<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
- --------------------------------------------------------------------------------
Washington, D.C. 20549
Schedule 14D-1
Tender Offer Statement Pursuant to Section 14(d)(1)
of the Securities Exchange Act of 1934
(Amendment No. 3)
- --------------------------------------------------------------------------------
KRUPP REALTY LIMITED PARTNERSHIP-V
(Name of Subject Company)
KRESCENT PARTNERS L.L.C.
AP-GP PROM PARTNERS INC.
AMERICAN HOLDINGS I, L.P.
AMERICAN HOLDING I-GP, INC.
AMERICAN PROPERTY INVESTORS, INC.
(Bidders)
UNITS OF INVESTOR LIMITED PARTNERSHIP INTERESTS
(Title of
Class of Securities)
501128 30 0
(CUSIP Number of Class of Securities)
- --------------------------------------------------------------------------------
W. Edward Scheetz
Krescent Partners L.L.C.
1301 Avenue of the Americas, 38th Floor
New York, NY 10019
Copies to:
Peter M. Fass Bonnie D. Podolsky
Steven L. Lichtenfeld Gordon Altman Butowsky
Battle Fowler LLP Weitzen Shalov & Wein
75 East 55th Street 114 West 47th Street
New York, NY 10022 New York, NY 10036
(212) 856-7000 (212) 626-0800
(Name, Address and Telephone Number of
Person Authorized to Receive Notices and
Communications on Behalf of Bidder)
Calculation of Filing Fee
- --------------------------------------------------------------------------------
Transaction Amount of
Valuation* Filing Fee
- --------------------- ---------------------
[S] [C]
$3,687,200 $737.44
- -----------------------------------------------------------------------------
*For purposes of calculating the filing fee only. This amount assumes
the purchase of 8,380 Units of Investor Limited Partnership Interests ("Units")
of the subject company for $440 per Unit in cash.
[X] Check box if any part of the fee is offset as provided by Rule 0-
11(a)(2) and identify the filing with which the offsetting fee
was previously paid. Identify the previous filing by
registration statement number, or the Form or Schedule and date
of its filing.
Amount previously paid: $628.50
Form or registration no.: Schedule 14D-1
Filing party: Krescent Partners L.L.C.
Date filed: November 21, 1996
(Continued on following pages)
(Page 1 of 11 pages)
<PAGE> 2
<TABLE>
<S> <C>
Cusip No.: 501128 30 0 14D-1 Page 2 of 11
- --------------------------------------------------------------------------------
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
(See Instructions)
(a) [ ]
(b) [X]
- --------------------------------------------------------------------------------
3. SEC Use Only
- --------------------------------------------------------------------------------
4. Sources of Funds (See Instructions)
AF; WC
- --------------------------------------------------------------------------------
5. Check Box if Disclosure of Legal Proceedings is Required
Pursuant to Item 2(e) or 2(f)
[ ]
- --------------------------------------------------------------------------------
6. Citizenship or Place of Organization
Delaware
- --------------------------------------------------------------------------------
7. Aggregate Amount Beneficially Owned by Each Reporting Person
5 Units of Investor Limited Partnership Interests
- --------------------------------------------------------------------------------
8. Check Box if the Aggregate Amount in Row (7) Excludes
Certain Shares (See Instructions)
[ ]
- --------------------------------------------------------------------------------
9. Percent of Class Represented by Amount in Row (7)
Less than 1%
- --------------------------------------------------------------------------------
10. Type of Reporting Person (See Instructions)
OO
</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
Cusip No.: 501128 30 0 14D-1 Page 3 of 11
- --------------------------------------------------------------------------------
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
(See Instructions)
(a) [ ]
(b) [X]
- --------------------------------------------------------------------------------
3. SEC Use Only
- --------------------------------------------------------------------------------
4. Sources of Funds (See Instructions)
AF
- --------------------------------------------------------------------------------
5. Check Box if Disclosure of Legal Proceedings is Required
Pursuant to Item 2(e) or 2(f)
[ ]
- --------------------------------------------------------------------------------
6. Citizenship or Place of Organization
Delaware
- --------------------------------------------------------------------------------
7. Aggregate Amount Beneficially Owned by Each Reporting Person
5 Units of Investor Limited Partnership Interests
- --------------------------------------------------------------------------------
8. Check Box if the Aggregate Amount in Row (7) Excludes
Certain Shares (See Instructions)
[ ]
- --------------------------------------------------------------------------------
9. Percent of Class Represented by Amount in Row (7)
Less than 1%
- --------------------------------------------------------------------------------
10. Type of Reporting Person (See Instructions)
CO
</TABLE>
<PAGE> 4
<TABLE>
<S> <C>
Cusip No.: 501128 30 0 14D-1 Page 4 of 11
- --------------------------------------------------------------------------------
1. Name of Reporting Person
S.S. or I.R.S. Identification No. of Above Person
AMERICAN HOLDINGS I, L.P.
- --------------------------------------------------------------------------------
2. Check the Appropriate Box if a Member of a Group
(See Instructions)
(a) [ ]
(b) [X]
- --------------------------------------------------------------------------------
3. SEC Use Only
- --------------------------------------------------------------------------------
4. Sources of Funds (See Instructions)
AF; WC
- --------------------------------------------------------------------------------
5. Check Box if Disclosure of Legal Proceedings is Required
Pursuant to Item 2(e) or 2(f)
[ ]
- --------------------------------------------------------------------------------
6. Citizenship or Place of Organization
Delaware
- --------------------------------------------------------------------------------
7. Aggregate Amount Beneficially Owned by Each Reporting Person
45 Units of Investor Limited Partnership Interests
- --------------------------------------------------------------------------------
8. Check Box if the Aggregate Amount in Row (7) Excludes
Certain Shares (See Instructions)
[ ]
- --------------------------------------------------------------------------------
9. Percent of Class Represented by Amount in Row (7)
Less than 1%
- --------------------------------------------------------------------------------
10. Type of Reporting Person (See Instructions)
PN
</TABLE>
<PAGE> 5
<TABLE>
<S> <C>
Cusip No.: 501128 30 0 14D-1 Page 5 of 11
- --------------------------------------------------------------------------------
1. Name of Reporting Person
S.S. or I.R.S. Identification No. of Above Person
AMERICAN HOLDINGS I-GP, INC.
- --------------------------------------------------------------------------------
2. Check the Appropriate Box if a Member of a Group
(See Instructions)
(a) [ ]
(b) [X]
- --------------------------------------------------------------------------------
3. SEC Use Only
- --------------------------------------------------------------------------------
4. Sources of Funds (See Instructions)
OO
- --------------------------------------------------------------------------------
5. Check Box if Disclosure of Legal Proceedings is Required
Pursuant to Item 2(e) or 2(f)
[ ]
- --------------------------------------------------------------------------------
6. Citizenship or Place of Organization
Delaware
- --------------------------------------------------------------------------------
7. Aggregate Amount Beneficially Owned by Each Reporting Person
45 Units of Investor Limited Partnership Interests
- --------------------------------------------------------------------------------
8. Check Box if the Aggregate Amount in Row (7) Excludes
Certain Shares (See Instructions)
[ ]
- --------------------------------------------------------------------------------
9. Percent of Class Represented by Amount in Row (7)
Less than 1%
- --------------------------------------------------------------------------------
10. Type of Reporting Person (See Instructions)
CO
</TABLE>
<PAGE> 6
Cusip No.: 501128 10 2 14D-1 Page 6 of 11
- --------------------------------------------------------------------------------
1. Name of Reporting Person
S.S. or I.R.S. Identification No. of Above Person
AMERICAN PROPERTY INVESTORS, INC.
- --------------------------------------------------------------------------------
2. Check the Appropriate Box if a Member of a Group
(See Instructions)
(a) { }
(b) {X}
- --------------------------------------------------------------------------------
3. SEC Use Only
- --------------------------------------------------------------------------------
4. Sources of Funds (See Instructions)
OO
- --------------------------------------------------------------------------------
5. Check Box if Disclosure of Legal Proceedings is Required
Pursuant to Item 2(e) or 2(f)
[ ]
- --------------------------------------------------------------------------------
6. Citizenship or Place of Organization
Delaware
- --------------------------------------------------------------------------------
7. Aggregate Amount Beneficially Owned by Each Reporting Person
45 Units of Investor Limited Partnership Interests
- --------------------------------------------------------------------------------
8. Check Box if the Aggregate Amount in Row (7) Excludes
Certain Shares (See Instructions)
[ ]
- --------------------------------------------------------------------------------
9. Percent of Class Represented by Amount in Row (7)
Less than 1%
- --------------------------------------------------------------------------------
10. Type of Reporting Person (See Instructions)
CO
<PAGE> 7
AMENDMENT NO. 4 TO SCHEDULE 14D-1
This Amendment No. 4 amends the Tender Offer Statement on Schedule 14D-1
filed by Krescent Partners L.L.C., a Delaware limited liability company (the
"Purchaser" or "Krescent"), with the Securities and Exchange Commission on
November 21, 1996 (the "Schedule 14D-1"), as amended by Amendment No. 1 dated
December 20, 1996, Amendment No. 2 dated December 31, 1996 and Amendment No. 3
dated January 9, 1997, relating to the tender offer by the Purchaser to
purchase up to 8,380 of the issued and outstanding Units of Investor Limited
Partnership Interests ("Units") of Krupp Realty Limited Partnership-V, a
Massachusetts limited partnership (the "Partnership"), upon the terms and
subject to the conditions set forth in the Purchaser's Offer to Purchase dated
November 21, 1996 and the related Letter of Transmittal. Reference to the
"Supplement" in this Amendment No. 4 to the Schedule 14D-1 shall mean the Offer
to Purchase as amended by the Supplement to the Offer to Purchase by the
Purchaser and AHI (as defined in Item 2 below) dated January 10, 1997 (the
"Supplement"), a copy of which is attached hereto as Exhibit (a)(8).
Capitalized terms used but not otherwise defined herein shall have the
meanings set forth in the Schedule 14D-1 and the Offer to Purchase.
ITEM 1. SECURITY AND SUBJECT COMPANY.
Item 1(b) is hereby supplement and amended to include the information
set forth in the Introduction to the Supplement, which is incorporated herein
by reference.
ITEM 2. IDENTITY AND BACKGROUND.
Item 2 is hereby supplemented and amended as follows:
(a)-(d) This statement is being filed by the Purchaser, AP-GP Prom
Partners, Inc., a Delaware corporation and the managing member (the "Managing
Member") of the Purchaser, American Holdings I, L.P., a Delaware limited
partnership ("AHI"), American Holdings I-GP, Inc., a Delaware corporation
and the general partner of AHI (the "AHI General Partner"), and American
Property Investors, Inc. ("API"), a Delaware corporation and the general
partner of the sole stockholder of the AHI General Partner. The Purchaser and
AHI have entered into an agreement (the "Krescent-AHI Agreement") relating to
the conduct of the Offer, a copy of which is attached hereto as Exhibit (c)(9).
Items 2(a)-(d) are hereby supplemented and amended to include the information
set forth in Section 10 ("Certain Information Concerning the Purchaser and
AHI") and Schedule I to the Supplement, which is incorporated herein by
reference.
(e) and (f) During the last five years, neither the Purchaser, the
Managing Member, AHI, the AHI General Partner, API nor, to the best of their
knowledge, any of the persons listed on Schedule I to the Offer to Purchase or
referred to in Section 10 ("Certain Information Concerning the Purchaser and
AHI") of the Offer to Purchase, in each case as amended by the Supplement, (i)
has been convicted in a criminal proceeding (excluding traffic violations or
similar misdemeanors) or (ii) was a party to a civil proceeding of a judicial
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 activities subject to, Federal or state
securities laws or finding any violation of such laws.
