-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, QpzlpRC32+CkMgGunkFQX8u6Z5RVijo8PIZF7q0doFkhpdbZL5zqJBykFasuhG6a icS/Wkj6hcNWzg3HLNeS2Q== 0000950116-98-000583.txt : 19980313 0000950116-98-000583.hdr.sgml : 19980313 ACCESSION NUMBER: 0000950116-98-000583 CONFORMED SUBMISSION TYPE: SC 14D1 PUBLIC DOCUMENT COUNT: 6 FILED AS OF DATE: 19980312 SROS: NONE GROUP MEMBERS: AMERICAN PROPERTY INVESTORS, INC. GROUP MEMBERS: AMERICAN REAL ESTATE HOLDINGS L P GROUP MEMBERS: AMERICAN REAL ESTATE HOLDINGS, L.P. GROUP MEMBERS: CARL C. ICAHN GROUP MEMBERS: OLYMPIA INVESTORS, L.P. GROUP MEMBERS: OLYMPIA-GP, INC. SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: INTEGRATED RESOURCES HIGH EQUITY PARTNERS SERIES 85 CENTRAL INDEX KEY: 0000730067 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE [6500] IRS NUMBER: 133239107 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 14D1 SEC ACT: SEC FILE NUMBER: 005-51099 FILM NUMBER: 98564446 BUSINESS ADDRESS: STREET 1: 411 WEST PUTNAM AVE CITY: GREENWICH STATE: CT ZIP: 06830 BUSINESS PHONE: 2038627000 MAIL ADDRESS: STREET 1: 411 WEST PUTNAM AVENUE CITY: GREENWICH STATE: CT ZIP: 06830 FORMER COMPANY: FORMER CONFORMED NAME: HIGH EQUITY PARTNERS SERIES 85 DATE OF NAME CHANGE: 19850626 FORMER COMPANY: FORMER CONFORMED NAME: RESOURCES HIGH EQUITY PARTNERS DATE OF NAME CHANGE: 19850203 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: AMERICAN REAL ESTATE HOLDINGS L P CENTRAL INDEX KEY: 0001034563 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 133398767 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 14D1 BUSINESS ADDRESS: STREET 1: 100 SOUTH BEDFORD RD CITY: MT KISCO STATE: NY ZIP: 10549 BUSINESS PHONE: 2129213340 MAIL ADDRESS: STREET 1: 100 SOUTH BEDFORD ROAD CITY: MOUNT KISCO STATE: NY ZIP: 10153 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 ------------------------- INTEGRATED RESOURCES HIGH EQUITY PARTNERS, SERIES 85 (Name of Subject Company [Issuer]) OLYMPIA INVESTORS L.P. OLYMPIA-GP, INC. AMERICAN REAL ESTATE HOLDINGS, L.P. AMERICAN PROPERTY INVESTORS, INC. CARL C. ICAHN (Bidders) UNITS OF LIMITED PARTNERSHIP INTEREST (Title of Class of Securities) NONE (CUSIP Number of Class of Securities) ------------------------- Bonnie D. Podolsky Gordon Altman Butowsky Weitzen Shalov & Wein 114 West 47th Street New York, New York 10036 (212) 626-0800 - -------------------------------------------------------------------------------- (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*: $15,200,000 Filing Fee: $3,040 - -------------------------------------------------------------------------------- For purposes of calculating the filing fee only. This amount assumes the purchase of 160,000 Units of the subject company for $95.00 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 the date of its filing. Amount Previously Paid: ______________________________________________________ Form or Registration No.: ______________________________________________________ Filing Party: __________________________________________________________________ Dated Filed: __________________________________________________________________ -1- SCHEDULE 14D-1 CUSIP No. None 1 NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Olympia Investors, L.P. 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See Instructions) (a) /x/ (b) / / 3 SEC USE ONLY 4 SOURCES OF FUNDS (See Instructions) AF; WC 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(e) or 2(f) / / 6 CITIZENSHIP OR PLACE OF ORGANIZATION Delaware 7 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON N/A 8 CHECK IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES CERTAIN SHARES (See Instructions) / / 9 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7) N/A 10 TYPE OF REPORTING PERSON (See Instructions) PN -2- SCHEDULE 14D-1 CUSIP No. None 1 NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Olympia-GP, Inc. 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See Instructions) (a) /x/ (b) / / 3 SEC USE ONLY 4 SOURCES OF FUNDS (See Instructions) AF 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(e) or 2(f) / / 6 CITIZENSHIP OR PLACE OF ORGANIZATION Delaware 7 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON N/A 8 CHECK IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES CERTAIN SHARES (See Instructions) / / 9 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7) N/A 10 TYPE OF REPORTING PERSON (See Instructions) CO -3- SCHEDULE 14D-1 CUSIP No. None 1 NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON American Real Estate Holdings, L.P. 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See Instructions) (a) /x/ (b) / / 3 SEC USE ONLY 4 SOURCES OF FUNDS (See Instructions) WC 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(e) or 2(f) / / 6 CITIZENSHIP OR PLACE OF ORGANIZATION Delaware 7 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON N/A 8 CHECK IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES CERTAIN SHARES (See Instructions) / / 9 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7) N/A 10 TYPE OF REPORTING PERSON (See Instructions) PN -4- SCHEDULE 14D-1 CUSIP No. None 1 NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON American Property Investors, Inc. 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See Instructions) (a) /x/ (b) / / 3 SEC USE ONLY 4 SOURCES OF FUNDS (See Instructions) AF 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(e) or 2(f) / / 6 CITIZENSHIP OR PLACE OF ORGANIZATION Delaware 7 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON N/A 8 CHECK IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES CERTAIN SHARES (See Instructions) / / 9 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7) N/A 10 TYPE OF REPORTING PERSON (See Instructions) CO -5- SCHEDULE 14D-1 CUSIP No. None 1 NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Carl C. Icahn 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See Instructions) (a) /x/ (b) / / 3 SEC USE ONLY 4 SOURCES OF FUNDS (See Instructions) AF 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(e) or 2(f) / / 6 CITIZENSHIP OR PLACE OF ORGANIZATION United States of America 7 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 1,657 Units 8 CHECK IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES CERTAIN SHARES (See Instructions) / / 9 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7) 0.4% 10 TYPE OF REPORTING PERSON (See Instructions) IN -6- SCHEDULE 14D-1 ITEM 1. SECURITY AND SUBJECT COMPANY. (a) The name of the subject company is Integrated Resources High Equity Partners L.P. - Series 85, a California limited partnership (the "Partnership"), which has its principal executive offices at 411 West Putnam Avenue, Greenwich, CT 06830. (b) This Schedule relates to the offer by Olympia Investors, L.P., a Delaware limited partnership (the "Purchaser"), to purchase up to 160,000 of the issued and outstanding Units of Limited Partnership Interests ("Units") of the Partnership at a purchase price of $95.00 per Unit, net to the seller in cash (the "Purchase Price"), without interest, less the amount of any distributions declared or made with respect to the Units (other than distributions of Adjusted Cash from Operations, as defined in the Partnership's partnership agreement) between March 12, 1998 and the date of payment of the Purchase Price by the Purchaser, upon the terms and subject to the conditions set forth in the Offer to Purchase (the "Offer to Purchase") dated March 12, 1998, and the related Assignment of Partnership Interest, copies of which are attached hereto as Exhibits (a)(1) and (a)(2), respectively. Information concerning the number of Units outstanding is set forth in the "INTRODUCTION" to the Offer to Purchase and is incorporated herein by reference. (c) The information set forth in Section 12 ("Background of the Offer") of the Offer to Purchase is incorporated herein by reference. ITEM 2. IDENTITY AND BACKGROUND. (a)-(d) The Purchaser is a Delaware limited partnership, the general partner of which is Olympia-GP Inc., a Delaware corporation which is wholly-owned by American Real Estate Holdings, L.P., a Delaware limited partnership ("AREH"), and the sole limited partner of which is AREH. The general partner of AREH is American Property Investors, Inc. ("API"), a Delaware corporation which is wholly-owned by Carl C. Icahn, and the sole limited partner of AREH is American Real Estate Partners, L.P., a Delaware limited partnership. The information set forth in Section 10 ("Information Concerning the Purchaser and Certain Affiliates of the Purchaser") of the Offer to Purchase and Schedule I of the Offer to Purchase is incorporated herein by reference. (e)-(f) During the last five years, neither the Purchaser nor, to the best of its knowledge, any of the persons listed in Schedule I or referred to in Section 10 ("Information Concerning the Purchaser and Certain Affiliates of the Purchaser") of the Offer to Purchase (i) has been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or (ii) was a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a -7- 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 I of the Offer to Purchase is incorporated herein by reference. ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY. (a) None. (b) The information set forth in Section 8. ("Future Plans of the Purchaser") and Section 12 ("Background of the Offer") of the Offer to Purchase is incorporated herein by reference. ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION. (a) The information set forth in Section 11 ("Source of Funds") of the Offer to Purchase is incorporated herein by reference. (b) Not applicable. (c) Not applicable. ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDER. (a)-(c) The information set forth in Section 8 ("Future Plans of the Purchaser") of the Offer to Purchase is incorporated herein by reference. (d)-(e) Not applicable. (f)-(g) The information set forth in Section 7 ("Effects of the Offer") of the Offer to Purchase is incorporated herein by reference. ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY. (a)-(b) The information set forth in the Introduction and Section 10 ("Information Concerning the Purchaser and Certain Affiliates of the Purchaser") of the Offer to Purchase is incorporated herein by reference. ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO THE SUBJECT COMPANY'S SECURITIES. The information set forth in Section 12 ("Background of the Offer") of the Offer to Purchase is incorporated herein by reference. -8- ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED. The information set forth in Section 16 ("Fees and Expenses") of the Offer to Purchase is incorporated herein by reference. ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS. Not applicable. ITEM 10. ADDITIONAL INFORMATION. (a) The information set forth in Exhibit (c)(1) is incorporated herein by reference. (b)-(d) The information set forth in 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 Assignment of Partnership Interest, 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 March 12, 1998. (a)(2) Assignment of Partnership Interest. (a)(3) Press Release, dated March 12, 1998. (a)(4) Cover Letter, dated March 12, 1998, from Olympia Investors, L.P. to the holders of the Units. (b) Not applicable (c)(1) Letter Agreement, dated March 6, 1998, between Presidio Capital Corp., Olympia Investors, L.P. and American Real Estate Holdings, L.P. (d)-(f) Not applicable -9- 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: March 12, 1998 OLYMPIA INVESTORS, L.P. OLYMPIA GP-INC. By: OLYMPIA GP-INC., its general partner By: /s/ Martin L. Hirsch ----------------------- Name: Martin L. Hirsch Title: Vice President By: /s/ Martin L. Hirsch ----------------------- Name: Martin L. Hirsch Title: Vice President AMERICAN REAL ESTATE HOLDINGS, L.P. By: AMERICAN PROPERTY INVESTORS, INC., its general partner By: /s/ Martin L. Hirsch ----------------------- Name: Martin L. Hirsch Title: Vice President AMERICAN PROPERTY INVESTORS, INC. By: /s/ Martin L. Hirsch ----------------------- Name: Martin L. Hirsch Title: Vice President ___________________________ CARL C. ICAHN [Signature Page for High Equity Partners L.P. - Series 85, Schedule 14D-1] -10- INDEX TO EXHIBITS EXHIBIT NUMBER DESCRIPTION - -------- ----------- (a)(1) Offer to Purchase, dated March 12, 1998. (a)(2) Assignment of Partnership Interest. (a)(3) Press Release, dated March 12, 1998. (a)(4) Cover Letter, dated March 12, 1998, from Olympia Investors, L.P. to the holders of the Units. (b) Not applicable (c)(1) Letter Agreement, dated March 6, 1998, between Presidio Capital Corp., Olympia Investors, L.P. and American Real Estate Holdings, L.P. (d)-(f) Not applicable -11- EX-1.(A) 2 EXHIBIT (A)(1) Offer to Purchase for Cash Up to 160,000 Units of Limited Partnership Interest in INTEGRATED RESOURCES HIGH EQUITY PARTNERS, SERIES 85 for $95.00 Net Per Unit by OLYMPIA INVESTORS, L.P. - -------------------------------------------------------------------------------- THE OFFER, WITHDRAWAL RIGHTS AND PRORATION PERIOD WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON WEDNESDAY, APRIL 8, 1998, UNLESS THE OFFER IS EXTENDED. - -------------------------------------------------------------------------------- IMPORTANT Olympia Investors, L.P., a Delaware limited partnership (the "Purchaser"), is offering to purchase up to 160,000 of the outstanding units of limited partnership interest ("Units") in Integrated Resources High Equity Partners, Series 85, a California limited partnership (the "Partnership"), at a purchase price of $95.00 per Unit (the "Purchase Price"), net to the seller in cash, without interest, less the amount of distributions per Unit, if any (other than distributions of Adjusted Cash from Operations, as defined in the Partnership's partnership agreement ("Partnership Agreement")), made by the Partnership from the date of this Offer to Purchase (as it may be supplemented or amended from time to time, the "Offer to Purchase"), until the Payment Date (as defined below), upon the terms and subject to the conditions set forth in the Offer to Purchase and in the related Assignment of Partnership Interest, including the Instructions thereto, as it may be supplemented or amended from time to time (the "Assignment of Partnership Interest" which, collectively with the Offer to Purchase, constitute the "Offer"). As a result of Carl C. Icahn's relationship with the Purchaser, he may be deemed to be a "co-bidder" with the Purchaser. LIMITED PARTNERS WHO TENDER THEIR UNITS WILL NOT BE OBLIGATED TO PAY ANY COMMISSIONS OR PARTNERSHIP TRANSFER FEES. The 160,000 Units sought pursuant to the Offer represent approximately 40% of the total Units outstanding as of September 30, 1997. The Purchaser is not affiliated with the general partners of the Partnership. However, the Purchaser has entered into an agreement (the "Agreement") with Presidio Capital Corp. ("Presidio"), an affiliate of the Partnership's general partners, pursuant to which, among other things and subject to the terms and conditions set forth therein: (i) the Purchaser has granted Presidio the right to purchase 50% of the Units acquired by the Purchaser pursuant to the Offer and the Purchaser's offers for Units of two related limited partnerships (the "Related Partnerships"); (ii) either party can initiate buy/sell procedures pursuant to which the non-initiating party would be required to elect either to buy certain Units from the initiating party or to sell certain Units to the initiating party; (iii) the Purchaser and its affiliates have agreed that, prior to the Standstill Expiration Date (as defined in Section 12 ("Background of the Offer"), they will not: seek the removal of the general partners, call any meeting of limited partners or seek to control the management, policies or affairs of the Partnership or the Related Partnerships, effect any business combination or other extraordinary transaction with the Partnership, any Related Partnership or their general partners, acquire Units other than pursuant to the Offers or acquire properties or assets of the Partnership or any Related Partnership; (iv) the Purchaser and its affiliates have agreed, prior to the Standstill Expiration Date, to vote their Units in favor of a proposal, if any, by the Partnership's general partners that would result in Limited Partners receiving securities that are listed on NASDAQ or a national securities exchange; and (v) Presidio has agreed to cause the general partners of the Partnership and the Related Partnership to cooperate to facilitate the Offers. Section 12 ("Background of the Offer") contains a more detailed description of the Agreement. The Offer is not conditioned upon any minimum number of Units being tendered. If, as of the Expiration Date (as defined in Section 1 ("Terms of the Offer; Expiration Date; Proration")), more than 160,000 Units are validly tendered and not properly withdrawn, the Purchaser will accept for purchase on a pro rata basis only 160,000 Units, subject to the terms and conditions set forth herein. See Section 14 ("Conditions of the Offer"). Any (i) limited partner of the Partnership, (ii) beneficial owner, in the case of Units owned by Individual Retirement Accounts or Keogh Plans (a "Beneficial Owner"), or (iii) person who has purchased Units but has not yet been reflected on the Partnership's books as a substitute limited partner (an "Assignee", and collectively with limited partners of the Partnership and Beneficial Owners, the "Limited Partners") desiring to tender Units should complete and sign the Assignment of Partnership Interest or a facsimile thereof in accordance with the Instructions in the Assignment of Partnership Interest and mail or deliver the signed Assignment of Partnership Interest to the Depositary (as defined below). A Limited Partner may tender any or all of the Units owned by that Limited Partner, provided, however, in order for a tender to be valid, (i) a minimum of 10 Units or, if Units are tendered by an Individual Retirement Account or a Keogh Plan, 4 Units, must be sold pursuant to the Offer and (ii) to the extent such tender is a partial tender, after the sale of Units pursuant to the Offer, the Limited Partner must continue to hold at least 10 Units or, if Units are tendered by an Individual Retirement Account or a Keogh Plan, 4 Units (8 Units for an Individual Retirement Account or a Keogh Plan for Missouri and Washington residents) ((i) and (ii) collectively, the "Minimum Units Requirements"). See Section 3 ("Procedure for Tendering Units"). Limited Partners are urged to consider the following factors: * The Purchaser is making the Offer with a view to making a profit. Accordingly, in establishing the Purchase Price, the Purchaser was motivated to set the lowest price for the Units which might be acceptable to Limited Partners consistent with the Purchaser's objectives. Such objectives and motivations may conflict with the interest of the Limited Partners in receiving the highest price for their 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 Purchase Price of $95.00 per Unit is approximately 73% of the Purchaser's estimate of the net asset value per Unit of $130.21 and approximately 77% of the Purchaser's estimate of liquidation value per Unit of $124.12. See "Introduction" and Section 13 ("Purchase Price Considerations"). * If the Purchaser is successful in acquiring a substantial number of Units pursuant to the Offer, the Purchaser, which is controlled by Carl C. Icahn, could, after the Standstill Expiration Date, thereby be in a position to significantly influence voting decisions with respect to the Partnership, including, without limitation, decisions concerning amendments to the Partnership Agreement and removal and replacement of the Partnership's general partners. This means that, after the Standstill Expiration Date, (i) those who remain Limited Partners could be prevented from taking action they desire but that the Purchaser opposes and (ii) the Purchaser may be able to take action desired by the Purchaser but opposed by such remaining Limited Partners. Generally, however, voting decisions, other than certain decisions concerning the removal and substitution of the Partnership's general partners, require the consent of the Partnership's general partners prior to effectuation. Questions and requests for assistance or for additional copies of the Offer to Purchase and the Assignment of Partnership Interest may be directed to the Information Agent (as defined below) at the address and telephone number set forth below and on the back cover of the Offer to Purchase. No soliciting dealer fees or other payments to brokers for tenders are being paid by the Purchaser. THIS TRANSACTION HAS NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION (THE "COMMISSION") NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THE INFORMATION CONTAINED IN THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. For More Information or for Further Assistance, Please Call the Information Agent: BEACON HILL PARTNERS, INC. 90 Broad Street New York, New York 10004 (212) 843-8500 (Collect) (800) 301-8755 (Toll Free) TABLE OF CONTENTS Page INTRODUCTION...................................................................1 THE OFFER......................................................................5 SECTION 1. TERMS OF THE OFFER; EXPIRATION DATE; PRORATION................5 SECTION 2. ACCEPTANCE FOR PAYMENT AND PAYMENT FOR UNITS..................6 SECTION 3. PROCEDURE FOR TENDERING UNITS.................................6 SECTION 4. WITHDRAWAL RIGHTS.............................................8 SECTION 5. EXTENSION OF TENDER PERIOD; TERMINATION; AMENDMENT............9 SECTION 6. CERTAIN FEDERAL INCOME TAX MATTERS............................9 SECTION 7. EFFECTS OF THE OFFER.........................................11 SECTION 8. FUTURE PLANS OF THE PURCHASER................................12 SECTION 9. CERTAIN INFORMATION CONCERNING THE PARTNERSHIP...............13 SECTION 10. INFORMATION CONCERNING THE PURCHASER AND CERTAIN AFFILIATES OF THE PURCHASER..........................16 SECTION 11. SOURCE OF FUNDS..............................................18 SECTION 12. BACKGROUND OF THE OFFER......................................18 SECTION 13. PURCHASE PRICE CONSIDERATIONS................................19 SECTION 14. CONDITIONS OF THE OFFER......................................22 SECTION 15. CERTAIN LEGAL MATTERS........................................24 SECTION 16. FEES AND EXPENSES............................................25 SCHEDULE I...................................................................I-1 -i- To the Limited Partners of Integrated Resources High Equity Partners, Series 85 INTRODUCTION The Purchaser hereby offers to purchase up to 160,000 Units at a purchase price of $95.00 per Unit (the "Purchase Price"), net to the seller in cash, without interest, less the amount of distributions per Unit, if any (other than distributions of Adjusted Cash from Operations, as defined in the Partnership Agreement), made by the Partnership from the date of the Offer until the Payment Date, upon the terms and subject to the conditions set forth in the Offer. Limited Partners who tender their Units in response to the Offer will not be obligated to pay any commissions or partnership transfer fees. The Purchaser has retained Beacon Hill Partners, Inc. to act as Information Agent (the "Information Agent") and Harris Trust Company of New York to act as Depositary (the "Depositary") in connection with the Offer. The Purchaser will pay all charges and expenses in connection with the services of the Information Agent and the Depositary. The Offer is not conditioned on any minimum number of Units being tendered. Subject to the Minimum Units Requirements, a Limited Partner may tender any or all of the Units owned by that Limited Partner. Notwithstanding any provision contained in the Offer to Purchase or any related document, under no circumstances will the Purchaser be required to accept any Units the transfer of which to the Purchaser would be prohibited by the Partnership Agreement or any regulation or procedure adopted thereunder. The Purchaser is not affiliated with the general