SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
- --------------------------------------------------------------------------------
SCHEDULE 14D-1
Tender Offer Statement Pursuant to Section 14(d)(1)
of the Securities Exchange Act of 1934
- --------------------------------------------------------------------------------
INDEPENDENCE TAX CREDIT PLUS L.P.
(Name of Subject Company)
LEHIGH TAX CREDIT PARTNERS L.L.C.
(Bidder)
BENEFICIAL ASSIGNMENT CERTIFICATES
(Title of Class
of Securities)
453780 10 8
(CUSIP Number of Class
of Securities)
- --------------------------------------------------------------------------------
J. Michael Fried
c/o Related Capital Company
625 Madison Avenue
New York, NY 10022
(212) 421-5333
Copy to:
Peter M. Fass
Battle Fowler LLP
75 East 55th Street
New York, NY 10022
(212) 856-7000
(Name, Address and Telephone Number of
Person Authorized to Receive Notices and
Communications on Behalf of Bidder)
Calculation of Filing Fee
- --------------------------------------------------------------------------------
Transaction Amount of
Valuation* Filing Fee
----------- ----------
$14,013,810 $2,802.77
- --------------------------------------------------------------------------------
*For purposes of calculating the filing fee only. This amount
assumes the purchase of 19,197 Beneficial Assignment Certificates (representing
assignments of limited partnership interests) ("BACs") of the subject company
for $730 per BAC in cash.
{ } Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously
paid. Identify the previous filing by registration statement number, or
the Form or Schedule and date of its filing.
Amount previously paid: N/A Filing party: N/A
Form or registration no.: N/A Date filed: N/A
(Continued on following pages)
(Page 1 of 8 pages)
<PAGE>
Cusip No.: 453780 10 8 14D-1 Page 2 of 8
- --------------------------------------------------------------------------------
1. Name of Reporting Person
S.S. or I.R.S. Identification No. of Above Person
LEHIGH TAX CREDIT PARTNERS L.L.C.
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2. Check the Appropriate Box if a Member of a Group
(See Instructions)
(a) [ ]
(b) [X]
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3. SEC Use Only
- --------------------------------------------------------------------------------
4. Sources of Funds (See Instructions)
AF; BK
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5. Check Box if Disclosure of Legal Proceedings is Required
Pursuant to Item 2(e) or 2(f)
[ ]
- --------------------------------------------------------------------------------
6. Citizenship or Place of Organization
Delaware
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7. Aggregate Amount Beneficially Owned by Each Reporting Person
121 Beneficial Assignment Certificates (representing assignments
of limited partnership interests)
- --------------------------------------------------------------------------------
8. Check Box if the Aggregate Amount in Row (7) Excludes
Certain Shares (See Instructions)
[ ]
- --------------------------------------------------------------------------------
9. Percent of Class Represented by Amount in Row (7)
Less than 1%
- --------------------------------------------------------------------------------
10. Type of Reporting Person (See Instructions)
OO
<PAGE>
Cusip No.: 453780 10 8 14D-1 Page 3 of 8
- --------------------------------------------------------------------------------
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
(See Instructions)
(a) [ ]
(b) [X]
- --------------------------------------------------------------------------------
3. SEC Use Only
- --------------------------------------------------------------------------------
4. Sources of Funds (See Instructions)
AF; BK
- --------------------------------------------------------------------------------
5. Check Box if Disclosure of Legal Proceedings is Required
Pursuant to Item 2(e) or 2(f)
[ ]
- --------------------------------------------------------------------------------
6. Citizenship or Place of Organization
Delaware
- --------------------------------------------------------------------------------
7. Aggregate Amount Beneficially Owned by Each Reporting Person
121 Beneficial Assignment Certificates (representing assignments
of limited partnership interests)
- --------------------------------------------------------------------------------
8. Check Box if the Aggregate Amount in Row (7) Excludes
Certain Shares (See Instructions)
[ ]
- --------------------------------------------------------------------------------
9. Percent of Class Represented by Amount in Row (7)
Less than 1%
- --------------------------------------------------------------------------------
10. Type of Reporting Person (See Instructions)
CO
<PAGE>
Item 1. Security and Subject Company.
(a) The name of the subject company is 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.
(b) This Schedule 14D-1 relates to the offer by Lehigh Tax
Credit Partners L.L.C., a Delaware limited liability company ("the Purchaser"),
to purchase up to 19,197 issued and outstanding Beneficial Assignment
Certificates ("BACs") representing assignments of limited partnership interests
in the Partnership ("Limited Partnership Interests") at $730 per BAC, net to
the seller in cash (the "Purchase Price"), without interest thereon, upon the
terms and subject to the conditions set forth in the Offer to Purchase dated
May 30, 1997 (the "Offer to Purchase") and the related Letter of Transmittal,
copies of which are attached hereto as Exhibits (a)(1) and (a)(2), respectively.
The Purchase Price will be automatically reduced by $14 per BAC for each month
(or part of a month) between July 31, 1997 and the date of transfer for BACs
transferred after July 31, 1997. Information concerning the number of
outstanding BACs is set forth in the Introduction to the Offer to Purchase and
is incorporated herein by reference.
(c) The information set forth in Section 13 ("Purchase Price
Considerations") of the Offer to Purchase is incorporated herein by reference.
Item 2. Identity and Background.
(a)-(d) The information set forth in Section 10 ("Certain
Information Concerning the Purchaser") and Schedule I to the Offer to Purchase
is incorporated herein by reference.
(e) and (f) During the last five years, neither the Purchaser
nor, to the best of its knowledge, any of the persons listed in Schedule I or
referred to in Section 10 ("Certain Information Concerning the Purchaser") of
the Offer to Purchase (i) have been convicted in a criminal proceeding
(excluding traffic violations or similar misdemeanors) or (ii) were a party to
a civil proceeding of a judicial or administrative body of competent
jurisdiction and as a result of such proceeding were or are subject to a
judgment, decree or final order enjoining future violations of, or prohibiting
activities subject to, Federal or state securities laws or finding any violation
of such laws.
(g) The information set forth in Schedule I to the Offer to
Purchase is incorporated herein by reference.
Item 3. Past Contacts, Transactions or Negotiations With the Subject
Company.
(a) The Purchaser is an affiliate of Related Independence
Associates L.P., the general partner of the Partnership. Accordingly, the
information contained in Section 9 ("Certain Information
4
<PAGE>
Concerning the Partnership") of the Offer to Purchase, including the terms of
the Partnership's amended and restated agreement of limited partnership (the
"Partnership Agreement"), is incorporated herein by reference. Additionally, the
information set forth in Section 10 ("Certain Information Concerning the
Purchaser") and Schedule I to the Offer to Purchase is incorporated herein by
reference.
(b) The information set forth in Section 11 ("Background of the
Offer") of the Offer to Purchase is incorporated herein by reference.
Item 4. Source and Amount of Funds or Other Consideration.
(a)-(c) The information set forth in Section 12 ("Source of
Funds") of the Offer to Purchase is incorporated herein by reference.
Item 5. Purpose of the Tender Offer and Plans or Proposals of the
Bidder.
(a)-(b) The information set forth in Section 8 ("Purpose of
the Offer; Future Plans") of the Offer to Purchase is incorporated
herein by reference.
(c)-(e) Not applicable.
(f)-(g) The information set forth in Section 7 ("Effects of
the Offer") of the Offer to Purchase is incorporated herein by
reference.
Item 6. Interest in Securities of the Subject Company.
(a)-(b) The information set forth in the Introduction and
Section 10 ("Certain Information Concerning the Purchaser") of the Offer to
Purchase is incorporated herein by reference.
Item 7. Contracts, Arrangements, Understandings or Relationships with
Respect to the Subject Company's Securities.
The information set forth in Section 8 ("Purpose of the Offer;
Future Plans"), Section 10 ("Certain Information Concerning the Purchaser") and
Section 11 ("Background of the Offer") of the Offer to Purchase is incorporated
herein by reference.
Item 8. Persons Retained, Employed or to be Compensated.
The information set forth in Section 16 ("Certain Fees and
Expenses") of the Offer to Purchase is incorporated herein by reference.
5
<PAGE>
Item 9. Financial Statements of Certain Bidders.
Not applicable.
Item 10. Additional Information.
(a) None.
(b)-(d) The information set forth in Section 15 ("Certain
Legal Matters") of the Offer to Purchase is incorporated herein by reference.
(e) None.
(f) The information set forth in the Offer to Purchase and the
related Letter of Transmittal is incorporated herein in its entirety by
reference.
Item 11. Material to be Filed as Exhibits.
(a)(1) Offer to Purchase, dated May 30, 1997.
(a)(2) Letter of Transmittal.
(a)(3) Cover Letter, dated May 30, 1997, from Lehigh
Tax Credit Partners L.L.C. to the holders of BACs.
(a)(4) Form of Notice to Brokers dated May 30, 1997.
(b) None.
(c)(1) Letter Agreement dated May 28, 1997 among Independence
Tax Credit Plus L.P., Lehigh Tax Credit Partners
L.L.C. and Related Independence Associates L.P.
(the "Standstill Agreement").
(c)(2) Letter Agreement dated April 23, 1997 among Lehigh Tax
Credit Partners L.L.C. and Everest Properties (the
"Everest Agreement").
(d) None.
(e) Not applicable.
(f) None.
6
<PAGE>
SIGNATURES
After due inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this statement is true,
complete and correct.
Dated: May 30, 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
7
<PAGE>
EXHIBIT INDEX
EXHIBIT
NO. TITLE
- ------- -----
(a)(1) Offer to Purchase, dated May 30, 1997.
(a)(2) Letter of Transmittal.
(a)(3) Cover Letter, dated May 30, 1997, from Lehigh Tax Credit
Partners L.L.C. to the holders of BACs.
(a)(4) Form of Notice to Brokers dated May 30, 1997.
(c)(1) Letter Agreement, dated May 28, 1997, among Independence Tax
Credit Plus L.P., Lehigh Tax Credit Partners L.L.C. and
Related Independence Associates L.P. (the "Standstill Agreement").
(c)(2) Letter Agreement dated April 23, 1997 among Lehigh Tax Credit
Partners L.L.C. and Everest Properties (the "Everest Agreement").
8
Exhibit (a)(1)
OFFER TO PURCHASE
UP TO 19,197
BENEFICIAL ASSIGNMENT CERTIFICATES
in
INDEPENDENCE TAX CREDIT PLUS L.P.
for
$730 NET PER BAC IN CASH
by
LEHIGH TAX CREDIT PARTNERS L.L.C.
- --------------------------------------------------------------------------------
THE OFFER, WITHDRAWAL RIGHTS AND PRORATION PERIOD WILL EXPIRE AT 12:00
MIDNIGHT, NEW YORK CITY TIME, ON JUNE 27, 1997, UNLESS EXTENDED.
- --------------------------------------------------------------------------------
Lehigh Tax Credit Partners L.L.C., a Delaware limited liability company
("the Purchaser") and an affiliate of the general partner of the Partnership
(as defined below), hereby offers to purchase up to 19,197 of the issued and
outstanding Beneficial Assignment Certificates ("BACs") representing
assignments of limited partnership interests ("Limited Partnership Interests")
in Independence Tax Credit Plus L.P., a Delaware limited partnership (the
"Partnership"), at a purchase price of $730 per BAC, net to the seller in cash
(the "Purchase Price"), without interest thereon, upon the terms and subject
to the conditions set forth in this Offer to Purchase (the "Offer to
Purchase") and in the related Letter of Transmittal, as each may be
supplemented, modified or amended from time to time (which together constitute
the "Offer"). The Purchase Price will be automatically reduced by $14 per BAC
for each month (or part of a month) between July 31, 1997 and the date of
transfer for BACs transferred after July 31, 1997. BACs HOLDERS WHO TENDER
THEIR BACs WILL NOT BE OBLIGATED TO PAY ANY COMMISSIONS OR PARTNERSHIP
TRANSFER FEES, WHICH COMMISSIONS AND FEES WILL BE BORNE BY THE PURCHASER. The
19,197 BACs sought pursuant to the Offer represent, to the best knowledge of
the Purchaser, approximately 25% of the BACs outstanding as of the date of
this Offer.
-------------------------
THE PURCHASER AND RELATED INDEPENDENCE ASSOCIATES L.P., THE GENERAL PARTNER
OF THE PARTNERSHIP, ARE AFFILIATED.
-------------------------
THE OFFER IS NOT CONDITIONED UPON ANY MINIMUM NUMBER OF BACs BEING
TENDERED. SEE SECTION 14 ("CONDITIONS OF THE OFFER").
-------------------------
IN ORDER TO COMPLY WITH CERTAIN RESTRICTIONS SET FORTH IN THE PARTNERSHIP'S
AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP, TENDERS OF LESS THAN
ALL BACs OWNED BY A BACs HOLDER THAT WOULD RESULT IN A BACs HOLDER HOLDING
LESS THAN 5 BACs WILL NOT BE ACCEPTED.
-------------------------
Before tendering, BACs holders are urged to consider the following factors:
(bullet) Although the Purchaser cannot predict the future value of the
Partnership's assets on a per BAC basis, the net after-tax benefit
that would be realized from retaining ownership of BACs together with
any cash distributions from operations and any net proceeds from a
future sale of the properties owned by the Partnership (the
"Properties") could be lower or higher than the Purchase Price. See
Section 13 ("Purchase Price Considerations").
(bullet) If the Purchaser is successful in acquiring a significant number of
BACs pursuant to the Offer, the Purchaser could, subject to the
Standstill Agreement (as defined in the Glossary), be in a position
to significantly influence all Partnership decisions on which BACs
holders may vote, including decisions regarding removal of the
General Partner, certain amendments to the Partnership Agreement (as
defined in the Glossary) and dissolution of the Partnership.
(bullet) The Purchaser believes that the projected aggregate per BAC benefit
of the Offer, together with the benefits already received by a BACs
holder, compares favorably with the potential benefits the Purchaser
believes a BACs holder will receive if he or she remains in the
Partnership. See Section 13 ("Purchase Price Considerations").
<PAGE>
IMPORTANT
Any (i) BACs holder, (ii) beneficial owner, in the case of BACs owned by
Individual Retirement Accounts or Keogh Plans (a "Beneficial Owner"), or (iii)
person who has purchased BACs but has not yet been reflected on the
Partnership's books as a transferee of such BACs (an "Assignee"), desiring to
tender any or all of such person's BACs should either (1) complete and sign
the Letter of Transmittal, or a facsimile copy thereof, in accordance with the
instructions in the Letter of Transmittal and mail or deliver the Letter of
Transmittal, or a facsimile copy thereof, and any other required documents to
Related Capital Company (the "Depositary"), at the address or facsimile number
set forth below, or (2) request his or her broker, dealer, commercial bank,
trust company or other nominee to effect the transaction for him or her.
Unless the context requires otherwise, references to BACs holders in this
Offer to Purchase shall be deemed to also refer to Beneficial Owners and
Assignees. Questions or requests for assistance may be directed to The Herman
Group, Inc. (the "Information Agent") at the address and telephone number set
forth below. Requests for additional copies of this Offer to Purchase, the
Letter of Transmittal and other related documents may be directed to the
Information Agent.
NO PERSON HAS BEEN AUTHORIZED TO MAKE ANY RECOMMENDATION OR ANY
REPRESENTATION ON BEHALF OF THE PURCHASER OR TO PROVIDE ANY INFORMATION OTHER
THAN AS CONTAINED HEREIN OR IN THE LETTER OF TRANSMITTAL. NO SUCH
RECOMMENDATION, INFORMATION OR REPRESENTATION MAY BE RELIED UPON AS HAVING
BEEN AUTHORIZED.
EACH BACs HOLDER IS URGED TO READ CAREFULLY THE ENTIRE OFFER TO PURCHASE,
THE LETTER OF TRANSMITTAL AND RELATED DOCUMENTS.
Send Completed Letters of Transmittal to:
Related Capital Company
625 Madison Avenue
New York, New York 10022
Attention: Denise Bernstein
Telephone: (800) 600-6422 (ext. 2030)
Facsimile: (212) 593-5794
For Additional Information Call:
The Herman Group, Inc.
2121 San Jacinto Street
26th Floor
Dallas, Texas 75201
Telephone: (800) 243-6107
ii
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
-----
<S> <C> <C>
INTRODUCTION ..................................................................................................... 1
THE TENDER OFFER .................................................................................................. 4
1. Terms of the Offer ................................................................................ 4
2. Proration; Acceptance for Payment and Payment for BACs ............................................ 5
3. Procedures for Tendering BACs ..................................................................... 5
4. Withdrawal Rights ................................................................................. 7
5. Extension of Tender Period; Termination; Amendment ............................................... 8
6. Certain Federal Income Tax Consequences .......................................................... 8
7. Effects of the Offer .............................................................................. 10
8. Purpose of the Offer; Future Plans ................................................................ 12
9. Certain Information Concerning the Partnership .................................................... 13
10. Certain Information Concerning the Purchaser ...................................................... 19
11. Background Of The Offer ........................................................................... 20
12. Source Of Funds ................................................................................... 20
13. Purchase Price Considerations ..................................................................... 21
14. Conditions of the Offer ........................................................................... 22
15. Certain Legal Matters ............................................................................. 24
16. Certain Fees and Expenses ........................................................................ 24
17. Miscellaneous .................................................................................... 25
Appendix A. Glossary ..........................................................................................A-1
Schedule I. Information with respect to the executive officers and directors of Lehigh Tax Credit
Partners, Inc. ....................................................................................S-1
Schedule II. Local Partnership schedule ........................................................................S-2
Schedule III. Certain information concerning the Properties ....................................................S-4
</TABLE>
iii
<PAGE>
To the Holders of Beneficial Assignment Certificates of Independence Tax
Credit Plus L.P.:
INTRODUCTION
Lehigh Tax Credit Partners L.L.C., a Delaware limited liability company
("the Purchaser") and an affiliate of the general partner of the Partnership
(as defined below), hereby offers to purchase up to 19,197 of the issued and
outstanding Beneficial Assignment Certificates ("BACs") representing limited
partnership interests in Independence Tax Credit Plus L.P., a Delaware limited
partnership (the "Partnership"), at a purchase price of $730 per BAC, net to
the seller in cash (the "Purchase Price"), without interest, upon the terms
and subject to the conditions set forth in this Offer to Purchase (the "Offer
to Purchase") and in the related Letter of Transmittal, as each may be
supplemented, modified or amended from time to time (which together constitute
the "Offer"). The Purchase Price will be automatically reduced by $14 per BAC
for each month (or part of a month) between July 31, 1997 and the date of
transfer for BACs transferred after July 31, 1997. BACs holders who tender
their BACs will not be obligated to pay any commissions or Partnership
transfer fees, which commissions and fees will be borne by the Purchaser. The
19,197 BACs sought pursuant to the Offer represent, to the best knowledge of
the Purchaser, approximately 25% of the BACs issued and outstanding as of the
date of this Offer.
The Purchaser is affiliated with Related Independence Associates L.P., the
general partner of the Partnership (the "General Partner"). In order to comply
with certain restrictions set forth in the Partnership's Amended and Restated
Agreement of Limited Partnership (the "Partnership Agreement"), tenders of
less than all BACs owned by a BACs holder that would result in a BACs holder
holding less than 5 BACs will not be accepted.
The Purchaser is making this Offer because it believes that the BACs
represent an attractive investment at the price offered based upon, in part,
the expected remaining Tax Credits and tax losses. There can be no assurance,
however, that the Purchaser's judgment is correct, and, as a result, ownership
of BACs (either by the Purchaser or BACs holders who retain their BACs) will
remain a speculative investment. The Purchaser is acquiring the BACs for
investment purposes and does not intend to make any effort to change current
management or the operations of the Partnership. Because the Purchaser is
affiliated with the General Partner, the Purchaser's acquisition of BACs may
have the effect of making any future change of current management more
difficult. The Purchaser has no current plans for any extraordinary
transaction involving the Partnership.
Factors to be considered by BACs holders. In considering the Offer, BACs
holders are urged to consider the following factors:
(bullet) Although the Purchaser cannot predict the future value of the
Partnership's assets on a per BAC basis, the net after-tax benefit
that would be realized from retaining ownership of the BACs together
with any cash distributions from operations and any net proceeds
from a future sale of the properties owned by the Partnership (the
"Properties") could be lower or higher than the Purchase Price. See
Section 13 ("Purchase Price Considerations").
(bullet) There may be a conflict between the desire of the Purchaser to
acquire the BACs at a low price and the desire of the BACs holders
to sell their BACs at a high price. Therefore, BACs holders might
receive greater value if they hold their BACs, rather than tender,
continue to be allocated Tax Credits and tax losses, and receive any
distributions from operations and any proceeds, if any, from the
liquidation of the Partnership. Alternatively, BACs holders may
prefer to receive the Purchase Price now rather than wait to be
allocated future Tax Credits and tax losses and uncertain future
cash distributions. The return to BACs holders could be higher or
lower than the Purchase Price for persons who retain their BACs.
(bullet) The Offer is being made in order to acquire BACs for investment
purposes. The Purchaser intends to sell membership interests in the
Purchaser to third parties with a need for the Tax Credits and/or
tax losses attributable to the tendered BACs. The aggregate sales
price of the Purchaser's membership interests to third parties will
be equal to the aggregate purchase price for the tendered BACs and
all other securities tendered to the Purchaser pursuant to other
tender offers, plus the Purchaser's expenses in conducting and
consummating the Offer, its other tender offers, and financing the
purchase of the tendered securities (including, without limitation,
the BACs). Neither the Purchaser nor its current members will derive
a profit from the sale of the Purchaser's membership interests.
