SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
INDEPENDENCE TAX CREDIT PLUS L.P. II
- --------------------------------------------------------------------------------
(Name of Issuer)
BENEFICIAL ASSIGNMENT CERTIFICATES
- --------------------------------------------------------------------------------
(Title of Class of Securities)
45378B 10 4
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(CUSIP Number)
J. Michael Fried
Lehigh Tax Credit Partners L.L.C.
c/o Related Capital Company
625 Madison Avenue
New York, NY 10022
(212) 421-5333
- --------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person Authorized to Receive Notices
and Communications)
December 31, 1997
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(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box / /.
Note: Six copies of this statement, including all exhibits, should be filed with
the Commission. See Rule 13d-1(a) for other parties to whom copies are to be
sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
Page 1 of 10 Pages
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CUSIP No. 45378B 10 4 SCHEDULE 13D Page 2 of 10 Pages
1 NAME OF REPORTING PERSON.
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON.
Lehigh Tax Credit Partners L.L.C.
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP.* (a) / /
(b) /X/
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3 SEC USE ONLY.
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4 SOURCE OF FUNDS.*
AF; BK
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e).
/ /
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6 CITIZENSHIP OR PLACE OF ORGANIZATION.
Delaware
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7 SOLE VOTING POWER.
4,427.65 Beneficial Assignment Certificates
NUMBER OF (representing assignments of limited partnership interests)
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SHARES
BENEFICIALLY 8 SHARED VOTING POWER.
OWNED BY 0
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EACH
REPORTING 9 SOLE DISPOSITIVE POWER.
PERSON WITH: 4,427.65 Beneficial Assignment Certificates
(representing assignments of limited partnership interests)
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10 SHARED DISPOSITIVE POWER.
0
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON.
4,427.65 Beneficial Assignment Certificates
(representing assignments of limited partnership interests)
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES.* / /
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11).
7.5%
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14 TYPE OF REPORTING PERSON*.
OO
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*SEE INSTRUCTIONS
<PAGE>
CUSIP No. 45378B 10 4 SCHEDULE 13D Page 3 of 10 Pages
1 NAME OF REPORTING PERSON.
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON.
Lehigh Tax Credit Partners, Inc.
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP.* (a) / /
(b) /X/
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3 SEC USE ONLY.
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4 SOURCE OF FUNDS.*
AF; BK
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e).
/ /
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6 CITIZENSHIP OR PLACE OF ORGANIZATION.
Delaware
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7 SOLE VOTING POWER.
4,427.65 Beneficial Assignment Certificates
NUMBER OF (representing assignments of limited partnership interests)
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SHARES
BENEFICIALLY 8 SHARED VOTING POWER.
OWNED BY 0
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EACH
REPORTING 9 SOLE DISPOSITIVE POWER.
PERSON WITH: 4,427.65 Beneficial Assignment Certificates
(representing assignments of limited partnership interests)
------------------------------------------------------------------
10 SHARED DISPOSITIVE POWER.
0
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON.
4,427.65 Assignment Certificates (representing
assignments of limited partnership interests)
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES.* / /
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11).
7.5%
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14 TYPE OF REPORTING PERSON*.
CO
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*SEE INSTRUCTIONS
<PAGE>
STATEMENT PURSUANT TO RULE 13d-1
OF THE
GENERAL RULES AND REGULATIONS
UNDER THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED (THE "ACT")
================================================================================
Item 1. Security and Issuer.
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This statement relates to Beneficial Assignment Certificates
("BACs") representing assignments of limited partnership interests in
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.
Item 2. Identity and Background.
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This Statement is filed jointly by Lehigh Tax Credit Partners
L.L.C., a Delaware limited liability company ("Lehigh"), and Lehigh Tax Credit
Partners, Inc., a Delaware corporation (the "Managing Member"). Lehigh and the
Managing Member are sometimes collectively referred to herein as the "Reporting
Persons".
Lehigh was organized for the purpose of acquiring tax credits,
including the BACs pursuant to a tender offer on Schedule 14D-1, commenced on
November 10, 1997 (the "Tender Offer"). The address of Lehigh's principal office
is c/o Related Capital Company, 625 Madison Avenue, New York, New York 10022.
The managing member of Lehigh is the Managing Member, which is ultimately
controlled by Messrs. J. Michael Fried, Stuart J. Boesky, Alan P. Hirmes and
Marc D. Schnitzer and Ms. Denise L. Kiley. The Managing Member is principally
engaged in the business of serving as managing member of Lehigh. The address of
the Managing Member's principal office is c/o Related Capital Company, 625
Madison Avenue, New York, New York 10022.
