-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, TIM4ymW3gI5Ht9KOofg36kY/98S1lqlnVLmXcM4lqdTQR3C+SuMX5iZTtnzPEHcx JJ2TC5cmJ0oQ/Op7JLDYvg== 0001072761-03-000029.txt : 20030417 0001072761-03-000029.hdr.sgml : 20030417 20030417141716 ACCESSION NUMBER: 0001072761-03-000029 CONFORMED SUBMISSION TYPE: SC TO-T PUBLIC DOCUMENT COUNT: 5 FILED AS OF DATE: 20030417 GROUP MEMBERS: EVEREST PROPERTIES II, LLC GROUP MEMBERS: MILLENIUM MANAGEMENT, LLC SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: INCOME GROWTH PARTNERS LTD X CENTRAL INDEX KEY: 0000830051 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE [6500] IRS NUMBER: 330294177 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC TO-T SEC ACT: 1934 Act SEC FILE NUMBER: 005-55927 FILM NUMBER: 03654029 BUSINESS ADDRESS: STREET 1: 11300 SORRENTO VALLEY RD STE 108 CITY: SAN DIEGO STATE: CA ZIP: 92121 BUSINESS PHONE: 8584572750 MAIL ADDRESS: STREET 1: 11300 SORRENTO VALLEY ROAD STREET 2: SUITE 108 CITY: SAN DIEGO STATE: CA ZIP: 92121 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: MILLENIUM MANAGEMENT LLC CENTRAL INDEX KEY: 0001072761 FILING VALUES: FORM TYPE: SC TO-T BUSINESS ADDRESS: STREET 1: 155 N. LAKE AVENUE SUITE 1000 CITY: PASADENA STATE: CA ZIP: 91101 BUSINESS PHONE: 6265855920 MAIL ADDRESS: STREET 1: 155 N. LAKE AVENUE SUITE 1000 CITY: PASADENA STATE: CA ZIP: 91101 FORMER COMPANY: FORMER CONFORMED NAME: MILLENIUM INVESTORS 2 LLC DATE OF NAME CHANGE: 19981028 SC TO-T 1 incomegpx_sctot041703.txt TENDER OFFER STATMENT BY THIRD PARTY SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 -------------- SCHEDULE TO TENDER OFFER STATEMENT UNDER SECTION 14(d)(1) OR 13(e)(1) OF THE SECURITIES EXCHANGE ACT OF 1934 Income Growth Partners, Ltd. X - -------------------------------------------------------------------------------- (Name of Subject Company [Issuer]) Millenium Management, LLC (offeror) Everest Properties II, LLC (other person) - -------------------------------------------------------------------------------- (Filing Persons) Original Units of Limited Partnership Interest - -------------------------------------------------------------------------------- (Title of Class of Securities) None - -------------------------------------------------------------------------------- (CUSIP Number of Class of Securities) Christopher K. Davis Everest Properties II, LLC 155 N. Lake Ave., Suite 1000 Pasadena, CA 91101 Telephone (626) 585-5920 - -------------------------------------------------------------------------------- (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications on Behalf of Filing Persons) CALCULATION OF FILING FEE - -------------------------------------------------------------------------------- Transaction Valuation: $1,598,000(1) Amount of Filing Fee: $319.60 - -------------------------------------------------------------------------------- (1) Calculated as the product of the number of Original Units on which the Offer is made and the gross cash price per Original 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 [ ] Check box if the filing relates solely to preliminary communications made before the commencement of a tender offer. Check the appropriate boxes below to designate any transactions to which the statement relates: [X] third-party tender offer subject to Rule 14d-1. [ ] issuer tender offer subject to Rule 13e-4. [ ] going-private transaction subject to Rule 13e-3. [ ] amendment to Schedule 13D under Rule 13d-2. Check the following box if the filing is a final amendment reporting the results of the tender offer: [ ] This Tender Offer Statement on Schedule TO (this "Statement") relates to an offer by Millenium Management, LLC ("Millenium" or the "Purchaser"), a California limited liability company, to purchase up to 1,880 original units ("Original Units") of limited partnership interests in Income Growth Partners, Ltd. X (the "Partnership") at a cash purchase price of $850 per Original Unit, without interest, less the amount of Distributions (as defined in the Offer to Purchase (as defined herein)) per unit, if any, made to unit holders by the Partnership after the date of the Offer, and less any Partnership transfer fees, which the Partnership advises Purchaser are $40 per transfer (regardless of the number of units transferred), upon the terms and subject to the conditions set forth in the Offer to Purchase, dated April 17, 2003, 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 12.1 and 12.2 hereto, respectively. Capitalized terms used but not defined herein have the meaning ascribed to them in the Offer to Purchase. ITEM 1. SUMMARY TERM SHEET. Reference is hereby made to the information set forth in the cover page, "Introduction" and "Summary of the Offer" of the Offer to Purchase, which is incorporated herein by reference. ITEM 2. SUBJECT COMPANY INFORMATION. (a) The name of the subject company is Income Growth Partners, Ltd. X, a California limited partnership (the "Partnership"). The address of the Partnership's principal executive offices is 11230 Sorrento Valley Road, Suite 220, San Diego, California 92121. The telephone number of the Partnership is (858) 457-2750.] (b) The class of equity securities to which this Statement relates is Original Units of Limited Partnership Interests in the Partnership. Reference is hereby made to the information set forth in "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 "Summary of the Offer" and "Certain Information Concerning the Partnership - Trading History of the Units" of the Offer to Purchase, which is incorporated herein by reference. ITEM 3. IDENTITY AND BACKGROUND OF FILING PERSON. Reference is hereby made to the information set forth in the "Certain Information Concerning the Purchaser" and Schedule I concerning the directors and executive officers ("Directors and Executive Officers") of Everest Properties II, LLC ("EPII") of the Offer to Purchase, which is incorporated herein by reference. During the last five years, none of the Purchaser, EPII or, to the knowledge of each of the Purchaser and EPII, any of the Directors and Executive Officers, has been (i) convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or (ii) 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. ITEM 4. TERMS OF THE TRANSACTION. Reference is hereby made to the information set forth in the "Summary of the Offer," "Details of the Offer," "Effects of the Offer" and "Certain Federal Income Tax Matters" of the Offer to Purchase, which is incorporated herein by reference. The Purchaser does not currently plan to provide a subsequent offering period, as described by Rule 14d-11 of Regulation 14D under the Securities Exchange Act of 1934, as amended. ITEM 5. PAST CONTACTS, TRANSACTIONS, NEGOTIATIONS AND AGREEMENTS. (a) None. (b) Reference is hereby made to the information set forth in "Summary of the Offer" and "Certain Information Concerning the Purchaser - Prior Acquisitions of Units and Prior Contacts" of the Offer to Purchase, which is incorporated herein by reference. ITEM 6. PURPOSE OF THE TRANSACTION AND PLANS OR PROPOSALS. (a), (c)(1) - (c)(7) Reference is hereby made to the information set forth in "Summary 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 Original Units as is listed in paragraphs (c)(1) through (c)(7) of Item 1006 of Regulation M-A. ITEM 7. 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), (d) Not applicable. ITEM 8. INTEREST IN SECURITIES OF THE SUBJECT COMPANY. Reference is hereby made to the information set forth in "Certain Information Concerning the Purchaser - Prior Acquisitions of Units and Prior Contacts" and " - General" of the Offer to Purchase, which is incorporated herein by reference. ITEM 9. PERSONS/ASSETS RETAINED, EMPLOYED, COMPENSATED OR USED. 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 10. FINANCIAL STATEMENTS. Certain selected information regarding the Partnership is set forth in Appendix A - Part II of the Offer to Purchaser and is incorporated herein by reference. Certain information regarding Purchaser's method of financing the Offer and the Purchaser's financial condition is set forth in "Certain Information Concerning the Purchaser - Source of Funds" and Appendix B of the Offer to Purchaser and is incorporated herein by reference. Audited financial statements of the Purchaser are not available because the Purchaser does not have them prepared in the ordinary course of business. The incorporation by reference in this Item of the above-referenced information does not constitute an admission that such information is material to a decision by a holder of the Original Units as to whether to sell, tender or hold Original Units. ITEM 11. ADDITIONAL INFORMATION. (a) None. (b) Reference is hereby made to the entire text of the Offer to Purchase and the related Agreement of Transfer and Letter of Transmittal, which are incorporated herein by reference. ITEM 12. EXHIBITS. 12.1 Offer to Purchase, dated April 17, 2003. 12.2 Agreement of Transfer and Letter of Transmittal, with Instructions. 12.3 Letter to Unit Holders dated April 17, 2003. 12.4 Limited Appraisal-Restricted Appraisal Report of The Samppala Group dated May 8, 2002. 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: April 17, 2003 MILLENIUM MANAGEMENT, 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 EX-99 3 incomegpx_sctot0417offer.txt OFFER TO PURCHASE 4/17/03 OFFER TO PURCHASE FOR CASH 1,880 Original Units of Limited Partnership Interests in Income Growth Partners, Ltd. X by MILLENIUM MANAGEMENT, LLC at a Cash Purchase Price of $850 per Original Unit THE OFFER, WITHDRAWAL RIGHTS AND PRORATION PERIOD WILL EXPIRE AT 5:00 P.M., LOS ANGELES TIME, ON MONDAY, MAY 19, 2003, UNLESS THE OFFER IS EXTENDED. Millenium Management, LLC ("Millenium" or the "Purchaser"), a California limited liability company, is offering to purchase up to 1,880 Original Units of Income Growth Partners, Ltd. X (the "Partnership"), at a cash purchase price of $850 per Original Unit, without interest, less the amount of the Distributions (as defined below) per Unit, if any, made to the Unit Holders by the Partnership after the date of this Offer, and less any transfer fees imposed by the Partnership for each transfer, which the Partnership advises us are $40 per transfer (regardless of the number of units transferred). The Offer (as defined below) is subject to certain terms and conditions set forth in this Offer to Purchase, as it may be supplemented from time to time (the "Offer to Purchase") and in 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"). This Offer is not subject to brokerage commissions and is not conditioned upon financing. The enclosed Letter of Transmittal may be used to tender Units for the Offer. Please read all Offer materials completely before completing and returning the Letter of Transmittal (blue form). ------------------ For More Information or for Further Assistance, Please Call or Contact the Purchaser at: Everest Properties II, LLC (Manager) 155 North Lake Avenue Suite 1000 Pasadena, California 91101 (626) 585-5920 (800) 611-4613 (toll free) April 17, 2003 TABLE OF CONTENTS Page INTRODUCTION.................................................................1 