Exhibit (a)(1)
OFFER TO PURCHASE FOR CASH 1,000,000
SHARES OF COMMON STOCK
OF
BELLAVISTA CAPITAL, INC.
AT
$2.25 PER SHARE
SUTTER OPPORTUNITY FUND 3, LLC; SUTTER OPPORTUNITY FUND 3 TAX EXEMPT, LLC;
MPF-NY 2005, LLC; MPF BLUE RIDGE FUND I, LLC; MPF BLUE RIDGE FUND II, LLC; MPF
FLAGSHIP FUND 11; MP VALUE FUND 7, LLC; MACKENZIE PATTERSON SPECIAL FUND 5, LLC;
MACKENZIE PATTERSON SPECIAL FUND 7, LLC; MACKENZIE PATTERSON SPECIAL FUND 6,
LLC; MACKENZIE PATTERSON SPECIAL FUND 6-A, LLC; MPF FLAGSHIP FUND 10, LLC; MPF
DEWAAY PREMIER FUND 2, LLC; MPF DEWAAY FUND 3, LLC; AND MPF INCOME FUND 23, LLC
(collectively the "Purchasers")
THE OFFER, WITHDRAWAL RIGHTS, AND PRORATION PERIOD WILL EXPIRE AT 12:00
MIDNIGHT, PACIFIC TIME, ON NOVEMBER 28, 2005, UNLESS THE OFFER IS
EXTENDED.
The Purchasers hereby seek to acquire 1,000,000 Shares of common stock (the
"Shares") in BELLAVISTA CAPITAL, INC. (the "Corporation"). The Purchasers are
not affiliated with the Corporation or its management. The Purchasers hereby
offer to purchase 1,000,000 Shares at a purchase price equal to $2.25 per Share,
less the amount of any dividends declared or made with respect to the Shares
between October 17, 2005 and November 28, 2005, or such other date to which this
offer may be extended (the "Expiration Date"), in cash, without interest, upon
the terms and subject to the conditions set forth in this offer to purchase (the
"Offer to Purchase") and in the related Letter of Transmittal, as each may be
supplemented or amended from time to time (which together constitute the
"Offer"). As noted above, the Offer price would be subject to reduction for
dividends made or declared prior to the Expiration Date. Any dividends made or
declared after the Expiration Date would, by the terms of the Offer and as set
forth in the Letter of Transmittal, be assigned by tendering Shareholders to the
Purchasers.
Tender of Shares will include the tender of any and all securities into which
the Shares may be converted and any securities distributed with respect to the
Shares from and after the Offer Date.
The Corporation had 958 holders of record (according to the Corporation as of
June 22, 2005, after reduction for the purchases by the Purchasers and/or their
affiliates earlier this year) owning an aggregate of 14,991,325 shares as of
June 30, 2005, according to its Quarterly Report on Form 10-Q for the fiscal
quarter ending June 30, 2005. The Purchasers and their affiliates currently
beneficially own 273,908 Shares, or 1.83% of the outstanding Shares. The
1,000,000 Shares subject to the Offer constitute 6.67% of the outstanding
Shares. Consummation of the Offer, if all Shares sought are tendered, would
require payment by the Purchasers of up to $2,250,000.00 in aggregate purchase
price, which the Purchasers intend to fund out of their current working capital.
Holders of Shares ("Shareholders") are urged to consider the following factors:
o Shareholders who tender their Shares will give up the opportunity to
participate in any future benefits from the ownership of Shares,
including potential future dividends by the Corporation from
property operations or dispositions, and the purchase price per
Share payable to a tendering Shareholder by the Purchasers may be
less than the total amount which might otherwise be received by the
Shareholder with respect to the Share from the Corporation.
o The Purchasers are making the Offer for investment purposes and with
the intention of making a profit from the ownership of the Shares.
In establishing the purchase price of $2.25 per Share, the
Purchasers are motivated to establish the lowest price which might
be acceptable to Shareholders consistent with the Purchasers'
objectives. There is no public market for the Shares, and neither
the Shareholders nor the Purchasers have any accurate means for
determining the actual present value of the Shares. Although there
can be no certainty as to the actual present value of the Shares,
the Corporation has estimated that the Corporation could have an
estimated liquidation value of approximately $4.24 per Share,
according to its letter to Shareholders dated October 4, 2005. It
should be noted, however, that the Purchasers have not made an
independent appraisal of the Shares or the Corporation's assets, and
are not qualified to appraise
1
real estate. Furthermore, there can be no assurance as to the timing
or amount of any future Corporation dividends, and there cannot be
any assurance that the Corporation's estimate accurately reflects an
approximate value of the Shares or that the actual amounts which may
be realized by holders for the Shares may not vary substantially
from this estimate.
o The Depositary, MacKenzie Patterson Fuller, Inc., is an affiliate of
certain of the Purchasers. No independent party will hold securities
tendered until the offer closes and payment is made. Because there
is no independent intermediary to hold the Purchasers' funds and
tendered securities, the Purchasers may have access to the
securities before all conditions to the Offer have been satisfied
and selling Shareholders have been paid.
o The Offer allows Shareholders the option to sell "All or None" of
their Shares, thereby allowing Shareholders the option to avoid
proration if more than 1,000,000 Shares are tendered. See "Section
2--Acceptance for Payment and Payment for Shares; Proration" and
"Section 4--Withdrawal Rights; Automatic Withdrawal Option." The
Purchasers may accept only a portion of the Shares tendered by a
Shareholder if a total of more than 1,000,000 Shares are tendered
and the Shareholder does not select the "All or None" option.
THE OFFER TO PURCHASE IS NOT CONDITIONED UPON ANY MINIMUM NUMBER OF SHARES BEING
TENDERED. IF MORE THAN 1,000,000 SHARES ARE VALIDLY TENDERED AND NOT WITHDRAWN,
THE PURCHASERS WILL ACCEPT FOR PURCHASE 1,000,000 SHARES FROM TENDERING
SHAREHOLDERS (WHO DO NOT ELECT THE "ALL OR NONE" OPTION) ON A PRO RATA BASIS,
SUBJECT TO THE TERMS AND CONDITIONS HEREIN. A SHAREHOLDER MAY TENDER ANY OR ALL
SHARES OWNED BY SUCH SHAREHOLDER.
The Purchasers expressly reserve the right, in their sole discretion, at any
time and from time to time, (i) to extend the period of time during which the
Offer is open and thereby delay acceptance for payment of, and the payment for,
any Shares, (ii) upon the occurrence of any of the conditions specified in
Section 13 of this Offer to Purchase, to terminate the Offer and not accept for
payment any Shares, and (iii) to amend the Offer in any respect prior to the
Expiration Date. Notice of any such extension, termination, or amendment will
promptly be disseminated to Shareholders in a manner reasonably designed to
inform Shareholders of such change in compliance with Rule 14d-4(c) under the
Securities Exchange Act of 1934 (the "Exchange Act"). In the case of an
extension of the Offer, such extension will be followed by a press release or
public announcement which will be issued no later than 9:00 a.m., Eastern Time,
on the next business day after the scheduled Expiration Date, in accordance with
Rule 14e-1(d) under the Exchange Act.
October 17, 2005
2
IMPORTANT
Any Shareholder desiring to tender any or all of such Shareholder's Shares
should complete and sign the Letter of Transmittal (a copy of which is enclosed
with this Offer to Purchase, printed on blue paper) in accordance with the
instructions in the Letter of Transmittal and mail, deliver or telecopy the
Letter of Transmittal and any other required documents to MacKenzie Patterson
Fuller, Inc. (the "Depositary"), an affiliate of certain of the Purchasers, at
the address or facsimile number set forth below.
MacKenzie Patterson Fuller, Inc.
1640 School Street
Moraga, California 94556
Telephone: 800-854-8357
Facsimile: 925-631-9119
E-Mail Address: offers@mpfi.com
Questions or requests for assistance or additional copies of this Offer to
Purchase or the Letter of Transmittal may be directed to the Purchasers at
1-800-854-8357.
- ---------------------------
NO PERSON HAS BEEN AUTHORIZED TO MAKE ANY RECOMMENDATION OR ANY REPRESENTATION
ON BEHALF OF THE PURCHASERS OR TO PROVIDE ANY INFORMATION OTHER THAN AS
CONTAINED HEREIN OR IN THE LETTER OF TRANSMITTAL. NO SUCH RECOMMENDATION,
INFORMATION OR REPRESENTATION MAY BE RELIED UPON AS HAVING BEEN AUTHORIZED.
- ---------------------------
The Corporation is subject to the information and reporting requirements of the
Exchange Act and in accordance therewith is required to file reports and other
information with the Securities and Exchange Commission ("Commission") relating
to its business, financial condition and other matters. Such reports and other
information are available on the Commission's electronic data gathering and
retrieval (EDGAR) system, at its internet web site at www.sec.gov, may be
inspected at the public reference facilities maintained by the Commission at 100
F Street, NE, Room 1580, Washington, D.C. 20549. Copies of such material can
also be obtained from the Public Reference Room of the Commission in Washington,
D.C. at prescribed rates.
The Purchasers have filed with the Commission a Tender Offer Statement on
Schedule TO (including exhibits) pursuant to Rule 14d-3 of the General Rules and
Regulations under the Exchange Act, furnishing certain additional information
with respect to the Offer. Such statement and any amendments thereto, including
exhibits, may be inspected and copies may be obtained from the offices of the
Commission in the manner specified above.
