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KRESCENT PARTNERS L.L.C.
1301 AVENUE OF THE XXXXXXXX, 00XX XXXXX
XXX XXXX, XXX XXXX 00000
January 8, 1997
American Holdings I, L.P.
000 Xxxxx Xxxxxxx Xxxx
Xxxxx Xxxxx, Xxx Xxxx 00000
Re: XXXXX REALTY FUND, LTD.--III
Ladies and Gentlemen:
The parties hereto confirm their agreement to the terms of
Exhibit A annexed hereto, which terms are incorporated herein by reference,
which agreement is intended to be legally binding and enforceable upon
execution and delivery hereof and which, unless modified or terminated by a
writing signed by all of the parties hereto, constitutes the definitive
agreement among the parties relating to the subject matter hereof and thereof.
Each of the parties represents and warrants to the other that
(1) it has the right, power and authority to enter into this letter agreement,
(2) upon the execution of this letter agreement by each of the parties hereto,
this letter agreement will constitute the legal, valid and binding obligation
of such party, enforceable against such party in accordance with its terms, and
(3) no consent or approval of any third party or governmental agency or
authority is required for such party to execute and deliver this letter
agreement or to perform its obligations hereunder.
Each of the parties hereto agrees that the terms of this
letter agreement are confidential and may not be disclosed by any party hereto,
except as may be required by law and except to principals and authorized
representatives of the parties hereto, without the written consent of all of
the parties. Except as may be required by law, any public announcement
regarding this letter agreement or the transactions contemplated herein may not
be made by any party without the prior consent of all other parties hereto.
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This letter agreement shall be governed by and interpreted in
accordance with the laws of the State of New York, without regard to the
conflicts of law provisions thereof.
This letter agreement may be executed in separate
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument. This letter agreement
shall supersede all prior agreements, written or oral, by or among any of the
parties hereto with respect to the subject matter hereof and may not be amended
or otherwise modified except in writing signed by all of the parties hereto.
Any party may execute this letter agreement by transmitting a copy of its
signature by facsimile to the other parties. In such event the signing party
shall deliver an original of the signature page to each of the other parties
within one business day of signing and failure to so deliver such originals
shall result in the facsimile copy of that party's signature being treated as
an original.
Very truly yours,
KRESCENT PARTNERS L.L.C.
By: AP-GP Prom Partners Inc.,
Managing Member
By: /s/ Xxxxxxx Xxxx
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Xxxxxxx Xxxx, Vice President
AP-GP PROM PARTNERS INC.
By: /s/ Xxxxxxx Xxxx
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Xxxxxxx Xxxx, Vice President
APOLLO REAL ESTATE INVESTMENT
FUND II, L.P.
By: Apollo Real Estate Advisors II, L.P.,
General Partner
By: Apollo Real Estate Capital Advisors
II, Inc., General Partner
By: /s/ W. Xxxxxx Xxxxxxx
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W. Xxxxxx Xxxxxxx, Vice President
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KRESCENT LFG L.L.C.
By: AP-GP Prom Partners Inc.,
Managing Member
By: /s/ Xxxxxxx Xxxx
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Xxxxxxx Xxxx, Vice President
ACCEPTED AND AGREED TO AS
OF THE DATE FIRST ABOVE WRITTEN:
AMERICAN HOLDINGS I, L.P.
By: American Holdings I-GP, Inc.,
General Partner
By: /s/ Xxxxx X. Xxxxxx
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Xxxxx X. Xxxxxx, Vice President
AMERICAN HOLDINGS I-GP, INC.
By: /s/ Xxxxx X. Xxxxxx
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Xxxxx X. Xxxxxx, Vice President
AMERICAN REAL ESTATE HOLDINGS
LIMITED PARTNERSHIP
By: American Property Investors, Inc.,
General Partner
By: /s/ Xxxx X. Xxxxxxxxxx
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Xxxx X. Xxxxxxxxxx, Vice President
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EXHIBIT A
KRESCENT PARTNERS L.L.C./
AMERICAN HOLDINGS I, L.P.