Attached hereto as Appendix A is information concerning the
executive officers, directors and control persons of the Managing Member, which
information is required to be disclosed in response to Item 2 and General
Instruction C to Schedule 13D.
None of the Reporting Persons nor any of the persons or
entities referred to in Appendix A hereto has, during the last five years, been
convicted in a criminal proceeding (excluding traffic violations and similar
misdemeanors) or been a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction and as a result of such proceeding
was or is subject to a judgment, decree or final order enjoining future
violations of, or prohibiting or mandating activities subject to, federal or
state securities laws or finding any violation with respect to such laws.
4
<PAGE>
Item 3. Source and Amount of Funds or Other Consideration.
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As of the date hereof, the Reporting Persons are deemed to
beneficially own 4,427.65 BACs. The source of all funds used to acquire
beneficial ownership of the BACs is a promissory note dated as of November 7,
1997 (the "Note") obtained by Lehigh from one of its members, RCC Credit
Facility, L.L.C. ("Credit Facility L.L.C."), containing substantially the same
economic terms and conditions that such member borrowed or will borrow such
funds under an existing credit facility that such member has available to it
with BankBoston, National Association (formerly known as The First National Bank
of Boston) ("BankBoston") and Fleet National Bank (collectively, the "Lenders").
The existing credit agreement is among the Lenders and Credit Facility L.L.C.,
Related Capital Company ("RCC") and The Related Companies, L.P. The stated
interest rate is the "Base Rate" (as publicly announced by BankBoston, from time
to time) plus 0.5%, which is presently equal to 9.0% per annum or, at the
election of Credit Facility L.L.C., the "Euro Loan Rate" plus 2.375%. All of the
BACs owned by Lehigh and all of Lehigh's membership interests have been or will
be pledged to the Lenders to secure the Note. Additionally, RCC has guaranteed
all amounts borrowed under such credit facility. Lehigh expects to repay all
amounts borrowed from its member by selling additional membership interests to
persons or entities that have a need for the tax credits and/or tax losses
attributable to the BACs. No plans or arrangements have been made with regard to
the payment of periodic interest required by the terms of the Note. However, it
is expected that if interest payments are due and payable, Lehigh may borrow
those funds from its affiliate(s). The discussion herein of the Note is subject
to and qualified in its entirety by reference to such Note, a copy of which is
attached hereto as an exhibit and incorporated herein by reference. The Managing
Member is deemed to beneficially own the BACs beneficially owned by Lehigh. The
BACs beneficially owned by the Reporting Persons were acquired as described
below.
Pursuant to the Tender Offer and the depositary's calculation
of the number of BACs tendered, Lehigh purchased an aggregate of 4,342.65
BACs on December 31, 1997 for an aggregate purchase price of approximately
$3,148,421.25. Lehigh obtained or will obtain all of such funds from the Note as
described above. Prior to commencing the Tender Offer, Lehigh effected a
transaction and acquired a total of 40 BACs for an aggregate purchase price of
approximately $31,040 ($776 per BAC). Also prior to commencing the Tender Offer,
Lehigh effected a transaction and acquired a total of 45 BACs for an aggregate
purchase price of $36,337.50 ($807.50 per BAC) from a BACs holder who was
referred to Lehigh by its affiliate, RCC.
Item 4. Purpose of Transaction.
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Each of the Reporting Persons acquired beneficial ownership of
the BACs for investment purposes and not with the purpose of changing or
influencing control of the Partnership. Each of the Reporting Persons retains
the right, however, to change such investment intent, to acquire additional BACs
or to sell or otherwise dispose of all or part of the BACs beneficially owned by
such Reporting Person in any manner permitted by law.
Although the foregoing currently reflects the present plans
and intentions of the Reporting Persons, the foregoing is subject to change at
any time. The Reporting Persons have and will, on an on-going basis, continue to
evaluate their investment in the Partnership. In the event of a material change
in the present plans or intentions of the Reporting Persons, the Reporting
Persons will amend this Schedule 13D to reflect such change.
5
<PAGE>
Item 5. Interest in Securities of the Issuer.
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(a) and (b) As of the date hereof, the Reporting Persons are
deemed to beneficially own an aggregate of 4,427.65 BACs, which constitutes
approximately 7.5% of the BACs outstanding.* The Reporting Persons have sole
voting and sole dispositive power of all such BACs beneficially owned.
(c) Except for the BACs purchased pursuant to the Tender
Offer, neither Lehigh, the Managing Member, and to the best of Lehigh's
knowledge, the persons listed on Appendix A, nor any affiliate thereof has
effected any transaction in the BACs within the past 60 days.
