Exhibit (a)(1)
Offer to Purchase for Cash
Up to 1,825,000 Outstanding Shares of Common Stock
of
NEUBERGER BERMAN REAL ESTATE INCOME FUND INC.
at
$19.89 Net Per Share
by
LOLA BROWN TRUST NO. 1B
and
ERNEST HOREJSI TRUST NO. 1B
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON FRIDAY, OCTOBER 8, 2004, UNLESS THE OFFER IS EXTENDED.
THE OFFER IS NOT CONDITIONED UPON THE RECEIPT OF FINANCING OR UPON ANY MINIMUM
NUMBER OF SHARES BEING TENDERED. THE OFFER IS SUBJECT TO CERTAIN CONDITIONS. SEE
"THE OFFER -- SECTION 14."
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THIS TRANSACTION OR PASSED UPON THE
MERITS OR FAIRNESS OF THIS TRANSACTION OR PASSED UPON THE ADEQUACY OR ACCURACY
OF THE INFORMATION CONTAINED IN THIS DOCUMENT. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
IMPORTANT
Any stockholder desiring to tender all or any portion of the stockholder's
shares should either:
|X| Request the stockholder's broker, dealer, commercial bank, trust
company or other nominee to effect the transaction for the
stockholder. A stockholder whose shares are registered in the name of
a broker, dealer, commercial bank, trust company or other nominee must
contact such broker, dealer, commercial bank, trust company or other
nominee if the stockholder desires to tender such shares; or
|X| Complete and sign the letter of transmittal (or a facsimile thereof)
in accordance with the instructions in the letter of transmittal, have
the stockholder's signature guaranteed if required by Instruction 1 to
the letter of transmittal, mail or deliver the letter of transmittal
(or such facsimile), or, in the case of a transfer effected pursuant
to the book-entry transfer procedures set forth in "THE OFFER --
Section 7," transmit an "agent's message" (as defined in "THE OFFER --
Section 6"), and any other required documents to the depositary and
either deliver the certificates for such shares to the depositary
along with the letter of transmittal (or such facsimile) or deliver
the shares pursuant to the book-entry transfer procedures set forth in
"THE OFFER -- Section 7."
If a stockholder desires to tender shares and the share certificates are not
immediately available, or the procedure for book-entry transfer cannot be
completed on a timely basis, or time will not permit all required documents to
reach the depositary prior to the "expiration date" (as defined herein), then
the tender may be effected by following the procedure for guaranteed delivery
set forth in "THE OFFER -- Section 7."
Questions and requests for assistance may be directed to MacKenzie Partners,
Inc., the information agent, at the address and telephone number set forth on
the back cover of this offering document. Additional copies of this offering
document, the letter of transmittal, the notice of guaranteed delivery and other
related materials may be obtained from the information agent.
THE INFORMATION AGENT FOR THIS OFFER IS:
MACKENZIE PARTNERS, INC.
[GRAPHIC OMITTED]
September 10, 2004
TABLE OF CONTENTS
SUMMARY TERM SHEET.................................................................................................................i
INTRODUCTION.......................................................................................................................1
THE OFFER..........................................................................................................................2
SECTION 1. CERTAIN INFORMATION CONCERNING THE TRUSTS...........................................................................2
SECTION 2. OWNERSHIP OF AND TRANSACTIONS IN SHARES.............................................................................2
SECTION 3. BACKGROUND AND PURPOSE OF THE OFFER; PLANS FOR NRL..................................................................3
SECTION 4. SOURCE AND AMOUNT OF FUNDS..........................................................................................4
SECTION 5. TERMS OF THE OFFER; PRORATION.......................................................................................5
SECTION 6. ACCEPTANCE FOR PAYMENT AND PAYMENT..................................................................................6
SECTION 7. PROCEDURES FOR ACCEPTING THE OFFER AND TENDERING SHARES.............................................................7
SECTION 8. WITHDRAWAL RIGHTS...................................................................................................9
SECTION 9. MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE OFFER.........................................................10
SECTION 10. PRICE RANGE OF THE SHARES; DIVIDENDS..............................................................................11
SECTION 11. EFFECT OF THE OFFER ON THE MARKET FOR THE SHARES..................................................................11
SECTION 12. CERTAIN INFORMATION CONCERNING NRL................................................................................11
SECTION 13. DIVIDENDS AND DISTRIBUTIONS.......................................................................................12
SECTION 14. CONDITIONS TO THE OFFER...........................................................................................12
SECTION 15. CERTAIN LEGAL MATTERS.............................................................................................14
SECTION 16. CERTAIN FEES AND EXPENSES.........................................................................................15
SECTION 17. MISCELLANEOUS.....................................................................................................15
SCHEDULE I.....................................................................................................................16
SCHEDULE II....................................................................................................................17
SUMMARY TERM SHEET
The Lola Brown Trust No. 1B and the Ernest Horejsi Trust No. 1B are
offering to purchase up to a total of 1,8250,00 outstanding shares of common
stock, par value $0.0001 per share, of Neuberger Berman Real Estate Income Fund
Inc. at a price of $19.89 per share, net to the seller in cash, without
interest. Our offer is subject to the terms and conditions set forth in this
offering document and in the related letter of transmittal. The Lola Brown Trust
No. 1B and the Ernest Horejsi Trust No. 1B are referred to as "we," "our," "us"
or "the Trusts," and Neuberger Berman Real Estate Income Fund Inc. is referred
to as "NRL." We refer to shares of common stock, par value $0.0001 per share,
issued by NRL as "shares." The following summary highlights selected information
from this offering document. We urge you to read the remainder of this offering
document and the accompanying letter of transmittal carefully, because the
information in the summary is not complete and the remainder of this offering
document and the letter of transmittal contain additional important information.
Who is offering to purchase my shares?
Our names are the Lola Brown Trust No. 1B and the Ernest Horejsi Trust No.
1B. We are irrevocable grantor trusts domiciled and administered in South Dakota
and our principal business is investing in securities. See "THE OFFER -- Section
1" for more information regarding us. We currently own approximately 10% of the
outstanding shares, purchased for an aggregate of approximately $8.9 million.
How much are you offering to pay?
We are offering to pay you $19.89 per share in cash, without interest,
which was the last sale price of the shares reported by the New York Stock
Exchange on September 9, 2004, the day before we commenced our offer.
Why are you making this offer?
We are making our offer because we intend to acquire as much as 50% of the
outstanding shares so that we may take the fund in a new direction. See "THE
OFFER -- Section 3." For stockholders who do not wish to be a part of the new
direction, our offer is an opportunity to sell shares before any changes occur.
What is your plan for a new direction for NRL?
To implement our plan to take the fund in a new direction, we intend to
propose that:
|X| NRL stockholders elect our nominees in place of the incumbent
directors at each of NRL's annual meetings until all NRL directors
were nominated by us (or by directors that we nominated);
|X| NRL's incumbent investment adviser be terminated and replaced with
Boulder Investment Advisors, LLC and Stewart West Indies Trading
Company, Ltd., doing business as Stewart Investment Advisors, as
co-advisors;
|X| Stewart R. Horejsi, an investment consultant to us, be appointed as
NRL's portfolio manager;
|X| NRL's incumbent administrator be terminated and replaced with Fund
Administrative Services, LLC, which we partially own;
|X| NRL change its name so that it does not include "Neuberger Berman;"
and
|X| NRL change its investment policies and objectives, which may include,
among other changes, proposals for NRL to expand its scope to include
investments in real estate operating companies and investment trusts
outside the United States, consistent with our philosophy that NRL's
advisors should have the greatest possible flexibility to seek out and
invest in what they believe to be the best values among any asset
class anywhere in the world.
Some of these changes are likely to increase NRL's costs. See "THE OFFER --
Section 3."
Do you have the financial resources to make payment?
Yes. We intend to use cash on hand and margin borrowings under an account
maintained by Merrill Lynch, Pierce, Fenner & Smith Incorporated to fund the
acquisition of the shares we are offering to purchase in this offer. See "THE
OFFER -- Section 4."
How many shares are you seeking to purchase in the offer?
We are offering to purchase up to 1,825,000 outstanding shares. The Lola
Trust will purchase up to 1,551,250 shares and the Ernest Trust will purchase up
to 273,750 shares. We may reallocate between us the 1,825,000 shares to be
purchased pursuant to our offer.
Will I have to pay any fees or commissions?
If you are the record owner of your shares and you tender your shares to us
in our offer, you will not have to pay brokerage fees or similar expenses. If
you own your shares through a bank, broker, dealer, trust company or other
nominee and that person tenders your shares on your behalf, that person may
charge you a fee for doing so. You should consult with your bank, broker,
dealer, trust company or other nominee to determine whether any charges will
apply. See "INTRODUCTION."
i
What happens if stockholders tender more than you are willing to buy?
If stockholders tender more than the number of shares that we are willing
to buy, we will purchase shares on a pro-rata basis. This means that we will
purchase the same ratio of shares from each tendering stockholder. For example,
if two shares are tendered for every share we purchase in the offer, we will
purchase 50% of the number of shares that you tender. We will make adjustments
to avoid purchases of fractional shares. For more information about the terms of
our offer, see "THE OFFER -- Section 5."
If you prorate, when will I know how many shares will actually be purchased?
If proration of tendered shares is required, we do not expect to announce
the final results of proration or pay for any shares until at least five New
York Stock Exchange trading days after the expiration date. This is because we
will not know the precise number of shares properly tendered until all
supporting documentation for those tenders are reviewed and guaranteed
deliveries are made. Preliminary results of proration will be announced by press
release as soon as we can after the offer expires. Holders of shares may obtain
these preliminary results from the information agent at its telephone number set
forth on the back cover of this offering document.
What are the most important conditions to the offer?
We are not obligated to buy any shares in our offer if various events
occur, including:
|X| any change or prospective change in the affairs of NRL that has had or
may have a materially adverse effect on NRL or us;
|X| the existence or threat of litigation that adversely affects our offer
or our ability to acquire or exercise ownership rights with respect to
the shares or that could have a materially adverse effect on NRL;
|X| the existence or proposal of any law limiting our ability to
consummate the offer or our ability to exercise ownership rights with
respect to the shares or that could have a materially adverse effect
on NRL;
|X| a general suspension of trading on any national securities exchange in
the United States;
|X| any event that might adversely affect the extension of credit by banks
or other financial institutions;
|X| a material change in United States or other currency exchange rates or
a suspension of or limitation on trading in currency exchange markets;
|X| the commencement of, or a significant expansion in any currently
ongoing, war, armed hostilities or other similar national or
international calamity directly or indirectly involving the United
States;
|X| any attack on, or outbreak or act of terrorism involving, the United
States;
|X| a material decrease in the market price for the shares or in the
general level of market prices for equity securities in the United
States;
|X| any change in the general political, market, economic or financial
conditions in the United States that could have a materially adverse
effect on NRL; or
|X| any change in NRL's capitalization or stated distribution policy.
Our offer is also subject to a number of other conditions. See "THE OFFER
-- Section 14."
How long do I have to decide whether to tender in the offer?
You will have at least until 12:00 Midnight, New York City time, on October
8, 2004, to tender your shares in our offer. If you cannot deliver everything
that we require in order to make a proper tender by that time, you may be able
to use a guaranteed delivery procedure. The procedure is discussed in "THE OFFER
- -- Section 7."
Can the offer be extended and under what circumstances?
