pay all expenses of the
Offer, including the fees and expenses of Arlen Capital, LLC, the Depository.
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.
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 14D-1, 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 14D-1 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.
Palm Investors, LLC
April 13, 1999
<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.
<TABLE>
<CAPTION>
Present Principal Occupation or Employment
Name and Five-Year Employment History
<S> <C>
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.
</TABLE>
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.
<PAGE>
SCHEDULE 2
COURTYARD BY MARRIOTT HOTELS OWNED BY THE PARTNERSHIP
The following Schedule of Properties owned by the Partnership was
extracted from the Partnership's Annual Report Form 10-K for the year ending
December 31, 1998, as filed with the Commission.
<TABLE>
<CAPTION>
No. of
Property Title to Land Rooms Opening Date
<S> <C> <C> <C>
1. Birmingham/Homewood, AL Owned in fee 140 12/21/85
500 Shades Creek Parkway
Homewood, AL 35209
2. Birmingham/Hoover, AL Leased from Essex 153 08/08/87
1824 Montgomery House Condominium
Highway South Corp. *
Hoover, AL 35244
3. Huntsville, AL Leased from 149 08/15/87
4808 University Drive Marriott
Huntsville, AL 35816 International, Inc.
4. Phoenix/Mesa, AZ Leased from 148 31/19/88
1221 S. Westward Avenue Marriott
Mesa, AZ 85210 International, Inc.
5. Phoenix/Metrocenter, AZ Leased from 146 11/29/87
9631 N. Black Canyon Marriott
Phoenix, AZ 85021 International, Inc.
6. Tucson Airport, AZ Leased from 149 10/01/88
2505 E. Executive Drive Marriott
Tucson, AZ 85706 International, Inc.
7. Little Rock, AR Leased from 149 05/29/88
10900 Financial Centre Marriott
Parkway International,
Little Rock, AR 72211 Inc.
8. Bakersfield, CA Leased from 146 02/13/88
3601 Marriott Drive Marriott
Bakersfield, CA 93308 International, Inc.
9. Cupertino, CA Leased from Vallco 149 05/14/88
10605 N. Wolfe Road Park, Ltd.
Cupertino, CA 95014
10. Foster City, CA Leased from Essex 147 09/26/87
550 Shell Blvd. House Condominium
Foster City, CA 94404 Corp. *
11. Fresno, CA Leased from 146 09/13/86
140 E. Shaw Avenue Richard, Miche,
Fresno, CA 93710 Aram & Aznive
Erganian
12. Hacienda Heights, CA Leased from 150 03/28/90
1905 Azusa Avenue Marriott
Hacienda Heights, CA 91745 International, Inc.
<PAGE>
13. Marin/Larkspur Landing, CA Leased from Essex 146 07/25/87
2500 Larkspur Landing Circle House Condominium
Larkspur, CA 94939 Corp. *
14. Palm Springs, CA Leased from 149 10/08/88
300 Tahquitz Canyon Way Marriott
Palm Springs, CA 92262 International, Inc.
15. Torrance, CA Leased from 149 10/15/88
2633 West Sepulveda Marriott
Boulevard International,
Torrance, CA 90505 Inc.
16. Boulder, CO Leased from 148 08/06/88
4710 Pearl East Circle Marriott
Boulder, CO 80301 International, Inc.
17. Denver, CO Owned in fee 146 08/15/87
7415 East 41st Avenue
Denver, CO 80301
18. Denver/Southeast, CO Leased from Essex 152 05/30/87
6566 S. Boston Street House Condominium
Englewood, CO 80111 Corp. *
19. Norwalk, CT Leased from Mary 145 07/30/88
474 Main Avenue Fabrizio
Norwalk, CT 06851
20. Wallinford, CT Leased from 149 04/21/90
600 Northrop Road Marriott
Wallingford, CT 06492 International, Inc.
21. Ft. Myers, FL Leased from 149 08/27/88
4455 Metro Parkway Marriott
Ft. Myers, FL 33901 International, Inc.
22. Ft. Lauderdale/ Leased from 149 09/21/88
Plantation, FL Marriott
7780 S.W. 6th Street International,
Plantation, FL 33324 Inc.
