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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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SCHEDULE 14D-9
Solicitation/Recommendation Statement
Pursuant to Section 14(d)(4) of the
Securities Exchange Act of 1934
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INDEPENDENCE TAX CREDIT PLUS L.P. II
(Name of Subject Company)
INDEPENDENCE TAX CREDIT PLUS L.P. II
(Name of Person(s) Filing Statement)
BENEFICIAL ASSIGNMENT CERTIFICATES
(Title of Class of Securities)
45378B 10 4
(CUSIP Number of Class of Securities)
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J. Michael Fried
Related Independence Associates L.P.
625 Madison Avenue
New York, NY 10022
(212) 421-5333
(Name, Address and Telephone Number of
Persons Authorized to Receive Notices and Communications
on Behalf of the Person(s) Filing Statement)
Copy to:
Peter M. Fass, Esq.
Battle Fowler LLP
75 East 55th Street
New York, NY 10022
(212) 856-7000
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Item 1. Security and Subject Company.
The name of the subject company is Independence Tax Credit Plus L.P. II, a
Delaware limited partnership (the "Partnership"), which has its principal
executive offices at 625 Madison Avenue, New York, New York 10022. The general
partner of the Partnership is Related Independence Associates L.P. (the
"General Partner"), a Delaware limited partnership, which has its principal
executive offices at 625 Madison Avenue, New York, New York 10022. The title of
the class of equity securities to which this statement relates is the
Partnership's Beneficial Assignment Certificates ("BACs") representing
assignments of limited partnership interests in the Partnership.
Item 2. Tender Offer of the Bidder.
This Schedule 14D-9 relates to the offer by Lehigh Tax Credit Partners
L.L.C. (the "Purchaser"), a Delaware limited liability company and an affiliate
of the General Partner, disclosed in a Tender Offer Statement on Schedule 14D-1
dated November 10, 1997 (the "Schedule 14D-1"), to purchase up to 14,732 issued
and outstanding BACs at a purchase price of $725 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 November 10,
1997 and the related Letter of Transmittal, as each may be supplemented,
modified or amended from time to time (which collectively constitute the
"Lehigh Offer" and are contained within the Schedule 14D-1).
The address of the Purchaser's principal executive offices is 625 Madison
Avenue, New York, New York 10022.
Item 3. Identity and Background.
(a) The name and business address of the Partnership, which is the person
filing this statement, are set forth in Item 1 above.
(b)(1) The Partnership does not have any employees, directors or executive
officers. All decisions with respect to the management of the Partnership and
its affairs are made by the General Partner. Except as described below, there
are no material contracts, agreements, arrangements or understandings or any
actual or potential conflicts of interest between the General Partner or its
affiliates and the Partnership and its affiliates.
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, as set forth in the Partnership's Amended and Restated Agreement of
Limited Partnership, dated as of March 31, 1993 (the "Partnership Agreement"),
the Partnership's prospectus and other publicly filed documents, 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 partnerships (the "Local Partnerships") in which the
Partnership has acquired a partnership interest). 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,
Partnership Management Fees for any year will be reduced to the extent that the
sum of (i) the aggregate amount of operating cash flow received by affiliates
of the General Partner or the General Partner itself from Local Partnerships
and (ii) the amount of operating cash flow received by the General Partner from
the Partnership exceeds 1% of all distributions of operating cash flow by the
Partnership for such year. "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 any interests in Local Partnerships or any properties, and (ii)
the amount of all liens and mortgages on properties acquired by the Local
Partnerships. For the six months ended September 30, 1997 and the three years
ended March 31, 1997, 1996 and 1995, the General Partner earned aggregate
Partnership Management Fees of $25,000, $87,500, $434,550 and $475,023,
respectively.
Independence SLP L.P. ("Independence SLP") is an affiliate of the General
Partner. Independence SLP is entitled to receive up to $5,000 per year as a fee
(the "Local Administrative Fee") from each Local Partnership of which it is a
special limited partner; provided, however, the sum of the aggregate Local
Administrative Fee and the Partnership Management Fee for any year shall not
exceed 0.5% of Invested Assets. Independence SLP, as special limited partner of
the Local Partnerships, earned Local Administrative Fees of $10,000, $20,000,
$12,500 and
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$15,000 from the Local Partnerships for the six months ended September 30, 1997
and the three years ended March 31, 1997, 1996 and 1995, respectively.
The General Partner and the officers and directors of its 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 six months ended
September 30, 1997 and the three years ended March 31, 1997, 1996 and 1995, the
Partnership incurred, in the aggregate, $75,089, $101,581, $91,757 and $94,702,
respectively, to the General Partner and its affiliates as reimbursement of
expenditures and asset monitoring services made on behalf of the Partnership.
