Exhibit 2
FREEDOM TAX CREDIT PLUS L.P.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
August 26, 1997
Personal and Confidential
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Related Freedom Associates L.P.
Lehigh Tax Credit Partners L.L.C.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Gentlemen:
As you requested, the purpose of this letter is to set forth our
understanding with regard to any proposed acquisition of beneficial assignment
certificates ("BACs") of Freedom Tax Credit Plus L.P., a Delaware limited
partnership (the "Partnership"), from holders of BACs (each a "BACs holder" and
collectively, "BACs holders") by Related Freedom Associates L.P. ("RFA"), Lehigh
Tax Credit Partners L.L.C. ("Lehigh") or any person who is their Affiliate (as
defined below) (collectively, "you").
In response to your proposal to commence a tender offer for BACs and in
consideration of the agreements set forth in this letter agreement, the
Partnership agrees to mail your tender offer materials, at your expense, subject
to the terms set forth below and whether or not such tender offer is subject to
the provisions of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"). Nothing in this letter agreement shall be construed as requiring the
Partnership to provide you with a current list of the names and addresses of the
BACs holders. The Partnership will not be obligated to mail your tender offer
materials until it has received from you an amount of cash equal to $10,000,
representing the estimated cost of such mailing together with the Partnership's
other expenses, including, without limitation, reasonable attorney fees. You
agree that you may only acquire up to 45% (including BACs acquired through all
other means) of the Partnership's outstanding BACs.
You represent and warrant that on the date hereof you beneficially own
not more than one hundred eighty nine (189) BACs. You also agree that prior to
the tenth anniversary of the date of this letter agreement, neither you nor any
person who is your Affiliate (as defined under Rule 405 of the Securities Act of
1933, as amended) will, without the prior written consent of the Partnership,
which may be withheld for any reason, directly or indirectly, (i) in any manner
including, without limitation, by tender offer (whether or not pursuant to a
filing made with the Securities and Exchange Commission), acquire, attempt to
acquire or make a proposal to acquire, directly or indirectly, more than 45%
(including BACs acquired through all other means) of the outstanding BACs of the
Partnership from any BACs holder, BACs holders or otherwise, (ii) seek 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 Securities and
Exchange Commission) to vote 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, except that those Affiliates bound by this letter agreement will
not be deemed to have violated this letter agreement and formed a "group" solely
by acting in accordance with this letter agreement, (v) disclose in writing to
any third party any intention, plan or arrangement inconsistent with the terms
of this letter agreement or (vi) loan money to, advise, assist or encourage any
person in connection with any action inconsistent with the terms of this letter
agreement. Notwithstanding the foregoing restrictions, nothing in this letter
agreement shall apply to, govern, restrict or limit any sales, purchases,
transfers or assignments of interests in Lehigh.
You agree that any tender offer commenced by you will be at a price per
BAC not less than the value per BAC determined by an independent third party,
approved by the Partnership, in a report delivered to and approved by the
Partnership, completed or updated not more than three months prior to the
commencement of your tender offer. We hereby agree that the report by Valuation
Research Corporation, dated June 30, 1997, satisfies this requirement and is
approved by the Partnership. Notwithstanding any other provision of this letter
agreement, you agree that you shall not commence any tender offer for BACs of
the Partnership unless, prior to the commencement of such tender offer, the
Partnership's general partners agree to the response to be made by the
Partnership in connection with such tender offer.
You also agree during such ten year period, any proposal or request,
directly or indirectly, to amend, waive or terminate any provision of this
letter agreement shall be granted only upon the unanimous consent of the
Partnership's general partners. In addition, you (excluding your affiliate which
serves as a general partner of the Partnership while acting in its capacity as
general partner) agree that you will notify the Partnership in writing at least
five days (one day if such communication is a press release or is sent in
response to a prior communication made to BACs holders by the Partnership or its
general partners which is not seeking to advise or influence any person with
respect to the voting of any voting securities of the Partnership) before
mailing or disseminating any communication with BACs holders and provide us a
copy of such communication (if written) with such notice.
You have advised us that, if requested by us, you (excluding your
affiliate which serves as a general partner of the Partnership while acting in
its capacity as general partner) will incorporate in any communication with BACs
holders a statement as to the valuation per BAC as determined by an independent
third party appraisal. In addition, if you commence a tender offer for less than
5% of the outstanding BACs, you will include verbatim the following language in
any such communication:
"TENDER OFFERS OF THIS NATURE ARE NOT REQUIRED TO COMPLY WITH CERTAIN
RULES AND REGULATIONS OF THE SECURITIES AND EXCHANGE COMMISSION.
