-----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, P5F8H4Imz8h8dUuIpz0xboRrVrGozyJE+y+GgTDFjY5sluI8As+OuSxqkGzudFs3 Gz9n2G2O9H3mBdjI3kzQ7A== 0000916002-00-000001.txt : 20000202 0000916002-00-000001.hdr.sgml : 20000202 ACCESSION NUMBER: 0000916002-00-000001 CONFORMED SUBMISSION TYPE: SC 14D1 PUBLIC DOCUMENT COUNT: 6 FILED AS OF DATE: 20000113 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: MCNEIL REAL ESTATE FUND XX L P CENTRAL INDEX KEY: 0000750334 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE [6500] IRS NUMBER: 330050225 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 14D1 SEC ACT: SEC FILE NUMBER: 005-48310 FILM NUMBER: 506504 BUSINESS ADDRESS: STREET 1: 13760 NOEL RD STE 600 LB70 CITY: DALLAS STATE: TX ZIP: 75240 BUSINESS PHONE: 9724485800 MAIL ADDRESS: STREET 1: 13760 NOEL ROAD SUITE 600 LB 70 STREET 2: 13760 NOEL ROAD SUITE 600 LB 70 CITY: DALLAS STATE: TX ZIP: 75240 FORMER COMPANY: FORMER CONFORMED NAME: SOUTHMARK INCOME INVESTORS LTD DATE OF NAME CHANGE: 19920413 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: BOND PURCHASE LLC CENTRAL INDEX KEY: 0001058983 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 431722871 STATE OF INCORPORATION: MO FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 14D1 BUSINESS ADDRESS: STREET 1: 1100 MAIN STREET 2: SUITE 2100 CITY: KANSAS CITY STATE: MO ZIP: 64105 BUSINESS PHONE: 8164214670 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 - -------------------------------------------------------------------------------- MCNEIL REAL ESTATE FUND XX, L.P. (Name of Subject Company) BOND PURCHASE, L.L.C. (Bidder) UNITS OF LIMITED PARTNERSHIP INTEREST (Title of Class of Securities) ------------------------------------------------------------------------------- Bond Purchase, L.L.C. 1100 Main, Suite 2100 Kansas City, MO 64105 Copy to: Scott M. Herpich Lathrop & Gage L.C. 2345 Grand Blvd., Suite 2800 Kansas City, MO 64108 (816) 292-2000 (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications on Behalf of Bidder) Calculation of Filing Fee - -------------------------------------------------------------------------------- Transaction Amount of Valuation* Filing Fee $4,750,732 $951 - -------------------------------------------------------------------------------- *For purposes of calculating the filing fee only. This amount assumes the purchase of 47,507 units of limited partnership interest ("Units") of the subject company for $100 per Unit in cash. [ ] Check box if any part of the fee is offset as provided by Rule 0-11(a)(2) and identify the filing with which the offsetting fee was previously paid. Identify the previous filing by registration statement number, or the Form or Schedule and date of its filing. Amount previously paid: N/A Filing party: N/A Form or registration no.: N/A Date filed: N/A (Continued on following pages) (Page 1 of 7 pages) 14D-1 Page 2 of 7 Pages - -------------------------------------------------------------------------------- 1. Name of Reporting Person S.S. or I.R.S. Identification No. of Above Person Bond Purchase, L.L.C. - -------------------------------------------------------------------------------- 2. Check the Appropriate Box if a Member of a Group (See Instructions) (a) [ ] (b) [ ] - -------------------------------------------------------------------------------- 3. SEC Use Only - -------------------------------------------------------------------------------- 4. Sources of Funds (See Instructions) WC - -------------------------------------------------------------------------------- 5. Check Box if Disclosure of Legal Proceedings is Required Pursuant to Item 2(e) or 2(f) [ ] - -------------------------------------------------------------------------------- 6. Citizenship or Place of Organization Missouri - -------------------------------------------------------------------------------- 7. Aggregate Amount Beneficially Owned by Each Reporting Person 2,004.68 Units of Limited Partnership Interest - -------------------------------------------------------------------------------- 8. Check Box if the Aggregate Amount in Row (7) Excludes Certain Shares (See Instructions) [ ] - -------------------------------------------------------------------------------- 9. Percent of Class Represented by Amount in Row (7) 4.0% - -------------------------------------------------------------------------------- 10. Type of Reporting Person (See Instructions) PN 2 ITEM 1. SECURITY AND SUBJECT COMPANY. (a) The name of the subject company is McNeil Real Estate Fund XX, L.P., a California limited partnership (the "Partnership"), which has its principal executive offices at 13760 Noel Road, Suite 600, LB70, Dallas, Texas 75240. (b) This Schedule 14D-1 relates to the offer by Bond Purchase, L.L.C., a Missouri limited liability company (the "Purchaser"), to purchase all of the issued and outstanding units of limited partnership interest ("Units") of the Partnership at $100 per Unit less the amount of any distributions declared or made with respect to the Units between December 31, 1999 and the date of payment of the purchase price (the "Purchase Price") for the Units by the Purchaser, net to the seller in cash, without interest thereon, upon the terms and subject to the conditions set forth in the Offer to Purchase dated January 13, 2000 (the "Offer to Purchase") and the related Letter of Transmittal, copies of which are attached hereto as Exhibits (a)(1) and (a)(2), respectively. Information concerning the number of outstanding Units is set forth in the Introduction to the Offer to Purchase and is incorporated herein by reference. The information set forth in Section 13 ("Purchase Price Considerations") of the Offer to Purchase is incorporated herein by reference. (c) The information set forth in Section 13 ("Purchase Price Considerations") of the Offer to Purchase is incorporated herein by reference. ITEM 2. IDENTITY AND BACKGROUND. (a)-(d) The information set forth in Section 10 ("Certain Information Concerning the Purchaser") to the Offer to Purchase is incorporated herein by reference. (e) and (f) During the last five years, neither the Purchaser nor, to the best of its knowledge, any of the persons referred to in Section 10 ("Certain Information Concerning 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 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 Section 10 ("Certain Information Concerning the Purchaser") to the Offer to Purchase is incorporated herein by reference. ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY. (a) - (b) The information set forth in Section 10 ("Certain Information Concerning the Purchaser") and Section 11 ("Background of the Offer") of the Offer to Purchase is incorporated herein by reference. 3 ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION. (a)-(b) The information set forth in Section 12 ("Source of Funds") of the Offer to Purchase is incorporated herein by reference. (c) Not applicable. ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDER. (a)-(b) Not applicable. (c) The information set forth in Section 8 ("Purpose of the Offer; Future Plans") of the Offer to Purchase is incorporated herein by reference. (d) Not applicable. (e) The information set forth in Section 8 ("Purpose of the Offer; Future Plans") of the Offer to Purchase is incorporated herein by reference. (f)-(g) Not applicable. ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY. (a)-(b) The information set forth in the Introduction and Section 10 ("Certain Information Concerning 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 10 ("Certain Information Concerning the Purchaser") and Section 11 ("Background of the Offer") of the Offer to Purchase is incorporated herein by reference. ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED. Not applicable. ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS. Not applicable. ITEM 10. ADDITIONAL INFORMATION. (a) None. 4 (b)-(e) The information set forth in Section 15 ("Certain Legal Matters") of the Offer to Purchase is incorporated herein by reference. (f) The information set forth in the Offer to Purchase and the related Letter of Transmittal is incorporated herein in its entirety by reference. ITEM 11. MATERIAL TO BE FILED AS EXHIBITS. 99.(a)(1) Offer to Purchase dated January 13, 2000. 99.(a)(2) Letter of Transmittal. 99.(a)(3) Cover Letter, dated January 13, 2000, from Bond Purchase, L.L.C. to the holders of Units. 99.(b) Escrow Agreement dated January 11, 2000, by and between Bond Purchase, L.L.C. and Assured Quality Title Company. 99.(c) Assignment and Transfer Agreement respecting the purchase of Units in the Partnership by and between Madison/WP Partnership Value Fund II, LP, Madison/WP Partnership Value Fund III, LLC, and Bond Purchase, L.L.C. 99.(d) None. 99.(e) Not applicable. 99.(f) None. 5 SIGNATURES After due inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. Dated: January 12, 2000 BOND PURCHASE, L.L.C. By: /s/ David L. Johnson Name: David L. Johnson Title: Member 6 EXHIBIT INDEX EXHIBIT NO. TITLE 99.(a)(1) Offer to Purchase dated January 13, 2000. 99.(a)(2) Letter of Transmittal. 99.(a)(3) Cover Letter, dated January 13, 2000, from Bond Purchase, L.L.C. to the holders of Units. 99.(b) Escrow Agreement dated January 11, 2000, by and between Bond Purchase, L.L.C. and Assured Quality Title Company. 99.(c) Assignment and Transfer Agreement respecting the purchase of Units in the Partnership by and between Madison/WP Partnership Value Fund II, LP, Madison/WP Partnership Value Fund III, LLC, and Bond Purchase, L.L.C. 7 EX-99.(A)(1) 2 OFFER TO PURCHASE FOR CASH ALL OF THE ISSUED AND OUTSTANDING UNITS OF LIMITED PARTNERSHIP INTEREST of McNeil Real Estate Fund XX, L.P. at $100 NET PER UNIT OF LIMITED PARTNERSHIP INTEREST by Bond Purchase, L.L.C. ******************************************************************************** THE OFFER AND THE WITHDRAWAL RIGHTS PERIOD WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON FEBRUARY 11, 2000, UNLESS EXTENDED. ******************************************************************************** Bond Purchase, L.L.C., a Missouri limited liability company (the "Purchaser"), hereby offers to purchase all of the issued and outstanding units of limited partnership interest (the "Units") of McNeil Real Estate Fund XX, L.P., a California limited partnership (the "Partnership"), at a purchase price of $100 per Unit, net to the seller in cash (the "Purchase Price"), without interest thereon, upon the terms and subject to the conditions set forth in this Offer to Purchase (the "Offer to Purchase") and in the related Letter of Transmittal, as each may be supplemented, modified or amended from time to time (which together constitute the "Offer"). The Purchase Price will be automatically reduced by the aggregate amount of distributions per Unit, if any, made or declared by the Partnership after December 31, 1999 and on or prior to the Expiration Date (as defined in Section 1 ("Terms of the Offer")). In addition, if a distribution is made or declared after the Expiration Date but prior to the date on which the Purchaser pays the Purchase Price for the tendered Units, the Purchaser will offset the amount otherwise due a Limited Partner (as defined herein) pursuant to the Offer in respect of the tendered Units which have been accepted for payment but not yet paid for by the amount of any such distribution. LIMITED PARTNERS WHO TENDER THEIR UNITS WILL NOT BE OBLIGATED TO PAY ANY COMMISSIONS OR PARTNERSHIP TRANSFER FEES, WHICH COMMISSIONS AND FEES WILL BE BORNE BY THE PURCHASER. - -------------------------------------------------------------------------------- THE PURCHASER IS NOT AFFILIATED WITH THE GENERAL PARTNER OF THE PARTNERSHIP. - -------------------------------------------------------------------------------- THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, A MINIMUM OF 12,378 UNITS OF THE PARTNERSHIP BEING VALIDLY TENDERED AND NOT PROPERLY WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER ("THE MINIMUM CONDITION"). THE OFFER IS ALSO CONDITIONED UPON THE MERGER PROPOSAL OF THE GENERAL PARTNER NOT BEING APPROVED BY A MAJORITY OF THE OUTSTANDING UNITS OF THE PARTNERSHIP. SEE SECTION 9 ("CERTAIN INFORMATION CONCERNING THE PARTNERSHIP") AND SECTION 14 ("CONDITIONS OF THE OFFER.") A LIMITED PARTNER MAY TENDER ANY OR ALL UNITS OWNED BY SUCH LIMITED PARTNER; HOWEVER, BECAUSE OF RESTRICTIONS IN THE PARTNERSHIP AGREEMENT (AS DEFINED IN SECTION 9), (I) A LIMITED PARTNER MAY NOT MAKE A PARTIAL TENDER OF UNITS OWNED BY SUCH LIMITED PARTNER IF SUCH LIMITED PARTNER WOULD OTHERWISE RETAIN LESS THAN TEN (10) UNITS AND (II) TENDERS OF LESS THAN TEN (10) UNITS WILL ONLY BE ACCEPTED IF ALL OF THE UNITS HELD BY SUCH LIMITED PARTNER ARE TENDERED. - -------------------------------------------------------------------------------- Before tendering, Limited Partners are urged to consider the following factors: - - If Limited Partners holding a majority of the outstanding Units of the Partnership vote in favor of the Partnership's merger proposal (as more fully described in Section 9 ("Certain Information Concerning the Partnership-Master Agreement")), the Partnership has estimated that the Limited Partners will receive $92 per Unit. - - Although the Purchaser cannot predict the future value of the Partnership's assets on a per Unit basis, the Purchase Price could differ significantly from the net proceeds that would be realized from a current sale of the properties owned by the Partnership or that may be realized upon a future liquidation of the Partnership. - - The Purchaser is making the Offer with a view to making a profit. Accordingly, there may be a conflict between the desire of the Purchaser to acquire the Units at a low price and the desire of Limited Partners to sell their Units at a high price. - - As a result of the Offer, the Purchaser could be in a position to significantly influence all Partnership decisions on which Limited Partners may vote, including decisions regarding removal of the General Partner of the Partnership (McNeil Partners, L.P., a Delaware limited partnership), merger, extension of the legal existence of the Partnership, sales of assets and liquidation of the Partnership. IMPORTANT Any (i) owner of record of Units (a "Limited Partner"), (ii) beneficial owner, in the case of Units owned by Individual Retirement Accounts or qualified plans (a "Beneficial Owner"), or (iii) person who has purchased Units but has not yet been reflected on the Partnership's books as the record owner of such Units (an "Assignee"), desiring to tender any or all of such person's Units should either (1) complete and sign the Letter of Transmittal in accordance with the instructions in the Letter of Transmittal and mail or deliver (A) the Letter of Transmittal, (B) certificates evidencing ii tendered Units and (C) any other required documents to Bond Purchase, L.L.C., at the address set forth below, or (2) request his or her broker, dealer, commercial bank, trust company or other nominee to effect the transaction for him or her. Unless the context requires otherwise, references to Limited Partners in this Offer to Purchase shall be deemed to also refer to Beneficial Owners and Assignees. Questions or requests for assistance may be directed to Bond Purchase, L.L.C. at the address and telephone number set forth below. Requests for additional copies of this Offer to Purchase, the Letter of Transmittal and other related documents may be directed to Bond Purchase, L.L.C. NO PERSON HAS BEEN AUTHORIZED TO MAKE ANY RECOMMENDATION OR ANY REPRESENTATION ON BEHALF OF THE PURCHASER OR TO PROVIDE ANY INFORMATION OTHER THAN AS CONTAINED HEREIN OR IN THE LETTER OF TRANSMITTAL. NO SUCH RECOMMENDATION, INFORMATION OR REPRESENTATION MAY BE RELIED UPON AS HAVING BEEN AUTHORIZED. EACH LIMITED PARTNER IS URGED TO READ CAREFULLY THE ENTIRE OFFER TO PURCHASE, THE LETTER OF TRANSMITTAL AND RELATED DOCUMENTS. FOR ADDITIONAL INFORMATION CALL: BOND PURCHASE, L.L.C. 1100 Main Street, Suite 2100 Kansas City, MO 64105 TELEPHONE: (816) 421-4670 FACSIMILE: (816) 221-1829 iii TABLE OF CONTENTS Page INTRODUCTION...................................................................1 THE TENDER OFFER...............................................................5 1. Terms of the Offer........................................................5 2. Acceptance for Payment and Payment for Units..............................5 3. Procedures for Tendering Units............................................6 4. Withdrawal Rights.........................................................9 5. Extension of Tender Period; Termination; Amendment.......................10 6. Certain Federal Income Tax Consequences..................................11 7. Effects of the Offer.....................................................15 8. Purpose of the Offer; Future Plans.......................................16 9. Certain Information Concerning the Partnership...........................18 10. Certain Information Concerning the Purchaser.............................26 11. Background of the Offer..................................................27 12. Source Of Funds..........................................................28 13. Purchase Price Considerations............................................28 14. Conditions of the Offer..................................................29 15. Certain Legal Matters....................................................31 16. Certain Fees and Expenses................................................32 17. Miscellaneous............................................................32 iv TO THE HOLDERS OF UNITS OF LIMITED PARTNERSHIP INTEREST OF MCNEIL REAL ESTATE FUND XX, L.P.: INTRODUCTION Bond Purchase, L.L.C., a Missouri limited liability company (the "Purchaser"), hereby offers to purchase all of the issued and outstanding units of limited partnership interest (the "Units") of McNeil Real Estate Fund XX, L.P., a California limited partnership (the "Partnership"), at a purchase price of $100 per Unit, net to the seller in cash (the "Purchase Price"), without interest, upon the terms and subject to the conditions set forth in this Offer to Purchase (the "Offer to Purchase") and in the related Letter of Transmittal, as each may be supplemented, modified or amended from time to time (which together constitute the "Offer"). The Purchase Price will be automatically reduced by the aggregate amount of distributions per Unit, if any, made or declared by the Partnership after December 31, 1999 and on or prior to the Expiration Date (as defined in Section 1 ("Terms of the Offer")). In addition, if a distribution is made or declared after the Expiration Date but prior to the date on which the Purchaser pays the Purchase Price for the tendered Units, the Purchaser will offset the amount otherwise due a Limited Partner pursuant to the Offer in respect of the tendered Units which have been accepted for payment but not yet paid for by the amount of any such distribution. Limited Partners who tender their Units will not be obligated to pay any commissions or partnership transfer fees, which commissions and fees will be borne by the Purchaser. THE PURCHASER IS NOT AFFILIATED WITH THE GENERAL PARTNER OF THE PARTNERSHIP. THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, A MINIMUM OF 12,378 OF THE OUTSTANDING UNITS OF THE PARTNERSHIP BEING VALIDLY TENDERED AND NOT PROPERLY WITHDRAWN PRIOR TO THE EXPIRATION DATE (THE "MINIMUM CONDITION"). SEE SECTION 14 ("CONDITIONS OF THE OFFER"). A LIMITED PARTNER MAY TENDER ANY OR ALL UNITS OWNED BY SUCH LIMITED PARTNER; HOWEVER, BECAUSE OF RESTRICTIONS IN THE PARTNERSHIP AGREEMENT, (I) A LIMITED PARTNER MAY NOT MAKE A PARTIAL TENDER OF UNITS OWNED BY SUCH LIMITED PARTNER IF SUCH LIMITED PARTNER WOULD OTHERWISE RETAIN LESS THAN TEN (10) UNITS AND (II) TENDERS OF LESS THAN TEN (10) UNITS WILL ONLY BE ACCEPTED IF ALL OF THE UNITS HELD BY SUCH LIMITED PARTNER ARE TENDERED. The Purchaser is making this 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. In considering the Offer, Limited Partners are urged to consider the following factors: 1 - - If Limited Partners holding a majority of the outstanding Units vote in favor of the Merger Proposal (as defined and more fully described in Section 9 ("Certain Information Concerning the Partnership-Master Agreement")), as disclosed in the Definitive Proxy Statement on Schedule 14A filed by the Partnership with the Securities and Exchange Commission on December 14, 1999 (File No. 000-14007) (the "Proxy Statement"), the Partnership has estimated that the Limited Partners will receive $92 per Unit. - - Although the Purchaser cannot predict the future value of the Partnership's assets on a per Unit basis, the Purchase Price could differ significantly from the net proceeds that would be realized on a per Unit basis from a current sale of the Partnership's properties or that may be realized upon a future liquidation of the Partnership. - - The Purchaser is making the Offer with a view to making a profit. Accordingly, there may be a conflict between the desire of the Purchaser to acquire the Units at a low price and the desire of the Limited Partners to sell their Units at a high price. 