SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------
SCHEDULE TO
Tender Offer Statement Pursuant to Section 14(d)(1) or 13(e)(1)
of the Securities Exchange Act of 1934
-------------------
JCM PARTNERS, LLC
(Name of Subject Company)
MPF-NY 2007, LLC, MPF Badger Acquisition Co., LLC, Sutter Opportunity Fund 4,
LLC, MPF Senior Note Program I, LP, MPF ePlanning Opportunity Fund, LP, MPF
DeWaay Fund 4, LLC, MPF Flagship Fund 12, LLC, MPF Special Fund 9, LLC, MPF Blue
Ridge Fund I, LLC, MPF Blue Ridge Fund II, LLC, MPF Special Fund 8, LLC, MPF
Income Fund 22, LLC, MPF Income Fund 23, LLC, MPF DeWaay Fund 5, LLC, MPF
Flagship Fund 11, LLC; and MacKenzie Patterson Fuller, LP
(Bidders)
Class 1 or Class 2 units ("UNITS") OF LIMITED LIABILITY COMPANY INTEREST
(Title of Class of Securities)
None or unknown
(CUSIP Number of Class of Securities)
-----------------------
Copy to:
Christine Simpson Chip Patterson, Esq.
MacKenzie Patterson Fuller, LP MacKenzie Patterson Fuller, LP
1640 School Street 1640 School Street
Moraga, California 94556 Moraga, California 94556
(925) 631-9100 ext.224 (925) 631-9100 ext. 206
(Name, Address, and Telephone Number of
Person Authorized to Receive Notices and
Communications on Behalf of Bidder)
Calculation of Filing Fee
Transaction Amount of
Valuation* Filing Fee
---------- ----------
$3,850,657 $412.02
* For purposes of calculating the filing fee only. Assumes the purchase of
2,750,469 Units at a purchase price equal to $1.40 per Unit in cash.
|_| Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the Form
or Schedule and the date of its filing.
Amount Previously Paid:
Form or Registration Number:
Filing Party:
Date Filed:
|_| Check the 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: |_|
TENDER OFFER
This Tender Offer Statement on Schedule TO relates to the offer (the "Offer") by
MPF-NY 2007, LLC, MPF Badger Acquisition Co., LLC, Sutter Opportunity Fund 4,
LLC, MPF Senior Note Program I, LP, MPF ePlanning Opportunity Fund, LP, MPF
DeWaay Fund 4, LLC, MPF Flagship Fund 12, LLC, MPF Special Fund 9, LLC, MPF Blue
Ridge Fund I, LLC, MPF Blue Ridge Fund II, LLC, MPF Special Fund 8, LLC, MPF
Income Fund 22, LLC, MPF Income Fund 23, LLC, MPF DeWaay Fund 5, LLC, MPF
Flagship Fund 11, LLC (collectively the "Purchasers") to purchase up to
2,750,469 Units of Class 1 or Class 2 limited liability company interest (the
"Units") in JCM Partners, LLC (the "Company"), the subject company, at a
purchase price equal to $1.40 per Unit, less the amount of any distributions
declared or made with respect to the Units between March 30, 2007 (the "Offer
Date") and May 14, 2007 or such other date to which this Offer may be extended
(the "Expiration Date"), upon the terms and subject to the conditions set forth
in the Offer to Purchase dated March 30, 2007 (the "Offer to Purchase") and the
related Letter of Transmittal, copies of which are attached hereto as Exhibits
(a)(1) and (a)(2), respectively. As noted above, the Offer price would be
subject to reduction for distributions made or declared prior to the Expiration
Date. Any distributions made or declared after the Expiration Date, by the terms
of the Offer and as set forth in the Letter of Transmittal, would be assigned by
tendering Unit holders to the Purchasers. MacKenzie Patterson Fuller, LP is
named as a bidder herein because it is deemed to control the Purchasers, but is
otherwise not participating in the offer described in this schedule.
In the event of a price reduction resulting from a Company distribution
declared or made after the Offer Date and before the Expiration Date, as
described above, the Purchasers will file an amendment to this Schedule TO
reflecting such reduction and will, to the extent necessary, extend the
Expiration Date to assure there is a minimum ten business day period following
the amendment before the Offer expires.
Tender of Units will include the tender of any and all securities into
which the Units may be converted and any securities distributed with respect to
the Units from and after the Offer Date.
The Company had 314 holders of record owning an aggregate of 27,692,912
Class 1 and Class 2 Units as of March 31, 2006 and MARCH 27, 2007, according to
its Form 10-K filed March 31, 2006 and its Form 8-K filed March 27, 2007,
respectively. An additional 13,513,769 Class 1 and 2 Units were owned by the
Company's subsidiary. The Purchasers and their affiliates currently beneficially
own 0 Units, or 0.0% of the outstanding Units. The 2,750,469 Units subject to
the Offer constitute 9.93% of the outstanding Units, not including those owned
by the Company's subsidiary, or 6.7% of all outstanding Units. Consummation of
the offer, if all Units sought are tendered, would require payment by the
Purchasers of up to $3,850,657 in aggregate Purchase Price, which the Purchasers
intend to fund out of their current working capital.
The address of the Company's principal executive offices is 2151 Salvio
Street, Suite 325, Concord, CA 94520, and its phone number is (925) 676-1966.
The information in the Offer to Purchase, including all schedules and
annexes thereto, is hereby expressly incorporated herein by reference in
response to all the items of this Statement.
Item 12. Exhibits.
(a)(1) Offer to Purchase dated March 30, 2007
(a)(2) Letter of Transmittal
(a)(3) Form of Letter to Unit holders dated March 30, 2007
(a)(4) Form of advertisement in Investor's Business Daily
(a)(5) Form of transfer documents required by Company
(b)- (h) Not applicable.
Item 13. Information Required by Schedule 13E-3.
Not applicable.
SIGNATURES
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
Dated: March 30, 2007
MPF-NY 2007, LLC, MPF Badger Acquisition Co., LLC, Sutter Opportunity Fund 4,
LLC, MPF Senior Note Program I, LP, MPF ePlanning Opportunity Fund, LP, MPF
DeWaay Fund 4, LLC, MPF Flagship Fund 12, LLC, MPF Special Fund 9, LLC, MPF Blue
Ridge Fund I, LLC, MPF Blue Ridge Fund II, LLC, MPF Special Fund 8, LLC, MPF
Income Fund 22, LLC, MPF Income Fund 23, LLC, MPF DeWaay Fund 5, LLC, MPF
Flagship Fund 11, LLC
By: /s/ Chip Patterson
--------------------------
Chip Patterson, Senior Vice President of Manager or General Partner of
each filing person
MACKENZIE PATTERSON FULLER, LP
By: /s/ Chip Patterson
--------------------------
Chip Patterson, Senior Vice President
EXHIBIT INDEX
Exhibit Description
- ------- -----------
(a)(1) Offer to Purchase dated March 30, 2007
(a)(2) Letter of Transmittal
(a)(3) Form of Letter to Unit holders dated March 30, 2007
(a)(4) Form of advertisement in Investor's Business Daily
(a)(5) Form of transfer documents required by Company
Exhibit (a)(1)
OFFER TO PURCHASE FOR CASH 2,750,469
CLASS 1 OR CLASS 2 UNITS OF LIMITED LIABILITY COMPANY INTEREST
OF
JCM PARTNERS, LLC
AT
$1.40 PER UNIT
MPF-NY 2007, LLC, MPF Badger Acquisition Co., LLC, Sutter Opportunity Fund 4,
LLC, MPF Senior Note Program I, LP, MPF ePlanning Opportunity Fund, LP, MPF
DeWaay Fund 4, LLC, MPF Flagship Fund 12, LLC, MPF Special Fund 9, LLC, MPF Blue
Ridge Fund I, LLC, MPF Blue Ridge Fund II, LLC, MPF Special Fund 8, LLC, MPF
Income Fund 22, LLC, MPF Income Fund 23, LLC, MPF DeWaay Fund 5, LLC, MPF
Flagship Fund 11, LLC
(collectively the "Purchasers")
THE OFFER, WITHDRAWAL RIGHTS, AND PRORATION PERIOD WILL EXPIRE AT
11:59 P.M., PACIFIC TIME, ON MAY 14, 2007, UNLESS THE OFFER IS EXTENDED.
The Purchasers hereby seek to acquire 2,750,469 Class 1 or Class 2 Units of
limited liability company interest (the "Units") in JCM PARTNERS, LLC (the
"Company"). The Purchasers are not affiliated with the Company. The Company is
managed by the Board of Managers (the "Board"). The Purchasers hereby offer to
purchase 2,750,469 Units at a purchase price equal to $1.40 per Unit, less the
amount of any distributions declared or made with respect to the Units between
March 30, 2007 and May 14, 2007, or such other date to which this offer may be
extended (the "Expiration Date"), in cash, without interest, upon the terms and
subject to the conditions set forth in this offer to purchase (the "Offer to
Purchase") and in the related Letter of Transmittal, as each may be supplemented
or amended from time to time (which together constitute the "Offer"). As noted
above, the Offer price would be subject to reduction for distributions made or
declared prior to the Expiration Date. Any distributions made or declared after
the Expiration Date would, by the terms of the Offer and as set forth in the
Letter of Transmittal, be assigned by tendering Unit holders to the Purchasers.
Tender of Units will include the tender of any and all securities into which the
Units may be converted and any securities distributed with respect to the Units
from and after the Offer Date. The Offer does not apply to Class 3 Units of the
Company (any Class 2 Units that have already been converted into Class 3 Units
may not be tendered). Neither does the Offer apply to Class 1 Units that were
converted into the right to receive $2.78 per Unit by June 30, 2007, less
distributions paid from July 1, 2005 through June 30, 2006, or approximately
$2.70 per Unit, pursuant to the Put Right for those Unitholders who exercised
the Put Right by September 2005.
The Company had 314 holders of record owning an aggregate of 27,692,912 Class 1
and 2 Units as of March 31, 2006 and March 27, 2007, according to its Form 10-K
filed March 31, 2006 and its Form 8-K filed March 27, 2007, respectively. An
additional 13,513,769 Class 1 and 2 Units were owned by the Company's
subsidiary. The Purchasers and their affiliates currently beneficially own 0
Units, or 0.0% of the outstanding Units. The 2,750,469 Units subject to the
Offer constitute 9.93% of the outstanding Units, not including those owned by
the Company's subsidiary, or 6.7% of all outstanding Units. The Purchasers and
their affiliates currently beneficially own 0 Units, or 0.0% of the outstanding
Units. Consummation of the Offer, if all Units sought are tendered, would
require payment by the Purchasers of up to $3,850,657 in aggregate purchase
price, which the Purchasers intend to fund out of their current working capital.
Holders of Units ("Unit holders") are urged to consider the following factors:
o Unit holders who tender their Units will give up the opportunity to
participate in any future benefits from the ownership of Units,
including potential future distributions by the Company from
property operations or dispositions, and the purchase price per Unit
payable to a tendering Unit holder by the Purchasers may be less
than the total amount which might otherwise be received by the Unit
holder with respect to the Unit over the remaining term of the
Company.
o The Purchasers are making the Offer for investment purposes and with
the intention of making a profit from the ownership of the Units. In
establishing the purchase price of $1.40 per Unit, the Purchasers
are motivated to establish the lowest price which might be
acceptable to Unit holders consistent with the Purchasers'
objectives. There is no public market for the Units, and neither the
Unit holders nor the
1
Purchasers have any accurate means for determining the actual
present value of the Units. Although there can be no certainty as to
the actual present value of the Units, the Purchasers have
estimated, solely for the purposes of determining an acceptable
Offer price, that the Company could have an estimated liquidation
value of approximately $2.70 per Unit, which is based upon the price
at which Class 1 Units will be redeemed by the Company pursuant to
the Put Right that expired September 2005 (the payment for which
must be made by the Company by June 30, 2005). It should be noted,
however, that the Purchasers have not made an independent appraisal
of the Units or the Company's properties, and are not qualified to
appraise real estate. Furthermore, there can be no assurance as to
the timing or amount of any future Company distributions, and there
cannot be any assurance that the Purchasers' estimate accurately
reflects an approximate value of the Units or that the actual
amounts which may be realized by holders for the Units may not vary
substantially from this estimate. When the Class 2 Units become
eligible to be put to the Company, the exercise price is likely to
differ from this price, either higher or lower.
o The Depositary, MacKenzie Patterson Fuller, LP, is an affiliate of
certain of the Purchasers. No independent party will hold securities
tendered until the offer closes and payment is made. Because there
is no independent intermediary to hold the Purchasers' funds and
tendered securities, the Purchasers may have access to the
securities before all conditions to the Offer have been satisfied
and selling Unit holders have been paid; however, neither the
Depository nor the Purchasers has any rights with respect to the
Units prior to the Expiration Date and acceptance by the Purchasers
for payment. Further, by tendering your Units, you are agreeing to
arbitrate any disputes that may arise between you and the Purchasers
or the Depositary, to subject yourself to personal jurisdiction in
California, and that the prevailing party in any such action will be
entitled to recover attorney fees and costs.
o The Offer allows Unitholders the option to sell 'All or None' of
their Units, thereby allowing Unitholders the option to avoid
proration if more than 2,750,469 Units are tendered. See Section
2--Acceptance for Payment and Payment for Units; Proration and
Section 4--Withdrawal Rights; Automatic Withdrawal Option. The
Purchasers may accept only a portion of the Units tendered by a
Unitholder if a total of more than 2,750,469 Units are tendered and
the Unitholder does not select the 'All or None' option.
THE OFFER TO PURCHASE IS NOT CONDITIONED UPON ANY MINIMUM NUMBER OF UNITS BEING
TENDERED. IF MORE THAN 2,750,469 UNITS ARE VALIDLY TENDERED AND NOT WITHDRAWN,
THE PURCHASERS WILL ACCEPT FOR PURCHASE 2,750,469 UNITS FROM TENDERING
UNITHOLDERS (WHO DO NOT ELECT THE 'ALL OR NONE' OPTION) ON A PRO RATA BASIS,
SUBJECT TO THE TERMS AND CONDITIONS HEREIN. A UNIT HOLDER MAY TENDER ANY OR ALL
UNITS OWNED BY SUCH UNIT HOLDER.
The Purchasers expressly reserve the right, in their sole discretion, at any
time and from time to time, (i) to extend the period of time during which the
Offer is open and thereby delay acceptance for payment of, and the payment for,
any Units, subject to the restriction below, (ii) upon the occurrence of any of
the conditions specified in Section 13 of this Offer to Purchase prior to the
Expiration Date, to terminate the Offer and not accept for payment any Units,
and (iii) to amend the Offer in any respect prior to the Expiration Date. 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 Securities Exchange Act of
1934 (the "Exchange Act"). In the case of an extension of the Offer, such
extension will be followed by a press release or public announcement which will
be issued no later than 9:00 a.m., Eastern Time, on the next business day after
the scheduled Expiration Date, in accordance with Rule 14e-1(d) under the
Exchange Act.
March 30, 2007
2
IMPORTANT
Any Unit holder desiring to tender any or all of such Unit holder's Units should
complete and sign the Letter of Transmittal (a copy of which is enclosed with
this Offer to Purchase, printed on purple paper) in accordance with the
instructions in the Letter of Transmittal and mail, deliver or telecopy the
Letter of Transmittal and any other required documents to MacKenzie Patterson
Fuller, LP (the "Depositary"), an affiliate of certain of the Purchasers, at the
address or facsimile number set forth below.
MacKenzie Patterson Fuller, LP
1640 School Street
Moraga, California 94556
Telephone: 800-854-8357
Facsimile: 925-631-9119
E-Mail Address: offers@mpfi.com
Questions or requests for assistance or additional copies of this Offer to
Purchase or the Letter of Transmittal may be directed to the Purchasers at
1-800-854-8357.
- -----------------------
NO PERSON HAS BEEN AUTHORIZED TO MAKE ANY RECOMMENDATION OR ANY REPRESENTATION
ON BEHALF OF THE PURCHASERS OR TO PROVIDE ANY INFORMATION OTHER THAN AS
CONTAINED HEREIN OR IN THE LETTER OF TRANSMITTAL. NO SUCH RECOMMENDATION,
INFORMATION OR REPRESENTATION MAY BE RELIED UPON AS HAVING BEEN AUTHORIZED.
- -----------------------
The Company is subject to the information and reporting requirements of the
Exchange Act and in accordance therewith is required to file reports and other
information with the Securities and Exchange Commission ("Commission") relating
to its business, financial condition and other matters. Such reports and other
information are available on the Commission's electronic data gathering and
retrieval (EDGAR) system, at its internet web site at www.sec.gov, may be
inspected at the public reference facilities maintained by the Commission at 100
F Street, NE, Room 1580, Washington, D.C. 20549. Copies of such material can
also be obtained from the Public Reference Room of the Commission in Washington,
D.C. at prescribed rates.
The Purchasers have filed with the Commission a Tender Offer Statement on
Schedule TO (including exhibits) pursuant to Rule 14d-3 of the General Rules and
Regulations under the Exchange Act, furnishing certain additional information
with respect to the Offer. Such statement and any amendments thereto, including
exhibits, may be inspected and copies may be obtained from the offices of the
Commission in the manner specified above.
