SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
INDEPENDENCE TAX CREDIT PLUS L.P.
_______________________________________________________________________________
(Name of Issuer)
BENEFICIAL ASSIGNMENT CERTIFICATES
_______________________________________________________________________________
(Title of Class of Securities)
453780 10 8
_______________________________________________________________________________
(CUSIP Number)
J. Michael Fried
Lehigh Tax Credit Partners L.L.C.
c/o Related Capital Company
625 Madison Avenue
New York, NY 10022
(212) 421-5333
_______________________________________________________________________________
(Name, Address and Telephone Number of Person Authorized to Receive
Notices and Communications)
August 15, 1997
_______________________________________________________________________________
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box | |.
Note: Six copies of this statement, including all exhibits, should be filed
with the Commission. See Rule 13d-1(a) for other parties to whom copies are to
be sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
Page 1 of 10 Pages
<PAGE>
CUSIP No. 453780 10 8 SCHEDULE 13D Page 2 of 10 Pages
1 NAME OF REPORTING PERSON.
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON.
Lehigh Tax Credit Partners L.L.C.
_______________________________________________________________________________
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP.* (a)
(b) /X/
_______________________________________________________________________________
3 SEC USE ONLY.
_______________________________________________________________________________
4 SOURCE OF FUNDS.*
AF; BK
_______________________________________________________________________________
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
- -
TO ITEMS 2(d) or 2(e). / /
_______________________________________________________________________________
6 CITIZENSHIP OR PLACE OF ORGANIZATION.
Delaware
_______________________________________________________________________________
7 SOLE VOTING POWER.
6,879.475 beneficial Assignment Certificates (representing
NUMBER OF assignments of limited partnership interests)
SHARES _______________________________________________________________
BENEFICIALLY
OWNED BY
EACH
REPORTING
PERSON WITH: _______________________________________________________________
8 SHARED VOTING POWER.
0
________________________________________________________________
9 SOLE DISPOSITIVE POWER.
6,879.475 Beneficial Assignment Certificates
(representing assignments of limited partnership
interests)
________________________________________________________________
10 SHARED DISPOSITIVE POWER.
0
_______________________________________________________________________________
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON.
6,879.475 Beneficial Assignment Certificates (representing
assignments of limited partnership interests)
_______________________________________________________________________________
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES.* / /
_______________________________________________________________________________
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11).
9.0%
_______________________________________________________________________________
14 TYPE OF REPORTING PERSON*.
OO
_______________________________________________________________________________
*SEE INSTRUCTIONS
<PAGE>
CUSIP No. 453780 10 8 SCHEDULE 13D Page 3 of 10 Pages
1 NAME OF REPORTING PERSON.
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON.
Lehigh Tax Credit Partners, Inc.
_______________________________________________________________________________
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP.* (a)
(b) /X/
_______________________________________________________________________________
3 SEC USE ONLY.
_______________________________________________________________________________
4 SOURCE OF FUNDS.*
AF;BK
_______________________________________________________________________________
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e). / /
_______________________________________________________________________________
6 CITIZENSHIP OR PLACE OF ORGANIZATION.
Delaware
_______________________________________________________________________________
7 SOLE VOTING POWER.
6,879.475 Beneficial Assignment Certificates (representing
NUMBER OF assignments of limited partnership interests)
SHARES _______________________________________________________________
BENEFICIALLY 8 SHARED VOTING POWWER
OWNED BY 0
EACH _______________________________________________________________
REPORTING 9 SOLE DISPOSITIVE POWER.
PERSON WITH: 6,879.475 Beneficial Assignment Certificates
(representing assignments of limited partnership
interests)
________________________________________________________________
10 SHARED DISPOSITIVE POWER.
0
_______________________________________________________________________________
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON.
6,879.475 Beneficial Assignment Certificates (representing
assignments of limited partnership interests)
_______________________________________________________________________________
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES.* / /
_______________________________________________________________________________
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11).
9.0%
_______________________________________________________________________________
14 TYPE OF REPORTING PERSON*.
CO
_______________________________________________________________________________
*SEE INSTRUCTIONS
<PAGE>
STATEMENT PURSUANT TO RULE 13d-1
OF THE
GENERAL RULES AND REGULATIONS
UNDER THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED (THE "ACT")
_______________________________________________________________________________
_______________________________________________________________________________
Item 1. Security and Issuer.