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 any. 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. 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. When the assets of the Partnership are ultimately sold, the return to Limited Partners could be higher or lower than the Purchase Price. Limited Partners are urged to consider carefully all of the information contained herein before accepting the Offer. - - Pursuant to the terms of the Offer, the Purchaser is expected to acquire, at a minimum, at least 25% of the Units outstanding and, at a maximum, all of the Units outstanding, and, as a result, will be in a position to significantly influence all Partnership decisions on which Limited Partners may vote. If a sufficient number of Units sought by the Purchaser are tendered and accepted for payment pursuant to the Offer, the Purchaser could effectively (i) prevent non-tendering Limited Partners from taking actions they desire but that the Purchaser opposes and (ii) enable the Purchaser to take action desired by it but opposed by non- tendering Limited Partners. Under the Partnership Agreement, Limited Partners holding a majority of the Units are entitled to take action with respect to a variety of matters, including: dissolution and winding up of the Partnership; removal of the General Partner; approval or disapproval of the sale of all or substantially all of the Partnership's assets; and most types of amendments to the Partnership Agreement. Depending on the number of Units obtained by the Purchaser pursuant to the Offer, the Purchaser has intentions to (i) influence the control and management of the Partnership and attempt to remove the General Partner, (ii) vote against the Merger Proposal and (iii) amend that provision of the Partnership Agreement that requires the General Partner to use commercially reasonable efforts to complete the 2 liquidation and termination of the Partnership by December 31, 1999. In any event, the Purchaser will vote the Units acquired pursuant to the Offer in its interest, which may, or may not, be in the best interest of non-tendering Limited Partners. - - If 50% or more of the total Units in Partnership capital and profits are sold or exchanged within a twelve (12) month period, the Partnership will terminate for federal income tax purposes (a "Tax Termination"). Any such Tax Termination will, among other things, cause the Partnership to start new depreciable lives for its assets. This generally would decrease the annual average depreciation deductions allocable to Units not tendered pursuant to the Offer (thereby increasing the taxable income allocable to such Units in each such year), but would have no effect on the total depreciation deductions available over the useful lives of the assets of the Partnership. Limited Partners may no longer wish to continue with their investment in the Partnership for a number of reasons, including: - - The Purchase Price is greater than the price the Partnership estimates a Limited Partner will receive if the Limited Partners approve the Merger Proposal proposed by the General Partner ($92). - - 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, and the Purchase Price is greater than the price the Partnership estimates a Limited Partner will receive pursuant to the Merger Proposal proposed by the General Partner. - - Although there are some limited resale mechanisms available to the Limited Partners wishing to sell their Units, there is no formal trading market for the Units. The Form 10-K states: "There is no established public trading market for limited partnership units, nor is one expected to develop." Accordingly, Limited Partners who desire 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 at a price greater than the price the Partnership estimates a Limited Partner will receive pursuant to the Merger Proposal proposed by the General Partner. 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 the General Partner. Limited Partners should note, however, that they do have the right to remove the General Partner by majority vote. 3 - - 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. Following the completion of the Offer, the Purchaser and its affiliates may acquire additional Units. Any such acquisitions may be made through private purchases, through one or more future tender offers or by any other means deemed advisable, and may be at prices higher or lower than the price to be paid for the Units purchased pursuant to the Offer. See Section 8 ("Purpose of the Offer; Future Plans"). A Limited Partner may tender any or all of his or her Units; however, because of restrictions in the Partnership Agreement (i) a Limited Partner may not make a partial tender of Units owned by such Limited Partner if such Limited Partner would otherwise retain less than ten (10) Units and (ii) tenders of less than ten (10) Units will only be accepted if all the Units held by such Limited Partner are tendered. According to the Form 10-K, there were 49,512 Units issued and outstanding, held of record by approximately 4,185 Limited Partners. On December 1, 1999, the Purchaser was admitted to the Partnership as a Limited Partner having purchased 10 Units from Citadel Secondary Market Fund I, Ltd., a Florida limited partnership, at a per Unit price of $92. The Purchaser has also signed an agreement to acquire 1,994.68 Units at a per Unit price of $100 from Madison/WP Partnership Value Fund II, L.P. and Madison/WP Partnership Value Fund III, LLC. Except as otherwise indicated, information contained in this Offer to Purchase is based upon documents and reports publicly filed by the Partnership with the Securities and Exchange Commission (the "Commission"). Although the Purchaser has no information that any statements contained in this Offer to Purchase are untrue, the Purchaser does not take responsibility for the accuracy or completeness of any information contained in this Offer to Purchase which is derived from such public documents, 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. Each Limited Partner must make his or her own decision based on his or her particular circumstances. Limited Partners should consult with their respective advisors about the financial, tax, legal and other implications to them of accepting the Offer. LIMITED PARTNERS ARE URGED TO READ THIS OFFER TO PURCHASE, THE RELATED LETTER OF 4 TRANSMITTAL AND THE OTHER ACCOMPANYING MATERIALS CAREFULLY BEFORE DECIDING WHETHER TO TENDER THEIR UNITS. THE TENDER OFFER 1. TERMS OF THE OFFER. Upon the terms of the Offer (including the terms and conditions of any extension or amendment of the Offer), the Purchaser will accept for payment and pay for all of the outstanding Units of the Partnership. Such Units must have been validly tendered on or prior to the Expiration Date (as hereinafter defined) and not withdrawn in accordance with Section 4 ("Withdrawal Rights"). The term "Expiration Date" shall mean 12:00 midnight, New York City time, on February 11, 2000, unless the Purchaser, in its sole discretion, shall have extended the period of time during which the Offer is open, in which event the term "Expiration Date" shall refer to the latest time and date at which the Offer, as so extended by the Purchaser, will expire. IF, PRIOR TO THE EXPIRATION DATE, THE PURCHASER SHALL INCREASE THE PURCHASE PRICE OFFERED TO LIMITED PARTNERS, SUCH INCREASED PURCHASE PRICE SHALL BE PAID FOR ALL UNITS ACCEPTED FOR PAYMENT PURSUANT TO THE OFFER, WHETHER OR NOT SUCH UNITS WERE TENDERED PRIOR TO THE INCREASE IN CONSIDERATION. The Offer is conditioned upon, among other things, satisfaction of the Minimum Condition and the Merger Proposal not being approved prior to consummation of the Offer. See Section 14 (which sets forth in full the conditions of the Offer). The Purchaser reserves the right (but shall not be obligated), in its sole discretion, to waive any or all of such conditions, including the Minimum Condition. If, on the Expiration Date, any or all of such conditions have not been satisfied or waived, the Purchaser may (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 then 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, or (iv) amend the Offer. 2. ACCEPTANCE FOR PAYMENT AND PAYMENT FOR UNITS. If the number of Units validly tendered and not properly withdrawn on or prior to the Expiration Date is equal to or greater than 12,378 of the outstanding Units, the Purchaser will purchase all Units so tendered and not properly withdrawn, upon the terms and subject to the conditions of the Offer. Upon the terms and subject to the conditions of the Offer (including, if the Offer is extended or amended, the terms and conditions of any such extension or amendment), the Purchaser will 5 Upon the terms and subject to the conditions of the Offer (including, if the Offer is extended or amended, the terms and conditions of any such extension or amendment), the Purchaser will purchase, by accepting for payment, and will pay for, all Units validly tendered and not withdrawn in accordance with Section 4 on or prior to the Expiration Date as promptly as practicable following the Expiration Date. In addition, subject to applicable rules of the Commission, the Purchaser expressly reserves the right to delay acceptance for payment of, or payment for, Units pending receipt of any additional documentation required by the Letter of Transmittal. In all cases, payment for Units accepted for payment pursuant to the Offer will be made only after timely receipt by Bond Purchase, L.L.C. of (a) the Letter of Transmittal properly completed and duly executed, with any required signature guarantees, if applicable, (b) certificates evidencing tendered Units and (c) any other documents required by the Letter of Transmittal. The Purchase Price will automatically be reduced by the aggregate amount of distributions per Unit, if any, made or declared by the Partnership after December 31, 1999 and on or prior to the Expiration Date. In addition, if a distribution is made or declared after the Expiration Date but prior to the date on which the Purchaser pays for tendered Units, the Purchaser will offset the amount otherwise due to a Limited Partner pursuant to the Offer in respect of tendered Units which have been accepted for payment but not yet paid for by the amount of any such distribution. UNDER NO CIRCUMSTANCES WILL THE PURCHASER PAY INTEREST ON THE PURCHASE PRICE FOR UNITS. If any tendered Units are not purchased pursuant to the Offer for any reason, the Letter of Transmittal with respect to such Units will be destroyed by Bond Purchase, L.L.C., and the certificates representing such Units will be returned to the Limited Partner by Bond Purchase, L.L.C. If, for any reason whatsoever, 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"), Bond Purchase, L.L.C. may, nevertheless, subject to Rule 14e-1(c) under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), retain tendered Units, and such Units may not be withdrawn except to the extent that the tendering Limited Partner is entitled to withdrawal rights as described in Section 4 ("Withdrawal Rights"). 3. PROCEDURES FOR TENDERING UNITS. Valid Tender. For Units to be validly tendered pursuant to the Offer, a Letter of Transmittal, properly completed and duly executed, and the certificates representing the tendered Units, together with any other documents required by the Letter of Transmittal, must be received by Bond Purchase, L.L.C. at its address on the back cover page of the Offer to Purchase on or prior to the Expiration Date. A Limited Partner may tender any or all Units owned by such Limited Partner; however, because of restrictions in the Partnership Agreement, (i) a Limited Partner may not make a partial tender of Units owned by such Limited Partner if such Limited Partner would otherwise retain less than ten (10) Units and (ii) tenders of less than ten (10) Units will only be accepted if all of the Units held by such Limited Partner are tendered. See Instruction 1 to the Letter of Transmittal. 6 IN ORDER FOR A TENDERING LIMITED PARTNER TO PARTICIPATE IN THE OFFER, UNITS MUST BE VALIDLY TENDERED AND NOT WITHDRAWN ON OR PRIOR TO THE EXPIRATION DATE, WHICH IS 12:00 MIDNIGHT, NEW YORK CITY TIME, ON FEBRUARY 11, 2000, UNLESS EXTENDED. THE METHOD OF DELIVERY OF THE LETTER OF TRANSMITTAL AND CERTIFICATES 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 BOND PURCHASE, L.L.C. IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY. SEE INSTRUCTION 1 TO THE LETTER OF TRANSMITTAL. Signature Guarantees. If the Letter of Transmittal is signed by the registered holder of the Units and payment is to be made directly to that holder, or if the Units are tendered for the account of a member firm of a registered national securities exchange, a member of the National Association of Securities Dealers, Inc. or a commercial bank, savings bank, credit union, savings and loan association or trust company having an office, branch or agency in the United States (each an "Eligible Institution"), no signature guarantee is required on the Letter of Transmittal. However, in all other cases, all signatures on the Letter of Transmittal must be guaranteed by an Eligible Institution. See Instruction 2 of the Letter of Transmittal. 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 pursuant to the Offer, a tendering Limited Partner must provide the Purchaser with such Limited Partner's correct taxpayer identification number or social security number by completing the Substitute Form W-9 included in the Letter of Transmittal. See Instruction 3 to the Letter of Transmittal. FIRPTA Withholding. To prevent the withholding of federal income tax in an amount equal to 10% of the sum of the Purchase Price plus the amount of Partnership liabilities allocable to each Unit purchased, each Limited Partner must complete the FIRPTA Affidavit included in the Letter of Transmittal certifying such Limited Partner's taxpayer identification number and address and that the Limited Partner is not a foreign person. See Instruction 3 to the Letter of Transmittal. Appointment as Proxy; Power of Attorney. By executing and delivering the Letter of Transmittal, a tendering Limited Partner irrevocably appoints the Purchaser and the designees of the Purchaser and each of them as such Limited Partner's proxies, each with full power of substitution, in the manner set forth in the Letter of Transmittal, 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 (and with respect to any and all other Units or other securities issued or issuable in respect of such Units on or after the date hereof). All such proxies shall be considered irrevocable and coupled with an interest in the tendered Units. Such appointment will be effective when, and only 7 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 (and such other Units and securities) will be revoked without further action, and no subsequent proxies may be given nor any subsequent written consents executed (and, if given or executed, will not be deemed effective). The Purchaser and its designees will, with respect to the Units (and such other Units and securities) 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 (including any meeting with respect to the Merger Proposal) or any adjournment or postponement thereof, by written consent in lieu of any such meeting or otherwise. The Purchaser reserves the right to require that, in order for Units to be deemed validly tendered, immediately upon the Purchaser's acceptance of such Units for payment, the Purchaser must be able to exercise full voting rights with respect to such Units and other securities, including voting at any meeting of Limited Partners. In addition, pursuant to such appointment as attorneys-in-fact, the Purchaser and its designees 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) to become a record holder of the purchased Unit, to receive any and all distributions made by the Partnership after the Expiration Date, 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 the General Partner (as the case may be) 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. Assignment of Entire Interest in the Partnership. By executing and delivering the Letter of Transmittal, a tendering Limited Partner irrevocably assigns to the Purchaser and its assigns all of the right, title and interest of such Limited Partner in the Partnership with respect to the Units tendered and purchased pursuant to the Offer, including, without limitation, such Limited Partner's right, title and interest in and to any and all distributions made by the Partnership after the Expiration Date in respect of the Units tendered by such Limited Partner and accepted for payment by the Purchaser, regardless of the fact that the record date for any such distribution may be a date prior to the Expiration Date. Determination of Validity. All questions as to the form of documents and validity, eligibility (including time of receipt) and acceptance for payment of any tender of Units will be determined by the Purchaser, in its sole discretion, whose determination shall be final and binding on all parties. The Purchaser reserves the absolute right to reject any or all tenders determined by it not to be in 8 proper form, or the acceptance of or payment for which may, in the opinion of the Purchaser's counsel, be unlawful. The Purchaser also reserves the absolute right to waive any of the conditions of the Offer or any defect or irregularity in any tender of Units of any particular Limited Partner whether or not similar defects or irregularities are waived in the case of other Limited Partners. Assignee Status. Assignees must provide documentation to Bond Purchase, L.L.C. which demonstrates, to the satisfaction of the Purchaser, such person's status as an assignee of a Unit. The Purchaser's interpretation of the terms and conditions of the Offer (including the Letter of Transmittal and the instructions thereto) will be final and binding. 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. None of the Purchaser, any of its affiliates or assigns, if any, or any other person will be under any duty to give any notification of any defects or irregularities in tenders or incur any liability for failure to give any such notification. The Purchaser's acceptance for payment of Units tendered pursuant to the procedures described above will constitute a binding agreement between the tendering Limited Partner and the Purchaser upon the terms and subject to the conditions of the Offer. 4. WITHDRAWAL RIGHTS. Tenders of Units made 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 theretofore accepted for payment as provided in this Offer to Purchase, may also be withdrawn at any time after March 13, 2000. For a withdrawal to be effective, a written or facsimile transmission notice of withdrawal must be timely received by Bond Purchase, L.L.C. at the address set forth on the back cover of this Offer to Purchase. Any such notice of withdrawal must specify the name(s) of the person(s) who tendered the Units to be withdrawn, the number of Units to be withdrawn and the name(s) of the registered holder(s) of the Units, if different from that of the person(s) who tendered such Units. Such notice of withdrawal must also be signed by the same person(s) who signed the Letter of Transmittal in the same manner as the Letter of Transmittal was signed (including any signature guarantees, if applicable). If the Units are held in the name of two or more persons, all such persons must sign the notice of withdrawal. Any Units properly withdrawn will be deemed not validly tendered for purposes of the Offer, but may be re-tendered at any subsequent time prior to the Expiration Date by following the procedures described in Section 3 ("Procedures for Tendering Units"). If, for any reason whatsoever, acceptance for payment of any Units tendered pursuant to the Offer is delayed, or the Purchaser is unable to accept for payment or pay for Units tendered pursuant to the Offer, then, without prejudice to the Purchaser's rights set forth herein, Bond Purchase, L.L.C. may, nevertheless, retain tendered Units and such Units may not be withdrawn except to the extent 9 that the tendering Limited Partner is entitled to and duly exercises withdrawal rights as described herein. The reservation by the Purchaser of the right to delay the acceptance or purchase of or payment for Units is subject to the provisions of Rule 14e-1(c) under the Exchange Act, which requires the Purchaser to pay the consideration offered or return Units tendered by or on behalf of Limited Partners promptly after the termination or withdrawal of the Offer. All questions as to the form and validity (including time of receipt) of notices of withdrawal will be determined by the Purchaser, in its sole discretion, whose determination shall be final and binding. None of the Purchaser, any of its affiliates, Bond Purchase, L.L.C. or any other person will be under any duty to give any notification of any defects or irregularities in any notice of withdrawal or incur any liability for failure to give any such notification. 