7
<PAGE> 8
(g) Item 2 (g) is hereby amended and supplemented to include the
information set forth in Schedule I to the Supplement, which is incorporated
herein by reference.
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT
COMPANY.
Item 3(b) is hereby supplemented and amended to include the information
set forth in Section 11 ("Background of the Offer") of the Supplement, which is
incorporated herein by reference.
ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
Item 4(a) is hereby supplemented and amended to include the information
set forth in Section 12 ("Source of Funds") of the Supplement, which is
incorporated herein by reference.
ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDER.
Items 5 (a)-(b) are hereby supplemented and amended to include the
information set forth in Section 8 ("Purpose of the Offer; Future Plans")
of the Supplement, which is incorporated herein by reference.
Items 5 (f)-(g) are hereby supplemented and amended to include the
information set forth in Section 7 ("Effects of the Offer") of the Supplement,
which is incorporated herein by reference.
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
Items 6(a)-(b) are hereby supplemented and amended to include the
information set forth in the Introduction and Section 10 ("Certain Information
Concerning the Purchaser and AHI") of the Supplement, which is incorporated
herein reference.
ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH
RESPECT TO THE SUBJECT COMPANY'S SECURITIES.
Item 7 is hereby supplemented and amended to include the information set
forth in Section 10 ("Certain Information Concerning the Purchaser and AHI")
and Section 11 ("Background of the Offer") of the Supplement, which is
incorporated herein by reference.
ITEM 10. ADDITIONAL INFORMATION.
Item 10(f) is hereby supplemented and amended as follows:
The information set forth in the Supplement, the Letter of Transmittal
and the press release dated January 10, 1997, copies of
8
<PAGE> 9
which are attached hereto as Exhibits (a)(8), (a)(9) and (a)(10)
respectively, is incorporated herein by reference.
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS.
99.(a)(7) Letter, dated January 10, 1997, from Krescent
Partners L.L.C. and American Holdings I, L.P. to
holders of Units
99.(a)(8) Supplement to Offer to Purchase dated January 10,
1997
99.(a)(9) Letter of Transmittal
99.(a)(10) Press Release dated January 10 ,1997
99.(c)(6) Second Amendment to Settlement Agreement, dated
January 6, 1997 (the "Second Amendment"), between
The Krupp Corporation and Liquidity Financial
Group, L.P.
99.(c)(7) First Amendment to Option Agreement, dated as of
January 8, 1997, between Liquidity Financial
Group, L.P. and Apollo Real Estate Investment Fund
II, L.P.
99.(c)(8) Assumption Agreement, dated January 8, 1997 (the
"AHI Assumption Agreement"), between Liquidity
Financial Group, L.P. and American Holdings I, L.P.
99.(c)(9) Letter Agreement, dated January 8, 1997 (the
"Krescent-AHI Agreement"), between Krescent
Partners L.L.C. and American Holdings I, L.P.
9
<PAGE> 10
SIGNATURES
After due inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: January 10, 1997
KRESCENT PARTNERS L.L.C.
By: AP-GP Prom Partners Inc., its
managing member
By: /s/ RICHARD MACK
------------------------
Name: Richard Mack
-----------------
Title: Vice President
-----------------
AP-GP PROM PARTNERS INC.
By: /s/ RICHARD MACK
-------------------------------
Name: Richard Mack
------------------------
Title: Vice President
------------------------
AMERICAN HOLDINGS I, L.P.
By: American Holdings I-GP, Inc.,
its general partner
By: /s/ HENRY J. GERARD
--------------------------
Name: Henry J. Gerard
---------------------
Title: Vice President
-------------------
AMERICAN HOLDINGS I-GP, INC.
By: /s/ HENRY J. GERARD
-------------------------------
Name: Henry J. Gerard
------------------------
Title: Vice President
------------------------
AMERICAN PROPERTY INVESTORS, INC.
By: /s/ JOHN P. SALDARELLI
--------------------------
Name: John P. Saldarelli
-------------------
Title: Vice President
-------------------
10
<PAGE> 11
EXHIBIT INDEX
EXHIBIT
NO. TITLE
- --- -----
99.(a)(7) Letter, dated January 10, 1997, from Krescent Partners L.L.C. and
American Holdings I, L.P. to holders of Units
99.(a)(8) Supplement to Offer to Purchase dated January 10, 1997
99.(a)(9) Letter of Transmittal
99.(a)(10) Press Release dated January 10, 1997
99.(c)(6) Second Amendment to Settlement Agreement, dated January 6, 1997
(the "Second Amendment"), between The Krupp Corporation and
Liquidity Financial Group, L.P.
99.(c)(7) First Amendment to Option Agreement, dated as of January 8,
1997, between Liquidity Financial Group, L.P. and Apollo Real
Estate Investment Fund II, L.P.
99.(c)(8) Assumption Agreement, dated January 8, 1997 (the "AHI
Assumption Agreement"), between Liquidity Financial Group, L.P.
and American Holdings I, L.P.
99.(c)(9) Letter Agreement, dated January 8, 1997 (the "Krescent-AHI
Agreement"), between Krescent Partners L.L.C. and American
Holdings I, L.P.
11
<PAGE> 1
KRESCENT INCREASES OFFER TO PURCHASE UNITS TO
$440 PER UNIT
OFFER EXTENDED TO FRIDAY, JANUARY 31, 1997
AHI TERMINATES ITS 4.9% TENDER OFFER
Krescent Partners L.L.C. ("Krescent") has increased its offer
price to purchase Units of Krupp Realty Limited Partnership-V (the
"Partnership") to $440 PER UNIT. Krescent has also entered into an agreement
with American Holdings I, L.P. ("AHI") pursuant to which AHI will purchase a
portion of the Units tendered to Krescent in the Offer. In contemplation of
this agreement, AHI TERMINATED ITS OFFER TO PURCHASE UP TO 4.9% OF THE
OUTSTANDING UNITS. To the best of Krescent's and AHI's knowledge, as of the
date of this letter, KRESCENT'S OFFER IS THE ONLY OUTSTANDING TENDER OFFER to
purchase Units in the Partnership. The Offer has also been extended until
midnight, New York City time, on January 31, 1997.
The materials included in this package include important
information concerning the amended terms and conditions to the Offer,
information concerning AHI, and instructions for tendering your Units. It is
important that you take some time to read carefully the enclosed Supplement to
the Offer to Purchase, the Letter of Transmittal and other accompanying
materials in order to evaluate the Offer being made by Krescent.
In addition to the information previously provided to you, in
considering the Offer, Unitholders are urged to consider the following factors:
o Although Krescent and AHI cannot predict the future value of
the Partnership's assets on a per Unit basis, the Purchase
Price offered could differ significantly from the net proceeds
that would be realized from a current sale of the properties
owned by the Partnership (the "Properties") or that may be
realized upon a future liquidation of the Partnership.
Krescent and AHI believe, however, such a sale is presently
unlikely because the Partnership's existing mortgage
indebtedness is subject to a prepayment premium or is not
prepayable until the fall of 1998 (and thereafter is subject,
for a period of time, to certain prepayment penalties).
Accordingly, Krescent and AHI believe that the underlying
value of the Properties, and hence the value of the Units, may
not be realized for a number of years. There can be no
assurance, however, that either or both of the Properties will
not be sold subject to their existing mortgage indebtedness or
that the lenders under such mortgage loans will not waive or
modify such prepayment penalties which, in either event, would
facilitate or improve the economics associated with a sale of
the Properties.
o Krescent and AHI are making the Offer with a view to making a
profit. Accordingly, there may be a conflict between their
desire to acquire the Units at a low price and your desire to
sell your Units at a high price. The Purchase Price of $440
is approximately 97% and 83%, respectively, of Krescent's
and AHI's respective estimates of the liquidation value of the
Partnership's assets on a per Unit basis of approximately $451
and $528 assuming such assets were sold today.
o If Krescent and AHI are successful in acquiring a significant
number of Units as a result of the Offer, each could,
following the Standstill Expiration Date (as defined in the
Offer), be in a position to significantly influence all
Partnership decisions on which Unitholders may vote, including
decisions regarding removal of any General Partner, merger,
sales of assets and liquidation of the Partnership.
o The Partnership has historically performed poorly. According
to Partnership Profiles as of June 15, 1996, since the
inception of the Partnership in 1983, original investors have
received total cumulative distributions of only $127 on an
original investment of $1,000 per Unit.
IF YOU PREVIOUSLY TENDERED UNITS TO KRESCENT, YOU WILL
AUTOMATICALLY RECEIVE THE HIGHER PRICE WITHOUT TAKING ANY FURTHER ACTION. If
you desire additional information regarding the Offer or need assistance in
tendering your Units, you may call The Herman Group, Inc., which is acting as
Information Agent/Depositary for the Offer, at (800) 738-5516. Informed and
courteous agents are available to assist you.
THE HERMAN GROUP, INC.
2121 San Jacinto Street, 26th Floor
Dallas, Texas 75201
Facsimile No. (214) 999-9348 or (214) 999-9323
For information call 1-800-738-5516
January 10, 1997 KRESCENT PARTNERS L.L.C.
AMERICAN HOLDINGS I, L.P.
<PAGE> 1
SUPPLEMENT TO THE
OFFER TO PURCHASE FOR CASH
UP TO 8,380 UNITS OF INVESTOR LIMITED PARTNERSHIP INTERESTS
of
KRUPP REALTY LIMITED PARTNERSHIP-V
at
$440 NET PER UNIT OF INVESTOR LIMITED PARTNERSHIP INTEREST
by
KRESCENT PARTNERS L.L.C.
and
AMERICAN HOLDINGS I, L.P.
***************************************************************************
* *
* THE OFFER, WITHDRAWAL RIGHTS AND PRORATION PERIOD WILL EXPIRE AT *
* 12:00 MIDNIGHT, NEW YORK CITY TIME, ON JANUARY 31, 1997, UNLESS *
* EXTENDED. *
* *
***************************************************************************
Krescent Partners L.L.C., a Delaware limited liability company (the
"Purchaser"), hereby supplements and amends its offer to purchase up to 8,380
Units of Krupp Realty Limited Partnership-V, upon the terms and subject to the
conditions set forth in the Purchaser's Offer to Purchase dated November 21,
1996, as supplemented and amended, by this Supplement dated January 10, 1997
and by the related Letter of Transmittal. Capitalized terms used but not
otherwise defined in this Supplement shall have the meanings set forth in the
Offer to Purchase.
INTRODUCTION
The "Introduction" to the Offer to Purchase is hereby supplemented and
amended as follows:
The Purchaser hereby amends the Offer to increase the Purchase Price
to $440 per Unit, net to the seller in cash, without interest thereon, less the
aggregate amount of any distributions per Unit declared or made by the
Partnership after November 21, 1996 and on or prior to the Expiration Date,
upon the terms and subject to the conditions set forth in the Offer to
Purchase, as amended, and the related Letter of Transmittal, as each may be
supplemented or amended from time to time. 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 otherwise due a Unitholder pursuant to the Offer in respect
of the tendered Units which has been accepted for payment but not yet paid for
by the amount of any such distribution.
