<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
--------------
SCHEDULE 14D-1
TENDER OFFER STATEMENT PURSUANT TO SECTION
14(d) (1) OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. ____________)
WNC CALIFORNIA HOUSING TAX CREDITS, L.P.
- --------------------------------------------------------------------------------
(NAME OF SUBJECT COMPANY [ISSUER])
EVEREST TAX CREDIT INVESTORS, LLC
- --------------------------------------------------------------------------------
(BIDDER)
UNITS OF LIMITED PARTNERSHIP INTERESTS
- --------------------------------------------------------------------------------
(TITLE OF CLASS OF SECURITIES)
NONE
- --------------------------------------------------------------------------------
(CUSIP NUMBER OF CLASS OF SECURITIES)
CHRISTOPHER K. DAVIS
EVEREST PROPERTIES II, LLC
199 S. LOS ROBLES AVE., SUITE 440
PASADENA, CA 91101
TELEPHONE (800) 611-4613
- --------------------------------------------------------------------------------
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON
AUTHORIZED TO RECEIVE NOTICES AND COMMUNICATIONS ON BEHALF OF BIDDER)
CALCULATION OF FILING FEE
- --------------------------------------------------------------------------------
TRANSACTION VALUATION: $74,500(1) AMOUNT OF FILING FEE: $14.90
(1) CALCULATED AS THE PRODUCT OF THE NUMBER OF UNITS ON WHICH THE OFFER IS MADE
AND THE GROSS CASH PRICE PER UNIT.
[ ] Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the form
or schedule and the date of its filing.
Amount previously paid: Not Applicable Filing party: Not Applicable
Form or registration no.: Not Applicable Date filed: Not Applicable
<PAGE> 2
SCHEDULE 14D-1
CUSIP NO : NONE
<TABLE>
- --------------------------------------------------------------------------------
<S> <C>
1. NAME OF REPORTING PERSONS
I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS
Everest Tax Credit Investors, LLC
- --------------------------------------------------------------------------------
2. CHECK THE APPROPRIATE BOX IF A MEMBER (a) [ ]
OF A GROUP* (b) [ ]
Not Applicable
- --------------------------------------------------------------------------------
3. SEC USE ONLY
- --------------------------------------------------------------------------------
4. SOURCE OF FUNDS*
AF
- --------------------------------------------------------------------------------
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEM 2(e) OR 2(f) [ ]
Not Applicable
- --------------------------------------------------------------------------------
6. CITIZENSHIP OR PLACE OF ORGANIZATION
California
- --------------------------------------------------------------------------------
7. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
None
- --------------------------------------------------------------------------------
8. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES [ ]
CERTAIN SHARES
Not Applicable
- --------------------------------------------------------------------------------
9. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7)
Not Applicable
- --------------------------------------------------------------------------------
10. TYPE OF REPORTING PERSON*
OO
- --------------------------------------------------------------------------------
</TABLE>
2
<PAGE> 3
This Tender Offer Statement on Schedule 14D-1 (this "Statement") relates
to an offer by Everest Tax Credit Investors, LLC, a California limited liability
company (the "Purchaser") to purchase up to 745 units of limited partnership
interests ("Units") in WNC California Housing Tax Credits, L.P. (the
"Partnership") at $100.00 per Unit, without interest, less the amount of
Distributions (as defined in the Offer to Purchase) per Unit, if any, made to
Unit Holders by the Partnership after April 14, 1998 and less any tax credits
allocable to selling Unit Holders after June 30, 1998, and less any Partnership
transfer fees, upon the terms and subject to the conditions set forth in the
Offer to Purchase, dated May 12, 1998, as it may be supplemented or amended from
time to time (the "Offer to Purchase"), and the related Agreement of Transfer
and Letter of Transmittal, as it may be supplemented or amended from time to
time (the "Letter of Transmittal," which, together with the Offer to Purchase,
constitutes the "Offer"), copies of which are filed as Exhibits 11(a)(1) and
11(a)(2) hereto, respectively. Capitalized terms used but not defined herein
have the meaning ascribed to them in the Offer to Purchase.
ITEM 1. SECURITY AND SUBJECT COMPANY.
(a) The name of the subject company is WNC California Housing Tax
Credits, L.P., a California limited partnership (the "Partnership"). The address
of the Partnership's principal executive offices is 3158 Redhill Avenue, Suite
120, Costa Mesa, California 92626.
(b) The class of equity securities to which this Statement relates is
Units of Limited Partnership Interests in the Partnership. Reference is hereby
made to the information set forth on the cover page, in the "Introduction" and
"Certain Information Concerning the Partnership - Outstanding Units" of the
Offer to Purchase, which is incorporated herein by reference.
(c) Reference is hereby made to the information set forth in the
"Introduction - Purpose of the Offer" and "Determination of Purchase Price -
Trading History of the Units" of the Offer to Purchase, which is incorporated
herein by reference.
ITEM 2. IDENTITY AND BACKGROUND.
(a)-(d) Reference is hereby made to the information set forth on the
cover page and in the "Certain Information Concerning the Purchaser" and
Schedule I ("Directors and Executive Officers") of the Offer to Purchase, which
is incorporated herein by reference.
(e)-(f) During the last five years, neither the Purchaser nor, to the
best of its knowledge, any of the persons listed in Schedule I ("Directors and
Executive Officers") of the Offer to Purchase has been convicted in a criminal
proceeding (excluding traffic violations or similar misdemeanors) or was a party
to a civil proceeding of a judicial or administrative body of competent
jurisdiction and as a result of such proceeding any such person 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. During the last five years, neither of Global
Capital Management, Inc. ("GCM") or Valley Creek Capital, Inc. ("Valley Creek")
nor, to the best of their knowledge, any of the persons listed in Schedule I
("Directors and Executive Officers") of the Offer to Purchase has been convicted
in a criminal proceeding (excluding traffic violations or similar misdemeanors)
or was a party to a civil proceeding of a judicial or administrative body of
competent jurisdiction and as a result of such proceeding any such person 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. The inclusion of information concerning GCM
and Valley Creek does not constitute an acknowledgment or agreement that either
of them is a co-bidder in the Offer.
(g) Reference is hereby made to the information set forth in Schedule I
("Directors and Executive Officers") of the Offer to Purchase, which is
incorporated herein by reference.
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY.
(a) None.
3
<PAGE> 4
(b) Reference is hereby made to the information set forth in "Certain
Information Concerning the Partnership - Prior Acquisitions of Units and Prior
Contacts" of the Offer to Purchase, which is incorporated herein by reference.
ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a) Reference is hereby made to the information set forth in "Certain
Information Concerning the Purchaser - Source of Funds" of the Offer to
Purchase, which is incorporated herein by reference.
(b)-(c) Not applicable.
ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSAL OF THE BIDDER
(a)-(g) Reference is hereby made to the information set forth in the
"Introduction - Purpose of the Offer," "Future Plans of the Purchaser" and
"Effects of the Offer" of the Offer to Purchase, which is incorporated herein by
reference. Except as set forth in the Offer to Purchase, the Purchaser does not
have any present plans or proposals which would relate to, or would result in,
any transaction, change or other occurrence with respect to the Partnership or
the Units as is listed in paragraphs (a) through (g) of Item 5 of Schedule
14D-1.
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
(a)-(b) Reference is hereby made to the information set forth in the
"Introduction" and "Certain Information Concerning the Partnership - Prior
Acquisitions of Units and Prior Contacts" of the Offer to Purchase, which is
incorporated herein by reference.
ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO THE SUBJECT COMPANY'S SECURITIES
Reference is hereby made to the information set forth in the "Certain
Information Concerning the Purchaser-Letter Agreement for Option to Purchase
Securities" of the Offer to Purchase, which is incorporated herein by reference.
ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
Reference is hereby made to the information set forth in "Certain Legal
Matters - Fees and Expenses" of the Offer to Purchase, which is incorporated
herein by reference.
ITEM 9. FINANCIAL STATEMENTS OF BIDDER.
Not applicable. Certain information regarding the ability of the
Purchaser to finance the Offer is set forth in "Certain Information Concerning
the Purchaser - Source of Funds" of the Offer to Purchaser and is incorporated
herein by reference. The incorporation by reference herein of the above
referenced information does not constitute an admission that such information is
material to a decision by a holder of the Units as to whether to sell, tender or
hold Units being bought in the Offer.
ITEM 10. ADDITIONAL INFORMATION.
(a) Not applicable.
(b)-(d) Reference is hereby made to the information set forth in
"Certain Legal Matters" of the Offer to Purchase, which is incorporated herein
by reference.
(e) To the best knowledge of the Purchaser, no such proceedings are
pending or have been instituted.
4
<PAGE> 5
(f) Reference is hereby made to the entire text of the Offer to
Purchase and the related Letter of Transmittal, which are incorporated herein by
reference.
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS.
11(a)(1) Cover Letter to Unit Holders and Offer to Purchase, dated
May 12, 1998.
11(a)(2) Agreement of Transfer and Letter of Transmittal, with
Instructions.
11(a)(3) Summary Publication.
11(c) Letter Agreement for Option to Purchase Securities, dated
April 29, 1998, by and among the Purchaser, Global Capital
Management, Inc. and Valley Creek Capital, Inc.
5
<PAGE> 6
SIGNATURE
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: May 12, 1998
EVEREST TAX CREDIT INVESTORS, LLC
By: EVEREST PROPERTIES II, LLC,
Manager
By: /s/ David I. Lesser
-------------------------
David I. Lesser
Executive Vice President
6
<PAGE> 7
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description
----------- -----------
<S> <C>
11(a)(1) Cover Letter to Unit Holders and Offer to Purchase, dated
May 12, 1998.
11(a)(2) Agreement of Transfer and Letter of Transmittal, with
Instructions.
11(a)(3) Summary Publication.
11(c) Letter Agreement for Option to Purchase Securities, dated
April 29, 1998, by and among the Purchaser, Global Capital
Management, Inc. and Valley Creek Capital, Inc.
</TABLE>
7
<PAGE> 1
EXHIBIT 11(a)(1)
EVEREST TAX CREDIT INVESTORS, LLC
199 SOUTH LOS ROBLES AVENUE, SUITE 440
PASADENA, CALIFORNIA 91101
May 12, 1998
$100.00 PER UNIT CASH OFFER
TO ALL UNIT HOLDERS OF LIMITED PARTNERSHIP INTERESTS IN
WNC CALIFORNIA HOUSING TAX CREDITS, L.P.
Dear Unit Holder:
Enclosed is an OFFER TO PURCHASE up to 745 units of limited partnership
interests ("Units") in WNC California Housing Tax Credits, L.P. (the
"Partnership") for a cash price of $100.00 per Unit, without interest, less the
amount of Distributions (as defined in the Offer to Purchase) per Unit made to
you by the Partnership after April 14, 1998 and less any tax credits which are
allocated to selling Unit Holders after June 30, 1998 (allocable at the rate of
approximately $8.25 per month per Unit), and less any Partnership transfer fees.
PLEASE CONSIDER THE FOLLOWING POINTS:
o The Partnership's publicly filed documents state that there is no
established public trading market for the Units and it is not
anticipated that any public market will develop. Partnership
Spectrum, an independent industry publication, reflects NO TRANSFERS
OF THE UNITS FROM DECEMBER 1, 1995 TO JANUARY 31, 1998.
o Everest estimates, based on the Partnership's public filings and
assuming a sale date of June 30, 1998, that most sellers will receive
the following cumulative after-tax benefits from inception of the
Partnership for each Unit sold to Everest:
<TABLE>
<CAPTION>
1998 Tax Total
Effects* After-Tax
Benefit*
-------------------------------------------------- -----------
<S> <C> <C>
Cash................................ $100.00
Tax deduction against ordinary income $698.50
Tax benefit...................... $251.46
Long-term capital loss.............. $201.50
Tax benefit...................... $40.30
Estimated tax credits from inception
to 6/30/98 ...................... $1,517.50
---------
TOTAL BENEFIT*...................... $1,909.26
</TABLE>
* Assumes: the Units were held by individuals from inception; each
seller can fully utilize the long term capital loss recognized upon
the sale of the Units; prior passive activity losses have not been
utilized; ordinary income and capital gain federal tax rates of 36%
and 20%, respectively; and the sellers sell all of their interest in
the Partnership.
o The Offer is an immediate opportunity for Unit Holders to liquidate
their investment in the Partnership, but Unit Holders who tender
their Units will be giving up the opportunity to participate in any
potential future benefits, including allocations of tax credits and
passive activity losses, from ownership of Units.
We encourage you to read the Offer to Purchase completely and to return
your completed Letter of Transmittal promptly. The Offer is scheduled to expire
on June 15, 1998.
For answers to any questions you might have regarding these materials or
our Offer, or assistance in the procedures for accepting our Offer and tendering
your Units, please contact us at (800) 611-4613 (toll free).
Sincerely,
Everest Tax Credit Investors, LLC
<PAGE> 2
OFFER TO PURCHASE FOR CASH
UP TO 745 UNITS OF LIMITED PARTNERSHIP INTERESTS IN
WNC CALIFORNIA HOUSING TAX CREDITS, L.P.