23. St. Petersburg, FL Leased from 149 10/14/89
3131 Executive Drive Marriott
Clearwater, FL 34622 International, Inc.
24. Tampa/Westshore, FL Leased from 145 10/27/86
3805 West Cypress Hotsinger, Inc.
Tampa, FL 33607 and Owed in fee
25. West Palm Beach, FL Leased from 149 01/14/89
600 Northpoint Parkway Marriott
West Palm Beach, FL 33407 International, Inc.
26. Atlanta Airport South, GA Owned in fee 144 06/15/86
2050 Sullivan Road
College Park, CA 30337
27. Atlanta/Gwinnett Mall, CA Leased from 146 03/19/87
3550 Venture Parkway Marriott
Duluth, CA 30136 International, Inc.
28. Atlanta/Perimeter Ctr., GA Leased from Essex 145 12/12/87
6250 Peachtree-Dunwoody Road House Condominium
Atlanta, CA 30328 Corp. *
29. Atlanta/Roswell, GA Leased from 154 06/11/88
1500 Market Boulevard Roswell Landing
Roswell, GA 30076 Associates
<PAGE>
30. Arlington Heights-South, IL Owned in fee 147 12/20/85
100 W. Algonquin Road
Arlington Heights, IL 60005
31. Chicago/Deerfield, IL Owned in fee 131 01/02/86
800 Lake Cook Road
Deerfield, IL 60015
32. Chicago/Glenview, IL Leased from 149 07/08/89
1801 Milwaukee Avenue Marriott
Glenview, IL 60025 International, Inc.
33. Chicago/Highland Park, IL Leased from 149 06/10/88
1505 Lake Cook Road Marriott
Highland Park, IL 60035 International, Inc.
34. Chicago/Lincolnshire, IL Owned in fee 146 07/20/87
505 Milwaukee Avenue
Lincolnshire, IL 60069
35. Chicago/Oakbrook Terrace, IL Owned in fee 147 05/09/86
6 TransAm Plaza Drive
Oakbrook Terrace, IL 90181
36. Chicago/Waukegan, IL Leased from 149 05/28/88
800 Lakehurst Road Marriott
Waukegan, IL 60085 International, Inc.
37. Chicago/Wood Dale, IL Leased from 149 07/02/88
900 N. Wood Dale Road Marriott
Wood Dale, IL 60191 International, Inc.
38. Rockford, IL Owned in fee 147 04/12/86
7676 East State Road
Rockford, IL 61108
39. Indianapolis/Castleton, IN Leased from Essex 146 06/06/87
8670 Allisonville Road House Condominium
Indianapolis, IN 46250 Corp. *
40. Kansas City/Overland Leased from 149 01/14/89
Park, KS Marriott
11301 Metcalf Avenue International,
Overland Park, KS 66212 Inc.
41. Lexington/North, KY Leased from Essex 146 06/04/88
775 Newtown Court House Condominium
Lexington, KY 40511 Corp. *
42. Annapolis, MD Leased from Essex 149 03/04/89
2559 Riva Road House
Annapolis, MD 21401
43. Silver Spring, MD Leased from 146 08/06/88
12521 Prosperity Drive Marriott
Silver Spring, MD 20904 International, Inc.
44. Boston/Andover, MA Leased from 146 12/03/88
10 Campanelli Drive Marriott
Andover, MA 01810 International, Inc.
<PAGE>
45. Detroit Airport, MI Leased from 146 12/12/87
30653 Flynn Drive Marriott
Romulus, MA 48174 International, Inc.
46. Detroit/Livonia, MI Leased from 148 03/12/88
17200 N. Laurel Park Drive Marriott
Livonia, MI 48152 International, Inc.
47. Minneapolis Airport, MN Leased from Essex 146 06/13/87
1352 Northland Drive House Condominium
Mendota Heights, MN 55120 Corp. *
48. St. Louis/Creve Coeur, MO Leased from Essex 154 07/22/87
828 N. New Ballas Road House Condominium
Creve Coeur, MO 63146 Corp. *
49. St. Louis/Westport, MO Leased from 149 08/20/88
11888 Westline Marriott
Industrial Drive International,
St. Louis, MO 63146 Inc.
