<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
KRUPP REALTY LIMITED PARTNERSHIP-V
- --------------------------------------------------------------------------------
(Name of Issuer)
UNITS OF INVESTOR LIMITED PARTNERSHIP INTERESTS
- --------------------------------------------------------------------------------
(Title of Class of Securities)
501128 30 0
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(CUSIP Number)
John F. Hartigan, Esq.
Morgan, Lewis & Bockius LLP
801 South Grand Avenue
Los Angeles, CA 90017
(213) 612-2500
- --------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person Authorized to Receive
Notices and Communications)
January 31, 1997
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(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box [ ].
Check the following box if a fee is being paid with the statement . (A fee
is not required only if the reporting person (1) has a previous statement on
file reporting beneficial ownership of more than five percent of the class of
securities described in Item 1; and (2) has filed no amendment subsequent
thereto reporting beneficial ownership of five percent or less of such class.)
(See Rule 13d-7.)
NOTE: Six copies of this statement, including all exhibits, should be filed
with the Commission. See Rule 13d-1(a) for other parties to whom copies are to
be sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities,
and for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 ("Act") or otherwise subject to the liabilities of that section of
the Act but shall be subject to all other provisions of the Act (however, see
the Notes).
Page 1 of 13 Pages
<PAGE> 2
<TABLE>
<CAPTION>
CUSIP No. 501128 30 0 SCHEDULE 13D Page 2 of 13 Pages
<S> <C>
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
KRESCENT PARTNERS L.L.C.
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ]
(b) [X]
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3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
AF; WC
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) [ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
DELAWARE
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
1,075 Units of Investor Limited
Partnership Interests
NUMBER OF SHARES ---------------------------------------------------------
BENEFICIALLY OWNED 8 SHARED VOTING POWER
BY EACH REPORTING 0
PERSON WITH ---------------------------------------------------------
9 SOLE DISPOSITIVE POWER
1,075 Units of Investor Limited
Partnership Interests
---------------------------------------------------------
10 SHARED DISPOSITIVE POWER
0
---------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,075 Units of Investor Limited Partnership Interests
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* [ ]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
3.0%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
OO
- --------------------------------------------------------------------------------
</TABLE>
* SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE> 3
<TABLE>
<CAPTION>
CUSIP No. 501128 30 0 SCHEDULE 13D Page 3 of 13 Pages
<S> <C> <C>
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
AP-GP PROM PARTNERS INC.
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a)
(b) [X]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
OO
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) [ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
DELAWARE
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
1,075 Units of Investor Limited
Partnership Interests
NUMBER OF SHARES ---------------------------------------------------------
BENEFICIALLY OWNED 8 SHARED VOTING POWER
BY EACH REPORTING 0
PERSON WITH ---------------------------------------------------------
9 SOLE DISPOSITIVE POWER
1,075 Units of Investor Limited
Partnership Interests
---------------------------------------------------------
10 SHARED DISPOSITIVE POWER
0
---------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,075 Units of Investor Limited Partnership Interests
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* [ ]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
3.0%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
CO
- --------------------------------------------------------------------------------
</TABLE>
* SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE> 4
<TABLE>
<CAPTION>
CUSIP No. 501128 30 0 SCHEDULE 13D Page 4 of 13 Pages
<S> <C>
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
APOLLO REAL ESTATE INVESTMENT FUND II, L.P.
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a)
(b) [X]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
WC
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) [ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
DELAWARE
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
1,075 Units of Investor Limited
Partnership Interests
NUMBER OF SHARES ---------------------------------------------------------
BENEFICIALLY OWNED 8 SHARED VOTING POWER
BY EACH REPORTING 0
PERSON WITH ---------------------------------------------------------
9 SOLE DISPOSITIVE POWER
1,075 Units of Investor Limited
Partnership Interests
--------------------------------------------------------
10 SHARED DISPOSITIVE POWER
0
--------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,075 Units of Investor Limited Partnership Interests
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* [ ]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
3.0%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
PN
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</TABLE>
* SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE> 5
<TABLE>
<CAPTION>
CUSIP No. 501128 30 0 SCHEDULE 13D Page 5 of 13 Pages
<S> <C> <C>
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
APOLLO REAL ESTATE ADVISORS II, L.P.
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a)
(b) [X]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
OO
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) [ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
DELAWARE
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
1,075 Units of Investor Limited
Partnership Interests
NUMBER OF SHARES ---------------------------------------------------------
BENEFICIALLY OWNED 8 SHARED VOTING POWER
BY EACH REPORTING 0
PERSON WITH ---------------------------------------------------------
9 SOLE DISPOSITIVE POWER
1,075 Units of Investor Limited
Partnership Interests
---------------------------------------------------------
10 SHARED DISPOSITIVE POWER
0
---------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,075 Units of Investor Limited Partnership Interests
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* [ ]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
3.0%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
PN
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</TABLE>
* SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE> 6
STATEMENT PURSUANT TO RULE 13d-1
OF THE
GENERAL RULES AND REGULATIONS
UNDER THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED (THE "ACT")
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- --------------------------------------------------------------------------------
Item 1. Security and Issuer.
This statement relates to units of investor limited
partnership interests (the "Units") of Krupp Realty Limited Partnership-V, a
Massachusetts limited partnership (the "Partnership") which has its principal
executive offices at 470 Atlantic Avenue, Boston, Massachusetts 02210.
Item 2. Identity and Background.
This Statement is filed jointly by Krescent Partners L.L.C., a
Delaware limited liability company ("Krescent"), AP-GP Prom Partners Inc., a
Delaware corporation ("AP-GP Prom Partners"), Apollo Real Estate Investment
Fund II, L.P., a Delaware limited partnership ("AREIF II"), and Apollo Real
Estate Advisors II, L.P., a Delaware limited partnership ("AREA II").
Krescent, AP-GP Prom Partners, AREIF II and AREA II are sometimes collectively
referred to herein as the "Reporting Persons."
Krescent was organized for the purpose of acquiring the Units
pursuant to a tender offer on Schedule 14D-1 (the "Schedule 14D-1"), commenced
on November 21, 1996 (the "Tender Offer"). The principal executive office of
Krescent is at 1301 Avenue of the Americas, 38th Floor, New York, New York
10019. The managing member of Krescent is AP-GP Prom Partners, a newly-formed
Delaware corporation which is ultimately controlled by Apollo Real Estate
Capital Advisors II, Inc., a Delaware corporation ("Advisors"), as general
partner of AREA II, the general partner of AREIF II, a private real estate
investment fund and the sole shareholder of AP-GP Prom Partners.
AREIF II is principally engaged in the business of investing
in real estate and real estate-related interests. The address of AREIF II's
principal business and its principal office is c/o Apollo Real Estate Advisors
II, L.P., Two Manhattanville Road, Purchase, New York 10577.
AREA II is the general partner of AREIF II. AREA II is
principally engaged in the business of serving as managing general partner of
AREIF II. The address of AREA II's principal business and its principal office
is Two Manhattanville Road, Purchase, New York 10577. Advisors is the sole
general partner of AREA II. Advisors is principally engaged in the business of
serving as general partner of AREA II.
Attached hereto as Appendix A is information concerning the
executive officers and directors of AP-GP Prom Partners, the managing member of
Krescent, and Advisors, the general
Page 6
<PAGE> 7
partner of AREA II, as well as certain other entities, which information is
required to be disclosed in response to Item 2 and General Instruction C to
Schedule 13D. All such persons identified on Appendix A disclaim beneficial
ownership of and any pecuniary interest in the Units beneficially owned by the
Reporting Persons.
None of the Reporting Persons, Advisors, nor any of the
persons or entities referred to in Appendix A hereto, has, during the last five
years, been convicted in a criminal proceeding (excluding traffic violations
and similar misdemeanors) or been a party to a civil proceeding of a judicial
or administrative body of competent jurisdiction and as a result of such
proceeding was or is subject to a judgment, decree, or final order enjoining
future violations of, or prohibiting or mandating activities subject to,
federal or state securities laws or finding any violation with respect to such
laws.
Item 3. Source and Amount of Funds or Other Consideration.
As of the date hereof, the Reporting Persons are deemed to
beneficially own 1,075 Units. The source of all funds used to acquire
beneficial ownership of such Units was investment funds from working capital of
Krescent, which was contributed by its members AREIF II, AP-GP Prom Partners
and Krescent LFG L.L.C.. None of the funds used to acquire beneficial
ownership were borrowed funds or otherwise obtained for the purpose of
acquiring Units, however, the Reporting Persons may, from time to time, use
some or all of the Units in connection with various collateral investment
accounts in the ordinary course of business. AP-GP Prom Partners, the managing
member of Krescent, and AREA II, the general partner of AREIF II, are deemed to
beneficially own the Units beneficially owned by Krescent and AREIF II,
respectively. The Units beneficially owned by the Reporting Persons were
acquired as described below.
Pursuant to the Tender Offer, Krescent purchased an aggregate
of 1,070 Units on January 31, 1997 for an aggregate purchase price of
approximately $470,800. Prior to commencing the Tender Offer, Krescent
purchased 5 Units from an affiliate of its financial advisor at a purchase
price of $375 per Unit.
Item 4. Purpose of Transaction.
Each of the Reporting Persons acquired beneficial ownership of
the Units for investment purposes only and not with the purpose of changing or
influencing control of the Partnership. Each of the Reporting Persons retains
the right, however, to change such investment intent, to acquire further Units
or to sell or otherwise dispose of all or a part of the Units beneficially
owned by such Reporting Persons in any manner permitted by law and in
conformity with their obligations under the Standstill Agreement and the
Assumption Agreement as defined and described below in Item 6 and incorporated
by reference herein.
Although the foregoing currently reflects the present plans
and intentions of the Reporting Persons, the foregoing is subject to change at
any time. The Reporting Persons have and will, on an on-going basis, continue
to evaluate their investment in the Partnership. In the event of a material
change in the present plans or intentions of the Reporting Persons, the
Reporting Persons will amend this Schedule 13D to reflect such change.
Page 7
<PAGE> 8
Item 5. Interest in Securities of the Issuer.
(a) and (b) As of the date hereof, the Reporting Persons are
deemed to beneficially own an aggregate of 1,075 Units, which constitutes
approximately 3.0% of the Units outstanding.* The Reporting Persons have sole
voting and sole dispositive power of all such Units beneficially owned by them.