partners of the Partnership. However, the Purchaser has entered into an Agreement with Presidio, pursuant to which, among other things and subject to the terms and conditions set forth therein: (i) the Purchaser has granted Presidio the right to purchase 50% of the Units acquired by the Purchaser pursuant to the Offer and offers for Units of the Related Partnerships (collectively, the "Offers"); (ii) either party can initiate buy/sell procedures pursuant to which the non-initiating party would be required to elect either to buy certain Units from the initiating party or to sell certain Units to the initiating party; (iii) the Purchaser and its affiliates have agreed that, prior to the Standstill Expiration Date, they will not: seek the removal of the general partners, call any meeting of limited partners or seek to control the management, policies or affairs of the Partnership or the Related Partnerships, effect any business combination or other extraordinary transaction with the Partnership, any Related Partnership or their general partners, acquire Units other than pursuant to the Offers or acquire properties or assets of the Partnership or any Related Partnership; (iv) the Purchaser and its affiliates have agreed, prior to the Standstill Expiration Date, to vote their Units in favor of a proposal, if any, by the Partnership's general partners that would result in Limited Partners receiving securities that are listed on NASDAQ or a national securities exchange; and (v) Presidio has agreed to cause the general partners of the Partnership and the Related Partnership to cooperate to facilitate the Offers. Section 12 ("Background of the Offer") contains a more detailed description of the Agreement. Some Factors To Be Considered By Limited Partners. In considering the Offer, Limited Partners may wish to consider the following: * The Purchaser is making the Offer with a view to making a profit. Accordingly, in establishing the Purchase Price, the Purchaser was motivated to set the lowest price for the Units which might be acceptable to Limited Partners consistent with the Purchaser's objectives. Such objectives and motivations may conflict with the interest of the Limited Partners in receiving the highest price for their 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. -1- * The Purchase Price of $95.00 per Unit is approximately 73% of the Purchaser's estimate of the net asset value per Unit of $130.21 and approximately 77% of the Purchaser's estimate of liquidation value per Unit of $124.12. See Section 13 ("Purchase Price Considerations"). * Upon the liquidation of the Partnership, the Purchaser will benefit to the extent the amount per Unit it receives in the liquidation exceeds the Purchase Price, if at all. Therefore, Limited Partners might receive more value if they hold their Units, rather than tender, and receive proceeds from the liquidation of the Partnership. Alternatively, Limited Partners may prefer to receive the Purchase Price now rather than wait for uncertain future net liquidation proceeds. When the assets of the Partnership are ultimately sold or otherwise disposed of, the return to Limited Partners could be higher or lower than the Purchase Price. * If the Purchaser is successful in acquiring a substantial number of Units pursuant to the Offer, the Purchaser, which is controlled by Mr. Icahn, could, after the Standstill Expiration Date, thereby be in a position to significantly influence voting decisions with respect to the Partnership. This means that, after the Standstill Expiration Date, (i) those who remain Limited Partners could be prevented from taking action they desire but that the Purchaser opposes and (ii) the Purchaser may be able to take action desired by the Purchaser which may be opposed by, and which may not be in the best interests of, such remaining Limited Partners. Generally, however, voting decisions other than certain decisions concerning the removal and substitution of the Partnership's general partners require the consent of the Partnership's general partners prior to effectuation. * To the extent that a portion of the losses recognized and allocated to the Limited Partners for tax purposes by the Partnership in prior years was subject to restrictions on deductions of losses from passive activities, such losses were generally "suspended" and carried over by the Limited Partners. Such "suspended" losses may, depending on a Limited Partner's particular circumstances, be available to offset all or a portion of any gain recognized by such Limited Partner on the sale of Units. In the event that a Limited Partner tenders all of his Units, he would generally be able to deduct any loss on the sale along with the balance of any "suspended" passive activity losses from prior years. See Section 6 ("Certain Federal Income Tax Matters"). Because the Offer is being made for less than all of the outstanding Units, there can be no assurance that a Limited Partner tendering all of his Units will in fact sell all of such Units pursuant to the Offer. * Consummation of the Offer may limit the ability of Limited Partners to dispose of Units during the twelve month period following completion of the Offer. See Section 7 ("Effects of the Offer"). * Limited Partners 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, the $95.00 per Unit Purchase Price is a premium over the $71.28 per Unit weighted average selling price for Units reported for the limited and sporadic secondary market during the six-month period ended January 31, 1998. See Section 13 ("Purchase Price Considerations"). Such secondary market selling prices do not take into account commissions charged by secondary market makers effectuating such sales and other transaction costs; -2- The Offer will provide Limited Partners with an immediate opportunity to liquidate their investment in the Partnership without the usual transaction costs associated with market sales or Partnership transfer fees; Although there are some limited resale mechanisms available to Limited Partners wishing to sell their Units, there is no formal or organized trading market for the Units. The Partnership's Form 10-K for the year ended December 31, 1996 (the "Form 10-K") states: "Units of the Partnership are not publicly traded. There are certain restrictions set forth in the Partnership's amended limited partnership agreement ("Limited Partnership Agreement") which may limit the ability of a limited partner to transfer Units. Such restrictions could impair the ability of a limited partner to liquidate its investment in the event of an emergency or for any other reason." Accordingly, Limited Partners who desire resale liquidity may wish to consider the Offer. The Offer affords a significant number of Limited Partners an opportunity to dispose of their Units for cash, which alternative otherwise might not be available to them. However, the Purchase Price is not intended to represent either the fair market value of a Unit or the fair market value of the Partnership's assets on a per Unit basis; General disenchantment with real estate investments; General disenchantment with long-term investments in limited partnerships because of, among other things, their illiquidity and the inability of Limited Partners to effectuate management control over the Partnership's affairs through the annual election of general partners. Limited Partners should note, however, that they do have the right to remove the general partners by a majority vote; The Offer may be attractive to certain Limited Partners who wish in the future to avoid the expenses, delays and complications in filing complex income tax returns which result from an ownership of Units; The Offer provides Limited Partners with the opportunity to liquidate their Units and to reinvest the proceeds in other investments should they desire to do so; The Purchaser believes that the Units represent an attractive investment at the Purchase Price. There can be no assurance, however, that this judgment is correct. Ownership of Units will remain a speculative investment. The Purchaser reserves the right to transfer or assign, in whole or from time to time in part, to one or more persons, the right to purchase Units tendered pursuant to the Offer, but any such transfer or assignment will not relieve the Purchaser of its obligations under the Offer or prejudice the rights of tendering Limited Partners to receive payment for Units validly tendered and accepted for payment pursuant to the Offer. Limited Partners should consult with their respective advisors about the financial, tax, legal and other implications of accepting the Offer. Limited Partners are urged to read the Offer to Purchase and the related materials carefully and in their entirety before deciding whether to tender their Units. The Purchaser. The Purchaser is a Delaware limited partnership, the general partner of which is Olympia-GP Inc., a Delaware corporation which is wholly-owned by American Real Estate Holdings, L.P., a -3- Delaware limited partnership ("AREH"), and the sole limited partner of which is AREH. The general partner of AREH is American Property Investors, Inc., a Delaware corporation which is wholly-owned by Carl C. Icahn, and the sole limited partner of AREH is American Real Estate Partners, L.P., a Delaware limited partnership. Reasons For The Offer. The Purchaser is making the Offer because it believes that the Units represent an attractive investment at the price offered. There can be no assurance, however, that the Purchaser's judgment is correct, and, as a result, ownership of Units (either by the Purchaser or Limited Partners who retain their Units) will remain a speculative investment. The Purchaser is acquiring the Units for investment purposes and has no present intention to make any effort to change current management or the operations of the Partnership and has no present plans for any extraordinary transaction involving the Partnership. See Section 8 ("Future Plans of the Purchaser"). Conditions. The Offer is not conditioned on any minimum number of Units being tendered. Certain other conditions, however, do apply. See Section 14 ("Conditions of the Offer"). Outstanding Units. According to publicly available information, as of March 15, 1997, there were 400,010 Units issued and outstanding, which were held by 10,648 Limited Partners. An affiliate of the Purchaser beneficially owns 1, 657 Units. See Section 10 ("Information Concerning the Purchaser and Certain Affiliates of the Purchaser"). Additional Information. The Partnership is subject to the information and reporting requirements of the Securities Exchange Act of 1934, as amended ("Exchange Act"), and in accordance therewith is required to file reports and other information with the Commission relating to its business, financial condition and other matters. Such reports and other information may be inspected at the public reference facilities maintained by the Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and are available for inspection and copying at the regional offices of the Commission located in Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661 and at 7 World Trade Center, 13th Floor, New York, New York 10048 and at the Commission's World Wide Website at http://www.sec.gov. Copies of such material can also be obtained from the Public Reference Room of the Commission in Washington, D.C. at prescribed rates. ALL OF THE INFORMATION WITH RESPECT TO THE PARTNERSHIP CONTAINED IN THE OFFER TO PURCHASE HAS BEEN DERIVED FROM DOCUMENTS AND REPORTS PUBLICLY FILED BY THE PARTNERSHIP OR THE APPRAISAL INFORMATION (AS DEFINED IN SECTION 12 ("BACKGROUND OF THE OFFER")). ALTHOUGH THE PURCHASER HAS NO INFORMATION THAT ANY STATEMENTS CONTAINED HEREIN BASED UPON SUCH DOCUMENTS, REPORTS OR APPRAISAL INFORMATION ARE UNTRUE, THE PURCHASER CANNOT TAKE RESPONSIBILITY FOR THE ACCURACY OR COMPLETENESS OF THE INFORMATION CONCERNING THE PARTNERSHIP CONTAINED IN SUCH DOCUMENTS, REPORTS AND APPRAISAL INFORMATION OR FOR ANY FAILURE BY THE PARTNERSHIP TO DISCLOSE EVENTS WHICH MAY HAVE OCCURRED AND MAY AFFECT THE SIGNIFICANCE OR ACCURACY OF ANY SUCH INFORMATION BUT WHICH ARE UNKNOWN TO THE PURCHASER. -4- THE OFFER SECTION 1. TERMS OF THE OFFER; EXPIRATION DATE; PRORATION. Upon the terms and subject to the conditions of the Offer, the Purchaser will accept (and thereby purchase) up to 160,000 Units that are validly tendered on or prior to the Expiration Date and not withdrawn in accordance with the procedures set forth in Section 4 ("Withdrawal Rights"). For purposes of the Offer, the term "Expiration Date" shall mean 12:00 midnight, New York City time, on Wednesday, April 8, 1998, unless the Purchaser in its sole discretion shall have extended the period of time for which the Offer is open, in which event the term "Expiration Date" shall mean the latest time and date on which the Offer, as extended by the Purchaser, shall expire. See Section 5 ("Extension of Tender Period; Termination; Amendment") for a description of the Purchaser's right to extend the period of time during which the Offer is open and to amend or terminate the Offer. If, prior to the Expiration Date, the Purchaser increases the consideration offered to Limited Partners pursuant to the Offer, the increased consideration will be paid for all Units accepted for payment pursuant to the Offer, whether or not the Units were tendered prior to the increase in consideration. If more than 160,000 Units are validly tendered and not properly withdrawn on or prior to the Expiration Date, the Purchaser will, upon the terms and subject to the conditions of the Offer, accept for payment and pay for an aggregate of 160,000 of the Units so tendered, pro rata according to the number of Units validly tendered by each Limited Partner and not properly withdrawn on or prior to the Expiration Date, with appropriate adjustments to avoid (i) purchases of fractional Units and (ii) purchases that would violate the Partnership Agreement and any relevant procedures or regulations promulgated by the Partnership's general partners. If the number of Units validly tendered and not properly withdrawn on or prior to the Expiration Date is less than or equal to 160,000 Units, the Purchaser will purchase all Units so tendered and not properly withdrawn, upon the terms and subject to the conditions of the Offer, subject to the adjustments referred to in the preceding sentence. If proration of tendered Units is required, because of the difficulty of determining the number of Units validly tendered and not withdrawn, the Purchaser may not be able to announce the final results of such proration until at least approximately seven business days after the Expiration Date. Subject to the Purchaser's obligation under Rule 14e-1(c) under the Exchange Act to pay Limited Partners the Purchase Price in respect of Units tendered or return those Units promptly after the termination or withdrawal of the Offer, the Purchaser does not intend to pay for any Units accepted for payment pursuant to the Offer until the final proration results are known. NOTWITHSTANDING ANY SUCH DELAY IN PAYMENT, NO INTEREST WILL BE PAID ON THE PURCHASE PRICE. The Offer is conditioned on satisfaction of certain conditions. See Section 14 ("Conditions of the Offer"), which sets forth in full the conditions of the Offer. The Purchaser reserves the right (but in no event shall be obligated), in its sole discretion, to waive any or all of those conditions. If, on or prior to the Expiration Date, any or all of the 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 Limited Partners, (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 Limited Partners 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, and (iv) amend the Offer. The Partnership has provided the Purchaser with a list of Limited Partners for the purpose of making the Offer, and the Offer to Purchase, the Assignment of Partnership Interest and, if required, any other relevant materials are being mailed to the Limited Partners to the extent their names and addresses are on such list. -5- SECTION 2. ACCEPTANCE FOR PAYMENT AND PAYMENT FOR UNITS. Upon the terms and subject to the conditions of the Offer, the Purchaser will purchase by accepting for payment and will pay for Units validly tendered and not withdrawn in accordance with the procedures specified in Section 4 ("Withdrawal Rights"), as promptly as practicable following the Expiration Date (such date of payment referred to herein as the "Payment Date"). A tendering beneficial owner of Units whose Units are owned of record by an Individual Retirement Account or other qualified plan will not receive direct payment of the Purchase Price; rather, payment will be made to the custodian of such account or plan. In all cases, payment for Units purchased pursuant to the Offer will be made only after timely receipt by the Depositary of a properly completed and duly executed Assignment of Partnership Interest (or facsimile thereof) (with required medallion signature guarantees, unless waived by the Purchaser in its sole and absolute discretion) and any other documents required by the Assignment of Partnership Interest. See Section 3 ("Procedure for Tendering Units"). UNDER NO CIRCUMSTANCES WILL INTEREST BE PAID ON THE PURCHASE PRICE BY REASON OF ANY DELAY IN MAKING SUCH PAYMENT. For purposes of the Offer, the Purchaser will be deemed to have accepted for payment pursuant to the Offer, and thereby purchased, validly tendered Units, if, as and when the Purchaser gives verbal or written notice to the Depositary of the Purchaser's acceptance of those Units for payment pursuant to the Offer. No tender of Units will be deemed to have been validly made until all defects and irregularities with respect to such tender have been cured or waived. If any tendered Units are not purchased for any reason, the Assignment of Partnership Interest shall be effective to transfer to the Purchaser only that number of the Limited Partner's Units as is accepted for payment and thereby purchased 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 ("Conditions of the Offer"), the Depositary may, nevertheless, on behalf of the Purchaser retain tendered Units, and those Units may not be withdrawn except to the extent that the tendering Limited Partners are entitled to withdrawal rights as described in Section 4 ("Withdrawal Rights"); subject, however, to the Purchaser's obligation under Rule 14e-1(c) under the Exchange Act to pay Limited Partners the Purchase Price in respect of Units tendered or return those Units promptly after termination or withdrawal of the Offer. The Purchaser reserves the right to transfer or assign, in whole or from time to time in part, to one or more persons, the right to purchase Units tendered pursuant to the Offer, but any such transfer or assignment will not relieve the Purchaser of its obligations under the Offer or prejudice the rights of tendering Limited Partners to receive payment for Units validly tendered and accepted for payment pursuant to the Offer. SECTION 3. PROCEDURE FOR TENDERING UNITS. Valid Tender. To validly tender Units, a properly completed and duly executed Assignment of Partnership Interest (or facsimile thereof) and any other documents required by the Assignment of Partnership Interest must be received by the Depositary at its address set forth on the back cover of the Offer to Purchase, on or prior to the Expiration Date. Subject to the Minimum Units Requirements, a Limited Partner may tender any or all of the Units owned by that Limited Partner. No alternative, conditional or contingent tenders will be accepted. Signature Requirements. The signature(s) on the Assignment of Partnership Interest must be medallion guaranteed by a commercial bank, savings bank, credit union, savings and loan association or trust company having an office, branch or agency in the United States, a brokerage firm that is a member firm of a registered national securities exchange or a member of the National Association of Securities Dealers, Inc., as provided in the Assignment of Partnership Interest. See Instructions to the Assignment of Partnership Interest. -6- In order for a tendering Limited Partner to participate in the Offer, his Units must be validly tendered and not withdrawn on or prior to the Expiration Date. THE METHOD OF DELIVERY OF THE ASSIGNMENT OF PARTNERSHIP INTEREST AND ALL OTHER REQUIRED DOCUMENTS IS AT THE OPTION AND RISK OF THE TENDERING LIMITED PARTNER AND DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE TIMELY DELIVERY. Appointment As Proxy. By executing an Assignment of Partnership Interest, a tendering Limited Partner appoints the Purchaser, its general partner and any designees of the Purchaser as the Limited Partner's true and lawful agents and attorneys-in-fact and proxies, in the manner set forth in the Assignment of Partnership Interest, each with full power of substitution, to the full extent of the Limited Partners's rights with respect to the Units tendered by the Limited Partner and accepted for payment by the Purchaser. The Purchaser, its general partner and the designees of the Purchaser will, as to those Units, be empowered to exercise all voting and other rights with respect to such Units, including, without limitation, to assign such power of proxy and/or power-of- attorney to any person without assigning the related Units with respect to which the such proxy and power-of-attorney was granted, to deliver such Units and transfer ownership of such Units on the Partnership books maintained by the general partners of the Partnership, to become a substituted limited partner and to receive all benefits and otherwise exercise all rights of beneficial ownership of such Units and as a limited partner of the Partnership, all in accordance with the terms of the Offer. Each such power of attorney and proxy shall be considered coupled with an interest in the tendered Units. Such appointment is subject to and effective upon acceptance for payment of the Units tendered by the Limited Partner. Upon such acceptance for payment, all prior proxies given by the Limited Partner with respect to the Units will, without further action, be revoked, and no subsequent proxies may be given (and if given will not be effective). 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 the Units, the Purchaser must be able to exercise full voting rights with respect to the Units, including voting at any meeting of Limited Partners then scheduled or acting by written consent without a meeting. By executing the Assignment of Partnership Interest, a tendering holder of Units agrees to execute all such documents and take such other actions as shall be reasonably required to enable the Units tendered to be voted in accordance with the directions of the Purchaser. Assignment Of Interest In Future Distributions. By executing an Assignment of Partnership Interest, a tendering Limited Partner irrevocably assigns to the Purchaser and its assigns all of the right, title and interest of the Limited Partner in and to any and all distributions made by the Partnership from and after the Payment Date in respect of the Units tendered by the Limited Partner and accepted for payment and thereby purchased by the Purchaser. 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 Offer will be determined by the Purchaser, in its sole discretion, which determination shall be final and binding on all parties. The Purchaser reserves the absolute right to reject any or all tenders of any particular Units determined by it not to be in proper form or if the acceptance of or payment for those Units may, in the opinion of the Purchaser's counsel, be unlawful. The Purchaser also reserves the absolute right to waive or amend any of the conditions of the Offer that it is legally permitted to waive as to the tender of any particular Units and to waive any defect or irregularity in any tender with respect to any particular Units of any particular Limited Partner. The Purchaser's interpretation of the terms and conditions of the Offer (including the Assignment of Partnership Interest) will be final and binding on all parties. No tender of Units will be deemed to have been validly made unless and until all defects and irregularities have been cured or waived. Neither the Purchaser, the Depositary 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. -7- Backup Federal Income Tax Withholding. To prevent the possible application of backup federal income tax withholding of 31% with respect to payment of the Purchase Price, a tendering Limited Partner must provide the Purchaser with the Limited Partner's correct taxpayer identification number by completing the Substitute Form W-9 included in the Assignment of Partnership Interest. See Section 6 ("Certain Federal Income Tax Matters") and the Instructions to the Assignment of Partnership Interest. 