(d) The Reporting Persons have no knowledge of any persons who
have the right to receive or the power to direct the receipt of distributions
from, or the proceeds from the sale of, any BACs beneficially owned by the
Reporting Persons.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or Relationships with
- ------- -------------------------------------------------------------
Respect to Securities of the Issuer.
------------------------------------
The information set forth in Item 3, Item 4 and Item 5 above
is hereby incorporated herein by reference.
Pursuant to a letter agreement dated November 7, 1997 among
the Partnership, Lehigh and Related Independence Associates L.P. ("RIA") (the
"Standstill Agreement"), Lehigh 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 Act) with respect to any voting securities of the Partnership,
except that those affiliates bound by the Standstill Agreement will not be
deemed to have violated it and formed a "group" solely by acting in accordance
with the Standstill Agreement, (iii) disclose in writing to any third party any
intention, plan or arrangement inconsistent with the terms of the Standstill
Agreement, or (iv) loan money to, advise, assist or encourage any person in
connection with any action inconsistent with the terms of the Standstill
Agreement. By the terms of the Standstill Agreement, Lehigh also agreed to vote
its BACs in the same manner as a majority of all voting BACs holders; provided,
however, Lehigh is entitled to vote its BACs as it determines with regard to any
proposal (i) to remove RIA as a general partner of the Partnership or (ii)
concerning the reduction of any fees, profits, distributions or allocations for
the benefit of RIA or its affiliates. The discussion herein of the Standstill
Agreement is subject to and qualified in its entirety by reference to such
agreement, a copy of which is attached hereto as an exhibit and incorporated
herein by reference.
In connection with a tender offer commenced on April 10, 1997
by Lehigh and the settlement of matters relating to such tender offer, Lehigh
entered into an agreement with Everest Properties, Inc. ("Everest"), dated April
23, 1997 (the "Everest Agreement"). Pursuant to the Everest Agreement, Lehigh
granted to Everest, among other things, an option to purchase up to 25% of the
- --------
* All calculations of percentages of beneficial ownership in this
Schedule 13D are based on there being 58,928 BACs outstanding, as of
September 30, 1997, as disclosed in the Partnership's Quarterly Report
on Form 10-Q for the period ended September 30, 1997.
6
<PAGE>
BACs tendered in the Tender Offer on the same terms and conditions as Lehigh's
purchase of BACs (the "Everest Option"). In consideration of the foregoing,
Everest agreed, among other things, that neither it nor any of its affiliates
will, directly or indirectly: (i) in any manner, including, without limitation,
by tender offer (whether or not pursuant to a filing made with the Securities
and Exchange Commission (the "Commission")), acquire, attempt to acquire or make
a proposal to acquire, directly or indirectly, any securities of the
Partnership, except for (a) the BACs it acquires pursuant to the Everest Option
and (b) purchases of de minimis amounts of securities in the secondary market at
the prevailing secondary market price (it being understood that the purchaser of
such de minimis amounts of securities shall be bound by the terms and conditions
of the Everest Agreement); (ii) seek or propose to enter into, directly or
indirectly, any merger, consolidation, business combination, sale or acquisition
of assets, liquidation, dissolution or other similar transaction involving the
Partnership; (iii) make, or in any way participate, directly or indirectly, in
any "solicitation" of "proxies" or "consents" (as such terms are used in the
proxy rules of the Commission) to vote, or seek to advise or influence any
person with respect to the voting of, any voting securities of the Partnership;
(iv) form, join or otherwise participate in a "group" (within the meaning of
Section 13(d)(3) of the Act) with respect to any voting securities of the
Partnership; (v) disclose in writing to any third party any intention, plan or
arrangement inconsistent with the terms of the Everest Agreement; or (vi) loan
money to, advise, assist or encourage any person in connection with any action
inconsistent with the terms of the Everest Agreement. The foregoing restrictions
shall continue in full force and effect forever, in perpetuity, with respect to
the securities of the Partnership unless Lehigh fails to perform its obligations
under the Everest Agreement. The discussion herein of the Everest Agreement is
subject to and qualified in its entirety by reference to such agreement, a copy
of which is attached hereto as an exhibit and incorporated herein by reference.
On January 13, 1998, in accordance with the terms of the Everest Agreement,
Lehigh gave Everest notice of the number of BACs determined by the depositary to
be tendered pursuant to the Tender Offer. On January 13, 1998, Everest notified
Lehigh that it elected to exercise the Everest Option to purchase
approximately 25% of the BACs tendered pursuant to the Tender Offer.