On January 10, 1997, American Holdings I, L.P. ("American
Holdings"), American Holdings I-GP, Inc. and American Property Investors, Inc.
(collectively referred to herein as "AHI") joined the Tender Offer as
co-bidders. Pursuant to the Tender Offer, AHI purchased an aggregate of 769
Units on January 31, 1997. Prior to joining the Tender Offer, AHI advised
Krescent that it had purchased 45 Units pursuant to its own tender offer for up
to 4.9% of the outstanding Units, which AHI terminated on December 6, 1996 (the
"AHI Offer"). Therefore, as of the date hereof and based on information
provided by AHI to Krescent, AHI may be deemed to beneficially own an aggregate
of 814 Units, which constitutes approximately 2.3% of the Units outstanding.
The Reporting Persons and AHI may be deemed to constitute a
"group" because of their past cooperation in conducting the Tender Offer. If
the Reporting Persons and AHI are a group they may be deemed to beneficially
own approximately 5.3% of the Units outstanding. Since the expiration of the
Tender Offer, however, each of the Reporting Persons and AHI has and will
continue to act independently with respect to the voting of Units and, except
as described in Item 6 below, there is no agreement or understanding among the
Reporting Persons or AHI with respect to the purchase, sale or voting, or
refraining from purchasing, selling, or voting, Units of the Partnership. The
Reporting Persons disclaim formation of a "group" with AHI pursuant to Rule
13d-3 under the Act. Neither the filing of this Schedule 13D nor any of its
contents shall be deemed an admission that the Reporting Persons have formed a
"group" with AHI or that the Reporting Persons are the beneficial owners of any
of the Units held by AHI. The Reporting Persons expressly disclaim formation
of a "group" with AHI and the Reporting Persons expressly disclaim beneficial
ownership of any of AHI's Units.
(c) Except for the purchase of Units pursuant to the
Tender Offer, neither Krescent, AP-GP Prom Partners, AREIF II, AREA II, and to
the best of Krescent's knowledge, the persons listed on Appendix A, nor any
affiliate thereof has effected any transaction in the Units within the past 60
days.
(d) The Reporting Persons have no knowledge of any
persons who have the right to receive or the power to direct the receipt of
distributions from, or the proceeds from the sale of, any Units beneficially
owned by the Reporting Persons.
(e) Not applicable.
- --------------------------------
* All calculations of percentages of beneficial ownership in this
Schedule 13D are based on there being 35,200 Units outstanding, as of
September 30, 1996, as disclosed in the Partnership's Quarterly Report
on Form 10-Q for the period ended September 30, 1996.
Page 8
<PAGE> 9
Item 6. Contracts, Arrangements, Understandings or Relationships with Respect
to Securities of the Issuer.
The information set forth in Item 3, Item 4 and Item 5 above
is hereby incorporated by reference herein.
AREIF II entered into an Option Agreement, dated as of
November 21, 1996 (the "Option Agreement") and amended by the First Amendment
to Option Agreement, dated as of January 8, 1997 (the "Option Amendment"), with
Liquidity Financial Group, L.P., a California limited partnership ("LFG") and
an affiliate of the financial advisor of Krescent in connection with the Tender
Offer, pursuant to which LFG was granted an option, for the 6 month period
following the latest date Krescent accepts securities in any tender offer, to
acquire, indirectly through a member of Krescent, up to a 5% interest in
Krescent. The discussion herein of the Option Agreement and the Option
Amendment is subject to and qualified in its entirety by reference to such
agreements, copies of which are attached hereto as exhibits and incorporated
herein by reference.
Pursuant to an Assumption Agreement dated as of November 21,
1996 between Krescent and LFG, Krescent assumed the restrictions set forth in
the Settlement Agreement and Release, dated June 27, 1996, between LFG and The
Krupp Corporation ("Krupp") (the "Standstill Agreement"), as amended by the
First Amendment to Settlement Agreement and Release, dated as of October 8,
1996 (the "First Amendment"), and by the Second Amendment to Settlement
Agreement and Release, dated as of January 6, 1997 (the "Second Amendment").
As a result, Krescent agreed that, prior to the Standstill Expiration Date (as
defined in the Standstill Agreement), it will not and it will cause certain
affiliates not to generally acquire or attempt to acquire, directly or
indirectly, more than 25% (including Units acquired through all other means) of
the outstanding Units or take certain other actions not consistent therewith.
The discussion herein of the Assumption Agreement, the Standstill Agreement,
the First Amendment and the Second Amendment is subject to and qualified in its
entirety by reference to such agreements, copies of which are attached hereto
as exhibits and incorporated herein by reference.
Krescent entered into an Advisory Agreement, dated as of
November 21, 1996 (the "Advisory Agreement"), with Liquidity Financial
Advisors, Inc., a California corporation ("Liquidity Financial"), pursuant to
which Liquidity Financial is entitled to certain advisory fees in exchange for
advisory services it performed for Krescent in connection with the Tender
Offer. Such advisory fees are to be equal to 2% of the amount invested, as of
the ninetieth day after acquisition of the Units pursuant to the Tender Offer,
or approximately $9,416. Further, after the members of Krescent have received
certain minimum priority returns on their invested capital, Liquidity Financial
will be entitled to additional participations in distributions from the
Partnership pursuant to the terms of the Advisory Agreement. The discussion
herein of the Advisory Agreement is subject to and qualified in its entirety by
reference to such agreement, a copy of which is attached hereto as an exhibit
and incorporated herein by reference.
Krescent and its members, on the one hand, and American
Holdings and its partners, on the other, entered into a letter agreement, dated
as of January 8, 1997 (the "Krescent-AHI Agreement"), relating to the conduct
of the Tender Offer and the purchase by American Holdings of 41.8% of the Units
tendered pursuant thereto. The Krescent- AHI Agreement also provides, among
other things, that (i) if, after the exercise and/or expiration of all
outstanding options or other rights to acquire an interest in Krescent, the
direct and indirect percentage ownership interest of AREIF II
Page 9
<PAGE> 10
and its affiliates (the "Apollo Group") in Krescent exceeds 83.6%, then
American Holdings will be entitled to purchase additional Units from Krescent
so that, after giving effect to such purchase, the total percentage of Units
purchased by American Holdings in the Tender Offer equals 50% of such
percentage interest of the Apollo Group in Krescent; and (ii) each of American
Holdings and Krescent has the right to initiate a buy/sell right at any time
after the first anniversary of the expiration of the Tender Offer, or January
31, 1998, and so long as American Holdings and Krescent (and/or their
respective affiliates) own at least 2% of the outstanding Units. The buy/sell
right provides that either American Holdings or Krescent may offer to buy Units
from the other and the other must either sell such Units to the offering party
or buy the offering party's Units at a purchase price per Unit and on such
other terms and conditions as set forth in the initiating party's offer. The
Krescent-AHI Agreement also contains indemnification provisions pursuant to
which the parties agree to indemnify each other in respect to any material
misstatements or omissions in certain information provided by each of them in
connection with the Schedule 14D-1 and the offer materials relating to the AHI
Offer. The discussion herein of the Krescent-AHI Agreement is subject to and
qualified in its entirety by reference to such agreement, a copy of which is
attached hereto as an exhibit and incorporated herein by reference.
Except as described above, the Reporting Persons do not have
any contracts, arrangements, understandings or relationships with respect to
any securities of the Partnership.
Item 7. Material to be Filed as Exhibits.
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- -----------
<S> <C>
1 Option Agreement, dated as of November 21, 1996, between LFG and AREIF II.
2 First Amendment to Option Agreement, dated as of January 8, 1997, between LFG
and AREIF II.
3 Assumption Agreement, dated as of November 21, 1996, between LFG and Krescent.
4 Settlement Agreement and Release, dated as of June 27, 1996, between Krupp and
LFG.
5 First Amendment to Settlement Agreement and Release, dated as of October 8, 1996,
between Krupp and LFG.
6 Second Amendment to Settlement Agreement and Release, dated as of January 6,
1997, between Krupp and LFG.
7 Advisory Agreement, dated as of November 21, 1996, between Liquidity Financial
and Krescent.
8 Letter Agreement, dated as of January 8, 1997, between Krescent and American
Holdings.
</TABLE>
Page 10
<PAGE> 11
SIGNATURE
After reasonable 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: February 10, 1997
KRESCENT PARTNERS L.L.C.
By: AP-GP Prom Partners Inc., its managing
member
By: /s/ Michael D. Weiner
---------------------------------
Name: Michael D. Weiner
Title: Secretary
AP-GP PROM PARTNERS INC.
By: /s/ Michael D. Weiner
---------------------------------
Name: Michael D. Weiner
Title: Secretary
APOLLO REAL ESTATE INVESTMENT FUND II, L.P.
By: Apollo Real Estate Advisors II, L.P.
Managing Member
By: Apollo Real Estate Capital Advisors II,
Inc.
General Partner
By: /s/ Michael D. Weiner
------------------------------------
Name: Michael D. Weiner
Title: Vice President
APOLLO REAL ESTATE ADVISORS II, L.P.
By: Apollo Real Estate Capital Advisors
II, Inc. General Partner
By: /s/ Michael D. Weiner
--------------------------------
Name: Michael D. Weiner
Title: Vice President
Page 11
<PAGE> 12
APPENDIX A
The following sets forth information with respect to the
executive officers and directors of AP-GP Prom Partners, which is the managing
member of Krescent, and Advisors, which is the sole general partner of AREA II.
AP-GP Prom Partners. Messrs. Lee S. Neibart, W. Edward
Scheetz and Richard Mack are executive officers and directors of AP-GP Prom
Partners. The principal occupation of each of Messrs. Neibart and Scheetz,
each of whom is a citizen of the United States, is to act as an officer of
Advisors. The principal occupation of Mr. Mack, who is a citizen of the United
States, is to act as an associate of Advisors. The business address of each of
Messrs. Neibart, Scheetz and Mack is c/o Apollo Real Estate Management II,
L.P., 1301 Avenue of the Americas, New York, New York 10019.
Capital Advisors II. Messrs. Leon D. Black, John J. Hannan
and William L. Mack are executive officers and directors of Advisors. The
principal occupation of each of Messrs. Black and Hannan, each of whom is a
citizen of the United States, is to act as an executive officer and director of
Apollo Capital Management, Inc., a Delaware corporation ("Apollo Capital"), and
of Lion Capital Management, Inc., a Delaware corporation ("Lion Capital").