50. Lincroft/Red Bank, NJ Leased from 146 05/28/88
245 Half Mile Road Marriott
Red Bank, NJ 07701 International, Inc.
51. Poughkeepsie, NY Leased from 149 06/04/88
408 South Road Pizzgalli
Poughkeepsie, NY Investment Company
52. Rye, NY Leased from Essex 145 03/19/88
631 Midland Avenue House Condominium
Rye, NY 10580 Corp. *
53. Charlotte/South Park, NC Leased from Queens 149 03/25/89
6023 Park South Drive Properties, Inc.
Charlotte, NC 28210
54. Raleigh/Cary, NC Leased from 149 06/25/88
102 Edinburgh Drive South Marriott
Cary, NC 27511 International, Inc.
55. Dayton Mall, OH Leased from 146 09/19/87
100 Prestige Place Marriott
Miamisburg, OH 45342 International, Inc.
56. Toledo, OH Leased from 149 04/30/88
1435 East Mall Drive Marriott
Holland, OH 43528 International, Inc.
57. Oklahoma City Airport, OK Leased from 149 07/23/88
4301 Highline Boulevard Marriott
Oklahoma City, OK 73108 International, Inc.
58. Portland-Beaverton, OR Leased from 149 02/11/89
8500 S.W. Nimbus Drive Marriott
Beaverton, OR 97005 International, Inc.
59. Philadelphia/Devon, PA Leased from Three 149 11/19/88
762 W. Lancaster Avenue Devon Square
Wayne, PA 19087 Associates
60. Columbia, SC Leased from 149 01/28/89
347 Zimalcrest Drive Marriott
Columbia, SC 29210 International, Inc.
61. Greenville, SC Leased from Essex 146 03/05/88
70 Orchard Park Drive House Condominium
Greenville, SC 29615 Corp. *
<PAGE>
62. Memphis Airport, TN Leased from Essex 145 07/15/87
1780 Nonconnah Boulevard House Condominium
Memphis, TN 38132 Corp. *
63. Nashville Airport, TN Leased from Essex 145 01/23/88
2508 Elm Hill Pike House Condominium
Nashville, TN 37214 Corp. *
64. Dallas/Northeast, TX Leased from 149 01/16/88
1000 South Sherman Marriott
Richardson, TX 75081 International, Inc.
65. Dallas/Plano, TX Owned in fee 149 05/07/88
4901 W. Plano Parkway
Plano, TX 75093
66. Dallas/Stemmons, TX Leased from Essex 146 09/12/87
2383 Stemmons Trail House Condominium
Dallas, TX 75220 Corp. *
67. San Antonio/Downtown, TX Leased from Essex 149 02/30/90
600 Santa Rosa South House Condominium
San Antonio, TX 78204 Corp. *
68. Charlottesville, VA Leased from 150 01/21/89
638 Hillsdale Drive Marriott
Charlottesville, VA 22901 International, Inc.
69. Manassas, VA Leased from 149 03/04/89
10701 Battleview Parkway Marriott
Manassas, VA 22110 International, Inc.
70. Seattle/Southcenter, WA Leased from 149 03/11/89
400 Andover Park West Marriott
Tukwila, WA 98188 International, Inc.
</TABLE>
* Essex House Condominium Corporation is subsidiary of Marriott International,
Inc.
More comprehensive financial and other information is included in such
report and other documents filed by the Partnership with the Commission, and the
following is qualified by reference to such report and other documents. Such
report 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"
section of the Offer to Purchase. The Purchaser disclaims any responsibility
for the information included in such report and documents, and extracted in this
Schedule 2, as well as any changes which may have taken place in the information
in the report since the date it was issued.
<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
Depository at the telephone number and address set forth below.
