-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, DXOyTHE/oXYjqgyVc+hucB4yJztFX7EOtwId+WIKo7xSa+WODVVOE++T79ygQG86 7LqO3dEu5W6o11YUBG+8DA== 0000890587-94-000149.txt : 19941018 0000890587-94-000149.hdr.sgml : 19941018 ACCESSION NUMBER: 0000890587-94-000149 CONFORMED SUBMISSION TYPE: SC 14D1 PUBLIC DOCUMENT COUNT: 8 FILED AS OF DATE: 19941017 SROS: NONE SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: CENTURY PROPERTIES FUND XIX CENTRAL INDEX KEY: 0000705752 STANDARD INDUSTRIAL CLASSIFICATION: 6500 IRS NUMBER: 942887133 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 14D1 SEC ACT: 1934 Act SEC FILE NUMBER: 005-43357 FILM NUMBER: 94552913 BUSINESS ADDRESS: STREET 1: 5665 NORTHSIDE DR NW STREET 2: SUITE 370 CITY: ATLANTA STATE: GA ZIP: 30328 BUSINESS PHONE: 4049169090 MAIL ADDRESS: STREET 1: 5665 NORTHSIDE DRIVE NW STREET 2: SUITE 370 CITY: ATLANTA STATE: GA ZIP: 30328 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: DEFOREST VENTURES I L P CENTRAL INDEX KEY: 0000931436 STANDARD INDUSTRIAL CLASSIFICATION: 0000 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 14D1 BUSINESS ADDRESS: STREET 1: 100 JERICHO QUADRANGLE SUITE 214 CITY: JERICHO STATE: NY ZIP: 11753 BUSINESS PHONE: 5168220022 MAIL ADDRESS: STREET 2: 100 JERICHO QUADRANGLE SUITE 214 CITY: JERICHO STATE: NY ZIP: 11753 SC 14D1 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 _______________________ SCHEDULE 14D-1 Tender Offer Statement Pursuant to Section 14(d)(1) of the Securities Exchange Act of 1934 _______________________ CENTURY PROPERTIES FUND XIX (Name of Subject Company) DEFOREST VENTURES I L.P. (Bidder) UNITS OF LIMITED PARTNERSHIP INTEREST (Title of Class of Securities) NONE (CUSIP Number of Class of Securities) _______________________ Michael L. Ashner Copy to: DeForest Capital I Corporation Mark I. Fisher 100 Jericho Quadrangle Rosenman & Colin Suite 214 575 Madison Avenue Jericho, New York 11735-2717 New York, New York 10022-2585 (516) 822-0022 (212) 940-8877 (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications on Behalf of Bidder) Calculation of Filing Fee Transaction Amount of Valuation* Filing Fee $2,625,360 $525.07 *For purposes of calculating the filing fee only. This amount assumes the purchase of 43,756 units of limited partnership inter- est ("Units") of the subject company for $60 per Unit in cash. [ ] Check box if any part of the fee is offset as provided by Rule 0-11(a)(2) and identify the filing with which the offsetting fee was previously paid. Identify the previous filing by registration statement number, or the Form or Schedule and date of its filing. 1. Name of Reporting Person S.S. or I.R.S. Identification No. of Above Person DeForest Ventures I L.P. I.R.S. I.D. No. 11-3230287 2. Check the Appropriate Box if a Member of a Group (See Instructions) (a) [ ] (b) [ ] 3. SEC Use Only 4. Sources of Funds (See Instructions) WC; OO 5. Check Box if Disclosure of Legal Proceedings is Required Pursuant to Items 2(e) of 2(f) [ ] 6. Citizenship or Place of Organization Delaware 7. Aggregate Amount Beneficially Owned by Each Reporting Person 235 Units 8. Check Box if the Aggregate Amount in Row (7) Excludes Certain Shares (See Instructions) [ ] 9. Percent of Class Represented by Amount in Row (7) 0.3% 10. Type of Reporting Person (See Instructions) PN Item 1. Security and Subject Company. (a) The name of the subject company is Century Properties Fund XIX, a California limited partnership (the "Partnership"), which has its principal executive offices at 5665 Northside Drive, N.W., Suite 370, Atlanta, Georgia 30328. (b) This Schedule relates to the offer by DeForest Ventures I L.P., a Delaware limited partnership (the "Purchaser"), to purchase up to 43,756 outstanding units of limited partnership interest ("Units") of the Partnership at $60 per Unit, net to the seller in cash, upon the terms and subject to the conditions set forth in the Offer to Purchase dated October 17, 1994 (the "Offer to Purchase") and the related Letter of Transmittal, copies of which are attached hereto as Exhibits (a)(1) and (a)(2), respectively. The number of Units outstanding is set forth under "INTRODUCTION" in the Offer to Purchase and is incorporated herein by reference. (c) The information set forth under "THE TENDER OFFER -- Section 13. Background of the Offer" of the Offer to Purchase is incorporated herein by reference. Item 2. Identity and Background. (a)-(d) The information set forth under "INTRODUCTION", "THE TENDER OFFER -- Section 11. Certain Information Concerning the Purchaser" and Schedule 1 of the Offer to Purchase is incorporated herein by reference. (e)-(f) During the last five years, neither the Purchaser, the General Partner nor, to the best of its knowledge, any of the persons listed in Schedule 1 of the Offer to Purchase (i) has been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or (ii) were a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding were or are subject to a judgment, decree or final order enjoining future violations of, or prohibiting activities subject to, Federal or state securities laws or finding any violation of such laws. (g) The information set forth in Schedule 1 of the Offer to Purchase is incorporated herein by reference. Item 3. Past Contracts, Transactions or Negotiations with the Subject Company. (a) The information set forth in "THE TENDER OFFER -- Section 10. Conflicts of Interest and Transactions with Affiliates" and "THE TENDER OFFER -- Section 13. Background of the Offer" of the Offer to Purchase is incorporated herein by reference. In addition, the information set forth in Note 2 to the financial statements of the Partnership included in the Form 10-K of the Partnership for the fiscal year ended December 31, 1993 (such Note being referred to as the "Form 10-K Note"), a copy of which is attached hereto as Exhibit (g)(i), Note 2 to the financial statements of the Partnership included in the Form 10-Q of the Partnership for the six months ended June 30, 1994 (such Note being referred to as the "Form 10-Q Note"), a copy of which is attached hereto as Exhibit (g)(ii), and Item 5 of Form 8-K of the Partnership dated October 12, 1994 ("Form 8-K"), a copy of which is attached hereto as Exhibit (g)(iii), is incorporated herein by reference. (b) The information set forth in "THE TENDER OFFER -- Section 13. Background of the Offer" of the Offer to Purchase is incorporated herein by reference. In addition, the information set forth in the Form 10-K Note, the Form 10-Q Note and Item 5 of Form 8-K is incorporated herein by reference. Item 4. Source and Amount of Funds or Other Consideration. (a)-(b) The information set forth in "THE TENDER OFFER - -- Section 10. Conflicts of Interest and Transactions with Affiliates" and "THE TENDER OFFER -- Section 12. Source of Funds" of the Offer to Purchase is incorporated herein by reference. (c) Not applicable. Item 5. Purpose of the Tender Offer and Plans or Proposals of the Bidder. (a)-(b) The information set forth in "THE TENDER OFFER - -- Section 8. Future Plans" and "THE TENDER OFFER -- Section 13. Background of the Offer" of the Offer to Purchase is incorporated herein by reference. (c) Not applicable. (d) The information set forth in "THE TENDER OFFER -- Section 8. Future Plans" of the Offer to Purchase is incorporated herein by reference. (e)-(g) Not applicable. Item 6. Interest in Securities of the Subject Company. (a) The information set forth in "INTRODUCTION" and "THE TENDER OFFER -- Section 11. Certain Information Concerning the Purchaser" of the Offer to Purchase is incorporated herein by reference. (b) None. Item 7. Contracts, Arrangements, Understandings or Relationships with Respect to the Subject Company's Securities. The information set forth in "THE TENDER OFFER -- Section 12. Source of Funds" of the Offer to Purchase is incorporated herein by reference. Item 8. Persons Retained, Employed or to be Compensated. None. Item 9. Financial Statements of Certain Bidders. The information set forth in "THE TENDER OFFER -- Section 11. Certain Information Concerning the Purchaser" and Schedule 2 of the Offer to Purchase is incorporated herein by reference. Item 10. Additional Information. (a) None. (b)-(d) The information set forth in "THE TENDER OFFER - -- Section 15. Certain Legal Matters" of the Offer to Purchase is incorporated herein by reference. (e) None. (f) Reference is hereby made to the Offer to Purchase and the related Letter of Transmittal, copies of which are attached hereto as Exhibits (a)(1) and (a)(2), respectively, and which are incorporated herein in their entirety by reference. Item 11. Material to be Filed as Exhibits. (a)(1) Offer to Purchase dated October 17, 1994. (a)(2) Letter of Transmittal. (a)(3) Form of Cover Letter, dated October 17, 1994, from DeForest Ventures I L.P. to Unitholders. (b) Commitment Letter dated October 11, 1994 between Kidder Peabody Mortgage Capital Corporation, DeForest Ventures I L.P., DeForest Ventures II L.P., NPI-AP Management, L.P. and National Property Investors, Inc. (c) None. (d) None. (e)-(f) Not applicable. (g)(i) Note 2 to the financial statements of Century Properties Fund XIX included in the Form 10-K of Century Properties Fund XIX for the fiscal year ended December 31, 1993. (g)(ii) Note 2 to the financial statements of Century Properties Fund XIX included in the Form 10-Q of Century Properties Fund XIX for the six months ended June 30, 1994. (g)(iii) Item 5 of the Form 8-K of Century Properties Fund XIX dated October 12, 1994. Signatures After due inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. Dated: October 17, 1994 DEFOREST VENTURES I L.P. By: DeForest Capital I Corporation, its General Partner By: /s/ Michael L. Ashner Name: Michael L. Ashner Title: President EX-20 2 Offer to Purchase for Cash Up to 43,756 Units of Limited Partnership Interest of CENTURY PROPERTIES FUND XIX at $60 Net Per Unit by DEFOREST VENTURES I L.P. DeForest Ventures I L.P., a newly-formed Delaware limited partnership (the "Purchaser"), hereby offers to purchase up to 43,756 of the outstanding Units of Limited Partnership Interest (the "Units") of Century Properties Fund XIX, a California limited partnership (the "Partnership"), at a purchase price of $60 per Unit, net to the seller 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"). The Offer is made to Unitholders of record as of October 10, 1994. The 43,756 Units sought pursuant to the Offer represent approximately 49% of the Units outstanding as of October 10, 1994. The Offer is not conditioned upon any minimum number of Units being tendered. If more than 43,756 Units are validly tendered and not withdrawn, the Purchaser will accept for purchase on a pro rata basis 43,756 Units, subject to the terms and conditions herein. A Unitholder must tender all Units owned by such Unitholder in order for the tender to be valid. The Purchaser expressly reserves the right, in its sole discretion, at any time and from time to time, (i) to extend the period of time during which the Offer is open and thereby delay acceptance for payment of, and the payment for, any Units, (ii) to terminate the Offer and not accept for payment any Units not theretofore accepted for payment or paid for, (iii) upon the occurrence of any of the conditions specified in Section 14, to delay the acceptance for payment of, or payment for, any Units not theretofore accepted for payment or paid for, and (iv) to amend the Offer in any respect (including, without limitation, by increasing the consideration offered, increasing or decreasing the number of Units being sought, or both). Notice of any such extension, termination or amendment will promptly be disseminated to Unitholders in a manner reasonably designed to inform Unitholders 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., New York City time, on the next business day after the scheduled Expiration Date, in accordance with Rule 14e-1(d) under the Exchange Act. _____________________________ The Information Agent for the Offer is: The Herman Group Inc. 1-800-530-4966 The Dealer Manager of the Offer is: GKN Securities Corp. October 17, 1994 TABLE OF CONTENTS Page INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 THE TENDER OFFER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Section 1. Terms of the Offer . . . . . . . . . . . . . . . . . . 3 Section 2. Proration; Acceptance for Payment and Payment for Units . . . . . . . . . . . . . . . . . . . 3 Section 3. Procedures for Tendering Units . . . . . . . . . . . . 4 Section 4. Withdrawal Rights. . . . . . . . . . . . . . . . . . . 5 Section 5. Extension of Tender Period; Termination; Amendment. . . . . . . . . . . . . . . . . . . 5 Section 6. Certain Federal Income Tax Consequences. . . . . . . . . . . . . . . . . . . . . . . . 6 Section 7. Effects of the Offer . . . . . . . . . . . . . . . . . 8 Section 8. Future Plans . . . . . . . . . . . . . . . . . . . . . 9 Section 9. Certain Information Concerning the Partnership . . . . . . . . . . . . . . . . . . . . . . . . 9 Section 10. Conflicts of Interest and Transactions With Affiliates. . . . . . . . . . . . . . . . 9 Section 11. Certain Information Concerning the Purchaser . . . . . . . . . . . . . . . . . . . . . . . . . 10 Section 12. Source of Funds. . . . . . . . . . . . . . . . . . . . 11 Section 13. Background of the Offer. . . . . . . . . . . . . . . . 13 Section 14. Conditions of the Offer. . . . . . . . . . . . . . . . 16 Section 15. Certain Legal Matters. . . . . . . . . . . . . . . . . 17 Section 16. Fees and Expenses. . . . . . . . . . . . . . . . . . . 18 Section 17. Miscellaneous. . . . . . . . . . . . . . . . . . . . . 18 Schedule 1 Information with respect to Directors and Executive Officers of DeForest Capital Schedule 2 Financial Statements of the Purchaser and DeForest Capital Schedule 3 NPI Partnerships and Fox Subject Partnerships To the Holders of Units of Limited Partnership Interest of Century Properties Fund XIX INTRODUCTION DeForest Ventures I L.P., a newly-formed Delaware limited partnership (the "Purchaser"), hereby offers to purchase up to 43,756 of the outstanding Units of Limited Partnership Interest (the "Units") of Century Properties Fund XIX, a California limited partnership (the "Partnership"), at a purchase price of $60 per Unit (the "Purchase Price"), net to the seller 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"). Holders of Units ("Unitholders") who tender their Units will not be obligated to pay any commissions or partnership transfer fees, which commissions and fees will be borne by the Purchaser. The Purchaser will also pay all charges and expenses of The Herman Group, Inc. (the "Information Agent") and GKN Securities Corp. (the "Dealer Manager") in connection with the Offer. A Unitholder must tender all Units owned by such Unitholder in order for the tender to be valid. The Offer will provide Unitholders with an opportunity to liquidate their investment without the usual transaction costs associated with market sales. Unitholders may no longer wish to continue with their investment in the Partnership for a number of reasons, including: Although not necessarily an indication of value, an Offer price substantially in excess of recent secondary market trades for Units The absence of a formal trading market for the Units General disenchantment with real estate investments, partic- ularly long-term investments in limited partnerships The continuing administrative costs and resultant negative financial impact on the value of the Partnership's assets due to their ownership in a publicly registered limited partnership More immediate use for the cash tied up in an investment in the Units The delays and complications in preparing and filing personal income tax returns which may result from an investment in the Units The opportunity to transfer Units without the costs and commissions normally associated with a transfer The Offer is not conditioned upon any minimum number of Units being tendered. If more than 43,756 Units are validly tendered and not withdrawn, the Purchaser will accept for purchase on a pro rata basis 43,756 Units, subject to the terms and conditions herein. As discussed herein, the Purchaser is affiliated with the general partners of the Partnership and, accordingly, the general partners of the Partnership have certain conflicts of interest with respect to the Offer. The Partnership has indicated in its statement on Schedule 14D-9 filed with the Securities and Exchange Commission (the "Commission") that, because of such conflicts, it makes no recommendation and is remaining neutral as to whether a Unitholder should accept the Offer. (See "THE TENDER OFFER - Section 13. Background of the Offer"; and "Section 10. Conflicts of Interest and Transactions with Affiliates".) The general partner of the Purchaser is DeForest Capital I Corporation, a newly-formed Delaware corporation ("DeForest Capital") which is affiliated with NPI Equity Investments II, Inc. ("NPI Equity"), the entity which, on December 6, 1993, assumed management and obtained control of Fox Capital Management Corporation ("FCMC") and Fox Realty Investors ("FRI"), the general partners of Fox Partners II, the general partner of the Partnership (the "General Partner"). (See "THE TENDER OFFER - Section 13. Background of the Offer".) Unitholders who desire liquidity may wish to consider the Offer. However, each Unitholder must make his or her own decision based upon such Unitholder's particular circumstances, including the Unitholder's own financial needs, other investment opportunities and tax position. Each Unitholder should consult with his or her own advisors, tax, financial or otherwise, in evaluating the terms of and whether to tender Units pursuant to the Offer. The Purchaser has made its own independent analysis in establishing the Purchase Price. No independent person has been retained to evaluate or render any opinion with respect to the fairness of the Purchase Price. Accordingly, Unitholders are urged to consider carefully all of the information contained herein before accepting the Offer. (See "THE TENDER OFFER - Section 13. Background of the Offer".) According to information supplied by the Partnership, there are 89,292 Units issued and outstanding held by 9,486 Unitholders. The Purchaser does not directly own any of these Units; however, affiliates of the Purchaser in the aggregate own 235 Units in the Partnership, constituting approximately .3% of the Units outstanding. Certain information contained in this Offer to Purchase which relates to the Partnership, or represents statements made by the General Partner, has been derived from information provided to the Purchaser by the General Partner. Unitholders are urged to read this Offer to Purchase and the accompanying Letter of Transmittal carefully before deciding whether to tender their Units. THE TENDER OFFER Section 1. Terms of the Offer. Upon the terms of the Offer, the Purchaser will pay for Units validly tendered on or prior to the Expiration Date and not withdrawn in accordance with Section 4 of this Offer to Purchase. The term "Expiration Date" shall mean 5:00 p.m., New York City time, on November 18, 1994, unless the Purchaser shall have extended the period of time for which the Offer is open. In the event the Offer is extended, the term "Expiration Date" shall mean the latest time and date on which the Offer, as extended by the Purchaser, shall expire. If, prior to the Expiration Date, the Purchaser shall increase the consideration offered to Unitholders pursuant to the Offer, such increased consideration shall be paid for all Units accepted for payment pursuant to the Offer, whether or not such Units were tendered prior to such increase. The Offer is conditioned on satisfaction of certain conditions. See Section 14, which sets forth in full the conditions of the Offer. The Purchaser reserves the right (but shall not be obligated), in its sole discretion, to waive any or all of such conditions. If, on or prior to the Expiration Date, any or all of such conditions have not been satisfied or waived, the Purchaser reserves the right to (i) decline to purchase any of the Units tendered, terminate the Offer and return all tendered Units to tendering Unitholders, (ii) waive all the unsatisfied conditions and, subject to complying with applicable rules and regulations of the Commission, purchase all Units validly tendered, (iii) extend the Offer and, subject to the right of Unitholders to withdraw Units until the Expiration Date, retain the Units that have been tendered during the period or periods for which the Offer is extended, or (iv) amend the Offer. This Offer to Purchase and the related Letter of Transmittal are being mailed by the Purchaser to Unitholders or beneficial owners of Units (in the case of Individual Retirement Accounts and qualified plans) of record as of October 10, 1994. Section 2. Proration; Acceptance for Payment and Payment for Units. If the number of Units validly tendered on or prior to the Expiration Date and not withdrawn is 43,756 or less, the Purchaser will accept for payment, subject to the terms and conditions of the Offer, all Units so tendered. If the number of Units validly tendered on or prior to the Expiration Date and not withdrawn exceeds 43,756, the Purchaser will accept for payment, subject to the terms and conditions of the Offer, Units so tendered on a pro rata basis (with such adjustments to avoid purchase of fractional Units). In the event that proration is required, because of the difficulty of immediately determining the precise number of Units to be accepted, the Purchaser does not expect to announce the final results of proration until at least ten business days following the Expiration Date. The Purchaser will not pay for any Units tendered until after the final proration factor has been determined. The Purchaser will pay for Units validly tendered and not withdrawn in accordance with Section 4 as promptly as practicable following the Expiration Date. In all cases, payment for Units purchased pursuant to the Offer will be made only after timely receipt by Purchaser of a properly completed and duly executed Letter of Transmittal (or facsimile thereof) and any other documents required by the Letter of Transmittal. (See "Section 3. Procedures for Tendering Units".) Under no circumstances will interest be paid on the purchase price by reason of any delay in making such payment. If any tendered Units are not purchased for any reason, the Letter of Transmittal with respect to such Units will be destroyed by the Purchaser. If for any reason acceptance for payment of, or payment for, any Units tendered pursuant to the Offer is delayed or the Purchaser is unable to accept for payment, purchase or pay for Units tendered pursuant to the Offer, then, without prejudice to the Purchaser's rights under Section 14, the Purchaser may retain tendered Units, and such Units may not be withdrawn except to the extent that the tendering Unitholders are entitled to withdrawal rights as described in Section 4; provided, however, that the Purchaser is required, pursuant to Rule 14e-1(c) under the Exchange Act, to pay Unitholders the Purchase Price in respect of Units ten- dered or return such Units promptly after termination or withdrawal of the Offer. Section 3. Procedures for Tendering Units. Valid Tender. To validly tender Units, a properly completed and duly executed Letter of Transmittal and any other documents required by the Letter of Transmittal, must be received by the Purchaser on or prior to the Expiration Date. A Unitholder must tender all Units owned by such Unitholder in order for the tender to be valid. Signature Requirements. If the Letter of Transmittal is signed by the registered holder of the Units and payment is to be made directly to that holder, then no notarization or signature guarantee is required on the Letter of Transmittal. Similarly, if the Units are tendered for the account of a member firm of a registered national securities exchange, a member of the National Association of Securities Dealers, Inc. or a commercial bank, savings bank, credit union, savings and loan association or trust company having an office, branch or agency in the United States (each an "Eligible Institution"), no notarization or signature guarantee is required on the Letter of Transmittal. However, in all other cases, all signatures on the Letter of Transmittal must either be notarized or guaranteed by an Eligible Institution. In order for a tendering Unitholder to participate in the Offer, Units must be validly tendered and not withdrawn on or prior to the Expiration Date, which is 5:00 p.m., New York City time, on November 18, 1994. The method of delivery of the Letter of Transmittal and all other required documents is at the option and risk of the tendering Unitholder and delivery will be deemed made only when actually received by the Purchaser. Backup Federal Income Tax Withholding. To prevent the possible application of backup federal income tax withholding with respect to payment of the purchase price, a tendering Unitholder must provide the Purchaser with such Unitholder's correct taxpayer identification number by completing the Substitute Form W-9 included in the Letter of Transmittal. (See the Instructions to the Letter of Transmittal and "Section 6. Certain Federal Income Tax Consequences".) FIRPTA Withholding. To prevent the withholding of federal income tax in an amount equal to 10% of the amount of the Purchase Price plus Partnership liabilities allocable to each Unit purchased, each Unitholder must complete the FIRPTA Affidavit included in the Letter of Transmittal certifying such Unitholder's taxpayer identification number and address and that the Unitholder is not a foreign person. (See the Instructions to the Letter of Transmittal and "Section 6. Certain Federal Income Tax Consequences".) Other Requirements. By executing a Letter of Transmittal, a tendering Unitholder irrevocably appoints the designees of the Purchaser as such Unitholder's proxies, in the manner set forth in the Letter of Transmittal, each with full power of substitution, to the full extent of such Unitholder's rights with respect to the Units tendered by such Unitholder and accepted for payment by the Purchaser. Such appointment will be effective when, and only to the extent that, the Purchaser accepts such Units for payment. Upon such acceptance for payment, all prior proxies given by such Unitholder with respect to such Units will, without further action, be revoked, and no subsequent proxies may be given (and if given will not be effective). The designees of the Purchaser will, as to such Units, be empowered to exercise all voting and other rights of such Unitholder as they in their sole discretion may deem proper at any meeting of Unitholders, by written consent or otherwise. The Purchaser reserves the right to require that, in order for Units to