FOR
$100.00 PER UNIT
BY
EVEREST TAX CREDIT INVESTORS, LLC
THE OFFER, WITHDRAWAL RIGHTS AND PRORATION PERIOD WILL EXPIRE AT
12:00 MIDNIGHT, NEW YORK CITY TIME ON MONDAY, JUNE 15, 1998
UNLESS THE OFFER IS EXTENDED.
Everest Tax Credit Investors, LLC, a California limited liability
company, (the "Purchaser" or "Everest"), is offering to purchase up to 745 units
of limited partnership interests ("Units") in WNC California Housing Tax Credits
L. P., a California limited partnership (the "Partnership"), at a net cash price
of $100.00 per Unit (the "Purchase Price"), without interest, less the amount of
the Distributions (as defined below) per Unit, if any, made to the holders of
Units ("Unit Holders") by the Partnership after April 14, 1998 and less any tax
credits allocated to selling Unit Holders after June 30, 1998 (allocable at
approximately $8.25 per month per Unit), and less any transfer fees imposed by
the Partnership for each transfer. The Offer (as defined below) is subject to
certain terms and conditions. This Offer is upon the terms set forth in this
Offer to Purchase (the "Offer to Purchase") and in the related Agreement of
Transfer and Letter of Transmittal (the "Letter of Transmittal"), as each may be
supplemented or amended from time to time. The Offer to Purchase and the Letter
of Transmittal constitute the "Offer." The Offer is not conditioned upon
financing.
------------------
For More Information or for Further Assistance Please Call
or Contact the Purchaser at:
EVEREST PROPERTIES II, LLC
(MANAGER)
199 SOUTH LOS ROBLES AVENUE
SUITE 440
PASADENA, CALIFORNIA 91101
(626) 585-5920
(800) 611-4613 (TOLL FREE)
May 12, 1998
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
INTRODUCTION ................................................. 1
PURPOSE OF THE OFFER .................................... 1
DETAILS OF THE OFFER ......................................... 2
1. TERMS OF THE OFFER; EXPIRATION DATE; PRORATION ...... 2
2. ACCEPTANCE FOR PAYMENT AND PAYMENT OF
PURCHASE PRICE ...................................... 2
3. PROCEDURE TO ACCEPT THE OFFER ....................... 3
4. DETERMINATION OF VALIDITY; REJECTION OF UNITS; WAIVER
OF DEFECTS; NO OBLIGATION TO GIVE NOTICE OF DEFECTS.. 4
5. WITHDRAWAL RIGHTS ................................... 4
6 EXTENSION OF TENDER PERIOD; TERMINATION; AMENDMENT .. 4
7. CONDITIONS OF THE OFFER ............................. 5
8. BACKUP FEDERAL INCOME TAX WITHHOLDING ............... 6
9. FIRPTA WITHHOLDING .................................. 6
CERTAIN INFORMATION CONCERNING THE PARTNERSHIP ............... 6
GENERAL ................................................. 6
OUTSTANDING UNITS ....................................... 7
SELECTED FINANCIAL AND PROPERTY RELATED DATA ............ 7
PRIOR ACQUISITIONS OF UNITS AND PRIOR CONTACTS .......... 8
DETERMINATION OF PURCHASE PRICE .............................. 8
TRADING HISTORY OF THE UNITS ............................ 8
REMAINING TAX CREDITS ................................... 8
CERTAIN INFORMATION CONCERNING THE PURCHASER ................. 8
THE PURCHASER ........................................... 8
LETTER AGREEMENT FOR OPTION TO PURCHASE SECURITIES ...... 9
GENERAL ................................................. 9
SOURCE OF FUNDS ......................................... 9
FUTURE PLANS OF THE PURCHASER ................................ 9
EFFECTS OF THE OFFER ......................................... 10
FUTURE BENEFITS OF UNIT OWNERSHIP ....................... 10
LIMITATIONS ON RESALES .................................. 10
INFLUENCE ON VOTING DECISIONS BY THE PURCHASER .......... 10
CERTAIN FEDERAL INCOME TAX MATTERS ........................... 10
CERTAIN LEGAL MATTERS ........................................ 12
GENERAL ................................................. 12
STATE TAKEOVER STATUTES ................................. 12
FEES AND EXPENSES ....................................... 12
MISCELLANEOUS ........................................... 12
SCHEDULE I - DIRECTORS AND EXECUTIVE OFFICERS ................ 14
APPENDIX A ................................................... A-1
PART I - SELECTED FINANCIAL DATA ........................ A-1
PART II - PROPERTY DESCRIPTIONS ......................... A-4
</TABLE>
i
<PAGE> 4
INTRODUCTION
The Purchaser hereby offers to purchase up to 745 Units of limited
partnership interests in the Partnership at a cash purchase price of $100.00 per
Unit, without interest, less the amount of Distributions per Unit, if any, made
to Unit Holders by the Partnership after April 14, 1998, less tax credits
allocated after June 30, 1998 (allocable at approximately $8.25 per month per
Unit), and less any transfer fees imposed by the Partnership for each transfer.
PURPOSE OF THE OFFER. The purpose of the Offer is for the Purchaser to
acquire a substantial equity interest in the Partnership primarily for
investment.
In considering the Offer, Unit Holders may wish to consider the
following:
o The Partnership's publicly filed documents state that there is no
established public trading market for the Units and it is not
anticipated that any public market will develop. Partnership
Spectrum, an independent industry publication, reflects NO TRANSFERS
OF THE UNITS FROM DECEMBER 1, 1995 TO JANUARY 31, 1998.
o The Purchaser estimates, based on the Partnership's public filings
and assuming a sale date of June 30, 1998, that most sellers will
receive the following cumulative after-tax benefits from inception of
the Partnership for each Unit sold to Purchaser:
<TABLE>
<CAPTION>
1998 Tax Total
Effects* After-Tax
Benefit*
------------------------------------------------- ------------
<S> <C> <C>
Cash................................ $100.00
Tax deduction against ordinary income $698.50
Tax benefit...................... $251.46
Long-term capital loss.............. $201.50
Tax benefit...................... $40.30
Estimated tax credits from inception
to 6/30/98 ...................... $1,517.50
---------
TOTAL BENEFIT*...................... $1,909.26
=========
</TABLE>
* Assumes: the Units were held by individuals from inception; each
seller can fully utilize the long term capital loss recognized upon
the sale of the Units; prior passive activity losses have not been
utilized; ordinary income and capital gain federal tax rates of 36%
and 20%, respectively; and the sellers sell all of their interest in
the Partnership. See "CERTAIN FEDERAL INCOME TAX MATTERS."
o The Purchaser estimates, based on the Partnership's public filings,
that the value of the remaining tax credits in the Units is
approximately $179.50 per Unit from July 1998 through December 2001.
Current tax laws restrict individual use of both tax credits and
passive losses. The Purchaser is offering a guaranteed $100.00 per
Unit in cash now, and sellers of Units can avoid the risk of tax
credit recapture after 1998.
o The Offer allows Unit Holders to dispose of their Units without
incurring the sales commissions (approximately 5% to 10%) typically
associated with transfers of Units arranged through brokers or other
intermediaries.
o Unit Holders who accept the Offer for all their Units will receive
no further Partnership K-1's after the 1998 K-1.
o The Purchaser is making the Offer with a view to making a profit for
itself. Accordingly, there is a conflict between the desire of the
Purchaser to purchase Units at a low price and the desire of the Unit
Holders to sell their Units at a high price.
1
<PAGE> 5
o The Offer is an immediate opportunity for Unit Holders to liquidate
their investments in the Partnership, but Unit Holders who tender
their Units will be giving up the opportunity to participate in any
potential future benefits, including allocations of tax credits and
passive activity losses, from ownership of Units.
Each Unit Holder must make its own decision, based on the Unit Holder's
particular circumstances, whether to tender Units and, if so, how many Units to
tender. Unit Holders should consult with their respective advisors about the
financial, tax, legal and other implications of accepting the Offer.
DETAILS OF THE OFFER
1. Terms of the Offer; Expiration Date; Proration. On the terms and
subject to the conditions of the Offer, the Purchaser will accept and purchase
up to 745 Units that are validly tendered in accordance with the procedures set
forth in Section 3 on or prior to the Expiration Date and not withdrawn in
accordance with the procedures set forth in Section 5 ("Properly Tendered"). For
purposes of the Offer, the term "Expiration Date" means 12:00 Midnight, New York
City time on Monday, June 15, 1998, unless the Purchaser in its sole discretion
extends the period of time during which the Offer is open, in which event the
term "Expiration Date" shall mean the latest time and date to which the Offer is
extended by the Purchaser.
If, prior to the Expiration Date, the Purchaser increases the Purchase
Price offered to the Unit Holders pursuant to the Offer, the increased Purchase
Price will be paid for all Units accepted for payment pursuant to the Offer,
whether or not the Units were tendered prior to the increase in consideration.
If more than 745 Units are Properly Tendered (or if the number of Units
that are Properly Tendered exceeds the number that can be transferred without
imposing limitations on resales) the Purchaser will, upon the terms and subject
to the conditions of the Offer, accept for payment and pay for an aggregate of
745 Units (or, if less, the maximum number of Units which can be transferred
without imposing limitations on resales), pro rata, according to the number of
Units that are Properly Tendered by each Unit Holder, with appropriate
adjustments to avoid purchases of fractional Units and purchases that would
cause a Unit Holder who sells fewer than all of its Units to continue to hold
fewer than 5 Units. If the number of Units that are Properly Tendered is less
than or equal to 745 Units (or, if less, the maximum number of Units which can
be transferred without imposing limitations on resales), the Purchaser will
purchase all Units that are Properly Tendered, upon the terms and subject to the
conditions of the Offer.
If proration of tendered Units is required, the Purchaser may not be
able to announce the final results of the proration until at least seven
business days after the Expiration Date because of the difficulty of determining
the proration results. The Purchaser does not intend to pay for any Units
accepted for payment pursuant to the Offer until the final proration or other
adjustment results are known.
If on or prior to the Expiration Date any or all of the conditions of
the Offer have not been satisfied or waived, the Purchaser reserves the right
to: (i) decline to purchase any of the Units tendered, terminate the Offer and
return all tendered Units, (ii) waive the unsatisfied conditions and, subject to
complying with applicable rules and regulations of the Securities and Exchange
Commission (the "Commission"), purchase all Units that are Properly Tendered,
(iii) extend the Offer and, subject to the right of Unit Holders to withdraw
Units until the Expiration Date, retain previously tendered Units for the period
or periods for which the Offer is extended, and (iv) amend the Offer.
2. Acceptance for Payment and Payment of Purchase Price. On the terms
and subject to the conditions of the Offer, the Purchaser will purchase and will
pay for up to 745 Units that are Properly Tendered, as promptly as practicable
following the Expiration Date. In all cases, payment for Units purchased
pursuant to the Offer will be made only after timely receipt by the Purchaser
of: (i) a properly completed and duly executed and acknowledged
2
<PAGE> 6
Letter of Transmittal (or facsimile thereof), (ii) any other documents required
in accordance with the Letter of Transmittal and (iii) written confirmation from
the Partnership of the transfer of the Units to the Purchaser.
UNDER NO CIRCUMSTANCE WILL INTEREST ON THE PURCHASE PRICE BE PAID,
REGARDLESS OF ANY EXTENSION OF THE OFFER OR ANY DELAY IN MAKING SUCH PAYMENT.
If any tendered Units are not purchased for any reason (other than
proration adjustments), the original Letter of Transmittal with respect to the
Units may be destroyed by the Purchaser. If for any reason acceptance for
payment of, or payment for, any Units tendered pursuant to the Offer is delayed
or the Purchaser is unable to accept for payment, purchase or pay for Units
tendered, then, without prejudice to the Purchaser's rights under Section 4, the
Purchaser may, nevertheless, retain documents concerning tendered Units, and
those Units may not be withdrawn except to the extent that the tendering Unit
Holders are otherwise entitled to withdrawal rights as described in Section 5;
subject, however, to the Purchaser's obligation under Rule 14e-1(c) under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), to pay Unit
Holders the Purchase Price in respect of Units tendered or return documents, if
any, representing those Units promptly after termination or withdrawal of the
Offer.
3. PROCEDURE TO ACCEPT THE OFFER. A UNIT HOLDER MAY TENDER ANY OR ALL OF
THE UNITS OWNED BY THAT UNIT HOLDER. FOR UNITS TO BE VALIDLY TENDERED PURSUANT
TO THE OFFER, THE PURCHASER MUST RECEIVE, AT THE ADDRESS LISTED ON THE BACK PAGE
OF THIS OFFER TO PURCHASE ON OR PRIOR TO THE EXPIRATION DATE, A PROPERLY
COMPLETED AND DULY EXECUTED LETTER OF TRANSMITTAL, THE ORIGINAL PARTNERSHIP
CERTIFICATE (IF AVAILABLE), AND ALL DOCUMENTS REQUIRED BY THE LETTER OF
TRANSMITTAL.