Arlen Capital, LLC
1650 Hotel Circle North, Suite 200
San Diego, California 92108
Telephone: 1-800-491-4105
<PAGE>
COURTYARD BY MARRIOTT II LIMITED PARTNERSHIP
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
Palm Investors, LLC, a Delaware limited liability company ("Palm" or the
"Purchaser"), all of the Seller's right, title and interest in units of limited
partnership interests including any rights attributable to claims, damages,
recoveries, including recoveries from class action, derivative action or any
other types of lawsuits, and causes of action accruing to the ownership of such
units of limited partnership interests ("Units") in Courtyard by Marriott II
Limited Partnership (the "Partnership") being sold pursuant to this Agreement of
Sale ("Agreement") and the Offer to Purchase dated April 13, 1999, (which
together with this Agreement constitute the "Offer") for a purchase price of
$75,000 per Unit, less the amount of any distributions declared or paid from any
source by the Partnership with respect to the Units after April 13, 1999,
without regard to the record date or whether such distributions are classified
as a return on, or a return of, capital and prior to the Expiration Date,
excluding the $1,500 distribution to be made by the Partnership in April/May,
1999. Cash payment will be made after the Expiration Date and within five
business days following written confirmation that Palm has been admitted as a
Substitute Limited Partner, as that term is defined in the Agreement of Limited
Partnership, as to the Units to be purchased from the Seller.
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 5
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 Unitholder 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 April 13, 1999, which are made
payable to the Seller, in favor of Purchaser, excluding the $1,500 distribution
to be made by the Partnership in April/May, 1999, (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 PALM
INVESTORS, LLC, C/O ARLEN CAPITAL, 1650 HOTEL CIRCLE NORTH, SUITE 200, SAN
DIEGO, CALIFORNIA 92108, AND (ii) TO FORWARD ALL DISTRIBUTIONS AND ALL OTHER
INFORMATION TO BE RECEIVED BY SELLER TO PALM 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,
<PAGE>
COURTYARD BY MARRIOTT II LIMITED PARTNERSHIP
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 representations and warranties set forth herein.
All authority herein conferred or agreed to be conferred shall survive the death
or incapacity of the Seller and any obligations of the Seller shall be binding
upon the heirs, personal representatives, successors and assigns of the
undersigned. 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. Palm
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.
The Seller hereby also certifies, under penalties of perjury, that the Seller,
if an individual, is not a nonresident alien for purposes of U.S. income
taxation, and if not an individual, is not a foreign corporation, foreign
partnership, foreign trust, or foreign estate (as those terms are defined in the
Internal Revenue Code and Income Tax Regulations). The Seller understands that
this certification may be disclosed to the IRS by the Purchaser and that any
false statements contained herein could be punished by fine, imprisonment, or
both.
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.
By executing this Agreement the Seller hereby acknowledges to the General
Partner that the Seller desires to withdraw as a Limited Partner 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 Limited
Partner.
IN WITNESS WHEREOF the Limited Partner has executed, or caused its Authorized
Signatory to execute, this Agreement.
Print Name of Limited Partner (as it appears on the
investment)_____________________________________________________________________
Print Name and Capacity of Authorized Signatory (if other than
above)__________________________________________________________________________
- ---------------------------------- ----------------------------------
Seller's Signature Joint Seller's Signature
MEDALLION GUARANTEE MEDALLION GUARANTEE
(Medallion Guarantee for EACH (Medallion Guarantee for EACH
Seller's signature) Seller's signature)