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 tendering Limited Partner must complete the FIRPTA Affidavit included in the Assignment of Partnership Interest certifying the Limited Partner's taxpayer identification number and address and that the Limited Partner is not a foreign person. See Section 6 ("Certain Federal Income Tax Matters") and the Instructions to the Assignment of Partnership Interest. Assignee Status. Any assignee of Units who has not been admitted to the Partnership as a substitute Limited Partner must provide documentation to the Depositary which demonstrates, to the satisfaction of the Purchaser, such person's status as an assignee of a Unit. A tender of Units pursuant to any of the procedures described above and the acceptance for payment of such Units will constitute a binding agreement between the tendering Limited Partner and the Purchaser on the terms set forth in the Offer. SECTION 4. WITHDRAWAL RIGHTS. Tenders of Units pursuant to the Offer are irrevocable, except 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 the Offer to Purchase, may also be withdrawn at any time after May 11, 1998. For a withdrawal to be effective, a written or facsimile transmission notice of withdrawal must be timely received by the Depositary at its address set forth on the back cover of the Offer to Purchase. Any such notice of withdrawal must specify the name of the person who tendered, the number of Units to be withdrawn and the name in which the Units are registered, if different from the person who tendered. In addition, the notice of withdrawal must be signed by the person(s) who signed the Assignment of Partnership Interest in the same manner as the Assignment of Partnership Interest was signed (including medallion signature guaranties). 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 Depositary and may not be withdrawn, except to the extent that tendering Limited Partners are entitled to withdrawal rights as set forth in this Section 4; subject, however, to the Purchaser's obligation, pursuant to Rule 14e-1(c) under the Exchange Act, to pay Limited Partners the Purchase Price in respect of Units tendered or return those 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 the procedures described in Section 3 ("Procedure for Tendering Units") at any time prior to the Expiration Date. All questions as to the validity and form (including time of receipt) of notices of withdrawal will be determined by the Purchaser, in its sole discretion, which determination shall be final and binding on all parties. Neither the Purchaser, the Depositary nor any other person will be under any duty to give notification of any defects or irregularities in any notice of withdrawal or incur any liability for failure to give any such notification. -8- 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 theretofore accepted for payment or paid for, (iii) upon the occurrence of any of the conditions specified in Section 14 ("Conditions of the Offer"), 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 or decreasing the consideration offered, the number of Units being sought, or both). Notice of any such extension, termination or amendment will promptly be disseminated to Limited Partners in a manner reasonably designed to inform Limited Partners of such change in compliance with Rule 14d-4(c) under the Exchange Act. In the case of an extension of the Offer, the 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 Depositary may retain tendered Units and those Units may not be withdrawn except to the extent tendering Limited Partners are entitled to withdrawal rights as described in Section 4 ("Withdrawal Rights"); subject, however, to the Purchaser's obligation, pursuant to Rule 14e-1(c) under the Exchange Act, to pay Limited Partners the Purchase Price in respect of Units tendered or return those Units promptly after termination or withdrawal of the Offer. If the Purchaser makes a material change in the terms of the Offer, or if it waives a material condition to the Offer, the Purchaser will extend the Offer and disseminate additional tender offer materials to the extent required by Rules 14d-4(c) and 14d-6(d) under the Exchange Act. The minimum period during which an offer must remain open following any material change in the terms of an offer, other than a change in price or a change in percentage of securities sought or a change in any dealer's soliciting fee, will depend upon the facts and circumstances, including the materiality of the change. With respect to a change in price or, subject to certain limitations, a change in the percentage of securities sought or a change in any dealer's soliciting fee, a minimum of ten business days from the date of such change is generally required to allow for adequate dissemination to holders of Units. Accordingly, if prior to the Expiration Date, the Purchaser increases (other than increases of two percent or less than the outstanding Units) or decreases the number of Units being sought, or increases or decreases the consideration offered pursuant to an Offer, and if such Offer is scheduled to expire at any time earlier than the tenth business day from the date that notice of such increase or decrease is first published, sent or given to holders of Units, such Offer will be extended at least until the expiration of such ten business days. As used in the 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 MATTERS. The following summary is a general discussion of certain of the 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, all 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 Limited Partner in light of such Limited Partner's specific circumstances or to certain types of Limited Partners 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 (except as otherwise expressly indicated) does it describe 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 also may be taxable transactions under applicable state, local, foreign and other tax laws. -9- LIMITED PARTNERS SHOULD CONSULT THEIR RESPECTIVE TAX ADVISORS AS TO THE PARTICULAR TAX CONSEQUENCES TO EACH SUCH LIMITED PARTNER OF SELLING UNITS PURSUANT TO THE OFFER. In general, a Limited Partner will recognize gain or loss on a sale of Units pursuant to the Offer equal to the difference between (i) the Limited Partner's "amount realized" on the sale and (ii) the Limited Partner's adjusted tax basis in the Units sold. The amount of a Limited Partner's adjusted tax basis in such Units will vary depending upon the Limited Partner's particular circumstances. The "amount realized" with respect to a Unit will be a sum equal to the amount of cash received by the Limited Partner for the Unit pursuant to the Offer (that is, the Purchase Price) plus the amount of the Partnership's liabilities allocable to the Unit (as determined under Code Section 752). The gain or loss recognized by a Limited Partner on a sale of a Unit pursuant to the Offer generally will be treated as a capital gain or loss if (as is generally expected to be the case) the Unit was held by the Limited Partner as a capital asset. That capital gain or loss will be treated as long-term capital gain or loss if the tendering Limited Partner's holding period for the Units exceeds 18 months. If the tendering Limited Partner's holding period for the Units exceeds one year but not more than 18 months, the capital gain or loss will be treated as mid-term capital gain or loss. Under current law, long-term and mid-term capital gains of individuals and other non-corporate taxpayers are taxed at marginal federal income tax rates of 20% and 28%, respectively, whereas the maximum marginal federal income tax rate for ordinary 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 corporation's carry forward period is five years and a non- corporate taxpayer can carry forward such losses indefinitely); in addition, a corporation is permitted to carry back excess capital losses to the three preceding taxable years, provided the carryback does not increase or produce a net operating loss for any of those years. If any portion of the amount realized by a Limited Partner is attributable to "unrealized receivables" (which includes depreciation recapture) or "inventory" as defined in Code Section 751, then a portion of the Limited Partner's gain or loss may be ordinary rather than capital. A tendering Limited Partner 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 concerning transfers of Units. Such allocation and any cash distributed by the Partnership to the Limited Partner for that year will affect the Limited Partner's adjusted tax basis in Units and, therefore, the amount of such Limited Partner's taxable gain or loss upon a sale of Units pursuant to the Offer. Under Code Section 469, a non-corporate taxpayer or personal service corporation generally can deduct "passive activity losses" in any year only to the extent of the person's passive activity income for that year. Closely held corporations may not offset such losses against so-called "portfolio" income. Substantially all post-1986 losses of Limited Partners from the Partnership are passive activity losses. Limited Partners may have "suspended" passive activity losses from the Partnership (i.e., post-1986 net taxable losses in excess of statutorily permitted "phase-in" amounts and which have not been used to offset income from other passive activities). If a Limited Partner sells less than all of his Units pursuant to the Offer, a loss recognized by that Limited Partner can be currently deducted (subject to other applicable limitations) to the extent of the Limited Partner's passive income from the Partnership for that year plus any other passive activity income for that year, and a gain recognized by a Limited Partner upon the sale of Units can be offset by the Limited Partner's current or "suspended" passive activity losses (if any) from the Partnership and other sources. If, on the other hand, a Limited Partner sells 100% of his Units pursuant to the Offer, any "suspended" losses and any losses recognized upon the sale of the Units will be offset first against any other net passive gain to the Limited Partner from the sale of the Units and any other net passive activity income from other passive activity investments, and the -10- balance of any "suspended" net losses from the Units will no longer be subject to the passive activity loss limitation and, therefore, will be deductible by such Limited Partner from his other income (subject to any other applicable limitations). A tendering Limited Partner must sell all of his Units to receive these tax benefits. Because the Offer is being made for less than all of the outstanding Units, there can be no assurance that a Limited Partner which tenders all of his Units will in fact sell all of his Units pursuant to the Offer. Limited Partners (other than tax-exempt persons, corporations and certain foreign persons) who tender Units may be subject to 31% backup withholding unless those Limited Partners provide a taxpayer identification number ("TIN") and certify that the TIN is correct or properly certify that they are awaiting a TIN. A Limited Partner may avoid backup withholding by properly completing and signing the Substitute Form W-9 included as part of the Assignment of Partnership Interest. If a Limited Partner 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 Limited Partner. A Limited Partner who tenders Units must file an information statement with his federal income tax return for the year of the sale which provides the information specified in Treasury Regulation Section 1.751-1(a)(3). The selling Limited Partner also must notify the Partnership of the date of the transfer and the names, addresses and TINs of the transferor and transferee within 30 days of the date of the transfer (or, if earlier, by January 15 of the following calendar year). Gain realized by a foreign Limited Partner on the sale of a Unit pursuant to the Offer will be subject to federal income tax. Under Code Section 1445, the transferee of an interest held by a foreign person in a partnership which owns United States real property generally is required to deduct and withhold a tax equal to 10% of the amount realized on the disposition. In order to comply with this requirement, the Purchaser will withhold 10% of the amount realized by a tendering Limited Partner unless the Limited Partner properly completes and signs the FIRPTA Affidavit included as part of the Assignment of Partnership Interest certifying the Limited Partner's TIN, that such Limited Partner is not a foreign person and the Limited Partner's address. Amounts withheld would be creditable against a foreign Limited Partner'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. Effect On Trading Market; Registration Under Section 12(g) Of The Exchange Act. If a substantial number of Units are purchased pursuant to the Offer, the likely result will be a reduction in the number of Limited Partners. In the case of certain kinds of securities, a reduction in the number of security-holders might be expected to result in a reduction in the liquidity and volume of activity in the trading market for the security. In this case, however, there is no established public trading market for the Units and, therefore, the Purchaser does not believe a reduction in the number of Limited Partners will materially further restrict the Limited Partners' ability to find purchasers for their Units. The Units are registered under Section 12(g) of the Exchange Act, which means, among other things, that the Partnership is required to file periodic reports with the Commission and to comply with the Commission's proxy rules. The Purchaser does not expect or intend that consummation of the Offer will cause the Units to cease to be registered under Section 12(g) of the Exchange Act. If the Units were to be held by fewer than 300 persons, the Partnership could apply to de-register the Units under the Exchange Act. Because the Units are widely held, however, the Purchaser expects that, even if it purchases the maximum number of Units in the Offer, after that purchase, the Units will be held of record by substantially more than 300 persons. As a result of the Offer and in the Purchaser's capacity as a Limited Partner of the Partnership, the Purchaser will participate in any subsequent distributions to Limited Partners to the extent of the Units purchased pursuant to the Offer. -11- Certain Restrictions On Transfer Of Units. The Partnership Agreement restricts transfers of Units if, among other things, such transfer would cause a termination of the Partnership for federal income tax purposes (which termination would occur when Units representing 50% or more of total Partnership capital and profits are transferred within a twelve-month period). Consequently, sales of Units in the secondary market and in private transactions during the twelve-month period following completion of the Offer may be restricted, and requests for transfers of Units during such twelve-month period may not be recognized. The Purchaser does not intend to purchase Units to the extent such purchase would violate the transfer restrictions set forth in the Partnership Agreement. See Section 6 ("Certain Federal Income Tax Matters"). SECTION 8. FUTURE PLANS OF THE PURCHASER. The purpose of the Offer is to enable the Purchaser to acquire a significant interest in the Partnership for investment purposes based on its expectation that there may be underlying value in the Partnership's properties. The Purchaser does not presently intend to make any effort to change current management or the operation of the Partnership and has no present plans or intentions for any extraordinary transaction involving the Partnership. Furthermore, the Purchaser and its affiliates have agreed with Presidio that, prior to the Standstill Expiration Date, they will not, among other things, seek the removal of the general partners, seek to control the management, policies or affairs of the Partnership, or seek to effect any form of business combination or other extraordinary transaction with the Partnership or its general partners. The Purchaser and its affiliates have also agreed, prior to the Standstill Expiration Date, to vote their Units in favor of a proposal, if any, by the Partnership's general partners that would result in Limited Partners receiving securities that are listed on NASDAQ or a national securities exchange. See Section 12 ("Background of the Offer"). However, the Purchaser's plans with respect to its investment in the Units could change after the Standstill Expiration Date. If such plans with respect to the Partnership change in the future, the ability of the Purchaser to influence actions on which Limited Partners have the right to vote will depend on the response of Limited Partners to the Offer. If the Purchaser acquires only a few Units pursuant to the Offer, the Purchaser would not be in a position to influence matters over which Limited Partners have a right to vote. Conversely, if the maximum number of Units sought are purchased pursuant to the Offer, the Purchaser would own approximately 40% of the issued and outstanding Units (or 20% of the issued and outstanding Units if the call option granted under the Agreement is exercised) and, as a result, would be in a position, after the Standstill Expiration Date, to exert significant influence over matters on which Limited Partners have a right to vote. Under the Partnership Agreement, Limited Partners holding a majority of the Units are entitled to remove the Partnership's general partners at any time. However, as stated above, the Purchaser has no present intention of doing so and is prohibited from doing so under the Agreement prior to the Standstill Expiration Date. In addition, Limited Partners holding a majority of the Units, with the concurrence of the Partnership's general partner, are entitled to take action with respect to a variety of matters, including dissolution of the Partnership and most types of amendments to the Partnership Agreement, but the Purchaser has no present intention of doing so. The purchase of the Units will allow the Purchaser to benefit from any of the following: (a) any cash distributions from Partnership operations in the ordinary course of business; (b) any distributions of net proceeds from the sale of Partnership properties; and (c) any distributions of net proceeds from the liquidation of the Partnership. Following the completion of the Offer (but subject to the terms of the Agreement), the Purchaser and/or persons related to or affiliated with it may acquire additional Units or may sell Units. Any acquisition may be made through private purchases, through one or more future tender or exchange offers or by any other means deemed advisable. Any acquisition may be at a price higher or lower than the price to be paid for the Units purchased pursuant to the Offer, and may be for cash or other consideration. The Purchaser also may in the future (subject to the terms of the Agreement) consider selling some or all of the Units it acquires pursuant to the Offer to persons not yet determined. Under the Agreement, Presidio has the right to purchase 50% of the Units acquired by the Purchaser in the Offer and the Units are subject to a buy/sell agreement with Presidio. See Section 12 ("Background of the Offer"). -12- Except as set forth herein, the Purchaser does not have any present plans or proposals which relate to or would result in an extraordinary transaction, such as a merger, reorganization or liquidation, involving the Partnership; a sale or transfer of a material amount of the Partnership's assets; any changes in composition of the Partnership's senior management or personnel or their compensation; any changes in the Partnership's present capitalization or dividend policy; or any other material changes in the Partnership's structure or business. SECTION 9. CERTAIN INFORMATION CONCERNING THE PARTNERSHIP. Information contained in this Section 9 concerning the Partnership is derived from the Partnership's publicly-filed documents and reports. Although the Purchaser has no information that any statement contained in this Section 9 is untrue, the Purchaser cannot take responsibility for the accuracy or completeness of any information contained in this Section 9 or any failure by the Partnership to disclose events which may have occurred and may effect the significance or accuracy of any such information but which are unknown to the Purchaser. The Partnership's Assets and Business. The Partnership is a limited partnership formed in 1983 under the laws of the State of California. Its principal executive offices are located at 411 West Putnam Avenue, Greenwich, CT 06830. Its telephone number is (203) 862-7000. The Partnership is engaged in the business of operating and holding for investment previously acquired income-producing properties, consisting of office buildings, shopping centers and other commercial and industrial properties. As of March 15, 1997, the Partnership held interests in six properties containing an aggregate of 1,012,333 square feet of leasable area. The following table sets forth certain information regarding the Partnership's properties as of March 15, 1997. More comprehensive information concerning such properties is included in the Partnership's Form 10-K for the year ended December 31, 1996. -13-
Current Leasable Occupancy as of Property Name Location Square Footage January 1. - ------------------------------ ------------------- ---------------- ---------------- 1997 1998 ------- ----- Westbrook Mall Shopping Center Brooklyn Center, MN 79,242 21%(1) 83% Southport Shopping Center Fort Lauderdale, FL 143,089 95% 96% Loch Raven Plaza Towson, MD 150,000 91% 88% Century Park I(2) Kearny Mesa, CA 200,002 74%(3) 74% 568 Broadway(4) New York, NY 299,000 100% 95% Seattle Tower(5) Seattle, WA 141,000 96% 92%
- --------------- (1) Westbrook was 77% leased as of January 1, 1997. Occupancy, however, was only 21% as of January 1, 1997. (2) Century Park I is owned by a joint venture comprised of the Partnership and High Equity Partners L.P. - Series 86 ("HEP-86"), an affiliated public limited partnership. The Partnership and HEP-86 each have a 50% interest in the joint venture. (3) The leasing of 14,705 rentable square feet to HealthSouth/IMC Healthcare Centers in January 1997 increased the occupancy rate to 81%. (4) 568 Broadway is owned by a joint venture comprised of the Partnership, HEP-86 and High Equity Partners L.P. - Series 88 ("HEP-88"), both of which are affiliated public limited partnerships. The Partnership and HEP-86 each have a 38.925% interest and HEP-88 has a 22.15% interest in the joint venture. (5) Seattle Tower is owned by a joint venture comprised of the Partnership and HEP-86. The Partnership and HEP-86 each have a 50% interest in the joint venture. -14- Selected Financial Data. Set forth below is a summary of certain financial data for the Partnership which has been excerpted from the Partnership's Form 10-K for the year ended December 31, 1996 and Forms 10-Q for the nine month periods ended September 30, 1997 and September 30, 1996 respectively. More comprehensive financial and other information is included in such reports and other documents filed by the Partnership with the Commission, and the following summary is qualified in its entirety by reference to such reports and other documents and all the financial information and related notes contained therein. Statement of Operations For the Nine Months Ended September 30, 1997 1997 ---------- ---------- Rental Revenue.......................... $6,926,885 $6,721,339 ---------- ---------- Costs and Expenses: Operating expenses................... 2,629,694 2,537,699 Depreciation and amortization........ 969,805 958,096 Partnership management fee........... 681,129 681,131 Administrative expenses.............. 532,387 375,995 Property management fee.............. 204,378 200,473 ---------- ---------- 5,017,393 $4,753,394 ---------- ---------- Income before interest and other income 1,909,492 1,967,945 Interest income...................... 146,628 92,834 Other income......................... 69,660 52,464 ---------- ---------- Net income.............................. $2,125,780 $2,113,243 ========== ========== Net income Attributable to: Limited partners..................... $2,019,491 $2,007,581 General partners..................... 106,289 105,662 ---------- ---------- Net income.............................. $2,125,780 2,113,243 ========== ========== Net income per unit of limited Partnership interest (400,010 units outstanding)......................... $5.05 $5.02 ========== ========== -15- Summary Selected Financial Data