Accordingly, this tender offer does not need to comply with certain
disclosure requirements and rules governing tender offers set forth in
the Securities Exchange Act of 1934."
In addition, you hereby represent, warrant and covenant to the
Partnership that any tender offer to purchase BACs commenced by you will be
conducted in compliance with Section 14(e) (misleading statements), Rule 14d-7
(additional withdrawal rights), Rule 14d-8 (pro rata requirements), Rule 14e-1
(unlawful tender offer practices) and Rule 14e-3 (non-public information) of the
Exchange Act, notwithstanding that such tender offer may be for less than 5.0%
of the outstanding BACs.
You understand that the general partners of the Partnership may
consider from time to time selling all or substantially all of the assets of the
Partnership or entering into any other transaction determined by the general
partners to be in the best interests of the BACs holders and the Partnership.
The result of any such transaction, if approved by a majority vote of the BACs
holders, might be the dissolution and liquidation of the Partnership in
accordance with the partnership agreement. Accordingly, in order to avoid
disrupting any possible sale of all or substantially all of the Partnership's
assets or any other transaction determined by the general partners to be in the
best interests of the BACs holders and the Partnership and any required vote of
BACs holders, you agree that, prior to the ten-year anniversary of the date of
this letter
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agreement, all BACs obtained by you pursuant to any means will be voted by you
on all issues in the same manner as by the majority of all other BACs holders
who vote on such proposal. Notwithstanding the foregoing, you may vote all BACs
in the manner you determine, in your sole and absolute discretion, on proposals
(i) concerning the removal of RFA as general partner of the Partnership or (ii)
seeking to reduce any fees, profits, distributions or allocations attributable
to RFA or its Affiliates.
If at any time during such ten year period you (excluding your
affiliate which serves as a general partner of the Partnership while acting in
its capacity as general partner) are contacted in writing by, or have meaningful
negotiations with, any third party concerning participation in any transaction
involving the assets, businesses or securities of the Partnership or involving
any action inconsistent with the terms of this letter agreement, you will
promptly inform the Partnership of the nature of any such meaningful
negotiations and the parties thereto or forward a copy of such writing, as the
case may be, and you may inform such third party that this letter agreement
requires you to so notify the Partnership, provided however, this paragraph
shall not apply to any transaction or proposed transaction involving all or
substantially all of the assets, businesses or securities of Related Capital
Company and/or its Affiliates (other than the Partnership and RFA).
You will not sell any BACs owned by you prior to the tenth anniversary
of the date of this letter agreement, unless each buyer or transferee agrees in
writing with the Partnership to be bound by the terms and conditions of this
letter agreement until such tenth anniversary, provided however, that this
paragraph shall not apply to transfers made in the secondary market to any
purchaser which represents that following such sale, it shall not own 3% or more
of the BACs outstanding; provided further, however, that nothing in this letter
agreement shall apply to, govern, restrict or limit any sales, purchases,
transfers or assignments of interests in Lehigh. Notwithstanding the immediately
preceding sentence, Lehigh shall remain bound by this letter agreement
notwithstanding that any interests in Lehigh have been sold, purchased,
transferred or assigned.
Lehigh, RFA and Related Capital Company agree to indemnify and hold
harmless, to the fullest extent permitted by law, the Partnership, Freedom GP
Inc., and each of their partners, directors, officers, employees,
representatives and agents (the "Indemnified Parties") against any losses,
claims, damages, liabilities, costs, expenses (including reasonable attorney's
fees and expenses in advance of the final disposition of any claim, suit,
proceeding or investigation to each Indemnified Party to the fullest extent
permitted by law), judgments, fines and amounts (collectively, "Damages") paid
in connection with any threatened or actual claim, action, suit, proceeding or
investigation which arises out of or is the result of a breach of this letter
agreement, any tender offer commenced by you (regardless of whether such tender
offer is subject to the provisions of the Exchange Act) or the actual or
proposed acquisition of BACs by you by any other means; provided however, that
if such claim, action, suit, proceeding or investigation is threatened but not
actual, your obligation to indemnify the Indemnified Parties shall apply only if
such threat is in writing and only with respect to any legal fees incurred in
connection with such threat. If such threat becomes an actual claim, action,
suit, proceeding or investigation, you shall then be responsible for the full
indemnification provided for in this paragraph. If an Indemnified Party intends
to seek indemnification pursuant to this paragraph, it shall promptly notify you
of such claim, in writing, describing such claim in reasonable detail; provided,
that the failure to provide such notice shall not affect your obligations herein
unless you are materially prejudiced by the failure to provide such notice.