3
TABLE OF CONTENTS
Page
SUMMARY TERM SHEET.............................................................5
INTRODUCTION...................................................................8
TENDER OFFER..................................................................10
Section 1. Terms of the Offer................................................10
Section 2. Acceptance for Payment and Payment for Units;Proration.............11
Section 3. Procedures for Tendering Units.....................................11
Section 4. Withdrawal Rights..................................................13
Section 5. Extension of Tender Period; Termination; Amendment.................13
Section 6. Material Federal Income Tax Consequences...........................14
Section 7. Effects of the Offer...............................................16
Section 8. Future Plans......................................................16
Section 9. The Business of the Company........................................17
Section 10. Conflicts of Interest.............................................17
Section 11. Certain Information Concerning the Purchasers.....................17
Section 12. Source of Funds...................................................18
Section 13. Conditions of the Offer...........................................18
Section 14. Certain Legal Matters.............................................19
Section 15. Fees and Expenses.................................................20
Section 16. Miscellaneous.....................................................20
SCHEDULE I....................................................................21
4
SUMMARY TERM SHEET
The Purchasers are offering to purchase up to 2,750,469 Class 1 or Class 2 units
of limited liability company interest (the "Units") for $1.40 per Unit in cash.
The following are some of the questions that you, as a Unit holder of the
Company, may have and answers to those questions. The information in this
summary is not complete, and we urge you to carefully read the remainder of this
Offer to Purchase and the accompanying Letter of Transmittal.
WHO IS OFFERING TO BUY MY SECURITIES?
The offer to purchase your Units is being made jointly by MPF-NY 2007, LLC, MPF
Badger Acquisition Co., LLC, Sutter Opportunity Fund 4, LLC, MPF Senior Note
Program I, LP, MPF ePlanning Opportunity Fund, LP, MPF DeWaay Fund 4, LLC, MPF
Flagship Fund 12, LLC, MPF Special Fund 9, LLC, MPF Blue Ridge Fund I, LLC, MPF
Blue Ridge Fund II, LLC, MPF Special Fund 8, LLC, MPF Income Fund 22, LLC, MPF
Income Fund 23, LLC, MPF DeWaay Fund 5, LLC, MPF Flagship Fund 11, LLC. Each of
the entity Purchasers is a real estate investment fund managed or advised by
MacKenzie Patterson Fuller, LP, a private, independent real estate investment
firm or its affiliate Sutter Capital Management, LLC. None of these entities is
affiliated with the Company or its Board.
WHAT ARE THE CLASSES AND AMOUNTS OF SECURITIES SOUGHT IN THE OFFER?
We are seeking to purchase up to 2,750,469 Class 1 or Class 2 Units of limited
liability company interest, which are two of the classes of units issued to
investors in the Company. We are not offering to purchase Series B Preferred
units or Class 3 units. Neither does the Offer apply to Class 1 Units that were
converted into the right to receive $2.78 per Unit, less distributions paid from
July 1, 2005 through June 30, 2006, or approximately $2.70 per Unit, by June
2007 pursuant to the exercise of the Put Right.
HOW MUCH ARE YOU OFFERING TO PAY AND WHAT IS THE FORM OF PAYMENT?
We are offering to pay $1.40 per Unit, net to you in cash, less the amount of
any distributions declared or made with respect to the Units between March 30,
2007 and the date the Offer expires. The Offer price would be reduced by the
amount of distributions made or declared prior to the Expiration Date. Any
distributions made or declared after the Expiration Date would, by the terms of
the Offer and as set forth in the Letter of Transmittal, be assigned by
tendering Unit holders to the Purchasers. If you tender your Units to us in the
Offer, you will not have to pay brokerage fees or similar expenses.
DO YOU HAVE THE FINANCIAL RESOURCES TO MAKE PAYMENT?
If the total amount of Units sought is purchased, the Purchasers' capital
commitment will be approximately $3,850,657. The Purchasers have an aggregate of
approximately $44 million in total assets at their disposal to fund payment to
selling Unit holders. The Purchasers currently have sufficient funded capital to
fund all of their commitments under this Offer and all other tender offers they
may be presently making.
IS THE FINANCIAL CONDITION OF THE BIDDERS RELEVANT TO MY DECISION ON WHETHER TO
TENDER IN THE OFFER?
Because this is a cash offer that is not conditioned on financing being
available, and the Purchasers have more than adequate resources and no intention
to take control of the Company, other information concerning the Purchasers'
financial condition would seem to have little relevance to your decision.
HOW LONG DO I HAVE TO DECIDE WHETHER TO TENDER IN THE OFFER?
You will have at least until 11:59 p.m., Pacific Time, on May 14, 2007, to
decide whether to tender your Units in the Offer.
WILL ALL OF THE UNITS I TENDER BE ACCEPTED BY THE PURCHASERS?
The Purchasers desire to purchase up to 2,750,469 Units. If the number of Units
validly tendered and not properly withdrawn on or prior to the Expiration Date
is less than or equal to 2,750,469, we will purchase all Units so
5
tendered and not withdrawn, upon the terms and subject to the conditions of the
Offer. However, if more than 2,750,469 Units are so tendered and not withdrawn,
we will accept for payment and pay for 2,750,469 Units so tendered, pro rata
according to the number of Units so tendered, adjusted by rounding down to the
nearest whole number of Units tendered by each Unit holder to avoid purchases of
fractional Units, as appropriate. However, you have the option to sell `All or
None' of your Units by checking the appropriate box on the Letter of
Transmittal. If you check that box, we will not purchase your Units if more than
2,750,469 Units are tendered, and you will be deemed to automatically withdraw
your tender. See Section 2. Acceptance for Payment and Payment for Units;
Proration and Section 4. Withdrawal Rights.
CAN THE OFFER BE EXTENDED AND UNDER WHAT CIRCUMSTANCES?
The Offer can be extended in our discretion.
HOW WILL I BE NOTIFIED IF THE OFFER IS EXTENDED?
If we extend the offer, we will make a public announcement of the extension, not
later than 9:00 a.m., Eastern Time, on the day after the day on which the Offer
was scheduled to expire. You can check our website at www.mpfi.com (click on MPF
Tenders) to see if it has been extended.
WHAT ARE THE MOST SIGNIFICANT CONDITIONS TO THE OFFER?
There are no conditions to the offer based on a minimum number of Units
tendered, the availability of financing, or the success of the offer. However,
we may not be obligated to purchase any Units if certain conditions occur, such
as legal or government actions which would prohibit the purchase. Furthermore,
we are not obligated to purchase any Units which are validly tendered if, among
other things, there is a material adverse change in the Company or its business.
Please see the discussion in Section 13, Conditions of the Offer, for a
description of all conditions. Further, by tendering your Units, you are
agreeing to arbitrate any disputes that may arise between you and the Purchasers
or the Depositary, to subject yourself to personal jurisdiction in California,
and that the prevailing party in any such action will be entitled to recover
attorney fees and costs.
WHEN WILL YOU PAY ME FOR THE UNITS I TENDER?
Upon the Expiration of the Offer and our acceptance of the Units you tender, we
will pay you upon confirmation that the Board will either transfer the Units or
recognize the change of address for distributions and correspondence on the
Units.
HOW DO I TENDER MY UNITS?
To tender your Units, you must deliver a completed Letter of Transmittal
(printed on purple paper), to the Depositary at: MacKenzie Patterson Fuller, LP,
1640 School Street, Moraga, California 94556 (Telephone: 800-854-8357; Facsimile
Transmission: 925-631-9119), no later than the time the Offer expires.
UNTIL WHAT TIME CAN I WITHDRAW PREVIOUSLY TENDERED UNITS?
You can withdraw previously tendered Units at any time until the Offer has
expired and, if we have not agreed to accept your Units for payment by May 29,
2007, you can withdraw them at any time after such time until we do accept your
Units for payment.
HOW DO I WITHDRAW PREVIOUSLY TENDERED UNITS?
To withdraw Units, you must deliver a written notice of withdrawal, or a
facsimile of one, with the required information to the Depositary while you
still have the right to withdraw the Units.
WHAT DOES THE COMPANY'S BOARD THINK OF THE OFFER?
The Purchasers have not sought the approval or disapproval of the Board. The
Board may be expected to respond with the Company's position on the offer in the
next two weeks.
6
WILL THE COMPANY CONTINUE AS A PUBLIC COMPANY?
The Company reported 314 holders of its outstanding Class 1 and 2 Units as of
March 27, 2007. If the total number of Unit holders is below 300, the Company
can elect to discontinue its status as a public reporting company. In fact, the
Company has announced that it plans to so discontinue its status once it gets
below 300 holders, which it plans to attempt to do in the fourth quarter of
2007. However, there has never been a public trading market for the Units and
none is expected to develop, so the Company's status as a public company will
not affect a trading market in the Units. A change in the Company's status as a
public company could reduce the information available to Unit holders about the
Company in the event the information required by the Operating Agreement is not
as extensive as that provided in reports required to be filed by public
companies under applicable rules of the Securities and Exchange Commission.
Further, such potential deregistration would result in the loss of the other
protections afforded by registration.
IF I DECIDE NOT TO TENDER, HOW WILL THE OFFER AFFECT MY UNITS?
The Purchasers do not anticipate that Units held by non-tendering Unit holders
will be affected by the completion of the offer.
WHAT ARE THE PURCHASERS' FUTURE INTENTIONS CONCERNING THE COMPANY?
The Purchasers have no present intention to seek control of the Company or to
change the management or operations of the Company. The Purchasers do not have
any present intention to take action in connection with the liquidation of the
Company or with any extraordinary transaction concerning the Company or its
assets. Although the Purchasers do not have any present intention to take any
action with respect to management or control of the Company, the Purchasers
reserve the right, at an appropriate time, to exercise their rights as members
to vote on matters subject to a member vote, including any vote affecting the
sale of the Company's assets and the liquidation and dissolution of the Company.
The Operating Agreement of the Company prohibits any member from owning more
than 10% of the outstanding Units of the Company, so the Purchasers will not be
in a position to control the Company by virtue of their ownership of Units.
WHAT IS THE MARKET VALUE OF MY UNITS?
The Units do not have a readily ascertainable market value, and neither the Unit
holders nor the Purchasers have any accurate means for determining the actual
present value of the Units. According to the Company, "There is no public
trading market for any of the Classes of Units and there can be no assurance
that a market will ever develop." (Annual Report on Form 10-K filed March 31,
2006). The Purchasers review of independent secondary market reporting
publications such as The Stanger Report and The Direct Investments Spectrum
(formerly The Partnership Spectrum), reported no trading prices on secondary
markets during the 3rd Quarter 2006 and no trading prices on secondary markets
in Nov/Dec 2006, respectively. The American Partnership Board, another
independent, third-party source, reported no trades in January 2007. The
information published by these independent sources is believed to be the product
of their private market research and does not constitute the comprehensive
transaction reporting of a securities exchange. Accordingly, the Purchasers do
not know whether the foregoing information is accurate or complete. Further, the
Company disclosed that its subsidiary purchased 16,209 Class 1 and 2 Units in
the third quarter of 2006 for an average price of $1.81 per Unit (not including
redeemed Units). The Purchasers are unaware of any other recent trading prices.
Although there can be no certainty as to the actual present value of the Units,
the Purchasers have estimated, solely for the purposes of determining an
acceptable Offer price, that the Company could have an estimated liquidation
value of approximately $2.70 per Unit, or higher. This estimate is based upon
the price at which Class 1 Units will be redeemed for those Unit holders who
exercised the Put Right of the Class 1 Units in September 2005. It should be
noted, that the Purchasers have not made an independent appraisal of the Units
or the Company's properties, and are not qualified to appraise real estate.
Accordingly, there can be no assurance that this estimate accurately reflects an
approximate value of the Units or that the actual amounts which may be realized
by Unit holders for the may not vary substantially from this estimate. The Class
1 Units may be converted into Class 2 or Class 3 Units. The Class 2 Units also
have a Put Right that may be exercised in 2010 for redemption by June 30, 2012.
The exercise price in 2010 may be higher or lower than $2.70 per Unit.
TO WHOM CAN I TALK IF I HAVE QUESTIONS ABOUT THE TENDER OFFER?
You can call MacKenzie Patterson Fuller, LP, toll-free, at 800-854-8357.
7
To the Unit holders of JCM PARTNERS, LLC:
INTRODUCTION
The Purchasers hereby offer to purchase 2,750,469 Units at a purchase
price of $1.40 per Unit ("Offer Price"), less the amount of any distributions
declared or paid with respect to the Units between March 30, 2007, and the
Expiration Date, in cash, without interest, upon the terms and subject to the
conditions set forth in the Offer. The Purchasers are unaware of any
distributions declared or paid since March 30, 2007. Unit holders who tender
their Units will not be obligated to pay any Company transfer fees, or any other
fees, expenses or commissions in connection with the tender of Units. The
Purchasers will pay all such costs and all charges and expenses of the
Depositary, an affiliate of certain of the Purchasers, as depositary in
connection with the Offer.
For further information concerning the Purchasers, see Section 11 below
and Schedule I. None of the Purchasers or the Depositary is affiliated with the
Company or the Company's Board. The address of the Company's principal executive
offices is 2151 Salvio Street, Suite 325, Concord, CA 94520, and its phone
number is (925) 676-1966
Unit holders are urged to consider the following factors:
o The Offer will provide Unit holders with an opportunity to liquidate
their investment without the usual transaction costs associated with
market sales. Unit holders may have a more immediate need to use the
cash now tied up in an investment in the Units and may wish to sell
them to the Purchasers.
o Unit holders who tender their Units will give up the opportunity to
participate in any future benefits from the ownership of Units,
including potential future distributions by the Company from
property dispositions or operations from future development, if any,
and the purchase price per Unit payable to a tendering Unit holder
by the Purchasers may be less than the total amount which might
otherwise be received by the Unit holder with respect to the Unit
over the remaining term of the Company.
o The Purchasers are making the Offer for investment purposes and with
the intention of making a profit from the ownership of the Units. In
establishing the purchase price of $1.40 per Unit, the Purchasers
are motivated to establish the lowest price which might be
acceptable to Unit holders consistent with the Purchasers'
objectives. There is no public market for the Units, and neither the
Unit holders nor the Purchasers have any accurate means for
determining the actual present value of the Units. Although there
can be no certainty as to the actual present value of the Units, the
Purchasers have estimated, solely for the purposes of determining an
acceptable Offer price, that the Company could have an estimated
liquidation value of approximately $2.70 per Unit. This estimate is
based upon the price at which Class 1 Units will be redeemed for
those Unit holders who exercised the Put Right. There can be no
assurance as to the timing or amount of any future Company
distributions, and there can be no assurance that the Purchasers'
estimate accurately reflects an approximate value of the Units or
that the actual amounts which may be realized by holders for the
Units may not vary substantially from this estimate.
o The Depositary, MacKenzie Patterson Fuller, LP, is an affiliate of
certain of the Purchasers. No independent party will hold securities
tendered until the offer closes and payment is made. Because there
is no independent intermediary to hold the Purchasers' funds and
tendered securities, the Purchasers may have access to the
securities before all conditions to the Offer have been satisfied
and selling Unit holders have been paid; however, neither the
Depository nor the Purchasers has any rights with respect to the
Units prior to the Expiration Date and acceptance by the Purchasers
for payment. Further, by tendering your Units, you are agreeing to
arbitrate any disputes that may arise between you and the Purchasers
or the Depositary, to subject yourself to personal jurisdiction in
California, and that the prevailing party in any such action will be
entitled to recover attorney fees and costs.
o The Offer allows Unitholders the option to sell 'All or None' of
their Units, thereby allowing Unitholders the option to avoid
proration if more than 2,750,469 Units are tendered. See Section
2--Acceptance for Payment and Payment for Units; Proration and
Section 4--Withdrawal Rights; Automatic Withdrawal Option. The
Purchasers may accept only a portion of the Units tendered by a
Unitholder if a total of more than 2,750,469 Units are tendered and
the Unitholder does not select the 'All or None' option.
8
Establishment of the Offer Price
The Purchasers have set the Offer Price at $1.40 per Unit, less the amount
of any distributions declared or made with respect to the Units between March
30, 2007 and the Expiration Date. In determining the Offer Price, the Purchasers
analyzed a number of quantitative and qualitative factors, including: (i) the
lack of a secondary market for resales of the Units and the resulting lack of
liquidity of an investment in the Company; (ii) the estimated value of the
Company's real estate assets; and (iii) the costs to the Purchasers associated
with acquiring the Units.
The Company made the following statements in its Annual Report on Form
10-K filed March 31, 2006: "There is no public trading market for any of the
Classes of Units and there can be no assurance that a market will ever develop."
The lack of any public market for the sale of Units means that Unit holders have
limited alternatives if they seek to sell their Units. As a result of such
limited alternatives for Unit holders, the Purchasers may not need to offer as
high a price for the Units as they would otherwise. On the other hand, the
Purchasers take a greater risk in establishing a purchase price as there is no
prevailing market price to be used for reference and the Purchasers themselves
will have limited liquidity for the Units upon consummation of the purchase. The
Purchasers review of independent secondary market reporting publications such as
Stanger Report and The Direct Investments Spectrum (formerly The Partnership
Spectrum), reported no trading prices on secondary markets during the 3rd
Quarter 2006 and no trading prices on secondary markets in Nov/Dec 2006,
respectively. The American Partnership Board, another independent, third-party
source, reported no trades in January 2007. The information published by these
independent sources is believed to be the product of their private market
research and does not constitute the comprehensive transaction reporting of a
securities exchange. Accordingly, the Purchasers do not know whether the
foregoing information is accurate or complete. Further, the Company disclosed
that its subsidiary purchased 16,209 Class 1 and 2 Units in the third quarter of
2006 for an average price of $1.81 per Unit (not including redeemed Units). The
Purchasers are unaware of any other recent trading prices.