<PAGE>
Affiliates of the Purchaser, however, expect to arrange the sale of
membership interests of the Purchaser to third parties upon
conclusion of the Offer and to perform certain services for the
Purchaser during the period in which the Purchaser owns the tendered
BACs. In connection with such sales and in consideration for
structuring this transaction and the services to be performed, it is
expected that those affiliates will earn fees. These fees will be,
in part, dependent on the amount third parties are willing to pay
for membership interests and the amount of membership interests
sold. There can be no assurance, however, that any membership
interests in the Purchaser will be sold or at what price.
(bullet) If the Purchaser is successful in acquiring a significant number of
BACs pursuant to the Offer, the Purchaser could, subject to the
Standstill Agreement (as defined in the Glossary), be in a position
to significantly influence all Partnership decisions on which BACs
holders may vote. Additionally, because the Purchaser is affiliated
with the General Partner, the Purchaser's acquisition of BACs may
have the effect of making any future change of the Partnership's
current management more difficult. If the maximum number of BACs
sought by the Purchaser is tendered and accepted for payment
pursuant to the Offer, the Purchaser will own approximately 25% of
the outstanding BACs. After May 28, 2007 (the "Standstill Expiration
Date"), the ownership of tendered BACs by the Purchaser could
effectively (i) prevent non-tendering BACs holders from taking actions
they desire but that the Purchaser opposes and (ii) enable the
Purchaser to take actions desired by it but opposed by certain
non-tendering BACs holders. Under the Partnership Agreement, Limited
Partners and BACs holders holding more than 50% of aggregate Limited
Partnership Interests and BACs representing Limited Partnership
Interests are entitled, either directly or through the Assignor
Limited Partner, as the case may be, to take action with respect to
a variety of matters, including: approving the dissolution of the
Partnership; approving the removal of any General Partner and
proposing and approving a replacement therefor; approving or
disapproving the sale of all or substantially all of the assets of
the Partnership; and most types of amendments to the Partnership
Agreement. Although the Purchaser does not have any current intentions
with regard to any of these matters, it will, following the Standstill
Expiration Date, vote the BACs acquired pursuant to the Offer in its
interest, which may, or may not, be in the best interest of
non-tendering BACs holders. Until the Standstill Expiration Date, the
Purchaser has agreed to vote its BACs in the same manner as the
majority of all voting BACs holders; provided, however, the Purchaser
shall be entitled to vote its BACs as it determines with regard to any
proposal (i) to remove the General Partner or (ii) concerning the
reduction of any fees, profits, distributions or allocations for the
benefit of the General Partner or its affiliates.
(bullet) Most of the properties owned by the Local Partnerships in which the
Partnership has an interest began to qualify for Housing Tax Credits
in 1993 and 1994. Housing Tax Credits are generally available for 10
years. The amount of the Housing Tax Credits claimed by the
Partnership was $11,969,116 for the 1996 calendar year, $11,969,116
for the 1995 calendar year, and $9,809,218 for the 1994 calendar year.
Although there can be no assurance as to whether Housing Tax Credits
will continue to be available, the Purchaser estimates that a total of
approximately $960 Housing Tax Credits per BAC will be available
during the period beginning July 1, 1997 and ending December 31, 2004.
In addition, although there can be no assurance as to whether tax
losses will continue to be available, in calendar year 1996 each BAC
was allocated approximately $84 of tax losses and the Purchaser
estimates that each BAC will be allocated (a) approximately $87 of tax
losses per year through December 31, 2008, and (b) approximately $401
of taxable income upon a liquidation of the Partnership, assuming no
cash distributions are made. Actual future tax benefits may differ
significantly from the foregoing estimates. Tax losses are less
valuable than tax credits because tax losses can reduce income
(thereby resulting in a savings equal to the product of the tax loss
and the taxpayer's applicable tax rate) and require a reduction in tax
basis (which may cause taxable income to be recognized in subsequent
years), whereas tax credits result in a dollar-for-dollar reduction in
tax liability. BACs holders should consider whether the benefits of
the Offer, including the Purchase Price, are more valuable to them
than the present value of anticipated future tax benefits. See Section
13 ("Purchase Price Considerations").
BACs holders may no longer wish to continue with their investment in
the Partnership for a number of reasons, including:
(bullet) Although there are some limited resale mechanisms available to the
BACs holders wishing to sell their BACs, there is no formal or
organized trading market for the BACs. The Partnership's Form 10-K for
the fiscal year ended March 31, 1996 (the "Form 10-K") states:
"Neither the BACs nor the Limited Partnership Interests are traded on
any established trading market. The Partnership does not intend to
include the BACs for quotation on NASDAQ or for listing on any
national or regional stock exchange or any other established
securities mar-
2
<PAGE>
ket." Accordingly, BACs holders who desire resale liquidity may wish
to consider the Offer. The Offer affords a significant number of
BACs holders with an opportunity to dispose of their BACs for cash,
which alternative otherwise might not be available to them. The
Purchase Price is not intended to represent either the fair market
value of a BAC or the fair market value of the Tax Credits and tax
losses attributable to each BAC and the Partnership's assets on a
per BAC basis.
(bullet) The Offer will provide BACs holders with an immediate opportunity to
liquidate their investment in the Partnership without the usual
transaction costs associated with market sales or partnership
transfer fees.
(bullet) The Purchaser believes that the projected aggregate per BAC benefit
from the Offer, together with the benefits received since 1991,
total approximately $1,862. Such benefits include $730 (the Purchase
Price) plus $593 (representing the Tax Credits allocated through
June 30, 1997) plus approximately $62 (representing the tax savings,
assuming a tax rate of 28%, attributable to the use of the capital
loss of $222 the Purchaser believes an individual BACs holder will
realize if all of his BACs are sold in the Offer and the individual
has not previously used such losses to offset passive income) plus
approximately $488 (representing the assumed return on the
reinvestment of the Purchase Price at 5% for approximately 10.5
years) less approximately $11 (representing a recapture of Historic
Tax Credits). See Section 13 ("Purchase Price Considerations"). The
Purchaser believes that such aggregate projected benefit compares
favorably with the potential benefits to a BACs holder who remains
in the Partnership, continuing to receive Tax Credits, and assuming
a return of the present value of the original investment of $1,000
as, and if, the Partnership's 28 properties are sold for amounts in
excess of the then existing indebtedness and other liabilities. The
aggregate of such potential benefits would be approximately $1,841.
BACs HOLDERS SHOULD CONSULT WITH THEIR RESPECTIVE TAX AND OTHER
ADVISORS REGARDING THE CONSEQUENCES OF THE LEHIGH OFFER TO THEM.
(bullet) Although not necessarily an indication of value, the $730 Purchase
Price is a premium over the $678.25 weighted average selling price
for BACs reported in the limited and sporadic secondary market
during the two-month period ended March 31, 1997. See Section 13
("Purchase Price Considerations"). Such secondary market selling
prices do not take into account commissions charged by secondary
market makers effectuating such sales which the Purchaser believes,
based on a typical 5 BAC sales transaction, range from 5% to 8.75%
of the sales price (which would result in a reduction of the net
proceeds to the seller of at least approximately $34 per BAC).
(bullet) The Offer may be attractive for BACs holders whose circumstances
have changed such that anticipated future allocation of Tax Credits
and tax losses may no longer be beneficial to them.
(bullet) Acceptance of the Offer will eliminate any future risk to the
selling BACs holder of recapture of the Tax Credits received, since
such risk will be borne by the Purchaser. The Purchaser believes,
however, that any risk of such recapture is minimal.
(bullet) General disenchantment with real estate investments and with
long-term investments in limited partnerships because of, among
other things, their illiquidity.
(bullet) The Offer may be attractive to certain BACs holders who wish in the
future to avoid the continued additional expense, delay and
complication in filing income tax returns which result from the
ownership of BACs.
(bullet) The Offer provides BACs holders with the opportunity to liquidate
their BACs and to reinvest the proceeds in other investments should
they desire to do so.
(bullet) The Purchaser believes that the BACs represent an attractive
investment at the Purchase Price based upon, in part, the expected
remaining Tax Credits and tax losses. There can be no assurance,
however, that this judgment is correct. Therefore, ownership of BACs
will remain a speculative investment.
Following the completion of the Offer and subject to the terms of the
Standstill Agreement, the Purchaser and its affiliates may acquire additional
BACs. Any such acquisitions may be made through private purchases, through one
or more future tender offers or by any other means deemed advisable, and may be
at prices higher or lower than the price to be paid for the BACs purchased
pursuant to the Offer. See Section 8 ("Purpose of the Offer; Future Plans").
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The Offer is not conditioned upon any minimum number of BACs being
tendered. If, as of the Expiration Date, more than 19,197 BACs are validly
tendered and not properly withdrawn, the Purchaser will only accept for
purchase on a pro rata basis 19,197 BACs, subject to the terms and conditions
herein. See Section 14 ("Conditions of the Offer").
BACs holders are urged to consider carefully all of the information
contained herein before accepting the Offer.
The Purchaser expressly reserves the right, in its sole discretion and
for any reason, to terminate the Offer at any time and to waive any or all of
the conditions of the Offer, although the Purchaser does not presently intend
to waive any such conditions. See Section 7 ("Effects of the Offer"). In order
to comply with certain restrictions set forth in the Partnership Agreement,
tenders of less than all BACs owned by a BACs holder that would result in a
BACs holder holding less than 5 BACs will not be accepted.
According to the Form 10-Q, there were 76,786 BACs issued and
outstanding, which represent 76,786 Limited Partnership Interests issued to
the Assignor Limited Partner. The 10-K reports that as of March 31, 1996 the
Partnership had 5,228 registered holders of the issued and outstanding BACs.
The Purchaser owns 121 BACs.
Except as otherwise indicated, information contained in this Offer to
Purchase is based upon documents and reports publicly filed by the Partnership
with the Commission. Although the Purchaser has no information that any
statements contained in this Offer to Purchase are untrue, the Purchaser does
not take responsibility for the accuracy or completeness of any information
contained in this Offer to Purchase which is derived from such public
documents, or for any failure by the Partnership to disclose events which may
have occurred and may affect the significance or accuracy of any such
information but which are unknown to the Purchaser.
Each BACs holder must make his or her own decision whether to accept the
Offer based on his or her particular circumstances. BACs holders should
consult with their respective advisors about the financial, tax, legal and
other implications to them of accepting the Offer. BACs holders are urged to
read this Offer to Purchase, the related Letter of Transmittal and the other
accompanying materials carefully before deciding whether to tender their BACs.
THE TENDER OFFER
1. Terms of the Offer.
Upon the terms of the Offer (including the terms and conditions of any
extension or amendment of the Offer), the Purchaser will accept for payment
and pay for up to 19,197 BACs that are validly tendered on or prior to the
Expiration Date (as hereinafter defined) and not withdrawn in accordance with
Section 4 ("Withdrawal Rights"). The term "Expiration Date" shall mean 12:00
midnight, New York City time, on June 27, 1997, unless the Purchaser, in its
sole discretion, shall have extended the period of time during which the Offer
is open, in which event the term "Expiration Date" shall refer to the latest
time and date at which the Offer, as so extended by the Purchaser, will
expire.
IF, PRIOR TO THE EXPIRATION DATE, THE PURCHASER SHALL INCREASE THE
PURCHASE PRICE OFFERED TO BACs HOLDERS, SUCH INCREASED PURCHASE PRICE SHALL BE
PAID FOR ALL BACs ACCEPTED FOR PAYMENT PURSUANT TO THE OFFER, WHETHER OR NOT
SUCH BACs WERE TENDERED PRIOR TO THE INCREASE OF THE PURCHASE PRICE.
The Offer is conditioned on satisfaction of certain conditions. See
Section 14 ("Conditions of the Offer"). The Purchaser reserves the right (but
shall not be obligated), in its sole discretion, to waive any or all of such
conditions. If, on or prior to the Expiration Date, any or all of such
conditions have not been satisfied or waived, the Purchaser may (i) decline to
purchase any of the BACs tendered, terminate the Offer and return all tendered
BACs to tendering BACs holders, (ii) waive all the then unsatisfied conditions
and, subject to complying with applicable rules and regulations of the
Commission, purchase all BACs validly tendered, (iii) extend the Offer and,
subject to the right of BACs holders to withdraw BACs until the Expiration
Date, retain the BACs that have been tendered during the period or periods for
which the Offer is extended, or (iv) amend the Offer.
At the request of the Purchaser, and pursuant to Rule 14d-5 of the
Exchange Act, this Offer to Purchase, the related Letter of Transmittal and,
if required, any other relevant materials are being mailed, at the Purchaser's
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expense, by the Partnership to BACs holders, Beneficial Owners and Assignees
who hold BACs, to the extent their names and addresses are reflected on the
books and records of the Partnership.
2. Proration; Acceptance for Payment and Payment for BACs.
If more than 19,197 BACs are validly tendered on or prior to the Expiration
Date and not properly withdrawn on or prior to the Expiration Date, the
Purchaser will only accept for payment, upon the terms and subject to the
conditions of the Offer, and pay for an aggregate of 19,197 BACs so tendered,
pro rata according to the number of BACs validly tendered and not properly
withdrawn on or prior to the Expiration Date, with appropriate adjustments to
avoid purchases that would violate the transfer restrictions in Section 7.1 of
the Partnership Agreement (the "Transfer Restrictions"). If the number of BACs
validly tendered and not properly withdrawn on or prior to the Expiration Date
is less than or equal to 19,197 BACs, the Purchaser will purchase all BACs so
tendered and not properly withdrawn, upon the terms and subject to the
conditions of the Offer.
In the event that proration of tendered BACs is required, and because of
the difficulty of determining the proration results, the Purchaser may not be
able to announce the final results of such proration until at least
approximately seven business days after the Expiration Date. Subject to the
Purchaser's obligation under Rule 14e-1(c) under the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), to pay BACs holders the Purchase
Price in respect of BACs tendered or return those BACs promptly after the
termination or withdrawal of the Offer, the Purchaser does not intend to pay
for any BACs accepted for payment pursuant to the Offer until the final
proration results are known.
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of any such
extension or amendment), the Purchaser will purchase, by accepting for
payment, and will pay for, all BACs validly tendered and not withdrawn in
accordance with Section 4 on or prior to the Expiration Date as promptly as
practicable following the Expiration Date. In addition, subject to applicable
rules of the Commission, the Purchaser expressly reserves the right to delay
acceptance for payment of, or payment for, BACs pending receipt of any
regulatory or governmental approvals specified in Section 15 ("Certain Legal
Matters") or pending receipt of any additional documentation required by the
Letter of Transmittal. In all cases, payment for BACs accepted for payment
pursuant to the Offer will be made only after timely receipt by the Depositary
of (a) the Letter of Transmittal properly completed and duly executed and (b)
any other documents required by the Letter of Transmittal.
For purposes of the Offer, the Purchaser shall be deemed to have accepted
for payment tendered BACs when, as and if the Purchaser gives oral or written
notice to the Depositary of the Purchaser's acceptance for payment of such
BACs pursuant to the Offer. No tender of BACs will be deemed to have been
validly made until all defects and irregularities with respect to such tender
have been cured or waived. Upon the terms and subject to the conditions of the
Offer, payment for BACs tendered and accepted for payment pursuant to the
Offer will in all cases be made by deposit of the Purchase Price with the
Depositary, which will act as agent for the tendering BACs holders for the
purpose of receiving payment from the Purchaser and transmitting payment to
tendering BACs holders.
The Purchase Price will be automatically reduced by $14 per BAC for each
month (or part of a month) between July 31, 1997 and the date of transfer for
BACs transferred after July 31, 1997. Under no circumstances will the
Purchaser pay interest on the Purchase Price for BACs.
If any tendered BACs are not purchased pursuant to the Offer for any
reason, the Letter of Transmittal with respect to such BACs will be destroyed
by the Depositary. If, for any reason whatsoever, acceptance for payment of or
payment for any BACs tendered pursuant to the Offer is delayed or the
Purchaser is unable to accept for payment, purchase or pay for BACs tendered
pursuant to the Offer, then, without prejudice to the Purchaser's rights under
Section 14 ("Conditions of the Offer"), the Depositary may, nevertheless, on
behalf of the Purchaser and subject to Rule 14e-1(c) under the Exchange Act,
retain tendered BACs, and such BACs may not be withdrawn except to the extent
that the tendering BACs holder is entitled to withdrawal rights as described
in Section 4 ("Withdrawal Rights").
3. Procedures for Tendering BACs.
Valid Tender. For BACs to be validly tendered pursuant to the Offer, a
Letter of Transmittal or facsimile thereof, properly completed and duly
executed, together with any other documents required by the Letter of
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Transmittal, must be received by the Depositary at its address or facsimile
number on the back cover page of the Offer to Purchase on or prior to the
Expiration Date. If tendering by facsimile, a BACs holder should subsequently
send original copies of the Letter of Transmittal and any other documents
required by the Letter of Transmittal to the Depositary at its address on the
back cover of the Offer to Purchase. In order to comply with certain
restrictions set forth in the Partnership Agreement, tenders of less than all
BACs owned by a BACs holder that would result in a BACs holder holding less
than 5 BACs will not be accepted. See Instruction 1 to the Letter of
Transmittal.
In order for a tendering BACs holder to participate in the Offer, BACs must
be validly tendered and not withdrawn on or prior to the Expiration Date,
which is 12:00 midnight, New York City time, on June 27, 1997, unless
extended.
The method of delivery of the Letter of Transmittal and all other required
documents is at the option and risk of the tendering BACs holder and delivery
will be deemed made only when actually received by the Depositary. If delivery
is by mail, registered mail with return receipt requested is recommended. In
all cases, sufficient time should be allowed to ensure timely delivery. See
Instruction 1 to the Letter of Transmittal.
Backup Federal Income Tax Withholding. To prevent the possible application
of backup federal income tax withholding with respect to payment of the
Purchase Price pursuant to the offer, a tendering BACs holder must provide the
Purchaser with such BACs holder's correct taxpayer identification number or
social security number by completing the Substitute Form W-9 included in the
Letter of Transmittal. See Instruction 4 to the Letter of Transmittal.
FIRPTA Withholding. To prevent the withholding of federal income tax in an
amount equal to 10% of the sum of the Purchase Price plus the amount of
Partnership liabilities allocable to each BAC purchased, each BACs holder must
complete the FIRPTA Affidavit included in the Letter of Transmittal certifying
such BACs holder's taxpayer identification number and address and that the
BACs holder is not a foreign person. See Instruction 4 to the Letter of
Transmittal.
Appointment as Proxy; Power of Attorney. By executing and delivering the
Letter of Transmittal, a tendering BACs holder irrevocably appoints the
Purchaser and the designees of the Purchaser and each of them as such BACs
holder's proxies, in the manner set forth in the Letter of Transmittal, each
with full power of substitution, to the full extent of such BACs holder's
rights with respect to the BACs tendered by such BACs holder and accepted for
payment by the Purchaser (and with respect to any and all other BACs or other
securities issued or issuable in respect of such BACs on or after the date
hereof). All such proxies shall be considered irrevocable and coupled with an
interest in the tendered BACs. Such appointment will be effective when, and
only to the extent that, the Purchaser accepts such BACs for payment. Upon
such acceptance for payment, all prior proxies given by such BACs holder with
respect to such BACs (and such other BACs and securities) will be revoked
without further action, and no subsequent proxies may be given nor any
subsequent written consents executed (and, if given or executed, will not be
deemed effective). The Purchaser and its designees will, with respect to the
BACs (and such other BACs and securities) for which such appointment is
effective, be empowered to exercise all voting and other rights of such BACs
holder as it in its sole discretion may deem proper pursuant to the
Partnership Agreement or otherwise. The Purchaser may assign such proxy and/or
power of attorney to any person with or without assigning the related BACs
with respect to which such proxy and/or power of attorney was granted. The
Purchaser reserves the right to require that, in order for BACs to be deemed
validly tendered, immediately upon the Purchaser's payment for such BACs, the
Purchaser must be able to exercise full voting rights with respect to such
BACs and other securities.
In addition, pursuant to such appointment as attorneys-in-fact, the
Purchaser and its designees each will have the power, among other things, (i)
to seek to transfer ownership of such BACs on the books and records of the
Partnership maintained by the Assignor Limited Partner (and execute and
deliver any accompanying evidences of transfer and authenticity any of them
may deem necessary or appropriate in connection therewith, including, without
limitation, any documents or instruments required to be executed under the
Partnership Agreement or a "Transferor's (Seller's) Application for Transfer"
created by the NASD, if required), (ii) upon receipt by the Depositary (as the
tendering BACs holder's agent) of the Purchase Price, to be allocated all Tax
Credits and tax losses and to receive any and all distributions made by the
Partnership after the Expiration Date, and to receive all benefits and
otherwise exercise all rights of beneficial ownership of such BACs in
accordance with the terms of the Offer, (iii) to execute and deliver to the
Partnership, the General Partner and/or the Assignor Limited Partner (as the
case may be) a change of address form instructing the Partnership to send any
and all future distributions to which the Purchaser is entitled pursuant to
the terms of the Offer in respect of tendered BACs to the address specified in
such form, and (iv) to
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endorse any check payable to or upon the order of such BACs holder
representing a distribution, if any, to which the Purchaser is entitled
pursuant to the terms of the Offer, in each case on behalf of the tendering
BACs holder.