On January 8, 1997, the Purchaser entered into an agreement with
American Holdings I, L.P., a Delaware limited partnership ("AHI"), pursuant to
which AHI agreed to join the Purchaser in making the Offer (the "Krescent-AHI
Agreement"). Pursuant to the Krescent-AHI Agreement, the Purchaser and AHI
have agreed, among other things, (i) for the Purchaser to sell to AHI
approximately 41.8% of the Units (subject to increase as described in Section
11 ("Background of the Offer")) acquired pursuant to the Offer at the Purchase
Price per Unit plus a pro rata portion of the applicable expenses relating to
the Offer and the AHI Offer (as defined below), (ii) that they will jointly
control the conduct of the Offer and (iii) AHI has or will terminate its Offer
to Purchase up to 4.9% of the Units. The purpose of this Supplement is to
describe the terms of the Krescent-AHI Agreement and to provide Unitholders
with background information regarding AHI and its affiliates.
In considering the Offer, Unitholders are advised that (i) AHI is not
affiliated with the General Partners and (ii) the same factors applicable to
the Purchaser as set forth in the Introduction to the Offer to Purchase are
also separately applicable to AHI. However, the number of Units that the
Purchaser and AHI seek to acquire pursuant to the Offer remains limited to
8,380 Units.
All references in the Offer to Purchase that relate to the Purchaser's
rights regarding the conduct of the Offer, including, without limitation, the
validity of tenders, the extension of the Offer or the waiver of any
conditions, shall refer jointly to the Purchaser and AHI.
<PAGE> 2
THE TENDER OFFER
1. TERMS OF THE OFFER.
Section 1 of the Offer to Purchase is hereby supplemented and amended
as follows:
The term "Expiration Date" shall mean 12:00 midnight, New York City
time, on January 31, 1997, unless the Purchaser and AHI, in their sole
discretion, shall have further extended the period of time during which the
Offer is open, in which event the term "Expiration Date" shall refer to the
latest time and date at which the Offer, as so extended by the Purchaser and
AHI, will expire.
3. PROCEDURES FOR TENDERING UNITS.
Section 3 of the Offer to Purchase is hereby supplemented and amended
as set forth below.
In the paragraph captioned "Appointment as Proxy; Power of Attorney",
the following is inserted before the last sentence of the first paragraph
thereof: "The Purchaser may assign such proxy and/or power of attorney to any
person with or without assigning the related Units with respect to which such
proxy and/or power of attorney was granted."
In the paragraph captioned "Assignment of Entire Interest in the
Partnership" the following is inserted after the first sentence thereof: "The
Purchaser reserves the right to transfer or assign, in whole or from time to
time in part, to AHI, the right to purchase Units tendered pursuant to the
Offer, together with the Purchaser's rights under the Letter of Transmittal,
but any such transfer or assignment will not relieve the Purchaser of its
obligations under the Offer or prejudice the rights of tendering Unitholders to
receive payment for Units validly tendered and accepted for payment pursuant to
the Offer."
7. EFFECTS OF THE OFFER.
Section 7 of the Offer to Purchase is hereby supplemented and amended
by amending and restating the caption "Control Of All Unitholder Voting
Decisions by Purchaser" in its entirety as follows:
CONTROL OF ALL UNITHOLDER VOTING DECISIONS BY PURCHASER AND AHI. The
Purchaser and AHI will have the right to vote each Unit acquired by them
pursuant to the Offer. If the Purchaser and AHI are successful in acquiring a
significant number of Units pursuant to the Offer, and following the Standstill
Expiration Date, each of the Purchaser and AHI could be in a position to
significantly influence all Partnership decisions on which Investor Limited
Partners may vote. If the maximum number of Units sought by the Purchaser are
tendered and accepted for payment pursuant to the Offer, the Purchaser and AHI
will own approximately 11.9% and 8.6% of the outstanding Units, respectively.
The Units acquired by the Purchaser and AHI will also be subject to a buy/sell
arrangement commencing one year following the Offer that could result in a
consolidation of the Units acquired pursuant to the Offer with either the
Purchaser or AHI. After the Standstill Expiration Date, the ownership of
tendered Units by the Purchaser and/or AHI could effectively (i) prevent
non-tendering Unitholders from taking action they desire but that the Purchaser
or AHI opposes and (ii) enable the Purchaser or AHI to take action desired by
it but opposed by non-tendering Unitholders. Under the Partnership Agreement,
a majority in interest of the Investor Limited Partners are entitled to take
action with respect to a variety of matters, including: removal of any General
Partner; termination of the Partnership; sale of all or substantially all of
the Partnership's properties; and most types of amendments to the Partnership
Agreement. Although neither the Purchaser nor AHI has any current intentions
with regard to any of these matters, each of them will, following the
Standstill Expiration Date, vote the Units acquired pursuant to the Offer in
its interest, which may, or may not, be in the best interest of non-tendering
Unitholders. Until the Standstill Expiration Date, the Purchaser and AHI have
agreed to vote their Units in the same proportion to the votes of all other
Investor Limited Partners who vote on any proposals. See Section 8 ("Purpose
of the Offer; Future Plans") for certain contractual limitations on the
Purchaser and AHI regarding their participation in certain extraordinary
transactions involving the Partnership, including the solicitation of proxies
to replace the General Partners.
2
<PAGE> 3
8. PURPOSE OF THE OFFER; FUTURE PLANS.
The first paragraph of "Purpose of the Offer" and the first paragraph
of "Future Plans", each under Section 8 of the Offer to Purchase, are hereby
supplemented and amended to change all references to "the Purchaser" to "the
Purchaser and AHI" and to make all grammatical changes in connection therewith
as the context requires.
Section 8 of the Offer to Purchase is hereby further supplemented and
amended to amend and restate the second paragraph under the caption "Future
Plans" in its entirety:
Pursuant to an Agreement dated November 21, 1996 between the Purchaser
and Liquidity Financial Group, L.P., an affiliate of Liquidity Financial, the
Purchaser agreed to become bound by the restrictions set forth in the
Standstill Agreement with respect to the Partnership. As a result, the
Purchaser agreed that, prior to the Standstill Expiration Date, it will not and
it will cause certain affiliates not to (i) acquire, attempt to acquire or make
a proposal to acquire, directly or indirectly, more than 25% of the outstanding
Units, (ii) propose or propose to enter into, directly or indirectly, any
merger, consolidation, business combination, sale or acquisition of assets,
liquidation, dissolution or other similar transaction involving the
Partnership, (iii) make, or in any way participate, directly or indirectly, in
any solicitation of "proxies" or "consents" (as such terms are used in the
proxy rules of the Commission) to vote, or seek to advise or influence any
person with respect to the voting of any voting securities of the Partnership,
(iv) form, join or otherwise participate in a "group" (within the meaning of
Section 13(d)(3) of the Exchange Act) with respect to any voting securities of
the Partnership unless each member of such group agrees in writing to be bound
by the terms of the Standstill Agreement, provided, however, that those
affiliates bound by the Standstill Agreement will not be deemed to be acting in
a "group" in violation of it solely by virtue of voting in compliance with the
Standstill Agreement, (v) sell, transfer or assign any Units to any person or
entity not bound by the terms and conditions of the Standstill Agreement, (vi)
disclose any intention, plan or arrangement inconsistent with the terms of the
Standstill Agreement, or (vii) loan money to, advise, assist or encourage any
person in connection with any action restricted or prohibited by the terms of
the Standstill Agreement. Pursuant to an Assumption Agreement dated January 8,
1997 between AHI and Liquidity Financial Group, L.P. (a copy of which has been
filed as Exhibit (c)(8) to Amendment No. 4 to the Tender Offer Statement on
Schedule 14D-1 filed with the Commission on January 10, 1997), AHI agreed to
become bound by the restrictions set forth in the Standstill Agreement with
respect to the Partnership. As a result, AHI agreed that, prior to the
Standstill Expiration Date, it will not, and it will cause certain affiliates
not to, take any of the foregoing actions prohibited by the Standstill
Agreement.
10. CERTAIN INFORMATION CONCERNING THE PURCHASER AND AHI.
Section 10 of the Offer to Purchase is hereby supplemented and amended
as follows:
AHI is a Delaware limited partnership. Its general partner is
American Holdings I-GP, Inc. (the "AHI General Partner"), a Delaware
corporation which is wholly owned by American Real Estate Holdings, L.P., a
Delaware limited partnership ("AREH"). The general partner of AREH is American
Property Investors, Inc. ("API"), a Delaware corporation which is wholly-owned
by Carl C. Icahn. The address of the principal offices of each of AHI, the AHI
General Partner, AREH and API is 100 South Bedford Road, Mount Kisco, New York
10549. Mr. Icahn's business address is c/o Icahn Associates Corp., 114 W. 47th
Street, New York, New York 10036.
AHI and the AHI General Partner were recently formed for the purpose
of acquiring Units pursuant to an offer by AHI to purchase up to 4.9% of the
Units at a purchase price of $390 per Unit (the "AHI Offer") and acquiring the
securities of certain other limited partnerships. AREH is engaged in the
business of acquiring and managing real estate and activities related thereto.
API is engaged in the business of acting as general partner of AREH and of
American Real Estate Partners, L.P., a Delaware limited partnership which is
the limited partner of AREH. Mr. Icahn's present principal occupation or
employment is set forth on Schedule I to this Supplement and incorporated
herein by reference.
For certain information concerning the executive officers and
directors of the AHI General Partner and API, see Schedule I to this
Supplement.
Neither AHI, the AHI General Partner, AREH, API, Mr. Icahn, nor any
executive officer or director of the AHI General Partner or API has, during the
past five years, (a) been convicted in a criminal proceeding (excluding traffic
violations or similar misdemeanors) or (b) 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
3
<PAGE> 4
future violations of, or prohibiting activities subject to, federal or state
securities laws or a finding of any violation of such laws. Except as set
forth below in this Supplement, (i) neither AHI, the AHI General Partner, AREH,
API, Mr. Icahn nor, to the best of AHI's knowledge, any of the persons listed
on Schedule I to this Supplement, nor any affiliate of the foregoing
beneficially owns or has a right to acquire any Units, (ii) neither AHI, the
AHI General Partner, AREH, API, Mr. Icahn nor, to the best of AHI's knowledge,
any of the persons listed on Schedule I to this Supplement, nor any affiliate
of the foregoing has effected any transaction in the Units within the past 60
days, (iii) neither AHI, the AHI General Partner, AREH, API, Mr. Icahn nor, to
the best of AHI's knowledge, any of the persons listed on Schedule I to this
Supplement, nor any affiliate of the foregoing has any contract, arrangement,
understanding or relationship with any other person with respect to any
securities of the Partnership, including, but not limited to, contracts,
arrangements, understandings or relationships concerning the transfer or voting
thereof, joint ventures, loan or option arrangements, puts or calls, guarantees
of loans, guarantees against loss or the giving or withholding of proxies, (iv)
there have been no transactions or business relationships which would be
required to be disclosed under the rules and regulations of the Commission
between any of AHI, the AHI General Partner, AREH, API, Mr. Icahn nor, to the
best of AHI's knowledge, any of the persons listed on Schedule I to this
Supplement, on the one hand, and the Partnership or its affiliates, on the
other hand, and (v) there have been no contracts, negotiations or transactions
between AHI, the AHI General Partner, AREH, API, Mr. Icahn nor, to the best of
AHI's knowledge, any of the persons listed on Schedule I to this Supplement, on
the one hand, and the Partnership or its affiliates, on the other hand,
concerning a merger, consolidation or acquisition, tender offer or other
acquisition of securities, an election of directors or a sale or other transfer
of a material amount of assets.
An affiliate of AHI purchased 20 Units in 1995 in auction transactions
utilizing the Chicago Partnership Board, Inc. In addition, AHI acquired 45
Units in December 1996 at a price of $390 per Unit pursuant to the AHI Offer.
In the aggregate, such Units represent less than 1% of the number of Units
outstanding as reported in the Form 10-K (the most recently available filing
containing such information).
