-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, EVYt3rVHSzOGQqRi9EFfOUZ+O/rUopSpJPlc1wNY6z5NA3gVTTO69eUiK1HkaqXK +6Gj0KWKEOkNegQHz4agbA== 0000857004-96-000022.txt : 19961003 0000857004-96-000022.hdr.sgml : 19961003 ACCESSION NUMBER: 0000857004-96-000022 CONFORMED SUBMISSION TYPE: 10-K/A PUBLIC DOCUMENT COUNT: 7 CONFORMED PERIOD OF REPORT: 19951231 FILED AS OF DATE: 19961002 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: HISTORIC PRESERVATION PROPERTIES 1990 LP TAX CREDIT FUND CENTRAL INDEX KEY: 0000857004 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE [6500] IRS NUMBER: 043066191 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 000-19257 FILM NUMBER: 96638310 BUSINESS ADDRESS: STREET 1: BATTERYMARCH PARK II CITY: QUINCY STATE: MA ZIP: 02169 BUSINESS PHONE: 6174721000 MAIL ADDRESS: STREET 1: C/O HISTORIC PRESERVATION PROPERTIES STREET 2: ONE BATTERYMARCH PARK II CITY: QUINCY STATE: MA ZIP: 02169 10-K/A 1 10-K/A UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K/A (Mark One) [x] Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 [Fee Required] For the fiscal year ended December 31, 1995 ----------------- [ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 [Fee Required] For the transition period from to Commission file Number 33-31778 -------- Historic Preservation Properties 1990 L.P. Tax Credit Fund (Exact name of registrant as specified in its charter) Delaware 04-3066191 -------- ---------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) Batterymarch Park II, Quincy, MA 02169 -------------------------------------- (Address of principal executive offices) Registrant's telephone number, including area code 617-472-1000 ------------ Previous Address: One Liberty Square, Third Floor, Boston, MA 02109 ------------------------------------------------- Securities registered pursuant to Section 12(b) of the Act: Title of each class Name of each exchange on which registered None Securities registered pursuant to Section 12(g) of the act: None (Title of class) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. [x] Yes [ ] No Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (229.405 of this chapter) is not contained herein, and will not contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. HISTORIC PRESERVATION PROPERTIES 1990 L.P. TAX CREDIT FUND 1995 FORM 10-K/A ANNUAL REPORT TABLE OF CONTENTS Sequential Page No. Page No. PART I Item 1 Business K-3 4 Item 2 Properties K-9 10 Item 3 Legal Proceedings K-9 10 Item 4 Submission of Matters to a Vote of Unit Holders K-9 10 PART II Item 5 Market for Registrant's Units and Related Unit Holder Matters K-10 11 Item 6 Selected Financial Data K-11 12 Item 7 Management's Discussion and Analysis of Financial Condition and Results of Operations K-12 13 Item 8 Financial Statements and Supplementary Data K-15 16 Item 9 Changes in and Disagreements with Accountants on Accounting and Financial Disclosure K-15 16 PART III Item 10 Directors and Executive Officers of the Registrant K-16 17 Item 11 Executive Compensation K-17 18 Item 12 Unit Ownership of Certain Beneficial Owners and Management K-17 18 Item 13 Certain Relationships and Related Transactions K-18 19 PART IV Item 14 Exhibits, Financial Statement Schedules and Reports on Form 8-K K-19 20 SIGNATURES K-26 27 SUPPLEMENTAL INFORMATION K-27 28 K-2 DOCUMENTS INCORPORATED BY REFERENCE Part of the Form 10-K Document into which Incorporated Incorporated by Reference - ----------------------- ------------------------- I Prospectus of the Registrant dated March 30, 1990 (the "Prospectus"). Supplement No. 1 to the Prospectus dated August 1, 1990. Supplement No. 2 to the Prospectus dated December 3, 1990. III The Prospectus. K-1 PART I Item 1. Business. Historic Preservation Properties 1990 L.P. Tax Credit Fund (the Partnership), a Delaware limited partnership, was organized under the Delaware Revised Uniform Limited Partnership Act on October 4, 1989 for the purpose of investing in a portfolio of real properties which qualify for rehabilitation tax credits (Rehabilitation Tax Credits) afforded by Section 47 of the Internal Revenue Code of 1986, as amended (the Code), and rehabilitating such properties (or acquiring such properties in the process of rehabilitation and completing such rehabilitation) in a manner intended to render the cost of such rehabilitation eligible for classification as "Qualified Rehabilitation Expenditures", as such term is defined in the Code, and thus eligible for Rehabilitation Tax Credits. The Partnership was initially capitalized with contributions of $100 from its general partner and $100 from each of three initial limited partners. On October 26, 1989, the Partnership filed a Registration Statement on Form S-11, File Number 33-31778 (the Registration Statement), with the Securities and Exchange Commission (the Commission) with respect to the public offering of units of limited partnership interest (Units) in the Partnership. The Registration Statement, covering the offering of up to 50,000 Units at a purchase price of $1,000 per Unit (an aggregate of $50,000,000), was declared effective on March 30, 1990. The offering of Units terminated on December 31, 1990, at which time the Partnership had received gross offering proceeds of $16,361,000 from 1,391 investors. The general partner of the Partnership (the General Partner) is Boston Historic Partners II Limited Partnership, a Massachusetts limited partnership. The general partner of the General Partner is BHP II Advisors Limited Partnership (BHP II Advisors). The general partners of BHP II Advisors are Terrence P. Sullivan and Portfolio Advisory Services II, Inc. (PAS II) a corporation whose controlling shareholder, director and president is Mr. Sullivan (Sullivan). The Partnership does not have any employees. Through September 30, 1995, accounting, asset management and investor services were performed by Portfolio Advisory Services, Inc. (PAS), a Massachusetts corporation whose sole shareholder is Sullivan. PAS is related to BHP II through certain common ownership and management and whose sole shareholder is Sullivan. The original contract was for one year, commencing July 1, 1993, and was extended through September 30, 1995. PAS received no fee for these services but was reimbursed by the Partnership for all operating expenses of providing such services. Effective October 1, 1995, the Partnership engaged Claremont Management Corporation, an unaffiliated Massachusetts Corporation to perform accounting, asset management and investor services for an annual fee of $38,400 and reimbursement of all operating expenses of providing such services. The contract expires June 30, 1997 and is automatically renewed on a yearly basis unless otherwise terminated as provided for in the agreement. K-3 The Partnership's only business is investing in real properties which are expected to qualify for Rehabilitation Tax Credits. A presentation of information about industry segments is not applicable and would not be helpful in understanding the Partnership's business taken as a whole. The Partnership's investment objectives and policies are described in pages 28-36 of its prospectus dated March 30, 1990 (the Prospectus) under the caption "Investment Objectives and Policies," which description is incorporated herein by this reference. The Prospectus was filed with the Commission pursuant to Rule 424(b) on April 6, 1990. During 1990, the Partnership acquired interests in the following real estate, collectively referred to as the "Ventures". The Partnership's purchases of the Ventures were made on substantially the same terms described in Supplement No. 1 to the Prospectus dated August 1, 1990 (Supplement No. 1) and Supplement No. 2 to the Prospectus dated December 3, 1990 (Supplement No. 2). Both Supplement No. 1 and Supplement No. 2 are incorporated herein by this reference. Supplement No. 1 and Supplement No. 2 were filed pursuant to Rule 424(b) on August 14, 1990 and December 4, 1990, respectively. As of December 31, 1995, 100% of the limited partners' capital contributions (net of selling commission, organizational and sales costs, acquisition fees and reserves) had been invested in real property investments: Henderson's Wharf Baltimore, L.P. (the Building Venture) is a Delaware limited partnership formed on July 20, 1990 to acquire a fee interest in a seven-story building on 1.5 acres of land located at 1000 Fell Street, Baltimore, Maryland and to rehabilitate the building into residential units, 149 indoor parking spaces and a 38 room inn. The building contains 137 residential units as of December 31, 1995, 125 of which were currently owned by the Building Venture and 12 of which were owned by unrelated parties. In 1994, the Building Venture entered into contracts to purchase three condominium units and parking spaces (the Property) owned by unrelated parties. The purchase price of the Property is the greater of the seller's outstanding mortgage balance as of the date of purchase or the fair market value of the property as defined in the contracts. The Building Venture has possession of the property, bears the risk of loss and damage to the Property, receives all of the rents and other income generated by the Property and is responsible for payment of all related costs which include but are not limited to debt service, taxes and condominium fees. On February 27, 1996, the Building Venture purchased the three units for approximately $314,800. The building has been renovated and certain of the related renovation costs have qualified for Rehabilitation Tax Credits. The Building Venture purchased the building for $6,812,500 which included seller financing of $6,350,000. The Building Venture and the seller entered into an agreement (Agreement) whereby the seller extended the original December 31, 1990 maturity date on this note to December 31, 1992 in exchange for the payment of $1,000,000 of this note in December 1990. On December 7, 1992 the Building Venture entered into an agreement with the seller to extend the maturity date on the note until January 2, 1994. In consideration for the extension, the Building Venture was obligated to pay $150,000 on the earlier of January 2, 1994 or the date of any optional prepayment of the note in full. In April 1994, the seller extended the K-4 maturity date of the note to December 31, 1995 and added the $150,000 extension fee to the outstanding principal balance of the note along with unpaid interest totaling $89,168 on the note, for the period March 16, 1994 through May 15, 1994 and unpaid interest on the extension fee totaling $1,250 for the period April 16, 1994 through May 15, 1994. Interest through the date of refinancing (February 27, 1996) was due monthly on the new principal balance of the note at the annual rate of 10%. In addition, the seller required the Building Venture to establish a real estate tax escrow account (Tax Escrow) which was funded on a monthly basis through the date of refinancing (February 27, 1996). The balance of the Tax Escrow at December 31, 1995 was approximately $49,000. On February 27, 1996, HPP 1990 obtained a $6,000,000 deed of trust note with a third party lender which provided funds for the Building Venture to refinance the outstanding balance of the seller financed purchase money note totaling $5,590,418, to