5. EXTENSION OF TENDER PERIOD; TERMINATION; AMENDMENT. If, on the Expiration Date, any or all of such conditions set forth in Section 14 ("Conditions of the Offer") have not been satisfied or waived, the Purchaser may (i) decline to purchase any of the Units tendered, terminate the Offer and return all tendered Units to tendering Limited Partners, (ii) 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, or (iii) amend the Offer. If the Purchaser decreases the number of Units being sought or increases the consideration to be paid for any Units pursuant to the Offer and the Offer is scheduled to expire at any time before the expiration of a period of 10 business days from, and including, the date that notice of such increase or decrease is first published, sent or given in the manner specified below, the Offer will be extended until, at a minimum, the expiration of such period of 10 business days. If the Purchaser makes a material change in the terms of the Offer (other than a change in price, percentage or minimum number of securities sought) or in the information concerning the Offer, or waives a material condition of the Offer, the Purchaser will extend the Offer, if required by applicable law, for a period sufficient to allow Limited Partners to consider the amended terms of the Offer. If the Purchaser extends the period of time during which the Offer is open, delays acceptance for payment of or payment for Units or is unable to accept for payment or pay for Units pursuant to the Offer for any reason, then, without prejudice to the Purchaser's rights under the Offer, the Purchaser may retain all Units tendered, and such Units may not be withdrawn except as otherwise provided under Section 4 ("Withdrawal Rights"). The reservation by the Purchaser of the right to delay acceptance for payment of or payment for Units is subject to applicable law, which requires that the Purchaser pay the consideration offered or return the Units deposited by or on behalf of Limited Partners promptly after the termination or withdrawal of the Offer. Any extension, termination or amendment of the Offer will be followed as promptly as practicable by a public announcement thereof. Without limiting the manner in which the Purchaser may choose to make any public announcement, the Purchaser will have no obligation (except as 10 otherwise required by applicable law) to publish, advertise or otherwise communicate any such public announcement other than by making a release to the Dow Jones News Service. In the case of an extension of the Offer, the Purchaser will make a public announcement of such extension no later than 9:00 a.m., New York City time, on the next business day after the previously scheduled Expiration Date. 6. CERTAIN FEDERAL INCOME TAX CONSEQUENCES. The following summary is a general discussion of certain federal income tax consequences of a sale of Units pursuant to the Offer assuming that the Partnership is a partnership for federal income tax purposes and that it is not a "publicly traded partnership" as defined in Section 7704 of the Internal Revenue Code of 1986, as amended (the "Code"). This summary is based on the Code, applicable Treasury Regulations thereunder, administrative rulings, practice and procedures and judicial authority as of the date of the Offer. All of the foregoing are subject to change, and any such change could affect the continuing accuracy of this summary. This summary does not discuss all aspects of federal income taxation that may be relevant to a particular 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 does it discuss any aspect of state, local, foreign or other tax laws. Sales of Units pursuant to the Offer will be taxable transactions for federal income tax purposes, and may also be taxable transactions under applicable state, local, foreign and other tax laws. EACH LIMITED PARTNER SHOULD CONSULT HIS OR ITS TAX ADVISOR AS TO THE PARTICULAR TAX CONSEQUENCES TO SUCH LIMITED PARTNER OF SELLING UNITS PURSUANT TO THE OFFER. Consequences to a Tendering Limited Partner. 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 realized" with respect to a Unit will be equal to the sum of the amount of cash received by the Limited Partner for the Unit sold pursuant to the Offer plus the amount of Partnership liabilities allocable to the Unit (as determined under Code Section 752). Thus, the Limited Partner's taxable gain and tax liability resulting from a sale of a Unit could exceed the cash received upon such sale. If the Limited Partner acquired Units for cash, the Limited Partner's initial tax basis in such Units is generally equal to the Limited Partner's cash investment in the Partnership increased by the Limited Partner's share of Partnership liabilities at the time the Limited Partner acquired such Units. The Limited Partner's initial tax basis generally has been increased by (i) the Limiter Partner's share of Partnership income and gains, and (ii) any increases in the Limited Partner's share of Partnership liabilities, and has been decreased (but not below zero) by (i) the Limited Partner's share of Partnership cash distributions, (ii) any decreases in the Limited Partner's share of Partnership liabilities, (iii) the Limited Partner's share of Partnership losses, and (iv) the Limited Partner's share of nondeductible Partnership expenditures that are not chargeable to capital. For purposes of 11 determining the Limited Partner's adjusted tax basis in Units immediately prior to a disposition of such Units, the Limited Partner's adjusted tax basis in such Units will include the Limited Partner's allocable share of Partnership income, gain or loss for the taxable year of disposition. If the Limited Partner's adjusted tax basis is less than the Limited Partner's share of Partnership liabilities (e.g., as a result of the effect of net loss allocations and/or distributions exceeding the cost of such Unit), the Limited Partner's gain recognized with respect to a Unit pursuant to the Offer will exceed the cash proceeds realized upon the sale of such Unit. 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 the Unit was held by the Limited Partner as a capital asset. Recent changes to the tax laws modified applicable capital gain rates and holding periods. Gain with respect to Units held for more than one year will be taxed, for federal income tax purposes, at a maximum long-term capital gain rate of 20 percent. Gain with respect to Units held one year or less will be taxed at ordinary income rates. If the amount realized with respect to a Unit that is attributable to the Limited Partner's share of "unrealized receivables" of the Partnership exceeds the tax basis attributable to those assets, such excess will be treated as ordinary income. Among other things, "unrealized receivables" include depreciation recapture for certain types of property. It should also be noted that the Taxpayer Relief Act of 1997 imposed depreciation recapture of previously deducted straight line depreciation with respect to real property at a rate of 25 percent (assuming eligibility for long-term capital gain treatment). A portion of the gain realized by a Limited Partner with respect to a disposition of the Units may be subjected to this 25 percent rate to the extent that the gain is attributable to depreciation recapture inherent in the properties of the Partnership. Capital losses are deductible only to the extent of capital gains, except that taxpayers who are natural persons may deduct up to $3,000 per year 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 "C" corporation's carry-forward period is five years and an individual taxpayer can carry forward such losses indefinitely). If a Limited Partner tenders a Unit in the Offer, the Limited Partner will be allocated a share of Partnership taxable income or loss for the year of tender with respect to any Units sold. The Limited Partner will not receive any future distributions on Units tendered on or after the date on which such Units are accepted for purchase and, accordingly, the Limited Partner may not receive any distributions with respect to such accreted income. Such allocation and any Partnership cash distributions to you for that year will affect the Limited Partner's adjusted tax basis in such Unit and, therefore, the amount of the Limited Partner's taxable gain or loss upon a sale of a Unit pursuant to the Offer. Under Code Section 469, individuals, S corporations and certain closely-held corporations generally are able to deduct "passive activity losses" in any year only to the extent of the person's passive activity income for that year. Substantially all post-1986 losses of Limited Partner from the Partnership are passive activity losses. Limited Partner may have "suspended" passive activity 12 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). The benefits estimated to be realized by each seller of a Unit assumes that all of the seller's losses from the Partnership have been suspended and not utilized. If a Limited Partner sells less than all of its Units pursuant to the Offer, a passive loss recognized by that Limited Partner can be currently deducted (subject to the other applicable limitations) to the extent of the Limited Partner's passive income from the Partnership for that year plus any other net passive activity income for that year, and any 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 percent of its Units pursuant to the Offer, any "suspended" passive activity losses from the Partnership and any passive activity losses recognized upon the sale of the Units will be offset first against any net passive activity income from the Limited Partner's other passive activity investments, and the balance of any net passive activity losses attributable to the Partnership will no longer be subject to the passive activity loss limitation and, therefore, will be deductible by such Limited Partner from its other "ordinary" income (subject to any other applicable limitations). Limited Partners (other than tax-exempt persons, corporations and certain foreign individuals) who tender Units may be subject to 31 percent backup withholding unless those Limited Partners provide a taxpayer identification number ("TIN") and are certain 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 Letter of Transmittal. If a Limited Partner who is subject to backup withholding does not include its TIN, the Purchaser will withhold 31 percent 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 must also notify the Partnership of the date of the transfer and the names, addresses and tax identification numbers of the transferors and transferee within 30 days of the date of the transfer (or, if earlier, January 15 of the following calendar year) (See IRS Form 8308). Consequences to a Non-Tendering and a Partially-Tendering Limited Partner. Code Section 708 provides that if there is a sale or exchange of 50% or more of the total interest in capital and profits of a partnership within any 12-month period, such partnership terminates for United States federal income tax purposes. It is possible that the Purchaser's acquisition of Units pursuant to the Offer alone or in combination with other transfers of interests in the Partnership could result in such a termination of the Partnership. If the Partnership is deemed to terminate for tax purposes, the following Federal income tax events will be deemed to occur: the terminated partnership will be deemed to have contributed all of its assets (subject to its liabilities) to a new partnership in exchange for an interest in the new partnership and, immediately thereafter, the old partnership will 13 be deemed to have distributed interests in the new partnership to the remaining Limited Partners in proportion to their respective interests in the old partnership in liquidation of the old partnership. A remaining Limited Partner will generally not recognize any gain or loss upon the deemed distribution or upon the deemed contribution and the capital accounts of the remaining Limited Partners in the old partnership will carry over intact into the new partnership. A termination may change (and possibly shorten) a remaining Limited Partner's holding period with respect to its retained units in the Partnership for United States federal income tax purposes. The new partnership's adjusted tax basis in its assets will be the same as the old partnership's basis in such assets immediately before the termination. A termination may also subject the assets of the new partnership to depreciable lives in excess of those currently applicable to the old partnership. This would generally decrease the annual average depreciation deductions allocable to the remaining Limited Partners for a number of years following consummation of the Offer (thereby increasing the taxable income allocable to their Units in each such year), but would have no effect on the total depreciation deductions available over the useful lives of the assets of the Partnership. Elections as to certain tax matters previously made by the old partnership prior to termination will not be applicable to the new partnership unless the new partnership chooses to make the same elections. Additionally, upon a termination for tax purposes, the old partnership's taxable year will close for all Limited Partners. In the case of a remaining Limited Partner or a partially tendering Limited Partner reporting on a tax year other than a calendar year, the closing of the Partnership's taxable year may result in more than 12 months' taxable income or loss of the old partnership being includible in such Limited Partner's taxable income for the year of termination. Consequences to a Tax-Exempt Limited Partner. Although certain entities are generally exempt from federal income taxation, such tax-exempt entities (including individual retirement accounts (each an "IRA")) are subject to federal income tax on any "unrelated business taxable income" ("UBTI"). UBTI generally includes, among other things, income (other than, in the case of property which is not "debt-financed property", interest, dividends, real property rents not dependent upon income or profits, and gain from disposition of non-inventory property) derived by certain trusts (including IRAs) from a trade or business or by certain other tax-exempt organizations from a trade or business, the conduct of which is not substantially related to the exercise of such organization's charitable, educational or other exempt purpose and income to the extent derived from debt-financed property. Subject to certain exceptions, "debt-financed property" is generally any property which is held to produce income and with respect to which there is an "acquisition indebtedness" at any time during the taxable year. Acquisition indebtedness is generally indebtedness incurred by a tax-exempt entity directly or through a partnership: (i) in acquiring or improving a property; (ii) before acquiring or improving a property if the indebtedness would not have been incurred but for such acquisition or improvement; or (iii) after acquiring or improving a property if the indebtedness would not have been incurred but for such acquisition or improvement 14 and the incurrence of such indebtedness was reasonably foreseeable at the time of the acquisition or improvement. To the extent the Partnership holds debt financed property or inventory or other assets as a dealer, a tax-exempt Limited Partner (including an IRA) could realize UBTI on the sale of a Partnership interest. In addition, a tax-exempt Limited Partner will realize UBTI upon the sale of a Unit, if such Limited Partner held its Units as inventory or otherwise as dealer property, or acquired its Units with acquisition indebtedness. However, any UBTI recognized by a tax-exempt Limited Partner as a result of a sale of a Unit, in general, may be offset by such Limited Partner's net operating loss carryover (determined without taking into account any amount of income or deduction which is excluded in computing UBTI), subject to applicable limitations. EACH TAX-EXEMPT LIMITED PARTNER SHOULD CONSULT ITS TAX ADVISOR AS TO THE PARTICULAR TAX CONSEQUENCES TO SUCH LIMITED PARTNER OF SELLING OR NOT SELLING UNITS PURSUANT TO THE OFFER. 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 result will be a reduction in the number of Limited Partners. In the case of certain kinds of equity securities like the Units, 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. The Form 10-K states: "There is no established public trading market for limited partnership units, nor is one expected to develop." 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 through secondary market transactions. Partnership Profiles, Inc. tracks recent trades in certain limited partnership interests. A recent issue of Partnership Spectrum indicates that 25 Units traded in the period from April 1, 1999 through September 30, 1999 at per Unit prices between $72.51 and $74.08. Sales may be conducted which are not reported by Partnership Profiles and the prices of sales through other channels may differ from those reported by Partnership Profiles. The Purchaser does not know whether the information provided by Partnership Profiles is accurate or complete. The Units are currently registered under the Exchange Act. Such registration may be terminated upon application to the Commission if the Units are not listed on a national securities exchange and there are fewer than 300 record holders. Termination of registration under the Exchange Act would substantially reduce the information required to be furnished by the Partnership to its Unitholders and to the Commission and would make inapplicable to the Partnership certain provisions of the Exchange Act, such as the short-swing profit recovery provisions of Section 16(b), the requirements to furnish proxy statements in connection with Unitholders' meetings pursuant to 15 Section 14(a), and the requirements of Rule 13e-3 under the Exchange Act with respect to "going private" transactions. Furthermore, if the Purchaser acquires a substantial number of Units, the ability of "affiliates" of the Partnership and persons holding "restricted securities" of the Partnership to dispose of such securities pursuant to Rule 144 or 144A promulgated under the Securities Act of 1933, as amended, may be impaired or eliminated. The Purchaser may cause the Partnership to apply for termination of registration of the Units under the Exchange Act following the consummation of the Offer, depending upon the number of Units tendered. Significant Influence on All Limited Partner Voting Decisions by the Purchaser. The Purchaser will have the right to vote each Unit purchased pursuant to the Offer. Pursuant to the terms of the Offer, the Purchaser is expected to acquire, at a minimum, at least 25% of the Units outstanding and, at a maximum, all of the Units outstanding, and, as a result, will be in a position to significantly influence all Partnership decisions on which Limited Partners may vote. This could effectively (i) prevent non-tendering Limited Partners from taking actions they desire but that the Purchaser opposes and (ii) enable the Purchaser to take action desired by it but opposed by non- tendering Limited Partners. Under the Partnership Agreement, Limited Partners holding the majority of the Units are entitled to take action with respect to a variety of matters, including: dissolution and winding up of the Partnership; removal of the General Partner; approve or disapprove the sale of all or substantially all of the Partnership's assets; and most types of amendments to the Partnership Agreement. Depending on the number of Units obtained by the Purchaser pursuant to the Offer, the Purchaser has intentions to (i) influence the control and management of the Partnership and attempt to remove the General Partner, (ii) vote against the Merger Proposal and (iii) amend that provision of the Partnership Agreement that requires the General Partner to use commercially reasonable efforts to complete the liquidation and termination of the Partnership by December 31, 1999. In any event, the Purchaser will vote the Units acquired pursuant to the Offer in its interest, which may, or may not, be in the best interest of non-tendering Limited Partners. See Section 8 ("Purpose of the Offer; Future Plans"). 8. PURPOSE OF THE OFFER; FUTURE PLANS. Purpose of the Offer. 