We may elect to extend our offer from time to time if, at the then
scheduled expiration date of our offer, any of the conditions to our offer are
not satisfied. We will also extend our offer if the rules of the Securities and
Exchange Commission require us to do so. See "THE OFFER -- Section 5."
How will I be notified if the offer is extended?
If we extend our offer, we will make a public announcement of the
extension. The announcement will be made no later than 9:00 a.m., New York City
time, on the next business day after the day on which our offer was scheduled to
expire. See "THE OFFER -- Section 5."
How do I accept the offer and tender myshares?
To tender shares, you must deliver various documents to The Colbent
Corporation, the depositary for our offer, prior to the expiration of our offer.
If you are a record holder, these documents include the certificates
representing your shares and a completed letter of transmittal. If your shares
are held through a bank, broker, dealer, trust company or other nominee, the
shares can be tendered only by that bank, broker, dealer, trust company or other
nominee. If you cannot deliver a required item to the depositary by the
expiration of our offer, you may get a little extra time to do so by having a
broker, bank or other fiduciary that is a member of the Securities Transfer
Agents Medallion Program or another eligible institution guarantee that the
depositary will receive the missing items within a period of three New York
Stock Exchange trading days. The depositary must receive the missing items
within that period for the tender to be valid. See "THE OFFER -- Section 7."
ii
If I accept the offer, when will I be paid?
If the conditions to the offer are satisfied and we consummate the offer
and accept your shares for payment, you will receive payment for the shares you
tendered as soon as practicable following the expiration of the offer. See "THE
OFFER -- Section 6."
Can I withdraw my previously tendered shares?
You may withdraw all or a portion of your tendered shares at any time prior
to the expiration date of our offer. Further, if we have not agreed to accept
your shares for payment within 60 days of the commencement of the offer, you can
withdraw them at any time after that 60-day period until we do accept your
shares for payment. Once shares are accepted for payment, they cannot be
withdrawn. See "THE OFFER -- Section 8."
How do I withdraw previously tendered shares?
To withdraw shares, you must deliver a written notice of withdrawal with
the required information to the depositary while you still have the right to
withdraw the shares. If you have tendered your shares by giving instructions to
a bank, broker, dealer, trust company or other nominee, you must instruct them
to arrange for the withdrawal of your shares. See "THE OFFER -- Section 8."
What does NRL's board of directors think of this offer?
We have not contacted NRL's board of directors prior to the commencement of
this tender offer. To our knowledge, NRL's board of directors was unaware of
this offer prior to publication of this offering document, and has not approved
this offer or otherwise commented on it as of the date of this offering
document. Within 10 business days after the date of this offering document, NRL
is required to publish, send or give to you (and file with the Securities and
Exchange Commission) a statement as to whether it recommends acceptance or
rejection of the offer, that it has no opinion with respect to the offer or that
it is unable to take a position with respect to the offer.
If I decide not to tender, how will the offer affect me?
If you decide not to tender your shares, you will still own the same amount
of shares, and NRL will still be a public company listed on the New York Stock
Exchange (barring the occurrence of some event not associated with our offer
that causes the shares to become ineligible for continued listed on the New York
Stock Exchange). However, the purchase of shares in the offer may reduce the
number of holders of shares and will reduce the number of shares that might
otherwise trade publicly. This could adversely affect the liquidity and market
value of the remaining shares the public holds. See "THE OFFER -- Section 11."
What is the market value of my shares as of a recent date?
On September 9, 2004, the last trading day before we announced our
intention to make our offer and commenced our offer, the last sale price of the
shares reported by the New York Stock Exchange was $19.89 per share. We advise
you to obtain a recent price quotation for shares in deciding whether to tender
your shares. See "THE OFFER -- Section 10."
Do I have appraisal or dissenter's rights?
There are no appraisal or dissenter's rights available in connection with
our offer.
What are the U.S. federal income tax consequences of tendering shares in the
offer?
Selling your shares in our offer will be a taxable transaction for U.S.
federal income tax purposes, and payments for shares sold will be subject to
applicable withholding of United States federal, state and local taxes.
Generally, you will recognize gain or loss in an amount equal to the difference
between the cash that you receive in our offer and your adjusted tax basis in
the shares that you sell in our offer. That gain or loss will be a capital gain
or loss if the shares are capital assets in your hands and if you meet certain
additional requirements. Any capital gain or loss will be long-term capital gain
or loss if you have held the shares for more than one year at the time our offer
is completed. The tax consequences of the Offer to you may vary depending on
your particular circumstances. For a summary of the federal income tax
consequences of our offer, see "THE OFFER -- Section 9." We recommend that you
consult with your tax advisor.
Who can I talk to if I have questions about the offer?
You may call MacKenzie Partners, Inc., which is acting as the information
agent for our offer, at (212) 929-5500 (collect) or (800) 322-2885 (toll-free).
See the back cover of this offering document.
iii
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To the Holders of Shares of Common Stock of Neuberger Berman Real Estate Income
Fund Inc.:
INTRODUCTION
The Lola Brown Trust No. 1B, an irrevocable grantor trust domiciled and
administered in South Dakota (the "Lola Trust") and the Ernest Horejsi Trust No.
1B, an irrevocable grantor trust domiciled and administered in South Dakota (the
"Ernest Trust" and, together with the Lola Trust, the "Trusts" and also referred
to herein as "we," "our" or "us"), hereby offer to purchase up to 1,825,000
issued and outstanding shares of common stock, par value $0.0001 per share (the
"shares"), of Neuberger Berman Real Estate Income Fund Inc., a Maryland
corporation ("NRL"), at a price of $19.89 per share, net to the seller in cash
(subject to applicable withholding of United States federal, state and local
taxes), without interest (the "Offer Price"), upon the terms and subject to the
conditions set forth in this Offer to Purchase and in the related letter of
transmittal (which, together with any amendments or supplements thereto,
constitute the "Offer"). The Offer Price is equal to the last sale price of the
shares reported by the New York Stock Exchange on September 9, 2004, the day
before we commenced the Offer. Under the terms of the Offer, the Lola Trust will
purchase up to 1,551,250 shares accepted for payment under the Offer, and the
Ernest Trust will purchase up to 273,750 shares accepted for payment under the
Offer. We reserve the right to reallocate between us the 1,825,000 shares to be
purchased pursuant to the Offer. In this Offer to Purchase, references to
sections are to sections hereof unless otherwise indicated.
We are making this Offer because we intend to acquire as much as 50% of the
outstanding shares so that we may take the fund in a new direction. To implement
our plan to take the fund in a new direction, we intend to propose that:
|X| NRL stockholders elect our nominees in place of the incumbent
directors at each of NRL's annual meetings until all NRL directors
were nominated by us (or by directors that we nominated);
|X| NRL's incumbent investment adviser be terminated and replaced with
Boulder Investment Advisors, LLC and Stewart West Indies Trading
Company, Ltd., doing business as Stewart Investment Advisors, as
co-advisors;
|X| Stewart R. Horejsi, an investment consultant to us, be appointed as
NRL's portfolio manager;
|X| NRL's incumbent administrator be terminated and replaced with Fund
Administrative Services, LLC, which we partially own;
|X| NRL change its name so that it does not include "Neuberger Berman;"
and
|X| NRL change its investment policies and objectives, which may include,
among other changes, proposals for NRL to expand its scope to include
investments in real estate operating companies and investment trusts
outside the United States, consistent with our philosophy that NRL's
advisors should have the greatest possible flexibility to seek out and
invest in what they believe to be the best values among any asset
class anywhere in the world.
Some of these changes are likely to increase NRL's costs. For stockholders
who do not wish to be a part of NRL's new direction, our offer is an opportunity
to sell shares before any changes occur. Those stockholders only need to
properly tender their shares according to the procedures described in this
Offer. If the Offer is consummated, those stockholders will be able to invest
the proceeds in similar Neuberger Berman funds or use the proceeds for other
purposes.
Tendering stockholders whose shares are registered in their own name and
who tender directly to The Colbent Corporation, the depositary for the Offer,
will not be obligated to pay brokerage fees or commissions. If you own your
shares through a bank, broker, dealer, trust company or other nominee and that
person tenders your shares on your behalf, that person may charge you a fee for
doing so. You should consult your bank, broker, dealer, trust company or other
nominee to determine whether any charges will apply. Except as set forth in
Instruction 6 of the letter of transmittal, stockholders will not have to pay
transfer taxes on the sale of shares pursuant to the Offer. Any tendering
stockholder or other payee who fails to complete and sign the Substitute Form
W-9 included in the letter of transmittal may be subject to a required backup
Federal income tax withholding of 28% of the gross proceeds payable to the
stockholder or other payee pursuant to the Offer. See "THE OFFER -- Section 9."
We will pay all fees and expenses of The Colbent Corporation, which is acting as
the depositary for the Offer, and MacKenzie Partners, Inc., which is acting as
the information agent for the Offer, that are attributable to the Offer. See
"THE OFFER -- Section 16."
THE OFFER IS NOT CONDITIONED UPON THE RECEIPT OF FINANCING OR UPON ANY
MINIMUM NUMBER OF SHARES BEING TENDERED. OUR OBLIGATION TO ACCEPT, AND PAY FOR,
SHARES VALIDLY TENDERED PURSUANT TO THE OFFER IS CONDITIONED UPON SATISFACTION
OR WAIVER OF THE CONDITIONS SET FORTH IN "THE OFFER -- SECTION 14."
We have not communicated with the Board of Directors or management of NRL
regarding the Offer. The NRL Board of Directors is required by law to
communicate its views regarding the Offer to the NRL stockholders within ten
business days from the date the Offer is commenced.
According to NRL's semi-annual report filed with the Securities and
Exchange Commission (the "SEC") for the period ended April 30, 2004, as of April
30, 2004 there were 4,578,983 shares outstanding.
1
"THE OFFER -- Section 9" describes various United States federal income tax
consequences of a sale of shares under the Offer.
THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION THAT YOU SHOULD READ CAREFULLY BEFORE YOU MAKE ANY
DECISION REGARDING THE OFFER.
THE OFFER
SECTION 1. CERTAIN INFORMATION CONCERNING THE TRUSTS.
The Lola Trust is an irrevocable grantor trust organized many years ago by
Lola Brown for the benefit of her issue, and the Ernest Trust is an irrevocable
grantor trust organized by Ernest Horejsi for the benefit of his issue. Although
the Trusts were established under the laws of and originally domiciled in
Kansas, the Trusts are now domiciled and administered in South Dakota. The
Trusts' principal business is investing in securities. The business address of
the Trusts is: c/o Badlands Trust Company, P.O. Box 801 (614 Broadway), Yankton,
SD 57078, and the business telephone number of the Trusts is (605) 665-9401.
The trustees of the Lola Trust and the Ernest Trust are Badlands Trust
Company ("Badlands"), Susan L. Ciciora and Larry L. Dunlap (the "Trustees").
Stewart R. Horejsi serves as an advisor to both Trusts. Mr. Horejsi is Lola
Brown's grandson and Ernest Horejsi's son.
Badlands is a South Dakota corporation organized to act as a private trust
company to administer the Trusts as well as other trusts associated with Mr.
Horejsi's family. The business address of Badlands is c/o Badlands Trust
Company, P.O. Box 801 (614 Broadway), Yankton, SD 57078. The name, business
address, citizenship, present principal occupation and employment history of
each of the directors and executive officers of Badlands are set forth in
Schedule I of this Offer to Purchase.