For the Year Ended December 31, 1966 1995 1994 1993 1992 ----------- ------------ ---------- ------------ ----------- Revenue $ 8,888,016 $ 7,877,644 $7,994,126 $ 9,508,298 $ 9,015,258 Net Income (Loss) $ 2,134,717 $(18,624,934)(5) $1,442,884(3) $ (7,160,418)(2)$ (11,975,981)(1) Net Income (Loss) Per Unit $5.07 $ (44.23)(5) 3.43(3) $ (17.01)(2) $ (20.44)(1) Distributions Per Unit (6) $2.40 $2.40 14.39(4) $ 6.25 8.60 Total Assets (7) $39,290,185 $ 37,309,597 856,742,905 863,040,600 $ 73,075,021
- ---------------------- (1) Net loss for the year ended December 31, 1992 includes a write-down for impairment on Century Park I, Seattle Tower and 568 Broadway of $14,60,1450, or $34.68 per Unit. (2) Net loss for the year ended December 31, 1993 includes a write-down for impairment on Southern National, Century Park I and 568 Broadway in the aggregate amount of $10,050,650, or $23.97 per Unit. (3) Net income for the year ended December 31, 1994 includes a write-down for impairment on Southern National of $181,000, or $0.43 per Unit. (4) Distributions for the year ended December 31, 1994 include a $9.45 per Unit distribution from the proceeds of the sale of Southern National. (5) Net loss for the year ended December 31, 1995 including a write-down for impairment on Century Park I, Seattle Tower, 568 Broadway, Loch Raven, Southport and Westbrook in the aggregate amount of $20,469,050, or $48.01 per Unit. (6) All distributions are in excess of accumulated undistributed net income and, therefore represent a return of capital to investors on a generally accepted accounting principles basis. Distributions per Unit for the nine months ended September 30, 1997 were $2.63. (7) Total assets as of September 30, 1997 were $40,046,484. -16- SECTION 10. INFORMATION CONCERNING THE PURCHASER AND CERTAIN AFFILIATES OF THE PURCHASER. The Purchaser is a Delaware limited partnership, the general partner of which is Olympia-GP, Inc. (the "Olympia General Partner"), a Delaware corporation which is wholly-owned by American Real Estate Holdings, L.P., a Delaware limited partnership ("AREH"), and the sole limited partner of which is AREH. The general partner of AREH is American Property Investors, Inc. ("API"), a Delaware corporation which is wholly-owned by Carl C. Icahn, and the sole limited partner of AREH is American Real Estate Partners, L.P., a Delaware limited partnership ("AREP"). The address of the principal office of each of the Purchaser, the Olympia General Partner, AREH and API is 100 South Bedford Road, Mount Kisco, New York 10549. Mr. Icahn's business address is c/o Icahn Associates Corp., 767 Fifth Avenue, 47th Floor, New York, New York, 10153. The Purchaser and the Olympia General Partner were formed in February, 1998 for the purpose of acquiring Units in the Partnership and in the Related Partnerships. See Section 12 ("Background of the Offer"). AREH is primarily engaged in the business of acquiring and managing real estate and activities related thereto. API is engaged in the business of acting as general partner of AREH and of AREP. Mr. Icahn's present principal occupation or employment is set forth on Schedule I attached hereto and is incorporated herein by reference. Also set forth on Schedule I and incorporated herein by reference are Mr. Icahn's material occupations, positions, offices or employments during the past five years, including the principal business and address of any business, corporation or other organization in which such occupation, position, office or employment was carried on. The name, position, citizenship, business address, present principal occupation or employment, material occupations, positions, offices or employments during the past five years and the principal business address of any business corporation or other organization in which such occupation, position, office or employment was carried on, of each executive officer and director of the Olympia General Partner and API are set forth on Schedule I attached hereto and are incorporated herein by reference. Neither the Purchaser, the Olympia General Partner, AREH, API, Mr. Icahn, nor any executive officer or director of any of the foregoing, has been, during the past five years, (a) convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or (b) a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting activities subject to, federal or state securities laws or a finding of any violation of such laws. Except as set forth in this Offer to Purchase, (i) neither the Purchaser, the Olympia General Partner, AREH, API, Mr. Icahn nor, to the best of the Purchaser's knowledge, any of the persons listed on Schedule I, nor any affiliate of the foregoing beneficially owns or has a right to acquire any Units, (ii) neither the Purchaser, the Olympia General Partner, AREH, API, Mr. Icahn nor, to the best of the Purchaser's knowledge, any of the persons listed on Schedule I, nor any affiliate of the foregoing has effected any transaction in the Units within the past 60 days, (iii) neither the Purchaser, the Olympia General Partner, AREH, API, Mr. Icahn nor, to the best of the Purchaser's knowledge, any of the persons listed on Schedule I nor any affiliate of the foregoing has any contract, arrangement, understanding or relationship with any other person with respect to any securities of the Partnership, including, but not limited to, contracts, arrangements, understandings or relationships concerning the transfer or voting thereof, joint ventures, loan or option arrangements, puts or calls, guarantees of loans, guarantees against loss or the giving or withholding of proxies, (iv) there have been no transactions or business relationships which would be required to be disclosed under the rules and regulations of the Commission between any of the Purchaser, the Olympia General Partner, AREH, API, Mr. Icahn or, to the best of the Purchaser's knowledge, any of the persons listed on Schedule I, 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, the Olympia General partner, AREH, API, Mr. Icahn or, to the best of the Purchaser's knowledge, any of the persons listed -17- on Schedule I, 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. AREH owns two parcels of land in Northridge, California and San Diego, California, respectively, which it leases to affiliates of the general partners of the Partnership. Improvements on these properties are owned by such affiliates and leased by them to third parties. AREH also owns a one-half interest in three joint ventures owning certain properties in which one of the Related Partnerships owns the other one-half interest. Longacre Corp., a Delaware corporation ("Longacre"), an affiliate of the Purchaser, owns an aggregate of 1,657 Units, which represents less than 1% of the number of Units outstanding, as reported in the Partnership's Form 10-Q for the quarterly period ended September 30, 1997. Such Units are indirectly beneficially owned by Mr. Icahn. These Units were acquired in auction transactions through the American Partnership Board more than 60 days prior to the date of the Offer. SECTION 11. SOURCE OF FUNDS. The Purchaser expects that approximately $15,200,000 (exclusive of fees and expenses) will be required to purchase 160,000 Units, if tendered. The Purchaser will obtain all of such funds from capital contributions from AREH, which has an aggregate net worth substantially in excess of the amount required to purchase such Units. AREH will obtain the funds necessary to make such capital contributions from its working capital. SECTION 12. BACKGROUND OF THE OFFER. On September 11, 1997, Longacre sent letters to the general partners of the Partnership and the Related Partnerships requesting lists of limited partners of the Partnership and the Related Partnerships for the purpose of enabling an affiliate to make a tender offer for Units. Longacre sent a second letter requesting limited partner lists to the general partners of the Partnership and the Related Partnerships on February 13, 1998. The requested lists were furnished to the Purchaser under the Agreement discussed below on or about March 9, 1998. In late October or early November 1997, a representative of AREH contacted the managing partner of Northstar Capital Partners ("Northstar"), which indirectly controls Presidio and the general partners of the Partnership and the Related Partnerships, to discuss the possibility of conducting a joint tender offer for Units of the Partnership and the Related Partnerships. Representatives of AREH met with the managing partner of Northstar on November 3, 1997, but they were unable to reach agreement on the terms on which a joint tender might be conducted. Following the November 3 meeting, representatives of AREH, Northstar and Presidio continued to discuss a possible joint tender offer in several telephone conversations. Between approximately December 17, 1997 and March 5, 1998, representatives of AREH, Northstar and Presidio and their counsel attended meetings and/or participated in telephone conversations in which they negotiated the terms of the Agreement, a copy of which has been filed as Exhibit (c)(1) to the Purchaser's Tender Offer Statement on Schedule 14D-1 filed with the Commission on March 12, 1998. The Agreement provides, among other things, for: (i) the Purchaser's conduct of tender offers for up to 40% of the outstanding Units of the Partnership and the Related Partnerships, and the cooperation of the general partners of the Partnership and Related Partnerships to facilitate such offers (including furnishing the Purchaser with limited partner lists for use in connection with the Offers and taking a neutral stance with respect thereto) and the transfer of tendered Units to the Purchaser without the imposition of transfer fees; (ii) an agreement by the Purchaser and its affiliates to limit their acquisition of Units in the Partnership and the Related Partnerships to Units acquired in the Offers and to limit their acquisition of assets or properties of the Partnership or the Related Partnerships to properties or assets which the general partners or their affiliates have publicly announced their intention to sell or have hired a broker for such purpose; (iii) an agreement by the Purchaser and its affiliates not to: seek the removal of the general partners or call any meeting of limited partners of the Partnership or the Related Partnerships; make any -18- proposal to or seek proxies from limited partners of the Partnership or the Related Partnerships; or act, either alone on in concert with others, to seek to control the management, policies or affairs of the Partnership or any Related Partnership or to effect any business combination or other extraordinary transaction with the Partnership or its general partners; (iv) an agreement by the Purchaser and its affiliates to vote Units owned by them in favor of a proposal, if any, by the general partners of the Partnership or the Related Partnerships resulting in limited partners receiving securities that are listed on NASDAQ or a national securities exchange; (v) the Purchaser's grant to Presidio of a call option to purchase 50% of the Units in the Partnership acquired in the Offer at a price equal to the lesser of the price paid by the Purchaser or $110.68 per Unit (except that the limitation of the call price to $110.68 per Unit will not apply if the Purchase Price is increased to more than that amount in response to a competing bid), plus 50% of the Purchaser's costs associated with the Offer; (vi) the grant to Presidio of a similar call option to purchase 50% of the Units in the Related Partnerships acquired pursuant to the Offers; (vii) a buy/sell agreement, pursuant to which either party can initiate buy/sell procedures by notifying the other of a specified price per Unit (not to exceed the then current net asset value of the Units) and the other terms and conditions on which the non-initiating party would then be required to elect (subject to certain exceptions) either to buy certain Units from the initiating party or to sell certain Units to the initiating party (such Units consisting, in the case of the Purchaser, of all Units owned by the Purchaser and its affiliates and, in the case of Northstar, of all Units purchased by Northstar upon exercise of the call option described above). The agreements of the Purchaser and its affiliates described in clauses (ii), (iii) and (iv) above expire on March 6, 2001 (the "Standstill Expiration Date"), but may expire earlier under certain circumstances. In connection with the negotiation of the Agreement, Northstar and Presidio furnished the Purchaser with appraisals of each of the properties of the Partnership and the Related Partnerships prepared by an independent appraisal firm (the "Appraiser") in August and September 1997 (collectively, the "Appraisal Information"). For a more complete discussion of the Appraisal Information, see Section 13 ("Purchase Price Considerations"). SECTION 13. PURCHASE PRICE CONSIDERATIONS. The Purchaser has set the Purchase Price at $95.00 net per Unit (subject to adjustment as set forth in this Offer to Purchase). The Purchaser established the Purchase Price by analyzing a number of quantitative and qualitative factors including: (i) the absence of a significant number of recent reported resales of the Units; (ii) the lack of liquidity of an investment in the Partnership; (iii) the costs to the Purchaser associated with acquiring the Units; (iv) the administrative costs of continuing to own the Partnership's assets through a publicly registered limited partnership; (v) the possibility that Limited Partners may realize taxable income in excess of tax distributions from the Partnership in future years; (vi) the inability of Limited Partners to exercise effective control over the management of the Partnership through the annual election of the General Partners; and (vii) estimated transaction costs of completing the Offer. 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. Limited Partners are urged to consider carefully all of the information contained herein and consult with their own advisors, tax, financial or otherwise, in evaluating the terms of the Offer before deciding whether to tender Units. The Units are not listed or traded on any exchange or quoted on any NASDAQ list or system. At present, privately negotiated sales and sales through intermediaries (e.g., through the trading system operated by The American Partnership Board, which publishes sales by holders of Units) are the principal means available to a Limited Partner to liquidate an investment in Units (other than the Offer). According to The Partnership Spectrum, an independent third-party industry publication, for the six months ended January 31, 1998, a total of 5,262 Units traded at per Unit prices between $58.00 and $89.00 with a weighted average of $71.28 per Unit. Set forth below is a schedule of the trading activity of Units during the six-months ended January 31, 1998, in two-month intervals, as reported by The Partnership Spectrum: -19- Trading Activity for Six-Month Period Ended January 31, 1998
Period Low/High No. of Units Total Volume ------ -------- ------------ ------------ Traded ------------ August 1, 1997 - Sept. 30, 1997 $58.00/$83.00 1,983 134,427.57 October 1, 1997 - November 30, 1997 $58.00/$81.11 1,201 79,628.80 December 1, 1997 - January 1, 1998 $58.00/$89.00 2,078 161,036.00 ------------- ----- ----------- TOTALS: $58.00/$89.00 5,262 $375,092.37 ============= ===== ===========
Limited Partners are advised, however, that such gross sales prices reported by The Partnership Spectrum do not necessarily reflect the net sales proceeds received by sellers of Units, which typically are reduced by commissions and other transaction costs to amounts less than the reported prices. The Purchaser has been informed that, in a letter dated February 3, 1997, the general partners advised Limited Partners that they estimated net asset value per Unit to be $89.37. The Purchaser is not aware of a more recent estimate of net asset value by the general partners. Furthermore, the general partners have not disclosed the formula used, the assumptions made, or the underlying valuations relied upon in deriving this estimated net asset value of each Unit. Different formulas, assumptions, or underlying valuations may result in higher or lower estimates of net asset value. The Purchaser has also estimated net asset value per unit, as described below. However, the Purchaser believes that net asset value is not necessarily representative of the value of the Units if the Partnership ultimately liquidates its properties. Property selling costs and expenses (e.g., brokers' commissions, attorneys' fees, escrow fees, title company costs, rent guarantees, correction of deferred maintenance, etc.) which could be incurred by the Partnership in disposing of the properties may significantly reduce the gross sale proceeds paid to the Partnership and, in turn, the amount of cash available for distribution to the Limited Partners. Accordingly, the Purchaser has also estimated liquidation value per Unit, as described below. Finally, Limited Partners should note that the general partners of the Partnership may seek to "liquidate" the Partnership by means of an extraordinary transaction that would not necessarily involve the sale of individual Partnership properties. In a communication to Limited Partners dated November 6, 1997, the general partners stated: "The General Partners are actively considering a variety of plans to enhance to value and liquidity of the Units. These plans include the possible conversion of the Partnership into an actively traded real estate investment trust, where the General Partners believe that the trading price should be greater than the current trading price in the secondary market for the Units." The Purchaser has no further information regarding the current plans of the general partners with respect to any such transaction, nor can the Purchaser predict the price per Unit that Limited Partners could achieve in connection therewith. The Purchase Price represents 73% of the Purchaser's estimate of net asset value per Unit ("NAV Estimate") and 77% of the Purchaser's estimate of liquidation value per Unit. The Purchaser prepared its NAV Estimate based on a hypothetical sale of all of the Partnership's properties at their estimated aggregate value (based upon the Appraisal Information) and the distribution to the partners of the gross proceeds of that sale, together with the Partnership's cash and other assets (net of existing liabilities). The Purchaser's NAV Estimate does not take into account: (i) real estate transaction costs that would be incurred on a sale of the Partnership's properties, such as brokerage commissions and other selling and closing expenses; (ii) timing considerations; or (iii) costs associated with winding up the Partnership. NAV Estimate. The Purchaser was furnished with the Appraisal Information in connection with the discussions between the Purchaser, Northstar and Presidio described in Section 12 ("Background of the Offer"). The Purchaser derived an estimate of net asset value per Unit by using the Appraiser's conclusions as to the value -20- of each of the Partnership's properties contained in the Appraisal Information and adjusting such amount to reflect the Partnership's other assets and liabilities. Specifically, the Purchaser added receivables and cash and cash equivalents shown on the Partnership's unaudited balance sheet at September 30, 1997 and subtracted accounts payable and accrued expenses, distributions payable and amounts due to affiliates. After deducting 5% of aggregate net asset value to account for the general partners' share of Partnership distributions, the Purchaser derived an NAV Estimate of $52,083,856.00 or $130.21 per Unit. The paragraphs that follow describe certain matters pertaining to the Appraisal Information that may be relevant to Limited Partners in making a judgment as to the reliability of the property values derived by the Appraiser and any estimate of net asset value based thereon. While the Purchaser has no reason to believe that any of the Appraisal Information is incorrect, the Purchaser cannot take responsibility for the accuracy or completeness of the Appraisal Information (including without limitation the accuracy, completeness or appropriateness of the underlying assumptions and methodology employed by the Appraiser) or for any failure of the Partnership to disclose events which may have occurred and may affect the significance or accuracy of any such information but which are unknown to the Purchaser. The description that follows is derived in its entirety from the Appraisal Information. In connection with its appraisals, the Appraiser indicates that it generally conducted a physical inspection of the subject property, the interior of the improvements and the surrounding area, reviewed economic and demographic trends in the neighborhood and the region and considered the competitive market in the local area. The Appraiser's reports indicate that, in general, its valuations were derived by utilizing the Sales Comparison or the Income Capitalization approaches, depending on the Appraiser's view of which approach was most appropriate on a property-by-property basis. According to the Appraiser, the Sales Comparison Approach involves an estimate of value derived by comparing the subject property with similar, recently sold properties in the surrounding or competing area. This approach relies on the principle of substitution, which holds that when a property is replaceable in the market, its value tends to be set at the cost of acquiring an equally desirable substitute property, assuming that no costly delay is encountered in making the substitution. The Income Capitalization Approach derives an estimate of value by converting the anticipated economic benefits of owning property into a value estimate through capitalization. This approach is based on the principle of "anticipation", which holds that investors recognize the relationship between an asset's income and its value. In order to value the economic benefits of a property, potential income and expenses must be estimated, and the most appropriate capitalization method must be selected. The two most common methods of converting net income into value are direct capitalization and discounted cash flow analysis. In direct capitalization, net operating income is divided by an overall rate extracted from market sales to indicate a value. In the discounted cash flow method, anticipated future net income streams and a reversionary value are discounted to an estimate of net present value at a chosen yield rate (internal rate of return). The cover letters from the Appraiser included in the Appraisal Information state that the Appraiser's value opinions are qualified by certain assumptions, limiting conditions, certifications and definitions, which are more particularly described in its reports. The Appraiser states that, in