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EXHIBIT 99.(c)(2)
AGREEMENT AS TO SUBJECT PARTNERSHIPS
THIS AGREEMENT, dated as of November 20, 1995, is entered into by and
among Insignia Financial Group, Inc., a Delaware corporation ("Insignia"), on
the one hand, and Xxxxxx Street Capital, L.L.C., a Delaware limited liability
company ("Xxxxxx Street"), on the other hand.
WHEREAS, contemporaneously with the execution and delivery of this
Agreement Insignia, through FMG Acquisition, L.L.C., and Xxxxxx Street, through
Xxxxxx Street Capital Acquisition Co., L.L.C., have formed nine joint-venture
partnerships (the "JV Partnerships") and entered into nine separate Partnership
Agreements relating thereto, each dated as of November 20, 1995 (the
"Partnership Agreements"), pursuant to which the Xxxxxx Street Group and the
Insignia Group (each as defined below) have agreed jointly to invest in limited
partnership interests ("Units") in certain limited partnerships (the "Subject
Partnerships") controlled by The Balcor Company ("Balcor");
WHEREAS, pursuant to property management contracts between the Subject
Partnerships and an affiliate of Insignia, Insignia and its affiliates provide
property management services to the Subject Partnerships with respect to the
properties held by the Subject Partnerships;
WHEREAS, the execution and delivery of the Partnership
Agreements is conditioned on the execution and delivery of this Agreement;
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NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants contained herein, the parties to this Agreement hereby agrees as
follows:
ARTICLE I
DEFINITIONS
"Affiliate" means, as to any Person, (i) any other Person (and the
immediate family members of such Person) that controls, is controlled by, or is
under common control with the first Person; and (ii) if the first Person is a
natural person, the immediate family members of that Person.
"Balcor Contract" means any existing contract between any Balcor
Entity and any member of the Insignia Group pursuant to which any member of the
Insignia Group provides property management services to such Balcor Entity.
"Balcor Entity" means (i) any Subject Partnership which is party to a
Balcor Contract, and (ii) any successor to any entity described in clause (i).
"Balcor Property" means any property owned by a Balcor Entity which is
subject to a Balcor Contract, but does not include any property no longer owned
by a Balcor Entity.
"Insignia Group" means (i) Insignia and each of its current and future
controlling persons, subsidiaries and controlled Affiliates, (ii) the
respective successors and assigns of any of the Persons identified in clause
(i), (iii) the current and future directors and officers of any of the
foregoing.
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"Person" means any natural person or any corporation, partnership,
venture, association or other entity.
"Principal" means each of Xxxx X. Xxxxx, Xxx X. Xxxxxxxx, Xxxxxxx X.
Xxxxxx and Xxxxxxx X. Quicksilver, severally and not jointly.
"Xxxxxx Street Group" (i) Xxxxxx Street, and each of its respective
current and future Principals and other controlling persons, subsidiaries and
its controlled Affiliates, (ii) the respective successors and assigns of any of
the Persons identified in clause (i), and (iii) the current and future
directors and officers of any of the foregoing.
Any capitalized term not otherwise defined herein shall be as defined
in the Partnership Agreements.
ARTICLE II
STANDSTILL PROVISIONS
1. Without the consent of all Partners, each Partner and its
Affiliates (in the case of Xxxxxx Street, as to its Associates only) will not,
(i) participate in, directly or indirectly, any solicitation of proxies or
become a participant in any election contest with respect to any general
partner interest in any Subject Partnership, or (ii) acquire, directly or
indirectly, any general partner interest in any Subject Partnership.