Mr. Horejsi is (and has been for the past five years) a private investor
and serves as the portfolio manager for two registered investment advisers,
Boulder Investment Advisers, LLC ("BIA") and Stewart West Indies Trading
Company, Ltd., doing business as Stewart Investment Advisers ("SIA"). BIA and
SIA are co-investment advisers to two closed-end investment companies, the
Boulder Total Return Fund, Inc. ("BTF") and the Boulder Growth & Income Fund,
Inc. ("BIF"). The principal business address of BIA, BTF and BIF is 1680 38th
Street, Suite 800, Boulder, Colorado 80301. The principal business address for
SIA is Bellerive, Queen Street, St. Peter, Barbados. Mr. Horejsi splits his time
between the United States and Barbados. His business address in the United
States is 1680 38th Street, Suite 800, Boulder, Colorado 80301.
Mr. Dunlap served as the President and owner of Salina Auto Parts, Inc.,
for more than forty years until July 2004, when he sold the business and
retired. The address of Salina Auto Parts, Inc. is 223 N. Santa Fe, Salina,
Kansas 67401. He continues to serve as a director of Badlands and as a trustee
of or protector with respect to other Horejsi family trusts in addition to the
Trusts. Mr. Dunlap's address is P.O. Box 121, Salina, KS 67402.
Ms. Ciciora is Mr. Horejsi's daughter and is a director of BTF and First
Financial Fund, Inc. ("FF"), another closed end fund, as well as a trustee of
several other Horejsi family trusts in addition to the Trusts. She has been the
owner of Superior Interiors, an interior design firm, and the secretary of
Ciciora Custom Builders, LLC, a residential construction firm, since 1995. Ms.
Ciciora's business address and the principal business address of FF is 1680 38th
Street, Suite 800, Boulder, Colorado 80301.
BTF is traded on the New York Stock Exchange under the symbol "BTF." Its
primary focus is total return. The Lola Trust, the Ernest Trust and several
other Horejsi family trusts took control of BTF in 1999.
BIF is also traded on the New York Stock Exchange and its trading symbol is
"BIF." Its primary focus is total return. The Ernest Trust took control of BIF
in 2002.
FF is also traded on the New York Stock Exchange and its trading symbol is
"FF." Its primary focus is financial stocks. The Lola Trust, the Ernest Trust
and several other Horejsi family trusts acted together to acquire control of FF
in 2003.
After we successfully gained control of the boards of BTF and BIF, we
recommended, and the respective boards and a majority of the shareholders
agreed, that BIA and SIA should replace the prior advisers of these funds and
that the funds' investment objectives should be changed. In the case of FF, we
concluded that the incumbent adviser should be retained and the fund's
investment objective left unchanged, and FF's newly elected board concurred. In
all three cases, the respective boards moved the administrative contract for
each fund to FAS.
SECTION 2. OWNERSHIP OF AND TRANSACTIONS IN SHARES
Ownership of Shares. The Lola Trust is the direct beneficial owner of
463,200 shares and the Ernest Trust is the direct beneficial owner of 4,900
shares. The Lola Trust and the Ernest Trust acted together in acquiring shares.
The Trustees, as the trustees of each of the Lola Trust and the Ernest Trust,
may be deemed to control the Trusts and may be deemed to possess indirect
beneficial ownership of the shares held by the Trusts. In addition, by virtue of
their position as directors or executive officers of Badlands, the persons
listed on Schedule I may be deemed to control Badlands and therefore indirectly
to control the Trusts. However, none of the Trustees, acting alone, can vote or
exercise dispositive authority over shares held by either the Lola Trust or the
Ernest Trust. Accordingly, the Trustees and the persons listed on Schedule I
disclaim beneficial ownership of the shares beneficially owned, directly or
indirectly, by the Trusts.
2
As a result of his advisory role with the Trusts, Mr. Horejsi may be deemed
to have indirect beneficial ownership over the shares they directly beneficially
own. However, Mr. Horejsi disclaims beneficial ownership of these shares.
Transactions in Shares. During the past sixty days, the Trusts purchased
shares in open market transactions on the NYSE on the dates, in the amounts and
at the prices set forth in the table set forth in Schedule 2.
SECTION 3. BACKGROUND AND PURPOSE OF THE OFFER; PLANS FOR NRL
We are conducting the Offer for the purpose of acquiring a significant
equity stake in NRL, so that we may gain control of NRL's board of directors and
influence the policies and management of NRL. We currently intend to acquire as
much as 50% of the shares. If we are successful in acquiring a significant
ownership interest in NRL, we currently expect to propose that:
1) NRL stockholders elect five of our nominees in place of the incumbent
directors at NRL's next annual meeting (the date of the meeting has
not been set). We prefer directors that we know, trust and in whom we
have confidence with regard to fund-related business decisions.
Because NRL has a classified board of directors, incumbent directors
would retain 2/3 of the seats on the NRL board even if our nominees
are successfully elected. However, we anticipate nominating directors
for election at each succeeding annual meeting until we have nominated
all NRL directors (or the directors have been nominated by directors
that we have nominated);
2) NRL stockholders vote to terminate NRL's incumbent adviser. We also
expect to propose that the NRL board retain BIA and SIA as co-advisers
for NRL (subject to stockholder approval). In other funds they advise,
BIA and SIA are paid an aggregate fee of 1.25% of the funds' average
monthly net assets. NRL's current advisor is paid a fee of 0.60% of
NRL's average daily managed assets, but the advisor has agreed to
reduce its fee to 0.20% until the end of 2007 (with smaller reductions
until the end of 2011). As a result, if BIA and SIA are retained as
NRL's investment advisors, fees paid by NRL are likely to increase. We
believe that BIA and SIA would perform better than the incumbent
advisor, warranting the increased fees that they would likely charge.
Mr. Horejsi, an investment consultant to us who is also the portfolio
manager for BIA and SIA, would likely be proposed by BIA and SIA to be
NRL's portfolio manager.
3) NRL terminate its incumbent administrator and replace it with Fund
Administrative Services, LLC ("FAS"), which we partially own. NRL's
incumbent administrator is paid a fee of 0.25% of NRL's average daily
managed assets. In other funds that it administers, FAS is paid a fee
of 0.20% of the funds' average monthly net assets. Although FAS' fees
may be less than the current administrator's fees, overall fees are
likely to increase because of a significant increase in advisory fees,
as described above.
4) NRL change its name so as not to include "Neuberger Berman." This
change would be made if the fund's advisor is no longer associated
with Neuberger Berman, LLC and its investment advisory fund complex.
5) NRL change its investment policies and objectives, which may include,
among other changes, proposals for NRL to expand its scope to include
investments in real estate operating companies and investment trusts
outside the United States. We believe that NRL's advisors should have
the greatest possible flexibility to seek out and invest in what they
believe to be the best values among any asset class anywhere in the
world. Any final decision to invest outside the United States would
hinge on market conditions at the time.
We believe that the Offer provides stockholders who might oppose these
changes with the option of selling their shares in the Offer and liquidating
those holdings, rather than retaining their shares after these changes are made.
For stockholders who do not want to be a part of the new direction of NRL, the
Offer is an opportunity to sell shares before any changes occur. Those
stockholders only need to properly tender their shares according to the
procedures described in this Offer. If the Offer is consummated, those
stockholders will be able to invest the proceeds in similar Neuberger Berman
funds or use the proceeds for other purposes.
3
On September 10, 2004, we delivered the following letter to the board of
directors of NRL:
STEWART R. HOREJSI
1680 38TH STREET, SUITE 800
BOULDER, COLORADO 80301
September 9, 2004
Members of the Board of Directors
Neuberger Berman Real Estate Income Fund Inc.
605 Third Avenue
New York, New York 10158
Ladies and Gentlemen:
I am writing in connection with the tender offer that the Lola Brown
Trust No. 1B and the Ernest Horejsi Trust No. 1B will commence
tomorrow for shares of Neuberger Berman Real Estate Income Fund Inc.
(the "Fund"). As you are probably aware, as directors of the Fund you
will be asked to take a position with respect to the tender offer. I
urge you to support the tender offer.
In considering your response to the tender offer, I believe the board
will exercise due caution and I urge the independent directors of the
Fund to select their own independent counsel and seek independent
legal advice. As I am sure you are aware, scandals such as the ones at
Enron and Hollinger have illustrated the hazards and potential
pitfalls for board members who make missteps in carrying out their
fiduciary duties. Certain breaches of fiduciary duties result in
directors being held personally liable, with those liabilities not
covered by either D&O insurance or indemnification.
The Trusts intend to acquire as much as 50% of the Fund's outstanding
shares. In the past, the Trusts have acquired control of three other
closed-end investment companies. In two of these cases the incumbent
investment advisor was replaced. In the third case, the incumbent
investment advisor was retained. In the case of the Fund, the Trusts
anticipate asking shareholders of the Fund to replace the incumbent
advisor, as indicated in the tender offer materials. In addition, the
Trusts anticipate supporting changes in the Fund's investment policies
to broaden the Fund's investments. We believe the tender offer
provides shareholders of the Fund the opportunity to sell their shares
at a fair price if they do not want to be a part of these changes.
I would be happy to meet with you to discuss the tender offer. If you
would like to set up a meeting, you can contact Steve Miller in our
offices in Boulder at 303-442-2156 and he will make the arrangements.
We would like to avoid a lengthy fight that accomplishes nothing other
than running up expenses that Fund shareholders will bear.
Please do not hesitate to contact me.
Sincerely yours,
/s/
Stewart R. Horejsi
SECTION 4. SOURCE AND AMOUNT OF FUNDS
If we purchase 1,825,000 shares pursuant to the Offer at $19.89 per share,
our aggregate cost will be $36,299,250, not including fees and expenses which
are estimated to be approximately $75,000. See "THE OFFER -- Section 16." The
Offer is not conditioned on any financing arrangements. Of the up to 1,825,000
shares sought in the Offer, the Lola Trust will purchase 85% of such shares, and
the Ernest Trust will purchase the remaining 15%. We will each provide funds in
the same proportion that the number of shares purchased by each of us bears to
the aggregate number of shares purchased pursuant to the Offer. We reserve the
right to reallocate between us the shares to be purchased pursuant to the Offer,
although any reallocation will not affect each of our obligations to purchase
the number of shares described above.
We will use cash on hand and margin borrowings under an account (the
"Merrill Lynch Account") maintained by Merrill Lynch, Pierce, Fenner & Smith
Incorporated ("Merrill Lynch") to fund our purchase of the shares pursuant to
the Offer. Our borrowings from the Merrill Lynch Account are subject to the
terms of a cash management account agreement between us and Merrill Lynch (the
"Merrill Lynch Agreement").
Our margin borrowings from the Merrill Lynch Account bear interest at the
federal funds rate plus 40 basis points and are due on demand. The margin
borrowings are based on the collateral in the Merrill Lynch Account maintained
by us. As of September 1, 2004 approximately $60.7 million in borrowings were
outstanding under the Merrill Lynch Account.
4
The Merrill Lynch Agreement does not contain limitations on the ability to
use borrowings from the Merrill Lynch Account in connection with the Offer. All
borrowings from the Merrill Lynch Account will be in compliance with the margin
requirements of Section 7 of the Exchange Act. We have no present plans or
arrangements as to the source of refinancing or repayment of any borrowings made
from the Merrill Lynch Account.
A copy of the Merrill Lynch Agreement is filed as Exhibit (b)(1) to our
Schedule TO filed with the SEC.