be deemed validly tendered, immediately upon the Purchaser's acceptance for payment of such Units, the Purchaser must be able to exercise full voting rights with respect to such Units, including voting at any meeting of Unitholders then scheduled. Determination of Validity; Rejection of Units; Waiver of Defects; No Obligation to Give Notice of Defects. All questions as to the validity, form, eligibility (including time of receipt) and acceptance for payment of any tender of Units pursuant to the procedures described above will be determined by the Purchaser, in its sole discretion, which determination shall be final and binding. The Purchaser reserves the absolute right to reject any or all tenders if not in proper form or if the acceptance of, or payment for, the Units tendered may, in the opinion of the Purchaser's counsel, be unlawful. The Purchaser also reserves the right to waive any defect or irregularity in any tender with respect to any particular Units of any particular Unitholder, and the Purchaser's 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 Purchaser, the Information Agent, the Dealer Manager nor any other person will be under any duty to give notification of any defects or irregularities in the tender of any Units or will incur any liability for failure to give any such notification. A tender of Units pursuant to any of the procedures described above will constitute a binding agreement between the tendering Unitholder and the Purchaser on the terms set forth in the Offer. Section 4. Withdrawal Rights. Except as otherwise provided in this Section 4, all tenders of Units pursuant to the Offer are irrevocable, provided that Units tendered pursuant to the Offer may be withdrawn at any time prior to the Expiration Date and, unless already accepted for payment as provided in this Offer to Purchase, may also be withdrawn at any time after November 18, 1994. For withdrawal to be effective, a written or facsimile transmission notice of withdrawal must be timely received by the Purchaser at the address set forth on the back cover of this Offer to Purchase. Any such notice of withdrawal must specify the name of the person who tendered the Units 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, Units is delayed for any reason or if the Purchaser is unable to purchase or pay for Units for any reason, then, without prejudice to the Purchaser's rights under the Offer, tendered Units may be retained by the Purchaser and may not be withdrawn except to the extent that tendering Unitholders are entitled to withdrawal rights as set forth in this Section 4; provided, however, that the Purchaser is required, pursuant to Rule 14e-1(c) under the Exchange Act, to pay Unitholders the Purchase Price in respect of Units tendered or return such Units promptly after termination or withdrawal of the Offer. Any Units properly withdrawn will be deemed not to be validly tendered for purposes of the Offer. Withdrawn Units may be re- tendered, however, by following any of the procedures described in Section 3 at any time prior to the Expiration Date. Section 5. Extension of Tender Period; Termination; Amendment. The Purchaser expressly reserves the right, in its sole discretion, at any time and from time to time, (i) to extend the period of time during which the Offer is open and thereby delay acceptance for payment of, and the payment for, any Units, (ii) to terminate the Offer and not accept for payment any Units not already accepted for payment or paid for, (iii) upon the occurrence of any of the conditions specified in Section 14, to delay the acceptance for payment of, or payment for, any Units not already accepted for payment or paid for, and (iv) to amend the Offer in any respect (including, without limitation, by increasing the consideration offered, increasing or decreasing the number of Units being sought, or both). Notice of any such extension, termination or amendment will promptly be disseminated to Unitholders in a manner reasonably designed to inform Unitholders of such change in compliance with Rule 14d-4(c) under 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., New York City time, on the next business day after the scheduled Expiration Date, in accordance with Rule 14e-1(d) under the Exchange Act. If the Purchaser extends the Offer, or if the Purchaser (whether before or after its acceptance for payment of Units) is delayed in its payment for Units or is unable to pay for Units pursuant to the Offer for any reason, then, without prejudice to the Purchaser's rights under the Offer, the Purchaser may retain tendered Units and such Units may not be withdrawn except to the extent tendering Unitholders are entitled to withdrawal rights as described in Section 4; provided, however, that the Purchaser is required, pursuant to Rule 14e-1(c) under the Exchange Act, to pay Unitholders the Purchase Price in respect of Units tendered or return such Units promptly after termination or withdrawal of the Offer. If the Purchaser makes a material change in the terms of the Offer or the information concerning the Offer or waives a material condition of the Offer, the Purchaser will extend the Offer and disseminate additional tender offer materials to the extent required by Rules 14d-4(c) and 14d-6(d) under the Exchange Act. The minimum period during which an offer must remain open following a material change in the terms of the offer or information concerning the offer will depend upon the facts and circumstances, including the relative materiality of the change in the terms or information. In the Commission'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 securityholders, and if material changes are made with respect to information that approaches the significance of price or the percentage of securities sought, a minimum of ten business days may be required to allow for adequate dissemination to securityholders 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, New York City time. Section 6. Certain Federal Income Tax Consequences. The following summary is a general discussion of certain federal income tax consequences of a sale of Units pursuant to the Offer. This summary is based on the Internal Revenue Code of 1986, as amended (the "Code"), applicable Treasury regulations thereunder, administrative rulings, practice and procedures and judicial authority as of the date of the Offer. All of the foregoing are subject to change, and any such change could affect the continuing accuracy of this summary. This summary does not discuss all aspects of federal income taxation that may be relevant to a particular Unitholder in light of such Unitholder's specific circumstances or to certain types of Unitholders subject to special treatment under the federal income tax laws (for example, foreign persons, dealers in securities, banks, insurance companies and tax- exempt organizations), nor does it discuss any aspect of state, local, foreign or other tax laws. Sales of Units pursuant to the Offer will be taxable transactions for federal income tax purposes, and may also be taxable transactions under applicable state, local, foreign and other tax laws. EACH UNITHOLDER SHOULD CONSULT HIS OR ITS TAX ADVISOR AS TO THE PARTICULAR TAX CONSEQUENCES TO SUCH UNITHOLDER OF SELLING UNITS PURSUANT TO THE OFFER. A taxable Unitholder will recognize gain or loss on a sale of Units pursuant to the Offer equal to the difference between (i) the Unitholder's "amount realized" on the sale and (ii) the Unitholder's adjusted tax basis in the Units sold. The amount of a Unitholder's adjusted tax basis in such Units will vary depending upon such Unitholder's particular circumstances. The "amount realized" with respect to a Unit will be a sum equal to the amount of cash received by the Unitholder for the Unit pursuant to the Offer plus the amount of Partnership liabilities allocable to the Unit (as determined under Code Section 752). Based on the results of Partnership operations through December 31, 1993, it is estimated that, depending on the Unitholder's date of entry into the Partnership, the taxable gain or loss recognized by a taxable Unitholder who or which tenders Units that were acquired by such Unitholder at the time of the Partnership's original offering of Units will range from a gain of $146 per Unit for those admitted in October 1983, to a loss of $50 per Unit for those admitted in October 1984. It also is estimated that such Unitholder has "suspended" passive activity losses (i.e., post-1986 net taxable losses in excess of statutorily provided "phase-in" amounts) from the Partnership of $344 per Unit (subject to reduction to the extent such Unitholder utilized any of such losses to offset passive activity income from other investments). Under the passive activity loss rules, such losses would be deductible by such Unitholder against his gain, if any, on the sale (subject to any other applicable limitations). In addition, once the Unitholder sells all his Units, any suspended passive activity losses from the Partnership in excess of such Unitholder's gain, if any, on the sale should no longer be subject to the passive activity loss limitation, and therefore should be deductible by such Unitholder from his other income subject to any other applicable limitations. (See the discussion of the passive activity loss limitation below.) The gain or loss recognized by a Unitholder on a sale of a Unit pursuant to the Offer generally will be treated as a capital gain or loss if the Unit was held by the Unitholder as a capital asset. Such capital gain or loss will be treated as long-term capital gain or loss if the tendering Unitholder's holding period for the Unit exceeds one year. Under current law, long-term capital gains of individuals and other non-corporate taxpayers are taxed at a maximum marginal federal income tax rate of 28%, whereas the maximum marginal federal income tax rate for other income of such persons is 39.6%. Capital losses are deductible only to the extent of capital gains, except that non-corporate taxpayers may deduct up to $3,000 of capital losses in excess of the amount of their capital gains against ordinary income. Excess capital losses generally can be carried forward to succeeding years (a corpora- tion's carryforward period is five years and a non-corporate taxpayer can carry forward such losses indefinitely); in addition, corporations are allowed to carry back excess capital losses to the three preceding taxable years. If any portion of the amount realized by a Unitholder is attributable to "unrealized receivables" (which includes depreciation recapture) or "substantially appreciated inventory" as defined in Code Section 751, then a portion of the Unitholder's gain or loss may be ordinary rather than capital. It is possible that the basis allocation rules of Code Section 751 may result in a Unitholder's recognizing ordinary income with respect to such items while recognizing a larger capital loss with respect to the remainder of the Unit, even though such Unitholder has an overall loss on the sale. Under Code Section 469, a non-corporate taxpayer or personal service corporation can deduct passive activity losses in any year only to the extent of such person's passive activity income for such year, and closely held corporations may not offset such losses against so-called "portfolio" income. A loss recognized by a Unitholder upon a sale of a Unit pursuant to the Offer can be currently deducted (subject to other applicable limitations) to the extent of such Unitholder's taxable income from the Partnership for that year, and gain recognized by a Unitholder upon such sale can be offset by such Unitholder's passive activity losses (if any) from the Partnership. If a Unitholder disposes of all his Units pursuant to the Offer, such Unitholder generally will be able to deduct his remaining passive activity losses (if any) from the Partnership that could not previously be deducted by such Unitholder due to the foregoing limitation. A tendering Unitholder will be allocated a pro rata share of the Partnership's taxable income or loss for the year of sale with respect to the Units sold in accordance with the provisions of the Partnership Agreement of the Partnership (the "Partnership Agreement") concerning transfers of Units. Such allocation and any cash distributed by the Partnership to such Unitholder for such year will affect the Unitholder's adjusted tax basis in Units and, therefore, the amount of such Unitholder's taxable gain or loss upon a sale of Units pursuant to the Offer. A taxable Unitholder (other than corporations and certain foreign individuals) who tenders Units may be subject to 31% backup withholding unless the Unitholder provides a taxpayer identification number ("TIN") and certifies that the TIN is correct or properly certifies that he is awaiting a TIN. A Unitholder may avoid backup withholding by properly completing and signing the Substitute Form W-9 included as part of the Letter of Transmittal. If a Unitholder who is subject to backup withholding does not properly complete and sign the Substitute Form W-9, the Purchaser will withhold 31% from payments to such Unitholder. Gain realized by a foreign Unitholder on a sale of a Unit pursuant to the Offer will be subject to federal income tax. Under Section 1445 of the Code, the transferee of a partnership interest held by a foreign person is generally required to deduct and with- hold a tax equal to 10% of the amount realized on the disposition. The Purchaser will withhold 10% of the amount realized by a tendering Unitholder unless the Unitholder properly completes and signs the FIRPTA Affidavit included as part of the Letter of Transmittal certifying the Unitholder's TIN, that such Unitholder is not a foreign person and the Unitholder's address. Amounts withheld would be creditable against a foreign Unitholder's federal income tax liability and, if in excess thereof, a refund could be obtained from the Internal Revenue Service by filing a U.S. income tax return. Section 7. Effects of the Offer. Limitations on Resales. Pursuant to authority contained in the Partnership Agreement, the General Partner restricts transfers of Units if a transfer, when considered with all other transfers during the same applicable twelve-month period, would cause a termination of the Partnership for federal or applicable state income tax purposes (which termination may occur when more than 50% of the Units are transferred in a twelve-month period). Consequently, sales of Units on the secondary market in private transactions for the twelve-month period following completion of the Offer may be limited. The Partnership will not process any requests for recognition of substitution of Unitholders upon a transfer of Units during such twelve-month period which the General Partner believes may cause a tax termination. In determining the number of Units for which the Offer to Purchase is made (representing approximately 49% of the outstanding Units if 43,756 Units are tendered), the Purchaser took this restriction into account so as to permit normal historical levels of transfers to occur without violating this restriction. Effect on Trading Market. There is no established public trading market for the Units and, therefore, a reduction in the number of Unitholders should not materially further restrict the Unitholders' ability to find purchasers for their Units. (See "Section 13. Background of the Offer - Establishment of the Purchase Price" for certain limited information regarding recent secondary sales of the Units.) Control of all Unitholder Voting Decisions by Purchaser; Effect of Affiliation with General Partner. The Purchaser will have the right to vote each Unit purchased. As a result, the Purchaser could be in a position to significantly influence all voting decisions with respect to the Partnership. This could (i) prevent non-tendering Unitholders from taking action they desire but that the Purchaser opposes and (ii) enable the Purchaser to take action desired by the Purchaser but opposed by non-tendering Unitholders. Under the Partnership Agreement, Unitholders holding a majority of the Units are entitled to take action with respect to a variety of matters. When voting on such matters, the Purchaser will vote the Units acquired pursuant to the Offer in its interest, which, because of its affiliation with the General Partner, will also likely be in the interest of the General Partner. However, the Purchaser agrees, for the benefit of non-tendering Unitholders, that it will vote its Units in proportion to the votes cast by other Unitholders on matters put to a vote of Unitholders which propose to change the fees and other compensation payable by the Partnership to the General Partner and any of its affiliates. Except for the foregoing, no other limitations are imposed on the Purchaser's right to vote each Unit purchased. The Units are registered under the Exchange Act, which requires, among other things, that the Partnership furnish certain information to its Unitholders and to the Commission and comply with the Commission's proxy rules in connection with meetings of, and solicitation of consents from, Unitholders. Purchase of Units pursuant to the Offer will not result in the Units becoming eligible for deregistration under the Exchange Act. Possible Acceleration of Mortgage Debt. A mortgage encumbering the McMillan Place property, representing approximately $12,938,000 in outstanding principal amount of indebtedness, contains provisions which could give the holder thereof the right to accelerate the mortgage debt as a result of the consummation of the transactions contemplated by the Offer. If the lender successfully asserts that its mortgage debt may be accelerated, the Partnership will be required to satisfy the outstanding mortgage debt and to pay any prepayment fees, expenses or other sums required pursuant to the terms of the mortgage under such circumstance. In such event, the Partnership will seek to arrange for alternative sources of mortgage financing for such property. However, any such refinancings may be at interest rates which are higher or otherwise on terms which are less favorable than those provided for by the current mortgage. If the lender is successful in accelerating its mortgage, the cost of obtaining alternative financing could have a material adverse effect on the Partnership after the consummation of the Offer. Furthermore, if alternative financing cannot be obtained, the lender could foreclose on the property securing its mortgage. Section 8. Future Plans. The Purchaser is acquiring the Units pursuant to the Offer for investment purposes. Subject to the limitation on resales discussed in Section 7, following the completion of the Offer, the Purchaser may acquire additional Units. Any such acquisition may be made through private purchases, through one or more future tender offers or by any other means deemed advisable. Any such acquisition may be at a price higher or lower than the price to be paid for the Units purchased pursuant to the Offer. Neither the Purchaser nor the General Partner has any present plans or intentions with respect to a liquidation, sale of assets or, except as described in "Section 13. Background of the Offer", refinancing of any of the Partnership's properties. However, the Purchaser believes that consistent with its fiduciary obligations the General Partner will continue to review any opportunities such as sales or refinancings and will seek to maximize returns to investors in the Units. The General Partner's stated intentions are to manage the Partnership's assets to maximize capital appreciation, improve property operations and reduce Partnership debt. See "Section 10. Conflicts of Interest and Transactions with Affiliates" for certain information concerning the General Partner's potential conflict of interest with respect to sales or refinancings. Section 9. Certain Information Concerning the Partnership. The Partnership was organized on August 6, 1982, under the laws of the State of California. Its principal executive offices are located at 5665 Northside Drive, N.W., Suite 370, Atlanta, Georgia 30328. Its telephone number is (404) 916-9050. The Partnership's primary business is real estate related operations. Unitholders are referred to the financial and other information included in the Partnership's Annual Report on Form 10-K for the fiscal year ended December 31, 1993, and the Partner- ship's Quarterly Report on Form 10-Q for the six months ended June 30, 1994. Such reports and other documents may be examined and copies may be obtained from the offices of the Commission at 450 Fifth Street, N.W., Washington, D.C 20549, and at the regional offices of the Commission located in the Northwestern Atrium Center, 500 Madison Street, Suite 1400, Chicago, Illinois 60661, and 7 World Trade Center, New York, New York 10048. Copies should be available by mail upon payment of the Commission's customary charges by writing to the Commission's principal offices at 450 Fifth Street, N.W., Washington, D.C. 20549. On September 16, 1994, the Partnership entered into an agreement with the lender for its McMillan Place property pursuant to which the loan encumbering this property was refinanced. The loan now matures on September 16, 1999 and the interest rate was reduced to 8.25% per annum. In addition, the lender required the Partnership to enter into a cash management agreement which provides, among other things, that upon non-compliance with certain covenants, the lender will receive any excess cash flow over budgeted expenses, with such excess cash flow to be applied towards the reduction of the outstanding loan balance. Section 10. Conflicts of Interest and Transactions with Affiliates. The General Partner, the Purchaser and their affiliates have conflicts of interest with respect to the Offer as set forth below. Conflicts of Interest With Respect to the Offer. The General Partner has a conflict of interest with respect to the Offer, including as a result of its affiliation with the Purchaser. (See "Section 7. Background of the Offer".) Voting by the Purchaser. As a result of the Offer, the Purchaser may be in a position to significantly influence all Partnership decisions on which Unitholders may vote. However, the Purchaser agrees, for the benefit of non-tendering Unitholders, that it will vote its Units in proportion to the votes cast by other Unitholders on matters put to a vote of Unitholders which propose to change the fees and other compensation payable by the Partnership to the General Partner and any of its affiliates. (See "Section 7. Effects of the Offer".) Repayment of Tender Offer Loan. A loan (the "DeForest Loan") may be obtained by the Purchaser in connection with the Offer. (See "Section 12. Source of Funds".) The Purchaser plans to service the DeForest Loan with Purchaser Cash Flow and Tender Cash Flow (as defined in Section 12). The amount of the DeForest Loan, and consequently the ability of the Purchaser to repay such amount, is dependent upon the number of Units tendered in the DeForest Tender Offers (as defined in Section 12), which number is not currently ascertainable. One of several possible sources of Tender Cash Flow is the Purchaser's distributable portion of the proceeds of any sales or refinancings of Partnership properties attributable to the Units tendered. Consequently, a conflict of interest may exist for the General Partner in determining whether and when to sell and/or refinance the Partnership's properties. Any such conflict, however, may be mitigated by the fact that (i) proceeds from the sale or refinancing of properties owned by other partnerships in which the Purchaser or its affiliates may have an interest may be available to the Purchaser (see "Section 12. Source of Funds."), (ii) there exist other repayment sources, including capital contributions from the Purchaser's partners, (iii) certain of the Purchaser's partners have agreed to loan funds to the Purchaser in order to enable the Purchaser to make timely interest payments, and (iv) the Purchaser may be able to refinance all or a portion of the DeForest Loan. Distributions upon Sales or Refinancings. As mentioned above, one source of Tender Cash Flow is the Purchaser's distributable portion of the proceeds of any sales or refinancings of Partnership properties attributable to the Units tendered. The agreement governing the DeForest Loan will provide that the Purchaser will be required to make a prepayment on the DeForest Loan of an amount equal to 60% (100% in the case of a refinancing) of the Purchaser's distributable portion of the proceeds of such sale or refinancing, whether or not distributed by the Partnership. Consequently, unless the Purchaser otherwise has funds available to make such a required prepayment, a conflict of interest may exist for the General Partner in determining whether and when to cause the Partnership to distribute the proceeds of any such sale or refinancing to the Partnership's partners. Transactions with Affiliates. The General Partner of the Partnership, an affiliate of the Purchaser, owns a 2% interest in the Partnership and thus receives, as a continuing interest in the Partnership, an amount equal to a 2% allocation of the Partnership's profits and losses, and 2% of distributions. The General Partner is also entitled to be reimbursed for certain expenses and to receive certain fees pursuant to the terms of the Partnership Agreement. For information as to the amounts paid to the General Partner and its affiliates during the last three fiscal years and the six months ended June 30, 1994, see Note 2 to the Financial Statements of the Partnership in the Form 10-K of the Partnership for the fiscal year ended December 31, 1993 and Note 2 to the Financial Statements of the Partnership in the Form 10-Q of the Partnership for the six months ended June 30, 1994. For the period from July 1, 1994 through September 30, 1994, the General Partner and its affiliates received from the Partnership an aggregate of approximaately $184,000 with respect to the foregoing interests, reimbursements and fees. In February 1994, the Partnership used approximately $437,000 of the net proceeds from the sale of its Plantation Forest property to pay to NPI Realty Advisors, Inc. ("NPI Realty"), an affiliate of the Purchaser, the outstanding balance, including accrued interest, on a loan which had been made to the Partnership. (See "Section 13. Background of the Offer".) In connection with NPI Equity's acquisition of management and control of the Partnership, NPI Equity and certain principals of NPI agreed to indemnify FRI, FCMC and certain of the former individual general partners of FRI for 25% of the out-of-pocket costs, expenses and liabilities, if any, that may be incurred by them in connection with the restoration of any deficit balance in the General Partner's