The method of delivery of the Letter of Transmittal, and all other
required documents is at the option and risk of the tendering Unit Holder, and
delivery will be deemed made only when actually received by the Purchaser. If
delivery is by mail, registered mail with return receipt requested, properly
insured, is recommended. In all cases, sufficient time should be allowed to
assure timely delivery.
A Unit Holder may tender any or all of the Units owned by that Unit
Holder; provided, however, that to comply with the Partnership Agreement, if the
Unit Holder desires to tender less than all of its Units, the Unit Holder must
retain at least 5 Units. By executing and delivering a Letter of Transmittal, a
tendering Unit Holder irrevocably appoints the Purchaser and its officers and
any other designee of the Purchaser, and each of them, the attorneys-in-fact and
proxies of the Unit Holder, in the manner set forth in the Letter of
Transmittal, each with full power of substitution, to the full extent of the
Unit Holder's rights with respect to the Units tendered by the Unit Holder and
accepted for payment by the Purchaser (and with respect to any and all
distributions, other Units, rights or other securities issued or issuable in
respect thereof (collectively, "Distributions")), including without limitation
the right to direct any IRA custodian, trustee or other record owner to execute
and deliver the Letter of Transmittal, the right to accomplish a withdrawal of
any previous tender of the Unit Holder's Units and the right to complete the
transfer contemplated thereby. All such proxies will be considered coupled with
an interest in the tendered Units, are irrevocable and are granted in
consideration of, and are effective upon, the acceptance for payment of the
Units by the Purchaser in accordance with the terms of the Offer. Upon
acceptance for payment, all prior powers of attorney and proxies given by the
Unit Holder with respect to the Units and Distributions will, without further
action, be revoked, and no subsequent powers of attorney or proxies may be given
(and, if given, will be without force or effect). The officers and designees of
the Purchaser will, with respect to the Units for which the appointment is
effective, be empowered to exercise all voting and other rights of the Unit
Holder as they in their sole discretion may deem proper at any meeting of the
Partnership or any adjournment or postponement thereof. In order for Units to be
deemed validly tendered, immediately upon the Purchaser's acceptance for payment
of the Units, the Purchaser or its designee must be able to exercise full voting
rights with respect to the Units, including voting at any meeting of the
Partnership's Limited Partners.
By executing and delivering a Letter of Transmittal, a tendering Unit
Holder irrevocably assigns to the Purchaser and its assigns all of the right,
title and interest of the Unit Holder in and to any and all Distributions or
3
<PAGE> 7
tax credit allocations made by the Partnership from and after the date of
acceptance with respect to Units accepted for payment and thereby purchased
by the Purchaser.
4. Determination of Validity; Rejection of Units; Waiver of Defects; No
Obligation to Give Notice of Defects. All questions about the validity, form,
eligibility (including time of receipt) and acceptance for payment of any tender
of Units pursuant to the Offer will be determined by the Purchaser, in its sole
discretion, which determination will be final and binding. The Purchaser
reserves the absolute right to reject any or all tenders of any particular Units
determined by it not to be in proper form or if the acceptance of or payment for
those Units may, in the opinion of Purchaser's counsel, be unlawful. The
Purchaser also reserves the absolute right to waive or amend any of the
conditions of the Offer that it is legally permitted to waive and to waive any
defect in any tender with respect to any particular Units. The Purchaser's
interpretation of the terms and conditions of the Offer (including the Letter of
Transmittal) will be final and binding. No tender of Units will be deemed to
have been validly made until all defects have been cured or waived. Neither the
Purchaser nor any other person will be under any duty to give notification of
any defects in the tender of any Units or will incur any liability for failure
to give any such notification.
A tender of Units pursuant to the procedure described above and the
acceptance for payment of such Units will constitute a binding agreement between
the tendering Unit Holder and the Purchaser on the terms set forth in the Offer.
For purposes of the Offer, the Purchaser will be deemed to have accepted
for payment pursuant to this Offer, and thereby purchased, Properly Tendered
Units if, as and when the Purchaser gives written notice to the Partnership or
its Transfer Agent of the Purchaser's acceptance of those Units for payment
pursuant to the Offer. Upon the terms and subject to the conditions of the
Offer, payment for Units accepted for payment pursuant to the Offer will be made
and transmitted directly to Unit Holders whose Units have been accepted for
payment.
5. 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 on or prior to the Expiration Date and, unless already accepted for
payment by the Purchaser pursuant to the Offer, may also be withdrawn at any
time after July 13, 1998. If purchase of, or payment for, Units is delayed for
any reason, including extension by the Purchaser of the Expiration Date, or if
the Purchaser is unable to purchase or pay for Units for any reason (for
example, because of proration adjustments) then, without prejudice to the
Purchaser's rights under the Offer, tendered Units may be retained by the
Purchaser and may not be withdrawn, except to the extent that tendering Unit
Holders are otherwise entitled to withdrawal rights as set forth in this Section
5; subject, however, to the Purchaser's obligation, pursuant to Rule 14e-1(c)
under the Exchange Act, to pay Unit Holders the Purchase Price in respect of
Units tendered promptly after termination or withdrawal of the Offer.
For withdrawal to be effective, a written or facsimile transmission
notice of withdrawal must be timely received by the Purchaser at its address
listed on the back cover of this Offer to Purchase. Any notice of withdrawal
must specify the name of the person(s) who tendered the Units to be withdrawn
and must be signed by the person(s) who signed the Letter of Transmittal in the
same manner as the Letter of Transmittal was signed. Any Units properly
withdrawn will be deemed not validly tendered for purposes of the Offer.
Withdrawn Units may be re-tendered, however, by following the procedures
described in Section 3 at any time prior to the Expiration Date.
All questions about the validity and form (including time of receipt) of
notices of withdrawal will be determined by the Purchaser, in its sole
discretion, which determination shall be final and binding. Neither the
Purchaser nor any other person will be under any duty to give notice of any
defects in any notice of withdrawal or incur any liability for failure to give
any such notice.
6. Extension of Tender Period; Termination; Amendment. The Purchaser
expressly reserves the right, in its sole discretion, at any time, (i) to extend
the period of time during which the Offer is open and thereby delay acceptance
for payment of, and the payment for, any Units, (ii) to terminate the Offer and
not accept for payment any Units not already accepted for payment, (iii) upon
the occurrence of any of the conditions specified in Section 7, to delay the
acceptance for payment of, or payment for, any Units not already accepted for
payment or paid for,
4
<PAGE> 8
and (iv) to amend the Offer in any respect (including, without limitation, by
increasing the consideration offered, increasing or decreasing the number of
Units being sought, or both). Notice of any such extension, termination or
amendment will promptly be disseminated to Unit Holders in a manner reasonably
designed to inform Unit Holders of such change in compliance with Rule 14d-4(c)
under the Exchange Act. In the case of an extension of the Offer, the extension
will be followed by a press release or public announcement which will be issued
no later than 9:00 a.m. New York City time, on the next business day after the
scheduled Expiration Date, in accordance with Rule 14e-1(d) under the Exchange
Act. If the Purchaser makes a material change in the terms of the Offer or the
information concerning the Offer or waives a material condition of the Offer,
the Purchaser will extend the Offer and disseminate additional tender offer
materials to the extent required by Rules 14d-4(c) and 14d-6(d) under the
Exchange Act.
7. Conditions of the Offer. Notwithstanding any other term of the Offer,
the Purchaser will not be required to accept for payment or to pay for any Units
tendered if all authorizations, consents, orders of, or filings with, or
expirations of waiting periods imposed by, any court, administrative agency or
other governmental authority necessary for the consummation of the transactions
contemplated by the Offer shall not have occurred or been filed, or obtained.
Furthermore, notwithstanding any other term of the Offer and in addition to the
Purchaser's right to withdraw the Offer at any time before the Expiration Date,
the Purchaser will not be required to accept for payment or pay for any Units,
or may delay the acceptance for payment of the Units tendered if, at any time on
or after the date of the Offer and before the acceptance of such Units for
payment or the payment therefor, any of the following conditions exists:
(a) a preliminary or permanent injunction or other order of any federal
or state court, government or governmental agency shall have been issued and
shall remain in effect which: (i) makes illegal, delays or otherwise directly or
indirectly restrains or prohibits the making of the Offer or the acceptance for
payment, purchase of or payment for any Units by the Purchaser, (ii) imposes or
confirms limitations on the ability of the Purchaser effectively to exercise
full rights of both legal and beneficial ownership of the Units, (iii) requires
divestiture by the Purchaser of any Units, (iv) causes any material diminution
of the benefits to be derived by the Purchaser as a result of the transactions
contemplated by the Offer, (v) might 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 clauses (i) through (vi) of 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 of the Partnership, which is or
may be materially adverse to the Partnership, or there shall be any material
lien not disclosed in the Partnership's financial statements, or the Purchaser
shall have become aware of any fact that does or may have a material adverse
effect on the value of the Units or the Properties (as defined below);
(d) the General Partners (as defined below) of the Partnership shall
have failed or refused to take all other action that the Purchaser deems
necessary, in the Purchaser's judgment, for the Purchaser to be the registered
owner of the Units tendered and accepted for payment hereunder simultaneously
with the consummation of the Offer or as soon thereafter as is permitted under
the Partnership Agreement, in accordance with the Partnership Agreement and
applicable law;
(e) there shall have been threatened, instituted or pending any action
or proceeding before any court or governmental agency or other regulatory or
administrative agency or commission or by any other person, challenging the
acquisition of any Units pursuant to the Offer or otherwise directly or
indirectly relating to the Offer, or otherwise, in the sole judgment of the
Purchaser, adversely affecting the Purchaser, the Partnership or the
5
<PAGE> 9
Properties or the value of the Units or the benefits expected to be derived by
the Purchaser as a result of the transactions contemplated by the Offer;
(f) 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
or the General Partners shall have authorized, proposed or announced its
intention to propose any merger, consolidation or business combination
transaction, acquisition of assets, disposition of assets or material change in
its capitalization, or any comparable event not in the ordinary course of
business; or
(g) the General Partners 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
Unit Holders.
The foregoing conditions are for the sole benefit of the Purchaser 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 in its sole discretion. Any determination by the
Purchaser concerning the events described above will be final and binding upon
all parties.
8. Backup Federal Income Tax Withholding. To prevent the possible
application of backup federal income tax withholding of 31 percent with respect
to payment of the Purchase Price, a tendering Unit Holder must provide the
Purchaser with the Unit Holder's correct taxpayer identification number in the
space provided in the Letter of Transmittal.
9. FIRPTA Withholding. To prevent the withholding of federal income tax
in an amount equal to ten percent of the amount of the Purchase Price plus
Partnership liabilities allocable to each Unit purchased, the Letter of
Transmittal includes FIRPTA representations certifying the Unit Holder's
taxpayer identification number and address and that the Unit Holder is not a
foreign person.
CERTAIN INFORMATION CONCERNING THE PARTNERSHIP
Information contained in this section is based upon documents and
reports publicly filed by the Partnership, including the Annual Report on Form
10-K for the fiscal year ended December 31, 1997 (the "Form 10-K"). Although the
Purchaser has no information that any statements contained in this section are
untrue, the Purchaser has not independently investigated the accuracy of
statements, and takes no responsibility for the accuracy, inaccuracy,
completeness or incompleteness of any of the information contained in this
section or for the failure by the Partnership to disclose events which may have
occurred and may affect the significance or accuracy of any such information.
General. The Partnership was formed in 1988 under the laws of the State
of California. Its principal executive offices are located at 3158 Redhill
Avenue, Suite 120, Costa Mesa, CA 92626. The General Partners of the Partnership
are WNC & Associates, Inc., a California corporation, and Wilfred N. Cooper,
Sr., an individual (collectively, the "General Partners"). Wilfred N. Cooper,
Sr., through the Cooper Revocable Trust, owns just less than 70% of the
outstanding stock of WNC & Associates, Inc. John B. Lester, Jr. is the original
limited partner of the Partnership and owns, through the Lester Family Trust,
just less than 30% of the outstanding stock of WNC & Associates, Inc. The
business of the Partnership is conducted primarily through WNC & Associates,
Inc. as the Partnership has no employees of its own.
The Partnership was formed to acquire limited partnership interests in
local limited partnerships ("Local Limited Partnerships") which own multifamily
apartment complexes that are eligible for low-income housing federal and
California income tax credits ("Low Income Housing Credits"). The Partnership's
principal business
6
<PAGE> 10
therefore consists of investing as a limited partner in Local Limited
Partnerships each of which will own and operate an apartment complex (the
"Apartment Complex" or "Property"), which will qualify for the Low Income
Housing Credit. In general, under Section 42 of the Internal Revenue Code, an
owner of low-income housing can receive the Low Income Housing Credit to be used
against Federal income taxes otherwise due in each year of a ten year period. In
general, under Section 17058 of the California Revenue and Taxation Code, an
owner of low-income housing can receive the Low Income Housing Credit to be used
against California income taxes otherwise due in each year of a four year
period. The Apartment Complex is subject to a fifteen-year compliance period
(the "Compliance Period").
