Exhibit (a)(1)
OFFER TO PURCHASE FOR CASH ANY AND ALL
EQUITY UNITS OF LIMITED PARTNERSHIP INTEREST
(EACH CONSISTING OF ONE CLASS A INTEREST AND ONE CLASS B INTEREST)
OF
CONCORD MILESTONE PLUS, LP
AT
$2.50 per Unit
SUTTER OPPORTUNITY FUND 3, LLC, SUTTER OPPORTUNITY FUND 3 (TE), LLC,
SCM-CMP ACQUISITION FUND, LLC, MacKENZIE PATTERSON FULLER, INC.,
and ROBERT E. DIXON
(the "Purchasers")
THE OFFER, WITHDRAWAL RIGHTS AND PRORATION PERIOD WILL EXPIRE AT
12:00 MIDNIGHT, PACIFIC DAYLIGHT TIME, ON MAY 27, 2005, UNLESS THE
OFFER IS EXTENDED.
The Purchasers hereby seek to acquire Equity Units of limited partnership
interest, with each Equity Unit consisting of one Class A Interest and One Class
B Interest (the Equity Units are hereinafter referred to as the "Units") in
CONCORD MILESTONE PLUS, LP, a Delaware limited partnership (the "Company"). The
Purchasers are not affiliated with the Company. The Purchasers hereby offer to
purchase any and all outstanding Units at a purchase price equal to $2.50 per
Unit, less the amount of any dividends declared or paid with respect to the
Units between April 27, 2005 and May 27, 2005, or such other date to which this
Offer may be extended (the "Expiration Date"), in cash, without interest, upon
the terms and subject to the conditions set forth in this Offer to Purchase (the
"Offer to Purchase") and in the related Letter of Transmittal, as each may be
supplemented or amended from time to time (which together constitute the
"Offer"). As noted above, the Offer price would be subject to reduction for
dividends paid or declared prior to the Expiration Date. Any dividends paid or
declared after the Expiration Date would, by the terms of the Offer and as set
forth in the Letter of Transmittal, be assigned by tendering Unit holders to the
Purchasers.
Tender of Units will include the tender of any and all securities
into which the Units may be converted, and any securities distributed with
respect to the Units, by way of dividend or otherwise, from and after the Offer
Date.
As of March 10, 2005, there were approximately 983 unit holders of
record of Units and the number of Units outstanding as of March 10, 2005 was
1,518,800 according to the Company's annual report on Form 10-K for the year
ended December 31, 2004. The Purchasers and their affiliates currently
beneficially own none of the outstanding Units. If all of the Units sought in
this Offer are purchased, the Purchasers and their affiliates would beneficially
own 100% of the outstanding Units. Consummation of the Offer, if all Units
sought are tendered, would require payment by the Purchasers of up to $3,797,000
in aggregate purchase price, which the Purchasers will fund out of their
existing working capital.
Holders of Units ("Unit holders") are urged to consider the following factors:
o Unit holders who tender their Units will give up the opportunity to
participate in any future benefits from the ownership of Units,
including potential future distributions by the Partnership from
property operations or dispositions, and the purchase price per Unit
payable to a tendering Unit holder by the Purchasers may be less than
the total amount which might otherwise be received by the Unit holder
with respect to the Unit over the remaining term of the Partnership.
o The Purchasers are making the Offer for investment purposes and with
the intention of making a profit from the ownership of the Units. In
establishing the purchase price of $2.50 per Unit, the Purchasers are
motivated to establish the lowest price which might be acceptable to
Unit holders consistent with the Purchasers' objectives. There is no
public market for the Units. According to Direct Investment Spectrum,
Units traded at $1.15 per unit during January and February 2005.
Neither the Unit holders nor the Purchasers have any accurate means for
determining the actual present value of the Units. Although there can
be no certainty as to the actual present value of the Units, the
Purchasers have estimated, solely for the purposes of determining an
acceptable Offer price, that the Company could have an estimated
liquidation value of approximately $4.18 per Unit. It should be noted,
however, that the Purchasers have not made an independent appraisal of
the Units or the Company's properties, and are not qualified to
appraise real estate. Furthermore, there can be no assurance as to the
timing or amount of any future Company distributions, and there cannot
be any assurance that the Purchasers' estimate accurately reflects an
approximate value of the Units or that the actual amounts which may be
1
realized by holders for the Units may not vary substantially from this
estimate.
o No independent party will hold securities tendered until the offer
closes and payment is made. Because there is no independent
intermediary to hold the Purchasers' funds and tendered securities, the
Purchasers may have access to the securities before all conditions to
the Offer have been satisfied and selling Unit holders have been paid.
THE OFFER TO PURCHASE IS NOT CONDITIONED UPON ANY MINIMUM NUMBER OF UNITS BEING
TENDERED. A UNIT HOLDER MAY TENDER ANY OR ALL UNITS OWNED BY SUCH UNIT HOLDER.
The Purchasers expressly reserve the right, in their sole discretion, at any
time and from time to time, (i) to extend the period of time during which the
Offer is open and thereby delay acceptance for payment of, and the payment for,
any Units, (ii) upon the occurrence of any of the conditions specified in
Section 13 of this Offer to Purchase, to terminate the Offer and not accept for
payment any Units not theretofore accepted for payment or paid for, or to delay
the acceptance for payment of, or payment for, any Units not theretofore
accepted for payment or paid for, and (iii) to amend the Offer in any respect.
Notice of any such extension, termination or amendment will promptly be
disseminated to Unit holders in a manner reasonably designed to inform Unit
holders of such change in compliance with Rule 14d-4(c) under the Securities
Exchange Act of 1934 (the "Exchange Act"). In the case of an extension of the
Offer, such extension will be followed by a press release or public announcement
which will be issued no later than 9:00 a.m., Eastern Standard Time, on the next
business day after the scheduled Expiration Date, in accordance with Rule
14e-1(d) under the Exchange Act.
April 27, 2005
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IMPORTANT
Any Unit holder desiring to tender any or all of such Unit holder's Units should
mail, deliver or telecopy the Letter of Transmittal and any other required
documents to the Purchasers at the address or facsimile number set forth below.
c/o Sutter Capital Management, LLC
220 Montgomery Street, Suite 2100,
San Francisco, California 94104
(415) 788-1441
Facsimile: (415) 788-1515
Questions or requests for assistance or copies of this Offer to Purchase or the
Letter of Transmittal may be directed to the Purchasers at (415) 788-1441.
- ---------------------------
NO PERSON HAS BEEN AUTHORIZED TO MAKE ANY RECOMMENDATION OR ANY REPRESENTATION
ON BEHALF OF THE PURCHASERS OR TO PROVIDE ANY INFORMATION OTHER THAN AS
CONTAINED HEREIN OR IN THE LETTER OF TRANSMITTAL. NO SUCH RECOMMENDATION,
INFORMATION OR REPRESENTATION MAY BE RELIED UPON AS HAVING BEEN AUTHORIZED.
- ---------------------------
The Company is subject to the information and reporting requirements of the
Exchange Act and in accordance therewith is required to file reports and other
information with the Commission relating to its business, financial condition
and other matters. Such reports and other information are available on the
Commission's electronic data gathering and retrieval (EDGAR) system, at its
internet web site at www.sec.gov, may be inspected at the public reference
facilities maintained by the Commission at Room 1024, Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549. Copies of such material can also be
obtained from the Public Reference Room of the Commission in Washington, D.C. at
prescribed rates.
