Common use of Background of the Offer Clause in Contracts

Background of the Offer. The purpose of the Offer is to enable the Purchaser to acquire a significant interest in the Partnership for investment purposes based on its expectation that the Partnership will continue to generate Tax Credits and tax losses attributable to the BACs. The Purchaser intends to sell, and has begun the process of selling, membership interests in the Purchaser to third parties with a need for Tax Credits and/or tax losses. The aggregate sales price of the Purchaser's membership interests to third parties will be equal to the aggregate purchase price for the tendered BACs and all other securities acquired by the Purchaser pursuant to secondary market transactions and other tender offers conducted to date, together with the expenses associated therewith, the expenses associated with the Purchaser's sale of membership interests and the prepayment of certain fees and expenses in connection with the Purchaser's operations. Neither the Purchaser nor its current members will derive a profit from the sale of the Purchaser's membership interests. However, affiliates of the Purchaser expect to earn fees in connection with such sales, for structuring this transaction and for performing certain services for the Purchaser. The Purchaser has commenced other tender offers for the securities of affiliated partnerships and expects to commence additional tender offers in the future. In connection with a tender offer commenced on April 10, 1997 by the Purchaser and the settlement of matters relating to such tender offer, the Purchaser entered into an agreement with Everest Properties, Inc. ("Everest"), dated April 23, 1997 (the "Everest Agreement", a copy of which has been filed as Exhibit (c)(2) to the Purchaser's Tender Offer Statement on Schedule 14D-1 filed with the Commission on November 10, 1997). Pursuant to the Everest Agreement, the Purchaser granted to Everest, among other things, an option to purchase up to 25% of the BACs tendered in the Offer on the same terms and conditions as the Purchaser's purchase of BACs (the "Everest Option"). In consideration of the foregoing, Everest agreed, among other things, that neither it nor any of its affiliates will, directly or indirectly: (i) in any manner, including, without limitation, by tender offer (whether or not pursuant to a filing made with the Commission), acquire, attempt to acquire or make a proposal to acquire, directly or indirectly, any securities of the Partnership, except for (a) the BACs it acquires pursuant to the Everest Option and (b) purchases of de minimis amounts of securities in the secondary market at the prevailing secondary market price (it being understood that the purchaser of such de minimis amounts of securities shall be bound by the terms and conditions of the Everest Agreement); (ii) seek or propose to enter into, directly or indirectly, any merger, consolidation, business combination, sale or acquisition of assets, liquidation, dissolution or other similar transaction involving the Partnership; (iii) make, or in any way participate, directly or indirectly, in any "solicitation" of "proxies" or "consents" (as such terms are used in the proxy rules of the Commission) to vote, or seek to advise or influence any person with respect to the voting of, any voting securities of the Partnership; (iv) form, join or otherwise participate in a "group" (within the meaning of Section 13(d)(3) of the Exchange Act) with respect to any voting securities of the Partnership; (v) disclose in writing to any third party any intention, plan or arrangement inconsistent with the terms of the Everest Agreement; or (vi) loan money to, advise, assist or encourage any person in connection with any action inconsistent with the terms of the Everest Agreement. The foregoing restrictions shall continue in full force and effect forever, in perpetuity, with respect to the securities of the Partnership unless the Purchaser fails to perform its obligations under the Everest Agreement. The foregoing description of the Everest Agreement is subject to and qualified in its entirety by reference to such agreement, which agreement is incorporated herein by reference. The Purchaser and the General Partner are effectively controlled by the same persons. Therefore, the Purchaser and the General Partner, subject to its fiduciary duties, may have a conflict of interest with respect to certain matters involving BACs holders, Limited Partners and/or the Partnership. In order to address certain of those matters, the Purchaser entered into the Standstill Agreement. The Partnership expressed concern that consummation of the Offer would cause it to be classified as a "publicly-traded partnership" (a "PTP") for federal income tax purposes and, therefore, suffer adverse tax conse-