pay $109,582 to the seller in release of the contingent purchase price promissory note, and to purchase in part three condominium units and parking spaces owned by unrelated parties for an aggregate purchase price of $314,800. The deed of trust note bears interest at 7.85% and requires monthly principal and interest payments in the amount of $49,628 commencing in April 1996. The deed of trust note amortizes over a 20 year schedule and all remaining unpaid principal and interest is due in March 2006. Under the deed of trust note, the lender has the option with six months written notice to call amounts outstanding under the deed of trust note at the end of ten years or anytime thereafter. The deed of trust note is secured by the Building Venture's property, rents and assignment of leases and is guaranteed by the Building Venture. This transaction will release approximately $1,000,000 of suspended rehabilitation tax credits to the Partnership from the Building Venture in 1996. The Building Venture was placed in service in December 1990 and commenced lease-up in January 1991 and currently is fully operational. As of December 31, 1995, approximately 93% of the apartment units have been leased. The inn was opened in May 1991 and is also fully operational. The average occupancy for the inn in 1995 and 1994 was 74% and 65%, respectively. No Rehabilitation Tax Credits have been allocated to the Partnership in 1995, 1994 and 1993 from the Building Venture. The Partnership may invest in other real estate ventures as set forth on pages 28-36 of the Prospectus (which pages are hereby incorporated by this reference) upon the remaining lease-up and refinancing of this property. Henderson's Wharf Marina, L.P. (the Marina Venture) is a Delaware limited partnership formed on July 20, 1990 to acquire a 1.92 acre parcel of land together with a 256-slip marina which is adjacent to the Building Venture's property. The Marina Venture owns the fee interest in the property. The Marina Venture purchased the property for $1,266,363 which included seller financing of $1,187,500. Under the Second Amended and Restated Agreement of Limited Partnership of Henderson's Wharf Baltimore, L.P. dated February 1, 1991, Henderson's Wharf Development Corporation (HWDC), a Delaware corporation that is wholly owned by the Partnership, was admitted as a general partner of the Building Venture (the Partnership and HWDC are collectively referred to as "Henderson's General Partners"). Hillcrest Management, Inc. (HMI), a K-5 Massachusetts corporation, was admitted as the limited partner of the Building Venture. Generally, allocations of net profits and losses, as well as cash flow, are to be allocated 99%, .9% and .1% to the Partnership, HWDC and HMI, respectively. The overall management and control of the business and affairs of the Building Venture are solely vested in Henderson's General Partners. The Second Amended and Restated Agreement of Limited Partnership of Henderson's Wharf Marina, L.P. dated February 1, 1991 provided ownership and management identical to that of the Building Venture described in the preceding paragraph. On August 1, 1991, Amendment No. 1 to the Second Amended and Restated Agreement of Limited Partnership was executed. HWDC became the sole general partner of the Marina Venture and HMI and the Partnership became limited partners. Generally, allocations of net profits and losses, as well as cash flow under this agreement, were allocated 98.9%, 1% and .1% to the Partnership, HWDC and HMI, respectively. The overall management and control of the business and affairs of the Marina Venture is solely vested with the general partner of the Marina Venture. On February 1, 1991, the Building Venture entered into a long term property management and brokerage agreement (Management Agreement), an inn lease (Inn Lease) and a consulting agreement (Consulting Agreement) with HMI. The Management Agreement expired on December 31, 1991 and was originally extended until December 31, 1993, and subsequently terminated as of July 31, 1993, and required the payment of management fees to HMI equal to 6% of gross rental receipts, as defined in the agreement. The Management Agreement also required the payment of a one time lease-up fee during the lease-up phase equal to one month's rent. Management and lease- up fees paid to HMI totaled $82,766 for the period January 1 through July 31, 1993. The Inn Lease originally expired on December 31, 1995 and was also terminated as of July 31, 1993 and required the payment to HMI of 50% of the operating profit, as defined in the agreement, relating to the 38 room inn. If total management fees earned based on the inn's gross rental receipts were less than $75,000 for any one year, then the Inn Lease required payments to HMI equal to the difference between actual management fees paid and $75,000. No amounts were paid under the Inn Lease during 1993. The Consulting Agreement which expired on December 31, 1991 required the Building Venture to pay HMI a $15,000 refinancing fee upon the closing of any refinancing of the existing Building Venture's financing. The Consulting Agreement also required the Building Venture to pay HMI an incentive fee equal to 1% of the gross sales proceeds resulting from the sale of the building property to an unaffiliated third party buyer. These commitments survive the December 31, 1991 expiration date of the Consulting Agreement and the termination of all other agreements with HMI (see below). The Building Venture paid the $15,000 refinancing fee to HMI in March 1996 as a result of refinancing its purchase money note on February 27, 1996, as mentioned above. On January 1, 1992, the Marina Venture entered into a long term property management agreement with HMI. This agreement provided for payment of management fees to HMI equal to 9% of gross operating revenues, as defined in the agreement. In addition, the property management agreement required the Marina Venture to pay HMI an incentive management fee equal to 6% of the gross sales proceeds and an incentive brokerage fee K-6 equal to 3% of gross sales proceeds. The incentive management and brokerage fees were required to be paid to the extent that the partners of the Marina Venture have received a return of their capital contributions, as defined in the Third Amended and Restated Agreement of Limited Partnership. Management fees paid to HMI for the period January 1, 1993 through July 31, 1993 totaled $2,494. On January 1, 1992, the Partnership (herein referred to as HPP 1990) hired Hillcrest Asset Management, Inc. (Hillcrest), a company related to HMI through common ownership, to assist the general partner in providing accounting, asset management and investor services. Hillcrest provided such services for a management fee of $12,000 annually plus reimbursement of all its costs of providing such services. This contract expired on June 30, 1993 and was not renewed. For the period January 1, 1993 to June 30, 1993 management fees paid to HMI totaled $6,000, and expense reimbursements paid to HMI totaled $54,469. After evaluating the marina property over the initial years following acquisition, the Marina Venture had determined that it was in its best interest to either renegotiate the debt or restructure the Marina Venture before proceeding with the development of the marina. As such, the Marina Venture did not pay the interest due on the mortgage for 1992 and 1991. Accordingly, the mortgage was in default and the seller, at its option could have demanded immediate payment of the note. Based on the fair market value of marina land and improvements determined by independent appraisal and the priority distribution of proceeds from capital transactions as provided for in the Marina Venture's Third Amended and Restated Agreement of Limited Partnership, the Partnership had reserved $845,672 against its investment in the marina land and improvements at December 31, 1992. On December 31, 1992, the seller (HWFP, Inc.) agreed to reduce the original principal amount of the purchase money note from $1,187,500 to $350,000 and forgave $237,500 of accrued interest. Also on December 31, 1992, the Third Amended and Restated Agreement of Limited Partnership of Henderson's Wharf Marina L.P. was executed. HWFP, Inc., a Maryland corporation, received a 50% limited partnership interest in the Marina Venture. Concurrently, HMI withdrew as a limited partner in the Marina Venture, HPP 1990's limited partnership interest in the Marina Venture was reduced to 49% and HWDC retained a 1% general partnership interest in the Marina Venture. The minority interest was initially recorded at fair market value based on an independent appraisal and priority distribution of proceeds from capital transactions as provided for in the Marina Venture's Third Amended and Restated Agreement of Limited Partnership. On February 27, 1996, HPP 1990, HWPC and HWPF, Inc. executed the First Amendment to the Third Amended and Restated Agreement of Limited Partnership of Henderson's Wharf Marina L.P. HWFP redeemed its 50% limited partnership interest in the Marina Venture in return for a $225,000 first mortgage secured by the marina property. The note bears interest at 7.50%, matures in March 2006, and requires monthly principal and interest payments in the amount of $2,086. As a result, HPP 1990's limited partnership interest in the Marina Venture increased to 98%, while HWDC's ownership in the Marina Venture increased to a 1% limited partnership interest and a 1% general partnership interest. K-7 On July 1, 1993, HPP 90 engaged Portfolio Advisory Services, Inc., a Massachusetts corporation, which is related to BHP II through certain common ownership and management, and in which Terrence P. Sullivan is the sole shareholder, for a twelve month period, to assist the general partner in providing accounting, asset management and investor services. The original contract was for one year and was extended through September 1995. PAS receives no fee for its services, however it was reimbursed for all operating costs of providing these services. Expense reimbursement to PAS for the period January 1, 1995 through September 30, 1995, the year ended December 31, 1994, and the period July 1, 1993 through December 31, 1993, totaled $65,903, $46,063, and $24,964, respectively. Effective July 31, 1993, the Ventures terminated their respective Management Agreement and Inn Lease (Contracts) with HMI. As of December 31, 1993, HPP 1990 had not reached an agreement with HMI as to whether any additional payments were due under the Contracts as a result of the termination. Consequently, HPP 1990 was unable to reasonably estimate amounts due to HMI, if any, and no liability was recorded as of December 31, 1993. During October 1994, HPP 1990 and HMI agreed in principle to an agreement whereby the parties would settle their differences to put rest to all further controversy and to avoid substantial expense of burdensome and protracted litigation. In January 1995, HPP 1990 entered into an agreement on behalf of the Ventures to pay HMI contract termination settlement payments (Settlement Payments) totaling $271,108 which was included in accrued expenses as of December 31, 1994. The Settlement Payments required an initial payment of $36,000 due on January 27, 1995 and requires