PURCHASE OF UNITS OF INVESTOR LIMITED PARTNERSHIP INTEREST OF
XXXXX REALTY FUND, LTD. - III
TENDER OFFER
Krescent Partners L.L.C. has commenced an offer (the "Offer") to purchase up to
5,117 units of investor limited partnership interest (the "Units") of Xxxxx
Realty Fund, Ltd. - III (the "Partnership") at a purchase price of $315 per
Unit, net to the seller in cash, without interest, upon the terms and subject
to the conditions set forth in the Offer to Purchase, dated November 21, 1996
(the "Offer to Purchase"), and the related Letter of Transmittal (the "Letter
of Transmittal"). The purchase price will be reduced by the aggregate amount
of distributions per Unit, if any, made or declared by the Partnership after
November 21, 1996 and prior to 12:00 midnight, New York City time, on January
8, 1997 or such later date to which the Offer may be extended (the "Expiration
Date"). In addition, if a distribution is made or declared after the
Expiration Date but prior to the date on which the Purchaser pays the purchase
price for the tendered Units, the Purchaser will offset the amount of such
distribution from the amount otherwise due a holder of Units pursuant to the
Offer. Krescent filed a Tender Offer Statement on Schedule 14D-1 (the
"Schedule 14D-1") with the Securities and Exchange Commission (the
"Commission") with respect to the Offer on November 21, 1996.
PURCHASE OF UNITS
Krescent will sell to American Holdings I, L.P. ("AHI"), an affiliate of
American Real Estate Holdings Limited Partnership, and AHI will purchase from
Krescent, upon the terms and subject to the conditions set forth herein, 41.8%
of the Units purchased pursuant to the Offer for a purchase price equal to the
price paid by Krescent to Unitholders in respect of such Units (after giving
effect to all deductions and offsets for distributions referred to above),
without interest. Notwithstanding the foregoing, if the direct and indirect
percentage interest of Apollo Real Estate Investment Fund II, L.P. and its
affiliates (collectively, the "Apollo Group") in Krescent immediately following
the expiration and/or exercise of all outstanding options or other rights to
acquire an interest in Krescent, whether directly or indirectly, exceeds 83.6%
then AHI will be entitled to purchase additional Units from Krescent, at the
same purchase price per Unit, so that, after giving effect to such purchase,
the total percentage of Units purchased by AHI from Krescent equals 50% of such
percentage interest of the Apollo Group in Krescent (all such Units purchased
by AHI being hereinafter collectively referred to as the "AHI Units"). The
closing of the initial purchase and sale (the "Closing")
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will occur not more than 2 business days following the purchase of the AHI
Units by Krescent pursuant to the Offer, and before Krescent has submitted such
Units for transfer to the Partnership. At such Closing, (1) Krescent will
deliver the AHI Units to AHI, together with all necessary documentation to
transfer to AHI all of Krescent's right, title and interest in and to such
Units, such transfer to be free and clear of all claims, liens and encumbrances
created by Krescent, (2) AHI will pay the purchase price for such AHI Units by
wire transfer into an account designated by Krescent, (3) the parties will make
appropriate payments so that Total Expenses (as hereinafter defined) are shared
in the manner described below and (4) Krescent will assign to AHI its rights
under all letters of transmittal (including related proxies and
powers-of-attorney) relating to the AHI Units.
Anything herein to the contrary notwithstanding, the parties acknowledge and
agree that, in the event the transfer of AHI Units from Krescent to AHI, as
contemplated above, would be restricted or delayed by the Partnership as a
result of concerns that such transfer would cause the Partnership to be treated
as a "publicly traded partnership," Krescent will, if AHI so requests, assign
to AHI its right to purchase 41.8% of the Units tendered pursuant to the Offer,
together with its rights under all letters of transmittal (including related
proxies and powers-of-attorney) relating to the AHI Units, and AHI will,
thereupon, purchase such Units directly from tendering Unitholders. In such
event, AHI will pay the purchase price for such Units by wire transfer to
Xxxxxx Group (as hereinafter defined), simultaneously with the payment by
Krescent of the purchase price for the Units it purchases.