Except as described above, the Reporting Persons do not have
any contracts, arrangements, understandings or relationships with respect to any
securities of the Partnership.
Item 7. Material to be Filed as Exhibits.
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EXHIBIT
NO. DESCRIPTION
--- -----------
1 Promissory Note, dated November 7, 1997.
2 Standstill Agreement, dated November 7, 1997, among the
Partnership, Lehigh and RIA.
3 Letter Agreement, dated April 23, 1997, between Lehigh and Everest.
7
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this statement is true,
complete and correct.
Dated: January 13, 1998
LEHIGH TAX CREDIT PARTNERS L.L.C.
By: Lehigh Tax Credit Partners, Inc.,
its managing member
By: /s/ Alan P. Hirmes
----------------------------
Name: Alan P. Hirmes
Title: Vice President
LEHIGH TAX CREDIT PARTNERS, INC.
By: /s/ Alan P. Hirmes
-----------------------------------
Name: Alan P. Hirmes
Title: Vice President
8
<PAGE>
APPENDIX A
The following sets forth information with respect to the
executive officers, directors and control persons of Lehigh Tax Credit Partners,
Inc., which is the managing member of Lehigh.
Messrs. J. Michael Fried, Stuart J. Boesky, Alan P. Hirmes and
Marc D. Schnitzer and Ms. Denise L. Kiley are executive officers, directors and
control persons of Lehigh Tax Credit Partners, Inc. The present principal
occupation of each of Messrs. Fried, Boesky, Hirmes and Schnitzer and Ms. Kiley,
each of whom is a citizen of the United States, is to act as an officer of
Related Capital Company ("RCC"), a New York general partnership and an affiliate
of Lehigh and the Managing Member. RCC has, directly or indirectly, sponsored 22
public and 238 private real estate investment programs that have raised in
excess of $2.8 billion from more than 106,000 investors. The business address of
each of Messrs. Fried, Boesky, Hirmes and Schnitzer and Ms. Kiley is c/o Related
Capital Company, 625 Madison Avenue, New York, New York 10022.
9
<PAGE>
Exhibit Index
-------------
Exhibit
Ex-99.1 Promissory Note, dated November 7, 1997.
Ex-99.2 Standstill Agreement, dated November 7, 1997, among the
Partnership, Lehigh and RIA.
Ex-99.3 Letter Agreement, dated April 23, 1997, between Lehigh and Everest.
10
Exhibit 1
<PAGE>
GRID NOTE
---------
$10,685,000 New York, New York
November 7, 1997
FOR VALUE RECEIVED, LEHIGH TAX CREDIT PARTNERS L.L.C., a Delaware
limited liability company (the "Debtor"), hereby promises to pay to the order of
RCC CREDIT FACILITY, L.L.C., a Delaware limited liability company (the "Payee"),
at its offices located at 625 Madison Avenue, New York, New York 10022, or at
such other place as the Payee or any holder hereof may from time to time
designate, in lawful money of the United States, the principal sum of TEN
MILLION SIX HUNDRED EIGHTY FIVE THOUSAND DOLLARS ($10,685,000), or, if less than
such sum, the aggregate principal amount of all monies advanced to the Debtor by
the Payee hereunder as indicated on the grid schedule attached hereto and made a
part hereof. All principal outstanding hereunder shall be payable in full on the
date (the "Payment Date") which is the earlier to occur of (i) the earlier to
occur of (x) the date on which the portion of the RCC Credit Loan (as
hereinafter defined) used to fund the loan to the Debtor evidenced hereby shall
be due and payable or (y) "Maturity Date" as such term is defined in the Loan
Agreement dated August 22, 1997 (as the same may be amended, modified or
supplemented from time to time, the "Loan Agreement"), among the Payee, The
Related Companies, L.P. ("TRCLP"), a New York limited partnership, Related
Capital Company ("RCC"), a New York general partnership, BankBoston, National
Association (f/k/a The First National Bank of Boston) ("BKB"), Fleet National
Bank ("Fleet" and together with BKB, the "Banks") and BKB, as agent for the
Banks, or such earlier or later date as the Payee shall be obligated under the
Loan Agreement to pay to the Banks the amounts outstanding under the RCC Credit
Loan and (ii) the date on which the Debtor shall receive cash proceeds in an
amount equal to or greater than the amount of principal, and interest thereon,
due and owing hereunder, from the sale of its membership interests as
contemplated by the Debtor's Offer to Purchase of Beneficial Assignment
Certificates ("BACs") of Independence Tax Credit Plus L.P. II, dated November
10, 1997 (as amended, the "Offer").