The Purchasers are offering to purchase Units which are an illiquid
investment and are not offering to purchase the Company's underlying assets. The
Company has disclosed that certain Class 1 Unit holders have elected to have the
Company redeem their units at $2.78 less distributions paid from July 1, 2005
through June 30, 2006, or approximately $2.70 per Unit (see Quarterly Report on
Form 10-Q for the period ending September 30, 2006). The Company will pay
redeeming unit holders on or prior to June 30, 2007. Those Unit holders that did
not exercise their put right forfeited it, and may now only convert into Class 2
Units, which have a put right requiring the Company to pay the Exercise Price,
if exercised, by June 30, 2012 (which price will be determined at the time the
put rights are exercised). The Purchasers' valuation is based upon the Class 1
Unit exercise price mentioned above, but the remaining Class 1 and Class 2 Units
may not be redeemed until June 30, 2012. Accordingly, that exercise price is
only one factor used by the Purchasers in arriving at the Offer Price.
The Offer Price represents the price at which the Purchasers are willing
to purchase Units. The Purchasers arrived at the $1.40 Offer Price by applying a
liquidity discount to their calculations of Estimated Liquidation Value of the
Company's assets, after deducting selling and liquidation costs. The Purchasers
apply such a discount with the intention of making a profit by holding on to the
Units until the Company is liquidated or the Units are redeemed. No independent
person has been retained to evaluate or render any opinion with respect to the
fairness of the Offer Price and no representation is made by the Purchasers or
any affiliate of the Purchasers as to such fairness. Other measures of the value
of the Units may be relevant to Unit holders. Unit holders are urged to consider
carefully all of the information contained herein and consult with their own
advisers, tax, financial or otherwise, in evaluating the terms of the Offer
before deciding whether to tender Units.
The Offer is not made with any current view toward or plan or purpose of
acquiring Units in a series of successive and periodic offers. Nevertheless, the
Purchasers reserve the right to gauge the response to this solicitation, and, if
not successful in purchasing 2,750,469 Units pursuant to this Offer, may
consider future offers. Factors affecting the Purchasers' future interest in
acquiring additional Units include, but are not limited to, the relative success
of the current Offer, any increase or decrease in the availability of capital
for investment by the Purchasers and their investment fund affiliates, the
current diversification and performance of each affiliated fund's portfolio of
real estate interests, the development of any public market in the Units or
actions by unrelated parties to tender for or purchase Units, the status of and
changes and trends in the Company's operations, announcement of pending property
sales and the proposed terms of sales, and local and national real estate and
financial market developments and trends.
9
General Background Information
Certain information contained in this Offer to Purchase which relates to,
or represents, statements made by the Company or the Board, has been derived
from information provided in reports filed by the Company with the Securities
and Exchange Commission.
Tendering Unit holders will not be obligated to pay transfer fees,
brokerage fees, or commissions on the sale of the Units to the Purchasers
pursuant to the Offer. The Purchasers will pay all charges and expenses incurred
in connection with the Offer. The Purchasers desire to purchase up to 2,750,469
Units. If the number of Units validly tendered and not properly withdrawn on or
prior to the Expiration Date is less than or equal to 2,750,469, we will
purchase all Units so tendered and not withdrawn, upon the terms and subject to
the conditions of the Offer. However, if more than 2,750,469 Units are so
tendered and not withdrawn, we will accept for payment and pay for 2,750,469
Units so tendered, pro rata according to the number of Units so tendered,
adjusted by rounding down to the nearest whole number of Units tendered by each
Unit holder to avoid purchases of fractional Units, as appropriate. However, you
have the option to sell `All or None' of your Units by checking the appropriate
box on the Letter of Transmittal. If you check that box, we will only purchase
your Units if we can purchase all of your Units; otherwise, you will be deemed
to automatically withdraw your tender. See Section 2. Acceptance for Payment and
Payment for Units; Proration and Section 4. Withdrawal Rights.
If, prior to the Expiration Date, the Purchasers increase the
consideration offered to Unit holders pursuant to the Offer, such increased
consideration will be paid with respect to all Units that are purchased pursuant
to the Offer, whether or not such Units were tendered prior to such increase in
consideration.
Unit holders are urged to read this Offer to Purchase and the accompanying
Letter of Transmittal carefully before deciding whether to tender their Units.
TENDER OFFER
Section 1. Terms of the Offer. Upon the terms and subject to the conditions of
the Offer, the Purchasers will accept for payment and pay for Units validly
tendered on or prior to the Expiration Date and not withdrawn in accordance with
Section 4 of this Offer to Purchase. The term "Expiration Date" shall mean 11:59
p.m., Pacific Time, on May 14, 2007, unless and until the Purchasers shall have
extended the period of time for which the Offer is open, in which event the term
"Expiration Date" shall mean the latest time and date on which the Offer, as so
extended by the Purchasers, shall expire.
The Offer is conditioned on satisfaction of certain conditions. See
Section 13, which sets forth in full the conditions of the Offer. The Purchasers
reserve the right (but shall not be obligated), in their sole discretion and for
any reason, to waive any or all of such conditions. If, by the Expiration Date,
any or all of such conditions have not been satisfied or waived, the Purchasers
reserve the right (but shall not be obligated) to (i) decline to purchase any of
the Units tendered, terminate the Offer and return all tendered Units to
tendering Unit holders, (ii) waive all the unsatisfied conditions and, subject
to complying with applicable rules and regulations of the Commission, purchase
all Units validly tendered, (iii) extend the Offer and, subject to the right of
Unit holders to withdraw Units until the Expiration Date, retain the Units that
have been tendered during the period or periods for which the Offer is extended
or (iv) to amend the Offer. Notwithstanding the foregoing, upon the expiration
of the Offer, if all conditions are either satisfied or waived, the Purchasers
will promptly pay for all validly tendered Units upon confirmation that the
Board will either transfer the Units or recognize the change of address for
distributions and correspondence on the Units, and the Purchasers do not intend
to imply that the foregoing rights of the Purchasers would permit the Purchasers
to delay payment for validly tendered Units following expiration.
The Purchasers do not anticipate and have no reason to believe that any
condition or event will occur that would prevent the Purchasers from purchasing
tendered Units as offered herein.
Further, by tendering your Units, you are agreeing to arbitrate any
disputes that may arise between you and the Purchasers or the Depositary, to
subject yourself to personal jurisdiction in California, and that the prevailing
party in any such action will be entitled to recover attorney fees and costs.
However, by so doing, you are not waiving any of your rights under the federal
securities laws or any rule or regulation thereunder.
10
Section 2. Acceptance for Payment and Payment for Units Acceptance for Payment
and Payment for Units; Proration. Upon the terms and subject to the conditions
of the Offer (including, if the Offer is extended or amended, the terms and
conditions of any extension or amendment), the Purchasers will accept for
payment, and will pay for, Units validly tendered and not withdrawn in
accordance with Section 4, promptly following the Expiration Date and upon
confirmation that the Board will either transfer the Units or recognize the
change of address for distributions and correspondence on the Units. In all
cases, payment for Units purchased pursuant to the Offer will be made only after
timely receipt by the Depositary of a properly completed and duly executed
Letter of Transmittal (or facsimile thereof) and any other documents required by
the Letter of Transmittal.
The Purchasers desire to purchase up to 2,750,469 Units. If the number of
Units validly tendered and not properly withdrawn on or prior to the Expiration
Date is less than or equal to 2,750,469, we will purchase all Units so tendered
and not withdrawn, upon the terms and subject to the conditions of the Offer.
However, if more than 2,750,469 Units are so tendered and not withdrawn, we will
accept for payment and pay for 2,750,469 Units so tendered, pro rata according
to the number of Units so tendered, adjusted by rounding down to the nearest
whole number of Units tendered by each Unit holder to avoid purchases of
fractional Units, as appropriate.
In the event that proration is required, because of the difficulty of
immediately determining the precise number of Units to be accepted, the
Purchasers will announce the final results of proration as soon as practicable,
but in no event later than five business days following the Expiration Date. The
Purchasers will not pay for any Units tendered until after the final proration
factor has been determined.
Unitholders may indicate, by checking a box on the Letter of Transmittal
(the 'All or None' Box), that they only wish to sell their Units if they will be
able to sell all of their Units, without any proration. See Section
4--Withdrawal Rights. If more than 2,750,469 Units have been properly tendered
without checking the All or None Box, then the above description of proration
will apply only to tenders of such Units that do not have the All or None Box
checked.
For purposes of the Offer, the Purchasers shall be deemed to have accepted
for payment (and thereby purchased) tendered Units when, as and if the
Purchasers give oral or written notice to the Depositary of the Purchasers'
acceptance for payment of such Units pursuant to the Offer. Upon the terms and
subject to the conditions of the Offer, payment for Units purchased pursuant to
the Offer will in all cases be made by deposit of the Offer Price with the
Depositary, which will act as agent for the tendering Unit holders for the
purpose of receiving payment from the Purchasers and transmitting payment to
tendering Unit holders.
Under no circumstances will interest be paid on the Offer Price by reason
of any delay in making such payment.
If any tendered Units are not purchased for any reason (other than due to
proration as described above), the Letter of Transmittal with respect to such
Units not purchased will be of no force or effect. If, for any reason
whatsoever, acceptance for payment of, or payment for, any Units tendered
pursuant to the Offer is delayed or the Purchasers are unable to accept for
payment, purchase or pay for Units tendered pursuant to the Offer, then, without
prejudice to the Purchasers' rights under Section 13, the Depositary may,
nevertheless, on behalf of the Purchasers, retain tendered Units and such Units
may not be withdrawn (but subject to compliance with Rule 14e-1(c) under the
Exchange Act, which requires that the Purchasers pay the consideration offered
or return the Units deposited by or on behalf of the Unit holder promptly after
the termination or withdrawal of a tender offer), except to the extent that the
tendering Unit holders are entitled to withdrawal rights as described in Section
4.
If, prior to the Expiration Date, the Purchasers shall increase the
consideration offered to Unit holders pursuant to the Offer, such increased
consideration shall be paid for all Units accepted for payment pursuant to the
Offer, whether or not such Units were tendered prior to such increase.
Section 3. Procedures for Tendering Units.
Valid Tender. For Units to be validly tendered pursuant to the Offer, a properly
completed and duly executed Letter of Transmittal (a copy of which is enclosed
with this Offer to Purchase, printed on purple paper) with any other documents
required by the Letter of Transmittal must be received by the Depositary at its
address set forth on the back cover of this Offer to Purchase on or prior to the
Expiration Date. A Unit holder may tender any or all Units owned by such Unit
holder.
11
In order for a tendering Unit holder to participate in the Offer, Units must be
validly tendered and not withdrawn prior to the Expiration Date, which is 11:59
p.m., Pacific Time, on May 14, 2007, or such date to which the Offer may be
extended.
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 Depositary.
Backup Federal Income Tax Withholding. To prevent the possible application of
31% backup federal income tax withholding with respect to payment of the Offer
Price for Units purchased pursuant to the Offer, a tendering Unit holder must
provide the Depositary with such Unit holder's correct taxpayer identification
number and make certain certifications that such Unit holder is not subject to
backup federal income tax withholding. Each tendering Unit holder must insert in
the Letter of Transmittal the Unit holder's taxpayer identification number or
social security number in the space provided on the front of the Letter of
Transmittal. The Letter of Transmittal also includes a substitute Form W-9,
which contains the certifications referred to above. (See the Instructions to
the Letter of Transmittal.)
FIRPTA Withholding. To prevent the withholding of federal income tax in an
amount equal to 10% of the sum of the Offer Price plus the amount of Company
liabilities allocable to each Unit tendered, each Unit holder must complete the
FIRPTA Affidavit included in the Letter of Transmittal certifying such Unit
holder's taxpayer identification number and address and that the Unit holder is
not a foreign person. (See the Instructions to the Letter of Transmittal and
"Section 6. Certain Federal Income Tax Consequences.")
Other Requirements. By executing a Letter of Transmittal as set forth above, a
tendering Unit holder irrevocably appoints the designees of the Purchasers as
such Unit holder's proxies, in the manner set forth in the Letter of
Transmittal, each with full power of substitution, to the full extent of such
Unit holder's rights with respect to the Units tendered by such Unit holder and
accepted for payment by the Purchasers. Such appointment will be effective when,
and only to the extent that, the Purchasers accept such Units for payment. Upon
such acceptance for payment, all prior proxies given by such Unit holder with
respect to such Units will, without further action, be revoked, and no
subsequent proxies may be given (and if given will not be effective). The
designees of the Purchasers will, with respect to such Units, be empowered to
exercise all voting and other rights of such Unit holder as they in their sole
discretion may deem proper at any meeting of Unit holders, by written consent or
otherwise. In addition, by executing a Letter of Transmittal, a Unit holder also
assigns to the Purchasers all of the Unit holder's rights to receive
distributions from the Company with respect to Units which are accepted for
payment and purchased pursuant to the Offer, other than those distributions
declared or paid during the period commencing on the Offer Date and terminating
on the Expiration Date.
Determination of Validity; Rejection of Units; Waiver of Defects; No Obligation
to Give Notice of Defects. All questions as to the validity, form, eligibility
(including time of receipt), and acceptance for payment of any tender of Units
pursuant to the procedures described above will be determined by the Purchasers,
in their sole discretion, which determination shall be final and binding. The
Purchasers reserve the absolute right to reject any or all tenders if not in
proper form or if the acceptance of, or payment for, the absolute right to
reject any or all tenders if not in proper form or if the acceptance of, or
payment for, the Units tendered may, in the opinion of the Purchasers' counsel,
be unlawful. The Purchasers also reserve the right to waive any defect or
irregularity in any tender with respect to any particular Units of any
particular Unit holder, and the Purchasers' interpretation of the terms and
conditions of the Offer (including the Letter of Transmittal and the
Instructions thereto) will be final and binding. Neither the Purchasers, the
Depositary, nor any other person will be under any duty to give notification of
any defects or irregularities in the tender of any Units or will incur any
liability for failure to give any such notification.
A tender of Units pursuant to any of the procedures described above will
constitute a binding agreement between the tendering Unit holder and the
Purchasers upon the terms and subject to the conditions of the Offer, including
the tendering Unit holder's representation and warranty that (i) such Unit
holder owns the Units being tendered within the meaning of Rule 14e-4 under the
Exchange Act and (ii) the tender of such Unit complies with Rule 14e-4. Rule
14e-4 requires, in general, that a tendering security holder actually be able to
deliver the security subject to the tender offer, and is of concern particularly
to any Unit holders who have granted options to sell or purchase the Units, hold
option rights to acquire such securities, maintain "short" positions in the
Units (i.e., have borrowed the
12
Units) or have loaned the Units to a short seller. Because of the nature of
limited liability company interests, the Purchasers believe it is unlikely that
any option trading or short selling activity exists with respect to the Units.
In any event, a Unit holder will be deemed to tender Units in compliance with
Rule 14e-4 and the Offer if the holder is the record owner of the Units and the
holder (i) delivers the Units pursuant to the terms of the Offer, (ii) causes
such delivery to be made, (iii) guarantees such delivery, (iv) causes a guaranty
of such delivery, or (v) uses any other method permitted in the Offer (such as
facsimile delivery of the Transmittal Letter).
Section 4. Withdrawal Rights. Except as otherwise provided in this Section 4,
all tenders of Units pursuant to the Offer are irrevocable, provided that Units
tendered pursuant to the Offer may be withdrawn at any time prior to the
Expiration Date and, unless theretofore accepted for payment as provided in this
Offer to Purchase, may also be withdrawn at any time on or after May 29, 2007.
For withdrawal to be effective a written or facsimile transmission notice
of withdrawal must be timely received by the Depositary at the address or the
facsimile number set forth in the attached Letter of Transmittal. Any such
notice of withdrawal must specify the name of the person who tendered the Units
to be withdrawn and must be signed by the person(s) who signed the Letter of
Transmittal in the same manner as the Letter of Transmittal was signed.
If purchase of, or payment for, Units is delayed for any reason or if the
Purchasers are unable to purchase or pay for Units for any reason, then, without
prejudice to the Purchasers' rights under the Offer, tendered Units may be
retained by the Depositary on behalf of the Purchasers and may not be withdrawn
except to the extent that tendering Unit holders are entitled to withdrawal
rights as set forth in this Section 4, subject to Rule 14e-1(c) under the
Exchange Act, which provides that no person who makes a tender offer shall fail
to pay the consideration offered or return the securities deposited by or on
behalf of security holders promptly after the termination or withdrawal of the
tender offer.
All questions as to the form and validity (including time of receipt) of
notices of withdrawal will be determined by the Purchasers, in their sole
discretion, which determination shall be final and binding. Neither the
Purchasers, nor the Depositary, nor any other person will be under any duty to
give notification of any defects or irregularities in any notice of withdrawal
or will incur any liability for failure to give any such notification.
Any Units properly withdrawn will be deemed not to be validly tendered for
purposes of the Offer. Withdrawn Units may be re-tendered, however, by following
the procedures described in Section 3 at any time prior to the Expiration Date.