In addition, under the terms of the Partnership Agreement, upon the
removal of the General Partner by the limited partners of the Partnership (the
"Limited Partners") or upon the occurrence of a "Removal Event," as defined
below, the General Partner may be entitled to receive compensating payments,
which will be payable with interest for a term of not less than five years. The
amount of such payments 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.
(2) The managing member of the Purchaser (the "Managing Member") is Lehigh
Tax Credit Partners, Inc., a Delaware corporation. Except as described below,
there are no material contracts, agreements, arrangements or understandings or
any actual or potential conflicts of interest between the General Partner or
its affiliates and the Purchaser or the Managing Member, its executive
officers, directors or affiliates. The Purchaser is an affiliate of the General
Partner. Most of the executive officers and directors of the Managing Member
also serve as executive officers and directors of the sole general partner 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 the Partnership, its partners and its investors.
The Partnership, the Purchaser and the General Partner entered into a
letter agreement, dated November 7, 1997 (the "Standstill Agreement") (a copy
of which has been filed as Exhibit (c)(1) hereto), pursuant to which the
Purchaser agreed that, prior to November 7, 2007 (the "Standstill Expiration
Date"), it will not and it will cause certain affiliates not to (i) seek to
propose to enter into, directly or indirectly, any merger, consolidation,
business combination, sale or acquisition of assets, liquidation, dissolution
or other similar transaction involving the Partnership, (ii) form, join or
otherwise participate in a "group" (within the meaning of Section 13(d)(3) of
the Securities Exchange Act of 1934, as amended) 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. The Purchaser, the General Partner and Related
Capital Company also agreed to indemnify and hold harmless the Partnership,
Independence SLP and certain associated parties against any claims or damages
arising from a breach of the Standstill Agreement or from a tender offer or
acquisition of BACs by the Purchaser or its affiliates. The foregoing
discussion of the Standstill Agreement is subject to and qualified in its
entirety by reference to such agreement, which is incorporated herein by
reference.
The Partnership has been informed that the Purchaser expects to purchase
all of the BACs tendered pursuant to the Lehigh Offer (other than BACs
purchased by Everest Properties, Inc. or its affiliates ("Everest") pursuant to
the Everest Option (as defined according to the Lehigh Offer)) with funds
borrowed from one of its members pursuant to a promissory note dated as of
November 7, 1997, containing substantially the same economic terms and
conditions that such member borrows such funds under an existing credit
facility it has available to it with BankBoston, National Association (formerly
known as The First National Bank of Boston) and Fleet National Bank
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(the "Lenders"). Alternatively, the Partnership has been informed that if the
Purchaser has completed its contemplated sale of membership interests to third
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 Lehigh 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. All of the BACs tendered
pursuant to the Lehigh Offer and all of the Purchaser's membership interests
will be pledged to the Lenders to secure the loan. Additionally, Related
Capital Company will guarantee all amounts borrowed under such credit facility.
Item 4. The Solicitation or Recommendation.
(a) Following receipt of the terms of the Lehigh Offer, the General
Partner reviewed and considered the Lehigh Offer. The General Partner is
expressing no opinion and is remaining neutral with respect to the Lehigh
Offer.
(b) Although the General Partner is not making a recommendation with
respect to the Lehigh Offer, the General Partner believes that BACs holders
should carefully consider the following factors in making their own decisions
of whether to accept or reject the Lehigh Offer:
[bullet] BACs holders should note that the selling price for BACs reported in
the limited and sporadic secondary market during the two-month period ended
March 31, 1997 was $860. However, the Purchaser states its belief in the
Lehigh Offer that such secondary market selling prices do not take into
account commissions charged by secondary market makers effectuating such
sales and the fact that the BACs become less valuable with the passage of
time as fewer tax credits remain. Additionally, based on certain
assumptions therein, the Purchaser states in the Lehigh Offer that the
present value of the potential aggregate benefits to a BACs holder who
tenders to the Purchaser exceeds the Purchaser's estimate of the present
value of the potential aggregate benefits if a BACs holder does not tender.
[bullet] The Lehigh Offer will provide BACs holders with an immediate
opportunity to liquidate their investment in the Partnership. BACs holders
who have a present or future need for the tax credits and/or tax losses
from the BACs may, however, prefer to retain their BACs and not tender them
pursuant to the Lehigh Offer.
[bullet] As stated by the Purchaser in the Lehigh Offer, there may be a
conflict of interest between the Purchaser's desire to purchase the BACs at
a low price and a BACs holder's desire to sell its BACs at a high price.