The Purchasers have filed with the Commission a Tender Offer Statement on
Schedule TO (including exhibits) pursuant to Rule 14d-3 of the General Rules and
Regulations under the Exchange Act, furnishing certain additional information
with respect to the Offer. Such statement and any amendments thereto, including
exhibits, may be inspected and copies may be obtained from the offices of the
Commission in the manner specified above.
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TABLE OF CONTENTS
Page
SUMMARY TERM SHEET.............................................................5
INTRODUCTION...................................................................7
TENDER OFFER...................................................................9
Section 1. Terms of the Offer...........................................9
Section 2. Proration; Acceptance for Payment and Payment for Units......9
Section 3. Procedures for Tendering Units..............................10
Section 4. Withdrawal Rights...........................................11
Section 5. Extension of Tender Period; Termination; Amendment..........11
Section 6. Certain Federal Income Tax Consequences.....................12
Section 7. Effects of the Offer........................................12
Section 8. Future Plans................................................13
Section 9. The Business of the Company.................................13
Section 10. Conflicts of Interest.......................................13
Section 11. Certain Information Concerning the Purchasers...............13
Section 12. Source of Funds.............................................14
Section 13. Conditions of the Offer.....................................14
Section 14. Certain Legal Matters.......................................15
Section 15. Fees and Expenses...........................................15
Section 16. Miscellaneous...............................................15
Schedule I - The Purchasers and their Principals
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SUMMARY TERM SHEET
The Purchasers are offering to purchase any and all of the 1,518,800 outstanding
Units for $2.50 per Unit in cash. The following are some of the questions that
you, as a Unit holder of the Company, may have and answers to those questions.
The information in this summary is not complete and we urge you to carefully
read the remainder of this Offer to Purchase and the accompanying Letter of
Transmittal.
WHO IS OFFERING TO BUY MY SECURITIES?
The offer to purchase any and all Units is being made by Sutter Opportunity
Fund 3, LLC, Sutter Opportunity Fund 3 (TE), LLC, SCM-CMP Acquisition Fund, LLC,
MacKenzie Patterson Fuller, Inc., and Robert E. Dixon. The entity Purchasers are
all investment entities, and all except MacKenzie Patterson Fuller, Inc.are
controlled by or affiliated with Mr. Dixon. MacKenzie Patterson Fuller, Inc. is
owned and controlled by C.E. Patterson. All Purchasers are unrelated to the
Company or its management.
WHAT ARE THE CLASSES AND AMOUNTS OF SECURITIES SOUGHT IN THE OFFER?
We are seeking to purchase any and all outstanding Equity Units of Limited
Partnership Interest (each a "Unit"), each of which consists of one Class A
Interest and one Class B Interest, in the Company. The Purchasers and their
affiliates currently beneficially own none of the outstanding Units. If all of
the Units sought in this Offer are purchased, the Purchasers and their
affiliates would beneficially own 100% of the outstanding Units.
HOW MUCH ARE YOU OFFERING TO PAY AND WHAT IS THE FORM OF PAYMENT?
We are offering to pay $2.50 per Unit, net to you in cash, less the amount of
any dividends declared or paid with respect to the Units between the date of
this Offer and the date the Offer expires. The Offer price would be reduced by
the amount of dividends paid or declared prior to the Expiration Date. Any
dividends paid or declared after the Expiration Date would, by the terms of the
Offer and as set forth in the Letter of Transmittal, be assigned by tendering
Unit holders to the Purchasers. If you tender your Units to us in the Offer, you
will not have to pay brokerage fees or similar expenses in connection with the
sale (other than any fees you must pay in connection with your custodial or
other beneficiary accounts).
DO YOU HAVE THE FINANCIAL RESOURCES TO MAKE PAYMENT?
If the total amount of Units sought is purchased, the Purchasers' capital
commitment will be approximately $3,797,000. The Purchasers and their members
and Unit holders have adequate working capital resources at their disposal to
fund in full all payments due to selling Unit holders.
IS THE FINANCIAL CONDITION OF THE BIDDERS RELEVANT TO MY DECISION ON WHETHER TO
TENDER IN THE OFFER?
Because this is a cash offer for all outstanding Units and is not conditioned on
financing being available, and the Purchasers have more than adequate financial
resources, other information concerning the Purchasers' financial condition
would have little relevance to your decision.
HOW LONG DO I HAVE TO DECIDE WHETHER TO TENDER IN THE OFFER?
You will have at least until 12:00 midnight, pacific daylight time, on May 27,
2005, to decide whether to tender your Units in the Offer.
CAN THE OFFER BE EXTENDED AND UNDER WHAT CIRCUMSTANCES?
The Offer can be extended in our discretion.
HOW WILL I BE NOTIFIED IF THE OFFER IS EXTENDED?
If we extend the offer, we will make a public announcement of the extension, not
later than 9:00 a.m., eastern daylight time, on the day after the day on which
the Offer was scheduled to expire.
5
WHAT ARE THE MOST SIGNIFICANT CONDITIONS TO THE OFFER?
There are no conditions to the offer based on minimum Units tendered, the
availability of financing or otherwise determined by the success of the offer.
However, we may not be obligated to purchase any Units in the event certain
conditions occur, such as legal or government actions which would prohibit the
purchase. Furthermore, we are not obligated to purchase any Units which are
validly tendered if, among other things, there is a material adverse change in
the Company or its business prior to the Expiration Date.
HOW DO I TENDER MY UNITS?
To tender your Units, you can deliver a completed Letter of Transmittal to the
Purchasers at: Sutter Capital Management, LLC, 220 Montgomery Street, Suite
2100, San Francisco, California 94104; (415) 788-1441; Facsimile: (415)
788-1515.
UNTIL WHAT TIME CAN I WITHDRAW PREVIOUSLY TENDERED UNITS?
You can withdraw previously tendered Units at any time until the Offer has
expired and, if we have not agreed to accept your Units for payment by June 26,
2005, you can withdraw them at any time after such time until we do accept your
Units for payment.
HOW DO I WITHDRAW PREVIOUSLY TENDERED UNITS?
To withdraw Units, you must deliver a written notice of withdrawal, or a
facsimile of one, with the required information to the Purchasers while you
still have the right to withdraw the Units.
WHAT DOES THE COMPANY THINK OF THE OFFER?
The Purchasers have not sought the approval or disapproval of the Company. The
Company may be expected to respond with its position on the offer in the next
two weeks.
WILL THE COMPANY CONTINUE AS A PUBLIC COMPANY?
It is possible that, upon consummation of the Purchasers' offer, the number of
Unit holders would drop below 300 and the Company could be eligible to
deregister its securities. In this event, the Company could become a "private"
company, and the Company would no longer file annual and quarterly reports with
the Securities and Exchange Commission and the solicitation of proxies and
making of tender offers would not be subject to the Exchange Act's rules
applicable only to public companies. Based on the Purchasers' experience with
similar offers to purchase illiquid partnership securities, the Purchasers do
not believe that the Company will be eligible to remove the Units from
registration as a result of this offer. Furthermore, the Purchasers have no
reason to believe that the Company's obligation under its Limited Partnership
Agreement to provide Unit holders with annual and quarterly reports, including
annual audited financial statements, would be affected by any change in the
Company's status as a public company.
IF I DECIDE NOT TO TENDER, HOW WILL THE OFFER AFFECT MY UNITS?
The Purchasers do not anticipate that Units held by non-tendering Unit holders
will be affected in any way by the consummation of the offer.
WHAT ARE THE PURCHASERS' FUTURE INTENTIONS CONCERNING THE COMPANY?
The Purchasers are acquiring the Units for investment purposes and have no
present intention to seek control of the Company or to change the management or
operations of the Company. However, if the Purchasers successfully acquire a
majority of the outstanding Units, they could potentially influence management
of the Company in the future and reserve the right to do so.