The Partnership issues Units and invests in Local Limited Partnerships
on behalf of the Units issued. The Partnership commenced offering Units on March
16, 1989 and completed the offering on October 31, 1990, with a total of 7,450
Units issued for $7,450,000. The net proceeds available for investment were
disbursed for the payment of acquisition fees and acquisition expenses, the
establishment of reserves, the payment of operating expenses and the acquisition
of investments in Local Limited Partnerships which own the Apartment Complexes.
The Partnership has paid all capital contributions due for its investments in
Local Limited Partnerships and has no further obligations for its property
investments. As of December 31, 1997, the Partnership had invested $2,001,882
and held investments in 11 Local Limited Partnerships which own and operate
Apartment Complexes consisting of 433 apartment units. Each Apartment Complex
owned by the Local Limited Partnership is eligible for federal Low Income
Housing Tax Credit. Eight of the Apartment Complexes are eligible for the
California Low Income Housing Credit. The limited partners received $99 and $100
federal Low Income Housing Credits per Unit for the years 1996 and 1997,
respectively. State Low Income Housing Credits in the aggregate amount of $473
to $700 per Unit were generated from 1989 through 1994. All of the Local Limited
Partnerships also benefit from governmental programs promoting low or moderate
income housing.
Attached to this Offer to Purchase as Part II of Appendix A is a
schedule of the Apartment Complexes held as of December 31, 1997, and further
information.
The Partnership's profits and losses (subject to certain priority
allocations and distributions) and tax credits are allocated 99% to limited
partners and 1% to the General Partners. Subject to the terms of the Partnership
Agreement, the benefits of ownership of any Unit which is transferred during the
year shall be allocated between the transferee and the transferor based upon the
number of quarterly periods that each was the holder of the Units. The
Partnership's investment objectives do not include receipt of significant cash
flow from the Local Limited Partnerships in which it invests. Investments in
Local Limited Partnerships are made principally with a view towards realizing
Low Income Housing Credits for allocation to the Partnership's General Partners
and limited partners.
In general, in order to avoid recapture of Low Income Housing Credits,
the Partnership does not expect that it will dispose of its interests in Local
Limited Partnerships ("Local Limited Partnership Interests") or approve the sale
by a Local Limited Partnership of any Apartment Complex prior to the end of the
applicable Compliance Period. The Form 10-K does not indicate that any Local
Limited Partnership in which the Partnership has invested has suffered an event
of recapture.
The Partnership is subject to the information reporting requirements of
the Exchange Act and is required to file reports and other information with the
Commission relating to its business, financial results and other matters. 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, or
electronically 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.
Outstanding Units. According to the Form 10-K, there were 7,450 Units
issued and outstanding, held by approximately 688 Unit Holders, as of December
31, 1997.
Selected Financial and Property Related Data. Attached as Appendix A is
a summary of certain financial and statistical information with respect to the
Partnership and the Properties, all of which has been taken from the
7
<PAGE> 11
Form 10-K. More comprehensive financial and other information is included in
such reports and other documents filed by the Partnership with the Commission,
and Appendix A is qualified in its entirety by reference to such reports and
other documents and all the financial information and related notes contained
therein.
Prior Acquisitions of Units and Prior Contacts. Neither the Purchaser
nor any of its affiliates holds any Units of the Partnership. During the past
year, Purchaser had several conversations with representatives of the
Partnership and its affiliates regarding an investment in, or acquisition of,
some or all of the equity stock of certain Partnership affiliates and regarding
a proposal by Purchaser to acquire the tax credits held by the general partners
of the Partnership and other affiliated partnerships. In connection with such
discussions, the Purchaser received information regarding the value of such tax
credits. Purchaser's proposal included a provision for the Purchaser to receive
a list of the Unit Holders for the purpose of making a tender offer to acquire
Units. Purchaser's proposal was not accepted and no agreements were reached. On
May 11, 1998, the Purchaser informed representatives of the Partnership of its
desire to make an offer to purchase Units and requested a list of Unit Holders
for such purpose. As of the date of this Offer, the Purchaser has received no
response. Except as set forth above, neither the Purchaser nor its affiliates
are party to any past, present or proposed material contracts, arrangements,
understandings, relationships, or negotiations with the Partnership or with the
General Partner concerning the Partnership.
DETERMINATION OF PURCHASE PRICE
In establishing the Purchase Price, the Purchaser reviewed certain
publicly available information including among other things: (i) the Partnership
Agreement and (ii) the Form 10-K. 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 "[t]he Units are not traded on a public
exchange....It is not anticipated that any public market will develop for the
purchase and sale of any Unit." At present, privately negotiated sales and sales
through intermediaries (such as through the American Partnership Board) are the
only means available to a Unit Holder to liquidate an investment in Units (other
than this Offer 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.
According to Partnership Spectrum, an independent third party
publication, there have not been any sales of the Partnership's Units since
December 1, 1995 to January 31, 1998. Sales may be conducted which are not
reported in the Partnership Spectrum and the prices of sales through other
channels may differ from those reported by the Partnership Spectrum. The
reported gross sales prices may not reflect the net sales proceeds received by
sellers of Units, which typically are reduced by commissions (approximately 5%
to 10%) and other secondary market transaction costs. The Purchaser does not
know whether the information provided by the Partnership Spectrum is accurate or
complete.
Remaining Tax Credits. Based on information contained in public filings,
the Purchaser believes that additional tax credits of approximately $179.50 per
Unit will be available to Unit Holders who hold their Units through 2001.
CERTAIN INFORMATION CONCERNING THE PURCHASER
The Purchaser. The Purchaser is a California limited liability company
that was formed in 1997. The principal office of the Purchaser is 199 South Los
Robles Avenue, Suite 440, Pasadena, CA 91101. Everest Tax Credit Investors, LLC
is owned by Everest Properties II, LLC, a California limited liability company
("EPII"), and by Imperial Bank, a California state-chartered bank. Imperial Bank
is the wholly owned operating subsidiary of Imperial Bancorp, a bank holding
company registered under the Bank Holding Company Act of 1956. The Manager of
the Purchaser is EPII, and it is the person that manages Purchaser's affairs.
For certain information
8
<PAGE> 12
concerning the directors and executive officers of EPII, Imperial Bank and
Imperial Bancorp, see Schedule I to the Offer to Purchase.
Letter Agreement for Option to Purchase Securities. The Purchaser has
entered into a certain Letter Agreement for the Option to Purchase Securities,
dated April 29, 1998 (the "Option Agreement"), by and among the Purchaser,
Global Capital Management, Inc. ("GCM") and Valley Creek Capital, Inc. ("Valley
Creek"). Pursuant to the terms of the Option Agreement, Purchaser has granted or
will caused to be granted to Valley Creek an option to purchase up to 50% of the
total Units tendered in the Offer for the same price paid by Purchaser. A copy
of the Option Agreement is filed as an exhibit to Purchaser's Schedule 14D-1.
For certain information concerning the directors and executive officers of GCM
and Valley Creek, see Schedule I to the Offer to Purchase. The inclusion of
information concerning GCM and Valley Creek does not constitute an
acknowledgment or agreement that either of them is a co-bidder in the Offer.
General. Except as set forth above or elsewhere in this Offer to
Purchase: (i) each of the Purchaser, GCM and Valley Creek does not beneficially
own or have a right to acquire, and, to the best knowledge of the Purchaser, GCM
and Valley Creek, no associate or majority-owned subsidiary of any of them or
the persons listed in Schedule I hereto, beneficially owns or has a right to
acquire any Units or any other equity securities of the Partnership; (ii) each
of the Purchaser, GCM and Valley Creek has not, and to the best knowledge of the
Purchaser, GCM and Valley Creek, none of the persons and entities referred to in
clause (i) above or any of their executive officers, directors or subsidiaries
has, effected any transaction in the Units or any other equity securities of the
Partnership during the past 60 days other than as stated in this Offer; (iii)
each of the Purchaser, GCM and Valley Creek does not have and, to the best
knowledge of the Purchaser, GCM and Valley Creek, none of the persons listed in
Schedule I hereto has, any contract, arrangement, understanding or relationship
with any other person with respect to any securities of the Partnership,
including, but not limited to, the transfer or voting thereof, joint ventures,
loan arrangements, puts or calls, guarantees of loans, guarantees against loss
or the giving or withholding of proxies, consents or authorizations; (iv) since
December 31, 1994, there have been no transactions which would require reporting
under the rules and regulations of the Commission between the Partnership or any
of its affiliates and any of the Purchaser, GCM or Valley Creek or any of their
subsidiaries or, to the best knowledge of the Purchaser, GCM and Valley Creek,
any of their executive officers, directors or affiliates; and (v) since December
31, 1994 except as otherwise stated in this Offer, there have been no contacts,
negotiations or transactions between the Purchaser, GCM or Valley Creek, or any
of their subsidiaries or, to the best knowledge of the Purchaser, GCM and Valley
Creek, any of the persons listed in Schedule I hereto, 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 of the Partnership.
Source of Funds. Based on the Purchase Price of $100.00 per Unit, the
Purchaser estimates that the total amount of funds necessary to purchase all
Units sought by this Offer and to pay related fees and expenses, will be
approximately $89,500. The Purchaser expects to obtain these funds by means of
equity capital contributions from its members at the time the Units tendered
pursuant to the Offer are accepted for payment. Such members will fund their
capital contributions through existing cash and other financial assets which in
the aggregate are sufficient to provide the funds required in connection with
the Offer without any additional borrowings. If Valley Creek exercises fully
its option under the Option Agreement, approximately half of such funds would
be paid by Valley Creek. Valley Creek has informed Purchaser that Valley Creek
would obtain such funds from capital contribution of its members.
FUTURE PLANS OF THE PURCHASER
The Purchaser is seeking to acquire Units pursuant to the Offer to
obtain a substantial equity interest in the Partnership, primarily for
investment. Following the completion of the Offer, the Purchaser and persons
related to or affiliated with the Purchaser may acquire additional Units. Any
such acquisition may be made through private purchases, through one or more
future tender or exchange offers or by any other means deemed advisable by the
Purchaser in its sole discretion. Any such acquisition may be at a price higher
or lower than the price to be paid for the Units purchased pursuant to the
Offer, and may be for cash or other consideration. The Purchaser also may
consider selling some or all of the Units it acquires pursuant to the Offer,
either directly or by a sale of one or more interests in the Purchaser itself,
depending upon liquidity, strategic, tax and other considerations.
9
<PAGE> 13
The Purchaser does not currently intend to change current management or
the operation of the Partnership and does not have current plans for any
extraordinary transaction involving the Partnership. However, these plans could
change at any time in the future. If any transaction is effected by the
Partnership and financial benefits accrue to the Unit Holders, the Purchaser and
its affiliates will participate in those benefits to the extent of their
ownership of the Units.
The Purchaser has no present plans or proposals that would result in an
extraordinary transaction, such as a merger, reorganization, liquidation,
reallocation of operations or sale or transfer of assets involving the
Partnership or any material changes in the Partnership's structure, business or
composition of its management or personnel.
EFFECTS OF THE OFFER
Future Benefits of Unit Ownership. Tendering Unit Holders shall receive
cash in exchange for their Units purchased by the Purchaser and will forego all
future distributions and tax credit and loss allocations from the Partnership
with respect to such Units.
Limitations on Resales. Transfers of 50% or more of the Units in a
twelve-month period may result in a termination of the Partnership for federal
income tax purposes and would also result in a recapture of tax credits.
Pursuant to the Partnership Agreement, no sale, exchange, transfer or assignment
of any Units may be made if such sale, exchange, transfer or assignment will
have the effect as stated in the preceding sentence. Any deferred sales or
exchanges, if made, shall be made (in chronological order to the extent
practicable) as of the first day of a fiscal quarter after the end of any such
twelve-month period. The Purchaser believes that its Offer (for approximately
10% of the Units) will not likely result in a tax termination.
Influence on Voting Decisions by the Purchaser. Under the Partnership
Agreement, Unit Holders holding a majority of the Units are entitled to take
action with respect to a variety of matters, including removal a General
Partner, dissolution and termination of the Partnership, and approval of most
types of amendments to the Partnership Agreement. If the Purchaser obtains all
or most of the 745 Units sought, the influence of Purchaser and its affiliates
on such actions may be significant.
CERTAIN FEDERAL INCOME TAX MATTERS
The following summary is a general discussion of certain of the federal
income tax consequences of a sale of Units pursuant to the Offer. The summary is
based on the Internal Revenue Code of 1986, as amended (the "Code"), applicable
Treasury regulations thereunder, administrative rulings, and judicial authority,
all as of the date of the Offer. All of the foregoing are subject to change, and
any such change could affect the continuing accuracy of this summary. This
summary does not discuss all aspects of federal income taxation that may be
relevant to a particular Unit Holder in light of such Unit Holder's specific
circumstances, nor does it describe any aspect of state, local, foreign or other
tax laws. Sales of Units pursuant to the Offer will be taxable transactions
under applicable state, local, foreign and other tax laws. UNIT HOLDERS SHOULD
CONSULT THEIR RESPECTIVE TAX ADVISORS AS TO THE PARTICULAR TAX CONSEQUENCES TO
THE UNIT HOLDER OF SELLING UNITS PURSUANT TO THE OFFER.