Notwithstanding the foregoing, if any Person (other than the Partners and their
respective Affiliates (in the case of Xxxxxx Street, as to its Associates
only)) is "seeking to
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acquire" (as defined below) any general partner interest in any Subject
Partnership, then any Partner or its Affiliate may (i) participate in, directly
or indirectly, any solicitation of proxies or become a participant in any
election contest with respect to any general partner interest in any such
Subject Partnership, or (ii) acquire such general partner interest; provided,
however, that in connection with such acquisition the acquiring Partner or
Affiliate (in the case of Xxxxxx Street, as to its Associates only) shall offer
the other Partner the opportunity to acquire a 50% interest in the general
partner. A Person will be deemed to be "seeking to acquire" a general partner
interest in any such Subject Partnership (x) if it has commenced a proxy
solicitation or election contest to remove and replace such general partner or
(y) if the general partner of such Subject Partnership or any controlling
person thereof shall have requested bids for the sale of such general partner
or (z) if either Partner has actual knowledge that a general partner or any
controlling person thereof shall be engaged in bona fide, substantive
negotiations with a reputable Person for the sale of such general partner.
2. Xxxxxx Street agrees during the term of this Agreement that it
will not, and it will cause each member of the Xxxxxx Group not to, (a)
directly or indirectly terminate, seek to terminate, cause the termination of,
reduce the compensation then payable under, or otherwise interfere in any way
with any Balcor Contract, unless a member of the Insignia Group has engaged in
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conduct with respect to such Balcor Contract that constitutes gross negligence,
intentional misconduct or fraud or a material breach of such Balcor Contract
which has not been cured within a reasonable period; or (b) instigate,
encourage or assist any limited partner of any Balcor Entity or any other third
party to do any of the foregoing. Nothing contained in this paragraph 2 shall
prohibit any member of the Xxxxxx Group or any of its Affiliates from selling a
property that is subject to a Balcor Contract. Except as set forth in this
Agreement, the Xxxxxx Street Group, and its Affiliates shall not be prohibited
from entering into agreements with Balcor.
3. If at any time after the date of this Agreement any member of
the Xxxxxx Street Group becomes the general partner of, or otherwise controls,
an entity that is a Balcor Entity, or otherwise controls any Balcor Property,
then Xxxxxx Street, subject to their fiduciary duties to any Balcor Entity or
other owner of a Balcor Property, will, and will cause the members of the
Xxxxxx Street Group, to, use their reasonable efforts to cause Insignia or an
Affiliate designated by Insignia to continue to be engaged as the property
manager for such Balcor Entity or with respect to such Balcor Property on terms
substantially similar to the then current Balcor Contracts.
4. Xxxxxx Street agrees that during the term of this Agreement it
will not, and it will cause the members of the Xxxxxx Street Group not to,
provide any property management services to any Balcor Entity in respect of any
Balcor Property.
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5. Applicability to Principals. Each Principal, severally and
not jointly, agrees that the restrictions on the Xxxxxx Street Group of
paragraphs 1, 2 and 3 of this Article II shall apply to such Principal and
Persons controlled by such Principal for a ten-year period from the date hereof
(twenty years for Xxxx Xxxxx); provided that each Principal shall have no
obligations under this Article II for the actions or inactions of the Xxxxxx
Street Group other than such Principal or any entity he controls.
6. Nothing in this Article II shall restrict any Person who
employs, uses, hires or otherwise contracts with a Principal other than the
Xxxxxx Street Group; provided that such Principal does not control such Person.
ARTICLE III
MISCELLANEOUS PROVISIONS
1. Term. The term of this Agreement shall be for a period of
twenty (20) years from the date hereof; provided that the term of this
Agreement shall be ten (10) years with respect to each Principal other than
Xxxx Xxxxx.
2. Entire Agreement. This Agreement and the Partnership
Agreements supersede any and all prior or contemporaneous communications or
agreements between the parties hereto concerning the subject matter hereof,
whether written or oral.
3. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but
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all of which together shall constitute one and the same agreement.
4. Waivers; Amendments. The provisions of this Agreement cannot
be waived or modified unless such waiver or modification is in writing and
signed by the parties hereto.