monthly payments of $3,221 commencing September 1995 through the earlier of September 2001 or the occurrence of certain events as defined in the agreement. The Settlement Payments are secured by 100% of HPP 1990's economic interest as a partner, as defined in the agreements, in the Ventures; net sales and refinancing proceeds; cash flow; return of capital contributions; all of HPP 1990's cash and marketable equity securities in excess of $150,000; and all of the Venture's cash in excess of the greater of $200,000 or reserves required by lenders. No distributions to the partners of HPP 1990 are permitted until all Settlement Payments are paid in full. As of December 31, 1995, unpaid settlement payments included in accrued expenses and other liabilities totaled $222,224. On August 23, 1993 the Ventures engaged McKenna Management Associates, Inc. (McKenna) as the independent onsite property management company. The management agreement with McKenna originally expired in August 1995 and was extended until October 31, 1995. The agreement required the payment of $9,000 per month for the first year and $7,650 per month for the second year (and additional months) for the total complex. On November 1, 1995, the Building and Marina Venture entered into property management contracts with Claremont Management Corporation (CMC), an unaffiliated Massachusetts corporation, to manage the apartments, inn and marina operations. The property management contracts with the apartments and inn provide for payment of management fees to CMC equal to 4% and 4.5% respectively, of gross receipts, as defined. The marina property management agreement with CMC provides for payment of management fees equal to 9% of gross receipts, as defined. The agreements expire on June 30, 1997, and are automatically extended on a year to year basis unless otherwise terminated as provided for in the agreements. A condition K-8 of the agreements requires the Ventures to maintain with CMC, for the benefit of the Ventures, operating cash and contingency reservesof $190,000 and $70,000, respectively. To facilitate the transition of property management and through an arrangement with CMC, McKenna continued to provide management services to the apartments, inn and marina operations through December 31, 1995. Management fees paid to CMC and McKenna by the Ventures totaled $94,841, $102,600, and $38,334, for the years ended 1995, 1994 and 1993, respectively. Item 2. Properties. - ------- ----------- See Item 1 above. Item 3. Legal Proceedings. - ------- ------------------ The Partnership is not a party to, nor, to the best knowledge of the General Partner, are any of the Ventures or real properties owned by the Ventures subject to, any material pending legal proceedings. Item 4. Submission of Matters to a Vote of Unit Holders. - ------- ------------------------------------------------ No matters were submitted to a vote of Unit holders. K-9 PART II Item 5. Market For Registrant's Units and Related Unit Holder Matters. - ------- -------------------------------------------------------------- (a) There is no active market for the Units and no such market is expected to develop. Trading in the Units is sporadic and occurs solely through private transactions. (b) As of March 15, 1996, there were 1,392 holders of Units. The Amended and Restated Agreement of Limited Partnership (Partnership Agreement) requires that any Cash Flow (as defined therein) be distributed quarterly to the investor limited partners (Limited Partners) in specified proportions and priorities and that Sale or Refinancing Proceeds (as defined therein) be distributed as and when available. As discussed in Item 1, there are some restrictions on the Partnership's present and future ability to make distributions of Cash Flow or Sale or Refinancing Proceeds. For the periods ended December 31, 1994, 1993 and 1992, no distributions of Cash Flow or Sale or Refinancing Proceeds were paid or accrued to the Limited Partners. K-10 Item 6. Selected Financial Data. - ------- ------------------------
Periods Ended December 31, 1995 1994 1993 1992 1991 -------------------------------------------------------------------------- Revenues $ 2,769,347 $ 2,501,562 $ 2,220,822 $ 2,256,736 $ 1,106,631 Net Loss before extraordinary gain $ (359,021) $ (667,504) $ (917,379) $(2,009,440) $(2,165,604) Extraordinary Gain $ 0 $ 0 $ 0 $ 1,075,000 $ 0 Net Loss $ (359,021) $ (667,504) $ (917,379) $( 934,440) $(2,165,604) Net Loss per units of Investor Limited Partnership Interest based on Unit outstanding: Loss before extraordinary gain $ (21.72) $ (40.39) $ (55.51) $ (121.59) $ (131.04) Extraordinary gain $ 0 $ 0 $ 0 $ 65.05 $ 0 Net Loss $ (21.72) $ (40.39) $ (55.51) $ (56.54) $ (131.04) Total Assets as of December 31, $15,483,025 $ 15,849,184 $16,276,877 $16,997,456 $18,843,454 Long Term Debt as of December 31, $ 5,590,418 $ 5,590,418 $ 5,350,000 $ 5,530,000 $ 6,537,500 Cash Distributions per weighted average Unit outstanding $ 0 $ 0 $ 0 $ 0 $ 0 Rehabilitation Tax Credit per Unit $ 0 $ 0 $ 0 $ 0 $ 26.60
See Item 7 for a discussion of the factors that may materially affect the foregoing information in future years. K-11 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations. Liquidity and Capital Resources. The Partnership terminated its offering of Units on December 31, 1990, at which time Limited Partners had purchased 16,361 Units, representing gross capital contributions of $16,361,000. As of December 31, 1995, the Partnership had invested an aggregate of $12,461,719 in the Building and Marina Ventures. The rehabilitation of the Building Venture is intended to qualify for Rehabilitation Tax Credits. Such amount contributed in the Building and Marina Ventures represents approximately 100% of the Limited Partners' capital contribution after deducting selling commissions, organizational and sales costs, acquisition fees and reserves. The Partnership does not anticipate making any additional investments in new real estate. As of December 31, 1995, the Ventures and HPP 1990 had unrestricted cash of $196,606 and $186,747, respectively. HPP 1990's cash is used primarily to fund general and administrative expenses of running the public fund. The Venturers' cash is used to fund operating expenses of the properties. In addition, to the extent available, the Building Venture distributes cash to HPP 1990 to help fund general and administrative expenses of running the public fund. As mentioned in Item 1, on February 27, 1996, the Building Venture obtained mortgage financing of $6,000,000 at 7.85% which requires principal and interest monthly payments of $49,628 for ten years based on a 20 year amortization and matures in March 2006. The short term liquidity of the Building Venture depends upon its ability to pay its debt service, real estate taxes, operating expenses and have sufficient cash to distribute to HPP 1990. The short term liquidity of the Building Venture depends on its ability to generate sufficient rental income to fund operating expenses and debt service requirements and have sufficient cash to distribute to HPP 1990. Settlement Payments due HMI, that were negotiated as part of the contract termination (See Item 1), are secured by 100% of HPP 1990's economic interest as a partner, as defined in the agreements, in the Ventures; net sales and refinancing proceeds; cash flow; return of capital contributions; all of HPP 1990's cash and marketable equity securities in excess of $150,000; and all of the Ventures' cash in excess of the greater of $200,000 or reserves required by potential lenders. Cash flow generated from the Partnership's present investment properties and the Partnership's share of the proceeds from the sale of such properties is expected to be the source of future long-term liquidity. Results of Operations. The Partnership incurred total losses under generally accepted accounting principles of $359,021 in 1995 which includes depreciation and amortization of $568,217. The Partnership was not allocated any Rehabilitation Tax Credits from the Building Venture in 1995. In 1995, the Building Venture was fully operational during the entire year, and the Marina Venture had available approximately 240 slips for use, of which a minimal number of slips were fully operational offering various utility hook-ups. The results of the Partnership's operations in K-12 future years should be comparable to 1995 numbers provided the Ventures are able to maintain greater than 90% occupancy in the Apartments and greater than 60% in the Inn. Expense levels should increase with the rate of inflation but, it is anticipated that the monthly rents and the average daily room rate revenues should increase accordingly. In recent years, the occupancy of the apartments has increased from previous years as a result of management's decision to enter into more traditional long term, annual, leases. The Apartments have achieved stabilized occupancy in 1995 and 1994 with occupancy rates of 94% and 93%, respectively. In addition, a market study of the competition was prepared, and the Building Ventures' monthly rental rates were adjusted to reflect market rates for a property located in the Fells Point, Baltimore neighborhood. Management is projecting economic occupancy for the Apartments to be approximately 93% for calendar year 1996 which will be indicative of the expected levels for future years. The average occupancy of the Inn increased from 47% in 1993 to 64% in 1994 to 74% in 1995. Also, the average daily rate from room rentals increased approximately 4% in 1994 and approximately 7% in 1995, respectively, from previous years. The Building Venture made a decision in the third quarter of 1993 to hire a full time hospitality manager to generate new business from previously untapped markets. The increase in occupancy of the Inn for 1995 was due in part to a major competitor temporarily discontinuing operations for major renovations. That major competitor reopened in early 1996. In addition, the hospitality market nationwide experienced an increase from previous years. Management is projecting Inn occupancy of 67% for calendar year 1996 and Inn occupancy in future years is expected to stay at the same level, depending upon market constraints. Certain expense items, including condominium assessments, real estate taxes, and depreciation which remained consistent throughout 1993, 1994, and 1995, are not variable expenses and are not effected by changes in operational activity. Payroll services and other operating expenses experienced a reduction from 1993 to 1994 due to certain efficiencies implemented by the full time hospitality manager; these expense items increased from 1994 to 1995 primarily due to the increased activity of the Inn. Management fees were reduced in 1994 and 1995 as a direct result of the negotiated contract with the hospitality manager. The decrease from 1993 to 1994 and the increase from 1994 to 1995, in operating and administrative expenses are due to the fees and other administrative expenses associated with engaging third party entities in 1993 and 1995 to perform asset management, accounting and investor services for HPP 1990. During 1994, HPP 1990 entered into an agreement to make settlement payments to HMI (see Item 1) totaling $271,108 which has been recorded in the fourth quarter