SUMMARY 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...............3 3. Procedure to Accept the Offer......................................4 4. Determination of Validity; Rejection of Units; Waiver of Defects; No Obligation to Give Notice of Defects.........4 5. Withdrawal Rights..................................................5 6. Extension of Tender Period; Termination; Amendment.................5 7. Conditions of the Offer............................................6 8. Backup Federal Income Tax Withholding..............................7 9. FIRPTA Withholding.................................................7 CERTAIN INFORMATION CONCERNING THE PARTNERSHIP...............................7 General.................................................................8 Outstanding Units.......................................................8 Trading History of the Units............................................8 Selected Financial and Property Related Data............................8 DETERMINATION OF OFFER PRICE.................................................9 CERTAIN INFORMATION CONCERNING THE PURCHASER.................................9 The Purchaser...........................................................9 General.................................................................9 Prior Acquisitions of Units and Prior Contacts.........................10 Source of Funds........................................................11 FUTURE PLANS OF THE PURCHASER...............................................11 EFFECTS OF THE OFFER........................................................11 Future Benefits of Unit Ownership......................................11 Limitations on Resales.................................................11 Influence on Voting Decisions by the Purchaser.........................12 CERTAIN FEDERAL INCOME TAX MATTERS..........................................12 CERTAIN LEGAL MATTERS.......................................................14 General................................................................14 State Takeover Statutes................................................14 Fees and Expenses......................................................14 Miscellaneous..........................................................14 INTRODUCTION The Purchaser hereby offers to purchase up to 1,880 Original Units of limited partnership interests in the Partnership at a cash purchase price of $850 per Original Unit, without interest, less the amount of Distributions (defined below) per Unit, if any, made to Unit Holders by the Partnership after the date of this Offer, and less any transfer fees imposed by the Partnership for each transfer, which the Partnership advises us are $40 per transfer (regardless of the number of units transferred). SUMMARY OF THE OFFER. The purpose of the Offer is for the Purchaser to acquire a substantial equity interest in the Partnership for investment purposes. In considering the Offer, Unit Holders are urged to consider the following: o The price offered for the Original Units is $850 in CASH, less any Distributions made after the date of this Offer and any transfer fees ($40/transfer) imposed by the Partnership. See "Details of the Offer - Acceptance for Payment and Payment of Purchase Price." o $850 per Original Unit equals the amount of net proceeds the Purchaser estimates would be distributed if the Partnership's properties were sold for the value estimated in the appraisal obtained by the General Partner, dated May 8, 2002, after deducting Purchaser's estimate of loan defeasance fees, deferred maintenance, commissions, selling costs and preferential distributions to the Class A Units. See "Determination of Offer Price." o The Offer price exceeds by $199 per Unit (30%) the highest prior offer for Original Units of which Purchaser is aware, made November 12, 2002, based on the offers that Purchaser has received as an existing limited partner in the Partnership and a review of public SEC filings. o The Offer price exceeds by at least $463 per Unit (120%) the average price per unit for trades of Partnership interests over the last 12 months, as reported by Partnership Spectrum, an independent industry publication. See "Certain Information Concerning the Partnership - Trading History of the Units." o No distributions can be made on the Original Units until approximately $4.1 Million ($510 per unit) more is distributed on the Class A Units, which would take 4 to 5 years at the rate of distributions made on the Class A Units over the last two years. No distributions have ever been made on the Original Units. See "Appendix A - Dividends." o In March 2003, the Partnership's general partner advised the Purchaser that the Partnership was going to list its properties for sale; however, the Purchaser has no knowledge of whether or not the properties have actually been listed or what efforts are being made, if any, to sell the properties. See "Certain Information Concerning the Purchaser - Prior Acquisitions of Units and Prior Contacts." o The Purchaser is not affiliated with the Partnership or its sole general partner, Income Growth Management, Inc. ("General Partner"). The General Partner may be expected to communicate its position on the Offer in the next two weeks. o The Offer allows Unit Holders to dispose of their Original Units without incurring the sales commissions (typically up to 8% with a minimum of $150-$200) associated with sales arranged through brokers or other intermediaries. See "Certain Information Concerning the Partnership - Trading History of the Units." 1 o The Purchaser is making the Offer with a view to making a profit for itself. Accordingly, the desire of the Purchaser to purchase Original Units at a low price conflicts with the desire of the Unit Holders to sell their Original Units at a high price. o The Offer is an immediate opportunity for Unit Holders to liquidate their investment in the Partnership, subject to proration, but Unit Holders who tender their Original Units will be giving up the opportunity to participate in any potential future benefits from ownership of Original Units, including distributions resulting from any future sale of the Partnership's properties. Unit Holders may have a more immediate need to use the cash now tied up in the Units, and may consider the Offer more certain to achieve a prompt liquidation of their investment in the Units. Unit Holders who sell all of their Units will also eliminate the need to file Form K-1 information for the Partnership with their federal tax returns for years after 2003. See "Details of the Offer - Acceptance for Payment and Payment of Purchase Price." o If the Purchaser acquires all of the Units sought in this Offer, the Purchaser and its affiliates will hold 15% of the limited partner voting rights (combined Original and Class A Units) and may be in a position to significantly influence Partnership decisions on which Unit Holders may vote. The Purchaser and its affiliates will vote in their own interest, which may differ from the interests of the remaining Unit Holders. However, the Purchaser is not aware of any matters to be submitted to a vote of the limited partners. See "Effects of the Offer." o The Purchaser may accept only a portion of the Units tendered by a Unit Holder if more than 1,880 Units are tendered. See "Details of the Offer - Terms of the Offer; Expiration Date; Proration" and "- Acceptance for Payment and Payment of Purchase Price." Each Unit Holder must make his own decision, based on the Unit Holder's particular circumstances, whether to tender Units. Unit Holders should consult with their respective advisors about the financial, tax, legal and other implications of accepting the Offer. The above statements are intended only as a brief overview of the principal terms and considerations regarding the Offer. The entire Offer to Purchase, which follows, provides substantially greater detail about the Offer, and all of the statements above are qualified by the entire Offer to Purchase. You should read it completely and carefully before deciding whether or not to tender your Units. The Offer is subject to certain terms and conditions set forth in this Offer to Purchase, and in the related Agreement of Transfer and Letter of Transmittal, that are not summarized above. 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 1,880 validly tendered, and not withdrawn, Original Units in accordance with the procedures set forth in this Offer to Purchase ("Properly Tendered"). For purposes of the Offer, the term "Expiration Date" means 5:00 p.m., Los Angeles time, on Monday, May 19, 2003, unless the Purchaser 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 price offered to the Unit Holders pursuant to the Offer, the increased 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. 2 If more than 1,880 Original Units are Properly Tendered (or if the number of Original Units that are Properly Tendered exceeds applicable 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 1,880 Original Units (or, if less, the maximum number of such Units that can be transferred without exceeding applicable 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. If the number of Units that are Properly Tendered is less than or equal to 1,800 Original Units (or, if less, the maximum number of such Units which can be transferred without exceeding applicable limitations on resales), the Purchaser will purchase all Units that are Properly Tendered, upon the terms and subject to the conditions of the Offer. See "Effects of the Offer - Limitations on Resales." 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 prior to the Expiration Date any or all of the conditions of the Offer have not been satisfied, or waived by the Purchaser, 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 1,880 Properly Tendered Original Units, promptly 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 Letter of Transmittal, (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. Any Distributions made or declared on or after the date of this Offer would, by the terms of the Offer and as set forth in the Letter of Transmittal, be assigned by tendering Unit Holders to the Purchaser and deducted from your proceeds. Also, the transfer fees charged by the Partnership will be deducted from your proceeds, which the Partnership advises us is $40 per transfer (regardless of the number of Units transferred). 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 Purchaser may destroy the original Letter of Transmittal with respect to the Units. 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 herein, 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 herein, 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 3. Procedure to Accept the Offer. For the tender of any Units to be valid, 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. 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 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 made by the Partnership, effective upon 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, which determination will be final and binding. The Purchaser reserves the 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 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. 