SECTION 5. TERMS OF THE OFFER; PRORATION
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 such extension
or amendment), we will accept for payment and pay for up to 1,825,000 shares in
the aggregate that are validly tendered on or prior to the expiration date (as
hereinafter defined) and not withdrawn in accordance with the procedures set
forth in "THE OFFER -- Section 8." The Lola Trust will purchase up to 1,551,250
shares, and the Ernest Trust will purchase up to 273,750 shares. If fewer than
1,8250,000 shares are tendered by NRL stockholders and accepted for payment
under the Offer, the Lola Trust will purchase 85% of the tendered shares, and
the Ernest Trust will purchase 15% of the tendered shares. The term "expiration
date" means 12:00 Midnight, New York City time, on Friday, October 8, 2004,
unless and until we, in our sole discretion, shall have extended the period of
time during which the Offer is open, in which event the term "expiration date"
shall mean the latest time and date at which the Offer, as so extended by us,
will expire. For purposes of the Offer, a "business day" means any day other
than a Saturday, Sunday or any U.S. federal holiday, and consists of the time
period from 12:01 a.m. through 12:00 Midnight, New York City time.
We reserve the right to reallocate between us the proportion of the shares
tendered to be purchased by each of us. Any reallocation of shares between us
will not affect each of our obligations to purchase the number of shares set
forth in the previous paragraph.
If more than 1,825,000 shares are validly tendered prior to the expiration
date, and not withdrawn, we will, upon the terms and subject to the conditions
of the Offer, purchase 1,825,000 shares on a pro rata basis (with adjustments to
avoid purchases of fractional shares) based upon the number of shares validly
tendered by the expiration date and not withdrawn (the "proration period"). If
proration of tendered shares is required, because of the difficulty of
determining the precise number of shares properly tendered and not withdrawn, we
do not expect to announce the final results of proration or pay for any shares
until at least five New York Stock Exchange (the "NYSE") trading days after the
expiration date and proration period. Preliminary results of proration will be
announced by press release as promptly as practicable, and holders of shares may
obtain the preliminary information from the information agent at its telephone
number on the back cover of this Offer to Purchase. All shares not accepted for
payment due to an oversubscription will be returned to the stockholder or, in
the case of tendered shares delivered by book-entry transfer, credited to the
account at the book-entry transfer facility from which the transfer had
previously been made, in each case, in accordance with the procedure described
in "THE OFFER -- Section 6."
Subject to the terms of the applicable rules and regulations of the SEC, we
reserve the right, but will not be obligated at any time and from time to time,
and regardless of whether or not the conditions set forth in the "THE OFFER --
Section 14" shall have been satisfied, to:
1) extend the Offer beyond the then scheduled expiration date, and
thereby delay acceptance for payment of and payment for any shares, by
giving oral or written notice of that extension to the depositary; and
2) amend the Offer in any other respect by giving oral or written notice
of that amendment to the depositary.
UNDER NO CIRCUMSTANCES WILL WE PAY INTEREST ON THE PURCHASE PRICE FOR
TENDERED SHARES, REGARDLESS OF ANY EXTENSION OF OR AMENDMENT TO THE OFFER OR ANY
DELAY IN PAYING FOR SUCH SHARES.
There can be no assurance that we will exercise our right to extend the
Offer.
If by 12:00 Midnight, New York City time, on Friday, October 8, 2004 (or
any date or time then set as the expiration date), any or all of the conditions
to the Offer has or have not been satisfied or waived, we reserve the right (but
shall not be obligated except as described in this Section 5), subject to the
applicable rules and regulations of the SEC, to:
1) terminate the Offer and not accept for payment or pay for any shares
and return all tendered shares to tendering stockholders;
2) waive all the unsatisfied conditions and accept for payment and pay
for all shares validly tendered prior to the expiration date and not
theretofore withdrawn;
3) extend the Offer and, subject to the right of stockholders to withdraw
shares until the expiration date, retain the shares that have been
tendered during the period or periods for which the Offer is extended;
or
4) amend the Offer.
5
If we extend the Offer or if we are delayed in our acceptance for payment
of or payment (whether before or after our acceptance for payment of shares) for
shares or we are unable to pay for shares pursuant to the Offer for any reason,
then, without prejudice to our rights under the Offer, the depositary may retain
tendered shares on our behalf, and such shares may not be withdrawn except to
the extent tendering stockholders are entitled to withdrawal rights as described
herein under "THE OFFER -- Section 8." However, our ability to delay the payment
for shares that we have accepted for payment is limited by Rule 14e-1(c) under
the Securities and Exchange Act of 1934, as amended (the "Exchange Act"), which
requires that a bidder pay the consideration offered or return the securities
deposited by or on behalf of stockholders promptly after the termination or
withdrawal of the bidder's offer.
Any extension, waiver, amendment or termination will be followed as
promptly as practicable by public announcement thereof. In the case of an
extension, Rule 14e-l(d) under the Exchange Act requires that the announcement
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 requirements of Rule 14d-4(d) under the Exchange Act. Subject to
applicable law (including Rules 14d-4(d) and 14d-6(c) under the Exchange Act,
which require that any material change in the information published, sent or
given to stockholders in connection with the Offer be promptly disseminated to
stockholders in a manner reasonably designed to inform stockholders of such
change) and without limiting the manner in which we may choose to make any
public announcement, we currently intend to make announcements regarding the
Offer by issuing a press release to Business Wire.
If we make a material change in the Offer, or if we waive a material
condition to the Offer, we will extend the Offer and disseminate additional
tender offer materials to the extent required by Rules 14d-4(d), 14d-6(c) and
14e-1 under the Exchange Act. The minimum period during which the Offer must
remain open following material changes in its terms or the information
concerning it, other than a change in price or the percentage of securities
sought, will depend on the facts and circumstances then existing, including the
relative materiality of the changed terms or information. In the SEC's view, an
offer should remain open for a minimum of five business days from the date the
material change is first published, sent or given to stockholders, and, if
material changes are made with respect to information that approaches the
significance of price and the percentage of securities sought, a minimum of ten
business days may be required to allow for adequate dissemination and investor
response. With respect to a change in price, a minimum period of ten business
days from the date of the change is required to allow for adequate dissemination
to stockholders.
If we decide, in our sole discretion, to increase or decrease the Offer
Price or to change the percentage of shares we are seeking in the Offer, and if,
at the time that notice of any such changes is first published, sent or given to
holders of shares, the Offer is scheduled to expire at any time earlier than the
tenth business day after (and including) the date of such notice, then the Offer
will be extended at least until the expiration of such period of ten business
days. If, however, we increase the number of shares we are seeking under the
Offer by not more than two percent of the outstanding shares, then pursuant to
Rule 14e-1(b) under the Exchange Act, we would not be required to extend the
expiration date of the Offer.
IF, PRIOR TO THE EXPIRATION DATE, WE INCREASE THE CONSIDERATION BEING PAID
FOR SHARES ACCEPTED FOR PAYMENT PURSUANT TO THE OFFER, SUCH INCREASED
CONSIDERATION WILL BE PAID TO ALL STOCKHOLDERS WHOSE SHARES ARE PURCHASED
PURSUANT TO THE OFFER, WHETHER OR NOT SUCH SHARES WERE TENDERED PRIOR TO THE
ANNOUNCEMENT OF THE INCREASE IN CONSIDERATION.
A request is being made to NRL pursuant to Rule 14d-5 under the Exchange
Act for the use of NRL's stockholder lists and security position listings for
the purpose of disseminating the Offer to stockholders. Upon compliance by NRL
with this request, this Offer to Purchase, the letter of transmittal and all
other relevant materials will be mailed to record holders of shares and will be
furnished to brokers, dealers, banks, trust companies and similar persons whose
names, or the names of whose nominees, appear on NRL's stockholders lists, or,
if applicable, who are listed as participants in a clearing agency's security
position listing for subsequent transmittal to beneficial owners of shares by us
or, if NRL so elects, the materials will be mailed by NRL.
If any tendered shares are not purchased pursuant to the Offer for any
reason, or if share certificates are submitted representing more shares than are
tendered, certificates representing unpurchased or untendered shares will be
returned, without expense to the tendering stockholder (or, in the case of
shares delivered pursuant to the book-entry transfer procedures set forth in
"THE OFFER -- Section 7," such shares will be credited to an account maintained
within the book-entry transfer facility), as promptly as practicable following
the expiration, termination or withdrawal of the Offer.
SECTION 6. ACCEPTANCE FOR PAYMENT AND PAYMENT
On the terms of and subject to the conditions to the Offer, including, if
we extend or amend the Offer, the terms and conditions of any such extension or
amendment, we will accept for payment and will pay promptly after the expiration
date for all shares validly tendered prior to the expiration date and not
properly withdrawn in accordance with "THE OFFER -- Section 8," up to a maximum
of 1,825,000 shares. We will decide, in our reasonable discretion, all questions
as to the satisfaction of those terms and conditions, and each such decision
will be final and binding. See "THE OFFER -- Section 5" and "THE OFFER --
Section 14." We expressly reserve the right, in our sole discretion, to delay
acceptance for payment of or payment for shares until satisfaction of all
conditions to the Offer relating to governmental or regulatory approvals. We
will effect any such delays in compliance with Exchange Act Rule 14e-1(c), which
relates to the obligation of a bidder to pay for or return tendered securities
promptly after the termination or withdrawal of its offer.
6
In all cases, we will pay for shares we have accepted for payment under the
Offer only after timely receipt by the depositary of:
1) certificates representing, or timely confirmation (a "book-entry
confirmation") of the book-entry transfer of the shares into the
depositary's account at The Depository Trust Company (the "book-entry
transfer facility") pursuant to the procedures set forth in "THE OFFER
-- Section 7;"
2) the letter of transmittal (or a facsimile thereof), properly completed
and duly executed, with any required signature guarantees, or an
"agent's message" (as defined below) in connection with a book-entry
transfer; and
3) any other documents required by the letter of transmittal.
Accordingly, tendering stockholders may be paid at different times
depending on when certificates for shares or book-entry confirmations respecting
shares are actually received by the depositary.
The term "agent's message" means a message, transmitted by the book-entry
transfer facility to, and received by, the depositary and forming a part of a
book-entry confirmation, which states that the book-entry transfer facility has
received an express acknowledgment from the participant in the book-entry
transfer facility tendering the shares which are the subject of such book-entry
confirmation, that the participant has received and agrees to be bound by the
terms of the letter of transmittal and that we may enforce that agreement
against the participant.
For purposes of the Offer, we will be deemed to have accepted for payment,
and thereby purchased, shares properly tendered to us and not withdrawn, if and
when we give oral or written notice to the depositary of our acceptance for
payment of those shares. On the terms of and subject to the conditions to the
Offer, we will pay for shares we have accepted for payment under the Offer by
depositing the purchase price therefor with the depositary. The depositary will
act as agent for tendering stockholders for the purpose of receiving payment
from us and transmitting payment to tendering stockholders whose shares we have
accepted for payment. Upon our deposit of funds with the depositary for the
purpose of making payments to tendering stockholders, our obligation to make the
payment shall be satisfied and tendering stockholders must thereafter look
solely to the depositary for payment of amounts owed to them by reason of the
acceptance for payment of shares pursuant to the Offer.