This statement relates to Beneficial Assignment Certificates ("BACs")
representing assignments of limited partnership interests in Independence Tax
Credit Plus L.P., a Delaware limited partnership (the "Partnership"), which has
its principal executive offices at 625 Madison Avenue, New York, New York 10022.
Item 2. Identity and Background.
This Statement is filed jointly by Lehigh Tax Credit Partners L.L.C.,
a Delaware limited liability company ("Lehigh"), and Lehigh Tax Credit Partners,
Inc., a Delaware corporation (the "Managing Member"). Lehigh and the Managing
Member are sometimes collectively referred to herein as the "Reporting Persons".
Lehigh was organized for the purpose of acquiring tax credits,
including the BACs pursuant to a tender offer on Schedule 14D-1, commenced on
May 30, 1997 (the "Tender Offer"). The address of Lehigh's principal office is
c/o Related Capital Company, 625 Madison Avenue, New York, New York 10022. The
managing member of Lehigh is the Managing Member, a Delaware corporation, which
is ultimately controlled by Messrs. J. Michael Fried, Stuart J. Boesky and Alan
P. Hirmes. The Managing Member is principally engaged in the business of serving
as managing member of Lehigh. The address of the Managing Member's principal
office is c/o Related Capital Company, 625 Madison Avenue, New York, New York
10022.
Attached hereto as Appendix A is information concerning the executive
officers, directors and control persons of the Managing Member, which
information is required to be disclosed in response to Item 2 and General
Instruction C to Schedule 13D.
None of the Reporting Persons nor any of the persons or entities
referred to in Appendix A hereto has, during the last five years, been convicted
in a criminal proceeding (excluding traffic violations and similar misdemeanors)
or been a party to a civil proceeding of a judicial or administrative body of
competent jurisdiction and as a result of such proceeding was or is subject to a
judgment, decree or final order enjoining future violations of, or prohibiting
or mandating activities subject to, federal or state securities laws or finding
any violation with respect to such laws.
4
<PAGE>
Item 3. Source and Amount of Funds or Other Consideration.
As of the date hereof, the Reporting Persons are deemed to beneficially own
6,879.475 BACs. The source of all funds used to acquire beneficial ownership of
the BACs is a loan (the "Loan") obtained by Lehigh from one of its members, RCC
Credit Facility, L.L.C. ("Credit Facility L.L.C."), on substantially the same
economic terms and conditions that such member borrowed or will borrow such
funds under an existing credit facility that such member has available to it
with BankBoston, National Association (formerly known as The First National Bank
of Boston) ("BankBoston") and Fleet National Bank (collectively, the "Lenders").
The existing credit facility replaced the credit facility described in the
Tender Offer documents. The current credit agreement is among the Lenders and
Credit Facility L.L.C., Related Capital Company ("RCC") and The Related
Companies, L.P. The stated interest rate is the "Base Rate" (as publicly
announced by BankBoston, from time to time) plus 0.5%, which is presently equal
to 9.0% per annum, or, at the election of Credit Facility L.L.C., the "Euro Loan
Rate" plus 2.375%. All of the BACs owned by Lehigh and all of Lehigh's
membership interests have been or will be pledged to the Lenders to
collateralize the Loan. Additionally, RCC has guaranteed all amounts borrowed
under such credit facility. Lehigh expects to repay all amounts borrowed from
its member by selling additional membership interests to persons or entities
that have a need for the tax credits and/or tax losses attributable to the BACs.
No plans or arrangements have been made with regard to the payment of periodic
interest required by the terms of the Loan. However, it is expected that if
interest payments are due and payable, Lehigh may borrow those funds from its
affiliate(s). The Managing Member is deemed to beneficially own the BACs
beneficially owned by Lehigh. The BACs beneficially owned by the Reporting
Persons were acquired as described below.
Pursuant to the Tender Offer and the depositary's calculation of the number
of BACs tendered, Lehigh purchased an aggregate of 6,758.475 BACs on August 15,
1997 for an aggregate purchase price of approximately $4,933,686.75. Lehigh
obtained or will obtain all of such funds from the Loan as described above.
Prior to commencing the Tender Offer, Lehigh effected three separate
transactions and acquired a total of 121 BACs for an aggregate purchase price of
approximately $81,615 ($674.50 per BAC).
Item 4. Purpose of Transaction.
Each of the Reporting Persons acquired beneficial ownership of the
BACs for investment purposes and not with the purpose of changing or influencing
control of the Partnership. Each of the Reporting Persons retains the right,
however, to change such investment intent, to acquire additional BACs or to sell
or otherwise dispose of all or part of the BACs beneficially owned by such
Reporting Person in any manner permitted by law.