Assignment of Entire Interest in the Partnership. By executing and
delivering the Letter of Transmittal, a tendering BACs holder irrevocably
assigns to the Purchaser and its assigns all of the, direct and indirect,
right, title and interest of such BACs holder in the Partnership with respect
to the BACs tendered and purchased pursuant to the Offer, including, without
limitation, such BACs holder's right, title and interest in and to any and all
Tax Credits and tax losses and any and all distributions made by the
Partnership after the Expiration Date in respect of the BACs tendered by such
BACs holder and accepted for payment by the Purchaser, regardless of the fact
that the record date for any such distribution may be a date prior to the
Expiration Date. Upon the Purchaser's acceptance of, and payment for, tendered
BACs, a tendering BACs holder will no longer be entitled to any benefits as a
BACs holder, regardless of whether such BACs holder retains a Beneficial
Assignment Certificate. The Purchaser reserves the right to transfer or
assign, in whole or from time to time in part, to any third party, the right
to purchase BACs tendered pursuant to the Offer, together with its rights
under the Letter of Transmittal, but any such transfer or assignment will not
relieve the assigning party of its obligations under the Offer or prejudice
the rights of tendering BACs holders to receive payment for BACs validly
tendered and accepted for payment pursuant to the Offer.
Determination of Validity. All questions as to the form of documents and
validity, eligibility (including time of receipt) and acceptance for payment
of any tender of BACs will be determined by the Purchaser, in its sole
discretion, whose determination shall be final and binding on all parties. The
Purchaser reserves the absolute right to reject any or all tenders determined
by it not to be in proper form, or the acceptance of or payment for which may,
in the opinion of the Purchaser's counsel, be unlawful. The Purchaser also
reserves the absolute right to waive any of the conditions of the Offer or any
defect or irregularity in any tender of BACs of any particular BACs holder
whether or not similar defects or irregularities are waived in the case of
other BACs holders.
Assignee Status. Assignees must provide documentation to the Depositary
which demonstrates, to the satisfaction of the Purchaser, such person's
status as an assignee of a BAC.
The Purchaser's interpretation of the terms and conditions of the Offer
(including the Letter of Transmittal and the instructions thereto) will be
final and binding. No tender of BACs will be deemed to have been validly made
until all defects and irregularities with respect to such tender have been
cured or waived. None of the Purchaser, any of its affiliates or assigns, if
any, the Information Agent, the Depositary or any other person will be under
any duty to give any notification of any defects or irregularities in tenders
or incur any liability for failure to give any such notification.
The Purchaser's acceptance for payment of BACs tendered pursuant to the
procedures described above will constitute a binding agreement between the
tendering BACs holder and the Purchaser upon the terms and subject to the
conditions of the Offer.
4. Withdrawal Rights.
Tenders of BACs made pursuant to the Offer are irrevocable, except that
BACs tendered pursuant to the Offer may be withdrawn at any time prior to the
Expiration Date and, unless theretofore accepted for payment as provided in
this Offer to Purchase, may also be withdrawn at any time after July 29, 1997.
For a withdrawal to be effective, a written or facsimile transmission
notice of withdrawal must be timely received by the Depositary at the address
set forth on the back cover of this Offer to Purchase. Any such notice of
withdrawal must specify the name(s) of the person(s) who tendered the BACs to
be withdrawn, the number of BACs to be withdrawn and the name(s) of the
registered holder(s) of the BACs, if different from that of the person(s) who
tendered such BACs. Such notice of withdrawal must also be signed by the same
person(s) who signed the Letter of Transmittal in the same manner as the
Letter of Transmittal was signed (including, if applicable, medallion
signature guarantees). If the BACs are held in the name of two or more
persons, all such persons must sign the notice of withdrawal. Any BACs
properly withdrawn will be deemed not validly tendered for purposes of the
Offer, but may be re-tendered at any subsequent time prior to the Expiration
Date by following the procedures described in Section 3 ("Procedures for
Tendering BACs").
If, for any reason whatsoever, acceptance for payment of any BACs tendered
pursuant to the Offer is delayed, or the Purchaser is unable to accept for
payment or pay for BACs tendered pursuant to the Offer, then, without
prejudice to the Purchaser's rights set forth herein, the Depositary may,
nevertheless, on behalf of the Purchaser, retain tendered BACs and such BACs
may not be withdrawn except to the extent that the tendering BACs holder
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is entitled to and duly exercises withdrawal rights as described herein. The
reservation by the Purchaser of the right to delay the acceptance or purchase
of or payment for BACs is subject to the provisions of Rule 14e-1(c) under the
Exchange Act, which requires the Purchaser to pay the consideration offered or
return BACs tendered by or on behalf of BACs holders promptly after the
termination or withdrawal of the Offer.
All questions as to the form and validity (including time of receipt) of
notices of withdrawal will be determined by the Purchaser, in its sole
discretion, whose determination shall be final and binding. None of the
Purchaser, any of its affiliates or assigns, if any, the Information Agent,
the Depositary or any other person will be under any duty to give any
notification of any defects or irregularities in any notice of withdrawal or
incur any liability for failure to give any such notification.
5. Extension of Tender Period; Termination; Amendment.
The Purchaser reserves the right, in its sole discretion and regardless of
whether any of the conditions set forth in Section 14 ("Conditions of the
Offer") shall have been satisfied, at any time and from time to time, (i) to
extend the period of time during which the Offer is open and thereby delay
acceptance for payment of, and the payment for, any BACs, (ii) to terminate
the Offer and not accept for payment any BACs not already accepted for payment
or paid for, and (iii) to amend the Offer in any respect by giving oral or
written notice of such amendment to the Information Agent and the Depositary.
If the Purchaser increases or decreases either the number of the BACs being
sought or the consideration to be paid for any BACs pursuant to the Offer and
the Offer is scheduled to expire at any time before the expiration of a period
of 10 business days from, and including, the date that notice of such increase
or decrease is first published, sent or given in the manner specified below,
the Offer will be extended until, at a minimum, the expiration of such period
of 10 business days. If the Purchaser makes a material change in the terms of
the Offer (other than a change in price or percentage of securities sought) or
in the information concerning the Offer, or waives a material condition of the
Offer, the Purchaser will extend the Offer, if required by applicable law, for
a period sufficient to allow BACs holders to consider the amended terms of the
Offer.
The Purchaser also reserves the right, in its sole discretion, if any of
the conditions specified under Section 14 ("Conditions of the Offer") shall
not have been satisfied and so long as BACs have not theretofore been accepted
for payment, to delay (except as otherwise required by applicable law)
acceptance for payment of or payment for BACs or to terminate the Offer and
not accept for payment or pay for BACs.
If the Purchaser extends the period of time during which the Offer is open,
delays acceptance for payment of or payment for BACs or is unable to accept
for payment or pay for BACs pursuant to the Offer for any reason, then,
without prejudice to the Purchaser's rights under the Offer, the Depositary
may, on behalf of the Purchaser, retain all BACs tendered, and such BACs may
not be withdrawn except as otherwise provided under Section 4 ("Withdrawal
Rights"). The reservation by the Purchaser of the right to delay acceptance
for payment of or payment for BACs is subject to applicable law, which
requires that the Purchaser pay the consideration offered or return the BACs
deposited by or on behalf of BACs holders promptly after the termination or
withdrawal of the Offer.
Any extension, termination or amendment of the Offer will be followed as
promptly as practicable by a public announcement thereof. Without limiting the
manner in which the Purchaser may choose to make any public announcement, the
Purchaser will have no obligation (except as otherwise required by applicable
law) to publish, advertise or otherwise communicate any such public
announcement other than by making a release to the Dow Jones News Service. In
the case of an extension of the Offer, the Purchaser will make a public
announcement of such extension no later than 9:00 a.m., New York City time, on
the next business day after the previously scheduled Expiration Date.
6. Certain Federal Income Tax Consequences.
The following summary is a general discussion of certain federal income tax
consequences of a sale of BACs pursuant to the Offer assuming that the
Partnership is a partnership for federal income tax purposes and that it is
not a "publicly traded partnership" as defined in Section 7704 of the Internal
Revenue Code of 1986, as amended (the "Code"). This summary is based on the
Code, applicable Treasury Regulations thereunder, administrative rulings,
practice and procedures and judicial authority as of the date of the Offer.
All of the foregoing are subject to change, and any such change could affect
the continuing accuracy of this summary. This summary does not discuss
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all aspects of federal income taxation that may be relevant to a particular
BACs holder in light of such BACs holder's specific circumstances or to
certain types of BACs holders subject to special treatment under the federal
income tax laws (for example, foreign persons (if any), dealers in securities,
banks, insurance companies and tax-exempt entities), nor does it discuss any
aspect of state, local, foreign or other tax laws. Sales of BACs pursuant to
the Offer will be taxable transactions for federal income tax purposes, and
may also be taxable transactions under applicable state, local, foreign and
other tax laws. EACH BACs HOLDER SHOULD CONSULT HIS OR HER TAX ADVISOR AS TO
THE PARTICULAR TAX CONSEQUENCES TO SUCH BACs HOLDER OF SELLING BACs PURSUANT
TO THE OFFER, INCLUDING, WITHOUT LIMITATION, FEDERAL, STATE AND LOCAL TAX
CONSEQUENCES.
Consequences to Tendering BACs holder. A BACs holder will recognize gain or
loss on a sale of BACs pursuant to the Offer equal to the difference between
(i) the BACs holder's "amount realized" on the sale and (ii) the BACs holder's
adjusted tax basis in the BACs sold. The "amount realized" with respect to a
BAC sold pursuant to the Offer will be a sum equal to the amount of cash
received by the BACs holder for the BAC plus the amount of Partnership
liabilities allocable to the BAC (as determined under Code Section 752). The
amount of a BACs holder's adjusted tax basis in BACs sold pursuant to the
Offer will vary depending upon the BACs holder's particular circumstances, and
will be affected by allocations of Partnership income, gain or loss, and any
historic tax credits to a BACs holder with respect to such BACs. In this
regard, tendering BACs holders will be allocated a pro rata share of the
Partnership's taxable income or loss with respect to BACs sold pursuant to the
Offer through the effective date of the sale.
Tendering BACs holders who have not utilized passive losses: A BACs holder
who sells his or her BACs pursuant to this Offer will receive $730 of proceeds
per BAC that may result in a taxable gain, which gain could be sheltered by
unused passive losses. In the case of an individual BACs holder who acquired
BACs pursuant to the original offering of BACs by the Partnership and who has
not utilized the passive losses from the Partnership to offset passive income,
the ability to use unapplied passive losses from the Partnership should offset
any gain recognized on a sale of those BACs, so that the BACs holder would not
be required to make a federal tax payment. In addition, if an individual sells
all of his or her BACs, unused passive losses of up to approximately $222 per
BAC may be available to offset other capital gains of such BACs holder.
Tendering BACs holders who have utilized passive losses: An individual BACs
holder who acquired BACs pursuant to the original offering of BACs by the
Partnership and has utilized all of his passive losses (therefore not being
able to shelter any gain from the sale of BACs) is expected to recognize a
taxable gain of approximately $117 per BAC.
In general, the character (as capital or ordinary) of BACs holder's gain or
loss on a sale of a BAC pursuant to the Offer will be determined by allocating
the BACs holder's amount realized on the sale and his adjusted tax basis in
the BACs sold between "Section 751 items," which are "substantially
appreciated inventory" and "unrealized receivables" (including depreciation
recapture) as defined in Code Section 751, and non-Section 751 items. The
difference between the portion of the BACs holder's amount realized that is
allocable to Section 751 items and the portion of the BACs holder's adjusted
tax basis in the BACs sold that is so allocable will be treated as ordinary
income or loss, and the difference between the BACs holder's remaining amount
realized and adjusted tax basis will be treated as capital gain or loss
assuming the BACs were held by the BACs holder as a capital asset. The
Purchaser believes that substantially all of any taxable gain realized on a
sale of BACs pursuant to the Offer will be treated as a capital gain under
these rules, although it is possible, because a BACs holder's adjusted tax
basis in the BACs sold will be allocated to Section 751 items based on the
Partnership's tax basis in these items, that a BACs holder may recognize
ordinary income with respect to the portion of the BACs holder's amount
realized on the sale of a BAC that is attributable to Section 751 items while
recognizing a capital loss with respect to the balance of the selling price.
A BACs holder's capital gain (if any) or loss on a sale of BACs pursuant to
the Offer will be treated as long-term capital gain or loss if the BACs
holder's holding period for the BACs exceeds one year. Under current law
(which is subject to change), long-term capital gains of individuals and other
non-corporate taxpayers are taxed at a maximum marginal federal income tax
rate of 28%, whereas the maximum marginal federal income tax rate for other
income of such persons is 39.6%. Capital losses are deductible only to the
extent of capital gains, except that non-corporate taxpayers may deduct up to
$3,000 of capital losses in excess of the amount of their capital gains
against ordinary income. Excess capital losses generally can be carried
forward to succeeding years (a corporation's carryforward period is five years
and a non-corporate taxpayer can carry forward such losses indefinitely); in
addition,
9
<PAGE>
corporations, but not non-corporate taxpayers, are allowed to carry back
excess capital losses to the three preceding taxable years. Certain members of
Congress have proposed to reduce the long-term capital gains tax rate from 28%
to approximately 20% for sales occurring on or after May 7, 1997. It is,
however, uncertain whether this proposal will become law.
Under Code Section 469, a non-corporate taxpayer or personal service
corporation can deduct passive activity losses in any year only to the extent
of such person's passive activity income for such year, and closely held
corporations may not offset such losses against so-called "portfolio" income.
If a BACs holder is subject to these restrictions and has unused tax losses
from prior years, such tax losses will generally become available upon a sale
of the BACs, provided the BACs holder sells all his BACs. If a BACs holder is
unable to sell all his BACs, the deductibility of such losses would continue
to be subject to the passive activity loss limitation until the BACs holder
sells his remaining BACs. See Section 7 ("Effects of the Offer").
In certain cases, the transfer of an interest in a Partnership from which
Tax Credits were allocated can result in a recapture of the Tax Credits to the
seller (i.e., the seller would be required to pay an additional amount of tax
equal to the credit "recaptured"). A disposition by a BACs holder of his
entire interest in the Partnership within five years from the date property
for which the Historic Tax Credit was claimed was placed in service will
trigger a recapture of a portion of the Historic Tax Credits previously
claimed by the BACs holder. The Purchaser anticipates that $11 per BAC of
Historic Tax Credits will be recaptured with respect to BACs acquired in the
original offering. The transfer of an interest in an entity that has generated
Housing Tax Credits generally results in a recapture of a portion of the
Housing Tax Credits. However, an exception to this rule is provided for
partnerships with 35 or more partners, such as the Partnership. In order for
this rule to be applicable, within a 12-month period at least 50% (in value)
of the ownership of the Partnership must remain unchanged. The Purchaser
anticipates that, as a result of this rule, the sale of BACs will not cause a
recapture of Housing Tax Credits.
A BACs holder (other than corporations and certain foreign individuals) who
tenders BACs may be subject to 31% backup withholding unless the BACs holder
provides a taxpayer identification number ("TIN") and certifies that the TIN
is correct or properly certifies that he is awaiting a TIN. A BACs holder may
avoid backup withholding by properly completing and signing the Substitute
Form W-9 included as part of the Letter of Transmittal. If a BACs holder who
is subject to backup withholding does not properly complete and sign the
Substitute Form W-9, the Purchaser will withhold 31% from payments to such
BACs holder. See Instruction 4 to the Letter of Transmittal.
Gain realized by a foreign BACs holder on a sale of a BAC pursuant to the
Offer will be subject to federal income tax. Under Section 1445 of the Code,
the transferee of a partnership interest held by a foreign person is generally
required to deduct and withhold a tax equal to 10% of the amount realized on
the disposition. The Purchaser will withhold 10% of the amount realized by a
tendering BACs holder from the Purchase Price payable to such BACs holder
unless the BACs holder properly completes and signs the FIRPTA Affidavit
included as part of the Letter of Transmittal certifying the BACs holder's
TIN, that such BACs holder is not a foreign person and the BACs holder's
address. Amounts withheld would be creditable against a foreign BACs holder's
federal income tax liability and, if in excess thereof, a refund could be
obtained from the Internal Revenue Service by filing a U.S. income tax return.
Consequences to a Non-Tendering BACs holder. The Purchaser does not
anticipate that a BACs holder who does not tender his or her BACs will realize
any material tax consequences as a result of the election not to tender. The
Purchaser has retained two independent law firms which will deliver opinion
letters that consummation of the Offer will not result in the Partnership
being treated as a publicly-traded partnership for federal income tax
purposes. There can be no assurance, however, that the Internal Revenue
Service (the "IRS") will agree with the conclusions reached in such opinions.
There is no precedent governing whether the Offer will cause the Partnership
to be treated as a publicly-traded partnership for federal income tax
purposes. If the IRS successfully asserted that the Partnership should be
treated as a publicly-traded partnership, investors who are subject to the
passive activity loss rules would not be able to use tax losses derived from
the Partnership to offset income from sources other than the Partnership prior
to the investor's disposition of his entire interest in the Partnership.
7. Effects of the Offer.
Certain Restrictions on Transfer of Interests. The Partnership Agreement
restricts transfers of BACs if, among other things, such transfer would cause
a termination of the Partnership for federal income tax purposes
10
<PAGE>
(which termination would occur when BACs that represent 50% or more of the
total Partnership capital and profits are transferred within a twelve-month
period). Consequently, sales of BACs in the secondary market and in private
transactions during the twelve-month period following completion of the Offer
may be restricted, and requests for transfers of BACs during such twelve-month
period may not be recognized. The Purchaser does not intend to purchase BACs
to the extent such purchase would violate the transfer restrictions set forth
in the Partnership Agreement. Based on information provided by the
Partnership, for the period from May 1, 1996 to May 1, 1997, approximately
1,861 BACs (representing approximately 2.4% of the outstanding BACs) were
transferred. Therefore, the Purchaser does not believe the number of BACs
sought in the Offer will violate the Transfer Restrictions.
Effect on Trading Market; Registration Under Section 12(g) of the Exchange
Act. If a substantial number of BACs are purchased pursuant to the Offer, the
result will be a reduction in the number of BACs holders. In the case of
certain kinds of equity securities like the BACs, a reduction in the number of
securityholders might be expected to result in a reduction in the liquidity
and volume of activity in the trading market for the security. The Form 10-K
states: "Neither the BACs nor the Limited Partnership Interests are traded on
any established trading market. The Partnership does not intend to include the
BACs for quotation on NASDAQ or for listing on any national or regional stock
exchange or any other established securities market." Therefore, the Purchaser
does not believe a reduction in the number of BACs holders will materially
further restrict the BACs holders' ability to find purchasers for their BACs
through secondary market transactions.
Partnership Profiles, Inc., which publishes the Partnership Spectrum,
tracks recent trades in certain limited partnership interests. The most recent
issue of the Partnership Spectrum (March/April 1997) indicates that 49 BACs
traded in the period from February 1, 1997 through March 31, 1997 at per BAC
prices between $675 and $706.85, with a weighted average of $678.25 per BAC.
The BACs currently are registered under Section 12(g) of the Exchange Act,
which means, among other things, that the Partnership is required to file
periodic reports with the Commission and to comply with the Commission's proxy
rules. The Purchaser does not expect or intend that consummation of the Offer
will cause the BACs to cease to be registered under Section 12(g) of the
Exchange Act. If the BACs were to be held by fewer than 300 persons, the
Partnership could apply to de-register the BACs under the Exchange Act.
Because the BACs are widely held, however, the Purchaser expects that even if
it purchases the maximum number of BACs in the Offer, the BACs will continue
to be held of record by substantially more than 300 persons.
Influence over All BACs Holder Voting Decisions by Purchaser. Pursuant to
the Partnership Agreement, the Purchaser, through the Assignor Limited
Partner, will have the right to vote each BAC purchased by it pursuant to the
Offer. If the Purchaser is successful in acquiring a significant number of
BACs pursuant to the Offer, the Purchaser could, subject to the Standstill
Agreement, be in a position to significantly influence all Partnership
decisions on which BACs holders, through the Assignor Limited Partner, and
Limited Partners, collectively, may vote. If the maximum number of BACs sought
by the Purchaser is tendered and accepted for payment pursuant to the Offer,
the Purchaser will own approximately 25% of the outstanding BACs. After the
Standstill Expiration Date, the ownership of tendered BACs by the Purchaser
could effectively (i) prevent non-tendering BACs holders from taking actions
they desire but that the Purchaser opposes and (ii) enable the Purchaser to
take actions desired by it but opposed by non-tendering BACs holders.
Generally, under the Partnership Agreement, holders of more than 50% of the
Limited Partnership Interests and BACs (which represent Limited Partnership
Interests) are entitled, directly or through the Assignor Limited Partner, as
the case may be, to take action with respect to a variety of matters,
including: approving the removal of any General Partner and proposing and
approving a replacement therefor; approving the dissolution of the
Partnership; approving or disapproving the sale of all or substantially all of
the assets of the Partnership; and most types of amendments to the Partnership
Agreement. No such votes have, however, ever been taken and the General
Partner has indicated that none are presently scheduled or expected. Although
the Purchaser does not have any current plans or intentions with regard to any
of these matters, it will, following the Standstill Expiration Date, vote the
BACs acquired pursuant to the Offer in its interest, which may, or may not, be
in the best interest of non-tendering BACs holders. Until the Standstill
Expiration Date, the Purchaser has agreed to vote its BACs in the same manner
as a majority of all voting BACs holders; provided, however, the Purchaser
shall be entitled to vote its BACs as it determines with regard to any
proposal (i) to remove the General Partner or (ii) concerning the reduction of
any fees, profits, distributions or allocations for the benefit of the General
Partner or its affiliates.