In general, a Unit Holder will recognize gain or loss on a sale of Units
pursuant to the Offer equal to the difference between (i) the Unit Holder's
"amount realized" on the sale and (ii) the Unit Holder's adjusted tax basis in
the Units sold. The amount of a Unit Holder's adjusted tax basis in a Unit will
vary depending upon the Unit Holder's particular circumstances, and it will
include the amount of the Partnership's liabilities allocable to the Unit (as
determined under Code Section 752). The "amount realized" with respect to a Unit
will be a sum equal to the amount of cash received by the Unit Holder for the
Unit pursuantto the Offer (that is, the Purchase Price), plus the amount of the
Partnership's liabilities allocable to the Unit (as determined under Code
Section 752).
10
<PAGE> 14
The gain or loss recognized by a Unit Holder 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 Unit Holder as a capital asset. Recent changes to the tax
laws made by the Taxpayer Relief Act of 1997 (the "Act") modified applicable
capital gain rates and holding periods. Gain with respect to Units held for more
than 18 months will be taxed at a maximum long-term capital gain rate of 20
percent. Gain with respect to Units held more than one year but less than 18
months will be taxed at a maximum mid-term capital gain rate of 28 percent. Gain
with respect to Units held one year or less will be taxed at ordinary income
rates. It should also be noted that the Act 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 Unit Holder 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).
A tendering Unit Holder will be allocated a pro rata share of the
Partnership's tax credits and taxable income or loss for the year of the sale
with respect to the Units sold in accordance with the provisions of the
Partnership Agreement concerning transfers of Units. Such allocations and any
cash distributed by the Partnership to the Unit Holder for that yearwill affect
the Unit Holder's adjusted tax basis in Units and, therefore, the amount of such
Unit Holder's taxable gain or loss upon a sale of Units 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 Unit Holders from the Partnership
are passive activity losses. Unit Holders may have "suspended" passive activity
losses from the Partnership (i.e., post-1986 net taxable losses in excess of
statutorily permitted "phase-in" amounts and which have not been used to offset
income from other passive activities). 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 Unit Holder sells less than all of its Units pursuant to the Offer,
a passive loss recognized by that Unit Holder can be currently deducted (subject
to the other applicable limitations) to the extent of the Unit Holder's passive
income from the Partnership for that year plus any other net passive activity
income for that year, and a gain recognized by a Unit Holder upon the sale of
Units can be offset by the Unit Holder's current or "suspended" passive activity
losses (if any) from the Partnership and other sources. If, on the other hand, a
Unit Holder sells 100 percent of its Units pursuant to the Offer, any
"suspended" losses from the Partnership and any losses recognized upon the sale
of the Units will be offset first against any other net passive gain to the Unit
Holder from the sale of the Units and any other net passive activity income from
other passive activity investments, and the balance of any "suspended" net
losses from the Units will no longer be subject to the passive activity loss
limitation and, therefore, will be deductible by such Unit Holder from its other
"ordinary" income (subject to any other applicable limitations). If more than
745 Units are tendered, some tendering Unit Holders may not be able to sell 100
percent of their Units pursuant to the Offer because of proration of the number
of Units to be purchased by the Purchaser, unless the Purchaser amends the Offer
to increase the number of Units to be purchased.
Unit Holders (other than tax-exempt persons, corporations and certain
foreign individuals) who tender Units may be subject to 31 percent backup
withholding unless those Unit Holders provide a taxpayer identification number
("TIN") and are certain that the TIN is correct or properly certify that they
are awaiting a TIN. A Unit Holder may avoid backup withholding by properly
completing and signing the Letter of Transmittal. If a Unit Holder who is
subject to backup withholding does not include its TIN, the Purchaser will
withhold 31 percent from payments to such Unit Holder.
A Unit Holder 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
11
<PAGE> 15
selling Unit Holder must also notify the Partnership of the date of the transfer
and the names, addresses and tax identification numbers of the transferorsand
transferee within 30 days of the date of the transfer (or, if earlier, January
15 of the following calendar year) (See IRS Form 8308).
CERTAIN LEGAL MATTERS
General. Except as set forth in this Section, the Purchaser is not aware
of any filings, approvals or other actions by any domestic or foreign
governmental or administrative agency that would be required prior to the
acquisition of Units by the Purchaser pursuant to the Offer. The Purchaser's
obligation to purchase and pay for Units is subject to certain conditions,
including conditions related to the legal matters discussed in this Section.
State Takeover Statutes. The Partnership was formed under the laws of
the State of California, which currently does not have any takeover statute
applicable to limited partnerships. However, it is a condition to the Offer that
no state or federal statute impose a material limitation on the Purchaser's
right to vote the Units purchased pursuant to the Offer. If this condition is
not met, Purchaser may terminate or amend the Offer.
If any person seeks to apply any state takeover statute, the Purchaser
will take such action as then appears desirable, which action may include
challenging the validity or applicability of any such statute in appropriate
court proceedings. If there is a claim that one or more takeover statutes apply
to the Offer, and it is not determined by an appropriate court that such
statutes do not apply or are invalid as applied to the Offer, the Purchaser
might be required to file certain information with, or receive approvals from,
the relevant state authorities. This could prevent the Purchaser from purchasing
or paying for Units tendered pursuant to the Offer, or cause delay in continuing
or consummating the Offer. In such case, the Purchaser may not be obligated to
accept for payment or pay for Units tendered.
Fees and Expenses. 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 will pay all costs and expenses of printing and mailing the
Offer and its legal fees and expenses; provided, however, if Valley Creek
exercises its option pursuant to the Option Agreement, Valley Creek will pay for
a portion of such costs and expenses, excluding any litigation expenses, in an
amount determined in accordance with the terms of the Option Agreement. The
Purchaser will reduce the purchase price of Units by any transfer fees imposed
by the Partnership.
Miscellaneous. The Offer is not made to (nor will tenders be accepted on
behalf of) Unit Holders residing in any jurisdiction in which the making of the
Offer or the acceptance thereof would not be in compliance with the securities
or other laws of such jurisdiction. However, the Purchaser may, in its
discretion, take such action as it deems necessary to make the Offer in any
jurisdiction and extend the Offer to Unit Holders in such jurisdiction.
In any jurisdiction where the securities or other laws require the Offer
to be made by a licensed broker or dealer, the Offer will be deemed to be made
on behalf of the Purchaser by one or more registered brokers or dealers that are
licensed under the laws of such jurisdiction.
The Purchaser has filed with the Commission a Tender Offer Statement on
Schedule 14D-1 pursuant to Rule 14d-3 under the Exchange Act, furnishing certain
additional information with respect to the Offer, and may file amendments
thereto. The Schedule 14D-1 and any amendments thereto, including exhibits, may
be inspected and copies may be obtained at the same places and in the same
manner as set forth under the caption "CERTAIN INFORMATION CONCERNING THE
PARTNERSHIP -- GENERAL".
12
<PAGE> 16
No person has been authorized to give any information or to make any
representation on behalf of the Purchaser not contained herein or in the Letter
of Transmittal and, if given or made, such information or representation must
not be relied upon as having been authorized.
EVEREST TAX CREDIT INVESTORS, LLC
May 12, 1998
13
<PAGE> 17
SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS
The business address of each executive officer and director of Everest
Properties II, LLC is 199 South Los Robles Avenue, Suite 440, Pasadena,
California 91101. Each executive officer and director is a United States
citizen. The name and principal occupation or employment of each executive
officer and director of Everest Properties II, LLC, are set forth below.
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT
NAME POSITION AND FIVE-YEAR EMPLOYMENT HISTORY
- ---- -----------------------------------------
W. Robert Kohorst President of Everest Properties II, LLC from
1996 - present. President and Director of Everest
Properties, Inc. from 1994 - present. President and
Director of KH Financial, Inc. from 1991 - present.
David I. Lesser Executive Vice President and Secretary of Everest
Properties II, LLC from 1996 - present. Executive Vice
President of Everest Properties, Inc. from 1995 -
present. Principal and member of Feder, Goodman &
Schwartz, Inc. from 1992 - 1996.
The business address of each executive officer and director of Imperial
Bank and Imperial Bancorp is 9920 South La Cienega Boulevard, Inglewood,
California 90301. Each executive officer and director is a United States
citizen. The name and principal occupation or employment of each executive
officer and director of Imperial Bank and Imperial Bancorp are set forth below.
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT
NAME POSITION AND FIVE-YEAR EMPLOYMENT HISTORY
- ---- -----------------------------------------
George L. Graziadio, Jr. Chairman of the Board, President and Chief Executive
Officer of Imperial Bancorp for the past five years.
Chairman of the Board and Co-Founder of Imperial Bank.
Chairman of the Board of Imperial Financial Group,
Inc. Mr. Graziadio is also engaged as an owner or
partner in many other business activities primarily in
the real estate industry. Director of Coastcost Corp.
J. Richard Barkley Executive Vice President and Director, Human Resources
for the past five years.
Richard J. Casey Executive Vice President of Imperial Bank for the past
five years.
Harry W. Chenoweth Executive Vice President of Imperial Bank commencing
in 1997. Previously served as a Senior Vice President
with Union Bank for five years.
Norman P. Creighton Vice Chairman and Chief Executive Officer and Director
of Imperial Bank for the past five years. Director of
Imperial Bancorp.
Richard K. Eamer Director of Imperial Bank and Imperial Bancorp.
Chairman Emeritus of Tenet Healthcare Corporation.
Chairman of National Medical Enterprises.
Robert M. Franko President and Director of Imperial Finance Group, Inc.
commencing in 1997. Executive Vice President and
Chief Financial Officer of Imperial Bank from
1995-1997. Previously served as President and Chief
Executive Officer of Springfield Bank and Trust Ltd.
G. Louis Graziadio, III Director of Imperial Bancorp. President of Ginarra
Holdings, Inc. Co-Chairman of the Board of Imperial
Financial Group, Inc.
Bernard G. LeBeau Director of Imperial Bancorp and Imperial Bank.
Chairman of the Board of Imperial Bank from 1982 -
1995.
Eldon K. Lloyd Executive Vice President, Chief Credit Officer of
Imperial Bank for the past five years.
14
<PAGE> 18
William L. MacDonald Director of Imperial Bank. President and Chief
Executive Officer of Compensation Resource Group.
Daniel R. Mathis Director, President and Chief Operating Officer of
Imperial Bank.
Christine McCarthy Executive Vice President and Chief Financial Officer
of Imperial Bank commencing in 1997. Executive Vice
President and Chief Financial Officer of First
Interstate Bank for the five years prior to 1997.
Lee E. Mikles Director of Imperial Bank from 1994 to present.
Investment Advisor, Mikles/Miller Management, Inc.
Director of Coastcast Corp.
Paul A. Novelly Director of Imperial Bank. President of Apex Oil Co.
Director of Imperial Financial Group, Inc. Director of
Coastcast Corp., Vista 2000, Inc., and Intrawest Corp.
Robert S. Muehlenbeck Executive Vice President of Imperial Bank since 1993.
President of Seaborg, Inc. for five years prior
thereto.
Charles T. Owen Director of Imperial Bank. President and Publisher of
the San Diego Business Journal.
John A. Andreini Director of Imperial Bank. Chairman of Andreini & Co.
James R. Daly Executive Vice President of Imperial Bank since 1996.
Previously served as President of Sunrise Bank.
Richard Baker Senior Vice President, General Counsel and Secretary
of Imperial Bancorp and Imperial Bank since 1983.
Previously served as Senior Vice President and General
Counsel for American City Bank.
The Manager of Valley Creek Capital, Inc., a Delaware limited liability
company ("Valley Creek"), is Global Capital Management, Inc., a Delaware
corporation ("GCM"), which is controlled by its three officers and directors,
Richard J. Emmerich, John D. Brandenborg and Michael J. Frey. GCM is also the
general partner of and exercises sole control over the limited partnership which
is a member of Valley Creek and which owns all of the interests of Valley Creek.
The business address of each executive officer and director of GCM is 601
Carlson Parkway, Suite 200, Minnetonka, Minnesota 55305. Each executive officer
and director is a United States citizen. The name and principal occupation or
employment of each executive officer and director of GCM are set forth below.
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT
NAME POSITION AND FIVE-YEAR EMPLOYMENT HISTORY
- ---- -----------------------------------------
Richard J. Emmerich Richard J. Emmerich has been the President and a
Director of GCM from August 1988 to present.
John D. Brandenborg John D. Brandenborg has been a Vice President,
Treasurer and a Director of GCM from August 1988 to
present.