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 Property. Depending on the number of Units acquired by the Purchaser pursuant to the Offer, the Purchaser will likely attempt to remove the General Partner and/or the Property Manager. Pursuant to the terms of the Partnership Agreement, the Partnership: (i) pays property management fees to the Property Manager for property management services (the "Property Management Fee"); (ii) pays a disposition fee to an affiliate of the General Partner for brokerage services performed in connection with the sale of the Partnership's properties (the "Disposition Fee"); (iii) reimburses the Property Manager for its costs, including overhead, of administering the Partnership's affairs; and (iv) pays an asset management fee to the General Partner (the "Asset Management Fee"). According to information provided in the Partnership's Form 10-Q for the 16 quarter ended September 30, 1999 (the "Form 10-Q"), the total amount of such fees and expenses payable to the General Partner, the Property Manager and their affiliates totaled $368,695 as of September 30, 1999. If the General Partner is removed, the Partnership Agreement provides that (i) any portion of the Property Management Fee, Asset Management Fee or Disposition Fee payable pursuant to the terms of the Partnership Agreement which is then accrued and due, but not yet paid, (ii) any expenses which are required to be reimbursed to the General Partner and its Affiliates pursuant to the terms of the Partnership Agreement, and (iii) any unpaid loans or advances (together with any accrued but unpaid interest) shall be paid by the Partnership to the General Partner, Property Manager or their affiliates, as applicable, in cash, within 30 days of the date of removal as stated in the written notice of removal of the General Partner. The Master Agreement (as defined in Section 9) provides that in certain circumstances (including, if a person who is not an affiliate of the Partnership makes an acquisition proposal for the Partnership) the Partnership may be subject to a "break-up fee." If the break-up fee is applicable, according to the information obtained from the Form 10-Q, the Partnership's pro rata portion of the break-up fee would be approximately $179,226. The Partnership Agreement currently provides that the General Partner shall use its commercially reasonable efforts to complete the liquidation and termination of the Partnership by December 31, 1999. It is the Purchaser's current intention to consider attempting to amend this provision of the Partnership Agreement, if it acquires sufficient Units, and not immediately liquidate and terminate the Partnership. 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 any properties; and (c) any distributions of net proceeds from the liquidation of the Partnership. Future Plans. Depending on the number of Units obtained by the Purchaser pursuant to the Offer, the Purchaser has intentions to (i) influence the control and management of the Partnership and attempt to remove the General Partner, (ii) vote against the Merger Proposal and (iii) amend that provision of the Partnership Agreement that requires the General Partner to use commercially reasonable efforts to complete the liquidation and termination of the Partnership by December 31, 1999. Following the completion of the Offer, the Purchaser and its affiliates may acquire additional Units. Any such acquisition may be made through private purchases, through one or more future tender offers or by any other means deemed advisable, and may be at prices higher or lower than the price to be paid for the Units purchased pursuant to the Offer. 17 9. CERTAIN INFORMATION CONCERNING THE PARTNERSHIP. Information included herein concerning the Partnership is derived from the Partnership's publicly-filed reports. Additional financial and other information concerning the Partnership is contained in the Partnership's Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and other filings with the Commission. Such reports and other documents may be examined and copies may be obtained from the offices of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, and at the Commission's web site at http://www.sec.gov. Copies should be available by mail upon payment of the Commission's customary charges by writing to the Commission's principal offices at 450 Fifth Street, N.W., Washington, D.C. 20549. The Purchaser disclaims any responsibility for the information included in such reports and extracted in this Offer to Purchase. The Partnership's Assets And Business. The Partnership, formerly known as Southmark Income Investors, Ltd., was organized on July 19, 1984 as a limited partnership under the provisions of the California Revised Limited Partnership Act to invest in, hold, manage and dispose of mortgage loans, real estate and real estate-related investments. The general partner of the Partnership is McNeil Partners, L.P. (the "General Partner"), a Delaware limited partnership, an affiliate of Robert A. McNeil ("McNeil"). The General Partner was elected at a meeting of limited partners on March 30, 1992, at which time an amended and restated partnership agreement (the "Partnership Agreement") was adopted. Prior to March 30, 1992, the general partner of the Partnership was Southmark Investment Group, Inc. (the "Original General Partner"), a Nevada corporation and a wholly-owned subsidiary of Southmark Corporation ("Southmark"). The principal place of business for the Partnership and the General Partner is 13760 Noel Road, Suite 600, LB70, Dallas, Texas, 75240. On September 28, 1984, the Partnership registered with the Securities and Exchange Commission under the Securities Act of 1933 (File No. 2-92376) and commenced a public offering for the sale of $30,000,000 of limited partnership units. The Units represent equity interests in the Partnership and entitle the holders thereof to participate in certain allocations and distributions of the Partnership. The sale of Units closed on September 27, 1985, with 49,528 Units sold at $500 each, or gross proceeds (net of discounts of $57,546) of $24,706,454 to the Partnership. In 1994 and 1993, 12 and 4 Units were relinquished, respectively, leaving 49,512 Units outstanding at December 31, 1998. The Partnership has been engaged in the servicing of mortgage loans, including equity and revenue participation loans, and the ownership, operation and management of revenue-producing properties acquired through foreclosure. In July 1990, the Partnership foreclosed on Park Spring Apartments (renamed Sterling Springs Apartments) in settlement of the related mortgage loan. In September 1991, the Partnership foreclosed on Holiday Inn-Jacksonville (renamed Cherokee Inn) in partial settlement of the related mortgage loan and later sold the property in January 1993. In May 1993, the Partnership foreclosed on 1130 Sacramento Condominiums in settlement of the related mortgage loan and later sold the property in August 1997. In 1998, the Partnership's mortgage loan investments secured by Idlewood and Lakeland nursing homes and the Partnership's mortgage loan 18 investments affiliate secured by Fort Meigs Plaza were repaid in full by the respective borrowers. At December 31, 1998, the Partnership operated one revenue-producing property-Sterling Springs Apartments (the "Property"). The following table contains information with respect to the Property as of December 31, 1998. The buildings and the land on which the Property is located are owned by the Partnership in fee, subject to a first lien deed of trust as described in the Form 10-K. 1998 Net Basis Property Date Property Description of Property Debt Taxes Acquired - -------- ----------- ----------- ---- ----- -------- Sterling Springs Apartments Austin, TX 172 units $ 2,848,199 $ 2,613,312 $ 142,490 7/90 =========== =========== =========
Sterling Springs Apartments is owned by Sterling Springs Fund XX Limited Partnership, which is wholly-owned by the Partnership. The following table sets forth the Property's occupancy rate and rent per square foot for the last five years: 1998 1997 1996 1995 1994 ---- ---- ---- ---- ---- Sterling Springs Occupancy Rate 97% 97% 91% 99% 95% Rent Per Square Foot $9.94 $9.50 $9.28 $9.10 $8.37
Occupancy rate represents all units leased divided by the total number of units of the Property as of December 31 of the given year. Rent per square foot represents all revenue, except interest, derived from the property's operations divided by the leasable square footage of the Property. The Partnership does not directly employ any personnel. The General Partner conducts the business of the Partnership directly and through its affiliates. The Partnership reimburses affiliates of the General Partner for such services rendered in accordance with the Partnership Agreement. Master Agreement. The Partnership has entered into a Master Agreement, dated as of June 24, 1999 (the "Master Agreement"). The Master Agreement provides, among other things, that (i) the General Partner will contribute all of its general partner interests in the Partnership to a newly formed limited liability company directly or indirectly wholly owned by WXI/McN Realty L.L.C., a Delaware limited liability company (the "Acquirer"), and this subsidiary will be appointed as the new general partner of the Partnership and (ii) a separate newly formed limited partnership directly or indirectly wholly owned by the Acquirer will merge with and into the Partnership with the Partnership continuing as the surviving limited partnership, and each limited partner of the 19 Partnership (other than limited partners who validly exercise dissenters' rights in connection with the merger) will receive cash merger consideration of approximately $63.00 for each limited partner unit held by that limited partner in the Partnership, together with that limited partner's allocable share, if any, of a special distribution in cash if the Partnership participates in the transaction and has a positive net working capital balance calculated in accordance with the terms of the Master Agreement on the closing date of the transaction, all as more fully described in the Proxy Statement (the "Merger Proposal"). In the Proxy Statement, the Partnership estimates that each Limited Partner will receive an aggregate of $92.00 per Unit if the Merger Proposal is approved. The Partnership has scheduled a meeting of the Limited Partners to vote on the Merger Proposal on January 21, 2000. Litigation. Class and derivative actions were previously brought against the Partnership by, among other parties, Limited Partners of the Partnership. In these actions, plaintiffs allege that McNeil Investors, Inc., and its affiliate McNeil Real Estate Management, Inc. ("McREMI") and three of their senior officers and/or directors (collectively, the "Defendants") breached their fiduciary duties and certain obligations under various partnership agreements (including the Partnership Agreement). Plaintiffs alleged, among other things, that Defendants rendered the Units highly illiquid and artificially depressed the prices that were available for Units on the resale market. Plaintiffs also alleged that Defendants engaged in a course of conduct to prevent the acquisition of Units by Carl Icahn by disseminating purportedly false, misleading and inadequate information. Plaintiffs further alleged that Defendants acted to advance their own personal interests at the expense of the Partnership's public Limited Partners by failing to sell Partnership properties and failing to make distributions to Limited Partners. On September 15, 1998, the parties signed a Stipulation of Settlement. As structured, the Stipulation of Settlement provided for the payment of over $35 million in distributions and the commitment to market various McNeil-affiliated partnerships (including the Partnership) for sale through a fair and impartial bidding process overseen by a national investment banking firm. To ensure the integrity of that process, Defendants agreed, among other things, to involve plaintiff's counsel in oversight of that process, and plaintiff's counsel retained an independent advisor to represent the interests of limited partners of the partnerships in the event of a transaction. The execution of the Master Agreement was a result of the terms of the Stipulation of Settlement. On July 23, 1999, High River Limited Partnership and two other affiliates of Carl C. Icahn (Unicorn Associates Corporation and Longacre Corporation), filed a complaint for damages against the General Partner and certain of its affiliates alleging that the defendants improperly interfered with tender offers made by High River for Units in the Partnership and other affiliated partnerships in which the General Partner serves as General Partner (the "McNeil Partnerships"), by, among other things, filing purportedly frivolous litigation to delay High River's offers, issuing purportedly false and misleading statements opposing the offers and purportedly forcing High River itself to file litigation to enforce its rights. High River also alleged that as a result the defendants caused High River to incur undue expense and that the defendants ultimately prevented High River from 20 acquiring a greater number of limited partner units. Plaintiffs also alleged that the defendants improperly excluded High River from participating in the auction process for the sale of the McNeil Partnerships, and otherwise took steps to prevent its participation in the auction. In addition, plaintiffs also sued the defendants based on their status as opt-outs from the Stipulation of Settlement. Plaintiffs sought undisclosed damages and an accounting. On July 30, 1999, defendants filed an answer to the High River complaint, denying each and every material allegation contained in the High River complaint and asserting several affirmative defenses. On December 7, 1999, the parties entered into a settlement agreement (the "Settlement Agreement") to settle and dispose of all claims, demands and causes of action existing as of the date of the Settlement Agreement and arising out of, connected with or incidental to the dealings between the parties to the Settlement Agreement, including all claims, demands and causes of action reflected in the Schofield litigation or the High River litigation, as well as all prior disputes arising out of events in the years leading up to the execution of the Master Agreement. On December 7, 1999, concurrently with the execution of the Settlement Agreement, the plaintiffs dismissed, with prejudice, as to all parties, with each party bearing its own costs and attorneys' fees, the High River litigation as well as any appeal of the Final Order and Judgment in the Schofield litigation. In consideration of the dismissal of the High River litigation and any appeal of the Final Order and Judgment in the Schofield litigation, the mutual general releases and covenant not to sue described below and the other matters described in the Settlement Agreement, McNeil Partners, McREMI, McNeil Investors, Robert A. McNeil and Carole J. McNeil will make a cash settlement payment to High River at the closing of the transactions contemplated by the Master Agreement, provided that the Settlement Agreement has not been terminated as provided below. The McNeil Partnerships and their subsidiaries have no liability or obligation with respect to the settlement payment. Moreover, Robert A. McNeil and Carole J. McNeil have agreed that notwithstanding that they may be entitled to indemnification pursuant to the provisions of the limited partnership agreements governing the McNeil Partnerships, neither they, nor their affiliates, will seek or accept from any McNeil Partnership, or any subsidiary corporation or subsidiary partnership of a McNeil Partnership, payment or reimbursement of any portion of the settlement payment or related legal fees. The Settlement Agreement provides for mutual general releases by the parties. Each of the parties has also agreed not to initiate, file or pursue any action, claim, suit or proceeding against the other that concerns any of the matters which are the subject of the releases. The releases and covenant not to sue also apply to the respective predecessors, successors, present and former affiliates, subsidiaries, parents, assigns, officers, directors, equity holders, partners, members, controlling persons, employees, attorneys, financial advisors, investment bankers and agents of the parties and, with some exceptions in the case of WXI/McN Realty. 21 The Settlement Agreement terminates in its entirety on the date which is the earliest to occur of: - June 30, 2000, if the closing of the transactions contemplated by the Master Agreement has not occurred on or prior to June 30, 2000; - the termination of the Master Agreement in its entirety; and - the termination of the Master Agreement with respect to the last participating McNeil Partnership. The Settlement Agreement does not constitute an admission of damages, wrongdoing or liability by any party. The Partnership Agreement provides that the Partnership shall provide broad indemnity to the General Partner and its affiliates from and against a wide range of expenses and damages. Notwithstanding the terms of the Settlement Agreement, it is possible that the Partnership Agreement will require indemnification of the General Partner and its affiliates for expenses and damages incurred in connection with the aforementioned litigation. On December 13, 1999, Bond Purchase filed a lawsuit against the Partnership and several affiliated entities demanding access to the books and records, including lists of equity holders, of the entities. Bond Purchase has also recently filed lawsuits in connection with other McNeil-affiliated partnerships. Selected Financial Data. Set forth below is a summary of certain financial data for the Partnership which has been excerpted from the Form 10-K and the Form 10-Q. 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. 22 BALANCE SHEETS (Unaudited)
September 30, December 31, 1999 1998 ------------- ------------ ASSETS Real estate investment: Land.................................................. $ 392,000 $ 392,000 Buildings and improvements............................ 4,059,990 3,981,407 --------- --------- 4,451,990 4,373,407 Less: Accumulated depreciation....................... (1,696,013) (1,525,208) ----------- ----------- 2,755,977 2,848,199 Cash and cash equivalents................................. 1,710,453 3,070,785 Cash segregated for security deposits..................... 34,066 28,773 Accounts receivable....................................... 5,602 6,603 Escrow deposits........................................... 134,336 180,267 Deferred borrowing costs, net of accumulated amortization of $88,882 and $76,154 at September 30, 1999 and December 31, 1998, respectively.......................................... 72,612 85,340 Prepaid expenses and other assets......................... 10,174 5,500 ------ ----- $ 4,723,220 $ 6,225,467 =========== =========== LIABILITIES AND PARTNERS' EQUITY (DEFICIT) Mortgage note payable, net................................ $ 2,570,101 $ 2,613,312 Accounts payable and other accrued expenses............... 60,559 52,848 Accrued property taxes.................................... 107,19 142,490 Payable to affiliates..................................... 368,695 376,849 Security deposits and deferred rental revenue............. 35,563 27,702 ------ ------ 3,142,112 3,213,201 ========= ========= Partners' equity (deficit): Limited partners - 60,000 limited partnership units authorized; 49,512 limited partnership units issued and outstanding at September 30, 1999 and December 31, 1998......................... 1,864,297 3,296,145 General Partner....................................... (283,189) (283,879) --------- --------- 1,581,108 3,012,266 --------- --------- $ 4,723,220 $ 6,225,467 =========== ===========
23 STATEMENTS OF OPERATIONS (Unaudited)
Three Months Ended Nine Months Ended September 30, September 30, ---------------------------- ---------------------------- 1999 1998 1999 1998 ---------- ---------- ---------- ---------- Revenue: Rental revenue...................... $ 350,079 $ 320,966 $ 998,464 $ 967,846 Interest income on mortgage loan investments................. -- 42,092 -- 180,872 Interest income on mortgage loan investments--affiliate...... -- -- -- 108,214 Other interest income............... 18,518 93,607 70,672 178,719 Gain on extinguishment of mortgage loan investment......... -- -- -- 1,025,833 ---------- ---------- ---------- ---------- Total revenue.................... 368,597 456,665 1,069,136 2,461,484 ---------- ---------- ------------ ------------ Expenses: Interest ........................... 59,714 60,677 180,166 182,975 Depreciation........................ 56,919 57,626 170,805 176,863 Property taxes...................... 35,826 41,046 107,478 118,984 Personnel costs..................... 37,120 37,242 16,007 111,316 Utilities........................... 17,125 23,175 56,928 63,350 Repairs and maintenance............. 25,407 30,005 85,669 87,283 Property management fees - affiliates................ 16,376 15,944 48,131 45,976 Other property operating expenses......................... 14,493 20,835 44,717 57,127 General and administrative.......... 16,840 39,384 54,874 202,584 General and administrative - affiliates....................... 47,717 30,412 135,318 161,538 ---------- ---------- ------------ ------------ Total expenses................... 327,537 356,346 1,000,093 1,207,996 ---------- ---------- ------------ ------------ Net income.............................. $ 41,060 $ 100,319 $ 69,043 $1,253,488 ======= ======== ======== =========