It is likely that the Purchaser, which is affiliated with the General
Partner, will vote all of its BACs to continue the General Partner as the
general partner of the Partnership and in a manner that is otherwise consistent
with the
11
<PAGE>
decisions and recommendations of the General Partner, including as they relate
to matters involving transactions between the Partnership and affiliates of
the Purchaser. Therefore, the Purchaser's acquisition of BACs may have the
effect of making any future change of the Partnership's policies and/or current
management more difficult.
8. Purpose of the Offer; Future Plans.
Purpose of the Offer. The purpose of the Offer is to enable the Purchaser
to acquire a significant interest in the Partnership for investment purposes
based on its expectation that the Partnership will continue to generate Tax
Credits and tax losses attributable to the BACs. The Purchaser intends to sell
membership interests in the Purchaser to third parties with a need for Tax
Credits and/or tax losses. The aggregate sales price of the Purchaser's
membership interests to third parties will be equal to the aggregate purchase
price for the tendered BACs and all other securities tendered to the Purchaser
pursuant to other tender offers, plus the Purchaser's expenses in conducting
and consummating the Offer, its other tender offers, and financing the
purchase of the tendered securities (including, without limitation, the BACs).
Neither the Purchaser nor its current members will derive a profit from the
sale of the Purchaser's membership interests.
Another purpose of the Offer is to allow BACs holders who have a current or
anticipated need or desire for liquidity to sell their BACs. An additional
purpose of the Offer is to establish a standard against which any subsequent
tender offers for BACs will be judged.
The Purchaser does not currently intend to make any effort to change
current management or the operation of the Partnership nor does it have any
current plans or intentions for any extraordinary transaction involving the
Partnership. However, the Purchaser's plans with respect to its investment in
the BACs could change at any time in the future. If such plans with respect to
the Partnership change in the future, the ability of the Purchaser to
influence actions on which BACs holders (through the Assignor Limited Partner)
have a right to vote will depend on the BACs holders' response to the Offer
(i.e., the number of BACs tendered). If the Purchaser acquires only a small
number of BACs pursuant to the Offer, it will not be in a position to
influence matters over which BACs holders have a right to vote. Conversely, if
the maximum number of BACs sought are tendered and accepted for payment
pursuant to the Offer, the Purchaser will own approximately 25% of the issued
and outstanding BACs and, as a result, will, subject to the Standstill
Agreement, be in a position to exert significant influence over matters on
which BACs holders (through the Assignor Limited Partner) have a right to
vote. The purchase of the BACs will allow the Purchaser to benefit from any of
the following: (a) any and all Tax Credits and tax losses attributable to such
BACs; (b) any cash distributions from Partnership operations in the ordinary
course of business; (c) distributions, if any, of net proceeds from the sale
of any Properties after the Partnership has satisfied its liabilities; and (d)
any distributions of net proceeds from the dissolution of the Partnership.
Future Plans. Following the completion of the Offer and subject to the
terms of the Standstill Agreement, the Purchaser and its affiliates may
acquire additional BACs. Any such acquisition may be made through private
purchases, through one or more future tender offers or by any other means
deemed advisable, and may be at prices higher or lower than the price to be
paid for the BACs purchased pursuant to the Offer. Additionally, the Purchaser
intends to sell membership interests in the Purchaser to third parties with a
need for Tax Credits and/or tax losses. The aggregate sales price of the
Purchaser's membership interests to third parties will be equal to the
aggregate purchase price for the tendered BACs and all other securities
tendered to the Purchaser pursuant to other tender offers, plus the
Purchaser's expenses in conducting and consummating the Offer, its other
tender offers, and financing the purchase of the tendered securities
(including, without limitation, the BACs). Neither the Purchaser nor its
current members will derive a profit from the sale of the Purchaser's
membership interests. Affiliates of the Purchaser expect to arrange the sale
of membership interests of the Purchaser to third parties upon conclusion of
the Offer in order to earn fees for structuring this transaction, arranging
the sale and performing certain services for the Purchaser during the period
in which the Purchaser owns the tendered BACs. These fees will be, in part,
dependent on the amount third parties are willing to pay for membership
interests in excess of the Purchase Price per BAC and the amount of membership
interests sold. There can be no assurance, however, that any membership
interests in the Purchaser will be sold or at what price.
Pursuant to the Standstill Agreement (a copy of which has been filed as
Exhibit (c)(1) to the Purchaser's Tender Offer Statement on Schedule 14D-1
filed with the Commission on May 30, 1997), the Purchaser agreed that, prior
to 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,
12
<PAGE>
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 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, the Purchaser
has also agreed to vote its BACs in the same manner as a majority of all
voting BACs holders; provided, however, the Purchaser is entitled to vote its
BACs as it determines with regard to any proposal (i) to remove the General
Partner or (ii) concerning the reduction of any fees, profits, distributions
or allocations for the benefit of the General Partner or its affiliates.
9. Certain Information Concerning the Partnership.
Information included herein concerning the Partnership is derived from the
Partnership and its publicly-filed reports. Additional financial and other
information concerning the Partnership is contained in the Partnership's
Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and other filings
with the Commission. Such reports and other documents may be examined and
copies may be obtained from the public reference facilities maintained at the
principal offices of the Commission at 450 Fifth Street, N.W., Washington,
D.C. 20549, at the regional offices of the Commission located at 7 World Trade
Center, Suite 1300, New York, New York 10048 and 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661, and at the Commission's World Wide Web
site at http://www.sec.gov. Copies should be available by mail upon payment of
the Commission's customary charges by writing to the Commission's principal
offices at 450 Fifth Street, N.W., Washington, D.C. 20549. The Purchaser
disclaims any responsibility for the information included in such reports and
extracted in this Offer to Purchase.
The Partnership's Assets and Business
The Partnership is a limited partnership formed in 1990, under the laws of
the State of Delaware. Its principal executive offices are located at 625
Madison Avenue, New York, New York 10022. Its telephone number is (212)
421-5333. The Partnership's fiscal year ends March 31st.
The Partnership was formed to invest, as a limited partner, in other
limited partnerships (referred to herein as "Local Partnerships" or
"Subsidiary Partnerships") each of which owns one or more leveraged low-income
multifamily residential complexes ("Apartment Complexes") that are eligible
for the low-income housing tax credit ("Housing Tax Credit") enacted in the
Tax Reform Act of 1986, some of which are eligible for the historic
rehabilitation tax credit ("Historic Rehabilitation Tax Credit"). Some of the
Apartment Complexes benefit from one or more other forms of federal or state
housing assistance. The Partnership's investment in each Local Partnership
represents from 98% to 98.99% of the partnership interests in the Local
Partnership. According to the Form 10-Q, as of December 31, 1996, the
Partnership had acquired an interest in 28 Local Partnerships. The Partnership
does not intend to acquire additional properties.
Independence SLP L.P. ("Independence SLP") is the special limited partner
in all 28 Local Partnerships and is an affiliate of the General Partner.
Independence SLP has certain rights and obligations in its role as special
limited partner which permit Independence SLP to execute control over the
management and policies of the Local Partnerships.
According to the Form 10-K, the stated investment objectives of the
Partnership are to:
1. Entitle qualified BACs holders to Housing Tax Credits over the Credit
Period (as defined below) with respect to each Apartment Complex;
2. Preserve and protect the Partnership's capital;
3. Participate in any capital appreciation in value of the Apartment
Complexes and provide distributions of sale or refinancing proceeds upon the
disposition of the Apartment Complexes; and
4. Allocate passive losses to individual BACs holders to offset passive
income that they may realize from rental real estate investments and other
passive activities, and allocate passive losses to corporate BACs holders to
offset business income.
According to the Form 10-K, one of the Partnership's objectives is to
entitle qualified BACs holders to Housing Tax Credits over the period of the
Partnership's entitlement to claim such Tax Credits (for each Apartment
Complex,
13
<PAGE>
generally ten years from the date of investment or, if later, the date the
Apartment Complex is placed in service; referred to herein as the "Credit
Period"). Each of the Local Partnerships in which the Partnership has acquired
an interest has been allocated by the relevant state credit agency the
authority to recognize Tax Credits during the Credit Period provided that the
Local Partnership satisfies the rent restriction, minimum set-aside and other
requirements for recognition of the Tax Credits at all times during such
period. Once a Local Partnership has become eligible to recognize Tax Credits,
it may lose such eligibility and suffer an event of "recapture" if its
property fails to remain in compliance with the Tax Credit requirements.
According to the Form 10-K, none of the Local Partnerships in which the
Partnership has acquired an interest has suffered an event of recapture.
According to the Form 10-K and information provided by the Partnership, the
Partnership and BACs holders will begin to recognize Housing Tax Credits with
respect to an Apartment Complex when the Credit Period for such Apartment
Complex commences. Because of the time required for the acquisition,
completion and rent-up of Apartment Complexes, it is expected that the amount
of Tax Credits per BAC will gradually increase over the first three years of
the Partnership. Housing Tax Credits not recognized in the first three years
will be recognized in the 11th through 13th years. According to the Form 10-K,
the Partnership generated $11,969,116, $11,969,116, and $9,809,218 Housing Tax
Credits and no Historic Tax Credits during the three years ended December 31,
1996, 1995 and 1994, respectively.
According to the Form 10-K, as of March 31, 1996, there can be no assurance
that the Partnership will achieve its investment objectives as described
above.
The Partnership holds a 98.99% limited partnership interest in 27 Local
Partnerships and a 98% limited partnership interest in one Local Partnership.
Attached to this Offer to Purchase as Schedule II is a schedule of these Local
Partnerships (the "Local Partnership Schedule"), including certain information
concerning their respective Apartment Complexes. Attached to this Offer to
Purchase as Schedule III is additional information concerning these Local
Partnerships and their Apartment Complexes, including information relating to
mortgage encumbrances and accumulated depreciation. The information set forth
in Schedules II and III repeats information set forth in the Form 10-K.
According to the Form 10-K, the General Partner has generally required in
connection with investments in development-stage Apartment Complexes that the
general partners of the Local Partnerships (the "Local General Partners")
provide completion guarantees and/or undertake to repurchase the Partnership's
interest in the Local Partnership if construction or rehabilitation is not
completed substantially on time or on budget ("Development Deficit
Guarantees"). The Development Deficit Guarantees have generally also required
the Local General Partner to provide any funds necessary to cover net
operating deficits of the Local Partnership until such time as the Apartment
Complex has achieved break-even operations. The General Partner has generally
required that the Local General Partners undertake an obligation to fund
operating deficits of the Local Partnership (up to a stated maximum amount)
during a limited period of time (typically three to five years) following the
achievement of break-even operations ("Operating Deficit Guarantees"). Under
the terms of the Development and Operating Deficit Guarantees, amounts funded
will be treated as Operating Loans which will not bear interest and which will
be repaid only out of 50% of available cash flow or out of available net sale
or refinancing proceeds. In some instances, the Local General Partners are
required to undertake an obligation to comply with a Rent-Up Guaranty
Agreement, whereby the Local General Partner agrees to pay liquidating damages
if predetermined occupancy rates are not achieved. These payments are made
without right of repayment. In cases where the General Partner deems it
appropriate, the obligations of a Local General Partner under the Development
Deficit, Operating Deficit and/or Rent-Up Guarantees are secured by letters of
credit and/or cash escrow deposits.
According to the Form 10-K, all leases at the Properties are generally for
periods not exceeding one to two years and no tenant occupies more than 10% of
the rentable square footage.
Rent from commercial tenants (to which average rental per square foot
applies) comprise less than 5% of the rental revenues of the Partnership.
Rents for the residential units are determined annually by HUD and reflect
increases in consumer price indexes in various geographic areas.
According to the Form 10-K, management of the Partnership continuously
reviews the physical state of the properties and budgets improvements when
required, which are generally funded from cash flow from operations or release
of replacement reserve escrows. No improvements are expected to require
additional financing.
14
<PAGE>
According to the Form 10-K, management of the Partnership continuously
reviews the insurance coverage of the properties and believes such coverage is
adequate.
Real estate taxes are calculated using rates and assessed valuations
determined by the township or city in which the property is located. Such
taxes have approximated 1% of the aggregate cost of the Apartment Complexes
(See Schedule III to this Offer to Purchase).
Selected Financial Data. Set forth below is a summary of certain financial
data for the Partnership which has been excerpted from the Form 10-K and the
Form 10-Q. More comprehensive financial and other information is included in
such reports and other documents filed by the Partnership with the Commission,
and the following summary is qualified in its entirety by reference to such
reports and other documents and all the financial information and related
notes contained therein.
Statements of Operations
For the Nine Months Ended December 31, 1996 and 1995
(unaudited)
Nine Months Ended
December 31,
--------------------------
1996 1995*
---- -----
Revenue:
Rental income ................................ $14,550,082 $14,265,925
Other ......................................... 331,005 300,795
----------- -----------
Total Revenue ............................... 14,881,087 14,566,720
----------- -----------
Expenses:
General and administrative .................... 2,290,320 2,005,733
General and administrative--related parties ... 837,032 1,458,405
Operating and other ........................... 1,892,784 1,796,487
Repairs and maintenance ....................... 2,210,685 1,884,742
Taxes ......................................... 942,117 937,147
Insurance ..................................... 594,058 606,296
Financial, principally interest ............... 4,280,603 4,305,681
Depreciation and amortization ................. 4,583,185 4,521,020
----------- ------------
Total Expenses .............................. 17,630,784 17,515,511
----------- ------------
Net loss before minority interest ............... (2,749,697) (2,948,791)
Minority interest in loss of subsidiary
partnerships ................................. 24,109 20,481
----------- ------------
Net loss ........................................ $(2,725,588) $(2,928,310)
=========== ============
Net loss--limited partners ...................... $(2,698,332) $(2,899,027)
=========== ============
Net loss per BAC ................................ $ (35.14) $ (37.75)
=========== ============
*Reclassified for comparative purposes
15
<PAGE>
Summary Selected Financial Data
<TABLE>
<CAPTION>
For the Period
May 31, 1991
For the Year Ended March 31, (inception)
-------------------------------------------------------------- Through
OPERATIONS 1996 1995 1994 1993 March 31, 1992
- ---------- ---------------- ------------- ------------- --------------- --------------
<S> <C> <C> <C> <C> <C>
Revenues .................... $ 19,169,610 $ 18,061,137 $ 14,024,220 $ 3,816,728 $ 204,143
Operating Expenses .......... 24,084,097 21,848,948 16,549,054 4,817,238 219,607
------------ ------------ ------------ ------------ -----------
Loss before minority interest (4,914,487) (3,787,811) (2,524,834) (1,000,510) (15,464)
Minority interest in loss of
subsidiary partnerships ... 32,193 32,583 24,646 1,018 2
------------ ------------ ------------ ------------ -----------
Net loss .................... $ (4,882,294) $ (3,755,228) $ (2,500,188) $ (999,492) $ (15,462)
============ ============ ============ ============ ===========
Net loss per weighted average
BAC ....................... $ (62.95) $ (48.42) $ (32.23) $ (17.36) $ (1.36)
============ ============ ============ ============ ===========
March 31,
--------------------------------------------------------------------------
FINANCIAL POSITION 1996 1995 1994 1993 1992
- ------------------ ------------ ------------ ------------ ----------- -----------
Total assets ................ $183,788,219 $189,946,896 $202,231,410 $145,354,121 $32,820,793
============ ============ ============ ============ ===========
Total liabilities ........... $120,702,900 $121,484,923 $131,248,328 $ 71,077,055 $ 7,527,933
============ ============ ============ ============ ===========
Minority interest ........... $ 6,850,591 $ 7,344,951 $ 6,110,832 $ 6,904,628 $ 2
============ ============ ============ ============ ===========
Total partners' capital ..... $ 56,234,728 $ 61,117,022 $ 64,872,250 $ 67,372,438 $25,292,858
============ ============ ============ ============ ===========
</TABLE>
During the year ended March 31, 1996, total assets decreased primarily due
to depreciation of approximately $6,000,000. During the year ended March 31,
1995, total assets decreased primarily due to depreciation of approximately
$5,000,000 and the payment of development fees and other amounts due to local
general partners and affiliates totaling approximately $8,000,000. For the
year ended March 31, 1995, total liabilities decreased as a result of the
payment of development fees and other amounts due to local general partners
and affiliates. During the years ended March 31, 1994 and 1993, total assets
and liabilities increased primarily due to the continued acquisition of Local
Partnerships. Property and equipment increased approximately $66,000,000 and
$41,000,000 and construction in progress increased approximately $16,000,000
and $28,000,000, respectively. Mortgage notes increased approximately
$39,000,000 and $26,000,000, respectively, and construction notes increased
approximately $20,000,000 and $26,000,000, respectively. For the year ended
March 31, 1993, there was also an increase in assets due to capital
contributions which were not fully expended. For the year ended March 31,
1993, minority interest increased approximately $7,000,000 due to capital
contributions from local general partners.
Cash Distributions
- ------------------
According to the Form 10-K, the Partnership has made no distributions to
the BACs holders as of March 31, 1996.
Liquidity and Capital Resources
- -------------------------------
According to the Form 10-K, the Partnership's primary source of funds
includes (i) working capital reserves and interest earned thereon and (ii)
cash distributions from the operations of the Local Partnerships.
According to the Form 10-Q, cash and cash equivalents of the Partnership
and its 28 consolidated subsidiary partnerships decreased approximately
$394,000 during the nine months ended December 31, 1996 primarily due to net
repayments of mortgage notes of $1,150,000; acquisitions of property and
equipment of $109,000; and a net decrease in due to local general partners and
affiliates of $56,000 which exceeded cash provided by operating activities of
$629,000; and a decrease in cash held in escrow for investing activities of
$322,000. Included in the
16
<PAGE>
adjustments to reconcile the net loss to cash flow from operations is
depreciation and amortization of approximately $4,583,000.
According to the Form 10-Q, the Partnership has working capital reserves of
approximately $203,000 and $365,000 at December 31, 1996 and March 31, 1996,
respectively.
According to the Form 10-K, the Partnership has negotiated Operating
Deficit Guaranty Agreements with all Local Partnerships by which the general
partners of the Local Partnerships have agreed to fund operating deficits for
a specified period of time. The terms of the Operating Deficit Guaranty
Agreements vary for each Local Partnership, with maximum dollar amounts to be
funded for a specified period of time, generally three years, commencing on
the break-even date. According to the Form 10-K, the gross amount of the
operating deficit guarantees aggregates approximately $8,366,000, of which
$200,000 had expired as of March 31, 1996. As of March 31, 1996, 1995, and
1994, approximately $824,000, $799,000, and $799,000, respectively, had been
funded by the Local General Partners to meet such obligations, which includes
amounts held in escrow by the Local Partnerships. All operating deficit
guarantees expire within the next three years. According to the Form 10-K,
management of the Partnership does not expect a material impact on liquidity,
based on prior years' fundings.
In addition, several Local Partnerships have Rent-Up Guaranty Agreements,
by which the Local General Partner agrees to pay liquidating damages if
predetermined occupancy rates are not achieved. According to the Form 10-K,
the gross amount of these guarantees is approximately $470,000, none of which
had expired as of March 31, 1996. As of March 31, 1996, there had not been any
fundings under the Rent-Up Guaranty Agreements. All rental guarantees expire
within the next three years. According to the Form 10-K, management of the
Partnership does not expect a material impact on liquidity, based on prior
years' fundings.
Cash distributions received from the Local Partnerships remain relatively
immaterial. According to the Form 10-Q, distributions of approximately $52,000
and $58,000 were received during the nine months ended December 31, 1996 and
1995, respectively. However, management of the Partnership expects that the
distributions received from the Local Partnerships will increase, although not
to a level sufficient to permit cash distributions to BACs holders. These
distributions, as well as the working capital reserves referred to above, will
be used to meet the operating expenses of the Partnership.
Results of Operations of Certain Local Partnerships
- ---------------------------------------------------
Rolling Green Associates, L.P.
According to the Form 10-Q, in October 1993, certain Federal Grand Jury
subpoenas were served upon employees of Rolling Green Associates, L.P.
("Rolling Green") and upon Rolling Green's management agent as custodian of
records. The subpoenas are part of a United States Attorney and Federal Grand
Jury investigation into the propriety and accuracy of Section 8 Housing
Assistance Payments ("HAP") rent subsidies claimed by Rolling Green under its
HAP Contract. The investigation dates back to mid-1993. Upon receiving its
subpoena, the management agent promptly turned over the requested records. The
management agent conducted its own investigation which has resulted in the
discovery of tenancies which were incorrectly reported on earlier HAP subsidy
vouchers. On its December 1993 and January 1994 HAP subsidy vouchers, Rolling
Green returned to New York State Housing Finance Agency (the HAP contract
administrator) adjustments in the approximate net amount of $91,000 to correct
the previously incorrectly reported tenancies. Rolling Green believes the
adjustments as filed are accurate and complete. However, because the matter is
ongoing, no estimate can be made of any further adjustments deemed appropriate
by the United States Attorney or New York State Housing Finance Agency. The
United States Attorney for the Northern District of New York has pursued a
civil action seeking undetermined penalties and damages; however, such action
was only commenced against the management company and not Rolling Green.
According to the Form 10-Q, the Partnership's investment in this subsidiary
partnership was approximately $2,872,000 and $2,883,000 at December 31 and
March 31, 1996, respectively. The minority interest balance was $0 at December
31 and March 31, 1996. The net loss after minority interest for this
subsidiary partnership amounted to approximately $73,000 and $3,000 and
$11,000 and $77,000 for the three and nine months ended December 31, 1996 and
1995, respectively.