Michael J. Frey Michael J. Frey has been Secretary, Vice President and
a Director of GCM from 1988 to present.
15
<PAGE> 19
APPENDIX A
Set forth below is a summary of certain financial data for the
Partnership which has been excerpted or developed from the Partnership's Annual
Report on Form 10-K for the fiscal year ended December 31, 1997 (the "Form
10-K"), filed with the Securities and Exchange Commission. Such reports and
other documents filed by the Partnership with the Commission contain more
comprehensive financial and other information, including the notes accompanying
the financial statements, and the following summary is qualified in its entirety
by reference to such report and other documents and all the financial
information and related notes contained therein.
PART I
SELECTED FINANCIAL DATA
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
<TABLE>
<CAPTION>
1997 1996 1995
--------- --------- ---------
<S> <C> <C> <C>
Interest income ............... $ 2,227 $ 3,549 $ 3,911
Operating expenses:
Amortization ................ 14,904 14,904 15,970
Partnership management fees . 111,691 111,691 111,691
Legal and accounting ........ 5,339 5,175 7,000
Office ...................... 7,661 6,946 11,145
--------- --------- ---------
Total operating expenses .... 139,595 138,716 145,806
--------- --------- ---------
Loss from operations .......... (137,368) (135,167) (141,895)
Equity in losses from
limited partnerships ........ (420,868) (476,567) (412,291)
--------- --------- ---------
Net loss ...................... $(558,236) $(611,734) $(554,186)
========= ========= =========
Net loss allocable to:
General partners ............ $ (5,582) $ (6,117) $ (5,542)
========= ========= =========
Limited partners ............ $(552,654) $(605,617) $(548,644)
========= ========= =========
Net loss per weighted number of
limited partners units ..... $ (74.18) $ (81.29) $ (73.64)
========= ========= =========
Outstanding weighted limited
partner units ............... 7,450 7,450 7,450
========= ========= =========
</TABLE>
A-1
<PAGE> 20
BALANCE SHEETS
FOR THE YEARS ENDED DECEMBER 31, 1997 AND 1996
<TABLE>
<CAPTION>
1997 1996
----------- -----------
<S> <C> <C>
ASSETS
Cash and cash equivalents ................ $ 78,109 $ 83,943
Investments in limited partnerships ...... 2,001,822 2,442,547
----------- -----------
$ 2,079,931 $ 2,526,490
=========== ===========
LIABILITIES AND PARTNERS' EQUITY (DEFICIT)
Liabilities
Accrued fees and expenses due to general
partner and affiliates ................. $ 705,925 $ 594,248
----------- -----------
Partners' equity (deficit):
General partners ......................... (51,100) (45,518)
Limited partners (10,000 units authorized;
7,450 units issued and outstanding at
December 31, 1997 and 1996) ............ 1,425,106 1,977,760
----------- -----------
Total partners equity .................... 1,374,006 1,932,242
----------- -----------
$ 2,079,931 $ 2,526,490
=========== ===========
</TABLE>
DIVIDEND HISTORY
The Partnership has made no distributions of net cash flow to Unit
Holders from its inception through December 31, 1997.
LIQUIDITY AND CAPITAL RESOURCES
The Partnership commenced offering Units on March 16, 1989. As of the
close of the public offering on October 31, 1990, a total of 7,450 Units
representing $7,450,000 had been sold. The net proceeds available for investment
were disbursed for the payment of acquisition fees and acquisition expenses, the
establishment of reserves, the payment of operating expenses and the acquisition
of investments in Local Limited Partnerships which own the Apartment Complexes.
The Partnership has paid all capital contributions due for its investments in
Local Limited Partnerships and has no further obligations for its property
investments. As of December 31, 1997, the Partnership had committed the net
offering proceeds to pay capital contributions to 11 Local Limited Partnerships
in the amount of $2,001,822.
Overall, the Partnership had a net decrease in cash and cash equivalents
of approximately $5,800 for the period ended December 31, 1997. This decrease
was due to cash used by operating activities for the Partnership of
approximately $10,800 and cash provided by investing activities of approximately
$5,000 of distributions from Local Limited Partnerships.
It is not expected that any of the Local Limited Partnerships in which
the Partnership has invested will generate cash sufficient to provide
distributions to the Partnership of any material amount. Distributions to the
Partnership would first be used to meet operating expenses of the Partnership,
including the payment of the asset management fee to the General Partners.
The Partnership's investments are not readily marketable and may be
affected by adverse general economic conditions which, in turn, could
substantially increase the risk of operating losses for the Apartment Complexes,
the Local Limited Partnerships and the Partnership. These problems may result
from a number of factors, many of which cannot be controlled by the General
Partners. Nevertheless, the General Partners anticipate
A-2
<PAGE> 21
that capital raised from the sale of Local Limited Partnership interests is
sufficient to fund the Partnership's operations.
Upon completion of its pubic offering, the Partnership established
working capital reserves of 3.3% of capital contributions (or approximately
$247,000), an amount which is anticipated to be sufficient to satisfy general
working capital and administrative expense requirements of the Partnership
including payment of the asset management fee as well as expenses attendant to
the preparation of tax returns and reports to the limited partners and other
investor servicing obligations of the Partnership. To the extent that working
capital reserves are insufficient to satisfy the cash requirements of the
Partnership, it is anticipated that additional funds would be sought through
bank loans or other institutional financing. The General Partners may also apply
any cash distributions received from the local limited partnerships for such
purposes or to replenish or increase working capital reserves.
Reserves of the Partnership and reserves of the Local Limited
Partnership may be increased or decreased from time to time by the General
Partners or the Local General Partner, as the case may be, in order to meet
anticipated costs and expenses. The amount of cash flow available for
distribution and/or sale or refinancing, if any, which is available for
distribution to the Limited Partners may be affected accordingly.
RESULTS OF OPERATIONS
As reflected on its Statements of Operations, the Partnership had losses
of $558,236, $611,734 and $554,186 for the years ended December 31, 1997, 1996,
and 1995, respectively. The component items of revenue and expense are discussed
below.
Revenue. Partnership revenues consisted entirely of interest earned on
cash deposits held in financial institutions as reserves. Interest revenue in
future years will be a function of prevailing interest rates and the amount of
cash balances. It is anticipated that the Partnership will maintain cash
reserves in an amount not materially in excess of the minimum amount required by
its Partnership Agreement, which is 3% of capital contributions.
Expenses. The most significant component of operating expenses is
expected to be the Asset Management Fee. The Asset Management Fees is equal to
0.5% of invested assets of Local Limited Partnerships. Accordingly the amount to
be incurred in the future is a function of the level of such invested assets
(i.e., the sum of the Partnership's capital contributions to the Local Limited
Partnerships plus the Partnership's share of the debts related to the Apartment
Complexes owned by such Local Limited Partnerships). The annual management fee
incurred was $111,691 and $111,691, for the years ended December 31, 1997 and
1996, respectively, of which no amounts were paid in such years. Office expense
consists of the Partnership's administrative expenses, such as accounting and
legal fees, bank charges and investor reporting expenses.
Equity in losses from Local Limited Partnerships. The
Partnership's equity in losses from Local Limited Partnerships is equal to 99%
of the aggregate net loss of the Local Limited Partnerships. After rent-up, the
Local Limited Partnerships are expected to generate losses during each year of
operations. This is so because, although rental income is expected to exceed
cash operating expenses, depreciation and amortization deductions claimed by the
Local Limited Partnerships are expected to exceed net rental income.
The Partnership, as a limited partner in the Local Limited Partnerships
in which it has invested, is subject to the risks incident to the construction,
management, and ownership of improved real estate. The Partnership investments
are also subject to adverse general economic conditions, and accordingly, the
status of the national economy, including substantial unemployment and
concurrent inflation, could increase vacancy levels, rental payment defaults,
and operating expenses, which in turn, could substantially increase the risk of
operating losses for the Apartment Complexes.
A-3
<PAGE> 22
PART II
PROJECTS OWNED BY LOCAL LIMITED PARTNERSHIPS
IN WHICH THE PARTNERSHIP HAS AN INVESTMENT
AS OF DECEMBER 31, 1997
<TABLE>
<CAPTION>
PERCENTAGE
OF TOTAL
UNITS UNITS UNITS
NAME & LOCATION NO. OF APTS. COMPLETED OCCUPIED OCCUPIED
--------------- ------------ --------- -------- -----------
<S> <C> <C> <C> <C>
Alta Vista Investors, Ltd.......... 42 42 41 98%
Orisi, California
BCA Associates, Ltd................ 40 40 40 100%
Anderson, California
Cloverdale Garden Apts., Ltd....... 34 34 34 100%
Cloverdale, California
Countryway Associates, Ltd......... 41 41 39 95%
Mendota, California
East Garden Apartments, Ltd........ 51 51 49 96%
Jamestown, California
HPA Investors, Ltd................. 42 42 41 98%
Shafter, California
Knights Landing, Ltd............... 25 25 23 92%
Knights Landing, California
Midland Manor Associates........... 40 40 37 94%
Mendota, California
San Jacinto Associates............. 38 38 26 68%
San Jacinto, California
Woodlake Manor, Ltd................ 44 44 39 89%
Woodlake, California
Yreka Investment Group, Ltd........ 36 36 35 97%
--- --- --- ----
Yreka, California 433 433 404 93%
=== === === ====
</TABLE>
A-4
<PAGE> 23
The Letter of Transmittal, and any other required documents should be
sent or delivered by each Unit Holder or his broker, dealer, commercial bank,
trust company or other nominee to the Purchaser at its address set forth below:
EVEREST PROPERTIES II, LLC
(MANAGER)
199 SOUTH LOS ROBLES AVENUE
SUITE 440
PASADENA, CALIFORNIA 91101
Questions and requests for assistance may be directed to the Purchaser
at its 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 the Purchaser 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.
FOR INFORMATION REGARDING THE OFFER CONTACT:
EVEREST PROPERTIES II, LLC
(MANAGER)
199 SOUTH LOS ROBLES AVENUE
SUITE 440
PASADENA, CALIFORNIA 91101
(800) 611-4613 OR (626) 585-5920
FACSIMILE: (626) 585-5929
<PAGE> 1
EXHIBIT 11(a)(2)
AGREEMENT OF TRANSFER AND LETTER OF TRANSMITTAL
FOR UNITS OF LIMITED PARTNERSHIP INTERESTS ("UNITS")
IN
WNC CALIFORNIA HOUSING TAX CREDITS, L.P.
FOR $100.00 PER UNIT
Subject to and effective upon acceptance for payment, the undersigned
(the "Seller") hereby sells, assigns, transfers, conveys and delivers and
irrevocably directs any custodian or trustee to sell, assign, transfer, convey
and deliver ("Transfer") to Everest Tax Credit Investors, LLC, a California
limited liability company (the "Purchaser"), all of the Seller's right, title
and interest in units of limited partnership interests ("Units") of WNC
California Housing Tax Credits, L. P., a California limited partnership (the
"Partnership"), for $100.00 per Unit, less the amount of Distributions (as
defined in the Offer to Purchase) per Unit, if any, made to Seller by the
Partnership after April 14, 1998 and before the date on which the Purchaser
purchases the Units tendered pursuant to the Offer (the "Purchase Date") and
less any tax credits allocated to Seller after June 30, 1998, in accordance with
and pursuant to the Offer to Purchase, dated May 12, 1998, as it may be
supplemented or amended from time to time (the "Offer to Purchase") and this
Agreement of Transfer and Letter of Transmittal, as it may be supplemented or
amended from time to time (the "Letter of Transmittal," which together with the
Offer to Purchase, constitutes the "Offer").
Such Transfer shall include, without limitation, all rights in, and
claims to, any Partnership profits and losses, tax credit allocations, cash
distributions, voting rights and other benefits of any nature whatsoever
distributable or allocable to such Units under the Partnership's Agreement of
Limited Partnership, as amended (the "Partnership Agreement"), and all
certificates evidencing the same, and Seller agrees immediately to endorse and
deliver to Purchaser all distribution checks received from the Partnership after
the Purchase Date. The Seller hereby irrevocably constitutes and appoints the
Purchaser as the true and lawful agent and attorney-in-fact of the Seller with
respect to such Units, with full power of substitution (such power of attorney
being deemed to be an irrevocable power coupled with an interest), to vote,
inspect Partnership books and records or act in such manner as any such
attorney-in-fact shall, in its sole discretion, deem proper with respect to such
Units, to deliver such Units and transfer ownership of such Units on the
Partnership's books maintained by the General Partners of the Partnership,
together with all accompanying evidences of transfer and authenticity to, or
upon the order of, the Purchaser, to immediately revoke and withdraw all prior
tenders of Units hereof, to direct any custodian or trustee holding record title
to the Units to do any of the foregoing, including the execution and delivery of
a copy of this Letter of Transmittal, and upon payment by the Purchaser of the
purchase price, to receive all benefits and cash distributions, endorse
Partnership checks payable to Seller and otherwise exercise all rights of
beneficial ownership of such Units. The Purchaser shall not be required to post
bond of any nature in connection with this power of attorney.