accordance with an agreement between the Appraiser and the Partnership, its report is the result of a limited process in that certain allowable departures from specific guidelines of the Uniform Standards of Professional Appraisal Practice ("USPAP") were invoked and the reliability of the value conclusion provided may be impacted to the degree there is departure from specific guidelines of USPAP. Liquidation Value. In estimating liquidation value per Unit, the Purchaser adjusted its NAV Estimate by deducting from that amount a reserve equal to 5% of the projected property selling prices, which represents the Purchaser's estimate of the costs of brokerage commissions, title costs, legal fees, real estate transfer taxes and other disposition expenses (but does not include any estimate of the costs of conducting a consent solicitation in order to obtain the Limited Partners' approval for property sales, as may be required by the Partnership Agreement or of the costs of winding up the Partnership, because of the difficulty of estimating those amounts). The result of $124.12 per Unit represents the Purchaser's estimate of the aggregate net liquidating proceeds -21- (before provision for the costs described in the parenthetical to the preceding sentence) that could be realized in an orderly liquidation of the Partnership, based on the assumptions described above. Northstar has informed the Purchaser that a former affiliate of the general partners was advised by the Appraiser in late 1996 that a methodology providing for a 17.5% discount of the Partnership's pre-liquidation value (in addition to the 5% reserve for liquidation costs taken by the Purchaser) constituted a reasonable means of determining the total net liquidation proceeds of the Partnership in connection with a bulk sale of the Partnership's properties, given the then current state of the real estate market. The Purchaser cannot take responsibility for the appropriateness of the methodology described in the preceding sentence. The Purchaser's analysis of liquidation value described above is merely theoretical and does not itself reflect the value of the Units because (i) there is no assurance that any such liquidation in fact will occur in the foreseeable future; and (ii) any liquidation in which the estimated values described above might be realized would take an extended period of time (at least a year and, quite possibly, significantly longer), during which the Partnership would continue to be exposed to the risk of fluctuation in asset values because of changing market conditions and other factors. Preliminary NAV Estimate. Prior to its receipt of the Appraisal Information, the Purchaser estimated net asset value on a preliminary basis by reviewing publicly available financial information relating to the Partnership for the fiscal year ended December 31, 1996 and the nine months ended September 30, 1997, in order to determine an adjusted net income (reduced by an amount intended to reflect normal capital expenditures and operating expenses) of $5,352,384.00, and then capitalized that amount at 10%, which the Purchaser believes represents an appropriate capitalization rate for a real estate portfolio such as the Partnership's. The Purchaser then adjusted such amount to reflect the Partnership's other assets and liabilities and deducted the general partners' 5% share of Partnership distributions in the manner described above under "NAV Estimate." As a result of that review process, the Purchaser derived a preliminary estimate of net asset value of $54,267,754.00, or $135.67 per Unit. These calculations are based on rough estimates and the values resulting therefrom may not be indicative of actual values to any extent. It should be noted that investors may disagree as to the appropriate capitalization rate to be applied. The utilization of a lower capitalization rate results in a higher estimate of aggregate value. The Purchaser believes that the NAV Estimate derived from the Appraisal Information is likely to represent a closer approximation of net asset value per Unit because the Appraisal Information was based upon an individual review and analysis of each Partnership property, while the Purchaser's preliminary estimate was based solely upon publicly available information regarding the Partnership as a whole, although there can be no assurance that either estimate is correct. SECTION 14. CONDITIONS OF THE OFFER. Notwithstanding any other term of the Offer, the Purchaser will 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 expiration 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 and in addition to the Purchaser's right to withdraw the Offer at any time before the Expiration Date, the Purchaser will 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, purchase 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 -22- 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 Limited Partners, (iii) imposes or confirms limitations on the ability of the Purchaser to fully exercise the voting rights conferred pursuant to its appointment as proxy in respect of all tendered Units which it accepts for payment, or (iv) requires divestiture by the Purchaser of any Units (except, in any such case, as expressly contemplated by the Agreement); (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 of the Offer to Purchase, in the business, properties, assets, liabilities, financial condition, operations, results of operations, or prospects of the Partnership, which is outside the ordinary course of the Partnership's business or may be materially adverse to the Partnership, or the Purchaser shall have become aware of any fact that 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 or 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) the Partnership's general partners shall not have consented in writing to, and shall not have taken all other action that the Purchaser deems necessary, in the Purchaser's judgment, for the admission of the Purchaser to the Partnership, as of the next quarterly admission date following the consummation of the Offer, as a substitute Limited Partner in accordance with the Partnership Agreement and applicable law; (f) the Partnership's general partners shall not have furnished to the Purchaser such information as is necessary, in the Purchaser's judgment, to verify that the persons purporting to transfer Units to the Purchaser pursuant to the Offer are in fact the owners of such Units as reflected on the Partnership's books and records; (g) the Partnership's general partners shall have caused the Partnership to impose unreasonable transfer, substitution or similar fees, including, without limitation, those that would otherwise apply to: (i) the tender of Units by holders pursuant to the Offer, (ii) the transfer of such Units to the Purchaser or (iii) the admission of the Purchaser as a substitute Limited Partner in respect of such Units; (h) there shall have been threatened, instituted or pending any action or proceeding before any court or governmental agency or other regulatory or administrative agency or commission or by any other person, challenging the acquisition of any Units pursuant to the Offer or otherwise directly or indirectly relating to the Offer, or otherwise, in the judgment of the Purchaser, adversely affecting the Purchaser or the Partnership or causing any material diminution of the benefits to be derived by the Purchaser as a result of the transactions contemplated by the Offer; -23- (i) the Partnership shall have (i) issued, or authorized or proposed the issuance of, any partnership interests of any class, or any securities convertible into, or rights, warrants or options to acquire, any such interests or other convertible securities, (ii) issued or authorized or proposed the issuance of any other securities, in respect of, in lieu of, or in substitution for, all or any of the presently outstanding Units, or (iii) declared or paid any distribution, other than in cash, on any of its partnership interests, or (iv) the Partnership or any of the Partnership's general partners shall have authorized, proposed or announced its intention to propose any merger, consolidation or business combination transaction, acquisition of assets, disposition of assets or material change in its capitalization, or any comparable event not in the ordinary course of business; (j) a tender offer or exchange offer for some or all of the Units is made or publicly announced or proposed to be made, supplemented or amended by any person other than the Purchaser; or (k) the general partners of the Partnership shall have modified, or taken any step or steps to modify, in any way, the procedures or regulations applicable to the registration of Units or transfers of Units on the books and records of the Partnership or the admission of transferees of Units as Limited Partners. 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. If the Purchaser, in its sole discretion, waives the condition contained in the foregoing paragraph (g), then the Purchaser will, to the extent of such waiver, pay all applicable fees referred to in such paragraph. SECTION 15. CERTAIN LEGAL MATTERS. General. Except as set forth in this Section 15, the Purchaser is not, based on its review of publicly available filings by the Partnership with the Commission and other publicly available information regarding the Partnership, aware of any licenses or regulatory permits that would be material to the business of the Partnership, taken as a whole, and that might be adversely affected by the Purchaser's acquisition of Units as contemplated herein, or any filings, approvals or other actions by or with any domestic or foreign governmental authority or administrative or regulatory agency that would be required prior to the acquisition of Units by the Purchaser pursuant to the Offer as contemplated herein. 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 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, those regulations generally are not applicable to the Offer. State Laws. The Purchaser is not aware of any jurisdiction in which the making of the Offer is not in -24- 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) Limited Partners 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 shall be made on behalf of the Purchaser, if at all, only by one or more registered brokers or dealers licensed under the laws of that jurisdiction. 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 Harris Trust Company of New York to act as Depositary and Beacon Hill Partners, Inc. to act as Information Agent in connection with the Offer. The Purchaser will pay the Depositary and Information Agent reasonable and customary compensation for their services in connection with the Offer, plus reimbursement for out-of-pocket expenses, and will indemnify the Depositary and Information Agent 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 and its legal fees and expenses. 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 Assignment of Partnership Interest 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 Tender Offer Statement on Schedule 14D-1 (including exhibits), 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 the Introduction of the Offer to Purchase (except that they will not be available at the regional offices of the Commission). OLYMPIA INVESTORS, L.P. March 12, 1998 -25- SCHEDULE I EXECUTIVE OFFICERS AND DIRECTORS OF OLYMPIA-GP INC. AND AMERICAN PROPERTY INVESTORS, INC. The name and positions of the executive officers and directors of the Olympia General Partner, the general partner of the Purchaser, and American Property Investors, Inc. ("API"), the general partner of the sole stockholder of the Olympia General Partner. The business address of each such executive officer and director (other than Messrs. Icahn and Hirsch) is 100 South Bedford Road, Mount Kisco, N.Y. 10549. The business address of Messrs. Icahn and Hirsch is c/o Icahn Associates Corp., 767 Fifth Avenue, 47th Floor, New York, New York 10153. Each such executive officer and director is a citizen of the United States of America. Name Position Carl C. Icahn Director and Chairman of the Board (API) Alfred D. Kingsley Director (API) William A. Leidesdorf Director (API) Jack G. Wasserman Director (API) John P. Saldarelli Vice President, Secretary and Treasurer (API); Treasurer, Secretary and Director (Olympia General Partner) Henry J. Gerard Vice President, Assistant Secretary and Director (Olympia General Partner) Martin L.Hirsch Vice President (API); Vice President and Director (Olympia General Partner) The following sets forth with respect to each executive officer and director of the Olympia General Partner and API such person's (a) name, (b) present principal occupation or employment and the name, principal business and address of any corporation or other organization in which such employment or occupation is conducted and (c) material occupations, positions, offices or employments during the last five years, giving the starting and ending dates of each and the name, principal business and address of any business corporation or other organization in which such occupation, position, office or employment was carried on. CARL C. ICAHN. Carl C. Icahn has been Chairman of the Board of Directors of API since November 15, 1990. Mr. Icahn is also President and a director of Starfire Holding Corporation (formerly Icahn Holding Corporation), a Delaware corporation ("SHC"), and Chairman of the Board and a director of various of SHC's subsidiaries, including ACF Industries, Inc., a New Jersey corporation ("ACF"). SHC is primarily engaged in the business of holding, either directly or through subsidiaries, a majority of the common stock of ACF and its address is 100 South Bedford Road, Mount Kisco, New York 10549. Mr. Icahn has also been Chairman of the Board of Directors of ACF since October 29, 1984 and a director of ACF since June 29, 1984. ACF is a railroad freight and tank car leasing, sales and manufacturing company. He has also been Chairman of the Board of Directors and President of Icahn & Company, Inc. since 1968. Icahn & Company, Inc. is a registered broker-dealer and a member of the National Association of Securities Dealers. In 1979, Mr. Icahn acquired control and presently serves as Chairman of the Board of Directors of Bayswater Realty & Capital Corp., which is a real estate investment and development company ("Bayswater"). ACF, Icahn & Company, Inc. and Bayswater are deemed to be directly or indirectly owned and controlled by Mr. Icahn. Mr. Icahn was Chief Executive Officer and member of the Office of the Chairman of Trans World Airlines, Inc. ("TWA") from November 8, 1988 to January 8, 1993; Chairman of the Board of Directors of TWA from January 3, 1986 to January 8, 1993; and a director of TWA from September 27, 1985 to January 8, 1993. Mr. Icahn also has substantial equity interests in and controls various partnerships and corporations which invest in publicly traded securities. ALFRED D. KINGSLEY. Alfred D. Kingsley has served as a director of API since November 15, 1990. He was also Vice Chairman of the Board of Directors of TWA from February 1, 1989 to January 8, 1993 and a member of the Office of the Chairman from November 8, 1988 to January 8, 1993. Mr. Kingsley I-1 was a director of TWA from September 27, 1985 to January 8, 1993. He also was a director and executive officer and Director of Research at Icahn & Co., Inc. and related entities from 1968 until December 1994. He also has been Vice Chairman of the Board of Directors of ACF since October 29, 1984 and a Director of ACF since June 29, 1984. Mr. Kingsley has also been a Senior Managing Director of Greenway Partners, L.P. since May 1993, which invests in publicly traded securities. WILLIAM A. LEIDESDORF. William A. Leidesdorf has served as a director of API since March 26, 1991. Since April 1995, Mr. Leidesdorf has acted as an independent real estate investment banker. From January 1, 1994 through April 1995, Mr. Leidesdorf was Managing Director of RFG Financial, Inc., a commercial mortgage company. From September 30, 1991 to December 31, 1993, Mr. Leidesdorf was Senior Vice President of Palmieri Asset Management Group. From May 1, 1990 to September 30, 1991, Mr. Leidesdorf was Senior Vice President of Lowe Associates, Inc., a real estate development company, where he was involved in the acquisition of real estate and the asset management workout and disposition of business areas. He also acted as the Northeast Regional Director for Lowe Associates, Inc. From June 1985 to January 30, 1990, Mr. Leidesdorf was Senior Vice President and stockholder of Eastdil Realty, Inc., a real estate company, where he was involved in the asset management workout, disposition of business and financing areas. During the interim period form January 30, 1990 through May 1, 1990, Mr. Leidesdorf was an independent contractor for Eastdil Realty, Inc. on real estate matters. JACK G. WASSERMAN. Jack G. Wasserman has served as a director of API since December 3, 1993. Mr. Wasserman is an attorney and a member of the New York State Bar and has been with the New York based law firm of Wasserman, Schneider & Babb since 1966, where he is currently a senior partner. JOHN P. SALDARELLI. John P. Saldarelli has served as a director, Secretary and Treasurer of the Olympia General Partner since February 1998. He has also served as Vice President, Secretary and Treasurer of API since March 18, 1991. Mr. Saldarelli was also President of Bayswater Realty Brokerage Corp. from June 1987 until November 19, 1993 and Vice President of Bayswater Realty & Capital Corp. from September 1979 until April 15, 1993. HENRY J. GERARD. Mr. Gerard has served as a director, Vice President and Assistant Secretary of the Olympia General Partner since February 1998. He has also served as Vice President and Controller of API since March 18, 1991. From January 1988 to May 1991, he was a Vice President API, a provider of financial services. From 1981 through 1987 he was a controller at Interstate Properties, a commercial real estate developer/operator. MARTIN L. HIRSCH. Mr. Hirsch has served as a director and Vice President of the Olympia General Partner since February 1998. He has also served as Vice President of API since March 18, 1991. From January 1986 to January 1991 he was a vice president at Integrated Resources, Inc. I-2 Manually signed facsimile copies of the Assignment of Partnership Interest will be accepted. The Assignment of Partnership Interest and any other required documents should be sent or delivered by each Limited Partner or such Limited Partner's broker, dealer, bank, trust company or other nominee to the Depositary as set forth below. THE DEPOSITARY FOR THE OFFER IS: Harris Trust Company of New York BY MAIL: Wall Street Station P.O. Box 1023 New York, New York 10268-1023 BY HAND/OVERNIGHT DELIVERY: Receive Window Wall Street Plaza 88 Pine Street, 19th Floor New York, New York 10005 CONFIRM BY TELEPHONE: (212) 701-7624 Questions and requests for assistance or for additional copies of the Offer to Purchase and the Assignment of Partnership Interest may be directed to the Information Agent at its telephone number and address listed below. You may also contact your broker, dealer, bank, trust company or other nominee for assistance concerning the Offer. THE INFORMATION AGENT FOR THE OFFER IS: BEACON HILL PARTNERS, INC. 90 Broad Street New York, New York 10004 (212) 843-8500 (Collect) or (800) 301-8755 (Toll Free) I-3 EX-2.A 3 EXHIBIT (A)(2) ASSIGNMENT OF PARTNERSHIP INTEREST to Tender Units of Limited Partnership Interest of Integrated Resources High Equity Partners, Series 85 Pursuant to the Offer to Purchase Dated March 12, 1998 As Amended From Time to Time of OLYMPIA INVESTORS, L.P. ================================================================================ THE OFFER, WITHDRAWAL RIGHTS AND PRORATION PERIOD WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON APRIL 8, 1998, UNLESS THE OFFER IS EXTENDED. ================================================================================ Limited Partners desiring to tender their Units should complete and sign this Assignment of Partnership Interest, and forward it to the Depositary at one of the addresses set forth below. Instructions for completing this Assignment of Partnership Interest are included herein, along with a pre-addressed envelope to the Depositary. The Depositary for the Offer is: HARRIS TRUST COMPANY OF NEW YORK By Mail: To Confirm: By Hand/Overnight Delivery: Wall Street Station (212) 701-7624 Receive Window P.O. Box 1023 Wall Street Station New York, NY 10268-1023 88 Pine Street, 19th Floor New York, NY 10005 If you have any questions or need assistance in completing this Assignment of Partnership Interest, please call the Information Agent, Beacon Hill Partners, Inc. at (212) 843-8500 (collect) or (800) 301-8755 (toll free). Delivery of this Assignment of Partnership Interest or any other required documents to an address other than those set forth above does not constitute valid delivery. PLEASE CAREFULLY READ THE ACCOMPANYING INSTRUCTIONS Capitalized terms used herein and not defined shall have the meanings given to them in the Olympia Investors, L.P. Offer to Purchase Limited Partnership Units of Integrated Resources High Equity Partners, Series 85, dated March 12, 1998 (as it may be amended from time to time, the "Offer to Purchase"). The undersigned hereby tenders to Olympia Investors, L.P., a Delaware limited partnership (the "Purchaser"), the number of the undersigned's units of limited partnership interest specified in the signature box ("Units") in Integrated Resources High Equity Partners, Series 85, a California limited partnership (the "Partnership"), at a price of $95.00 per Unit, net to the seller in cash, without interest, less the amount of distributions per Unit, if any (other than distributions of Adjusted Cash from Operations, as defined in the Partnership Agreement), made by the Partnership from the date of the Offer to Purchase to the Payment Date, upon the terms and subject to the conditions set forth in the Offer to Purchase receipt of which is hereby acknowledged, and in this Assignment of Partnership Interest (which, together with any supplements or amendments, collectively constitute the "Offer"), all as more fully described in the Offer to Purchase. The Purchaser reserves the right to transfer or assign, in whole or from time to time in part, to one or more persons, the right to purchase Units tendered pursuant to the Offer, but any such transfer or assignment will not relieve the Purchaser of its obligations under the Offer or prejudice the rights of tendering Limited Partners to receive payment for Units validly tendered and accepted for payment pursuant to the Offer. Limited Partners who tender their Units will not be obligated to pay any commissions or Partnership transfer fees in connection with such tender. The undersigned understands that if more than 160,000 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 tendered Units 160,000 Units on a pro rata basis based upon the number of the tendered Units with adjustments to avoid purchases of certain fractional Units and subject to the transfer requirements of the Partnership Agreement. Subject to and effective upon acceptance for payment of and payment for the Units tendered hereby, the undersigned hereby sells, assigns, and transfers to or upon the order of the Purchaser all right, title, proxy and interest in and to all of the Units tendered hereby, including, without limitation, all rights in, and claims to, any voting rights, rights to be substituted as a Limited Partner of the Partnership, Partnership profits and losses, cash distributions and other benefits of any nature whatsoever distributable or allocable or otherwise to such tendered Units under the Partnership Agreement; provided, that if proration of tendered Units is required as described in Section 1 of the Offer to Purchase, this Assignment of Partnership Interest shall be effective to transfer to the Purchaser only that number of the undersigned's Units as is accepted for payment and thereby purchased by the Purchaser. The undersigned understands that upon acceptance for payment of and payment for the Units tendered by the undersigned, the Purchaser will seek admission to the Partnership as a Limited Partner in substitution for the undersigned as to all Units tendered by the undersigned. If, however, proration of tendered Units is required and as a result the Purchaser accepts for payment and thereby purchases less than all of the undersigned's Units tendered hereby, then the undersigned may continue to be a Limited Partner with respect to the tendered Units tendered by the undersigned that are not purchased. By executing and delivering this Assignment of Partnership Interest, the undersigned, being a tendering Limited Partner, expressly intends the Purchaser to become a Limited Partner. The undersigned understands and hereby acknowledges and agrees that the Purchaser shall be entitled to (i) deduct from the Purchase Price all distributions of cash or other property, if any (other than distributions of Adjusted Cash from Operations), made by the Partnership with respect to the transferred Units that are made on or after March 12, 1998, without regard to whether the record date for any such distribution may be a date after or prior to the date of the transfer and (ii) receive all Partnership distributions after the Payment Date. By executing and delivering this Assignment of Partnership Interest, a tendering Limited Partner appoints the Purchaser, its general partner and any designees of the Purchaser and of each of them as such Limited Partner's proxies, with full power of substitution, to the full extent of such Limited Partner's rights with respect to the Units tendered by such Limited Partner and accepted for payment by the Purchaser, including, without limitation, to deliver such Units and transfer ownership of such Units on the Partnership's books maintained by the general partners of the Partnership and to become a substituted Limited Partner and to receive all benefits and otherwise exercise all rights of beneficial ownership of such Units and as a Limited Partner of the Partnership, all in accordance with the terms of the Offer. All such proxies shall be considered effective and irrevocable until March 11, 2008 and coupled with an interest in the tendered Units. 