ALLOCATION OF EXPENSES
AHI and Krescent shall share Total Expenses in the same ratio as the number of
AHI Units purchased by AHI from Krescent bears to the total number of Units
purchased pursuant to the Offer. At the Closing and, if necessary, from time
to time thereafter, one party shall pay the other such amounts as may be
necessary so that Total Expenses are shared in such ratio. "Total Expenses"
means all out-of-pocket costs and expenses incurred by Krescent, AHI or their
respective affiliates (including attorneys fees and expenses) with respect to:
(1) the Offer, including, without duplication, Commission filing fees, the fees
and expenses of The Xxxxxx Group, Inc., the information agent/depositary for
the Offer ("Xxxxxx Group"), printing and mailing expenses and Partnership
transfer fees, but excluding any fees payable to LFG (as hereinafter defined)
or its affiliates; (2) the AHI Offer (as hereinafter defined) and the
termination thereof; and (3) the negotiation, execution and delivery of this
letter agreement. Total Expenses shall not include the costs of purchasing the
Units. Each party will provide, at the execution and delivery hereof, an
estimate of its costs and expenses incurred to date and shall provide, upon
request, invoices or other appropriate evidence of the incurrence of costs and
expenses constituting Total Expenses hereunder.
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AHI OFFER
On November 29, 1996, AHI commenced an offer to purchase up to 4.9% of the
Units at a purchase price of $325 per Unit (the "AHI Offer"). Prior to or
concurrently with the execution and delivery of this Letter Agreement, AHI has
terminated the AHI Offer.
STANDSTILL AGREEMENT
In order to obtain a list of Unitholders, Liquidity Financial Group, L.P.
("LFG"), an affiliate of Krescent's financial advisor, Liquidity Financial
Advisors, Inc., entered into a settlement agreement and release, dated June 27,
1996, as amended as of October 8, 1996 (the "Standstill Agreement"), with the
Partnership. Krescent assumed the obligations of LFG under the Standstill
Agreement pursuant to an assumption agreement, dated as of November 21, 1996
(the "Krescent Assumption Agreement"). The Standstill Agreement and the
Krescent Assumption Agreement have been filed as exhibits to the Schedule
14D-1. An affiliate of AHI entered into a Standstill Agreement with the
Partnership on November 26, 1996 (the "AHI Standstill Agreement"). The parties
will cooperate in taking all such action as may be necessary or desirable for
AHI to assume the obligations of LFG under the Standstill Agreement with
respect to the Partnership to the same extent that Krescent is bound thereby
and to amend the Standstill Agreement and the AHI Standstill Agreement to
permit the parties to engage in the transactions contemplated hereby.
The parties will also cooperate in seeking the agreement of the general partner
of the Partnership to admit AHI as a limited partner of the Partnership or
recognize AHI as a registered owner of Units to the same extent as it has
agreed to so admit or recognize Krescent pursuant to the letter Agreement filed
as Exhibit 99.(c)(5) to the Schedule 14D-1.
CONDUCT OF OFFER
From and after the date hereof, all decisions relating to the conduct of the
Offer and the acquisition and transfer of Units pursuant thereto, including
without limitation any change in the terms or waiver of any of the conditions
thereof, shall be made jointly by Krescent and AHI. Notwithstanding the
foregoing, in the event that either Krescent or AHI proposes to increase the
purchase price for Units and the other opposes such an increase, such purchase
price shall, subject to the provisions set forth below, nonetheless be
increased as proposed, and the parties shall take all necessary action to amend
the Offer accordingly. The party proposing to increase the purchase price
shall so notify the other party in writing. Not later than 5:00 p.m., New York
City time, on the second business day following receipt of such notice, the
party receiving the notice shall notify the proposing party whether it agrees
to or opposes such increase. If AHI so notifies Krescent of its opposition to
an increase in the purchase price proposed by Krescent, AHI shall have no
further obligation to purchase the AHI Units hereunder, and Krescent shall
thereafter control all decisions regarding the conduct
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of the Offer and the acquisition and transfer of Units pursuant thereto. If
Krescent so notifies AHI of its opposition to an increase in the purchase price
proposed by AHI, Krescent shall assign to AHI, and AHI shall assume, Krescent's
right and obligation, subject to the terms and conditions of the Offer, to
purchase Units tendered pursuant to the Offer (together with its rights under
letters of transmittal, including proxies and powers-of-attorney, relating to
the Purchased Units). From and after the effectiveness of any such assignment
and assumption, AHI shall control all decisions regarding the conduct of the
Offer and the acquisition and transfer of Units pursuant thereto. In either
such event, the parties shall execute and deliver such instruments and
documents and cooperate in taking any other action as may be necessary or
desirable to amend or supplement the Schedule 14D-1 and the Offer to Purchase
in accordance with the applicable requirements of the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), and the rules and regulations of the
Commission thereunder. If a party opposes a proposed purchase price increase,
AHI shall be responsible for 41.8%, and Krescent shall be responsible for
58.2%, of Total Expenses incurred through the date on which the opposing party
notifies the proposing party of its opposition, and the proposing party shall
be responsible for 100% of Total Expenses incurred subsequent to such date.