Background of the Offer. The purpose of the Offer is to enable the Purchaser to acquire a significant interest in the Partnership for investment purposes based on its expectation that the Partnership will continue to generate Tax Credits and tax losses attributable to the BACs. The Purchaser intends to sell, and has begun the process of selling, membership interests in the Purchaser to third parties (mostly corporations) with a need for Tax Credits and/or tax losses. The aggregate sales price of the Purchaser's membership interests to third parties will be equal to the aggregate purchase price for the tendered BACs and all other securities acquired by the Purchaser pursuant to secondary market transactions and other tender offers conducted to datetransactions, together with the expenses associated therewith, the expenses associated with the Purchaser's sale of membership interests and the prepayment of certain fees and expenses in connection with the Purchaser's operations. Neither the Purchaser nor its current members will derive a profit from the sale of the Purchaser's membership interests. However, affiliates of the Purchaser expect to will earn substantial fees in connection with such sales, for structuring this transaction and for performing certain services for the Purchaser. See Item 8, Purpose of the Offer; Future Plans. The Purchaser has not commenced other tender offers for the securities of affiliated partnerships and expects to in the past but will commence additional such tender offers in the future. However, affiliates of the Purchaser have previously commenced and completed such tender offers. In connection with a tender offer commenced on April 10, 1997 by the Purchaser and the settlement of matters relating to such tender offer, commenced on April 10, 1997 by Lehigh Tax Credit Partners L.L.C. ("Lehigh I"), an affiliate of the Purchaser Purchaser, Lehigh I entered into an agreement with Everest Properties, Inc. ("Everest"), dated April 23, 1997 (the "Everest Agreement", a copy of which has been filed as Exhibit (c)(2) to the Purchaser's Tender Offer Statement on Schedule 14D-1 filed with the Commission on November 10October 9, 19971998). Pursuant to the Everest Agreement, Lehigh I and its affiliates (including the Purchaser Purchaser) granted to Everest, among other things, an option to purchase up to 25% of the BACs tendered in the Offer on the same terms and conditions as the Purchaser's purchase of BACs (the "Everest Option"). In consideration of the foregoing, Everest agreed, among other things, that neither it nor any of its affiliates will, directly or indirectly: (i) in any manner, including, without limitation, by tender offer (whether or not pursuant to a filing made with the Commission), acquire, attempt to acquire or make a proposal to acquire, directly or indirectly, any securities of the Partnership, except for (a) the BACs it acquires pursuant to the Everest Option and (b) purchases of de minimis amounts of securities in the secondary market at the prevailing secondary market price (it being understood under- stood that the purchaser of such de minimis amounts of securities shall be bound by the terms and conditions of the Everest Agreement); (ii) seek or propose to enter into, directly or indirectly, any merger, consolidation, business combination, sale or acquisition of assets, liquidation, dissolution or other similar transaction involving the Partnership; (iii) make, or in any way participate, directly or indirectly, in any "solicitation" of "proxies" or "consents" (as such terms are used in the proxy rules of the Commission) to vote, or seek to advise or influence any person with respect to the voting of, any voting securities of the Partnership; (iv) form, join or otherwise participate in a "group" (within the meaning of Section 13(d)(3) of the Exchange Act) with respect to any voting securities of the Partnership; (v) disclose in writing to any third party any intention, plan or arrangement inconsistent with the terms of the Everest Agreement; or (vi) loan money to, advise, assist or encourage any person in connection with any action inconsistent with the terms of the Everest Agreement. The foregoing restrictions shall continue in full force and effect forever, in perpetuity, with respect to the securities of the Partnership unless the Purchaser fails to perform its obligations under the Everest Agreement. The foregoing description of the Everest Agreement is subject to and qualified in its entirety by reference to such agreement, which agreement is incorporated herein by reference. The Purchaser and the General Partner are effectively controlled by the same persons. Therefore, the Purchaser and the General Partner, subject to its fiduciary duties, may have a conflict of interest with respect to certain matters involving BACs holders, Limited Partners and/or the Partnership. In order to address certain of those matters, the Purchaser entered into the Standstill Agreement. The Partnership expressed concern that consummation of the Offer would cause it to be classified as a "publicly-traded partnership" (a "PTP") for federal income tax purposes and, therefore, suffer adverse tax conse-.