Automatic Withdrawal Option. Unitholders may indicate, by checking a box
on the Letter of Transmittal (the 'All or None Box'), that they only wish to
sell their Units if they will be able to sell all of their Units, without any
proration. If at any time during the day of the Expiration Date more than
2,750,469 Units have been properly tendered, unless the Purchaser amends the
Offer to increase the number of Units to be purchased, the Purchaser will deem
all Units from Unitholders that checked the All or None Box to be withdrawn and
not validly tendered for purposes of the Offer. Neither the Purchaser nor any
other person will be under any duty to give any notice that such automatic
withdrawal will occur. Unitholders may change their election whether or not to
check the All or None Box at any time on or prior to the Expiration Date by
submitting a new Letter of Transmittal with their preferred election, in the
manner described in Section 3 herein.
Section 5. Extension of Tender Period; Termination; Amendment. The Purchasers
expressly reserve the right, in their sole discretion, at any time and from time
to time, (i) to extend the period of time during which the Offer is open and
thereby delay acceptance for payment of, and the payment for, any Units by
giving oral or written notice of such extension to the Depositary, (ii) upon the
occurrence or failure to occur of any of the conditions specified in Section 13,
to terminate the Offer and not accept for payment any Units by giving oral or
written notice of such termination to the Depositary, and (iii) to amend the
Offer in any respect (including, without limitation, by increasing or decreasing
the consideration offered or the number of Units being sought in the Offer or
both or changing the type of consideration) by giving oral or written notice of
such amendment to the Depositary prior to the Expiration Date. Any extension,
termination, or amendment will be followed as promptly as practicable by public
announcement, the announcement in the case of an extension to be issued no later
than 9:00 a.m., Eastern Time, on the next business day after the previously
scheduled Expiration Date, in accordance with the public announcement
requirement of Rule 14d-4(c) under the Exchange Act. Without limiting the manner
in which the Purchasers may choose to make any public announcement, except as
provided by applicable law (including Rule 14d-4(c) under the
13
Exchange Act), the Purchasers will have no obligation to publish, advertise, or
otherwise communicate any such public announcement, other than by issuing a
press release. The Purchasers may also be required by applicable law to
disseminate to Unit holders certain information concerning the extensions of the
Offer and any material changes in the terms of the Offer. The Purchasers will
not provide a subsequent offering period following the Expiration Date.
If the Purchasers extend the Offer, or if the Purchasers (whether before
or after its acceptance for payment of Units) are delayed in their payment for
Units or are unable to pay for Units pursuant to the Offer for any reason, then,
without prejudice to the Purchasers' rights under the Offer, the Depositary may
retain tendered Units on behalf of the Purchasers, and such Units may be
withdrawn to the extent tendering Unit holders are entitled to withdrawal rights
as described in Section 4 (generally, if notice of withdrawal is given to the
Depository prior to the Expiration Date). However, the ability of the Purchasers
to delay payment for Units that the Purchasers have accepted for payment is
limited by Rule 14e-1 under the Exchange Act, which requires that the Purchasers
pay the consideration offered or return the securities deposited by or on behalf
of holders of securities promptly after the termination or withdrawal of the
Offer, except that the Purchasers may delay payment until they receive
confirmation that the Board will either transfer the Units or recognize the
change of address for distributions and correspondence on the Units.
If the Purchasers make a material change in the terms of the Offer or the
information concerning the Offer or waive a material condition of the Offer, the
Purchasers will extend the Offer to the extent required by Rules 14d-4(c),
14d-6(d) and 14e-1 under the Exchange Act. The minimum period during which an
offer must remain open following a material change in the terms of the offer or
information concerning the offer, other than a change in price or a change in
percentage of securities sought, will depend upon the facts and circumstances,
including the relative materiality of the change in the terms or information.
With respect to a change in price or a change in percentage of securities sought
(other than an increase of not more than 2% of the securities sought), however,
a minimum ten business day period is generally required to allow for adequate
dissemination to security holders and for investor response. As used in this
Offer to Purchase, "business day" means any day other than a Saturday, Sunday or
a federal holiday, and consists of the time period from 12:01 a.m. through
midnight, Pacific Time. Any material change in the terms of the Offer will be
published, sent, or given to you in a manner reasonably designed to inform you
of such change; in most cases we will mail you supplemental materials.
Section 6. Material Federal Income Tax Consequences. THE FEDERAL INCOME TAX
DISCUSSION SET FORTH BELOW DOES NOT PURPORT TO ADDRESS ALL ASPECTS OF TAXATION
THAT MAY BE RELEVANT TO A PARTICULAR UNIT HOLDER. For example, this discussion
does not address the effect of any applicable foreign, state, local or other tax
laws other than federal income tax laws. Certain Unit holders (including trusts,
foreign persons, tax-exempt organizations or corporations subject to special
rules, such as life insurance companies or S corporations) may be subject to
special rules not discussed below. This discussion is based on the Internal
Revenue Code of 1986, as amended (the "Code"), existing regulations, court
decisions and Internal Revenue Service ("IRS") rulings and other pronouncements.
EACH UNIT HOLDER TENDERING UNITS SHOULD CONSULT SUCH UNIT HOLDER'S OWN TAX
ADVISOR AS TO THE PARTICULAR TAX CONSEQUENCES TO SUCH UNIT HOLDER OF ACCEPTING
THE OFFER, INCLUDING THE APPLICATION OF THE ALTERNATIVE MINIMUM TAX AND FEDERAL,
FOREIGN, STATE, LOCAL AND OTHER TAX LAWS.
The following discussion is based on the assumption that the Company is
treated as a Company for federal income tax purposes and is not a "publicly
traded Company" as that term is defined in the Code. Certain Companys are
classified as "publicly traded Companys" and, subject to certain exceptions, are
taxed as corporations for federal income tax purposes. A Company is a publicly
traded Company if the Company interests are traded on an established securities
market or readily tradable on a secondary market (or the substantial equivalent
of a secondary market). The Units are not traded on an established securities
market. In the unlikely event that the Company becomes a "publicly traded
Company" and is not excepted from federal income tax, there would be several
adverse tax consequences to the Unit holders. For instance, the Company would be
regarded as having transferred all of its assets (subject to all of its
liabilities) to a newly-formed corporation in exchange for stock which would be
deemed distributed to the Unit holders in liquidation of their interests in the
Company. In addition, if the Company is deemed to be a "publicly traded
Company," then special rules under Code Section 469 govern the treatment of
losses and income of the Company. We cannot assure you that the Company will not
be treated as a publicly traded Company because the IRS could determine that the
Units are readily traded on a secondary market by virtue of the fact that there
have been some tender offers and auction trades of Units, however unlikely and
inconsistent with the
14
Code that would be.
Gain or Loss. A taxable Unit holder will recognize a gain or loss on the sale of
such Unit holder's Units in an amount equal to the difference between (i) the
amount realized by such Unit holder on the sale and (ii) such Unit holder's
adjusted tax basis in the Units sold. The amount realized by a Unit holder will
include the Unit holder's share of the Company's liabilities, if any (as
determined under Code section 752 and the regulations thereunder). If the Unit
holder reports a loss on the sale, such loss generally could not be currently
deducted by such Unit holder except against such Unit holder's capital gains
from other investments. In addition, such loss would be treated as a passive
activity loss. (See "Suspended Passive Activity Losses" below.)
The adjusted tax basis in the Units of a Unit holder will depend upon
individual circumstances. (See also "Company Allocations in Year of Sale"
below.) Each Unit holder who plans to tender hereunder should consult with the
Unit holder's own tax advisor as to the Unit holder's adjusted tax basis in the
Unit holder's Units and the resulting tax consequences of a sale.
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.
A tax-exempt Unit holder (other than an organization described in Code
Section 501(c)(7) (social club), 501(c)(9) (voluntary employee benefit
association), 501(c)(17) (supplementary unemployment benefit trust), or
501(c)(20) (qualified group legal services plan)) should not be required to
recognize unrelated trade or business income upon the sale of its Units pursuant
to the Offer, assuming that such Unit holder does not hold its Units as a
"dealer" and has not acquired such Units with debt financed proceeds.
Company Allocations in Year of Sale. A tendering Unit holder will be allocated
the Unit holder's pro rata share of the annual taxable income and losses from
the Company with respect to the Units sold for the period through the date of
sale, even though such Unit holder will assign to the Purchasers their rights to
receive certain cash distributions with respect to such Units. Such allocations
and any Company 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.
Possible Tax Termination. The Code provides that if 50% or more of the capital
and profits interests in a Company are sold or exchanged within a single
12-month period, such Company generally will terminate for federal income tax
purposes. It is possible that the Company could terminate for federal income tax
purposes as a result of consummation of the Offer (if another 40% had
transferred in the same period, which is not likely), although the Operating
Agreement prevents transfers of Units that would cause such a termination. A tax
termination of the Company could have an effect on a corporate or other
non-individual Unit holder whose tax year is not the calendar year, as such a
Unit holder might recognize more than one year's Company tax items in one tax
return, thus accelerating by a fraction of a year the effects from such items.
Suspended "Passive Activity Losses". A Unit holder who sells all of the Unit
holder's Units would be able to deduct "suspended" passive activity losses from
the Company, if any, in the year of sale free of the passive activity loss
limitation. As a member of the Company, which was engaged in real estate
activities, the ability of a Unit holder, who or which is subject to the passive
activity loss rules, to claim tax losses from the Company was limited. Upon sale
of all of the Unit holder's Units, such Unit holder would be able to use any
"suspended" passive activity losses first against gain, if any, on sale of the
Unit holder's Units and then against income from any other source.
Foreign Unit holders. Gain realized by a foreign Unit holder on a sale of a Unit
pursuant to the Offer will be subject to federal income tax. Under Section 1445
of the Code, the transferee of a Company interest held by a foreign person is
generally required to deduct and withhold a tax equal to 10% of the amount
realized on the disposition. The Purchasers will withhold 10% of the amount
realized by a tendering Unit holder from the purchase price payment to be made
to such Unit holder unless the Unit holder properly completes and signs the
FIRPTA Affidavit included as part of the Letter of Transmittal certifying the
Unit holder's TIN, that such Unit holder is not a foreign person and the Unit
holder's address. Amounts withheld would be creditable against a foreign Unit
holder's
15
federal income tax liability and, if in excess thereof, a refund could be
obtained from the Internal Revenue Service by filing a U.S. income tax return.
Section 7. Effects of the Offer.
Limitations on Resales. The Purchasers do not believe the provisions of the
Operating Agreement should restrict transfers of Units pursuant to the Offer,
although no more than 50% of the Units may be transferred in any 12-month
period. This limitation will not affect the tender of Units under this Offer
because, first, it is highly unlikely that another 40% of the Units of the
Company have transferred in that period, and second, because subject to the
terms of the Offer, we will pay for the Units upon confirmation that the Board
will either transfer the Units or recognize the change of address for
distributions and correspondence on the Units, and, under the terms of the
Letter of Transmittal, we will take a power of attorney over your Units that
will permit us to change the address to which distributions are sent. We will
then wait to transfer the Units tendered until the Company can effect the
transfer of record title in accordance with the Operating Agreement. Further,
the Operating Agreement prohibits any member from owning 10% of the Outstanding
Units, but this Offer is for only 9.93% of outstanding Class 1 and 2 Units not
owned by the Company's subsidiary, or 6.7% of all outstanding Class 1 and Class
2 Units, and an even lesser percentage of all outstanding Units.
Effect on Trading Market. If a substantial number of Units are purchased
pursuant to the Offer the result would be a reduction in the number of Unit
holders. Reducing the number of security holders in certain kinds of equity
securities might be expected to result in a reduction in the liquidity and
volume of activity in the trading market for the security. However, there is no
established public trading market for the Units and none is expected to develop.
Therefore, the Purchasers do not believe a reduction in the number of Unit
holders will materially further restrict the Unit holders' ability to find
purchasers for their Units through secondary market transactions.
Voting Power of Purchasers. If the Purchasers acquire a significant number of
the Units sought hereunder could give the Purchasers a significant, but not
controlling, voting interest in matters subject to a member vote. Votes of Unit
holders would only be solicited, if ever, for matters affecting the fundamental
structure of the Company, such as the sale of the properties and termination of
the Company, and the affirmative vote of more than 50% of the outstanding Units
(not a mere quorum) is required to effect action. The Purchasers and their
affiliates do not intend to call for any such vote in the foreseeable future. A
Unit holder who tenders Units to the Purchasers grants a proxy to the Purchasers
as of the date of acceptance of the tender, granting the Purchasers the right to
vote such Units it their sole discretion as to any matters for which the Company
has established a record date prior to the time such. Units are transferred by
the Company to the Purchasers. The Purchasers reserve the right to exercise any
and all rights they might hold in the event that any vote is called by the
Board, or if, in the future, changes in circumstances would dictate that they or
other members exercise their right to call a vote. The Operating Agreement of
the Company prohibits any member from owning more than 10% of the outstanding
Units of the Company, so the Purchasers will not be in a position to control the
Company by virtue of their ownership of Units.
Other Potential Effects. The Units are registered under the Exchange Act, which
requires, among other things that the Company furnish certain information to its
Unit holders and to the Commission and comply with the Commission's proxy rules
in connection with meetings of, and solicitation of consents from, Unit holders.
Registration and reporting requirements could be terminated by the Company if
the number of record holders falls below 300, or below 500 if the Company's
total assets are below $10 million for three consecutive preceding fiscal years.
The Company reported a total of 314 members as of March 27, 2007, but the
Purchasers are offering to purchase up to 2,750,469 Units. Further, the Company
has announced that it plans on trying to get the number of holders below 300 so
that it can de-register. It is also likely that the Offer could result in the
total number of Unit holders falling below the foregoing 300 holder level. As
disclosed by the Company in its public reports, however, there has never been a
public trading market for the Units and none is expected to develop, so the
Company's status as a public company will not affect a trading market in the
Units. A change in the Company's status as a public company could reduce the
information available to Unit holders about the Company in the event the
information required by the Operating Agreement is not as extensive as that
provided in reports required to be filed by public companies under applicable
rules of the Securities and Exchange Commission.
Section 8. Future Plans. Following the completion of the Offer, the Purchasers,
or their affiliates, may acquire additional Units. Any such acquisitions may be
made through private purchases, one or more future tender offers or by any other
means deemed advisable or appropriate. Any such acquisitions may be at a
consideration higher or lower than the consideration to be paid for the Units
purchased pursuant to the Offer. The Purchasers are seeking to
16
purchase a total of 2,750,469 Units. If the Purchasers acquire fewer than
2,750,469 Units pursuant to the Offer, the Purchasers may seek to make further
purchases on the open market at prevailing prices, or solicit Units pursuant to
one or more future tender offers at the same price, a higher price or, if the
Company's circumstances change, at a lower price. Alternatively, the Purchasers
may discontinue any further purchases of Units after termination of the Offer,
regardless of the number of Units purchased. The Offer is not made with any
current view toward or plan or purpose of acquiring Units in a series of
successive and periodic offers. Nevertheless, as noted above, the Purchasers
reserve the right to gauge the response to this solicitation, and, if not
successful in purchasing 2,750,469 Units in this Offer, may consider future
offers. Factors affecting the Purchasers' future interest in acquiring
additional Units include, but are not limited to, the relative success of the
current Offer, any increase or decrease in the availability of capital for
investment by the Purchasers and their investment fund affiliates, the current
diversification and performance of each affiliated fund's portfolio of real
estate interests, the development of any public market in the Units or actions
by unrelated parties to tender for or purchase Units, the status of and changes
and trends in the Company's operations, announcement of pending property sales
and the proposed terms of sales, and local and national real estate and
financial market developments and trends.
The Purchasers are acquiring the Units pursuant to the Offer solely for
investment purposes. The Purchasers have no present intention to seek control of
the Company or to change the management or operations of the Company. The
Purchasers do not have any present intention to take any action in connection
with the liquidation of the Company. The Purchasers nevertheless reserve the
right, at an appropriate time, to exercise their rights as members to vote on
matters subject to a member vote, including, but not limited to, any vote to
affecting the sale of the Company's properties and the liquidation and
dissolution of the Company. Except as expressly set forth herein, the Purchasers
have no present intention to seek control of the Company, to cause the Company
to engage in any extraordinary transaction, to cause any purchase, sale or
transfer of a material amount of the assets of any Company, to make any change
in the distribution policies, indebtedness or capitalization of any Company or
to change the structure, management or operations of the Company, the listing
status of the Units or the reporting requirements of the Company. The Operating
Agreement of the Company prohibits any member from owning more than 10% of the
outstanding Units of the Company, so the Purchasers will not be in a position to
control the Company by virtue of their ownership of Units.
Section 9. The Business of the Company. For information about the Company,
please refer to the annual report prepared by the Company which was sent to you
earlier, particularly Item 2 of Form 10-K, the Quarterly Reports on Form 10-Q,
Forms 8-K, and any other materials sent to you by the Company. These documents
contain updated information concerning the Company, including detailed
information regarding the properties owned, including mortgages, rental rates,
operations, management, and taxes. In addition, the Company is subject to the
information and reporting requirements of the Exchange Act and information about
the Company can be obtained on the Commission's EDGAR system, at its internet
web site at www.sec.gov, and are available for inspection at the Commission's
principal office in Washington, D.C.
Section 10. Conflicts of Interest. The Depositary is affiliated with certain
Purchasers. Therefore, by virtue of this affiliation, the Depositary may have
inherent conflicts of interest in acting as Depositary for the Offer. The
Depositary's role is administrative only, however, and any conflict of interest
should not be deemed material to Unit holders.