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 Limited Partner with respect to such Units will be revoked without further action, and no subsequent proxies may be given nor any subsequent written consent executed (and, if given or executed, will not be deemed effective). The Purchaser, its general partner and any designees of the Purchaser will, with respect to the Units for which such appointment is effective, be empowered to exercise all voting and other rights of such Limited Partner as they in their sole discretion may deem proper at any meeting of Limited Partners or any adjournment or postponement thereof, by written consent in lieu of any such meeting or otherwise. The Purchaser may assign such proxy to any person with or without assigning the related Units with respect to which such proxy was granted. The Purchaser reserves the right to require that, in order for a Unit to be deemed validly tendered, immediately upon the Purchaser's payment for such Unit, the Purchaser must be able to exercise full voting rights with respect to such Unit and other securities, including voting at any meeting of Limited Partners. By executing and delivering the Assignment of Partnership Interest, a tendering Limited Partner also constitutes and appoints the Purchaser, its general partner and any designees of the Purchaser as the Limited Partner's attorneys-in-fact, each with full power of substitution to the extent of the Limited Partner's rights with respect to the Units tendered by the Limited Partner and accepted for payment by the Purchaser. Such appointment will be effective when, and only to the extent that, the Purchaser accepts the tendered Units for payment and continues to be effective and irrevocable until March 11, 2008. Upon such acceptance for payment, all prior powers of attorney granted by the Limited Partner with respect to such Units will, without further action, be revoked, and no subsequent powers of attorney may be granted (and if granted will not be effective). Pursuant to such appointment as attorneys-in-fact, the Purchaser, its general partner and any designees of the Purchaser each will have the power, among other things, (i) to seek to transfer ownership of such Units on the Partnership's books (and execute and deliver any accompanying evidences of transfer and authenticity any of them may deem necessary or appropriate in connection therewith, including, without limitation, any documents or instruments required to be executed under a "Transferor's (Seller's) Application for Transfer" created by the NASD, if required), (ii) upon receipt by the Depositary (as the tendering Limited Partner's agent) of the Purchase Price, to receive any and all distributions made by the Partnership, and to receive all benefits and otherwise exercise all rights of beneficial ownership of such Units in accordance with the terms of the Offer, (iii) to execute and deliver to the Partnership and/or its general partners a change of address form instructing the Partnership to send any and all future distributions to which the Purchaser is entitled pursuant to the terms of the Offer, in respect of tendered Units to the address specified in such form, and (iv) to endorse any check payable to or upon the order of such Limited Partner representing a distribution to which the Purchaser is entitled pursuant to the terms of the Offer, in each case on behalf of the tendering Limited Partner. If legal title to the Units is held through an IRA or KEOGH or similar account, the Limited Partner understands that this Assignment of Partnership Interest must be signed by the custodian of such IRA or KEOGH account and the Limited Partner hereby authorizes and directs the custodian of such IRA or KEOGH to confirm this Assignment of Partnership Interest. This Power of Attorney shall not be affected by the subsequent mental disability of the Limited Partner, and the Purchaser shall not be required to post bond in any nature in connection with this Power of Attorney. The Purchaser may assign such Power of Attorney to any person with or without assigning the related Units with respect to which such Power of Attorney was granted. The undersigned hereby represents and warrants that the undersigned owns the Units tendered hereby and has full power and authority to validly tender, sell, assign and transfer the Units tendered hereby and that when the same 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 claims and that the transfer and assignment contemplated herein are in compliance with all applicable laws and regulations. The undersigned further represents and warrants that the undersigned is a "United States person," as defined in section 7701(a)(30) of the Internal Revenue Code of 1986, as amended (the "Code"), or if the undersigned is not a United States person, the undersigned does not own beneficially or of record more than 5% of the outstanding Units. Upon request, the undersigned will execute and deliver any additional documents deemed by the Depositary or the Purchaser to be necessary or desirable to complete the assignment, transfer and purchase of Units tendered hereby and otherwise in order to complete the transactions, transfers and admissions to the Partnership contemplated herein. The undersigned understands that a tender of Units pursuant to the procedures described in Section 3 of the Offer to Purchase and in the Instructions hereto will constitute a binding agreement between the undersigned and the Purchaser upon the terms and subject to the conditions of the Offer. All authority herein conferred or agreed to be conferred shall survive the death or incapacity of the undersigned, and any obligation of the undersigned hereunder shall be binding upon the heirs, personal representatives, successors and assigns of the undersigned. Except as stated in the Offer, this tender is irrevocable. 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. If any tendered Units are not purchased for any reason, the Assignment of Partnership Interest shall be effective to transfer to the Purchaser only that number of Units as is accepted for payment and thereby purchased by the Purchaser. Upon acceptance of Units by the Purchaser, the Purchaser agrees to be bound by all of the terms and provisions of the Partnership Agreement. SIGN HERE TO TENDER YOUR UNITS PLEASE BE SURE TO COMPLETE ALL APPLICABLE BLANKS ================================================================================ By executing this document in the space provided below, the undersigned hereby: (i) evidences the Limited Partner's agreement to and acceptance of all of the terms, provisions and matters set forth in this Assignment of Partnership Interest and in the Offer to Purchase and (ii) tenders the number of Units specified below pursuant to the terms of the Offer. The undersigned hereby acknowledges and certifies, under penalty of perjury, to all of the foregoing and that the information and representations set forth below and provided in Boxes A, B and C of this Assignment of Partnership Interest, which have been duly completed by the undersigned, are true and correct as of the date hereof.
X______________________________________ Address:________________________________________ Signature of Limited Partner - Date - --------------------------------------- ----------------------------------------------- Printed Name of Limited Partner (Include Zip Code) (The address provided above must be the registered address of the Limited X______________________________________ Partner.) Signature of Limited Partner - Date Telephone (Day) (_____)________________________________ - --------------------------------------- Printed Name of Limited Partner Telephone (Eve) (_____)________________________________ Total Number of Number of Units Capacity (Full Title):_________________ Units Owned:_________________ Tendered:______________ - -------------------------------------------------------------------------------------------------------------------------------- GUARANTEE OF SIGNATURE(S) Authorized Name of Eligible Institution:______________________________________ Signature:_____________________________ Name:__________________________________ Address:________________________________________ Date:___________________________________ Telephone:(_____)_______________________________
================================================================================ TAX CERTIFICATES ================================================================================ BOX A SUBSTITUTE FORM W-9 (See Instruction 4) The person signing this Assignment of Partnership Interest hereby certifies to the Purchaser under penalties of perjury: Part 1 - The Taxpayer Identification Number (TIN) furnished in the space below is the correct TIN of the Limited Partner; TIN: ________________________________ Part 2 - If no TIN is provided in the space above and this box |_| is checked, the Limited Partner has applied for a TIN, a TIN has not been issued to the Limited Partner and either (i) the Limited Partner has mailed or delivered an application to receive a TIN to the appropriate Internal Revenue Service ("IRS") Center or Social Security Administration office or (ii) the Limited Partner intends to mail or deliver an application in the near future and it is understood that if the Limited Partner does not provide a TIN to the Purchaser within 60 days, 31% of all reportable payments made to the Limited Partner thereafter will be withheld until a TIN is provided to the Purchaser; and Part 3 - Unless this box |_| is checked, the Limited Partner is NOT subject to backup withholding either because the Limited Partner (i) is exempt from backholding, (ii) has not been notified by the IRS that the Limited Partner is subject to backup withholding as a result of a failure to report all interest or dividends or (iii) has been notified by the IRS that such Limited Partner is no longer subject to backup withholding. ================================================================================ ================================================================================ BOX B FIRPTA AFFIDAVIT - CERTIFICATE OF NON-FOREIGN STATUS Under Section 1445(c)(5) of the Code and Treas. Reg. 1.1445-IIT(d), a transferee of a U.S. real property interest must withhold tax if the transferor is a foreign person. To inform the Purchaser that no withholding is required with respect to the Limited Partner's interest in the Partnership, the person signing this Assignment of Partnership Interest hereby certifies the following under penalties of perjury: Part 1 - Unless this box |_| is checked, the Limited Partner is a U.S. citizen or a resident 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 Code and Income Tax Regulations); Part 2 - The name of the Limited Partner is _____________________________________________________; Part 3 - The Limited Partner's Social Security Number (for individuals) or Employer Identification Number (for non- individuals) is ________________________________; and Part 4 - The Limited Partner's home address (in the case of an individual) or office address (in the case of an entity) is - ------------------------------------------------------------. ================================================================================ INSTRUCTIONS FOR COMPLETING ASSIGNMENT OF PARTNERSHIP INTEREST for INTEGRATED RESOURCES HIGH EQUITY PARTNERS, SERIES 85 Forming Part of Terms and Conditions of the Offer FOR ASSISTANCE IN COMPLETING THIS ASSIGNMENT OF PARTNERSHIP INTEREST, PLEASE CALL: BEACON HILL PARTNERS, INC. AT (212) 843-8500 (COLLECT) OR (800) 301-8755 (TOLL FREE). 1. Delivery of Assignment of Partnership Interest. For convenience in responding to the Offer, a pre-addressed envelope has been enclosed with the Offer to Purchase. To ensure the Depository's receipt of the Assignment of Partnership Interest, it is suggested that you use an overnight courier or, if the Assignment of Partnership Interest is to be delivered by United States mail, that you use certified or registered mail, return receipt requested. The method of delivery of the Assignment of Partnership Interest and all other required documents is at the option and risk of the tendering Limited Partner and delivery will be deemed made only when actually received by the Depositary. In all cases, sufficient time should be allowed to assure timely delivery. To be effective, a properly completed and duly executed Assignment of Partnership Interest along with required signature guarantees and any other required documents must be received by the Depository at one of the addresses set forth below prior to 12:00 Midnight, New York City time on Wednesday, April 8, 1998, unless extended (the "Expiration Date"). By Mail: HARRIS TRUST COMPANY OF NEW YORK Wall Street Station P.O. Box 1023 New York, New York 10268-1023 By Hand/Overnight Delivery: HARRIS TRUST COMPANY OF NEW YORK Receive Window Wall Street Plaza 88 Pine Street, 19th Floor New York, New York 10005 To Confirm: (212) 701-7624 Please note that a tendering beneficial owner of Units whose Units are owned of record by an IRA or other qualified plan will not receive direct payment of the Purchase Price; rather, payment will be made to the custodian of such account or plan. 2. Signatures on Assignment of Partnership Interest. If the Assignment of Partnership Interest is signed by the registered holder(s) of the Units tendered hereby, the signature(s) must correspond exactly with the name(s) as shown on the records of the Partnership without alteration, enlargement or any change whatsoever. If any Units tendered hereby are held of record by two or more joint holders, all such holders must sign the Assignment of Partnership Interest. If the Assignment of Partnership Interest is signed by trustees, executors, administrators, guardians, attorneys-in-fact, agents, officers of corporations or others acting in a fiduciary or representative capacity, such persons should so indicate when signing, and proper evidence satisfactory to the Depositary and the Purchaser of their authority so to act must be submitted (see Instruction 3). With respect to most trusts, generally only the signature of the named trustee will be required. For Units held in a custodial account for minors, only the signature of the custodian will be required. For IRA custodial accounts, the beneficial owner should return the executed Assignment of Partnership Interest to the Depository as specified in Instruction 1 herein. Such Assignment of Partnership Interest will then be forwarded by the Depository to the custodian for additional execution. Such Assignment of Partnership Interest will not be considered duly completed until after it has been executed by the custodian. If any tendered Units are registered in different names, it will be necessary to complete, sign and submit as many separate Assignment of Partnership Interests as there are different registrations. All signatures on the Assignment of Partnership Interest must be medallion guaranteed by a commercial bank, savings bank, credit union, savings and loan association or trust company having an office, branch or agency in the United States, a brokerage firm that is a member of a registered national securities exchange or member of the National Association of Securities Dealers, Inc. (each, an "Eligible Institution"). 3. Documentation Requirements. In addition to information required to be completed on the Assignment of Partnership Interest, additional documentation may be required by the Purchaser under certain circumstances including, but not limited to those listed below. Questions on documentation should be directed to Beacon Hill Partners, Inc. at (212) 843-8500 (collect) or (800) 301-8755 (toll free). Deceased Owner (Joint Tenant) Certified copy of death certificate. Deceased Owner (Others) Certified copy of death certificate (See also Executor/Administrator/Guardian below). Executor/Administrator/Guardian (a) Certified copies of court appointment documents for executor or administrator dated within 60 days of the date of execution of the Assignment of Partnership Interest; and (b) Copy of applicable provisions of the will (title page, executor(s)' powers, asset distribution); OR (c) Certified copy of estate distribution documents. Attorney-In-Fact Current power of attorney. Corporations/Partnerships Certified copy of corporate resolution(s) (with raised corporate seal) or other evidence of authority to act. Partnerships should furnish a copy of their partnership agreement. Trust/Pension Plans Copy of cover page of the trust or pension plan, along with copy of the section(s) setting forth names and powers of trustee(s) and any amendments to such sections or appointment of successor trustee(s). All signatures must be medallion guaranteed. 4. U.S. Persons. A limited Partner who or which is a United States citizen or a resident alien individual, a domestic corporation, a domestic partnership, a domestic trust or a domestic estate (collectively, "United States persons") as those are defined in the Code and Income Tax Regulations, should follow the instructions with respect to certifying Boxes A and B. Taxpayer Identification Number. To avoid 31% federal income tax withholding, the Limited Partner or other payee must provide the Depository with the Limited Partner's correct TIN in the blanks provided for that purpose in Boxes A and B. In the case of an individual person, such person's social security number is his or her TIN. WHEN DETERMINING THE TIN TO BE FURNISHED, PLEASE NOTE : Individual accounts should reflect their own TIN; joint accounts should reflect the TIN of the person whose name appears first; trust accounts should reflect the TIN assigned to the Trust; custodial accounts for the benefit of minors should reflect the TIN of the minor; corporations or other businesses should reflect the TIN assigned to that entity. Substitute Form W-9 - Box A. Each tendering Limited Partner is required to provide the Depositary with a correct TIN on Substitute Form W-9 and to certify, under penalties of perjury, that (i) the TIN provided on Substitute Form W-9 is correct (or that such Limited Partner is awaiting a TIN) and (ii) the Limited Partner either (a) is exempt from backup withholding, (b) has not been notified by the IRS that the Limited Partner is subject to backup withholding as a result of a failure to report all interest or dividends or (c) has been notified by the IRS that the Limited Partner is no longer subject to backup withholding. Failure to provide the information on the form may subject the tendering Limited Partner to 31% federal income tax withholding on the payments made to the Limited Partner or other payee with respect to Units purchased pursuant to the Offer. The box in Box A, Part 2 of the form may be checked if the tendering Limited Partner has not been issued a TIN and has applied for a TIN or intends to apply for a TIN in the near future. If the box in Part 2 is checked, backup withholding, if applicable, will begin 7 days after the Depositary receives an Awaiting TIN Certification and will continue until the Limited Partner's TIN is provided to the Depositary. If within 60 days the Depositary receives the Limited Partner's TIN on a new IRS Form W-9 or copy of the Substitute Form W-9 provided above, the Depositary will return amounts withheld through the date such IRS Form W-9 or Substitute Form W-9 is received. DO NOT CHECK THE BOX IN BOX A, PART 3 UNLESS YOU HAVE BEEN NOTIFIED BY THE IRS THAT YOU ARE SUBJECT TO BACKUP WITHHOLDING. FIRPTA Affidavit - Box B. To avoid potential withholding of tax pursuant to Section 1445 of the 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 Limited Partner who or which is a United States person must complete the FIRPTA Affidavit stating, under penalties of perjury, such Limited Partner's TIN and address, and that such Limited Partner is not a foreign person. Tax withheld under Section 1445 of the Code is not an additional tax. If withholding results in an overpayment of tax, a refund may be obtained from the IRS. CHECK THE BOX IN BOX B, PART 1 ONLY IF YOU ARE NOT A U.S. PERSON AS DESCRIBED THEREIN. 5. Foreign Persons. In order for a Limited Partner who is a foreign person (i.e., not a United States person as defined in Instruction 4 above) to qualify as exempt from 31% backup withholding, such foreign Limited Partner must complete and deliver to the Depository, along with the Assignment of Partnership Interest, a Substitute Form W-8 which can be obtained from the Information Agent. 6. Conditional Tenders. No alternative, conditional or contingent tenders will be accepted. 7. Number of Units Tendered; Minimum Tenders; Partial Tenders. ASSIGNMENTS OF PARTNERSHIP INTEREST WHICH HAVE BEEN DULY EXECUTED, BUT WHERE NO INDICATION IS MARKED IN THE "NUMBER OF UNITS TENDERED" COLUMN ON IN SIGNATURE BOX, SHALL BE DEEMED TO HAVE TENDERED ALL UNITS PURSUANT TO THE OFFER. A Limited Partner may tender any or all of the Units owned by that Limited Partner, provided, however, in order for the transfer to be valid, a minimum of 10 Units or, if Units are tendered by an IRA or KEOGH, 4 Units, must be sold pursuant to the Offer and provided further that a Limited Partner must sell all of his Units if he would otherwise retain less than 10 Units or, in the case of an IRA or KEOGH, 4 Units (8 Units for residents of Missouri and Washington). No fractional Units will be purchased (except from a Limited Partner who is tendering all of the Units owned by that Limited Partner). All tendering Limited Partners, by execution of the Assignment of Partnership Interest (or facsimile thereof), waive any right to receive any notice of the acceptance of their Units for payment. 8. Assignee Status. Assignees must provide documentation to the Depository which demonstrates, to the satisfaction of the Purchaser, such person's status as an assignee. 