24 Net income allocable to limited partners................. $ 40,650 $ 99,316 $ 68,353 $1,240,953 Net income allocable to General Partner.................. 410 1,003 690 12,535 ---------- ---------- ------------ ------------ Net income.............................. $ 41,060 $ 100,319 $ 69,043 $1,253,488 ======= ======== ======== ========= Net income per limited partnership unit.................... $ .82 $ 2.00 $ 1.38 $ 25.06 ======= ======== ======== ========= Distributions per limited partnership unit.................... $ -- $ 116.14 $ 30.30 $ 146.08 ======= ======== ======== =========
Statements of Years Ended December 31, -----------------------------------------------------------------
Operations 1998 1997 1996 1995 1994 - ----------- ---- ---- ---- ---- ---- Rental revenue $ 1,290,193 $ 1,279,458 $ 1,413,050 $ 1,405,346 $ 1,172,233 Interest income 516,148 539,573 524,791 568,970 591,791 Gain on extinguishment of mortgage loan investment 1,025,833 - - - - Gain on disposition of real estate - 1,962,280 - - - Net income 1,258,637 2,239,792 116,736 64,116 88,909 Net income per limited partnership unit $ 25.17 $ 44.78 $ 2.33 $ 1.28 $ 1.78 ============= =========== ============ ============= ============= Distributions per limited partnership unit $ 146.08 $ 65.64 $ 24.24 $ 5.05 $ 5.05 ============ =========== =========== ============= =============
As of December 31,
---------------------------------------------------------------------- Balance Sheets 1998 1997 1996 1995 1994 - -------------- ---- ---- ---- ---- ---- Real estate investments, net $ 2,848,199 $ 2,983,609 $ 5,457,587 $ 5,726,377 $ 5,938,194 Mortgage loan investments, net - 6,868,788 4,138,453 4,271,336 4,418,306 Total assets 6,225,467 12,112,244 13,189,106 14,345,949 14,484,111 Mortgage note payable, net 2,613,312 2,666,814 2,715,909 2,760,961 2,802,303 Partners' equity 3,012,266 8,986,219 9,996,414 11,079,628 11,265,513
25 10. CERTAIN INFORMATION CONCERNING THE PURCHASER. The Purchaser. The Purchaser is a Missouri limited liability company that was formed on November 15, 1995. The principal office of the Purchaser is 1100 Main, Suite 2100, Kansas City, Missouri 64105. Mr. Johnson is the owner of 86% of the Purchaser, is the managing member of Purchaser and is the person that manages the Purchaser's affairs. Since 1994, Mr. Johnson has been Chairman, Chief Executive Officer, and a majority shareholder of Maxus Properties, Inc., a Missouri corporation ("Maxus") that specializes in commercial property management. Mr. Johnson is also a vice president of KelCor, Inc., a Missouri corporation ("KelCor") that specializes in the acquisition of commercial real estate and the purchase of loans and apartments from lending institutions and agencies of the federal government. Mr. Johnson and his wife own all of the issued and outstanding stock of KelCor. Mr. Johnson is a citizen of the United States whose business address is 1100 Main, Suite 2100, Kansas City, Missouri 64105. The Purchaser's business consists of purchasing interests in real estate partnerships, notes and tax-exempt bonds. General. Except as otherwise set forth in this Offer to Purchase, (i) neither the Purchaser, and to the best of Purchaser's knowledge, Mr. Johnson, nor any affiliate of the foregoing beneficially owns or has a right to acquire any Units, (ii) neither the Purchaser, and to the best of Purchaser's knowledge, Mr. Johnson, nor any affiliate of the foregoing has effected any transaction in the Units within the past 60 days, (iii) neither the Purchaser, and to the best of Purchaser's knowledge, Mr. Johnson, 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 the Purchaser, or, to the best of Purchaser's knowledge, Mr. Johnson, on the one hand, and the Partnership or its affiliates, on the other hand, and (v) except as otherwise stated in this Offer to Purchase, there have been no contacts, negotiations or transactions between the Purchaser, or, to the best of Purchaser's knowledge, Mr. Johnson, 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. The Purchaser was admitted as a Limited Partner of the Partnership on December 1, 1999, after having purchased 10 Units from Citadel Secondary Market Fund I, Ltd., a Florida limited partnership at a per Unit price of $92. The Purchaser has also signed an agreement 26 to acquire 1,994.68 Units at a per Unit price of $100 from Madison/WP Partnership Value Fund II, L.P. and Madison/WP Partnership Value Fund III, LLC. Bond Purchase has recently conducted a number of mini tender offers for interests in entities affiliated with the General Partner. On October 15, 1999, Bond Purchase made a tender offer, which expired on November 20, 1999, for up to 2,000 current income units, or approximately 8.0% of the outstanding current income units, in McNeil Real Estate Fund XXI, L.P. at a price of $105 per current income unit. On October 11, 1999, Bond Purchase offered to purchase up to 30 limited partner units, or approximately 33.3% of the outstanding limited partner units, in McNeil Midwest Properties I, L.P. at a price of $26,500 per limited partner unit in cash. The offer expired on December 31, 1999. On September 17, 1999, Bond Purchase, offered to purchase up to eleven limited partner units, or approximately 34.4% of the outstanding limited partner units, in Regency North Associates, L.P. at a price of $77,000 per limited partner unit in cash. The offer expired on October 15, 1999. On October 18, 1999, Bond Purchase offered to purchase up to three additional limited partner units in Regency North Associates, L.P. at a price of $77,000 per limited partner unit in cash. The offer expired on November 15, 1999. The Purchaser and its affiliates currently own units in several partnerships affiliated with the General Partner and the Partnership. On December 13, 1999, Bond Purchase filed a lawsuit against the Partnership and several affiliated entities demanding access to the books and records, including lists of equity holders, of the entities. Bond Purchase has also recently filed lawsuits in connection with other partnerships affiliated with the General Partner and the Partnership. Since the week of December 20, 1999, the Purchaser has had settlement discussions with the General Partner concerning the Purchaser's (and the Purchaser's affiliates') ownership interests in various partnerships affiliated with the General Partner and the Partnership, including the Partnership. The Purchaser indicated its interest in purchasing ownership interests in some of such partnerships at prices higher than those that would be paid pursuant to the terms of the Master Agreement. The Purchaser and the General Partner have not been able to reach an agreement on settlement terms. 11. BACKGROUND OF THE OFFER. Except as otherwise set forth in this Offer to Purchase, the Purchaser, and to the best of Purchaser's knowledge, Mr. Johnson and affiliates of the foregoing have had no contacts or correspondence with the Partnership or its affiliates regarding the Partnership. Mr. Johnson and Bond Purchase have requested access to the books and records of the Partnership. The Purchaser and Mr. Johnson have corresponded with affiliates of the Partnership with respect to the Purchaser's ownership of limited partnership units in other limited partnerships that are affiliates of the Partnership. 27 On December 13, 1999, Bond Purchase filed a lawsuit against the Partnership and several affiliated entities demanding access to the books and records, including lists of equity holders, of the entities. Bond Purchase has also recently filed lawsuits in connection with other partnerships affiliated with the General Partner and the Partnership. Since the week of December 20, 1999, the Purchaser has had settlement discussions with the General Partner concerning the Purchaser's (and the Purchaser's affiliates') ownership interests in various partnerships affiliated with the General Partner and the Partnership, including the Partnership. The Purchaser indicated its interest in purchasing ownership interests in some of such partnerships at prices higher than those that would be paid pursuant to the terms of the Master Agreement. The Purchaser and the General Partner have not been able to reach an agreement on settlement terms. 12. SOURCE OF FUNDS. The Purchaser expects that approximately $4,750,000 (exclusive of fees and expenses) would be required to purchase the Units sought pursuant to the Offer, if tendered. The Purchaser has escrowed $4,751,000 from its working capital to fund the Purchase Price of the Units sought pursuant to the Offer. The Purchaser transferred $4,751,000 into an escrow with Assured Quality Title Company. The escrowed funds will be released only (i) to fund the Purchase Price for the purchase of Units tendered upon consummation of the Offer or (ii) upon the termination of the Offer if on the Expiration Date any or all of the conditions of the Offer have not been satisfied or waived. 13. PURCHASE PRICE CONSIDERATIONS. The Purchaser has set the Purchase Price at $100 net per Unit (subject to adjustment as set forth in this Offer to Purchase). In establishing the Purchase Price, the Purchaser reviewed certain publicly available information including among other things: (i) the Partnership Agreement, (ii) the Form 10-K and (iii) the Form 10-Q. The Purchaser determined the Purchase Price pursuant to its independent analysis of the Partnership and the Property. The Purchaser did not obtain current independent valuations on appraisals of the assets. Based on that information, the Purchaser considered several factors, some of which are discussed below. Trading History of the Units. Secondary market sales activity for the Units, including privately negotiated sales, has been limited and highly sporadic. The Form 10-K states that "There is no established public trading market for limited partnership units, nor is one expected to develop." At present, privately negotiated sales and sales through intermediaries are the only means available to a Unit Holder to liquidate an investment in Units (other than this Offer, the Merger Proposal or other occasional offers by other partnership investors, if any) because the Units are not listed or traded on any exchange or quoted on any NASDAQ list or system. 28 Partnership Profiles, Inc. tracks recent trades in certain limited partnership interests. A recent issue of Partnership Spectrum indicates that 25 Units traded in the period from April 1, 1999 through September 30, 1999 at per Unit prices between $72.51 and $74.08. Sales may be conducted which are not reported by Partnership Profiles and the prices of sales through other channels may differ from those reported by Partnership Profiles. The Purchaser does not know whether the information provided by Partnership Profiles is accurate or complete. The Purchase Price represents the price at which the Purchaser is willing to purchase Units. No independent person has been retained to evaluate or render any opinion with respect to the fairness of the Purchase Price and no representation is made by the Purchaser or any affiliate of the Purchaser as to such fairness. The Purchaser did not attempt to obtain current independent valuations or appraisals of the underlying assets owned by the Partnership. Other measures of the value of the Units may be relevant to Limited Partners. 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. 14. CONDITIONS OF THE OFFER. Notwithstanding any other provisions of the Offer, the Purchaser shall not be required to accept for payment, purchase or pay for, subject to Rule 14e-1(c) under the Exchange Act, any tendered Units (whether or not any Units have theretofore been accepted for payment or paid for pursuant to the Offer), and may terminate the Offer as to any Units not then paid for, if (i) the Minimum Condition has not been satisfied or (ii) the Merger Proposal has been approved by Limited Partners holding a majority of the outstanding Units prior to consummation of the Offer. Furthermore, notwithstanding any other term of the Offer, 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 therefore, any of the following conditions exist: (a) there shall have been threatened, instituted or pending any action, proceeding, application, audit, claim or counterclaim by any government or governmental authority, commission or agency, domestic or foreign, or by any other person or before any court or governmental, regulatory or administrative agency, authority or tribunal, domestic, foreign or supranational, 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 both legal and beneficial ownership of the Units; (iii) requires divestiture by the Purchaser of any Units; (iv) causes any material diminution in the reasonable judgment of the Purchaser of the value of the Units or the benefits to be derived by the Purchaser as a result of the transactions contemplated by the 29 Offer; (v) might be reasonably expected to materially adversely affect the business, properties, assets, liabilities, financial condition, operations, results of operations or prospects of the Purchaser, or the Partnership; or (vi) seeks to impose any material condition to the Offer unacceptable to the Purchaser; (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 paragraph (a) above; (c) any change or development shall have occurred or been threatened or disclosed in the business, properties, assets, liabilities, financial condition, operations, results of operations or prospects, capitalization, partners' equity of the Partnership, which is or may be materially adverse to the Partnership; (d) the General Partner of the Partnership shall have failed or refused to take all action that the Purchaser deems necessary for the Purchaser to be the registered owner of the Units tendered and accepted for payment hereunder simultaneously with the consummation of the Offer, in accordance with the Partnership Agreement and applicable law; (e) 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, (iii) declared or paid any Distribution, other than in cash, on any of the Units, or (iv) the Partnership, its subsidiary or the General Partner shall have authorized, recommended, proposed or announced its intention to propose any merger, consolidation, liquidation or business combination transaction, acquisition of assets, disposition of assets or material change in its capitalization, or any comparable event (other than the Merger Proposal) not in the ordinary course of business; or (f) the General Partner 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 registered owners and as Limited Partners. The foregoing conditions are for the sole benefit of the Purchaser and its affiliates and may be (but need not 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. Any determination by the Purchaser concerning the events described above will be final and binding upon all parties. 30 15. CERTAIN LEGAL MATTERS. Except as set forth in this Offer to Purchase, based on its review of publicly available filings by the Partnership with the Commission and other publicly available information regarding the Partnership, the Purchaser is not 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, other than the filing of a Tender Offer Statement on Schedule 14D-1 (which has been filed) and any required amendments thereto. Should any such approval or other action be required, 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 or the Purchaser's business might not have to be disposed of or held separate or other substantial conditions complied with in order to obtain such approval or action in the event that such approvals were not obtained or such actions were not taken. Appraisal Rights. Limited Partners will not have appraisal rights as a result of the Offer. State Anti-Takeover Laws. A number of states have adopted anti-takeover laws which purport, to varying degrees, to be applicable to attempts to acquire securities of corporations or other entities which are incorporated or organized in such states or which have substantial assets, security holders, principal executive officers or principal places of business therein. Although the Purchaser has not attempted to comply with any state anti-takeover statutes in connection with the Offer, the Purchaser reserves the right to challenge the validity or applicability or any state law allegedly applicable to the Offer and nothing in this Offer to Purchase nor any action taken in connection therewith is intended as a waiver of such right. If any state anti-takeover statute is applicable to the Offer, the Purchaser might be unable to accept for payment or purchase Units tendered pursuant to the Offer or be delayed in continuing or consummating the Offer. In such case, the Purchaser may not be obliged to accept for purchase or pay for any Units tendered. ERISA. By executing and returning the Letter of Transmittal, a Limited Partner will be representing that either (a) the Limited Partner is not a plan subject to Title I of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), or Section 4975 of the Code, or an entity deemed to hold "plan assets" within the meaning of 29 C.F.R. Section 2510.3-101 of any such plan; or (b) the tender and acceptance of Units pursuant to the Offer will not result in a nonexempt prohibited transaction under Section 406 of ERISA or Section 4975 of the Code. 31 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. Antitrust. Under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act"), and the rules and regulations that have been promulgated thereunder by the Federal Trade Commission (the "FTC"), certain acquisition transactions may not be consummated until certain information and documentary material has been furnished for review by the Antitrust Division of the Department of Justice and the FTC and certain waiting period requirements have been satisfied. The Purchaser does not believe any filing is required under the HSR Act with respect to its acquisition of Units contemplated by the Offer. 16. CERTAIN FEES AND EXPENSES. 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 is acting as depositary in connection with the Offer. The Purchaser will pay all costs and expenses of printing and mailing the Offer and its legal fees and expenses. 17. MISCELLANEOUS. The Offer is being made to all Limited Partners, Beneficial Owners and Assignees, all to the extent known by the Purchaser. The Purchaser is not aware of any state in which the making of the Offer is prohibited by administrative or judicial action pursuant to a state statute. If the Purchaser becomes aware of any state where the making of the Offer is so prohibited, the Purchaser will make a good faith effort to comply with any such statute or seek to have such statute declared inapplicable to the Offer. If, after such good faith effort, the Purchaser cannot comply with any applicable statute, the Offer will not be made to (nor will tenders be accepted from or on behalf of) Limited Partners in such state. Pursuant to Rule 14d-3 of the General Rules and Regulations under the Exchange Act, the Purchaser has filed with the Commission a Tender Offer Statement on Schedule 14D-1, together with exhibits, furnishing certain additional information with respect to the Offer. Such statement and any amendments thereto, including exhibits, may be inspected and copies may be obtained at the same places and in the same manner as set forth with respect to information concerning the Partnership in Section 9 ("Certain Information Concerning the Partnership"). 32 NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY REPRESENTATION ON BEHALF OF THE PURCHASER NOT CONTAINED HEREIN OR IN THE LETTER OF TRANSMITTAL AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED. Bond Purchase, L.L.C. January 13, 2000 33 Questions and requests for assistance may be directed to Bond Purchase, L.L.C. at the address and telephone number listed below. Additional copies of this Offer to Purchase, the Letter of Transmittal and other tender offer materials may be obtained from Bond Purchase, L.L.C. as set forth below, and will be furnished promptly at the Purchaser's expense. The Letter of Transmittal and any other required documents should be sent or delivered by each Limited Partner to Bond Purchase, L.L.C. at its address set forth below. To be effective, a duly completed and signed Letter of Transmittal as well as Certificates representing any Units being tendered must be received by Bond Purchase, L.L.C. at the address set forth below before 12:00 midnight, New York City Time, on February 11, 2000. By Mail/Hand or Overnight Delivery Bond Purchase, L.L.C. 1100 Main Street, Suite 2100 Kansas City, MO 64105 By Facsimile (816) 221-1829 For Additional Information Call (816) 421-4670 34 EX-99.(A)(2) 3 LETTER OF TRANSMITTAL TO TENDER UNITS OF LIMITED PARTNERSHIP INTEREST OF MCNEIL REAL ESTATE FUND XX, L.P. PURSUANT TO THE OFFER TO PURCHASE DATED JANUARY 13, 2000 BY BOND PURCHASE, L.L.C. - -------------------------------------------------------------------------------- THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE AT MIDNIGHT, NEW YORK CITY TIME, ON FEBRUARY 11, 2000, (THE "EXPIRATION DATE") UNLESS EXTENDED. - -------------------------------------------------------------------------------- BOND PURCHASE, L.L.C. By Mail, Overnight Courier or By Hand: 1100 Main Street, Suite 2100 Kansas City, Missouri 64105 - ----------------------------------------------------------------------------------- DESCRIPTION OF UNITS TENDERED - ----------------------------------------------------------------------------------- Name(s) and Address(es) of Registered | Holder(s) (Please indicate changes or |Units in McNeil Real Estate Fund XX, L.P. corrections to the name, address and | tax identification number printed | below.) - -------------------------------------------------------------------------------- | 1. Total | 2. Number of | | Number of | Units | | Units | Tendered | | Owned | for Cash | | ( ) | ( ) | - --------------------------------------------------------------------------------