WHOM CAN I TALK TO IF I HAVE QUESTIONS ABOUT THE TENDER OFFER?
You can call Sutter Capital Management, LLC, at 415-788-1441.
6
TO THE UNIT HOLDERS OF CONCORD MILESTONE PLUS, LP
INTRODUCTION
The Purchasers hereby offer to purchase any and all outstanding Units
at a purchase price of $2.50 per Unit ("Offer Price"), less the amount of any
dividends declared or paid with respect to the Units between April 27, 2005, and
the Expiration Date, in cash, without interest, upon the terms and subject to
the conditions set forth in the Offer.
For further information concerning the Purchasers, see Section 11 below
and Schedule I.
Unit holders are urged to consider the following factors:
o Unit holders who tender their Units will give up the opportunity to
participate in any future benefits from the ownership of Units,
including potential future distributions by the Partnership from
property operations or dispositions, and the purchase price per Unit
payable to a tendering Unit holder by the Purchasers may be less than
the total amount which might otherwise be received by the Unit holder
with respect to the Unit over the remaining term of the Partnership.
o The Purchasers are making the Offer for investment purposes and with
the intention of making a profit from the ownership of the Units. In
establishing the purchase price of $2.50 per Unit, the Purchasers are
motivated to establish the lowest price which might be acceptable to
Unit holders consistent with the Purchasers' objectives. There is no
public market for the Units. According to Direct Investment Spectrum,
Units traded at $1.15 per unit during January and February 2005.
Neither the Unit holders nor the Purchasers have any accurate means for
determining the actual present value of the Units. Although there can
be no certainty as to the actual present value of the Units, the
Purchasers have estimated, solely for the purposes of determining an
acceptable Offer price, that the Company could have an estimated
liquidation value of approximately $4.18 per Unit. It should be noted,
however, that the Purchasers have not made an independent appraisal of
the Units or the Company's properties, and are not qualified to
appraise real estate. Furthermore, there can be no assurance as to the
timing or amount of any future Company distributions, and there cannot
be any assurance that the Purchasers' estimate accurately reflects an
approximate value of the Units or that the actual amounts which may be
realized by holders for the Units may not vary substantially from this
estimate.
o No independent party will hold securities tendered until the offer
closes and payment is made. Because there is no independent
intermediary to hold the Purchasers' funds and tendered securities, the
Purchasers may have access to the securities before all conditions to
the Offer have been satisfied and selling Unit holders have been paid.
The Offer will provide Unit holders with an opportunity to liquidate
their investment without the usual transaction costs associated with secondary
market sales. Unit holders may have a more immediate need to use the cash now
tied up in an investment in the Units and wish to sell them to the Purchasers.
Establishment of the Offer Price
The Purchasers have set the Offer Price at $2.50 per Unit, less the
amount of any dividends declared or paid with respect to the Units between April
27, 2005 and the Expiration Date. In determining the Offer Price, the Purchasers
analyzed a number of quantitative and qualitative factors, including: (i) the
limited secondary market for resales of the Units and the resulting lack of
liquidity of an investment in the Company; and (ii) the costs to the Purchasers
associated with acquiring the Units.
The Company, in its annual report on Form 10-K for the year ended
December 31, 2004, described the trading market for Units as follows:
7
"Class A and Class B Interests are not traded on any established public
trading market or on any national securities exchange and are not
quoted on any national quotation system. No organized public market has
developed for the interests in the Partnership. Sales of Class A and
Class B Interests occur from time to time through independent
broker-dealers, but to the best of the Partnership's knowledge, as of
March 1, 2005 there are no market makers for the interests."
The lack of any public market for the sale of Units means that Unit
holders have limited alternatives if they seek to sell their Units. As a result
of such limited alternatives for Unit holders, the Purchasers may not need to
offer as high a price for the Units as they would otherwise. On the other hand,
the Purchasers take a greater risk in establishing a purchase price as there is
no prevailing market price to be used for reference and the Purchasers
themselves will have limited liquidity for the Units upon consummation of the
purchase. According to Direct Investment Spectrum, an independent secondary
market reporting publication, 500 Units traded at $1.15 per unit during January
and February, 2005. The information published by this independent source is
believed to be the product of its private market research and does not
constitute the comprehensive transaction reporting of a securities exchange.
Accordingly, the Purchasers do not know whether the foregoing information is
accurate or complete.
Additionally, according to the Company's Annual Report on Form 10-K for
the period ended December 31, 2004, the book value of the Company's Units was
$2.89 per unit.
The Purchasers have estimated a per-unit net asset value of $4.18 per
unit. The Purchasers are not qualified as real estate appraisers and have relied
solely on publicly available information in making their estimate of the value
of the Partnership's assets. The Purchasers estimated value of partnership
assets was calculated solely for purposes of formulating their offer and cannot
be relied upon as representing an amount which might actually be realized upon a
liquidation of the Partnership's assets, whether now or at any time in the
future. Using publicly available information concerning the Partnership
contained in the Partnership's Annual Report on Form 10-K for the fiscal period
ending December 31, 2004, the Purchasers' calculated the Partnership's net
operating income ("NOI") by adding interest expense of $1,269,814, and
depreciation and amortization of $758,193, to net income of $117,638, and
subtracting non-operating income of $33,005, which yields NOI of $2,112,640. The
NOI was then capitalized at a 10% capitalization rate (i.e., dividing it by
10%), to arrive at an aggregate property value of $21,126,400. This property
value is reduced by 5% to account for estimated selling commissions of
$1,056,320, and by long-term debt of $15,143,369, then increased by net current
assets of $1,416,476, to arrive at total net asset value of $6,343,187. This
number is then divided by 1,518,800 units outstanding to arrive at a per unit
net asset value of $4.18.
The Purchasers believe that the capitalization rate utilized is within
a range of capitalization rates currently employed in the marketplace for
properties of similar type, age, and quality. The utilization of different
capitalization rates, however, could also be appropriate. In this regard, Unit
holders should be aware that the use of lower capitalization rate would result
in a higher estimated net sales value and thus a higher estimated asset value
per Unit.
The Offer Price represents the price at which the Purchasers are
willing to purchase Units. No independent person has been retained to evaluate
or render any opinion with respect to the fairness of the Offer Price and no
representation is made by the Purchasers or any affiliate of the Purchasers as
to such fairness. Other measures of the value of the Units may be relevant to
Unit holders. Unit holders are urged to consider carefully all of the
information contained herein and consult with their own advisors, tax, financial
or otherwise, in evaluating the terms of the Offer before deciding whether to
tender Units.
The Offer is not made with any current view toward or plan or purpose
of acquiring Units in a series of successive and periodic offers. Nevertheless,
the Purchasers reserve the right to gauge the response to this solicitation,
and, if not successful in purchasing all the Units sought, may consider future
offers. Factors affecting the Purchasers' future interest in acquiring
additional Units include, but are not limited to, the relative success of the
current Offer, any increase or decrease in the availability of capital for
investment by the Purchasers and its investment fund affiliates, changes in the
public market in the Units or actions by unrelated parties to tender for or
purchase Units, the status of and changes and trends in the Company's
operations, any significant capital transactions by the Company, and local and
national economic and financial market developments and trends.
General Background Information
Certain information contained in this Offer to Purchase which relates
to, or represents, statements made by the Company has been derived from
information provided in reports filed by the Company with the Securities and
Exchange Commission.