Messrs. Black and Hannan are founding principals of Apollo Advisors, L.P.
("Apollo Advisors"), Lion Advisors, L.P. ("Lion Advisors") and together with
Mr. Mack of Apollo Real Estate Advisors II, L.P. The principal occupation of
Mr. Mack, who is a citizen of the United States, is to act as a consultant to
Apollo Advisors and as a principal of Apollo Real Estate Advisors, L.P. and to
act as President and Managing Partner of the Mack Organization, an owner and
developer of and investor in office and industrial buildings and other
commercial properties. The principal business of Apollo Advisors and of Lion
Advisors is to provide advice regarding investments in securities and the
principal business of Apollo Real Estate Advisors, L.P. is to provide advice
regarding investments in real estate and real estate-related investments. The
business address of each of Messrs. Black, Hannan and Mack is c/o Apollo Real
Estate Management II, L.P., 1301 Avenue of the Americas, New York, New York
10019.
Page 12
<PAGE> 13
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
-------
<S> <C>
Ex-99.1 Option Agreement, dated as of November 21, 1996, between LFG and
AREIF II.
Ex-99.2 First Amendment to Option Agreement,dated as of January 8, 1997,
between LFG and AREIF II.
Ex-99.3 Assumption Agreement, dated as of November 21, 1996,
between LFG and Krescent.
Ex-99.4 Settlement Agreement and Release, dated as of June 27, 1996,
between Krupp and LFG.
Ex-99.5 First Amendment to Settlement Agreement and Release, dated
as of October 8, 1996, between Krupp and LFG.
Ex-99.6 Second Amendment to Settlement Agreement and Release,
dated as of January 6, 1997, between Krupp and LFG.
Ex-99.7 Advisory Agreement, dated as of November 21, 1996,
between Liquidity Financial and Krescent.
Ex-99.8 Letter Agreement, dated as of January 8, 1997, between
Krescent and American Holdings.
</TABLE>
Page 13
<PAGE> 1
OPTION AGREEMENT
AGREEMENT, dated as of November 21, 1996 (this "Agreement"),
by and between Liquidity Financial Group, L.P., a California limited
partnership (the "Optionee"), and Apollo Real Estate Investment Fund II, L.P.,
a Delaware limited partnership (the "Fund").
W I T N E S S E T H:
WHEREAS, the Fund owns 29.23% of the outstanding limited
liability company interests (the "Krescent Interests") of Krescent LFG L.L.C.,
a Delaware limited liability company ("Krescent LFG");
WHEREAS, Krescent LFG owns 17.1% of the outstanding limited
liability company interests (the "Bidder Interests") of Krescent Partners
L.L.C., a Delaware limited liability company (the "Bidder");
WHEREAS, the Bidder has commenced or will commence tender
offers (the "Tender Offers") to acquire units of Investor Limited Partnership
Interest (or assignee interests therein or depositary certificates representing
such units) (the "Units") of various real estate limited partnerships sponsored
and/or managed by The Krupp Corporation, a Massachusetts corporation (the
"Targets"); and
WHEREAS, the Fund desires to grant to the Optionee an option
to acquire up to 100% of the Fund's Krescent Interests (the "Option
Interests"), upon the terms and subject to the conditions set forth in this
Agreement.
NOW, THEREFORE, in consideration of the foregoing premises,
the mutual covenants set forth herein and for other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
Optionee and the Fund hereby agree as follows:
1. Grant of the Options. The Fund hereby grants to the Optionee
the right to purchase (the "Option") all or any part of the Option Interests
from the Fund exercisable from the date Bidder accepts for payment Units
tendered pursuant to the Tender Offer until that date which is six months after
the date the Option becomes exercisable (the "Option Period"), at a purchase
price (the "Purchase Price") equal to five percent (5%) of the aggregate
consideration paid and expenses incurred by the Bidder for the Units in the
Tender Offer together with interest at a rate of 20% per annum based on a year
of 366 days (calculated from and after the date of the closing of the Tender
Offer through and including the date of the closing of the Option). If
Optionee does not exercise the entire Option, the Purchase Price shall be
reduced pro rata in accordance with the percentage of the entire Option
exercised by the Optionee.
<PAGE> 2
2. Exercise of the Option. The Option to purchase the Option
Interests shall be exercisable in whole or in part on the terms and subject to
the conditions hereinafter set forth:
(a) In the event that the Optionee is entitled to and
wishes to exercise the Option, the Optionee shall, during the Option Period,
send a written notice (the "Exercise Notice") to the Fund identifying the date
and place for the closing (the "Closing") of the Option Interests to be
purchased. Delivery of the Exercise Notice prior to the expiration of the
Option Period shall be sufficient to entitle the Optionee to purchase the
Option Interests notwithstanding that the Closing may occur after the
expiration of the Option Period; provided, however, that the Closing shall not
be more than fifteen (15) business days from the date that the Exercise Notice
is received by the Fund unless another date is agreed upon in writing by the
Fund and the Optionee.
(b) Payment of the Purchase Price for the Option
Interests to be acquired pursuant to the exercise of the Option will be made by
the Optionee at the Closing by delivering to the Fund, by wire transfer or by
certified check payable to the order of the Fund, an amount equal to the
Purchase Price.
3. Transferability of the Option. The Option may not be
assigned, transferred, or otherwise disposed of, or pledged or hypothecated or
in any way be subject to execution, attachment or other process. Any
assignment, transfer, pledge, hypothecation or other disposition of the Option
attempted contrary to the provisions of this Agreement or any levy, execution,
attachment or other process attempted upon the Option will be null and void and
without effect.
4. Sale of Option Interests. Except as provided in this
Agreement, the Fund shall not, without the express written consent of the
Optionee, during the Option Period, (i) sell or otherwise dispose of any or all
of the Option Interests, or (ii) convert such Option Interests into cash,
capital stock or other securities.
5. Adjustment Upon Changes in Capitalization. In the event of
any change in the Krescent Interests by reason of dividends, split-ups,
recapitalizations, combinations, exchanges of interests or the like, the type
and number of interests of Krescent Interests subject to the Option and the
Purchase Price shall be appropriately adjusted and proper provision shall be
made so that, in the event that any additional Krescent Interests become
outstanding as a result of any such change after the date of this Agreement,
the Option shall be adjusted so that, after such change and together with the
Krescent Interests previously outstanding pursuant to the exercise of the
Option (as adjusted on account of any of the foregoing change in Krescent
Interests), it equals 29.23% of the number of Krescent Interests then
outstanding.
6. Investment. The Optionee acknowledges that the Option
Interests are not being offered pursuant to a registration statement under the
Securities Act of 1933, as amended (the "Act"), or any other securities laws.
The Optionee acknowledges that the Option Interests are being acquired for the
Optionee's own account for investment purposes only and not with a view to, or
for sale in connection with, any public distribution thereof and will not sell,
or offer to sell or otherwise dispose of, any interest in the Option Interests
acquired by the Optionee in violation of the Act. The Optionee has had
substantial experience in business and financial matters and in making
investments of the type contemplated by this Agreement, is capable of
evaluating the merits and risks of the purchase of the Option Interests and is
able to bear the economic risks of such investment.
<PAGE> 3
7. Representations and Warranties of the Fund. The Fund hereby
represents and warrants to the Optionee as follows:
(a) Organization. The Fund is a limited partnership duly
formed, validly existing and in good standing under the laws of the State of
Delaware, has all requisite power and authority to execute and deliver this
Agreement and perform its obligations hereunder. The execution and delivery by
the Fund of this Agreement and the performance by the Fund of its obligations
hereunder have been duly and validly authorized by the general partner of the
Fund and no other partnership actions on the part of the Fund are necessary to
authorize the execution, delivery or performance of this Agreement or the
consummation of the transactions contemplated hereby.
(b) Authorization. This Agreement has been duly and validly
executed and delivered by the Fund and constitutes a valid and binding
agreement enforceable against the Fund in accordance with its terms, except
that (i) such enforcement may be subject to applicable bankruptcy, insolvency
or other similar laws, now or hereafter in effect, affecting creditors' rights
generally, and (ii) the remedy of specific performance and injunctive and other
forms of equitable relief may be subject to equitable defenses and to the
discretion of the court before which any proceeding therefor may be brought.
(c) Title to Option Interests. As of the date hereof,
the Fund is the legal, beneficial and record owner of the Option Interests.
The Fund has good and marketable title to all of the Option Interests, free and
clear of any liens, encumbrances, equities, restrictions and claims of every
kind and nature. No person other than the Fund has any interest in or right to
acquire any interest in any of the Option Interests. There are no rights,
options, convertible or exchangeable, instruments or interests or commitments,
agreements, arrangements or undertakings of any kind to which the Fund is a
party or by which the Fund is bound obligating the Fund to deliver, sell, or
cause to be sold or delivered, the Option Interests.
(d) No Conflicts. Except for authorizations, consents
and approvals as may be required hereunder, (i) no filing with, and permit,
authorization, consent or approval of any state or federal public body or
authority is necessary for the execution of this Agreement by the Fund and the
consummation by the Fund of the transactions contemplated hereby and (ii) none
of the execution and delivery of this Agreement by the Fund and the
consummation by the Fund of the transactions contemplated hereby will (A)
conflict with any or result in any breach of any provision of the
organizational documents of the Fund, (B) result in a violation or breach of,
or constitute (with or without due notice or lapse of time or both) a default
(or give rise to any right of termination, cancellation or acceleration) under
any of the terms, conditions or provisions of any indenture, license, contract,
agreement or other instrument or obligation to which the Fund is a party or by
which it may be bound, or (C) violate any order, writ, injunction, decree,
statute, rule or regulation applicable to the Fund.
8. Representations and Warranties of the Optionee. The Optionee
hereby represents and warrants to the Fund as follows:
(a) Organization. The Optionee is a limited partnership
duly formed, validly existing and in good standing under the laws of the State
of California, has all requisite power and authority to execute and deliver
this Agreement and perform its obligations hereunder. The execution and
delivery by the Optionee of this Agreement and the performance by the Optionee
of its
<PAGE> 4
obligations hereunder have been duly and validly authorized by the general
partner of the Optionee and no other partnership actions on the part of the
Optionee are necessary to authorize the execution, delivery or performance of
this Agreement or the consummation of the transactions contemplated hereby.