The Debtor hereby authorizes the Payee to record on the grid
schedule attached hereto and made a part hereof the amount and date of each
advance made hereunder and the date and amount of each payment of principal
thereon. All such notations shall be presumptive as to the correctness thereof
and the aggregate unpaid amount of advances set forth on such schedule shall be
presumed to be the unpaid principal amount hereof.
The principal amount of this Note may be prepaid at any time
or from time to time by Debtor, in whole or in part, without premium or penalty,
provided that all partial prepayments shall be in a minimum amount of $100,000
(or such lesser amount as may then be outstanding hereunder) and integral
multiples of $25,000 thereof. All prepayments shall be accompanied by the
payment of interest accrued on the amount of such prepayment to the date
thereof. Amounts of principal prepaid or repaid under this Note may not be
reborrowed.
In addition, the Debtor promises to pay accrued interest to
the Payee, on the date of each prepayment of the principal hereof as set forth
in the previous paragraph, on the Payment Date and thereafter on demand, in like
money at said office or place from the date hereof on the unpaid principal
balance hereof at a rate per annum equal to the rate of interest payable at any
time and from time to time by the Payee to the Banks on advances made to the
Payee under the Loan Agreement (collectively, at any time, all such advances,
the "RCC Credit Loan") and advanced by the Payee to the Debtor hereunder.
Interest shall be calculated on the basis of a 360-day year and actual days.
If Payment of all outstanding principal and accrued interest
is not made in full on or prior to the Payment Date, then the Debtor shall pay,
as additional interest, all other amounts owing by Payee to
<PAGE>
the Banks under the Loan Agreement as a result of such non-payment or incomplete
payment, as the case may be.
This Note is secured by the Pledge and Security Agreement (as amended,
modified or supplemented from time to time, the "Pledge Agreement") between the
Debtor and the Payee and is a note referred to therein and is entitled to the
benefits thereof.
The holder of this Note may declare all principal and interest thereon
evidenced by this Note immediately due and payable upon the happening of any of
the following events (each, an "Event of Default"): (i) nonpayment when the same
becomes due, whether by acceleration or otherwise, of any principal, interest or
other amount on or under this Note; (ii) default by the Debtor in the payment or
performance of any obligation under, or termination of, the Pledge Agreement;
(iii) Debtor shall (a) voluntarily commence any proceeding or file any petition
seeking relief under Title 11 of the United States Code or any other Federal,
state or foreign bankruptcy, insolvency, liquidation or similar law, (b) consent
to the institution of, or fail to contravene in a timely and appropriate manner,
any such proceeding or the filing of any such petition, (c) apply for or consent
to the appointment of a receiver, trustee, custodian, sequestrator or similar
official for Debtor or for a substantial part of its property or assets, (d)
file an answer admitting the material allegations of a petition filed against it
in any such proceeding, (e) make a general assignment for the benefit of
creditors, (f) become unable, admit in writing its inability or fail generally
to pay its debts as they become due or (g) take corporate action for the purpose
of effecting any of the foregoing; (iv) an involuntary proceeding shall be
commenced or an involuntary petition shall be filed in a court of competent
jurisdiction seeking (a) relief in respect of Debtor, or of a substantial part
of the property or assets of Debtor, under Title 11 of the United States Code or
any other Federal state or foreign bankruptcy, insolvency, receivership or
similar law, (b) the appointment of a receiver, trustee, custodian, sequestrator
or similar official for Debtor or for a substantial part of the property of
Debtor or (c) the winding-up or liquidation of Debtor, and such proceeding or
petition shall continue undismissed for 30 days or an order or decree approving
or ordering any of the foregoing shall continue unstayed and in effect for 30
days; or (v) the occurrence of any event described in clause (iii) or (iv) of
this paragraph with respect to any endorser, guarantor or any other party liable
for, or whose assets or any interest therein secures, payment of any
indebtedness evidenced by this Note.
The Debtor hereby waives diligence, demand, presentment, protest and
notice of any kind, and assents to extensions of the time of payment, release,
surrender or substitution of security, or forbearance or other indulgence,
without notice.
This Note may not be changed, modified or terminated orally, but only
by an agreement in writing signed by the party to be charged.
THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK AND SHALL BE BINDING UPON THE SUCCESSORS AND
ASSIGNS OF THE DEBTOR AND INURE TO THE BENEFIT OF THE PAYEE AND ITS SUCCESSORS
AND ASSIGNS.