Section 11. Certain Information Concerning the Purchasers. The Purchasers are
MPF-NY 2007, LLC, MPF Badger Acquisition Co., LLC, Sutter Opportunity Fund 4,
LLC, MPF Senior Note Program I, LP, MPF ePlanning Opportunity Fund, LP, MPF
DeWaay Fund 4, LLC, MPF Flagship Fund 12, LLC, MPF Special Fund 9, LLC, MPF Blue
Ridge Fund I, LLC, MPF Blue Ridge Fund II, LLC, MPF Special Fund 8, LLC, MPF
Income Fund 22, LLC, MPF Income Fund 23, LLC, MPF DeWaay Fund 5, LLC, MPF
Flagship Fund 11, LLC. For information concerning the Purchasers and their
respective principals, please refer to Schedule I attached hereto. The principal
business of each of the Purchasers is investment in securities, particularly
real estate-based securities. The principal business address of each of the
Purchasers is 1640 School Street, Moraga, California 94556.
The Purchasers have made binding commitments to contribute and have
available sufficient amounts of capital necessary to fund the acquisition of all
Units subject to the Offer, the expenses to be incurred in connection with the
Offer, and all other anticipated costs of the Purchasers. The Purchasers are not
public companies and have not prepared audited financial statements or financial
statements prepared in accordance with generally accepted accounting principles.
MacKenzie Patterson Fuller, LP and its affiliates have been in the business of
purchasing illiquid real estate securities, both in open market transactions and
by means of tender offers, since 1982 and have
17
acquired more than $75 million in such securities for affiliated portfolios
during the last ten years. The Purchasers have aggregate assets that are more
than sufficient to fund their collective obligation to purchase Units in this
Offer and any other outstanding tender offers.
Except as otherwise set forth herein, (i) neither the Purchasers nor, to the
best knowledge of the Purchasers, the persons listed on Schedule I nor any
affiliate of the Purchasers beneficially owns or has a right to acquire any
Units, (ii) neither the Purchasers nor, to the best knowledge of the Purchasers,
the persons listed on Schedule I nor any affiliate of the Purchasers, or any
director, executive officer or subsidiary of any of the foregoing has effected
any transaction in the Units within the past 60 days, (iii) neither the
Purchasers nor, to the best knowledge of the Purchasers, the persons listed on
Schedule I nor any affiliate of the Purchasers has any contract, arrangement,
understanding or relationship with any other person with respect to any
securities of the Company, including but not limited to, contracts,
arrangements, understandings or relationships concerning the transfer or voting
thereof, joint ventures, loan or option arrangements, puts or calls, guarantees
of loans, guarantees against loss or the giving or withholding of proxies,
consents or authorizations, (iv) there have been no transactions or business
relationships which would be required to be disclosed under the rules and
regulations of the Commission between any of the Purchasers or, to the best
knowledge of the Purchasers, the persons listed on Schedule I, or any affiliate
of the Purchasers on the one hand, and the Company or its affiliates, on the
other hand, (v) there have been no contracts, negotiations or transactions
between the Purchasers, or to the best knowledge of the Purchasers any affiliate
of the Purchasers on the one hand, the persons listed on Schedule I, and the
Company 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, (vi) no
person listed on Schedule I has been convicted in a criminal proceeding during
the past five years (excluding traffic violations or similar misdemeanors), and
(vii) no person listed on Schedule I has been a party to any judicial or
administrative proceeding during the past five years (except for matters
dismissed without sanction or settlement) that resulted in a judgment, decree,
or final order enjoining the person from future violations of, or prohibiting
activities subject to, federal or state securities laws, or a finding of any
violation of federal or state securities laws. .
Section 12. Source of Funds. The Purchasers expect that approximately $3,850,657
would be required to purchase 2,750,469 Units, if tendered, and an additional
$20,000 may be required to pay related fees and expenses. The Purchasers
anticipate funding all of the purchase price and related expenses through their
existing capital and assets. The cash and liquid securities necessary to
complete the entire purchase are readily available and are committed to that
purpose. Accordingly, there are no financing arrangements to fall through and no
alternative financing plans.
Section 13. Conditions of the Offer. Notwithstanding any other term of the
Offer, the Purchasers shall not be required to accept for payment or to pay for
any Units tendered unless all authorizations or approvals of, 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 have been obtained or occurred on or before the
Expiration Date. As of the Offer Date, the Purchasers are unaware of any such
required authorizations, approvals, or waiting periods relating to this Offer.
The Purchasers shall not be required to accept for payment or pay for any
Units and may terminate or amend the Offer as to such Units if, at any time on
or after the date of the Offer and before the 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 authority or agency shall have been
issued and shall remain in effect which (i) makes illegal, delays or otherwise
directly or indirectly restrains or prohibits the making of the Offer or the
acceptance for payment of or payment for any Units by the Purchasers, (ii)
imposes or confirms limitations on the ability of the Purchasers effectively to
exercise full rights of ownership of any Units, including, without limitation,
the right to vote any Units acquired by the Purchasers pursuant to the Offer or
otherwise on all matters properly presented to the Company's Unit holders, (iii)
requires divestiture by the Purchasers of any Units, (iv) causes any material
diminution of the benefits to be derived by the Purchasers as a result of the
transactions contemplated by the Offer (see the discussion of such benefits in
the Summary Term Sheet and Introduction sections of the Offer to Purchase) or
(v) materially adversely affect the business, properties, assets, liabilities,
financial condition, operations, results of operations or prospects of the
Purchasers or the Company, in the reasonable judgment of the Purchasers;
(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
18
authority or agency, other than the application of the waiting period provisions
of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, which
will, directly or indirectly, result in any of the consequences referred to in
clauses (i) through (v) of paragraph (a) above;
(c) any change or development shall have occurred or been threatened since
the date hereof, in the business, properties, assets, liabilities, financial
condition, operations, results of operations or prospects of the Company, which,
in the reasonable judgment of the Purchasers, is or will be materially adverse
to the Company, or the Purchasers shall have become aware of any fact that, in
the reasonable judgment of the Purchasers, does or will have a material adverse
effect on the value of the Units;
(d) there shall have occurred (i) any general suspension of trading in, or
limitation on prices for, securities on any national securities exchange or in
the over-the-counter market in the United States, (ii) a declaration of a
banking moratorium or any suspension of payments in respect of banks in the
United States, (iii) any limitation by any governmental authority on, or other
event which might affect, the extension of credit by lending institutions or
result in any imposition of currency controls in the United States, (iv) a
commencement of a war or armed hostilities or other national or international
calamity directly or indirectly involving the United States, (v) a material
change in United States or other currency exchange rates or a suspension of a
limitation on the markets thereof, or (vi) in the case of any of the foregoing
existing at the time of the commencement of the Offer, a material acceleration
or worsening thereof; or
(e) it shall have been publicly disclosed or the Purchasers shall have
otherwise learned that (i) more than fifty percent of the outstanding Units have
been or are proposed to be acquired by another person (including a "group"
within the meaning of Section 13(d)(3) of the Exchange Act), or (ii) any person
or group that prior to such date had filed a Statement with the Commission
pursuant to Sections 13(d) or (g) of the Exchange Act has increased or proposes
to increase the number of Units beneficially owned by such person or group as
disclosed in such Statement by two percent or more of the outstanding Units.
The foregoing conditions are for the sole benefit of the Purchasers and
may be asserted by the Purchasers or may be waived by the Purchasers in whole or
in part at any time and from time to time prior to the Expiration Date in their
sole exercise of reasonable discretion, and the Offer will remain open for a
period of at least five business days following any such waiver of a material
condition. However, if we waive a certain condition for one tendering
Unitholder, we will waive that condition for all Unitholders tendering Units.
Any determination by the Purchasers concerning the events described above will
be final and binding upon all parties, subject, of course, to the parties'
ability to seek review of any contested determination by an arbitrator pursuant
to Section 16.
Section 14. Certain Legal Matters.
General. Except as set forth in this Section 14, the Purchasers are 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 Purchasers pursuant to the Offer. Should any such approval or other
action be required, it is the Purchasers' present intention that such additional
approval or action would be sought. While there is no present intent to delay
the purchase of Units tendered pursuant to the Offer pending receipt of any such
additional approval or the taking of any such action, there can be no assurance
that any such additional approval or action, if needed, would be obtained
without substantial conditions or that adverse consequences might not result to
the Company's business, or that certain parts of the Company's business might
not have to be disposed of or held separate or other substantial conditions
complied with in order to obtain such approval or action, any of which could
cause the Purchasers to elect to terminate the Offer without purchasing Units
thereunder. The Purchasers' obligation to purchase and pay for Units is subject
to certain conditions, including conditions related to the legal matters
discussed in this Section 14.
Antitrust. The Purchasers do not believe that the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, is applicable to the acquisition of Units
pursuant to the Offer.
Margin Requirements. The Units are not "margin securities" under the regulations
of the Board of Governors of the Federal Reserve System and, accordingly, such
regulations are not applicable to the Offer.
State Takeover Laws. A number of states have adopted anti-takeover laws which
purport, to varying degrees, to be applicable to attempts to acquire securities
of corporations which are incorporated in such states or which have
19
substantial assets, security holders, principal executive offices or principal
places of business therein. These laws are directed at the acquisition of
corporations and not Companys. The Purchasers, therefore, do not believe that
any anti-takeover laws apply to the transactions contemplated by the Offer.
Although the Purchasers have not attempted to comply with any state
anti-takeover statutes in connection with the Offer, the Purchasers reserve the
right to challenge the validity or applicability of any state law allegedly
applicable to the Offer and nothing in this Offer nor any action taken in
connection herewith is intended as a waiver of such right. If any state
anti-takeover statute is applicable to the Offer, the Purchasers might be unable
to accept for payment or purchase Units tendered pursuant to the Offer or be
delayed in continuing or consummating the Offer. In such case, the Purchasers
may not be obligated to accept for purchase or pay for any Units tendered.
Section 15. Fees and Expenses. The Purchasers have retained MacKenzie Patterson
Fuller, LP, an affiliate of certain Purchasers, to act as Depositary in
connection with the Offer. The Purchasers will pay the Depositary reasonable and
customary compensation for its services in connection with the Offer, plus
reimbursement for out-of-pocket expenses, and will indemnify the Depositary
against certain liabilities and expenses in connection therewith, including
liabilities under the federal securities laws. The Purchasers will also pay all
costs and expenses of printing, publication and mailing of the Offer and all
costs of transfer.
Section 16. Miscellaneous. THE OFFER IS NOT BEING MADE TO (NOR WILL TENDERS BE
ACCEPTED FROM OR ON BEHALF OF) UNIT HOLDERS IN ANY JURISDICTION IN WHICH THE
MAKING OF THE OFFER OR THE ACCEPTANCE THEREOF WOULD NOT BE IN COMPLIANCE WITH
THE LAWS OF SUCH JURISDICTION. THE PURCHASERS ARE NOT AWARE OF ANY JURISDICTION
WITHIN THE UNITED STATES IN WHICH THE MAKING OF THE OFFER OR THE ACCEPTANCE
THEREOF WOULD BE ILLEGAL.
No person has been authorized to give any information or to make any
representation on behalf of the Purchasers 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.
Further, by tendering your Units, you are agreeing to arbitrate any disputes
that may arise between you and the Purchasers or the Depositary, to subject
yourself to personal jurisdiction in California, and that the prevailing party
in any such action will be entitled to recover attorney fees and costs.
March 30, 2007
MPF-NY 2007, LLC, MPF Badger Acquisition Co., LLC, Sutter Opportunity Fund 4,
LLC, MPF Senior Note Program I, LP, MPF ePlanning Opportunity Fund, LP, MPF
DeWaay Fund 4, LLC, MPF Flagship Fund 12, LLC, MPF Special Fund 9, LLC, MPF Blue
Ridge Fund I, LLC, MPF Blue Ridge Fund II, LLC, MPF Special Fund 8, LLC, MPF
Income Fund 22, LLC, MPF Income Fund 23, LLC, MPF DeWaay Fund 5, LLC, MPF
Flagship Fund 11, LLC
20
SCHEDULE I
THE PURCHASERS AND THEIR RESPECTIVE PRINCIPALS
The Purchasers are MPF-NY 2007, LLC, MPF Badger Acquisition Co., LLC,
Sutter Opportunity Fund 4, LLC, MPF Senior Note Program I, LP, MPF ePlanning
Opportunity Fund, LP, MPF DeWaay Fund 4, LLC, MPF Flagship Fund 12, LLC, MPF
Special Fund 9, LLC, MPF Blue Ridge Fund I, LLC, MPF Blue Ridge Fund II, LLC,
MPF Special Fund 8, LLC, MPF Income Fund 22, LLC, MPF Income Fund 23, LLC, MPF
DeWaay Fund 5, LLC, MPF Flagship Fund 11, LLC. Each of the entity Purchasers is
organized as a limited liability company or limited partnership. The Manager of
each of the limited liability company Purchasers and the general partner of each
of the limited partnership Purchasers is MacKenzie Patterson Fuller, LP or its
affiliate Sutter Capital Management, LLC. The names of the directors and
executive officers of MacKenzie Patterson Fuller, LP are set forth below. Sutter
Capital Management, LLC is wholly owned by MPF Advisers, LP, an affiliate of
MacKenzie Patterson Fuller, LP. The Purchasers have jointly made the offer and
are jointly and severally liable for satisfying its terms. Other than the
foregoing, the Purchasers' relationship consists of an informal agreement to
share the costs associated with making the offer and to allocate any resulting
purchases of Units among them in such manner and proportions as they may
determine in the future. Each of the entities is organized in California. The
Purchasers intend, if the Offer is fully subscribed, to allocate the Units among
themselves as follows: 10% to MPF-NY 2007, LLC, Sutter Opportunity Fund 4, LLC,
MPF Senior Note Program I, LP, and MPF ePlanning Opportunity Fund, LP; 6% to MPF
DeWaay Fund 4, LLC, MPF Flagship Fund 12, LLC, MPF Blue Ridge Fund I, LLC, MPF
Income Fund 22, LLC, MPF Income Fund 23, LLC, and MPF DeWaay Fund 5, LLC; 5% to
MPF Badger Acquisition Co., LLC and MPF Special Fund 8, LLC; 4% to MPF Blue
Ridge Fund II, LLC and MPF Flagship Fund 11, LLC; 3% to MPF Special Fund 9, LLC.
We will determine modifications to this allocation based upon the number of
Units tendered. Priority is given to Purchasers which already hold Units, then
to Purchasers which raised capital first, then to the remaining Purchasers in
equal shares. Units will be allocated according to this priority until the
maximum number of Units listed above are allocated to Purchasers within a given
priority, then Units will be allocated similarly among Purchasers in the next
level of priority, until all Units are allocated; provided that MPF-NY 2007 will
receive at least 10% of all Units tendered.
MacKenzie Patterson Fuller, LP
The names of the directors and executive officers of MacKenzie Patterson Fuller,
LP are set forth below. Each individual is a citizen of the United States of
America. The principal business address of MacKenzie Patterson Fuller, LP, each
Purchaser, and each individual is 1640 School Street, Moraga, California 94556,
and the business telephone number for each is 925-631-9100. The general partner
is BC-GP, Inc., a California corporation owned by the limited partners.
C.E. Patterson is President and a director of MacKenzie Patterson Fuller, LP,
which acts as manager and general partner of a number of real estate investment
vehicles, and has served in those positions since January 1989. In 1981, Mr.
Patterson founded Patterson Financial Services, Inc. (now MPF Advisers, LP), a
registered investment adviser ("MPFA"), with Berniece A. Patterson, as a
financial planning firm, and he has served as its President since that date. Mr.
Patterson founded Patterson Real Estate Services, a licensed California Real
Estate Broker, in 1982. As President of MPFA, Mr. Patterson is responsible for
all investment counseling activities. He supervises the analysis of investment
opportunities for the clients of the firm. Mr. Patterson previously served as
president of Host Funding, Inc., an owner of lodging properties, from December
1999 through 2003. Mr. Patterson is also an officer and controlling shareholder
of Cal-Kan, Inc., a closely held real estate investment company. Mr. Patterson,
through his affiliates, manages a number of investment and real estate
companies.
Berniece A. Patterson is a director of MacKenzie Patterson Fuller, LP and has
served in that capacity since January 1989. In 1981, Ms. Patterson and C.E.
Patterson established MPFA. She has served as Chair of the Board and Secretary
of MPFA since that date. Her responsibilities with MPFA include oversight of
administrative matters and monitoring of past projects underwritten by MPFA.
Since October 1990, Ms. Patterson has served as Chief Executive Officer of
Pioneer Health Care Services, Inc. and Santa Rita Care Center, LLC and is
responsible for the day-to-day operations of their two nursing homes and over
200 employees.
Glen W. Fuller became senior vice president and a director of MacKenzie
Patterson Fuller, LP in May 2000. Since 2004 he has been a director and vice
president of MPFA. Prior to becoming senior vice president, from August 1998 to
April 2000, he was with MacKenzie Patterson Fuller, LP as a portfolio manager
and research analyst. From
21
December 1999 to 2003, Mr. Fuller served as an officer and director of Host
Funding, Inc. Prior to joining MacKenzie Patterson Fuller, LP, from May 1996 to
July 1998, Mr. Fuller ran the over-the-counter trading desk for North Coast
Securities Corp. (previously Morgan Fuller Capital Group) with responsibility
for both the proprietary and retail trading desks. Mr. Fuller was also the
registered options principal and registered municipal bond principal for North
Coast Securities, a registered broker dealer. Mr. Fuller was formerly a
NASD-registered options principal and registered bond principal, and he held his
NASD Series 7, general securities license (now inactive). Mr. Fuller has also
spent time working on the floor of the New York Stock Exchange as a trading
clerk and on the floor of the Pacific Stock Exchange in San Francisco as an
assistant specialist for LIT America.