To participate in the offer, you must send a duly completed and executed copy of this Letter of Transmittal, the certificates representing the Units, and any other documents required by this Letter of Transmittal so that such documents are received by Bond Purchase, L.L.C. on or prior to February 11, 2000, unless extended. The method of delivery of this Letter of Transmittal and all other required documents is at your option and risk, and delivery will be deemed made only when actually received by Bond Purchase, L.L.C. If delivery is by mail, registered mail with return receipt requested is recommended. In all cases, sufficient time should be allowed to assure timely delivery. Delivery of this Letter of Transmittal or any other required documents to an address other than as set forth above does not constitute valid delivery. PLEASE SEND THE CERTIFICATE ORIGINALLY ISSUED TO REPRESENT YOUR INTEREST IN THE PARTNERSHIP TO BOND PURCHASE, L.L.C. WITH THIS LETTER OF TRANSMITTAL For information or assistance in connection with the offer or the completion of this Letter of Transmittal, please contact Bond Purchase, L.L.C. at 1-816-421-4670. The instructions accompanying this Letter of Transmittal should be read carefully before this Letter of Transmittal is completed. ---------------------------------------------------- ---------------------------------------------------- | SPECIAL PAYMENT INSTRUCTIONS | | SPECIAL DELIVERY INSTRUCTIONS | | (See Instructions 1 and 9) | | (See Instructions 1 and 9) | | | | | |To be completed ONLY if the consideration price of| |To be completed ONLY if the consideration for the | |Units accepted for payment is to be issued in the | |purchase price of Units accepted for payment is | |name of someone other than the undersigned. | |to be issued in the name of someone other than the | | | |undersigned or to the undersigned at an address | |[ ] Issue consideration to: | |other than that shown above. | | | | | |Name _____________________________________________ | |[ ] Mail consideration to: | | (Please type or Print) | | | | | |Name_____________________________________________ | |Address __________________________________________ | | (Please Type or Print) | | | | | |__________________________________________________ | |Address___________________________________________ | | (Include Zip Code) | | | | | |__________________________________________________ | | | | (Include Zip Code) | | __________________________________________________ | | | | (Tax Identification or Social Security No.) | | __________________________________________________ | | (See Substitute Form W-9) | | (Tax Identification or Social Security No.) | | | | (See Substitute Form W-9) | ---------------------------------------------------- ----------------------------------------------------
NOTE: SIGNATURES MUST BE PROVIDED BELOW PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY 2 Ladies and Gentlemen: The undersigned hereby tender(s) to Bond Purchase, L.L.C., a Missouri limited liability company (the "Purchaser"), the number of units of limited partnership interest ("Units") of McNeil Real Estate Fund XX, L.P., a California limited partnership (the "Partnership"), specified below, pursuant to the Purchaser's offer to purchase up to 24,000 of the issued and outstanding Units at a purchase price of $100 per Unit, net to the seller in cash (the "Purchase Price"), without interest thereon, provided, however, that the Purchaser will not accept any Units the acceptance of which would result in a sale or exchange of 50% or more of the total interest in capital and profits of the Partnership within any 12-month period, as determined by the Purchaser, and upon the other terms and subject to the conditions set forth in the Offer to Purchase dated January 13, 2000 (the "Offer to Purchase") and this Letter of Transmittal ("the "Letter of Transmittal," which, together with the Offer to Purchase and any supplements, modifications or amendments thereto, constitute the "Offer"), all as more fully described in the Offer to Purchase. The Purchase Price will be automatically reduced by the aggregate amount of distributions per Unit, if any, made or declared by the Partnership after December 31, 1999 and on or prior to 12:00 midnight, New York City time, on February 11, 2000 (the "Expiration Date"). In addition, if a distribution is made or declared after the Expiration Date but prior to the date on which the Purchaser pays the Purchase Price for the tendered Units, the Purchaser will offset the amount otherwise due a holder of Units pursuant to the Offer in respect of tendered Units which have been accepted for payment but not yet paid for by the amount of any such distribution. LIMITED PARTNERS WHO TENDER THEIR UNITS WILL NOT BE OBLIGATED TO PAY ANY COMMISSIONS OR PARTNERSHIP TRANSFER FEES, WHICH COMMISSIONS OR PARTNERSHIP TRANSFER FEES WILL BE BORNE BY THE PURCHASER. Receipt of the Offer to Purchase is hereby acknowledged. Capitalized terms used but not defined herein have the respective meanings ascribed to them in the Offer to Purchase. By executing and delivering this Letter of Transmittal, a tendering Limited Partner irrevocably appoints the Purchaser and designees of the Purchaser and each of them as such Limited Partner's proxies, with full power of substitution, in the manner set forth in this Letter of Transmittal 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 (and with respect to any and all other Units or other securities issued or issuable in respect of such Units on or after the date hereof). All such proxies shall be considered irrevocable 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 (and such other Units and securities) will be revoked without further action, and no subsequent proxies may be given nor any subsequent written consents executed (and, if given or executed, will not be deemed effective). The Purchaser and its designees will, with respect to the Units (and such other Units and securities) 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 (including any meeting with respect to the Merger Proposal) or any adjournment or postponement thereof, by written consent in lieu of any such meeting or otherwise. The Purchaser reserves the right to require that, in order for a Unit to be deemed validly tendered, immediately upon the Purchaser's acceptance of such Units for payment, the Purchaser must be able to exercise 3 full voting rights with respect to such Unit and other securities, including voting at any meeting of Limited Partners. By executing and delivering this Letter of Transmittal, a tendering Limited Partner also irrevocably constitutes and appoints the Purchaser and its designees 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. Upon such acceptance for payment, all prior powers of attorney granted by the Limited Partner with respect to such Unit 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 and its designees each will have the power, among other things, (i) to seek to transfer ownership of such Units on the Partnership books maintained by the transfer agent and registrar for the Partnership (and execute and deliver any accompanying evidences of transfer and authenticity any of them may deem necessary or appropriate in connection therewith), (ii) to receive any and all distributions made by the Partnership after the Expiration Date, 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 general partner of the Partnership (the "General Partner") a change of address form instructing the General Partner 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, (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, and (v) if legal title to the Units is held through an IRA or KEOGH or similar account, the Limited Partner understands that this Letter of Transmittal 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 Letter of Transmittal. 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. By executing and delivering the Letter of Transmittal, a tendering Limited Partner irrevocably assigns to the Purchaser and its assigns all of the right, title and interest of such Limited Partner in the Partnership with respect to the Units tendered and purchased pursuant to the Offer, including, without limitation, such Limited Partner's right, title and interest in and to any and all distributions made by the Partnership after the Expiration Date in respect of the Units tendered by such Limited Partner and accepted for payment by the Purchaser, regardless of the fact that the record date for any such distribution may be a date prior to the Expiration Date. By executing and returning this Letter of Transmittal, the undersigned represents that either (a) the undersigned is not a plan subject to Title I of the Employee Retirement Income Security Act of 1974, as amended ("ERISA") or Section 4975 of the Internal Revenue Code of 1986, as amended (the "Code"), or an entity deemed to hold "plan assets" within the meaning of 29 C.F.R. 4 Section 2510.3-101 of any such plan; or (b) the tender and acceptance of Units pursuant to the Offer will not result in a nonexempt prohibited transaction under Section 406 of ERISA or Section 4975 of the Code. By executing this Letter of Transmittal, the undersigned hereby represents and warrants to Purchaser that it (i) has received and reviewed the Offer to Purchase and (ii) owns the Units and has full power and authority to validly sell, assign, transfer, convey and deliver to Purchaser the Units, and that effective when the Units are accepted for payment by Purchaser, the undersigned hereby conveys to Purchaser and will hereby acquire good, marketable and unencumbered title thereto, free and clear of all options, liens, restrictions, charges, encumbrances, conditional sales agreements or other obligations relating to the sale or transfer thereof, and the Units will not be subject to any adverse claim. The undersigned further represents and warrants that it is a "United States person," as defined in Section 7701(a)(30) of the Internal Revenue Code of 1986, as amended. All authority herein conferred or agreed to be conferred shall survive the death or incapacity of the undersigned, and any obligations of the undersigned shall be binding upon the heirs, personal representatives, trustees in bankruptcy, legal representatives, and successors and assigns of the undersigned. The undersigned further represents and warrants that, to the extent a certificate evidencing the Units tendered hereby (the "original certificate") is not delivered by the undersigned together with this Letter of Transmittal, (i) the undersigned represents and warrants to the Purchaser that the undersigned has not sold, transferred, conveyed, assigned, pledged, deposited or otherwise disposed of any portion of the Units, (ii) the undersigned has caused a diligent search of its records to be taken and has been unable to locate the original certificate, (iii) if the undersigned shall find or recover the original certificate evidencing the Units, the undersigned will immediately and without consideration surrender it to the Purchaser; and (iv) the undersigned shall at all times indemnify, defend, and save harmless the Purchaser and the Partnership, its successors, and its assigns from and against any and all claims, actions, and suits whether groundless or otherwise, and from and against any and all liabilities, losses, damages, judgments, costs, charges, counsel fees, and other expenses of every nature and character by reason of honoring or refusing to honor the original certificate when presented by or on behalf of a holder in due course of a holder appearing to or believed by the partnership to be such, or by issuance or delivery of a replacement certificate, or the making of any payment, delivery, or credit in respect of the original certificate without surrender thereof, or in respect of the replacement certificate. The undersigned recognizes that, if proration is required pursuant to the terms of the Offer will accept for payment from among those Units validly tendered on or prior to the Expiration Date and not properly withdrawn, the maximum number of Units permitted pursuant to the Offer (including the maximum amount possible without causing a Tax Termination of the Partnership) on a pro rata basis, based upon the number of Units validly tendered prior to the Expiration Date and not properly withdrawn; however, because of restrictions in the Partnership Agreement (i) a Limited Partner may not make a partial tender of Units owned by such Limited Partner if such Limited Partner would otherwise retain less than ten (10) Units and (ii) tenders of less than ten (10) Units will only be accepted if all the Units held by such Limited Partner are tendered. The undersigned understands that a tender of Units to the Purchaser will constitute a binding 5 agreement between the undersigned and the Purchaser upon the terms and subject to the conditions of the Offer. The undersigned recognizes that under certain circumstances set forth in Section 2 ("Proration; Acceptance for Payment and Payment for Units") and Section 14 ("Conditions of the Offer") of the Offer to Purchase, the Purchaser may not be required to accept for payment any of the Units tendered hereby. In such event, the undersigned understands that any Letter of Transmittal for Units not accepted for payment will be destroyed by the Purchaser. Except as stated in Section 4 ("Withdrawal Rights") of the Offer to Purchase, this tender is irrevocable, provided Units tendered pursuant to the Offer may be withdrawn at any time prior to the Expiration Date. 6 - -------------------------------------------------------------------------------- Signature Box (See Instruction 2) Please sign exactly as your name is printed on the form of this Letter of Transmittal. For joint owners, each joint owner must sign. (See Instruction 2) TRUSTEES, EXECUTORS, ADMINISTRATORS, GUARDIANS, ATTORNEYS-IN-FACT, OFFICERS OF A CORPORATION OR OTHER PERSONS ACTING IN A FIDUCIARY OR REPRESENTATIVE CAPACITY, PLEASE COMPLETE THIS BOX AND SEE INSTRUCTION 2. The signatory hereto hereby tenders the Units indicated in this Letter of Transmittal to the Purchaser pursuant to the terms of the Offer, and certifies under penalties of perjury that the statements in Box A, Box B and, if applicable, Box C and Box D are true. X ___________________________________________________________________________ (Signature of Owner) X ___________________________________________________________________________ (Signature of Joint Owner) Name and Capacity (if other than individuals):_________________________________ Title: ________________________________________________________________________ Address: ______________________________________________________________________ (City) (State) (zip) Area Code and Telephone No. (Day): ____________________________________________ (Evening): _______________________________________ Signature(s) Guarantee Required For All Signatures (See Instruction 2) Name and Address of Eligible Institution: ____________________________________ ______________________________________________________________________________ ______________________________________________________________________________ Authorized Signature: X______________________________________________________ Name: ________________________________________________________________________ Title:_____________________________________ Date: _________________________ - -------------------------------------------------------------------------------- 7 TAX CERTIFICATIONS (See Instruction 3) By signing the Letter of Transmittal in the Signature Box, the Limited Partner certifies as true under penalty of perjury, the representations in Boxes A, B and C below. Please refer to the attached instructions for completing this Letter of Transmittal and Boxes A, B and C below. - -------------------------------------------------------------------------------- BOX A SUBSTITUTE FORM W-9 (See Instruction 3) The Limited Partner hereby certifies the following to the Purchaser under penalties of perjury: (i) The Taxpayer Identification No. ("TIN") printed (or corrected) on the front of this Letter of Transmittal is the correct TIN of the Limited Partner, unless the Units are held in an Individual Retirement Account ("IRA"), or if box C is checked, the Limited Partner has applied for a TIN. If the Limited Partner has applied for a TIN, a TIN has not been issued to the Limited Partner, and either (a) the Limited Partner has mailed or delivered an application to receive a TIN to the appropriate IRS Center or Social Security Administration Office, or (b) the Limited Partner intends to mail or deliver an application in the near future (it being understood that if the Limited Partner does not provide a TIN to the Purchaser, 31% of all reportable payments made to the Limited Partner will be withheld); and (ii) Unless this box [ ] is checked, the Limited Partner is not subject to back-up withholding either because the Limited Partner, (a) is exempt from back-up withholding; (b) has not been notified by the IRS that such Limited Partner is subject to back-up withholding as a result of a failure to report all interest or dividends; or (c) has been notified by the IRS that such Limited Partner is no longer subject to back-up withholding. Note: Place an "X" in the box in (ii) above, only if you are unable to certify that the Limited Partner is not subject to back-up withholding. - -------------------------------------------------------------------------------- 8 - -------------------------------------------------------------------------------- BOX B FIRPTA AFFIDAVIT (See Instruction 3) - -------------------------------------------------------------------------------- Under Section 1445(e)(5) of the Internal Revenue Code and Treas. Reg. 1. 1445-1(d), a transferee must withhold tax equal to 10% of the amount realized with respect to certain transfers of an interest in a partnership if 50% or more of the value of its gross assets consists of U.S. real property interests and 90% or more of the value of its gross assets consists of U.S. real property interests plus cash equivalents, and the holder of the partnership interest is a foreign person. To inform the Purchaser that no withholding is required with respect to the Limited Partner's Units in the Partnership, the person signing this Letter of Transmittal hereby certifies the following under penalties of perjury: (i) Unless this box [ ] is checked, the Limited Partner, if an individual, is a U.S. citizen or a resident alien for purposes of U.S. income taxation, and if other than an individual, is not a foreign corporation, foreign partnership, foreign estate or foreign trust (as those terms are defined in the Internal Revenue Code and Income Tax Regulations); (ii) The Limited Partner's U.S. social security number (for individuals) or employer identification number (for non-individuals) is correct as furnished in the blank provided for that purpose on the front of the Letter of Transmittal; (iii) The Limited Partner's home address (for individuals), or office address (for nonindividuals), is correctly printed (or corrected) on the front of this Letter of Transmittal. The person signing this Letter of Transmittal understands that this certification may be disclosed to the IRS by the Purchaser and that any false statements contained herein could be punished by fine, imprisonment, or both. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- BOX C SUBSTITUTE FORM W-8 (See Instruction 4) By checking this box [ ], the person signing this Letter of Transmittal hereby certifies under penalties of perjury that the Limited Partner is an "exempt foreign person" for purposes of the Back-up Withholding rules under the U.S. Federal income tax laws, because the Limited Partner has the following characteristics: (i) Is a nonresident alien individual or a foreign corporation, partnership, estate or trust; (ii) Is an individual, has not been and plans not to be present in the U.S. for a total of 183 days or more during the calendar year; and (iii) Neither engages, nor plans to engage, in a U.S. trade or business that has effectively connected gains from transactions with a broker or barter exchange. - -------------------------------------------------------------------------------- 9 INSTRUCTIONS FOR COMPLETING LETTER OF TRANSMITTAL Forming Part of the Terms and Conditions of the Offer ======================================================================= FOR ASSISTANCE IN COMPLETING THE LETTER OF TRANSMITTAL, CALL: Bond Purchase, L.L.C. AT 1-816-421-4670 ======================================================================= 1. Delivery of Letter of Transmittal. For convenience in responding to the Offer, a self-addressed, postage-paid envelope had been enclosed with the Offer to Purchase. However, to ensure receipt of the Letter of Transmittal, it is suggested that you use an overnight courier or, if the Letter of Transmittal is to be delivered by United States mail, that you use certified or registered mail, return receipt requested. To be effective, a duly completed and signed Letter of Transmittal (or facsimile thereof) and certificates evidencing tendered Units must be received by Bond Purchase, L.L.C. at the address (or facsimile number) set forth below before the Expiration Date, 12:00 Midnight, New York City Time on February 11, 2000, unless extended. LETTERS OF TRANSMITTAL WHICH HAVE BEEN DULY EXECUTED, BUT WHERE NO INDICATION IS MARKED IN THE "NUMBER OF UNITS TENDERED" COLUMN, SHALL BE DEEMED TO HAVE TENDERED ALL UNITS PURSUANT TO THE OFFER. Because of restrictions in the Partnership Agreement, (i) a Limited Partner may not make a partial tender of Units owned by such Limited Partner if such Limited Partner would otherwise retain less than ten (10) Units and (ii) tenders of less than ten (10) Units will only be accepted if all of the Units held by such Limited Partner are tendered. By Mail/hand Delivery or Bond Purchase, L.L.C. Overnight Courier: 1100 Main Street, Suite 2100 Kansas City, Missouri 64105 By Facsimile: (816) 221-1829 For Additional Information Call: (816) 421-4670 The method of delivery of the Letter of Transmittal, certificates evidencing tendered units and all other required documents is at the option and sole risk of the tendering Limited Partner, and the delivery will be deemed made only when actually received by Bond Purchase, L.L.C. In all cases, sufficient time should be allowed to assure timely delivery. If tendering by facsimile, please mail the original copy of the Letter of Transmittal (along with certificates evidencing tendered units) to Bond Purchase, L.L.C. at the address listed above. 10 All tendering holders of Units, by execution of this Letter of Transmittal or facsimile hereof, waive any right to receive any notice of the acceptance of their Units for payment. 2. Signatures. All Limited Partners must sign in the Signature Box of this Letter of Transmittal. If the Units are held in the names of two or more persons, all such persons must sign the Letter of Transmittal. When signing as a general partner, corporate officer, attorney-in-fact, executor, custodian, administrator or guardian, please give full title and send proper evidence of authority satisfactory to the Purchaser with this Letter of Transmittal. With respect to most trusts, the Partnership will generally require only the named trustee to sign the Letter of Transmittal. 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 Letter of Transmittal to Bond Purchase, L.L.C. as specified in Instruction 1 herein. Such Letter of Transmittal will then be forwarded by Bond Purchase, L.L.C. to the custodian for additional execution. Such Letter of Transmittal 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 Letters of Transmittal as there are different registrations of certificates. If the Letter of Transmittal is signed by the registered holder of the Units tendered herewith and payment is to be made directly to that holder, then no signature guarantee is required on the Letter of Transmittal. Similarly, if the Units are tendered for the account of a member firm of a registered national securities exchange, a member of the National Association of Securities Dealers, Inc. or a commercial bank, savings bank, credit union, savings and loan association or trust company having an office, branch or agency in the United States (each an "Eligible Institution"), no signature guarantee is required on the Letter of Transmittal. However, in all other cases, all signatures on the Letter of Transmittal must be guaranteed by an Eligible Institution. 3. 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 terms are defined in the Code and Income Tax Regulations, should follow the instructions below with respect to certifying Boxes A and B. Taxpayer Identification Number. To avoid 31% federal income tax backup withholding, the Limited Partner must furnish his, her or its TIN in the blank provided for that purpose on the back of the Letter of Transmittal and certify under penalties of perjury Box A, B and, if applicable, Box C. When determining the TIN to be furnished, please refer to the following note as a guideline: 11 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. IRA CUSTODIAL ACCOUNTS should reflect the TIN of the custodian. CUSTODIAL ACCOUNTS FOR THE BENEFIT OF MINORS should reflect the TIN of the minor. CORPORATIONS OR OTHER BUSINESS ENTITIES should reflect the TIN assigned to that entity. If you need additional information, please see the attached copy of the Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9. Substitute Form W-9 - Box A. (i) In order to avoid 31% federal income tax backup withholding, the Limited Partner must provide to the Purchaser in the blank provided for that purpose on the back of the Letter of Transmittal the Limited Partner's correct TIN and certify, under penalties of perjury, that such Limited Partner is not subject to such backup withholding. The TIN being provided on the Substitute Form W-9 is that of the registered Limited Partner as indicated on the back of the Letter of Transmittal. If a correct TIN is not provided, penalties may be imposed by the IRS, in addition to the Limited Partner being subject to backup withholding. Certain Limited Partners (including, among others, all corporations) are not subject to backup withholding. Backup withholding is not an additional tax. If withholding results in an overpayment of taxes, a refund may be obtained from the IRS. (ii) Do not check the box in Box A, Part (ii), unless you have been notified by the IRS that you are subject to backup withholding. FIRPTA Affidavit - Box B. To avoid withholding of tax pursuant to Section 1445 of the Code, each Limited Partner who or which is a United States Person (as defined in Instruction 3 above) must certify, under penalties of perjury, the Limited Partner's TIN and address, and that the Limited Partner is not a foreign person. Tax withheld under Section 1445 of the Internal Revenue Code is not an additional tax. If withholding results in an overpayment of tax, a refund may be obtained from the IRS. Check the box in Box B, Part (ii) only if you are not a U.S. Person, as described therein. 4. Foreign Persons - Box C. In order for a Limited Partner who is a foreign person (i.e., not a United States Person as defined in Instruction 3 above) to qualify as exempt from 31% backup withholding, such foreign Limited Partner must certify, under penalties of perjury, the statement in Box C of this Letter of Transmittal attesting to that foreign person's status by checking the box in such statement. UNLESS SUCH BOX IS CHECKED, SUCH FOREIGN PERSON WILL BE SUBJECT TO 31% WITHHOLDING OF TAX UNDER SECTION 1445 OF THE CODE. 5. Conditional Tenders. No alternative, conditional or contingent tenders will be accepted. 12 6. Validity of Letter of Transmittal. All questions as to the validity, form, eligibility (including time of receipt) and acceptance of a Letter of Transmittal 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 Letter of Transmittal) 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 Letter of Transmittal will not be valid unless and until any irregularities have been cured or waived. The Purchaser is under no duty to give notification of defects in a Letter of Transmittal and will incur no liability for failure to give such notification. 7. Assignee Status. Assignees must provide documentation to Bond Purchase, L.L.C. which demonstrates, to the satisfaction of the Purchaser, such person's status as an assignee. 8. Inadequate Space. If the space provided herein is inadequate, the numbers of Units and any other information should be listed on a separate schedule attached hereto and separately signed on each page thereof in the same manner as this Letter of Transmittal is signed. 9. Special Payment and Delivery Instructions. If consideration is to be issued in the name of a person other than the person signing the Signature box of the Letter of Transmittal or if consideration is to be sent to someone other than such signer or to an address other than that set forth on the Letter of Transmittal in the box entitled "Description of Units Tendered," the appropriate boxes on the Letter of Transmittal should be completed. Questions and requests for assistance may be directed to Bond Purchase, L.L.C. at its address and telephone number listed below. Additional copies of the Offer to Purchase, the Letter of Transmittal and other tender offer materials may be obtained from Bond Purchase, L.L.C. as set forth below, and will be furnished promptly at the Purchaser's expense. You may also contact your broker, dealer, commercial bank, trust company or other nominee for assistance concerning the Offer. Bond Purchase, L.L.C. 1100 Main Street, Suite 2100 Kansas City, Missouri 64105 Call (816) 421-4670 13 GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 Guidelines for determining the proper identification number to give the payer Social Security numbers have nine digits separated by two hyphens: i.e., 000-00-0000. Employer identification numbers have nine digits separated by only one hyphen: i.e., 00-0000000. The table below will help determine the number to give the payer. FOR THIS TYPE OF ACCOUNT: GIVE THE TAXPAYER IDENTIFICATION NUMBER OF 1. An individual account The individual 2. Two or more individuals (joint The actual owner of the account or, account) if combined funds, the first individual on the account 3. Custodian account of a minor (Uniform The minor(2) Gift to Minors Act) 4.a. The usual revocable savings trust account The grantor-trustee(1) (grantor is also trustee) 4.b. So-called trust account that is not a legal The actual owner(l) or valid trust under state law 5. Sole proprietorship account The owner(3) 6. A valid trust, estate or pension trust The legal entity (Do not furnish the identifying number of the personal representative or trustee unless the legal entity itself is not designated in the account title.)(4) 7. Corporate The corporation 8. Association, club, religious, charitable, The organization educational or other tax-exempt organization 9. Partnership The partnership 10. A broker or registered nominee The broker or nominee
14 11. Account with the Department of The public entity Agriculture in the name of a public entity (such as a State or local government school district, or prison) that receives agricultural program payments (1) List first and circle the name of the person whose number you furnish. If only one person on a joint account has an SSN, that person's number must be furnished. (2) Circle the minor's name and furnish the minor's social security number. (3) Show your individual name. You may also enter your business name. You may use your social security number or employer identification number. (4) List first and circle the name of the legal trust, estate, or pension trust. NOTE: If no name is circled when there is more than one name, the number will be considered to be that of the first name listed. Obtaining a Number If you do not have a taxpayer identification number or you do not know your number, obtain Form SS-5, Application for a Social Security Number Card (for individuals), or Form SS-4, Application for Employer Identification Number (for businesses and all other entities), at the local office of the Social Security Administration or the Internal Revenue Service and apply for a number. Payees Exempt from Back-up Withholding Payees specifically exempted from back-up withholding on ALL payments include the following: - A corporation. - A financial institution. - An organization exempt from tax under section 501(a) of the Internal Revenue Code of 1986, as amended (the "Code"), or an individual retirement plan. - The United States or any agency or instrumentality thereof. - A State, the District of Columbia, a possession of the United States, or any subdivision or instrumentality thereof. 15 - A foreign government, a political subdivision of a foreign government, or any agency or instrumentality thereof. An international organization or any agency or instrumentality thereof. - A registered dealer in securities or commodities registered in the U.S. or a possession of the U.S. A real estate investment trust. - A common trust fund operated by a bank under section 584(a) of the Code. - An exempt charitable remainder trust or a non-exempt trust described in section 4947(a)(1). An entity registered at all times under the Investment Company Act of 1940. - A foreign central bank of issue. - A futures commission merchant registered with the Commodity Futures Trading Commission. Payments of dividends and patronage dividends not generally subject to back-up withholding include the following: - Payments to nonresident aliens subject to withholding under section 1441 of the Code. - Payments to Partnerships not engaged in a trade or business in the U.S. and which have at least one nonresident partner. - Payments of patronage dividends where the amount received is not paid in money. - Payments made by certain foreign organizations. - Payments made to an appropriate nominee. - Section 404(k) payments made by an ESOP. Payments of interest not generally subject to back-up withholding include the following: - Payments of interest on obligations issued by individuals. NOTE: You may be subject to back-up withholding if this interest is $600 or more and is paid in the course of the payer's trade or business and you have not provided your correct taxpayer identification number to the payer. Payments of tax exempt interest (including exempt interest dividends under section 852 of the Code). 16 - Payments described in section 6049(b)(5) of the Code to nonresident aliens. Payments on tax-free covenant bonds under section 1451 of the Code. - Payments made by certain foreign organizations. Payments of mortgage interest to you. - Payments made to an appropriate nominee. Penalties (1) Penalty for failure to furnish taxpayer identification number--If you fail to furnish your correct taxpayer identification number to a payer, you are subject to a penalty of $50 for each such failure unless your failure is due to reasonable cause and not to willful neglect. (2) Civil penalty for false information with respect to withholding--If you make a false statement with no reasonable basis that results in no imposition of back-up withholding, you are subject to a penalty of $500. (3) Criminal penalty for falsifying information--Willfully falsifying certifications or affirmations may subject you to criminal penalties including fines and/or imprisonment. FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE SERVICE. 17 BOND PURCHASE, L.L.C. 1100 Main Street, Suite 2100 Kansas City, Missouri 64105 Call (816) 421-4670 18 EX-99.(A)(3) 4 Bond Purchase, L.L.C. 1100 Main Street, Suite 2100 Kansas City, MO 64105 January 13, 2000 $100 PER UNIT OFFER TO PURCHASE To Limited Partners in McNeil Real Estate Fund XX, L.P.: BOND PURCHASE, L.L.C., A MISSOURI LIMITED LIABILITY COMPANY (THE "PURCHASER"), IS OFFERING TO PURCHASE ALL OF THE OUTSTANDING UNITS OF LIMITED PARTNERSHIP INTEREST (THE "UNITS") IN McNEIL REAL ESTATE FUND XX, L.P. (THE "PARTNERSHIP") FOR A CASH PURCHASE PRICE OF $100 PER UNIT, NET TO THE SELLER, UPON THE TERMS AND SUBJECT TO THE CONDITIONS SET FORTH IN THE ATTACHED OFFER TO PURCHASE DATED JANUARY 13, 2000 AND THE RELATED LETTER OF TRANSMITTAL (WHICH TOGETHER CONSTITUTE THE "OFFER"). Unless extended by the Purchaser, the Offer is effective until midnight, New York City time, on February 11, 2000. The Offer is conditioned upon a minimum of 12,378 of the outstanding Units being tendered. A Limited Partner may tender any or all of his or her Units; however, because of restrictions in the Partnership Agreement (i) a Limited Partner may not make a partial tender of Units owned by such Limited Partner if such Limited Partner would otherwise retain less than ten (10) Units and (ii) tenders of less than ten (10) Units will only be accepted if all the Units held by such Limited Partner are tendered. The materials included in this package include important information concerning the Purchaser, the terms and conditions to 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 and the Letter of Transmittal in order to evaluate the Offer being made by the Purchaser. In reviewing the Offer, please note: - If Limited Partners holding a majority of the outstanding Units of the Partnership vote in favor of the Partnership's merger proposal (as more fully described in Section 9 of the Offer to Purchase ("Certain Information Concerning the Partnership-Master Agreement")), the Partnership has estimated that the Limited Partners will receive $92 per Unit. - No Commissions and No Transfer Fees. The Purchaser will pay any transfer fees charged by the Partnership in connection with transferring the ownership of your Units pursuant to the Offer and you will not incur any commissions in connection with tendering your Units pursuant to the Offer. - No More K-1 Reporting Costs if You Sell All of Your Units. If you sell all of your Units you will avoid the expense, delay, and complications in filing complex tax returns which result from an ownership of Units. 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 Bond Purchase, L.L.C. at 1-816- 421-4670. Informed and courteous agents are available to assist you. Bond Purchase, L.L.C. 2 EX-99.