3
TABLE OF CONTENTS
Page
SUMMARY TERM SHEET.............................................................5
INTRODUCTION...................................................................8
TENDER OFFER..................................................................11
Section 1. Terms of the Offer................................................11
Section 2. Acceptance for Payment and Payment for Shares; Proration..........11
Section 3. Procedures for Tendering Shares...................................12
Section 4. Withdrawal Rights.................................................13
Section 5. Extension of Tender Period; Termination; Amendment................14
Section 6. Material Federal Income Tax Consequences..........................14
Section 7. Effects of the Offer..............................................15
Section 8. Future Plans......................................................15
Section 9. The Business of the Partnership...................................16
Section 10. Conflicts of Interest.............................................16
Section 11. Certain Information Concerning the Purchasers.....................16
Section 12. Source of Funds...................................................17
Section 13. Conditions of the Offer...........................................17
Section 14. Certain Legal Matters.............................................18
Section 15. Fees and Expenses.................................................19
Section 16. Miscellaneous.....................................................19
SCHEDULE I....................................................................20
4
SUMMARY TERM SHEET
The Purchasers are offering to purchase up to 1,000,000 Shares for $2.25 per
Share in cash. The following are some of the questions that you, as a
Shareholder of the Corporation, may have and answers to those questions. The
information in this summary is not complete, and we urge you to carefully read
the remainder of this Offer to Purchase and the accompanying Letter of
Transmittal.
WHO IS OFFERING TO BUY MY SECURITIES?
The offer to purchase your Shares is being made jointly by Sutter Opportunity
Fund 3, LLC; Sutter Opportunity Fund 3 Tax Exempt, LLC; MPF-NY 2005, LLC; MPF
Blue Ridge Fund I, LLC; MPF Blue Ridge Fund II, LLC; MPF Flagship Fund 11; MP
Value Fund 7, LLC; MacKenzie Patterson Special Fund 5, LLC; MacKenzie Patterson
Special Fund 7, LLC; MacKenzie Patterson Special Fund 6, LLC; MacKenzie
Patterson Special Fund 6-A, LLC; MPF Flagship Fund 10, LLC; MPF DeWaay Premier
Fund 2, LLC; MPF DeWaay Fund 3, LLC; and MPF Income Fund 23, LLC. Each of the
entity Purchasers is a real estate investment fund managed or advised by
MacKenzie Patterson Fuller, Inc., a private, independent real estate investment
firm. None of these entities is affiliated with the Corporation or its
management.
WHAT ARE THE CLASSES AND AMOUNTS OF SECURITIES SOUGHT IN THE OFFER?
We are seeking to purchase 1,000,000 Shares of common stock, which are the
"Shares" issued to investors in the Corporation.
HOW MUCH ARE YOU OFFERING TO PAY AND WHAT IS THE FORM OF PAYMENT?
We are offering to pay $2.25 per Share, net to you in cash, less the amount of
any dividends declared or made with respect to the Shares between October 17,
2005 and the date the Offer expires. The Offer price would be reduced by the
amount of dividends made or declared prior to the Expiration Date (however, the
Corporation has said it will not be paying dividends). Any dividends made or
declared after the Expiration Date would, by the terms of the Offer and as set
forth in the Letter of Transmittal, be assigned by tendering Shareholders to the
Purchasers. If you tender your Shares to us in the Offer, you will not have to
pay brokerage fees or similar expenses.
DO YOU HAVE THE FINANCIAL RESOURCES TO MAKE PAYMENT?
If the total amount of Shares sought is purchased, the Purchasers' capital
commitment will be approximately $2,250,000.00. The Purchasers have an aggregate
of approximately $35 million in total assets at their disposal to fund payment
to selling Shareholders. The Purchasers currently have sufficient funded capital
to fund all of their commitments under this Offer and all other tender offers
they may be presently making.
IS THE FINANCIAL CONDITION OF THE BIDDERS RELEVANT TO MY DECISION ON WHETHER TO
TENDER IN THE OFFER?
Because this is a cash offer that is not conditioned on financing being
available, and the Purchasers have more than adequate resources and no intention
to take control of the Corporation, other information concerning the Purchasers'
financial condition would seem to have little relevance to your decision.
HOW LONG DO I HAVE TO DECIDE WHETHER TO TENDER IN THE OFFER?
You will have at least until 12:00 midnight, Pacific Time, on November 28, 2005,
to decide whether to tender your Shares in the Offer.
5
WILL ALL OF THE SHARES I TENDER BE ACCEPTED BY THE PURCHASERS?
The Purchasers desire to purchase up to 1,000,000 Shares. If the number of
Shares validly tendered and not properly withdrawn on or prior to the Expiration
Date is less than or equal to 1,000,000, we will purchase all Shares so tendered
and not withdrawn, upon the terms and subject to the conditions of the Offer.
However, if more than 1,000,000 Shares are so tendered and not withdrawn, we
will accept for payment and pay for 1,000,000 Shares so tendered, pro rata
according to the number of Shares so tendered, adjusted by rounding down to the
nearest whole number of Shares tendered by each Shareholder to avoid purchases
of fractional Shares, as appropriate. However, you have the option to sell "All
or None" of your shares by checking the appropriate box on the Letter of
Transmittal. If you check that box, we will only purchase your Shares if we can
purchase all of your Shares; otherwise, you will be deemed to automatically
withdraw your tender. See "Tender Offer -- Section 2. Acceptance for Payment and
Payment for Shares; Proration" and "Section 4. Withdrawal Rights."
CAN THE OFFER BE EXTENDED AND UNDER WHAT CIRCUMSTANCES?
The Offer can be extended in our discretion.
HOW WILL I BE NOTIFIED IF THE OFFER IS EXTENDED?
If we extend the offer, we will make a public announcement of the extension, not
later than 9:00 a.m., Eastern Time, on the day after the day on which the Offer
was scheduled to expire.
WHAT ARE THE MOST SIGNIFICANT CONDITIONS TO THE OFFER?
There are no conditions to the offer based on a minimum number of Shares
tendered, the availability of financing, or the success of the offer. However,
we may not be obligated to purchase any Shares if certain conditions occur, such
as legal or government actions which would prohibit the purchase. Furthermore,
we are not obligated to purchase any Shares which are validly tendered if, among
other things, there is a material adverse change in the Corporation or its
business. Please see the discussion in Section 13, Conditions of the Offer, for
a description of all conditions.
WHEN WILL YOU PAY ME FOR THE SHARES I TENDER?
Upon the Expiration of the Offer and our acceptance of the Shares you tender, we
will pay you upon the earlier of receipt of your share certificates or
confirmation from the Corporation that you own the Shares.
HOW DO I TENDER MY SHARES?
To tender your Shares, you must deliver a completed Letter of Transmittal
(printed on blue paper), to the Depositary at: MacKenzie Patterson Fuller, Inc.,
1640 School Street, Moraga, California 94556 (Telephone: 800-854-8357; Facsimile
Transmission: 925-631-9119), no later than the time the Offer expires.
UNTIL WHAT TIME CAN I WITHDRAW PREVIOUSLY TENDERED SHARES?
You can withdraw previously tendered Shares at any time until the Offer has
expired and, if we have not agreed to accept your Shares for payment by December
16, 2005, you can withdraw them at any time after such time until we do accept
your Shares for payment.
HOW DO I WITHDRAW PREVIOUSLY TENDERED SHARES?
To withdraw Shares, you must deliver a written notice of withdrawal, or a
facsimile of one, with the required information to the Depositary while you
still have the right to withdraw the Shares.
WHAT DOES THE CORPORATION THINK OF THE OFFER?
The Purchasers have not sought the approval or disapproval of the Corporation.
The Corporation may be expected to respond with the Corporation's position on
the offer in the next two weeks.
6
WILL THE CORPORATION CONTINUE AS A PUBLIC COMPANY?
The Corporation reported 958 holders of its outstanding Shares (according to the
Corporation as of June 22, 2005, after reduction for the purchases by the
Purchasers and/or their affiliates earlier this year). If the total number of
Shareholders is below 300, the Corporation can elect to discontinue its status
as a public reporting company. Accordingly, it is possible that the Offer could
result in the total number of Shareholders falling below the 300 holder level.
However, there has never been a public trading market for the Shares and none is
expected to develop, so the Corporation's status as a public company will not
affect a trading market in the Shares. A change in the Corporation's status as a
public company could reduce the information available to Shareholders about the
Corporation in the event the information provided to Shareholders by the
Corporation is not as extensive as that provided in reports required to be filed
by public companies under applicable rules of the Securities and Exchange
Commission. Further, such potential deregistration would result in the loss of
the other protections afforded by registration.
IF I DECIDE NOT TO TENDER, HOW WILL THE OFFER AFFECT MY SHARES?
The Purchasers do not anticipate that Shares held by non-tendering Shareholders
will be affected by the completion of the offer.
WHAT ARE THE PURCHASERS' FUTURE INTENTIONS CONCERNING THE CORPORATION?