Notwithstanding the foregoing, if the proposing party shall at any time lower
the purchase price for Units or shall breach its obligation to acquire Units
pursuant to the Offer (assuming all conditions thereto have been satisfied or
waived), the opposing party shall have the right (exercisable in its sole
discretion) to purchase Units upon the terms and conditions set forth herein,
and, if the opposing party exercises such right, the parties shall share Total
Expenses as provided under "Allocation of Expenses" above.
COOPERATION
AHI and Krescent shall cooperate and provide each other with such information
as may be necessary or desirable to include AHI as a co-bidder in the Offer and
to disclose the transactions contemplated hereby in accordance with the
applicable requirements of the Exchange Act and the rules and regulations of
the Commission thereunder. Neither party shall use the name of the other in
any public disclosure regarding the transactions contemplated hereby without
obtaining the prior written consent of such other party, which shall not be
unreasonably withheld or delayed.
AHI and Krescent shall also cooperate in connection with the transfer of Units
to AHI and Krescent, respectively, and, to the extent within Krescent's
reasonable control, in ensuring that AHI is accorded the benefits of ownership
of the AHI Units from and after the date of the Closing, notwithstanding any
delays in the recognition or effectiveness of the transfer of such Units to AHI
on the books of the Partnership. Krescent shall execute and deliver such
further instruments and documents as may be necessary or desirable in
connection with the foregoing.
Krescent shall instruct Xxxxxx Group to provide AHI, upon request, with
information
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regarding the Offer and tenders made pursuant thereto and to provide AHI with
reports regarding such status and tenders as such reports are made to Krescent.
INDEMNIFICATION
Krescent and its members, jointly and severally, shall indemnify AHI and hold
it harmless against any loss, claim, damage or liability (or any action in
respect thereof) to which AHI may become subject, insofar as such loss, claim,
damage or liability arises out of or is based upon any violation of the
Xxxxxxxx Act or any untrue statement of a material fact included in the
Schedule 14D-1 as heretofore amended or the omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading.
Krescent and its members, jointly and severally, on the one hand, and AHI and
its partners, jointly and severally, on the other, shall indemnify and hold
harmless the other against any loss, claim, damage or liability (or any action
in respect thereof) to which any of them may become subject, insofar as such
loss, claim, damage or liability arises out of or is based upon any violation
of the Xxxxxxxx Act or any untrue statement of a material fact included in the
Schedule 14D-1 as hereafter amended or the omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading, but only to the extent that any such loss, claim, damage or
action is based upon an untrue statement or alleged untrue statement or
omission or alleged omission made in reliance upon and in conformity with
information furnished by Krescent or its affiliates, on the one hand, or AHI or
its affiliates, on the other, for inclusion in such Schedule 14D-1.
AHI and its partners, jointly and severally, shall indemnify and hold harmless
Krescent against any loss, claim, damage or liability (or any action in respect
thereof) to which Krescent may become subject, insofar as such loss, claim,
damage or liability arises out of or is based upon any violation of the
Xxxxxxxx Act or any untrue statement of a material fact included in the tender
offer materials of AHI relating to the AHI Offer or the omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading.