of 1994 and included in accrued expenses and other liabilities at December 31, 1994. As of December 31, 1995, unpaid settlement payments included in accrued expenses and other liabilities totaled $222,224. The Building Venturer's $5,350,000 purchase money note was originally due on December 31, 1990. During 1991, the maturity date of the purchase money note was extended to December 31, 1992. During 1992, the fmaturity date of the purchase money note was extended to January 2, 1994. During 1993, the maturity date was extended to March 2, 1994. On April 15, K-13 1994, the holder of the purchase money note (the Lender) extended the maturity date to December 31, 1995 and added $150,000 of extension fees and approximately two months of unpaid interest to the principal balance under the purchase money note. The lender also required the Building Venture to make monthly payments to a Tax Escrow account for the exclusive purpose of funding real estate tax payments by the required due date. On February 27, 1996, HPP 1990 obtained a $6,000,000 deed of trust note with a third party lender which provided funds for the Building Venture to refinance the outstanding balance of the seller financed purchase money note totaling $5,590,418 to pay $109,582 to the seller in release of the contingent purchase price promissory note, and to purchase in part three condominium units and parking spaces owned by unrelated parties for an aggregate purchase price of $314,800. The deed of trust note bears interest at 7.85% and requires monthly principal and interest payments in the amount of $49,628 commencing in April 1996. All remaining unpaid principal and interest is due in March 2006. Under the deed of trust note, the lender had the option with six months written notice to call amounts outstanding under the deed of trust note at the end of ten years or anytime thereafter. The deed of trust note is secured by the Building Venture's property, rents and assignment of leases and is guaranteed by the Building Venture. This transaction will release approximately $1,000,000 of suspended rehabilitation tax credits to the Partnership from the Building Venture in 1996. The Marina Venture requires substantial rehabilitation to become fully operational. After evaluating the marina over the past few years, the Marina Venture determined that it was in its best interest to restructure the Marina Venture before proceeding with the development of the marina. The Marina Venture did not pay the real estate taxes in 1991 or the interest due on its property's mortgage in 1992 and 1991. Accordingly, the mortgage was in default and the lender could, at its option, demand immediate payment of the note. Based on management's analysis completed during the fourth quarter of 1992 which considered the fair market value of marina land and improvements determined by independent appraisal and priority distribution of proceeds from capital transactions as provided for in the Marina Venture's Third Amended and Restated Agreement of Limited Partnership, the Partnership reserved $845,672 against its investment in the marina land and improvements as of December 31, 1992. On December 31, 1992, the seller (HWFP, Inc.) agreed to reduce the original principal amount of the purchase money note from $1,187,500 to $350,000 and forgave $237,500 of accrued interest. As a result, the Partnership recognized an extraordinary gain of $1,075,000 in 1992. Also on December 31, 1992, the Third Amended and Restated Agreement of Limited Partnership of Henderson's Wharf Marina L.P. was executed. HWFP, Inc., a Maryland corporation, received a 50% limited partnership interest in the Marina Venture. Concurrently, HMI withdrew as a limited partner in the Marina Venture, HPP 1990's limited partnership interest in the Marina Venture was reduced to 49% and HWDC retained a 1% general partnership interest in the Marina Venture. HWFP, Inc.'s minority interest in the Marina Venture was recorded at fair market value based on an independent appraisal and priority distribution of proceeds from capital transactions K-14 as provided for in the Marina Venture's Third Amended and Restated Agreement of Limited Partnership. On February 27, 1996, HPP 1990, HWDC and HWFP, Inc. entered into the First Amendment to the Third Amended and Restated Agreement of Limited Partnership of Henderson's Wharf Marina, L.P. by which HWFP, Inc. redeemed its 50% limited partnership interest in the Marina Venture in return for a $225,000 first mortgage note secured by the marina property. The note bears interest at 7.50%, matures on March 15, 2006, and requires monthly principal and interest payments in the amount of $2,086. As a result of the redemption of HWFP's interest, HPP 1990's limited partnership interest in the Marina Venture increased to 98% and HWDC received a 1% limited partnership interest and maintained its 1% general partnership interest in the Marina Venture. Inflation and Other Economic Factors ------------------------------------ Recent economic trends have kept inflation relatively low although the Partnership cannot make any predictions as to whether recent trends will continue. The assets of the Partnership are highly leveraged in view of the fact that the Building Venture was subject to a substantial purchase money note as of December 31, 1995, and remains subject to a substantial mortgage note based on the refinancing effective February 27, 1996. Operating expenses and rental revenues of each property are subject to inflationary factors. Low rates of inflation could result in slower rental rate increases, and to the extent that these factors are not offset by similar increases in property operating expenses (which could arise as a result of general economic circumstances such as an increase in the cost of energy or fuel, or from local economic circumstances), the operations of the Partnership could be adversely affected. Actual deflation in prices generally would, in effect, increase the economic burden of the mortgage debt service with a corresponding adverse effect. High rates of inflation, on the other hand, raise the operating expenses for projects and to the extent they cannot be passed on to tenants through higher rents, such increases could also adversely affect Partnership operations. Although, to the extent rent increases are commensurable, the burden imposed by the mortgage leverage is reduced with a favorable effect. Low levels of new construction of similar projects and high levels of interest rates may foster demand for existing properties through increasing rental income and appreciation in value. Item 8. Financial Statements and Supplementary Data. - ------- -------------------------------------------- See the Financial Statements of the Partnership included as part of this Annual Report on Form 10-K. Item 9. Changes in and Disagreements with Accountants on Accounting and - ------- Financial Disclosure. None K-15 PART III Item 10. Directors and Executive Officers of the Registrant. - -------- --------------------------------------------------- (a) and (b) Identification of Directors and Executive Officers. The following table sets forth the name and age of the director and executive officer of BHP II Advisors and the offices held by such person. Name Office Age ---- ------ --- Terrence P. Sullivan President and Director 49 Mr. Sullivan has served as a director and executive officer of BHP II Advisors since the organization of PAS II in June 1989. Since that time he has also been a general partner of BHP II Advisors. He will continue to serve in the capacity indicated above until his successor is elected and qualified. Mr. Sullivan is also an executive officer of Boston Capital Planning. (c) Family Relationships. --------------------- None. (e) Business Experience. -------------------- The background and experience of the executive officer and director of BHP II Advisors and Boston Capital Planning identified above in Items 10(a) and 10(b) are as follows: Terrence P. Sullivan, 49, is the founder and sole shareholder of Boston Capital Planning, a financial consulting and real estate syndication firm, and its wholly-owned subsidiary, Boston Bay Capital, Inc. (Boston Bay Capital). Founded in 1979, Boston Bay Capital was an NASD-Registered broker/dealer specializing in placement of interests in real estate limited partnerships which own historic and restoration properties. From 1986 through December 31, 1989, Boston Bay Capital participated in the placement of limited partnership interest in 98 real estate programs, over 60 of which were historic rehabilitation or restoration partnerships, placing a total of approximately $140,000,000 in equity. In addition, from 1987 to 1990, Boston Bay Capital served as dealer manager in connection with the sale of units of limited partnership interest in Historic Preservation Properties Limited Partnership, Historic Preservation Properties 1988 Limited Partnership, Historic Preservation Properties 1989 Limited Partnership and the Partnership, the first four public programs sponsored by Affiliates of the General Partner. Such public programs sold an aggregate of approximately $82 million of Units of limited partnership interest. From 1972 to 1978, Mr. Sullivan was the Tax Shelter coordinator for the Boston office of White, Weld & Co., Inc., an investment banking firm. Mr. Sullivan graduated from Worcester Polytechnic Institute in 1968 with a Bachelor of Science degree in mechanical engineering. He received a Masters in Business Administration degree from the University of Massachusetts (Amherst) in 1971. Mr. Sullivan serves as a general partner of BBC Restoration Properties Limited Partnership and BBC Restoration Properties II Limited Partnership. In addition, an entity controlled by Mr. Sullivan serves as the general partner of Institutional Credit Partners K-16 Limited Partnership (ICP), a partnership organized to invest in a diversified portfolio of properties which qualify for low income housing tax credits, Rehabilitation Tax Credits, or both. In 1989, ICP completed a private placement of $5,790,000 of limited partnership interest to corporations and other institutional investors. (f)-(g) Involvement in Certain Legal Proceedings. None Item 11. Executive Compensation. - -------- ----------------------- The director and executive officer of PAS II and Boston Capital Planning received no remuneration from the Partnership. Under the Partnership Agreement, the General Partner and its affiliates are entitled to receive various fees, expense reimbursements, commissions, cash distributions, allocations of taxable income or loss and tax credits from the Partnership. The amounts of these items and the times at which they are payable to the General Partner or its affiliates are described at pages 14-16 and 36-39 of the Prospectus under the captions "Management Compensation" and "Cash Distributions and Net Profits and Net Losses", respectively, which descriptions are incorporated herein by this reference. No commissions, fees, or cash distributions were paid by the Partnership to the General Partner or its affiliates for the years ended December 31, 1995, 1994 and 1993. The Partnership reimbursed an affiliate of the General Partner $65,903, $46,063, and $24,964 for administrative expenses for the years ended December 31, 1995, 