The Purchasers have no present intention to seek control of the Corporation or
to change the management or operations of the Corporation. The Purchasers do not
have any present intention to take action in connection with the liquidation of
the Corporation or with any extraordinary transaction concerning the Corporation
or its assets. Although the Purchasers do not have any present intention to take
any action with respect to management or control of the Corporation, the
Purchasers reserve the right, at an appropriate time, to exercise their rights
as shareholders to vote on matters subject to a shareholder vote, including any
vote affecting the sale of the Corporation's assets and the liquidation and
dissolution of the Corporation.
WHAT IS THE MARKET VALUE OF MY SHARES?
The Shares do not have a readily ascertainable market value, and neither the
Shareholders nor the Purchasers have any accurate means for determining the
actual present value of the Shares. According to the Corporation, "There is no
public market for shares nor is it anticipated that any public market for shares
will develop." (Quarterly Report on Form 10-Q for the fiscal quarter ending June
30, 2005). The Purchasers are unaware of any trading in the Shares on secondary
markets other than a tender offer by certain of the Purchasers and their
affiliates in June 2005, pursuant to which they purchased 273,908 Shares at
$2.25 per Share. Although there can be no certainty as to the actual present
value of the Shares, the Corporation has estimated that the Corporation an
estimated Net Realizable Value of approximately $4.24 per Share according to its
Form 10-Q for the period ending June 30, 2005. It should be noted, that the
Purchasers have not made an independent appraisal of the Shares or the
Corporation's assets, and are not qualified to appraise real estate.
Accordingly, there can be no assurance that this estimate accurately reflects an
approximate value of the Shares or that the actual amounts which may be realized
by Shareholders for the may not vary substantially from this estimate.
TO WHOM CAN I TALK IF I HAVE QUESTIONS ABOUT THE TENDER OFFER?
You can call MacKenzie Patterson Fuller, Inc., toll-free, at 800-854-8357.
7
To the Shareholders of BELLAVISTA CAPITAL, INC.:
INTRODUCTION
The Purchasers hereby offer to purchase up to 1,000,000 Shares at a
purchase price of $2.25 per Share ("Offer Price"), less the amount of any
dividends declared or paid with respect to the Shares between October 17, 2005,
and the Expiration Date, in cash, without interest, upon the terms and subject
to the conditions set forth in the Offer. The Purchasers are unaware of any
dividends declared or paid since October 17, 2005. Shareholders who tender their
Shares will not be obligated to pay any Corporation transfer fees, or any other
fees, expenses or commissions in connection with the tender of Shares. The
Purchasers will pay all such costs and all charges and expenses of the
Depositary, an affiliate of certain of the Purchasers, as depositary in
connection with the Offer.
For further information concerning the Purchasers, see Section 11 below
and Schedule I. None of the Purchasers or the Depositary is affiliated with the
Corporation or the Corporation's management. The address of the Corporation's
principal executive offices is 420 Florence Street Suite 200, Palo Alto, CA
94301, and its phone number is (650) 328-3060
Shareholders are urged to consider the following factors:
o The Offer will provide Shareholders with an opportunity to liquidate
their investment without the usual transaction costs associated with
market sales. Shareholders may have a more immediate need to use the
cash now tied up in an investment in the Shares and may wish to sell
them to the Purchasers.
o The Corporation has decided to cancel all share redemptions and all
dividends for at least three years (according to the Form 8-K filed
o Shareholders who tender their Shares will give up the opportunity to
participate in any future benefits from the ownership of Shares,
including potential future dividends by the Corporation from asset
dispositions or operations from future development, if any, and the
purchase price per Share payable to a tendering Shareholder by the
Purchasers may be less than the total amount which might otherwise
be received by the Shareholder with respect to the Share from the
Corporation.
o The Purchasers are making the Offer for investment purposes and with
the intention of making a profit from the ownership of the Shares.
In establishing the purchase price of $2.25 per Share, the
Purchasers are motivated to establish the lowest price which might
be acceptable to Shareholders consistent with the Purchasers'
objectives. There is no public market for the Shares, and neither
the Shareholders nor the Purchasers have any accurate means for
determining the actual present value of the Shares. Although there
can be no certainty as to the actual present value of the Shares,
the Corporation has estimated that the Corporation an estimated Net
Realizable Value of approximately $4.24 per Share according to its
Form 10-Q for the period ending June 30, 2005. It should be noted,
however, that the Purchasers have not made an independent appraisal
of the Shares or the Corporation's assets, and are not qualified to
appraise real estate. Furthermore, although the Corporation has
announced that it is attempting to sell its remaining property,
there can be no assurance as to the timing or amount of any future
Corporation dividends, and there can be no assurance that the
Purchasers' estimate accurately reflects an approximate value of the
Shares or that the actual amounts which may be realized by holders
for the Shares may not vary substantially from this estimate.
o The Depositary, MacKenzie Patterson Fuller, Inc., is an affiliate of
certain of the Purchasers. No independent party will hold securities
tendered until the offer closes and payment is made. Because there
is no independent intermediary to hold the Purchasers' funds and
tendered securities, the Purchasers may have access to the
securities before all conditions to the Offer have been satisfied
and selling Shareholders have been paid.
o The Purchasers may accept only a portion of the Shares tendered by a
Shareholder in the event a total of more than 1,000,000 Shares are
tendered, although the Shareholder has the option to sell "All or
None" and avoid any proration. See
8
Establishment of the Offer Price
The Purchasers have set the Offer Price at $2.25 per Share, less the
amount of any dividends declared or made with respect to the Shares between
October 17, 2005 and the Expiration Date. In determining the Offer Price, the
Purchasers analyzed a number of quantitative and qualitative factors, including:
(i) the lack of a secondary market for resales of the Shares and the resulting
lack of liquidity of an investment in the Corporation; (ii) the estimated value
of the Corporation's assets; and (iii) the costs to the Purchasers associated
with acquiring the Shares.
The Corporation made the following statements in its Quarterly Report on
Form 10-Q for the fiscal quarter ending June 30, 2005: "There is currently no
public trading market for our stock." The lack of any public market for the sale
of Shares means that Shareholders have limited alternatives if they seek to sell
their Shares. As a result of such limited alternatives for Shareholders, the
Purchasers may not need to offer as high a price for the Shares as they would
otherwise. On the other hand, the Purchasers take a greater risk in establishing
a purchase price as there is no prevailing market price to be used for reference
and the Purchasers themselves will have limited liquidity for the Shares upon
consummation of the purchase. The Purchasers are unaware of any trading in the
Shares on secondary markets other than a tender offer by certain of the
Purchasers and their affiliates in June 2005, pursuant to which they purchased
273,908 Shares at $2.25 per Share.
The Purchasers are offering to purchase Shares which are an illiquid
investment and are not offering to purchase the Corporation's underlying assets.
Although there can be no certainty as to the actual present value of the Shares,
the Corporation has estimated that the Corporation an estimated Net Realizable
Value of approximately $4.24 per Share according to its Form 10-Q for the period
ending June 30, 2005. The valuation is based upon the sale of the assets of the
Corporation, but such assets may not be liquidated for an indefinite period of
time. Accordingly, the underlying asset value of the Corporation is only one
factor used by the Purchasers in arriving at the Offer Price.
The Offer Price represents the price at which the Purchasers are willing
to purchase Shares. The Purchasers arrived at the $2.25 Offer Price by applying
a liquidity discount to the Corporation's estimated Net Realizable Value of the
Corporation's assets. The Purchasers apply such a discount with the intention of
making a profit by holding on to the Shares until the Corporation is liquidated,
hopefully at close to the full Net Realizable Value or more. No independent
person has been retained to evaluate or render any opinion with respect to the
fairness of the Offer Price and no representation is made by the Purchasers or
any affiliate of the Purchasers as to such fairness. Other measures of the value
of the Shares may be relevant to Shareholders. Shareholders are urged to
consider carefully all of the information contained herein and consult with
their own advisers, tax, financial or otherwise, in evaluating the terms of the
Offer before deciding whether to tender Shares.
The Offer is not made with any current view toward or plan or purpose of
acquiring Shares in a series of successive and periodic offers. Nevertheless,
the Purchasers reserve the right to gauge the response to this solicitation,
and, if not successful in purchasing 1,000,000 Shares pursuant to this Offer,
may consider future offers. Factors affecting the Purchasers' future interest in
acquiring additional Shares include, but are not limited to, the relative
success of the current Offer, any increase or decrease in the availability of
capital for investment by the Purchasers and their investment fund affiliates,
the current diversification and performance of each affiliated fund's portfolio
of real estate interests, the development of any public market in the Shares or
actions by unrelated parties to tender for or purchase Shares, the status of and
changes and trends in the Corporation's operations, announcement of pending
property sales and the proposed terms of sales, and local and national real
estate and financial market developments and trends.
General Background Information
Certain information contained in this Offer to Purchase which relates to,
or represents, statements made by the Corporation or its management, has been
derived from information provided in reports filed by the Corporation with the
Securities and Exchange Commission.
Tendering Shareholders will not be obligated to pay transfer fees,
brokerage fees, or commissions on the sale of the Shares to the Purchasers
pursuant to the Offer. The Purchasers will pay all charges and expenses incurred
in connection with the Offer. The Purchasers desire to purchase up to 1,000,000
Shares. If the number of Shares validly tendered and not properly withdrawn on
or prior to the Expiration Date is less than or equal to 1,000,000, we will
purchase all Shares so tendered and not withdrawn, upon the terms and subject to
the conditions of the Offer.