UNDER NO CIRCUMSTANCES WILL WE PAY INTEREST ON THE PURCHASE PRICE FOR
TENDERED SHARES, REGARDLESS OF ANY EXTENSION OF THE OFFER OR ANY DELAY IN PAYING
FOR THOSE SHARES. We will pay any stock transfer taxes incident to the transfer
to us of validly tendered shares, except as otherwise provided in instruction 6
of the letter of transmittal, as well as any charges and expenses of the
depositary and the information agent.
SECTION 7. PROCEDURES FOR ACCEPTING THE OFFER AND TENDERING SHARES
Valid Tender. Except as set forth below, in order for shares to be validly
tendered pursuant to the Offer, on or prior to the expiration date either the
guaranteed delivery procedures set forth below must be followed or:
|X| certificates representing the tendered shares must be received by the
depositary at one of its addresses set forth on the back cover of this
Offer to Purchase, or the shares must be tendered pursuant to the
book-entry transfer procedures set forth below and a book-entry
confirmation must be received by the depositary;
|X| the letter of transmittal (or a facsimile thereof), properly completed
and duly executed, together with any required signature guarantees, or
an agent's message in connection with a book-entry transfer of shares,
must be received by the depositary at one of its addresses; and
|X| any other documents required by the letter of transmittal must be
received by the depositary at one of its addresses.
The valid tender of shares by you by one of the procedures described in
this Section 7 will constitute a binding agreement between you and us on the
terms of, and subject to the conditions to, the Offer.
Book-Entry Transfer. The depositary will make a request to establish
accounts with respect to the shares at the book-entry transfer facility for
purposes of the Offer within two business days after the date of this Offer to
Purchase. Any financial institution that is a participant in the system of the
book-entry transfer facility may make book-entry delivery of shares by causing
the book-entry transfer facility to transfer such shares into the depositary's
account at the book-entry transfer facility in accordance with the book-entry
transfer facility's procedures for such transfer. However, although delivery of
shares may be effected through book-entry transfer into the depositary's account
at the book-entry transfer facility, the letter of transmittal (or a facsimile
thereof), properly completed and duly executed, with any required signature
guarantees, or an agent's message, and any other required documents must, in any
case, be transmitted to and received by the depositary at one of its addresses
set forth on the back cover of this Offer to Purchase on or prior to the
expiration date, or the guaranteed delivery procedures set forth below must be
complied with. REQUIRED DOCUMENTS MUST BE TRANSMITTED TO AND RECEIVED BY THE
DEPOSITARY AT ONE OF ITS ADDRESSES SET FORTH ON THE BACK COVER PAGE OF THIS
OFFER TO PURCHASE. DELIVERY OF DOCUMENTS TO THE BOOK-ENTRY TRANSFER FACILITY IN
ACCORDANCE WITH THE BOOK-ENTRY TRANSFER FACILITY'S PROCEDURES DOES NOT
CONSTITUTE DELIVERY TO THE DEPOSITARY.
7
THE METHOD OF DELIVERY OF SHARES, THE LETTER OF TRANSMITTAL AND ALL OTHER
REQUIRED DOCUMENTS, INCLUDING, WITHOUT LIMITATION, DELIVERY THROUGH THE
BOOK-ENTRY TRANSFER FACILITY, IS AT THE ELECTION AND SOLE RISK OF THE TENDERING
STOCKHOLDER, AND THE DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY
THE DEPOSITARY. IF DELIVERY IS BY MAIL, WE RECOMMEND THAT YOU DELIVER BY
OVERNIGHT COURIER OR REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, AND OBTAIN
PROPER INSURANCE. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE
TIMELY DELIVERY.
Signature Guarantees. No signature guarantee is required on the letter of
transmittal for shares tendered thereby if:
|X| the letter of transmittal is signed by the registered holder(s) of
shares tendered therewith and the registered holder has not completed
either the box entitled "Special Delivery Instructions" or the box
entitled "Special Payment Instructions" on the letter of transmittal;
or
|X| the shares are tendered for the account of an "eligible institution."
For purposes hereof, a "registered holder" of tendered shares will include
any participant in the book-entry transfer facility's system whose name appears
on a security position listing as the owner of those shares, and an "eligible
institution" is a "financial institution," which term includes most commercial
banks, savings and loan associations and brokerage houses, that is a participant
in any of the following: (i) the Securities Transfer Agents Medallion Program;
(ii) the New York Stock Exchange, Inc. Medallion Signature Program; or (iii) the
Stock Exchange Medallion Program.
Except as we describe above, all signatures on any letter of transmittal
for shares tendered thereby must be guaranteed by an eligible institution. See
instructions 1 and 5 to the letter of transmittal. If the certificates for
shares are registered in the name of a person other than the signer of the
letter of transmittal, or if payment is to be made, or certificates for shares
not tendered or not accepted for payment are to be returned, to a person other
than the registered holder of the certificates surrendered, then the tendered
share certificates must be endorsed or accompanied by appropriate stock powers,
in either case signed exactly as the name or names of the registered holders or
owners appear on the certificates, with the signatures on the certificates or
stock powers guaranteed as aforesaid. See instructions 1 and 5 to the letter of
transmittal.
Guaranteed Delivery. If you wish to tender shares pursuant to the Offer and
your certificates for shares are not immediately available or the procedures for
book-entry transfer cannot be completed on a timely basis or time will not
permit all required documents to reach the depositary prior to the expiration
date, your tender may be effected if all the following conditions are met:
|X| your tender is made by or through an eligible institution;
|X| a properly completed and duly executed notice of guaranteed delivery,
substantially in the form we provide, is received by the depositary,
as provided below, prior to the expiration date; and
|X| within three NYSE trading days after the date of execution of the
notice of guaranteed delivery (i) certificates representing tendered
shares are received by the depositary at one of its addresses set
forth on the back cover of this Offer to Purchase, or the shares are
tendered pursuant to the book-entry transfer procedures and a
book-entry confirmation is received by the depositary, (ii) the letter
of transmittal (or a facsimile thereof), properly completed and duly
executed, together with any required signature guarantees, or an
agent's message in connection with a book-entry transfer of shares, is
received by the depositary at one of such addresses and (iii) any
other documents required by the letter of transmittal are received by
the depositary at one of such addresses.
A notice of guaranteed delivery must be delivered to the depositary by
hand, facsimile transmission or mail and must include a guarantee by an eligible
institution in the form set forth in the notice of guaranteed delivery that is
to be delivered to the depositary.
Backup U.S. Federal Income Tax Withholding. Under the U.S. federal income
tax laws, payments in connection with the transaction may be subject to "backup
withholding" at a rate of 28%, unless a stockholder that holds shares:
|X| provides a correct taxpayer identification number (which, for an
individual stockholder, is the stockholder's social security number)
and any other required information; or
|X| is a corporation or comes within other exempt categories and, when
required, demonstrates this fact and otherwise complies with
applicable requirements of the backup withholding rules.
A stockholder that does not provide a correct taxpayer identification
number may be subject to penalties imposed by the Internal Revenue Service. To
prevent backup U.S. federal income tax withholding on cash payable under the
Offer, each stockholder should provide the depositary with his or her correct
taxpayer identification number and certify that he or she is not subject to
backup U.S. federal income tax withholding by completing the Substitute Internal
Revenue Service Form W-9 included in the letter of transmittal. Noncorporate
foreign stockholders should complete and sign the appropriate Internal Revenue
Service Form W-8, Certificate of Foreign Status, a copy of which may be obtained
from the depositary, in order to avoid backup withholding. See instruction 9 to
the letter of transmittal.
8
Appointment. By executing a letter of transmittal, or a facsimile thereof,
or, in the case of a book-entry transfer, by delivery of an agent's message in
lieu of a letter of transmittal, you will irrevocably appoint our designees as
your attorneys-in-fact and proxies in the manner the letter of transmittal sets
forth, each with full power of substitution, to the full extent of your rights
with respect to the shares tendered by you and accepted for payment by us and
with respect to any and all other shares and other securities or rights issued
or issuable in respect of such shares on or after the date of this Offer to
Purchase. All these proxies will be considered coupled with an interest in the
tendered shares and additional securities attributable thereto. This appointment
will be effective when, and only to the extent that, we accept for payment
shares tendered by you as provided herein. On that appointment, all prior powers
of attorney, proxies and consents you have given with respect to the shares
tendered by you and accepted for payment by us and all additional securities
attributable thereto will, without further action, be revoked and no subsequent
powers of attorney, proxies, consents or revocations may be given by you or on
your behalf (and, if given, will not be effective). Our designees will thereby
be empowered to exercise all your voting and other rights with respect to those
shares and additional securities attributable thereto in respect of any annual,
special or adjourned meeting of NRL's stockholders, actions by written consent
without any such meeting or otherwise, as our designees in their sole discretion
deem proper. We reserve the right to require that, in order for shares to be
deemed validly tendered, we must be able, immediately on our acceptance for
payment of those shares, to exercise full voting, consent and other rights with
respect to those shares and the additional securities attributable thereto,
including voting at any meeting of stockholders or acting by written consent
without such a meeting.
Tendering Stockholder's Representation and Warranty; Company's Acceptance
Constitutes an Agreement. It is a violation of Rule 14e-4 promulgated under the
Exchange Act for a person acting alone or in concert with others, directly or
indirectly, to tender shares for such person's own account unless at the time of
tender and at the expiration date such person has a "net long position" in (a)
the shares that is equal to or greater than the amount tendered and will deliver
or cause to be delivered such shares for the purpose of tendering to us within
the period specified in the Offer or (b) other securities immediately
convertible into, exercisable for or exchangeable into shares ("equivalent
securities") that is equal to or greater than the amount tendered and, upon the
acceptance of such tender, will acquire such shares by conversion, exchange or
exercise of such equivalent securities to the extent required by the terms of
the Offer and will deliver or cause to be delivered such shares so acquired for
the purpose of tender to us within the period specified in the Offer. Rule 14e-4
also provides a similar restriction applicable to the tender or guarantee of a
tender on behalf of another person. A tender of shares made pursuant to any
method of delivery set forth herein will constitute the tendering stockholder's
representation and warranty to us that (a) the stockholder has a "net long
position" in shares or equivalent securities being tendered within the meaning
of Rule 14e-4, and (b) the tender of shares complies with Rule 14e-4. Our
acceptance for payment of shares tendered pursuant to the Offer will constitute
a binding agreement between the tendering stockholder and us upon the terms and
subject to the conditions of the Offer.
Determination of Validity. WE WILL DECIDE, IN OUR SOLE DISCRETION, ALL
QUESTIONS AS TO THE VALIDITY, FORM, ELIGIBILITY (INCLUDING TIME OF RECEIPT) AND
ACCEPTANCE FOR PAYMENT OF ANY TENDER OF SHARES, AND EACH SUCH DECISION WILL BE
FINAL AND BINDING ON ALL PARTIES. We reserve the absolute right to reject any or
all tenders we determine not to be in proper form or the acceptance for payment
of, or payment for, shares which may, in the opinion of our counsel, be
unlawful. We also reserve the absolute right to waive any defect or irregularity
in the tender of any shares of any particular stockholder whether or not we
waive similar defects or irregularities in the case of other stockholders. No
tender of shares will be deemed to have been validly made until all defects or
irregularities relating thereto have been cured or waived. None of us, the
depositary, the information agent or any other person will be under any duty to
give notification of any defects or irregularities in tenders or incur any
liability for failure to give any such notification. Our interpretation of the
terms of and conditions to the Offer, including the letter of transmittal and
the instructions thereto, will be final and binding. By tendering shares to us
you agree to accept all decisions we make concerning these matters and waive any
right you might otherwise have to challenge those decisions.