4 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 June 16, 2003. 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 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 herein 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, 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 at any time: o 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; o upon the occurrence of any of the conditions specified in Section 7 herein, to terminate the Offer and not accept for payment any Units not already accepted for payment, or to delay the acceptance for payment of, or payment for, any Units not already accepted for payment or paid for; and o to amend the Offer in any respect (including, without limitation, by increasing or decreasing the price, increasing or decreasing the number of Units being sought, or both). 5 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, subject to any applicable rules and regulations of the Commission, including Rule 14e-1(c) under the Exchange Act (relating to a bidder's obligation to pay for or return tendered securities promptly after the termination or withdrawal of such bidder's offer), 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, the Purchaser will not be required to accept for payment or, subject to the aforesaid, pay for any Units, may delay the acceptance for payment of the Units tendered, or may withdraw the Offer if, at any time on or after the date of the Offer and on or before the Expiration Date, any of the following conditions exists: (a) a preliminary or permanent injunction or other order of any federal or state court, government or governmental 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) might materially adversely affect the business, properties, assets, liabilities, financial condition, operations, results of operations or prospects of the Purchaser, or the Partnership; or (v) seeks to impose any material condition to the Offer unacceptable to the Purchaser; (b) there shall be any action taken, or any statute, rule, regulation or order proposed, enacted, enforced, promulgated, issued or deemed applicable to the Offer by any federal or state court, government or governmental authority or agency which might, directly or indirectly, result in any of the consequences referred to in paragraph (a) above; (c) any change or development shall have occurred or been threatened or disclosed in the business, properties, assets, liabilities, financial condition, operations, results of operations or prospects of the Partnership, which is or may be materially adverse to the Partnership or its business or properties, 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 Partnership's properties; (d) the General Partner (as defined herein) 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; 6 (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 judgment of the Purchaser, adversely affecting the Purchaser, the Partnership or its properties or the value of the Units; (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 Partner 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 Partner shall have modified, or taken any step or steps to modify, in any way, the procedures or regulations applicable to the registration of Units or transfers of Units on the books and records of the Partnership or the admission of transferees of Units as registered owners and as 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 on or prior to the Expiration Date. Any determination by the Purchaser, in its reasonable judgment, 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% 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 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. 7 General. Attached as Part I of Appendix A to this Offer to Purchase are excerpts from the last Annual Report on Form 10-K filed by the Partnership with the Commission (the "Form 10-K"), which excerpts describe the business and operations of the Partnership. Outstanding Units. According to the Form 10-K, there were 18,826.5 Original Units and 8,100 Class A Units (not included in this Offer) issued and outstanding, held by approximately 1,984 Unit Holders, as of December 31, 2002. Trading History of the Units. There is no established trading market for the Units other than limited and sporadic trading through matching services or privately negotiated sales. 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, between February 1, 2002 and January 31, 2003 (the most recent published information): 132.5 of the Partnership's limited partnership interests traded at prices ranging from $600 to $310 per unit; with a weighted average price per unit for such trades of $386.92. The most recent trades reported for December 2002 - January 2003 were at $330 per unit. Partnership Spectrum does not state, and Purchaser does not know, whether such transfers were of Class A Units or Original Units. 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 (typically up to 8% with a minimum of $150-$200) and other secondary market transaction costs. The Purchaser does not know whether the information provided by the Partnership Spectrum is accurate or complete. Selected Financial and Property Related Data. Attached as Part II of Appendix A is a summary of certain financial and statistical information with respect to the Partnership and its properties, all of which has been taken from the Form 10-K. More comprehensive financial and other information is included in such reports and other documents filed by the Partnership with the Commission. Part II of Appendix A is qualified in its entirety by reference to such publicly filed reports and documents, including, without limitation, all the financial information and related notes contained therein. Unit Holders should also refer to any Quarterly Reports on Form 10-Q or Current Reports on Form 8-K filed with the Commission after the Form 10-K or after the date of this Offer for more recent information relating to the business and operations of the Partnership. The General Partner has provided the Purchaser with a copy of an appraisal of the Partnership's properties dated May 8, 2002. The appraisal is a "Limited Appraisal-Restricted Appraisal Report" by The Samppala Group and is made subject to numerous limiting conditions and assumptions, including without limitation: it relies primarily on the income capitalization approach to valuation of the properties; it relies on the appraisers past experience and familiarity with the appraised properties, obtained through prior reviews of such properties; it assumes that residential apartment units are the highest and best use of the properties; it does not consider the potential of converting the properties to for-sale units; and it assumes the recipient of the appraisal is knowledgeable in real estate matters and property values and that a restricted appraisal is appropriate for such recipient. Subject to the limiting conditions and assumptions therein, the appraisal estimates that the fair market values of the Partnership's properties are $23,800,000 and $19,000,000, for Mission Park and Shadowridge Meadows, respectively, as of the valuation date. The Purchaser has not received any representations or assurances from the General Partner, The Samppala Group or any other party regarding such appraisal or the continuing accuracy thereof; and has not independently investigated the accuracy of such appraisal. The Purchaser disclaims responsibility for the contents of the appraisal except to the extent prohibited by law. The appraisal is attached as Exhibit 12.4 to the Schedule TO, which schedule, amendments and 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." The Samppala Group has not consented to the filing of the appraisal as an exhibit. Please also see the back cover of the Offer to Purchase for information on how to obtain additional tender offer materials. 8 DETERMINATION OF OFFER PRICE In establishing the Offer price, the Purchaser reviewed certain publicly available information including among other things: (i) the Partnership's limited partnership agreement (the "Partnership Agreement"), (ii) Annual Reports on Form 10-K, (iii) Quarterly Reports on Form 10-Q, and (iv) other reports filed with the Commission. The Purchaser also obtained from the General Partner a copy of the most recent limited appraisal of the Partnership's properties dated May 8, 2002, the operating statements for each property, and certain mortgage loan documents; and had representatives visit the properties. The Purchaser determined the Offer price pursuant to its independent evaluation of the Partnership and its properties. The Purchaser did not obtain current independent valuations or appraisals of the assets. Purchaser developed an estimated current liquidation value for the Partnership's Original Units using its proprietary valuation methods, based on estimated fair market values in the most recent appraisal of the properties obtained by the General Partner, the Partnership Agreement provisions regarding the allocation of distributions, historical distributions made to Unit Holders, the assets, liabilities and operating results of the Partnership, the mortgage loans, assumed expenses of selling the properties and liquidating the Partnership, and other considerations. The Purchaser made its own estimate of the loan defeasance fees ($2.1 Million), deferred maintenance reserves ($265,000), commissions and selling costs ($1.3 Million), and then reviewed the Partnership Agreement to determine how net liquidation proceeds from a current sale of the Partnership's properties would be distributed between the preferred distributions to the Class A Units and the residual distributions to the Original Units. Based on the information described above, the Purchaser estimates the net proceeds to Unit Holders from a current liquidation of the Partnership would be $850 per Original Unit. No assurances can be provided that the Purchaser's estimates are correct, and the actual amount of net proceeds that would be received from a current liquidation of the Partnership's assets may differ substantially from the Purchaser's estimate. CERTAIN INFORMATION CONCERNING THE PURCHASER The Purchaser. The Purchaser is a California limited liability company that was formed on October 23, 1998. The principal office of the Purchaser is 155 North Lake Avenue, Suite 1000, Pasadena, CA 91101. The Manager of the Purchaser is Everest Properties II, LLC ("EPII") and it is the person that manages the Purchaser's affairs. For certain information concerning the directors and executive officers of EPII, see Schedule I to this Offer to Purchase. The Purchaser and EPII and their affiliates invest in limited partnerships such as the Partnership, and in other forms of real estate oriented investments, and conduct activities incident thereto. For certain selected unaudited financial information available with respect to the Purchaser, see Appendix B to this Offer to Purchase. The inclusion of this information