IN WITNESS WHEREOF, the Debtor, by its duly authorized officer, has
executed and delivered this Note on 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
-2-
<PAGE>
Loans and Payment
-----------------
Payments of Unpaid Principal
Date Amount of Loan Principal/Interest Balance of Note
- ---- -------------- ------------------ ---------------
-3-
Exhibit 2
<PAGE>
INDEPENDENCE TAX CREDIT PLUS L.P. II
625 Madison Avenue
New York, NY 10022
November 7, 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. 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 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.
<PAGE>
You understand that the general partner of the Partnership may consider
from time to time selling all or substantially all of the assets of the
Partnership or entering into any other transaction determined by the general
partner to be in the best interests of the BACs holders and the Partnership. The
result of any such transaction, if approved by a majority vote of the BACs
holders, might be the dissolution and liquidation of the Partnership in
accordance with the partnership agreement. Accordingly, in order to avoid
disrupting any possible sale of all or substantially all of the Partnership's
assets or any other transaction determined by the general partner to be in the
best interests of the BACs holders and the Partnership and any required vote of
BACs holders, you agree that, prior to the ten-year anniversary of the date of
this letter agreement, all BACs obtained by you pursuant to any means will be
voted by you on all issues in the same manner as by the majority of all other
BACs holders who vote on such proposal. Notwithstanding the foregoing, you may
vote all BACs in the manner you determine, in your sole and absolute discretion,
on proposals (i) concerning the removal of RIA as general partner of the
Partnership or (ii) seeking to reduce any fees, profits, distributions or
allocations attributable to RIA or its Affiliates.
If at any time during such ten year period you (excluding your
affiliate which serves as the general partner of the Partnership while acting in
its capacity as general partner) are contacted in writing by any third party
concerning participation in any transaction involving the assets, businesses or
securities of the Partnership or involving any action inconsistent with the
terms of this letter agreement, you will promptly forward a copy of such writing
to the Partnership and you may inform such third party that this letter
agreement requires you to so notify the Partnership, provided, however, this
paragraph shall not apply to any transaction or proposed transaction involving
all or substantially all of the assets, businesses or securities of Related
Capital Company and/or its Affiliates (other than the Partnership and RIA).
Nothing in this letter agreement shall apply to, govern, restrict or
limit any sales, purchases, transfers or assignments of interests in Lehigh.
Notwithstanding the immediately preceding sentence, Lehigh shall remain bound by
this letter agreement notwithstanding that any interests in Lehigh have been
sold, purchased, transferred or assigned.
Lehigh, RIA and Related Capital Company agree to indemnify and hold
harmless, to the fullest extent permitted by law, the Partnership, Independence
SLP L.P., and each of their partners, directors, officers, employees,
representatives and agents (the "Indemnified Parties") against any losses,
claims, damages, liabilities, costs, expenses (including reasonable attorney's
fees and expenses in advance of the final disposition of any claim, suit,
proceeding or investigation to each Indemnified Party to the fullest extent
permitted by law), judgments, fines and amounts (collectively, "Damages") paid
in connection with any threatened or actual claim, action, suit, proceeding or
investigation which arises out of or is the result of a breach of this letter
agreement, any tender offer commenced by you (regardless of whether such tender
offer is subject to the provisions of the Exchange Act) or the actual or
proposed acquisition of BACs by you by any other means; provided, however, that
if such claim, action, suit, proceeding or investigation is threatened but not
actual, your obligation to indemnify the Indemnified Parties shall apply only if
such threat is in writing and only with respect to any legal fees incurred in
connection with such threat. If such threat becomes an actual claim, action,
suit, proceeding or investigation, you shall then be responsible for the full
indemnification provided for in this paragraph. If an Indemnified Party intends
to seek indemnification pursuant to this paragraph, it shall promptly notify you
of such claim, in writing, describing such claim in reasonable detail; provided,
that the failure to provide such notice shall not affect your obligations herein
unless you are materially prejudiced by the failure to provide such notice.
Counsel for the Indemnified Party shall be chosen at your discretion and shall
be directed by you. We both agree that you will be materially prejudiced if, due
to the failure of an Indemnified Party 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
-2-
<PAGE>
above, then you and each party seeking indemnification shall contribute to the
aggregate amount of such Damages incurred by such Indemnified Party in such
proportion as is appropriate to reflect the relative benefits received by each
party from the act which gives rise to the indemnification claim. You agree that
the amount of such economic benefit received by each Indemnified Party shall be
$1 and the amount of such economic benefit received by you shall be computed by
multiplying your per BAC offer price by the total number of BACs which were
sought in your tender offer. Both you and the Indemnified Parties each hereby
agree to cooperate fully in all aspects of any investigation, defense, pre-trial
activities, trial, compromise, settlement or discharge of any claim in respect
of which indemnity is sought pursuant to this paragraph, including, but not
limited to, by providing the other party reasonable access upon reasonable
notice to employees and officers and other information during reasonable
business hours. Nothing in this paragraph is intended to limit your ability to
obtain indemnification from the Partnership if such indemnification is available
to you pursuant to the Partnership's partnership agreement and applicable law,
provided, however, that your obligations herein shall not be affected by your
ability or inability to obtain such indemnification. We each hereby agree that
the provisions of this paragraph shall have no effect on any other partnership
which you or any of our respective Affiliates may be a partner.