11. BACKGROUND OF THE OFFER.
Section 11 of the Offer to Purchase is hereby supplemented and amended
as follows:
By letter dated November 4, 1996, Longacre Corp., an affiliate of AHI,
contacted the Partnership and the General Partners to request lists of the
names, addresses and telephone numbers of the Unitholders of the Partnership
and certain other limited partnerships sponsored by the General Partners.
Counsel to the Partnership responded to Longacre's request on November 12, 1996
by refusing to furnish such lists. On or about November 22, 1996, counsel to
Longacre contacted representatives of the General Partners and suggested that,
in consideration of the General Partners agreeing to furnish the lists,
Longacre would be prepared to enter into a standstill agreement relating to the
Partnership and such other partnerships containing terms substantially similar
to those contained in the Standstill Agreement executed by LFG. Longacre and a
General Partner signed such a standstill agreement (the "Longacre Standstill
Agreement") on November 26, 1996. On November 27, 1996, a General Partner
provided Longacre with lists of the Unitholders of the Partnership and certain
of the other partnerships covered by the Longacre Standstill Agreement.
Under the Longacre Standstill Agreement, Longacre and its affiliates
are required to deliver to the General Partners, five days before mailing or
other dissemination, any communication to be given by them to one or more
investors in the Partnership or any other Krupp partnership covered by the
Longacre Standstill Agreement. Accordingly, on or about November 25, 1996,
counsel to AHI delivered to a General Partner copies of offer materials
relating to the AHI Offer. A General Partner waived the five-day requirement
with respect to such materials by letter to counsel to AHI, dated November 27,
1996.
AHI commenced the AHI Offer on November 29, 1996. In anticipation of
entering into the Krescent-AHI Agreement (as defined below), AHI terminated
the AHI Offer on December 6, 1996. Prior to termination of the AHI Offer, 45
Units were received by AHI's depositary.
During the week of December 2, 1996, representatives of AHI and the
Purchaser began discussing terms upon which AHI would (i) join the Purchaser in
making the Offer and (ii) terminate the AHI Offer. These discussions resulted
in the execution of a letter agreement, dated January 8, 1997 (the
"Krescent-AHI Agreement"), a copy of which has been filed as Exhibit (c)(9) to
Amendment No. 4 to the Tender Offer Statement on Schedule 14D-1 filed with the
Commission on January 10, 1997. The Krescent-AHI Agreement provides that,
among other things: (i) all decisions relating to the conduct of the Offer will
be made jointly by the Purchaser and AHI; (ii) AHI will initially purchase
41.8% of the Units
4
<PAGE> 5
tendered to the Purchaser pursuant to the Offer for a purchase price equal to
the Purchase Price payable by the Purchaser to Unitholders; (iii) if, after the
exercise and/or expiration of all outstanding options or other rights to
acquire an interest in the Purchaser, the direct and indirect percentage
ownership interest of Apollo Real Estate Investment Fund II, L.P. and its
affiliates (the "Apollo Group") in the Purchaser exceeds 83.6%, then AHI will
be entitled to purchase additional Units from the Purchaser so that, after
giving effect to such purchase, the total percentage of Units purchased by AHI
from the Purchaser equals 50% of such percentage interest of the Apollo Group
in the Purchaser; (iv) at any time after the first anniversary of the purchase
of Units pursuant to the Offer and so long as AHI and the Purchaser (and/or
their respective affiliates) own at least 2% of the outstanding Units, each of
AHI and the Purchaser has the right to initiate a buy/sell right pursuant to
which either AHI or the Purchaser 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; and (v) AHI and the
Purchaser will share the costs and expenses of the Offer and the costs and
expenses of the AHI Offer in the same percentages as their right to purchase
Units pursuant to the Offer. After the purchase of Units pursuant to the Offer
and except as set forth above, there is no contract, agreement or understanding
between the Purchaser and AHI with respect to voting or disposing of Units or
with respect to any action relating to the Partnership.
On December 10, 1996, counsel for the Purchaser contacted counsel for
the Partnership with regard to amending the Standstill Agreement in order to
clarify an issue relating to participation in a "group" (within the meaning of
Section 13(d)(3) of the Exchange Act). During the week of December 16, 1996,
counsel for the Purchaser and counsel for the Partnership discussed group
participation issues and the proposed Krescent-AHI Agreement, as well as
certain concerns of the Partnership relating to the conduct of the Offer. The
Purchaser and AHI satisfied the Partnership's concerns and, on January 6, 1997,
an amendment to the Standstill Agreement was executed to allow "group"
participation, formation or otherwise if each member of such group agrees to be
bound by the terms of the Standstill Agreement.
On January 8, 1997, Longacre and the General Partner amended the
Longacre Standstill Agreement to delete the Partnership and certain other
partnerships sponsored by the General Partners from the schedule of
partnerships covered thereby. Concurrently with the execution of such
amendment, AHI assumed the obligations of LFG under the Standstill Agreement
with respect to the Partnership and certain other partnerships.
On January 8, 1997, the Purchaser and Liquidity Financial Group, L.P.
amended that certain option agreement, dated November 21, 1996, to clarify an
ambiguity relating to the exercise of that option and explicitly set forth that
the option may be exercised for the six month period following the latest date
the Purchaser accepts securities in any tender offer.
On January 3, 1997 and again on January 7, 1997, counsel for the
Purchaser contacted counsel for the Partnership requesting a waiver of the five
business day notice provision in the Standstill Agreement. On January 8, 1997,
counsel for the Partnership indicated that the Partnership was not prepared to
consent to the Purchaser's waiver request at that time. Such waiver request was
subsequently granted on January 10, 1997 following discussions among
representatives of and counsel for the Purchaser, AHI and the Partnership.
12. SOURCE OF FUNDS.
Section 12 of the Offer to Purchase is hereby amended and restated as
follows:
The Purchaser and AHI expect that an aggregate of $3,687,200
(exclusive of fees and expenses) would be required to purchase the Units sought
pursuant to the Offer, if tendered. Therefore, the Purchaser expects that
approximately $2,145,950 (exclusive of fees and expenses) would be required to
purchase 58.2% of the Units sought pursuant to the Offer, if tendered. The
Purchaser presently contemplates that it will obtain all of such funds from
capital contributions from its members who have an aggregate net worth
substantially in excess of the amount required to purchase the Units. One of
the Purchaser's members, Apollo Real Estate Investment Fund II, L.P., has
capital commitments from institutional and other investors for aggregate
amounts that exceed $500 million. However, the Purchaser may seek to obtain
debt financing to facilitate the purchase of Units, but no commitment has been
obtained for any such debt financing.
AHI expects that approximately $1,541,250 (exclusive of fees and
expenses) would be required to purchase 41.8% of the Units sought pursuant to
the Offer, if tendered. AHI presently contemplates that it will obtain all of
such funds from capital contributions from its partners, who have an aggregate
net worth substantially in excess of the amount required to purchase such
Units.
5
<PAGE> 6
13. PURCHASE PRICE CONSIDERATIONS.
Section 13 of the Offer to Purchase is hereby supplemented and amended
to add the following paragraph:
The Purchaser, together with its financial advisor, established the
Purchase Price based on its and its financial advisor's own independent
analysis of the Partnership, the Properties, the other assets of the
Partnership and the financial condition of the Partnership. No appraisal was
obtained for any of the Properties, and no independent person was retained by
the Purchaser to render any valuation or fairness opinion. The Purchaser
derived the estimated liquidation value per Unit from its analysis of financial
information from publicly-available information in the Form 10-K and Form 10-Q,
its review of the property information therein and its independent analysis of
the markets in which the Properties are located. The Purchaser made numerous
assumptions and certain adjustments to the Partnership's operating statements
(to reflect capital expenses) and certain other items including, without
limitation, assuming annual capital expenditures of $400 per unit at each of
the Properties and assuming the current management fees of 5% of gross receipts
continued. The liquidation value was derived by taking into account the other
assets and liabilities of the Partnership as set forth in the Form 10-K, and
certain other factors, resulting in an estimated liquidation value of
$15,859,787. Dividing that amount by the number of Units outstanding, the
Purchaser arrived at an estimated liquidation value per Unit of approximately
$451. AHI has separately derived an estimated liquidation value per Unit from
its analysis of the publicly-available financial and property information
described above and its independent analysis of the markets in which the
Properties are located. AHI also made numerous assumptions and certain
adjustments to the Partnership's operating statements including, without
limitation, annualizing revenues and expenses relating specifically to the
Properties from the Form 10-Q, using annual capital expenditures of $200 per
unit and an assumed management fee of 4%. AHI's estimate of liquidation value
was derived by taking into account the other assets and liabilities of the
Partnership as set forth in the Form 10-Q and certain other factors, resulting
in an estimated liquidation value of $18,596,682 or $528 per Unit. THE
FOREGOING AMOUNTS ARE ONLY ESTIMATES. The amount of adjusted net operating
income and other assets used to establish estimated liquidation value will vary
from period to period. If the Purchaser or AHI used results from another
period and used the same analysis, the estimated liquidation value may vary.
In addition, a different valuation formula may result in higher or lower
estimated valuations for the Properties.
14. CONDITIONS OF THE OFFER
The first paragraph of Section 14 of the Offer to Purchase is hereby
amended and restated as follows:
Notwithstanding any other provisions of the Offer and in addition to
(and not in limitation of) the Purchaser's and AHI's rights to extend and amend
the Offer at any time in their sole discretion, neither the Purchaser nor AHI
shall be required to accept for payment, subject to Rule 14e-1(c) under the
Exchange Act, any tendered Units, and may terminate the Offer as to any Units
not then paid for, if (i) the Purchaser and AHI shall not have confirmed to
their reasonable satisfaction that, upon purchase of the Units pursuant to the
Offer, each of the Purchaser and AHI will have full rights to ownership as to
all such Units and each of the Purchaser and AHI will be admitted as a
Substitute Limited Partner under Section 10.3 of the Partnership Agreement,
(ii) the Purchaser and AHI shall not have confirmed to their reasonable
satisfaction that, upon the purchase of the Units pursuant to the Offer, the
Transfer Restrictions will have been satisfied, or (iii) all authorizations,
consents, orders or approvals of, or declarations or filings with, or
expirations of waiting periods imposed by, any court, administrative agency or
commission or other governmental authority or instrumentality, domestic or
foreign, necessary for the consummation of the transactions contemplated by the
Offer shall not have been filed, occurred or been obtained. Furthermore,
notwithstanding any other term of the Offer, the Purchaser and AHI will not be
required to accept for payment or pay for any Units not theretofore accepted
for payment or paid for and may terminate or amend the Offer as to such Units
if, at any time on or after the date of the Offer and before the acceptance of
such Units for payment or the payment therefore, any of the following
conditions exist:
Krescent Partners L.L.C.
American Holdings I, L.P.
January 10, 1997
6
<PAGE> 7
SCHEDULE I
Schedule I is supplemented and amended by adding the following:
EXECUTIVE OFFICERS AND DIRECTORS OF AMERICAN HOLDINGS I-GP, INC.
AND AMERICAN PROPERTY INVESTORS, INC.
The name and positions of the executive officers and directors of
American Holdings I-GP, Inc. (the "AHI General Partner"), the general partner
of AHI, and American Property Investors, Inc. ("API"), the general partner of
the sole stockholder of the AHI General Partner, are set forth below. The
business address of each such executive officer and director (other than Mr.
Icahn) is 100 South Bedford Road, Mount Kisco, N.Y. 10549. Mr. Icahn's
business address is c/o Icahn Associates Corp., 114 W. 47th Street, New York,
New York 10036. Each such executive officer and director is a citizen of the
United States of America.