is for informational purposes only and is not intended to imply that such information is material to a decision whether to sell, tender or hold the Units. General. Except as set forth above or elsewhere in this Offer to Purchase: (i) the Purchaser does not beneficially own or have a right to acquire, and, to 9 the best knowledge of the Purchaser, no associate or majority-owned subsidiary of Purchaser 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) the Purchaser has not, and to the best knowledge of the Purchaser, 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 to Purchase; (iii) the Purchaser does not have and, to the best knowledge of the Purchaser, 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, 2000, 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 the Purchaser or any of its subsidiaries or, to the best knowledge of the Purchaser, any of its executive officers, directors or affiliates; and (v) since December 31, 2000 except as otherwise stated in this Offer to Purchase, there have been no contacts, negotiations or transactions between the Purchaser, or any of its subsidiaries or, to the best knowledge of the Purchaser, 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. Prior Acquisitions of Units and Prior Contacts. The Purchaser does not own units of the Partnership. An affiliate, Everest Investors 10, LLC owns 1,730 Original Units (9.2%) and 136 Class A Units (1.7%). Of such units, 1,073 Original Units were acquired pursuant to a tender offer commenced on November 12, 2002, and 69 Original Units and 7 Class A units were acquired in private purchasers within the last six months. An affiliate of the Purchaser, Everest Properties, Inc., owns 205 Original Units (1.1%), which were acquired pursuant to an offer made on November 26, 2001. An affiliate of the Purchaser, Everest Properties II, LLC, has entered into agreements to purchase 120 Class A units (1.5%) pursuant to an offer made on March 13, 2003. In October 2002, representatives of the Purchaser and the General Partner met and discussed the General Partner's plans for the Partnership. The Purchaser advised the General Partner that Purchaser was interested in increasing its investment in the Partnership. The General Partner stated that it was considering converting the properties to condominiums and selling the individual units over the next several years, but that only very preliminary consideration has been given to such option, no decisions have been made, and that nothing is likely to occur in that regard in the near term. In March 2003, a representative of the General Partner informed representatives of the Purchaser that the Partnership was going to list its properties for sale. The General Partner stated that it was still considering converting one of the properties to condominiums and was going to study that option further before listing that property for sale. The Purchaser advised the General Partner that Purchaser or one of its affiliates would probably be interested in bidding for the properties if they were listed for sale. Neither the Purchaser nor any affiliate has received any further information regarding the status of the efforts, if any, made to list or sell any of the Partnership's properties. 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. Source of Funds. Based on the Offer price of $850 per Original Unit, the Purchaser estimates that the total amount of funds necessary to purchase all 10 Units sought by this Offer and to pay related fees and expenses, will be approximately $1,620,000. 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 borrowings. Such members have agreed and are obligated to make such capital contributions available to the Purchaser on demand. 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, for investment purposes. 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. 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. However, the Purchaser has no present intention of making additional tender offers for the Units. 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. The Purchaser or one of its affiliates would probably be interested in bidding for the properties if they were listed for sale; however, neither the Purchaser nor any affiliate has received any further information regarding whether or not any effort is actually being made to sell the properties. Other than as set forth above, the Purchaser does not currently intend to change current management, indebtedness, capitalization, corporate structure or business operations of the Partnership and does not have current plans for any extraordinary transaction such as a merger, reorganization, liquidation or sale or transfer of assets 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. 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 income and loss allocations from the Partnership with respect to such Units. Limitations on Resales. The Partnership Agreement provides that the General Partner may refuse to recognize a transfer of Units if in its opinion the transfer would, for federal income tax purposes, cause the Partnership to be characterized as a "publicly traded partnership," or cause the Partnership to be taxed as a corporation. This provision may limit sales of Units on the secondary market and in private transactions following completion of the Offer. Accordingly, the Partnership may not recognize any requests for recognition of a transferee Unit Holder upon a transfer of Units if the General Partner believes the transfer would cause a tax termination of the Partnership. For the same reasons, it is theoretically possible that the number of Units tendered for purchase by the Purchaser taken together with the number of Units that have transferred prior to the Offer could exceed the number that the General Partner believes would cause a tax termination of the Partnership; in which case the Purchaser will purchase the maximum number of Units it may purchase without causing such a tax termination, as informed by the General Partner. See "Details of the Offer - Terms of the Offer; Expiration Date; Proration." 11 Influence on Voting Decisions by the Purchaser. Under the Partnership Agreement, Unit Holders holding a majority of the Original Units and the Class A Units, taken together, are entitled to take action with respect to a variety of matters, including removal of the 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 Original 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 is 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 may 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 pursuant to the Offer (that is, the purchase price), plus the amount of the Partnership's liabilities allocable to the Unit (as determined under Code Section 752). The gain or loss recognized by a 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. Gain with respect to Units held for more than one year will be taxed, for federal income tax purposes, at a maximum long-term capital gain rate of 20 percent. Gain with respect to Units held one year or less will be taxed at ordinary income rates. It should also be noted that the Taxpayer Relief Act of 1997 imposed depreciation recapture of previously deducted straight line depreciation with respect to real property at a rate of 25 percent (assuming eligibility for long-term capital gain treatment). A portion of the gain realized by a 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. If any portion of the amount realized by a Unit Holder is attributable to such Unit Holder's share of "unrealized receivables" or "substantially appreciated inventory items" as defined in Code Section 751, a corresponding portion of such Unit Holder's gain or loss will be treated as ordinary gain or loss. It is possible that the basis allocation rules of Code Section 751 may result in a Unit Holder's recognizing ordinary income with respect to the portion of the Unit Holder's amount realized on the sale of a Unit that is attributable to such items while recognizing a capital loss with respect to the remainder of the Unit. 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). 12 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). If a Unit Holder sells less than all of its interest in the Partnership 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 any 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 interest in the Partnership pursuant to the Offer, any "suspended" passive activity losses from the Partnership and any passive activity losses recognized upon the sale of the Units will be offset first against any net passive activity income from the Unit Holder's other passive activity investments, and the balance of any net passive activity losses attributable to the Partnership will no longer be subject to the passive activity loss limitation and, therefore, will be deductible by such Unit Holder from its other "ordinary" income (subject to any other applicable limitations). If more than 1,880 Original Units are Properly Tendered, some tendering Unit Holders may not be able to sell 100 percent of their Original 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. A tendering Unit Holder will be allocated the Unit Holder's pro rata share of the annual taxable income and losses from the Partnership with respect to the Units sold for the period through the date of sale, even though such Unit Holder will assign to the Purchaser its rights to receive certain cash distributions with respect to such Units. Such allocations and any Partnership distributions for such period would affect a Unit Holder's adjusted tax basis in the tendered Units and, therefore, the amount of gain or loss recognized by the Unit Holder on the sale of the Units. 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. CERTAIN LEGAL MATTERS General. Except as set forth herein, 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 herein. 13 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. Employees of EPII may solicit tenders of Units without any additional compensation. The Purchaser will pay all costs and expenses of printing and mailing the Offer and its legal fees and expenses. 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 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 TO 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 TO 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." 