Although the foregoing currently reflects the present plans and
intentions of the Reporting Persons, the foregoing is subject to change at any
time. The Reporting Persons have and will, on an on-going basis, continue to
evaluate their investment in the Partnership. In the event of a material change
in the present plans or intentions of the Reporting Persons, the Reporting
Persons will amend this Schedule 13D to reflect such change.
5
<PAGE>
Item 5. Interest in Securities of the Issuer.
(a) and (b) As of the date hereof, the Reporting Persons are deemed to
beneficially own an aggregate of 6,879.475 BACs, which constitutes approximately
9.0% of the BACs outstanding.* The Reporting Persons have sole voting and sole
dispositive power of all such BACs beneficially owned.
(c) Except for the BACs purchased pursuant to the Tender Offer,
neither Lehigh, the Managing Member, and to the best of Lehigh's knowledge, the
persons listed on Appendix A, nor any affiliate thereof has effected any
transaction in the BACs within the past 60 days.
(d) The Reporting Persons have no knowledge of any persons who have
the right to receive or the power to direct the receipt of distributions from,
or the proceeds from the sale of, any BACs beneficially owned by the Reporting
Persons.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or Relationships
with Respect to Securities of the Issuer.
The information set forth in Item 3, Item 4 and Item 5 above is hereby
incorporated herein by reference.
Pursuant to a letter agreement dated May 28, 1997 among the
Partnership, Lehigh and Related Independence Associates L.P. ("RIA") (the
"Standstill Agreement"), Lehigh agreed that, prior to May 28, 2007 (the
"Standstill Expiration Date"), it will not and it will cause certain affiliates
not to (i) seek to 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, (ii) form,
join or otherwise participate in a "group" (within the meaning of Section
13(d)(3) of the Act) with respect to any voting securities of the Partnership,
except that those affiliates bound by the Standstill Agreement will not be
deemed to have violated it and formed a "group" solely by acting in accordance
with the Standstill Agreement, (iii) disclose in writing to any third party any
intention, plan or arrangement inconsistent with the terms of the Standstill
Agreement, or (iv) loan money to, advise, assist or encourage any person in
connection with any action inconsistent with the terms of the Standstill
Agreement. By the terms of the Standstill Agreement, Lehigh also agreed to vote
its BACs in the same manner as a majority of all voting BACs holders; provided,
however, Lehigh is entitled to vote its BACs as it determines with regard to any
proposal (i) to remove RIA as a general partner of the Partnership or (ii)
concerning the reduction of any fees, profits, distributions or allocations for
the benefit of RIA or its affiliates. The discussion herein of the Standstill
Agreement is subject to and qualified in its entirety by reference to such
agreement, a copy of which is attached hereto as an exhibit and incorporated
herein by reference.
In connection with a tender offer commenced on April 10, 1997 by
Lehigh and the settlement of matters relating to such tender offer, Lehigh
entered into an agreement with Everest Properties, Inc. ("Everest"), dated April
23, 1997 (the "Everest Agreement"). Pursuant to the Everest
- ------------------
* All calculations of percentages of beneficial ownership in this Schedule
13D are based on there being 76,786 BACs outstanding, as of June 30, 1997,
as disclosed in the Partnership's Quarterly Report on Form 10-Q for the
period ended June 30, 1997.
6
<PAGE>
Agreement, Lehigh granted to Everest, among other things, an option to
purchase up to 25% of the BACs tendered in the Tender Offer on the same terms
and conditions as Lehigh's purchase of BACs (the "Everest Option"). In
consideration of the foregoing, Everest agreed, among other things, that neither
it nor any of its affiliates will, 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 (the "Commission")),
acquire, attempt to acquire or make a proposal to acquire, directly or
indirectly, any securities of the Partnership, except for (a) the BACs it
acquires pursuant to the Everest Option and (b) purchases of de minimis amounts
of securities in the secondary market at the prevailing secondary market price
(it being understood that the purchaser of such de minimis amounts of securities
shall be bound by the terms and conditions of the Everest Agreement); (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 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 Act)
with respect to any voting securities of the Partnership; (v) disclose in
writing to any third party any intention, plan or arrangement inconsistent with
the terms of the Everest Agreement; or (vi) loan money to, advise, assist or
encourage any person in connection with any action inconsistent with the terms
of the Everest Agreement. The foregoing restrictions shall continue in full
force and effect forever, in perpetuity, with respect to the securities of the
Partnership unless Lehigh fails to perform its obligations under the Everest
Agreement. The discussion herein of the Everest Agreement is subject to and
qualified in its entirety by reference to such agreement, a copy of which is
attached hereto as an exhibit and incorporated herein by reference. On August
19, 1997, in accordance with the terms of the Everest Agreement, Lehigh gave
Everest notice of the number of BACs determined by the depositary to be tendered
pursuant to the Tender Offer. On August 21, 1997, Everest notified Lehigh in
writing that it elected to exercise the Everest Option to purchase 25% of the
BACs tendered pursuant to the Tender Offer.