Other
- -----
The Partnership's investment as a limited partner in the Local
Partnerships is subject to the risks incident to the potential losses arising
from management and ownership of improved real estate. The Partnership's
investments
17
<PAGE>
also could be adversely affected by poor economic conditions generally, which
could increase vacancy levels, rental payment defaults, and operating
expenses, any or all of which could threaten the financial viability of one or
more of the Local Partnerships.
There also are substantial risks associated with the operation of Apartment
Complexes receiving government assistance. These risks stem from governmental
regulations concerning tenant eligibility, which may make it more difficult to
rent apartments in the complexes; difficulties in obtaining government
approval for rent increases; limitations on the percentage of income which
low- and moderate-income tenants may pay as rent; the possibility that
Congress may not appropriate funds to enable HUD to make the rental assistance
payments it has contracted to make; and that when the rental assistance
contracts expire there may not be market demand for apartments at full market
rents in a Local Partnership's Apartment Complex.
The Local Partnerships are impacted by inflation in several ways. Inflation
allows for increases in rental rates generally to reflect the impact of higher
operating and replacement costs. Inflation also affects the Local Partnerships
adversely by increasing operating costs, such as fuel, utilities and labor.
The Partnership Agreement
The General Partner and its affiliates have received or will receive
certain types of compensation, fees or other distributions in connection with
the operations of the Partnership. The arrangements for payment of
compensation and fees set forth in the Partnership Agreement were not
determined in arm's-length negotiations with the Partnership.
Pursuant to the Partnership Agreement, the General Partner is entitled to a
fee (the "Partnership Management Fee") for its services in connection with the
administration of the affairs of the Partnership (including, without
limitation, coordination of communications between the Partnership and BACs
holders and with the Local Partnerships). The Partnership Management Fee is
payable annually and is determined by the General Partner based on its review
of the Partnership's investments, up to a maximum of 0.5% of the Partnership's
Invested Assets (as defined below); provided, however, the Partnership
Management Fee is a minimum of $2,500 per $1 million of Invested Assets up to
Invested Assets of $20 million and $5,000 per $1 million of Invested Assets
above $20 million. "Invested Assets" means the purchase price paid upon the
acquisition by the Partnership of properties and interests in Local
Partnerships, including (i) the total of all fees and commissions paid in
connection with the selection or purchase by the Partnership or Local
Partnerships of properties or interests in Local Partnerships, and (ii) the
amount of all liens and mortgages on properties acquired by the Partnership.
For the nine months ended December 31, 1996 and the three years ended March
31, 1996, 1995 and 1994, the General Partner earned aggregate Partnership
Management Fees of $75,000, $685,165, $880,221 and $878,981, respectively.
According to the Partnership Agreement, the General Partner is also
entitled to receive a disposition fee (the "Disposition Fee") for services
rendered in connection with the sale of a property or the sale of the
Partnership's interest in a Local Partnership. Payment of such fee shall be
subordinated to the return to Limited Partners and BACs holders of their
capital contribution and other items as set forth in the Partnership
Agreement. Each Disposition Fee is equal to the lesser of one-half the
competitive real estate commission or 3% of the sale price in respect of any
such sale (including the principal amount of any mortgage loans and any
related seller financing with respect to a property to which such sale is
subject). In no event, however, shall the Disposition Fee and all other fees
payable to the General Partner and any of its affiliates and any unrelated
parties arising out of any given sale exceed in the aggregate the lesser of
the competitive rate or 6% of the gross proceeds from such sale. For the nine
months ended December 31, 1996 and the three years ended March 31, 1996, 1995
and 1994, the General Partner did not earn any Disposition Fee.
Independence SLP is an affiliate of the General Partner. Independence SLP,
as special limited partner of the Local Partnerships, earned an aggregate
annual fee (the "Annual Local Administrative Fee") of $54,000, $72,078,
$58,893 and $54,400 from the Local Partnerships for the nine months ended
December 31, 1996 and the three years ended March 31, 1996, 1995 and 1994,
respectively. Independence SLP is entitled to receive up to $2,500 per year as
an Annual Local Administrative Fee from each Local Partnership of which it is
a special limited partner, but the sum of the aggregate Annual Local
Administrative Fee and the Partnership Management Fee for any year shall not
exceed 0.5% of Invested Assets.
Affiliates of the Local Partnerships' general partners incurred property
management fees, of which, for the nine months ended December 31, 1996 and the
three years ended March 31, 1996, 1995 and 1994, $38,363, $65,121, $67,467 and
$28,595, respectively, were incurred to an affiliate of the General Partner.
18
<PAGE>
The General Partner and the officers and directors of the General Partner
are each entitled to indemnification under certain circumstances from the
Partnership pursuant to provisions of the Partnership Agreement. Generally,
the General Partner is also entitled to reimbursement of expenditures made on
behalf of the Partnership. An affiliate of the General Partner performs asset
monitoring services for the Partnership. These services include site visits
and evaluations of the Local Partnerships' performance. For the nine months
ended December 31, 1996 and the three years ended March 31, 1996, 1995 and
1994, the Partnership incurred, in the aggregate, $77,581, $84,912, $106,374
and $136,640, respectively, to the General Partner and its affiliates as
reimbursement of expenditures and asset monitoring made on behalf of the
Partnership.
In addition, under the terms of the Partnership Agreement, upon the removal
of a General Partner by the Limited Partners or upon the occurrence of a
"Removal Event", as defined below, the General Partner may be entitled to
receive a fee, which will be payable with interest over a five-year period and
may be secured by the assets of the Partnership. The amount of such fee shall
be the fair market value of the removed General Partner's interest, which
amount could be substantial. The Partnership Agreement deems a "Removal Event"
to have occurred if the business of the Partnership is continued after the
bankruptcy, death, adjudication of incompetence or removal of a General
Partner (subject to certain exceptions pursuant to the Partnership Agreement).
A majority in interest of the Limited Partners may approve the removal of any
General Partner without the concurrence of any General Partner at a meeting of
the Partnership.
10. Certain Information Concerning the Purchaser.
The Purchaser was organized for the purpose of acquiring the BACs pursuant
to the Offer. The principal executive office of the Purchaser is at 625
Madison Avenue, New York, New York 10022. The managing member of the Purchaser
(the "Managing Member") is Lehigh Tax Credit Partners, Inc., a newly-formed
Delaware corporation. Since its inception, the directors of the Managing
Member have been J. Michael Fried, Stuart J. Boesky and Alan P. Hirmes. The
business address for each of Messrs. Fried, Boesky and Hirmes is 625 Madison
Avenue, New York, New York 10022.
For certain information concerning the executive officers and directors of
the Managing Member, see Schedule I to this Offer to Purchase. The persons set
forth on Schedule I, who effectively control the Purchaser, are also officers
of the General Partner. Therefore, the Purchaser and the General Partner,
subject to its fiduciary duties, may have a conflict of interest with respect
to certain matters involving BACs holders, Limited Partners and/or the
Partnership.
Except as otherwise set forth in this Offer to Purchase or Schedule I
hereto, (1) neither the Purchaser, the Managing Member and, to the best of the
Purchaser's knowledge, the persons listed on Schedule I, nor any affiliate of
the foregoing beneficially owns or has a right to acquire any BACs, (2)
neither the Purchaser, the Managing Member and, to the best of the Purchaser's
knowledge, the persons listed on Schedule I, nor any affiliate thereof or
director, executive officer or subsidiary of the Managing Member has effected
any transaction in the BACs within the past 60 days, (3) neither the
Purchaser, the Managing Member and, to the best of the Purchaser's knowledge,
any of the persons listed on Schedule I, nor any director or executive officer
of the Managing Member has any contract, arrangement, understanding or
relationship with any other person with respect to any securities of the
Partnership, including, but not limited to, contracts, arrangements,
understandings or relationships concerning the transfer or voting thereof,
joint ventures, loan or option arrangements, puts or calls, guarantees of
loans, guarantees against loss or the giving or withholding of proxies, (4)
there have been no transactions or business relationships which would be
required to be disclosed under the rules and regulations of the Commission
between any of the Purchaser, the Managing Member, or, to the best of the
Purchaser's knowledge, the persons listed on Schedule I, on the one hand, and
the Partnership or its affiliates, on the other hand, and (5) there have been
no contracts, negotiations or transactions between the Purchaser, the Managing
Member or, to the best of the Purchaser's knowledge, the persons listed on
Schedule I, on the one hand, and the Partnership or its affiliates, on the
other hand, concerning a merger, consolidation or acquisition, tender offer or
other acquisition of securities, an election of directors or a sale or other
transfer of a material amount of assets.
The Purchaser owns 121 BACs, which represents less than 1% of the number of
BACs outstanding as reported in the Form 10-K (the most recently available
filing containing such information). On March 1, 1997, the Purchaser effected
three separate transactions and acquired a total of 121 BACs at a price per
BAC of $674.50. The Purchaser was referred to those selling BACs holders by
its affiliate, Related Capital Company, which received telephone calls from
such parties requesting information with respect to persons that may be
interested in purchasing BACs. The Purchaser did not solicit the selling BACs
holders.
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<PAGE>
11. Background Of The Offer.
The purpose of the Offer is to enable the Purchaser to acquire a
significant interest in the Partnership for investment purposes based on its
expectation that the Partnership will continue to generate Tax Credits and tax
losses attributable to the BACs. The Purchaser intends to sell membership
interests in the Purchaser to third parties with a need for Tax Credits and/or
tax losses. The aggregate sales price of the Purchaser's membership interests
to third parties will be equal to the aggregate Purchase Price for the
tendered BACs plus the Purchaser's expenses in conducting and consummating the
Offer and financing the purchase of the tendered BACs. Neither the Purchaser
nor its current members will derive a profit from the sale of the Purchaser's
membership interests.
The Purchaser commenced another tender offer on April 10, 1997 for the
securities of an affiliated partnership and expects to commence additional
tender offers in the future. In connection with the tender offer already
commenced by the Purchaser and the settlement of a matter regarding such
tender offer, the Purchaser entered into an agreement with Everest Properties,
Inc. ("Everest"), dated April 23, 1997 (the "Everest Agreement", a copy of
which has been filed as Exhibit (c)(2) to the Purchaser's Tender Offer
Statement on Schedule 14D-1 filed with the Commission on May 30, 1997).
Pursuant to the Everest Agreement, the Purchaser granted to Everest, among
other things, an option to purchase up to 25% of the BACs tendered in the
Offer on the same terms and conditions as the Purchaser'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 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
Exchange 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 the Purchaser fails
to perform its obligations under the Everest Agreement. The foregoing
description of the Everest Agreement is subject to and qualified in its
entirety by reference to such agreement, which agreement is incorporated
herein by reference.
The Purchaser and the General Partner are effectively controlled by the
same persons. Therefore, the Purchaser and the General Partner, subject to its
fiduciary duties, may have a conflict of interest with respect to certain
matters involving BACs holders, Limited Partners and/or the Partnership. In
order to address certain of those matters, the Purchaser entered into the
Standstill Agreement.
The Partnership expressed concern that consummation of the Offer would
cause it to be classified as a "publicly-traded partnership" (a "PTP") for
federal income tax purposes and, therefore, suffer adverse tax consequences.
To address this concern, the Purchaser agreed to retain two independent law
firms to deliver legal opinions to the Partnership that consummation of the
Offer will not result in it being treated as a PTP.
The Purchaser requested that the Partnership mail this Offer to Purchase,
the related Letter of Transmittal and other relevant material. On May 30,
1997, the Purchaser was notified that such materials were mailed at the
Purchaser's expense and the Offer was commenced.
12. Source Of Funds.
The Purchaser expects that approximately $14,014,000 (exclusive of fees and
expenses) would be required to purchase all of the BACs sought pursuant to the
Offer, if tendered. Other than BACs purchased by Everest pursuant to the
Everest Option, if any, the Purchaser presently contemplates that it will
borrow all of such funds from one of its members, on substantially the same
terms and conditions that such member borrows such funds under an existing
credit facility it has available to it with The First National Bank of Boston
and Wells Fargo Bank (the "Lenders"). Alternatively, if the Purchaser has
completed its contemplated sale of membership interests to third
20
<PAGE>
parties with a need for the Tax Credits and/or tax losses attributable to the
BACs, the Purchaser may obtain the funds required to purchase the BACs
pursuant to the Offer from capital contributions from its members.
The existing credit agreement is among the Lenders and RCC Credit Facility,
L.L.C., Related Capital Company and The Related Companies, L.P.. The stated
interest rate is the "Base Rate" (as publicly announced by The First National
Bank of Boston, from time to time) plus 1%, which is presently equal to 9.5%
per annum. All of the BACs tendered pursuant to the Offer and all of the
Purchaser's membership interests will be pledged to the Lenders to
collateralize the loan. Additionally, Related Capital Company will guarantee
all amounts borrowed under such credit facility.
The Purchaser 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 from 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, the Purchaser may borrow those funds from its
affiliate(s).
If Everest exercises the Everest Option for 25% of all of the BACs sought
pursuant to the Offer and 19,197 BACs are tendered and accepted for payment,
the Purchaser expects that approximately $3,503,000 (exclusive of fees and
expenses) of the aggregate purchase price would be paid by Everest. Everest
has informed the Purchaser that Everest will obtain all of such funds from
investment funds Everest has raised from investors.
13. Purchase Price Considerations
The Purchaser has set the Purchase Price at $730 net per BAC (subject to
adjustment as set forth in this Offer to Purchase). The Purchaser considered
the estimated potential benefits to a non-tendering BACs holder (see below in
this Section 13) and determined the Purchase Price in order to provide
comparable potential benefits to a tendering BACs holder.
If you tender your BACs pursuant to the Offer, the Purchaser believes your
aggregate benefits will total $1,862:
Purchase Price: $ 730
Tax Credits Received through June 30, 1997: 593
Tax Savings: 62
Interest to Be Earned on Investing Purchase Price: 488
Historic Tax Credit Recapture: (11)
------
$1,862
If you retain your BACs, the Purchaser believes your aggregate benefits
will total $1,841:
Tax Credits Received through June 30, 1997: $ 593
Present Value of Expected Remaining Tax Credits: 820
Present Value of Original Investment, if returned: 428
------
$1,841
The Purchaser believes that the projected aggregate per BAC benefit from
the Offer, together with the benefits received since 1991, total approximately
$1,862. Such benefits include $730 (the Purchase Price) plus $593
(representing the Tax Credits allocated through June 30, 1997) plus
approximately $62 (representing the tax savings, assuming a tax rate of 28%,
attributable to the use of the capital loss of $222 the Purchaser believes an
individual BACs holder will realize if all of his BACs are sold in the Offer)
plus approximately $488 (representing the assumed return on the reinvestment
of the Purchase Price at 5% for approximately 10.5 years) less approximately
$11 (representing a recapture of Historic Tax Credits). The projected benefit
of $1,862 assumes the BACs holder acquired the BACs pursuant to the original
offering and such BACs holder did not utilize any passive losses. The
projected benefit may be more or less depending on, among other things, a
tendering BACs holder's tax rate and the return a tendering BACs holder may
earn when investing the Purchase Price.
The Purchaser believes that such aggregate projected benefit compares
favorably with the potential benefits to a BACs holder who remains in the
Partnership, continuing to receive Tax Credits, and assuming a return of the
present value of the original investment of $1,000 as, and if, the
Partnership's 28 properties are sold for amounts in excess of the then
existing indebtedness and other liabilities. The aggregate of such potential
benefits would be
21
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approximately $1,841, which include $593 (the Tax Credits allocated through
June 30, 1997) plus $820 (the present value at 5% of the remaining Tax Credits
to be allocated over the remaining Credit Period) plus approximately $428 (the
present value at 5% of a BACs holder's original $1,000 investment, returned
ratably over the 4 years following the end of the Credit Period). There can,
however, be no guarantee that these benefits will be realized. Neither the
General Partner nor the Purchaser is making any representation, and there can
be no assurance, that any or all of the properties of the Partnership will be
sold and, if sold, will result in distributable cash sufficient to return any
of a BACs holder's original investment.
The Form 10-K states that: "Neither the BACs nor the Limited Partnership
Interests are traded on any established trading market. The Partnership does
not intend to include the BACs for quotation on NASDAQ or for listing on any
national or regional stock exchange or any other established securities
market." At present, privately negotiated sales and sales through
intermediaries (e.g., through the trading system operated by Chicago
Partnership Board, Inc., which publishes sales by holders of BACs) are the
only means available to BACs holders to liquidate an investment in BACs (other
than the Offer) because the BACs are not listed or traded on any exchange or
quoted on any NASDAQ list or system. According to Partnership Spectrum, an
independent third-party industry publication, for the two months ended March
31, 1997, a total of 49 BACs traded at per BAC prices between $675 and $706.85
with a weighted average of $678.25 per BAC. Set forth below is a schedule of
the trading activity of BACs during the year ended March 31, 1997, in
two-month intervals, as reported by The Partnership Spectrum:
Trading Activity for Year Ended March 31, 1997
----------------------------------------------
Period Low/High No. of BACs Traded
------ -------- ------------------
April 1, 1996--May 31, 1996 $657.53/$700 35
June 1, 1996--July 31, 1996 $657.33/$700 66
August 1, 1996--September 30, 1996 N/A 0
October 1, 1996--November 30, 1996 $625/$721.85 190
December 1, 1996--January 31, 1997 $650/$880 407.5
February 1, 1997--March 31, 1997 $675/$706.85 49
BACs holders are advised, however, that such gross sales prices reported by
The Partnership Spectrum do not necessarily reflect the net sales proceeds
received by sellers of BACs, which typically are reduced by commissions and
other secondary market transaction costs to amounts less than the reported
prices.
The Purchase Price represents the price at which the Purchaser is willing
to purchase BACs. No independent person has been retained to evaluate or
render any opinion with respect to the fairness of the Purchase Price and no
representation is made by the Purchaser or any affiliate of the Purchaser as
to such fairness. The Purchaser did not attempt to obtain current independent
valuations or appraisals of the underlying assets owned by the Partnership.
Other measures of the value of the BACs may be relevant to BACs holders. BACs
holders are urged to consider carefully all of the information contained
herein and should consult with their respective tax and other advisors
regarding the terms of the Offer before deciding whether to tender BACs.
14. Conditions of the Offer.
Notwithstanding any other provisions of the Offer and in addition to (and
not in limitation of) the Purchaser's rights to extend and amend the Offer at
any time in its sole discretion, the Purchaser shall not be required to accept
for payment, subject to Rule 14e-1(c) under the Exchange Act, any tendered
BACs and may terminate the Offer as to any BACs not then paid for if, prior to
the Expiration Date, (i) the Purchaser shall not have confirmed to its
reasonable satisfaction that, upon purchase of the BACs pursuant to the Offer,
the Purchaser will have full rights to ownership as to all such BACs and the
Purchaser will become the transferee of the purchased BACs for all purposes
under the Partnership Agreement, (ii) the Purchaser shall not have confirmed
to its reasonable satisfaction that, upon the purchase of the BACs pursuant to
the Offer, the Transfer Restrictions will have been satisfied, or (iii) all
authorizations, consents, orders or approvals of, or declarations or filings
with, or expirations of waiting periods imposed by, any court, administrative
agency or commission or other governmental authority or instrumentality,
domestic or foreign, necessary for the consummation of the transactions
contemplated by the Offer shall not have been filed, occurred or been
obtained. Furthermore, notwithstanding any other term of the Offer, the
Purchaser will not be required to accept for payment and may terminate or
amend the Offer as to such BACs if, at any time on or after the date of the
Offer and before the Expiration Date, any of the following conditions exist:
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(a) there shall have occurred (i) any general suspension of trading in, or
limitation on prices for, securities on any national securities exchange or
the over-the-counter market in the United States, (ii) a declaration of a
banking moratorium or any suspension of payments in respect of banks in the
United States (whether or not mandatory), (iii) the commencement or escalation
of a war, armed hostilities or other national or international crisis
involving the United States, (iv) any limitation (whether or not mandatory)
imposed by any governmental authority on, or any other event that might have
material adverse significance with respect to, the nature or extension of
credit by banks or other lending institutions in the United States, or (v) in
the case of any of the foregoing, a material acceleration or worsening
thereof; or
(b) any material adverse change (or any condition, event or development
involving a prospective material adverse change) shall have occurred or be
likely to occur in the business, prospects, financial condition, results of
operations, properties, assets, liabilities, capitalization, partners' equity,
licenses, franchises or businesses of the Partnership and its subsidiaries
taken as a whole; or
(c) there shall have been threatened, instituted or pending any action,
proceeding, application, audit, claim or counterclaim by any government or
governmental authority or agency, domestic or foreign, or by or before any
court or governmental, regulatory or administrative agency, authority or
tribunal, domestic, foreign or supranational, which (i) challenges the
acquisition by the Purchaser of the BACs or seeks to obtain any material
damages as a result thereof, (ii) makes or seeks to make illegal, the
acceptance for payment, purchase or payment for any BACs or the consummation
of the Offer, (iii) imposes or seeks to impose limitations on the ability of
the Purchaser or any affiliate of the Purchaser to acquire or hold or to
exercise full rights of ownership of the BACs, including, but not limited to,
the right to vote (through the Assignor Limited Partner) any BACs purchased by
them on all matters with respect to which BACs holders have the right to
direct the Assignor Limited Partner on the manner in which it will vote on
matters presented to the Limited Partners and BACs holders, (iv) may result in
a material diminution in the benefits expected to be derived by the Purchaser
or any of their affiliates as a result of the Offer, (v) requires divestiture
by the Purchaser of any BACs, (vi) might materially adversely affect the
business, properties, assets, liabilities, financial condition, operations,
results of operations or prospects of the Partnership or the Purchaser, or
(vii) challenges or adversely affects the Offer; or
(d) there shall be any action taken, or any statute, rule, regulation,
order or injunction shall have been enacted, promulgated, entered, enforced or
deemed applicable to the Offer, or any other action shall have been taken, by
any government, governmental authority or court, domestic or foreign, other
than the routine application to the Offer of waiting periods that has
resulted, or in the reasonable good faith judgment of the Purchaser could be
expected to result, in any of the consequences referred to in clauses (i)
through (vii) of paragraph (c) above; or
(e) the Partnership or any of its subsidiaries shall have authorized,
recommended, proposed or announced an agreement or intention to enter into an
agreement, with respect to any merger, consolidation, liquidation or business
combination, any acquisition or disposition of a material amount of assets or
securities, or any comparable event, not in the ordinary course of business
consistent with past practices; or
(f) the failure to occur of any necessary approval or authorization by any
federal or state authorities necessary to the consummation of the purchase of
all or any part of the BACs to be acquired hereby, which in the reasonable
judgment of the Purchaser in any such case, and regardless of the
circumstances (including any action of the Purchaser) giving rise thereto,
makes it inadvisable to proceed with such purchase or payment; or
(g) the Purchaser shall become aware that any material right of the
Partnership or any of its subsidiaries under any governmental license, permit
or authorization relating to any environmental law or regulation is reasonably
likely to be impaired or otherwise adversely affected as a result of, or in
connection with, the Offer; or
(h) the Partnership or its General Partner shall have amended, or proposed
or authorized any amendment to, the Partnership Agreement or the Purchaser
shall have become aware that the Partnership or its General Partner has
proposed any such amendment.