Lost Certificates. If the share certificates which a registered holder
wants to surrender have been lost, destroyed or stolen, the stockholder should
promptly notify the transfer agent for the shares, Bank of New York, at
1-800-524-4458. The transfer agent will instruct the stockholder as to the steps
that must be taken in order to replace the certificates.
SECTION 8. WITHDRAWAL RIGHTS
Except as this Section 8 otherwise provides, tenders of shares made
pursuant to the Offer are irrevocable. You may withdraw shares that you have
previously tendered pursuant to the Offer according to the procedures we
describe below at any time on or prior to the expiration date and you may also
withdraw your previously tendered shares at any time after November 9, 2004,
unless the shares have been accepted for payment as provided in the Offer.
For a withdrawal to be effective, a written notice of withdrawal must:
|X| be received in a timely manner by the depositary at one of its
addresses set forth on the back cover of this Offer to Purchase; and
|X| specify the name of the person having tendered the shares to be
withdrawn, the number of shares to be withdrawn and the name of the
registered holder of the shares to be withdrawn, if different from the
name of the person who tendered the shares.
9
If certificates for shares have been delivered or otherwise identified to
the depositary, then, prior to the physical release of those certificates, the
serial numbers shown on those certificates must be submitted to the depositary
and, unless an eligible institution has tendered those shares, an eligible
institution must guarantee the signatures on the notice of withdrawal.
If shares have been delivered in accordance with the procedures for
book-entry transfer as set forth in "THE OFFER -- Section 7," any notice of
withdrawal must also specify the name and number of the account at the
book-entry transfer facility to be credited with the withdrawn shares and
otherwise comply with the book-entry transfer facility's procedures.
Withdrawals of tenders of shares may not be rescinded, and any shares
properly withdrawn will thereafter be deemed not validly tendered for purposes
of the Offer. Withdrawn shares may be retendered at any time prior to the
expiration date by again following one of the procedures described in "THE OFFER
- -- Section 7."
We will decide, in our sole discretion, all questions as to the form and
validity, including time of receipt, of notices of withdrawal, and each such
decision will be final and binding. We also reserve the absolute right to waive
any defect or irregularity in the withdrawal of shares by any stockholder,
whether or not we waive similar defects or irregularities in the case of any
other stockholder. None of us, the depositary, the information agent or any
other person will be under any duty to give notification of any defects or
irregularities in any notice of withdrawal or incur any liability for failure to
give any such notification.
SECTION 9. MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE OFFER
Taxable Transaction. Your receipt of cash for shares in our Offer will be a
taxable transaction for U.S. federal income tax purposes under the Internal
Revenue Code of 1986, as amended (the "Code"), and also may be a taxable
transaction under applicable state, local or foreign income or other tax laws.
Generally, for U.S. federal income tax purposes, you will recognize gain or
loss equal to the difference between the amount of cash you receive in the Offer
and your adjusted tax basis in the shares you sold in the Offer. Gain or loss
will be calculated separately for each share tendered and purchased under the
Offer.
If you hold shares as capital assets, the gain or loss you recognize will
be capital gain or loss, which will be long-term capital gain or loss if your
holding period for the shares exceeds one year. If you are an individual,
long-term capital gains will be eligible for a maximum federal income tax rate
of 15%. Under present law, the ability to use capital losses to offset ordinary
income is limited. You should consult your tax advisor in this regard.
The foregoing discussion may not be applicable with respect to holders of
shares who are subject to special tax treatment under the Code, such as non-U.S.
persons, life insurance companies, tax-exempt organizations, employee benefit
plans and financial institutions. In addition, the foregoing discussion may not
apply to a holder of shares in light of individual circumstances, such as
holding shares as a hedge or as part of a straddle or a hedging, constructive
sale, integrated or other risk-reduction transaction. We base this discussion on
present law, which is subject to change, possibly with retroactive effect. In
addition, the foregoing does not address state, local or foreign tax laws that
may be applicable.
THE SUMMARY OF TAX CONSEQUENCES SET FORTH ABOVE IS BASED ON THE LAW IN
EFFECT ON THE DATE HEREOF. WE URGE YOU TO CONSULT YOUR TAX ADVISOR TO DETERMINE
THE PARTICULAR TAX CONSEQUENCES OF THE OFFER TO YOU, INCLUDING THE APPLICATION
AND EFFECT OF THE ALTERNATIVE MINIMUM TAX AND OF STATE, LOCAL OR FOREIGN INCOME
AND OTHER TAX LAWS.
Backup Withholding. Some non-corporate stockholders may be subject to
backup withholding at a 28% rate on cash payments they receive under the Offer
unless certain information is provided to the depositary or an exemption
applies. See "THE OFFER -- Section 7."
10
SECTION 10. PRICE RANGE OF THE SHARES; DIVIDENDS
The shares are traded on the NYSE under the symbol "NRL." The following
table sets forth, for each of the periods indicated since NRL commenced trading
on the NYSE on December 2, 2002, the high and low sales prices per share as
reported by the NYSE, based on published financial sources.
High Low
- ------------------------------------------------------------------------------------------------------------------------------------
Year Ended December 31, 2002:
Fourth Quarter (from December 2, 2002 to December 31, 2002) $ 15.17 $ 15.00
Year Ended December 31, 2003:
First Quarter $ 15.95 $ 14.35
Second Quarter $ 16.93 $ 15.02
Third Quarter $ 16.85 $ 16.00
Fourth Quarter $ 18.85 $ 16.66
Year Ended December 31, 2004:
First Quarter $ 19.98 $ 18.29
Second Quarter $ 20.14 $ 14.85
Third Quarter (through September 9, 2004) $ 20.50 $ 17.54
On September 9, 2004, which was the last trading day before we announced
our intention to make our offer and commenced our offer, the last reported sales
price of the shares reported by the NYSE was $19.89. We urge stockholders to
obtain a current market price. On September 3, 2004, NRL indicated that its net
asset value per share was $22.23.
Dividends and Distributions. NRL's publicly announced policy is to declare
quarterly and pay monthly stable distributions to holders of shares. In an
effort to maintain a stable distribution amount, distributions to holders of
shares have historically been funded through a mixture of net investment income,
realized gains and paid-in capital. In addition, NRL may pay distributions in
excess of those required by its stable distribution policy to avoid excise tax
or to satisfy the requirements of Subchapter M of the Internal Revenue Code. NRL
has declared quarterly and paid monthly distributions to holders of shares in
the amount of $0.115 per share in each month beginning with January 2003.
Dividends and distributions to NRL's preferred stockholders are accrued and
determined according to the dividend and distribution rights of the preferred
stockholders fixed under NRL's Articles of Incorporation. We do not currently
intend to propose any changes to NRL's current distribution policy, although
changes to NRL's current distribution policy may be necessary if NRL's
investment policies are changed as we intend to propose.
SECTION 11. EFFECT OF THE OFFER ON THE MARKET FOR THE SHARES
Our purchase of shares under the Offer may reduce the number of holders of
shares and will reduce the number of shares that might otherwise trade publicly,
which could adversely affect the liquidity and market value of, and increase the
volatility of market prices of, the remaining shares the public holds. However,
we cannot predict whether the reduction in the number of shares that might
otherwise trade publicly would have an adverse or beneficial effect on the
market price for, or marketability of, the shares or whether such reduction
would cause future market prices to be greater or less than the price paid in
the Offer.
The continued listing of the shares on the NYSE is subject to compliance
with the listing requirements of the NYSE. In accordance with NYSE's published
guidelines, the shares would not meet the criteria for continued listing on the
NYSE if, among other things, the average market capitalization of NRL over 30
consecutive trading days is below $15.0 million or if NRL ceases to maintain its
closed-end status. We do not believe that the Offer would adversely affect the
continued listing of the shares on the NYSE. In addition, so long as NRL is a
registered investment company, the shares are not eligible for termination of
registration under Section 12(g)(4) of the Exchange Act.
SECTION 12. CERTAIN INFORMATION CONCERNING NRL
The information concerning NRL contained in this Offer to Purchase has been
taken from or based upon publicly available documents and records on file with
the SEC and other public sources and is qualified in its entirety by reference
thereto. None of the Trusts, the information agent or the depositary can take
responsibility for the accuracy or completeness of the information contained in
such documents and records, or for any failure by NRL to disclose events which
may have occurred or may affect the significance or accuracy of any such
information but which are unknown to the Trusts, the information agent or the
depositary.
According to NRL's annual report filed with the SEC for the fiscal year
ended October 31, 2003, NRL was organized as a Maryland corporation on September
11, 2002 as a non-diversified, closed-end management investment company under
the Investment Company Act of 1940, as amended (the "1940 Act"). The principal
executive offices of NRL are located at 605 Third Avenue, 2nd Floor, New York,
New York 10158-0180, and its telephone number is (212) 476-8800. According to
NRL's semi-annual report filed with the SEC for the period ended April 30, 2004,
as of April 30, 2004 there were 4,578,983 shares outstanding.
11
NRL is subject to the informational filing requirements under the 1940 Act
and the Exchange Act and is required to file annual and semi-annual reports,
proxy statements and other information with the SEC. You may read and copy any
reports, statements or other information NRL files at the SEC's public reference
room located at 450 Fifth Street, N.W., Washington, D.C. 20549. Please call the
SEC at l-800-SEC-0330 for further information on the public reference room.
Copies of such materials may also be obtained by mail from the Public Reference
Section of the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549 at
prescribed rates. The respective SEC filings are also available to the public
from commercial document retrieval services and at the web site maintained by
the SEC at http://www.sec.gov.
SECTION 13. DIVIDENDS AND DISTRIBUTIONS
Changes in Capitalization. If, on or after September 9, 2004, NRL should
(a) split, combine or otherwise change the shares or its capitalization, (b)
acquire or otherwise cause a reduction in the number of outstanding shares or
other securities or (c) issue or sell additional shares, shares of any other
class of capital stock, other voting securities or any securities convertible
into, or rights, warrants or options, conditional or otherwise, to acquire, any
of the foregoing, then, subject to the provisions of "THE OFFER -- Section 14,"
we, in our sole discretion, may make such adjustments as we deem appropriate in
the Offer price and other terms of the Offer, including, without limitation, the
number or type of securities offered to be purchased. If the Offer price is
reduced pursuant to the preceding sentence, and if, at the time that notice of
any such reduction in the Offer price is first published, sent, or given to
holders of shares, the Offer is scheduled to expire at any time earlier than the
tenth business day after (and including) the date of such notice, then the Offer
will be extended at least until the expiration of such period of ten business
days.
Dividends and Distributions - Generally. If, on or after September 9, 2004,
NRL should declare or pay any cash dividend (other than NRL's regular monthly
distribution of $0.115 per share payable on September 30, 2004) or other
distribution on the shares, or issue, with respect to the shares, any additional
shares, shares of any other class of capital stock, other voting securities or
any securities convertible into, or rights, warrants or options, conditional or
otherwise, to acquire, any of the foregoing, payable or distributable to
stockholders of record on a date prior to the transfer of the shares purchased
pursuant to the Offer to us or our nominees or transferees on NRL's stock
transfer records, then, subject to the provisions of "THE OFFER -- Section 14,"
(i) the Offer price will be reduced by the amount of any such cash dividend or
cash distribution and (ii) the whole of any such noncash dividend, distribution
or issuance to be received by the tendering stockholders will (a) be received
and held by the tendering stockholders for our account and will be required to
be promptly remitted and transferred by each tendering stockholder to the
depositary for our account, accompanied by appropriate documentation of
transfer, or (b) at our direction, be exercised for our benefit, in which case
the proceeds of such exercise will promptly be remitted to us. Pending such
remittance and subject to applicable law, we will be entitled to all rights and
privileges as owner of any such noncash dividend, distribution, issuance or
proceeds and may withhold the entire Offer price for the shares or deduct
therefrom the amount or value thereof, as we determine in our sole discretion.