Chip Patterson is senior vice president, general counsel, and a director of the
MacKenzie Patterson Fuller, LP Since 2004 he has been a director and vice
president of MPFA. Prior to joining MacKenzie Patterson Fuller, LP in July 2003,
he was a securities and corporate finance attorney with the national law firm of
Davis Wright Tremaine LLP from August 2000 to January 2003. From August 1997 to
May 2000 he attended the University of Michigan Law School, where he graduated
magna cum laude with a Juris Doctor Degree. Prior to law school, Chip Patterson
taught physics, chemistry, and math at the high school level for three years,
from June 1994 to June 1997. He graduated with high distinction and Phi Beta
Kappa from the University of California at Berkeley with a Bachelor of Arts
Degree in Political Science. He also has prior experience in sales, retail, and
banking.
Christine Simpson is vice president of MacKenzie Patterson Fuller, LP and MPFA
and is responsible for the day-to-day management of research and securities
purchases and sales on behalf of the entities managed by MacKenzie Patterson
Fuller, LP Ms. Simpson has served in that position since January 1997; from
January 1994 until her promotion to vice president, she was a research analyst
with MacKenzie Patterson Fuller, LP She joined MacKenzie Patterson Fuller, LP as
an administrative assistant in July 1990. Ms. Simpson received her Bachelor of
Arts degree in Management from Saint Mary's College of California in May 2005
and her Master of Science in Financial Analysis and Investment Management from
Saint Mary's College of California in October 2006.
Robert E. Dixon is senior vice president and a director of MPFA and MacKenzie
Patterson Fuller, LP and has served as an officer and director of Sutter Holding
Company, Inc. since March 2002. Mr. Dixon received his Bachelor's degree in
economics from the University of California at Los Angeles in 1992. He worked
for Lehman Brothers, Inc. in equity sales and trading during 1993 and 1994. From
October 1994 to June, 1996 he worked for MacKenzie Patterson, Inc. as a
securities research analyst. Mr. Dixon became a Chartered Financial Analyst in
1996, and received his Master of Business Administration degree from Cornell
University in 1998. In July of 1998 he began buying and selling securities for
his own account and those of the entities he controlled, and he was principally
engaged in that activity until May 2005, when he rejoined MPFA. Mr. Dixon was a
registered representative of North Coast Securities from 1994 through 1997.
Andrea K. Meyer is vice president of Trading and Portfolios for MPFA and
MacKenzie Patterson Fuller, LP As vice president of Trading and Portfolios, Ms.
Meyer is responsible for handling the day-to-day operations of the trading
department. She graduated from St. Mary's College of California in 1997 with a
Bachelor of Science in Business Administration with a concentration in Finance
and a Minor in Accounting. Prior to joining MPFA in 1998, she worked for a year
for State Street Bank and Trust, one of the leading financial services
specialists worldwide, as a portfolio accountant.
22
Exhibit (a)(2)
23
LETTER OF TRANSMITTAL
To participate in the Offer, a duly executed copy of this Letter of Transmittal
and any other documents required by this Letter of Transmittal must be received
by the Depositary on or prior to the Expiration Date. Delivery of this Letter of
Transmittal or any other required documents to an address other than as set
forth above does not constitute valid delivery. The method of delivery of all
documents is at the election and risk of the tendering Unit holder. Please use
the pre-addressed, postage-paid envelope provided. This Letter of Transmittal is
to be completed by holders of Units of limited liability company interest in JCM
PARTNERS, LLC (the "Company"), pursuant to the procedures set forth in the Offer
to Purchase (as defined below). Capitalized terms used herein and not defined
herein have the same meanings as in the Offer to Purchase.
11020 THE OFFER, WITHDRAWAL RIGHTS, AND PRORATION PERIOD WILL
EXPIRE AT 11:59 P.M., PACIFIC TIME, ON MAY 14, 2007 (THE
Name: _________________________________ "EXPIRATION DATE") UNLESS EXTENDED.
Deliver to: MacKenzie Patterson Fuller, LP
Address: ______________________________ 1640 School Street
Moraga, California 94556
City, State, ZIP: _____________________ For Assistance: (800) 854-8357
Facsimile: (925) 631-9119
Units Owned: __________________________ E-Mail Address: offers@mpfi.com
(PLEASE INDICATE CHANGES OR CORRECTIONS TO THE ADDRESS
IN THE BOX TO THE LEFT)
PLEASE CAREFULLY READ THE ACCOMPANYING INSTRUCTIONS
To whom it may concern:
The undersigned hereby tenders to MPF-NY 2007, LLC, MPF Badger Acquisition Co.,
LLC, Sutter Opportunity Fund 4, LLC, MPF Senior Note Program I, LP, MPF
ePlanning Opportunity Fund, LP, MPF DeWaay Fund 4, LLC, MPF Flagship Fund 12,
LLC, MPF Special Fund 9, LLC, MPF Blue Ridge Fund I, LLC, MPF Blue Ridge Fund
II, LLC, MPF Special Fund 8, LLC, MPF Income Fund 22, LLC, MPF Income Fund 23,
LLC, MPF DeWaay Fund 5, LLC, MPF Flagship Fund 11, LLC (collectively the
"Purchasers") all of the Class 1 or Class 2 Units of limited liability company
interest ("Units") in the Company held by the undersigned as set forth above
(or, if less than all such Units, the number set forth below in the signature
box), at a purchase price equal to $1.40 per Unit, less the amount of any
distributions made or declared with respect to the Units between March 30, 2007
and the Expiration Date, and upon the other terms and subject to the conditions
set forth in the Offer to Purchase, dated March 30, 2007 (the "Offer to
Purchase") and in this Letter of Transmittal, as each may be supplemented or
amended from time to time (which together constitute the "Offer"). Receipt of
the Offer to Purchase is hereby acknowledged. The undersigned recognizes that,
if more than 2,750,469 Units are validly tendered prior to or on the Expiration
Date and not properly withdrawn, the Purchasers will, upon the terms of the
Offer, accept for payment from among those Units tendered prior to or on the
Expiration Date 2,750,469 Units on a pro rata basis, with adjustments to avoid
purchases of certain fractional Units, based upon the number of Units validly
tendered prior to the Expiration Date and not withdrawn. Subject to and
effective upon acceptance for payment of any of the Units tendered hereby, the
undersigned sells, assigns, and transfers to, Purchasers all right, title, and
interest in and to such Units which are purchased pursuant to the Offer. The
undersigned hereby irrevocably constitutes and appoints the Purchasers as the
true and lawful agent and attorney-in-fact and proxy of the undersigned with
respect to such Units, with full power of substitution (such power of attorney
and proxy being deemed to be an irrevocable power and proxy coupled with an
interest), to deliver such Units and transfer ownership of such Units, on the
books of the Company, together with all accompanying evidences of transfer and
authenticity, to the Purchasers and, upon acceptance of the tender of such Units
by the Purchasers, to exercise all voting rights and to receive all benefits and
otherwise exercise all rights of beneficial ownership of such Units all in
accordance with the terms of the Offer. Upon the purchase of any Units tendered
hereby, the undersigned hereby requests that each of the Purchasers be admitted
to the Company as a substitute Member under the terms of the Operating Agreement
of the Company. Upon the purchase of Units pursuant to the Offer, all prior
proxies and consents given by the undersigned with respect to such Units will be
revoked and no subsequent proxies or consents may be given (and if given will
not be deemed effective). In addition, by executing this Letter of Transmittal,
the undersigned assigns to the Purchasers all of the undersigned's rights to
receive distributions from the Company with respect to Units which are purchased
pursuant to the Offer, other than distributions declared or paid through the
Expiration Date and to change the address of record for such distributions on
the books of the Company. Upon request, the Seller will execute and deliver, and
irrevocably directs any custodian to execute and deliver, any additional
documents deemed by the Purchaser to be necessary or desirable to complete the
assignment, transfer, and purchase of such Units.
The undersigned hereby represents and warrants that the undersigned owns the
Units tendered hereby and has full power and authority to validly tender, sell,
assign, and transfer the Units tendered hereby, and that when any such Units are
purchased by the Purchasers, the Purchasers will acquire good, marketable, and
unencumbered title thereto, free and clear of all liens, restrictions, charges,
encumbrances, conditional sales agreements, or other obligations relating to the
sale or transfer thereof, and such Units will not be subject to any adverse
claim. Upon request, the undersigned will execute and deliver any additional
documents deemed by the Purchasers to be necessary or desirable to complete the
assignment, transfer, and purchase of Units tendered hereby. The undersigned
understands that a tender of Units to the Purchasers will constitute a binding
agreement between the undersigned and the Purchasers upon the terms and subject
to the conditions of the Offer. The undersigned recognizes the right of the
Purchasers to effect a change of distribution address to MacKenzie Patterson
Fuller, LP at 1640 School Street, Moraga, California, 94556. The undersigned
recognizes that under certain circumstances set forth in the Offer to Purchase,
the Purchasers may not be required to accept for payment any of the Units
tendered hereby. In such event, the undersigned understands that any Letter of
Transmittal for Units not accepted for payment will be destroyed by the
Purchasers. All authority herein conferred or agreed to be conferred shall
survive the death or incapacity of the undersigned and any obligations of the
undersigned shall be binding upon the heirs, personal representatives,
successors and assigns of the undersigned. Except as stated in the Offer to
Purchase, this tender is irrevocable.
Arbitration Agreement: The Purchaser and the undersigned agree that any dispute,
claim, or controversy arising out of a purchase of Units shall be resolved by
submission to binding arbitration in Oakland, California before a retired judge,
and all parties agree to be subject to jurisdiction in California. If the
parties are unable to agree on an arbitrator, the parties shall select an
arbitrator pursuant to the rules of JAMS. The arbitrator selected must follow
applicable Federal securities laws and California law and the rules of JAMS
consistent herewith. The arbitrator must render a decision in writing,
explaining the legal and factual basis for decision as to each of the principal
controverted issues. The arbitrator's decision will be final and binding upon
the parties. A judgment upon any award may be entered in a court of competent
jurisdiction. Each party shall be responsible for advancing one-half of the
costs of arbitration; provided that the prevailing party shall be entitled to
recover expenses including but not limited to attorney fees, arbitrator fees,
and filing fees. Neither party is waiving any rights under the federal
securities laws, rules, or regulations. All matters relating to this arbitration
shall be governed by the Federal Arbitration Act (9 U.S.C. Sections 1 et seq.).
- --------------------------------------------------------------------------------
BOX A -- Medallion Signature Guarantee-- X___________________________________________________
PLEASE DO NOT USE FOR ANY OTHER PURPOSE (Signature of Owner) Date
(Required for all Sellers; See Instruction 1)
X___________________________________________________
(Signature of Owner) Date
Taxpayer I.D. or Social # _________________________
Telephone No. (day) ______________________________
(eve.) _____________________________
_______ Units |_| SELL ALL OR NONE (check this box
if you wish to sell your Units ONLY
if ALL your Units will be purchased).
- --------------------------------------------------------------------------------
Please sign exactly as your name is printed (or corrected) above, and insert
your Taxpayer Identification Number or Social Security Number in the space
provided. For joint owners, each joint owner must sign. (See Instruction 1). The
signatory hereto hereby certifies under penalties of perjury the statements in
Box B, Box C and, if applicable, Box D. If the Owner is tendering less than all
Units held, the number of Units tendered is set forth above. Otherwise, all
Units held by the undersigned are tendered hereby.
- --------------------------------------------------------------------------------
================================================================================
BOX B
SUBSTITUTE FORM W-9
(See Instruction 3 - Box B)
================================================================================
The person signing this Letter of Transmittal hereby certifies the following to
the Purchasers under penalties of perjury:
(i) The TIN set forth in the signature box on the front of this Letter of
Transmittal is the correct TIN of the Unit holder, or if this box [ ] is
checked, the Unit holder has applied for a TIN. If the Unit holder has applied
for a TIN, a TIN has not been issued to the Unit holder, and either: (a) the
Unit holder has mailed or delivered an application to receive a TIN to the
appropriate IRS Center or Social Security Administration Office, or (b) the Unit
holder intends to mail or deliver an application in the near future (it being
understood that if the Unit holder does not provide a TIN to the Purchasers
within sixty (60) days, 31% of all reportable payments made to the Unit holder
thereafter will be withheld until a TIN is provided to the Purchasers); and
(ii) Unless this box [ ] is checked, the Unit holder is not subject to
backup withholding either because the Unit holder: (a) is exempt from backup
withholding, (b) has not been notified by the IRS that the Unit holder is
subject to backup withholding as result of a failure to report all interest or
dividends, or (c) has been notified by the IRS that such Unit holder is no
longer subject to backup withholding.
Note: Place an "X" in the box in (ii) if you are unable to certify that the Unit
holder is not subject to backup withholding.
================================================================================
BOX C
FIRPTA AFFIDAVIT
(See Instruction 3 - Box C)
================================================================================
Under Section 1445(e)(5) of the Internal Revenue Code and Treas. Reg.
1.1445-11T(d), a transferee must withhold tax equal to 10% of the amount
realized with respect to certain transfers of an interest in a Company if 50% or
more of the value of its gross assets consists of U.S. real property interests
and 90% or more of the value of its gross assets consists of U.S. real property
interests plus cash equivalents, and the holder of the Company interest is a
foreign person. To inform the Purchasers that no withholding is required with
respect to the Unit holder's interest in the Company, the person signing this
Letter of Transmittal hereby certifies the following under penalties of perjury:
(i) Unless this box [ ] is checked, the Unit holder, if an individual, is
a U.S. citizen or a resident alien for purposes of U.S. income taxation, and if
other than an individual, is not a foreign corporation, foreign partnership,
foreign estate, or foreign trust (as those terms are defined in the Internal
Revenue Code and Income Tax Regulations); (ii) the Unit holder's U.S. social
security number (for individuals) or employer identification number (for
non-individuals) is correctly printed in the signature box on the front of this
Letter of Transmittal; and (iii) the Unit holder's home address (for
individuals), or office address (for non-individuals), is correctly printed (or
corrected) on the front of this Letter of Transmittal. If a corporation, the
jurisdiction of incorporation is __________.
The person signing this Letter of Transmittal understands that this
certification may be disclosed to the IRS by the Purchasers and that any false
statements contained herein could be punished by fine, imprisonment, or both.
================================================================================
BOX D
SUBSTITUTE FORM W-8
(See Instruction 4 - Box D)
================================================================================
By checking this box |_|, the person signing this Letter of Transmittal hereby
certifies under penalties of perjury that the Unit holder is an "exempt foreign
person" for purposes of the backup withholding rules under the U.S. federal
income tax laws, because the Unit holder:
(i) Is a nonresident alien individual or a foreign corporation,
partnership, estate, or trust;
(ii) If an individual, has not been and plans not to be present in the
U.S. for a total of 183 days or more during the calendar year; and
(iii) Neither engages, nor plans to engage, in a U.S. trade or business
that has effectively connected gains from transactions with a broker
or barter exchange.
INSTRUCTIONS
Forming Part of the Terms and Conditions of the Offer
1. Tender, Signature Requirements; Delivery. After carefully reading and
completing this Letter of Transmittal, in order to tender Units a Unit holder
must sign at the "X" on the bottom of the first page of this Letter of
Transmittal and insert the Unit holder's correct Taxpayer Identification Number
or Social Security Number ("TIN") in the space provided below the signature. The
signature must correspond exactly with the name printed (or corrected) on the
front of this Letter of Transmittal without any change whatsoever. If this
Letter of Transmittal is signed by the registered Unit holder of the Units, a
Medallion signature guarantee on this Letter of Transmittal is required.
Similarly, if Units are tendered for the account of a member firm of a
registered national security exchange, a member firm of the National Association
of Securities Dealers, Inc. or a commercial bank, savings bank, credit union,
savings and loan association, or trust company having an office, branch or
agency in the United States (each an "Eligible Institution"), a Medallion
signature guarantee is required. In all other cases, signatures on this Letter
of Transmittal must be Medallion guaranteed by an eligible institution, by
completing the signature guarantee set forth in BOX A of this Letter of
Transmittal. If any tendered Units are registered in the names of two or more
joint holders, all such holders must sign this Letter of Transmittal. If this
Letter of Transmittal is signed by trustees, administrators, guardians,
attorneys-in-fact, officers of corporations, or others acting in a fiduciary or
representative capacity, such persons should so indicate when signing and must
submit proper evidence satisfactory to the Purchasers of their authority to so
act. For Units to be validly tendered, a properly completed and duly executed
Letter of Transmittal, together with any required signature guarantees in BOX A,
and any other documents required by this Letter of Transmittal, must be received
by the Depositary prior to or on the Expiration Date at its address or facsimile
number set forth on the front of this Letter of Transmittal. No alternative,
conditional or contingent tenders will be accepted. All tendering Unit holders
by execution of this Letter of Transmittal waive any right to receive any notice
of the acceptance of their tender.
2. Transfer Taxes. The Purchasers will pay or cause to be paid all transfer
taxes, if any, payable in respect of Units accepted for payment pursuant to the
Offer.