The foregoing conditions are for the sole benefit of the Purchaser and its
affiliates and may be asserted by the Purchaser regardless of the
circumstances (including, without limitation, any action or inaction by the
Purchaser or any of its affiliates) giving rise to such condition, or may be
waived by the Purchaser, in whole or in part, from time to time in its sole
discretion. The failure by the Purchaser at any time to exercise the foregoing
rights will not be deemed a waiver of such rights, which will be deemed to be
ongoing and may be asserted at any time and
23
<PAGE>
from time to time. Any determination by the Purchaser concerning the events
described in this Section 14 will be final and binding upon all parties.
15. Certain Legal Matters.
Except as set forth in this Offer to Purchase, based on its review of
publicly available filings by the Partnership with the Commission and other
publicly available information regarding the Partnership, the Purchaser is not
aware of any licenses or regulatory permits that would be material to the
business of the Partnership, taken as a whole, and that might be adversely
affected by the Purchaser's acquisition of BACs as contemplated herein, or any
filings, approvals or other actions by or with any domestic or foreign
governmental authority or administrative or regulatory agency that would be
required prior to the acquisition of BACs by the Purchaser pursuant to the
Offer as contemplated herein, other than the filing of a Tender Offer
Statement on Schedule 14D-1 (which has been filed) and any required amendments
thereto. Should any such approval or other action be required, there can be no
assurance that any such additional approval or action, if needed, would be
obtained without substantial conditions or that adverse consequences might not
result to the Partnership's business, or that certain parts of the
Partnership's or the Purchaser's businesses might not have to be disposed of
or held separate or other substantial conditions complied with in order to
obtain such approval or action in the event that such approvals were not
obtained or such actions were not taken.
Appraisal Rights. BACs holders will not have appraisal rights as a result
of the Offer.
State Anti-takeover Laws. A number of states have adopted anti-takeover
laws which purport, to varying degrees, to be applicable to attempts to
acquire securities of corporations or other entities which are incorporated or
organized in such states or which have substantial assets, securityholders,
principal executive offices or principal places of business therein. Although
the Purchaser has not attempted to comply with any state anti-takeover
statutes in connection with the Offer, the Purchaser reserves the right to
challenge the validity or applicability of any state law allegedly applicable
to the Offer and nothing in this Offer to Purchase nor any action taken in
connection therewith is intended as a waiver of such right. If any state
anti-takeover statute is applicable to the Offer, the Purchaser might be
unable to accept for payment or purchase BACs tendered pursuant to the Offer
or be delayed in continuing or consummating the Offer. In such case, the
Purchaser may not be obliged to accept for purchase or pay for any BACs
tendered.
ERISA. By executing and returning the Letter of Transmittal, a BACs holder
will be representing that either (a) the BACs holder is not a plan subject to
Title I of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), or Section 4975 of the Code, or an entity deemed to hold "plan
assets" within the meaning of 29.C.F.R. ss.2510.3-101 of any such plan; or (b)
the tender and acceptance of BACs pursuant to the Offer will not result in a
nonexempt prohibited transaction under Section 406 of ERISA or Section 4975 of
the Code.
Margin Requirements. The BACs are not "margin securities" under the
regulations of the Board of Governors of the Federal Reserve System and,
accordingly, those regulations generally are not applicable to the Offer.
Antitrust. Under the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended (the "HSR Act"), and the rules and regulations that have been
promulgated thereunder by the Federal Trade Commission (the "FTC"), certain
acquisition transactions may not be consummated until certain information and
documentary material has been furnished for review by the Antitrust Division
of the Department of Justice and the FTC and certain waiting period
requirements have been satisfied. The Purchaser does not believe any filing is
required under the HSR Act with respect to its acquisition of BACs
contemplated by the Offer.
16. Certain Fees and Expenses.
Except as set forth in this Section 16, the Purchaser will not pay any fees
or commissions to any broker, dealer or other person for soliciting tenders of
BACs pursuant to the Offer. The Purchaser has retained Related Capital
Company, its affiliate and an affiliate of the General Partner, to act as
Depositary in connection with the Offer. The Purchaser has retained The Herman
Group, Inc. to act as Information Agent in connection with the Offer. The
Purchaser will pay to the Depositary and Information Agent reasonable and
customary compensation for their services, plus reimbursement for certain
reasonable out-of-pocket expenses, and has agreed to indemnify each against
certain liabilities and expenses in connection therewith, including certain
liabilities under the federal securities laws. The Purchaser will also pay all
costs and expenses of printing and mailing the Offer and its legal fees and
expenses.
24
<PAGE>
17. Miscellaneous.
The Offer is being made to all BACs holders, Beneficial Owners and
Assignees, all to the extent their names and addresses are reflected on the
books and records of the Partnership. The Purchaser is not aware of any state
in which the making of the Offer is prohibited by administrative or judicial
action pursuant to a state statute. If the Purchaser becomes aware of any
state where the making of the Offer is so prohibited, the Purchaser will make
a good faith effort to comply with any such statute or seek to have such
statute declared inapplicable to the Offer.
If, after such good faith effort, the Purchaser cannot comply with any
applicable statute, the Offer will not be made to (nor will tenders be
accepted from or on behalf of) BACs holders in such state.
Pursuant to Rule 14d-3 of the General Rules and Regulations under the
Exchange Act, the Purchaser has filed with the Commission a Tender Offer
Statement on Schedule 14D-1, together with exhibits, furnishing certain
additional information with respect to the Offer. Such statement and any
amendments thereto, including exhibits, may be inspected and copies may be
obtained at the same places and in the same manner as set forth with respect
to information concerning the Partnership in Section 9 ("Certain Information
Concerning the Partnership") (except that they will not be available at the
regional offices of the Commission).
No person has been authorized to give any information or make any
representation on behalf of the Purchaser not contained herein or in the
Letter of Transmittal and, if given or made, such information or
representation must not be relied upon as having been authorized.
Lehigh Tax Credit Partners L.L.C.
May 30, 1997
25
<PAGE>
APPENDIX A
GLOSSARY OF DEFINED TERMS
"Assignee" means a person or entity who has purchased BACs but is not
recognized on the books and records of the Partnership maintained by the
Assignor Limited Partner as a registered holder of such BACs.
"Assignor Limited Partner" means Independence Assignor Inc., a Delaware
corporation, or any successor to it which holds Limited Partnership Interests
on behalf of BACs holders.
"BACs" means the beneficial assignment certificates executed by the
Assignor Limited Partner and delivered to a purchaser of BACs in evidence of
the assignment by the Assignor Limited Partner to such BACs holder of all of
the economic and virtually all of the other rights, benefits and privileges of
the ownership of a portion of the Partnership interest of the Assignor Limited
Partner.
"BACs holder" means a holder of BACs and who is reflected as an assignee of
record of BACs on the books and records of the Partnership maintained by the
Assignor Limited Partner.
"Beneficial Owner" means a BACs holder in the case of BACs owned by
Individual Retirement Accounts or Keogh plans.
"business day" means any day other than a Saturday, Sunday or federal
holiday and consists of the time period from 12:01 a.m. through 12:00
midnight, New York City time, and any time period of business days will be
computed in accordance with Rule 14d-1(c)(6) under the Exchange Act.
"Code" means the Internal Revenue Code of 1986, as amended.
"Commission" means the Securities and Exchange Commission.
"Credit Period" has the meaning set forth in Section 9.
"Depositary" means Related Capital Company, an affiliate of the Purchaser
and the General Partner.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Everest" means Everest Properties, Inc.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated thereunder.
"Expiration Date" has the meaning set forth in Section 1.
"Form 10-K" means the Partnership's Form 10-K for the fiscal year ended
March 31, 1996.
"Form 10-Q" means the Partnership's Form 10-Q for the quarter ended
December 31, 1996.
"FTC" means the Federal Trade Commission.
"General Partner" means Related Independence Associates L.P., a Delaware
limited partnership and the general partner of the Partnership. The General
Partner is affiliated with the Purchaser.
"Historic Tax Credits" means any historic rehabilitation credits to tax
allowed to the Partnership and its partners under Section 47 of the Code.
"Housing Tax Credits" means any low-income housing credits to tax allowed
to the Partnership and its partners under Section 42 of the Code.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended.
"Independence SLP" means Independence SLP L.P., a Delaware limited
partnership and an affiliate of the General Partner.
"Information Agent" means The Herman Group, Inc.
"IRA" means an individual retirement account.
A-1
<PAGE>
"Limited Partner" means the Assignor Limited Partner, the Original Limited
Partner or any other person or entity who is admitted as a Substituted Limited
Partner, at the time of reference thereto, in such person's or entity's
capacity as a limited partner of the Partnership.
"Limited Partnership Interest" means the ownership interest of a Limited
Partner, including its interest in distributions, including liquidating
distributions, and profits and losses of the Partnership and all of its other
rights, duties and obligations under the Partnership Agreement.
"Managing Member" means Lehigh Tax Credit Partners, Inc., a Delaware
corporation and the managing member of the Purchaser.
"NASD" means the National Association of Securities Dealers, Inc.
"Offer" has the meaning set forth in the Introduction.
"Offer to Purchase" means this Offer to Purchase dated May 30, 1997.
"Partnership" means Independence Tax Credit Plus L.P., a Delaware limited
partnership.
"Partnership Agreement" means the Amended and Restated Agreement of Limited
Partnership of the Partnership, dated as of September 16, 1991, by and among
Related Independence Associates L.P., a Delaware limited partnership, as
General Partner, Independence SLP L.P., a Delaware limited partnership, as
Original Limited Partner of the Partnership and as Special Limited Partner of
Local Partnerships, Independence Assignor Inc., a Delaware corporation, as
Assignor Limited Partner, and those persons or entities admitted to the
Partnership from time to time as Limited Partners.
"Purchase Price" has the meaning set forth in the Introduction.
"Purchaser" means Lehigh Tax Credit Partners L.L.C., a Delaware limited
liability company and an affiliate of the General Partner.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
"Standstill Agreement" means the letter agreement, dated May 28, 1997,
among the Partnership, the Purchaser and the General Partner.
"Standstill Expiration Date" means May 28, 2007.
"Substituted Limited Partner" means any person or entity admitted to the
Partnership as a Limited Partner pursuant to the provisions of Section 7.2D of
the Partnership Agreement.
"Tax Credits" means Historic Rehabilitation Tax Credits and Housing Tax
Credits.
"TIN" means taxpayer identification number.
"Transfer Restrictions" has the meaning set forth in Section 2.
"UBTI" means unrelated business taxable income.
"Unit" means a unit of limited partner interest in the Partnership,
representing a cash contribution of $1,000 to the capital of the Partnership.
A-2
<PAGE>
SCHEDULE I
EXECUTIVE OFFICERS AND DIRECTORS OF LEHIGH TAX CREDIT PARTNERS, INC.
Set forth below is the name, current business address, present principal
occupation, and employment history for at least the past five years of each
executive officer and director of Lehigh Tax Credit Partners, Inc. (the
"Managing Member" of the Purchaser). Each person listed below is a citizen of
the United States.
J. Michael Fried is a director and executive officer of the Managing
Member. Mr. Fried is also the President and the Director of Related
Independence Associates Inc., a general partner of the General Partner.
Additionally, Mr. Fried is the sole stockholder of one of the general partners
of Related Capital Company ("Related Capital"), a New York general partnership
that 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. In that capacity, he is generally responsible for
all of syndication, finance, acquisition and investor reporting activities of
Related Capital and its affiliates. Mr. Fried practiced corporate law in New
York City with the law firm of Proskauer Rose Goetz & Mendelsohn from 1974
until he joined Related in 1979. Mr. Fried graduated from Brooklyn Law School
with a Juris Doctor Degree, magna cum laude; from Long Island University
Graduate School with a Master of Science degree in Psychology; and from
Michigan State University with a Bachelor of Arts degree in History. Mr.
Fried's business address is 625 Madison Avenue, New York, New York 10022.
Stuart J. Boesky is a director and executive officer of the Managing
Member. Mr. Boesky is also a Vice President of Related Independence Associates
Inc., a general partner of the General Partner. Mr. Boesky practiced real
estate and tax law in New York City with the law firm of Shipley & Rothstein
from 1984 until February 1986 when he joined Related Capital. From 1983 to
1984 Mr. Boesky practiced law with the Boston law firm of Kaye, Fialkow,
Richmond & Rothstein (which subsequently merged with Stroock & Stroock &
Lavan) and from 1978 to 1980 was a consultant specializing in real estate at
the accounting firm of Laventhol & Horwath. Mr. Boesky is the sole stockholder
of one of the general partners of Related Capital. Mr. Boesky graduated from
Michigan State University with a Bachelor of Arts degree and from Wayne State
School of Law with a Juris Doctor degree. He then received a Master of Laws
degree in Taxation from Boston University School of Law. Mr. Boesky's business
address is 625 Madison Avenue, New York, New York 10022.
Alan P. Hirmes is a director and executive officer of the Managing Member.
Mr. Hirmes is also the Senior Vice President of Related Independence
Associates Inc., a general partner of the General Partner. Additionally, Mr.
Hirmes has been a Certified Public Accountant in New York since 1978. Prior
to joining Related Capital in October 1983, Mr. Hirmes was employed by Wiener
& Co., certified public accountants. Mr. Hirmes is also the sole stockholder
of one of the general partners of Related Capital. Mr. Hirmes graduated from
Hofstra University with a Bachelor of Arts degree. Mr. Hirmes' business
address is 625 Madison Avenue, New York, New York 10022.
S-1
<PAGE>
SCHEDULE II
Local Partnership Schedule
--------------------------
<TABLE>
<CAPTION>
% of Units Occupied at May 1
-----------------------------------------------
Name and Location (Number of Units) Date Acquired 1996 1995 1994 1993 1992
---------------------------------- -------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Harbor Court Limited Partnership
Staten Island, NY (40) December 1991 100% 88% 88% 100% 100%
Old Public Limited Partnership
Lawrenceburg, TN (30) December 1991 77% 93% 87% 100% 100%
Lancaster Terrace Limited Partnership
Salem, OR (104) February 1992 99% 99% 96% 100% 0%*
655 North Street Limited Partnership
Baton Rouge, LA (195) March 1992 83% 89% 92% 95% 76%
Landreth Venture
Philadelphia, PA (47) March 1992 96% 95% 100% 90% 0%*
Homestead Apartments Associates Ltd.
Homestead, FL (123) March 1992 93% 95% 96% 50%* 0%*
Bethel Villa Associates, L.P.
Wilmington, DE (150) April 1992 100% 100% 99% 83%(1)
West Diamond Street Associates
Philadelphia, PA (28) May 1992 96% 96% 93% 60%(1)
Susquehanna Partners
Philadelphia, PA (47) May 1992 100% 96% 100% 50%(1)
Boston Bay Limited Partnership
Boston, MA (130) August 1992 100% 99% 99% 100%
Morrant Bay Limited Partnership
Boston, MA (130) August 1992 97% 100% 100% 100%
Hope Bay Limited Partnership
Boston, MA (45) August 1992 98% 100% 100% 100%
Lares Apartments Limited Partnership
Lares, PR (102) August 1992 100% 100% 100% 0%*
Lajas Apartments Limited Partnership
Lajas, PR (99) August 1992 100% 100% 100% 100%
Arlington-Rodeo
Los Angeles, CA (29) August 1992 100% 93% 100% 0%*
Conifer Bateman Associates
Lowville, NY (24) August 1992 100% 100% 96% 100%
Hampden Hall Associates, L.P.
St. Louis, MO (75) September 1992 99% 89% 96% 0%*
Chester Renaissance Associates
Chester, PA (20) September 1992 100% 96% 100% 25%(1)
Homestead Apts. II LTD.
Homestead, FL (112) October 1992 92% 95% 98% 0%*
</TABLE>
S-2
<PAGE>
SCHEDULE II (continued)
Local Partnership Schedule
--------------------------
<TABLE>
<CAPTION>
% of Units Occupied at May 1
-----------------------------------------------
Name and Location (Number of Units) Date Acquired 1996 1995 1994 1993 1992
---------------------------------- -------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
P.S. 157 Associates, L.P.
New York, NY (73) November 1992 96% 98% 100% 100%
Cloisters Limited Partnership II
Philadelphia, PA (65) November 1992 94% 97% 98% 0%*
Creative Choice Homes II, LTD.
Opa-Locka, FL (390) December 1992 99% 100% 99% 0%*
Milford Crossing Associates L.P.
Milford, DE (73) December 1992 96% 96% 100% 0%*
BX-7F Associates, L.P.
Bronx, NY (85) January 1993 98% 98% 99% 60%*(1)
Los Angeles Limited Partnership
Rio Piedras, PR (124) May 1993 98% 99% 0%*
Christine Apartments, L.P.
Buffalo, NY (32) June 1993 100% 100% 100%
Plainsboro Housing Partners, L.P.
Plainsboro, NJ (126) July 1993 98% 99% 13%(1)
Rolling Green Associates, L.P.
Syracuse, NY (395) October 1993 97% 90% 91%
</TABLE>
- ---------------
*Properties in construction phase during year indicated.
(1) Properties in rent-up phase during year indicated.
S-3
<PAGE>
SCHEDULE III
Certain Information Concerning the Properties
As of March 31, 1996
<TABLE>
<CAPTION>
Initial Cost to Partnership Cost Gross at which Carried at Close of Period
---------------------------- Capitalized -----------------------------------------
Buildings Subsequent
and to Acquisition: Buildings and
Description Encumbrances Land Improvements Improvements Land Improvements Total
- ------------------------------ ------------- --------- ------------- -------------- --------- ----------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Harbor Court Limited $ 0 $137,450 $1,007,966 $ 69,289 $140,813 $1,073,892 $1,214,705
Partnership
Staten Island, NY
Old Public Limited Partnership 636,263 10,000 1,713,310 74,504 13,640 1,784,174 1,797,814
Lawrenceburg, TN
Lancaster Terrace Limited 1,741,086 161,269 3,679,601 38,325 163,105 3,716,090 3,879,195
Partnership
Salem, OR
655 North Street Limited 5,163,600 125,500 3,040,980 5,604,866 127,751 8,643,595 8,771,346
Partnership
Baton Rouge, LA
Landreth Venture 3,431,543 1,765 5,903,337 20,983 3,645 5,922,436 5,926,081
Philadelphia, PA
Homestead Apartments 3,605,478 329,402 0 5,916,800 331,468 5,914,734 6,246,202
Associates Ltd.
Homestead, FL
Bethel Villa Associates, L.P. 6,966,654 270,000 5,969,354 2,921,723 275,099 8,885,978 9,161,077
Wilmington, DE
West Diamond Street Associates 1,558,638 30,829 3,444,649 40,009 32,414 3,483,073 3,515,487
Philadelphia, PA
Susquehanna Partners 1,935,557 16,000 0 3,973,428 17,585 3,971,843 3,989,428
Philadelphia, PA
Boston Bay Limited Partnership 3,365,404 440,000 4,143,758 646,556 441,585 4,788,729 5,230,314
Boston, MA
Morrant Bay Limited 5,079,216 650,000 5,522,250 999,896 651,585 6,520,561 7,172,146
Partnership
Boston, MA
Hope Bay Limited Partnership 1,509,225 225,000 1,435,185 501,915 226,585 1,935,515 2,162,100
Boston, MA
Lares Apartments Limited 4,512,406 137,000 0 5,452,732 151,585 5,438,147 5,589,732
Partnership
Lares, PR
Lajas Apartments Limited 4,160,425 110,090 4,952,929 57,082 111,675 5,008,426 5,120,101
Partnership
Lajas, PR
Arlington-Rodeo Properties 3,543,123 624,052 0 4,979,377 625,637 4,977,792 5,603,429
Los Angeles, CA
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Life on Which
Depreciation in
Year of Latest Income
Accumulated Construction/ Date Statement is
Description Depreciation Renovation Acquired Computed(a)
- ------------------------------ ------------ ----------- ---------- --------------
<S> <C> <C> <C> <C>
Harbor Court Limited 27.5 years $ 153,107 1991 Dec. 1991
Partnership
Staten Island, NY
Old Public Limited Partnership 27.5 years 256,464 1991 Dec. 1991
Lawrenceburg, TN
Lancaster Terrace Limited 15-27.5 years 635,230 1992 Feb. 1992
Partnership
Salem, OR
655 North Street Limited 27.5 years 983,300 1992 Mar. 1992
Partnership
Baton Rouge, LA
Landreth Venture 40 years 488,764 1992 Mar. 1992
Philadelphia, PA
Homestead Apartments 40 years 422,762 1992 Mar. 1992
Associates Ltd.