8
Tendering Unit holders will not be obligated to pay transfer fees,
brokerage fees or commissions on the sale of the Units to the Purchasers
pursuant to the Offer. The Purchasers will pay all charges and expenses incurred
in connection with the Offer. The Purchasers desire to purchase all Units
tendered by each Unit holder.
If, prior to the Expiration Date, the Purchasers increase 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.
Unit holders are urged to read this Offer to Purchase and the
accompanying Letter of Transmittal carefully before deciding whether to tender
their Units.
TENDER OFFER
Section 1. Terms of the Offer. Upon the terms and subject to the conditions of
the Offer, the Purchasers will accept for payment and pay for Units validly
tendered on or prior to the Expiration Date and not withdrawn in accordance with
Section 4 of this Offer to Purchase. The term "Expiration Date" shall mean 12:00
midnight, Pacific Standard Time, on May 27, 2005, unless and until the
Purchasers shall have extended the period of time for which the Offer is open,
in which event the term "Expiration Date" shall mean the latest time and date on
which the Offer, as so extended by the Purchasers, shall expire.
The Offer is conditioned on satisfaction of certain conditions. See
Section 13, which sets forth in full the conditions of the Offer. The Purchasers
reserve the right (but shall not be obligated), in their sole discretion and for
any reason, to waive any or all of such conditions. If, by the Expiration Date,
any or all of such conditions have not been satisfied or waived, the Purchasers
reserve the right (but shall not be obligated) to (i) decline to purchase any of
the Units tendered, terminate the Offer and return all tendered Units to
tendering Unit holders, (ii) waive all the unsatisfied conditions and, subject
to complying with applicable rules and regulations of the Commission, purchase
all Units validly tendered, (iii) extend the Offer and, subject to the right of
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 (iv) to amend the Offer. Notwithstanding the foregoing, upon the expiration
of the Offer, if all conditions are either satisfied or waived, the Purchasers
will promptly pay for all validly tendered Units, and the Purchasers do not
intend to imply that the foregoing rights of the Purchasers would permit the
Purchasers to delay payment for validly tendered Units following expiration.
The Purchasers do not anticipate and have no reason to believe that any
condition or event will occur that would prevent the Purchasers from purchasing
tendered Units as offered herein.
Section 2. Acceptance for Payment and Payment for Units. Upon the terms
and subject to the conditions of the Offer (including, if the Offer is extended
or amended, the terms and conditions of any extension or amendment), the
Purchasers will accept for payment, and will pay for, Units validly tendered and
not withdrawn in accordance with Section 4, promptly following the Expiration
Date. In all cases, payment for Units purchased pursuant to the Offer will be
made only after timely tender of the Units or of a properly completed and duly
executed Letter of Transmittal (or facsimile thereof) and any other documents
required by the Letter of Transmittal.
For purposes of the Offer, the Purchasers shall be deemed to have
accepted for payment (and thereby purchased) tendered Units when, as and if the
Purchasers give oral or written notice to the Unit holder of the Purchasers'
acceptance for payment of such Units pursuant to the Offer. Upon the terms and
subject to the conditions of the Offer, payment for Units purchased pursuant to
the Offer will in all cases be made by deposit of the Offer Price with the Unit
holder or the custodian of the Units.
Under no circumstances will interest be paid on the Offer Price by
reason of any delay in making such payment.
If any tendered Units are not purchased for any reason, the Letter of
Transmittal with respect to such Units not purchased will be of no force or
effect. If, for any reason whatsoever, acceptance for payment of, or payment
for, any Units tendered pursuant to the Offer is delayed or the Purchasers are
unable to accept for payment, purchase or pay for Units tendered pursuant to the
Offer, then, without prejudice to the Purchasers' rights under Section 13 (but
subject to compliance with Rule 14e-1(c) under the Exchange Act), the Purchasers
may, nevertheless, retain tendered Units, subject to any limitations of
9
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 Purchasers 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.
Section 3. Procedures for Tendering Units.
Valid Tender. For Units to be validly tendered pursuant to the Offer, you may
instruct your broker to submit your Units to Depository Trust Company, or submit
a properly completed and duly executed Letter of Transmittal with any other
documents required by the Letter of Transmittal, in either case with Units
received by Depository Trust Company or the Letter of Transmittal received by
the Purchasers at the 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, Pacific Standard Time, on May 27, 2005, or such date to which the
Offer may be extended.
The method of delivery of the Letter of Transmittal and all other required
documents is at the option and risk of the tendering Unit holder and delivery
will be deemed made only when actually received by the Purchasers.
Other Requirements. By tendering Units as set forth above, and upon acceptance
for payment, a tendering Unit holder irrevocably appoints the designees of the
Purchasers as such Unit holder's proxies, in the manner set forth in the Letter
of Transmittal, each with full power of substitution, to the full extent of such
Unit holder's rights with respect to the Units tendered by such Unit holder and
accepted for payment by the Purchasers. Such appointment will be effective when,
and only to the extent that, the Purchasers accept such Units for payment. Upon
such acceptance for payment, all prior proxies given by such Unit holder with
respect to such Units will, without further action, be revoked, and no
subsequent proxies may be given (and if given will not be effective). The
designees of the Purchasers will, with respect to such Units, be empowered to
exercise all voting and other rights of such Unit holder as they in their sole
discretion may deem proper at any meeting of Unit holders, by written consent or
otherwise. In addition, by tendering Units, upon acceptance for payment, a Unit
holder also assigns to the Purchasers all of the Unit holder's rights to receive
distributions from the Company with respect to Units which are accepted for
payment and purchased pursuant to the Offer, other than those dividends declared
or paid during the period commencing on the Offer Date and terminating on the
Expiration Date.
Determination of Validity; Rejection of Units; Waiver of Defects; No Obligation
to Give Notice of Defects. All questions as to the validity, form, eligibility
(including time of receipt) and acceptance for payment of any tender of Units
pursuant to the procedures described above will be determined by the Purchasers,
in their sole discretion, which determination shall be final and binding. The
Purchasers reserve the absolute right to reject any or all tenders if not in
proper form or if the acceptance of, or payment for, the absolute right to
reject any or all tenders if not in proper form or if the acceptance of, or
payment for, the Units tendered may, in the opinion of the Purchasers' counsel,
be unlawful. The Purchasers also reserve the right to waive any defect or
irregularity in any tender with respect to any particular Units of any
particular Unit holder, and the Purchasers' interpretation of the terms and
conditions of the Offer (including the Letter of Transmittal and the
Instructions thereto) will be final and binding. Neither the Purchasers nor any
other person will be under any duty to give notification of any defects or
irregularities in the tender of any Units or will incur any liability for
failure to give any such notification.
A tender of Units pursuant to any of the procedures described above will
constitute a binding agreement between the tendering Unit holder and the
Purchasers upon the terms and subject to the conditions of the Offer, including
the tendering Unit holder's representation and warranty that (i) such Unit
holder owns the Units being tendered within the meaning of Rule 14e-4 under the
Exchange Act and (ii) the tender of such Unit complies with Rule 14e-4. Rule
14e-4 requires, in general, that a tendering security holder actually be able to
deliver the security subject to the tender offer, and is of concern particularly
to any Unit holders who have granted options to sell or purchase the Units, hold
option rights to acquire such securities, maintain "short" positions in the
Units (i.e., have borrowed the Units) or have loaned the Units to a short
seller. Because of the limited public market for the Units, the Purchasers
believe it is unlikely that any option trading or short selling activity exists
with respect to the Units. In any event, a Unit holder will be deemed to tender
Units in compliance with Rule 14e-4 and the Offer if the holder is the record
owner of the Units and the holder (i) delivers the Units pursuant to the terms
of the Offer, (ii) causes such delivery to be made, (iii) guarantees such
10
delivery, (iv) causes a guaranty of such delivery, or (v) uses any other method
permitted in the Offer (such as facsimile delivery of the Transmittal Letter).