9. Validity of Assignment of Partnership Interest. All questions as to the validity, form, eligibility (including time of receipt) and acceptance of Assignment of Partnership Interest will be determined by the Purchaser and such determination will be final and binding. The Purchaser's interpretation of the terms and conditions of the Offer (including these Instructions for the Assignment of Partnership Interest) also will be final and binding. The Purchaser will have the right to waive any irregularities or conditions as to the manner of tendering. Any irregularities in connection with tenders must be cured within such time as the Purchaser shall determine unless waived by it. The Assignment of Partnership Interest will not be valid unless and until any irregularities have been cured or waived. Neither the Purchaser, the Depository nor the Information Agent are under any duty to give notification of any defects in an Assignment of Partnership Interest and will incur no liability for failure to give such notification. 10. Requests for Assistance and Additional Copies. Questions or requests for assistance may be directed to the Information Agent, Beacon Hill Partners, Inc. at (212) 843-8500 (collect) or (800) 301-8755 (toll free). Copies of the Offer to Purchase and the Assignment of Partnership Interest may be obtained from the Information Agent by calling either number. 11. Inadequate Space. If the space provided herein is inadequate, additional information may be provided on a separate schedule signed and attached hereto. IMPORTANT: A PROPERLY COMPLETED AND DULY EXECUTED ASSIGNMENT OF PARTNERSHIP INTEREST (ALONG WITH REQUIRED SIGNATURE GUARANTEES AND ANY OTHER REQUIRED DOCUMENTS) MUST BE RECEIVED BY THE DEPOSITARY ON OR PRIOR TO 12:00 MIDNIGHT, NEW YORK CITY TIME ON WEDNESDAY, APRIL 8, 1998, UNLESS EXTENDED. IMPORTANT TAX INFORMATION Under federal income tax law, in order to prevent backup withholding on amounts payable to a Limited Partner whose tendered Units are accepted for payment, such Limited Partner is required to provide the Depositary with such Limited Partner's correct TIN on Substitute Form W-9 above or otherwise establish a basis for exemption from backup withholding. If the Depositary is not provided with the correct TIN, the Limited Partner or other payee may be subject to penalties imposed by the IRS. In addition, payments that are made to such Limited Partner or other payee with respect to Units purchased pursuant to the Offer may be subject to backup withholding. Certain Limited Partners (including, among others, all corporations and certain foreign persons) are not subject to these backup withholding and reporting requirements. Exempt Limited Partners should indicate their exempt status on Substitute Form W-9. In order for a foreign person to qualify as an exempt recipient, that Limited Partner must deliver to the Depositary a Substitute Form W-8, signed under penalties of perjury, attesting to that Limited Partner's exempt status. If backup withholding applies, the Depositary is required to withhold 31% of any reportable payments made to the Limited Partner or other payee. Backup withholding is not an additional tax. Rather, the federal income tax liability of persons subject to backup withholding will be reduced by the amount of tax withheld. If withholding results in an overpayment of taxes, a refund may be obtained from the IRS. EX-3.A 4 EXHIBIT (A)(3) [American Real Estate Partners, L.P. Letterhead] FOR IMMEDIATE RELEASE --------------------- Contact: Information Agent: Beacon Hill Partners, Inc. (212) 843-8500 AN AFFILIATE OF AMERICAN REAL ESTATE PARTNERS, L.P. --------------------------------------------------- INITIATES TENDER OFFERS ----------------------- Mount Kisco, N.Y., March 12, 1998 - American Real Estate Partners, L.P. (NYSE: ACP) announced today that Olympia Investors, L.P., a Delaware limited partnership affiliated with American Real Estate Partners, L.P. is initiating tender offers (the "Offers") for units of limited partnership interest ("Units") in the following limited partnerships: Up to 160,000 Units of Integrated Resources High Equity Partners, Series 85 at a purchase price per Unit of $95.00; Up to 235,000 Units of High Equity Partners L.P. - Series 86 at a purchase price per Unit of $85.00; and Up to 148,500 Units of High Equity Partners L.P. - Series 88 at a purchase price per Unit of $117.00. The Units sought constitute approximately 40% of the outstanding Units of each Partnership. The purpose of the Offers is to enable Olympia to acquire a significant interest in each Partnership for investment purposes. The Offers are not subject to financing. American Real Estate Partners, L.P. is a master limited partnership primarily engaged in acquiring and managing real estate investments, with a primary focus on office, retail, industrial, hotel and residential properties. 100 South Bedford Road o Mount Kisco, NY 10549 914-242-7700 o 914-242-9282 (Fax) EX-4.A 5 EXHIBIT (A)(4) $95.00 PER UNIT OFFER TO PURCHASE To Unitholders in Integrated Resources High Equity Partners, Series 85: Olympia Investors, L.P., a Delaware limited partnership (the "Purchaser"), is offering to purchase up to 160,000 of the outstanding units of limited partnership interest ("Units") in Integrated Resources High Equity Partners, Series 85 (the "Partnership") for a purchase price of $95.00 per Unit, net to the seller in cash, without interest, less the amount of distributions per Unit, if any (other than distributions of Adjusted Cash from Operations, as defined in the Partnership's Partnership Agreement), made by the Partnership from the date hereof until the Payment Date (as defined in the attached Offer to Purchase dated March 12, 1998), upon the terms and subject to the conditions set forth in the Offer to Purchase, and the related Assignment of Partnership Interest (which together constitute the "Offer"). Unless extended by the Purchaser, the Offer is effective until midnight, New York City time, on April 8, 1998. The Offer is not conditioned upon any minimum number of Units being tendered; however, in order for a tender to be valid, (i) a minimum of 10 Units or, if Units are tendered by an Individual Retirement Account or a Keogh Plan, 4 Units, must be sold pursuant to the Offer, and (ii) to the extent such tender is a partial tender, after the sale of Units pursuant to the Offer, you must continue to hold at least 10 Units or, if Units are tendered by an Individual Retirement Account or a Keogh Plan, 4 Units (8 Units for an IRA or Keogh Plan for Missouri and Washington residents). The materials included in this package include important information concerning the Purchaser, the terms and conditions of the Offer, tax implications and instructions for tendering your Units. It is important that you take some time to read carefully the enclosed Offer to Purchase, the Assignment of Partnership Interest and other accompanying materials in order to evaluate the Offer being made by the Purchaser. You must decide whether to tender your Units based on your own particular circumstances, including your judgment of the value of your Units taking into account their upside potential and risks. You should consult with your advisors about the financial, tax, legal and other implications to you of accepting the Offer. If you desire additional information regarding the Offer or need assistance in tendering your Units, you may call Beacon Hill Partners, Inc., which is acting as Information Agent for the Offer. Informed and courteous agents are available to assist you. BEACON HILL PARTNERS, INC. 90 Broad Street New York, New York 10004 (212) 843-8500 (Collect) or (800) 301-8755 (Toll Free) March 12, 1998 OLYMPIA INVESTORS, L.P. EX-1.C 6 EXHIBIT (C)(1) AGREEMENT Dated March 6, 1998 The parties to this agreement are Presidio Capital Corp., a corporation organized in the British Virgin Islands ("Presidio"), American Real Estate Holdings L.P., a Delaware limited partnership ("AREH") and Olympia Investors, L.P., a Delaware limited partnership ("Olympia"). Presidio, directly or indirectly, controls the general partners of each of Integrated Resources High Equity Partners, Series 85, a California limited partnership ("HEP 85"), High Equity Partners L.P. - Series 86, a Delaware limited partnership ("HEP 86"), and High Equity Partners L.P. - Series 88, a Delaware limited partnership ("HEP 88" and collectively with HEP 85 and HEP 86, the "Partnerships"). On the date of this agreement, AREH and its affiliates beneficially own 1,657 units of limited partnership interest ("Units") of HEP 85, 3,243 Units of HEP 86 and 2,346 Units of HEP 88. Olympia, a newly-formed Delaware limited partnership affiliated with AREH, wishes to make tender offers (the "Offers") to acquire up to approximately 40% of the outstanding Units of each of the Partnerships and, in that connection, proposes to file with the Securities and Exchange Commission (the "Commission") a Tender Offer Statement on Schedule 14D-1 relating to each Offer (collectively, the "Schedule 14D-1's") substantially in the forms set forth on schedule A. The parties agree as follows: 1. Offers. (a) Olympia intends to file the Schedule 14D-1's with the Commission, and to cause the related Offers to Purchase, Assignments of Partnership Interest and Cover Letters included as exhibits to such Schedule 14D-1's (such Offers to Purchase, 1 Assignments of Partnership Interest and Cover Letters, together with any amendments or supplements thereto or any other communications proposed to be sent to holders of Units of any Partnership being collectively referred to as the "Offering Materials") to be mailed to holders of Units, on or before the fifth business day following delivery by the Partnerships to Olympia of the Lists referred to in section 1(b) hereof. Olympia shall cause each Offer to expire on or before May 12, 1998 (the date on which an Offer expires in accordance with this sentence, as the same may be extended in accordance with the proviso set forth below, the "Final Expiration Date"); provided, however, that the Final Expiration Date with respect to any Offer may be extended, upon notice by Olympia to Presidio, under the following circumstances: (i) if there is in effect, on such date, any preliminary or permanent injunction or other order of any federal or state court, government or governmental authority or agency of the type described in paragraph (a) of Section 14 of the applicable Offer to Purchase (such preliminary or permanent injunction or other order being hereinafter referred to as an "Injunction"), the Final Expiration Date of such Offer may be extended to the earliest practicable date on which such Offer may expire in accordance with the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the rules and regulations promulgated by the commission thereunder (the Exchange Act and such rules and regulations being hereinafter collectively referred to as the "Rules"), following the vacation or dissolution of such Injunction and the dissemination to limited partners of additional Offering Materials containing any necessary disclosure relating thereto; (ii) subject to clause (i) above, if there is pending, on such date, any action or proceeding of the type described in paragraph (h) of Section 14 of the applicable Offer to Purchase, the Final Expiration Date of such Offer may be extended to the earlier of (A) the earliest practicable date on which such Offer may expire in accordance 2 with the Rules following the final resolution of such action or proceeding and the dissemination to limited partners of additional offering Materials containing any necessary disclosure relating thereto or (B) June 11, 1998; (iii) the Final Expiration Date of such Offer may be extended to the earliest practicable date on which such Offer may expire in accordance with the Rules following the dissemination to limited partners of additional Offering Materials prepared for the purpose of complying with comments by the staff of the Commission, provided that Olympia uses its best efforts to comply with such comments expeditiously; or (iv) in the event that a competing offer for Units is commenced by a third party bidder who is not affiliated with AREH (a "Competing Offer"), the Final Expiration Date of such Offer may be extended, on one or more occasions, to the earliest practicable date on which such Offer may expire in accordance with the Rules following an increase in the offering price to a price equal to or higher than the price offered by the competing bidder and the dissemination to limited partners of amended Offering Materials disclosing such increase, provided, however, that if such Competing Offer is for less than 5% of the outstanding Units of a Partnership, the Final Expiration Date may not be extended for more than ten business days beyond June 11, 1998 pursuant to this clause (iv). Presidio will not unreasonably withhold or delay its consent to any request by Olympia to extend the Final Expiration Date of any Offer, for any reason other than those set forth in the immediately preceding sentence, provided that such request does not seek to extend such Final Expiration Date beyond June 11, 1998. (b) Concurrently herewith, Presidio has caused the Partnerships to furnish Olympia with lists, as of the most recent practicable date and in computer readable form, of the names, addresses and numbers of Units held by limited partners of the Partnerships (the "Lists"), 3 together with such computer processing data as is necessary to make use of such computer readable Lists and printouts of such Lists for verifications purposes. AREH shall not, and shall cause its affiliates, agents and representatives not to, use the Lists for any purpose other than to acquire Units pursuant to the Offers. (c) Olympia shall make all decisions regarding the conduct of the Offers and the acquisition and transfer of Units pursuant thereto, including without limitation decisions regarding any change in the terms or waiver of any of the conditions thereof; provided, however, that, without obtaining the prior written approval of Presidio, Olympia shall not amend or otherwise modify the terms of any Offer: (i) to increase the number of Units of any Partnership sought to be purchased in such Offer to a number in excess of 40% of the outstanding Units of such Partnership; or (ii) in a manner that violates or is inconsistent with its obligations under this agreement. Olympia shall provide Presidio with copies of Offering Materials describing any proposed change in the terms of, or waiver of any condition to, an Offer not less than two business days prior to the date such Offering Materials are first mailed to holders of Units. Each party shall, and shall cause its affiliates to, comply with the Rules in connection with the Offers. (d) Presidio will not, and will cause its affiliates not to, directly or indirectly, purchase or otherwise acquire beneficial ownership of Units in any Partnership, enter into any agreement with a third party to purchase or otherwise acquire beneficial ownership of any Units in any Partnership, or make any offer to purchase or otherwise acquire beneficial ownership of, or solicit any offer to sell, Units in any Partnership, at any time commencing on the date hereof through and including the Final Expiration Date of the Offer with respect to such Partnership. 2. Standstill. (a) Prior to the Standstill Expiration Date (as hereinafter defined), 4 except to the extent AREH or its affiliates is invited to do otherwise by Presidio, AREH shall not, and shall not permit any of its affiliates to, directly or indirectly: (i) acquire, announce an intention to acquire, offer or propose to acquire, solicit an offer to sell or agree to acquire, by purchase, by gift, by joining a partnership, a limited partnership, a syndicate or any group or otherwise (other than any partnership, limited partnership, syndicate or group consisting solely of AREH and its affiliates and, in such event, only to the extent permitted pursuant to section 2(b) below), (A) any Units in any Partnership or (B) any assets, businesses or properties of any Partnership; (ii) participate in the formation or encourage the formation of, or join or in any way participate with, any partnership, limited partnership, syndicate, group or other person or entity that beneficially owns or seeks to acquire beneficial ownership of Units in any Partnership for the purpose of beneficially owning or acquiring beneficial ownership of any such Units (other than any group consisting solely of AREH and its affiliates); (iii) solicit, or participate in the solicitation of, proxies or become a participant in any election contest (the terms used in this section 2.3 having the respective meanings given them to Regulation 14A under the Exchange Act) with respect to any Partnership; (iv) initiate, propose or otherwise solicit limited partners for the approval of one or more proposals with respect to any Partnership or induce any other person to initiate any such proposal; (v) seek the removal of any general partner of any Partnership or seek to have called any meeting of limited partners of any Partnership; (vi) deposit any Units of any Partnership in a voting trust or subject them to 5 a voting agreement or other agreement or arrangement with respect to voting (other than this agreement or any agreement or arrangement solely among AREH and its affiliates); or (vii) otherwise act, alone or in concert with others, to seek to control the management, policies or affairs of any Partnership or solicit, propose, seek to effect or negotiate with any other person or entity (including, without limitation, any Partnership) with respect to any form of business combination or other extraordinary transaction with any Partnership or any of its general partners; solicit, make or propose, or negotiate with any other person or entity with respect to, or announce an intent to make, any tender offer or exchange offer for any Units in any Partnership; publicly disclose an intent, purpose, plan or proposal with respect to any Partnership or any securities or assets of any Partnership that would violate the provisions of this section 2; or assist, participate in, facilitate or solicit any effort or attempt by any person or entity to do or seek to do any of the foregoing. (b) Notwithstanding the provisions of section 2(a): (i) AREH and its affiliates: may conduct the Offers, and acquire Units pursuant to the Offers, in accordance with section 1 hereof and may exercise their rights and perform their obligations under this Agreement; (ii) Olympia and/or any Permitted Transferee may acquire from any Partnership, as a distribution from the Partnership, any securities or other assets or properties the Partnership distributes to its partners in any such distribution. (iii) Except as to the matters expressly referred to in section 2(a) and except as provided in section 5, Olympia and any Permitted Transferee of Units shall be entitled to exercise their rights as a limited partner of each Partnership in which they own Units, including, without 6 limitation, the rights to access books and records of the Partnership and to vote. (iv) Neither AREH nor any affiliate of AREH shall be deemed to have violated section 2 of this Agreement in the event that such person acquires beneficial ownership of Units of any Partnership pursuant to a transaction in which such person acquires another entity, in circumstances in which the principal purpose of such transaction is not to acquire Units of such Partnership or otherwise to circumvent the intent of this agreement, provided that the number of Units so acquired, together with the aggregate number of Units of such Partnership acquired by AREH or any affiliate of AREH in any other transactions permitted pursuant to this paragraph (iv), represent a de minimis amount of the total outstanding Units of such Partnership. (v) AREH and its affiliates may acquire, offer or propose to acquire, or agree to acquire one or more assets, businesses or properties of any Partnership if, prior to AREH or any affiliate taking action with respect to such acquisition, the general partners of the Partnership owning such assets, businesses or properties or their affiliates have publicly announced such Partnership's intention to offer such assets, businesses or properties for sale or to solicit offers for the purchase thereof or have retained a broker for such purpose. (c) For purposes of this agreement, "Standstill Expiration Date", with respect to any Partnership, shall mean the earliest to occur of: (i) the third anniversary of the date hereof; (ii) the date of a Default (as hereinafter defined) by Presidio in its obligation to purchase Units of such Partnership pursuant to the buy/sell agreements set forth in section 4 hereof; and (iii) the closing date of the purchase by Olympia and/or any affiliate of Units from Presidio pursuant to the buy/sell agreements set forth in section 4 hereof. 7 3. Restrictions on Transfer 3.1 Transfers to be made only as Permitted or Required by this Agreement. Olympia and its affiliates shall not, directly or indirectly, sell, assign, transfer, pledge or otherwise encumber or dispose of (collectively, "transfer") any Units any of them acquires pursuant to the Offers, except as specifically permitted or required by this agreement. Any other purported transfer shall be void and of no effect. The foregoing provisions shall not be deemed to prohibit (a) the transfer of the capital stock or other equity interest in Olympia, AREH or any of their respective affiliates in circumstances in which the principal purpose of such transfer is not to dispose of Units or otherwise to circumvent the intent of this agreement; or (b) the pledge of any Units acquired pursuant to the Offers or any capital stock or other equity interest in Olympia, AREH or any such affiliates from being pledged to collateralize or otherwise support general corporate or partnership obligations of Olympia, AREH or such affiliate existing of the date or incurred during the term of this agreement, provided that the foregoing shall not relieve Olympia, AREH or such affiliate from its obligations to fully perform its undertakings hereunder and provided further that any direct pledgee of Units shall agree to be bound by the provisions of this agreement to the same extent as Olympia is so bound as a condition to foreclosing upon such Units. 3.2 Permitted Transfers. Olympia and its affiliates may, at any time or from time to time, transfer some or all of the Units they acquire pursuant to the Offers (or the right to acquire Units pursuant to the Offers) to any of their affiliates (Olympia and each such affiliate being hereinafter referred to as a "Permitted Transferee"). No transfer to a Permitted Transferee shall be effective, however, unless the Permitted Transferee agrees, in a writing that is reasonably 8 satisfactory to Presidio, to be bound by all the terms of this agreement to the same extent that Olympia and AREH are so bound. 3.3 Termination of Restrictions. The provisions of section 3.1 shall terminate, as to a Partnership, on the earlier to occur of: (a) the third anniversary of this agreement; or (b) the closing of any purchase of Units of such Partnership by Olympia or an affiliate upon exercise of the buy/sell provisions set forth in section 4 hereof. In addition, the provisions of section 3.1 shall not apply to any of the Partnerships at any time following the occurrence and during the continuance of a Default by Presidio in its obligation to purchase Units of one or more Partnerships upon exercise of the buy/sell provisions set forth in section 4 hereof. If Units are transferred to a third party other than a Permitted Transferee at any time when the restrictions on transfer do not apply (as provided in the immediately preceding sentence) or transferred to any third party following the termination of such restrictions, the transferee will not be bound by any of the obligations applicable to the transferor of such Units under this Agreement. 