Homestead, FL
Bethel Villa Associates, L.P. 27.5 years 1,072,379 1992 Apr. 1992
Wilmington, DE
West Diamond Street Associates 40 years 271,989 1992 May 1992
Philadelphia, PA
Susquehanna Partners 20-40 years 283,396 1992 May 1992
Philadelphia, PA
Boston Bay Limited Partnership 27.5 years 657,530 1991 Aug. 1992
Boston, MA
Morrant Bay Limited 27.5 years 909,620 1991 Aug. 1992
Partnership
Boston, MA
Hope Bay Limited Partnership 27.5 years 268,378 1991 Aug. 1992
Boston, MA
Lares Apartments Limited 40 years 432,834 1992 Aug. 1992
Partnership
Lares, PR
Lajas Apartments Limited 40 years 464,427 1992 Aug. 1992
Partnership
Lajas, PR
Arlington-Rodeo Properties 27.5 years 402,141 1992 Aug. 1992
Los Angeles, CA
</TABLE>
S-4
<PAGE>
SCHEDULE III (continued)
Certain Information Concerning the Properties
As of March 31, 1996
<TABLE>
<CAPTION>
Initial Cost to Partnership Cost Gross at which Carried at Close of Period
---------------------------- Capitalized -----------------------------------------
Buildings Subsequent
and to Acquisition: Buildings and
Description Encumbrances Land Improvements Improvements Land Improvements Total
- ------------------------------ ------------- --------- ------------- ------------ --------- ------------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Conifer Bateman Associates 1,097,789 15,000 2,525,729 52,319 16,585 2,576,463 2,593,048
Lowville, NY
Hampden Hall Associates, L.P. 3,295,000 0 0 7,811,012 1,585 7,809,427 7,811,012
St. Louis, MO
Chester Renaissance Associates 853,000 33,667 168,333 1,678,142 42,153 1,837,989 1,880,142
Chester, PA
Homestead Apartments II, LTD 3,542,380 338,966 0 5,254,556 340,551 5,252,971 5,593,522
Homestead, FL
P.S. 157 Associates, L.P. 6,740,018 36,500 9,350,642 58,381 38,085 9,407,438 9,445,523
New York, NY
Cloisters Limited 0 35,160 0 9,446,151 36,745 9,444,566 9,481,311
Partnership II
Philadelphia, PA
Creative Choice Homes II, LTD 12,483,476 0 0 21,411,509 574,637 20,836,872 21,411,509
Opa-Locka, FL
Milford Crossing 2,695,472 203,006 0 4,467,373 210,591 4,459,788 4,670,379
Associates L.P
Milford, DE
BX-7F Associates, L.P. 3,952,509 4 5,705,064 43,481 2,178 5,746,371 5,748,549
Bronx, NY
Los Angeles Limited 3,627,689 201,210 0 6,597,933 203,384 6,595,759 6,799,143
Partnership
Rio Piedras, PR
Christine Apartments, L.P. 1,245,000 10,000 2,351,072 62,250 12,174 2,411,148 2,423,322
Buffalo, NY
Plainsboro Housing 4,130,899 800,000 0 8,830,180 802,174 8,828,006 9,630,180
Partners, L.P
Plainsboro, NJ
Rolling Green Associates, L.P. 16,785,000 180,000 19,583,101 286,048 182,174 19,866,975 20,049,149
Syracuse, NY
------------ ---------- ----------- ----------- ---------- ------------ ------------
$107,656,850 $5,121,866 $80,497,260 $97,296,820 $5,777,188 $177,138,758 $182,915,946
============ ========== =========== =========== ========== ============ ============
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Life on Which
Depreciation in
Year of Latest Income
Accumulated Construction/ Date Statement is
Description Depreciation Renovation Acquired Computed(a)
- ------------------------------ ------------ ------------ ---------- --------------
<S> <C> <C> <C> <C>
Conifer Bateman Associates 330,015 1990 Aug. 1992 15-27.5 years
Lowville, NY
Hampden Hall Associates, L.P. 631,020 1992 Sep. 1992 27.5 years
St. Louis, MO
Chester Renaissance Associates 117,554 1992 Sep. 1992 20-40 years
Chester, PA
Homestead Apartments II, LTD 312,206 1992 Oct. 1992 40 years
Homestead, FL
P.S. 157 Associates, L.P. 733,301 1992 Nov 1992 40 years
New York, NY
Cloisters Limited 632,815 1992 Nov 1992 40 years
Partnership II
Philadelphia, PA
Creative Choice Homes II, LTD 1,230,297 1988 Dec 1992 40 years
Opa-Locka, FL
Milford Crossing 377,324 1992 Dec. 1992 27.5 years
Associates L.P
Milford, DE
BX-7F Associates, L.P. 353,786 1993 Jan. 1993 40 years
Bronx, NY
Los Angeles Limited 253,395 1994 Apr. 1993 40 years
Partnership
Rio Piedras, PR
Christine Apartments, L.P. 203,160 1993 June 1993 27.5 years
Buffalo, NY
Plainsboro Housing 436,741 1994 July 1993 27.5 years
Partners, L.P
Plainsboro, NJ
Rolling Green Associates, L.P. 2,123,780 1992 Oct. 1993 27.5 years
Syracuse, NY
-----------
$15,437,715
===========
</TABLE>
(a) Personal property is depreciated over the estimated useful life ranging
from 3 to 10 years.
S-5
<PAGE>
SCHEDULE III (continued)
Certain Information Concerning the Properties
As of March 31, 1996
<TABLE>
<CAPTION>
Cost of Property and Equipment Accumulated Depreciation
----------------------------------------- -----------------------------------
Year Ended March 31
------------------------------------------------------------------------------
1996 1995 1994 1996 1995 1994
------------- ------------- ------------ ----------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Balance at beginning of period $182,534,521 $166,201,677 $ 57,778,195 $ 9,648,615 $4,236,820 $ 762,800
Additions during period:
Improvements 924,831 16,535,765 108,481,165
Depreciation expense 5,858,536 5,412,437 3,474,020
Reductions during period:
Dispositions 5,828 202,921 57,683 0 642 0
Adjustments 537,578 0 0 69,436 0 0
------------ ------------ ------------ ----------- ---------- ----------
Balance at end of period $182,915,946 $182,534,521 $166,201,677 $15,437,715 $9,648,615 $4,236,820
============ ============ ============ =========== ========== ==========
</TABLE>
At the time the local partnerships were acquired by Independence Tax Credit
Plus L.P., the entire purchase price paid by Independence Tax Credit Plus L.P.
was pushed down to the local partnerships as property and equipment with an
offsetting credit to capital. Since the projects were in the construction
phase at the time of acquisition, the capital accounts were insignificant at
the time of purchase. Therefore, there are no material differences between the
original cost basis for tax and GAAP.
S-6
<PAGE>
Facsimile copies of the Letter of Transmittal, properly completed and duly
executed, will be accepted. Questions and requests for assistance may be
directed to the Information Agent at the address and telephone number listed
below. Additional copies of this Offer to Purchase, the Letter of Transmittal
and other tender offer materials may be obtained from the Information Agent or
Depositary as set forth below, and will be furnished promptly at the
Purchaser's expense. The Letter of Transmittal and any other required
documents should be sent or delivered by each BACs holder to the Depositary at
its address or facsimile number set forth below. If tendering by facsimile, a
BACs holder should subsequently send original copies of the Letter of
Transmittal and any other required documents to the Depositary at its address
set forth below. To be effective, a duly completed and signed Letter of
Transmittal or facsimile thereof must be received by the Depositary at the
address or facsimile number set forth below before 12:00 midnight, New York
City Time, on Friday, June 27, 1997.
By Facsimile or by Mail/Hand or Overnight Delivery:
Related Capital Company
625 Madison Avenue
New York, New York 10022
Attention: Denise Bernstein
Facsimile: (212) 593-5794
For Additional Information Call:
The Herman Group, Inc.
2121 San Jacinto Street
26th Floor
Dallas, Texas 75201
Telephone: (800) 243-6107
Exhibit (a)(2)
LETTER OF TRANSMITTAL
TO
TENDER BENEFICIAL ASSIGNMENT CERTIFICATES
IN INDEPENDENCE TAX CREDIT PLUS L.P.
PURSUANT TO THE OFFER TO PURCHASE DATED MAY 30, 1997 BY LEHIGH
TAX CREDIT PARTNERS L.L.C.
Number of Number of(1) Purchase Price(2)
BACs Owned BACs Tendered Per BAC
---------- ------------- -----------------
$730
(1) If no indication is marked in the Number of BACs Tendered column, all BACs
issued to you will be deemed to have been tendered.
(2) The Purchase Price will be automatically reduced by $14 per BAC for each
month (or part of a month) between July 31, 1997 and the date of transfer
for BACs transferred after July 31, 1997.
Please indicate changes or corrections to the address printed above.
- --------------------------------------------------------------------------------
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE AT MIDNIGHT, NEW
YORK CITY TIME, ON THE EXPIRATION DATE (AS SUCH TERM IS DEFINED IN THE OFFER
TO PURCHASE, AS DEFINED BELOW) UNLESS SUCH OFFER IS EXTENDED.
The undersigned hereby tender(s) to Lehigh Tax Credit Partners L.L.C., a
Delaware limited liability company (the "Purchaser"), the number of Beneficial
Assignment Certificates ("BACs") representing assignments of limited partnership
interests in Independence Tax Credit Plus L.P., a Delaware limited partnership
(the "Partnership"), specified above, pursuant to the Purchaser's offer to
purchase up to 19,197 of the issued and outstanding BACs at a purchase price of
$730 per BAC, net to the seller in cash (the "Purchase Price"), without interest
thereon, upon the terms and subject to the conditions set forth in the Offer to
Purchase dated May 30, 1997 (the "Offer to Purchase") and this Letter of
Transmittal (the "Letter of Transmittal", which, together with the Offer to
Purchase and any supplements, modifications or amendments thereto, constitute
the "Offer"), all as more fully described in the Offer to Purchase. The Purchase
Price will be automatically reduced by $14 per BAC for each month (or part of a
month) between July 31, 1997 and the date of transfer for BACs transferred after
July 31, 1997. BACs HOLDERS WHO TENDER THEIR BACS WILL NOT BE OBLIGATED TO PAY
ANY COMMISSIONS OR PARTNERSHIP TRANSFER FEES, WHICH COMMISSIONS AND FEES WILL BE
BORNE BY THE PURCHASER. Receipt of the Offer to Purchase is hereby acknowledged.
Capitalized terms used but not defined herein have the respective meanings
ascribed to them in the Offer to Purchase.
By executing and delivering this Letter of Transmittal, a tendering BACs
holder irrevocably appoints the Purchaser and the designees of the Purchaser and
each of them as such BACs holder's proxies, each with full power of
substitution, to the full extent of such BACs holder's rights with respect to
the BACs tendered by such BACs holder and accepted for payment by the Purchaser
(and with respect to any and all other BACs or other securities issued or
issuable in respect of such BACs on or after the date hereof). All such proxies
shall be considered irrevocable and coupled with an interest in the tendered
BACs. Such appointment will be effective when, and only to the extent that, the
Purchaser accepts such BACs for payment. Upon such acceptance for payment, all
prior proxies given by such BACs holder with respect to such BACs (and such
other BACs and securities) will be revoked without further action, and no
subsequent proxies may be given nor any subsequent written consents executed
(and, if given or executed, will not be deemed effective). The Purchaser and its
designees will, with respect to the BACs (and such other BACs and securities)
for which such appointment is effective, be empowered to exercise all voting and
other rights of such BACs holder as it in its sole discretion may deem proper
pursuant to the Partnership Agreement or otherwise. The Purchaser may assign
such proxy to any person with or without assigning the related BACs with respect
to which such proxy and/or power of attorney was granted. The Purchaser reserves
the right to require that, in order for BACs to be deemed validly tendered,
immediately upon the Purchaser's payment for such BACs, the Purchaser must be
able to exercise full voting rights with respect to such BACs and other
securities, including voting at any meeting of BACs holders.
By executing and delivering this Letter of Transmittal, a tendering BACs
holder also irrevocably constitutes and appoints the Purchaser and its
designees as the BACs holder's attorneys-in-fact, each with full power of
substitution to the extent of the BACs holder's rights with respect to the
BACs tendered by the BACs holder and accepted for payment by the Purchaser.
Such appointment will be effective when, and only to the extent that, the
Purchaser accepts the tendered BACs for payment. Upon such acceptance for
payment, all prior powers of attorney granted by the BACs holder with respect
to such BAC will, without further action, be revoked, and no subsequent powers
of attorney may be granted (and if granted will not be effective). Pursuant to
such appointment as attorneys-in-fact, the Purchaser and its designees each
will have the power, among other things, (i) to seek to transfer ownership of
such BACs on the books and records of the Partnership maintained by the
Assignor Limited Partner (and execute and deliver any accompanying evidences
of transfer and authenticity any of them may deem necessary or appropriate in
connection therewith, including, without limitation, any documents or
instruments required to be executed under the Partnership Agreement or a
"Transferor's (Seller's) Application for Transfer" created by the NASD, if
required), (ii) upon receipt by the Depositary (as the tendering BACs holder's
agent) of the Purchase Price, to be allocated all Tax Credits and tax losses
and to receive any and all distributions made by the Partnership after the
Expiration Date, and to receive all benefits and otherwise exercise all rights
of beneficial ownership of such BACs in accordance with the terms of the
Offer, (iii) to execute and deliver to the Partnership, the General Partner
and/or the Assignor Limited Partner (as the case may be) a change of address
form instructing the Partnership to send any and all future distributions to
which the Purchaser is entitled pursuant to the terms of the Offer in respect of
tendered BACs to the address specified in such form, and (iv) to endorse any
check payable to or upon the order of such BACs holder representing a
distribution, if any, to which the Purchaser is entitled pursuant to the terms
of the Offer, in each case on behalf of the tendering BACs holder. If legal
title to the BACs is held through an IRA or KEOGH or similar account, the BACs
holder understands that this Letter of Transmittal must be signed by the
custodian of such IRA or KEOGH account and the BACs holder hereby authorizes and
directs the custodian of such IRA or KEOGH to confirm this Letter of
Transmittal. This power of attorney shall not be affected by the subsequent
mental disability of the BACs holder, and the Purchaser shall not be required
to post bond in any nature in connection with this power of attorney. The
Purchaser may assign such power of attorney to any person with or without
assigning the related BACs with respect to which such power of attorney was
granted.
By executing and delivering this Letter of Transmittal, a tendering BACs
holder irrevocably assigns to the Purchaser and its assigns all of the, direct
and indirect, right, title and interest of such BACs holder in the Partnership
with respect to the BACs tendered and purchased pursuant to the Offer,
including, without limitation, such BACs holder's right, title and interest in
and to any and all Tax Credits and tax losses and any and all distributions
made by the Partnership after the Expiration Date in respect of the BACs
tendered by such BACs holder and accepted for payment by the Purchaser,
regardless of the fact that the record date for any such distribution may be a
date prior to the Expiration Date. The Purchaser reserves the right to
transfer or assign, in whole or from time to time in part, to any third party,
the right to purchase BACs tendered pursuant to the Offer, together with its
rights under the Letter of Transmittal, but any such transfer or assignment
will not relieve the assigning party of its obligations under the Offer or
prejudice the rights of tendering BACs holders to receive payment for BACs
validly tendered and accepted for payment pursuant to the Offer.
By executing this Letter of Transmittal, the undersigned represents that
either (a) the undersigned is not a plan subject to Title I of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA") or Section 4975
of the Internal Revenue Code of 1986, as amended (the "Code"), or an entity
deemed to hold "plan assets" within the meaning of 29 C.F.R. S.2510.3-101 of
any such plan; or (b) the tender and acceptance of BACs pursuant to the Offer
will not result in a nonexempt prohibited transaction under Section 406 of
ERISA or Section 4975 of the Code.
The undersigned recognizes that, if proration is required pursuant to the
terms of the Offer, the Purchaser will accept for payment from among those
BACs validly tendered on or prior to the Expiration Date and not properly
withdrawn, the maximum number of BACs permitted pursuant to the Offer on a pro
rata basis, with adjustments to avoid purchases which would violate the terms
of the Offer, based upon the number of BACs validly tendered prior to the
Expiration Date and not properly withdrawn.
The undersigned understands that a tender of BACs to the Purchaser will
constitute a binding agreement between the undersigned and the Purchaser upon
the terms and subject to the conditions of the Offer. The undersigned
recognizes that under certain circumstances set forth in Section 2
("Proration; Acceptance for Payment and Payment for BACs") and Section 14
("Conditions of the Offer") of the Offer to Purchase, the Purchaser may not be
required to accept for payment any of the BACs tendered hereby. In such event,
the undersigned understands that any Letter of Transmittal for BACs not
accepted for payment will be destroyed by the Purchaser. Except as stated in
Section 4 ("Withdrawal Rights") of the Offer to Purchase, this tender is
irrevocable, provided BACs tendered pursuant to the Offer may be withdrawn at
any time prior to the Expiration Date. The undersigned acknowledges that (i)
upon acceptance of, and payment for, tendered BACs, the undersigned shall no
longer be entitled to any benefits as a BACs holder and (ii) notwithstanding
that the undersigned may retain a Beneficial Assignment Certificate, such
certificate shall not entitle the undersigned or any purported transferees
(other than the Purchaser) to any benefits as a BACs holder.
<PAGE>
- --------------------------------------------------------------------------------
SIGNATURE BOX
- --------------------------------------------------------------------------------
Please sign exactly as your name is printed (or corrected) above. For joint
owners, each joint owner must sign. The signatory hereto hereby certifies
under penalties of perjury the Taxpayer Identification Number (i.e., the
signatory's social security number) furnished in the blank provided in this
Signature Box and the statements in Box A, Box B and, if applicable, Box C.
The undersigned hereby represents and warrants for the benefit of the
Partnership and the Purchaser that the undersigned owns (or beneficially owns)
the BACs tendered hereby and has full power and authority to validly tender,
sell, assign, transfer, convey and deliver the BACs tendered hereby and that
when the same are accepted for payment by the Purchaser, the Purchaser will
acquire good, marketable and unencumbered title thereto, free and clear of all
liens, restrictions, charges, encumbrances, conditional sales agreements or
other obligations relating to the sale or transfer thereof, such BACs will not
be subject to any adverse claims, the transfer and assignment contemplated
herein are in compliance with all applicable laws and regulations, and that
upon such transfer and assignment the undersigned will not own less than 5
BACs. All authority herein conferred or agreed to be conferred shall survive
the death or incapacity of the undersigned and any obligations of the
undersigned shall be binding upon the heirs, personal representatives,
successors and assigns of the undersigned. Except as stated in Section 4
("Withdrawal Rights") of the Offer to Purchase, this tender is irrevocable.
X
----------------------------------------------------------------------------
(Signature of Owner) (Date)
X
---------------------------------------------------------------------------
Taxpayer Identification Number of Owner (Social Security Number)
X
----------------------------------------------------------------------------
(Signature of Co-Owner) (Date)
- ------------------------------------------------------------------------------
(Title)
Telephone (Day) ( ) Telephone (Eve) ( )
----------------------- --------------------
- -------------------------------------------------------------------------------
TAX CERTIFICATIONS
- -------------------------------------------------------------------------------
BOX A
SUBSTITUTE FORM W-9
(See Instruction 3)
The person signing this Letter of Transmittal hereby certifies the following
to the Purchaser under penalties of perjury:
(i) The Taxpayer Identification Number ("TIN") furnished in the space provided
for that purpose in the Signature Box of this Letter of Transmittal is the
correct TIN of the BACs holder. If no TIN is provided above and this box [ ] is
checked, the BACs holder has applied for a TIN. If the BACs holder has applied
for a TIN, a TIN has not been issued to the BACs holder, and either (a) the BACs
holder has mailed or delivered an application to receive a TIN to the
appropriate Internal Revenue Service ("IRS") Center or Social Security
Administration Office, or (b) the BACs holder intends to mail or deliver an
application in the near future, it is hereby understood that if the BACs holder
does not provide a TIN to the Purchaser within sixty (60) days, 31% of all
reportable payments made to the BACs holder thereafter will be withheld until a
TIN is provided to the Purchaser; and
(ii) Unless this box [ ] is checked, the BACs holder is not subject to backup
withholding either because the BACs holder (a) is exempt from backup
withholding, (b) has not been notified by the IRS that the BACs holder is
subject to backup withholding as a result of a failure to report all interest or
dividends, or (c) has been notified by the IRS that such BACs holder is no
longer subject to backup withholding.
Note: Place an "X" in the box in (ii) above, if you are unable to certify that
the BACs holder is not subject to backup withholding.