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. MILLENIUM MANAGEMENT, LLC April 17, 2003 14 SCHEDULE I DIRECTORS AND EXECUTIVE OFFICERS The business address of each executive officer and director of Everest Properties II, LLC is 155 North Lake Avenue, Suite 1000, 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 ("EPII"), are set forth below. Present Principal Occupation or Employment Name Position and Five-Year Employment History W. Robert Kohorst President of EPII from 1996 - present. President and Director of Everest Properties, Inc. from 1994 - present. President and Director of KH Financial, Inc. from 1994 - present. David I. Lesser Executive Vice President and Secretary of EPII from 1996 - present. Executive Vice President of Everest Properties, Inc. from 1995 - present. Christopher K. Davis Vice President and the General Counsel of EPII since 1998. Senior Staff Counsel and then Director of Corporate Legal of Pinkerton's, Inc. from 1995 - 1998. Peter J. Wilkinson Vice President and the Chief Financial Officer of EPII since 1996. Chief Financial Officer and Director of Everest Properties, Inc. since 1996. APPENDIX A The following information has been copied from the Partnership's Annual Report on Form 10-K for the year ended December 31, 2002 (the "Form 10-K"). Although the Purchaser has no information that any statements contained in this Appendix A 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. PART I Business General. Income Growth Partners, Ltd. X, a California limited partnership (the "Limited Partnership") and subsidiaries (collectively, the "Partnership"), was formed in February 1988 to acquire, operate and hold for investment one or more parcels of income-producing, multi-family residential real property. Currently, the Limited Partnership operates two separate apartment complexes in Southern California: 1) Mission Park and 2) Shadow Ridge Meadows. The limited partnership agreement provides that the Partnership shall continue through February 2021, unless terminated sooner. Income Growth Management, Inc. ("IGM") is the sole general partner. The general partner has made no cash capital contributions to date. As of December 31, 2002, there were 1,984 limited partners in the Partnership. The Partnership has no full time employees. Employees of corporations affiliated with the general partner perform certain administrative and other services on behalf of the Partnership (see Item 12). The Partnership's executive offices are located at 11230 Sorrento Valley Road, Suite 220, San Diego, California 92121 and the Partnership's telephone number is (858) 457-2750. Financing Strategy. The Partnership seeks to minimize the cost of financing its properties and will refinance existing loans from time to time to take advantage of prevailing market conditions. The Mission Park and Shadow Ridge Meadows properties were refinanced to prevailing rates during 1995 and 1997, respectively. Competitive Conditions. Changes in the national and regional economic climates, changes in local real estate conditions, such as the oversupply of apartments or a reduction in demand for apartments, competition from single-family housing, apartment properties and other forms of multifamily residential housing, the inability to provide adequate maintenance and to obtain adequate insurance, increased operating costs, changes in zoning, building, environmental, rent control and other laws and regulations, the costs of compliance with current and future laws, changes in real property taxes and unusual occurrences (such as earthquakes and floods) and other factors beyond the control of the Partnership may adversely affect the income from, and value of, the Partnership's properties. Leases and Inflation. Substantially all of the leases at the Partnership's apartment properties are for a period of one year or less, allowing, at the time of renewal, for adjustments in the rental rate and the opportunity to release the apartment unit at the prevailing market rate. The short-term nature of these leases generally serves to minimize the risk to the Partnership of the adverse effect of inflation and the Partnership does not believe that inflation has had a material adverse impact on its revenues. A-1 Restrictions Imposed By Laws Benefiting Disabled Persons. Under the Americans with Disabilities Act of 1990 (the "ADA"), all places of public accommodation are required to meet certain federal requirements related to access and use by disabled persons. These requirements became effective in 1992. A number of additional federal, state and local laws exist which also may require modifications to the properties, or restrict certain further renovations thereof, with respect to access thereto by disabled persons. For example, the Fair Housing Amendments Act of 1988 (the "FHAA") requires apartment properties first occupied after March 13, 1990 to be accessible to the handicapped. Noncompliance with the ADA or the FHAA could result in an order to correct any noncomplying feature, which could result in substantial capital expenditures. Although management of the Partnership believes that the properties are substantially in compliance with present requirements, if the properties are not in compliance, the Partnership is likely to incur additional costs to comply with the ADA and the FHAA. During 1995, on a tax free basis, the Limited Partnership exchanged the Mission Park property for a 99% interest in IGP X Mission Park Associates, L.P., a newly formed California limited partnership (the "Mission Park Subsidiary"). The Mission Park Subsidiary is separate and distinct from the Limited Partnership, having separate assets, liabilities and business operations. During 1997, on a tax free basis, the Limited Partnership exchanged the Shadow Ridge Meadows property for a 99% interest in IGP X Shadow Ridge Meadows, Ltd., a newly formed California limited partnership (the "Shadow Ridge Meadows Subsidiary"). The Shadow Ridge Meadows Subsidiary is also separate and distinct from the Partnership, having separate assets, liabilities and business operations. Formation of the Mission Park Subsidiary and the Shadow Ridge Subsidiary had no impact on the Partnership's overall financial condition, results of operations, allocation of net income/loss, cash distributions or Partnership assets. PART II Properties The Partnership, through its subsidiaries, presently owns two properties as follows: MISSION PARK: Date of purchase: August 1989 Purchase price: $17,100,000 Property Description: A 264-unit apartment complex located in San Marcos, California. The property includes two full-size recreation rooms, two heated swimming pools and spas, night-lighted tennis courts, a satellite cable TV system and covered parking. The building is approximately 13 years old. The property contains 215,292 square feet. Mortgage debt outstanding on this property as of December 31, 2002 and 2001 was approximately $9,400,000 and $9,600,000, respectively. SHADOW RIDGE MEADOWS: Date of purchase: November 1988 Purchase price $12,700,000 A-2 Property Description: A 184-unit apartment complex located in Vista, California. The property includes a large recreation center, a heated swimming pool and spa, five laundry facilities, a satellite cable TV system and covered parking. The building is approximately 14 years old. The property contains 127,197 square feet. Mortgage debt outstanding on this property as of December 31, 2002 and 2001, was approximately $9,300,000 and $9,400,000, respectively. As depreciation methods for tax and accounting purposes may differ, the tax basis of the properties will vary from the amounts reported in the financial statements. Dividends As a limited partnership, the Partnership does not pay dividends. The amended partnership agreement provides that any distributions of cash from operations will be made in the following order of priority: First, each Class A Unit receives a 12% cumulative noncompounded annual return on the balance of actual funds invested in Class A Units. Second, each Class A Unit receives a total return of original invested capital. Third, each Class A Unit receives a $500 bonus. Fourth, each Original Unit holder receives a 10% noncumulative return on the adjusted balance of original invested capital. Thereafter, 90% of distributions of cash from operations will be made to the Original Unit holders and 10% to the general partner. The amended partnership agreement also provides that any distributions of cash from a sale or refinancing of [sic] will be made in the following order of priority: First, each Class A Unit receives a 12% cumulative noncompounded annual return on the balance of actual funds invested in Class A Units. Second, each Class A Unit receives a total return of original invested capital. Third, each Class A Unit receives a $500 bonus. Fourth, each Original Unit holder receives an amount equal to the adjusted balance of original invested capital. Fifth, the general partner receives any non-subordinated debts payable to them. Sixth, each Original Unit holder receives a 10% cumulative return on the adjusted balance of original invested capital (the "Preferred Return"). Thereafter, 85% of distributions of cash from sale or refinancing will be made to the Original Unit holders and 15% to the general partner. As of December 31, 2002, the general partner has not received any cash distributions from operations or from a sale or refinancing. The Partnership distributed approximately $810,000 during 2002 and $907,200 during 2001. Cash distributions are determined at the discretion of the general partner. Any future distributions are largely dependent on future income, expenses, debt service and operating reserves and there can be no assurance that future distributions will be paid. A-3 Selected Financial Data. The following selected financial data has been copied or derived from the Form 10-K and should be read in conjunction with the financial statements and the related notes set forth in such report: December 31, December 31, 2002 2001 Rental properties, at cost, less accumulated depreciation. $17,075,846 $17,491,481 Total assets..................... 18,225,015 18,559,299 Total liabilities................ 19,189,602 19,537,067 Partners' capital (deficit) Limited partners'............. (829,498) (719,202) General partner's............. (125,089) (248,566) Year ended Year ended December 31, December 31, 2002 2001 Revenue - ------------------------------------- $5,355,976 $4,978,621 Rents......................... 303,866 288,823 Other......................... 2,247 7,094 Interest...................... Total revenues................... 5,662,089 5,274,538 Expenses Operating expenses............ 2,427,176 2,458,077 Interest...................... 1,445,424 1,463,836 Depreciation and amortization. 966,308 928,624 Total expenses................... 4,838,908 4,850,537 Net income....................... $ 823,181 $ 424,001 A-4 APPENDIX B MILLENIUM MANAGEMENT, LLC Balance Sheet As of February 28, 2003 (unaudited)* TOTAL ASSETS.............................................. $6,850 ====== LIABILITIES & EQUITY Members Capital.................................... $ (13,028) Retained Earnins.................................... 19,878 ------ TOTAL LIABILITIES & EQUITY................................ $6,850 ====== * The Purchaser's business consists solely of making and holding investments for its own account in limited partnership interests. Audited financial statements are not prepared. B-1 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. 