(b) Authorization. This Agreement has been duly and
validly executed and delivered by the Optionee and constitutes a valid and
binding agreement enforceable against the Optionee in accordance with its
terms, except that (i) such enforcement may be subject to applicable
bankruptcy, insolvency or other similar laws, now or hereafter in effect,
affecting creditors' rights generally, and (ii) the remedy of specific
performance and injunctive and other forms of equitable relief may be subject
to equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought.
(c) No Conflicts. Except for authorizations, consents
and approvals as may be required hereunder, (i) no filing with, and permit,
authorization, consent or approval of any state or federal public body or
authority is necessary for the execution of this Agreement by the Optionee and
the consummation by the Optionee of the transactions contemplated hereby and
(ii) none of the execution and delivery of this Agreement by the Optionee and
the consummation by the Optionee of the transactions contemplated hereby will
(A) conflict with any or result in any breach of any provision of the
organizational documents of the Optionee, (B) result in a violation or breach
of, or constitute (with or without due notice or lapse of time or both) a
default (or give rise to any right of termination, cancellation or
acceleration) under any of the terms, conditions or provisions of any
indenture, license, contract, agreement or other instrument or obligation to
which the Optionee is a party or by which it may be bound, or (C) violate any
order, writ, injunction, decree, statute, rule or regulation applicable to the
Optionee.
9. Termination. Except as otherwise provided herein, the
covenants and agreements contained herein with respect to the Option Interests
shall terminate upon the expiration of the Option Period.
10. Notices. Notices relating to this Agreement shall be in
writing and delivered in person or by hand delivery or certified mail, return
receipt requested, postage prepaid, as follows:
If to the Optionee:
Liquidity Financial Group, L.P.
2200 Powell Street, Suite 700
Emeryville, California 94608
Attention: Brent Donaldson
with a copy to:
Morgan, Lewis & Bockius
1800 M Street N.W.
Washington, D.C. 20036
Attention: Lloyd Feller, Esq.
<PAGE> 5
If to the Fund:
c/o Apollo Real Estate Advisors, L.P.
1301 Avenue of the Americas
38th Floor
New York, New York 10019
Attention: W. Edward Scheetz
Richard Mack
with a copy to:
Battle Fowler LLP
75 East 55th Street
New York, New York 10022
Fax: (212) 856-7811
Attention: Peter M. Fass, Esq.
Steven L. Lichtenfeld, Esq.
or to such other address as either party may designate by written notice to the
other in accordance with this provision, and is hereby deemed to have been
given or made: if delivered in person, immediately upon delivery; if by telex,
telegram or facsimile transmission, immediately upon sending and upon
confirmation of receipt; if by nationally recognized overnight courier service
with instructions to deliver the next business day, one (1) business day after
sending; and if by certified mail, return receipt requested, three (3) days
after mailing.
11. Benefits of Agreement. This Agreement shall inure to the
benefit and shall be binding upon the successors, heirs, legal representatives
and permitted assigns of the parties hereto.
12. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware without regard
to the principles thereof respecting conflicts of laws.
13. Holidays. Whenever any payment to be made hereunder shall be
stated to be due on a Saturday, Sunday or any national holiday, such payment
may be made on the next succeeding business day.
14. Section Headings. The section headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
15. Entire Understanding and Release. (a) This Agreement
contains the entire agreement between the Fund and the Optionee and supersedes
any and all prior agreements, understandings and undertakings, whether written
or oral, between the Fund and its officers, directors, employees or agents on
the one hand, and the Optionee on the other hand. No representations,
warranties, covenants or agreements, except those expressly set forth in this
Agreement will be deemed to have been made by either the Fund and its officers,
directors, employees or agents on the one hand, and the Optionee on the other
hand.
<PAGE> 6
(b) The Optionee hereby releases, acquits and forever
discharges the Fund and its partners, employees and agents, as well as each of
their respective heirs, personal representatives, successors and assigns, from
any and all losses, damages, claims, demands, debts, actions, causes of action,
suits, contracts, agreements, obligations, accounts, defenses and liabilities
of any kind or character whatsoever, known or unknown, suspected or
unsuspected, in contract or in tort, at law or in equity, which the Optionee
ever had, now has, or might hereafter have against the Fund and its partners,
employees and agents for or by reason of any matter, cause or thing whatsoever
which relates in any manner, in whole or in part, directly or indirectly, to
any agreement, understanding, or undertaking of the Fund and its partners,
employees, and agents in connection with the transactions contemplated by this
Agreement.
16. Severability. If any of the provisions of this Agreement
shall be held by a court of competent jurisdiction to be void or unenforceable,
the balance of the provisions of this Agreement shall remain in effect and be
enforced so as to give effect as nearly as possible to the intentions of the
Fund and the Optionee.
17. Execution. This Agreement may be executed in one or more
counterparts, each of which shall be deemed as original, but all of which
together shall constitute one and the same instrument. Facsimile signatures
shall be deemed an original.
<PAGE> 1
FIRST AMENDMENT TO
OPTION AGREEMENT
FIRST AMENDMENT TO OPTION AGREEMENT, dated as of January 8,
1997 (the "Amendment"), by and between Liquidity Financial Group, L.P., a
California limited partnership (the "Optionee"), and Apollo Real Estate
Investment Fund II, L.P., a Delaware limited partnership (the "Fund").
WITNESSETH:
WHEREAS, the parties entered into an Option Agreement, dated
the 21st day of November, 1996 (the "Agreement"), and now desire to amend the
Agreement to clarify the commencement of the Option Period; and
WHEREAS, Krescent Partners L.L.C., a Delaware limited
liability company (the "Bidder"), has commenced or will commence a series of
tender offers (the "Tender Offers") to acquire units of Investor Limited
Partnership Interest (or assignee interests therein or depositary certificates
representing such units) (the "Units") of various real estate limited
partnerships sponsored and/or managed by The Krupp Corporation, a Massachusetts
corporation (the "Targets").
NOW, THEREFORE, for good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto
hereby agree as follows:
1. Section 1 of the Agreement is hereby amended and
restated in its entirety as follows:
1. Grant of the Options. The Fund hereby grants to the
Optionee the right to purchase (the "Option") all or any part of the
Option Interests from the Fund exercisable from the latest date Bidder
accepts for payment Units tendered pursuant to a Tender Offer until
that date which is six months after the date the Option becomes
exercisable (the "Option Period"), at a purchase price (the "Purchase
Price") equal to five percent (5%) of the aggregate consideration paid
and expenses incurred by the Bidder for the Units in the Tender Offer
together with interest at a rate of 20% per annum based on a year of
366 days (calculated from and after the date of the closing of the
Tender Offer through and including the date of the closing of the
Option). If Optionee does not exercise the entire Option, the
Purchase Price shall be reduced pro rata in accordance with the
percentage of the entire Option exercised by the Optionee;
2. Except as expressly set forth above, the Agreement
shall remain in full force and effect without amendment or modification.
3. Capitalized terms used but not otherwise defined
herein shall have the meanings ascribed to them in the Agreement.
<PAGE> 2
IN WITNESS WHEREOF, the parties have executed this Agreement under
seal as of the date first above written.
LIQUIDITY FINANCIAL GROUP, L.P.
By: Liquidity Financial
Corporation, its general partner
By: /s/ Brent Donaldson
------------------------------------
Brent Donaldson
President
APOLLO REAL ESTATE INVESTMENT
FUND II, L.P.
By: Apollo Real Estate Advisors II,
L.P., its general partner
By: Apollo Real Estate Capital
Advisors II, Inc.,
its general partner
By: /s/ W. Edward Scheetz
----------------------------------
W. Edward Scheetz
Vice President
<PAGE> 1
ASSUMPTION AGREEMENT (this "Agreement"), dated as of November
21, 1996, between Liquidity Financial Group, L.P., a California limited
partnership ("LFG"), and Krescent Partners L.L.C., a Delaware limited liability
company (the "LLC").
W I T N E S S E T H:
WHEREAS, LFG and The Krupp Corporation, a Massachusetts
corporation (the "Corporation"), entered into a Letter Agreement, dated as of
June 27, 1996 and amended as of October 8, 1996 (the "Letter Agreement"),
pursuant to which LFG and its Affiliates (as defined therein) agreed to certain
restrictions in exchange for current lists (the "Lists") of the names and
addresses of the holders of the units of Investor Limited Partnership Interest
(or assignee interests therein or depositary certificates representing such
units) (the "Units") in various real estate limited partnerships sponsored
and/or managed by The Krupp Corporation, a Massachusetts corporation; and
WHEREAS, the LLC (i) has retained or will retain Liquidity
Financial Advisors, Inc., an affiliate of LFG, as its financial advisor and
(ii) desires to use the Lists for purposes consistent with the terms of the
Letter Agreement.
NOW, THEREFORE, in consideration of the foregoing and other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the LLC agrees as follows:
(a) The LLC hereby agrees to become bound by the Letter
Agreement to the extent LFG is so bound as if the LLC had executed the Letter
Agreement as of June 27, 1996, and amended as of October 8, 1996; provided,
however, the LLC shall only have liability with respect to its actions or
inactions under the Letter Agreement and shall not be liable for any breach of
any representation, warranty or covenant by LFG or any other party to the
Letter Agreement.
(b) The LLC shall not be bound by the Letter Agreement to
the extent that any of the obligations and liabilities of LFG under the Letter
Agreement are expanded, broadened, increased or enlarged.
(c) Nothing contained herein shall require the LLC to
pay, perform or discharge any liabilities or obligations expressly assumed
hereunder so long as the LLC shall in good faith contest or cause to be
contested the amount or validity thereof.
<PAGE> 2
IN WITNESS WHEREOF, LFG and the LLC have caused this Agreement
to be duly executed as of the date first written above.
KRESCENT PARTNERS L.L.C.
By: AP-GP Prom Partners, Inc.,
its managing member
By: /s/ Richard Mack
---------------------
Name: Richard Mack
Title: Vice President
LIQUIDITY FINANCIAL GROUP, L.P.
By: Liquidity Financial
Corporation, its general
partner
By: /s/ Brent Donaldson
------------------------
Name: Brent Donaldson
Title: President
<PAGE> 1
SETTLEMENT AGREEMENT AND RELEASE
This Settlement Agreement and Release (this "Agreement") is made and
entered into as of the 27th day of June, 1996, by and between The Krupp
Corporation ("Krupp"), a Massachusetts corporation with a principal place of
business at 470 Atlantic Avenue, Boston, Massachusetts 02210, and Liquidity
Financial Group, L.P. ("Liquidity") individually and on behalf of certain
Affiliates as hereinafter defined, a California limited partnership with a
principal place of business at 2200 Powell Street, Suite 700, Emeryville,
California 94608.