Notwithstanding the immediately preceding paragraph, we acknowledge
that you may engage a third party lender(s) to finance your proposed acquisition
of BACs. We hereby acknowledge and agree for the benefit of such third party
lender(s) that the indemnification provisions in the immediately preceding
paragraph are not intended to apply to or obligate, and in no event shall be
binding upon, such third party lender(s) or any of its assigns or successors in
interest to any of the BACs acquired by you.
We each hereby acknowledge that we are aware, and that we will advise
our respective Affiliates, of our respective responsibilities under the
securities laws. We each agree that the other of us or our respective
Affiliates, as the case may be, shall be entitled to equitable relief, including
injunctive relief and specific performance, in the event of any breach of the
provisions of this letter agreement, in addition to all other remedies available
at law or in equity.
In case any provision in or obligation under this letter agreement
shall be invalid, illegal or unenforceable in any jurisdiction, the validity,
legality and enforceability of the remaining provisions or obligations, or of
such provision or obligation in any other jurisdiction, shall not in any way be
affected or impaired thereby.
This letter agreement shall be governed by the laws of the State of New
York without giving effect to principles of conflicts of law thereof. This
letter agreement may be executed in counterparts, each of which shall be deemed
an original, but all of which together constitute one and the same instrument.
-3-
<PAGE>
If you agree with the foregoing, please sign and return two copies of
this letter agreement, which will constitute our agreement with respect to the
subject matter of this letter agreement.
Very truly yours,
INDEPENDENCE TAX CREDIT PLUS L.P. 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
Exhibit 3
<PAGE>
LEHIGH TAX CREDIT PARTNERS L.L.C.
625 MADISON AVENUE
NEW YORK, NEW YORK 10022
April 23, 1997
Everest Properties
3280 E. Foothill Boulevard
Suite 320
Pasadena, California 91107
Attention: W. Robert Kohorst
Gentlemen:
This letter agreement confirms our mutual agreement to be bound by the
terms of this letter agreement, including the terms and conditions set forth in
Exhibit A annexed hereto and made a part hereof. This agreement is intended to
be legally binding and enforceable upon execution and delivery hereof.
Each of the parties represents and warrants to the other that (1) it
has the right, power and authority to enter into this letter agreement and
perform its obligations hereunder, (2) upon the execution of this letter
agreement by each of the parties hereto, this letter agreement will constitute
the legal, valid and binding obligation of such party, enforceable against such
party in accordance with its terms, and (3) no consent or approval of any third
party or governmental agency or authority is required for such party to execute
and deliver this letter agreement or to perform its obligations hereunder.
Each of the parties hereto agrees that the terms of this letter
agreement are confidential and may not be disclosed by any party hereto, except
as may be required by law and except to the principals and authorized
representatives of the parties hereto and the general partners of Liberty III
and the Additional Partnerships (as defined in Exhibit A), without the written
consent of all of the parties. Except as may be required by law, any public
announcement regarding this letter agreement or the transactions contemplated
herein may not be made by any party without the prior consent of all other
parties hereto.
This letter agreement shall be governed by and interpreted in
accordance with the laws of the State of New York, without regard to the
conflicts of law provisions thereof. Nothing herein shall be deemed to grant
jurisdiction to the State of New York over any dispute concerning this letter
agreement.
This letter agreement may be executed in separate counterparts, each of
which shall be deemed an original but all of which together shall constitute one
and the same instrument.
This letter agreement supersedes any and all prior agreements, written
or oral, by or among any of the parties hereto with respect to the subject
matter hereof and may not be amended or otherwise modified except in writing
signed by all of the parties hereto.
This letter agreement shall be binding upon the parties hereto and
their respective successors, assigns and controlled affiliates.
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
<PAGE>
of the other parties within one business day of signing and failure to so
deliver such originals shall result in the facsimile copy of that party's
signature being treated as an original.
Very truly yours,
LEHIGH TAX CREDIT PARTNERS L.L.C.