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. Everest Properties II, LLC (Manager) 155 North Lake Avenue Suite 1000 Pasadena, California 91101 (800) 611-4613 or (626) 585-5920 Facsimile: (626) 585-5929 EX-99 4 incomegpx_sctot0417agmt.txt AGMT OF TRANSFER LTR OF TRANSMITTAL W/INSTR AGREEMENT OF TRANSFER AND LETTER OF TRANSMITTAL for Original Units of INCOME GROWTH PARTNERS, LTD. X for $850 per Original Unit Subject to and effective upon acceptance for payment, the undersigned (the "Seller") hereby sells, assigns, transfers and delivers, and irrevocably directs any custodian or trustee to sell, assign, transfer and deliver ("Transfer") to Millenium Management, LLC, a California limited liability company (the "Purchaser"), all of the Seller's right, title and interest in such Seller's units of limited partnership interest ("Original Units" or "Units") of INCOME GROWTH PARTNERS, LTD. X, a California limited partnership (the "Partnership"), at the cash purchase price of $850 per Original Unit, without interest, less the amount of Distributions (as defined in the Offer to Purchase) per Unit, if any, made to Seller by the Partnership after the date of the Offer to Purchase, and less any transfer fees imposed by the Partnership, upon the terms and subject to the conditions set forth in the Offer to Purchase, dated April 17, 2003, as it may be supplemented or amended (the "Offer to Purchase") and this Agreement of Transfer and Letter of Transmittal, as it may be supplemented or amended (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, cash distributions, legal claims, settlements and awards, voting rights and other benefits of any nature whatsoever distributable or allocable to Seller's tendered Units, 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 date upon which the Purchaser purchases Units tendered pursuant to the Offer. Seller hereby irrevocably constitutes and appoints the Purchaser as the true and lawful agent and attorney-in-fact of the Seller with respect to all tendered 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, change the address of record of tendered Units prior to or after completion of the Transfer, or act in such manner as any such attorney-in-fact shall, in its 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 Partner of the Partnership, together with all accompanying evidences of transfer and authenticity to, or upon the order of, the Purchaser, to execute and deliver in the name and on behalf of Seller any and all instruments or documents the Partnership or its General Partner may request in order to complete the Transfer (including without limitation any additional agreement of transfer, representation and warranty, indemnity, confirmation of intention to sell Units, or other forms required by the Partnership or its General Partner), to immediately revoke and withdraw all prior tenders of Units, 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. Seller hereby represents and warrants to the Purchaser that Seller owns all Units tendered pursuant to the Offer. Seller further hereby represents and warrants to Purchaser that Seller has full power and authority to validly sell, assign, transfer 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 and marketable title thereto, free and clear of all claims, options, restrictions, charges, encumbrances or other interests. If the undersigned is signing on behalf of an entity, the undersigned declares that he has authority to sign this document on behalf of such 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 accepted for payment by the Purchaser and any Letter of Transmittal for Units not accepted for payment may be destroyed by the Purchaser. All authority herein conferred or agreed to be conferred shall survive the death or incapacity or liquidation of Seller and any obligations of the Seller shall be binding upon the heirs, personal representatives, successors and assigns of the undersigned. Upon request, 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. Seller hereby certifies, under penalties of perjury, that (1) the number shown below on this form as Seller's Taxpayer Identification Number is correct and (2) Seller is not subject to backup withholding either because Seller is exempt from backup withholding, 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. Seller hereby also certifies, under penalties of perjury, that 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). 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. Upon completion and recording of the Transfer, the Purchaser accepts all of the terms and conditions of the Partnership Agreement, as amended. The Seller requests that the Purchaser become a substitute limited partner of the Partnership. The Seller also hereby separately instructs the Partnership and its General Partner to immediately change the address of Seller's account to the Purchaser's address. Seller agrees that the Partnership and its General Partner shall have no liability to Seller for immediately making the address change or for transferring the Units under this Letter of Transmittal. All questions as to the validity, form, eligibility (including time of receipt) and acceptance of a Letter of Transmittal will be determined by the Purchaser, and such determinations will be final and binding. The Purchaser's interpretation of the terms and conditions of the Offer (including this Letter of Transmittal) will also 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. - ----------------------------------------- ----------------------------------- [Social Security or Taxpayer ID Number(s)] [Signature of Owner] ------------------------/---------- ____________________/____________________ [Print Name] [Date] [Phone Number] / [Fax or E-mail] - ----------------------------------------- ----------------------------------- [If Selling Less than ALL UNITS, [Signature of Co-Owner] Specify Number] ------------------------/---------- [Print Name] [Date] - ---------------/-----------------/----------- [IRA Custodian / Account No. / Phone (if applicable)] ----------------------------------------- Forward the completed Letter of Transmittal and original Partnership Certificate(s) (if available) to: Millenium Management, LLC 155 N. Lake Ave., Suite 1000 Pasadena, CA 91101 Attn: Securities Processing Department (626) 585-5920 Re: Income Growth Partners, Ltd. X ----------------------------------------- Instructions To Complete Agreement Of Transfer ================================================================================ TO SELL YOUR UNITS, PLEASE DO THE FOLLOWING: 1. Sign the Agreement, print your name and the date. 2. Provide your social security number. 3. If you are selling less than all your Units, indicate the number you wish to sell. 4. Be sure to enter your telephone number. 5. If the units are held in an IRA, enter the name of the custodian, your account number, and the phone number of the custodian. 6. Send the Agreement in the envelope provided. ADDITIONALLY... IF YOU OWN THE UNITS JOINTLY WITH ANOTHER INDIVIDUAL: Please have both owners sign the Agreement. IF THE OWNER OR A CO-OWNER IS DECEASED: Please enclose (a) certified copy of the Death Certificate and (b) a Letter Testamentary or Will showing your beneficial ownership or executor capacity. IF YOU OWN THE UNITS IN YOUR IRA: Please provide your IRA account number. This information will be used solely by your custodian to make certain that the purchase proceeds are properly deposited in your account. IF THE UNITS ARE OWNED IN A TRUST, PROFIT SHARING, OR PENSION PLAN: Attach the first page, signature pages, and the section of the Trust Agreement showing that the signer has the authority to sign the Agreement on behalf of the Trust or Plan. IF THE UNITS ARE OWNED IN A CORPORATION, PARTNERSHIP OR LIMITED LIABILITY COMPANY: Attach an original resolution showing that the signer has the authority to sign the Agreement on behalf of the corporation, partnership or LLC. ================================================================================ Millenium Management, LLC, 155 N. Lake Avenue, Suite 1000, Pasadena, CA 91101 (800) 611-4613 EX-99 5 incomegpx_sctot417shltr.txt LETTER TO UNIT HOLDERS DATED 4/17/03 Millenium Management, LLC 155 N. Lake Avenue, Suite 1000 Pasadena, CA 91101 Phone: 626-585-5920 Fax: 626-585-5929 April 17, 2003 TO HOLDERS OF ORIGINAL UNITS OF INCOME GROWTH PARTNERS, LTD. X Re: Offer to Purchase Original Units for $850 Per Unit Dear Unit Holder: Enclosed is an OFFER TO PURCHASE up to 1,880 Original Units of limited partnership interests in Income Growth Partners, Ltd. X (the "Partnership") at a cash purchase price of $850 per Original Unit, without interest, less the amount of distributions made to you after the date of the Offer, and less any transfer fees imposed by the Partnership, which the Partnership advises us are $40 per transfer (regardless of the number of Units transferred). Please consider the following points, which are discussed in greater detail in the accompanying Offer to Purchase: o $850 per Original Unit equals the amount of net proceeds the Purchaser estimates would be distributed if the Partnership's properties were sold for the value estimated in the appraisal obtained by the General Partner, dated May 8, 2002. o The Offer price exceeds by $199 per unit (30%) the highest prior offer for Original Units of which Purchaser is aware, and exceeds by at least $463 per unit (120%) the average price per unit for trades of Partnership interests reported over the last 12 months. o No distributions can be made on the Original Units until approximately $4.1 Million ($510 per unit) more is distributed on the Class A Units, which would take 4 to 5 years at the rate of distributions made on the Class A Units over the last two years. No distributions have ever been made on the Original Units. o A sale of all Partnership units would eliminate the need to file Form K-1 information for the Partnership for years after 2003. The Partnership's general partner advised the Purchaser in March 2003 that the Partnership was going to list its properties for sale, but the Purchaser does not know whether or not any efforts to sell the properties are being made. We urge you to read the Offer to Purchase completely and to return your completed Agreement of Transfer and Letter of Transmittal promptly (blue form) in the envelope provided. The Offer is scheduled to expire on May 19, 2003. 