WITNESSETH:
WHEREAS, Liquidity is engaged in the business of sponsoring and
managing funds which invest in, among other things, real estate limited
partnerships;
WHEREAS, Krupp and certain affiliates sponsored and are engaged in the
business of managing, among other things, real estate limited partnerships;
WHEREAS, Liquidity sponsored and manages Liquidity Fund #33 LP as well
as other investment funds, and may in the future sponsor and manage and or
provide investment advice to additional investment funds (collectively, the
"Liquidity Funds"), and Krupp sponsored and manages Krupp Realty Fund, Ltd.-III
("Realty III") and Krupp Realty Limited Partnership-V ("Realty-V") as well as
other investment funds, and may in the future sponsor or manage additional
investment funds (individually a "Krupp Fund" and collectively, the "Krupp
Funds");
WHEREAS, Liquidity has, on behalf of certain of the Liquidity Funds,
sought to obtain from Krupp lists of the investors in certain of the Krupp
Funds for the stated purpose of contacting such investors in order to attempt
to acquire their units in the Krupp Funds;
WHEREAS, Krupp has refused to provide lists of the investors to
Liquidity, alleging that they are not entitled to obtain such lists and
Liquidity has stated that, absent a satisfactory resolution, its present
intention is to litigate the issue;
WHEREAS, the parties have conferred through their respective counsel
and are desirous of resolving and settling Liquidity's claims, upon the terms
and conditions hereinafter set forth.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto hereby agree as
follows:
1. Delivery of Lists: Within ten business days of the date of
this Agreement, Krupp will deliver to Liquidity lists of investors (containing
the names, addresses and capital contributions of such investors) in Realty III
and Realty V. The lists will be sorted alphabetically and delivered in both
paper format and on 3.5" IBM Compatible computer diskette in ASCII format. Any
additional lists delivered pursuant to paragraph 3 below will also be delivered
in both paper format on 3.5" IBM Compatible computer diskette in ASCII format.
<PAGE> 2
2. Payment for Lists: Within ten business days of the date of
this Agreement, Liquidity will deliver to Krupp payment for the estimated cost
of reproducing and delivering such lists in the total amount of $600.00.
3. Provision of Additional Lists: From time to time during the
twelve month period commencing on the date hereof and expiring on the first
anniversary date of this Agreement, Krupp will, upon written request from
Liquidity, deliver to Liquidity within 15 business days of receipt of such
written request, updated lists of investors in Realty III and Realty V, or, to
the extent a Liquidity Fund is a Limited Partner or Shareholder (as the case
may be) in any other Krupp Fund, current lists of investors in such other Krupp
Fund, provided such request includes an undertaking by Liquidity to pay the
cost of reproducing and delivering such lists within 10 business days after
receipt of such lists.
4. Restrictions on Activities: For a period commencing on the
date hereof and continuing for 30 months from the last date an investor list in
a Krupp Fund is delivered to Liquidity in response to Liquidity's request,
Liquidity and any person or entity controlling, controlled, managed or advised
by Liquidity or its subsidiaries (including the Liquidity Funds) or under
common control with Liquidity ("Liquidity Affiliates") shall not, without the
prior written consent of Krupp, which may be granted or withheld in Krupp's
sole and exclusive discretion and for any reason, or no reason:
(a) vote its interests in any Krupp Fund on any issue other than
in proportion to the votes of all other interest holders who vote on such
issue;
(b) in any manner acquire, attempt to acquire, or make a proposal
to acquire, directly or indirectly, more than a 25% interest in any Krupp Fund;
(c) propose, or propose to enter into, directly or indirectly, any
merger, consolidation, business combination, sale or acquisition of assets,
liquidation or other similar transaction involving any Krupp Fund;
(d) form, join or otherwise participate in a "group" within the
meaning of Section 13(d)(3) of the Securities and Exchange Act of 1934, as
amended, with respect to any voting securities of a Krupp Fund;
(e) make or participate in any way, directly or indirectly, in any
solicitation of "proxies" or "consents" (as such terms are used in the proxy
rules of the Securities and Exchange Commission) to vote, or seek to advise or
influence any person with respect to the voting of any voting securities of any
Krupp Fund;
(f) sell, transfer or assign any interests in any Krupp Fund to
any person or entity not bound by the terms and conditions of this Agreement;
(g) disclose any intention, plan or arrangement inconsistent with
the terms of this Agreement; and
(h) loan money to, advise, assist or encourage any person in
connection with any of the actions restricted or prohibited by this Agreement.
<PAGE> 3
5. Use of Lists, Prohibition on Furnishing to Others: Any
investor list obtained by Liquidity or Liquidity Affiliates relative to any
Krupp Fund will be utilized only for the purpose of contacting investors to
inquire as to whether they wish to sell their units in such Krupp Fund to a
Liquidity Fund, and for no other purpose. The lists will not be furnished by
Liquidity or Liquidity Affiliates to any other person or entity.
6. Third Parties: If at any time Liquidity or Liquidity
Affiliates is approached or contacted by any third party concerning
participation in a transaction involving the assets, businesses or securities
of any Krupp Fund or involving any of the actions proscribed by Section 4
hereof or otherwise by this Agreement, Liquidity or Liquidity Affiliates, as
the case may be, will immediately notify such party of its inability to
participate in such a transaction and, its obligation to notify Krupp and will
thereafter promptly (and in any event, within 5 business days) notify Krupp of
the nature of such contact and the parties thereto. Krupp will indemnify,
defend and hold harmless Liquidity and the Liquidity Affiliates from and
against any and all claims, demands or liabilities that may arise as a result
of Liquidity's or any Liquidity Affiliates' strict compliance with the terms of
this paragraph.
7. Compliance with Securities and Other Laws: Liquidity and
Liquidity Affiliates acknowledge their obligations under the Securities Laws
and Rules of the Securities and Exchange Commission.
8. Provision of Copies of All Communications: Liquidity and
Liquidity Affiliates covenant and agree that they shall deliver to Krupp at
least 5 business days before mailing or otherwise distributing to investors in
any Krupp Fund any communication to be given to one or more investors in any
Krupp Fund.
9. Fiduciary Duties of Krupp; Safe Harbor Provision, Protection
of Partnership Status: Liquidity acknowledges that:
(a) Krupp and its affiliates have significant fiduciary
obligations to the investors in the Krupp Funds, and has stated that it is
entering into this Agreement to, among other things, fulfill those fiduciary
obligations;
(b) Krupp may need to take certain further action to meet its
fiduciary obligations, including, without limitation, suspending the acceptance
of transfer paperwork in one or more Krupp Funds to avoid the termination of
such Krupp Fund's status as a partnership under the Internal Revenue Code of
1986 (the "Code"), as amended; avoid the treatment of such Krupp Fund as a
Publicly Traded Partnership under the Code; or cause the Krupp Fund to fall
outside any so-called "Safe Harbor" provision relating to taxation or tax
status, including provisions relating to Publicly Traded Partnerships; and
(c) That the suspension of the acceptance of transfer paperwork by
Krupp would mean that, notwithstanding the presentment of valid transfer
paperwork and the terms of this Agreement, transfers requested by Liquidity or
a Liquidity Affiliate would not be processed nor reflected on the books and
records of the Krupp Fund.
Nothing herein shall be construed, however, as an acknowledgement or
agreement by Liquidity that Krupp has the right under any particular
circumstances to suspend the acceptance of transfer paperwork, or as a waiver
of any future claims of Liquidity arising out of any such suspension or other
similar action.
<PAGE> 4
10. Release: For and in consideration of the agreements herein
made, Liquidity, individually and on behalf of the Liquidity Affiliates, does
hereby remise, release and acquit Krupp and all of its partners, officers,
directors, affiliates, predecessors, successors and assigns and each of their
partners, officers, directors, affiliates, predecessors, successors and assigns
from and against any and all claims, damages, costs, expenses, actions and
causes of action which Liquidity and the Liquidity Affiliates (including their
partners, officers, directors, affiliates, successors and assigns and all of
their partners, officers, directors, affiliates, predecessors, successors and
assigns) had in the past, now has, or may in the future acquire arising from or
related to the failure or refusal of Krupp to provide an investor list of any
Krupp Fund, except for such a failure or refusal in violation of the provisions
of this Agreement.
11. Notices: Any and all notices required or permitted hereunder
shall be in writing and shall be deemed given or served, as the case may be,
upon actual delivery to the parties at the following addresses:
If to Liquidity: Liquidity Financial Group, L.P.
2200 Powell Street-Suite 700
Emeryville, California 94608
Attention: Brent Donaldson
with a copy to: Roger B. Mead, Esq.
Folger & Levin
Embarcadero Center West Tower
275 Battery Street-23rd Floor
San Francisco, California 94111
If to Krupp: The Krupp Corporation
470 Atlantic Avenue
Boston, Massachusetts 02210
Attention: Laurence Gerber
with a copy to: Scott D. Spelfogel, Esq.
Vice President and General Counsel
The Berkshire Group
470 Atlantic Avenue
Boston, Massachusetts 02210
12. No Admissions, Confidentiality: The parties agree that this
Agreement is being entered into solely to settle disputed claims, and nothing
herein shall be deemed to constitute an admission of liability on the part of
Krupp, all such liability being expressly contested. The parties agree that
their discussions prior to entering into this Agreement, the nature, existence
and terms of this Agreement, and all matters relating to the dispute and
settlement shall be strictly confidential and not disclosed by either party to
any individual or entity, nor be admissible in court for any purpose.
Notwithstanding the foregoing, should either party believe that it must produce
this Agreement in response to subpoena or other lawful process, it shall first
notify the other party and provide the other party with at least 15 business
days in which to seek to quash or limit any such subpoena or process, before
producing this Agreement. To the extent the second party does not have
standing to seek to quash or limit the subpoena, the first party shall
cooperate in such efforts, provided such cooperation does not result in the
incurring of any costs on the part of said first party.
<PAGE> 5
13. Enforcement: The parties agree that each shall be entitled to
equitable relief, including injunctive relief and specific performance, in the
event of any breach of the provisions of this Agreement, in addition to all
other remedies available at law or in equity. In the event either party must
refer this agreement to an attorney for enforcement, the prevailing party shall
be entitled to all costs of enforcement, including attorney's fees.