5. Interpretation. The parties hereto acknowledge that this
Agreement is the product of arm's-length negotiations between the parties, each
of whom was represented by counsel, and agree that in any dispute concerning
the interpretation of any provision of this Agreement, there will be no
presumption that any provision is to be construed against or in favor of any
particular party.
6. Expenses. The reasonable expenses incurred by each party
(including legal fees and expenses) in connection with the negotiation and
documentation of this Agreement shall be borne and paid pro rata by the JV
Partnerships.
7. No Support. Neither Xxxxxx Street nor any Principal thereof
will support or encourage the taking of any action by any Affiliate of Xxxxxx
Street which is prohibited hereunder to be taken by Xxxxxx Street Group or any
member of Xxxxxx Street Group.
8. Contributions. Insignia agrees to cause to be contributed to
each Partnership an amount equal to 25%, and Xxxxxx Street agrees to cause to
be contributed to each Partnership an amount equal to 75%, of the sum of the
following: (i) the aggregate purchase price paid by such Partnership for
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Units, (ii) the costs of preparing and completing the Offer (including any
litigation related expenses) and (iii) any other required Capital Contributions
under Section 6.1(b)(vi) of the Partnership Agreements. Insignia will also
cause to be contributed to the Subject Partnerships in respect of indemnity
obligations of its Affiliates under Section 6.5(b) of each such Subject
Partnership's Partnership Agreement an additional aggregate amount equal to
200% of such Affiliate's aggregate unreturned Capital Contributions in the
Subject Partnerships.
9. Allocations. In connection with the proposed investments by
the JV Partnerships in the Subject Partnerships, the aggregate Tender Costs (as
defined in the Partnership Agreements) of the JV Partnerships will be allocated
among the JV Partnerships pro rata based upon the aggregate purchase of the
Units of a Subject Partnership acquired by each respective JV Partnership. The
total miscellaneous expenses incurred by Xxxxxx Street to be reimbursed
pursuant to clause (y) of the definition of Tender Costs will not exceed
$150,000, and the total legal expenses incurred by Insignia to be reimbursed
pursuant to clause (z) of the definition of Tender Costs will not exceed
$40,000.
10. Governing Law. The validity, interpretation, enforceability
and performance of this Agreement shall be governed by and construed in
accordance with the law of the State of Illinois, without reference to its
conflicts of law rules. To the fullest extent permitted by law, each of the
parties hereto hereby waive any right to trial by jury in any action with
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respect to the matters set forth herein. If any provision of this Agreement
shall be held invalid or unenforceable in whole or in part, that invalidity or
unenforceability shall not affect the validity or enforceability of the balance
of this Agreement. Without limiting the generality of the foregoing, if a
provision is held by a court of competent jurisdiction to be invalid or
unenforceable by reason of the length of time during which it is to remain in
effect, such provision nonetheless shall be enforceable to the maximum extent
and for the maximum period of time determined by such court to be permissible.
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IN WITNESS WHEREOF, the undersigned have executed or caused to be
executed on their behalf this Agreement as of the date first set forth above.
INSIGNIA FINANCIAL GROUP, INC.
By: /s/ Xxxxx X. Xxxxxxxx
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Xxxxx X. Xxxxxxxx
Executive Managing Director
XXXXXX STREET CAPITAL, L.L.C.
By: /s/ Xxx X. Xxxxxxxx
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Xxx X. Xxxxxxxx
Principal
(THE FOLLOWING INDIVIDUALS ARE PARTIES
FOR PURPOSES OF PARAGRAPHS 1, 2, 3 and
5 OF ARTICLE II ONLY)
/s/ Xxxx X. Xxxxx
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Xxxx X. Xxxxx
/s/ Xxx X. Xxxxxxxx
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Xxx X. Xxxxxxxx
/s/ Xxxxxxx X. Quicksilver
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Xxxxxxx X. Quicksilver
/s/ Xxxxxxx X. Xxxxxx
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Xxxxxxx X. Xxxxxx