<TABLE>
<CAPTION>
NAME POSITION
---- --------
<S> <C>
Carl C. Icahn . . . . . . . . . . . Director and Chairman of the Board (API)
Alfred D. Kingsley . . . . . . . . . Director (API)
William A. Leidesdorf . . . . . . . Director (API)
Jack G. Wasserman . . . . . . . . . Director (API)
John P. Saldarelli . . . . . . . . . Vice President, Secretary and Treasurer (API);
Director, Secretary and Treasurer (AHI General
Partner)
Henry J. Gerard . . . . . . . . . . Vice President (AHI General Partner)
</TABLE>
The following sets forth with respect to each executive officer and
director of the AHI General Partner and API such person's (a) name, (b) present
principal occupation or employment and the name, principal business and address
of any corporation or other organization in which such employment or occupation
is conducted and (c) material occupations, positions, offices or employments
during the last five years, giving the starting and ending dates of each and
the name, principal business and address of any business corporation or other
organization in which such occupation, position, office or employment was
carried on.
CARL C. ICAHN. Carl C. Icahn has been Chairman of the Board of
Directors of API since November 15, 1990. Mr. Icahn is also President and a
director of Starfire Holding Corporation (formerly Icahn Holding Corporation),
a Delaware corporation ("SHC"), and Chairman of the Board and a director of
various of SHC's subsidiaries, including ACF Industries, Inc., a New Jersey
corporation ("ACF"). SHC is primarily engaged in the business of holding,
either directly or through subsidiaries, a majority of the common stock of ACF
and its address is 100 South Bedford Road, Mount Kisco, New York 10549. Mr.
Icahn has also been Chairman of the Board of Directors of ACF since October 29,
1984 and a director of ACF since June 29, 1984. ACF is a railroad freight and
tank car leasing, sales and manufacturing company. He has also been Chairman
of the Board of Directors and President of Icahn & Company., Inc. since 1968.
Icahn & Co., Inc. is a registered broker-dealer and a member of the National
Association of Securities Dealers. In 1979, Mr. Icahn acquired control and
presently serves as Chairman of the Board of Directors of Bayswater Realty &
Capital Corp., which is a real estate investment and development company
("Bayswater"). ACF, Icahn & Co., Inc. and Bayswater are deemed to be directly
or indirectly owned and controlled by Mr. Icahn. Mr. Icahn was Chief Executive
Officer and member of the Office of the Chairman of Trans World Airlines, Inc.
("TWA") from November 8, 1988 to January 8, 1993; Chairman of the Board of
Directors of TWA from January 3, 1986 to January 8, 1993 and a director of TWA
from September 27, 1985 to January 8, 1993. Mr. Icahn also has substantial
equity interests in and controls various partnerships and corporations which
invest in publicly traded securities.
ALFRED D. KINGSLEY. Alfred D. Kingsley has served as a director of
API since November 15, 1990. He was also Vice Chairman of the Board of
Directors of TWA from February 1, 1989 to January 8, 1993 and a member of the
Office of the Chairman from November 8, 1988 to January 8, 1993. Mr. Kingsley
was a director of TWA from September 27, 1985 to January 8, 1993. He also was
a director and executive officer and Director of Research at Icahn & Co., Inc.
and related entities from 1968 until December 1994. He also has been Vice
Chairman of the Board of
S-1
<PAGE> 8
Directors of ACF since October 29, 1984 and a Director of ACF since June 29,
1984. Mr. Kingsley has also been a Senior Managing Director of Greenway
Partners, L.P. since May 1993, which invests in publicly traded securities.
WILLIAM A. LEIDESDORF. William A. Leidesdorf has served as a director
of API since March 26, 1991. Since April 1995, Mr. Leidesdorf has acted as an
independent real estate investment banker. From January 1, 1994 through April
1995, Mr. Leidesdorf was Managing Director of RFG Financial, Inc., a commercial
mortgage company. From September 30, 1991 to December 31, 1993, Mr. Leidesdorf
was Senior Vice President of Palmieri Asset Management Group. From May 1, 1990
to September 30, 1991, Mr. Leidesdorf was Senior Vice President of Lowe
Associates, Inc., a real estate development company, where he was involved in
the acquisition of real estate and the asset management workout and disposition
of business areas. He also acted as the Northeast Regional Director for Lowe
Associates, Inc. From June 1985 to January 30, 1990, Mr. Leidesdorf was
Senior Vice President and stockholder of Eastdil Realty, Inc., a real estate
company, where he was involved in the asset management workout, disposition of
business and financing areas. During the interim period from January 30, 1990
through May 1, 1990, Mr. Leidesdorf was an independent contractor for Eastdil
Realty, Inc. on real estate matters.
JACK G. WASSERMAN. Jack G. Wasserman has served as a director of API
since December 3, 1993. Mr. Wasserman is an attorney and a member of the New
York State Bar and has been with the New York based law firm of Wasserman,
Schneider & Babb since 1966, where he is currently a senior partner.
JOHN P. SALDARELLI. John P. Saldarelli has served as sole director,
Secretary and Treasurer of the AHI General Partner since November 1996. He has
also served as Vice President, Secretary and Treasurer of API since March 18,
1991. Mr. Saldarelli was also President of Bayswater Realty Brokerage Corp.
from June 1987 until November 19, 1993 and Vice President of Bayswater Realty &
Capital Corp. from September 1979 until April 15, 1993, both of which are
deemed to be directly or indirectly owned and controlled by Carl C. Icahn.
HENRY J. GERARD. Mr. Gerard has served as Vice President of the AHI
General Partner since November 1996. He has also served as a Vice President
and Assistant Secretary of API since March 18, 1991. From January 1988 to May
1991, he was a Vice President of Integrated Resources, Inc., a provider of
financial services. From 1981 through 1987 he was a controller at Interstate
Properties, a commercial real estate developer/operator.
S-2
<PAGE> 9
Facsimile copies of the Letter of Transmittal, properly completed and
duly executed, will be accepted. Questions and requests for assistance may be
directed to the Information Agent/Depositary at the address and telephone
number listed below. Additional copies of this Offer to Purchase, the Letter
of Transmittal and other tender offer materials may be obtained from the
Information Agent/Depositary as set forth below, and will be furnished promptly
at the Purchaser's expense. The Letter of Transmittal and any other required
documents should be sent or delivered by each Unitholder to the Information
Agent/Depositary at its address set forth below. To be effective, a duly
completed and signed Letter of Transmittal (or facsimile thereof) must be
received by the Information Agent/Depositary at the address (or facsimile
number) set forth below before 12:00 midnight, New York City Time, on Friday,
January 31, 1997. If tendering by facsimile, please mail the original copies
of all the required documents to the Information Agent/ Depositary to the
address below.
By Mail/Hand or Overnight Delivery:
2121 San Jacinto Street
26th Floor
Dallas, TX 75201
By Facsimile:
(214) 999-9348
or
(214) 999-9323
For Additional Information Call:
[THE HERMAN INC. LOGO]
(800) 738-5516
or
(214) 999-9393
<PAGE> 1
LETTER OF TRANSMITTAL
TO
TENDER UNITS OF INVESTOR LIMITED PARTNERSHIP INTERESTS
OF
KRUPP REALTY LIMITED PARTNERSHIP-V
PURSUANT TO THE OFFER TO PURCHASE DATED NOVEMBER 21, 1996, AS
SUPPLEMENTED AND AMENDED, BY
KRESCENT PARTNERS L.L.C.
<TABLE>
<CAPTION>
Number of Number of(1) Purchase Price Total Purchase Price(2)
Units Owned Units Tendered Per Unit if all Units Tendered
----------- -------------- --------------- ---------------------
<S> <C> <C> <C> <C>
$440
(1) If no indication is marked above, all Units issued to you
will be deemed to have been tendered.
Please indicate changes or corrections (2) Reduced by the amount of any distributions made or declared
to the address printed above. by the Partnership subsequent to the date of the Offer.
</TABLE>
================================================================================
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE AT MIDNIGHT, NEW
YORK CITY TIME, ON FRIDAY, JANUARY 31, 1997 (THE "EXPIRATION DATE") UNLESS SUCH
OFFER IS EXTENDED.
The undersigned hereby tender(s) to Krescent Partners L.L.C., a Delaware
limited liability company or its assignee(s) (the "Purchaser"), the number of
units of Investor Limited Partnership Interests ("Units") of Krupp Realty
Limited Partnership-V, a Massachusetts limited partnership (the "Partnership"),
specified above, pursuant to the Purchaser's offer to purchase up to 8,380 of
the issued and outstanding Units at a purchase price of $440 per Unit, net to
the seller in cash (the "Purchase Price"), without interest thereon, upon the
terms and subject to the conditions set forth in the Offer to Purchase dated
November 21, 1996, as supplemented and amended, (the "Offer to Purchase") and
this Letter of Transmittal (the "Letter of Transmittal", which, together with
the Offer to Purchase and any supplements, modifications or amendments thereto,
constitute the "Offer"), all as more fully described in the Offer to Purchase.
The Purchase Price will be automatically reduced by the aggregate amount of
distributions per Unit, if any, made or declared by the Partnership after
November 21, 1996 and on or prior to 12:00 midnight, New York City time, on
January 31, 1997 (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 otherwise due a holder of Units pursuant to the Offer in
respect of tendered Units which have been accepted for payment but not yet paid
for by the amount of any such distribution. UNITHOLDERS WHO TENDER THEIR UNITS
WILL NOT BE OBLIGATED TO PAY ANY COMMISSIONS OR PARTNERSHIP TRANSFER FEES,
WHICH COMMISSIONS OR PARTNERSHIP TRANSFER FEES WILL BE BORNE BY THE PURCHASER.
Receipt of the Offer to Purchase is hereby acknowledged. Capitalized terms
used but not defined herein have the respective meanings ascribed to them in
the Offer to Purchase.
By executing and delivering this Letter of Transmittal a tendering
Unitholder irrevocably appoints the Purchaser and designees of the Purchaser
and each of them as such Unitholder's proxies, with full power of substitution,
in the manner set forth in this Letter of Transmittal to the full extent of
such Unitholder's rights with respect to the Units tendered by such Unitholder
and accepted for payment by the Purchaser (and with respect to any and all
other Units or other securities issued or issuable in respect of such Unit on
or after the date hereof). All such proxies shall be considered irrevocable
and coupled with an interest in the tendered Units. Such appointment will be
effective when, and only to the extent that, the Purchaser accepts such Units
for payment. Upon such acceptance for payment, all prior proxies given by such
Unitholder with respect to such Units (and such other Units and securities)
will be revoked without further action, and no subsequent proxies may be given
nor any subsequent written consent executed (and, if given or executed, will
not be deemed effective). The Purchaser and its designees will, with respect
to the Units (and such other Units and securities) for which such appointment
is effective, be empowered to exercise all voting and other rights of such
Unitholder as they in their sole discretion may deem proper at any meeting of
Unitholders or any adjournment or postponement thereof, by written consent in
lieu of any such meeting or otherwise. The Purchaser may assign such proxy
and/or power-of-attorney to any person with or without assigning the related
Units with respect to which such proxy and/or power-of-attorney was granted.
The Purchaser reserves the right to require that, in order for a Unit to be
deemed validly tendered, immediately upon the Purchaser's payment for such
Unit, the Purchaser must be able to exercise full voting rights with respect to
such Unit and other securities, including voting at any meeting of Unitholders.