capital account upon the dissolution of the Partnership subsequent to the sale of all of the Partnership's properties. (See "Section 13. Background of the Offer" for a description of the transaction pursuant to which NPI Equity acquired control of the Partnership.) Section 11. Certain Information Concerning the Purchaser. The Purchaser was organized for the purpose of acquiring the Units. The principal executive office of the Purchaser and DeForest Capi- tal is at 5665 Northside Drive, N.W., Suite 370, Atlanta, Georgia 30328. DeForest Capital was organized for the purpose of acting as the general partner of the Purchaser. For certain information concerning the directors and executive officers of DeForest Capital, the general partner of the Purchaser, see Schedule 1 to this Offer to Purchase. For certain financial information concerning the Purchaser and DeForest Capital, see Schedule 2 to this Offer to Purchase. Except with respect to 235 Units in the aggregate owned by affiliates of the Purchaser, and except as otherwise set forth herein, (i) neither the Purchaser, DeForest Capital, to the best of Purchaser's knowledge, the persons listed on Schedule 1 nor any affiliate of the foregoing beneficially owns or has a right to acquire any Units, (ii) neither the Purchaser, DeForest Capital, to the best of Purchaser's knowledge, the persons listed on Schedule n Schedule information included in the Partnership's Annual Report on Form 10-K for the fiscal year ended December 31, 1993, and the Partner- ship's Quarterly Report on Form 10-Q for the six months ended June 30, 1994. Such reports and other documents may be examined and copies may be obtained from the offices of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, and at the regional offices of the Commission located in the Northwestern Atrium Center, 500 Madison Street, Suite 1400, Chicago Illinois 60661, and 7 World Trade Center, New York, New York 10048. Copies should be available by mail upon payment of the Commission's customary charges by writing to the Commission's principal offices at 450 Fifth Street, N.W., Washington, D.C. 20549. On September 16, 1994, the Partnership entered into an agreement with the lender for its McMillan Place property pursuant to which the loan encumbering this property was refinanced. The loan now matures on September 16, 1999 and the interest rate was reduced to 8.25% per annum. In addition, the lender required the Partnership to enter a cash management agreement which provides, among other things, that upon noncompliance with certain covenants, the lender will receive any excess cash flow over budgeted expenses, with such excess cash flow to be applied towards the reduction of the outstanding loan balance. Section 10. Conflicts of Interest and Transaction with Affiliates. The General Partner, the Purchaser and their affiliates have conflicts of interest with respect to the Offer as set forth below. Conflicts of Interest With Respect to the Offer. The General Part- ner has a conflict of interest with respect to the Offer, including as a result of it affiliation with the Purchaser. (See "Section 7. Background of the Offer".) Voting by the Purchaser. As a result of the Offer, the Purchaser may be in a position to significantly influence all Partnership decisions on which Unitholders may vote. However, the Purchaser agrees, for the benefit of non-tendering Unitholder, that it will vote its Units in proportion to the votes cast by other Unitholders on matters put to a vote of Unitholders which purpose to change the fees and other compensation payable by the Partnership to the General Partner and any of its affiliates. (See "Section 7. Effects of the Offer".) Repayment of Tender Offer Loan. A loan (the "DeForest Loan") may be obtained by the Purchaser in connection with the Offer. (See "Section 12. Source of Funds".) The Purchaser plans to service the DeForest Loan with Purchaser Cash Flow and Tender Cash Flow (as defined in Section 12). The amount of the DeForest Loan, and consequently the ability of the Purchaser to repay such amount, is dependent upon the number of Units tendered in the DeForest Tender Offers (as defined in Section 12), which number is not currently ascertainable. One of several possible sources of Tender Cash Flow is the Purchaser's distributable portion of the proceeds, of any sales or refinancings of Partnership properties attributable to the Units tendered. Consequently, a conflict of interest may exist for the General Partner in determining hether and when to sell and/or refinance the Partnership's properties. Any such conflict, however, may be mitigated by the fact that (i) proceeds of any sales or refinancings of properties owned by other partnerships in which the Purchaser or its affiliates may have an interest may be available to the Purchaser (see "Section 12. Sourc of Funds."), (ii) there exist other repayment sources, including capital contributions from the Purchaser's partners, (iii) certain of the Purchaser's partners have agreed to loan funds to the Purchaser in order to enable the Purchaser to make timely interest payments, and (iv) the Purchaser may be able to refinance all or a portion of the DeForest Loan. Distrubution upon Sales or Refinancings. As mentioned above, source of Tender Cash Flow is the Purchaser's distributable portion of the proceeds of any sales or refinancings of Partnership properties attributable to the Units tendered. The agreement governign the DeForest Loan will provide that the Purchser will be required to make a prepayment on the DeForest Loan of an amount equal to 60 % (100 % in the case of a refinancing) of the Purchaser's distributable portion of the proceeds of such a sale or refinancing, whether or not distributed by the Partnership. Consequently, unless the Purchaser otherwise has funds available to make such a required prepayment, a conflict of interest may exist for the General Partner in determining whether and when to cause the Partnership to distribute the proceeds of any such sale or refinancing to the Partnership's partners. Transaction with Affiliates. The General Partner of the Partnership, an affiliate of the Purchaser, owns a 2 % interest in the Partnership and thus receives, as a continuing interest in the Partnership, an amount equal to a 2% allocation of the Partnership's profits and losses, and 2 % of distributions. The General Partner is also entitled to be reimbursed for certain expenses and to receive certain fees pursuant to the terms of the Partnership Agreement. For information as to the amounts paid to the General Partner and its affiliates during the last three fiscal years and the six months ended June 30, 1994, see Note 2 to the Financial Statements of the Partnership in the Form 10-K of the Partnership for the fiscal year ended December 31, 1993 and Note 2 to the Financial Statements of the in the Form 10-Q of the Partnership for the six months ended June 30, 1994. For the period from July 1, 1994 through September 30, 1994, the General Partner and its affiliates received from the Partnership an aggregate of approximately $184,000 with respect to the fore going interests, reimbursements and fees. In February 1994, the Partnership used approximately $437,000 of the net proceeds from the sale of its Plantation Forest property to pay to NPI Realty Advisors, Inc. ("NPI Realty"), an affiliate of the Purchaser, the outstanding balance, including accrued interest, on a loan which had been made to the Partnership. (See "Section 13. Background of the Offer".) In connection with NPI Equity's acquisition of management and control of the Partnership, NPI Equity and certain principals of NPI agreed to indemnify FRI, FCMC and certain of the former individual general partners of FRI for 25% of the out-of-pocket costs, expenses and liabilities, if any, that may be incurred by them in connection with the restoration of any deficit balance in the General Partner's capital account upon the dissolution of the Partnership subsequent to the sale of all of the Partnership's properties. (See "Section 13. Background of the Offer" for a description of the transaction pursuant to which NPI Equity acquired control of the Partnership.) Section 11. Certain Information Concerning the Purchaser. The Purchaser was organized for the purpose of acquiring the Units. The principal executive office of the Purchaser and DeForest Capital is at 5665 Northside Drive, N.W., Suite 370, Atlanta, Georgia 30328. DeForest Capital was organized for the purpose of acting as the general partner of the Purchaser. For certain information concerning the directors and executive officers of DeForest Capital, the general partner of the Purchaser, see Schedule 1 to this Offer to Purchase. For certain financial information concerning the Purchaser and DeForest Capital, see Schedule 2 to this Offer to Purchase. Except with respect to 235 Units in the aggregate owned by affiliate thereof or director, executive officer or subsidiary of DeForest Capital has effected any transaction in the Units, (iii) neither the Purchaser, DeForest Capital, to the best of Purchaser's knowledge, any of the persons listed on Schedule 1, nor any director or executive officer of DeForest Capital has any contract, arrangement, understanding or relationship with any other person with respect to any securities of the Partnership, including, but not limited to, contracts, arrangements, understandings or relationships concerning the transfer or voting thereof, joint ventures, loan or option arrangements, puts or calls, guarantees of loans, guarantees against loss or the giving ersons listed on Schedule 1, on the one hand, and the Partnership or its affiliates, on the other hand, and (v) there have been no contracts, negotiations or transactions between the Purchaser, DeForest Capital or, to the best of Purchaser's knowledge, the persons listed on Schedule 1, on the one hand, and the Partnership 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. 135 of the Units owned by the Purchaser's affiliates are owned by QAL Associates, whose address is 100 Jericho Quadrangle, Suite 214, Jericho, New York 11753, and 100 of such Units are owned by FCMC, whose address is 5665 Northside Drive, Suite 370, Atlanta, Georgia 30328. Section 12. Source of Funds. The Purchaser expects that approximately $2,825,000 would be required to purchase 43,756 Units, if tendered, and to pay related fees and expenses. Purchaser will obtain not less than $689,000 of such funds from capital contributions from its partners. The remainder of such funds will be obtained from debt financing to be provided by Kidder Peabody Mortgage Capital Corporation or an affiliate thereof (the "Lender") concurrently with the consummation of the Offer pursuant to the terms of a commitment letter, dated October 11, 1994 (the "Commitment Letter") among the Lender, the Purchaser and the NPI Purchaser (as defined below). The Commitment Letter provides for two separate loans (together, the "Loans"). One loan, the DeForest Loan, will be made to the Purchaser in order to enable the Purchaser to consummate the Offer as well as to tender for units of limited partnership interest of eleven other Fox Partnerships (as defined in Section 13) (together with the Partnership, the "Fox Subject Partnerships"). The Purchaser commenced such other tender offers concurrently with the commencement of the Offer (the Offer and such other tender offers are collectively referred to herein as the "Deforest Tender Offers"). The second loan (the "DeForest II Loan") will be made to DeForest Ventures II L.P. (the "NPI Purchaser"), an affiliate of the Purchaser, which is the offeror in tenders for units of limited partnership interest in seven limited partnerships (collectively, the "NPI Partnerships"). The NPI Purchaser commenced such tender offers (the "DeForest II Tender Offers") concurrently with the commencement of the Offer. The units of limited partnership interest of the Fox Subject Partnerships which are purchased by the Purchaser pursuant to the Deforest Tender Offers, and the units of limited partnership interest of the NPI Partnerships which are purchased by the NPI Purchaser pursuant to the DeForest II Tender Offers, are collectively referred to herein as the "Tendered Units". Schedule 3 hereto sets forth the identity of each other Fox Subject Partner- ship and each NPI Partnership. The maximum aggregate principal amount of the Loans will be $55 million, of which $36,775,000 has been allocated to the Purchaser for its use in consummating the DeForest Tender Offers. In no event, however, will the aggregate principal amount of the Loan made to the Purchaser exceed 80% of the aggregate purchase price of the Tendered Units to be acquired by it. It is anticipated that the aggregate maximum purchase price, including related fees and expenses, will be approximately $48,640,000 for the Tendered Units in the Fox Subject Partnerships and will be approximately $23,325,000 for the Tendered Units in the NPI Partnerships. The Purchaser will obtain not less than approximately $11,900,000 of the anticipated maximum aggregate purchase price for the Tendered Units in the Fox Subject Partnerships from capital contributions from its partners, and the NPI Purchaser will obtain not less than approximately $5,100,000 of the anticipated maximum aggregate purchase price for the Tendered Units in the NPI Partnerships from capital contributions from its partners. Accordingly, it is anticipated that not more than approximately $36,775,000 of such aggregate maximum purchase price will be borrowed by the Purchaser and not more than approximately $18,225,000 will be borrowed by the NPI Purchaser. To the extent that the number of Tendered Units is less than the aggregate number of units of limited partnership interest sought by the Purchaser and the NPI Purchaser, the aggregate principal amount of the Loans will be reduced. The DeForest Loan and the DeForest II Loan will be cross- defaulted and cross-collateralized. Each Loan will be due and payable one year after initial funding subject to the right of the borrower to extend such Loan for two consecutive one-year periods provided that the Loans are not then in default. Interest on each Loan will accrue monthly and be payable in arrears at a rate per annum equal to 250 basis points over LIBOR during the initial 12 months of the Loan, 350 basis points over LIBOR during the second 12 months of the Loan and 450 basis points over LIBOR during the last 12 months of the Loan. As of October 11, 1994 the LIBOR rate was 5.125% per annum. The Lender will also be entitled to additional interest on the Loans in the form of a residual fee. Payment of the Lender's additional interest, however, is subordinate to the prior return of the aggregate capital contributions received by the Purchaser and the NPI Purchaser, together with a 15% per annum return thereon. The residual fee will consist of the greater of 20% or a specified percentage of Tender Cash Flow until the Lender has received a 17% per annum rate of return. The specified percentage to be received by the Lender will be based upon the actual monthly outstanding balance of the Loans and the period of time during which the Loans were outstanding, and will continue to be paid to the Lender after its receipt of a 17% per annum rate of return. The amount of the Loans is dependent upon the number of Tendered Units acquired. Because such amount and the time of repayment of the Loans cannot be ascertained at this time, the effective rate of interest on the Loans cannot be determined. "Tender Cash Flow" is the amount to be received by the Purchaser with respect to the Tendered Units acquired by it, whether in the form of distributions from the Fox Subject Partnerships or as proceeds from the sale or other disposition of such Tendered Units. Although the Loans will be prepayable at any time without premium or penalty, a prepayment is required upon the occurrence of certain events. The Purchaser will be required to prepay the outstanding principal amount of the DeForest Loan utilizing Purchaser Cash Flow (as defined herein), if any, remaining after its application to the payment of interest on the Loans and, under certain circumstances, to the prepayment of the DeForest II Loan. Further, whether or not distributed to the Purchaser, 60% of the Purchaser's distributable portion of the net proceeds of a sale (and 100% of the net proceeds of a refinancing) of a property owned by a Fox Subject Partnership is required to be applied in prepayment of the DeForest Loan. (See "Section 10. Conflicts of Interest and Transactions With Affiliates" for a discussion of certain conflicts of interest which will be created as a result of the Purchaser's obligation to prepay the DeForest Loan with the proceeds of sales or refinancings of Partnership properties.) "Purchaser Cash Flow" means the cash revenues, with certain exceptions, to be received by NPI-AP Management, L.P. ("NPI-AP Management"), an affiliate of the Purchaser, and by certain other entities affiliated with National Property Investors, Inc. ("NPI") less allowable operating expenses. Each of NPI-AP Management and NPI will guarantee the Loans. As collateral security for the Loans, among other things, the Purchaser and the NPI Purchaser will be required to pledge and collaterally assign the Tendered Units to the Lender, and their respective partners will be required to pledge all partnership interests in the borrowers. As additional collateral security, all outstanding shares of the common stock of NPI Equity (and its parent NPI) and all partnership interests in NPI-AP Management will be required to be pledged to the Lender by the holders thereof. The Purchaser and the NPI Purchaser anticipate that the loan agreement(s) governing the Loans will contain certain customary affirmative and negative reporting and operational covenants. The borrowers will be required to pay the Lender reasonable and customary fees in connection with the Loans and will also be required to indemnify the Lender against certain liabilities, including liabilities under the Exchange Act. It is also anticipated that the agreement(s) governing the Loans will provide that certain actions (i.e., bankruptcy or insolvency and default under mortgage indebtedness) by Fox Subject Partnerships or NPI Partnerships having in the aggregate an Attributed Net Value (as defined below) of more than 20% of the Attributed Net Value of all the Fox Subject Partnerships and the NPI Partnerships shall constitute a default under the Loans. "Attributed Net Value" of any Fox Subject Partnership or any NPI Partnership will represent the purchase price actually paid by the Purchaser or the NPI Purchaser for Tendered Units of such Partnership multiplied by the number of Tendered Units actually acquired. Neither the Purchaser nor the General Partner has any present plans or intentions with respect to a liquidation, sale of assets or, except as described in "Section 13. Background of the Offer", refinancing of any of the Partnership's properties. However, the Purchaser believes that the General Partner will continue to review opportunities to sell the Partnership's properties and refinance its indebtedness consistent with its fiduciary obligations and with a view to maximizing returns to Unit Holders. The amount of the Loans is dependent upon the number of Tendered Units to be acquired, which number is not currently ascertainable. If the DeForest Tender Offers are successful, and the maximum number of Tender Units sought are acquired, unless properties owned by one or more of the Fox Subject Partnerships and/or the NPI Partnerships are sold or refinanced, repayment of the Loans would be dependent upon the ability of the Purchaser or the NPI Purchaser to obtain replacement financing. (See "Section 10. Conflicts of Interest and Transactions with Affiliates" for a discussion of certain conflicts of interest which will be created as a result of the Purchaser consummating the DeForest Loan.) There are 86 individual properties owned by the Fox Subject Partnerships and the NPI Partnerships. Except for one property owned by MRI Business Properties Fund, Ltd. ("MRI"), neither the Purchaser nor the General Partner is able to identify any specific property owned by any Fox Subject Partnership or NPI Partnership which is intended to be sold. MRI has entered into a letter of intent to sell its interests in the Dallas Marriott Quorum Hotel. It is anticipated that the sale of this property will be consummated prior to December 31, 1994, and MRI anticipates receiving net proceeds of approximately $1,500,000 from this sale. There can be no assurance, however, that the sale of this property will be consummated. The Purchaser anticipates that, over the course of the Loans or any refinancing thereof, the allocable share of sale or refinancing proceeds to be received by it on account of its investment in the Tendered Units, together with the Purchaser Cash Flow available to service the Loans, will be sufficient to retire the principal balance of the Loans or any replacement loans. However, neither the Purchaser nor the NPI Purchaser has made any plans or arrangements to refinance the Loans. Section 13. Background of the Offer. Acquisition of Control. On December 6, 1993, NPI Equity, a wholly-owned subsidiary of NPI, an affiliate of the Purchaser, assumed management and obtained control of the General Partner of the Partnership, as well as the respective general partners of certain other affiliated limited partnerships (together with the Partnership, the "Fox Partnerships"), by being appointed as substitute managing partner of FRI, a partner of the General Partner and the direct or indirect general partner of certain of the other Fox Partnerships, and by entering into a voting trust agreement with the beneficial owners of the outstanding shares of stock of FCMC, another partner of the General Partner and the direct or indirect general partner of certain of the other Fox Partnerships. Three of the eleven former individual general partners of FRI are limited partners of the Purchaser. In connection with the acquisition by NPI Equity of management and control of the Partnership and the Fox Partnerships, NPI Realty acquired for cash and notes an aggregate of approximately $10,800,000 of loans made by FRI and/or FCMC to the Partnership and the Fox Partnerships (the "Partnership Advances"), including a $433,091 loan to the Partnership, for the outstanding balance of such loans. As of the date of this Offer, the Fox Partnerships have repaid all but $182,000 of the Partnership Advances from, among other sources, the proceeds of the sales of certain Fox Partnership properties, including the repayment by the Partnership of the outstanding loan made to the Partnership from the sale of Plantation Forest. On October 12, 1994, NPI sold one-third of its stock to an affiliate of Apollo Real Estate Advisors, L.P. ("Apollo"). (See the Partnership's Form 8-K dated October 12, 1994 for additional information with respect to this transaction.) Certain individual beneficial owners of NPI and an entity affiliated with Apollo formed both the Purchaser and DeForest Capital on September 30, 1994 for the purpose of making the Offer. Establishment of Purchase Price. The Purchaser has set the Purchase Price at $60 net per Unit. The Purchaser established the Purchase Price by analyzing a number of both quantitative and qualitative factors including: (i) the volume and prices of recent secondary market resales of the Units; (ii) the lack of liquidity of, and lack of current income derived from, an investment in the Partnership; (iii) an estimate of the underlying value of the Partnership's assets; (iv) the costs to the Purchaser associated with acquiring the Units; and (v) the administrative costs of continuing to own the Partnership's assets through a publicly registered limited partnership. Secondary sales activity for the Units has been limited and sporadic. According to information obtained from trade publications which report on public real estate limited partnerships, from July 1, 1993 through June 30, 1994, an aggregate of 68 Units were transferred in the secondary market at prices ranging from $2.00 to $10.00 per Unit. Secondary market sales may not be an efficient measure of value. However, such sales of Units on the secondary market and in private transactions are the only current means available to a Unitholder to liquidate his investment in his Units since the Units are not listed or traded on any exchange or quoted on any NASDAQ list or system. Therefore, the Purchaser believes resale prices may be relevant to establishing the Purchase Price. Based solely on the price range set forth herein, the Purchase Price is at least 600% of the highest secondary market sales price during the foregoing period. The Purchaser is offering to purchase Units which are a relatively illiquid investment and which do not presently generate current income and is not offering to purchase the Partnership's underlying assets. Consequently, the Purchaser does not believe that the underlying asset value of the Partnership is determinative in arriving at the Purchase Price. Nevertheless, the Purchaser derived an estimated net value (the "Derived Value") for the Partnership's assets. In determining the Derived Value, the Purchaser first calculated the "Adjusted Value" of each of the Partnership's properties. The Adjusted Value was determined by subtracting a replacement reserve (the "Replacement Reserve") from a property's earnings before interest, depreciation and amortization ("EBIDA") for the twelve month period commencing on July 1, 1993 and ending June 30, 1994, which earnings were based upon the Partnership's actual operating results. This amount was then divided by a capitalization rate (the "Cap Rate") to determine the property's Adjusted Value. The Replacement Reserve used in calculating the Adjusted Value was $300.00 per apartment unit for those complexes constructed after 1983 and $400.00 per apartment unit for all other complexes. The Cap Rate used in calculating the Adjusted Value for the Partnership's apartment complexes was 9.25% for those complexes constructed after 1983 and 9.75% for all other complexes. The Adjusted Value of those Partnership properties which are encumbered by a mortgage which will need to be refinanced prior to December 31, 1995 was then reduced by an amount equal to 3% of the existing mortgage debt to account for the costs attendant to such refinancing. The Purchaser believes that the Replacement Reserve and Cap Rates utilized by it are within a range of reserves and capitalization rates currently employed in the marketplace. The utilization of different replacement reserves and capitalization rates could also be appropriate. Unitholders should be aware that the use of lower replacement reserves and/or capitalization rates would result