Regular Monthly Distribution. NRL has publicly announced that it has
declared a distribution of $0.115 per share payable on September 30, 2004 to
holders of record of shares on September 15, 2004. Tendering your shares will
not affect your right to receive payment for the distribution payable on
September 30, 2004.
SECTION 14. CONDITIONS TO THE OFFER
Notwithstanding any other term of the Offer, we shall not be required to
accept for payment or, subject to any applicable rules and regulations of the
SEC, including Exchange Act Rule 14e-l(c) (which relates to our obligation to
pay for or return tendered shares promptly after the termination or withdrawal
of the Offer), to pay for, and may postpone the acceptance for payment of and
payment for, shares tendered, and we may amend the Offer or terminate the Offer
and not accept for payment any tendered shares if at any time prior to the
expiration of the Offer any of the following events shall be determined by us to
have occurred:
1) any change (or condition, event or development involving a prospective
change) shall have occurred or been threatened in the business,
properties, assets, liabilities, capitalization, stockholders' equity,
financial condition, or prospects of NRL which, in our sole judgment,
does or may have a materially adverse effect on NRL or us or any of
our affiliates, or we shall have become aware of any fact that, in our
sole judgment, does or may have a material adverse effect on the value
of the shares;
2) there shall be threatened, instituted, or pending any action,
proceeding, application or counterclaim by or before any court or
governmental, administrative or regulatory agency or authority,
domestic or foreign, or any other person or tribunal, domestic or
foreign, which (i) challenges or seeks to challenge, restrain or
prohibit the making of the Offer, the acquisition by us of the shares,
or any other matter directly or indirectly relating to the Offer, or
seeks to obtain any material damages or otherwise directly or
indirectly relating to the transactions contemplated by the Offer,
(ii) seeks to make the purchase of, or payment for, some or all of the
shares pursuant to the Offer illegal or results in a delay in our
ability to accept for payment or pay for some or all of the shares,
(iii) seeks to impose limitations on our ability (or any affiliate of
ours) to acquire or hold or to exercise full rights of ownership of
the shares, including, but not limited to, the right to vote the
shares purchased by us on all matters properly presented to the NRL
stockholders, (iv) would or might prohibit, restrict or delay the
consummation of the Offer or materially impair the contemplated
benefits to us thereof, including the exercise of voting or other
stockholder rights with respect to the shares pursuant to the Offer or
the receipt of any distributions or other benefits of ownership of the
purchased shares to which owners of shares are entitled generally, (v)
otherwise could materially adversely affect the business, properties,
assets, liabilities, capitalization, stockholders' equity, financial
condition, or prospects of NRL, or (vi) otherwise directly or
indirectly relates to the Offer or which otherwise, in our sole
judgment, might adversely affect us, NRL or any of our affiliates or
the value of the shares;
12
3) any action shall have been taken or any statute, rule, regulation,
judgment, decree, injunction or order (preliminary, permanent or
otherwise) shall have been proposed, sought, enacted, entered,
promulgated, enforced or deemed to be applicable to the Offer or us or
NRL or any of our affiliates by any court, government or governmental
agency or other regulatory or administrative authority, domestic or
foreign, which, in our sole judgment, (i) indicates that any approval
or other action of any such court, agency or authority may be required
in connection with the Offer or the purchase of shares thereunder,
(ii) would or might prohibit, restrict or delay consummation of the
Offer or materially impair the contemplated benefits to us thereof,
including the exercise of voting or other stockholder rights with
respect to the shares purchased pursuant to the Offer or the receipt
of any distributions or other benefits of ownership of the purchased
shares to which owners of shares are entitled generally, or (iii)
otherwise could materially adversely affect the business, properties,
assets, liabilities, capitalization, stockholders' equity, financial
condition, or prospects of us or NRL or any of our affiliates;
4) there shall have occurred (i) any general suspension of, or general
limitation on prices for, or trading in, securities on any national
securities exchange in the United States or in the over-the-counter
market, for a period in excess of three hours, (ii) a declaration of a
banking moratorium or any suspension of payments in respect of banks
in the United States or any limitation (whether or not mandatory) by
any governmental agency or authority on, or any other event that, in
our sole judgment, might adversely affect, the extension of credit by
banks or other financial institutions, (iii) a material change in
United States or any other currency exchange rates or a suspension of
or limitation on the markets therefor, (iv) the commencement of, or a
significant expansion in any currently ongoing, war, armed hostilities
or other similar national or international calamity directly or
indirectly involving the United States, or any attack on, or outbreak
or act of terrorism involving, the United States, (v) a material
decrease, in our reasonable judgment, in the market price for the
shares or in the general level of market prices for equity securities
in the United States, (vi) any change in the general political,
market, economic or financial conditions in the United States or other
jurisdictions in which NRL does business that could, in the sole
judgment of the Trusts, have a material adverse effect on the
business, properties, assets, liabilities, capitalization,
stockholders' equity, financial condition, or prospects of NRL, or
(vii) in the case of any of the foregoing existing at the time of the
commencement of the Offer, in our sole judgment, a material
acceleration or worsening thereof;
5) NRL shall have (i) split, combined or otherwise changed, or authorized
or proposed the split, combination or other change, of the shares or
its capitalization, (ii) acquired or otherwise caused a reduction in
the number of, or authorized or proposed the acquisition or other
reduction in the number of, any presently outstanding shares or other
securities or other equity interests, (iii) issued, distributed or
sold, or authorized or proposed the issuance, distribution or sale of,
additional shares, other than shares issued or sold pursuant to NRL's
dividend reinvestment plan in effect on September 10, 2004, or issued,
distributed or sold, or authorized or proposed the issuance,
distribution or sale, of shares of any other class of capital stock or
other equity interests, other voting securities, debt securities or
any securities convertible into, or rights, warrants or options,
conditional or otherwise, to acquire, any of the foregoing, (iv)
declared, paid or proposed to declare or pay any dividend or other
distribution on any shares of capital stock of NRL other than in
connection with NRL's publicly disclosed stable monthly dividend
policy in effect on September 10, 2004, (v) altered or proposed to
alter any material term of any outstanding security or material
contract, permit or license, (vi) authorized, recommended, proposed or
entered into, or announced its intention to authorize, recommend,
propose or enter into, any agreement or arrangement with any person or
group that, in the Trusts' sole opinion, could adversely affect either
the value of NRL or the value of the shares, or (vii) amended or
authorized or proposed any amendment to its articles of incorporation
or bylaws, or the Trusts shall become aware that NRL shall have
proposed or adopted any such amendment which shall not have been
previously disclosed;
6) a tender or exchange offer for any shares of the capital stock of NRL
shall have been made or publicly proposed to be made by another
person, or it shall have been publicly disclosed or we shall have
learned that (i) any person, entity or "group" (as that term is used
in Section 13(d)(3) of the Exchange Act) shall have acquired, or
proposed to acquire, more than five percent of any class or series of
capital stock of NRL (including the shares), or shall have been
granted any option or right, conditional or otherwise, to acquire more
than five percent of any class or series of capital stock of NRL
(including the shares) other than acquisitions for bona fide arbitrage
purposes and other than acquisitions by any person, entity or group
which has publicly disclosed such ownership in a Schedule 13D or 13G
(or an amendment thereto on file with the SEC on or prior to September
10, 2004), (ii) any such person, entity or group which has publicly
disclosed such ownership prior to such date shall have acquired or
proposed to acquire more than one percent of any class or series of
capital stock of NRL (including the shares) or shall have been granted
any option or right to acquire more than one percent of any class or
series of capital stock of NRL (including the shares), (iii) any new
group shall have been formed which beneficially owns more than five
percent of any class or series of capital stock of NRL (including the
shares), (iv) any such person, entity or group shall have entered into
a definitive agreement or an agreement in principle or made a proposal
with respect to a tender offer or exchange offer for any shares or
other business combination with or involving NRL or (v) any person
shall have filed a Notification and Report Form under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, or
made a public announcement reflecting an intent to acquire NRL or
assets or securities of NRL);
13
7) legislation amending the Code has been passed by either the U.S. House
of Representatives or the Senate or becomes pending before the U.S.
House of Representatives or the Senate or any committee thereof, the
effect of which, in our sole judgment, would be to change the tax
consequences of the transaction contemplated by the Offer in any
manner that would adversely affect us or any of our affiliates; or
8) any approval, permit, authorization, favorable review or consent of
any governmental entity required to be obtained in connection with the
Offer shall not have been obtained on terms satisfactory to us in our
reasonable discretion,
which, in our sole judgment, in any such case, and regardless of the
circumstances (including any action or inaction by us) giving rise to any such
condition, makes it inadvisable to proceed with the Offer and/or with such
acceptance for payment or payment.
All the foregoing conditions are for our sole benefit and may be asserted
by us regardless of the circumstances giving rise to such condition (including
any action or inaction by NRL) or may be waived by us in whole or in part, at
any time and from time to time prior to the expiration of the Offer, in our
reasonable discretion. Our failure at any time to exercise any of the foregoing
rights shall not be deemed a waiver of any such right and each such right shall
be deemed an ongoing right which may be asserted at any time and from time to
time prior to the expiration of the Offer. Any determination by us concerning
the events described in this Section 14 will be final and binding upon all
parties.
SECTION 15. CERTAIN LEGAL MATTERS
General. Except as described in this Section 15, based on a review of
publicly available filings NRL has made with the SEC and other publicly
available information concerning NRL, we are not aware of any license or
regulatory permit that appears to be material to the business of NRL and that
might be adversely affected by our acquisition of shares as contemplated by the
Offer, or of any approval or other action by any governmental entity that would
be required or desirable for the acquisition or ownership of shares by us as
contemplated by the Offer. Should any approval or other action be required or
desirable, we currently contemplate that we will seek or request NRL to seek
that approval or other action. There can be no assurance that any such approval
or other action, if needed, would be obtained or would be obtained without
substantial conditions. Should any such approval or other action not be obtained
or be obtainable only subject to substantial conditions, we could decline to
accept for payment or pay for any shares tendered. See "THE OFFER -- Section
14."
Provisions of Maryland Law. Maryland has adopted a Control Share
Acquisition Act (the "Control Share Act"), which provides that control shares of
a Maryland corporation acquired in a control share acquisition have no voting
rights except to the extent approved by stockholders at a special meeting by a
vote of two-thirds of the votes entitled to be cast on the matter (excluding
shares owned by the acquiror and by officers or by directors who are employees
of the corporation). Control shares are voting shares of stock which, if
aggregated with all other shares of stock owned by the acquiror or in respect of
which the acquiror is able to exercise or direct the exercise of voting power
(except solely by virtue of a revocable proxy), would entitle the acquiror to
exercise voting power in electing directors within certain statutorily-defined
ranges (one-tenth but less than one-third, one-third but less than a majority,
and more than a majority of the voting power).