Except as described above, the Reporting Persons do not have any
contracts, arrangements, understandings or relationships with respect to any
securities of the Partnership.
Item 7. Material to be Filed as Exhibits.
EXHIBIT
NO. DESCRIPTION
1 Standstill Agreement, dated May 28, 1997, among the Partnership,
Lehigh and RIA.
2 Letter Agreement, dated April 23, 1997, between Lehigh and Everest.
7
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: August 25, 1997
LEHIGH TAX CREDIT PARTNERS L.L.C.
By: Lehigh Tax Credit Partners, Inc.,
its managing member
By: /s/ Alan P. Hirmes
___________________________________
Name: Alan P. Hirmes
Title: Vice President
LEHIGH TAX CREDIT PARTNERS, INC.
By: /s/ Alan P. Hirmes
________________________________________
Name: Alan P. Hirmes
Title: Vice President
8
<PAGE>
APPENDIX A
The following sets forth information with respect to the executive
officers, directors and control persons of Lehigh Tax Credit Partners, Inc.,
which is the managing member of Lehigh.
Messrs. J. Michael Fried, Stuart J. Boesky and Alan P. Hirmes are
executive officers, directors and control persons of Lehigh Tax Credit Partners,
Inc. The present principal occupation of each of Messrs. Fried, Boesky and
Hirmes, each of whom is a citizen of the United States, is to act as an officer
of Related Capital Company ("RCC"), a New York general partnership and an
affiliate of Lehigh and the Managing Member. RCC has, directly or indirectly,
sponsored 22 public and 238 private real estate investment programs that have
raised in excess of $2.8 billion from more than 106,000 investors. The business
address of each of Messrs. Fried, Boesky and Hirmes is c/o Related Capital
Company, 625 Madison Avenue, New York, New York 10022.
9
<PAGE>
Exhibit Index
Exhibit
Ex-99.1 Standstill Agreement, dated May 28, 1997, among the Partnership,
Lehigh and RIA.
Ex-99.2 Letter Agreement, dated April 23, 1997, between Lehigh and Everest.
10
Exhibit 1
<PAGE>
INDEPENDENCE TAX CREDIT PLUS L.P.
625 Madison Avenue
New York, NY 10022
May 28, 1997
Personal and Confidential
Related Independence Associates L.P.
Lehigh Tax Credit Partners L.L.C.
625 Madison Avenue
New York, NY 10022
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 Independence 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 Independence Associates L.P. ("RIA"),
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 represent and warrant that on the date hereof you beneficially own
not more than one hundred and twenty-one (121) 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)
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, (ii) 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, (iii) disclose in writing to
any third party any intention, plan or arrangement inconsistent with the terms
of this letter agreement or (iv) 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 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
<PAGE>
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 partner 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
partner 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 partner 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 RIA as general partner of the
Partnership or (ii) seeking to reduce any fees, profits, distributions or
allocations attributable to RIA or its Affiliates.
If at any time during such ten year period you (excluding your
affiliate which serves as the general partner of the Partnership while acting in
its capacity as general partner) are contacted in writing by 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 forward a copy of such writing
to the Partnership 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 RIA).
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, RIA and Related Capital Company agree to indemnify and hold
harmless, to the fullest extent permitted by law, the Partnership, Independence
SLP L.P., 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
2
<PAGE>
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 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 assigns 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.
3
<PAGE>
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,
INDEPENDENCE TAX CREDIT PLUS L.P.
By: Related Independence Associates L.P.,
its general partner
By: Related Independence Associates Inc.,
its general partner
By: /s/ Stuart J. Boesky
_________________________________
Name: Stuart J. Boesky
Title: Senior Vice President
Confirmed and agreed to as of
the date first above written
LEHIGH TAX CREDIT PARTNERS L.L.C.