in higher Adjusted Values for the Partnership's properties. The following table applies the method used by the Purchaser to determine the Adjusted Value. Property Year EBIDA Replacement Cap Adjustments Adjusted Built Rate Value Wood Lake 1983 $ 938,000 $ 88,000 9.75% --- $ 8,717,949 Wood Ridge 1982 $1,054,000 $112,000 9.75% --- $ 9,661,538 Sandspoint 1986 $1,178,000 $129,600 9.25% $285,000 $11,049,054 Greenpoint 1986 $1,127,000 $100,800 9.25% $243,000 $10,851,054 Plantation Crossing 1980 $ 628,000 $ 72,000 9.75% ___ $ 5,702,564 Sunrunner 1981 $ 493,000 $ 80,000 9.75% ---- $ 4,235,897 McMillan Place 1985 $1,130,000 $120,600 9.25% ___ $10,912,432 Misty Woods 1986 $ 533,000 $ 68,400 9.25% ---- $ 5,022,703 To determine the Derived Value of the Partnership's assets, the Purchaser then added to the aggregate Adjusted Value the net amount of all cash and cash equivalents of the Partnership at June 30, 1994, less all accounts payable and other claims against the Partnership which net amount equaled $1,266,000. Finally, the Adjusted Value of each property was reduced by subtracting to the extent of such property's Adjusted Value its long term debt as of June 30, 1994, which reduction amounted to approximately $56,917,000 in the aggregate. The resulting Derived Value of the Partnership's assets was approximately $10,502,000 or $115 per Unit (based upon the percentage of capital distributions to which Unitholders are entitled). The Purchaser believes that realization by the Partnership of the Derived Value may be impacted by several factors affecting real estate assets generally, including: (i) the highly leveraged capital structure of the Partnership, (ii) the reduced availability of real estate financing, resulting from various factors including the present condition of financial institutions, and (iii) the continued sale of properties acquired by financial institutions and government agencies. No Partnership properties or assets have been identified for sale, and neither the General Partner nor the Pur- chaser has any present plans or intentions with respect to liquida- tion of the Partnership. Furthermore, the Purchaser believes that sales of the Partnership's properties for all cash purchase prices may be affected by the foregoing factors. Unitholders should also be aware that, in connection with Apollo's decision to make an investment in the Purchaser and its affiliates, Apollo retained an independent third party to conduct an equity analysis of, among other entities, the Partnership as of June 30, 1994. The foregoing analysis estimated the equity value of the Partnership at an amount equivalent to $117 per Unit. However, Unitholders are advised that this valuation was not prepared with a view toward public disclosure (including disclosure in this Offer) and that Apollo does not as a matter of course make public its internal valuations. The fact that Apollo commissioned this evaluation of the Partnership in connection with its decision to make an investment in the Purchaser and its affiliates should not be considered as an indication that either Apollo or the Purchaser considers this valuation as an accurate indicator of the net amount the Partnership could realize for its assets. In establishing the Purchase Price, the Purchaser also took into account the administrative costs regularly incurred by the Partnership. Because the Purchaser is offering to purchase Units rather than the underlying assets of the Partnership, the Purchaser believes it is appropriate to consider such costs. From information set forth in the Partnership's Annual Report on Form 10-K for the fiscal year ended December 31, 1993, the average administrative costs of the Partnership for its three prior fiscal years was $604,000 or $6.76 per outstanding Unit per year. Furthermore, the Purchaser gave consideration to the costs associated with the acquisition of the Units of approximately $200,000 or $4.57 per Unit assuming it was able to purchase all of the Units sought. To the extent less Units are purchased, the Purchaser's cost per Unit will be proportionately increased. The Partnership Agreement provides, among other things, that upon dissolution of the Partnership subsequent to the sale of all of the Partnership's properties, the General Partner is required to contribute capital to the Partnership in an amount equal to any deficit then existing in its capital account. Through ownership of Units by the Purchaser, an affiliate of the General Partner, the potential liability of the General Partner and its affiliates would be effectively reduced. Although there was a deficit in the capital account of the General Partner of $11,317,656 as of the end of the Partnership's last fiscal year, such amount is subject to future reduction through allocation of a portion of the taxable gain, if any, that results from the sale by the Partnership of its properties under the Partnership Agreement. Consequently, the ultimate amount, if any, of the deficit and the date on which it would be paid are indeterminable. Accordingly, the Purchaser has attributed no value to this obligation in establishing the Purchase Price. By taking into consideration all of the above factors, the Purchaser determined the Purchase Price to be $60. The Purchase Price represents the price at which the Purchaser is willing to purchase Units. No independent person has been retained to evaluate or render any opinion with respect to the fairness of the Purchase Price and no representation is made by the Purchaser or any affiliate of the Purchaser as to such fairness. The Purchaser did not attempt to obtain current independent valuations or appraisals of the underlying properties and other assets owned by the Partnership; however, the Purchaser is aware of the equity analysis referred to above. As indicated above, the Purchaser does not believe that such valuations or appraisals should be determinative as to the Purchaser's establishment of the Purchase Price. Other measures of the value of the Units may be relevant to Unitholders. Unitholders are urged to consider carefully all of the information contained herein and consult with their own advisors, tax, financial or otherwise, in evaluating the terms of the Offer before deciding whether to tender Units. Partnership Makes No Recommendation. The Partnership has indicated in its Statement of Schedule 14D-9 filed with the Commission that it makes no recommendation and is remaining neutral as to whether Unitholders should tender their Units pursuant to the Offer because the General Partner of the Partnership is subject to an inherent conflict of interest resulting from the General Partner's affiliation with the Purchaser. Section 14. Conditions of the Offer. Notwithstanding any other term of the Offer, the Purchaser shall not be required to accept for payment or to pay for any Units tendered if all authorizations, consents, orders or approvals of, or declarations or filings with, or expirations of waiting periods imposed by, any court, administrative agency or commission or other governmental authority or instrumentality, domestic or foreign, necessary for the consummation of the transactions contemplated by the Offer shall not have been filed, occurred or been obtained. Furthermore, notwithstanding any other term of the Offer, the Purchaser shall not be required to accept for payment or pay for any Units not theretofore accepted for payment or paid for and may terminate or amend the Offer as to such Units if, at any time on or after the date of the Offer and before the acceptance of such Units for payment or the payment therefor, any of the following conditions exists: (a) a preliminary or permanent injunction or other order of any federal or state court, government or governmental authority or agency shall have been issued and shall remain in effect which (i) makes illegal, delays or otherwise directly or indirectly restrains or prohibits the making of the Offer or the acceptance for payment of or payment for any Units by the Purchaser, (ii) imposes or confirms limitations on the ability of the Purchaser effectively to exercise full rights of ownership of any Units, including, without limitation, the right to vote any Units acquired by the Purchaser pursuant to the Offer or otherwise on all matters properly presented to the Partnership's Unitholders, (iii) requires divestiture by the Purchaser of any Units, (iv) causes any material diminution of the benefits to be derived by the Purchaser as a result of the transactions contemplated by the Offer, or (v) might materially adversely affect the business, properties, assets, liabilities, financial condition, operations, results of operations or prospects of the Purchaser or the Partnership; (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, which might, directly or indirectly, result in any of the consequences referred to in clauses (i) through (v) of paragraph (a) above; (c) any change or development shall have occurred or been threatened since the date hereof, in the business, properties, assets, liabilities, financial condition, operations, results of operations or prospects of the Partnership, which, in the sole judgment of the Purchaser, is or may be materially adverse to the Partnership, or the Purchaser shall have become aware of any fact that, in the sole judgment of the Purchaser, does or may have a material adverse effect on the value of the Units; (d) there shall have occurred (i) any general suspension of trading in, or limitation on prices for, securities on any national securities exchange or in the over-the-counter market in the United States, (ii) a declaration of a banking moratorium or any suspension of payments in respect of banks in the United States, (iii) any limitation by any governmental authority on, or other event which might affect, the extension of credit by lending institutions or result in any imposition of currency controls in the United States, (iv) a commencement of a war or armed hostilities or other national or international calamity directly or indirectly involving the United States, (v) a material change in United States or other currency exchange rates or a suspension of a limitation on the markets thereof, or (vi) in the case of any of the foregoing existing at the time of the commencement of the Offer, a material acceleration or worsening thereof; (e) it shall have been publicly disclosed or the Purchaser shall have otherwise learned that (i) more than ten percent of the outstanding Units have been or are proposed to be acquired by another person (including a "group" within the meaning of Section 13(d)(3) of the Exchange Act), or (ii) any person or group that prior to such date had filed a Statement with the Commission pursuant to Section 13(d) or (g) of the Exchange Act has increased or proposes to increase the number of Units beneficially owned by such person or group as disclosed in such Statement by two percent or more of the outstanding Units; or (f) the transactions contemplated by the Commitment Letter shall not have been consummated. The foregoing conditions are for the sole benefit of the Purchaser and may be asserted by the Purchaser regardless of the circumstances giving rise to such conditions or may be waived by the Purchaser in whole or in part at any time and from time to time in its sole discretion. Any determination by the Purchaser concerning the events described above will be final and binding upon all parties. Section 15. Certain Legal Matters. General. Except as set forth in this Section 15, the Purchaser is not aware of any filings, approvals or other actions by any domestic or foreign governmental or administrative agency that would be required prior to the acquisition of Units by the Purchaser pursuant to the Offer. Should any such approval or other action be required, it is the Purchaser's present intention that such additional approval or action would be sought. While there is no present intent to delay the purchase of Units tendered pursuant to the Offer pending receipt of any such additional approval or the taking of any such action, there can be no assurance that any such additional approval or action, if needed, would be obtained without substantial conditions or that adverse consequences might not result to the Partnership's business, or that certain parts of the Partnership'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 Purchaser to elect to terminate the Offer without purchasing Units thereunder. The Purchaser's obligation to purchase and pay for Units is subject to certain conditions, including conditions related to the legal matters discussed in this Section 15. Antitrust. The Purchaser does not believe that the Hart- Scott-Rodino Antitrust Improvements Act of 1976, as amended, is applicable to the acquisition of Units contemplated by the Offer. Margin Requirements. The Units are not "margin securities" under the regulations of the Board of Governors of the Federal Reserve System and, accordingly, such regulations are not applicable to the Offer. State Takeover Laws. A number of states have adopted anti- takeover laws which purport, to varying degrees, to be applicable to attempts to acquire securities of corporations which are incorporated in such states or which have substantial assets, securityholders, principal executive offices or principal places of business therein. Although the Purchaser has not attempted to comply with any state anti-takeover statutes in connection with the Offer, the Purchaser reserves the right to challenge the validity or applicability of any state law allegedly applicable to the Offer and nothing in this Offer to Purchase nor any action taken in connection herewith is intended as a waiver of such right. If any state anti-takeover statute is applicable to the Offer, the Purchaser might be unable to accept for payment or purchase Units tendered pursuant to the Offer or be delayed in continuing or consummating the Offer. In such case, the Purchaser may not be obligated to accept for purchase or pay for any Units tendered. Section 16. Fees and Expenses. Except as set forth in this Section 16, the Purchaser will not pay any fees or commissions to any broker, dealer or other person for soliciting tenders of Units pursuant to the Offer. The Purchaser has retained The Herman Group, Inc. to act as Information Agent, and GKN Securities Corp. to act as Dealer Manager, in connection with the Offer. The Purchaser will pay the Information Agent and Dealer Manager reasonable and customary compensation for their respective services in connection with the Offer, plus reimbursement for out-of-pocket expenses, and will indemnify the Information Agent and the Dealer Manager against certain liabilities and expenses in connection therewith, including liabilities under the federal securities laws. The Purchaser will also pay all costs and expenses of printing and mailing the Offer. Section 17. Miscellaneous. The Purchaser is not aware of any jurisdiction in which the making of the Offer is not in compliance with applicable law. If the Purchaser becomes aware of any jurisdiction in which the making of the Offer would not be in compliance with applicable law, the Purchaser will make a good faith effort to comply with any such law. If, after such good faith effort, the Purchaser cannot comply with any such law, the Offer will not be made to (nor will tenders be accepted from or on behalf of) the holders of Units residing in such jurisdiction. In those jurisdictions whose securities or blue sky laws require the Offer to be made by a licensed broker or dealer, the Offer is being made on behalf of the Purchaser by the Dealer Manager. No person has been authorized to give any information or to make any representation on behalf of the Purchaser 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. The Purchaser has filed with the Commission a Schedule 14D-1, pursuant to Rule 14d-3 under the Exchange Act, furnishing certain additional information with respect to the Offer, and may file amendments thereto. The Schedule 14D-1 and any amendments thereto, including exhibits, may be inspected and copies may be obtained at the same places and in the same manner as set forth in Section 9 hereof (except that they will not be available at the regional offices of the Commission). DEFOREST VENTURES I L.P. October 17, 1994 Schedule 1 DIRECTORS AND EXECUTIVE OFFICERS Set forth below is the name, current business address, present principal occupation, and employment history for at least the past five years of each director and executive officer of DeForest Capi- tal. Except for Mr. Koenigsberger, who is a citizen of Guatemala, each person listed below is a citizen of the United States. Present Principal Occupation or Employment; Material Occupation, Position, Office or Employment during the Past Five Years Michael L. Ashner. Since October 1994, Mr. Ashner has been a Director, President and Co-Chairman of DeForest Capital and DeForest Capital II Corporation ("DeForest Capital II"), the general partner of the NPI Purchaser. Since June 1994, Mr. Ashner has been a Director, President and Co- Chairman of NPI, and since December 1984 has been a Director and President of NPI Equity. Mr. Ashner has also been a Director and executive officer of NPI Property Management Corporation ("NPI Management"), the general partner of NPI-AP Management, L.P., since April 1984, and is currently NPI Management's Chairman. Since 1981, Mr. Ashner has also served as President of Exeter Capital Corporation, a firm which has organized and administered real estate limited partnerships. Mr. Ashner's business address is 100 Jericho Quadrangle, Suite 214, Jericho, New York 11753. Martin Lifton. Since October 1994, Mr. Lifton has been a Director and Chairman of DeForest Capital and DeForest Capital II, and since June 1994 has been a Director and Chairman of NPI. Since November 1991, Mr. Lifton has been a Director and executive officer of NPI Equity, and is currently NPI Equity's Chairman. Mr. Lifton has also been a Director and/or executive officer of NPI Management since November 1991, and is currently a Director and NPI Management's Co-Chairman. Mr. Lifton has also served as Chairman and President of The Lifton Company, a real estate investment firm, since January 1985, and as Chairman of The Bank of Great Neck, a Great Neck, New York bank, since March 1986. Mr. Lifton's business address is 100 Jericho Quadrangle, Suite 214, Jericho, New York 11753. W. Edward Scheetz. Mr. Scheetz has been a Director of DeForest Capital, DeForest Capital II, NPI and NPI Equity since October 1994. Since May 1993, Mr. Scheetz has been a limited partner of Apollo Real Estate Advisors, L.P. ("Apollo"), the managing general partner of Apollo Real Estate Investment Fund, L.P., a private investment fund. Mr. Scheetz has also served as a Director of Roland International, Inc. ("Roland"), a real estate investment company, since January 1994, and as a Director of Capital Apartment Properties, Inc., a multi-family residential real estate investment trust, since January 1994. From 1989 to May 1993, Mr. Scheetz was a principal of Trammell Crow Ventures, a national real estate investment firm. Mr. Scheetz' business address is 1301 Avenue of the Americas, 38th floor, New York, New York 10019. Ricardo Koenigsberger. Mr. Koenigsberger has been a Director of DeForest Capital, DeForest Capital II, NPI and NPI Equity since October 1994. Since October 1990, Mr. Koenigsberger has been an associate of Apollo and of Lion Advisors, L.P., which acts as financial advisor to and representative for certain institutional investors with respect to securities investments. For more than one year prior thereto, Mr. Koenigsberger was an associate with Drexel Burnham Lambert Incorporated. Mr. Koenigsberger's business address is 1301 Avenue of the Americas, 38th floor, New York, New York 10019. Arthur N. Queler. Mr. Queler has been a Director, Executive Vice President, Secretary and Treasurer of DeForest Capital and DeForest Capital II since October 1994, and of NPI since June 1994. Mr. Queler has been a Director and executive officer of NPI Equity and NPI Management since December 1984 and April 1984, respectively. Mr. Queler has also served as President of ANQ Securities, Inc., a NASD registered broker-dealer firm which has been responsible for supervision of licensed brokers and coordination with a nationwide broker-dealer network for the marketing of NPI investment programs, since 1983. Mr. Queler's business address is 5665 Northside Drive, N.W., Suite 370, Atlanta, Georgia 30328. Lee Neibart. Mr. Neibart has been a Director of DeForest Capital, DeForest Capital II, NPI and NPI Equity since October 1994. Mr. Neibart has also been an associate of Apollo since December 1993. From 1986 to 1993, Mr. Neibart also served as Executive Vice President of the Robert Martin Company, a private real estate development and management firm based in Westchester County, New York, and from 1982 to 1985, Mr. Neibart served as President of the New York Chapter of the National Association of Industrial Office Parks, a professional real estate organization. Mr. Neibart's business address is 1301 Avenue of the Americas, 38th floor, New York, New York 10019. G. Bruce Lifton. Since October 1994, Mr. Lifton has been a Director and Vice President of DeForest Capital and DeForest Capital II. Mr. Lifton has also been Vice President of NPI and NPI Equity since January 1991 and November 1991, respectively, and a Director and Vice President of NPI Management since June 1994. Mr. Lifton has also served as Vice President of The Lifton Company since September 1986. Mr. Lifton is a son of Martin Lifton and the brother of Steven Lifton. Mr. Lifton's business address is 5665 Northside Drive, N.W., Suite 370, Atlanta, Georgia 30328. Steven Lifton. Mr. Lifton has been a Vice President of DeForest Capital and DeForest Capital II since October 1994 and of NPI Management since June 1994. Since June 1994, Mr. Lifton has been a Director and Vice President of NPI. Mr. Lifton has been Vice President of NPI Equity since November 1991 and a director since October 1994. Mr. Lifton has also served as Senior Vice President of The Lifton Company since September 1984 and as a Director of The Bank of Great Neck since March 1986. Steven Lifton is a son of Martin Lifton and the brother of G. Bruce Lifton. Mr. Lifton's business address is 100 Jericho Quadrangle, Suite 214, Jericho, New York 11753. Schedule 2 FINANCIAL STATEMENTS OF THE PURCHASER AND DEFOREST CAPITAL Independent Auditors' Report DeForest Ventures I L.P. (A Delaware Limited Partnership) We have audited the accompanying balance sheet of DeForest Ventures I L.P. (A Delaware Limited Partnership) as of October 12, 1994. This financial statement is the responsibility of the Company's management. Our responsibility is to express an opinion on this financial statement based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the balance sheet is free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the balance sheet. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall balance sheet presentation. We believe that our audit of the balance sheet provides a reasonable basis for our opinion. In our opinion, the balance sheet referred to above presents fairly, in all material respects, the financial position of DeForest Ventures I L.P. (A Delaware Limited Partnership) as of October 12, 1994 in conformity with generally accepted accounting principles. IMOWITZ KOENIG & COMPANY Certified Public Accountants New York, NY October 13, 1994 DeFOREST VENTURES I L.P. (A Delaware Limited Partnership) Balance Sheet October 12, 1994 ASSETS Cash $ 11,900,000 Deferred Costs 1,800,000 Total Assets $ 13,700,000 LIABILITIES AND PARTNERS' EQUITY Accrued Expenses $ 1,511,000 Due to Affiliate 289,000 Total Current Liabilities 1,800,000 Commitments and Contingencies Partners' Equity: General Partner 119,000 Limited Partners 11,781,000 Total Partners' Equity 11,900,000 Total Liabilities and Partners' Equity $ 13,700,000 See Notes to Financial Statement DeFOREST VENTURES I L.P. (A Delaware Limited Partnership) Notes to Financial Statement October 12, 1994 1. ORGANIZATION DeForest Ventures I L.P., a Delaware Limited Partnership ("DeForest"), was formed on September 30, 1994 for the purpose of acquiring limited partnership units in various limited partnerships (the "Limited Partnerships"). The general partner of DeForest is DeForest Capital I Corporation, a Delaware Corporation ("DeForest Capital"). Shareholders who control DeForest Capital also control the general partners of all the Limited Partnerships. The $289,000 due to an affiliate represents fees and expenses paid by a related party on behalf of DeForest. Concurrently with this transaction, DeForest Ventures II L.P. ("DeForest II"), a Delaware Limited Partnership, was formed for the purpose of acquiring limited partnership units in various other affiliated limited partnerships. 2. DEFERRED COSTS Deferred costs consist of fees and expenses related to the offers to purchase units in the Limited Partnerships. These costs will be capitalized as part of DeForest's investment once the purchases are consummated. 3. COMMITMENTS AND CONTINGENCIES In order to complete the purchase of limited partnership units, DeForest and DeForest II have received a commitment for debt financing from Kidder Peabody Mortgage Capital Corporation for up to $55 million. The financing will be in the form of two separate loans which will be cross-defaulted and cross-collateralized. Each loan will be due one year after initial funding subject to the right to extend such loan for two consecutive one-year periods provided that the loan is not then in default. Interest will accrue at a rate per annum equal to 250 basis points over LIBOR during the initial 12 months of the loan, 350 basis points over LIBOR during the second 12 months of the loan and 450 basis points over LIBOR during the last 12 months of the loan. The lender will also be entitled to additional interest on the loan pursuant to the terms of the formula set forth in the commitment. It is anticipated that DeForest and DeForest II will incur a total of approximately $1,300,000 in fees and expenses relating to the financing which will be divided between the two entities based upon the amount of their respective loans. Independent Auditors' Report DeForest Capital I Corporation We have audited the accompanying balance sheet of DeForest Capital I Corporation as of October 12, 1994. This financial statement is the responsibility of the Company's management. Our responsibility is to express an opinion on this financial statement based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the balance sheet is free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the balance sheet. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall balance sheet presentation. We believe that our audit of the balance sheet provides a reasonable basis for our opinion. In our opinion, the balance sheet referred to above presents fairly, in all material respects, the financial position of DeForest Capital I Corporation as of October 12, 1994 in conformity with generally accepted accounting principles. IMOWITZ KOENIG & COMPANY Certified Public Accountants New York, NY October 13, 1994 DeFOREST CAPITAL I CORPORATION. Balance Sheet October 12, 1994 ASSETS Investment in DeForest Ventures I L.P. $ 119,000 STOCKHOLDERS' EQUITY Capital Stock, Par Value $.01, 7,500 Shares Authorized, 600 issued and outstanding $ 6 Additional Paid in Capital 1,118,994 Notes Receivable from Stockholders (1,000,000) Total Stockholders' Equity $ 119,000 See Notes to Financial Statement DeFOREST CAPITAL I CORPORATION Notes to Financial Statement October 12, 1994 1. ORGANIZATION DeForest Capital I Corporation ("DeForest Capital"), a Delaware Corporation, was incorporated on September 30, 1994 and will serve as the general partner of DeForest Ventures I L.P. ("DeForest"). DeForest was formed for the purpose of acquiring limited partnership units in various limited partnerships (the "Limited Partnerships"). Shareholders who control DeForest Capital also control the general partners of all of the Limited Partnerships. 2. STOCKHOLDERS' EQUITY Shareholders of DeForest Capital have contributed $119,000 in cash and $1,000,000 in negotiable demand promissory notes. Schedule 3 NPI PARTNERSHIPS National Property Investors II National Property Investors III National Property Investors 4 National Property Investors 5 National Property Investors 6 National Property Investors 7 National Property Investors 8 FOX SUBJECT PARTNERSHIPS Century Properties Fund XII Century Properties Fund XIII Century Properties Fund XIV Century Properties Fund XV Century Properties Fund XVI Century Properties Fund XVII Century Properties Fund XVIII Century Properties Growth Fund XXII MRI Business Properties Fund, Ltd. MRI Business Properties Fund, Ltd. II MRI Business Properties Fund, Ltd. III Facsimile copies of the Letter of Transmittal, properly completed and duly executed, will be accepted. The Letter of Transmittal and any other required documents should be sent or delivered by each Unitholder or his broker, dealer, commercial bank, trust company or other nominee to the Purchaser at its address set forth below: DEFOREST VENTURES I L.P. By Hand, Mail (insured or registered recommended) or Overnight Delivery: DeForest Ventures I L.P. c/o The Herman Group, Inc. 13760 Noel Road, Suite 320 Dallas, Texas 75240 By Facsimile: (214) 991-4422 or (214) 991-4432 For Telephone Information: 1-800-530-4966 Any questions or requests for assistance or for additional copies of this Offer to Purchase, the Letter of Transmittal, the Notice of Guaranteed Delivery and other tender offer materials may be directed to the Information Agent at the telephone number and address below. You may also contact the Dealer Manager or your broker for assistance concerning the Offer. To confirm delivery of your Letter of Transmittal, please contact the Purchaser. The Information Agent for the Offer is: The Herman Group, Inc. 13760 Noel Road, Suite 320 Dallas, Texas 75240 1-800-530-4966 The Dealer Manager of the Offer is: GKN Securities Corp. 61 Broadway, 12th Floor New York, New York 10006 EX-99 3 CENTURY PROPERTIES FUND XIX LETTER OF TRANSMITTAL Taxpayer Identification Number THE OFFER, WITHDRAWAL RIGHTS AND PRORATION PERIOD WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON NOVEMBER 18, 1994 (the "Expiration Date") UNLESS EXTENDED. Deliver to: DeForest Ventures I L.P. c/o The Herman Group, Inc. 13760 Noel Road, Suite 320 Dallas, TX 75240 Telephone: (800) 530-4966 By Facsimile: (214) 991-4432 OR (214) 991-4422 To participate in the Offer, a duly executed copy of this Letter of Transmittal (or facsimile hereof) must be received by the Purchaser on or prior to the Expiration Date. Delivery of this Letter of Transmittal or any other required documents to an address or facsimile number other than as set forth above does not constitute valid delivery. The method of delivery of all documents is at the election and risk of the tendering Unitholder. Please use the pre-addressed, postage-paid envelope provided. This Letter of Transmittal is to be completed by Unitholders of record as of October 10, 1994 of Century Properties Fund XIX, a California limited partnership (the "Partnership"), pursuant to the procedures set forth in the Offer to Purchase (as defined below). PLEASE CAREFULLY READ THE ACCOMPANYING INSTRUCTIONS Gentlemen: The undersigned hereby tenders to DeForest Ventures I L.P., a Delaware limited partnership (the "Purchaser"), the above described Units at $60 per Unit, net to the seller in cash, upon the terms and subject to the conditions set forth in the Offer to Purchase, dated October 17, 1994 (the "Offer to Purchase"), and this Letter of Transmittal (which together constitute the "Offer"). Receipt of the Offer to Purchase is hereby acknowledged. Subject to and effective upon acceptance for payment of any of the Units tendered hereby, the undersigned hereby sells, assigns and transfers to, or upon the order of, Purchaser all right, title and interest in and to such Units tendered hereby. The undersigned hereby irrevocably constitutes and appoints the Purchaser as the true and lawful agent and attorney-in-fact of the undersigned with respect to such Units, with full power of substitution (such power of attorney being deemed to be an irrevocable power coupled with an interest), to deliver such Units and transfer ownership of such Units on the books of the Partnership, together with all accompanying evidences of transfer and authenticity, to or upon the order of the Purchaser and, upon payment of the purchase price in respect of such Units by the Purchaser, to receive all benefits and otherwise exercise all rights of beneficial ownership of such Units all in accordance with the terms of the Offer. Subject to and effective upon acceptance for payment of any Units tendered hereby, the undersigned hereby requests that the Purchaser be admitted to the Partnership as a "Substitute Limited Partner" under the terms of the Partnership Agreement of the Partnership. Upon the purchase of Units pursuant to the Offer, all prior proxies and consents given by the undersigned with respect to such Units will be revoked and no subsequent proxies or consents may be given (and if given will not be deemed effective). The undersigned recognizes that, if more than 43,756 Units are validly tendered prior to or on the Expiration Date and not properly withdrawn, the Purchaser will, upon the terms of the Offer, accept for payment from among those Units tendered prior to or on the Expiration Date 43,756 Units on a pro rata basis, with adjustments to avoid purchases of certain fractional Units, based upon the number of Units validly tendered prior to the Expiration Date and not withdrawn. The undersigned further recognizes that if no more than 43,756 Units are validly tendered prior to the Expiration Date and not withdrawn, the Purchaser will, upon the terms of the Offer, accept for payment all such Units. The undersigned hereby represents and warrants that the undersigned owns the Units tendered hereby within the meaning of Rule 13d-3 under the Securities Exchange Act of 1934, as amended, and has full power and authority to validly tender, sell, assign and transfer the Units tendered hereby, and that when any such Units are accepted for payment by the Purchaser, the Purchaser will acquire good, marketable and unencumbered title thereto, free and clear of all liens, restrictions, charges, encumbrances, conditional sales agreements or other obligations relating to the sale or transfer thereof, and such Units will not be subject to any adverse claim. Upon request, the undersigned will execute and deliver any additional documents deemed by the Purchaser to be necessary or desirable to complete the assignment, transfer, and purchase of Units tendered hereby. The undersigned understands that a tender of Units to the Purchaser will constitute a binding agreement between the undersigned and the Purchaser upon the terms and subject to the conditions of the Offer. The undersigned recognizes that under certain circumstances set forth in the Offer to Purchase, the Purchaser may not be required to accept for payment any of the Units tendered hereby. In such event, the undersigned understands that any Letter of Transmittal for Units not accepted for payment will be destroyed by the Purchaser. All authority herein conferred or agreed to be conferred shall survive the death or incapacity of the undersigned and any obligations of the undersigned shall be binding upon the heirs, personal representatives, successors and assigns of the undersigned. Except as stated in the Offer to Purchase, this tender is irrevocable. Do Not Return Certificates With This Letter of Transmittal The Unitholder hereby tenders Units pursuant to the terms of the Offer. The Unitholder hereby certifies, under penalities of perjury, that the information and representations provided in Boxes A and B (for U.S. persons) and Box C (for non-U.S. persons) of this Letter of Transmittal which have been duly completed by the Unitholder are true and complete and correct as of the date hereof. OWNERS SIGN HERE TO TENDER (Attach additional sheets, if necessary) If this Letter of Transmittal is not signed exactly as name(s) appear(s) above, or if this Letter of Transmittal is signed by a general partner, corporate officer, or other person acting in a fiduciary or representative capacity, please complete BOX D. (See Instruction 1). 1). X X Date Bus. Tel. ( ) Home Tel. ( ) PAYER'S NAME: DEFOREST VENTURES I L.P. BOX A (Attach additional copies for joint Unitholders) SUBSTITUTE FORM W-9 (See Instruction 3(A)) Part I - Please provide the TIN of the Unitholder submitting this Letter of Transmittal in the box at right or, if applicable, Social Security Number write "Applied For" in such box. or Employer Identification Number Please check the appropriate box describing the Unitholder: [] Individual/Sole Proprietor [] Corporation [] Partnership [] Other Part II - Certification - The Unitholder submitting this Letter of Transmittal hereby certifies the following: (1) The TIN shown in Part 1 above is the correct TIN of the Unitholder who is submitting this Letter of Transmittal. If the box in Part I states the words "Applied For", a TIN has not been issued to the Unitholder, and either (a) the Unitholder has mailed or delivered an application to receive a TIN to the appropriate IRS Center or Social Security Administration Office, or (b) the Unitholder intends to mail or deliver an application in the near future. The Unitholder understands that if such Unitholder does not provide a TIN to the Purchaser within sixty (60) days, 31% of all reportable payments made to the Unitholder thereafter will be withheld until a TIN is provided to the Purchaser; and (2) Unless this box [ ] is checked, such Unitholder is not subject to backup withholding either because such Unitholder has not been notified by the IRS that such Unitholder is subject to backup withholding as a result of a failure to report all interest or dividends, or because the IRS has notified such Unitholder that such Unitholder is no longer subject to backup withholding. (Note: You must place an "X" in the box in (2) above if you have been notified by the IRS that you are currently subject to backup withholding because of underreporting of interest or dividends on your tax return.) BOX B (Attach additional copies for joint Unitholders) FIRPTA AFFIDAVIT (See Instruction 3(B)) Under Section 1445(e)(5) of the Internal Revenue Code and Treas. Reg. 1.I445-11T(d), a transferee must withhold tax equal to 10% of the amount realized with respect to certain transfers of an interest in a partnership in which 50 percent or more of the value of the gross assets consists of U.S. real property interests and 90 percent or more of the value of the gross assets consist of U.S. real property interests plus cash or cash equivalents, if the holder of the partnership interest is a foreign person. To inform the Purchaser that no withholding is required with respect to the Unitholder's interest in the Partnership, the Unitholder hereby certifies the following under penalties of perjury: (1) The Unitholder, if an individual, is not a nonresident alien for purposes of U.S. income taxation, and if not an individual, is not a foreign corporation, foreign partnership, foreign trust, or foreign estate (as those terms are defined in the Internal Revenue Code and Income Tax Regulations); (2) The Unitholder's U.S. social security number (for individuals) or employer identification number (for non-individuals) is ___________ ; (3) The Unitholder's home address (for individuals), or office address and (if applicable) place of incorporation (for non- individuals) is ____________________________________________________ The Unitholder understands that this certification may be disclosed to the IRS by the Purchaser and that any false statements contained herein could be punished by fine, imprisonment, or both. BOX C (Attach additional copies for joint Unitholders) SUBSTITUTE FORM W-8 (See Instruction 4) By checking this box [ ], the Unitholder certifies that it is an "exempt foreign person" for purposes of the backup withholding rules under the U.S. federal income tax laws, because the Unitholder: (1) Is a nonresident alien individual or a foreign corporation, partnership, estate or trust; (2) If an individual, has not been and plans not to be present in the U.S. for a total of 183 days or more during the calendar year; and (3) Neither engages, nor plans to engage, in a U.S. trade or business that has effectively connected gains from transactions with a broker or barter exchange. BOX D (Attach additional copies for joint Unitholder) NON-CONFORMING SIGNATURES AND FIDUCIARIES SIGN HERE (See Instruction 1) The undersigned,if signing this Letter of Transmittal on behalf of the Unitholder, hereby declares that he, she or it has the authority to sign this document on behalf of such Unitholder. Fiduciary: X Printed Name: Address: Title: Telephone: ( ) Notarization of Signature (If required. See Instruction 1) STATE OF COUNTY OF On this_____day of____________________________, 1994, before me came personally______________________________________________________, to me known to be the person who executed the foregoing Letter of Transmittal. Notary Public OR Guarantee of Signature (If required. See Instruction 1) Name of Firm: Authorized Signature: Date: INSTRUCTIONS Forming Part of the Terms and Conditions of the Offer 1. Tender, Signature Requirements; Delivery. After carefully reading and duly completing this Letter of Transmittal, to tender Units a Unitholder must sign in the signature block on the front of this Letter of Transmittal. If this Letter of Transmittal is signed by the registered Unitholder(s) of the Units as printed on the front of this Letter of Transmittal without any change whatsoever, no notarization or signature guarantee on this Letter of Transmittal is required. Similarly, if Units are tendered for the account of a member firm of a registered national security exchange, a member firm of the National Association of Securities Dealers, Inc. or a commercial bank, savings bank, credit union, savings and loan association or trust company having an office, branch or agency in the United States (each an "Eligible Institution"), no notarization or signature guarantee is required on this Letter of Transmittal. In all other cases, signatures on this Letter of Transmittal must either be notarized or guaranteed by an Eligible Institution, by completing the Notarization or Guarantee of Signature set forth in BOX D of this Letter of Transmittal. If any tendered Units are registered in the names of two or more joint holders, all such holders must sign this Letter of Transmittal. If this Letter of Transmittal is signed by trustees, administrators, guardians, attorneys-in-fact, officers of corporations, or others acting in a fiduciary or representative capacity, such persons should so indicate when signing and must submit proper evidence satisfactory to the Purchaser of their authority to so act. For Units to be validly tendered, a properly completed and duly executed Letter of Transmittal (or facsimile thereof), together with any required notarizations or signature guarantees in BOX D and any other documents required by this Letter of Transmittal, must be received by the Purchaser prior to or on the Expiration Date at its address or to its facsimile number set forth herein. No alternative, conditional or contingent tenders will be accepted. All tendering Unitholders by execution of this Letter of Transmittal waive any right to receive any notice of the acceptance of their tender. 2. Transfer Taxes. The Purchaser will pay or cause to be paid all transfer taxes, if any, payable on the transfer to it of Units pursuant to the Offer. 3. U.S. Persons. A Unitholder who or which is a United States citizen or resident alien individual, a domestic corporation, a domestic partnership, a domestic trust or a domestic estate (collectively, "United States persons") as those terms are defined in the Internal Revenue Code and Income Tax Regulations, should complete the following: (A). Substitute Form W-9. In order to avoid 31% federal income tax backup withholding on the payment of the purchase price for Units purchased, the tendering Unitholder must provide to the Purchaser the Unitholder's correct Taxpayer Identification Number ("TIN") and certify under penalties of perjury, that such Unitholder is not subject to such backup withholding by completing the Substitute Form W-9 set forth in BOX A of this Letter of Transmittal. If a correct TIN is not provided, penalties may be imposed by the Internal Revenue Service ("IRS") in addition to the Unitholder being subject to backup withholding. Certain Unitholders (including, among others, all corporations) are not subject to backup withholding. Backup withholding is not an additional tax. If withholding results in an overpayment of taxes, a refund may be obtained from the IRS. The TIN that must be provided on the Substitute Form W-9 is that of the registered Unitholder(s) indicated on the front of this Letter of Transmittal. Write the words "Applied For" in the box in Part I of the Substitute Form W-9 if the tendering Unitholder has applied for but has not been issued a TIN or intends to apply for a TIN in the near future. If the words "Applied For" are written in the box in Part I of the Substitute Form W-9 and the Purchaser is not provided with the Unitholder's TIN within 60 days, the Purchaser will withhold 31% of all subsequent payments, if any, of the purchase price for the Units until such TIN is provided to the Purchaser. (B). FIRPTA Affidavit. To avoid potential withholding of tax pursuant to Section 1445 of the Internal Revenue Code in an amount equal to 10% of the purchase price for Units purchased pursuant to the Offer, plus the amount of any liabilities of the Partnership allocable to such Units, each Unitholder who or which is a United States person must complete the FIRPTA Affidavit contained in BOX B of this Letter of Transmittal stating, under penalties of perjury, such Unitholder's TIN and address, and that such Unitholder is not a foreign person. Tax withheld under Section 1445 of the Internal Revenue Code is not an additional tax. If withholding results in an overpayment of tax, a refund may be obtained from the IRS. 4. Foreign Persons. In order for a Unitholder who is a foreign person (i.e. a person who is not a United States person as defined in 3. above) to qualify as exempt from 31% backup withholding, such foreign Unitholder must certify, under penalties of perjury, the statement in BOX C of this Letter of Transmittal attesting to that foreign person's status by checking the box preceding such statement. In any event, the Purchaser intends to withhold from foreign Unitholders 10% of the purchase price of Units purchased pursuant to the Offer, plus the amount of liabilities of the Partnership allocable to such Units, pursuant to Section 1445 of the Internal Revenue Code. Backup withholding and tax withheld under Section 1445 of the Internal Revenue Code are not additional taxes. If withholding results in an overpayment of tax, a refund may be obtained from the IRS. 5. Additional Copies of Offer to Purchase and Letter of Transmittal. Requests for assistance or additional copies of the Offer to Purchase and this Letter of Transmittal may be obtained from the Information Agent at the address or telephone number set forth below: The Information Agent is: The Herman Group, Inc. 13760 Noel Road, Suite 320 Dallas, TX 75240 1-800-530-4966 IMPORTANT: In order to participate in the offer, this letter of transmittal (or facsimile hereof) must be received by the Purchaser on or prior to the Expiration Date. EX-20 4 DeForest Ventures I L.P. 5665 Northside Drive, N.W., Suite 370 Atlanta Georgia 30328 October 17, 1994 Dear ____________: As described in each enclosed Offer to Purchase and related Letter of Transmittal (the "Offer(s)"), DeForest Ventures I L.P. is offering to purchase, for cash, Units of Limited Partnership Interest of each Partnership listed below in which you own Units. The Offer(s) will provide you with an opportunity to liquidate your investment in the Partnership(s), without the usual transaction costs associated with market sales or partnership transfer fees. In this regard, you may no longer wish to continue your investment in the Partnership(s) for a number of reasons, including: More immediate use for the cash to be paid on account of your investment in the Units, The absence of a formal trading market for the Units, General disenchantment with real estate investments, particularly long-term investments in limited partnerships, The continuing administrative costs and resultant negative financial impact on the value of a Partnership's assets due to their ownership in a publicly registered limited partnership, Elimitate the delays and complications in preparing and filing personal income tax returns which may result from an investment in the Units, and The opportunity to transfer your Units without the costs and commissions normally associated with a transfer. If you tender your Units, you will receive the amount listed below so long as no more than the maximum number of Units sought in each Partnership is received. Name of Number of Purchase Price Total Purchase Partnership Units you own per Unit Price by Partnership _________________ Aggregate Purchase Price for your Units....................................$ Please note that in order to tender any of your Units in a Partnership, you must tender all of your Units in such Partner- ship - no partial tenders will be accepted. We suggest that you review the enclosed Offer(s) with your personal financial and tax advisor. After carefully reading each enclosed Offer, if you elect to tender your Units, mail (using the enclosed pre-addressed, postage-paid envelope) or telecopy a duly completed and executed copy of the Letter of Transmittal and any documents required by the Letter of Transmittal to the Purchaser at: DeForest Ventures I L.P. c/o The Herman Group, Inc. 13760 Noel Rd., Suite 320 Dallas, Texas 75240 Telecopier No. (214) 991-4422 or (214) 991-4432 If you have any questions, please call the Information Agent, The Herman Group, Inc., at 1-800-530-4966. DEFOREST VENTURES I L.P. EX-99 5 October 11, 1994 DeForest Ventures I L.P. DeForest Ventures II L.P. 5665 Northside Drive, N.W. Suite 370 Atlanta, Georgia 30328 Attention: Mr. Michael Ashner re Senior Secured Financing Gentlemen: You have advised Kidder Peabody Mortgage Capital Corporation ("KPMCC") that NPI-AP Management, L.P., a Delaware limited partnership ("NPI-AP Management"), intends to acquire (the "Acquisition") up to 49% of the limited partnership units (the "LP Units") of each of 19 partnerships identified to KPMCC (the "Tender Offer Partnerships") by means of offers to purchase (the "Tender Offers") initiated by (x) in the case of certain of the Tender Offer Partnerships, DeForest Ventures II L.P. ("Borrower A"), a newly-formed, bankruptcy remote single purpose Delaware limited partnership all of the limited partnership interests in which will be owned by NPI-AP Management and all of the general partnership interests in which will be owned by DeForest Capital II Corporation, a newly-formed, bankruptcy remote single purpose Delaware corporation ("DeForest Capital II"), and (y) in the case of the other Tender Offer Partnerships, DeForest Ventures I L.P. ("Borrower B", and together with Borrower A, the "Borrowers"), a newly-formed, bankruptcy remote single purpose Delaware limited partnership 71% of the partnership interests in which will be owned by NPI-AP Management (all of which are limited partnership interests), 28% of the partnership interests in which will be owned by Emmet J. Cashin, Jr., Jarold A. Evans, W. Patrick McDowell (or trusts created by such persons) and PD Associates (the "Fox Investors") (all of which are limited partnership interests) and 1% of the partnership interests (all of which will be general partnership interests) in which will be owned by DeForest Capital I Corporation, a newly- formed, bankruptcy remote single purpose Delaware corporation ("DeForest Capital I"). We also understand that at the closing of the Acquisition (x) Michael L. Ashner, Martin Lifton and Arthur N. Queler and/or their spouses and issue (and trusts established for the benefit of their spouses and issue) (collectively, the "NPI Principals") collectively will directly own 66%, and Apollo Real Estate Advisors, L.P. and/or its affiliates (collectively, "Apollo") collectively will directly own 33%, of the equity interests in each of DeForest Capital I, DeForest Capital II and National Property Investors, Inc., a Delaware corporation ("NPI Corp."), (y) the NPI Principals collectively will directly own 100% of the equity interests in NPI Property Management Corporation, a Florida corporation ("NPI Property Management"), and (z) NPI Property Management will directly own 66% of the partnership interests in, and Apollo will directly own 33% of the partnership interests in, NPI-AP Management. KPMCC understands that the Acquisition of the LP Units pursuant to the Tender Offers and the payment of related reasonable fees and expenses (which shall not be payable to the NPI Principals, Apollo or any affiliates of either, provided that Borrower B may reimburse NPI-AP Management or NPI Corp. for up to $100,000 of expenses incurred in connection with the Tender Offers) will be funded by (x) secured credit facilities in the aggregate amount of up to $55 million (the "Credit Facilities") to