(B) 5 ESCROW AGREEMENT THIS Escrow Agreement (the "Agreement") is made and entered into as of this 11th day of January, 2000, by and between Bond Purchase, L.L.C., a Missouri limited liability company ("Bond Purchase") and Assured Quality Title Company, a Missouri corporation located at 1001 Walnut, Kansas City, Missouri 64106 ("Assured"). WHEREAS, Bond Purchase is contemporaneously making a tender offer (the "Tender Offer") to purchase limited partnership units ("Units") of McNeil Real Estate Fund XX, L.P., a California limited partnership ("McNeil XX"), pursuant to certain terms and conditions more specifically described in that certain Offer to Purchase dated January 13, 2000 (the "Offer to Purchase"); and WHEREAS, pursuant to the terms of the Offer to Purchase, Bond Purchase intends to utilize its own working capital (the "Bond Purchase Capital") to fund the purchase of Units; and WHEREAS, to provide adequate assurances to the limited partners of McNeil XX that Bond Purchase has sufficient funds available to consummate the Tender Offer, Assured has agreed to act as escrow agent and escrow the Bond Purchase Capital for payment of the purchase of Units pursuant to the Tender Offer; and WHEREAS, Bond Purchase desires to appoint Assured as escrow agent ("Escrow Agent") and make arrangements for the delivery and possession of the Escrow Fund (as defined below); and WHEREAS, Assured is willing to act as such Escrow Agent for purposes of receiving, holding and distributing the Escrow Fund in accordance with the provisions of this Agreement. NOW, THEREFORE, in consideration of the premises and for other good and valuable consideration, the receipt and sufficiency of which are hereby expressly acknowledged, the parties agree as follows: 1. ESTABLISHMENT OF ESCROW FUND. Bond Purchase hereby agrees to deposit Four Million Seven Hundred Fifty-One Thousand Dollars ($4,751,000) (the "Escrow Fund") with the Escrow Agent, which hereby acknowledges receipt thereof as the Escrow Fund. 1 2. APPOINTMENT OF ESCROW AGENT. (a) Bond Purchase hereby appoints Assured as Escrow Agent under this Agreement, and Assured accepts such appointment, for the purpose of receiving, holding, investing and distributing the Escrow Fund in the manner hereinafter described for the benefit of Bond Purchase. (b) Escrow Agent shall be entitled to a reasonable administration fee (the "Administration Fee") and reimbursement for reasonable out-of-pocket expenses incurred in connection with the performance of its duties under this Agreement. Responsibility for such Administration Fee and expenses shall be borne by Bond Purchase, and such Administration Fee and expenses may be paid directly from proceeds of the Escrow Fund. (c) Escrow Agent may conclusively rely and shall be protected in acting or refraining from acting upon any document, instrument, certificate, instruction or signature believed by it to be genuine and may assume and shall be protected in assuming that any person purporting to give any notice or instructions in accordance with this Agreement or in connection with any transaction to which this Agreement relates has been duly authorized to do so. Escrow Agent shall not be obligated to make any inquiry as to the authority, capacity, existence or identity of any person purporting to have executed any such document or instrument or have made any such signature or purporting to give any such notice or instructions. (d) In the event that Escrow Agent shall be uncertain as to its duties or rights hereunder or shall receive instructions with respect to the Escrow Fund which, in its sole opinion, are in conflict with either other instructions received by it or any provision of this Agreement, it shall, without liability of any kind, be entitled to hold the Escrow Fund, pending the resolution of such uncertainty to Escrow Agent's sole satisfaction, by final judgment of a court or courts of competent jurisdiction or otherwise, or Escrow Agent, at its option, may, in final satisfaction of its duties hereunder, deposit the Escrow Fund with the clerk of any other court of competent jurisdiction. (e) Escrow Agent undertakes to perform only such duties as are expressly set forth herein and shall not be bound in any way by any agreement between Bond Purchase and any third party (whether or not Escrow Agent has knowledge thereof). (f) Escrow Agent shall not be liable for any action taken by it in good faith and believed by it to be authorized or within the rights or powers conferred upon it by this Agreement (provided that Escrow Agent shall be liable for its gross negligence or willful misconduct), and may consult with counsel of its own choice and shall have full and 2 complete authorization and protection for any action taken or suffered by it hereunder in good faith and in accordance with the opinion of such counsel. 3. INDEMNIFICATION. Bond Purchase agrees to indemnify Escrow Agent, its directors, officers, agents and employees and any person who "controls" the Escrow Agent within the meaning of Section 15 of the Securities Act of 1933, as amended (collectively, the "Indemnified Parties") against, and hold them harmless from, any and all loss, liability, cost, damage and expense, including, without limitation, costs of investigation and reasonable counsel fees and expenses, which any of the Indemnified Parties may suffer or incur by reason of any action, claim or proceeding brought against any of the Indemnified Parties, arising out of or relating in any way to this Agreement, other than any action, claim or proceeding to the extent resulting from the gross negligence or willful misconduct of such Indemnified Party. The provisions of this Section 3 shall survive the termination of this Agreement. 4. INVESTMENT OF ESCROW FUND. Escrow Agent shall invest the Escrow Fund in an interest bearing account designated in writing by Bond Purchase. 5. DISTRIBUTION OF ESCROW FUND. The Escrow Agent shall distribute the Escrow Fund as follows: (a) In the event that Bond Purchase desires or is obligated to consummate the Tender Offer, Bond Purchase shall execute, and deliver to Escrow Agent, (i) a certificate stating that Bond Purchase is consummating the Tender Offer and needs to draw on the Escrow Fund to fund payment to the tendering limited partners of McNeil XX (the "Consummation Certificate"). (b) Upon receipt of the Certificate by Escrow Agent, Escrow Agent shall, as soon as is reasonably practical, distribute that portion of the Escrow Fund to Bond Purchase that is equal to the amount required by Bond Purchase to consummate the Tender Offer (the "Payment Amount"). (c) After distribution of the Payment Amount, any and all amounts remaining in the Escrow Fund shall be distributed to Bond Purchase by Escrow Agent as soon as is reasonably practicable. (d) In the event the Tender Offer is terminated on or after the expiration date of the Tender Offer as a result of any or all of the conditions of the Offer not having been satisfied or waived, Bond Purchase shall execute and deliver to Escrow Agent a certificate stating that Bond Purchase has terminated the Tender Offer as a result of any or all of the 3 conditions of the Offer not being satisfied or waived (the "Termination Certificate"). Upon receipt of the Termination Certificate, Escrow Agent shall, as soon as is reasonably practicable, distribute the Escrow Fund to Bond Purchase, less any reasonable out-of-pocket expenses previously incurred by Escrow Agent in connection with fulfilling its obligations under this Agreement. (e) All interest earned with respect to the Escrow Fund ("Earnings") shall be added to the Escrow Fund and held, invested and distributed as provided herein. The Earnings shall constitute taxable income of Bond Purchase when received or earned by the Escrow Fund. Escrow Agent shall prepare and timely file appropriate information returns and statements as required by law reporting the Earnings as taxable income to Bond Purchase. 6. NOTICES. All notices and other communications hereunder shall be given to Bond Purchase at 1100 Main Street, Suite 2100, Kansas City, Missouri 64105 and to Escrow Agent at 1001 Walnut, Kansas City, Missouri 64106. 7. CONFIDENTIALITY. Until such time as Bond Purchase's Schedule 14d-1 in connection with the Tender Offer is filed with the Securities and Exchange Commission: (a) Any confidential or proprietary matters or information (including any information concerning the Tender Offer) obtained by any party to this Agreement respecting another party to this Agreement, or any of such party's affiliates, during the course of preparing, documenting or administering the escrow contemplated hereby; the existence of this Agreement and the Tender Offer; and the terms of this Agreement and the Tender Offer (except for information that is generally available to the public other than as a result of a disclosure by the recipient or his or its representatives or otherwise available to the recipient on a non-confidential basis), will be kept in strict confidence by the recipient and will not be disclosed by the recipient to any third party without the prior written consent of the other parties to this Agreement; provided, however, that all or any portion of such information may be disclosed by the recipient (i) to the extent required by applicable law or (ii) to any third party professional adviser, attorney, accountant or lender associated with the recipient who needs to know such confidential information to assist the recipient in connection with the escrow; the recipient shall inform such third parties of the confidential nature of such information and direct such third parties to treat such information in a manner consistent with this Section 7(a); and (b). Escrow Agent shall not issue any public announcement concerning the escrow or the Tender Offer without the prior written approval of Bond Purchase, unless in the opinion of any of the parties' legal counsel an announcement is required to be made to 4 comply with the requirements of applicable law or regulation, in which event a facsimile transmission of the text of any such arrangement will be sent to the other parties as soon as possible before or, only if necessary, after making such announcement. 8. MISCELLANEOUS. (a) This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of Missouri, without giving effect to its conflicts of law provisions. (b) The headings contained herein are for reference purposes only and shall not in any way affect the meaning or interpretation of this Agreement. (c) This Agreement and the respective rights and obligations of the parties hereunder shall not be assignable by any party hereto without the prior written consent of the other parties. (d) This Agreement represents the entire understanding and agreement between the parties hereto with respect to the subject matter hereof, and supersedes all prior negotiations and understandings relating to the subject matter hereof. (e) The failure of any party at any time or from time to time to require performance of the terms of this Agreement, shall in no manner affect the right to enforce the same, and a waiver by any party of any breach of any provision of this Agreement shall not be construed to be a waiver by such party of any breach of any other provision, or of a later breach of this Agreement. (f) This Agreement may be executed in one or more counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same instrument. (g) This Agreement shall inure to the benefit of and be binding upon, Bond Purchase and Escrow Agent, and their respective personal representatives, agents, heirs, successors and assigns. (h) Nothing in this Agreement, expressed or implied, is intended to confer upon any party, other than the parties hereto, and their respective heirs, personal representatives, successor and assigns, any rights, remedies, obligations or liabilities under or by reason of this Agreement, except as expressly provided herein. 5 (i) No change, modification or termination of any of the terms, provisions or conditions of this Agreement shall be effective unless made in writing and signed by Bond Purchase, Tramor and Escrow Agent, whereupon such change, modification or termination shall be binding upon all parties to this Agreement. (j) This Agreement and the obligations of the Escrow Agent hereunder shall terminate when the Escrow Funds and all Earnings thereon have been distributed as provided herein. IN WITNESS WHEREOF, the parties hereto have executed this Agreement effective as of the day and year first above written. BOND PURCHASE, L.L.C. By: /s/ David L. Johnson David L. Johnson, Member ASSURED QUALITY TITLE COMPANY By: /s/ Jose L. Evans Name: Jose L. Evans Title: President RECEIPT The Escrow Agent hereby acknowledges receipt of the Escrow Fund in the amount of Four Million Seven Hundred Fifty-One Thousand Dollars ($4,751,000) and agrees to serve as Escrow Agent under this Agreement. January 12, 2000 ASSURED QUALITY TITLE COMPANY By: /s/ Jose L. Evans Name: Jose L. Evans Title: President 6 EX-99.(C) 6 ASSIGNMENT AND TRANSFER AGREEMENT THIS ASSIGNMENT AND TRANSFER AGREEMENT (the "Agreement") is executed and delivered as of January 3, 2000 between Madison Partnership Liquidity Investors 34, LLC, Madison/WP Partnership Value Fund III, LLC, ISA Partnership Liquidity Investors, and Investment Services of America, LLC (each an "Assignor" and together the "Assignors") and Bond Purchase, LLC, a Missouri limited liability company ("Assignee"). RECITALS WHEREAS, the Assignors possess 1,995.667 units of limited partnership interests in McNeil Real Estate Fund XX, LP (the "Partnership"); WHEREAS, Assignee desires to purchase all of each Assignor's right, title and interest in those units (the "Units") and each Assignor desires to so assign and transfer its Units; NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agree as follows: 1. Assignment. Assignors hereby assign, transfer and convey the Units to Assignee. 2. Payment. Assignee shall pay to Ashby & Geddes, P.A., as escrow agent ("Escrow Agent"), the amount of $199,566.70 (the "Payment"), such Payment to be received by wire transfer on or before January 7, 2000 (or such later date as Assignors may provide). The Payment shall be distributed by the Escrow Agent to the Assignors upon Escrow Agent's receipt of an executed original of this Agreement from Assignors, which Assignee has agreed is sufficient documentation to evidence each Assignor's assignment of its Units to Assignee hereunder (the "Documentation"), and such Documentation shall then be forwarded to Assignee. Upon receipt of the Payment by Assignors, Assignors agree to provide Assignee with a duly executed revocable proxy voting against the proposed partnership merger described in the proxy statement dated December 14, 1999, and a power of attorney/proxy, the form of which has previously been provided by Assignee. 3. Confirmation and Transfer. Not withstanding anything to the contrary, the parties agree that neither this Agreement nor the transaction contemplated hereby effects the actual transfer of the Units on the books and records of the Partnership. Assignee further acknowledges that, pursuant to the terms of the Partnership's governing documents, such transfer may require the approval and/or confirmation of the Partnership's General Partner ("Confirmation"). The parties therefore agree that this Agreement is not contingent upon any such Confirmation. All efforts to be made regarding, and all costs associated with, Confirmation (including but not limited to payment of all applicable transfer fees) shall be the sole responsibility of Assignee. 4. Distributions and Benefits. Notwithstanding anything to the contrary herein, all distributions and other benefits related to the Units (together, the "Distributions") and actually paid on or before January 3, 2000 (regardless of when such Distribution was declared) shall be retained by the Assignors, with all Distributions paid after that date being hereby assigned to Assignee. All efforts to be made regarding, and all costs associated with, the Distributions shall be the responsibility of the party to which they are hereby retained or assigned. Any Distributions which are received by one party but which are due to the other party under the terms of this Agreement shall paid over to the proper party as soon as reasonably possible after such receipt. This Agreement is not contingent upon Assignee's receipt or recovery of any Distributions. 5. Release and Indemnification. Assignee releases the Assignors, their members, partners, officers, directors, employees and agents, their successors and assigns, from all claims and causes of action arising from or in connection with, whether directly or indirectly, the Units ("Claims"). Assignee further indemnifies Assignors, their members, partners, officers, directors, employees and agents, their successors and assigns, and agrees to hold them harmless from all such Claims and to defend and bear the cost of same, including the payment of Assignors' reasonable attorney's fees. Notwithstanding the foregoing, Assignee's release and indemnity 2 obligations under this paragraph shall not extend to damages incurred as a result of Assignors' breach of this Agreement. 6. Representations of Assignors. Each of the Assignors hereby warrants, represents and agrees as follows: (a) It is an entity duly formed, validly existing and in good standing under the laws of the State of Delaware. (b) It is the sole owner of its interest in the Units, has the power and authority to assign its Units under the terms of this Agreement, and has not made any other assignment of its Units, which are being assigned free and clear of all liens and encumbrances; (c) This Agreement has been duly executed by it and, when executed and delivered by all parties, will constitute its legal, valid and binding obligations enforceable against it in accordance with this Agreement's terms. (d) No litigation, investigation or proceeding by or before any court, arbitrator, governmental authority or otherwise is pending or, to its knowledge, threatened by or against it as would materially affect this Agreement. (e) All representations and warranties hereby made shall survive the execution and delivery of this Agreement. No representation or warranty contains or will contain any untrue statement of material fact or omits or will omit any material fact, necessary to make the statements contained therein not misleading. 7. Representations of Assignee. The Assignee hereby warrants, represents and agrees as follows: (a) Assignee is a limited liability company duly formed, validly existing and in good standing under the laws of the State of Missouri. (b) This Agreement has been duly executed by the Assignee and, when executed and delivered by both parties, will constitute a legal, valid and binding obligation of the Assignee enforceable against it in accordance with this Agreement's terms. (c) No litigation, investigation or proceeding by or before any court, arbitrator, governmental authority or otherwise is pending or, to Assignee's knowledge, threatened by or against the Assignee as would materially affect this Agreement. (d) All representations and warranties hereby made shall survive the execution and delivery of this Agreement. No representation or warranty contains or will contain any untrue statement of material fact or omits or will omit any material fact, necessary to make the statements contained therein not misleading. 3 8. Other Documents. The parties agree to execute such other documents and to undertake such other tasks as are reasonably related to effectuation of the transaction contemplated by this Agreement. 9. Counterparts. This Agreement may be executed in counterparts, each of which when so executed shall be deemed to be an original, and all of which together shall be one and the same instrument. 10. Severability. If any terms or Provisions of this Agreement or the application thereof to any person or circumstance shall, to any extent, be invalid or unenforceable, the remainder of this Agreement and its application shall not be affected thereby and each term shall be valid and be enforced to the fullest extent permitted by law. 11. No Waiver. The failure of a party to seek redress for any violation of, or to insist upon the strict performance of, any term of condition of this Agreement shall not prevent a subsequent act that would have originally constituted a violation of this Agreement from having all the force and effect of any original violation and shall not constitute or be construed as a waiver of such term or condition. All rights and remedies that any of the parties may have at law, in equity or otherwise upon breach of any term or condition of this Agreement shall be distinct, separate and cumulative and no one of them shall be deemed to be in exclusion of any other. 12. Entire Agreement. This Agreement contains the entire agreement between the parties. No modification of this Agreement shall be binding unless such modification shall be in writing and signed by the parties hereto. 13. Governing Laws. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware. Exclusive jurisdiction for all claim causes of action and disputes arising from or in connection with this Agreement ("Disputes") shall be vested in the 4 courts of the State of Delaware. The prevailing party in any Dispute shall be awarded its attorney's fees in connection with that Dispute. 14. Headings. The, headings used in this Agreement are for convenience only and shall not be used to interpret or construe its provisions. IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed as of the date first written above. Bond Purchase, LLC By: /s/ David L. Johnson Name: David L. Johnson Title: Member Madison Partnership Liquidity Investors 34, LLC By: /s/ Ronald Dickerman Name: Ronald Dickerman Title: Managing Director Madison/WP Partnership Value Fund III, LLC By: /s/ Ronald Dickerman Name: Ronald Dickerman Title: Managing Director ISA Partnership Liquidity Investors By: Madison Realty Partners 7, LLC, its General Partner By: /s/ Ronald Dickerman Name: Ronald Dickerman Title: Managing Director Investment Services of America, LLC By: /s/ Ronald Dickerman Name: Ronald Dickerman Title: Managing Director 5 -----END PRIVACY-ENHANCED MESSAGE-----