LIBERTY TAX CREDIT PLUS III L.P.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
April 4, 1997
Personal and Confidential
Related Credit Properties III 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 Liberty Tax Credit Plus III L.P., a Delaware limited
partnership (the "Partnership"), from holders of BACs (each a "BACs holder" and
collectively, "BACs holders") by Related Credit Properties III L.P. ("RCP"),
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 $15,000,
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 ninety-five (95) 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 March 31, 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 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 RCP as general partner of the
Partnership or (ii) seeking to reduce any fees, profits, distributions or
allocations attributable to RCP 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 RCP).
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, RCP and Related Capital Company agree to indemnify and hold
harmless, to the fullest extent permitted by law, the Partnership, Liberty
Associates IV, L.P., Liberty GP III, 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 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 Liberty III, Inc. or any of our respective Affiliates may be a
partner.
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.
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,
LIBERTY TAX CREDIT PLUS III, L.P.
By: Liberty GP III, Inc.,
its general partner
By: /s/ Xxxx X. Xxxxxx
----------------------
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 CREDIT PROPERTIES III L.P.
By: Related Credit Properties III, Inc.,
its general partner
By: /s/ Xxxx X. Xxxxxx
-------------------------
Name: Xxxx X. Xxxxxx
Title: Vice President