Background of the Offer. The purpose of the Offer is to enable the Purchaser to acquire a significant interest in the Partnership for investment purposes based on its expectation that the Partnership will continue to generate Tax Credits and tax losses attributable to the BACs. The Purchaser intends to sell, and has begun the process of selling, membership interests in the Purchaser to third parties (mostly corporations) with a need for Tax Credits and/or tax losses. The aggregate sales price of the Purchaser's membership interests to third parties will be equal to the aggregate purchase price for the tendered BACs and all other securities acquired by the Purchaser pursuant to secondary market transactions and other tender offers conducted to datetransactions, together with the expenses associated therewith, the expenses associated with the Purchaser's sale of membership interests and the prepayment of certain fees and expenses in connection with the Purchaser's operations. Neither the Purchaser nor its current members will derive a profit from the sale of the Purchaser's membership interests. However, affiliates of the Purchaser expect to will earn substantial fees in connection with such sales, for structuring this transaction and for performing certain services for the Purchaser. See Item 8, Purpose of the Offer; Future Plans. The Purchaser has not commenced other tender offers for the securities of affiliated partnerships and expects to in the past but will commence additional such tender offers in the future. However, affiliates of the Purchaser have previously commenced and completed such tender offers. In connection with a tender offer commenced on April 10, 1997 by the Purchaser and the settlement of matters relating to such tender offer, commenced on April 10, 1997 by Lehigh Tax Credit Partners L.L.C. ("Lehigh I"), an affiliate of the Purchaser Purchaser, Lehigh I entered into an agreement with Everest Properties, Inc. ("Everest"), dated April 23, 1997 (the "Everest Agreement", a copy of which has been filed as Exhibit (c)(2) to the Purchaser's Tender Offer Statement on Schedule 14D-1 filed with the Commission on November 10October 14, 19971998). Pursuant to the Everest Agreement, Lehigh I and its affiliates (including the Purchaser Purchaser) granted to Everest, among other things, an option to purchase up to 25% of the BACs tendered in the Offer on the same terms and conditions as the Purchaser's purchase of BACs (the "Everest Option"). In consideration of the foregoing, Everest agreed, among other things, that neither it nor any of its affiliates will, directly or indirectly: (i) in any manner, including, without limitation, by tender offer (whether or not pursuant to a filing made with the Commission), acquire, attempt to acquire or make a proposal to acquire, directly or indirectly, any securities of the Partnership, except for (a) the BACs it acquires pursuant to the Everest Option and (b) purchases of de minimis amounts of securities in the secondary market at the prevailing secondary market price (it being understood that the purchaser of such de minimis amounts of securities shall be bound by the terms and conditions of the Everest Agreement); (ii) seek or propose to enter into, directly or indirectly, any merger, consolidation, business combination, sale or acquisition of assets, liquidation, dissolution or other similar transaction involving the Partnership; (iii) make, or in any way participate, directly or indirectly, in any "solicitation" of "proxies" or "consents" (as such terms are used in the proxy rules of the Commission) to vote, or seek to advise or influence any person with respect to the voting of, any voting securities of the Partnership; (iv) form, join or otherwise participate in a "group" (within the meaning of Section 13(d)(3) of the Exchange Act) with respect to any voting securities of the Partnership; (v) disclose in writing to any third party any intention, plan or arrangement inconsistent with the terms of the Everest Agreement; or (vi) loan money to, advise, assist or encourage any person in connection with any action inconsistent with the terms of the Everest Agreement. The foregoing restrictions shall continue in full force and effect forever, in perpetuity, with respect to the securities of the Partnership unless the Purchaser fails to perform its obligations under the Everest Agreement. The foregoing description of the Everest Agreement is subject to and qualified in its entirety by reference to such agreement, which agreement is incorporated herein by reference. The Purchaser and the General Partner are effectively controlled by the same persons. Therefore, the Purchaser and the General Partner, subject to its fiduciary duties, may have a conflict of interest with respect to certain matters involving BACs holders, Limited Partners and/or the Partnership. In order to address certain of those matters, the Purchaser entered into the Standstill Agreement. The Partnership expressed concern that consummation of the Offer would cause it to be classified as a "publicly-traded partnership" (a "PTP") for federal income tax purposes and, therefore, suffer adverse tax conse-.