9
However, if more than 1,000,000 Shares are so tendered and not withdrawn, we
will accept for payment and pay for 1,000,000 Shares so tendered, pro rata
according to the number of Shares so tendered, adjusted by rounding down to the
nearest whole number of Shares tendered by each Shareholder to avoid purchases
of fractional Shares, as appropriate. (See "Tender Offer -- Section 2.
Acceptance for Payment and Payment for Shares; Proration.")
If, prior to the Expiration Date, the Purchasers increase the
consideration offered to Shareholders pursuant to the Offer, such increased
consideration will be paid with respect to all Shares that are purchased
pursuant to the Offer, whether or not such Shares were tendered prior to such
increase in consideration.
Shareholders are urged to read this Offer to Purchase and the accompanying
Letter of Transmittal carefully before deciding whether to tender their Shares.
10
TENDER OFFER
Section 1. Terms of the Offer. Upon the terms and subject to the conditions of
the Offer, the Purchasers will accept for payment and pay for Shares validly
tendered on or prior to the Expiration Date and not withdrawn in accordance with
Section 4 of this Offer to Purchase. The term "Expiration Date" shall mean 12:00
midnight, Pacific Time, on November 28, 2005, unless and until the Purchasers
shall have extended the period of time for which the Offer is open, in which
event the term "Expiration Date" shall mean the latest time and date on which
the Offer, as so extended by the Purchasers, shall expire.
The Offer is conditioned on satisfaction of certain conditions. See
Section 13, which sets forth in full the conditions of the Offer. The Purchasers
reserve the right (but shall not be obligated), in their sole discretion and for
any reason, to waive any or all of such conditions. If, by the Expiration Date,
any or all of such conditions have not been satisfied or waived, the Purchasers
reserve the right (but shall not be obligated) to (i) decline to purchase any of
the Shares tendered, terminate the Offer and return all tendered Shares to
tendering Shareholders, (ii) waive all the unsatisfied conditions and, subject
to complying with applicable rules and regulations of the Commission, purchase
all Shares validly tendered, (iii) extend the Offer and, subject to the right of
Shareholders 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 (iv) to amend the Offer. Notwithstanding the foregoing, upon the
expiration of the Offer, if all conditions are either satisfied or waived, the
Purchasers will promptly pay for all validly tendered Shares upon the earlier of
receipt of your share certificates or confirmation from the Corporation that you
own the Shares, and the Purchasers do not intend to imply that the foregoing
rights of the Purchasers would permit the Purchasers to delay payment for
validly tendered Shares following expiration.
The Purchasers do not anticipate and have no reason to believe that any
condition or event will occur that would prevent the Purchasers from purchasing
tendered Shares as offered herein.
Section 2. Acceptance for Payment and Payment for Shares; 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 extension or amendment),
the Purchasers will accept for payment, and will pay for, Shares validly
tendered and not withdrawn in accordance with Section 4, promptly following the
Expiration Date and upon the earlier of receipt of your share certificates or
confirmation from the Corporation that you own the Shares. In all cases, payment
for Shares purchased pursuant to the Offer will be made only after timely
receipt by the Depositary of a properly completed and duly executed Letter of
Transmittal (or facsimile thereof) and any other documents required by the
Letter of Transmittal.
The Purchasers desire to purchase up to 1,000,000 Shares. If the number of
Shares validly tendered and not properly withdrawn on or prior to the Expiration
Date is less than or equal to 1,000,000, we will purchase all Shares so tendered
and not withdrawn, upon the terms and subject to the conditions of the Offer.
However, if more than 1,000,000 Shares are so tendered and not withdrawn, we
will accept for payment and pay for 1,000,000 Shares so tendered, pro rata
according to the number of Shares so tendered, adjusted by rounding down to the
nearest whole number of Shares tendered by each Shareholder to avoid purchases
of fractional Shares, as appropriate.
In the event that proration is required, because of the difficulty of
immediately determining the precise number of Shares to be accepted, the
Purchasers will announce the final results of proration as soon as practicable,
but in no event later than five business days following the Expiration Date. The
Purchasers will not pay for any Shares tendered until after the final proration
factor has been determined.
Shareholders may indicate, by checking a box on the Letter of Transmittal
(the "All or None Box"), that they only wish to sell their Shares if they will
be able to sell all of their Shares, without any proration. See "Withdrawal
Rights." If more than 1,000,000 Shares have been properly tendered without
checking the All or None Box, then the above description of proration will apply
only to tenders of such Shares that do not have the All or None Box checked.
For purposes of the Offer, the Purchasers shall be deemed to have accepted
for payment (and thereby purchased) tendered Shares when, as and if the
Purchasers give oral or written notice to the Depositary of the Purchasers'
acceptance for payment of such Shares pursuant to the Offer. Upon the terms and
subject to the conditions of the Offer, payment for Shares purchased pursuant to
the Offer will in all cases be made by deposit of the Offer Price with the
Depositary, which will act as agent for the tendering Shareholders for the
purpose of
11
receiving payment from the Purchasers and transmitting payment to tendering
Shareholders.
Under no circumstances will interest be paid on the Offer Price by reason
of any delay in making such payment.
If any tendered Shares are not purchased for any reason (other than due to
proration as described above), the Letter of Transmittal with respect to such
Shares not purchased will be of no force or effect. If, for any reason
whatsoever, acceptance for payment of, or payment for, any Shares tendered
pursuant to the Offer is delayed or the Purchasers are unable to accept for
payment, purchase or pay for Shares tendered pursuant to the Offer, then,
without prejudice to the Purchasers' rights under Section 13, the Depositary
may, nevertheless, on behalf of the Purchasers, retain tendered Shares and such
Shares may not be withdrawn (but subject to compliance with Rule 14e-1(c) under
the Exchange Act, which requires that the Purchasers pay the consideration
offered or return the Shares deposited by or on behalf of the Shareholder
promptly after the termination or withdrawal of a tender offer), except to the
extent that the tendering Shareholders are entitled to withdrawal rights as
described in Section 4.
If, prior to the Expiration Date, the Purchasers shall increase the
consideration offered to Shareholders pursuant to the Offer, such increased
consideration shall be paid for all Shares accepted for payment pursuant to the
Offer, whether or not such Shares were tendered prior to such increase.
Section 3. Procedures for Tendering Shares.
Valid Tender. For Shares to be validly tendered pursuant to the Offer, a
properly completed and duly executed Letter of Transmittal (a copy of which is
enclosed with this Offer to Purchase, printed on blue paper) with any other
documents required by the Letter of Transmittal must be received by the
Depositary at its address set forth on the back cover of this Offer to Purchase
on or prior to the Expiration Date. A Shareholder may tender any or all Shares
owned by such Shareholder.
In order for a tendering Shareholder to participate in the Offer, Shares must be
validly tendered and not withdrawn prior to the Expiration Date, which is 12:00
midnight, Pacific Time, on November 28, 2005, or such date to which the Offer
may be extended.
The method of delivery of the Letter of Transmittal and all other required
documents is at the option and risk of the tendering Shareholder and delivery
will be deemed made only when actually received by the Depositary.
Backup Federal Income Tax Withholding. To prevent the possible application of
31% backup federal income tax withholding with respect to payment of the Offer
Price for Shares purchased pursuant to the Offer, a tendering Shareholder must
provide the Depositary with such Shareholder's correct taxpayer identification
number and make certain certifications that such Shareholder is not subject to
backup federal income tax withholding. Each tendering Shareholder must insert in
the Letter of Transmittal the Shareholder's taxpayer identification number or
social security number in the space provided on the front of the Letter of
Transmittal. The Letter of Transmittal also includes a substitute Form W-9,
which contains the certifications referred to above. (See the Instructions to
the Letter of Transmittal.)
Other Requirements. By executing a Letter of Transmittal as set forth above, a
tendering Shareholder irrevocably appoints the designees of the Purchasers as
such Shareholder's proxies, in the manner set forth in the Letter of
Transmittal, each with full power of substitution, to the full extent of such
Shareholder's rights with respect to the Shares tendered by such Shareholder and
accepted for payment by the Purchasers. Such appointment will be effective when,
and only to the extent that, the Purchasers accept such Shares for payment. Upon
such acceptance for payment, all prior proxies given by such Shareholder with
respect to such Shares will, without further action, be revoked, and no
subsequent proxies may be given (and if given will not be effective). The
designees of the Purchasers will, with respect to such Shares, be empowered to
exercise all voting and other rights of such Shareholder as they in their sole
discretion may deem proper at any meeting of Shareholders, by written consent or
otherwise. In addition, by executing a Letter of Transmittal, a Shareholder also
assigns to the Purchasers all of the Shareholder's rights to receive dividends
from the Corporation with respect to Shares which are accepted for payment and
purchased pursuant to the Offer, other than those dividends declared or paid
during the period commencing on the Offer Date and terminating on the Expiration
Date.