Section 4. Withdrawal Rights. Except as otherwise provided in this Section 4,
all tenders of Units pursuant to the Offer are irrevocable, provided that Units
tendered pursuant to the Offer may be withdrawn at any time prior to the
Expiration Date and, unless theretofore accepted for payment as provided in this
Offer to Purchase, may also be withdrawn at any time on or after June 26, 2005.
For withdrawal to be effective, a written or facsimile transmission
notice of withdrawal must be timely received by the Purchasers at the address or
the facsimile number set forth in the attached Letter of Transmittal. Any such
notice of withdrawal must specify the name of the person who tendered the Units
to be withdrawn and, if tendered by letter of Transmittal, must be signed by the
person(s) who signed the Letter of Transmittal in the same manner as the Letter
of Transmittal was signed.
If purchase of, or payment for, Units is delayed for any reason or if
the Purchasers are unable to purchase or pay for Units for any reason, then,
without prejudice to the Purchasers' rights under the Offer, tendered Units may
be retained by the Purchasers and may not be withdrawn except to the extent that
tendering Unit holders are entitled to withdrawal rights as set forth in this
Section 4, subject to Rule 14e-1(c) under the Exchange Act, which provides that
no person who makes a tender offer shall fail to pay the consideration offered
or return the securities deposited by or on behalf of security holders promptly
after the termination or withdrawal of the tender offer.
All questions as to the form and validity (including time of receipt)
of notices of withdrawal will be determined by the Purchasers, in their sole
discretion, which determination shall be final and binding. Neither the
Purchasers nor any other person will be under any duty to give notification of
any defects or irregularities in any notice of withdrawal or will incur any
liability for failure to give any such notification.
Any Units properly withdrawn will be deemed not to be validly tendered
for purposes of the Offer. Withdrawn Units may be re-tendered, however, by
following the procedures described in Section 3 at any time prior to the
Expiration Date.
Section 5. Extension of Tender Period; Termination; Amendment. The Purchasers
expressly reserve the right, in their sole discretion, at any time and from time
to time, (i) to extend the period of time during which the Offer is open and
thereby delay acceptance for payment of, and the payment for, any Units by
giving oral or written notice of such extension to the Unit holders, (ii) upon
the occurrence or failure to occur of any of the conditions specified in Section
13, to delay the acceptance for payment of, or payment for, any Units not
heretofore accepted for payment or paid for, or to terminate the Offer and not
accept for payment any Units not theretofore accepted for payment or paid for,
by giving oral or written notice of such termination to the Unit holders, and
(iii) to amend the Offer in any respect (including, without limitation, by
increasing or decreasing the consideration offered or the number of Units being
sought in the Offer or both or changing the type of consideration) by giving
oral or written notice of such amendment to the Unit holders. Any extension,
termination or amendment will be followed as promptly as practicable by public
announcement, the announcement in the case of an extension to be issued no later
than 9:00 a.m., Eastern Standard Time, on the next business day after the
previously scheduled Expiration Date, in accordance with the public announcement
requirement of Rule 14d-4(c) under the Exchange Act. Without limiting the manner
in which the Purchasers may choose to make any public announcement, except as
provided by applicable law (including Rule 14d-4(c) under the Exchange Act), the
Purchasers will have no obligation to publish, advertise or otherwise
communicate any such public announcement, other than by issuing a release to the
Dow Jones News Service or PR Newswire, and by filing the amendment with the
Securities Exchange Commission.
If the Purchasers extend the Offer, or if the Purchasers (whether
before or after their acceptance for payment of Units) are delayed in payment
for Units or are unable to pay for Units pursuant to the Offer for any reason,
then, without prejudice to the Purchasers' rights under the Offer, the
Purchasers may retain tendered Units, and such Units may not be withdrawn except
to the extent tendering Unit holders are entitled to withdrawal rights as
described in Section 4. However, the ability of the Purchasers to delay payment
for Units that the Purchasers have accepted for payment is limited by Rule 14e-1
under the Exchange Act, which requires that the Purchasers pay the consideration
offered or return the securities deposited by or on behalf of holders of
securities promptly after the termination or withdrawal of the Offer.
If the Purchasers make a material change in the terms of the Offer or
the information concerning the Offer or waive a material condition of the Offer,
the Purchasers will extend the Offer to the extent required by Rules 14d-4(c),
14d-6(d) and 14e-1 under the Exchange Act. The minimum period during which an
offer must remain open following a material change in the terms of the offer or
11
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, including a reduction for dividends declared
or paid prior to the Expiration Date, or a change in percentage of securities
sought (other than an increase of not more than 2% of the securities sought),
however, a minimum ten business day period is generally required to allow for
adequate dissemination to security holders and for investor response. As used in
this Offer to Purchase, "business day" means any day other than a Saturday,
Sunday or a federal holiday, and consists of the time period from 12:01 a.m.
through 12:00 midnight, Pacific Standard Time.
Section 6. Certain Federal Income Tax Consequences. THE FEDERAL INCOME TAX
DISCUSSION SET FORTH BELOW IS INCLUDED HEREIN FOR GENERAL INFORMATION ONLY AND
DOES NOT PURPORT TO ADDRESS ALL ASPECTS OF TAXATION THAT MAY BE RELEVANT TO A
PARTICULAR UNIT HOLDER. For example, this discussion does not address the effect
of any applicable foreign, state, local or other tax laws other than federal
income tax laws. Certain Unit holders (including trusts, foreign persons,
tax-exempt organizations or corporations subject to special rules, such as life
insurance companies or S corporations) may be subject to special rules not
discussed below. This discussion is based on the Internal Revenue Code of 1986,
as amended (the "Code"), existing regulations, court decisions and Internal
Revenue Service ("IRS") rulings and other pronouncements. EACH UNIT HOLDER
TENDERING UNITS SHOULD CONSULT SUCH UNIT HOLDER'S OWN TAX ADVISOR AS TO THE
PARTICULAR TAX CONSEQUENCES TO SUCH UNIT HOLDER OF ACCEPTING THE OFFER,
INCLUDING THE APPLICATION OF THE ALTERNATIVE MINIMUM TAX AND FEDERAL, FOREIGN,
STATE, LOCAL AND OTHER TAX LAWS.
A taxable Unit holder will recognize a gain or loss on the sale of such
Unit holder's Units in an amount equal to the difference between (i) the amount
realized by such Unit holder on the sale and (ii) such Unit holder's tax basis
in the Units sold. If the Unit holder reports a loss on the sale, such loss
generally could not be currently deducted by such Unit holder except against
such Unit holder's capital gains from other investments.
The tax basis in the Units of a Unit holder will depend upon individual
circumstances. Each Unit holder who plans to tender hereunder should consult
with the Unit holder's own tax advisor as to the Unit holder's tax basis in the
Unit holder's Units and the resulting tax consequences of a sale.
A tax-exempt Unit holder (other than an organization described in Code
Section 501(c)(7) (social club), 501(c)(9) (voluntary employee benefit
association), 501(c)(17) (supplementary unemployment benefit trust), or
501(c)(20) (qualified group legal services plan)) should not be required to
recognize unrelated trade or business income upon the sale of its Units pursuant
to the Offer, assuming that such Unit holder does not hold its Units as a
"dealer" and has not acquired such Units with debt financed proceeds.
Section 7. Effects of the Offer.