1994 and 1993, respectively. For the year ended December 31, 1995, the Partnership allocated approximately $6,800 of taxable loss and no Rehabilitation Tax Credits to the General Partner. See Note 6 to Financial Statements for additional information about transactions between the Partnership and the General Partner and its affiliates. Item 12. Unit Ownership of Certain Beneficial Owners and Management. - -------- ----------------------------------------------------------- (a) Unit Ownership of Certain Beneficial Owners. -------------------------------------------- The Spiegel Corporation, 1515 West 22nd Street, Oak Brook, Illinois 60522, is known by the Partnership to be the beneficial owner of more than 5% of the outstanding Units at March 15, 1996 (2,000 units 12.22%). Under the Partnership Agreement, the voting rights of the Limited Partners are limited and, in some circumstances, are subject to the prior receipt of certain opinions of counsel or judicial decisions. Under the Partnership Agreement, the right to manage the business of the Partnership is vested solely in the General Partner, although the consent of a majority in interest of the Limited Partners is required for the sale at one time of all or substantially all of the Partnership's assets and with respect to certain other matters. See Item 1 above for a description of the General Partner and its general partners. K-17 (b) Unit Ownership of Management. ----------------------------- No director or executive officer of BHP II Advisors, Boston Capital Planning or their affiliates had any beneficial ownership of Units as of March 15, 1996. No officer or director of BHP II Advisors or Boston Capital Planning, nor any general partner of the General Partner, nor any of their respective affiliates, possesses the right to acquire Units. (c) Change in Control. ------------------ There exists no arrangement known to the Partnership which may at a subsequent date result in a change in control of the Partnership. Item 13. Certain Relationships and Related Transactions. - -------- ----------------------------------------------- See Note 6 of Notes to Financial Statements for information about transactions between the Partnership and the General Partner and its affiliates. See Item 11 above for information concerning the fees, commissions, reimbursements and cash distributions which the Partnership paid to or accrued for the account of the General Partner and its affiliates for the years ended December 31, 1995, 1994 and 1993. K-18 PART IV Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K. - -------- ----------------------------------------------------------------- (a) The following documents are filed as part of this report: 1. Financial Statements - The Financial Statements listed on the accompanying Index to Financial Statements and Schedule are filed as a part of this Annual Report. 2. Financial Statement Schedules - The Financial Statement Schedules listed on the accompanying Index to Financial Statements and Schedules are filed as a part of this Annual Report. 3. Exhibits -------- 3(a) Certificate of Limited Partnership of Historic Preservation Properties 1990 L.P. Tax Credit Fund dated as of September 29, 1989, (filed as exhibit 3A to the Partnership's Registration Statement on Form S-11, File No. 33-31778, and incorporated herein by this reference). 3(b) Certificate of Amendment of Historic Preservation Properties 1990 L.P. Tax Credit Fund dated as of October 23, 1989, (filed as exhibit 3C to the Partnership's Registration Statement on Form S-11, File No. 33-31778, and incorporated herein by this reference). 3(c) Amended and Restated Agreement of Limited Partnership of Historic Preservation Properties 1990 L.P. Tax Credit Fund dated as of March 30, 1990, as currently in effect, other than amendments thereto which provide solely for the admission or withdrawal of investors as limited partners of the Partnership (attached as Exhibit A to Prospectus of the Partnership included as part of its Registration Statement on Form S-11, File No. 33-31778, and incorporated herein by reference). 4. See Exhibits 3(a), 3(b) and 3(c). 10(a) Escrow Deposit Agreement between Historic Preservation Properties 1990 L.P. Tax Credit Fund and Wainwright Bank and Trust Company, (filed as exhibit 10A to the Partnership's Registration Statement of Form S-11, File No. 33-31778, and incorporated herein by this reference). K-18 10(b) Documents relating to the acquisition of partnership interests in Henderson's Wharf Baltimore, L.P. and Henderson's Wharf Marina, L.P. and material contracts of these partnerships: I. Certificate of Limited Partnership of Henderson's Wharf Baltimore, L.P. dated as of July 12, 1990 and filed in the Office of the Secretary of State of Delaware on July 20, 1990. (1) II. Certificate of Limited Partnership of Henderson's Wharf Marina, L.P. dated as of July 12, 1990 and filed in the Office of the Secretary of State of Delaware on July 20, 1990. (1) III. Agreement of Limited Partnership of Henderson's Wharf Baltimore, L.P. dated as of July 18, 1990. (1) IV. Agreement of Limited Partnership of Henderson's Wharf Marina, L.P. dated as of July 18, 1990. (1) V. Certificate of Amendment of Certificate of Limited Partnership of Henderson's Wharf Baltimore, L.P. dated as of February 14, 1991 and filed in the Office of the Secretary of State of Delaware on March 5, 1991. (2) VI. Certificate of Amendment of Certificate of Limited Partnership of Henderson's Wharf Marina, L.P. dated as of February 14, 1991 and filed in the Office of the Secretary of State of Delaware on March 5, 1991. (2) VII. Amended and Restated Agreement of Limited Partnership of Henderson's Wharf Baltimore, L.P. dated as of July 31, 1990. (1) VIII. Second Amended and Restated Agreement of Limited Partnership of Henderson's Wharf Baltimore, L.P. dated February 1, 1991. (2) IX. Amended and Restated Agreement of Limited Partnership of Henderson's Wharf Marina, L.P. dated as of July 31, 1990. (1) X. Second Amended and Restated Agreement of Limited Partnership of Henderson's Wharf Marina, L.P. dated February 1, 1991. (2) (1) Previously filed as part of exhibit 10B to the Partnership's Registration Statement on Form S-11, File No. 33-31778, and incorporated herein by this reference. (2) Previously filed as part of exhibit 10(b) to the Partnership's Annual Report on Form 10-K for the year ended December 31, 1990 and incorporated herein by this reference. K-20 XI. Agreement for Sale of Henderson's Wharf, the Fastlands and Marina among HWFP, Inc., Kenneth M. Stein, J.E. Robert, the United Brotherhood of Carpenters and Joiners of America and Historic Preservation Properties 1990 L.P. Tax Credit Fund dated June 19, 1990. (1) XII. Assignment and Assumption Agreement Regarding Contract Rights between Historic Preservation Properties 1990 L.P. Tax Credit Fund and Henderson's Wharf Baltimore, L.P. dated July 31, 1990. (1) XIII. Assignment and Assumption Agreement Regarding Contract Rights between Historic Preservation Properties 1990 L.P. Tax Credit Fund and Henderson's Wharf Marina, L.P. dated July 31, 1990. (1) XIV. Deed dated July 31, 1990 from Joseph E. Robert, Jr., Kenneth M. Stein and HWFP, Inc. to Henderson's Wharf Baltimore, L.P. (1) XV. Deed dated July 31, 1990 from Joseph E. Robert, Jr., Kenneth M. Stein and HWFP, Inc. to Henderson's Wharf Marina, L.P. (1) XVI. Assignment and Blanket Transfer from HWFP, Inc. and the United Brotherhood of Carpenters and Joiners of America to Henderson's Wharf Baltimore, L.P. dated July 31, 1990. (1) XVII. Assignment and Blanket Transfer from HWFP, Inc. and the United Brotherhood of Carpenters and Joiners of America to Henderson's Wharf Marina, L.P. dated July 31, 1990. (1) XVIII. Purchase Money Promissory Note of Henderson's Wharf Baltimore, L.P. to HWFP, Inc. dated July 31, 1990 in the principal amount of $6,350,000. (1) XIX. Purchase Money Promissory Note of Henderson's Wharf Marina, L.P. to HWFP, Inc. dated July 31, 1990 in the principal amount of $1,187,500. (1) XX. Contingent Purchase Price Promissory Note of Henderson's Wharf Baltimore, L.P. to HWFP, Inc. dated July 31, 1990 in the principal amount of $1,150,000. (1) XXI. Purchase Money Deed of Trust between Henderson's Wharf Baltimore, L.P. and Kenneth M. Stein and Joseph E. Robert, Jr., Trustees, dated July 31, 1990. (1) (1)Previously filed as part of exhibit 10B to the Partnership's Registration Statement on Form S-11, File No. 33-31778, and incorporated herein by this reference. K-21 XXII. Purchase Money Deed of Trust between Henderson's Wharf Marina, L.P. and Kenneth M. Stein and Joseph E. Robert, Jr., Trustees, dated July 31, 1990. (1) XXIII. First Amendment to Amended and Restated Henderson's Wharf Disposition Agreement among Henderson's Wharf Baltimore, L.P., Henderson's Wharf Marina, L.P. and the Mayor and City Council of Baltimore, Maryland dated July 31, 1990. (1) XXIV. Second Amendment to Pedestrian Promenade Easement Agreement among Henderson's Wharf Baltimore, L.P. Henderson's Wharf Marina, L.P. and the Mayor and City Council of Baltimore, Maryland dated July 31, 1990. (1) XXV. Property Management and Brokerage Agreement between Henderson's Wharf Baltimore, L.P. and Richland Management, Inc. dated as of July 31, 1990. (1) XXVI. Development Agreement between Henderson's Wharf Baltimore, L.P. and Richland #1, L.P. dated as of July 31, 1990. (1) XXVII. Inn Lease between Henderson's Wharf Baltimore, L.P. and Hillcrest Management, Inc. dated as of July 31, 1990. (1) XXVIII. Property Management and Brokerage Agreement between Henderson's Wharf Baltimore, L.P. and Hillcrest Management, Inc. dated as of February 1, 1991. (2) XXIX. Consulting Agreement between Henderson's Wharf Baltimore, L.P. and Hillcrest Management, Inc. dated as of February 1, 1991. (2) XXX. Settlement Agreement between Historic Preservation Properties 1990 L.P. Tax Credit Fund, Henderson's Wharf Baltimore, L.P. Henderson's Wharf Marina, L.P. and Richard F. Holland, Richland #1 L.P., Richland Management, Inc., Richland Partners, Inc., Richland Construction, Inc., Richland Historic Properties, Inc. and Richland #2 L.P. dated February 1, 1991. (2) (1) Previously filed as part of exhibit 10B to the Partnership's Registration Statement on Form S-11, File No. 33-31778, and incorporated herein by this reference. (2) Previously filed as part of exhibit 10(b) to the Partnership's Annual Report on Form 10-K for the year ended December 31, 1990 and incorporated herein by this reference. K-22 XXXI. Amendment No. 1 to the Second Amended and Restated Agreement of Limited Partnership between Henderson's Wharf Development Corporation, Historic Preservation Properties 1990 L.P. Tax Credit Fund and Hillcrest Management, Inc. dated August 1, 1991. (3) XXXII. Settlement Agreement between Historic Preservation Properties 1990 L.P. Tax Credit Fund, Boston Historic Partners II Limited Partnership, BHP II Advisors Limited Partnership, Terrence P. Sullivan, Portfolio Advisory Services II, Inc., Boston Capital Planning Group, Inc., Boston Bay Capital, Inc. and Daniels Printing Company dated July 6, 1992. (4) XXXIII. Second Amendment to Note 1, the Purchase Money Promissory Note, between Henderson's Wharf Baltimore, L.P. and HWFP, Inc. dated December 7, 1992. (4) XXXIV. Release of Deed of Trust securing $1,187,500 Purchase