12
Determination of Validity; Rejection of Shares; Waiver of Defects; No Obligation
to Give Notice of Defects. All questions as to the validity, form, eligibility
(including time of receipt), and acceptance for payment of any tender of Shares
pursuant to the procedures described above will be determined by the Purchasers,
in their sole discretion, which determination shall be final and binding. The
Purchasers reserve the absolute right to reject any or all tenders if not in
proper form or if the acceptance of, or payment for, the absolute right to
reject any or all tenders if not in proper form or if the acceptance of, or
payment for, the Shares tendered may, in the opinion of the Purchasers' counsel,
be unlawful. The Purchasers also reserve the right to waive any defect or
irregularity in any tender with respect to any particular Shares of any
particular Shareholder, and the Purchasers' interpretation of the terms and
conditions of the Offer (including the Letter of Transmittal and the
Instructions thereto) will be final and binding. Neither the Purchasers, the
Depositary, nor any other person will be under any duty to give notification of
any defects or irregularities in the tender of any Shares or will incur any
liability for failure to give any such notification.
A tender of Shares pursuant to any of the procedures described above will
constitute a binding agreement between the tendering Shareholder and the
Purchasers upon the terms and subject to the conditions of the Offer, including
the tendering Shareholder's representation and warranty that (i) such
Shareholder owns the Shares being tendered within the meaning of Rule 14e-4
under the Exchange Act and (ii) the tender of such Share complies with Rule
14e-4. Rule 14e-4 requires, in general, that a tendering security holder
actually be able to deliver the security subject to the tender offer, and is of
concern particularly to any Shareholders who have granted options to sell or
purchase the Shares, hold option rights to acquire such securities, maintain
"short" positions in the Shares (i.e., have borrowed the Shares) or have loaned
the Shares to a short seller. A Shareholder will be deemed to tender Shares in
compliance with Rule 14e-4 and the Offer if the holder is the record owner of
the Shares and the holder (i) delivers the Shares pursuant to the terms of the
Offer, (ii) causes such delivery to be made, (iii) guarantees such delivery,
(iv) causes a guaranty of such delivery, or (v) uses any other method permitted
in the Offer (such as facsimile delivery of the Transmittal Letter).
Section 4. Withdrawal Rights. Except as otherwise provided in this Section 4,
all tenders of Shares pursuant to the Offer are irrevocable, provided that
Shares tendered pursuant to the Offer may be withdrawn at any time prior to the
Expiration Date and, unless theretofore accepted for payment as provided in this
Offer to Purchase, may also be withdrawn at any time on or after December 16,
2005.
For withdrawal to be effective a written or facsimile transmission notice
of withdrawal must be timely received by the Depositary at the address or the
facsimile number set forth in the attached Letter of Transmittal. Any such
notice of withdrawal must specify the name of the person who tendered the Shares
to be withdrawn and must be signed by the person(s) who signed the Letter of
Transmittal in the same manner as the Letter of Transmittal was signed.
If purchase of, or payment for, Shares is delayed for any reason or if the
Purchasers are unable to purchase or pay for Shares for any reason, then,
without prejudice to the Purchasers' rights under the Offer, tendered Shares may
be retained by the Depositary on behalf of the Purchasers and may not be
withdrawn except to the extent that tendering Shareholders are entitled to
withdrawal rights as set forth in this Section 4, subject to Rule 14e-1(c) under
the Exchange Act, which provides that no person who makes a tender offer shall
fail to pay the consideration offered or return the securities deposited by or
on behalf of security holders promptly after the termination or withdrawal of
the tender offer.
All questions as to the form and validity (including time of receipt) of
notices of withdrawal will be determined by the Purchasers, in their sole
discretion, which determination shall be final and binding. Neither the
Purchasers, nor the Depositary, nor any other person will be under any duty to
give notification of any defects or irregularities in any notice of withdrawal
or will incur any liability for failure to give any such notification.
Any Shares properly withdrawn will be deemed not to be validly tendered
for purposes of the Offer. Withdrawn Shares may be re-tendered, however, by
following the procedures described in Section 3 at any time prior to the
Expiration Date.
Automatic Withdrawal Option. Shareholders may indicate, by checking a box
on the Letter of Transmittal (the "All or None Box"), that they only wish to
sell their Shares if they will be able to sell all of their Shares, without any
proration. If at any time during the day of the Expiration Date more than
1,000,000 Shares have been Properly Tendered, unless the Purchaser amends the
Offer to increase the number of Shares to be purchased, the
13
Purchaser will deem all Shares from Shareholders that checked the All or None
Box to be withdrawn and not validly tendered for purposes of the Offer. Neither
the Purchaser nor any other person will be under any duty to give any notice
that such automatic withdrawal will occur. Shareholders may change their
election whether or not to check the All or None Box at any time on or prior to
the Expiration Date by submitting a new Letter of Transmittal with their
preferred election, in the manner described in Section 3 herein.
Section 5. Extension of Tender Period; Termination; Amendment. The Purchasers
expressly reserve the right, in their sole discretion, at any time and from time
to time, (i) to extend the period of time during which the Offer is open and
thereby delay acceptance for payment of, and the payment for, any Shares by
giving oral or written notice of such extension to the Depositary, (ii) upon the
occurrence or failure to occur of any of the conditions specified in Section 13,
to terminate the Offer and not accept for payment any Shares by giving oral or
written notice of such termination to the Depositary, and (iii) to amend the
Offer in any respect (including, without limitation, by increasing or decreasing
the consideration offered or the number of Shares being sought in the Offer or
both or changing the type of consideration) by giving oral or written notice of
such amendment to the Depositary prior to the Expiration Date. Any extension,
termination, or amendment will be followed as promptly as practicable by public
announcement, the announcement in the case of an extension to be issued no later
than 9:00 a.m., Eastern Time, on the next business day after the previously
scheduled Expiration Date, in accordance with the public announcement
requirement of Rule 14d-4(c) under the Exchange Act. Without limiting the manner
in which the Purchasers may choose to make any public announcement, except as
provided by applicable law (including Rule 14d-4(c) under the Exchange Act), the
Purchasers will have no obligation to publish, advertise, or otherwise
communicate any such public announcement, other than by issuing a press release.
The Purchasers may also be required by applicable law to disseminate to
Shareholders certain information concerning the extensions of the Offer and any
material changes in the terms of the Offer. The Purchasers will not provide a
subsequent offering period following the Expiration Date.
If the Purchasers extend the Offer, or if the Purchasers (whether before
or after its acceptance for payment of Shares) are delayed in their payment for
Shares or are unable to pay for Shares pursuant to the Offer for any reason,
then, without prejudice to the Purchasers' rights under the Offer, the
Depositary may retain tendered Shares on behalf of the Purchasers, and such
Shares may be withdrawn to the extent tendering Shareholders are entitled to
withdrawal rights as described in Section 4 (generally, if notice of withdrawal
is given to the Depository prior to the Expiration Date). However, the ability
of the Purchasers to delay payment for Shares that the Purchasers have accepted
for payment is limited by Rule 14e-1 under the Exchange Act, which requires that
the Purchasers pay the consideration offered or return the securities deposited
by or on behalf of holders of securities promptly after the termination or
withdrawal of the Offer, except that the Purchasers may delay payment until they
receive the earlier of your share certificates or confirmation from the
Corporation that you own the Shares.
If the Purchasers make a material change in the terms of the Offer or the
information concerning the Offer or waive a material condition of the Offer, the
Purchasers will extend the Offer to the extent required by Rules 14d-4(c),
14d-6(d) and 14e-1 under the Exchange Act. The minimum period during which an
offer must remain open following a material change in the terms of the offer or
information concerning the offer, other than a change in price or a change in
percentage of securities sought, will depend upon the facts and circumstances,
including the relative materiality of the change in the terms or information.
With respect to a change in price or a change in percentage of securities sought
(other than an increase of not more than 2% of the securities sought), however,
a minimum ten business day period is generally required to allow for adequate
dissemination to security holders and for investor response. As used in this
Offer to Purchase, "business day" means any day other than a Saturday, Sunday or
a federal holiday, and consists of the time period from 12:01 a.m. through 12:00
midnight, Pacific Time.
Section 6. Material Federal Income Tax Consequences. THE FEDERAL INCOME TAX
DISCUSSION SET FORTH BELOW DOES NOT PURPORT TO ADDRESS ALL ASPECTS OF TAXATION
THAT MAY BE RELEVANT TO A PARTICULAR SHAREHOLDER. For example, this discussion
does not address the effect of any applicable foreign, state, local or other tax
laws other than federal income tax laws. Certain Shareholders (including trusts,
foreign persons, tax-exempt organizations or corporations subject to special
rules, such as life insurance companies or S corporations) may be subject to
special rules not discussed below. This discussion is based on the Internal
Revenue Code of 1986, as amended (the "Code"), existing regulations, court
decisions and Internal Revenue Service ("IRS") rulings and other pronouncements.
EACH SHAREHOLDER TENDERING SHARES SHOULD CONSULT SUCH SHAREHOLDER'S OWN TAX
ADVISOR AS TO THE PARTICULAR TAX CONSEQUENCES TO SUCH SHAREHOLDER OF ACCEPTING
THE OFFER, INCLUDING THE APPLICATION OF THE ALTERNATIVE MINIMUM TAX AND FEDERAL,
14
FOREIGN, STATE, LOCAL AND OTHER TAX LAWS.
Gain or Loss. A taxable Shareholder will recognize a gain or loss on the sale of
such Shareholder's Shares in an amount equal to the difference between (i) the
amount realized by such Shareholder on the sale and (ii) such Shareholder's tax
basis in the Shares sold. If the Shareholder reports a loss on the sale, such
loss generally could not be currently deducted by such Shareholder except
against such Shareholder's capital gains from other investments.