By: Lehigh Tax Credit Partners, Inc.,
its managing member
By: /s/ Alan P. Hirmes
__________________________________
Name: Alan P. Hirmes
Title: Vice President
RELATED INDEPENDENCE ASSOCIATES L.P.
By: Related Independence Associates Inc.,
its general partner
By: /s/ Alan P. Hirmes
__________________________________
Name: Alan P. Hirmes
Title: Vice President
4
Exhibit 2
<PAGE>
LEHIGH TAX CREDIT PARTNERS L.L.C.
625 MADISON AVENUE
NEW YORK, NEW YORK 10022
April 23, 1997
Everest Properties
3280 E. Foothill Boulevard
Suite 320
Pasadena, California 91107
Attention: W. Robert Kohorst
Gentlemen:
This letter agreement confirms our mutual agreement to be bound by the
terms of this letter agreement, including the terms and conditions set forth in
Exhibit A annexed hereto and made a part hereof. This agreement is intended to
be legally binding and enforceable upon execution and delivery hereof.
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 and
perform its obligations hereunder, (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 the principals and authorized
representatives of the parties hereto and the general partners of Liberty III
and the Additional Partnerships (as defined in Exhibit A), without the written
consent of all of the parties. Except as may be required by law, any public
announcement regarding this letter agreement or the transactions contemplated
herein may not be made by any party without the prior consent of all other
parties hereto.
This letter agreement shall be governed by and interpreted in
accordance with the laws of the State of New York, without regard to the
conflicts of law provisions thereof. Nothing herein shall be deemed to grant
jurisdiction to the State of New York over any dispute concerning this letter
agreement.
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 supersedes any and 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.
This letter agreement shall be binding upon the parties hereto and
their respective successors, assigns and controlled affiliates.
<PAGE>
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,
LEHIGH TAX CREDIT PARTNERS L.L.C.
By: Lehigh Tax Credit Partners, Inc.,
Managing Member
By: /s/ Alan P. Hirmes
___________________________________
Alan P. Hirmes, Vice President
LEHIGH TAX CREDIT PARTNERS, INC.
By: /s/ Alan P. Hirmes
__________________________________
Alan P. Hirmes, Vice President
RELATED CAPITAL COMPANY
By: /s/ Alan P. Hirmes
_________________________________
Name: Alan P. Hirmes
Title: Senior Managing Director
ACCEPTED AND AGREED TO AS
OF THE DATE FIRST ABOVE WRITTEN:
EVEREST PROPERTIES, INC.
By: /s/ David I. Lesser
_________________________
Name: David I. Lesser
Title: Executive Vice President
EVEREST PROPERTIES II, LLC
By: /s/ David I. Lesser
________________________
Name: David I. Lesser
Title: Executive Vice President
-2-
<PAGE>
EVEREST PROPERTIES, LLC
By: /s/ David I. Lesser
_________________________
Name: David I. Lesser
Title: Executive Vice President
EVEREST TAX CREDIT INVESTORS, LLC
By: /s/ David I. Lesser
________________________
Name: David I. Lesser
Title: Executive Vice President
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<PAGE>
EXHIBIT A
OPTION TO PURCHASE SECURITIES
Tender Offer(s)
I. Liberty Tax Credit Plus III L.P.
Lehigh Tax Credit Partners L.L.C. has commenced a tender offer
(the "Liberty III Offer") to purchase up to 17,500 of the issued and
outstanding Beneficial Assignment Certificates ("BACs") representing
limited partnership interests in Liberty Tax Credit Plus III L.P.
("Liberty III") at a purchase price of $588.20 per BAC, net to the
seller in cash, without interest, upon the terms and subject to the
conditions set forth in the Offer to Purchase, dated April 10, 1997.
The Liberty III Offer expires at 12:00 midnight, New York City time, on
May 8, 1997 or such later date to which the Liberty III Offer may be
extended. Lehigh filed a Tender Offer Statement on Schedule 14D-1 (the
"Liberty III Schedule 14D-1") with the Securities and Exchange
Commission (the "Commission") with respect to the Liberty III Offer on
April 10, 1997. References herein to the Liberty III Offer shall
include (a) any amendments to the Liberty III Schedule 14D-1 and (b)
any subsequent tender offer made by Lehigh for BACs in Liberty III.