be made available to the Borrowers and (y) cash equity contributions to the Borrowers aggregating no less than $17 million. Attached as Annex A to this letter is a Summary of Certain Terms (the "Term Sheet") setting forth the principal terms and conditions of the Credit Facilities. KPMCC is pleased to confirm that subject to satisfaction of all of the conditions set forth herein and in the Term Sheet, KPMCC will provide 100% of the Credit Facilities. As you are aware, KPMCC and its advisers have undertaken certain legal, business and financial due diligence analysis and review of the proposed transaction (the "Transaction") including, without limitation, with respect to (i) the limited partnerships (including, without limitation, the Tender Offer Partnerships) which have been formed for the purpose of investing in real estate and the partnerships, subsidiaries and joint ventures in which such limited partnerships have an interest (each an "Operating Partnership" and, collectively, the "Operating Partnerships"), (ii) NPI-AP Management and its subsidiaries and partnerships (including, without limitation, the Borrowers) in which it has an interest, DeForest Capital I, DeForest Capital II and NPI Property Management (such entities, other than the Operating Partnerships and the NPI Entities (as defined below), collectively, the "NPI-AP Management Entities"), (iii) NPI Corp. and its subsidiaries and partnerships in which it has an interest (such entities, other than the Operating Partnerships and NPI-AP Management Entities, collectively, the "NPI Entities"), and (iv) the Tender Offers. KPMCC's willingness to provide the financing described in this letter is subject to (a) KPMCC being satisfied in its reasonable discretion that (x) NPI Corp. has the right to directly or indirectly control the liquidation and dissolution of the Tender Offer Partnerships and the sale, financing and management of property owned, directly or indirectly, by the Tender Offer Partnerships and (y) following the exercise of its rights under the security for the Credit Facilities, KPMCC and its successors and assigns shall have the right to exercise the rights of NPI Corp. as described in the immediately preceding clause (x), (b) KPMCC not becoming aware of any facts or information after the date hereof which was not previously disclosed to it and which in its reasonable determination has a material adverse effect on its evaluation of the Tender Offers or the business, property, operations, nature of assets, assets, liabilities, condition (financial or otherwise) or prospects of (x) any NPI-AP Management Entity or any NPI Entity (collectively, the "Credit Parties"), (y) any Tender Offer Partnership or (z) the Operating Partnerships (other than the Tender Offer Partnerships) taken as a whole and (c) no material adverse change having occurred in the Tender Offers or the business, property, operations, nature of assets, assets, liabilities, condition (financial or otherwise) or prospects of (x) any Credit Party, (y) any Tender Offer Partnership, or (z) the Operating Partnerships (other than the Tender Offer Partnerships) taken as a whole. In the event that KPMCC becomes aware of any such fact or information, KPMCC is not so satisfied as described above or any material adverse change occurs, KPMCC may, in its sole discretion, suggest alternative financing, amounts or structures (including, without limitation, interest and fees) that assure adequate protection for KPMCC or decline to provide or participate in the proposed financing. KPMCC shall not be responsible or liable for any consequential damages which may be alleged as a result of its failure to provide the Credit Facilities or for any damages for its failure to provide the Credit Facilities as permitted above. To induce KPMCC to issue this letter and to continue with its analysis and review, you, jointly and severally, hereby agree that all reasonable fees and expenses (including the reasonable fees and expenses of counsel for KPMCC, auditors, field examiners, appraisers, consultants or other outside experts) of KPMCC arising in connection with this letter (and the due diligence in connection herewith) and in connection with the Transaction shall be for your account, whether or not the transaction is consummated, the Credit Facilities are made available or the definitive legal documents with respect thereto are executed and are delivered by any party. You, jointly and severally, further agree to indemnify and hold harmless KPMCC and each director, officer, employee and affiliate thereof (each an "indemnified person") from and against any and all actions, suits, proceedings (including any investigations or inquiries), claims, losses, damages, liabilities or reasonable costs and expenses of any kind or nature whatsoever (including, without limitation, the reasonable fees and disbursements of counsel and amounts paid in settlement of court costs) which may be incurred by or asserted against or involve KPMCC or any such indemnified person as a result of or arising out of or in any way related to or resulting from any transaction (whether or not consummated) contemplated by this letter and, upon demand, to pay and reimburse KPMCC and each indemnified person for any reasonable legal or other out-of-pocket expenses incurred in connection with investigating, defending or preparing to defend any such action, suit, proceeding (including any inquiry or investigation) or claim (whether or not KPMCC or any such person is a party to any action or proceeding out of which any such expenses arise), provided that you shall not have to indemnify any indemnified person against any loss, claim, damage, expense or liability which resulted solely from the gross negligence or wilful misconduct of such indemnified person. This letter is issued for your benefit only and no other person or entity may rely hereon. The provisions of this paragraph shall survive any termination of this letter. This commitment is delivered to you with the understanding that, whether or not this or any other commitment is accepted from KPMCC relating to any aspect of the Transaction outlined herein, this commitment letter and the terms outlined herein and in the Term Sheet will be kept confidential by you and not disclosed to any third party (including, without limitation, other sources of financing) without the express prior written consent of KPMCC, except that (a) you may disclose this commitment letter and the Term Sheet and the contents hereof and thereof (i) to the Credit Parties and to your and their partners, shareholders, officers, directors, employees, accountants, attorneys and other advisors on a confidential basis in connection with the transactions contemplated hereby or thereby or (ii) as required by law, and (b) after your acceptance of this commitment letter you may disclose this commitment letter, the Term Sheet and the contents hereof and thereof (as well as a summary of the principal terms and conditions of KPMCC's commitment and obligations hereunder or thereunder) in any public filings whether in connection with the transactions contemplated hereby or otherwise (provided that any such written disclosure shall be subject to KPMCC's review and approval, which approval will not be unreasonably withheld). The provisions of this paragraph shall survive any termination of this letter. As a material inducement for KPMCC to execute and deliver this letter, you hereby represent and warrant that neither you nor any person acting on your behalf (including, without limitation, Apollo, any NPI Principal, any NPI Entity or any NPI-AP Management Entity) have employed or used a broker in connection with the transactions contemplated herein, and you agree to indemnify and hold harmless KPMCC and each other indemnified person from and against all loss, cost, damage or expense arising by reason of any claim made by any such broker. The provisions of this paragraph shall survive any termination of this letter. Upon the closing of the transactions contemplated in this letter, KPMCC and its affiliates shall be entitled, but not required, to advertise the same from time to time in media selected by KPMCC or its affiliates at their expense, provided that no such advertisement shall refer to the use of the proceeds of the Credit Facilities. Neither you nor your affiliates shall advertise the closing of the transactions contemplated herein prior to such closing. Upon the closing of the transactions contemplated herein, you and your affiliates shall be entitled, but not required, to advertise the same from time to time in media selected by you at your expense, provided that your advertisements shall include a disclosure, in each case approved in writing by KPMCC, that KPMCC provided the Credit Facilities. Any services provided by KPMCC pursuant hereto are those of an independent contractor providing a service. Nothing contained herein (i) shall constitute KPMCC or any of its affiliates or you or any of your affiliates as members of any partnership, joint venture, association or other separate entity, (ii) shall be construed to impose any liability as such on KPMCC or (iii) shall constitute a general or limited agency or be deemed to confer on any party hereto any express, implied or apparent authority to incur any obligation or liability on behalf of any other. This letter and the Term Sheet attached hereto contain all of the agreements and understandings of the parties hereto and their respective obligations in connection therewith. All prior negotiations, proposals, agreements and understandings relating to the subject matter of this letter and the Term Sheet are hereby agreed to be superseded hereby. If you are in agreement with the foregoing, please sign and return to KPMCC the enclosed copy of this letter by no later than 5:00 p.m., New York time on October 12, 1994. This letter, and the commitment set forth herein, shall terminate at such time unless you accept this letter as provided above. This letter and the rights and obligations of the parties hereunder shall be construed in accordance with and governed by the law of the State of New York. Very truly yours, KIDDER PEABODY MORTGAGE CAPITAL CORPORATION By Name: Title: Agreed to and Accepted this day of October, 1994 DEFOREST VENTURES I L.P. By DeForest Capital I Corporation, its General Partner By_________________________ Name: Michael A. Ashner Title: President DEFOREST VENTURES II L.P. By DeForest Capital II Corporation, its General Partner By_________________________ Name: Michael A. Ashner Title: President The obligations of DeForest Ventures I L.P. and DeForest Ventures II L.P. under the fifth and seventh paragraphs of this letter are jointly and severally guaranteed by each of the undersigned as primary obligors and not as a surety only: NATIONAL PROPERTY INVESTORS, INC. By Name: Michael A. Ashner Title: President NPI-AP MANAGEMENT, L.P. By NPI Property Management Corporation, a general partner By Name: Michael A. Ashner Title: Chief Executive Officer ANNEX A SUMMARY OF CERTAIN TERMS AND CONDITIONS Borrowers: Two newly-formed, bankruptcy remote, single purpose limited partnerships satisfactory to Kidder Peabody Mortgage Capital Corporation ("KPMCC") in all respects. Borrower A will tender for outstanding limited partnership units ("LP Units") in the partnerships listed on Exhibit A hereto which are controlled by NPI Equity Investments, Inc., a wholly- owned subsidiary of NPI Corp. (the "NPI Tender Partnerships"). Borrower B will tender for the LP Units in the partnerships listed on Exhibit A hereto which are controlled, directly or indirectly, by NPI Equity Investments II, Inc., a wholly owned subsidiary of NPI Corp. (the "Fox Tender Partnerships" and together with the NPI Tender Partnerships, the "Tender Offer Partnerships"). Lender: KPMCC (or its designee). Equity Contribution: An aggregate of at least $17 million in cash equity contributions will be made to the Borrowers by the partners therein which cash equity contributions will be allocated $5.1 million to Borrower A and $11.9 million to Borrower B. As is provided below under "Conditions Precedent," the entire minimum cash equity contribution (i.e., $17 million) must be utilized by the Borrowers to acquire the LP Units pursuant to the Tender Offers and to pay related reasonable fees and expenses prior to the incurrence of any loans under the Credit Facilities (the "Loans"). The equity contribution to the Borrowers may be increased over $17 million from time to time during the Availability Period (as defined below) at the Borrowers' discretion for purposes of paying the costs and expenses of the Tender Offers and funding an increase in the purchase prices of the LP Units pursuant to the Tender Offers over those specified in Exhibit A hereto (for each LP Unit its "Initial Price"). The aggregate amount of cash equity contributions actually made to the Borrowers in accordance with the immediately preceding paragraph is hereinafter referred to as the "Capital Contribution Amount". Use of Proceeds: The proceeds of the Loans will be used by the Borrowers solely to fund the acquisition of LP Units in the 19 partnerships identified on Exhibit A pursuant to the Tender Offers and to pay related reasonable fees and expenses (which shall not be payable to the NPI Principals, Apollo or any affiliate of either, provided that Borrower B may reimburse NPI-AP Management or NPI Corp. for up to $100,000 of expenses incurred in connection with the Tender Offers), provided that (i) the purchase price paid for the LP Units of a Tender Offer Partnership may not exceed the Initial Price and the fees and expenses related to the Tender Offers may not exceed $4.0 million, unless the sum of aggregate excess purchase prices paid for all LP Units plus the related fees and expenses in excess of $4.0 million does not exceed the amount by which the aggregate cash equity contributions actually made to the Borrowers which are not repaid with proceeds of the Loans as contemplated by clause (ii) below exceeds $17 million, (ii) the proceeds of the Loans made on the Closing Date may be utilized to (x) repay advances made by the partners to the Borrowers in connection with the Tender Offers or (y) return equity contributions made by such partners which exceed $17 million in the aggregate and (iii) the proceeds of the Loans made on the last day of the Availability Period may be utilized to return equity contributions made by the partners to the Borrower in an amount equal to the lesser of (x) the amount by which such equity contributions exceed $15,000,000 in the aggregate and (y) the amount by which the aggregate Initial Price for all LP Units (assuming that the full number of LP Units tendered for pursuant to the Tender Offers are purchased) exceeds the aggregate Initial Price for all LP Units actually acquired pursuant to the Tender Offer. The maximum number of LP Units of any Tender Partnership which may be accepted by the relevant Borrower shall be 49% of such LP Units. Commitment: Up to $55 million. The commitment will be allocated $18,225,000 to Borrower A and $36,775,000 to Borrower B. In no event will the aggregate principal amount of the Loans made to a Borrower exceed 80% of the total acquisition price of the LP Units acquired by such Borrower in the Tender Offers. All capitalized terms used herein but not defined shall have the meanings provided in the Commitment Letter to which this summary is attached. Availability: The Loans may be incurred under the Credit Facilities at any time prior to the 45th day after the initial borrowing of the Loans under the Credit Facilities (the "Closing Date") upon at least five days prior written notice, provided that (x) the aggregate principal amount of the Loans incurred on the Closing Date shall be no less than $10 million and (y) Loans may not be incurred on more than five different days. The period during which Loans may be incurred under the Credit Facilities is hereinafter referred to as the "Availability Period." Commitment Termination: The commitment, and KPMCC's obligations to make Loans under the Credit Facilities, will terminate if the Closing Date has not occurred on or before December 31, 1994. Maturity: The first anniversary of the Closing Date, provided that the Borrowers will have a right to two 1-year extensions of the maturity date provided that no default or event of default exists on the date of any such extension (such maturity date as it may be extended, the "Maturity Date"). Interest Rate: The Loans will bear interest at the LIBOR Rate (as defined below) as determined by KPMCC for interest periods of one month plus the Applicable Margin, provided that the initial interest period for Loans incurred after the Closing Date will terminate on the date the interest period for the Loans incurred on the Closing Date terminates. "LIBOR Rate" shall mean, for any interest period, the rate per annum from time to time equal to the rate (rounded upward, if necessary, to the nearest 1/32 of one percent), shown on the Telerate page 3750 (or such display substituted therefor as is then customarily used to quote the London interbank offering rate as determined by KPMCC in its reasonable discretion) as the offered rate per annum for one month U.S. dollar deposits of amounts in same day funds comparable to the principal amount of the Loans as of approximately 11:00 a.m. (London time) on each interest rate determination date for each interest period for such Loan, provided that if on any interest rate determination date the quotation specified in the preceding clause above does not appear on Telerate Page 3750, the LIBOR Rate will be either (a) the arithmetic mean (rounded upwards as aforesaid) of the offered rates which leading New York City banks selected by KPMCC are quoting at approximately 11:00 a.m. (New York City time) on the relevant interest rate determination date for United States dollar deposits for the next month to the principal London office of each of the reference banks or those of them (being at least two in number) to which such offered quotations are, in the opinion of KPMCC, being so made, or (b) in the event that KPMCC can determine no such arithmetic mean, the arithmetic mean (rounded upwards as aforesaid) of the offered rates which leading New York City banks selected by KPMCC are quoting on such interest rate determination date to leading European banks for United States dollar deposits for the next month. "Applicable Margin" shall mean a percentage per annum equal to (x) prior to the first anniversary of the Closing Date, 2.5%, (y) on and after the first anniversary of the Closing Date and prior to the second anniversary of the Closing Date, 3.5% and (z) on and after the second anniversary of the Closing Date, 4.5%. The Credit Facilities shall include customary protective provisions for such matters as capital adequacy, increased costs, funding losses, illegality and withholding taxes. Interest in respect of the Loans shall be payable at the end of the applicable interest period. All interest calculations shall be based on a 360-day year and actual days elapsed. Upon the happening and continuance of any default in the payment of principal or interest, subject to limitations imposed by applicable law, all Loans shall bear interest at a rate per annum equal to the rate which is the greater of (x) 12% and (y) 3% in excess of the prime lending rate announced from time to time by Bankers Trust Company. Such interest shall be payable on demand. Residual Fee: As additional compensation on the Loan, after the Initial Return Obligation (as defined below) has been satisfied, KPMCC will receive a residual fee (the "Residual Fee"). The amount of the Residual Fee will be the Participation Percentage (as defined in Exhibit B) of the Partnership Cash Flows (as defined below). The Borrowers will have the right to buy out KPMCC's right to receive the Residual Fee after the Loan Satisfaction Date (as defined below) for a purchase price calculated in accordance with Exhibit C. The "Initial Return Obligation" will be satisfied when each of the following has occurred: (i) the Loans, together with all interest accrued thereon and all other amounts owing under the Credit Facilities (other than the Residual Fee) have been paid in full (such date, the "Loan Satisfaction Date"); (ii) there has been deemed applied to a return on capital as provided under "Application of Partnership Cash Flows" below, a cumulative, compounded (annually) amount equal to 15% per annum of the Capital Contribution Amount; and (iii) there has been deemed applied to a return of capital as provided under "Application of Partnership Cash Flows" below, an amount equal to the Capital Contribution Amount. "Partnership Cash Flows" shall mean, without duplication, for any period, (x) distributions received by the Borrowers or the Fox Transferees (as defined below) in respect of the LP Units during such period, and (y) proceeds received by the Borrowers or the Fox Transferees during such period from the sale or other disposition of such LP Units, provided that Partnership Cash Flows shall not include Fox Deficit Distributions (as defined below). Definitions of NPI Net Cash Flow/Fox Cash Flow/Capital Event Proceeds: "NPI Net Cash Flow" shall mean, for any period, and without duplica- tion, (a) all cash revenues (including expense reimbursables) received by the NPI-AP Management Entities and the NPI Entities during such period (including, without limitation, (x) the distributions in respect of general partnership interests in the Operating Partnerships (other than the Tender Offer Partnerships) and (y) property management fees and asset management fees) other than (i) revenues which constitute Capital Event Proceeds, (ii) the portion of the management fees payable to PD Associates pursuant to the two letter agreements dated October 13, 1993 between NPI Corp. and LPD Equities, Inc. as amended by the letter dated November 29, 1993 between such parties (the collectively, "PD Agreement") to the extent that such portion does not exceed $700,000 during any year (the "PD Associate Fees"), (iii) after the Collateral Release Date (as defined below), the revenues from (x) the Non-Tender Offer Collateral (as defined below) and (y) the general partnership interests in the Operating Partnerships which are not Tender Offer Partnerships, (iv) the Fox Deficit Distributions, (v) the "special contribution" received by Borrower B from the Fox Investors pursuant to Sections 3.7(b) and (c) of the Borrower B partnership agreement, (vi) the amounts, if any, received by Borrower B from Lisle W. Payne and Janet E. Larson, individually and as Trustee of the Larson Family Revocable Trust, pursuant to the agreements which may be entered into by Borrower B and such persons (the amounts specified in clause (v) above and this clause (vi) are hereinafter collectively referred to as the "Borrower B Special Contributions"), (vii) the Borrower B Advances (as defined below), (viii) the distributions received in respect of the general partnership interests in the Fox Tender Partnerships which are required to be held by NPI Corp. in respect of the obligations of the former individual general partners of Fox Realty Investors ("FRI") to make contributions to such Fox Tender Partnerships due to excess distributions received by such former general partners (the "Fox GP Amounts"), provided that such amounts are set aside and held in the Security Account (as defined below) and (ix) amounts paid in respect of the general partnership interests in the Fox Tender Partnerships to FRI or Fox Management Capital Corp. ("FCMC") which are distributable to PRA Associates ("PRA") pursuant to FRI's partnership agreement or to the shareholders of FCMC, less (b) the Pro Rata Portion (as defined below) of the Approved Operating Expenses (as defined below) paid in cash by the NPI-AP Management Entities and the NPI Entities during such period (including reasonable compensation to the NPI Principals not to exceed in the aggregate amounts provided for in the current employment agreements for Michael L. Ashner, Martin Lifton, Steven J. Lifton, G. Bruce Lifton and Arthur N. Queler). It is understood that Net Cash Flow before officer's compensation is presently estimated to be $9 million per annum. "Pro Rata Portion" shall mean, for any period, the Approved Operating Expenses paid in cash during such period by the NPI-AP Management Entities and the NPI Entities mul- tiplied by a fraction the numerator of which is the cash revenues for such period from property and asset management fees which are included in determining NPI Net Cash Flow for such period plus the PD Associate Fees for such period and the denominator of which is the total cash revenues of the NPI-AP Management Entities and the NPI Entities for such period from property and asset management fees. "Approved Operating Expenses" shall mean, for any period, the operating expenses provided for in a budget for such period submitted to, and approved by, KPMCC prior to the first day of such period (such approval not to be unreasonably withheld), provided that the aggregate amount expended shall be deemed to be "Approved Operating Expenses" so long as the aggregate excess amounts for the entire period does not exceed the total budgeted amount by more than 10%, if prior to the Collateral Release Date, and 15%, if on and after the Collateral Release Date. In the event that KPMCC withholds consent for an annual budget, the budget for such year shall be the budget for the immediately preceding year increased by the consumer price increase for such immediately preceding year. "Fox Cash Flow" shall mean, for any period, (x) all cash received by the Borrower B in respect of the Borrower B Special Contributions and (y) all Borrower B Advances. "Capital Event Proceeds" shall mean for any Borrower for any period (w) distributions received by such Borrower, the NPI Entities or the holders of the Affiliate Units during such period in respect of the LP Units owned by such Borrower, by the NPI Entities or by such holders during such period and in respect of general partnership interests in the Tender Offer Partnerships related to such Borrower (other than any such amounts which are distributable to PRA pursuant to FRI's partnership agreement or the shareholders of FCMC but including amounts distributable by FRI to NPI Equity Investments II, Inc. and "Disposition Compensation" (as defined in FRI's partnership agreement)), (x) proceeds received by such Borrower, the NPI Entities or such holder during such period from the sale or other disposition of such LP Units and general partnership interests during such period and (y) the Refinancing Amount (as defined below) and the Liquidation Amount (as defined below) for each Distribution Date occurring during such period in respect of the properties owned by the Tender Offer