money Promissory Note between HWFP, Inc. Joseph E. Robert, Jr., S. Herbert Tinley, III and Henderson's Wharf Marina L.P. dated December 31, 1992. (4) XXXV. Third Amended and Restated Agreement of Limited Partnership of Henderson's Wharf Marina, L.P. dated December 31, 1992. (4) XXXVI. Agreement regarding refund of real estate taxes pertaining to Henderson's Wharf Baltimore L.P. and HWFP, Inc. dated December 31, 1992. (4) XXXVII. Property Management Agreement between Henderson's Wharf Marina, L.P. and Hillcrest Management, Inc. dated January 1, 1992. (4) (3) Previously filed as part of exhibit 10(c) to the Partnership's Annual Report on Form 10-K for the year ended December 31, 1991 and incorporated herein by this reference. (4) Previously filed as part of exhibit 10(b) to the Partnership's Annual Report on Form 10-K for the year ended December 31, 1992 and incorporated herein by this reference. K-23 XXXVIII. Property Management Agreement between Henderson's Wharf Marina L.P., Henderson's Wharf Baltimore, L.P. and the Residences and Inn at Henderson's Wharf, collectively referred to as "Henderson's Wharf" and McKenna Management Associates, Inc., dated August 23, 1993. (5) XXXIX. Third Amendment to Note 1, the Purchase Money Promissory Note, Between Henderson's Wharf Baltimore, L.P. and HWFP, Inc. dated December 31, 1993. (5) XL. Fourth Amendment to Note 1, the Purchase Money Promissory Note, between Henderson's Baltimore, L.P. and HWFP, Inc. dated February 22, 1994. (5) XLI. Promissory Note between Historic Preservation Properties 1990 L.P. Tax Credit Fund and Lew Cohen dated July 1, 1993. (6) XLII. Settlement documents which include the Settlement Agreement and Mutual Release, Agreement of Purchase and Sale, Deed, Escrow Agreement, Special Power of Attorney, Option Agreement, Maryland Residential Property Disclaimer Statement with Joseph and Eileen Mason for Unit # 433, dated June 1, 1994. (6) XLIII. Settlement documents which include the Settlement Agreement and Mutual Release, Agreement of Purchase and Sale, Deed, Escrow Agreement, Special Power of Attorney, Option Agreement, Maryland Residential Property Disclaimer Statement and Lease with Colvin Ryan for Unit # 510, dated June 1, 1994. (6) XLIV. Settlement documents which include the Agreement of Purchase and Sale, Deed, Escrow Agreement, Special Power of Attorney and Option Agreement with Anne B. Cook for Unit # 409. (6) XLV. Promissory Note between Historic Preservation Properties 1990 L.P. Tax Credit Fund and Hillcrest Asset Management, Inc. dated December 30, 1994. (6) XLVI. Pledge Agreement between Historic Preservation Properties, Henderson's Wharf Baltimore, L.P., Henderson's Wharf Marina, L.P. and Hillcrest Asset Management, Inc., dated December 30, 1994. (6) (5) Previously filed as part of exhibit 10(b) to the Partnership's Annual Report on Form 10-K for the year ended December 31, 1993 and incorporated herein by this reference. (6) Previously filed as part of exhibit 22 to the Partnership's Annual Report on Form 10-K for the year ended December 31, 1994 and incorporated herein by this reference. K-24 XLVII. Property Management Agreement between Henderson's Wharf Marina L.P., Henderson's Wharf Baltimore, L.P. and the Residences and Inn at Henderson's Wharf, collectively referred to as "Henderson's Wharf" and Claremont Management Corporation, dated November 1, 1995. XLVIII. Asset Management Agreement between Historic Preservation Properties 1990 L.P. Tax Credit Fund and Claremont Management Corporation dated October 1, 1995. 10 (c) Asset Management Agreement between Historic Preservation Properties 1990 L.P. Tax Credit Fund and Hillcrest Asset Management, Inc. dated January 1, 1992. (5) 22 List of Ventures. (5) 28 (ii) (a) Supplement No. 1 to the Partnership's Prospectus dated August 1, 1990. (7) (b) Supplement No. 2 to the Partnership's Prospectus dated December 3, 1990. (7) (c) Pages 14-16, 28-36 and 36-39 of the Partnership's Prospectus dated March 30, 1990 and filed with the Commission pursuant to Rule 424(b) on April 6, 1990. (7) (5) Previously filed as part of exhibit 22 to the Partnership's Annual Report on Form 10-K for the year ended December 31, 1993 and incorporated herein by this reference. (7) Previously filed as part of exhibit 28 (ii) (a) to the Partnership's Annual Partnership Report on Form 10-K for the year ended December 31, 1990 and incorporated herein by this reference. K-25 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. HISTORIC PRESERVATION PROPERTIES 1990 L.P. TAX CREDIT FUND By: BOSTON HISTORIC PARTNERS II LIMITED PARTNERSHIP, GENERAL PARTNER By: BHP II ADVISORS LIMITED PARTNERSHIP By: PORTFOLIO ADVISORY SERVICES II, INC. Date: March 28, 1996 By:_______________________ Terrence P. Sullivan, President and Date: March 28, 1996 By:_______________________ Terrence P. Sullivan, General Partner Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of the Registrant and in the capacities and on the dates indicated. Signature Title ____________________ Individual General Partner of Terrence P. Sullivan BHP II Advisors Limited Partnership and as President and Principal Date: March 28, 1996 Executive Officer of Portfolio -------------- Advisory Services II, Inc., General Partner of BHP II Advisors Limited Partnership Principal Financial and ____________________ Principal Accounting Officer Terrence P. Sullivan of Portfolio Advisory Services II, Inc., General Partner of BHP II Date: March 28, 1996 Advisors Limited Partnership -------------- K-26 Supplemental Information to be Furnished with Reports Filed Pursuant to Section 15(d) of the Act by Registrants Which Have Not Registered Securities Pursuant to Section 12 of the Act. An annual report will be furnished to Unit holders subsequent to filing of this Form 10-K. K-27 EX-99.1 2 HISTORIC PRESERVATION PROPERTIES 1990 L.P. TAX CREDIT FUND CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993 TOGETHER WITH INDEPENDENT AUDITORS' REPORTS ANNUAL REPORT ON FORM 10-K/A Items 14(a) (1) and (2) INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Page Consolidated Financial Statements of Historic Preservation Properties 1990 L.P. Tax Credit Fund Independent Auditors' Report F-3 Consolidated Balance Sheets as of December 31, 1995 and 1994 F-4 Consolidated Statements of Operations for the Years Ended December 31, 1995, 1994 and 1993 F-5 Consolidated Statements of Partners' Equity (Deficiency) for the Years Ended December 31, 1995, 1994 and 1993 F-6 Consolidated Statements of Cash Flows for the Years Ended December 31, 1995, 1994 and 1993 F-7 Notes to Consolidated Financial Statements F-8 Independent Auditors' Report on Accompanying Information F-18 Consolidated Financial Statement Schedule: Schedule III - Real Estate and Accumulated Depreciation F-19 Independent Auditors Report --------------------------- The Partners Historic Preservation Properties 1990 L.P. Tax Credit Fund Quincy, Massachusetts We have audited the accompanying consolidated balance sheets of HISTORIC PRESERVATION PROPERTIES 1990 L.P. TAX CREDIT FUND, a Delaware limited partnership (the "Partnership"), as of December 31, 1995 and 1994, and the related consolidated statements of operations, partners' equity (deficiency) and cash flows for each of the years in the three-year period ended December 31, 1995. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosure in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of HISTORIC PRESERVATION PROPERTIES 1990 L.P. TAX CREDIT FUND as of December 31, 1995 and 1994, and the results of its operations and cash flows for each of the years in the three-year period ended December 31, 1995, in conformity with generally accepted accounting principles. Lefkowitz, Garfinkel, Champi & DeRienzo, P.C. Providence, Rhode Island March 7, 1996 HISTORIC PRESERVATION PROPERTIES 1990 L.P. TAX CREDIT FUND CONSOLIDATED BALANCE SHEETS - DECEMBER 31, 1995 AND 1994 ASSETS 1995 1994 INVESTMENT IN REAL ESTATE Building and building improvements $14,736,101 $14,736,101 Land 97,034 97,034 Furniture and equipment 964,378 950,491 Marina - land and improvements 1,352,790 1,352,790 ----------- ----------- 17,150,303 17,136,416 Less accumulated depreciation 2,573,713 2,035,160 ----------- ----------- 14,576,590 15,101,256 Reserve for realization of Marina land and improvements (845,672) (845,672) ----------- ----------- 13,730,918 14,255,584 CASH, including restricted cash (1995, $86,716; 1994, $101,326) 474,835 505,501 ESCROW DEPOSITS 54,270 44,299 DEFERRED EVALUATION AND ACQUISITION COSTS, net of accumulated amortization (1995, $137,822; 1994, $110,258) 964,778 992,342 OTHER DEFERRED COSTS, net of accumulated amortization (1995, $0; 1994, $17,400) 51,121 2,100 OTHER ASSETS 207,103 49,358 ------------ ----------- $15,483,025 $15,849,184 ============ =========== LIABILITIES AND PARTNERS' EQUITY LIABILITIES: Note payable $ 5,590,418 $ 5,590,418 Accrued expenses and other liabilities 402,064 358,200 Security deposits 86,716 101,326 ----------- ----------- Total liabilities 6,079,198 6,049,944 ----------- ----------- COMMITMENTS (Notes 5 and 6) MINORITY INTEREST 268,325 304,717 PARTNERS' EQUITY Limited Partners' equity-Units of Investor Limited Partnership Interest, $1,000 stated value per Unit-issued and outstanding - 16,361 units 9,186,508 9,541,939 General Partner's equity deficiency (51,006) (47,416) ----------- ----------- Total partners' equity 9,135,502 9,494,523 ----------- ----------- $15,483,025 $15,849,184 ============ ============ The accompanying notes are an integral part of these financial statements. HISTORIC PRESERVATION PROPERTIES 1990 L. P. TAX CREDIT FUND CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993 1995 1994 1993 REVENUES: Rental and related income $2,706,446 $2,456,887 $2,082,011 Interest and other income 62,901 44,675 138,811 ---------- ---------- ---------- 2,769,347 2,501,562 2,220,822 ---------- ---------- ---------- EXPENSES: Operating and administrative 120,957 62,152 117,010 Professional fees 100,006 41,661 51,011 Depreciation and amortization 568,217 571,366 571,026 Property operating expenses: Payroll services 572,506 448,351 491,577 Condominium assessments 357,060 357,060 315,906 Real estate taxes 249,994 269,682 243,133 Management fees 94,841 102,600 123,594 Other operating 541,785 520,156 558,505 ---------- --------- --------- 2,605,366 2,373,028 2,471,762 ---------- --------- --------- Income (Loss) from operations 163,981 128,534 (250,940) ---------- --------- --------- OTHER EXPENSES: Interest expense and ext fee (559,394) (551,448) (685,204) Contract termination settlement - (271,108) - ----------- --------- --------- (559,394) (822,556) (685,204) ----------- --------- --------- MINORITY INTEREST IN LOSS ON MARINA VENTURE 36,392 26,518 18,765 ----------- --------- --------- NET LOSS $ (359,021) $(667,504) $(917,379) ============= ========== =========== NET LOSS ALLOCATED TO GENERAL PARTNER $ (3,590) $ (6,675) $ (9,174) ============= ========== =========== NET LOSS ALLOCATED TO LIMITED PARTNERS $ (355,431) $(660,829) $(908,205) ============= ========== =========== NET LOSS PER UNIT OF INVESTOR LIMITED PARTNERSP INT, BASED ON 16,361 UNITS OUTSTANDING: $ (21.72) $ (40.39) $ (55.51) ============== ========== =========== The accompanying notes are an integral part of these financial statements. HISTORIC PRESERVATION PROPERTIES 1990 L. P. TAX CREDIT FUND CONSOLIDATED STATEMENTS OF PARTNERS' EQUITY (DEFICIENCY) FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