- --------------------------------------------------------------------------------
<PAGE>
BOX B
FIRPTA AFFIDAVIT
(See Instruction 3)
Under Section 1445(c)(5) of the Code and Treas. Reg. 1.1445-IIT(d), a
transferee must withhold tax equal to 10% of the amount realized with respect
to certain transfers of an interest in a partnership if 50% or more of the
value of its gross assets consists of U.S. real property interests and 90% or
more of the value of its gross assets consists of U.S. real property interests
plus cash or cash equivalents, and the holder of the partnership interest is a
foreign person. To inform the Purchaser that no withholding is required with
respect to the BACs holder's interest in the Partnership, the person signing
this Letter of Transmittal hereby certifies the following
under penalties of perjury:
(i) Unless this box [ ] is checked, the BACs holder, if an individual, is a
U.S. citizen or a resident alien for purposes of U.S. income taxation, and if
other than an individual, is not a foreign corporation, foreign partnership,
foreign trust or foreign estate (as those terms are defined in the Code and
Income Tax Regulations);
(ii) the BACs holder's U.S. social security number (for individuals) or
employer identification number (for non-individuals) is correct as furnished
in the blank provided for that purpose on the back of this Letter of
Transmittal; and
(iii) the BACs holder's home address (for individuals), or office address (for
non-individuals), is correctly printed (or corrected) on the front of this
Letter of Transmittal. If a corporation, the jurisdiction of incorporation is
__________________.
The person signing this Letter of Transmittal understands that this
certification may be disclosed to the IRS by the Purchaser and that any false
statements contained herein could be punished by fine, imprisonment, or both.
- -------------------------------------------------------------------------------
BOX C
SUBSTITUTE FORM W-8
(See Instruction 3)
Bychecking this box [ ], the person signing this Letter of Transmittal hereby
certifies under penalties of perjury that the BACs holder is an "exempt
foreign person" for purposes of the backup withholding rules under U.S.
federal income tax laws, because the BACs holder:
(i) Is a nonresident alien or a foreign corporation, partnership, estate or
trust;
(ii) If an individual, has not been and plans not to be present in the U.S.
for a total of 183 days or more during the calendar year; and
(iii) Neither engages, nor plans to engage, in a U.S. trade or business that
has effectively connected gains from transactions with a broker or barter
exchange.
- -------------------------------------------------------------------------------
For BACs to be accepted for purchase, BACs holders should complete and sign
this Letter of Transmittal in the Signature Box and return it in the
self-addressed, postage-paid envelope enclosed, or by hand or overnight
courier to: Denise Bernstein, c/o Related Capital Company, 625 Madison Avenue,
New York, NY 10022, or by Facsimile to: (212) 593-5794. Delivery of this
Letter of Transmittal or any other required documents to an address other than
the one set forth above or transmission via facsimile other than as set forth
above does not constitute valid delivery.
PLEASE CAREFULLY READ THE INSTRUCTIONS ACCOMPANYING THIS LETTER
OF TRANSMITTAL AND BOXES A, B AND C ABOVE.
- ------------------------------------------------------------------------------
<PAGE>
INSTRUCTIONS FOR COMPLETING LETTER OF TRANSMITTAL
Forming Part of the Terms and Conditions of the Offer
- -------------------------------------------------------------------------------
FOR ASSISTANCE IN COMPLETING THE LETTER OF TRANSMITTAL, CALL:
DENISE BERNSTEIN, c/o RELATED CAPITAL COMPANY, AT (800) 600-6422 (ext. 2030)
- -------------------------------------------------------------------------------
1. Delivery of Letter of Transmittal. For convenience in responding to the
Offer, a self-addressed, postage-paid envelope had been enclosed with the
Offer to Purchase. However, to ensure receipt of the Letter of
Transmittal, it is suggested that you use an overnight courier or, if the
Letter of Transmittal is to be delivered by United States mail, that you
use certified or registered mail, return receipt requested.
To be effective, a duly completed and signed Letter of Transmittal must
be received by the Depositary at the address (or facsimile number) set
forth below before the Expiration Date, as such term is defined in the
Offer to Purchase, unless extended. Letters of Transmittal which have
been duly executed, but where no indication is marked in the "Number of
BACs Tendered" column, shall be deemed to have tendered all BACs pursuant
to the Offer. Tenders of less than all BACs owned by a BACs holder that
would result in such BACs holder holding less than 5 BACs will not be
accepted.
By Mail/Hand or Overnight Delivery:RELATED CAPITAL COMPANY
625 Madison Avenue
New York, New York 10022
Attention: Denise Bernstein
By Facsimile (see note below): (212) 593-5794
For Additional Information Call: THE HERMAN GROUP, INC.
(800) 243-6107
The method of delivery of the letter of transmittal and all other required
documents is at the option and sole risk of the tendering BACs holder, and the
delivery will be deemed made only when actually received by the depositary. In
all cases, sufficient time should be allowed to assure timely delivery. If
tendering by facsimile, please transmit both the front and back of the Letter
of Transmittal AND the Tax Certification page to the depositary at the
facsimile number listed above prior to the expiration of the offer AND THEN
mail the original copies of such pages to the Depositary at the address listed
above.
All tendering holders of BACs, by execution of this Letter of Transmittal or
facsimile hereof, waive any right to receive any notice of the acceptance of
their BACs for payment.
2. Signatures. All BACs holders must sign in the Signature Box on the back
of the Letter of Transmittal. If the BACs are held in the names of two or
more persons, all such persons must sign the Letter of Transmittal. When
signing as a general partner, corporate officer, attorney-in-fact,
executor, custodian, administrator or guardian, please give full title
and send proper evidence of authority satisfactory to the Purchaser with
this Letter of Transmittal. With respect to most trusts, the Partnership
will generally require only the named trustee to sign the Letter of
Transmittal. For BACs held in a custodial account for minors, only the
signature of the custodian will be required.
For IRA custodial accounts, the beneficial owner should return the executed
Letter of Transmittal to the Depositary as specified in Instruction 1
herein. Such Letter of Transmittal will then be forwarded by the Depositary
to the custodian for additional execution. Such Letter of Transmittal will
not be considered duly completed until after it has been executed by the
custodian.
If any tendered BACs are registered in different names, it will be
necessary to complete, sign and submit as many separate Letters of
Transmittal as there are different registrations of certificates.
3. Documentation Requirements. In addition to information required to be
completed on the Letter of Transmittal, additional documentation may be
required by the Purchaser under certain circumstances, including but not
limited to those listed below. Questions on documentation should be
directed to Denise Bernstein, c/o Related Capital Company, at (800)
600-6422 (ext. 2030). If tendering by fax, original copies should
subsequently be sent to the Depositary at the address listed above.
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Deceased Owner (Joint Tenant) - Certified Copy of Death Certificate.
Deceased Owner (Others) - Certified Copy of Death Certificate (See also Executor/Administrator
/Guardian below).
Executor/Administrator/Guardian - (i) Certified Copies of court Appointment Documents for Executor or
Administrator dated within 60 days of the date of execution of
the Letter of Transmittal; OR
(ii) a copy of applicable provisions of the Will (Title Page, Executor(s)'
powers, asset distribution ); OR
(iii) Certified copy of Estate distribution documents.
Attorney-in-Fact - Current Power of Attorney.
Corporations/Partnerships - Certified copy of Corporate Resolution(s) (with raised corporate seal),
or other evidence of authority to act. Partnerships should furnish copy
of Partnership Agreement.
Trust/Pension Plans - Copy of cover page of the Trust or Pension Plan, along with copy of the
section(s) setting forth names and powers of Trustee(s) and any amendments
to such sections or appointment of Successor Trustee(s).
</TABLE>
(Continued on Back)
<PAGE>
4. U.S. Persons. A BACs holder who or which is a United States citizen OR a
resident alien individual, a domestic corporation, a domestic
partnership, a domestic trust or a domestic estate (collectively, "United
States Persons") as those terms are defined in the Code and Income Tax
Regulations, should follow the instructions below with respect to
certifying Boxes A and B (on the reverse side of the Letter of
Transmittal).
Taxpayer Identification Number. To avoid 31% federal income tax backup
withholding, the BACs holder must furnish his, her or its TIN in the
blank provided for that purpose in the Signature Box on the back of the
Letter of Transmittal and certify under penalties of perjury Box A, B
and, if applicable, Box C. In the case of an individual person, such
person's social security number is his or her TIN.
When Determining the TIN to be furnished, please refer to the following
Note as a guideline:
NOTE: Individual Accounts should reflect their own TIN. Joint
Accounts should reflect the TIN of the person whose name appears
first. Trust Accounts should reflect the TIN assigned to the Trust.
Custodial accounts for the benefit of minors should reflect the TIN
of the minor. Corporations or other business entities should reflect
the TIN assigned to that entity. If you need additional information,
please see the enclosed copy of the Guidelines for Certification of
Taxpayer Identification Number on Substitute Form W-9.
Substitute Form W-9-Box A.
(i) In order to avoid 31% federal income tax backup withholding, the BACs
holder must provide to the Purchaser in the blank provided for that
purpose in the Signature Box on the back of the Letter of Transmittal the
BACs holder's correct TIN and certify, under penalties of perjury, that
such BACs holder is not subject to such backup withholding. The TIN being
provided on the Substitute Form W-9 is that of the registered BACs holder
as indicated in the Signature Box on the back of the Letter of
Transmittal. If a correct TIN is not provided, penalties may be imposed
by the IRS, in addition to the BACs holder being subject to backup
withholding. Certain BACs holders (including, among others, all
corporations) are not subject to backup withholding. Backup withholding
is not an additional tax. If withholding results in an overpayment of
taxes, a refund may be obtained from the IRS.
(ii) DO NOT CHECK THE BOX IN BOX A, PART (ii), UNLESS YOU HAVE BEEN NOTIFIED
BY THE IRS THAT YOU ARE SUBJECT TO BACKUP WITHHOLDING.
FIRPTA Affidavit-Box B. To avoid withholding of tax pursuant to Section
1445 of the Code, each BACs holder who or which is a United States Person
(as defined in Instruction 3 above) must certify, under penalties of
perjury, the BACs holder's TIN and address, and that the BACs holder is
not a foreign person. Tax withheld under Section 1445 of the Internal
Revenue Code is not an additional tax. If withholding results in an
overpayment of tax, a refund may be obtained from the IRS. CHECK THE BOX
IN BOX B, PART (ii) ONLY IF YOU ARE NOT A U.S. PERSON, AS DESCRIBED
THEREIN.
5. Foreign Persons-Box C. In order for a BACs holder who is a foreign person
(i.e., not a United States Person as defined in Instruction 3 above) to
qualify as exempt from 31% backup withholding, such foreign BACs holder
must certify, under penalties of perjury, the statement in Box C of this
Letter of Transmittal attesting to that foreign person's status by
checking the box in such statement. UNLESS SUCH BOX IS CHECKED, SUCH
FOREIGN PERSON WILL BE SUBJECT TO 31% WITHHOLDING OF TAX UNDER SECTION
1445 OF THE CODE.
6. Conditional Tenders. No alternative, conditional or contingent tenders
will be accepted.
7. Validity of Letter of Transmittal. All questions as to the validity,
form, eligibility (including time of receipt) and acceptance of a Letter
of Transmittal will be determined by the Purchaser and such determination
will be final and binding. The Purchaser's interpretation of the terms
and conditions of the Offer (including these instructions for the Letter
of Transmittal) also will be final and binding. The Purchaser will have
the right to waive any irregularities or conditions as to the manner of
tendering. Any irregularities in connection with tenders must be cured
within such time as the Purchaser shall determine unless waived by them.
The Letter of Transmittal will not be valid unless and until any
irregularities have been cured or waived. Neither the Purchaser nor the
Depositary is under any duty to give notification of defects in a Letter
of Transmittal and will incur no liability for failure to give such
notification.
8. Assignee Status. Assignees must provide documentation to the Depositary
which demonstrates, to the satisfaction of the Purchaser, such person's
status as an assignee.
9. Inadequate Space. If the space provided herein is inadequate, the numbers
of BACs and any other information should be listed on a separate schedule
attached hereto and separately signed on each page thereof in the same
manner as this Letter of Transmittal is signed.
Questions and requests for assistance may be directed to the Information
Agent at its address and telephone number listed below. Additional copies of the
Offer to Purchase, the Letter of Transmittal and other tender offer materials
may be obtained from the Information Agent or Depositary as set forth below,
and will be furnished promptly at the Purchaser's expense. You may also contact
your broker, dealer, commercial bank, trust company or other nominee for
assistance concerning the Offer.
The Depositary for the Offer is:
RELATED CAPITAL COMPANY
625 Madison Avenue
New York, New York 10022
Attention: Denise Bernstein
or
Call Toll-Free (800) 600-6422 (ext. 2030)
The Information Agent for the Offer is:
THE HERMAN GROUP, INC.
2121 San Jacinto Street
26th Floor
Dallas, Texas 75201
Telephone: (800) 243-6107
Exhibit (a)(3)
LEHIGH TAX CREDIT PARTNERS L.L.C.
625 Madison Avenue
New York, New York 10022
May 30, 1997
$730 PER BAC OFFER TO PURCHASE
To BACs holders in Independence Tax Credit Plus L.P.:
Lehigh Tax Credit Partners L.L.C., a Delaware limited liability company
(the "Purchaser"), is offering to purchase up to 19,197 of the outstanding
Beneficial Assignment Certificates ("BACs") representing assignments of limited
partnership interests of Independence Tax Credit Plus L.P. (the "Partnership")
for a cash purchase price of $730 per BAC, net to the seller in cash (the
"Purchase Price"), upon the terms and subject to the conditions in the attached
Offer to Purchase, dated May 30, 1997, and the related Letter of Transmittal
(which together constitute the "Offer"). The Purchase Price will be
automatically reduced by $14 per BAC for each month (or part of a month) between
July 31, 1997 and the date of transfer for BACs transferred after July 31, 1997.
THE PURCHASER AND RELATED INDEPENDENCE ASSOCIATES L.P., THE GENERAL PARTNER OF
THE PARTNERSHIP, ARE AFFILIATED.
Unless extended by the Purchaser, the Offer will expire at midnight, New
York City time, on June 27, 1997. The Offer is not conditioned upon any minimum
number of BACs being tendered; however, tenders of less than all BACs owned by a
BACs holder that would result in a BACs holder holding less than 5 BACs will not
be accepted.
The materials included in this package include important information
concerning the Purchaser, the terms and conditions to the Offer, tax
implications and instructions for tendering your BACs. It is important that you
take some time to read carefully the enclosed Offer to Purchase, the Letter of
Transmittal and other accompanying materials in order to evaluate the Offer
being made by the Purchaser.
The Offer is being made to provide BACs holders that have a current or
anticipated need or desire for liquidity with an opportunity to sell their BACs.
Such BACs holders may feel that their circumstances have changed such that
anticipated future allocation of tax credits and tax losses will no longer be
beneficial to them.
Possible tax consequences to tendering BACs holders:
Tendering BACs holders who have not utilized passive losses: A BACs
holder who sells his or her BACs pursuant to this Offer will receive $730
of proceeds per BAC that may result in a taxable gain, which gain could be
sheltered by unused passive losses. In the case of an individual BACs
holder who acquired BACs pursuant to the original offering of BACs by the
Partnership and who has not utilized the passive losses from the
Partnership to offset passive income, the ability to use unapplied passive
losses from the Partnership should offset any gain recognized on a sale of
those BACs, so that the BACs holder would not be required to make a federal
tax payment. In addition, if an individual sells all of his or her BACs,
unused passive losses of up to approximately $222 per BAC may be available
to offset other capital gains of such BACs holder.
Tendering BACs holders who have utilized passive losses: An individual
BACs holder who acquired BACs pursuant to the original offering of BACs by
the Partnership and has utilized all of his passive losses (therefore not
being able to shelter any gain from the sale of BACs) is expected to
recognize a taxable gain of approximately $117 per BAC.
The Purchaser believes that the projected aggregate per BAC benefit from
the Offer, together with the benefits received since 1991, total approximately
$1,862. Such benefits include $730 (the Purchase Price) plus $593 (representing
the Tax Credits allocated through June 30, 1997) plus approximately $62
(representing the tax savings attributable to the use of the capital loss of
$222 described in the preceding section, assuming a tax rate of 28%) plus
approximately $488 (representing the assumed return on the reinvestment of the
Purchase Price at 5% for approximately 10.5 years) less approximately $11
(representing a recapture of Historic Tax Credits). The projected benefit of
$1,862 assumes the BACs holder acquired the BACs pursuant to the original
offering and such BACs holder did not utilize any passive losses. The projected
benefit may be more or less depending on, among other things, a tendering BACs
holder's tax rate and the return a tendering BACs holder may earn when investing
the Purchase Price.
<PAGE>
The Purchaser believes that such aggregate projected benefit compares
favorably with the potential benefits to a BACs holder who remains in the
Partnership, continuing to receive Tax Credits, and assuming a return of the
present value of the original investment of $1,000 as, and if, the Partnership's
28 properties are sold for amounts in excess of the then existing indebtedness
and other liabilities. The aggregate of such potential benefits would be
approximately $1,841 which include $593 (the Tax Credits allocated through June
30, 1997) plus $820 (the present value at 5% of the remaining Tax Credits to be
allocated over the remaining Credit Period (as defined in the Offer to
Purchase)) plus approximately $428 (the present value at 5% of a BACs holder's
original $1,000 investment, returned ratably over the 4 years following the end
of the Credit Period). There can, however, be no guarantee that these benefits
will be realized. Neither the General Partner of the Partnership, nor the
Purchaser, is making any representation, and there can be no assurance, that any
or all of the properties of the Partnership will be sold and, if sold, will
result in distributable cash sufficient to return any of a BACs holder's
original investment.
You must decide whether to tender your BACs based on your own particular
circumstances. YOU SHOULD CONSULT WITH YOUR ADVISORS ABOUT THE FINANCIAL, TAX,
LEGAL AND OTHER IMPLICATIONS TO YOU OF ACCEPTING THE OFFER.
If you need additional information regarding the Offer or need assistance
in tendering your BACs, please do not hesitate to call Denise Bernstein, c/o
Related Capital Company, at (800) 600-6422 (ext. 2030).
LEHIGH TAX CREDIT PARTNERS L.L.C.
Exhibit (a)(4)
LEHIGH TAX CREDIT PARTNERS L.L.C.
625 MADISON AVENUE
NEW YORK, NY 10022
May 30, 1997
RE: Independence Tax Credit Plus L.P.
Dear American Express Financial Advisor:
Today, a tender offer (the "Offer") for your client's BACs/limited partnership
interests in Independence Tax Credit Plus L.P. (the "Partnership") was commenced
by Lehigh Tax Credit Partners L.L.C. ("Lehigh") for a purchase price of $730 per
$1,000 (BAC) invested by your client(s).
We are writing to explain the background of the Offer. Since the formation of
the Partnership, corporations have shown significant interest in investing in
programs benefiting from Low Income Housing Tax Credits. Such corporate
investors, in addition to utilizing such tax credits, are able to fully utilize
passive losses such as those generated by the Partnership, while individuals,
such as your clients, usually can not utilize such passive losses. Lehigh
believes this new corporate interest in tax credits has created an opportunity
for your client(s) to sell their interests, at what we believe to be an
attractive price.
Lehigh, which is an affiliate of the general partner of the Partnership,
believes that the per BAC benefit from the Offer, together with the value of the
benefits already received by your client since 1991, compares favorably with the
present value of the benefits your client may expect to receive by remaining in
the Partnership. Lehigh estimates the per BAC benefit of accepting the Offer is
approximately $1,862, which consists of tax credits received through June 30,
1997 ($593), the purchase price ($730), together with future earnings from
reinvesting the purchase price ($488, assuming a compounded return of 5% per
annum for approximately 10.5 years), and estimated tax savings resulting from
the capital loss (approximately $62), but recapturing historic tax credits
($11). If your client were to remain in the Partnership, Lehigh's estimate of
his benefits is approximately $1,841, which consists of the tax credits received
through June 30, 1997 ($593), the present value of the expected remaining tax
credits ($820) and the present value of a projected return of your client's
original $1,000 investment, assumed to be paid ratably during the four years
following the end of the compliance period ($428).
Attached please find a list of your client(s) who are BACs holders in the
Partnership. In addition, enclosed please find a copy of the cover letter each
of your clients is receiving in connection with the Offer. If your client is
interested in tendering, please have your clients sign the Letter of Transmittal
on the top of Page 2 (in the shaded section) and return it to us in the prepaid
envelope enclosed with the Offer.
If you have any questions or would like a copy of the Offer to Purchase, please
call Denise Bernstein at 800-600-6422, extension 2030.
Lehigh Tax Credit Partners, Inc.
Managing Member
Exhibit (c)(1)
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
<PAGE>
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 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
2
<PAGE>
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 to provide the notice required above, you
were not given the opportunity to obtain the counsel of your choice or
3
<PAGE>
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,
4
<PAGE>
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.
5
<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
Exhibit (c)(2)
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.
<PAGE>
This letter agreement shall be binding upon the parties hereto and their
respective successors, assigns and controlled affiliates.
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
-2-
<PAGE>
EVEREST PROPERTIES II, LLC
By: /s/ David I. Lesser
----------------------------
Name: David I. Lesser
Title: Executive Vice President
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
-3-
<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
<PAGE>
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 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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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
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(including without limitation the Liberty III Standstill Agreement) or execute a
replacement standstill agreement reasonably acceptable to the subject
partnership.
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 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.
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<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
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<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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