Effect on Trading Market. If the Purchasers acquire 100% of the outstanding
Units, or even if the Purchasers acquire a majority of the outstanding Units,
the secondary market trading in the Units would be materially reduced. The
existence of a majority Unit holder could reduce the desirability of owning a
minority interest in the Company, which could reduce the price a buyer would be
willing to pay for your Units in the secondary market.
Voting Power of Purchasers. The Offer could result in a change in the voting
control of the Company. Although the Purchasers do not currently intend to seek
to control the Company or influence management, they reserve the right to do so
in the future.
Status as a Public Company. The Units are registered under the Exchange Act,
which requires, among other things that the Partnership furnish certain
information to its Unit holders and to the Commission in periodic and current
reports, and comply with the Commission's proxy rules in connection with
meetings of, and solicitation of consents from, Unit holders, and the
Commission's and tender offer rules in connections with tender offers for Units.
Registration and reporting requirements could be terminated by the Company if
the number of record holders falls below 300, or below 500 if the Company's
total assets are below $10 million for three consecutive preceding fiscal years.
The Company reported a total of 951 Unit holders as of February 2005 and in
excess of $19 million in total assets in each of its last two fiscal years.
Although it is possible that the purchase of Units pursuant to the Offer could
reduce the number of record Unit holders below 300, the Purchasers believe the
possibility is unlikely based on the Purchasers' experience with tender offers
for illiquid limited partnership interests such as the Units. Accordingly, the
Purchaser does not believe that the purchase of Units pursuant to the Offer will
result in the Units becoming eligible for deregistration under the Exchange Act.
If the Units were to be removed from registration under the Exchange Act, the
12
Company would no longer file annual and quarterly reports with the Securities
and Exchange Commission and the solicitation of proxies and making of tender
offers would not be subject to the Exchange Act's rules applicable only to
public companies. Nevertheless, the Purchasers have no reason to believe that
the Company's obligation under its Limited Partnership Agreement to provide Unit
holders with annual and quarterly reports, including annual audited financial
statements, would be affected by any change in the Company's status as a public
company.
Section 8. Future Plans. Following the completion of the Offer, if the
Purchasers have not acquired 100% of the outstanding Units, they or their
affiliates may acquire additional Units. Any such acquisitions may be made
through private purchases, one or more future tender offers or by any other
means deemed advisable or appropriate. Any such acquisitions may be at a
consideration higher or lower than the consideration to be paid for the Units
purchased pursuant to the Offer. The Purchasers may seek to make further
purchases on the open market at prevailing prices, or solicit Units pursuant to
one or more future tender offers at the same price, a higher price or, if the
Company's circumstances change, at a lower price. Alternatively, the Purchasers
may discontinue any further purchases of Units after termination of the Offer,
regardless of the number of Units purchased. The Offer is not made with any
current view toward or plan or purpose of acquiring Units in a series of
successive and periodic offers. Nevertheless, as noted above, the Purchasers
reserve the right to gauge the response to this solicitation, and, if not
successful in achieving the Maximum Offer, may consider future offers. Factors
affecting the Purchasers' future interest in acquiring additional Units include,
but are not limited to, the relative success of the current Offer, any increase
or decrease in the availability of capital for investment by the Purchasers and
their investment fund affiliates, the current diversification and performance of
each affiliated fund=s portfolio of assets, including the mix and performance of
their real estate interests and securities, the development of any public market
in the Units or actions by unrelated parties to tender for or purchase Units,
the status of and changes and trends in the Company's operations, announcement
of pending capital transactions and local and national economic and financial
market developments and trends.
The Purchasers have no present intention to seek control of the Company
or to change the management or operations of the Company, to cause the Company
to engage in any extraordinary transaction, to cause any purchase, sale or
transfer of a material amount of the assets of the Company, to make any change
in the dividend policies, indebtedness or capitalization of the Company, or to
change the structure of the Company, the status of the Units or the reporting
requirements of the Company. However, if the Purchasers become a significant
Unit holder and decide in the future to attempt to influence any of the
foregoing, they could be in a position to do so.
Section 9. The Business of the Company. Information included herein concerning
the Company is derived from the Company's publicly-filed reports. Information
concerning the Company, its assets, operations and management is contained in
its Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q and other
filings with the Securities and Exchange Commission. Such reports and filings
are available on the Commission's EDGAR system, at its internet web site at
www.sec.gov, and are available for inspection at the Commission's principal
office in Washington, D.C. and at its regional offices in New York, New York and
Chicago, Illinois. The Purchasers have relied on such information to the extent
information is presented herein concerning the Company, and expressly disclaim
any responsibility for the information included in such reports and extracted in
this Offer.
Section 10. Conflicts of Interest. The Purchasers are aware of no material
conflicts of interest affecting the Offer.
Section 11. Certain Information Concerning the Purchasers. The
Purchasers are Sutter Opportunity Fund 3, LLC, Sutter Opportunity Fund 3(TE),
LLC, SCM-CMP Acquisition Fund, LLC, MacKenzie Patterson Fuller, Inc., and Robert
Dixon. The principal business address of each of the Purchasers except MacKenzie
Patterson Fuller, Inc., is 220 Montgomery Street, Suite 2100, San Francisco,
California 94104, and the business telephone number for each is 415-788-1441.
The principal business address for MacKenzie Patterson Fuller, Inc. is 1640
School Street, Moraga, CA 94563, and its business telephone number is
925-631-9100. For certain information concerning the directors and executive
officers of the Purchasers see Schedule I to this Offer to Purchase.
Except as otherwise set forth herein, (i) neither the Purchasers nor,
to the best knowledge of the Purchasers, the persons listed on Schedule I nor
any affiliate of the Purchasers beneficially owns or has a right to acquire any
Units, (ii) neither the Purchasers nor, to the best knowledge of the Purchasers,
the persons listed on Schedule I nor any affiliate of the Purchasers, or any
director, executive officer or subsidiary of any of the foregoing has effected
any transaction in the Units within the past 60 days, (iii) neither the
Purchasers nor, to the best knowledge of the Purchasers, the persons listed on
Schedule I nor any affiliate of the Purchasers have any contract, arrangement,
understanding or relationship with any other person with respect to any
securities of the Company, 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
13
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 the Purchasers or, to the best knowledge
of the Purchasers, the persons listed on Schedule I, or any affiliate of the
Purchasers on the one hand, and the Company or its affiliates, on the other
hand, (v) there have been no contracts, negotiations or transactions between the
Purchasers, or to the best knowledge of the Purchasers any affiliate of the
Purchasers on the one hand, the persons listed on Schedule I, and the Company or
its affiliates, on the other hand, concerning a merger, consolidation or
acquisition, tender offer or other acquisition of securities, an election of
directors or a sale or other transfer of a material amount of assets, (vi) no
person listed on Schedule I has been convicted in a criminal proceeding during
the past five years (excluding traffic violations or similar misdemeanors), and
(vii) no person listed on Schedule I has been a party to any judicial or
administrative proceeding during the past five years (except for matters
dismissed without sanction or settlement) that resulted in a judgment, decree,
or final order enjoining the person from future violations of, or prohibiting
activities subject to, federal or state securities laws, or a finding of any
violation of federal or state securities laws. .
Section 12. Source of Funds. The Purchasers expect that $3,797,000 would be
required to purchase 100% of the outstanding Units, if tendered, and an
additional $20,000 may be required to pay related fees and expenses. The
Purchasers anticipate funding all of the purchase price and related expenses
through their existing liquid capital reserves. Accordingly, there are no
financing arrangements to fall through and no alternative financing plans.