Background of the Offer. The purpose of the Offer is to enable the Purchaser to acquire a significant interest in the Partnership for investment purposes based on its expectation that the Partnership will continue to generate Tax Credits and tax losses attributable to the BACs. The Purchaser intends to sell, and has begun the process of selling, sell membership interests in the Purchaser to third parties with a need for Tax Credits and/or tax losses. The aggregate sales price of the Purchaser's membership interests to third parties will be equal to the aggregate purchase price Purchase Price for the tendered BACs and all other securities acquired by the Purchaser pursuant to secondary market transactions and other tender offers conducted to date, together with the expenses associated therewith, the expenses associated with plus the Purchaser's sale of membership interests and the prepayment of certain fees and expenses in connection with conducting and consummating the Purchaser's operationsOffer and financing the purchase of the tendered BACs. Neither the Purchaser nor its current members will derive a profit from the sale of the Purchaser's membership interests. However, affiliates of the Purchaser expect to earn fees in connection with such sales, for structuring this transaction and for performing certain services for the Purchaser. The Purchaser has commenced other tender offers for the securities of affiliated partnerships and expects to commence additional tender offers in the future. In connection with a tender offer commenced on April 10, 1997 by the Purchaser and the settlement of matters relating to such tender offer, the Purchaser entered into an agreement with Everest Properties, Inc. ("Everest"), dated April 23, 1997 (the "Everest Agreement", a copy of which has been filed as Exhibit (c)(2) to the Purchaser's Tender Offer Statement on Schedule 14D-1 filed with the Commission on November 10August 27, 1997). Pursuant to the Everest Agreement, the Purchaser granted to Everest, among other things, an option to purchase up to 25% of the BACs tendered in the Offer on the same terms and conditions as the Purchaser's purchase of BACs (the "Everest Option"). In consideration of the foregoing, Everest agreed, among other things, that neither it nor any of its affiliates will, directly or indirectly: (i) in any manner, including, without limitation, by tender offer (whether or not pursuant to a filing made with the Commission), acquire, attempt to acquire or make a proposal to acquire, directly or indirectly, any securities of the Partnership, except for (a) the BACs it acquires pursuant to the Everest Option and (b) purchases of de minimis amounts of securities in the secondary market at the prevailing secondary market price (it being understood that the purchaser of such de minimis amounts of securities shall be bound by the terms and conditions of the Everest Agreement); (ii) seek or propose to enter into, directly or indirectly, any merger, consolidation, business combination, sale or acquisition of assets, liquidation, dissolution or other similar transaction involving the Partnership; (iii) make, or in any way participate, directly or indirectly, in any "solicitation" of "proxies" or "consents" (as such terms are used in the proxy rules of the Commission) to vote, or seek to advise or influence any person with respect to the voting of, any voting securities of the Partnership; (iv) form, join or otherwise participate in a "group" (within the meaning of Section 13(d)(3) of the Exchange Act) with respect to any voting securities of the Partnership; (v) disclose in writing to any third party any intention, plan or arrangement inconsistent with the terms of the Everest Agreement; or (vi) loan money to, advise, assist or encourage any person in connection with any action inconsistent with the terms of the Everest Agreement. The foregoing restrictions shall continue in full force and effect forever, in perpetuity, with respect to the securities of the Partnership unless the Purchaser fails to perform its obligations under the Everest Agreement. The foregoing description of the Everest Agreement is subject to and qualified in its entirety by reference to such agreement, which agreement is incorporated herein by reference. The Purchaser and the General Partner RFA are effectively controlled by the same persons. Therefore, the Purchaser and the General PartnerRFA, subject to its fiduciary duties, may have a conflict of interest with respect to certain matters involving BACs holders, Limited Partners and/or the Partnership. In June 1997 and July 1997, representatives of the Purchaser had discussions with representatives of Freedom GP, the general partner of the Partnership which is not affiliated with the Purchaser, in order to address certain of those matters, discuss the Offer. These discussions resulted in the Purchaser entered entering into the Standstill Agreement. The Partnership expressed concern that consummation of the Offer would cause it to be classified as a "publicly-traded partnership" (a "PTP") for federal income tax purposes and, therefore, suffer adverse tax conse-consequences. To address this concern, the Purchaser agreed to retain two independent law firms to deliver legal opinions to the Partnership that consummation of the Offer will not result in it being treated as a PTP. The Purchaser requested that the Partnership mail this Offer to Purchase, the related Letter of Transmittal and other relevant material. On August 27, 1997, the Purchaser was notified that such materials were mailed at the Purchaser's expense and the Offer was commenced.