3. U.S. Persons. A Unit holder who or which is a United States citizen or
resident alien individual, a domestic corporation, a domestic partnership, a
domestic trust, or a domestic estate (collectively "United States persons") as
those terms are defined in the Internal Revenue Code and Income Tax Regulations,
should complete the following:
Box B - Substitute Form W-9. In order to avoid 31% federal income tax
backup withholding, the Unit holder must provide to the Purchasers the
Unit holder's correct Taxpayer Identification Number or Social Security
Number ("TIN") in the space provided below the signature line and certify,
under penalties of perjury, that such Unit holder is not subject to such
backup withholding. The TIN that must be provided is that of the
registered Unit holder indicated on the front of this Letter of
Transmittal. If a correct TIN is not provided, penalties may be imposed by
the Internal Revenue Service ("IRS"), in addition to the Unit holder being
subject to backup withholding. Certain Unit holders (including, among
others, all corporations) are not subject to backup withholding. Backup
withholding is not an additional tax. If withholding results in an
overpayment of taxes, a refund may be obtained from the IRS.
Box C - FIRPTA Affidavit. To avoid potential withholding of tax pursuant
to Section 1445 of the Internal Revenue Code, each Unit holder who or
which is a United States Person (as defined Instruction 3 above) must
certify, under penalties of perjury, the Unit holder's TIN and address,
and that the Unit holder is not a foreign person. Tax withheld under
Section 1445 of the Internal Revenue Code is not an additional tax. If
withholding results in an overpayment of tax, a refund may be obtained
from the IRS.
4. Foreign Persons. In order for a Unit holder who is a foreign person (i.e.,
not a United States Person as defined in 3 above) to qualify as exempt from 31%
backup withholding, such foreign Unit holder must certify, under penalties of
perjury, the statement in BOX D of this Letter of Transmittal attesting to that
foreign person's status by checking the box preceding such statement. However,
such person will be subject to withholding of tax under Section 1445 of the
Code.
5. Additional Copies of Offer to Purchase and Letter of Transmittal. Requests
for assistance or additional copies of the Offer to Purchase and this Letter of
Transmittal may be obtained from the Purchasers by calling 800-854-8357.
Exhibit (a)(3)
March 30, 2007
TO: UNIT HOLDERS OF JCM PARTNERS, LLC
SUBJECT: OFFER TO PURCHASE UNITS
Dear Unit Holder:
As described in the enclosed Offer to Purchase and related Letters of
Transmittal (the "Offer") the Purchasers named in the attached Offer
(collectively the "Purchasers") are offering to purchase up to 2,750,469 Class 1
or Class 2 Units of limited liability company interest (the "Units") in JCM
PARTNERS, LLC (the "Company") at a purchase price equal to:
$1.40 per Unit
The Offer will provide you with an opportunity to liquidate all, or a portion
of, your investment in JCM PARTNERS, LLC without the usual transaction costs
associated with market sales or Company transfer fees. Reasons you may wish to
sell your Units include:
o UNCERTAINTY OF COMPANY TERMINATION. Our offer provides you with the
opportunity to receive a guaranteed amount of money in a specified
time period. Management has given no indication when the Company
will be liquidating. Therefore, investors may not see liquidity for
some time. Most Class 1 Unit holders have elected to have the
Company redeem their units at $2.78 less distributions paid from
July 1, 2005 through June 30, 2006, or approximately $2.70 per Unit.
The Company will pay redeeming unit holders on or prior to June 30,
2007. Those Unit holders that did not exercise their put right
forfeited it, and may now only convert into Class 2 Units, which
have a put right requiring the Company to pay the Exercise Price, if
exercised, by June 30, 2012. Thus, if you did not exercise your put
right, you may not receive any liquidity options until 2012.
o ILLIQUIDITY OF UNITS. The relative illiquidity of the Units
resulting from the absence of a formal trading market makes the
Units difficult to sell.
o NO FUTURE IRS FILING REQUIREMENTS. The tax year in which you sell
your Units will be the final year for which you will be obligated to
file a K-1 for the Company with your tax return. This may represent
a reduction in costs associated with filing complicated tax returns.
Your decision to sell may have other favorable or unfavorable tax
consequences and potential sellers should consult their individual
tax advisers.
o ELIMINATION OF RETIREMENT ACCOUNT FEES. If you sell your Units, you
may avoid incurring fees for having this investment in your IRA or
retirement account. Because many custodians have transfer
restrictions against limited liability company units or charge
additional fees for holding this type of asset, many investors are
faced with the task of searching for a way to avoid these fees. Once
our cash payment is sent directly to your retirement account, you
are free to consolidate your retirement accounts or transfer the
funds to a custodian that offers lower fees.
After carefully reading the enclosed Offer, if you elect to tender your Units,
mail (using the enclosed pre-addressed, postage paid envelope) or fax (then
mail) a duly completed and executed copy of the Letter of Transmittal (printed
on purple paper) and change of address forms, and any other documents required
by the Letter of Transmittal, to the Depositary for the Offer at:
MacKenzie Patterson Fuller, LP
1640 School Street
Moraga, California 94556
Facsimile: (925) 631-9119
If you have any questions or need assistance, please call the Depository at
800-854-8357.
This Offer expires (unless extended) May 14, 2007.
Exhibit (a)(4)
[Published March 30, 2007 in Investor's Business Daily]
This announcement is neither an offer to buy nor a solicitation of an offer to
sell Units. The Offer is being made solely by the formal Offer to Purchase
forwarded to Unit holders of record and is not being made to, and tenders will
not be accepted from or on behalf of, Unit holders residing in any jurisdiction
in which making or accepting the Offer would violate that jurisdiction's laws.
In those jurisdictions where the securities, Blue Sky, or other laws require the
Offer to be made by a licensed broker or dealer, the Offer shall be deemed to be
made on behalf of Purchasers only by one or more registered dealers licensed
under the laws of such jurisdiction.
NOTICE OF OFFER TO PURCHASE FOR CASH:
Up to 2,750,469 Class 1 and Class 2 Units of Limited Liability Company Interest
of JCM Partners, LLC, a Delaware limited liability company (the "Company")
at a price of
$1.40 per Unit
by:
MPF-NY 2007, LLC, MPF Badger Acquisition Co., LLC, Sutter Opportunity Fund 4,
LLC, MPF Senior Note Program I, LP, MPF ePlanning Opportunity Fund, LP, MPF
DeWaay Fund 4, LLC, MPF Flagship Fund 12, LLC, MPF Special Fund 9, LLC, MPF Blue
Ridge Fund I, LLC, MPF Blue Ridge Fund II, LLC, MPF Special Fund 8, LLC, MPF
Income Fund 22, LLC, MPF Income Fund 23, LLC, MPF DeWaay Fund 5, LLC, MPF
Flagship Fund 11, LLC
(collectively the "Purchasers")
The Purchasers are offering to purchase for cash Up to 2,750,469 Class 1 and
Class 2 Units of Limited Liability Company Interest ("Units") of the Company, at
a price of $1.40 per Unit upon the terms and subject to the conditions set forth
in Purchasers' Offer to Purchase and in the related Letter of Transmittal for
the offer (which together constitute the "Offer" and the "Tender Offer
Documents").
THE OFFER AND WITHDRAWAL RIGHTS EXPIRE AT 11:59 P.M., PACIFIC TIME, ON MAY 14,
2007, UNLESS AN OFFER IS EXTENDED.
Funding for the purchase of the Units will be provided through the Purchasers'
existing working capital. The Offer is not made for the purpose of acquiring or
influencing control of the business of the issuer. The Offer will expire at
11:59 p.m., Pacific Time on May 14, 2007, unless and until Purchasers, in their
sole discretion, shall have extended the period of time for which the Offer is
open (such date and time, as extended the "Expiration Date"). The Purchasers
will not provide a subsequent offering period following the Expiration Date. If
Purchasers make a material change in the terms of the Offer, or if they waive a
material condition to the Offer, Purchasers 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 Securities Exchange Act of 1934, as amended (the
"Exchange Act"). The minimum period during which the Offer must remain open
following any material change in the terms of the Offer, other than a change in
price or a change in percentage of securities sought or a change in any dealer's
soliciting fee, will depend upon the facts and circumstances including the
materiality of the change with respect to a change in price or, subject to
certain limitations, a change in the percentage of securities ought or a change
in any dealer's soliciting fee. A minimum of ten business days from the date of
such change is generally required to allow for adequate dissemination to Unit
holders. Accordingly, if prior to the Expiration Date, Purchasers increase
(other than increases of not more than two percent of the outstanding Units) or
decrease the number of Units being sought, or increase or decrease the
consideration offered pursuant to the Offer, and if the Offer is scheduled to
expire at any time earlier than the period ending on the tenth business day from
the date that notice of such increase or decrease is first published, sent or
given to Unit holders, the Offer will be extended at least until the expiration
of such ten business days. For purposes of the Offer, a "business day" means any
day other than a Saturday, Sunday or federal holiday and consists of the time
period from 12:01 a.m. through midnight, Pacific Time. In all cases payment for
the Units purchased pursuant to the Offer will be made only after timely receipt
of the Letters of Transmittal (or facsimiles thereof), properly completed and
duly executed, with any required signature guarantees, and any other documents
required by such Letters of Transmittal.
Tenders of Units made pursuant to the Offer is irrevocable, except that Unit
holders who tender their Units in response to the Offer will have the right to
withdraw their tendered Units at any time prior to the Expiration Date by
sending to MacKenzie Patterson Fuller, LP a written or facsimile transmission
notice of withdrawal identifying the name of the person who tendered Units to be
withdrawn, signed by the same persons and in the same manner as the Letter of
Transmittal tendering the Units to be withdrawn. In addition, tendered Units may
be withdrawn at any time on or after May 29, 2007, unless the tender has
theretofore been accepted for payment as provided above. If tendering Unit
holders tender more than the number of Units that Purchasers seek to purchase
pursuant to the Offer for those Units, Purchasers will take into account the
number of Units so tendered and take up and pay for as nearly as may be pro
rata, disregarding fractions, according to the number of Units tendered by each
tendering Unit holder during the period during which that Offer remains open.
The terms of the Offer are more fully set forth in the formal Tender Offer
Documents which are available from Purchasers at the Purchasers' expense. The
Offer contains terms and conditions and the information required by Rule
14d-6(d)(1) under the Exchange Act which are incorporated herein by reference.
The Tender Offer Documents contain important information which should be read
carefully before any decision is made with respect to the Offer.
The Tender Offer Documents may be obtained by written request to Purchasers or
as set forth below. A request has been made to the Company pursuant to Rule
14d-5 under the Exchange Act for the use of its list of Unit holders for the
purpose of disseminating the Offer to Unit holders. Upon compliance by the
Company with such request, the Tender Offer Documents and, if required, other
relevant materials will be mailed at the Purchasers' expense to record holders
of Units, brokers, banks and similar persons whose names appear or whose nominee
appears on the list of securities holders, or persons who are listed as
participants in a clearing agency's security position listing, for subsequent
transmittal to beneficial owners of Units.
For Copies of the Tender Offer Documents, Call Purchasers at 1-800-854-8357,
Make a Written Request Addressed to 1640 School Street, Moraga, California
94556, email to offers@mpfi.com, or visit our website at www.mpfi.com (click on
MPF Tenders).
March 30, 2007
Exhibit (a)(5)
APPLICATION FOR TRANSFER, PART A
Transferor's (Seller's) Application for Transfer - Part A, Section 1
To: JCM Partners, LLC Transaction Reference Number:
P.O. Box 3000
Concord, CA 94522-3000
Attn: Shareholder Services
-----------------------------------------------------
(OPTIONAL-SEE INSTRUCTION 2)
Transfer fee: N/C
The transferor hereby makes application to transfer and assign, subject to the
Company's rights, to the transferee all rights and interests, as set forth in
the limited liability company below and for the transferee to succeed to such
interest as a Substitute Member, successor in interest, or assignee.
JCM PARTNERS, LLC FUND 1
- ----------------------------------------------------------------------------------------------------------
FULL NAME OF LIMITED LIABILITY COMPANY
Complete ID Information: Quantity Optional
complete at least one of the following (see Instruction 3). Must be completed. Number of units
Number of units to be to be held after
transferred: transfer:
LLC ID#: 943364323
----------------------- ---------------------- ------------------
Registration Information:
Indicate exactly as shown on Company records (see instruction 4.)
Membership interests are currently registered as follows:
- ----------------------------------------------------------------------------------------------------------
NAME OF TRANSFEROR
Tax Identification Information
complete applicable sections (see instruction 5)
- -------------------------------------------
- -------------------------------------------
ADDRESS OF RECORD Social Security or Tax ID#:
- ------------------------------------------- -----------------------------------------------------
TELEPHONE Custodian/Trustee Tax ID#:
- ------------------------------------------- -----------------------------------------------------
Broker/Dealer (OPTIONAL)
- ------------------------------------------- -----------------------------------------------------
NAME OF FIRM REGISTERED REPRESENTATIVE
- ------------------------------------------- -----------------------------------------------------
ADDRESS TELEPHONE
- ------------------------------------------- -----------------------------------------------------
CLIENT ACCOUNT NUMBER
- ------------------------------------------- -----------------------------------------------------
WIRE CODE (OPTIONAL)
1
- --------------------------------------------------------------------------------
Transferor's (Seller's) Application for Transfer - Part A, Section 1 (cont'd)
Certification
The transferor hereby certifies and represents possession of valid title and all
requisite power to assign such interests and that assignment is in accordance
with applicable laws and regulations and further certifies, under penalty of
law, the following:
Reason for Transfer:
(Check one) For certain types of transfer additional documentation may be
required.
______ Re-registration (Change of name, individual to trust, etc.)
______ Divorce
______ Gift
______ Sale (Indicate Amount of Consideration):
______ Death (Indicate Fair Market Value):
______ Other (Please specify):
Transferor Information (Check as many as apply)
I am not an officer or manager of the Company, and I am not related
to (whether by blood or marriage), or have any ownership interest
______ in, any officer, manager, or member of the Company.
- OR -
______ I am an officer of the Company.
______ I am a manager of the Company.
I have the following relationship with _______________, an officer,
______ manager, or member of the Company (describe):
Signature Execution:
Must be signed by the registered holder(s) exactly as name(s) appear(s) on the
Company Records (see instruction 7)
Transferor's Signature: Date:
-------------------------------- --------------------------------
Co-Transferor's Signature: Date:
-------------------------------- --------------------------------
If signature is by trustee(s), executor(s), administrator(s), guardian(s),
attorney(s)-in-fact, agent(s), officer(s) of a corporation or another acting in
a fiduciary or representative capacity, please provide the following
information.
Name(s): Capacity: (Full Title)
------------------------------- --------------------------------
------------------------------- --------------------------------
------------------------------- --------------------------------
Medallion Signature Guarantee
The signature must be guaranteed by a member of an approved Signature Guarantee
Medallion Program.
Instructions for Proposed Transferor (Seller) - Part A
1. TRANSFER FORMS. To effect the requested transfer both transferor and
transferee forms must be submitted together with Part B of the Application for
Transfer.
2. TRANSACTION REFERENCE NUMBER. The use of this space is optional. The number
placed in this space shall be internally generated by a broker or agreed upon by
two or more brokers and shall correspond to Internal records tracking system(s).
3. COMPANY IDENTIFICATION. Limited Liability Company Tax ID is provided.
4. REGISTRATION. Indicate the exact name of registrant and include any custodial
information. If a Custodial Account, address of record should be that of the
custodian/trustee.
5. TAX INFORMATION. If a Custodial Account, Custodian/Trustee's and client's tax
numbers should be completed.
6. MEMBER ID NUMBER. This is the account number established at the Company. It
may be obtained from the Registration Confirmation.
7. SIGNATURE EXECUTION. The signature must correspond with the name of the
registered holder exactly as it appears on the Company records. Persons who sign
as a representative or other fiduciary capacity must indicate their capacity
when signing and, unless waived by the Company or its agent in its sole
discretion, must present satisfactory evidence of their authority to so act.
This Form, Part A of the Application for Transfer, together
with Part B of the Application for Transfer, should be
returned directly to the Company at the address set forth above.
2
- --------------------------------------------------------------------------------
APPLICATION FOR TRANSFER, PART B
Relating to Certain Restrictions
on Transfer of Units of JCM Partners, LLC
and
Relating to Repayment of Member FTB Advances (as defined below)
to certain holders of Units of JCM Partners, LLC
(As Revised March 21, 2007)
To: JCM Partners, LLC
P.O. Box 3000
Concord, California 94522-3000
Attention: Shareholder Services
Application For Transfer - Part B, Section 1 (applicable to all transfers)
This Form constitutes Form B of the Application for Transfer of Units or
Preferred Units of JCM Partners, LLC ("the Company"). The Application for
Transfer consists of two parts, Part A and Part B, which taken together, upon
proper execution by both the proposed Transferor ("Proposed Transferor") and the
proposed Transferee ("Proposed Transferee"), constitute a complete Application
for Transfer. Both forms should be sent to the Company at the above address.
Unless otherwise noted, all capitalized terms used in the following
paragraphs shall have the meanings set forth in the Company's Second Amended and
Restated Limited Liability Company Agreement, including any further amendments
or restatements thereto (the "Agreement") or as set forth in Exhibits A and B to
Part B of this Application. Execution of this Application by both the Proposed
Transferor and the Proposed Transferee is a prerequisite to the Company's
recognition of the validity of any transfer of its Units or Preferred Units.