By executing and delivering the Letter of Transmittal, a tendering
Unitholder also irrevocably constitutes and appoints the Purchaser and its
designees as the Unitholder's attorneys-in-fact, each with full power of
substitution to the extent of the Unitholder's rights with respect to the Units
tendered by the Unitholder and accepted for payment by the Purchaser. Such
appointment will be effective when, and only to the extent that, the Purchaser
accepts the tendered Units for payment. Upon such acceptance for payment, all
prior powers of attorney granted by the Unitholder with respect to such Unit
will, without further action, be revoked, and no subsequent powers of attorney
may be granted (and if granted will not be effective). Pursuant to such
appointment as attorneys-in-fact, the Purchaser and its designees each will
have the power, among other things, (i) to seek to transfer ownership of such
Units on the Partnership's books maintained by the transfer agent for the
Partnership (and execute and deliver any accompanying evidences of transfer and
authenticity any of them may deem necessary or appropriate in connection
therewith, including, without limitation, any documents or instruments required
to be executed under a "Transferor's (Seller's) Application for Transfer"
created by the NASD, if required), (ii) upon receipt by the Information
Agent/Depositary (as the tendering Unitholder's agent) of the Purchase Price,
to become a Substitute Limited Partner, to receive any and all distributions
made by the Partnership after the Expiration Date, and to receive all benefits
and otherwise exercise all rights of beneficial ownership of such Units in
accordance with the terms of the Offer, (iii) to execute and deliver to the
Partnership and/or the General Partners (as the case may be) a change of
address form instructing the Partnership to send any and all future
distributions to which the Purchaser is entitled pursuant to the terms of the
Offer in respect of tendered Units to the address specified in such form and
(iv) to endorse any check payable to or upon the order of such Unitholder
representing a distribution to which the Purchaser is entitled pursuant to the
terms of the Offer, in each case on behalf of the tendering Unitholder. If
legal title to the Units is held through an IRA or KEOGH or similar account,
the Unitholder understands that this Letter of Transmittal must be signed by
the custodian of such IRA or KEOGH account and the Unitholder hereby authorizes
and directs the custodian of such IRA or KEOGH to confirm this Letter of
Transmittal. This Power of Attorney shall not be affected by the subsequent
mental disability of the Unitholder, and the Purchaser shall not be required to
post bond in any nature in connection with this Power of Attorney. The
Purchaser may assign such Power of Attorney to any person with or without
assigning the related Units with respect to which such Power of Attorney was
granted.
By executing and delivering this Letter of Transmittal, a tendering
Unitholder irrevocably assigns to the Purchaser and its assigns all of the
right, title and interest of such Unitholder in the Partnership with respect to
the Units tendered and purchased pursuant to the Offer, including, without
limitation, such Unitholder's right, title and interest in and to any and all
distributions made by the Partnership after the Expiration Date in respect of
the Units tendered by such Unitholder and accepted for payment by the
Purchaser, regardless of the fact that the record date for any such
distribution may be a date prior to the Expiration Date. The Purchaser
reserves the right to transfer or assign, in whole or from time to time in
part, to one or more persons, the right to purchase Units tendered pursuant to
the Offer, together with the Purchaser's rights under this Letter of
Transmittal, but any such transfer or assignment will not relieve the Purchaser
of its obligations under the Offer or prejudice the rights of tendering
Unitholders to receive payment for Units validly tendered and accepted for
payment pursuant to the Offer. The Purchaser will seek to be admitted to the
Partnership as a Substitute Limited Partner upon consummation of the Offer. By
executing and delivering this Letter of Transmittal, the undersigned, being a
tendering Unitholder, expressly intends the Purchaser to become a Substitute
Limited Partner.
By executing this Letter of Transmittal, the undersigned represents that
either (a) the undersigned is not a plan subject to Title I of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA") or Section 4975 of
the Internal Revenue Code of 1986, as amended (the "Code"), or an entity deemed
to hold "plan assets" within the meaning of 29 C.F.R. Section 2510.3-101 of any
such plan; or (b) the tender and acceptance of Units pursuant to the Offer will
not result in a nonexempt prohibited transaction under Section 406 of ERISA or
Section 4975 of the Code.
The undersigned recognizes that, if proration is required pursuant to the
terms of the Offer, the Purchaser will accept for payment from among those
Units validly tendered on or prior to the Expiration Date and not properly
withdrawn, the maximum number of Units permitted pursuant to the Offer on a pro
rata basis, with adjustments to avoid purchases of certain fractional Units and
purchases which would violate the terms of the Offer, based upon the number of
Units validly tendered prior to the Expiration Date and not properly withdrawn.
The undersigned understands that a tender of Units to the Purchaser will
constitute a binding agreement between the undersigned and the Purchaser upon
the terms and subject to the conditions of the Offer. The undersigned
recognizes that under certain circumstances set forth in Section 2 ("Proration;
Acceptance for Payment and Payment for Units") and Section 14 ("Conditions of
the Offer") of the Offer to Purchase, the Purchaser may not be required to
accept for payment any of the Units tendered hereby. In such event, the
undersigned understands that any Letter of Transmittal for Units not accepted
for payment will be destroyed by the Purchaser. Except as stated in Section 4
("Withdrawal Rights") of the Offer to Purchase, this tender is irrevocable,
provided Units tendered pursuant to the Offer may be withdrawn at any time
prior to the Expiration Date.
<PAGE> 2
<TABLE>
<CAPTION>
====================================================================================================================================
SIGNATURE BOX
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Please sign exactly as your name is printed (or
corrected) above. For joint owners, each joint owner X
must sign. All signatures must be medallion guaranteed --------------------------------------------------------------------
by an Eligible Institution. (See Instruction 2.) The (Signature of Owner) (Date)
signatory hereto hereby certifies under penalties of
perjury the Taxpayer Identification Number (i.e., the X
signatory's social security number) furnished in the --------------------------------------------------------------------
blank provided in this Signature Box and the statements Taxpayer Identification Number of Owner (other than IRA's)
in Box A, Box B and, if applicable, Box C. The
undersigned hereby represents and warrants for the
benefit of the Partnership and the Purchaser that the X
undersigned owns (or beneficially owns) the Units --------------------------------------------------------------------
tendered hereby and has full power and authority to (Signature of Co-Owner) (Date)
validly tender, sell, assign, transfer, convey and
deliver the Units tendered hereby and that when the same
are accepted for payment by the Purchaser, the Purchaser ---------------------------------------------------------------------
will acquire good, marketable and unencumbered title (Title)
thereto, free and clear of all liens, restrictions,
charges, encumbrances, conditional sales agreements or Telephone (Day) ( ) Telephone (Eve) ( )
other obligations relating to the sale or transfer ------------------- -----------------
thereof, such Units will not be subject to any adverse
claims, the transfer and assignment contemplated herein
are in compliance with all applicable laws and
regulations, and that upon such transfer and assignment GUARANTEE OF SIGNATURE (SEE INSTRUCTION 2):
the undersigned will not own less than 10 Units or
fractional Units (unless the undersigned is transferring Name of Eligible Institution:
and assigning less than all Units owned by the ----------------------------------------
undersigned). All authority herein conferred or agreed
to be conferred shall survive the death or incapacity of Authorized Signature:
the undersigned and any obligations of the undersigned ------------------------------------------------
shall be binding upon the heirs, personal
representatives, successors and assigns of the
undersigned. Except as stated in Section 4 ("Withdrawal
Rights") of the Offer to Purchase, this tender is
irrevocable.
====================================================================================================================================
</TABLE>
TAX CERTIFICATIONS
================================================================================
BOX A
SUBSTITUTE FORM W-9
(See Instruction 3)
The person signing this Letter of Transmittal hereby certifies the following
to the Purchaser under penalties of perjury:
(i) The Taxpayer Identification Number ("TIN") furnished in the space
provided for that purpose in the Signature Box of this Letter of Transmittal
is the correct TIN of the Unitholder, unless the Units are held in an
Individual Retirement Account ("IRA"); or if this box [ ] is checked, the
Unitholder has applied for a TIN. If the Unitholder has applied for a TIN, a
TIN has not been issued to the Unitholder, and either (a) the Unitholder has
mailed or delivered an application to receive a TIN to the appropriate
Internal Revenue Service ("IRS") Center or Social Security Administration
Office, or (b) the Unitholder intends to mail or deliver an application in the
near future, it is hereby understood that if the Unitholder does not provide a
TIN to the Purchaser within sixty (60) days, 31% of all reportable payments
made to the Unitholder thereafter will be withheld until a TIN is provided to
the Purchaser; and
(ii) Unless this box [ ] is checked, the Unitholder is not subject to backup
withholding either because the Unitholder (a) is exempt from backup
withholding, (b) has not been notified by the IRS that the Unitholder is
subject to backup withholding as a result of a failure to report all interest
or dividends, or (c) has been notified by the IRS that such Unitholder is no
longer subject to backup withholding.
Note: Place an "X" in the box in (ii) above, if you are unable to certify
that the Unitholder is not subject to backup withholding.
================================================================================
================================================================================
BOX B
FIRPTA AFFIDAVIT
(See Instruction 3)
Under Section 1445(c)(5) of the Code and Treas. Reg. 1.1445-IIT(d), a
transferee must withhold tax equal to 10% of the amount realized with respect
to certain transfers of an interest in a partnership if 50% or more of the
value of its gross assets consists of U.S. real property interests and 90% or
more of the value of its gross assets consists of U.S. real property interests
plus cash or cash equivalents, and the holder of the partnership interest is a
foreign person. To inform the Purchaser that no withholding is required with
respect to the Unitholder's interest in the Partnership, the person signing
this Letter of Transmittal hereby certifies the following under penalties of
perjury:
(i) Unless this box [ ] is checked, the Unitholder, if an individual, is a
U.S. citizen or a resident alien for purposes of U.S. income taxation, and if
other than an individual, is not a foreign corporation, foreign partnership,
foreign trust or foreign estate (as those terms are defined in the Code and
Income Tax Regulations);
(ii) the Unitholder's U.S. social security number (for individuals) or
employer identification number (for non- individuals) is correct as furnished
in the blank provided for that purpose on the back of this Letter of
Transmittal; and
(iii) the Unitholder's home address (for individuals), or office address (for
non-individuals), is correctly printed (or corrected) on the back of this
Letter of Transmittal. If a corporation, the jurisdiction of incorporation is
_________________________.
The person signing this Letter of Transmittal understands that this
certification may be disclosed to the IRS by the Purchaser and that any false
statements contained herein could be punished by fine, imprisonment, or both.
================================================================================
================================================================================
BOX C
SUBSTITUTE FORM W-8
(See Instruction 3)
By checking this box [ ], the person signing this Letter of Transmittal hereby
certifies under penalties of perjury that the Unitholder is an "exempt foreign
person" for purposes of the backup withholding rules under U.S. federal income
tax laws, because the Unitholder:
(i) Is a nonresident alien or a foreign corporation, partnership, estate or
trust;
(ii) If an individual, has not been and plans not to be present in the U.S.
for a total of 183 days or more during the calendar year; and
(iii) Neither engages, nor plans to engage, in a U.S. trade or business that
has effectively connected gains from transactions with a broker or barter
exchange.
================================================================================
For Units to be accepted for purchase, Unitholders should complete and sign
this Letter of Transmittal in the Signature Box and return it in the
self-addressed, postage-paid envelope enclosed, or by hand or overnight courier
to: The Herman Group, Inc., 2121 San Jacinto Street, Suite 2600, Dallas, TX
75201, or by Facsimile to: (214) 999-9323 or (214) 999-9348. Delivery of this
Letter of Transmittal or any other required documents to an address other than
the one set forth above or transmission via facsimile other than as set forth
above does not constitute valid delivery.
PLEASE CAREFULLY READ THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL
AND BOXES A, B AND C ABOVE.