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). Very truly yours, MILLENIUM MANAGEMENT, LLC EX-99 6 incomegpx_sctot0417appr.txt LIMITED APPRAISAL OF THE SAMPPALA GROUP THE SAMPPALA GROUP LIMITED APPRAISAL-RESTRICTED APPRAISAL REPORT APPRAISAL OF: Mission Park Apartments (221 Woodland Parkway, San Marcos, CA 92069) Shadowridge Meadows Apartments (1515 South Melrose Drive, Vista CA) PREPARED FOR: Mr. David Maurer Income Growth Management, Inc. 11300 Sorrento Valley Road, Suite 108 San Diego, CA 92121 PREPARED BY: James Naughton, Jr., MAI State Certified General Real Estate Appraiser Certificate # AG006748 DATE OF VALUATION: May 8, 2002 4895 Savannah Street San Diego, CA 92110-3824 THE SAMPPALA GROUP Limited Appraisal-Restricted Appraisal Report May 10,2002 Ref. No.02-005 Mr. David Maurer Income Growth Management, Inc. 11300 Sorrento Valley Road, Suite 108 San Diego, CA 92121 RE: Mission Park Apartments (221 Woodland Parkway, San Marcos, CA 92069) Shadowridge Meadows Apartments (1515 South Melrose Drive, Vista CA 92083 Dear Mr. Maurer: As requested, we are submitting the following information as a Limited Appraisal-Restricted Appraisal Report. This appraisal may be considered limited because it relies primarily on one approach to value (the Income Capitalization Approach, with support from the Sales Comparison Approach) and is a restricted report with most supporting data retained in our file. However, based on our extensive experience in appraising apartment properties and our familiarity with the subject properties, we are confident that the values reported are a reliable indicator of value for your "Factual Basis of Value". A Restricted Report cannot be fully understood without the additional information in the work file of the appraiser. This information is not presented in report form due to time constraints in creating a detailed report and also considering the function of the appraisal. This is a Restricted Appraisal Report that is intended to comply with the reporting requirements set forth under the Standards Rule 2-2c of the Uniform Standards of Professional Practice for a Restricted Appraisal Report. As such, it does not present discussions of the data, reasoning, and analyses that were used in the appraisal process to develop the appraiser's opinion of value. Supporting documentation concerning the data, reasoning, and analyses are retained in the appraiser's file. The depth of discussion contained in this report is specific to the needs of the client and for the intended use stated below. The appraiser is not responsible for the unauthorized use of this report. PURPOSE OF THE APPRAISAL: To estimate the market value of the subject property as defined in Standards of Professional Appraisal Practice of the Appraisal Institute (The Dictionary of Real Estate Appraisal, 3rd Edition). See definitions attached. INTENDED USE and USER OF REPORT: For the sole use by the client, Mr. David Maurer, for internal use. This appraisal is to provide a "Factual Basis of Value" for the client. The client is known to be knowledgeable in real estate matters including property values and the use of a Restricted Report is appropriate for the client's needs. 4895 SAVANNAH STREET, o SAN DIEGO, CA o 92110-3824 PHONE: 619/275-0967 o FAX: 619/275-5200 -2- MAY 10,2002 INTEREST VALUED: The property interests include Fee Simple ownership of the subject property. The properties are rental apartment units that use short-term rental agreements and do not create any specific leasehold/leased fee distinctions. EFFECTIVE DATE OF VALUE/DATE OF REPORT: May 8, 2002/ May 10, 2002. ESTIMATED EXPOSURE TIME: Average exposure time for apartments of the size and quality of the subjects is estimated to vary from 3 to 6 months, based on sales comparables. APPRAISAL DEVELOPMENT AND REPORTING PROCESS: The appraisers are very familiar with the subject properties since we have completed appraisals or appraisal reviews of each of the properties in the past, In preparing this appraisal, the appraisers inspected the subject properties in May 2000 (Exterior inspection only) and analyzed the financial and physical details of the subject properties, including full year operations for the year 2001 and rent roll dated April 19, 2002. Brief synopsis of due diligence steps: o Review previous appraisal work. o Review current rent roll and talk to rental office. o Conduct rental survey. o Review income and expense for 2001. o Set up proforma for income and expense. o Compare rent roll market and actual rent. o Review expenses and compare to comps. o Compare to previous work. o Collect and analyze market data. o Review market comparisons. o Analyze market overall rates, expenses and other units of comparison. o Look for market trends. (Articles and comps statistics). The value estimate for apartment properties of the size and quality of the subjects tend to rely on the Income Capitalization Approach with some consideration of the Sales Comparison Approach. The appraiser did not complete a Cost Approach to value since this approach is not utilized by typical buyers and sellers to establish values and the results of the Cost Approach are generally unreliable due to the lack of good land sale data and difficulty in estimating the various forms of depreciation. For the Income Approach the appraisers have reviewed the most recent operating results (Income and Expenses) as well as a current rent roll and rental survey of the market competition. Based on the historical operating history of the subject and other information available to the appraisers, we have been able to develop a reliable income/expense statement for the subject properties. The net income from these estimates is processed into a value estimate by the Direct Capitalization since there is sufficient overall rate data from comparable sales. THE SAMPPALA GROUP -3- MAY 1O,2002 The appraisers processed and analyzed approximately 22 sales of apartment complexes in San Diego County that met the following criteria: built since 1980, 80 units or more and recording date from 1/1/01 to present. Within this sample is a wide range of properties and we studied eleven specific sales in North San Diego County that share similar market characteristics with the two subject properties. No offer to sell properties meeting the basic search criteria was found using a typical Internet based service (Loopnet). These sales provide rent levels, expense comparisons, gross rent multipliers and capitalization rates in addition on to the price, which is compared per unit, per room and per square foot. The market conditions for investment properties similar to the subject has become very strong with vacancies decreasing and values improving. A recent report of rental trends for San Diego County as of March 2002 cites a 5.8 percent increase in average rents within the last year and an overall vacancy factor of 2.07 percent (1.94% in North County). This Restricted Appraisal Report sets forth only the appraiser's conclusions. Supporting documentation is retained in the appraiser's file. We have attached brief summary information. Departures from Standard 1 of USPAP include the following: Standards Rule 1-3 (a) identify and analyze the effect on use and value of existing land use regulations, reasonably probable modifications of such land use regulations, economic supply and demand, the physical adaptability of the real estate, and market area trends; and (b) develop an opinion of the highest and best use of the real estate. Standards Rule 1-4 In developing a real property appraisal, an appraiser must collect, verify, and analyze all information applicable to the appraisal problem, given the scope of work identified in accordance with Standards Rule 1-2(f). (a) When a sales comparison approach is applicable, an appraiser must analyze such comparable sales data as are available to indicate a value conclusion. (b) When a cost approach is applicable, an appraiser must: (i) develop an opinion of site value by an appropriate appraisal method or technique; (ii) analyze such comparable cost data as are available to estimate the cost new of the improvements (if any); and (iii) analyze such comparable data as are available to estimate the difference between the cost new and the present worth of the improvements (accrued depreciation). (c) When an income approach is applicable, an appraiser must: (i) analyze such comparable rental data as are available and/or the potential earnings capacity of the property to estimate the gross income potential of the property; (ii) analyze such comparable operating expense data as are available to estimate the operating expenses of the property; (iii) analyze such comparable data as are available to estimate rates of capitalization and/or rates of discount; and (iv) base projections of future rent and/or income potential and expenses on reasonably clear and appropriate evidence. (f) An appraiser must analyze the effect on value, if any, of anticipated public or private improvements, located on or off the site, to the extent that market actions reflect such anticipated improvements as of the effective appraisal date. (g) An appraiser must analyze the effect on value of any personal property, trade fixtures, or intangible items that are not real property but are included in the appraisal. The departures stated above do not affect the credibility of the concluded values for the intended use. Although the Cost Approach is not developed, it is not a typical method used by THE SAMPPALA GROUP -4- MAY 1O,2002 investors in existing apartments. The other items mentioned above were considered in earlier appraisals but are not reported in detail. REAL ESTATE APPRAISED: Mission Park Apartments is a 264 unit apartment complex at 221 Woodland Parkway, San Marcos, CA. This is a modern apartment built in two phases, with 120 one-bedroom units and 144 two-bedroom units. Assessor Parcel Number is 220-233-10,11. Shadowridge Meadows is a 184 unit apartment complex at 1515 South Melrose Drive, Vista, CA. This modern complex has 114 two-bedroom and 70 three-bedroom units and has 132 garages as well as carports and open parking. Assessor Parcel Number is 169-011-05. PRESENT USE and HIGHEST AND BEST USE: The subject properties are operating successfully as multiple residential apartments and the Highest and Best Use is concluded to be the same use. The appraiser has not analyzed the potential of conversion to for-sale units. CONCLUDED VALUES: We have concluded value estimates for the individual apartment properties with a date of value of August 1, 2000 as follows. Mission Park equals $23,800,000. Shadowridge Meadows equals $19,000,000. As previously mentioned, this report is restricted for the sole use of the client and is intended to present the conclusions of our appraisal without the supporting data. Thank you for this opportunity to provide appraisal services. Respectfully submitted, /S/ James Naughton, Jr. - ------------------------ James Naughton, Jr., MAI State Certified General Real Estate Appraiser Certificate #AG006748 THE SAMPPALA GROUP -5- MAY 1O,2002 CERTIFICATION I certify that, to the best of my knowledge and belief: 1. the statements of fact contained in this report are true and correct. 2. the reported analyses, opinions, and conclusions are limited only by the reported assumptions and limiting conditions, and are my personal, impartial, and unbiased professional analyses, opinions, and conclusions. 3. I have no present or prospective interest in the property that is the subject of this report, and no personal interest with respect to the parties involved. 4. I have no bias with respect to the property that is the subject of this report or to the parties involved with this assignment. 5. my engagement in this assignment was not contingent upon developing or reporting predetermined results. 6. my compensation for completing this assignment is not contingent upon the development or reporting of a predetermined value or direction In value that favors the cause of the client, the amount of the value opinion, the attainment of a stipulated result, or the occurrence of a subsequent event directly related to the Intended use of this appraisal. 