The Seller hereby represents and warrants to the Purchaser that: (i) the
Seller owns such Units and has full power and authority to validly sell, assign,
transfer, convey and deliver such Units to the Purchaser, and that when any such
Units are accepted for payment by the Purchaser, the Purchaser will acquire
good, marketable and unencumbered title thereto, free and clear of all options,
liens, restrictions, charges, encumbrances, conditional sales agreements or
other obligations relating to the sale or transfer thereof, and such Units will
not be subject to any adverse claim; (ii) the Seller is a "United States
person", as defined in Section 7701(a)(30) of the Internal Revenue Code of 1986,
as amended, or if the Seller is not a United States person, that the Seller does
not own beneficially or of record more than 5% of the outstanding Units; (iii)
the Transfer was not effected through an established securities market, or
through a broker-dealer or matching agent which makes a market in Units or which
provides a readily available, regular and ongoing opportunity to the Seller to
sell or exchange its Units through a public means of obtaining or providing
information of offers to buy, sell or exchange the Units; and (iv) if the
undersigned is signing on behalf of an entity, the undersigned has authority to
sign this document on behalf of the entity.
The undersigned recognizes that under certain circumstances set forth in
the Offer to Purchase (including proration), the Purchaser may not be required
to accept for payment any or all of the Units tendered hereby. In such event,
the undersigned understands that this Letter of Transmittal will be effective to
Transfer only those Units
<PAGE> 2
accepted for purchase by the Purchaser and any Letter of Transmittal for Units
not accepted for payment may be destroyed by the Purchaser (in accordance with
its customary practice).
All authority herein conferred or agreed to be conferred shall survive
the death or incapacity or liquidation of the Seller and any obligations of the
Seller shall be binding upon the heirs, personal representatives, successors and
assigns of the undersigned.
Upon request, the Seller will execute and deliver, and irrevocably
directs any custodian to execute and deliver, any additional documents deemed by
the Purchaser to be necessary or desirable to complete the assignment, transfer
and purchase of such Units.
The Seller hereby certifies, under penalties of perjury, that (1) the
number shown below on this form as the Seller's Taxpayer Identification Number
is correct and (2) Seller is not subject to backup withholding either because
Seller has not been notified by the Internal Revenue Service (the "IRS") that
Seller is subject to backup withholding as a result of a failure to report all
interest or dividends, or the IRS has notified Seller that Seller is no longer
subject to backup withholding. The Seller hereby also certifies, under penalties
of perjury, that the Seller, if an individual, is not a nonresident alien for
purposes of U.S. income taxation, and if not an individual, is not a foreign
corporation, foreign partnership, foreign trust, or foreign estate (as those
terms are defined in the Internal Revenue Code and Income Tax Regulations). The
Seller 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.
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 the determinations will be final and binding. The Purchaser's
interpretation of the terms and conditions of the Offer (including this Letter
of Transmittal) will be final and binding. The Purchaser will have the right to
waive any defects or conditions as to the manner of tendering. Any defects in
connection with tenders, unless waived, must be cured within such time as the
Purchaser will determine. This Letter of Transmittal will not be valid until all
defects have been cured or waived.
Date: May 12, 1998
<TABLE>
<S> <C>
ALL
- ----------------------------------------------- ----------------------------------------------
Specify Number of Units Tendered Signature of Owner
if less than "ALL"
- ----------------------------------------------- ----------------------------------------------
Your Telephone Number Print Name
- ----------------------------------------------- ----------------------------------------------
Your Social Security or Taxpayer ID Number Signature of Co-Owner
- ----------------------------------------------- ----------------------------------------------
Print Name
- -----------------------------------------------
Your Address
</TABLE>
--------------------------------------------
The completed Letter of
Transmittal and original
Partnership Certificate(s) (if
available) should be forwarded
to:
EVEREST PROPERTIES II, LLC
199 S. Los Robles Ave., Suite 440
Pasadena, CA 91101
Attn: Securities Processing Department
(626) 585-5920
RE: WNC CALIFORNIA HOUSING TAX CREDITS,
L.P., A CALIFORNIA LIMITED PARTNERSHIP
---------------------------------------------
<PAGE> 3
INSTRUCTIONS
IF SELLER IS THE BENEFICIAL OWNER OF RECORD:
1. Sign the Letter of Transmittal.
2. Indicate the Number of Units Tendered, if less than "All".
3. Fill in Telephone Number, Social Security or Tax ID Number and Address.
4. Return the Letter of Transmittal in the envelope provided.
IF OWNED JOINTLY:
1. Joint owner should sign, as well.
2. If joint owner is deceased and the Units have not been reregistered, owner
should send:
o A copy of the Death Certificate
IF UNITS HAVE BEEN INHERITED OR ARE OWNED BY AN ESTATE:
Executor should submit:
o A copy of the Death Certificate.
o Letter of Testamentary or Will showing your beneficial ownership or
executor capacity.
IF UNITS ARE HELD IN A TRUST:
Please provide first, last, and other applicable pages of the Trust
Agreement showing authorized signatory.
IF UNITS ARE HELD BY A CORPORATION:
Corporate resolutions required showing authorized signatory.
SEND IN THE ORIGINAL LIMITED PARTNER CERTIFICATE IF AVAILABLE.
<PAGE> 1
EXHIBIT 11(a)(3)
This announcement is neither an offer to purchase nor a solicitation of an offer
to sell Units. Each Offer is being made solely by the Offer to Purchase dated
May 12, 1998 and the related Agreement of Transfer and Letter of Transmittal
and is not being made to, nor will tenders be accepted from or on behalf of
the Unit Holders that reside in any jurisdiction in which making or
accepting each Offer would violate that jurisdiction's laws.
In those jurisdictions where the laws require each Offer
to be made by a licensed broker or dealer, the Offer
shall be deemed to be made on behalf of the
Purchaser, if at all, only by one or more
registered brokers or dealers licensed
under the laws of the applicable
jurisdiction.
NOTICE OF OFFER TO PURCHASE FOR CASH
<TABLE>
<S> <C>
UP TO 745 UNITS OF UP TO 1,772 UNITS OF
LIMITED PARTNERSHIP INTERESTS LIMITED PARTNERSHIP INTERESTS
IN IN
WNC CALIFORNIA HOUSING TAX CREDITS, LP WNC CALIFORNIA HOUSING TAX CREDITS II, LP
AT AT
$100 NET PER UNIT $310 NET PER UNIT
--------------- ---------------
UP TO 1,799 UNITS OF UP TO 700 UNITS OF
LIMITED PARTNERSHIP INTERESTS LIMITED PARTNERSHIP INTERESTS
IN IN
WNC CALIFORNIA HOUSING TAX CREDITS III, LP WNC HOUSING TAX CREDIT FUND II, LP
AT AT
$500 NET PER UNIT $200 NET PER UNIT
</TABLE>
---------------
UP TO 1,500 UNITS
LIMITED PARTNERSHIP INTERESTS
IN
WNC HOUSING TAX CREDIT FUND III, LP
AT
$600 NET PER UNIT
BY
EVEREST TAX CREDIT INVESTORS, LLC
Everest Tax Credit Investors, LLC, a California limited liability
company (the "Purchaser"), is offering to purchase up to: (i) 745 units of
limited partnership interest (" WNC Cal. Units") in WNC California Housing Tax
Credits, LP, a California limited partnership, at a net cash price of $100 per
WNC Cal. Unit; (ii) 1,772 units of limited partnership interest ("WNC Cal. II
Units") in WNC California Housing Tax Credits II, LP, a California limited
partnership, at a net cash price of $310 per WNC Cal. II Unit; (iii) 1,799 units
of limited partnership interest ("WNC Cal. III Units") in WNC California Housing
Tax Credits III, LP, a California limited partnership, at a net cash price of
$500 per WNC Cal. III Unit; (iv) 700 units of limited partnership interest ("WNC
Fund II Units") in WNC Housing Tax Credit Fund II, LP, a California limited
partnership, at a net cash price of $200 per WNC Fund II Unit; and (v) 1,500
units of limited partnership interest ("WNC Fund III Units") in WNC Housing Tax
Credit Fund III, LP, a California limited partnership, at a net cash price of
$600 per WNC Fund III Unit (each of the defined units a "Unit" and collectively
the "Units") (each of the limited partnerships a "Partnership" and collectively
the "Partnerships"), in each case, without interest, less the amount of the
Distributions (as defined in Purchaser's Offer to Purchase with respect to each
Partnership) per Unit, if any, made to the holders of Units ("Unit Holders") by
the Partnerships after April 14, 1998 and less any tax credits allocated to
selling Unit Holders after June 30, 1998, and less any transfer fees imposed by
the Partnerships for each transfer. Each Offer (as defined below) is upon the
terms set forth in Purchaser's Offer to Purchase with respect to each
Partnership, dated May 12, 1998 (the "Offer to Purchase") and in the related
Agreement of Transfer and Letter of Transmittal with respect to each Partnership
(the "Letter of Transmittal"), as each may be supplemented or amended from time
to time. Each Offer to Purchase and the related Letter of Transmittal constitute
the "Offer." Each Offer is not conditioned upon financing.
THE OFFER, WITHDRAWAL RIGHTS AND PRO-RATION PERIOD WILL EXPIRE AT 12:00
MIDNIGHT, NEW YORK CITY TIME ON MONDAY, JUNE 15, 1998 UNLESS THE OFFER
IS EXTENDED.
For purposes of each Offer, the Purchaser will be deemed to have
accepted for payment pursuant to the Offer, and thereby purchased, validly
tendered Units if, as and when the Purchaser gives oral or written notice to the
Partnerships of the Purchaser's acceptance of those Units for payment pursuant
to each Offer. Upon the terms and subject to the conditions of each Offer,
payment for Units accepted for payment pursuant to the Offer will be made and
transmitted directly to the Unit Holders whose Units have been accepted for
payment.
The Purchaser is making each Offer in order to acquire a substantial
equity interest in the Partnerships primarily for investment and does not
currently intend to change current management or the operation of the
Partnerships and does not have current plans for any extraordinary transaction
involving the Partnerships.
In all cases, payment for Units purchased pursuant to each Offer will be
made only after timely receipt by the Purchaser of: (i) a properly completed and
duly executed and acknowledged Letter of Transmittal, (ii) any other documents
required by the Letter of Transmittal, and (iii) written confirmation from the
respective Partnership of the transfer of the Units to the Purchaser. If more
than the Units being sought in each Offer are validly tendered and not withdrawn
on or prior to the Expiration Date, the Purchaser will, upon the terms and
subject to the conditions of the Offer, accept and pay for an aggregate of the
Units being sought in each Offer (or, if less, the maximum number of Units that
can be purchased without imposing limitations on future resales), pro rata, with
appropriate adjustments to avoid purchases of fractional Units and purchases
that would cause a Unit Holder who sells fewer than all of its Units to continue
to hold fewer than 5 Units. Under no circumstance will interest on the purchase
price for Units be paid, regardless of any extension of the Offer or delay in
making the payment to Unit Holders.
The term "Expiration Date" means 12:00 Midnight, New York City time, on
Monday, June 15, 1998 unless the Purchaser in its sole discretion extends the
period of time during which each Offer is open, in which event the term
"Expiration Date" will mean the latest time and date to which each Offer is
extended by the Purchaser. Subject to the applicable regulations of the
Securities and Exchange Commission, the Purchaser expressly reserves the right,
in its sole discretion, at any time, to extend the period of time during which
each Offer is open for any reason, including the occurrence of any of the events
specified in the Offer to Purchase. Any extension will be followed by a press
release or public announcement made no later than 9:00 a.m., New York City time,
on the next business day after the previously scheduled Expiration Date.
Tenders of Units made pursuant to each Offer are irrevocable, except
that Units tendered pursuant to each Offer may be withdrawn at any time on or
prior to the Expiration Date and, unless already accepted for payment by the
Purchaser pursuant to each Offer, may also be withdrawn at any time after July
13, 1998. For withdrawal to be effective, a written or facsimile transmission
notice of withdrawal must be timely received by the Purchaser at its address set
forth on the back cover of the Offer to Purchase. Any notice of withdrawal must
specify the name of the person(s) who tendered the Units to be withdrawn and
must be signed by the person(s) who signed the respective Letter of Transmittal
in the same manner as such Letter of Transmittal was signed. Any Units properly
withdrawn will be deemed not validly tendered for purposes of the Offer.
Withdrawn Units may be re-tendered, however, at any time prior to the Expiration
Date.
The information required to be disclosed by Rule 14d-6(e)(1)(vii) of the
General Rules and Regulations under the Securities and Exchange Act of 1934, as
amended (the "Act"), is contained in each Offer to Purchase and is incorporated
herein by reference.