Therefore, BACs holders might receive greater value if they hold their
BACs, rather than tender. Furthermore, BACs holders should be aware that a
secondary market exists for the BACs.
[bullet] BACs HOLDERS WILL NO LONGER RECEIVE THE TAX CREDITS AND/OR TAX LOSSES
FROM THE BACs SHOULD THEY TENDER PURSUANT TO THE LEHIGH OFFER.
[bullet] BACs holders who tender their BACs will lose the right to receive any
future distributions from the Partnership, including distributions from any
refinancing or sale. The Partnership has made no distributions to BACs
holders in the past, and there can be no assurance as to the timing, amount
or occurrence of any future distributions.
[bullet] BACs holders should consult with their respective advisors about the
financial, tax, legal and other consequences of the Lehigh Offer.
Item 5. Persons Retained, Employed or to Be Compensated.
Neither the Partnership nor any person acting on its behalf has employed,
retained or compensated, or intends to employ, retain or compensate, any person
to make solicitations or recommendations to BACs holders on its behalf
concerning the Lehigh Offer.
Item 6. Recent Transactions and Intent With Respect to Securities.
(a) Neither the Partnership nor the General Partner has effected any
transactions in the BACs during the past 60 days. The General Partner is not
aware of any transactions in the BACs during the past 60 days by any of its
executive officers, directors, affiliates or subsidiaries. According to the
Lehigh Offer materials, the Purchaser, an affiliate of the General Partner,
effected a private transaction, effective as of October 1, 1997, to acquire 45
BACs at a price per BAC of $807.50.
(b) Neither the General Partner nor, to the knowledge of the General
Partner, any of its executive officers, directors, affiliates or subsidiaries
own any BACs and, therefore, cannot tender BACs to the Purchaser pursuant to
the Lehigh Offer.
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Item 7. Certain Negotiations and Transactions by the Subject Company.
(a) No negotiation is being undertaken or is underway by the Partnership
in response to the Lehigh Offer which relates to or would result in: an
extraordinary transaction such as a merger or reorganization, involving the
Partnership or any subsidiary of the Partnership; a purchase, sale or transfer
of a material amount of assets by the Partnership or any subsidiary; except as
set forth in Item 8 below, a tender offer for or other acquisition of
securities by or of the Partnership; or any material change in the present
capitalization or dividend policy of the Partnership.
(b) Except as described above or in Item 3(b), there are no transactions,
board resolutions, agreements in principle or signed contracts in response to
the Lehigh Offer which relate to or would result in one or more of the matters
referred to in Item 7(a).
Item 8. Additional Information to Be Furnished.
The General Partner has in the past received from third parties requests
that such parties be provided with a list of the Partnership's BACs holders
(the "List"). Such a List would only be provided by the General Partner to
parties in cases where the General Partner has been satisfied that such List
has been properly requested by a person entitled by the Partnership Agreement
and applicable law to receive such a List, the party requesting the List has
demonstrated that such party has a proper partnership business purpose in
connection with such request and the General Partner has been satisfied that
the Partnership and the BACs holders have obtained appropriate protections from
such party with respect to the use of such List. The General Partner has sought
such protections to ensure, among other things, compliance with federal
securities tender offer rules (i.e., full and adequate disclosure, withdrawal
rights and rights to proration) if the List will be used to conduct a tender
offer and compliance with certain tax provisions to protect against possible
adverse tax consequences to the Partnership.
In March 1997, Credit d'Impots ("Credit"), a BACs holder, requested a copy
of the List. The Partnership's counsel communicated with Credit respecting the
purposes of Credit's request and the terms and conditions under which the
Partnership would make the List available to Credit. The purposes stated by
Credit for its request for the List changed over time and in its last
communication with the Partnership in April 1997, Credit stated that it wanted
to conduct a tender offer for BACs. There can be no assurance, however, that
Credit will commence any offer for BACs or what the terms of any such offer
would be. If Credit commences an offer, the Partnership will duly consider it
and respond in accordance with applicable securities laws and its fiduciary
duties. As of the date of this Schedule 14D-9, the Partnership has not
delivered the List to Credit nor has Credit been in communication with the
Partnership or its counsel since April 1997.
Item 9. Material to be Filed as Exhibits.
(a)(1) Letter from Independence Tax Credit Plus L.P. II to BACs holders,
dated November 25, 1997.
(b) None.
(c)(1) Letter Agreement, dated November 7, 1997, among Independence Tax
Credit Plus L.P. II, Lehigh Tax Credit Partners L.L.C. and Related
Independence Associates L.P.