Section 13. Conditions of the Offer. Notwithstanding any other term of the
Offer, the Purchasers shall not be required to accept for payment or to pay for
any Units tendered unless all authorizations or approvals of, or expirations of
waiting periods imposed by, any court, administrative agency or other
governmental authority necessary for the consummation of the transactions
contemplated by the Offer shall have been obtained or occurred on or before the
Expiration Date.
The Purchasers shall not be required to accept for payment or pay for
any Units not theretofore accepted for payment or paid for and may terminate or
amend the Offer as to such Units if, at any time on or after the date of the
Offer and before the Expiration Date, any of the following conditions exists:
(a) a preliminary or permanent injunction or other order of any federal
or state court, government or governmental authority or agency shall have been
issued and shall remain in effect which (i) makes illegal, delays or otherwise
directly or indirectly restrains or prohibits the making of the Offer or the
acceptance for payment of or payment for any Units by the Purchasers, (ii)
imposes or confirms limitations on the ability of the Purchasers effectively to
exercise full rights of ownership of any Units, including, without limitation,
the right to vote any Units acquired by the Purchasers pursuant to the Offer or
otherwise on all matters properly presented to the Company's Unit holders, (iii)
requires divestiture by the Purchasers of any Units, (iv) causes any material
diminution of the benefits to be derived by the Purchasers as a result of the
transactions contemplated by the Offer or (v) might materially adversely affect
the business, properties, assets, liabilities, financial condition, operations,
results of operations or prospects of the Purchasers or the Company, in the
reasonable judgment of the Purchasers;
(b) there shall be any action taken, or any statute, rule, regulation
or order proposed, enacted, enforced, promulgated, issued or deemed applicable
to the Offer by any federal or state court, government or governmental authority
or agency, other than the application of the waiting period provisions of the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, which might,
directly or indirectly, result in any of the consequences referred to in clauses
(i) through (v) of paragraph (a) above;
(c) any change or development shall have occurred or been threatened
since the date hereof, in the business, properties, assets, liabilities,
financial condition, operations, results of operations or prospects of the
Company, which, in the reasonable judgment of the Purchasers, is or may be
materially adverse to the Company, or the Purchasers shall have become aware of
any fact that, in the reasonable judgment of the Purchasers, does or may have a
material adverse effect on the value of the Units;
(d) there shall have occurred (i) any general suspension of trading in,
or limitation on prices for, securities on any national securities exchange or
in the over-the-counter market in the United States, (ii) a declaration of a
banking moratorium or any suspension of payments in respect of banks in the
United States, (iii) any limitation by any governmental authority on, or other
event which might affect, the extension of credit by lending institutions or
result in any imposition of currency controls in the United States, (iv) a
commencement of a war or armed hostilities or other national or international
calamity directly or indirectly involving the United States, (v) a material
change in United States or other currency exchange rates or a suspension of a
limitation on the markets thereof, or (vi) in the case of any of the foregoing
existing at the time of the commencement of the Offer, a material acceleration
or worsening thereof; or
14
(e) it shall have been publicly disclosed or the Purchasers shall have
otherwise learned that (i) more than fifty percent of the outstanding Units have
been or are proposed to be acquired by another person (including a "group"
within the meaning of Section 13(d)(3) of the Exchange Act), or (ii) any person
or group that prior to such date had filed a Statement with the Commission
pursuant to Sections 13(d) or (g) of the Exchange Act has increased or proposes
to increase the number of Units beneficially owned by such person or group as
disclosed in such Statement by two percent or more of the outstanding Units.
The foregoing conditions are for the sole benefit of the Purchasers and
may be asserted by the Purchasers or may be waived by the Purchasers in whole or
in part at any time and from time to time prior to the Expiration Date in their
sole exercise of reasonable discretion. In the event of any waiver of a material
condition, the Purchaser will publicly announce such a waiver and the Offer will
remain open for a period of at least five business days following the
announcement of any such waiver of a material condition. Any termination by the
Purchasers concerning the events described above will be final and binding upon
all parties.
Section 14. Certain Legal Matters.
General. Except as set forth in this Section 14, the Purchasers are not aware of
any filings, approvals or other actions by any domestic or foreign governmental
or administrative agency that would be required prior to the acquisition of
Units by the Purchasers pursuant to the Offer. Should any such approval or other
action be required, it is the Purchasers' present intention that such additional
approval or action would be sought. While there is no present intent to delay
the purchase of Units tendered pursuant to the Offer pending receipt of any such
additional approval or the taking of any such action, there can be no assurance
that any such additional approval or action, if needed, would be obtained
without substantial conditions or that adverse consequences might not result to
the Company's business, or that certain parts of the Company's business might
not have to be disposed of or held separate or other substantial conditions
complied with in order to obtain such approval or action, any of which could
cause the Purchasers to elect to terminate the Offer without purchasing Units
thereunder. The Purchasers' obligation to purchase and pay for Units is subject
to certain conditions, including conditions related to the legal matters
discussed in this Section 14.
Antitrust. The Purchasers do not believe that the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, is applicable to the acquisition of Units
pursuant to the Offer.
Margin Requirements. The Units are not "margin securities" under the regulations
of the Board of Governors of the Federal Reserve System and, accordingly, such
regulations are not applicable to the Offer.
State Takeover Laws. A number of states have adopted anti-takeover laws which
purport, to varying degrees, to be applicable to attempts to acquire securities
of corporations which are incorporated in such states or which have substantial
assets, security holders, principal executive offices or principal places of
business therein. The Purchasers are not seeking a controlling block of Units
nor such a number of Units as to fall within these state statutes and,
therefore, do not believe that any anti-takeover laws apply to the transactions
contemplated by the Offer.
Although the Purchasers have not attempted to comply with any state
anti-takeover statutes in connection with the Offer, the Purchasers reserve the
right to challenge the validity or applicability of any state law allegedly
applicable to the Offer and nothing in this Offer nor any action taken in
connection herewith is intended as a waiver of such right. If any state
anti-takeover statute is applicable to the Offer, the Purchasers might be unable
to accept for payment or purchase Units tendered pursuant to the Offer or be
delayed in continuing or consummating the Offer. In such case, the Purchasers
may not be obligated to accept for purchase or pay for any Units tendered.
Section 15. Fees and Expenses. The Purchasers have not retained any independent
party to act as depositary in connection with the Offer. The Purchasers will pay
all costs and expenses of printing, publication and mailing of the Offer and all
costs of transfer.
Section 16. Miscellaneous. THE OFFER IS NOT BEING MADE TO (NOR WILL TENDERS BE
ACCEPTED FROM OR ON BEHALF OF) 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 PURCHASERS ARE NOT AWARE OF ANY JURISDICTION
WITHIN THE UNITED STATES IN WHICH THE MAKING OF THE OFFER OR THE ACCEPTANCE
THEREOF WOULD BE ILLEGAL.
15
No person has been authorized to give any information or to make any
representation on behalf of the Purchasers not contained herein or in the Letter
of Transmittal and, if given or made, such information or representation must
not be relied upon as having been authorized.
April 27, 2005
SUTTER OPPORTUNITY FUND 3, LLC
SUTTER OPPORTUNITY FUND 3 (TE), LLC
SCM-CMP ACQUISITION FUND, LLC
MACKENZIE PATTERSON FULLER, INC.