II. Additional Tender Offers Contemplated
Attached hereto as Schedule I is a list of additional
partnerships (the "Additional Partnerships"), the securities of which
may be subject to a tender offer by Lehigh Tax Credit Partners L.L.C.,
Related Capital Company or any direct or indirect affiliate thereof
(collectively, "Lehigh"). Those additional tender offers, the Liberty
III Offer and any other tender offers for Liberty III or the Additional
Partnerships in which Lehigh participates (participation meaning the
activities covered by clauses (ii), (iv) and (vi) set forth under
"Standstill" below) are collectively referred to herein as the "Tender
Offers", and each a "Tender Offer". The BACs tendered pursuant to the
Liberty III Offer and the securities tendered pursuant to the other
Tender Offers are referred to herein as "Tendered Securities". Lehigh
agrees (a) that the tender offers for securities of any Additional
Partnerships shall be for at least 25% of the outstanding securities of
such Additional Partnership and (b) to commence Tender Offers for the
securities of at least two Additional Partnerships by July 31, 1997.
Option to Purchase Securities; Payment of Securities and Expenses
Subject to the terms and conditions set forth below, Lehigh hereby
grants, or will cause to be granted, to Everest Properties II, LLC and its
affiliates (collectively, "Everest") an option to purchase up to 25% of the
securities tendered in each Tender Offer; provided, however, the maximum amount
of all Tendered Securities purchased by Everest pursuant to this letter
agreement shall not exceed an amount that has an aggregate purchase price of
more than Ten Million ($10,000,000) Dollars; provided further, however, if
Everest has not had the opportunity to exercise its option to purchase Tendered
Securities with an aggregate purchase price of Ten Million ($10,000,000) Dollars
in connection with the first three Tender Offers, the 25% limitation set forth
above shall be increased in connection with any future Tender Offer(s) to a
percentage that will provide Everest with the opportunity to exercise its option
to purchase Tendered Securities with an aggregate purchase price of Ten Million
($10,000,000) Dollars. Upon the expiration of a Tender Offer, Lehigh shall
provide written notice to Everest of the amount of Tendered Securities accepted
by Lehigh pursuant to such Tender Offer. Within two business days
<PAGE>
following Lehigh's notice to Everest, Everest shall notify Lehigh in writing
whether or not it elects to exercise its option and to what extent. If Everest
fails to notify Lehigh of the exercise of its option within such two business
day period, Everest shall be deemed not to have exercised its option. If such
option is exercised, Everest shall pay Lehigh, by wire transfer, on the later of
(a) one business day after Everest delivers written notice of its election to
exercise, (b) one business day after Lehigh has given notice to Everest that
Lehigh will pay tendering security holders in accordance with the terms of the
Tender Offer (such notice to be given by Lehigh to Everest not less than one
business day prior to the date of such payment) and (c) the date that Lehigh
makes such payment, an amount equal to (i) the number of Tendered Securities
with respect to which Everest exercised its option (the "Option Securities")
multiplied by the price per Tendered Security paid by Lehigh in the applicable
Tender Offer plus (ii) Everest's share of the "Total Expenses" (as defined
below) for such applicable Tender Offer (see "Allocation of Expenses" below).
Upon receipt of such payment, (1) Lehigh will deliver the Option Securities to
Everest, together with all necessary documentation to transfer to Everest all of
Lehigh's right, title and interest in and to such Option Securities, (2) Lehigh
will assign to Everest its rights under all letters of transmittal (including
related proxies and powers-of-attorney) relating to such Option Securities, and
(3) Everest will agree in writing to be bound by the terms and conditions of the
"Partnership Standstill Agreement" (as defined below), if any, governing the
Tendered Securities. Lehigh will deliver (or will cause to be delivered),
concurrently with the receipt of such payment from Everest by Lehigh, a
confirmation from the subject partnership setting forth the number of Option
Securities that will be transferred to Everest.
Allocation of Expenses
At the time of the purchase of any Option Securities, Everest shall
pay to Lehigh a portion of Total Expenses related to such Tender Offer equal to
the lesser of (a) $25,000 and (b) Total Expenses multiplied by a fraction, the
numerator of which is the number of Tendered Securities purchased by Everest and
the denominator of which is the total number of Tendered Securities purchased
pursuant to the Tender Offer. "Total Expenses" with respect to each Tender Offer
means all third-party out-of-pocket costs and expenses incurred by Lehigh,
Everest or their respective affiliates (including attorneys fees and expenses in
connection with the preparation and filing of any Tender Offer documents, but
excluding litigation expenses) with respect to each Tender Offer, including,
without duplication, Commission filing fees, the out-of-pocket expenses of any
person for acting as the information agent/depositary for the Tender Offer,
printing and mailing expenses, and the out-of-pocket expenses of the general
partners of Liberty III or any Additional Partnership which are paid for by
Lehigh. Total Expenses shall not include the costs of purchasing the Tendered
Securities or any non-third-party costs, including the overhead of Lehigh. Each
party will provide, upon the execution and delivery hereof, an estimate of its
costs and expenses incurred to date in connection with any Tender Offers and
shall provide, upon request, invoices or other appropriate evidence of the
incurrence of costs and expenses constituting Total Expenses hereunder.