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SIGNATURES
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: November 25, 1997
INDEPENDENCE TAX CREDIT PLUS L.P. II
By: RELATED INDEPENDENCE ASSOCIATES L.P.
By: Related Independence Associates Inc.,
its general partner
By: /s/ Alan P. Hirmes
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Name: Alan P. Hirmes
Title: Vice President
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EXHIBIT INDEX
EXHIBIT
NO. TITLE
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(a)(1) Letter from Independence Tax Credit Plus L.P. II to BACs holders,
dated November 25, 1997.
(c)(1) Letter Agreement, dated November 7, 1997, among Independence Tax
Credit Plus L.P. II, Lehigh Tax Credit Partners L.L.C. and Related
Independence Associates L.P.
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INDEPENDENCE TAX CREDIT PLUS L.P. II
625 Madison Avenue
New York, New York 10022
November 25, 1997
Dear BACs holder:
As you are by now aware, Lehigh Tax Credit Partners L.L.C., a Delaware
limited liability company (the "Purchaser"), has made an offer (the "Lehigh
Offer") to purchase Beneficial Assignment Certificates representing assignments
of limited partnership interests ("BACs") of Independence Tax Credit Plus L.P.
II (the "Partnership") for a cash purchase price of $725 per BAC. THE PURCHASER
IS AN AFFILIATE OF RELATED INDEPENDENCE ASSOCIATES L.P., THE GENERAL PARTNER OF
THE PARTNERSHIP (THE "GENERAL PARTNER").
The General Partner is expressing no opinion and is remaining neutral
with respect to the Lehigh Offer. Although the General Partner is not making a
recommendation with respect to the Lehigh Offer, the General Partner believes
that BACs holders should carefully consider the following factors in making
their own decision of whether to accept or reject the Lehigh Offer:
o BACs holders should note that the selling price for BACs reported in
the limited and sporadic secondary market during the two-month period
ended March 31, 1997 was $860. However, the Purchaser states its
belief in the Lehigh Offer that such secondary market selling prices
do not take into account commissions charged by secondary market
makers effectuating such sales and the fact that the BACs become less
valuable with the passage of time as fewer tax credits remain.
Additionally, based on certain assumptions made therein, the Purchaser
states in the Lehigh Offer that the present value of the potential
aggregate benefits to a BACs holder who tenders to the Purchaser
exceeds the Purchaser's estimate of the present value of the potential
aggregate benefits if a BACs holder does not tender.
o The Lehigh Offer will provide BACs holders with an immediate
opportunity to liquidate their investment in the Partnership. BACs
holders who have a present or future need for the tax credits and/or
tax losses from the BACs may, however, prefer to retain their BACs and
not tender them pursuant to the Lehigh Offer.
o As stated by the Purchaser in the Lehigh Offer, there may be a
conflict of interest between the Purchaser's desire to purchase the
BACs at a low price and a BACs holder's desire to sell its BACs at a
high price. Therefore, BACs holders might receive greater value if
they hold their BACs, rather than tender. Furthermore, BACs holders
should be aware that a secondary market exists for the BACs.
o BACs HOLDERS WILL NO LONGER RECEIVE THE TAX CREDITS AND/OR TAX LOSSES
FROM THE BACs SHOULD THEY TENDER PURSUANT TO THE LEHIGH OFFER.
Enclosed is a copy of the Partnership's Statement on Schedule 14D-9
which has been filed with the Securities and Exchange Commission and sets forth
the Partnership's response to the Lehigh Offer. BACs holders are advised to
carefully read the Schedule 14D-9 and consult with their advisors about the
financial, tax, legal and other implications of accepting the Lehigh Offer.
Please do not hesitate to call Brenda Abuaf, c/o Related Capital
Company, at (800) 600-6422 (ext. 2090) for assistance in any Partnership matter.
INDEPENDENCE TAX CREDIT PLUS L.P. II
INDEPENDENCE TAX CREDIT PLUS L.P. II
625 Madison Avenue
New York, NY 10022
November 7, 1997
Personal and Confidential
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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. II, 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 eighty five (85) BACs. You also agree that prior to the tenth
anniversary of the date of this letter agreement, neither you nor any person who
is your Affiliate (as defined under Rule 405 of the Securities Act of 1933, as
amended) will, without the prior written consent of the Partnership, which may
be withheld for any reason, directly or indirectly, (i) seek or propose to enter
into, directly or indirectly, any merger, consolidation, business combination,
sale or acquisition of assets, liquidation, dissolution or other similar
transaction involving the Partnership, (ii) form, join or otherwise participate
in a "group" (within the meaning of Section 13(d)(3) of the Exchange Act) with
respect to any voting securities of the Partnership, except that those
Affiliates bound by this letter agreement will not be deemed to have violated
this letter agreement and formed a "group" solely by acting in accordance with
this letter agreement, (iii) disclose in writing to any third party any
intention, plan or arrangement inconsistent with the terms of this letter
agreement or (iv) loan money to, advise, assist or encourage any person in
connection with any action inconsistent with the terms of this letter agreement.