Proposed Transferor and Proposed Transferee understand and agree that any
purported transfer made pursuant to Part A and Part B of this Application for
Transfer is subject to restrictions ("the Current Transfer Restrictions")
originally adopted by the Board of Managers of the Company pursuant to its
authority under the Agreement and the Company's Bylaws and subsequently approved
by the Members as set forth in Section 6.3 of the Agreement. Such Current
Transfer Restrictions, incorporated herein and attached hereto as Exhibit A, are
set forth in Article VI of the Company's Bylaws. Among other items, such
restrictions include provisions requiring that:
1. With certain exceptions, no transfer of membership interests shall be
effective or recognized by the Company, no Transfer shall be registered by the
Company, and no Proposed Transferee shall be considered a Transferee or an
Assignee under the terms of the Agreement or have the right to seek admission as
a Substituted Member prior to the end of the thirtieth (30th) day following the
Company's receipt of both Part A and Part B of this Application for Transfer,
fully completed, duly executed, and in a form satisfactory to the Company; and
2. No Person may acquire, by any means, Units or Preferred Units of the
Company if, as a result of such acquisition, such Person would become the
Beneficial Owner of ten (10) percent or more of the Outstanding Units and
Preferred Units of the Company.
In addition, Proposed Transferor and Proposed Transferee understand and
agree that any purported transfer made pursuant to Part A and Part B of this
Application for Transfer is subject
5
- --------------------------------------------------------------------------------
Application For Transfer - Part B (cont'd)
to additional restrictions adopted by the Board of Managers of the Company on
March 21, 2007 pursuant to its authority under Section 6.11(b)(2) of the
Company's Bylaws (the "March 2007 Restrictions") as set forth in Exhibit B to
Part B of this Application. The March 2007 Restrictions provide that no Person
may transfer any Units of any class of Units or any Preferred Units of any
series of Preferred Units unless the transfer is on an 1:1 record holder to
record holder basis for that class of Units or series of Preferred Units, unless
an application has been made to the Board of Managers and a waiver has been
granted.
Proposed Transferor and Proposed Transferee agree to be bound by and to
comply with such Transfer Restrictions in connection with this proposal for
transfer of Units or Preferred Units. Proposed Transferee further agrees to
comply with such Transfer Restrictions in the future. Proposed Transferee hereby
certifies, represents and warrants that Proposed Transferee does not
Beneficially Own, and is not acquiring Beneficial Ownership of, other Units and
Preferred Units which, when added to the Units and Preferred Units to which this
Transfer Application relates, equal or exceed ten (10) percent of the Company's
outstanding Units and Preferred Units. Proposed Transferor and Proposed
Transferee further agree promptly to provide the Company with any information
that the Company requests in order to determine whether the Transfer
Restrictions have been or would be violated.
Proposed Transferor and Proposed Transferee further agree that their
execution below constitutes an amendment to their contract of sale and purchase
of the Company's Units or Preferred Units ("Contract") in that the acceptance by
Proposed Transferor and Proposed Transferee of the Transfer Restrictions shall
be incorporated into the Contract as conditions prerequisite to any contractual
obligation to sell or purchase such Units or Preferred Units as if fully set
forth therein. Proposed Transferor and Proposed Transferee accordingly agree
that should the Contract be inconsistent with the Transfer Restrictions in any
respect, the Contract shall be deemed amended to the extent necessary to remedy
such inconsistency.
Applications for Transfer that do not include this Part B, executed below
by both Proposed Transferor and Proposed Transferee, shall not be accepted by
the Company, and no purported transfer shall be effective or shall be recognized
or registered by the Company.
Mark the appropriate boxes if applicable:
|_| Transfer has been effected by will or last testament or by operation of
laws relating to descent and distribution.
|_| Proposed Transferor is a tax-exempt entity under federal and relevant
state law.
Application For Transfer - Part B, Section 2 (applicable if one of the boxes
below is checked)
|_| Non-resident non-consenting member.
|_| Non-resident consenting member with California source income in excess of
$1,500.
Proposed Transferor and Proposed Transferee understand and agree that any
purported transfer made pursuant to this Application for Transfer is subject to
the Transferor having repaid
6
- --------------------------------------------------------------------------------
Application For Transfer - Part B (cont'd)
to the Company all Member FTB Advances made by the Company to the Transferor
related to any Units or Preferred Units owned by the Transferor. As used herein,
a "Member FTB Advance" means any payments made by the Company to the California
Franchise Board on behalf of the Transferor related to income taxes associated
with the California source income of the Company's California non-resident
Members. The amount of the Member FTB Advances owed by the Transferor to the
Company as of is $___________. The Company will acknowledge having received
repayment of the Member FTB Advances and return any refund due to the Transferor
on or about the effective date of the transfer.
The Transferee of the Units or Preferred Units that are the subject of
this Application of Transfer shall take such Units or Preferred Units free from
any claim by the Company related to any Member FTB Advances made by the Company
to the Transferor.
Application for Transfer - Part B, Section 3 (applicable if the box below is
checked regarding acquisition of Class 3 Units under the Company's 2006
Long-Term Incentive Unit Award Plan ("LTI Plan")
|_| Holder of Class 3 Units acquired pursuant to an Award under the LTI Plan
and subject to a Long-Term Incentive Unit Award Agreement ("LTI |_|
Agreement").
Proposed Transferor and Proposed Transferee understand and agree that any
purported transfer made pursuant to this Application of Transfer is subject to
the restrictions on transfer set forth in Section 2.6 of the LTI Agreement.
Among other items, such restrictions include the right of the Company to
repurchase the Class 3 Units issued to the holder upon (i) termination of the
holder's employment with the Company for any reason; (ii) the Company's
determination that the holder has engaged in any activity contrary to the
interests of the Company; (iii) any attempted sale or transfer (including by
gift or operation of law) to any person or entity, other than the Company,
unless such transfer is in connection with a change of control of the Company;
or (iv) a purported transfer in violation of securities laws. Pursuant to
Section 2.6 of the LTI Agreement, the Company has an option to exercise its
repurchase rights for ninety (90) days from each of the events set forth above
at the price set forth in Section 2.6.3 of the LTI Agreement.
Proposed Transferor and Proposed Transferee acknowledge that the Class 3
Units are "restricted securities," uncertificated, subject to stop transfer
instructions under Section 2.11.6 of the LTI Agreement and subject to the
following legend:
THE SECURITIES SUBJECT HERETO HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "ACT"), NOR HAVE THEY BEEN REGISTERED OR QUALIFIED
UNDER THE SECURITIES LAWS OF ANY STATE. NO TRANSFER OF SUCH SECURITIES WILL BE
PERMITTED UNLESS A REGISTRATION STATEMENT UNDER THE ACT IS IN EFFECT AS TO SUCH
TRANSFER, THE TRANSFER IS MADE IN ACCORDANCE WITH RULE 144 UNDER THE ACT OR AS
OTHERWISE PERMITTED BY THE COMPANY; OR, IN THE OPINION OF COUNSEL SATISFACTORY
TO THE COMPANY, REGISTRATION UNDER THE ACT IS UNNECESSARY IN ORDER FOR SUCH
TRANSFER TO COMPLY WITH THE ACT AND WITH APPLICABLE STATE SECURITIES LAWS.
7
- --------------------------------------------------------------------------------
Application For Transfer - Part B (cont'd)
Each of the undersigned Proposed Transferor or Proposed Transferee, as
applicable, certify, under penalty of law, that the undersigned has read and
understood the foregoing, that all information the undersigned has provided
herein is accurate, and that the undersigned's execution below demonstrates the
undersigned's agreement as set forth above.
PROPOSED TRANSFEROR:
- --------------------------------------------------
Print Legal Name
- -------------------------------------------------- ----------------------
Signature of Owner Date
- -------------------------------------------------- ----------------------
Signature of Co-Owner Date
If signature of Proposed Transferor is by trustee(s), executor(s),
administrator(s), guardian(s), attorney(s)-in fact, agent(s), officer(s) of a
corporation or other entity, or a person otherwise acting in a fiduciary or
representative capacity, please provide the following:
- -------------------------------------------- ------------------------------
Print Name Capacity
- -------------------------------------------- ------------------------------
Print Name Capacity
PROPOSED TRANSFEREE:
- --------------------------------------------------
Print Legal Name
- -------------------------------------------------- ----------------------
Signature of Owner Date
- -------------------------------------------------- ----------------------
Signature of Co-Owner Date
If signature of Proposed Transferee is by trustee(s), executor(s),
administrator(s), guardian(s), attorney(s)-in fact, agent(s), officer(s) of a
corporation or other entity, or a person otherwise acting in a fiduciary or
representative capacity, please provide the following:
- -------------------------------------------- ------------------------------
Print Name Capacity
- -------------------------------------------- ------------------------------
Print Name Capacity
This Form, Part B of the Application for Transfer, together
with Part A of the Application for Transfer, should be
returned directly to the Company at the address set forth above.
8
- --------------------------------------------------------------------------------
[EXHIBIT A]
Application For Transfer - Part B (cont'd)
JCM PARTNERS, LLC
Restrictions on Transfer of Membership Interests
Originally Adopted by Resolutions of the
Board of Managers dated November 9, 2001,
subsequently approved by the Members as set forth in
Section 6.3 of the Limited Liability Company Agreement and
set forth in Article VI of the Bylaws
A. Unless waived in an individual case by the Company for good cause shown,
no Transfer Application shall be deemed received by the Company or by its
Transfer Agent prior to the close of business on the thirtieth (30th)
calendar day following the Company's receipt of all parts of a Transfer
Application, fully completed, duly executed by the parties thereto and in
a form satisfactory to the Company. Until that time, no event which is
deemed by the Agreement or the Bylaws to occur upon the Company's receipt
of such a Transfer Application shall be deemed to have occurred. By way of
illustration, and not of limitation, the proposed Transferee shall not be
considered a Transferee or Assignee, and shall not have the right to seek
admission as a Substituted Member, prior to that date. Moreover, no
Transfer shall be effective as between the proposed Transferor and the
proposed Transferee prior to that date. In connection with any Transfer
Application, the Transferor and Transferee shall promptly provide such
additional information as the Company may request. The Company shall not
recognize or register any Transfer that fails to comply with the foregoing
requirements, nor shall the Company forward any part of the Transfer
Application to the Company's Transfer Agent for registration of the
Transfer. This Paragraph A shall not be applicable to any Transfer
effected by will or last testament or by the laws of descent and
distribution, and this Paragraph A shall not apply to any Transfer as to
which the proposed Transferor is a tax-exempt entity; provided that the
other provisions of this resolution shall be fully applicable in the case
of such proposed Transfers.
B. Except as may be authorized by the Board of Managers prior to a Transfer,
by vote of a majority of the Managers then holding office, no Person may
acquire, by any means, Beneficial Ownership (as defined below) of any Unit
or Preferred Unit if, as a result of such acquisition, such Person would
become the Beneficial Owner (as so defined) of ten (10) percent or more of
the outstanding Units and Preferred Units of the Company (the "Ownership
Limit"). Notwithstanding the foregoing, no Person shall be deemed to have
exceeded the Ownership Limit as the result of an acquisition of Units or
Preferred Units by the Company which, by reducing the number of Units or
Preferred Units outstanding, increases the proportionate number of Units
and Preferred Units beneficially owned by such Person to ten (10) percent
or more of the Units and Preferred Units then outstanding; provided,
however, that, if a Person shall become the Beneficial Owner of ten (10)
percent or more of the Units and Preferred Units then outstanding by
reason of Unit and Preferred Units purchases by the Company and shall,
after such Unit and Preferred Units purchases by the Company, become the
Beneficial Owner of any additional Units and Preferred Units, then such
Person shall be deemed to have exceeded the Ownership Limit by the amount
of such additional purchase.
A Person shall be deemed the "Beneficial Owner" of, and shall be deemed to
"Beneficially Own," any Units or Preferred Units:
1. which such Person or any of such Person's Affiliates or Associates
(as such terms are defined below) Beneficially Owns, directly or
indirectly; or
2. which such Person or any of such Persons' Affiliates or Associates
has
(A) the right to acquire (whether such right is exercisable
immediately or only after the passage of time) pursuant to any
agreement, arrangement or understanding, or upon the exercise
of conversion rights, exchange rights, rights, warrants or
options, or otherwise; provided, however, that a Person shall
not be deemed the "Beneficial Owner" of, or to "Beneficially
Own," Units or Preferred Units tendered pursuant to a tender
or exchange offer made on behalf of such Person or any of such
Person's Affiliates or Associates until such tendered Units or
Preferred Units are accepted for purchase or exchange; or
(B) the right to vote or to have voted pursuant to any agreement,
arrangement or understanding; provided, however, that a Person
shall not be deemed the "Beneficial Owner" of, or to
"Beneficially Own" any Units or Preferred Units if the
agreement, arrangement or understanding to vote such Unit or
Preferred Unit (1) consists solely of a revocable proxy or
consent given to such Person in response to a public proxy or
consent solicitation made pursuant to, and in accordance with,
the applicable rules and regulations promulgated under the
Securities Exchange Act of 1934, as amended (the "Exchange
Act") and (2) is not then reportable pursuant to Section 13(d)
under the Exchange Act (or any comparable or successor
provision); or
3. which are beneficially owned, directly or indirectly, by any other
Person with which such Person or any of such Person's Affiliates or
Associates has any agreement, arrangement or understanding for the
purpose of acquiring, holding, voting (except to the extent
contemplated by the proviso in clause (B) of the preceding paragraph
B.2.) or disposing of any Units or Preferred Units of the Company.
"Affiliate" shall have the meaning set forth in the Agreement, and
"Associate" shall have the meaning ascribed to such term in Rule
12b-2 of the General Rules and Regulations under the Exchange Act,
as in effect on the date of this resolution.
C. Any Transfer that would result in a violation of the Ownership Limit shall
be void ab initio as to the Transfer of such number of Units and Preferred
Units that would cause the violation of the Ownership Limit, and the
proposed Transferee (the "Disqualified Holder") shall acquire no rights in
such Units and Preferred Units. If the foregoing Transfer Restriction
shall be determined by a court having jurisdiction to do so to be beyond
the power of the Board to effectuate or invalid, prohibited or
unenforceable for any other reason, then upon any event that results in a
violation of the Ownership Limit, the Units and Preferred Units in excess
of the Ownership Limit shall be deemed to have been transferred to the
Company or its designee, not as beneficial owner but in trust (the
"Trust") and as trustee for the exclusive benefit of such Disqualified
Holder and the beneficiary or beneficiaries to whom an interest in such
Trust may later be transferred.
1. The Disqualified Holder shall retain the right to receive allocations and
distributions with respect to Units and Preferred Units held in the Trust
in accordance with the terms of the Agreement, and for all tax purposes
including the allocation of gain and losses with respect to the Units and
Preferred Units, the Disqualified Holder will be treated as the Beneficial
Owner of such Units and Preferred Units, except that such Disqualified
Holder shall not be accorded any voting rights with respect to the Units
and Preferred Units. Instead, Units and Preferred Units held in the Trust
shall be voted solely by the trustee of the Trust. The trustee shall cast
such votes for or against any proposition on which Unit Holders are
entitled to vote (or, as to elections, in favor of each nominee) in the
same proportion as all other Units or Preferred Units which are voted on
such matters are voted.
2. The Disqualified Holder may designate a beneficiary of an interest of
Units and Preferred Units held in Trust (representing a specified number
of Units or Preferred Units held by the Trust), if those Units and
Preferred Units held in Trust plus the Units and Preferred Units
Beneficially Owned by such beneficiary would not exceed the Ownership
Limit if transferred to such beneficiary. Upon the designation of a
beneficiary of an interest in the Trust, the corresponding number of Units
and Preferred Units in the Trust shall be released to the beneficiary.
Notwithstanding the foregoing, prior to any transfer of any interest in
the Trust, the Disqualified Holder and the designee must fully complete,
duly execute and deliver to the Secretary of the Company all parts of a
Transfer Application, which shall be subject to all the provisions of this
resolution and of the Agreement and Bylaws to the same extent as if the
Disqualified Holder were a Transferor of Membership Interests and the
designee were a proposed Transferee.
3. Any Trust created pursuant to the above provisions shall continue in
effect until the earlier of the liquidation or dissolution of the Company
in accordance with the terms of the Agreement or the transfer of all Units
and Preferred Units out of the Trust in accordance with Paragraph C.2.
above.
JCM PARTNERS, LLC
(1:1 Record Holder Transfer Restrictions)
Restrictions on Transfer of Membership Interests
Adopted by a Resolution of the Board of Managers, dated
March 21, 2007, pursuant to the Board of Managers'
Authority under Section 6.11(b)(2) of the Bylaws
Except as may be authorized by the Board of Managers prior to a Transfer, no
Person may Transfer any Units of any class of Units or any Preferred Units of
any series of Preferred Units, if as a result of such Transfer, the number of
record holders of that class of Units or series of Preferred Units would
increase (i.e., a Person may only transfer on a 1:1 record holder to record
holder basis any Units of any class of Units or any Preferred Units of any
series of Preferred Units) (herein, the "1:1 Record Holder Restriction").
In order to request the Board of Managers' authorization to a Transfer outside
the 1:1 Record Holder Restriction, a holder of Units or Preferred Units shall
submit a written request to the Secretary of the Company that shall set forth
the holder's reasons for the request. The Secretary of the Company shall forward
the request to the Board of Managers. The Board of Managers shall act on the
request no later than the next regularly scheduled meeting of the Board of
Managers. The request may be granted or denied in the sole discretion of the
Board of Managers.
The Board of Managers, pursuant to a resolution of the Board of Managers, may
delegate the decision to grant a waiver to the Company's Chief Executive
Officer.