7. my analyses, opinions, and conclusions were developed, and this report has been prepared, In conformity with the Uniform Standards of Professional Appraisal Practice and the Code of Ethics of the Appraisal Institute. 8. The use of this report is subject to the requirements of the Appraisal Institute relating to review by its duly authorized representatives. 9. I have made a personal inspection of the property that is the subject of this report. 10. no one except co-signers of the report provided significant professional assistance to the person signing this report. 11. The undersigned has the necessary training and experience to complete this appraisal assignment in a competent manner. 12. as of the date of this report, I, James Naughton, Jr., MAI, have completed the requirements under the continuing education program of the Appraisal Institute. /S/ James Naughton, Jr. - ------------------------ James Naughton, Jr., MAI State Certified Real Estate Appraiser Certificate #AG006748 THE SAMPPALA GROUP -6- MAY 1O,2002 LIMITING CONDITIONS AND ASSUMPTIONS Standards Rule ("S.R.") 2-1 of the Uniform Standards of Professional Appraisal Practice (USPAP) requires that the appraiser "clearly and accurately disclose any extraordinary assumptions or limiting conditions that directly affects the appraisal and indicates its impact on value." In compliance with this rule and for proper interpretation of the report, both general and extraordinary assumptions and limiting conditions are outlined in the following paragraphs. 1. This is a Restricted Appraisal Report which is intended to comply with the reporting requirements set forth under Standard Rule 2-2(c) of the Uniform Standards of Professional Appraisal Practice for a Summary Appraisal Report. As such, it might not include full discussions of the data, reasoning, and analyses that were used in the appraisal process to develop the appraiser's opinion of value. Supporting documentation concerning the data, reasoning, and analyses is retained in the appraiser's file. The information contained in this report is specific to the needs of the client and for the intended use stated in this report. The appraiser is not responsible for unauthorized use of this report. 2. The appraiser assumes no responsibility for economic or physical factors that may affect or alter the opinions in this report if said economic, physical or demographic factors were not present as of the letter of transmittal accompanying this report. The appraiser is not obligated to predict future political or social trends. 3. The conclusions and opinions expressed in this report apply to the date of value set forth in the letter of transmittal accompanying this report. The dollar amount of any value opinion or conclusion rendered or expressed in this report is based upon the purchasing power of the American dollar existing on the date of value. 4. In preparing this report, the appraiser was required to rely on information furnished by other individuals or found in previously existing records and/or documents. Unless otherwise indicated, such information is presumed to be reliable. However, no warranty, either expressed or implied, is given by the appraiser for the accuracy of such information and the appraiser assumes no responsibility for information relied upon that later is found to have been inaccurate. The appraiser reserves the right to make such adjustments to the analyses, opinions and conclusions set forth in this report as may be required by consideration of additional data or more reliable data that may become available. 5. No opinion is intended to be expressed on matters that require legal expertise or specialized investigation or knowledge beyond that ordinarily employed by real estate appraisers, although such matters may be discussed in the report. Also, no liability is assumed on account of matters of a legal nature affecting this property, such as title defects, liens, encroachments, overlapping boundaries, etc. 6. No opinion as to title is rendered. Data on ownership and the legal description were obtained from sources generally considered reliable. Title is assumed to be marketable and free and clear of all liens and encumbrances, easements and restrictions except those specifically discussed in the report. The property is appraised assuming it to be under responsible ownership and competent management and available for its Highest and Best Use. 7. The appraiser has made no engineering survey. Except as specifically stated, data relative to size and area were taken from sources considered reliable and no encroachment of real property improvements is assumed to exist. THE SAMPPALA GROUP -7- MAY 1O, 2002 8. Maps, photos, plats, sketches, floor plans and other exhibits are included for illustration only, to assist the reader in visualizing the property. The appraiser has made no survey of the property. Approximate dimensions may be shown, but exhibits should not be considered as surveys or relied upon for any other purpose. 9. No opinion is expressed as to the value of subsurface oil, gas or mineral rights and the property is not subject to surface entry for the exploration or removal of such materials except as is expressly stated. 10. Any value estimates provided in the report apply to the entire property, and any proration or division of the total into fractional interests will invalidate the value estimate, unless such proration or division of interests has been set forth in the report. 11. The distribution, if any, of the total valuation in this report between land and improvements applies only under the stated program of utilization. The separate allocations for land and for buildings must not be used in conjunction with any other appraisal and are invalid if so used. 12. All mortgages, liens, encumbrances, leases and servitudes have been disregarded unless so specified within this report. Title to the property appraised is assumed to be marketable and free of encumbrances. 13. Possession of this report, or any copy thereof, does not carry with it the right of publication. This report may not be used for any purpose by anyone but the applicant, without the previous written consent of the appraiser, and in any event, only in its entirety. 14. The appraiser assumes that there are no hidden or unapparent conditions of the property, subsoil, terrain or structures, which would render it more or less valuable. The appraiser assumes no responsibility for such conditions, or for engineering which might be required to discover such factors. 15. The appraiser is not qualified to detect hazardous waste and/or toxic materials. Any comment by the appraiser that might suggest the possibility of the presence of such substances would not be taken as confirmation of the presence of hazardous waste and/or toxic materials. Such determination would require investigation by a qualified expert in the field of environmental assessment. The presence of substances such as asbestos, urea-formaldehyde foam insulation, or other potentially hazardous materials may affect the value of the property. The appraiser's value estimate is predicated on the assumption that there is such material on or in the property that would cause a loss in value unless otherwise stated in this report. No responsibility would cause a loss in value unless otherwise stated in this report. No responsibility is assumed for any environmental conditions or for any expertise or engineering knowledge required to discover them. The appraiser's descriptions and resulting comments are the result of the routine observations made during the appraisal process. Unless otherwise stated, this report assumes the subject property is in compliance with all federal, state and local environmental laws, regulations and rules. 16. Since earthquakes are common in the area, no opinion is offered regarding their possible effect on individual properties, and no responsibility for possible effects is assumed, unless detailed geologic reports are made available. 17. An accessibility survey and/or analysis to determine compliance with state and federal regulations (ADA compliance, Americans with Disabilities Act) is beyond the scope of the appraiser's expertise and has not been conducted. 18. The owners, his agent(s) or assigns are assumed to have represented the property accurately and correctly and have not withheld information pertinent to this report or its value conclusion 19. It is assumed that all applicable zoning and use regulations are complied with, unless a non-conformity has been stated, defined and considered in the appraisal report. It is THE SAMPPALA GROUP -8- MAY 10,2002 assumed that all required licenses, consent or other legislative or administrative authority from any local, state, or national governmental or private entity or organization have been, or can be, obtained or renewed for any use on which the value estimate contained in this report is based. 20. The appraiser assumes that items of public record pertinent to the property are correct and that the land area (as listed by the Assessor's Office) is accurate. This land area was utilized as the total land area throughout this report. 21. Valuation does not include any value for personal property or chattel items except for refrigerators that are typically included. THE SAMPPALA GROUP -9- MAY 10, 2002 DEFINITIONS OF SIGNIFICANT TERMS market value. a. "The fair market value of the property taken is the highest price on the date of valuation that would be agreed to by a seller being willing to sell but under no particular or urgent necessity for so doing, nor obligated to sell, and a buyer, being ready, willing, and able to buy under no particular necessity for so doing, each dealing with the other with full knowledge of all uses and purposes for which the property is reasonably adaptable and available." b. "The fair market value of the property taken for which there is no relevant market is its value on the date of valuation as determined by any method of valuation that is just and equitable." References: The Dictionary of Real Estate Appraisal, 3rd Edition, 1993 fee simple estate. Absolute ownership unencumbered by any other interest or estate, subject only to the limitations imposed by the governmental powers of taxation, eminent domain, police power, and escheat. leased fee estate. An ownership interest held by a landlord with the rights of use and occupancy conveyed by lease to others. The rights of the lessor (the leased fee owner) and the leased fee are specified by contract terms contained within the lease. leasehold estate. The interest held by the lessee (the tenant or renter) through a lease conveying the rights of use and occupancy for a stated term under certain conditions. highest and best use. The reasonably probable and legal use of vacant land or an improved property, which is physically possible, appropriately supported, financially feasible, and that results in the highest value. The four criteria the Highest and Best Use must meet are legal permissibility, physical possibility, financial feasibility and maximum profitability. THE SAMPPALA GROUP -----END PRIVACY-ENHANCED MESSAGE-----