The tax basis in the Shares of a Shareholder will depend upon individual
circumstances. Each Shareholder who plans to tender hereunder should consult
with the Shareholder's own tax advisor as to the Shareholder's tax basis in the
Shareholder's Shares and the resulting tax consequences of a sale.
A tax-exempt Shareholder (other than an organization described in Code
Section 501(c)(7) (social club), 501(c)(9) (voluntary employee benefit
association), 501(c)(17) (supplementary unemployment benefit trust), or
501(c)(20) (qualified group legal services plan)) should not be required to
recognize unrelated trade or business income upon the sale of its Shares
pursuant to the Offer, assuming that such Shareholder does not hold its Shares
as a "dealer" and has not acquired such Shares with debt financed proceeds.
Section 7. Effects of the Offer.
Limitations on Resales. The Purchasers do not believe the provisions of the
Corporation's Articles of Incorporation should restrict transfers of Shares
pursuant to the Offer.
Effect on Trading Market. If a substantial number of Shares are purchased
pursuant to the Offer the result would be a reduction in the number of
Shareholders. Reducing the number of security holders in certain kinds of equity
securities might be expected to result in a reduction in the liquidity and
volume of activity in the trading market for the security. However, there is no
established public trading market for the Shares and none is expected to
develop. Therefore, the Purchasers do not believe a reduction in the number of
Shareholders will materially further restrict the Shareholders' ability to find
purchasers for their Shares through secondary market transactions.
Voting Power of Purchasers. If the Purchasers acquire a significant number of
the Shares sought hereunder could give the Purchasers a controlling voting
interest in matters subject to a shareholder vote. The Corporation holds annual
meetings to elect directors and conduct other business. Votes of Shareholders
might also be solicited for matters affecting the fundamental structure of the
Corporation, such as the sale of the assets and dissolution of the Corporation.
A Shareholder who tenders Shares to the Purchasers grants a proxy to the
Purchasers as of the date of acceptance of the tender, granting the Purchasers
the right to vote such Shares it their sole discretion as to any matters for
which the Corporation has established a record date prior to the time such.
Shares are transferred by the Corporation to the Purchasers. The Purchasers
reserve the right to exercise any and all rights they might hold in the event
that any vote is called by the Corporation, or if, in the future, changes in
circumstances would dictate that they or other shareholders exercise their right
to vote.
Other Potential Effects. The Shares are registered under the Exchange Act, which
requires, among other things that the Corporation furnish certain information to
its Shareholders and to the Commission and comply with the Commission's proxy
rules in connection with meetings of, and solicitation of consents from,
Shareholders. Registration and reporting requirements could be terminated by the
Corporation if the number of record holders falls below 300, or below 500 if the
Corporation's total assets are below $10 million for three consecutive preceding
fiscal years. The Corporation reported a total of 958 shareholders (according to
the Corporation as of June 22, 2005, after reduction for the purchases by the
Purchasers and/or their affiliates earlier this year), but the Purchasers are
offering to purchase up to 1,000,000 Shares. Accordingly, it is possible that
the Offer could result in the total number of Shareholders falling below the
foregoing 300 holder level. As disclosed by the Corporation in its public
reports, however, there has never been a public trading market for the Shares
and none is expected to develop, so the Corporation's status as a public company
will not affect a trading market in the Shares. A change in the Corporation's
status as a public company could reduce the information available to
Shareholders about the Corporation if the information required to be provided to
Shareholders by the Corporation's Articles and Bylaws is not as extensive as
that provided in reports required to be filed by public companies under
applicable rules of the Securities and Exchange Commission.
Section 8. Future Plans. Following the completion of the Offer, the Purchasers,
or their affiliates, may acquire additional Shares. Any such acquisitions may be
made through private purchases, one or more future tender offers
15
or by any other means deemed advisable or appropriate. Any such acquisitions may
be at a consideration higher or lower than the consideration to be paid for the
Shares purchased pursuant to the Offer. The Purchasers are seeking to purchase a
total of 1,000,000 Shares. If the Purchasers acquire fewer than 1,000,000 Shares
pursuant to the Offer, the Purchasers may seek to make further purchases on the
open market at prevailing prices, or solicit Shares pursuant to one or more
future tender offers at the same price, a higher price or, if the Corporation's
circumstances change, at a lower price. Alternatively, the Purchasers may
discontinue any further purchases of Shares after termination of the Offer,
regardless of the number of Shares purchased. The Offer is not made with any
current view toward or plan or purpose of acquiring Shares in a series of
successive and periodic offers. Nevertheless, as noted above, the Purchasers
reserve the right to gauge the response to this solicitation, and, if not
successful in purchasing 1,000,000 Shares in this Offer, may consider future
offers. Factors affecting the Purchasers' future interest in acquiring
additional Shares include, but are not limited to, the relative success of the
current Offer, any increase or decrease in the availability of capital for
investment by the Purchasers and their investment fund affiliates, the current
diversification and performance of each affiliated fund's portfolio of real
estate interests, the development of any public market in the Shares or actions
by unrelated parties to tender for or purchase Shares, the status of and changes
and trends in the Corporation's operations, announcement of pending property
sales and the proposed terms of sales, and local and national real estate and
financial market developments and trends.
The Purchasers are acquiring the Shares pursuant to the Offer solely for
investment purposes. The Purchasers have no present intention to seek control of
the Corporation or to change the management or operations of the Corporation.
The Purchasers do not have any present intention to take any action in
connection with the ongoing liquidation of the Corporation. The Purchasers
nevertheless reserve the right, at an appropriate time, to exercise their rights
as shareholders to vote on matters subject to a shareholder vote, including, but
not limited to, any vote to affecting the sale of the Corporation's assets and
the liquidation and dissolution of the Corporation. Except as expressly set
forth herein, the Purchasers have no present intention to seek control of the
Corporation, to cause the Corporation to engage in any extraordinary
transaction, to cause any purchase, sale or transfer of a material amount of the
assets of any Corporation, to make any change in the dividend policies,
indebtedness or capitalization of any Corporation or to change the structure,
management or operations of the Corporation, the listing status of the Shares or
the reporting requirements of the Corporation.
Section 9. The Business of the Corporation. For information about the
Corporation, please refer to the annual report prepared by the Corporation which
was sent to you earlier, particularly Item 2 of Form 10-K, the Quarterly Reports
on Form 10-Q, the various Current Reports on Form 8-K, and any other materials
sent to you by the Corporation. These documents contain updated information
concerning the Corporation, including detailed information regarding the assets
owned, including mortgages, rental rates, operations, management, and taxes. In
addition, the Corporation is subject to the information and reporting
requirements of the Exchange Act and information about the Corporation can be
obtained on the Commission's EDGAR system, at its internet web site at
www.sec.gov, and are available for inspection at the Commission's principal
office in Washington, D.C.
Section 10. Conflicts of Interest. The Depositary is affiliated with certain
Purchasers. Therefore, by virtue of this affiliation, the Depositary may have
inherent conflicts of interest in acting as Depositary for the Offer. The
Depositary's role is administrative only, however, and any conflict of interest
should not be deemed material to Shareholders.
Section 11. Certain Information Concerning the Purchasers. The Purchasers are
Sutter Opportunity Fund 3, LLC; Sutter Opportunity Fund 3 Tax Exempt, LLC;
MPF-NY 2005, LLC; MPF Blue Ridge Fund I, LLC; MPF Blue Ridge Fund II, LLC; MPF
Flagship Fund 11; MP Value Fund 7, LLC; MacKenzie Patterson Special Fund 5, LLC;
MacKenzie Patterson Special Fund 7, LLC; MacKenzie Patterson Special Fund 6,
LLC; MacKenzie Patterson Special Fund 6-A, LLC; MPF Flagship Fund 10, LLC; MPF
DeWaay Premier Fund 2, LLC; MPF DeWaay Fund 3, LLC; and MPF Income Fund 23, LLC.
For information concerning the Purchasers and their respective principals,
please refer to Schedule I attached hereto. The principal business of each of
the Purchasers is investment in securities, particularly real estate-based
securities. The principal business address of each of the Purchasers is 1640
School Street, Moraga, California 94556.
The Purchasers have made binding commitments to contribute and have
available sufficient amounts of capital necessary to fund the acquisition of all
Shares subject to the Offer, the expenses to be incurred in connection with the
Offer, and all other anticipated costs of the Purchasers. The Purchasers are not
public companies and have not prepared audited financial statements or financial
statements prepared in accordance with generally accepted accounting principles.
MacKenzie Patterson Fuller, Inc. and its affiliates have been in the business of
purchasing
16
illiquid real estate securities, both in open market transactions and by means
of tender offers, since 1982 and have acquired more than $75 million in such
securities for affiliated portfolios during the last ten years. The Purchasers
have aggregate assets that are more than sufficient to fund their collective
obligation to purchase Shares in this Offer and any other outstanding tender
offers.