As a closed end investment company registered under the Investment Company
Act of 1940, NRL is exempt from the Control Share Act unless its board of
directors adopts a resolution electing to be subject to the Control Share Act.
Further, any resolution by NRL's board of directors electing to cause NRL to
become subject to the Control Share Act is not effective with respect to any
person who became a holder of control shares before the time that the resolution
is adopted. Based on a review of publicly available filings NRL has made with
the SEC, we are not aware of any action taken by NRL's board of directors to
adopt a resolution electing to subject NRL to the Control Share Act as of
September 10, 2004. In addition, because we may be deemed to own control shares
as of September 2, 2004, we do not believe that action by NRL's board of
directors to adopt such a resolution after that date would result in the Control
Share Act applying to us.
Maryland has also adopted a Business Combination Act (the "Business
Combination Act"), which prohibits an interested stockholder of a Maryland
corporation from engaging in a business combination with the corporation for a
period of five years after the most recent date on which the interested
stockholder became an interested stockholder. An interested stockholder is a
stockholder that holds ten percent or more of the voting power of the
outstanding stock of the corporation, and a business combination is generally
defined to include a merger, consolidation, share exchange, sale of a
substantial amount of assets, a transfer of the corporation's securities and
similar transactions to or with the interested stockholder or an entity
affiliated with the interested stockholder.
As a closed end investment company registered under the Investment Company
Act of 1940, NRL is exempt from the Business Combination Act unless its board of
directors adopts a resolution electing to be subject to the Business Combination
Act. Further, any resolution by NRL's board of directors electing to cause NRL
to become subject to the Business Combination Act is not effective with respect
to any person who became an interested stockholder before the time that the
resolution is adopted. Based on a review of publicly available filings NRL has
made with the SEC, we are not aware of any action taken by NRL's board of
directors to adopt a resolution electing to subject NRL to the Business
Combination Act as of September 10, 2004. In addition, because we may be deemed
to hold more than 10% of the voting power of the outstanding stock of NRL as of
September 2, 2004, we do not believe that action by NRL's board of directors to
adopt such a resolution after that date would result in the Business Combination
Act applying to us. Further, we have no current plans to seek to engage in any
transaction with NRL that we believe would constitute a business combination.
14
Other State Takeover Statutes. NRL may be deemed to conduct business in a
number of other states throughout the United States, some of which have enacted
takeover laws. We do not know whether any of these laws will, by their terms,
apply to the Offer and have not complied with any such laws. Should any person
seek to apply any such state takeover law, we will take such action as then
appears desirable, which may include challenging the validity or applicability
of any such statute in appropriate court proceedings. In the event it is
asserted that one or more state takeover laws is applicable to the Offer and an
appropriate court does not determine that it is inapplicable or invalid as
applied to the Offer, we might be required to file certain information with, or
receive approvals from, the relevant state authorities. In addition, if
enjoined, we might be unable to accept for payment any shares tendered pursuant
to the Offer or be delayed in continuing or consummating the Offer. In such
case, we may not be obligated to accept for payment any Shares tendered. See
"THE OFFER -- Section 14."
Antitrust. Under the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended, and the rules that have been promulgated thereunder by the Federal
Trade Commission (the "FTC"), certain acquisition transactions may not be
consummated unless certain information has been furnished to the Antitrust
Division of the Department of Justice and the FTC and certain waiting period
requirements have been satisfied. We have concluded that the purchase of shares
pursuant to the Offer is not subject to such requirements and, as a result,
believe the Offer can be consummated in compliance with federal and state
antitrust laws.
Appraisal Rights. There are no appraisal or dissenter's rights available in
connection with the Offer.
SECTION 16. CERTAIN FEES AND EXPENSES
We have retained MacKenzie Partners, Inc., to act as the information agent
and The Colbent Corporation to serve as the depositary in connection with the
Offer. The information agent and the depositary each will receive reasonable and
customary compensation for their services, be reimbursed for certain reasonable
out-of-pocket expenses and be indemnified against various liabilities and
expenses in connection therewith, including various liabilities and expenses
under the federal securities laws. The information agent may contact NRL
stockholders by mail, facsimile or personal interviews and may request banks,
brokers, dealers, trust companies and other nominee stockholders to forward
materials relating to the Offer to beneficial owners of the shares.
We will not pay any fees or commissions to any broker or dealer or other
person, other than the depositary and the information agent, in connection with
the solicitation of tenders of shares under the Offer. We will reimburse banks,
brokers, dealers, trust companies and other nominees on their request for
customary mailing and handling expenses they incur in forwarding material to
their customers.
SECTION 17. MISCELLANEOUS
The Offer is not being made to, nor will tenders be accepted from or on
behalf of, holders of shares in any jurisdiction in which the making of the
Offer or the acceptance thereof would not comply with the laws of that
jurisdiction. We are not aware of any jurisdiction in which the making of the
Offer or the tender of shares in connection therewith would not be in compliance
with the laws of such jurisdiction. If we become aware of any state law
prohibiting the making of the Offer or the acceptance of shares pursuant thereto
in such state, we will make a good faith effort to comply with any such state
statute or seek to have such state statute declared inapplicable to the Offer.
If, after such good faith effort, we cannot comply with any such state statute,
the Offer will not be made to (nor will tenders be accepted from or on behalf
of) the holders of shares in such jurisdiction. In any jurisdiction where the
securities, blue sky or other 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 Trusts
by one or more registered brokers or dealers which are licensed under the laws
of such jurisdiction.
No person has been authorized to give any information or to make any
representation on our behalf not contained herein or in the letter of
transmittal and, if given or made, that information or representation must not
be relied on as having been authorized.
We have filed with the SEC a Schedule TO under Exchange Act Rule 14d-3,
together with exhibits, furnishing additional information with respect to the
Offer, and may file amendments thereto. That schedule and any amendments
thereto, including exhibits, may be examined and copies may be obtained from the
offices of the SEC in the same manner as discussed in "THE OFFER -- Section 12"
with respect to information concerning NRL.
LOLA BROWN TRUST NO.1B
ERNEST HOREJSI TRUST NO.1B
September 10, 2004
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SCHEDULE I
INFORMATION CONCERNING THE DIRECTORS AND EXECUTIVE OFFICERS OF BADLANDS
The following table sets forth the name, address, present principal
occupation or employment, and material occupations, positions, offices or
employments for the past five years, of each director and executive officer of
Badlands (including the name and principal business and address of each
corporation or other organization in which the occupation, position, office or
employment of such person was conducted, to the extent not set forth in "THE
OFFER - Section 1").
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT; MATERIAL POSITIONS HELD
NAME; ADDRESS POSITION WITH BADLANDS DURING THE PAST FIVE YEARS
------------- ---------------------- --------------------------
|X| CPA with Williams & Company, an accounting firm whose
Gail G. Gubbells, President & Director since principal business address is 614 Broadway, Yankton, SD
614 Broadway 2001 57078, from 1981 to present
Yankton, SD 57078
|X| Of Counsel with Krassa & Miller LLC, a law firm whose
Stephen C. Miller Vice President & Director principal business address is 1680 38th Street #800, Boulder,
1680 38th Street #800 since 1997 CO 80301, from 1991 to present
Boulder, CO 80301 |X| President and General Counsel of BIA from 1999 to present
|X| Manager of FAS, whose principal business address is 1680 38th
Street #800, Boulder, CO 80301, from 1999 to present
|X| Vice President of SIA from 1996 to present
|X| Director and President of BIF from 2002 to present
|X| Director and President of BTF from 1999 to present
|X| Director and President of FF from August 2003 to present
|X| CPA with Williams & Company, an accounting firm whose
Martys Jans Director since 2000 principal business address is 614 Broadway, Yankton, SD
614 Broadway 57078, from 1964 to present
Yankton, SD 57078
|X| President, Salina Auto Parts, Inc. from 1960 to July 2004
Larry L. Dunlap Director since 1997 (since retired)
P.O. Box 121
Salina, KS 67402
|X| Pilot with American Airlines, whose principal business
Robert Ciciora Director since 1998 address is 4333 Amon Carter Boulevard, Fort Worth, TX 76155,
1680 38th Street #800 from 1987 to present
Boulder, CO 80301
|X| Executive Assistant at FAS from 1999 to present
Laura Rhodenbaugh Treasurer since 1997
200 S. Santa Fe, Suite 4
Salina, KS 67401
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SCHEDULE II
INFORMATION CONCERNING PURCHASES OF SHARES BY THE LOLA TRUST
AND THE ERNEST TRUST
The following table sets forth information concerning the date, number of
shares purchased and average price per shares of the shares purchased by the
Lola Trust. In addition, the Ernest Trust purchased 4,900 shares on August 31,
2004 at an average price of $19.65 per share.
Date of Purchase Number of Shares Purchased Price per Share
7/9/2004 31,000 $17.91
7/12/2004 37,500 $17.87
7/13/2004 6,900 $17.83
7/14/2004 32,900 $18.03
7/15/2004 1,900 $18.09
7/16/2004 13,800 $18.33
7/21/2004 5,000 $18.38
7/27/2004 3,500 $17.85
7/28/2004 2,200 $17.90
7/29/2004 5,000 $18.01
7/30/2004 8,100 $18.17
8/2/2004 2,000 $18.21
8/3/2004 10,200 $18.35
8/4/2004 4,800 $18.65
8/6/2004 4,200 $18.77
8/9/2004 10,400 $18.86
8/10/2004 2,200 $18.85
8/11/2004 3,000 $18.59
8/12/2004 27,100 $18.73
8/13/2004 16,800 $18.77
8/23/2004 25,000 $19.01
8/24/2004 23,300 $19.30
8/25/2004 42,900 $19.53
8/26/2004 34,200 $19.70
8/27/2004 22,800 $19.89
8/30/2004 24,900 $19.87
8/31/2004 22,800 $20.17
9/1/2004 25,800 $20.34
9/2/2004 7,000 $20.36
9/7/2004 6,000 $20.12
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Facsimile copies of the letter of transmittal, properly completed and duly
executed, will be accepted. The letter of transmittal, certificates for shares
and any other required documents should be sent or delivered by each stockholder
of NRL or his or her broker, dealer, commercial bank, trust company or other
nominee to the depositary at one of its addresses set forth below:
The Depositary for the Offer is:
The Colbent Corporation
By Mail: By Overnight Courier: By Hand:
The Colbent Corporation The Colbent Corporation The Colbent Corporation
Attn: Corporate Actions Attn: Corporate Actions Attn: Corporate Actions
POB 859208 161 Bay State Drive 161 Bay State Drive
Braintree MA 02185-9208 Braintree MA 02184 Braintree MA 02184
By Facsimile:
(781-380-3388)
Confirm Facsimile Transmission:
(781-843-1833 Ext. 200)
Questions and requests for assistance may be directed to the information agent
at its address and telephone numbers listed below. Additional copies of this
Offer to Purchase, the letter of transmittal and other tender offer materials
may be obtained from the information agent, and will be furnished promptly at
our expense. You may also contact your broker, dealer, commercial bank, trust
company or other nominee for assistance concerning the Offer.
The Information Agent for the Offer is:
MACKENZIE PARTNERS, INC.
[GRAPHIC OMITTED]
105 Madison Avenue
New York, New York 10016
(212) 929-5500 (Call Collect)
or
(800) 322-2885 (Toll Free)
E-MAIL: proxy@mackenziepartners.com
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