Partnerships related to such Borrower, provided that Capital Event Proceeds shall not include (a) Fox Deficit Distributions or (b) prior to the occurrence of a default or an event of default, the distributions in respect of, or the sale proceeds of, the Affiliate Units. "Distribution Date" shall mean each June 30 and December 31. "NPI Interest" in any amount shall mean the portion of such amount which would have been distributed to the NPI Entities and the NPI-AP Management Entities in respect of the LP Units and the general partnership interests in the Tender Offer Partnership receiving such amounts had 100% of such amount been distributed by the relevant Tender Offer Partnership. "Liquidation Amount" shall mean, for any Distribution Date and for any property owned by a Tender Offer Partnership, the NPI Interest in the net proceeds of (x) any sale of the properties owned by such Tender Offer Partnerships or (y) to the extent not applied to the repair, restoration or replacement of the affected property, condemnation or insurance proceeds with respect to such properties, which in the case of this clause (y) exceed $100,000 for each event for which such insurance or condemnation proceeds are payable, to the extent that such sale, condemnation or insurance proceeds are received during the period (for each Distribution Date, its "Measurement Period") commencing on the 15th day preceding the immedi- ately preceding Distribution Date and ending on the 15th day preceding such Distribution Date and are not distributed in full by the relevant Tender Offer Partnership on or before such Distribution Date. "Refinancing Amount" shall mean, for any Distribution Date, for any property owned by a Tender Offer Partnership: (x) if indebtedness in respect of such property is outstanding on the Closing Date, 75% of the NPI Interest in the amount by which the principal amount of indebtedness incurred in respect of such property (including any refinancing of existing indebtedness) during the Measurement Period for such Distribution Date exceeds 107% of the principal amount of the indebtedness in respect of such property which is outstanding on the Closing Date or (y) if no such indebtedness in respect of such property is outstanding on the Closing Date, the amount equal to 75% of the NPI Interest in indebtedness incurred in respect of such property during the Measurement Period for such Distribution Date to the extent that such excess indebtedness amounts are not distributed in full by the relevant Tender Offer Partnership, provided that the Refinancing Amount shall not include the first $500,000 of indebtedness which is incurred by each of CP Properties Fund XIX and Century Properties Growth Fund XXII which is in excess of 107% of the principal amount of the indebtedness of such Operating Partnership which is outstanding on the Closing Date so long as such indebtedness is utilized for operating expenses of each such Operating Partnership (other than payments to affiliates). Application of NPI Net Cash Flow/Fox Cash Flow/Capital Event Proceeds/Partnership Cash Flows: A. Application of NPI Net Cash Flow. Until the occurrence of the Loan Satisfaction Date, NPI Net Cash Flow will be applied as follows (with such application to be made on a monthly basis): (i) first, to the payment of interest on the Borrower A Loans and the other obligations of Borrower A under the Credit Facilities (other than the obligations to repay the principal amount of the Loans) which are then due and payable; (ii) second, to the payment of interest on the Borrower B Loans and the other obligations of Borrower B under the Credit Facilities (other than the obligations to repay the principal amount of the Loans) which are then due and payable after the application of Fox Cash Flow actually received; (iii) third, provided that no default or event of default then exists, an amount equal to 40% of the NPI Net Cash Flow remaining after the application pursuant to clauses (i) and (ii) above shall be retained by the relevant Credit Parties for application to the satisfaction of the income tax obligations of NPI Corp. and of the partners of NPI- AP Management; (iv) fourth, with respect to NPI Net Cash Flow remaining after application pursuant to clauses (i), (ii) and (iii) above (x) if such NPI Net Cash Flow is for a period ending on or before the first anniversary of the Closing Date, 50% of such remaining NPI Net Cash Flow and (y) if such remaining NPI Net Cash Flow is for any period thereafter, 100% of such remaining NPI Net Cash Flow shall be applied to the repayment of the principal of the Borrower A Loans and after the Borrower A Loans have been paid in full to the Borrower B Loans; and (v) fifth, provided that no default or event of default then exists, the NPI Net Cash Flow remaining after applications pursuant to clauses (i) through (iv) above shall be retained by the Credit Parties and may be utilized in a manner consistent with the covenants set forth in the Credit Facilities. Amounts retained for application to the satisfaction of income tax obligations of the partners of NPI- AP Management pursuant to clause (iii) above may be distributed by NPI-AP Management to its partners on February 1 of each year in respect of NPI Net Cash Flow of the immediately preceding calendar year and until such time as such amounts have been so distributed such amounts shall be retained in the Security Account. B. Application of Fox Cash Flows. Until the occurrence of the Loan Satisfaction Date, Fox Cash Flow will be applied as follows (with such application to be made on a monthly basis): (i) first, to the payment of interest on the Borrower B Loans and the other obligations of Borrower B under the Credit Facilities (other than the obligations to repay the principal amount of the Loans) which are then due and payable; (ii) second to the repayment of the principal of the Borrower B Loans. C. Application of Capital Event Proceeds. Until the occurrence of the Loan Satisfaction Date, Capital Event Proceeds for a Borrower will be applied as follows (with such application to be made upon receipt of such proceeds (with the Refinancing Amount and Liquidation Proceeds for a Distribution Date being deemed received on such Distribution Date)): (i) first, provided that no default or event of default then exists, an amount equal to 40% of the Capital Event Proceeds for such Borrower which do not constitute the Refinancing Amount shall be retained by the Credit Parties for application to the satisfaction of the income tax obligations of NPI Corp. and of the partners of NPI-AP Management; and (ii) second, with respect to Capital Event Proceeds for such Borrower remaining after application pursuant to clause (i) above, 100% of such remaining Capital Events Proceeds shall be applied to the repayment of the principal of the Loans of such Borrower; and (iii) third, with respect to Capital Event Proceeds remaining after application of clauses (i) and (ii) above and the repayment in full of all Loans made to such Borrower (x) in the case of Borrower A, 100% of such remaining Capital Event Proceeds shall be applied to the Loans of Borrower B and (y) in the case of Borrower B, the Retained Interest (as defined below) in such remaining Capital Event Proceeds shall be applied to the Loans of Borrower A. For purposes hereof the term "Retained Interest" is an amount which shall equal the greater of (x) 72% of such amount and (y) the percentage interest of the partners other than the Fox Investors in Borrower B at the time of determination. Amounts retained for application to the satisfaction of the income tax obligations of the partners of NPI- AP Management pursuant to clause (i) above, may be distributed by NPI-AP Management to its partners on February 1 of each year in respect of Capital Event Proceeds received in the immediately preceding calendar year and until such time as such amounts have been so distributed they shall be retained in the Security Account. D. Application of Partnership Cash Flow. After the occurrence of the Loan Satisfaction Date, Partnership Cash Flows will be applied as follows (with such applications to be made on a monthly basis): (i) first, an amount equal to 15% per annum (computed on a cumulative compounded (annually) basis) of the Capital Contribution Amount shall be deemed applied to a return on capital pursuant to this clause (i) to the extent not theretofore deemed applied to said return on capital; (ii) second, the Partnership Cash Flows remaining after application pursuant to clause (i) above to the full amount of the deemed return on capital then accrued shall be deemed applied to the return of capital until such time as an aggregate amount equal to the Capital Contribution Amount shall be deemed applied to a return of capital pursuant to this clause (ii); and (iii) third, the Partnership Cash Flows remaining after application pursuant to clauses (i) and (ii) above shall be applied to the Residual Fee and the remainder may be used by the Credit Parties for general corporate and partnership purposes. E. Application After an Event of Default. Notwithstanding anything to the contrary contained herein, upon the occurrence and during the continuance of an event of default, after KPMCC shall give notice thereof to the Borrowers all Collateral and the proceeds thereof (including, without limitation, revenues under management contracts and Capital Event Proceeds) shall be applied to the repayment of principal and interest on the Loans and to the satisfaction of the Borrowers' other obligations under the Credit Facilities. Repayment of the Loans: The Loans shall be repaid as follows: (i) the entire unpaid principal amount of the Loans shall be due and owing on the Maturity Date; and (ii) the Loans shall be repaid at the times, and in the amounts, required under "Application of NPI Net Cash Flow/Fox Cash Flow/Capital Events Proceeds/ Partnership Cash Flows" above. Security Account: KPMCC shall establish, with a financial institution satisfactory to KPMCC, a trust account (the "Security Account"), under the sole dominion and control of KPMCC, and KPMCC shall have a continuing security interest in and lien upon the Security Account and all funds on deposit therein from time to time (together with interest accruing thereon). The Security Account will be divided into a number of sub-accounts (each a "Sub-Account") to be determined. All revenues payable to the NPI-AP Management Entities and the NPI Entities (including, without limitation, the revenues under management contracts, Borrower B Special Contributions, the proceeds of Borrower B Advances and Capital Event Proceeds) shall be deposited directly into the appropriate Sub- Account (with all entities making such payments being directed to make such payments into the appropriate Sub-Account and not to the relevant NPI-AP Management Entity or NPI Entity). All revenues under management contracts will be deposited in a separate Sub-Account and provided that no default or event of default then exists, (x) the first $650,000 deposited in such management contract Sub-Account during a calendar month shall be transferred to an account designated by NPI Corp. and the amounts so transferred shall be utilized by the NPI Entities and the NPI-AP Management Entities for Approved Operating Expenses and (y) an amount equal to the amount required to be paid to PD Associates under the PD Agreements (but no more than $58,333 in any month) shall be withdrawn and paid to PD Associates. On the 15th day following the end of each calendar quarter, the aggregate amount expended for Approved Operating Expenses during such calendar quarter will be compared with the amounts transferred as designated by NPI Corp. during such calendar quarter and (x) to the extent such aggregate amount expended for Approved Operating Expenses exceeds the amount so transferred as designated by NPI Corp., an amount equal to such excess amount will be transferred as designated by NPI Corp. and (y) to the extent that the amount so transferred as designated by NPI Corp. exceeds the aggregate amount expended for Approved Operating Expenses, such excess amount shall be deposited by NPI Corp. into a debt service Sub- Account. Amounts on deposit in the Security Account shall be applied in accordance with the section hereof entitled "Application of NPI Net Cash Flow/Fox Cash Flow/Capital Event Proceeds/Partnership Cash Flows". Notwithstanding the foregoing the following shall not be required to be deposited in the Security Account: (x) amounts received by the NPI Entities solely as agent of the Operating Partnerships in respect of insurance premium payments (but only to the extent required to pay insurance premiums on insurance policies obtained for the benefit of the Operating Partnerships), (y) amounts received by the NPI Entities solely as agent to pay the salaries of employees of such Operating Partnership who are not included in the budget of Approved Operating Expenses as employees of the NPI Entities or the NPI-AP Management Entities and are not paid out of the revenues of the NPI-AP Management Entities or the NPI Entities and (z) amounts received from by the NPI Entities or the NPI-AP Management Entities solely as agent to pay the real estate taxes of the Operating Partnerships. Guarantors: The obligations of the Borrowers under the Credit Facilities will be fully guaranteed on a joint and several basis by NPI-AP Management (provided that such obligations shall be non-recourse to the general partners of NPI-AP Management) and NPI Corp. Collateral: All obligations of the Borrowers under the Credit Facilities (including, without limitation, the obligation to pay principal and interest on the Loans) shall be secured by a first priority perfected security interest in all of the following (collectively, the "Collateral"): (i) the general and limited partnership interests in the Borrowers; (ii) the LP Units held by the Borrowers including all rights to distributions in respect thereof; (iii) all limited partnership interests in the Tender Offer Partnerships which are owned, directly or indirectly, by the NPI Principals (including, without limitation, those owned by QAL Associates) (the "Affiliate Units") but not including those owned by FRI; (iv) the Fox GP Amounts held in respect of the obligations of the Fox Investors; (v) all stock of, and partnership interests in, (x) NPI Corp., DeForest Capital I, DeForest Capital II, NPI-AP Management and NPI Property Management (y) the direct subsidiaries of NPI Corp. (other than NPI Equity Investments, Inc.) and (z) the other entities (other than NPI Equity Investments, Inc. but including NPI Equity Investments II, Inc. and its partnership interest in FRI and its rights under the voting trust agreement relating to FCMC) holding all partnership interests held (whether directly or indirectly) by the NPI Entities (or any of their affiliates) (including, without limitation, the entities holding the general partnership interests in the Tender Offer Partnerships and the other Operating Partnerships); (vi) all management contracts and asset management agreements to which the NPI-AP Management Entities or the NPI Entities are party, whether currently existing or entered into after the date hereof; and (vii) the Security Account. The Collateral shall not include (x) Borrower B's rights to require the Borrower B Special Contributions (but shall include the proceeds thereof once contributed) or (y) the Fox Deficit Distributions. The Collateral described in clause (vi) above to the extent constituting management contracts with entities which are not Tender Offer Partnerships (such Collateral, the "Non-Tender Offer Collateral") shall be released on the first date (such date the "Collateral Release Date") on which the principal amount of the Loans is less than 65% of the aggregate principal amount of the Loans outstanding at the end of the Availability Period. The Collateral will be released in full on the Loan Satisfaction Date. KPMCC and its assignees will agree that it will pay to DeForest Capital I the portion of any distribution received by KPMCC or such assignee in respect of LP Units which are interests in a Fox Tender Partnership which are attributable to the capital contributions of general partners in such Tender Offer Partnership made to restore the deficit in such general partner's capital account (each a "Fox Deficit Distribution") net of any tax liabilities attributable thereto (without taking into account any tax credits or net operating loss carry forwards otherwise available to KPMCC or such assignee, as the case may be. KPMCC and its assignee will agree that it will not retain any amount in respect of tax liabilities attributable to Fox Deficit Distributions received by it if at the time of such receipt it shall have received an opinion of counsel satisfactory to it to the effect that no such tax liability will result from KPMCC's or such assignee's, as the case may be, receipt of the Fox Deficit Distribution. It is understood that a Fox Deficit Distribution shall not include amounts distributed in respect of the contribution of the Fox GP Amounts to the Fox Tender Partnerships. Cross Collateralization: The Collateral shall secure the obligations of each Borrower on a pari passu basis. Fox Investor Repurchase Right: In the event that an event of default occurs under the Credit Facility for Borrower A at a time when no default or event of default exists under the Credit Facility for Borrower B (other than the event of default arising under the cross default to the Borrower A Credit Facility) then KPMCC agrees that each Fox Investor will have the right to purchase a percentage of the LP Units owned by Borrower B equal to such Fox Investor's percentage interest in Borrower B at such time commencing on the date KPMCC gives notice to the Fox Investors that an event of default has occurred under the Credit Facility for Borrower A at a time when no event or event of default exists under the Credit Facility for Borrower B (other than the event of default arising under the cross default to the Borrower A Credit Facility) and that the purchase period contemplated hereby is then commencing and ending on the date 60 days after such notice, for a cash purchase price equal to the greater of (x) such percentage interest of all obligations of Borrower B under its Credit Facility (including the principal of the Loans, interest accrued thereon and all other amounts due and payable under such Credit Facility) and (y) the price established pursuant to the Borrower B partnership agreement. The cash purchase price shall be required to be paid on or before such 60th day directly to KPMCC and shall be applied to the repayment of the Borrower B Loans. It is understood and agreed that KPMCC may exercise any or all of its rights and remedies under the Credit Facilities before or after such 60 day period including, without limitation, foreclosing on the LP Units owned by Borrower B, provided that (x) it shall not foreclose on a percentage of the LP Units owned by Borrower B equal to the Fox Investors' percentage interest in Borrower B at such time unless it shall have given the notice to the Fox Investors referred to above and (y) any sale of such LP Units made during the Fox Investors' purchase period shall be subject to the Fox Investors' right to purchase such LP Units as herein provided. The LP Units purchased by any Fox Investor shall be a percentage in the LP Units of each Tender Offer Partnership owned by Borrower B equal to such Fox Investor's percentage. Any such units purchased by the Fox Investors are herein referred to as the "Fox Investor Units" and the lien of KPMCC on such units shall be released upon the payment of the full cash purchase price therefor. The Fox Investors purchasing such units (each a "Fox Transferee") shall be responsible for their pro rata share of any Residual Fee payable in respect of such units provided that the Credit Parties shall be obligated to pay such amounts whether or not paid by the Fox Investors. Prepayment: The Loans shall be fully prepayable in whole or in part on any interest payment date. KPMCC shall retain its right to its Residual Fee following repayment, subject to the Borrowers' right to "buy out". Recourse: The obligations under the Credit Facilities will be fully recourse to the Borrowers, NPI-AP Management, NPI Corp., and the Collateral, provided the Loans will be non-recourse to the general partners of the Borrowers and NPI- AP Management. Funding Fees: A funding fee shall be payable to KPMCC (i) on the Closing Date equal to the greater of (x) 1% of the Loans incurred on the Closing Date and (y) $400,000 and (ii) on each subsequent borrowing date an amount equal to 1% of the Loans being incurred on such borrowing date, provided that the Borrowers will be entitled to a credit against the aggregate of such fees payable on the subsequent borrowing dates in the amount by which the Funding Fee paid on the Closing Date exceeds 1% of the Loans incurred on the Closing Date. Conditions Precedent to Initial Loans: The conditions which shall be required to be satisfied prior to or simultaneously with the making of the Loans on the Closing Date will include those listed below, those listed in the commitment letter to which this Summary of Certain Terms and Conditions is attached and any other typical for this type of facility and any others appropriate in the context of the proposed transaction: (i) The Tender Offer documentation (collectively, the "Tender Offer Materials") shall be in full force and effect and any amendments thereto from the drafts dated October 11, 1994 provided to KPMCC prior to the date of the Commitment Letter (the "Initial Tender Offer Documents") shall be reasonably satisfactory to KPMCC. (ii) All conditions precedent under the Tender Offer Materials to the consummation of the Tender Offer(s) with respect to the LP Units then being acquired shall have been satisfied. The Tender Offer(s) with respect to the LP Units then being acquired shall have been consummated after the receipt of all necessary governmental, regulatory and other third party approvals. (iii) The Borrowers shall have received cash proceeds aggregating at least $17 million representing equity contributions from its partners and shall have utilized the full $17 million so made available to purchase the LP Units and to pay related fees and expenses as contemplated above under "Use of Proceeds." (iv) The documentation evidencing the Credit Facilities including the related security documentation (the "Credit Documents") shall have been executed and delivered reflecting the terms and conditions set forth in this Summary of Certain Terms and Conditions and shall otherwise be in form and substance satisfactory to KPMCC and all conditions to the making of the Loans set forth therein shall have been satisfied on or prior to the date of funding. All Loans shall be in full compliance with all requirements of law including Regulations G, T, U and X of the Board of Governors of the Federal Reserve System. (v) No litigation by any entity (private or governmental) shall be pending or threa- tened (x) with respect to the Acquisition, the Credit Facilities or the Tender Offers or any documentation executed in connection therewith or (y) which KPMCC shall determine could have a materially adverse effect on the business, assets, lia- bilities, condition (finan- cial or otherwise) or prospects of (m) the Credit Parties, (n) the Tender Offer Partnerships or (o) the Operating Partnerships (other than the Tender Offer Partnerships) taken as a whole. (vi) All necessary governmental, regulatory and third party approvals in connection with the Tender Offers, the transactions contemplated by the Credit Facilities and otherwise referred to herein shall have been obtained and remain in effect, and all applicable waiting periods shall have expired without any action being taken by any competent authority which restrains, prevents, or imposes materially adverse conditions upon, the consummation of the Tender Offers. Additionally, there shall not exist any judgment, order, injunction or other restraint prohibiting or imposing materially adverse con- ditions upon, or materially delaying, or making economically unfeasible, the purchase of LP Units pursuant to the Tender Offers. (vii) All costs, fees, expenses (including, without limitation, legal fees and expenses) and other compensation contemplated hereby payable to KPMCC shall have been paid to the extent due. (viii) KPMCC shall have received legal opinions from counsel, in form and substance reasonably acceptable to KPMCC. (ix) The security agreements required as described under the heading "Collateral" above shall have been executed and delivered and shall be satisfactory in form and substance to KPMCC and KPMCC shall have a first priority perfected interest in all Collateral as required above. In addition, all payors of amounts required to be deposited in the Security Account shall have been instructed to make such payments directly to the Security Account and each such payor shall have acknowledged such instructions and consented thereto. (x) PRA shall have consented to the assignment of NPI Equity Investments II Corporation's interest in FRI and FCMC to KPMCC or any other Approved Entity as contemplated by the Credit Documents and to such cure rights with respect to the occurrence of a "Triggering Event" (as defined in FRI's partner- ship agreement) as shall be reasonably satisfactory to KPMCC. An "Approved Entity" shall mean (x) KPMCC and its affiliates and (y) any other person which (m) is the general partner of at least seven public real estate limited partnerships, (n) has been engaged in the business of managing public real estate limited partnerships for at least three years, (o) has assets under management of at least $350 million, and (p) in the reasonable business judgment of KPMCC is capable of satisfying the fiduciary obligations of a managing general partner of a public real estate limited partnership. (xi) Amendments waiving the provisions of the master agreement relating to the acquisition of control of the Fox Tender Partnerships requiring that a restructuring proposal be made shall have become effective. (xii) The arrangement between NPI Corp. and its affiliates with Apollo and the Fox Investors shall have been consummated in a manner consistent with the terms of the Commitment Letter and this Summary of Certain Terms and Condition. Conditions to All Loans (including Loans incurred on the Closing Date): Absence of material adverse change, absence of material litigation, absence of default or unmatured default under the Credit Facilities, continued accuracy of representations and warranties, satisfaction of the condition precedent set forth under clause (ii) under "Conditions Precedent to Initial Loans" with respect to the Tender