Except as otherwise set forth herein, (i) neither the Purchasers nor, to the
best knowledge of the Purchasers, the persons listed on Schedule I nor any
affiliate of the Purchasers beneficially owns or has a right to acquire any
Shares, (ii) neither the Purchasers nor, to the best knowledge of the
Purchasers, the persons listed on Schedule I nor any affiliate of the
Purchasers, or any director, executive officer or subsidiary of any of the
foregoing has effected any transaction in the Shares within the past 60 days,
(iii) neither the Purchasers nor, to the best knowledge of the Purchasers, the
persons listed on Schedule I nor any affiliate of the Purchasers has any
contract, arrangement, understanding or relationship with any other person with
respect to any securities of the Corporation, including but not limited to,
contracts, arrangements, understandings or relationships concerning the transfer
or voting thereof, joint ventures, loan or option arrangements, puts or calls,
guarantees of loans, guarantees against loss or the giving or withholding of
proxies, consents or authorizations, (iv) there have been no transactions or
business relationships which would be required to be disclosed under the rules
and regulations of the Commission between any of the Purchasers or, to the best
knowledge of the Purchasers, the persons listed on Schedule I, or any affiliate
of the Purchasers on the one hand, and the Corporation or its affiliates, on the
other hand, (v) there have been no contracts, negotiations or transactions
between the Purchasers, or to the best knowledge of the Purchasers any affiliate
of the Purchasers on the one hand, the persons listed on Schedule I, and the
Corporation or its affiliates, on the other hand, concerning a merger,
consolidation or acquisition, tender offer or other acquisition of securities,
an election of directors or a sale or other transfer of a material amount of
assets, (vi) no person listed on Schedule I has been convicted in a criminal
proceeding during the past five years (excluding traffic violations or similar
misdemeanors), and (vii) no person listed on Schedule I has been a party to any
judicial or administrative proceeding during the past five years (except for
matters dismissed without sanction or settlement) that resulted in a judgment,
decree, or final order enjoining the person from future violations of, or
prohibiting activities subject to, federal or state securities laws, or a
finding of any violation of federal or state securities laws. .
Section 12. Source of Funds. The Purchasers expect that approximately
$2,250,000.00 would be required to purchase 1,000,000 Shares, if tendered, and
an additional $20,000 may be required to pay related fees and expenses. The
Purchasers anticipate funding all of the purchase price and related expenses
through their existing capital and assets. The cash and liquid securities
necessary to complete the entire purchase are readily available and are
committed to that purpose. Accordingly, there are no financing arrangements to
fall through and no alternative financing plans.
Section 13. Conditions of the Offer. Notwithstanding any other term of the
Offer, the Purchasers shall not be required to accept for payment or to pay for
any Shares tendered unless all authorizations or approvals of, or expirations of
waiting periods imposed by, any court, administrative agency or other
governmental authority necessary for the consummation of the transactions
contemplated by the Offer shall have been obtained or occurred on or before the
Expiration Date. As of the Offer Date, the Purchasers are unaware of any such
required authorizations, approvals, or waiting periods relating to this Offer.
The Purchasers shall not be required to accept for payment or pay for any
Shares and may terminate or amend the Offer as to such Shares if, at any time on
or after the date of the Offer and before the Expiration Date, any of the
following conditions exists:
(a) a preliminary or permanent injunction or other order of any federal or
state court, government or governmental authority or agency shall have been
issued and shall remain in effect which (i) makes illegal, delays or otherwise
directly or indirectly restrains or prohibits the making of the Offer or the
acceptance for payment of or payment for any Shares by the Purchasers, (ii)
imposes or confirms limitations on the ability of the Purchasers effectively to
exercise full rights of ownership of any Shares, including, without limitation,
the right to vote any Shares acquired by the Purchasers pursuant to the Offer or
otherwise on all matters properly presented to the Corporation's Shareholders,
(iii) requires divestiture by the Purchasers of any Shares, (iv) causes any
material diminution of the benefits to be derived by the Purchasers as a result
of the transactions contemplated by the Offer (see the discussion of such
benefits in the Summary Term Sheet and Introduction sections of the Offer to
Purchase) or (v) materially adversely affect the business, assets, liabilities,
financial condition, operations, results of operations or prospects of the
Purchasers or the Corporation, in the reasonable judgment of the Purchasers;
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(b) there shall be any action taken, or any statute, rule, regulation or
order proposed, enacted, enforced, promulgated, issued or deemed applicable to
the Offer by any federal or state court, government or governmental authority or
agency, other than the application of the waiting period provisions of the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, which will,
directly or indirectly, result in any of the consequences referred to in clauses
(i) through (v) of paragraph (a) above;
(c) any change or development shall have occurred or been threatened since
the date hereof, in the business, assets, liabilities, financial condition,
operations, results of operations or prospects of the Corporation, which, in the
reasonable judgment of the Purchasers, is or will be materially adverse to the
Corporation, or the Purchasers shall have become aware of any fact that, in the
reasonable judgment of the Purchasers, does or will have a material adverse
effect on the value of the Shares;
(d) there shall have occurred (i) any general suspension of trading in, or
limitation on prices for, securities on any national securities exchange or in
the over-the-counter market in the United States, (ii) a declaration of a
banking moratorium or any suspension of payments in respect of banks in the
United States, (iii) any limitation by any governmental authority on, or other
event which might affect, the extension of credit by lending institutions or
result in any imposition of currency controls in the United States, (iv) a
commencement of a war or armed hostilities or other national or international
calamity directly or indirectly involving the United States, (v) a material
change in United States or other currency exchange rates or a suspension of a
limitation on the markets thereof, or (vi) in the case of any of the foregoing
existing at the time of the commencement of the Offer, a material acceleration
or worsening thereof; or
(e) it shall have been publicly disclosed or the Purchasers shall have
otherwise learned that (i) more than fifty percent of the outstanding Shares
have been or are proposed to be acquired by another person (including a "group"
within the meaning of Section 13(d)(3) of the Exchange Act), or (ii) any person
or group that prior to such date had filed a Statement with the Commission
pursuant to Sections 13(d) or (g) of the Exchange Act has increased or proposes
to increase the number of Shares beneficially owned by such person or group as
disclosed in such Statement by two percent or more of the outstanding Shares.
The foregoing conditions are for the sole benefit of the Purchasers and
may be asserted by the Purchasers or may be waived by the Purchasers in whole or
in part at any time and from time to time prior to the Expiration Date in their
sole exercise of reasonable discretion, and the Offer will remain open for a
period of at least five business days following any such waiver of a material
condition. However, if we waive a certain condition for one tendering
Shareholder, we will waive that condition for all Shareholders tendering Shares.
Any determination by the Purchasers concerning the events described above will
be final and binding upon all parties.
Section 14. Certain Legal Matters.
General. Except as set forth in this Section 14, the Purchasers are not aware of
any filings, approvals or other actions by any domestic or foreign governmental
or administrative agency that would be required prior to the acquisition of
Shares by the Purchasers pursuant to the Offer. Should any such approval or
other action be required, it is the Purchasers' present intention that such
additional approval or action would be sought. While there is no present intent
to delay the purchase of Shares tendered pursuant to the Offer pending receipt
of any such additional approval or the taking of any such action, there can be
no assurance that any such additional approval or action, if needed, would be
obtained without substantial conditions or that adverse consequences might not
result to the Corporation's business, or that certain parts of the Corporation's
business might not have to be disposed of or held separate or other substantial
conditions complied with in order to obtain such approval or action, any of
which could cause the Purchasers to elect to terminate the Offer without
purchasing Shares thereunder. The Purchasers' obligation to purchase and pay for
Shares is subject to certain conditions, including conditions related to the
legal matters discussed in this Section 14.
Antitrust. The Purchasers do not believe that the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, is applicable to the acquisition of Shares
pursuant to the Offer.
Margin Requirements. The Shares are not "margin securities" under the
regulations of the Board of Governors of the Federal Reserve System and,
accordingly, such regulations are not applicable to the Offer.
State Takeover Laws. A number of states have adopted anti-takeover laws which
purport, to varying degrees, to be
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applicable to attempts to acquire securities of corporations which are
incorporated in such states or which have substantial assets, security holders,
principal executive offices or principal places of business therein. The
Purchasers are not seeking a controlling block of Shares or such a number of
Shares as to fall within these state statutes and, therefore, do not believe
that any anti-takeover laws apply to the transactions contemplated by the Offer.
Although the Purchasers have not attempted to comply with any state
anti-takeover statutes in connection with the Offer, the Purchasers reserve the
right to challenge the validity or applicability of any state law allegedly
applicable to the Offer and nothing in this Offer or any action taken in
connection herewith is intended as a waiver of such right. If any state
anti-takeover statute is applicable to the Offer, the Purchasers might be unable
to accept for payment or purchase Shares tendered pursuant to the Offer or be
delayed in continuing or consummating the Offer. In such case, the Purchasers
may not be obligated to accept for purchase or pay for any Shares tendered.
Section 15. Fees and Expenses. The Purchasers have retained MacKenzie Patterson
Fuller, Inc., an affiliate of certain Purchasers, to act as Depositary in
connection with the Offer. The Purchasers will pay the Depositary reasonable and
customary compensation for its services in connection with the Offer, plus
reimbursement for out-of-pocket expenses, and will indemnify the Depositary
against certain liabilities and expenses in connection therewith, including
liabilities under the federal securities laws. The Purchasers will also pay all
costs and expenses of printing, publication and mailing of the Offer and all
costs of transfer.