14. Governing Law; Venue and Jurisdiction: This Agreement shall
be governed by the laws of the Commonwealth of Massachusetts without regard to
principles of conflict of law thereof. The parties agree that the Federal and
state courts located within the Commonwealth of Massachusetts shall have
exclusive jurisdiction over disputes arising hereunder, and the parties hereby
consent to such venue and submit to the jurisdiction of such courts.
15. Captions: Captions and section headings used herein are for
convenience of reference only, are not part of this Agreement and are not to
affect the construction of, or to be taken into consideration in interpreting,
this Agreement.
16. Amendments: This Agreement may be amended, changed, modified,
altered or terminated only by written instrument or written instruments signed
by all of the parties hereto.
17. Severability: In the event any provision of this Agreement
shall be held invalid or unenforceable by any court of competent jurisdiction,
such holding shall not invalidate or render unenforceable any other provision
hereof.
IN WITNESS WHEREOF, the parties have executed this Agreement under
seal as of the date first above written.
LIQUIDITY FINANCIAL GROUP, L.P.
By: Liquidity Financial Corporation,
its general partner
By: /s/ Brent Donaldson
------------------------------
Brent Donaldson
President
THE KRUPP CORPORATION
By: /s/ Laurence Gerber
------------------------------
Laurence Gerber
President
<PAGE> 1
FIRST AMENDMENT TO
SETTLEMENT AGREEMENT AND RELEASE
This First Amendment to Settlement Agreement and Release (this
"Amendment") is made and entered into as of the 8th day of October, 1996, by
and between The Krupp Corporation ("Krupp"), a Massachusetts corporation with a
principal place of business at 470 Atlantic Avenue, Boston, Massachusetts
02210, and Liquidity Financial Group, L.P. ("Liquidity") individually and on
behalf of certain Affiliates as defined in the Agreement (as hereinafter
defined), a California limited partnership with a principal place of business
at 2200 Powell Street, Suite 700, Emeryville, California 94608.
WITNESSETH:
WHEREAS, the parties entered into a Settlement Agreement and Release
dated the 27th day of June, 1996 (the "Agreement") and desire to the amend the
Agreement, to eliminate a possible ambiguity, as hereinafter set forth.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto hereby agree as
follows:
1. Section 4(d), of the Agreement shall be and hereby is amended by
adding, at the end of said section following the semi-colon, the following
clause:
provided, however, that Liquidity and Liquidity Affiliates
shall not be deemed to be acting in a "group" in violation of this
Section 4(d) solely by virtue of their voting their interests in
compliance with Section 4(a) of this Agreement;
2. Except as expressly set forth above, the Agreement shall remain in
full force and effect without amendment or modification.
IN WITNESS WHEREOF, the parties have executed this Agreement under seal
as of the date first above written.
LIQUIDITY FINANCIAL GROUP, L.P. THE KRUPP CORPORATION
By: Liquidity Financial
Corporation, its general partner
By: /s/ Brent Donaldson By: /s/ Laurence Gerber
---------------------------- --------------------
Brent Donaldson Laurence Gerber
President President
<PAGE> 1
SECOND AMENDMENT TO
SETTLEMENT AGREEMENT AND RELEASE
This Second Amendment to Settlement Agreement and Release
(this "Amendment") is made and entered into as of the 6th day of January 1997,
by and between The Krupp Corporation ("Krupp"), a Massachusetts corporation
with a principal place of business at 470 Atlantic Avenue, Boston,
Massachusetts 02210, and Liquidity Financial Group, L.P. ("Liquidity")
individually and on behalf of certain Affiliates as defined in the Agreement
(as hereinafter defined), a California limited partnership with a principal
place of business at 2200 Powell Street, Suite 700, Emeryville, California
94608.
WITNESSETH:
WHEREAS, the parties entered into a Settlement Agreement and
Release, dated the 27th day of June, 1996, as amended as of October 8, 1996 (as
amended, the "Agreement"), and now desire to the amend the Agreement, to
eliminate a possible ambiguity and to facilitate the contemplated transactions
described below, as hereinafter set forth;
WHEREAS, Krescent Partners L.L.C. (i) retained Liquidity
Financial Advisors, Inc., an affiliate of Liquidity, as its financial advisor,
(ii) agreed to become bound by the terms of the Agreement, and (iii) commenced
tender offers (the "Krescent Tender Offers") for units of Investor Limited
Partnership Interests of the real estate limited partnerships listed on
Schedule I attached hereto (the "Scheduled Partnerships");
WHEREAS, American Holdings I, L.P. ("AHI") desires to
participate in the Krescent Tender Offers and, therefore, has agreed to become
bound by the terms of the Agreement with respect to the Scheduled Partnerships;
and
WHEREAS, Krupp has consented to the participation of AHI in
the Krescent Tender Offers upon AHI's agreement to be bound by the terms of the
Agreement with respect to the Scheduled Partnerships;
NOW, THEREFORE, in consideration of the foregoing and for
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties hereto hereby agree as follows:
1. Section 4(d) of the Agreement is hereby amended and
restated in its entirety as follows:
(d) form, join or otherwise participate in a "group"
within the meaning of Section 13(d)(3) of the Securities and Exchange
Act of 1934, as amended, with respect to any voting securities of a
Krupp Fund, unless each member of such group agrees in writing to be
bound by the terms of this Agreement; provided, however, that
Liquidity and Liquidity Affiliates shall not be deemed to be acting in
a "group" in violation of this Section 4(d) solely by virtue of their
voting their interests in compliance with Section 4(a) of this
Agreement;
<PAGE> 2
2. Krupp hereby agrees that the agreement between
Liquidity and AHI, attached hereto as Exhibit A, satisfies the requirements of
the amended Section 4(d) of the Agreement, as set forth in Section 1 of this
Amendment.
3. Except as expressly set forth above, the Agreement
shall remain in full force and effect without amendment or modification.
4. Liquidity represents that it has not made any
statements inconsistent with the terms of the Krescent Tender Offers and hereby
agrees to comply with the terms of that certain letter dated December 17, 1996
from Steven L. Lichtenfeld to James Dubin, a copy of which is attached hereto
as Exhibit B.
IN WITNESS WHEREOF, the parties have executed this Agreement under
seal as of the date first above written.
THE KRUPP CORPORATION
By: /s/ Laurence Gerber
-----------------------------------
Laurence Gerber, President
LIQUIDITY FINANCIAL GROUP, L.P.
By: Liquidity Financial
Corporation, its general partner
By: /s/ Brent Donaldson
---------------------------
Brent Donaldson,
President
<PAGE> 3
SCHEDULE I
Krupp Realty Fund, Ltd. - III
Krupp Realty Limited Partnership - V
Krupp Realty Limited Partnership - VII
Krupp Cash Plus Limited Partnership
<PAGE> 1
LIQUIDITY FINANCIAL ADVISORS, INC.
2200 Powell Street, Suite 700
Emeryville, California 94608
November 21, 1996
Krescent Partners L.L.C.
1301 Avenue of the Americas
38th Floor
New York, New York 10019
Attention: Mr. W. Edward Scheetz
Gentlemen:
When signed by Liquidity Financial Advisors, Inc. ("Advisor")
and countersigned by Krescent Partners L.L.C. (the "Bidder") this letter shall
constitute an agreement with respect to the Bidder's engagement of the Advisor
to act as its financial advisor in connection with its proposed acquisition of
units of investor limited partnership interests in Krupp Realty Limited
Partnership-V, a Massachusetts limited partnership (the "Partnership").
1. CERTAIN DEFINITIONS. Capitalized words and phrases used in this
letter agreement have the following meanings:
a. "Acquisition" means, directly or indirectly, through one
transaction or a series of transactions, (1) the acquisition
of record and beneficial ownership of more than 1% of the
outstanding limited partnership interests in the Partnership
by the Bidder and/or one of its Affiliates by means of a
merger, consolidation, reorganization or other business
combination pursuant to which the Bidder and/or one of its
Affiliates is merged or otherwise combined with the
Partnership; (2) the acquisition by the Bidder and/or one of
its Affiliates by assignment of an economic interest
consisting of, or of record and beneficial ownership of, more
than 1% of the outstanding limited partnership interests in
the Partnership by means of a tender or exchange offer,
negotiated purchase or otherwise; or (3) the acquisition by
the Bidder and/or one of its Affiliates of title to, or
control over, all or substantially all of the assets of the
Partnership.
b. "Acquisition Equity" with respect to a Person means the amount
of such Person's equity capital invested in an Acquisition
Transaction or Affiliate Acquisition Transaction as of the
ninetieth day after the consummation of such Acquisition
Transaction or Affiliate Acquisition Transaction.
c. "Acquisition Fee" shall have the meaning set forth in
paragraph 4(a).
d. "Acquisition Transaction" means the proposed Acquisition by
the Bidder of the Units.
e. "Advisor" means Liquidity Financial Advisors, Inc., a
California corporation.
<PAGE> 2
f. "Affiliate" with respect to any Person has the meaning set
forth in Rule 12b-2 promulgated under the Securities Exchange
Act of 1934, as amended.
g. "Affiliate Acquisition Transaction" means the Acquisition
Transaction and any Acquisition by an Affiliate of the Bidder
of limited partnership interests in a real estate limited
partnership in connection with which the Advisor was engaged
to act as financial advisor for such Affiliate.
h. "Anticipated Acquisition Equity" shall have the meaning set
forth in paragraph 4(b).
i. "Apollo Affiliate Investors" means AP-GP Prom Partners, Inc.,
Apollo Real Estate Investment Fund II, L.P. and any of their
Affiliates that invest in an Affiliate Acquisition
Transaction.
j. "Associate" with respect to any Person has the meaning set
forth in Rule 12b-2 promulgated under the Securities Exchange
Act of 1934, as amended.
k. "Bidder" means Krescent Partners L.L.C., a Delaware limited
liability company.
l. "Business Day" means a day other than a Saturday, a Sunday or
a day on which banking institutions in the City of New York
are authorized or obligated by law or executive order to
close.
m. "Cash Flow Fee" shall have the meaning set forth in paragraph
5(a).
n. "Indemnified Party" shall have the meaning set forth in
paragraphs 7(a) and (b).
o. "Invested Capital" with respect to any Person means the
amounts contributed from time to time by such Person to the
capital of another Person.
p. "LF Partnership" shall have the meaning set forth in
paragraph 7.
q. "Partnership" means Krupp Realty Limited Partnership-V, a
Massachusetts limited partnership.
r. "Person" means an individual, a corporation, a partnership, a
joint venture, a limited liability company, a trust, or any
other entity.
s. "Term" shall have the meaning set forth in paragraph 2(a).
t. "Units" means units of investor limited partnership interests
in the Partnership, including depositary units.