Notwithstanding the
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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 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
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of BACs by you by any other means; provided, however, that if such claim,
action, suit, proceeding or investigation is threatened but not actual, your
obligation to indemnify the Indemnified Parties shall apply only if such threat
is in writing and only with respect to any legal fees incurred in connection
with such threat. If such threat becomes an actual claim, action, suit,
proceeding or investigation, you shall then be responsible for the full
indemnification provided for in this paragraph. If an Indemnified Party intends
to seek indemnification pursuant to this paragraph, it shall promptly notify you
of such claim, in writing, describing such claim in reasonable detail; provided,
that the failure to provide such notice shall not affect your obligations herein
unless you are materially prejudiced by the failure to provide such notice.
Counsel for the Indemnified Party shall be chosen at your discretion and shall
be directed by you. We both agree that you will be materially prejudiced if, due
to the failure of an Indemnified Party to provide the notice required above, you
were not given the opportunity to obtain the counsel of your choice or direct
such counsel. You may participate at your own expense in the defense of any such
action; provided, that counsel for the Indemnified Party shall not (except with
the consent of the Indemnified Party) also serve as your counsel. You shall not,
without first obtaining a general release from liability for the Indemnified
Parties in a form satisfactory to such Indemnified Parties, settle or compromise
or consent to the entry of any judgment with respect to any threatened or actual
claim, action, suit, proceeding or investigation involving an Indemnified Party
which seeks indemnity under this paragraph. If the indemnification provided in
this paragraph is for any reason unavailable to or insufficient to hold harmless
an Indemnified Party in respect of any Damages referred to above, then you and
each party seeking indemnification shall contribute to the aggregate amount of
such Damages incurred by such Indemnified Party in such proportion as is
appropriate to reflect the relative benefits received by each party from the act
which gives rise to the indemnification claim. You agree that the amount of such
economic benefit received by each Indemnified Party shall be $1 and the amount
of such economic benefit received by you shall be computed by multiplying your
per BAC offer price by the total number of BACs which were sought in your tender
offer. Both you and the Indemnified Parties each hereby agree to cooperate fully
in all aspects of any investigation, defense, pre-trial activities, trial,
compromise, settlement or discharge of any claim in respect of which indemnity
is sought pursuant to this paragraph, including, but not limited to, by
providing the other party reasonable access upon reasonable notice to employees
and officers and other information during reasonable business hours. Nothing in
this paragraph is intended to limit your ability to obtain indemnification from
the Partnership if such indemnification is available to you pursuant to the
Partnership's partnership agreement and applicable law, provided, however, that
your obligations herein shall not be affected by your ability or inability to
obtain such indemnification. We each hereby agree that the provisions of this
paragraph shall have no effect on any other partnership which you or any of our
respective Affiliates may be a partner.
Notwithstanding the immediately preceding paragraph, we acknowledge
that you may engage a third party lender(s) to finance your proposed acquisition
of BACs. We hereby acknowledge and agree for the benefit of such third party
lender(s) that the indemnification provisions in the immediately preceding
paragraph are not intended to apply to or obligate, and in no event shall be
binding upon, such third party lender(s) or any of its assigns or successors in
interest to any of the BACs acquired by you.
We each hereby acknowledge that we are aware, and that we will advise
our respective Affiliates, of our respective responsibilities under the
securities laws. We each agree that the other of us or our respective
Affiliates, as the case may be, shall be entitled to equitable relief, including
injunctive relief and specific performance, in the event of any breach of the
provisions of this letter agreement, in addition to all other remedies available
at law or in equity.
3
<PAGE>
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.
4
<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. II
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: 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. For purposes of the indemnification
provisions on pages 2-3 only:
By: Related Independence Associates Inc.,
its general partner RELATED CAPITAL COMPANY,
a New York general partnership
By: /s/ Alan P. Hirmes By: APH Associates, L.P.
-------------------
Name: Alan P. Hirmes
Title: Senior Vice President By: APH Associates, Inc.,
its general partner
/s/ Alan P. Hirmes
------------------
Name: Alan P. Hirmes
Title: President