Units of Investor Limited Investor Partner- Limited General ship Partners' Partner's Interest Equity Deficiency Total --------- ------------- ------------- ------------ BALANCE, December 31, 1992 16,361 $ 11,110,973 $ (31,567) $ 11,079,406 Net loss - (908,205) (9,174) (917,379) --------- ------------- ------------- ------------- BALANCE, December 31, 1993 16,361 10,202,768 (40,741) 10,162,027 Net loss - (660,829) (6,675) (667,504) --------- ------------- ------------ ------------- BALANCE, December 31, 1994 16,361 9,541,939 (47,416) 9,494,523 Net loss - (355,431) (3,590) (359,021) --------- ------------- ----------- ------------- BALANCE, December 31, 1995 16,361 $ 9,186,508 $ (51,006) $ 9,135,502 ========= ============= ============ =============
The accompanying notes are an integral part of these financial statements. HISTORIC PRESERVATION PROPERTIES 1990 L. P. TAX CREDIT FUND CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993 1995 1994 1993 CASH FLOWS FROM OPER ACTIVITIES: Net loss $ (359,021) $(667,504) $ (917,379) Adjustments to reconcile net loss to net cash provided by (used in) operating act- Depreciation and amortization 568,217 571,366 571,026 Loss on disposal of equipment 18,339 Deferred interest expense and extension fee payable added to the principal of note payable 240,418 Contract termination settlement 271,108 Minority int in loss on Marina Venture (36,392) (26,518) (18,765) Inc (dec) in accrued expenses and other liabilities (7,523) (245,197) 215,683 Increase in escrow deposits (9,971) (44,299) (Increase) decrease in other assets (157,745) 27,546 (10,253) --------- --------- ---------- Net cash provided by (used in) operating activities (2,435) 145,259 (159,688) --------- --------- ---------- CASH FLOWS FROM INVESTING ACTIVITIES: Additions to Marina - - (11,668) Purchase of furniture and equipment (3,827) (13,083) (1,140) Payment of deferred costs (24,404) - - ---------- -------- ---------- Cash used in investing activities (28,231) (13,083) (12,808) CASH FLOWS FROM FINANCING ACTIVITIES: Decrease in minority interest - - (118) ---------- -------- ---------- NET INCREASE (DECREASE) IN CASH (30,666) 132,176 (172,614) CASH, BEGINNING OF YEAR 505,501 373,325 545,939 ---------- --------- ----------- CASH, END OF YEAR $ 474,835 $ 505,501 $ 373,325 ========== ========= =========== SUPPLEMENTAL CASH FLOW INFORMATION: Cash paid for interest $ 559,044 $ 461,030 $ 535,000 ========== ========= =========== The accompanying notes are an integral part of these financial statements. HISTORIC PRESERVATION PROPERTIES 1990 L.P. TAX CREDIT FUND NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993 (1) Organization Historic Preservation Properties 1990 L.P. Tax Credit Fund (HPP 1990) was formed on October 4, 1989 under the Delaware Revised Uniform Limited Partnership Act. The purpose of HPP 1990 is to invest in a portfolio of real properties which are intended to qualify for rehabilitation tax credits (Rehabilitation Tax Credits) afforded by Section 47 of the Internal Revenue Code of 1986, as amended, and to rehabilitate such properties (or acquire such properties in the process of rehabilitation and complete such rehabilitation) in a manner intended to render a portion of the costs thereof eligible for Rehabilitation Tax Credits. Boston Historic Partners II Limited Partnership (BHP II), a Delaware limited partnership, is the general partner of HPP 1990, and officers of Boston Capital Planning Group, Inc. (BCPG), an affiliate of BHP II, were the initial limited partners of HPP 1990. The initial limited partners withdrew as limited partners upon the first admission of Investor Limited Partners (Limited Partners). Prior to admission of the Limited Partners, all costs incurred by HPP 1990 were paid by BHP II. On June 29, 1990, the first Limited Partners were admitted to HPP 1990 and operations commenced. The Amended and Restated Agreement of Limited Partnership (Partnership Agreement) of HPP 1990 generally provides that all net profits, net losses, tax credits and cash distributions of HPP 1990 from normal operations subsequent to admissions of Limited Partners shall be allocated 99% to the Limited Partners and 1% to BHP II. Proceeds from sales or refinancing generally will be distributed 100% to the Limited Partners until they have received an amount equal to their Adjusted Capital Contributions (as defined in the Partnership Agreement) plus priority returns and additional incentive priority returns for certain Limited Partners admitted to HPP 1990 on or prior to certain specified dates. (2) General Partner - BHP II BHP II was formed in June 1989 for the purpose of organizing, syndicating, and managing publicly offered real estate limited partnerships (Public Rehabilitation Partnerships). During 1995, 1994 and 1993, BHP II incurred unaudited losses of approximately $13,000, $14,000 and $24,000 respectively. BHP II's unaudited deficit at December 31, 1995 was approximately $737,000. BHP II has a substantial amount of unpaid obligations to trade creditors. In the event BHP II is not able to generate sufficient cash to fund BHP II's operations, commitments and contingencies in the future, there might be unfavorable consequences to HPP 1990. (2) General Partner - BHP II (Continued) Under the Partnership Agreement, a bankruptcy of BHP II could result in the dissolution of HPP 1990, if at any time BHP II were to be adjudicated bankrupt (either by way of a voluntary filing or by an issuance of an order for relief in the event of an involuntary filing) and BHP II continued to be the sole general partner of HPP 1990. If an additional general partner was admitted to HPP 1990 prior to a bankruptcy of BHP II, the business of HPP 1990 would be able to continue. If BHP II were to be adjudicated bankrupt, and at the time BHP II was the sole general partner of HPP 1990, HPP 1990 would not be dissolved upon the occurrence of such an event if a majority in interest of the Limited Partners elect, within 90 days, to continue the business of HPP 1990 and another general partner is elected (under Delaware law, within 90 days a unanimous vote of the Limited Partners to continue HPP 1990 is required). Although the Partnership Agreement provides for the above mechanisms for continuing the business of HPP 1990, BHP II's general partners believe the most likely course of action would be to seek a successor or additional general partner for HPP 1990. If such events were to happen whereby BHP II and/or HPP 1990 could not consummate the above, HPP 1990 could be dissolved, resulting in adverse tax consequences to the Limited Partners, including recapture of a portion of the Rehabilitation Tax Credits allocated to them. (3) Summary of Significant Accounting Policies Principles of Consolidation The consolidated financial statements include the accounts of HPP 1990, Henderson's Wharf Baltimore, L.P. and Henderson's Wharf Marina, L.P. after elimination of all intercompany transactions and accounts. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. (3) Summary of Significant Accounting Policies (Continued) Real Estate Real estate is held for lease and stated at cost. During the construction period, all carrying costs, principally real estate taxes and interest, were capitalized. Depreciation is provided over the estimated economic useful lives of the assets using the straight-line method. Cash At December 31, 1995 and 1994, HPP 1990 had $204,684 and $268,975, respectively, of cash in banks which is in excess of amounts insured by the Federal Deposit Insurance Corporation. Deferred Evaluation and Acquisition Costs Expenditures related to the purchase of real estate have been capitalized and are being amortized on a straight-line basis over the estimated life of real property (40 years). Income Taxes No provision (benefit) for income taxes is reflected in the accompanying consolidated financial statements of HPP 1990. All partners are required to report on their tax returns their allocable share of income, gains, losses, deductions and credits determined on a tax basis. Syndication Costs Syndication costs were treated as a direct reduction of the Limited Partners' equity accounts. Deferred Costs Organization costs were capitalized and amortized on a straight- line basis over a 60-month period. Other deferred costs relating to the refinancing of the Partnership's note payable will be amortized on a straight-line basis over the term of the new mortgage note. Revenue Recognition Revenue from residential units, principally under short-term operating leases, is recorded when due. Revenue from rentals of inn units is recognized when earned. (4) Investment in Real Estate During 1990, HPP 1990 acquired an interest in the following entities (see below for subsequent changes in ownership): Henderson's Wharf Baltimore, L.P. (the Building Venture) is a Delaware limited partnership formed on July 20, 1990 to acquire a fee interest in a seven-story building on 1.5 acres of land and to rehabilitate the building into 125 residential units, 149 indoor parking spaces and a 38 room inn located at 1000 Fell Street, Baltimore, Maryland. The building contains a total of 137 residential units, 12 of which are owned by unrelated parties. The building has been substantially renovated and certain renovation costs qualify for Rehabilitation Tax Credits. The Building Venture purchased its interest for $6,812,500, which included seller financing of $6,350,000, and a contingent purchase price promissory note (see Note 5). Contributions by HPP 1990 to the Building Venture totaled $12,214,500 as of December 31, 1995. HPP 1990 has made all required capital contributions to the Building Venture in accordance with the Building Venture's partnership agreement, and is not required to make additional contributions, although at its sole discretion, may do so. The renovation of the residential units was substantially complete and a certificate of occupancy was received on December 31, 1990. The Building Venture commenced lease-up in 1991 and has been fully operational since 1992. At December 31, 1995, 93% of the residential units had been leased. During 1995, the average occupancy for the inn was 74%. During 1994, the Building Venture entered into contracts to purchase three condominium units and parking spaces (the Property) owned by unrelated parties. The purchase price of the Property is the greater of the seller's outstanding mortgage balance as of the date of purchase or the fair market value of the property as defined in the contracts. The Building Venture has possession of the property, bears the risk of loss and damage to the Property, receives all of the rents and other income generated by the Property and is responsible for payment of all related costs which include, but are not limited to debt service, taxes and condominium fees. During 1996, the Building Venture purchased the three condominium units in conjunction with the refinancing of its note payable (see Note 5). HPP 1990's operations, principally accounting, investor services and other general and administrative costs, are funded from distributions by the Building Venture. During 1995, the Building Venture distributed $223,138 to HPP 1990. (4) Investment in Real Estate (Continued) Henderson's Wharf Marina, L.P. (the Marina Venture) is a Delaware limited partnership formed on July 20, 1990 to acquire a fee interest in a 1.92 acre parcel of land together with a 256-slip marina located in Baltimore, Maryland. HPP 1990 purchased the Marina Venture for $1,266,363, which included seller financing of $1,187,500 (see Note 5). Contributions to the Marina Venture by HPP 1990 totalled $247,219 as of December 31, 1995. The Marina Venture operated a minimal number of slips from 1991 through 1995 due to the significant repairs necessary to be fully operational. HPP 1990 is required to make capital contributions to the Marina Venture to provide funds not otherwise available to make real estate tax and insurance payments. HPP 1990 may make additional capital contributions to the Marina Venture as provided in the Marina Venture's partnership agreement, but is not required to do so. Under the Second Amended and Restated Agreements of Limited Partnership dated February 1, 1991 of Henderson's Wharf Baltimore, L.P. and Henderson's Wharf Marina, L.P., Henderson's Wharf Development Corporation (HWDC), a Delaware corporation wholly owned by HPP 1990, was admitted as a general partner of the Ventures (HPP 1990 and HWDC are collectively referred to as the "Henderson's General Partners"), and Hillcrest Management, Inc.