A request is being made under Rule 14d-5 under the Act, for the use of
the list of the Unit Holders for the purpose of disseminating each Offer to the
respective Unit Holders. Upon compliance by each Partnership with the request,
the appropriate Offer to Purchase and the Letter of Transmittal and, if
required, other relevant materials will be mailed to registered owners of the
Units and will be furnished to brokers, banks and similar persons whose names,
or whose nominees, appear on the list of Unit Holders, or if applicable, who are
listed as participants in a clearing agency's security position listing for
subsequent transmittal to beneficial owners of Units.
Questions and requests for assistance may be directed to the Purchaser
at its address and telephone number set forth below. Copies of the Offer to
Purchase and the related Letter of Transmittal may be obtained from the
Purchaser, and will be furnished promptly at the Purchaser's expense. The
Purchaser will not pay any fees or commissions to any broker or dealer or any
other person for soliciting tenders of Units pursuant to the Offer.
Information About Each Offer is Available From:
EVEREST TAX CREDIT INVESTORS, LLC
199 S. LOS ROBLES AVE., SUITE 440
PASADENA, CALIFORNIA 91101
TELEPHONE: (800) 611-4613
FACSIMILE: (626) 585-5929
May 12, 1998
<PAGE> 1
EXHIBIT 11(c)
[EVEREST LETTERHEAD]
April 29, 1998
Global Capital Management, Inc.
601 Carlson Parkway, Suite 200
Minnetonka, Minnesota 55305
Attention: Thomas A. Schmidt
Gentlemen:
This letter agreement confirms our mutual agreement to be bound by the
terms of this letter agreement, including the terms and conditions set forth in
Exhibit A annexed hereto and made a part hereof. This agreement is intended to
be legally binding and enforceable upon execution and delivery hereof.
Each of the parties represents and warrants to the other that (1) it has
the right, power and authority to enter into this letter agreement and perform
its obligations hereunder, (2) upon the execution of this letter agreement by
each of the parties hereto, this letter agreement will constitute the legal,
valid and binding obligation of such party, enforceable against such party in
accordance with its terms, and (3) no consent or approval of any third party or
governmental agency or authority is required for such party to execute and
deliver this letter agreement or to perform its obligations hereunder.
Each of the parties hereto agrees that the terms of this letter
agreement are confidential and may not be disclosed by any party hereto, except
as may be required by law and except to the principals and authorized
representatives of the parties hereto without the written consent of all of the
parties. Except as may be required by law, any public announcement regarding
this letter agreement or the transactions contemplated herein may not be made by
any party without the prior consent of all other parties hereto. If public
announcement or disclosure is required by law, the disclosing party shall use
reasonable efforts to consult with the other party, and obtain the approval of
the other party of the announcement and disclosure to be made.
This letter agreement shall be governed by and interpreted in accordance
with the laws of the State of California, without regard to the conflicts of law
provisions thereof. Nothing herein shall be deemed to grant jurisdiction to the
State of California over any dispute concerning this letter agreement.
1
<PAGE> 2
This letter agreement may be executed in separate counterparts, each of
which shall be deemed an original but all of which together shall constitute one
and the same instrument.
This letter agreement supercedes any and all prior agreements, written
or oral, by or among any of the parties hereto with respect to the subject
matter hereof and may not be amended or otherwise modified except in writing
signed by all of the parties hereto.
This letter agreement shall be binding upon the parties hereto and their
respective successors and assigns.
Any party may execute this letter agreement by transmitting a copy of
its signature by facsimile to the other parties. In such event the signing party
shall deliver an original of the signature page to each of the other parties
within one business day of signing and failure to so deliver such originals
shall result in the facsimile copy of that party's signature being treated as an
original.
Very truly yours,
EVEREST TAX CREDIT INVESTORS, LLC
By: Everest Properties II, LLC
Manager
By: /s/ David I. Lesser
-------------------------------------------
David I. Lesser, Executive Vice President
EVEREST PROPERTIES II, LLC
By: /s/ David I. Lesser
-------------------------------------------
David I. Lesser, Executive Vice President
ACCEPTED AND AGREED TO AS
OF THE DATE FIRST ABOVE WRITTEN:
GLOBAL CAPITAL MANAGEMENT, INC.
By: /s/ Michael J. Frey
------------------------------
Name: Michael J. Frey
Title: Vice President
2
<PAGE> 3
VALLEY CREEK CAPITAL, LLC
By: Global Capital Management, Inc.
Manager
By: /s/Michael J. Frey
----------------------------------
Name: Michael J. Frey
Title: Vice President
3
<PAGE> 4
EXHIBIT A
OPTION TO PURCHASE SECURITIES
ADDITIONAL EVEREST TENDER OFFERS CONTEMPLATED
Attached hereto as Exhibit A-1 is a list of additional
partnerships (the "Additional Partnerships"), the securities of which
may be subject to tender offers by Everest (the "Additional Offers" or
the "Tender Offer"). The BACs and other securities tendered pursuant to
the Tender Offers are referred to herein as "Tendered Securities".
OPTION TO PURCHASE SECURITIES; PAYMENT OF SECURITIES AND EXPENSES
Subject to the terms and conditions set forth below, Everest
grants, or will cause to be granted, to Valley an option to purchase up
to 50% of the securities tendered in each Additional Offer.
Upon the expiration of a Tender Offer which is subject to any of
the foregoing options, the party making such offer (hereinafter the
bidding party) shall provide written notice to the holder of the
forgoing options (hereinafter an option holder) of the amount of
Tendered Securities accepted by such bidding party pursuant to such
Tender Offer. Within five business days following the bidding party's
notice to the option holder, the option holder shall notify the bidding
party in writing whether or not it elects to exercise its option and to
what extent. If the option holder fails to notify the bidding party of
the exercise of its option within such five business day period, the
option holder shall be deemed not to have exercised its option. If such
option is exercised, the option holder shall pay the bidding party, by
wire transfer, on the later of (a) three business days after the option
holder delivers written notice of its election to exercise, (b) one
business day after the bidding party has given notice to the option
holder that the bidding party will pay tendering security holders in
accordance with the terms of the Tender Offer (such notice to be given
by the bidding party to the option holder not more than one business day
prior to the date of such payment), (c) the date that the bidding party
makes such payment and (d) two business days after the date the bidding
party provides the option holder with written confirmation of the
transfer of the number of Tendered Securities with respect to which the
option holder exercised its option (the "Option Securities") an amount
equal to (i) the option securities multiplied by the price per Tendered
Security paid by the bidding party in the applicable Tender Offer plus
(ii) the option holder's share of the "Total Expenses" (as defined
below) for such applicable Tender Offer (see "ALLOCATION OF EXPENSES"
below). The bidding party will deliver (or will cause to be delivered),
concurrently with the receipt of such payment from the option holder by
the bidding party, a confirmation from the subject partnership setting
forth the number of Option Securities that will be transferred to the
option holder.
ALLOCATION OF EXPENSES
A-1
<PAGE> 5
At the time of purchase of any Option Securities, the option
holder shall pay to the bidding party a portion of Total Expenses
related to such Tender Offer equal to the lesser of (a) $25,000 and (b)
Total Expenses multiplied by a fraction, the numerator of which is the
number of Tendered Securities purchased by the option holder and the
denominator of which is the total number of Tendered Securities
purchased pursuant to the Tender Offer. "Total Expenses" with respect to
each Tender Offer means all third-party out-of-pocket costs and expenses
incurred by the bidding party, or its affiliates (including attorneys
fees and expenses in connection with the preparation and filing of any
Tender Offer documents, but excluding litigation expenses) with respect
to each Tender Offer, including, without duplication, Commission filing
fees, the out-of-pocket expenses of any person for acting as the
information agent/depositary for the Tender Offer, printing and mailing
expenses, and the out-of-pocket expenses of the general partners of
target partnerships which are paid for by the bidding party. Total
Expenses shall not include the costs of purchasing the Tendered
Securities or any non-third-party costs, including the overhead of the
bidding party. Each party will provide, upon the execution and delivery
hereof, an estimate of its costs and expenses incurred to date in
connection with any Tender Offers and shall provide, upon request,
invoices or other appropriate evidence of the incurrence of costs and
expenses constituting Total Expenses hereunder. Liabilities, costs,
obligations and damages incurred by any party in connection with any
litigation or threatened litigation relating to, or arising from, the
Tender Offers ("Tender Offer Litigation") shall be borne by the bidding
party and not the option holder. The bidding party agrees to indemnify
and defend the option holder and its affiliates, officers, directors,
members, employees and agents from and against all liabilities, costs,
obligations and damages in connection with Tender Offer Litigation
except to the extent that the foregoing arise out of any misstatements
or intentional acts of the option holder.
STANDSTILL AGREEMENT
Everest covenants and agrees that neither it nor any person who
is its "Affiliate" (as defined under Rule 405 of the Securities Act of
1933, as amended) will, directly or indirectly, make any offer or take
any act which is competitive with Valley and Global Capital Management,
Inc. ("Global") covenant and agree that neither they nor any person who
is their Affiliate will, directly or indirectly, make any offer or take
any act which is competitive with the Everest Offers or the Additional
Offers. The parties hereto acknowledge and agree that nothing in this
agreement shall cause them to form, become, join or otherwise
participate in a "group" (within the meaning of Section 13(d)(3) of the
Securities Exchange Act of 1934, as amended) with respect to any voting
securities of any partnership which is the target of a Tender Offer (the
"Covered Partnerships"). The foregoing restrictions shall continue in
full force and effect from the date hereof until the expiration of the
Tender Offers which are the subject matter hereof.
CONDUCT OF TENDER OFFER(S)
All decisions relating to the conduct of the Tender Offers and
the acquisition and transfer of Tendered Securities pursuant thereto,
including without limitation any change
A-2
<PAGE> 6
in the terms or waiver of any of the conditions thereof, shall be made
solely by the bidding party. Notwithstanding the foregoing, if requested
by the option holder, the bidding party agrees to consult with the
bidding party prior to commencing a Tender Offer with regard to the
purchase price offered therein and prior to increasing the offered price
in any Tender Offer commenced prior to or after the date hereof.
COOPERATION
The parties shall cooperate and provide each other with such
information as may be necessary or desirable to disclose the
transaction(s) contemplated hereby in accordance with applicable
securities laws and the rules and regulations promulgated thereunder.
Additionally, the bidding party agrees to furnish to the option holder,
promptly upon request, a report of securities tendered in any pending
Tender Offer.
NO OTHER CONTRACTS
Except as expressly set forth herein, there are no contracts,
arrangements, understandings or relationships between Everest, on the
one hand, and Valley or Global, on the other hand, with respect to the
BACs or the securities of any Covered Partnerships.
FURTHER ASSURANCES
Each of the parties agrees that it shall take, and will cause its
affiliates to take, whatever action or actions as are deemed by counsel
to any party hereto to be reasonably necessary, advisable or convenient
from time to time to effectuate the provisions or intent of this
agreement, and to that end, each party agrees that it will execute,
acknowledge and deliver any further instruments or documents as give
force and effect to this letter agreement or any of the provisions
hereof, or to carry out the intent of this letter agreement or any of
the provisions hereof. Global hereby guarantees full performance of this
agreement by Valley, and its Affiliates. Everest Properties II, LLC
hereby guarantees full performance of this agreement by Everest Tax
Credit Investors, LLC and its Affiliates.
REMEDIES
It is understood and agreed that monetary damages would be any
inadequate remedy for violation of this agreement, and in the case of an
actual breach by a party of the provisions hereof, any one or more of
the other parties shall be entitled to relief by way of injunction,
specific performance or other equitable relief. The prevailing party in
any dispute arising out of this letter agreement shall, in addition to
any monetary damages or equitable relief, be entitled to recover from
the other party, the prevailing party's attorney's fees and expenses
(including the time of personnel employed by Global or Everest) incurred
in connection with such dispute.
A-3
<PAGE> 7
NOTICES
Any notice or other communication required or permitted hereunder
shall be in writing and shall be delivered personally, sent by facsimile
transmission or sent by reputable overnight courier, postage or other
charges prepaid. Any such notice shall be deemed given when so delivered
personally, or by facsimile transmission when confirmed electronically
or, if sent by overnight courier, one day after delivery to the courier,
as follows:
If to Valley or Global, to:
Global Capital Management, Inc.
601 Carlson Parkway
Suite 200
Minnetonka, Minnesota 55305
Attention: Thomas A. Schmidt
Telephone: (612) 476-7200
Telecopier: (612) 476-7201
If to Everest, to:
Everest Properties
199 S. Los Robles
Suite 440
Pasadena, California 91101
Attention: W. Robert Kohorst or David I. Lesser
Telephone: (626) 585-5920
Telecopier: (626) 585-5929
Any party may designate another address or person for receipt of
notices hereunder by notice given in accordance with this section to the
other party.
A-4
<PAGE> 8
EXHIBIT A-1
ADDITIONAL PARTNERSHIPS
WNC California Housing Tax Credit Fund, LP
WNC California Housing Tax Credit Fund II, LP
WNC California Housing Tax Credit Fund III, LP
WNC Housing Tax Credit Fund II, LP
WNC Housing Tax Credit Fund III, LP
A-5