4. Call; Buy/Sell 4.1 Call. At any time after the Final Expiration Date and before the ninety-first day following the Final Expiration Date, Presidio shall have the option (the "Call Option") to purchase 50% (but not less than 50%) of the Units in each Partnership acquired pursuant to the Offers by Olympia and its affiliates for a price determined in accordance with schedule 4.1. The Call Option will be exercisable only by written notice by Presidio to Olympia and AREH, which notice must be given, if at all, prior to the expiration of such option. 4.2 Buy/Sell. (a) Either Olympia or Presidio may initiate buy/sell procedures with respect to one or more Partnerships at any time commencing on the Buy/Sell 9 Effective Date (as hereinafter defined) through and including the Standstill Expiration Date. Anything herein to the contrary notwithstanding, buy/sell procedures may not be instituted more than once with respect to any Partnership (except that the delivery of a Buy/Sell Offer that is rescinded pursuant to section 4.2(d) hereof shall not constitute the institution of buy/sell procedures for this purpose). Such buy/sell procedures shall cover, in the case of Olympia, all Units of a Partnership acquired by Olympia and/or any Permitted Transferee pursuant to an Offer (other than Units purchased by Presidio upon exercise of the Call Option) and all other Units owned by Olympia or any affiliate of Olympia at the time the buy/sell procedures are initiated (collectively, the "Olympia Covered Units") and, in the case of Presidio, all Units of such Partnership acquired by Presidio or any affiliate of Presidio upon exercise of the Call Option (collectively, the "Presidio Covered Units"). (b) Either Olympia or Presidio may initiate the buy/sell procedures with respect to one or more Partnerships by delivering to the other a written offer (the "Buy/Sell Offer") stating the buy/sell price on a per Unit/per Partnership basis (which buy/sell price shall be payable solely in cash and shall not exceed, for any Partnership, the net asset value per Unit for such Partnership as of the date of the Buy/Sell Offer (the "Maximum Price")) and other material terms and conditions on which the initiating party is willing to purchase all, but not less than all, Olympia Covered Units or Presidio Covered Units, as the case may be, of such Partnership. The non-initiating party shall then be obligated to elect to sell Units to the initiating party at the per Unit price and upon the other terms and conditions set forth in the Buy/Sell Offer, or to purchase Units from the initiating party upon such terms and conditions. (If the Buy/Sell Offer relates to more than one Partnership, the non-initiating party may, in its discretion, elect to buy Units of one 10 Partnership and sell Units of another, subject to Section 4.2(c) below). The non-initiating party shall have fifteen days from the date the Buy/Sell Notice is delivered to it (the "Reply Period") to decide whether to buy or sell. Failure to notify the initiating party of such decision at or prior to the end of the Reply Period shall be deemed a decision to buy Units. Notwithstanding the foregoing, in the event that the non-initiating party wishes to buy Units of a Partnership but believes that the buy/sell price named in the Buy/Sell Offer exceeds the Maximum Price for such Partnership, the non-initiating party shall notify the initiating party during the Reply Period of its election to buy such Units at the Maximum Price, which notice (the "Appraisal Notice") shall set forth the Maximum Price (in the opinion of the non-initiating party) and shall name an appraiser with a minimum of ten years experience in the appraisal of properties of the type owned by the Partnership(s) whose Units are subject to appraisal (a "Qualified Appraiser"). If the parties cannot agree upon the Maximum Price, the initiating party shall name a Qualified Appraiser (and shall so notify the non-initiating party in writing) within ten days following its receipt of the Appraisal Notice, and the two Qualified Appraisers shall choose a third impartial Qualified Appraiser (the "Impartial Appraiser") within ten days following selection of the second Qualified Appraiser. If the initiating party fails timely to select (and to notify the non-initiating party of its selection of) a Qualified Appraiser in accordance the immediately preceding sentence, the Qualified Appraiser selected by the non-initiating party shall select the Impartial Appraiser. The Impartial Appraiser so selected shall perform an appraisal to determine the Maximum Price of Units of the Partnership(s) subject to the dispute between the parties and shall present the results of such appraisal and his determination of the Maximum Price to the parties in writing within 90 days following such appraiser's selection. The determination of such Impartial Appraiser shall be 11 final and binding on the parties hereto. Each party shall bear any costs and expenses of the Qualified Appraiser selected by such party and Presidio shall bear 50% and AREH shall bear 50% of the costs and expenses of the Impartial Appraiser. (c) If Presidio or an affiliate does not exercise the Call Option with respect to one or more Partnerships (and, as a result, there are no Presidio Covered Units of such Partnership(s)) or if, at the time buy/sell procedures are initiated, Presidio and its affiliates collectively own more than 15% of the outstanding Units of the Partnership(s) with respect to which such buy/sell procedures are initiated, then, notwithstanding the provisions of section 4.2 hereof to the contrary: (i) if AREH or an affiliate initiates buy/sell procedures with respect to such Partnership(s), AREH or such affiliate may require Presidio to buy the Units of such Partnership(s) covered by AREH's or such affiliate's Buy/Sell Offer at the Maximum Price then applicable to such Units, and (ii) if Presidio initiates buy/sell procedures with respect to such Partnership(s), AREH and its affiliates may, in their discretion, elect to sell the Units covered by Presidio's Buy/Sell Offer at the Maximum Price then applicable to such Units or to retain such Units. The appraisal procedures set forth in paragraph (b) above shall apply to buy/sell procedures governed by this paragraph (c), if applicable. (d) As used herein, "Buy/Sell Effective Date" shall mean, as to Units of any Partnership, the earlier to occur of: (a) the six-month anniversary of the Final Expiration Date; and (b) the date on which Presidio gives notice (in accordance with Section 8.7 hereof) to Olympia and AREH of a proposal by or on behalf of the general partners of any Partnership or any affiliate of such general partners to effect a "roll-up" transaction (within the meaning of Item 901 of Regulation S-K promulgated by the Commission under the Exchange Act) involving such 12 Partnership (it being agreed by Presidio that it will not permit any such "roll-up" transaction to be consummated less than sixty days following the giving of such notice (in accordance with Section 8.7 hereof) to Olympia and AREH). Any notice given pursuant to clause (b) of the immediately preceding sentence shall set forth, in reasonable detail, all material terms of the "roll-up" transaction being proposed. Notwithstanding the foregoing, in the event that Presidio makes a Buy/Sell Offer at a time when either the purchase or sale of Units by Olympia or its affiliates pursuant to the buy/sell procedures set forth in this section 4 would cause Olympia or any such affiliate to incur liability under Section 16(b) of the Exchange Act, Olympia may so notify Presidio (which notice shall state the earliest date (the "Trigger Date") on which Olympia or such affiliate could commit either to purchase or sell Units without incurring such liability, provided that such Trigger Date shall not be more than six months and one day following the date of Presidio's Buy/Sell Offer), in which event Presidio's Buy/Sell Offer shall be deemed to be rescinded for all purposes of this agreement, and Presidio may not initiate another Buy/Sell Offer prior to the Trigger Date. Olympia may not cause a Buy/Sell Offer to be rescinded pursuant to this section 4.2(c) more than once. 4.3 Closing. The closing of any purchase and sale of Units of a Partnership upon exercise of the Call Option or pursuant to the buy/sell procedures, as the case may be, shall be held in New York City during normal business hours at a place and date specified by Presidio in writing to Olympia and AREH, but not fewer than 10 days or more than 30 days after: (x) the exercise of the Call Option or with respect to such Partnership; or (y) the end of the Reply Period following delivery of a Buy/Sell Offer covering such Partnership (or, if an Appraisal Notice is timely given relating to Units of such Partnership, then the final determination by the Impartial 13 Appraiser of, or the mutual agreement of the parties as to, the Maximum Price). Once scheduled, such closing shall not be postponed or adjourned except by mutual consent of the parties hereto. At such closing, (a) the party selling Units shall deliver to the party purchasing Units instruments of transfer with respect to the Units being sold, which instruments shall be substantially in the form set forth in schedule 4.3, and (b) the party purchasing Units shall pay the full purchase price for the Units being purchased by wire transfer of immediately available funds to an account specified in writing by party selling Units at least two days before the closing. As used herein, a "Default" by Presidio in its obligation to purchase Units upon exercise of the buy/sell procedures means the failure by Presidio timely to schedule a closing for such purchase as required by this section 4.3 or to pay the full purchase price for any or all of the Units required to be purchased by Presidio at such closing in the manner required by this section, provided that Olympia and/or any Olympia affiliate owning the Units required to be purchased at such closing are ready, willing and able to perform their obligations to transfer such Units to Presidio. Anything herein to the contrary notwithstanding, if, between the date a Buy/Sell Offer is made and the date of the closing pursuant to this section 4.3, a transaction has been consummated as a result of which the Units required to be transferred at such closing (and all other Units of the subject Partnership) have been exchanged for or converted into another security, the party required to sell such Units shall deliver at the closing the securities so received by it in connection with such exchange or conversion and the purchase price payable to such party shall be unaffected by such exchange or conversion. 5. Agreement to Vote. If, at any time or from time to time before the Standstill Expiration Date, the general partners of a Partnership submit to the limited partners of that 14 Partnership a proposal that would result in such limited partners receiving securities that, upon consummation of the proposal, are listed on a national securities exchange or NASDAQ, AREH shall cause all the Units in that Partnership owned by AREH or any affiliate of AREH and not theretofore purchased by Presidio to be voted in favor of the proposal. 6. Neutrality. Presidio will not, and will not cause or permit its affiliates to, take any action that would result in the conditions to the Offers set forth in Section 14 of each Offer to Purchase not to be satisfied and will not, and will not cause or permit its affiliates to, actively oppose the Offers, but rather will take, and will cause its affiliates to take, a neutral stance with respect thereto, except that in the case of (i) a competing third party bid (i.e., a bid made by or on behalf of a party other than AREH or an affiliate or Presidio or an affiliate that is not topped by Olympia) made prior to the expiration date of the Offers or (ii) the occurrence of any event materially adversely affecting the Offers, Presidio or any affiliate of Presidio may change any recommendation they have made to limited partners with respect to the Offers to reflect such competing bid or the occurrence of such event. In furtherance and not in limitation of the foregoing, Presidio will cause the general partners of the Partnerships to admit Olympia or a Permitted Transferee as a limited partner of each Partnership in which it purchases Units pursuant to an Offer upon delivery of each Partnership's standard transfer paperwork, such admission to be effective as of the first day of the calendar quarter next following the date of such delivery by Olympia. Presidio shall cause each of the Partnerships to waive applicable transfer fees in connection with transfers to Olympia or a Permitted Transferee of Units acquired pursuant to the Offers. 7. Termination. (a) Anything herein to the contrary notwithstanding, Olympia 15 and AREH shall have the right to terminate this agreement, by giving written notice of such termination to Presidio (without any liability on the part of any party hereto to any other party hereto, other than liability for breaches occurring prior to such termination), in the event that Presidio and/or any affiliate of Presidio fails or refuses to comply with (a) any comment made by the staff of the Commission to amend the Offers to the extent necessary to include Presidio and/or affiliate of Presidio as co-bidders and to make any related disclosures in the Offering Materials or (b) any other reasonable comment made by the staff relating to the Offers which comment applies to and contemplates the taking of certain action or making certain disclosures by Presidio and/or any affiliate of Presidio (and, in the case of clause (a) or (b) above, after counsel for Presidio has had reasonable opportunity to persuade the staff of the correctness of Presidio's position on such matter, if different than that of the staff). The obligations of Presidio pursuant to section 6 hereof will survive such termination. (b) Anything herein to the contrary notwithstanding, Presidio shall have the right to terminate this agreement (without any liability on the part of any party hereto to any other party hereto, other than liability for breaches occurring prior to such termination), by giving written notice of such termination to AREH and Olympia, at any time on or after the sixty-first day following the entry of an Injunction (but in no event prior to June 11, 1998), provided that the Final Expiration Date has not occurred and such Injunction remains in effect on the date Presidio terminates such agreement. 8. Miscellaneous 8.1 Definitions. As used in this agreement: the terms "affiliate" and "control" have the respective meanings given them in Rule 12b-2 under the Exchange Act; the 16 terms "beneficially own," "beneficial ownership" and "group" have the respective meanings given them in Rule 13d-3 under the Exchange Act; the term "Partnership" refers to each of the Partnerships (as defined in the preface to this agreement) and also includes each entity whose securities are issued to limited partners of a Partnership pursuant to a transaction of the type described in section 5 hereof; and the term "Unit" refers to Units of each Partnership (as defined in the preface to this agreement) and also includes any securities of the type described in section 5 hereof issued to limited partners of a Partnership in exchange for Units. 8.2 Benefit. This agreement shall be binding upon, and inure to the benefit of, the respective successors and assigns of the parties. Notwithstanding the foregoing, no party may assign its rights or obligations under this Agreement without obtaining the prior written consent of the other parties; provided, however, that any party may assign its right or obligation to purchase or sell Units pursuant to Section 4 hereof, provided that such assignment will not relieve the assigning party of any liability hereunder. 8.3 Governing Law; Jurisdiction. This agreement shall be governed by and construed in accordance with the law of the state of NewYork applicable to agreements made and to be performed wholly in New York. Any litigation based on, or arising out of, under or in connection with this Agreement or the consummation of the transactions contemplated hereby shall be brought and maintained exclusively (to the extent permitted under applicable law) in the courts of the State of New York, New York County or in the United States District Court for the Southern District of New York. The parties expressly and irrevocably submit to the jurisdiction of the courts of the State of New York, New York County, and of the United States District Court for the Southern District of New York for the purpose of any such litigation as set forth 17 above and irrevocably agree to be bound by any judgment rendered thereby in connection with such litigation. Each of the parties irrevocably consents to the service of process by registered mail, postage prepaid, or by personal service within or without the State of new York. 8.4 Remedies. The parties to this agreement will be irreparably damaged if this agreement is not specifically enforced. If any dispute arises under this agreement concerning any transfer of Units or any other right or obligation, that right or obligation shall be enforceable in a court of equity by an injunction or a decree of specific performance without any bond or other security being required. These remedies shall not be exclusive, and shall be in addition to any other remedies the parties may have. 8.5 Separability. If any provision of this agreement, or the application of any provision to any person or circumstance, shall for any reason or to any extent be invalid or unenforceable, the remainder of this agreement and the application of that provision to other persons or circumstances shall not be affected, but shall be enforced to the full extent permitted by law. 8.6 Waiver. The failure of a party to insist upon strict adherence to any term of this agreement on any occasion shall not be considered a waiver or deprive that party of the right thereafter to insist upon strict adherence to that term or any other term of this agreement. Any waiver must be in writing. 8.7 Notices. Any notice or other communication under this agreement shall be in writing and shall be considered given when delivered by hand. Notice may also be given by electronic facsimile transmission, but in such case will be deemed given only when received by the addressee. Notices shall be directed to the parties at their respective addresses set 18 forth below (or such other address as the party to be notified may have requested in writing): (a) if to Presidio, to it c/o Northstar Capital Partners LLC, 527 Madison Avenue, New York, New York 10022, Attn: Richard Sabella (Tel. No. (212)319-3400; Fax No. (212)319-4557), with a copy to: Edward W. Kerson, Esq., Proskauer Rose LLP, 1585 Broadway, New York, New York 10036 (Tel. No. (212)969-3290; Fax No. (212)969-2900) ; and (b) if to AREH or Olympia, to it c/o Icahn Associates Corp., 767 Fifth Avenue, 47th Floor, New York, New York 10153, Attn: Martin L. Hirsch (Tel. No. (212)702-4343; Fax No. (212)750-5841) with a copy to: Theodore Altman, Esq., Gordon Altman Butowsky Weitzen Shalov & Wein, 114 W. 47th Street, New York, New York 10036 (Tel. No. (212)626-0812; Fax No. (212)626-0799). 8.8 Counterparts. This agreement may be executed in counterparts, each of which shall be considered an original, but both of which together shall constitute the same instrument. 8.9 Complete Agreement. This agreement contains a complete statement of all the arrangement between the parties with respect to its subject matter, supersedes all existing agreements between them relating to that subject matter and cannot be changed or terminated orally. Except as expressly set forth herein, there are no contracts, arrangements, understandings or relationships between the parties hereto with respect to the Units. 8.10 Joint and Several Liability. AREH shall be jointly and severally liable for the obligations of AREH and of its affiliates (including Olympia) hereunder (and, in this regard, any action or inaction required hereunder to be taken or not taken, or which AREH is required to cause or prevent or not permit by such affiliate shall be deemed to be an obligation of both such affiliate and AREH hereunder), and Presidio shall have the right to enforce this 19 Agreement with respect to all such matters directly against AREH, without first being required to file suit or seek recourse of any kind against any other person. Presidio shall be jointly and severally liable for the obligations of Presidio and its affiliates (including the general partners of each Partnership) hereunder (and, in this regard, any action or inaction required hereunder to be taken or not taken, or which Presidio is required to cause or prevent or not permit by such affiliate shall be deemed to be an obligation of both such affiliate and Presidio hereunder), and AREH and Olympia shall have the right to enforce this Agreement with respect to all such matters directly against Presidio, without first being required to file suit or seek recourse of any kind against any other person. 8.11 Delivery of Offering Materials. Presidio hereby agrees on behalf of the Partnerships and their general partners that, for purposes of compliance by Olympia (and any affiliates who are co-bidders in the Offers) with Rule 14d-3(a)(2) and (b) of the Rules, Olympia may hand deliver a copy of its Schedule 14D-1's together with all exhibits thereto and any amendments thereto to the Partnerships c/o Edward W. Kerson, Esq., Proskauer Rose, LLP, 1585 Broadway, New York, New York 10036 and shall send a copy of such materials to the Partnerships at their principal executive offices for delivery on the next business day. 20 IN WITNESS WHEREOF, the undersigned have caused this agreement to be executed by their duly authorized representatives as of the date first above written. PRESIDIO CAPITAL CORP. By: /s/ Richard Sabella ----------------------- Name: Richard Sabella Title: OLYMPIA INVESTORS, L.P. By: Olympia-GP, Inc. By: /s/ Martin L. Hirsch ----------------------- Name: Martin L. Hirsch Title: Vice President AMERICAN REAL ESTATE HOLDINGS, L.P. By: American Property Investors, Inc. By: /s/ Martin L. Hirsch ----------------------- Name: Martin L. Hirsch Title: Vice President [Signature Page of Agreement, dated March 6, 1998, among Presidio Capital Corp., Olympia Investors, L.P. and American Real Estate Holdings L.P.] 21 Schedule 4.1 The purchase price per Unit payable upon exercise of the Call Option will be the sum of : (i) the Purchase Price per Unit (as hereinafter defined); and (ii) Expenses per Unit (as hereinafter defined). The Purchase Price per Unit will equal the lesser of (A) the price per Unit paid by Olympia in the Offers or (B) $110.68 per Unit for Units of HEP 85, $99.97 per Unit for Units of HEP86, and $124.13 per Unit for Units of HEP 88. Notwithstanding the foregoing, in the event that Olympia increases its offering price per Unit in order to equal or top a competing bidder, then the Purchase Price per Unit will equal the price per Unit paid by Olympia in the Offers. Expenses per Unit will equal (i) the sum of all out-of-pocket costs and expenses incurred by Olympia and its affiliates (including attorneys fees and expenses) with respect to the Offers and the purchase and transfer to Olympia or an affiliate of Units purchased pursuant thereto, including without limitation the fees and expenses of Beacon Hill Partners (the information agent for the Offer)(including without limitation fees and expenses incurred in connection with telephone calls to limited partners of the Partnerships), Harris Trust Company (the depositary for the Offer), printing and mailing expenses, Commission filing fees, and any out-of-pocket costs and expenses attributable to the admission of Olympia or an affiliate as a substitute limited partner (but will not include (x) any costs and expenses or attorneys fees and expenses attributable to the negotiation, execution and delivery of this agreement or any litigation arising out of or in connection with this agreement or the Offers or (y) the Purchase Price per Unit) divided by (ii) the total number of Units of the Partnerships purchased by Olympia and its affiliates pursuant to the Offers. 22 -----END PRIVACY-ENHANCED MESSAGE-----