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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. IV
(Name of Subject Company)
INDEPENDENCE TAX CREDIT PLUS L.P. IV
(Name of Person(s) Filing Statement)
BENEFICIAL ASSIGNMENT CERTIFICATES
(Title of Class of Securities)
45378R 10 9
(CUSIP Number of Class of Securities)
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J. Michael Fried
Related Independence L.L.C.
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.
Mark Schonberger, 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. IV, 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 L.L.C. (the "General
Partner"), a Delaware limited liability company, 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 III
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 October 14, 1998 (the "Schedule 14D-1"), to purchase up to 11,461 issued
and outstanding BACs at a purchase price of $750 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 October 14,
1998 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 September 25, 1995 (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 three months ended June 30, 1998 and
the three years ended March 31, 1998, 1997 and 1996, the General Partner earned
aggregate Partnership Management Fees of $69,329, $268,233 and $164,433 and
$6,667, respectively.
Independence SLP IV 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 $1,000, $5,000,
$5,000 and
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$5,000 from the Local Partnerships for the three months ended June 30, 1998 and
the three years ended March 31, 1998, 1997 and 1996, 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 three months ended
June 30, 1998 and the three years ended March 31, 1998, 1997 and 1996, the
Partnership incurred, in the aggregate, $39,950, $98,985, $98,302 and $11,659,
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 October 6, 1998 (the "Standstill Agreement") (a copy of
which has been filed as Exhibit (c)(1) hereto), pursuant to which the Purchaser
agreed that, prior to October 6, 2008 (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 October 9,
1998, 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, N.A. (formerly known as The First National Bank of Boston)
and Fleet National Bank (the "Lenders").
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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:
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
August 31, 1998 was $900. No trading of BACs has occurred since August 31,
1998 (the last date for which public information concerning trading in BACs
is available). 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.
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.
o 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.
o 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, neither the Purchaser, an affiliate of the General
Partner, nor any of its executive officers, directors affiliates or subsidiaries
have entered into any transactions in the BACs during the past 60 days.
(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.
Item 9. Material to be Filed as Exhibits.
(a)(1) Letter from Independence Tax Credit Plus L.P. IV to BACs holders,
dated October 28, 1998.
(b) None.
(c)(1) Letter Agreement, dated October 6, 1998, among Independence Tax
Credit Plus L.P. IV, Lehigh Tax Credit Partners III L.L.C. and
Related Independence L.L.C.
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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: October 28, 1998
INDEPENDENCE TAX CREDIT PLUS L.P. IV
By: RELATED INDEPENDENCE L.L.C.
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. IV to BACs holders,
dated October 28, 1998.
(c)(1) Letter Agreement, dated October 6, 1998, among Independence Tax Credit
Plus L.P. IV, Lehigh Tax Credit Partners III L.L.C. and Related
Independence L.L.C.
INDEPENDENCE TAX CREDIT PLUS L.P. IV
625 Madison Avenue
New York, New York 10022
October 28, 1998
Dear BACs holder:
As you are by now aware, Lehigh Tax Credit Partners III 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.
IV (the "Partnership") for a cash purchase price of $750 per BAC. THE PURCHASER
IS AN AFFILIATE OF RELATED INDEPENDENCE ASSOCIATES IV 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
August 31, 1998 was $900. No trading of BACs has occurred since August 31,
1998 (the last date for which public information concerning trading in BACs
is available). 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 Christy Corgan, c/o Related Capital
Company, at (800) 600-6422 (ext. 2040) for assistance in any Partnership
matter.
INDEPENDENCE TAX CREDIT PLUS L.P. IV
INDEPENDENCE TAX CREDIT PLUS L.P. IV
625 Madison Avenue
New York, NY 10022
October 6, 1998
Personal and Confidential
Lehigh Tax Credit Partners III L.L.C.
Lehigh Tax Credit Partners, Inc.