Section 16. Miscellaneous. THE OFFER IS NOT BEING MADE TO (NOR WILL TENDERS BE
ACCEPTED FROM OR ON BEHALF OF) SHAREHOLDERS IN ANY JURISDICTION IN WHICH THE
MAKING OF THE OFFER OR THE ACCEPTANCE THEREOF WOULD NOT BE IN COMPLIANCE WITH
THE LAWS OF SUCH JURISDICTION. THE PURCHASERS ARE NOT AWARE OF ANY JURISDICTION
WITHIN THE UNITED STATES IN WHICH THE MAKING OF THE OFFER OR THE ACCEPTANCE
THEREOF WOULD BE ILLEGAL.
No person has been authorized to give any information or to make any
representation on behalf of the Purchasers not contained herein or in the Letter
of Transmittal and, if given or made, such information or representation must
not be relied upon as having been authorized.
October 17, 2005
Sutter Opportunity Fund 3, LLC; Sutter Opportunity Fund 3 Tax Exempt, LLC;
MPF-NY 2005, LLC; MPF Blue Ridge Fund I, LLC; MPF Blue Ridge Fund II, LLC; MPF
Flagship Fund 11; MP Value Fund 7, LLC; MacKenzie Patterson Special Fund 5, LLC;
MacKenzie Patterson Special Fund 7, LLC; MacKenzie Patterson Special Fund 6,
LLC; MacKenzie Patterson Special Fund 6-A, LLC; MPF Flagship Fund 10, LLC; MPF
DeWaay Premier Fund 2, LLC; MPF DeWaay Fund 3, LLC; and MPF Income Fund 23, LLC
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SCHEDULE I
THE PURCHASERS AND THEIR RESPECTIVE PRINCIPALS
The Purchasers are Sutter Opportunity Fund 3, LLC; Sutter Opportunity Fund
3 Tax Exempt, LLC; MPF-NY 2005, LLC; MPF Blue Ridge Fund I, LLC; MPF Blue Ridge
Fund II, LLC; MPF Flagship Fund 11; MP Value Fund 7, LLC; MacKenzie Patterson
Special Fund 5, LLC; MacKenzie Patterson Special Fund 7, LLC; MacKenzie
Patterson Special Fund 6, LLC; MacKenzie Patterson Special Fund 6-A, LLC; MPF
Flagship Fund 10, LLC; MPF DeWaay Premier Fund 2, LLC; MPF DeWaay Fund 3, LLC;
and MPF Income Fund 23, LLC. Each of the entity Purchasers is organized as a
limited liability company or limited partnership. The Manager of each of the
limited liability company Purchasers and the general partner of each of the
limited partnership Purchasers is MacKenzie Patterson Fuller, Inc. The names of
the directors and executive officers of MacKenzie Patterson Fuller, Inc. are set
forth below. The Purchasers have jointly made the offer and are jointly and
severally liable for satisfying its terms. Other than the foregoing, the
Purchasers' relationship consists of an informal agreement to share the costs
associated with making the offer and to allocate any resulting purchases of
Shares among them in such manner and proportions as they may determine in the
future. Each of the entities is organized in California. The Purchasers intend,
if the Offer is fully subscribed, to allocate the Shares among themselves as
follows: [Click Here and Type] . We will determine modifications to this
allocation based upon the number of Shares tendered. Priority is given to
Purchasers which already hold Shares, then to Purchasers which raised capital
first, then to the remaining Purchasers in equal shares. Shares will be
allocated according to this priority until the maximum number of Shares listed
above are allocated to Purchasers within a given priority, then Shares will be
allocated similarly among Purchasers in the next level of priority, until all
Shares are allocated; provided that MPF-NY 2005 will receive at least 10% of all
Shares tendered.
MacKenzie Patterson Fuller, Inc.
The names of the directors and executive officers of MacKenzie Patterson Fuller,
Inc. are set forth below. Each individual is a citizen of the United States of
America. The principal business address of MacKenzie Patterson Fuller, Inc.,
each Purchaser, and each individual is 1640 School Street, Moraga, California
94556, and the business telephone number for each is 925-631-9100.
C.E. Patterson is President and a director of MacKenzie Patterson Fuller, Inc.,
which acts as manager and general partner of a number of real estate investment
vehicles, and has served in those positions since January 1989. In 1981, Mr.
Patterson founded Patterson Financial Services, Inc. (now MPF Advisers, Inc.), a
registered investment adviser ("MPFA"), with Berniece A. Patterson, as a
financial planning firm, and he has served as its President since that date. Mr.
Patterson founded Patterson Real Estate Services, a licensed California Real
Estate Broker, in 1982. As President of MPFA, Mr. Patterson is responsible for
all investment counseling activities. He supervises the analysis of investment
opportunities for the clients of the firm. Mr. Patterson previously served as
president of Host Funding, Inc., an owner of lodging properties, from December
1999 through 2003. Mr. Patterson is also an officer and controlling shareholder
of Cal-Kan, Inc., a closely held real estate investment company. Mr. Patterson,
through his affiliates, manages a number of investment and real estate
companies.
Berniece A. Patterson is a director of MacKenzie Patterson Fuller, Inc. and has
served in that capacity since January 1989. In 1981, Ms. Patterson and C.E.
Patterson established MPFA. She has served as Chair of the Board and Secretary
of MPFA since that date. Her responsibilities with MPFA include oversight of
administrative matters and monitoring of past projects underwritten by MPFA.
Since October 1990, Ms. Patterson has served as Chief Executive Officer of
Pioneer Health Care Services, Inc. and Santa Rita Care Center, LLC, and is
responsible for the day-to-day operations of their two nursing homes and over
200 employees.
Glen W. Fuller became senior vice president and a director of MacKenzie
Patterson Fuller, Inc. in May 2000. Since 2004 he has been a director and vice
president of MPFA. Prior to becoming senior vice president, from August 1998 to
April 2000, he was with MacKenzie Patterson Fuller, Inc. as a portfolio manager
and research analyst. From December 1999 to 2003, Mr. Fuller served as an
officer and director of Host Funding, Inc. Prior to joining MacKenzie Patterson
Fuller, Inc., from May 1996 to July 1998, Mr. Fuller ran the over-the-counter
trading desk for North Coast Securities Corp. (previously Morgan Fuller Capital
Group) with responsibility for both the proprietary and retail trading desks.
Mr. Fuller was also the registered options principal and registered municipal
bond principal for North Coast Securities, a registered broker dealer. Mr.
Fuller was formerly a NASD-registered options principal and registered bond
principal, and he held his NASD Series 7, general securities license (now
inactive). Mr. Fuller
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has also spent time working on the floor of the New York Stock Exchange as a
trading clerk and on the floor of the Pacific Stock Exchange in San Francisco as
an assistant specialist for LIT America.
Chip Patterson is senior vice president, general counsel, and a director of the
MacKenzie Patterson Fuller, Inc. Since 2004 he has been a director and vice
president of MPFA. Prior to joining MacKenzie Patterson Fuller, Inc. in July
2003, he was a securities and corporate finance attorney with the national law
firm of Davis Wright Tremaine LLP from August 2000 to January 2003. From August
1997 to May 2000 he attended the University of Michigan Law School, where he
graduated magna cum laude with a Juris Doctor Degree. Prior to law school, Chip
Patterson taught physics, chemistry, and math at the high school level for three
years, from June 1994 to June 1997. He graduated with high distinction and Phi
Beta Kappa from the University of California at Berkeley with a Bachelor of Arts
Degree in Political Science. He also has prior experience in sales, retail, and
banking.
Christine Simpson is vice president of MacKenzie Patterson Fuller, Inc. and MPFA
and is responsible for the day-to-day management of research and securities
purchases and sales on behalf of the entities managed by MacKenzie Patterson
Fuller, Inc. Ms. Simpson has served in that position since January 1997; from
January 1994 until her promotion to vice president, she was a research analyst
with MacKenzie Patterson Fuller, Inc. She joined MacKenzie Patterson Fuller,
Inc. as an administrative assistant in July 1990.
Robert E. Dixon is senior vice president and a director of MPFA and MacKenzie
Patterson Fuller, Inc. and has served as an officer and director of Sutter
Holding Company, Inc. since March 2002. Mr. Dixon received his Bachelor's degree
in economics from the University of California at Los Angeles in 1992. He worked
for Lehman Brothers, Inc. in equity sales and trading during 1993 and 1994. From
October 1994 to June, 1996 he worked for MacKenzie Patterson, Inc. as a
securities research analyst. Mr. Dixon became a Chartered Financial Analyst in
1996, and received his Master of Business Administration degree from Cornell
University in 1998. In July of 1998 he began buying and selling securities for
his own account and that of the entities he controls, and he was principally
been engaged in that activity until May 2005, when he rejoined MPFA. Mr. Dixon
was a registered representative of North Coast Securities from 1994 through
1997.
Andrea K. Meyer is vice president of Trading and Portfolios for MPFA and
MacKenzie Patterson Fuller, Inc. As vice president of Trading and Portfolios,
Ms. Meyer is responsible for handling the day-to-day operations of the trading
department. She graduated from St. Mary's College of California in 1997 with a
Bachelor of Science in Business Administration with a concentration in Finance
and a Minor in Accounting. Prior to joining MPFA in 1998, she worked for a year
for State Street Bank and Trust, one of the leading financial services
specialists worldwide, as a portfolio accountant.
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