2. TERM; SERVICES.
a. The term ("Term") of the engagement by the Bidder of the
Advisor hereunder shall be two years beginning on the date of
this letter agreement. During the
<PAGE> 3
Term, the Advisor will assist the Bidder on an exclusive basis
in analyzing, structuring, negotiating and effecting the
Acquisition Transaction on the terms and conditions set forth
in this letter agreement. In this connection, during the
Term, exclusively on the Bidder's behalf, the Advisor will,
as requested by the Bidder:
i. perform financial analysis of the Partnership in the
context of the Acquisition Transaction;
ii. assist the Bidder in its determination of the
appropriate price to be paid in the Acquisition
Transaction for the Units;
iii. advise the Bidder as to the structure and form of the
Acquisition Transaction;
iv. furnish the Bidder with such publicly-available due
diligence material as may reasonably be requested by
the Bidder;
v. furnish the Bidder with a current list of the limited
partners of the Partnership (or holders of Units) and
their addresses; and
vi. render such other financial advisory services as may
from time to time be reasonably requested by the
Bidder in connection with the Acquisition
Transaction.
b. The Advisor represents and warrants that neither it nor its
Affiliates or Associates have furnished to any Person except
the Bidder, and covenants and agrees that during the Term it
will not, and will cause its Affiliates and Associates not to
furnish, to any Person (other than counsel for the Advisor)
(i) the due diligence materials provided to the Bidder
hereunder, (ii) any list of the limited partners of the
Partnership (or holders of Units) or (iii) any financial
analysis of the Partnership prepared for the Bidder, unless
(I) it has first (A) furnished the Bidder with a written
notice setting forth its intention to do so, the identity of
each intended recipient of such material and a description of
any proposed or contemplated Acquisition or other transaction
involving such recipients and (B) offered the Bidder the
exclusive opportunity to engage the Advisor in connection with
such Acquisition or other transaction, (II) the Bidder has
failed to so engage the Advisor within 10 Business Days after
receipt of such written notice and (III) the Bidder has
consented in writing to the proposed action of the Advisor,
which consent shall not unreasonably be withheld; provided,
however, that the Advisor will not, and will cause its
Affiliates and Associates not to, disclose to any Person in
violation of any agreement between the Advisor or any
Affiliate or Associate of the Advisor and the Partnership or a
general partner of the Partnership any list of the limited
partners of the Partnership (or holders of Units) or take any
other action in violation of any such agreement.
c. The Advisor (i) represents and warrants that it has heretofore
disclosed in writing to the Bidder the identity of any Person
that holds or has a beneficial interest in
<PAGE> 4
Units for whom the Advisor or its Affiliates serve as general partners
or advisors or to whom the Advisor or its Affiliates owe any fiduciary
duty or other obligation and (ii) covenants and agrees that during the
Term it will not serve as a general partner or advisor for such a
Person (other than a Person specified in (i) above) or advise or
otherwise assist any Person (other than a Person specified in (i)
above or the Bidder) in acquiring a beneficial interest in Units,
unless (I) the Advisor has first (A) furnished the Bidder with a
written notice setting forth its intention to do so, the identity of
each Person involved and a description of any proposed or contemplated
Acquisition or other transaction involving such Persons and the Units
or the Partnership and (B) offered the Bidder the exclusive
opportunity to engage the Advisor in connection with such Acquisition
or other transaction, (II) the Bidder has failed to so engage the
Advisor within 10 Business Days after receipt of such written notice
and (III) the Bidder has consented in writing to the proposed action
of the Advisor, which consent shall not unreasonably be withheld.
d. The Advisor covenants and agrees that without the written
consent of the Bidder it will not, and will cause its
Affiliates and Associates not to, request any additional or
updated list of investors in the Partnership or any of its
Affiliates.
3. EXPENSE REIMBURSEMENT. The Bidder will reimburse the Advisor for its
reasonable actual out-of-pocket expenses incurred in connection with
the Acquisition Transaction upon submission of substantiating
documentation.
4. ACQUISITION FEE.
a. If, during the Term, an Acquisition Transaction is
consummated, the Bidder agrees to pay Advisor an acquisition
fee ("Acquisition Fee") calculated as follows:
i. 2.0 percent of the Acquisition Equity of the Bidder
in such Acquisition Transaction until the aggregate
Acquisition Equity of the Bidder and/or its
Affiliates in all Affiliate Acquisition Transactions
theretofore consummated together with the Acquisition
Equity of the Bidder in the Acquisition Transaction
itself equals $15,000,000; then
ii. 1.0 percent of the Acquisition Equity of the Bidder
in such Acquisition Transaction until the aggregate
Acquisition Equity of the Bidder and/or its
Affiliates in all Affiliate Acquisition Transactions
theretofore consummated together with the Acquisition
Equity of the Bidder in the Acquisition Transaction
itself equals $45,000,000; then
iii. 0.5 percent of the Acquisition Equity of the Bidder
in such Acquisition Transaction until the aggregate
Acquisition Equity of the Bidder and/or its
Affiliates in all Affiliate Acquisition Transactions
theretofore consummated together with the Acquisition
Equity of the Bidder in the Acquisition Transaction
itself equals $70,000,000; and then
<PAGE> 5
iv. 0.25 percent of the Acquisition Equity of the Bidder
in such Acquisition Transaction after the aggregate
Acquisition Equity of the Bidder and/or its
Affiliates in all Affiliate Acquisition Transactions
theretofore consummated together with the Acquisition
Equity of the Bidder in the Acquisition Transaction
itself exceeds $70,000,000.
b. At or prior to the closing of the Acquisition Transaction, the
Bidder will notify the Advisor in writing of the amount of the
Bidder's anticipated Acquisition Equity (the "Anticipated
Acquisition Equity") in such Acquisition Transaction as of the
ninetieth date after such closing and at closing the Bidder
will pay to the Advisor an Acquisition Fee based on the amount
of such Anticipated Acquisition Equity. Within 10 days after
the ninetieth day following the closing of such Acquisition
Transaction, a final determination of the Bidder's Acquisition
Equity in such Acquisition Transaction as of the ninetieth day
after the closing date of the Acquisition Transaction will be
made the Bidder and the Advisor. Within 10 days after such
determination, the Bidder will pay to the Advisor any
additional amount of the Acquisition Fee determined to be due
or the Advisor will repay to the Bidder any amount of the
Acquisition Fee determined to have been overpaid.
5. CASH FLOW FEE.
a. In addition to the fee payable pursuant to paragraph 4, the
Bidder will pay the Advisor a fee (the "Cash Flow Fee") based
upon the aggregate cash distributions of the Bidder in
connection with the Acquisition Transaction and the Bidder's
Affiliates in connection with all Affiliate Acquisition
Transactions, calculated and payable as follows:
i. 100 percent to members of the Bidder and its
Affiliates until such time as the Apollo Affiliate
Investors have received cash distributions in an
amount equal to their aggregate Invested Capital plus
a cumulative return of 15 percent per annum
compounded quarterly on their unreturned Invested
Capital; then
ii. 95 percent to members of the Bidder and its
Affiliates and 5 percent to the Advisor until such
time as the Apollo Affiliate Investors have received
cash distributions in an amount equal to their
aggregate Invested Capital plus a cumulative return
of 20 percent per annum compounded quarterly on their
unreturned Invested Capital; and then
iii. 90 percent to members of the Bidder and its
Affiliates and 10 percent to the Advisor.
b. The Advisor covenants and agrees that its interest in the Cash
Flow Fee will not be assigned, pledged, hypothecated or
otherwise transferred to any Person other than its Affiliates.
<PAGE> 6
6. REPRESENTATIONS, WARRANTIES AND COVENANTS.
a. The Advisor hereby represents and warrants to, and covenants
with, the Bidder as follows:
i. the execution and delivery of, and the performance by
the Advisor of its obligations under, this letter
agreement have been duly and validly authorized by
the Advisor, and this letter agreement has been duly
executed and delivered by the Advisor;
ii. the Advisor is duly registered as an investment
adviser under the Investment Advisers Act of 1940, as
amended;
iii. the Advisor does not possess any non-public
information with respect to the operations, assets,
liabilities, financial condition or prospects of the
Partnership;
iv. the Advisor, together with its Affiliates and
Associates, is the beneficial owner of 415 Units and,
except as contemplated hereunder or in the option
agreement dated November 21, 1996 between Liquidity
Financial Group, L.P. and Apollo Real Estate
Investment Fund II, L.P., covenants and agrees that
it will not, and will cause its Affiliates and
Associates not to, acquire, directly or indirectly, a
beneficial interest in any additional Units;
v. the Advisor is not in breach of any covenant or
agreement with the Partnership and will not be in
breach of any covenant or agreement with the
Partnership;
vi. neither the execution, delivery or performance of
this letter agreement by the Advisor, the offer by
the Bidder to acquire the Units nor the consummation
by the Bidder of the Acquisition Transaction
conflicts or will conflict with or constitutes or
will constitute a breach of, or a default under, any
agreement or other instrument to which the Advisor or
any Affiliate or Associate of the Advisor is a party
or by which any of them may be bound; and
vii. the information supplied or to be supplied by the
Advisor to the Bidder for inclusion in the Schedule
14D-1 to be filed by the Bidder in connection with
the Acquisition Transaction, the material to be filed
as exhibits thereto and any amendments thereto does
not and will not, to the Advisor's knowledge after
due inquiry, contain any untrue statement of a
material fact or omit to state any material fact
required to be stated therein or necessary in order
to make the statements made therein, in light of the
circumstances under which they were made, not
misleading.
b. The Bidder hereby represents and warrants to the Advisor as
follows:
<PAGE> 7
i. the execution and delivery of, and the performance by
the Bidder of its obligations under, this letter
agreement have been duly and validly authorized by
the Bidder and this letter agreement has been duly
executed and delivered by the Bidder;
ii. neither the execution, delivery or performance of
this letter agreement by the Advisor, the offer by
the Bidder to acquire the Units nor the consummation
by the Bidder of the Acquisition Transaction
conflicts or will conflict with or constitutes or
will constitute a breach of, or a default under, any
agreement or other instrument to which the Bidder or
any Affiliate or Associate of the Bidder is a party
or by which any of them may be bound;
iii. the Bidder is not in breach of any covenant or
agreement with the Partnership and will not be in
breach of any covenant or agreement with the
Partnership.