<PAGE> 3
INSTRUCTIONS FOR COMPLETING LETTER OF TRANSMITTAL
Forming Part of the Terms and Conditions of the Offer
================================================================================
FOR ASSISTANCE IN COMPLETING THE LETTER OF TRANSMITTAL, CALL:
THE HERMAN GROUP, INC. AT (800) 738-5516
================================================================================
1. DELIVERY OF LETTER OF TRANSMITTAL. For convenience in responding to
the Offer, a self-addressed, postage-paid envelope had been enclosed
with the Offer to Purchase. However, to ensure receipt of the Letter
of Transmittal, it is suggested that you use an overnight courier or,
if the Letter of Transmittal is to be delivered by United States mail,
that you use certified or registered mail, return receipt requested.
To be effective, a duly completed and signed Letter of Transmittal (or
facsimile thereof) must be received by the Information
Agent/Depositary at the address (or facsimile number) set forth below
before the Expiration Date, 12:00 Midnight, New York City Time on
Friday, January 31, 1997, unless extended. LETTERS OF TRANSMITTAL
WHICH HAVE BEEN DULY EXECUTED, BUT WHERE NO INDICATION IS MARKED IN
THE "NUMBER OF UNITS TENDERED" COLUMN, SHALL BE DEEMED TO HAVE
TENDERED ALL UNITS PURSUANT TO THE OFFER. Tenders of less than all
Units owned by a Unitholder that would result in such Unitholder
holding less than 10 Units or tenders of fractional Units will not be
accepted.
BY MAIL/HAND OR OVERNIGHT DELIVERY: THE HERMAN GROUP, INC.
2121 San Jacinto Street,
26th Floor
Dallas, Texas 75201
BY FACSIMILE: (214) 999-9323
or
(214) 999-9348
FOR ADDITIONAL INFORMATION CALL: (800) 738-5516
THE METHOD OF DELIVERY OF THE LETTER OF TRANSMITTAL AND ALL OTHER REQUIRED
DOCUMENTS IS AT THE OPTION AND SOLE RISK OF THE TENDERING UNITHOLDER, AND THE
DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE INFORMATION
AGENT/DEPOSITARY. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE
TIMELY DELIVERY. IF TENDERING BY FACSIMILE, PLEASE TRANSMIT BOTH THE FRONT AND
BACK OF THE LETTER OF TRANSMITTAL AND THE TAX CERTIFICATION PAGE AND MAIL THE
ORIGINAL COPIES OF SUCH PAGES TO THE INFORMATION AGENT/DEPOSITARY AT THE
ADDRESS LISTED ABOVE.
All tendering holders of Units, by execution of this Letter of Transmittal or
facsimile hereof, waive any right to receive any notice of the acceptance of
their Units for payment.
2. SIGNATURES. All Unitholders must sign in the Signature Box on the
back of the Letter of Transmittal. If the Units are held in the names
of two or more persons, all such persons must sign the Letter of
Transmittal. When signing as a general partner, corporate officer,
attorney-in-fact, executor, custodian, administrator or guardian,
please give full title and send proper evidence of authority
satisfactory to the Purchaser with this Letter of Transmittal. With
respect to most trusts, the Partnership will generally require only
the named trustee to sign the Letter of Transmittal. For Units held
in a custodial account for minors, only the signature of the custodian
will be required.
For IRA custodial accounts, the beneficial owner should return the
executed Letter of Transmittal to the Information Agent/Depositary as
specified in Instruction 1 herein. Such Letter of Transmittal will
then be forwarded by the Information Agent/Depositary to the custodian
for additional execution. Such Letter of Transmittal will not be
considered duly completed until after it has been executed by the
custodian.
If any tendered Units are registered in different names, it will be
necessary to complete, sign and submit as many separate Letters of
Transmittal as there are different registrations of certificates.
ALL SIGNATURES ON THE LETTER OF TRANSMITTAL MUST BE MEDALLION
GUARANTEED BY A COMMERCIAL BANK, SAVINGS BANK, CREDIT UNION, SAVINGS
AND LOAN ASSOCIATION OR TRUST COMPANY HAVING AN OFFICE, BRANCH OR
AGENCY IN THE UNITED STATES, A BROKERAGE FIRM THAT IS A MEMBER FIRM OF
A REGISTERED NATIONAL SECURITIES EXCHANGE OR A MEMBER OF THE NATIONAL
ASSOCIATION OF SECURITIES DEALERS, INC. (EACH, AN "ELIGIBLE
INSTITUTION").
3. DOCUMENTATION REQUIREMENTS. In addition to information required to be
completed on the Letter of Transmittal, additional documentation may
be required by the Purchaser under certain circumstances including,
but not limited to those listed below. Questions on documentation
should be directed to The Herman Group, Inc. at (800) 738-5516,
Project Administration Department.
Deceased Owner (Joint Tenant) - Certified Copy of Death
Certificate.
Deceased Owner (Others) - Certified Copy of Death
Certificate (See also
Executor/Administrator/
Guardian below).
Executor/Administrator/Guardian - (i) Certified Copies of court
Appointment Documents for
Executor or Administrator
dated within 60 days of the
date of execution of the
Letter of Transmittal; and
(ii) a copy of applicable
provisions of the Will
(Title Page, Executor(s)'
powers, asset distribution);
OR
(iii) Certified copy of Estate
distribution documents.
Attorney-in-Fact - Current Power of Attorney.
Corporations/Partnerships - Certified copy of Corporate
Resolution(s) (with raised
corporate seal), or other
evidence of authority to act.
Partnerships should furnish
copy of Partnership Agreement.
Trust/Pension Plans - Copy of cover page of the
Trust or Pension Plan, along
with copy of the section(s)
setting forth names and
powers of Trustee(s) and any
amendments to such sections
or appointment of Successor
Trustee(s).
ALL SIGNATURES MUST BE MEDALLION GUARANTEED.
(Continued on Back)
<PAGE> 4
4. U.S. PERSONS. A Unitholder who or which is a United States citizen OR a
resident alien individual, a domestic corporation, a domestic
partnership, a domestic trust or a domestic estate (collectively, "United
States Persons") as those terms are defined in the Code and Income Tax
Regulations, should follow the instructions below with respect to
certifying Boxes A and B (on the reverse side of the Letter of
Transmittal).
TAXPAYER IDENTIFICATION NUMBER. To avoid 31% federal income tax backup
withholding, the Unitholder must furnish his, her or its TIN in the blank
provided for that purpose in the Signature Box on the back of the Letter
of Transmittal and certify under penalties of perjury Box A, B and, if
applicable, Box C. In the case of an individual person, such person's
social security number is his or her TIN.
WHEN DETERMINING THE TIN TO BE FURNISHED, PLEASE REFER TO THE FOLLOWING
NOTE AS A GUIDELINE:
NOTE: INDIVIDUAL ACCOUNTS should reflect their own TIN. JOINT
ACCOUNTS should reflect the TIN of the person whose name appears
first. TRUST ACCOUNTS should reflect the TIN assigned to the
Trust. IRA CUSTODIAL ACCOUNTS should reflect the TIN of the
custodian. CUSTODIAL ACCOUNTS FOR THE BENEFIT OF MINORS should
reflect the TIN of the minor. CORPORATIONS OR OTHER BUSINESS
ENTITIES should reflect the TIN assigned to that entity. If you
need additional information, please see the enclosed copy of the
Guidelines for Certification of Taxpayer Identification Number
on Substitute Form W-9.
SUBSTITUTE FORM W-9 - BOX A.
(i) In order to avoid 31% federal income tax backup withholding, the
Unitholder must provide to the Purchaser in the blank provided for
that purpose in the Signature Box on the back of the Letter of
Transmittal the Unitholder's correct TIN and certify, under
penalties of perjury, that such Unitholder is not subject to such
backup withholding. The TIN being provided on the Substitute Form
W-9 is that of the registered Unitholder as indicated in the
Signature Box on the back of the Letter of Transmittal. If a
correct TIN is not provided, penalties may be imposed by the IRS, in
addition to the Unitholder being subject to backup withholding.
Certain Unitholders (including, among others, all corporations) are
not subject to backup withholding. Backup withholding is not an
additional tax. If withholding results in an overpayment of taxes,
a refund may be obtained from the IRS.
(ii) DO NOT CHECK THE BOX IN BOX A, PART (ii), UNLESS YOU HAVE BEEN
NOTIFIED BY THE IRS THAT YOU ARE SUBJECT TO BACKUP WITHHOLDING.
FIRPTA AFFIDAVIT - BOX B. To avoid withholding of tax pursuant to
Section 1445 of the Code, each Unitholder who or which is a United States
Person (as defined in Instruction 3 above) must certify, under penalties
of perjury, the Unitholder's TIN and address, and that the Unitholder is
not a foreign person. Tax withheld under Section 1445 of the Internal
Revenue Code is not an additional tax. If withholding results in an
overpayment of tax, a refund may be obtained from the IRS. CHECK THE BOX
IN BOX B, PART (ii) ONLY IF YOU ARE NOT A U.S. PERSON, AS DESCRIBED
THEREIN.
5. FOREIGN PERSONS - BOX C. In order for a Unitholder who is a foreign
person (i.e., not a United States Person as defined in Instruction 3
above) to qualify as exempt from 31% backup withholding, such foreign
Unitholder must certify, under penalties of perjury, the statement in Box
C of this Letter of Transmittal attesting to that foreign person's status
by checking the box in such statement. UNLESS SUCH BOX IS CHECKED, SUCH
FOREIGN PERSON WILL BE SUBJECT TO 31% WITHHOLDING OF TAX UNDER SECTION
1445 OF THE CODE.
6. CONDITIONAL TENDERS. No alternative, conditional or contingent tenders
will be accepted.
7. VALIDITY OF LETTER OF TRANSMITTAL. All questions as to the validity,
form, eligibility (including time of receipt) and acceptance of a Letter
of Transmittal will be determined by the Purchaser and such determination
will be final and binding. The Purchaser's interpretation of the terms
and conditions of the Offer (including these instructions for the Letter
of Transmittal) also will be final and binding. The Purchaser will have
the right to waive any irregularities or conditions as to the manner of
tendering. Any irregularities in connection with tenders must be cured
within such time as the Purchaser shall determine unless waived by it.
The Letter of Transmittal will not be valid unless and until any
irregularities have been cured or waived. Neither the Purchaser nor the
Information Agent/Depositary is under any duty to give notification of
defects in a Letter of Transmittal and will incur no liability for
failure to give such notification.
8. ASSIGNEE STATUS. Assignees must provide documentation to the Information
Agent/Depositary which demonstrates, to the satisfaction of the
Purchaser, such person's status as an assignee.
9. INADEQUATE SPACE. If the space provided herein is inadequate, the
numbers of Units and any other information should be listed on a separate
schedule attached hereto and separately signed on each page thereof in
the same manner as this Letter of Transmittal is signed.
Questions and requests for assistance may be directed to the Information
Agent/Depositary at its address and telephone number listed below. Additional
copies of the Offer to Purchase, the Letter of Transmittal and other tender
offer materials may be obtained from the Information Agent as set forth below,
and will be furnished promptly at the Purchaser's expense. You may also
contact your broker, dealer, commercial bank, trust company or other nominee
for assistance concerning the Offer.
The Information Agent/Depositary for the Offer is:
[THE HERMAN INC. LOGO]
2121 San Jacinto Street
Suite 2600
Dallas, Texas 75201
or
Call Toll-Free (800) 738-5516
<PAGE> 1
FOR IMMEDIATE RELEASE
Contact: The Herman Group, Inc.
800-738-5516
Attention: Sherri Herman
KRESCENT PARTNERS INCREASES OFFER TO $440
AMERICAN HOLDINGS I JOINS KRESCENT TENDER OFFER
NEW YORK, NEW YORK (January 10, 1997) -- KRESCENT PARTNERS L.L.C.