ROBERT E. DIXON
16
SCHEDULE I
THE PURCHASERS AND THEIR PRINCIPALS
The Purchasers are Sutter Opportunity Fund 3, LLC, Sutter
Opportunity Fund 3 (TE), LLC, SCM-CMP Acquisition Fund, LLC, MacKenzie Patterson
Fuller, Inc., and Robert E. Dixon. Each of the entity purchasers except
MacKenzie Patterson Fuller, Inc., is a privately held California limited
liability company managed by Sutter Capital Management, LLC, a California
limited liability company, which, in turn, is managed by Robert E. Dixon. No
person other than Mr. Dixon may be deemed a controlling person of any of the
entity purchasers, except that (i) the sole beneficial owner of Sutter
Opportunity Fund 3 (TE), LLC is the Girard Foundation, which is controlled by
Ralph Woolley, and (ii) MacKenzie Patterson Fuller, Inc., is a privately held
California corporation which is an investment management company controlled by
C.E. Patterson. The Purchasers have jointly made the offer and are jointly and
severally liable for satisfying its terms. Other than the foregoing, the
Purchasers' relationship consists of an informal oral agreement to share the
costs associated with making the offer and to allocate any resulting purchases
of Units among them in such manner and in such proportions as they may determine
in the future.
The principal business address for each of the Purchasers except
MacKenzie Patterson Fuller, Inc., is 220 Montgomery Street, Suite 2100, San
Francisco, California 94104, and the business telephone number for each is
415-788-1441. The principal business address for MacKenzie Patterson Fuller,
Inc. is 1640 School Street, Moraga, CA 94563, and its business telephone number
is 925-631-9100.
Sutter Capital Management, LLC
Sutter Capital Management, LLC is a California limited liability company formed
in 1998. The managing member and controlling interest holder in Sutter Capital
Management, LLC is Robert E. Dixon.
Robert E. Dixon has served as an officer and director of Sutter Holding Company,
Inc. since March 2002. Mr. Dixon received his Bachelors degree in economics from
the University of California at Los Angeles in 1992. He worked for Lehman
Brothers, Inc. in equity sales and trading during 1993 and 1994. From October
1994 to June, 1996 he worked for MacKenzie Patterson, Inc. as a securities
research analyst. Mr. Dixon became a Chartered Financial Analyst in 1996, and
received his Master of Business Administration degree from Cornell University in
1998. In July of 1998 he began buying and selling securities for his own account
and that of the entities he controls, and he has principally been engaged in
that activity since that date. Mr. Dixon was a registered representative of
North Coast Securities from 1994 through 1997.
MacKenzie Patterson Fuller, Inc.
The names of the directors and executive officers of MacKenzie Patterson Fuller,
Inc. are set forth below. Each individual is a citizen of the United States of
America. The principal business address of MacKenzie Patterson Fuller, Inc.,
each Purchaser, and each individual is 1640 School Street, Moraga, California
94556, and the business telephone number for each is 925-631-9100.
C.E. Patterson is President and a director of MacKenzie Patterson Fuller, Inc.,
which acts as manager and general partner of a number of real estate investment
vehicles, and has served in those positions since January 1989. In 1981, Mr.
Patterson founded Patterson Financial Services, Inc. (now MPF Advisers, Inc.), a
registered investment adviser ("MPFA"), with Berniece A. Patterson, as a
financial planning firm, and he has served as its President since that date. Mr.
Patterson founded Patterson Real Estate Services, a licensed California Real
Estate Broker, in 1982. As President of MPFA, Mr. Patterson is responsible for
all investment counseling activities. He supervises the analysis of investment
opportunities for the clients of the firm. Mr. Patterson has served as president
of Host Funding, Inc., an owner of lodging properties, since December 1999. Mr.
Patterson is also an officer and controlling shareholder of Cal-Kan, Inc., a
closely held real estate investment company. Mr. Patterson, through his
affiliates, manages a number of investment and real estate companies.
Berniece A. Patterson is a director of MacKenzie Patterson Fuller, Inc. and has
served in that capacity since January 1989. In 1981, Ms. Patterson and C.E.
Patterson established MPFA. She has served as Chair of the Board and Secretary
of MPFA since that date. Her responsibilities with MPFA include oversight of
administrative matters and monitoring of past projects underwritten by MPFA.
Since October 1990, Ms. Patterson has served as Chief Executive Officer of
Pioneer Health Care Services, Inc., and is responsible for the day-to-day
operations of its three nursing homes and over 300 employees.
17
Glen W. Fuller became senior vice president and a director of MacKenzie
Patterson Fuller, Inc. in May 2000. Since 2004 he has been a director and vice
president of MPFA. Prior to becoming senior vice president, from August 1998 to
April 2000, he was with MacKenzie Patterson Fuller, Inc. as a portfolio manager
and research analyst. Since December 1999, Mr. Fuller has served as an officer
and director of Host Funding, Inc. Prior to joining MacKenzie Patterson Fuller,
Inc., from May 1996 to July 1998, Mr. Fuller ran the over-the-counter trading
desk for North Coast Securities Corp. (previously Morgan Fuller Capital Group)
with responsibility for both the proprietary and retail trading desks. Mr.
Fuller was also the registered options principal and registered municipal bond
principal for North Coast Securities, a registered broker dealer. Mr. Fuller was
formerly a NASD-registered options principal and registered bond principal, and
he held his NASD Series 7, general securities license (now inactive). Mr. Fuller
has also spent time working on the floor of the New York Stock Exchange as a
trading clerk and on the floor of the Pacific Stock Exchange in San Francisco as
an assistant specialist for LIT America.
Chip Patterson is vice president, general counsel, and a director of the
MacKenzie Patterson Fuller, Inc. Since 2004 he has been a director and vice
president of MPFA. Prior to joining MacKenzie Patterson Fuller, Inc. in July
2003, he was a securities and corporate finance attorney with the national law
firm of Davis Wright Tremaine LLP from August 2000 to January 2003. From August
1997 to May 2000 he attended the University of Michigan Law School, where he
graduated magna cum laude with a Juris Doctor Degree. Prior to law school, Chip
Patterson taught physics, chemistry, and math at the high school level for three
years, from June 1994 to June 1997. He graduated with high distinction and Phi
Beta Kappa from the University of California at Berkeley with a Bachelor of Arts
Degree in Political Science. He also has prior experience in sales, retail, and
banking.
Christine Simpson is vice president of MacKenzie Patterson Fuller, Inc. and MPFA
and is responsible for the day-to-day management of research and securities
purchases and sales on behalf of the entities managed by MacKenzie Patterson
Fuller, Inc. Ms. Simpson has served in that position since January 1997; from
January 1994 until her promotion to vice president, she was a research analyst
with MacKenzie Patterson Fuller, Inc. She joined MacKenzie Patterson Fuller,
Inc. as an administrative assistant in July 1990.
Andrea K. Meyer is vice president of Trading and Portfolios for MPFA and
MacKenzie Patterson Fuller, Inc. As vice president of Trading and Portfolios,
Ms. Meyer is responsible for handling the day-to-day operations of the trading
department. She graduated from St. Mary's College of California in 1997 with a
Bachelor of Science in Business Administration with a concentration in Finance
and a Minor in Accounting. Prior to joining MPFA in 1998, she worked for a year
for State Street Bank and Trust, one of the leading financial services
specialists worldwide, as a portfolio accountant.
Sutter Opportunity Fund 3 (TE), LLC
As noted above, Sutter Opportunity Fund 3 (TE), LLC is managed by Sutter Capital
Management LLC and its sole beneficial owner is controlled by Ralph Wooley. See
the above discussion regarding Sutter Capital Management LLC.
Ralph Woolley is a private investor with over 25 years experience in the real
estate and venture capital industries. Mr. Woolley's principal business address
is 8070 La Jolla Shores Drive, #523, La Jolla, CA 92037.
18