Counsel for the Indemnified Party shall be chosen at your discretion and shall
be directed by you. We both agree that you will be materially prejudiced if, due
to the failure of an Indemnified Party to provide the notice required above, you
were not given the opportunity to obtain the counsel of your choice or direct
such counsel. You may participate at
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your own expense in the defense of any such action; provided, that counsel for
the Indemnified Party shall not (except with the consent of the Indemnified
Party) also serve as your counsel. You shall not, without first obtaining a
general release from liability for the Indemnified Parties in a form
satisfactory to such Indemnified Parties, settle or compromise or consent to the
entry of any judgment with respect to any threatened or actual claim, action,
suit, proceeding or investigation involving an Indemnified Party which seeks
indemnity under this paragraph. If the indemnification provided in this
paragraph is for any reason unavailable to or insufficient to hold harmless an
Indemnified Party in respect of any Damages referred to above, then you and each
party seeking indemnification shall contribute to the aggregate amount of such
Damages incurred by such Indemnified Party in such proportion as is appropriate
to reflect the relative benefits received by each party from the act which gives
rise to the indemnification claim. You agree that the amount of such economic
benefit received by each Indemnified Party shall be $1 and the amount of such
economic benefit received by you shall be computed by multiplying your per BAC
offer price by the total number of BACs which were sought in your tender offer.
Both you and the Indemnified Parties each hereby agree to cooperate fully in all
aspects of any investigation, defense, pre-trial activities, trial, compromise,
settlement or discharge of any claim in respect of which indemnity is sought
pursuant to this paragraph, including, but not limited to, by providing the
other party reasonable access upon reasonable notice to employees and officers
and other information during reasonable business hours. Nothing in this
paragraph is intended to limit your ability to obtain indemnification from the
Partnership if such indemnification is available to you pursuant to the
Partnership's partnership agreement and applicable law, provided however, that
your obligations herein shall not be affected by your ability or inability to
obtain such indemnification. We each hereby agree that the provisions of this
paragraph shall have no effect on any other partnership which you or Freedom GP
Inc. or any of our respective Affiliates may be a partner.
Notwithstanding the immediately preceding paragraph, we acknowledge
that you may engage a third party lender(s) to finance your proposed acquisition
of BACs. We hereby acknowledge and agree for the benefit of such third party
lender(s) that the indemnification provisions in the immediately preceding
paragraph are not intended to apply to or obligate, and in no event shall be
binding upon, such third party lender(s) or any of its assignees or successors
in interest to any of the BACs acquired by you.
We each hereby acknowledge that we are aware, and that we will advise
our respective Affiliates, of our respective responsibilities under the
securities laws. We each agree that the other of us or our respective
Affiliates, as the case may be, shall be entitled to equitable relief, including
injunctive relief and specific performance, in the event of any breach of the
provisions of this letter agreement, in addition to all other remedies available
at law or in equity.
In case any provision in or obligation under this letter agreement
shall be invalid, illegal or unenforceable in any jurisdiction, the validity,
legality and enforceability of the remaining provisions or obligations, or of
such provision or obligation in any other jurisdiction, shall not in any way be
affected or impaired thereby.
This letter agreement shall be governed by the laws of the State of New
York without giving effect to principles of conflicts of law thereof. This
letter agreement may be executed in counterparts, each of which shall be deemed
an original, but all of which together constitute one and the same instrument.
* * *
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If you agree with the foregoing, please sign and return two copies of
this letter agreement, which will constitute our agreement with respect to the
subject matter of this letter agreement.
Very truly yours,
FREEDOM TAX CREDIT PLUS L.P.
By: Liberty GP, Inc.,
its general partner
By: /s/ Xxxx X. Xxxxxx
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Name: Xxxx X. Xxxxxx
Title: President
Confirmed and agreed to as of
the date first above written
LEHIGH TAX CREDIT PARTNERS L.L.C.
By: /s/ Xxxx X. Xxxxxx
-------------------------
Name: Xxxx X. Xxxxxx
Title: Vice President
RELATED FREEDOM ASSOCIATES L.P.
By: Related Freedom Associates, Inc.,
its general partner
By: /s/ Xxxx X. Xxxxxx
--------------------------
Name: Xxxx X. Xxxxxx
Title: Vice President