By: Lehigh Tax Credit Partners, Inc.,
Managing Member
By: /s/ Alan P. Hirmes
--------------------------------
Alan P. Hirmes, Vice President
LEHIGH TAX CREDIT PARTNERS, INC.
By: /s/ Alan P. Hirmes
--------------------------------
Alan P. Hirmes, Vice President
RELATED CAPITAL COMPANY
By: /s/ Alan P. Hirmes
--------------------------------
Name: Alan P. Hirmes
Title: Senior Managing Director
ACCEPTED AND AGREED TO AS
OF THE DATE FIRST ABOVE WRITTEN:
EVEREST PROPERTIES, INC.
By: /s/ David I. Lesser
---------------------------
Name: David I. Lesser
Title: Executive Vice President
EVEREST PROPERTIES II, LLC
By: /s/ David I. Lesser
--------------------------------
Name: David I. Lesser
Title: Executive Vice President
2
<PAGE>
EVEREST PROPERTIES, LLC
By: /s/ David I. Lesser
--------------------------
Name: David I. Lesser
Title: Executive Vice President
EVEREST TAX CREDIT INVESTORS, LLC
By: /s/ David I. Lesser
--------------------------
Name: David I. Lesser
Title: Executive Vice President
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 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
<PAGE>
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).
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
2
<PAGE>
indirectly, any merger, consolidation, business combination, sale or acquisition
of assets, liquidation, dissolution or other similar transaction involving
Liberty III or any Additional Partnership; (iii) make, or in any way
participate, directly or indirectly, in any "solicitation" of "proxies" or
"consents" (as such terms are used in the proxy rules of the Commission) to
vote, or seek to advise or influence any person with respect to the voting of,
any voting securities of Liberty III or any Additional Partnership; (iv) form,
join or otherwise participate in a "group" (within the meaning of Section
13(d)(3) of the Securities Exchange Act of 1934, as amended) with respect to any
voting securities of Liberty III or any Additional Partnership; (v) disclose in
writing to any third party any intention, plan or arrangement inconsistent with
the terms of this letter agreement; or (vi) loan money to, advise, assist or
encourage any person in connection with any action inconsistent with the terms
of this letter agreement. The foregoing restrictions shall continue in full
force and effect from the date hereof and forever, in perpetuity, with respect
to the securities of Liberty III and any Additional Partnership, on a
partnership by partnership basis if Lehigh has accepted Tendered Securities of
the subject partnership and Everest has either (a) exercised its option, (b) not
exercised its option or (c) such option is deemed not to have been exercised in
accordance with the terms hereof. The foregoing restrictions shall continue in
full force and effect from the date hereof and forever, in perpetuity, with
respect to the securities of Liberty III and all of the Additional Partnership
if Everest has been granted an option by Lehigh to purchase Option Securities
for an aggregate purchase price of Ten Million ($10,000,000) Dollars. If Lehigh
fails to commence Tender Offers for the securities of any Additional Partnership
by October 31, 1997 and the aggregate purchase price for which Everest could
have exercised its option to purchase Tendered Securities prior to such date
(but for its failure or deemed failure to exercise such option) is less than Ten
Million ($10,000,000) Dollars or if Lehigh defaults in any material respect in
the performance of its obligations hereunder, then Everest shall cease to be
bound by the foregoing restrictions, but only with respect to Additional
Partnerships for which Lehigh has failed to commence Tender Offers. If Lehigh
defaults in any material respect in the performance of its obligations under the
section titled "Option to Purchase Securities; Payment of Securities and
Expenses" above, then Everest shall cease to be bound by the foregoing
restrictions, but only with respect to the partnership to which such default
relates and any Additional Partnerships for which Lehigh has failed to commence
tender offers prior to the date of such default.
Partnership Standstill Agreement(s)
Lehigh entered into a letter agreement with Liberty III, dated April 4,
1997 (the "Liberty III Standstill Agreement"), a copy of which has been filed as
an exhibit to the Liberty III Schedule 14D-1. It is expected that some or all of
the Additional Partnerships may require similar standstill agreements prior to
Lehigh commencing an offer for the securities of such Additional Partnerships
(such agreements, together with the Liberty III Standstill Agreement, are
referred to herein as the "Partnership Standstill Agreements"). Everest
covenants and agrees that upon the purchase of any Tendered Securities, it will,
if applicable, agree to be bound by the terms and conditions of any Partnership
Standstill Agreement (including without limitation the Liberty III Standstill
Agreement) or execute a replacement standstill agreement reasonably acceptable
to the subject partnership.
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
3
<PAGE>
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.
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.
4
<PAGE>
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
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.
5