Liabilities, costs, obligations and damages incurred by any party in connection
with any litigation or threatened litigation relating to, or arising from, the
Tender Offers ("Tender Offer Litigation") shall be borne by Lehigh and not
Everest. Lehigh agrees to indemnify and defend Everest and its affiliates,
officers, directors, members, employees and agents from and against all
liabilities, costs, obligations and damages in connection with Tender Offer
Litigation (even if the same are covered by an indemnification assumed by
Everest under the Partnership Standstill Agreement).
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<PAGE>
Standstill Agreement
Everest covenants and agrees that neither it nor any person who is its
Affiliate (as defined under Rule 405 of the Securities Act of 1933, as amended)
will, directly or indirectly: (i) in any manner including, without limitation,
by tender offer (whether or not pursuant to a filing made with the Commission),
acquire, attempt to acquire or make a proposal to acquire, directly or
indirectly, any securities of Liberty III or any Additional Partnership, except
for (a) the Option Securities and (b) purchases of de minimis amounts of
securities in the secondary market at the prevailing secondary market price (it
being understood that the purchaser of such de minimis amounts of securities
shall be bound by the terms and conditions of this agreement); (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 Liberty III or any Additional 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 Liberty III or any Additional
Partnership; (iv) form, join or otherwise participate in a "group" (within the
meaning of Section 13(d)(3) of the Securities Exchange Act of 1934, as amended)
with respect to any voting securities of Liberty III or any Additional
Partnership; (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. The foregoing restrictions
shall continue in full force and effect from the date hereof and forever, in
perpetuity, with respect to the securities of Liberty III and any Additional
Partnership, on a partnership by partnership basis if Lehigh has accepted
Tendered Securities of the subject partnership and Everest has either (a)
exercised its option, (b) not exercised its option or (c) such option is deemed
not to have been exercised in accordance with the terms hereof. The foregoing
restrictions shall continue in full force and effect from the date hereof and
forever, in perpetuity, with respect to the securities of Liberty III and all of
the Additional Partnership if Everest has been granted an option by Lehigh to
purchase Option Securities for an aggregate purchase price of Ten Million
($10,000,000) Dollars. If Lehigh fails to commence Tender Offers for the
securities of any Additional Partnership by October 31, 1997 and the aggregate
purchase price for which Everest could have exercised its option to purchase
Tendered Securities prior to such date (but for its failure or deemed failure to
exercise such option) is less than Ten Million ($10,000,000) Dollars or if
Lehigh defaults in any material respect in the performance of its obligations
hereunder, then Everest shall cease to be bound by the foregoing restrictions,
but only with respect to Additional Partnerships for which Lehigh has failed to
commence Tender Offers. If Lehigh defaults in any material respect in the
performance of its obligations under the section titled "Option to Purchase
Securities; Payment of Securities and Expenses" above, then Everest shall cease
to be bound by the foregoing restrictions, but only with respect to the
partnership to which such default relates and any Additional Partnerships for
which Lehigh has failed to commence tender offers prior to the date of such
default.
Partnership Standstill Agreement(s)
Lehigh entered into a letter agreement with Liberty III, dated April
4, 1997 (the "Liberty III Standstill Agreement"), a copy of which has been filed
as an exhibit to the Liberty III Schedule 14D-1. It is expected that some or all
of the Additional Partnerships may require similar standstill agreements prior
to Lehigh commencing an offer for the securities of such Additional Partnerships
(such agreements, together with the Liberty III Standstill Agreement, are
referred to herein as the "Partnership Standstill Agreements"). Everest
covenants and agrees that upon the purchase of any Tendered Securities, it will,
if applicable, agree to be bound by the terms and conditions of any Partnership
Standstill Agreement (including without limitation the Liberty III Standstill
Agreement) or execute a replacement standstill agreement reasonably acceptable
to the subject partnership.