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. IV, a Delaware
limited partnership (the "Partnership"), from holders of BACs (each a "BACs
holder" and collectively, "BACs holders") by Lehigh Tax Credit Partners III
L.L.C. ("Lehigh"), Lehigh Tax Credit Partners, Inc. ("Lehigh, Inc.") 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 ten (10) 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 Related Independence Associates IV
L.P. ("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 IV 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
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arises out of or is the result of a breach of this letter agreement, any tender
offer commenced by you (regardless of whether such tender offer is subject to
the provisions of the Exchange Act) or the actual or proposed acquisition of
BACs by you by any other means; provided, however, that if such claim, action,
suit, proceeding or investigation is threatened but not actual, your obligation
to indemnify the Indemnified Parties shall apply only if such threat is in
writing and only with respect to any legal fees incurred in connection with such
threat. If such threat becomes an actual claim, action, suit, proceeding or
investigation, you shall then be responsible for the full indemnification
provided for in this paragraph. If an Indemnified Party intends to seek
indemnification pursuant to this paragraph, it shall promptly notify you of such
claim, in writing, describing such claim in reasonable detail; provided, that
the failure to provide such notice shall not affect your obligations herein
unless you are materially prejudiced by the failure to provide such notice.
Counsel for the Indemnified Party shall be chosen at your discretion and shall
be directed by you. We both agree that you will be materially prejudiced if, due
to the failure of an Indemnified Party to provide the notice required above, you
were not given the opportunity to obtain the counsel of your choice or direct
such counsel. You may participate at your own expense in the defense of any such
action; provided, that counsel for the Indemnified Party shall not (except with
the consent of the Indemnified Party) also serve as your counsel. You shall not,
without first obtaining a general release from liability for the Indemnified
Parties in a form satisfactory to such Indemnified Parties, settle or compromise
or consent to the entry of any judgment with respect to any threatened or actual
claim, action, suit, proceeding or investigation involving an Indemnified Party
which seeks indemnity under this paragraph. If the indemnification provided in
this paragraph is for any reason unavailable to or insufficient to hold harmless
an Indemnified Party in respect of any Damages referred to above, then you and
each party seeking indemnification shall contribute to the aggregate amount of
such Damages incurred by such Indemnified Party in such proportion as is
appropriate to reflect the relative benefits received by each party from the act
which gives rise to the indemnification claim. You agree that the amount of such
economic benefit received by each Indemnified Party shall be $1 and the amount
of such economic benefit received by you shall be computed by multiplying your
per BAC offer price by the total number of BACs which were sought in your tender
offer. Both you and the Indemnified Parties each hereby agree to cooperate fully
in all aspects of any investigation, defense, pre-trial activities, trial,
compromise, settlement or discharge of any claim in respect of which indemnity
is sought pursuant to this paragraph, including, but not limited to, by
providing the other party reasonable access upon reasonable notice to employees
and officers and other information during reasonable business hours. Nothing in
this paragraph is intended to limit your ability to obtain indemnification from
the Partnership if such indemnification is available to you pursuant to the
Partnership's partnership agreement and applicable law, provided, however, that
your obligations herein shall not be affected by your ability or inability to
obtain such indemnification. We each hereby agree that the provisions of this
paragraph shall have no effect on any other partnership which you or 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.
3
<PAGE>
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.
[signature page follows]
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. IV
By: Related Independence Associates L.L.C.
By: /s/ Alan P. Hirmes
--------------------
Name: Alan P. Hirmes
Title: Vice President
Confirmed and agreed to as of
the date first above written
<TABLE>
<S> <C>
LEHIGH TAX CREDIT PARTNERS III L.L.C. LEHIGH TAX CREDIT PARTNERS, INC.
By: Lehigh Tax Credit Partners, Inc., By: /s/ Alan P. Hirmes
its managing member ------------------
Name: Alan P. Hirmes
Title: Vice President
By: /s/ Alan P. Hirmes
------------------
Name: Alan P. Hirmes
Title: Vice President
RELATED INDEPENDENCE ASSOCIATES L.L.C. For purposes of the indemnification
provisions on pages 2-3 only:
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
</TABLE>