__________________________________ Investor I.D. Number
__________________________________ Home Telephone Number
__________________________________ Office Telephone Number
__________________________________ Mailing Address
__________________________________ City, State, Zip Code
__________________________________ State of Residence
<PAGE>
__________________________________ Social Security/Tax ID No.
YOU MUST MAIL EXECUTED ORIGINAL TO THE DEPOSITORY:
__________________________________ Date Arlen Capital, LLC
1650 Hotel Circle North, Suite 200
$75,000 Sales Price per Unit San Diego, California 92108
- -----------------
_______ Number of Units to be sold
OR
/ / Check here if you wish to sell ALL your
units
PLEASE CALL US AT (800) 891-4105 IF YOU HAVE ANY QUESTIONS REGARDING THE
SALE OF YOUR UNITS.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
INSTRUCTIONS TO COMPLETE AGREEMENT OF SALE
ALL SIGNATURES MUST BE MEDALLION GUARANTEED
Beneficial Owner of Record Should: Death
- --------------------------------- -----
<S> <C>
1. COMPLETE and SIGN Agreement. If any owner is deceased, please enclose a certified copy of
2. Have your signature Medallion Guaranteed by your Bank or Broker. Death Certificate. If Ownership is other than Joint Tenants
3. Indicate Number of Units Owned and/or To Be Sold. With Right of Survivorship, please provide Letter of
4. Return Agreement in Envelope Provided. Testamentary or Administration current within 60 days
showing your beneficial ownership or executor capacity (in
Joint Ownership addition to copy of Death Certificate).
- ---------------
Please have ALL owners of record sign Agreement, and
SEPARATELY Medallion Guarantee each signature. Corporation
-----------
Corporate resolution required showing authorized signatory.
IRA/KEOGH
- ---------
1. Beneficial owner must sign Agreement. Trust, Profit Sharing or Pension Plan
2. Provide Custodian information. (i.e. Name, Company Name, Address, -------------------------------------
Phone No. and Account No.) Please provide title, signature, and other applicable pages
3. Palm will obtain the Medallion Guarantee of Custodian Signature. of Trust Agreement showing authorized signatory.
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
COURTYARD BY MARRIOTT II LIMITED PARTNERSHIP
PALM INVESTORS, LLC
- --------------------------------------------------------------------------------
APRIL 13, 1999
OFFER TO PURCHASE
COURTYARD BY MARRIOTT II LIMITED PARTNERSHIP UNITS
FOR
- --------------------------------------------------------------------------------
$75,000 CASH PER UNIT*
PALM IS NOT AN AFFILIATE OF THE GENERAL PARTNER OR OF THE PARTNERSHIP.
*
PLEASE CAREFULLY REVIEW THE ENCLOSED TENDER OFFER.
*
PAYMENT TO YOU WILL BE MADE WITHIN 5 BUSINESS DAYS FROM (i) MAY 14, 1999,
THE "EXPIRATION DATE" OF THE OFFER (UNLESS EXTENDED), AND (ii) FOLLOWING
WRITTEN CONFIRMATION FROM THE PARTNERSHIP THAT PALM HAS BEEN ADMITTED AS A
SUBSTITUTE LIMITED PARTNER ON THE RECORDS OF THE PARTNERSHIP.
*
AN AGREEMENT OF SALE IS ENCLOSED WHICH YOU MUST PROPERLY COMPLETE AND DULY
EXECUTE IN ACCORDANCE WITH THE INSTRUCTIONS AND RETURN TO PALM.
*A SELLING UNIT HOLDER WILL ALSO RECEIVE THE $1,500 PER UNIT DISTRIBUTION TO BE
MADE BY THE PARTNERSHIP IN APRIL/MAY, 1999.
- --------------------------------------------------------------------------------
PLEASE CALL US AT (800) 891-4105, IF YOU HAVE ANY QUESTIONS.
THANK YOU FOR YOUR CONSIDERATION OF OUR OFFER.
1650 HOTEL CIRCLE NORTH, SUITE 200 - SAN DIEGO, CA 92108 - (800) 891-4105
- FACSIMILE (619) 686-2056
<PAGE>
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 25 UNITS OF LIMITED PARTNERSHIP INTERESTS (THE "UNITS")
OF COURTYARD BY MARRIOTT II LIMITED PARTNERSHIP (THE "PARTNERSHIP")
BY PALM INVESTORS, LLC, A DELAWARE LIMITED LIABILITY COMPANY
(THE "PURCHASER")
The Purchaser is offering to purchase for cash up to 25 Units held by the
Limited Partners of the Partnership (the "Unit Holders") at $75,000 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 MAY
14, 1999, UNLESS THE OFFER IS EXTENDED.
Funding for the purchase of the Units will be provided through the
Purchaser's existing working capital.
The Offer will expire at 12:00 midnight, Eastern Time on May 14, 1999,
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 June 13, 1999, 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.
The terms of the Offer are more fully set forth in the formal Tender Offer
Documents which are
<PAGE>
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.
April 13, 1999