BUY/SELL
Either AHI or Krescent may institute buy/sell procedures at any time commencing
on the first anniversary of the purchase of the AHI Units by Krescent, as long
as both parties (together with their respective affiliates and members of their
immediate families) continue to own at least 2% of the issued and outstanding
Units. These buy/sell provisions shall cover all Units owned by AHI and by its
affiliates and members of their immediate families and all Units owned by
Krescent and by its affiliates and members of their immediate families, in each
case, whether such Units were acquired prior to the Offer, pursuant to the
Offer or subsequent to the Offer. For purposes of these buy/sell provisions,
LFG shall not be deemed an affiliate of Krescent. Accordingly, these buy/sell
provisions shall not cover (1) that percentage of the
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Krescent Units equal to the percentage interest in Krescent, if any, whether
direct or indirect, of LFG, its affiliates and members of their immediate
families or (2) any Units owned directly by any of them. These buy/sell
provisions shall not apply to the extent that any buy/sell transaction would
impose any liability under Section 16(b) of the Exchange Act.
Either party may initiate the buy/sell by delivering to the other a written
offer stating the purchase price on a per Unit basis and other material terms
and conditions on which the initiating party is willing to purchase all, but
not less than all, Units then owned by the non-initiating party.
The non-initiating party shall then be obligated to elect to sell Units to the
initiating party at the per Unit price and upon the other terms and conditions
set forth in the buy/sell offer, or to purchase all of the initiating party's
Units upon such terms and conditions. The non-initiating party shall have
thirty days to decide whether to buy or sell. Failure to notify the initiating
party of such decision on a timely basis shall be deemed a decision to sell.
The closing of any purchase and sale of Units pursuant to these buy-sell
provisions shall occur no later than 15 days following the delivery of the
notice of election set forth above or such earlier date as shall be specified
in writing by the purchasing party. At any such closing, the selling party
shall sell, transfer and assign to the purchasing party all right, title and
interest in and to the selling party's Units, free and clear of all liens,
claims and encumbrances; the purchasing party shall pay for such Units in cash
or immediately available Federal funds; and, at the request of the purchasing
party, the selling party shall execute all other documents and take such other
actions as may be reasonably necessary or desirable to effectuate the transfer
of the Units and to carry out the purposes of this letter agreement.
PURCHASE OF ADDITIONAL UNITS
Prior to the Standstill Expiration Date, the parties subject to the Standstill
Agreement (whether directly or by assumption of the obligations of LFG
thereunder) (such parties being collectively referred to as the "Standstill
Parties") are permitted to purchase up to 25% of the issued and outstanding
Units. In the event that less than such amount is tendered pursuant to the
Offer (and/or already owned by the Standstill Parties on the Expiration Date),
then, prior to the Standstill Expiration Date, AHI and its affiliates will be
entitled to purchase up to 41.8% (or, if AHI purchases additional AHI Units
from Krescent under the circumstances described under "Purchase of Units"
above, then the total percentage of the tendered Units purchased by AHI) of any
Remaining Units (as hereinafter defined) and the other Standstill Parties and
their respective affiliates, collectively, will be entitled to purchase the
balance of any Remaining Units, in each case, without obtaining the consent of
or notifying any other party. "Remaining Units" means the difference between
25% of the outstanding Units and the number of Units purchased pursuant to the
Offer and/or owned by the Standstill Parties as of the Expiration Date.
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NO OTHER CONTRACTS
Except as expressly set forth herein, there are no contracts, arrangements,
understandings or relationships between AHI and Krescent with respect to the
Units.
FURTHER ASSURANCES
Each of the parties agrees that it shall take whatever action or actions as are
deemed by counsel to any party hereto to be reasonably necessary, advisable or
convenient from time to time to effectuate the provisions or intent of this
agreement, and to that end, each party agrees that it will execute, acknowledge
and deliver any further instruments or documents as give force and effect to
this letter agreement or any of the provisions hereof, or to carry out the
intent of this letter agreement or any of the provisions hereof.
REMEDIES
It is understood and agreed that monetary damages would be an inadequate remedy
for violation of this agreement, and in the case of an actual breach by a party
of the provisions hereof, any one or more of the other parties shall be
entitled to relief by way of injunction, specific performance or other
equitable relief.
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