Offer(s) for the LP Units then being acquired and receipt of such documentation (including, without limitation, opinions of counsel) as shall be required by KPMCC. Representations and Warranties: The Credit Documents shall contain customary representations and warranties for transactions in the nature of the Transaction, including, without limitation, the following: (i) due organization, valid existence, good standing and authority and qualification to do business of each Borrower, each other Credit Party and each Operating Partnership; (ii) due authorization, execution and delivery of the Credit Documents by the applicable Credit Parties; (iii) no conflicts with laws, regulations or orders of governmental authorities applicable to the Credit Parties or their respective assets, and no conflicts with agreements to which any Credit Party or Operating Partnership is a party or which purport to bind them or their respective assets or the organizational documents of any Credit Party or Operating Partnership except that certain change of control provisions in the indebtedness of the Tender Offer Partnerships may be breached by the consummation of the Tender Offer and the financing under the Credit Facilities; (iv) no governmental approvals, filings or registrations are required other than those previously obtained or made; (v) no litigation which could have a material adverse effect on the Loans, the security therefor or the ability of any Credit Party to perform its obligations under the Credit Documents or which could have a material adverse effect on the business, assets, liabilities, condition (financial or otherwise) or prospects of (m) the Credit Parties, (n) the Tender Offer Partnerships or (o) the other Operating Partnerships taken as a whole; (vi) the appropriate Credit Party having good, unencumbered title to each item of Collateral being pledged by it as security for the Loans and KPMCC's security interest therein being a first priority perfected security interest except for the promissory notes issued by an Operating Partnership which have been pledged to secure the Bank South Loan; (vii) full and accurate disclosure by all Credit Parties; (viii) all Credit Parties and Operating Partnerships having made all required tax filings and having paid all taxes and other impositions applicable to them and/or their respective assets; (ix) each (x) Credit Party being in substantial compliance with the terms of any indebtedness owed by it (whether secured or unsecured), (y) Tender Offer Partnership being in substantial compliance with the terms of any indebtedness owed by it (whether secured or unsecured), no payment defaults existing under any such indebtedness and no notice of default having been received thereunder, except that (a) certain change of control provisions in the indebtedness of the Fox Tender Partnerships may have been breached by reason of NPI Corp.'s acquisition of control of such partnerships and (b) certain change of control provisions in the indebtedness of the Tender Offer Partnerships may be breached by the consummation of the Tender Offer and the consummation of the financing under the Credit Facilities and (z) Operating Partnership being in substantial compliance with the terms of any indebtedness owned by it whether secured or unsecured, except for (a) noncompliances which in the aggregate could not reasonably be expected to have a material adverse effect on the Operating Partnerships taken as a whole and (b) MAQ Kingston Associates is in default under the indebtedness owed by such partnership; (x) the properties owned by each Operating Partnership being in material compliance with applicable laws and governmental requirements, and all taxes and other impositions (including insurance premiums) relating to such properties having been duly paid, escrowed against or contested in good faith; (xi) all financial information provided in respect of the Credit Parties and the Operating Partnerships and their respective assets being true, complete and correct in all material respects; (xii) no pending or threatened condemnation in respect of any property owned by an Operating Partnership, except for the University Plaza property located in Bozeman, Montana, and no casualty at any such property; (xiii) neither Borrower nor any other Credit Party having any indebtedness other than the Credit Facilities, and no Operating Partnership or any other Credit Party having any indebtedness other than (w) the Bank South Loan, (x) as listed on Exhibit B hereto, (y) advances made by partners in the Borrowers to the Borrowers which are being repaid with the proceeds of the Loans incurred on the Closing Date and (z) after the Closing Date, Borrower B Advances; (xiv) each Tender Offer Partnership having good and marketable title to its property except as disclosed in the title reports relating thereto previously provided to KPMCC; (xv) no state of facts existing with respect to zoning, ingress and egress, permitting, separate tax lot status and access to utilities which would materially impair the value or use of the properties owned by (x) the Tender Offer Partnerships or (y) the Operating Partnerships taken as a whole; (xvi) the special purpose nature of the Borrowers and the general partners in the Borrowers; (xvii) Exhibit C hereto being a true and complete list of all interests in partnerships, corporations and other entities owned, directly or indirectly, by NPI-AP Management or NPI Corp., and said Exhibit C listing (x) the owners of all partnership interests in partnerships listed on Exhibit C (other than holders of LP Units not held by a member of the NPI affiliated group) and the percentage and type of each such interest and (y) the holder of such class of capital stock of each such corporation listed on Exhibit C and the percentage interest of the capital stock held by each such holder; (xviii) Exhibit D hereto being a true and complete list of Tender Offer Partnerships and a list of all real property owned, directly or indirectly, by each such partnership and in the case of any such real property which is not owned directly by a Tender Offer Partnership, the entity which directly holds such real property and the means by which such Tender Offer Partnership owns an interest in such entity and its ownership interest therein; (xix) Exhibit E hereto being a true and complete list of all presently effective management agreements to which NPI-AP Management is a party and each management agreement being in full force and effect and no default having occurred thereunder other than any such management agreement which shall have been terminated in the ordinary course of business, provided that the aggregate revenues received from all such terminated management agreements shall not exceed 4% of the total revenues received from all management agreements listed on said Exhibit E; (xx) NPI Corp. having the right to control, directly or indirectly, without the consent of any other person the managing general partner of each Tender Offer Partnership and the liquidation and dissolution of the Tender Offer Partnerships and the sale, financing and management of property owned, directly or indirectly by the Tender Offer Partnerships and Exhibit F listing all agreements which provide for, or limit or in any manner effect, the rights and ability of NPI Corp. to control the Tender Offer Partnerships; (xxi) true and complete copies having been provided to KPMCC prior to the delivery of the Commitment Letter of (x) all organizational documents of the Credit Parties and the Operating Partnerships, (y) all agreements relating to the indebtedness of the Credit Parties and the Tender Offer Partnerships and (z) all agreements listed on Exhibit E and Exhibit F, and no amendments having been made to any of the foregoing; (xxii) the Tender Offers having been consummated in compliance with applicable law and all the information in the Tender Offer Materials disclosing all material facts and not omitting any material facts; (xxiii) each Borrower and Tender Offer Partnership being a partnership for federal income tax purposes and not constituting a publicly traded partnership for purposes of Section 7704 of the Internal Revenue Code of 1986, as amended; (xxiv) the requirement that the "Restructuring" contemplated by the master agreement entered into with respect to the acquisition of control of the Fox Tender Partnerships be pursued by the NPI Entities having been waived; (xxv) no NPI Principal having any interest in PRA; and (xxvi) no default existing under the partnership agreements relating to the Operating Partnerships or any NPI Entity. Covenants: The Credit Documents shall contain customary covenants for transactions in the nature of the Transaction, including, without limitation, the following (with the following to be applicable to the Credit Parties and not to the Operating Partnerships): (i) maintenance of existence and compliance with laws by each Credit Party; (ii) payment of taxes and other impositions (including insurance premiums) applicable to each Credit Party and/or its respective assets; (iii) notice of pending or threatened litigation, proceedings or condemnation actions with respect to a Credit Party or an Operating Partnership; (iv) notice of pending defaults under the Credit Documents; (v) notice of defaults under the indebtedness of the Operating Partnerships; (vi) management of the properties of the Operating Partnerships in a manner consistent with past practice and requirement that a monthly certificate be provided certifying that, except as is disclosed in said exhibit, all insurance premiums in respect of the insurance policies of the Operating Partnerships have been paid, all debt payments in respect of indebtedness of the Operating Partnerships have been made and all real estate taxes of the Operating Partnerships have been paid; (vii) financial reporting requirements; (viii) maintenance of existence and businesses and operations of each Credit Party; (ix) each Borrower and the general partner in the Borrower remaining a single purpose, bankruptcy remote entity; (x) prohibition on other indebtedness, provided that (w) Borrower B may incur advances from its partners as contemplated by section 4.4(c) of its partnership agreement provided that such advances (the "Borrower B Advances") are subordinated to the Loans on terms satisfactory in form and substance to KPMCC, (x) the Borrowers may incur advances from their partners prior to the Closing Date provided that such advances are paid in full on the Closing Date, (y) the loan to NPI Capital II Corporation from Bank South (the "Bank South Loan") may remain outstanding (provided that the aggregate principal amount thereof shall not exceed $375,000) but not any refinancing thereof and (z) the installment notes issued by NPI Realty Advisors Inc. in connection with NPI Corp.'s acquisition of control of the Fox Tender Partnerships (the "Installment Notes") may remain outstanding (provided that the aggregate principal amount thereof shall not exceed $190,000) but not any refinancing thereof; (xi) restrictions on mergers, acquisitions, joint ventures, partnerships and acquisitions and dispositions of assets; (xii) restrictions on sale-leaseback transactions and lease pay- ments; (xiii) restrictions on dividends, distributions, and on amend- ments of management agree- ments, partnership agreements and organizational, corporate and other documents, provided that NPI-AP Management may distribute amounts in respect of the income taxes of its partners as provided above under "Application of NPI Net Cash Flow/Fox Cash Flow/Capital Event Proceeds/Partnership Cash Flows"; (xiv) restrictions on voluntary prepayments of other indebtedness and amendments thereto; (xv) restrictions on (x) transactions with affiliates other than (m) transactions disclosed in writing to KPMCC prior to the date of the Commitment Letter and (n) transactions consummated on an arm's length basis and (y) formation of subsidiaries; (xvi) restrictions on investments; (xvii) no liens other than (w) the liens securing the Credit Facilities, (x) the liens securing the Bank South Loan, (y) the lien of certain advances to Operating Partnerships owned by NPI Realty Advisors, Inc. which secure the Installment Note and (z) other exceptions to be negotiated; (xviii) adequate insurance coverage; (xix) ERISA covenants; (xx) restrictions on capital expenditures; (xxi) delivery of operating budgets for NPI-AP Management and NPI Corp.; (xxii) payment of costs (including enforcement costs); (xxiii) application of Loan proceeds; (xxiv) no transfers of Collateral or of properties owned by the Credit Parties. The covenants set forth above will be terminated on the Loan Satisfaction Date, provided that on and after the Loan Satisfaction Date the Credit Parties will agree (x) to be bound by the same fiduciary duty to KPMCC in respect of the Residual Fee as the general partners in the Operating Partnerships owe to the holders of the LP Units and (y) not to sell or transfer the LP Units to an affiliate or to any third party for consideration other than cash. Events of Default: The Credit Documents shall contain customary events of default for transactions in the nature of the Transaction, including, without limitation, the following: (i) failure to pay principal when due, interest within five days of due date or any other amount due under the Credit Documents within 30 days of notice by KPMCC; (ii) failure to make required deposits into the Security Account; (iii) failure to pay taxes or other impositions (including insurance premiums); (iv) any representation or warranty in the Credit Documents having been untrue in any material respect as of the date made or deemed made; (v) bankruptcy or insolvency of any Credit Party; (vi) bankruptcy or insolvency of (x) Tender Offer Partnerships having in the aggregate an Attributed Net Value (as defined below) of more than 20% of the Attributed Net Value of all Tender Offer Partnerships or (y) Operating Partnerships (other than Tender Offer Partnerships) which are obligated to pay management fees to NPI-AP Management during the fiscal year last ended which aggregate more than 20% of the management fees payable by all Operating Partnerships (other than the Tender Offer Partnerships) to NPI-AP Management during the fiscal year last ended; (vii) direct or indirect change in control of any Credit Party, with exceptions and consent requirements to be negotiated; (viii) dissolution or other termination of any Credit Party; (ix) breach of other covenants in the Credit Documents, with cure periods after notice (if applicable) to be negotiated; (x) failure of any security for the Loans; (xi) cross-defaults to other indebtedness of any Credit Party; (xii) cross-default to indebtedness of (x) Tender Offer Partnerships having in the aggregate an Attributable Net Value of more than 20% of the Attributed Net Value of all Tender Offer Partnerships or (y) Operating Partnerships (other than Tender Offer Partnerships) which are obligated to pay management fees to NPI-AP Management during the fiscal year last ended which aggregate more than 20% of the management fees payable by all Operating Partnerships (other than the Tender Offer Partnerships) to NPI-AP Management during the fiscal year last ended; (xiii) termination of management contracts (for a reason other than the sale of the related properties) by Operating Partnerships (including Tender Offer Partnerships) which are obligated to pay management fees to NPI-AP Management during the fiscal year last ended which aggregate more than 20% of the management fees payable by all Operating Partnerships (including the Tender Offer Partnerships) to NPI-AP Management during the fiscal year last ended (other than fees payable pursuant to management contracts terminated by reason of the sale of the related property); (xiv) material unsatisfied judgments with respect to the Credit Parties, the Credit Facilities or the Tender Offers; (xv) ERISA defaults; and (xvi) the occurrence of a Triggering Event. "Attributed Net Value" shall mean for any Tender Offer Partnership the purchase price actually paid by the relevant Borrower for the LP Units of such Tender Offer Partnership pursuant to the Tender Offers multiplied by the number of LP Units actually acquired by the relevant Borrower in such Tender Offer Partnership pursuant to the Tender Offers. Assignments and Participations: The Borrowers may not assign their respective rights or obligations under the Credit Facilities without the prior written consent of KPMCC. KPMCC may assign, and may sell participations in, its rights and obligations under the Credit Facilities, provided that neither KPMCC nor any assignee may assign, or sell participations in, the Credit Facilities (x) to any investment bank without the prior consent of NPI Corp. (which consent shall not be unreasonably withheld, or (y) to any other party unless such party shall have signed a customary confidentiality letter prior to such assignment or participation. The Credit Facilities shall provide for a mechanism which will allow for each assignee to become, after the termination of the Availability Period, a direct signatory to the Credit Facilities and will, after the termination of the Availability Period, relieve the assigning lender of its obligations with respect to the assigned portion of its commitment. Governing Law: The Credit Documents and the rights and obligations of the parties thereunder shall be construed in accordance with and governed by the law of the State of New York. Securitization: KPMCC intends to underwrite the Loans and the Collateral to rating agency standards, in order to facilitate a refinancing and securitization of the Loans and the Collateral in the event the Borrowers have not satisfied their obligations in full by the Maturity Date. The Credit Parties shall covenant and agree to cooperate in good faith with KPMCC in connection with such underwriting and the performance of all due diligence deemed necessary or desirable by KPMCC in connection therewith, and shall take all actions deemed necessary or desirable by KPMCC to effect any such securitization of the Loans and the Collateral, provided that (x) the Credit Parties will not be obligated to agree to have their obligations materially increased or their rights materially decreased, (y) any such securitization shall be done on a private placement basis with each investor therein agreeing to appropriate confidentiality provisions and (z) the reasonable out-of-pocket costs and expenses of the Credit Parties in connection therewith shall be reimbursed by KPMCC. Notwithstanding such underwriting by KPMCC, unless KPMCC agrees otherwise prior to the Maturity Date, the Borrowers will be required to repay the Loans in full and satisfy all of their other obligations under the Credit Documents not later than the Maturity Date. Exhibit A To Annex A Partnership Name Initial Price Property NPI II $36 Sugarmill NPI III $51 Lakeside Pinetree Summerwalk NPI IV $102 Pennbrook NPI V $70 Meadows Oakwood Seasons Village NPI VI $152 Alpine Colony Fairway View I Place Due Plantier Rocky Ridge Ski Lodge Village NPI VII $102 Fairway View II Northwoods Patchen Place Pines Southpoint NPI VIII $132 Huntington Williamsburgh Century 12 $126 Parkside Country Plaza Indian River Plaza Century 13 $227 Riverway Plaza North Park Plaza Parker Plaza Central Forest Hidden Valley Century 14 $117 Torrey Pines St. Charleston Village Sun River Village University Plaza Greenbriar Plaza The Oaks Duck Creek Gateway Park Broadway Trade Center Wingren Plaza Century 15 $120 Lakeside Plumtree Summerhill Preston Creek Farmer's Lane Plaza Northbank Phoenix Business Park Century 16 $15 The Landings Woods of Inverness Century 17 $76 Village in the Woods Creekside Lodge Cherry Creek Garden Cooper's Pond Century 18 $20 Overlook Point Oak Run Century 19 $60 Woodlake Wood Ridge Sandspoint Greenpoint Plantation Crossing Sunrunner McMillan Place Misty Woods Century 22 $80 Wood Creek Plantation Creek Stoney Creek Four Winds Promonotory Point Coopers Point Hampton Greens Monterey Village Autumn Run Cooper Mill MRI 1 $106 Resource Park West Mardot II Priest Office Building Parkway Village Norwood Tower MRI 2 $232 Holiday Inn Crowne Plaza Marriott-Somerset Radisson South Marriott Riverwalk Hotel MRI 3 $140 Holiday Inn Crowne Plaza Residence Inn-Sacramento Residence Inn-Orlando Embassy Suites-Tempe Hotel Exhibit B To Annex A Computation of Participation Percentage The "Participation Percentage" shall mean (x) until such time as KPMCC shall have earned an internal rate of return on the Loans of 17% per annum on a compounded (annually) cumulative basis (the computation of such IRR not to include the Funding Fee) the greater of (i) 20% and (ii) the Cumulative Monthly Participation Percentage for the month in which the Loan Satisfaction Date occurred and (y) at any time thereafter, the Cumulative Monthly Participation Percentage for the month in which the Loan Satisfaction Date occurred. "Cumulative Monthly Participation Percentage" shall mean the sum of the Monthly Participation Percentage for each month during the period commencing on the Closing Date and ending on and including the month in which the Loan Satisfaction Date occurs. "Monthly Participation Percentage" shall mean for each month the (x) percentage set forth opposite such month on the table below multiplied by (y) the average aggregate principal amount of the Loans outstanding during such month divided by $1,000,000: Month % 1-6 .01% 7-24 .015% 25-36 .025% Exhibit C To Annex A Buy Out Formula: The buy out of the Residual Participation shall be 90% of the resultant Residual Participation as calculated pursuant to Exhibit B, assuming a sale of the Properties of the Partnerships and a full liquidation of the Partnerships in an orderly way. The sale price of the properties shall be determined by the average of three appraisals, each performed by three independent appraisers, one chosen by NPI, one chosen by lender, and one chosen by each of the other selected appraisers. The cost of such appraisals shall be shared on a 50%/50% basis by NPI Corp. and KPMCC. EX-99 6 2. Transactions with the General Partner and Affiliates In accordance with the Partnership Agreement, the Partnership may be charged by the general partners and affiliates for services provided to the Partnership. From March 1988 to December 1992 such amounts were assigned pursuant to a services agreement by the general partner and affiliates to Metric Realty Services, L.P., which performed partnership management and other services for the Partnership. On January 1, 1993, Metric Management, Inc., a company which is not affiliated with the general partner, commenced providing certain property and portfolio management services to the Partnership under a new services agreement. As provided in the new services agreement effective January 1, 1993, no reimbursements were made to the general partner and affiliates during 1993. Subsequent to December 31, 1992, reimbursements were made to Metric Management, Inc. On December 16, 1993, the services agreement with Metric Management, Inc. was modified and, as a result thereof, the Partnership's general partner assumed responsibility for cash management of the Partnership as of December 23, 1993 and assumed responsibility for day-to-day management of the Partnership's affairs, including portfolio management, accounting and investor relations services as of April 1, 1994. In addition, interest was charged on borrowings from affiliates of the general partner to the Partnership. Related party expenses are as follows: 1993 1992 1991 Property management fees................ $ - $ 886,000 $ 878,000 Reimbursement of operational expenses: Accounting......................... $ - 269,000 269,000 Investor services.................. $ - 66,000 41,000 Professional services.............. - 39,000 44,000 Total................................... $ - $1,260,000 $1,232,000 Interest expense....................... $57,000 $69,000 $26,000 In accordance with the Partnership Agreement, the general partner received a Partnership management incentive allocation equal to ten percent of net and taxable income (losses) before gains on property dispositions. The general partner was also allocated its two percent continuing interest in the Partnership's net and taxable income (loss) after the preceding allocation. The general partner is also allocated gain on property dispositions to the extent it is entitled to receive distributions and then 12 percent of remaining gain. EX-99 7 CENTURY PROPERTIES FUND XIX - FORM 10-Q - JUNE 30, 1994 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 2. Transactions with Related Parties (a) An affiliate of the Managing General Partner ("MGP") received reimbursements of administrative expenses amounting to $57,000 during the six months ended June 30,l 1994. These reimbursements are primarily included in general and administrative expenses. (b) NPI Property Management Corporation ("NPI Management"), an affiliate of MGP, is entitled to receive a management fee equal to 5% of the annual gross receipts from certain properties it manages. For the six months ended June 30, 1994, NPI Management received $223,000. These fees are included in operating expenses. (c) Included in operating expenses for the six months ended June 30, 1994 is $146,00 of insurance premiums, which were paid to NPI Management under a master insurance policy arranged for by MGP. EX-99 8 Item 5. Other Events. On October 12, 1994, National Property Investors, Inc. ("NPI"), the parent of NPI Equity Investments II, Inc. ("NPI Equity") sold one-third of the stock of NPI to an affiliate ("Apollo") of Apollo Real Estate Advisors, L.P., for $325,000. NPI Equity controls the general partner of Registrant. Apollo is entitled to designate three of the seven directors of NPI Equity. In addition, the approval of certain major actions on behalf of Registrant requires the affirmative vote of at least five directors of NPI Equity. On October 12, 1994, affiliates of Apollo acquired for aggregate consideration of approximately $14,800,000 (i) one- third of the stock of the respective general partners of DeForest Ventures I L.P. ("DeForest I") and DeForest Ventures II L.P. ("DeForest II") and (ii) an additional equity interest in NPI-AP Management, L.P. ("NPI-AP"), an affiliate of NPI (bringing its total equity interest in such entity to one-third). NPI-AP is the sole limited partner of DeForest II and one of the limited partners of DeForest I. DeForest I has been formed for the purpose of making tender offers for limited partnership interests in Registrant as well as 11 affiliated limited partnerships. DeForest II has been formed for the purpose of making tender offers for limited partnership interests in 7 affiliated limited partnerships. -----END PRIVACY-ENHANCED MESSAGE-----