-3-
<PAGE>
Litigation
Reference is made to the following actions pending in Delaware
Chancery Court: (i) Everest Properties, Inc. v. Liberty Tax Credit Plus III
L.P., Related Credit Properties III L.P., Liberty GP III Inc., Lehigh Tax Credit
Partners L.L.C. and Lehigh Tax Credit Partners, Inc. (C.A. No. 15660) (commenced
April 15, 1997); and (ii) Everest Properties, Inc. v. Liberty Tax Credit Plus
III L.P., et al. (C.A. No. 15531) (commenced February 10, 1997). Everest
covenants and agrees that it shall immediately cause these actions to be
dismissed, without prejudice, and without costs to any of Lehigh, its affiliates
or the defendants in such actions. Each of Lehigh and Everest hereby releases
the other, and Everest hereby releases all of the defendants in the foregoing
actions, from any and all claims for events that have occurred prior to the date
of this letter agreement, such releases being expressly conditioned upon the
performance by Lehigh, in the case of Everest's release, Everest, in the case of
Lehigh's release, and the other defendants, in the case of Everest's release, of
their respective obligations, if any, hereunder.
Conduct of Offer(s)
All decisions relating to the conduct of the Tender Offers and the
acquisition and transfer of Tendered Securities pursuant thereto, including
without limitation any change in the terms or waiver of any of the conditions
thereof, shall be made solely by Lehigh. Notwithstanding the foregoing, if
requested by Everest, Lehigh agrees to consult with Everest prior to commencing
a Tender Offer with regard to the purchase price offered therein and prior to
increasing the offered price in any Tender Offer commenced prior to the date
hereof. Lehigh agrees to amend the Liberty III Offer materials to include the
following statement:
In its filed pleadings, Everest stated that the estimated offer
offer price of $414 per BAC for a possible tender offer by
Everest, as disclosed in the Offer to Purchase, was incorrect and
Everest intended to offer BACs holders a price higher than the
then-Purchase Price offered by the Purchaser.
Cooperation
Everest and Lehigh shall cooperate and provide each other with such
information as may be necessary or desirable to disclose the transaction(s)
contemplated hereby in accordance with applicable securities laws and the rules
and regulations promulgated thereunder. In addition, subject to applicable laws,
Lehigh agrees to provide Everest, promptly upon request (but in no event later
than five days prior to the commencement of a Tender Offer), with copies of all
reports sent to limited partners, filings with the Commission and other public
information reasonably requested by Everest. Additionally, Lehigh agrees to
furnish Everest, promptly upon request, a report of securities tendered in any
pending Tender Offer.
No Other Contracts
Except as expressly set forth herein, there are no contracts,
arrangements, understandings or relationships between Everest and Lehigh with
respect to the BACs or the securities of any Additional Partnership.
-4-
<PAGE>
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. Related
Capital Company agrees that it shall, and shall cause its affiliates to, take
such action as may be necessary to effectuate the provisions or intent of this
letter agreement. Furthermore, Related Capital Company agrees to (i) effect the
transfer to Everest of any Option Securities on the books and records of Liberty
III and any Additional Partnership to Everest contemporaneously with effecting
any such transfer to Lehigh on such books and records and (ii) consistent with
past practice and subject to the advice of legal counsel that the requested
transfer will result in the subject partnership being treated as a
"publicly-traded partnership" for federal income tax purposes, promptly effect
all other transfers to Everest of the securities of Liberty III and any
Additional Partnership permitted by the terms of this letter agreement.
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. The prevailing party in any dispute arising out of this letter
agreement shall, in addition to any monetary damages or equitable relief, be
entitled to recover from the other party, the prevailing party's attorney's fees
and expenses (including the time of personnel employed by Lehigh or Everest)
incurred in connection with such dispute.
Notices
Any notice or other communication required or permitted hereunder
shall be in writing and shall be delivered personally, sent by facsimile
transmission or sent by reputable overnight courier, postage or other charges
prepaid. Any such notice shall be deemed given when so delivered personally, or
by facsimile transmission or, if sent by overnight courier, one day after
delivery to the courier, as follows:
If to Lehigh, to:
Lehigh Tax Credit Partners L.L.C.
c/o Related Capital Company
625 Madison Avenue
New York, New York 10022
Attention: Alan P. Hirmes
Telephone: (212) 421-5333
Telecopier: (212) 593-5794
-5-
<PAGE>
If to Everest, to:
Everest Properties
3280 E. Foothill Boulevard
Suite 320
Pasadena, California 91107
Attention: W. Robert Kohorst
Telephone: (818) 585-5920
Telecopier: (818) 585-5929
Any party may designate another address or person for receipt of
notices hereunder by notice given in accordance with this section to the other
party.
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