("Krescent") has announced that it increased its offer price to purchase
outstanding Units of Investor Limited Partnership Interests ("Units") of Krupp
Realty Limited Partnership-V (the "Partnership") to $440 PER UNIT. Krescent
previously announced that its offer is now scheduled to expire at 12:00
midnight, New York City time, on January 31, 1997.
Krescent also announced that it entered into an agreement with American
Holdings I, L.P. ("AHI"), an affiliate of American Real Estate Partners, L.P.
pursuant to which AHI will purchase a portion of the Units tendered to Krescent
in the offer. In contemplation of this agreement, AHI terminated its offer to
purchase up to 4.9% of the outstanding Units. To the best of Krescent's and
AHI's knowledge, as of the date hereof, Krescent's offer is the
only outstanding tender offer to purchase units in the Partnership.
For additional information, contact The Herman Group, Inc., the
Information Agent/Depositary for the Offer by Krescent Partners, at 800-738-
5516.
<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;
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.
<PAGE> 2
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
2
<PAGE> 3
SCHEDULE I
Krupp Realty Fund, Ltd. - III
Krupp Realty Limited Partnership - V
Krupp Realty Limited Partnership - VII
Krupp Cash Plus Limited Partnership
3
<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 January 8,
1997, between Liquidity Financial Group, L.P., a California limited partnership
("LFG"), and American Holdings I, L.P., a Delaware limited partnership ("AHI").
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 and January 8, 1997 (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 depositary certificates representing such
units) (the "Units") in various real estate limited partnerships sponsored
and/or managed by The Krupp Corporation, a Massachusetts corporation ("Krupp");
WHEREAS, Krescent Partners L.L.C. (i) retained Liquidity
Financial Advisors, Inc., an affiliate of LFG, as its financial advisor and
(ii) used the Lists of the real estate limited partnerships listed on Schedule
I attached hereto (the "Scheduled Partnerships") to commence tender offers for
Units (the "Krescent Tender Offers");
WHEREAS, AHI desires to participate in the Krescent Tender Offers
and, therefore, has agreed to become bound by the terms of the Letter Agreement
with respect to the Scheduled Partnerships; and
WHEREAS, Longacre Corporation ("Longacre"), an affiliate of AHI,
and Krupp are parties to an agreement, dated November 26, 1996 (the "Longacre
Standstill Agreement"), pursuant to which Longacre has undertaken (on its own
behalf and on behalf of its affiliates, including AHI) certain obligations with
respect to the Scheduled Partnerships and certain other real estate limited
partnerships sponsored by Krupp and, concurrently with the execution and
delivery hereof, Longacre and Krupp have executed and delivered an amendment to
the Longacre Standstill Agreement (the "Amendment") to delete the Scheduled
Partnerships from the schedule of real estate limited partnerships covered by
the Longacre Standstill Agreement;
NOW, THEREFORE, in consideration of the foregoing and other good
and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, AHI agrees as follows:
(a) With respect to the Scheduled Partnerships, from and after
the date hereof AHI hereby agrees to become bound by the Letter Agreement to
the extent LFG is so bound as if AHI had executed the Letter Agreement on the
date hereof; provided, however, AHI 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 (whether directly or by assumption).
1
<PAGE> 2
(b) AHI 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 AHI to pay, perform
or discharge any liabilities or obligations expressly assumed hereunder so long
as AHI shall in good faith contest or cause to be contested the amount or
validity thereof.
(d) AHI 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.
IN WITNESS WHEREOF, LFG and AHI have caused this Agreement to be
duly executed as of the date first written above.
AMERICAN HOLDINGS I, L.P.
By: American Holdings I-GP, Inc.,
its general partner
By: /s/ HENRY J. GERARD
---------------------------
Name: Henry J. Gerard
------------------
Title: Vice President
-----------------
LIQUIDITY FINANCIAL GROUP, L.P.
By: Liquidity Financial Corporation,
its general partner
By: /s/ BRENT DONALDSON
---------------------------
Name: Brent Donaldson
Title: President
2
<PAGE> 3
SCHEDULE I
Krupp Realty Fund, Ltd. - III
Krupp Realty Limited Partnership - V
Krupp Realty Limited Partnership - VII
Krupp Cash Plus Limited Partnership
3
<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.
<PAGE> 2
This letter agreement shall be governed by and interpreted in
accordance with the laws of the State of New York, without regard to the
conflicts of law provisions thereof.
This letter agreement may be executed in separate counterparts,
each of which shall be deemed an original but all of which together shall
constitute one and the same instrument. This letter agreement shall supersede
all prior agreements, written or oral, by or among any of the parties hereto
with respect to the subject matter hereof and may not be amended or otherwise
modified except in writing signed by all of the parties hereto. Any party may
execute this letter agreement by transmitting a copy of its signature by
facsimile to the other parties. In such event the signing party shall deliver
an original of the signature page to each of the other parties within one
business day of signing and failure to so deliver such originals shall result
in the facsimile copy of that party's signature being treated as an original.
Very truly yours,
KRESCENT PARTNERS L.L.C.
By: AP-GP Prom Partners Inc.,
Managing Member
By: /s/ 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
-2-
<PAGE> 3
KRESCENT LFG L.L.C.
By: AP-GP Prom Partners Inc.,
Managing Member
By: /s/ Richard Mack
--------------------------------------
Richard Mack, Vice President
ACCEPTED AND AGREED TO AS
OF THE DATE FIRST ABOVE WRITTEN:
AMERICAN HOLDINGS I, L.P.
By: American Holdings I-GP, Inc.,
General Partner
By: /s/ 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
-3-
<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")
<PAGE> 5
will occur not more than 2 business days following the purchase of the AHI
Units by Krescent pursuant to the Offer, and before Krescent has submitted such
Units for transfer to the Partnership. At such Closing, (1) Krescent will
deliver the AHI Units to AHI, together with all necessary documentation to
transfer to AHI all of Krescent's right, title and interest in and to such
Units, such transfer to be free and clear of all claims, liens and encumbrances
created by Krescent, (2) AHI will pay the purchase price for such AHI Units by
wire transfer into an account designated by Krescent (3) the parties will make
appropriate payments so that Total Expenses (as hereinafter defined) are shared
in the manner described below and (4) Krescent will assign to AHI its rights
under all letters of transmittal (including related proxies and powers-of-
attorney) relating to the AHI Units.
Anything herein to the contrary notwithstanding, the parties acknowledge and
agree that, in the event the transfer of AHI Units from Krescent to AHI, as
contemplated above, would be restricted or delayed by the Partnership as a
result of concerns that such transfer would cause the Partnership to be treated
as a "publicly traded partnership," Krescent will, if AHI so requests, assign
to AHI its right to purchase 41.8% of the Units tendered pursuant to the Offer,
together with its rights under all letters of transmittal (including related
proxies and powers-of-attorney) relating to the AHI Units, and AHI will,
thereupon, purchase such Units directly from tendering Unitholders. In such
event, AHI will pay the purchase price for such Units by wire transfer to
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.
-2-
<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
-3-
<PAGE> 7
AHI of its opposition to an increase in the purchase price proposed by AHI,
Krescent shall assign to AHI, and AHI shall assume, Krescent's right and
obligation, subject to the terms and conditions of the Offer, to purchase Units
tendered pursuant to the Offer (together with its rights under letters of
transmittal, including proxies and powers-of-attorney, relating to the
purchased Units). From and after the effectiveness of any such assignment and
assumption, AHI shall control all decisions regarding the conduct of the Offer
and the acquisition and transfer of Units pursuant thereto. In either such
event, the parties shall execute and deliver such instruments and documents and
cooperate in taking any other action as may be necessary or desirable to amend
or supplement the Schedule 14D-1 and the Offer to Purchase in accordance with
the applicable requirements of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), and the rules and regulations of the Commission
thereunder. If a party opposes a proposed purchase price increase, AHI shall be
responsible for 41.8%, and Krescent shall be responsible for 58.2%, of Total
Expenses incurred through the date on which the opposing party notifies the
proposing party of its opposition, and the proposing party shall be responsible
for 100% of Total Expenses incurred subsequent to such date.
Notwithstanding the foregoing, if the proposing party shall at any time lower
the purchase price for Units or shall breach its obligation to acquire Units
pursuant to the Offer (assuming all conditions thereto have been satisfied or
waived), the opposing party shall have the right (exercisable in its sole
discretion) to purchase Units upon the terms and conditions set forth herein,
and, if the opposing party exercises such right, the parties shall share Total
Expenses as provided under "Allocation of Expenses" above.
COOPERATION
AHI and Krescent shall cooperate and provide each other with such information
as may be necessary or desirable to include AHI as a co-bidder in the Offer and
to disclose the transactions contemplated hereby in accordance with the
applicable requirements of the Exchange Act and the rules and regulations of
the Commission thereunder. Neither party shall use the name of the other in
any public disclosure regarding the transactions contemplated hereby without
obtaining the prior written consent of such other party, which shall not be
unreasonably withheld or delayed.
AHI and Krescent shall also cooperate in connection with the transfer of Units
to AHI and Krescent, respectively, and, to the extent 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.
-4-
<PAGE> 8
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 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.
-5-
<PAGE> 9
Either party may initiate the buy/sell by delivering to the other a written
offer stating the purchase price on a per Unit basis and other material terms
and conditions on which the initiating party is willing to purchase all, but
not less than all, Units then owned by the non-initiating party.
The non-initiating party shall then be obligated to elect to sell Units to the
initiating party at the per Unit price and upon the other terms and conditions
set forth in the buy/sell offer, or to purchase all of the initiating party's
Units upon such terms and conditions. The non-initiating party shall have
thirty days to decide whether to buy or sell. Failure to notify the initiating
party of such decision on a timely basis shall be deemed a decision to sell.
The closing of any purchase and sale of Units pursuant to these buy-sell
provisions shall occur no later than 15 days following the delivery of the
notice of election set forth above or such earlier date as shall be specified
in writing by the purchasing party. At any such closing, the selling party
shall sell, transfer and assign to the purchasing party all right, title and
interest in and to the selling party's Units, free and clear of all liens,
claims and encumbrances; the purchasing party shall pay for such Units in cash
or immediately available Federal funds; and, at the request of the purchasing
party, the selling party shall execute all other documents and take such other
actions as may be reasonably necessary or desirable to effectuate the transfer
of the Units and to carry out the purposes of this letter agreement.
PURCHASE OF ADDITIONAL UNITS
Prior to the Standstill Expiration Date, the parties subject to the Standstill
Agreement (whether directly or by assumption of the obligations of LFG
thereunder) (such parties being collectively referred to as the "Standstill
Parties") are permitted to purchase up to 25% of the issued and outstanding
Units. In the event that less than such amount is tendered pursuant to the
Offer (and/or already owned by the Standstill Parties on the Expiration Date),
then, prior to the Standstill Expiration Date, AHI and its affiliates will be
entitled to purchase up to 41.8% (or, if AHI purchases additional AHI Units
from Krescent under the circumstances described under "Purchase of Units"
above, then the total percentage of the tendered Units purchased by AHI) of any
Remaining Units (as hereinafter defined) and the other Standstill Parties and
their respective affiliates, collectively, will be entitled to purchase the
balance of any Remaining Units, in each case, without obtaining the consent of
or notifying any other party. "Remaining Units" means the difference between
25% of the outstanding Units and the number of Units purchased pursuant to the
Offer and/or owned by the Standstill Parties as of the Expiration Date.
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.
-6-
<PAGE> 10
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.
-7-