7. OTHER RELATIONSHIPS. The Bidder understands and acknowledges that to
the extent disclosed pursuant to paragraph 2(c) Advisor and/or its
Affiliates serve as general partners or advisors to Partnerships ("LF
Partnerships") that own Units and, accordingly, that Advisor and/or
its Affiliates have fiduciary or other obligations to the LF
Partnerships, limited partners in the LF Partnerships, and, depending
on the circumstances, the Partnership and other holders or beneficial
owners of the Units. Notwithstanding any provision of this letter
agreement to the contrary, the Bidder understands and agrees that, in
providing services to the Bidder hereunder, Advisor will not be
obligated to render any advice or assistance or provide any
information that Advisor believes would be inconsistent with its
obligations to these other Persons. Advisor may disclose to the LF
Partnerships and their limited partners information concerning this
letter agreement and the terms of the transactions contemplated hereby
to the extent Advisor believes the disclosure of such information is
necessary to satisfy its obligations to the LF Partnerships and their
limited partners.
8. INDEMNIFICATION.
a. The Bidder agrees to indemnify the Advisor and its Affiliates
and their respective partners, directors, officers, employees,
agents and controlling persons (each such person being an
"Indemnified Party") from and against any and all losses,
claims, damages and liabilities, joint or several, to which
such Indemnified Party may become subject under any applicable
federal or state law, or otherwise related to or arising out
of (i) the breach by the Bidder of any representation,
warranty or covenant made by the Bidder in this letter
agreement, (ii) the Acquisition Transaction or (iii) the
engagement of the Advisor pursuant to, and the performance by
the Advisor of the services contemplated by, this letter
agreement and will reimburse any Indemnified Party for all
reasonable expenses (including reasonable fees and expenses of
legal counsel) as they are incurred in connection with the
investigation of, preparation for or defense of any pending or
threatened claim or any action or proceeding arising
therefrom, whether or not such Indemnified Party is a party.
The Bidder will not be liable under the
<PAGE> 8
preceding sentence to the extent that any loss, claim, damage,
liability or expense relates to (i) a breach of any
representation or warranty made by the Advisor in this letter
agreement or (ii) the Advisor's bad faith, gross negligence or
willful misconduct in the performance by the Advisor of the
services contemplated by this letter agreement
b. The Advisor agrees to indemnify the Bidder, its members and
their respective Affiliates, partners, directors, officers,
employees, agents and controlling persons (each such person
being an "Indemnified Party") from and against any and all
losses, claims, damages and liabilities, joint or several, to
which such Indemnified Party may become subject under any
applicable federal or state law, or otherwise related to or
arising out of (i) the breach by the Advisor of any
representation, warranty or covenant made by the Advisor in
this letter agreement, (ii) the breach by the Advisor of any
representation, warranty or covenant made by the Advisor or
any Affiliate or Associate of the Advisor in any agreement
with the Partnership or any general partner of the Partnership
or (iii) the Advisor's bad faith, gross negligence or willful
misconduct in the performance by the Advisor of the services
contemplated by this letter agreement and will reimburse any
Indemnified Party for reasonable expenses (including
reasonable fees and expenses of legal counsel) as they are
incurred in connection with the investigation of, preparation
for or defense of any pending or threatened claim or any
action or proceeding arising therefrom, whether or not such
Indemnified Party is a party.
9. INDEPENDENT CONTRACTORS; NO JOINT VENTURE. The parties acknowledge
and agree that the relationship between the Advisor and the Bidder is
that of independent contractors. Nothing in this letter agreement is
intended to create or shall be deemed to create or constitute a joint
venture or partnership between the Advisor and the Bidder.
10. ASSIGNMENT; NO THIRD PARTY BENEFICIARIES. Neither party may assign
this letter agreement without the prior written consent of the other
party, and any purported assignment in violation of this provision
will be void. The terms and provisions of this letter agreement are
solely for the benefit of the parties hereto and other Indemnified
Parties and their respective successors, permitted assigns, heirs and
personal representatives, and no other person will acquire or have any
right by virtue of this letter agreement.
11. TERMINATION. This letter agreement shall terminate on the later of
March 1, 1997 and the fifteenth day after either party has given
written notice to the other of the termination thereof. The
provisions of this letter agreement relating to the payment of fees
and indemnification as well as the provisions of paragraphs 2(b),
2(c), 6(a)(iv), 6(a)(v) and 6(b)(iii) will survive the termination of
this letter agreement.
12. NOTICES. All notices or other communications required or permitted
hereunder shall be sufficient if it is in writing and delivered by
hand or sent by prepaid telex, cable or telecopier or sent, postage
prepaid, by registered, certified or express mail, or by recognized
overnight air courier service and shall be deemed given when so
delivered by hand, telex, cable or telecopy or if mailed or sent by
overnight courier service, on the
<PAGE> 9
fifth business day after mailing (one business day in the case of
express mail or overnight courier service) to the parties at the
following addresses:
a. If to the Bidder, to:
c/o AP-GP Prom Partners Inc.
Apollo Real Estate Advisors II, L.P.
1301 Avenue of the Americas
38th Floor
New York, New York 10019
Attention: W. Edward Scheetz
Telecopy: (212) 261-4060
and:
c/o AP-GP Prom Partners Inc.
c/o Apollo Real Estate Advisors II, L.P.
1999 Avenue of the Stars
Suite 1900
Los Angeles, California 90067
Attention: Michael D. Weiner
Telecopy: (310) 201-4166
with a copy to:
Battle Fowler LLP
75 East 55th Street
New York, New York 10022
Attention: Peter M. Fass
Telecopy: (212) 856-7822
b. If to the Advisor to:
2200 Powell Street, Suite 700
Emeryville, California 94608
Attention: Brent Donaldson
Telecopy: (510) 596-3299
13. PARAGRAPH HEADINGS. The paragraph headings contained in this letter
agreement are inserted for reference purposes only and shall not
affect the meaning or interpretation hereof.
14. GOVERNING LAW. This letter agreement shall be governed by, and
construed in accordance with, the laws of the State of New York
without regard to conflict of law principles.
15. WAIVERS. The waiver by any party of the breach of any of the terms
and conditions of, or any right under, this letter agreement shall not
be deemed to constitute the waiver of
<PAGE> 10
any other breach of the same or any other term or condition or of any
similar right. No such waiver shall be binding or effective unless
expressed in writing and signed by the party giving such waiver.
16. COUNTERPARTS. This letter agreement may be executed in one or more
counterparts, each of which shall be deemed an original and all of
which together shall constitute one and the same instrument.
17. ENTIRE AGREEMENT. This letter agreement contains, and is intended as,
a complete statement of all of the terms of the arrangements among the
parties with respect to the matters provided for herein and supersedes
any previous agreements and understandings between the parties with
respect to those matters. No amendment or modification of the terms
of this letter agreement shall be binding or effective unless
expressed in writing and signed by each party.
Please confirm that the foregoing correctly sets forth our
agreement by signing and returning to us the enclosed duplicate copy of this
letter agreement.
Very truly yours,
LIQUIDITY FINANCIAL ADVISORS, INC.
By: /s/ Brent Donaldson
-----------------------------------
Name: Brent Donaldson
Title: President
ACCEPTED AND AGREED TO AS OF
THE DATE FIRST WRITTEN ABOVE:
KRESCENT PARTNERS L.L.C.
By: AP-GP PROM PARTNERS, INC.,
its Managing Member
By: /s/ Richard Mack
- -----------------------------------
Name: Richard Mack
Title: Vice President
<PAGE> 1
KRESCENT PARTNERS L.L.C.
1301 AVENUE OF THE AMERICAS, 38TH FLOOR
NEW YORK, NEW YORK 10019
January 8, 1997
American Holdings I, L.P.
100 South Bedford Road
Mount Kisco, New York 10549
Re: KRUPP REALTY LIMITED PARTNERSHIP--V
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.
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
<PAGE> 2
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/ Richard Mack
-----------------------------------
Richard Mack, Vice President
AP-GP PROM PARTNERS INC.
By: /s/ Richard Mack
-----------------------------------
Richard Mack, 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. Edward Scheetz
--------------------------------
W. Edward Scheetz, Vice President
KRESCENT LFG L.L.C.
By: AP-GP Prom Partners Inc.,
Managing Member
By: /s/ Richard Mack
----------------------------------
Richard Mack, Vice President
<PAGE> 3
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/ Henry J. Gerard
---------------------------------------
Henry J. Gerard, Vice President
AMERICAN HOLDINGS I-GP, INC.
By: /s/ Henry J. Gerard
---------------------------------------
Henry J. Gerard, Vice President
AMERICAN REAL ESTATE HOLDINGS
LIMITED PARTNERSHIP
By: American Property Investors, Inc.,
General Partner
By: /s/ John P. Saldarelli
-----------------------------------------------
John P. Saldarelli, Vice President
<PAGE> 4
EXHIBIT A
KRESCENT PARTNERS L.L.C./
AMERICAN HOLDINGS I, L.P.
PURCHASE OF UNITS OF INVESTOR LIMITED PARTNERSHIP INTEREST OF
KRUPP REALTY LIMITED PARTNERSHIP--V
TENDER OFFER
Krescent Partners L.L.C. has commenced an offer (the "Offer") to purchase up to
8,380 units of investor limited partnership interest (the "Units") of Krupp
Realty Limited Partnership--V (the "Partnership") at a purchase price of $375
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") 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
<PAGE> 5
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
Herman 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 Herman Group, Inc., the information agent/depositary for
the Offer ("Herman 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.
<PAGE> 6
AHI OFFER
On November 29, 1996, AHI commenced an offer to purchase up to 4.9% of the
Units at a purchase price of $390 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 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
<PAGE> 7
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 with 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 Herman Group to provide AHI, upon request, with
information 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
Williams 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 Williams Act or any untrue statement of a material fact included
<PAGE> 8
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
Williams 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 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
<PAGE> 9
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.
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.