(HMI), a Massachusetts corporation, was admitted as the Limited Partner of the Ventures and became a minority interest holder in the ventures. On August 1, 1991 the Second Amended and Restated Agreement of Limited Partnership of Henderson's Wharf Marina, L.P. was amended. The amendment provided for the withdrawal by HPP 1990 as a limited partner. Consequently, HWDC became the sole general partner in the Marina Venture. On December 31, 1992, the Third Amended and Restated Agreement of Limited Partnership of Henderson's Wharf Marina L.P. was executed. HWFP, Inc. (HWFP), a Maryland corporation and the original holder of the purchase money note relating to the purchase of the marina property, received a 50% limited partnership interest in the Marina Venture and became the holder of a minority interest (see Note 5). Concurrently, HMI withdrew as a limited partner in the Marina Venture, HPP 1990's limited partnership interest in the Marina Venture was reduced to 49% and HWDC retained a 1% general partnership interest in the Marina Venture. The minority interest granted was recorded (4) Investment in Real Estate (Continued) at fair market value based on an independent appraisal and a priority distribution of proceeds from capital transactions as provided for in the Marina Venture's Third Amended and Restated Agreement of Limited Partnership. In accordance with the termination of all HMI contracts (see Note 6), effective January 1, 1995 HMI withdrew from the Building Venture as a .1% limited partner and was replaced by HWDC. Based on the fair market value of marina land and improvements determined by independent appraisal and the priority distribution of proceeds from capital transactions as provided for in the Marina Venture's Third Amended and Restated Agreement of Limited Partnership, the Partnership has reserved against its investment in the marina land and improvements. Generally, allocations of net profits and losses as well as cash flow of the Building Venture and Marina Venture are allocated in accordance with the Second Amended and Restated Agreement of Limited Partnership and Third Amended and Restated Agreement of Limited Partnership, respectively, as defined in the agreements. The overall management and control of the business and affairs of the Ventures is solely vested in Henderson's General Partners. As discussed in Note 5, on February 27, 1996, HWFP, Inc. redeemed its 50% limited partnership interest in the Marina Venture in return for a $225,000 first mortgage secured by the marina property. As a result of this redemption, HPP 1990's limited partnership interest in the Marina Venture was increased to 98% and HWDC received a 1% limited partnership interest and maintained its 1% general partnership interest in the Marina Venture. (5) Notes Payable and Subsequent Events The Building Venture financed $6,350,000 of the purchase price of the property by issuing a purchase money note to the seller, HWFP. HPP 1990 paid $1,000,000 of principal under this note in December 1990, reducing the balance to $5,350,000 at December 31, 1990. During 1992, the maturity date of the note was extended until January 2, 1994. In consideration for extending the maturity date of the note, the Building Venture was required to pay $150,000 to the holder of the purchase money note (the Lender) on the earlier of January 2, 1994 or a refinancing of the purchase money note. In April 1994, the Lender extended the maturity date on the note until December 31, 1995 and added the $150,000 extension fee to the outstanding principal balance of the note along with unpaid interest totalling $89,168 on the note (for the period March 16, 1994 through May 15, 1994) and unpaid interest on the extension fee totaling $1,250 (for the period April 16, 1994 through May15, 1994). Interest through the date of refinancing (see below) was due monthly on the new principal balance of the note at the annual rate of 10%. In addition, the Lender required the Building Venture to establish a real estate tax escrow account (Tax Escrow) which was being funded on a monthly (5) Notes Payable and Subsequent Events (Continued) basis through the date of refinancing. The balance of the Tax Escrow at December 31, 1995 was $48,930. The note was secured by the property, rents and assignment of leases. In conjunction with issuing a purchase money note to the seller, the Building Venture entered into a contingent purchase price promissory note with the seller for $1,250,000. Payment on the note was contingent upon the cash flow (as defined) generated from the future sale of apartment units in the Building Venture. The note was unsecured, bore no interest, and had no maturity date. As discussed below, the Building Venture paid off the contingent purchase price promissory note for $109,582 on February 27, 1996. On February 27, 1996, HPP 1990 obtained a $6,000,000 deed of trust note with a third party lender which provided funds for the Building Venture to refinance the outstanding balance of the seller financed purchase money note totaling $5,590,418, to pay $109,582 to the seller in release of the contingent purchase price promissory note, and to purchase in part three condominium units and parking spaces owned by unrelated parties for an aggregate purchase price of $314,800 (see Note 4). The deed of trust note bears interest at 7.85% and requires monthly principal and interest payments in the amount of $49,628 commencing in April 1996. The note amortizes over a 20 year schedule and all remaining unpaid principal and interest is due in March 2006. Under the deed of trust note, the lender has the option with six months written notice to call amounts outstanding under the deed of trust note at the end of ten years or anytime thereafter. The deed of trust note is secured by the Building Venture's property, rents and assignment of leases and is guaranteed by the Building Venture. On February 27, 1996, HPP 1990, HWDC and HWFP, Inc. entered into the First Amendment to the Third Amended and Restated Agreement of Limited Partnership of Henderson's Wharf Marina, L.P. by which HWFP, Inc. redeemed its 50% limited partnership interest in the Marina Venture in return for a $225,000 first mortgage note secured by the marina property. The note bears interest at 7.50%, matures in March 2086, and requires monthly principal and interest payments in the amount of $2,086 commencing April 1996. As a result of the redemption of HWFP's interest, HPP 1990's limited partnership interest in the Marina Venture increased to 98% and HWDC received a 1% limited partnership interest and maintained its 1% general partnership interest in the Marina Venture. (6) Transactions With Related Parties and Commitments On February 1, 1991, the Building Venture entered into a long term property management and brokerage agreement (Management Agreement), an inn lease (Inn Lease), and a consulting agreement (Consulting Agreement) with HMI. The Management Agreement originally expired on December 31, 1993 and the Inn Lease originally expired on December 31, 1995. The Management Agreement required the payment of management fees to HMI equal to 6% of gross rental receipts, as defined in the agreement. The Management Agreement also required the payment of a one time lease up fee for leasing residential units during the lease-up phase equal to one month's rent. The Inn Lease required the payments to HMI of 50% of the operating profit, as defined in the agreement, relating to the 38 room inn. If the total management fees earned based on the inn's gross rental receipts were less than $75,000 for any one year, then the Inn Lease required a payment to HMI equal to the difference between actual management fees paid and $75,000. The Management Agreement and Inn Lease were terminated by the Building Venture on July 31, 1993. Management fees paid to HMI totaled $82,766 in 1993. No amounts were paid under the Inn Lease during 1993. The Consulting Agreement, which expired on December 31, 1991, required the Building Venture to pay HMI a $15,000 refinancing fee upon the closing of any refinancing of the existing Building Venture's financing. The Consulting Agreement also required the Building Venture to pay HMI an incentive fee equal to 1% of the gross sales proceeds resulting from the sale of the building property to an unaffiliated third party buyer. These commitments survive the December 31, 1991 expiration date of the Consulting Agreement and the termination of all other agreements with HMI (see below). The Building Venture paid the $15,000 refinancing fee to HMI in March 1996 as a result of refinancing its purchase price promissory note as discussed in Note 5. On January 1, 1992, the Marina Venture entered into a long term Property Management Agreement with HMI. The agreement provided for payment of management fees to HMI equal to 9% of the Gross Operating Revenues, as defined in the agreement. Management fees paid to HMI for the Marina Venture totaled $2,494 in 1993. Effective July 31, 1993, the Venture's terminated their respective Management Agreements and Inn Lease (the Contracts) with HMI. As of December 31, 1993, HPP 1990 had not reached an agreement with HMI as to whether any additional payments were due under the Contracts as a result of the termination. Consequently, HPP 1990 was unable to reasonably estimate amounts due to HMI, if any, and no liability was recorded as of December 31, 1993. (6) Transactions With Related Parties and Commitments (Continued) During October 1994, HPP 1990 and HMI agreed in principle to an agreement whereby the parties would settle their differences to put to rest all further controversy and to avoid substantial expense of burdensome and protracted litigation. In January 1995, HPP 1990 entered into an agreement on behalf of the Venture's to pay HMI contract termination settlement payments (Settlement Payments) totaling $271,108 which was recorded during the fourth quarter of 1994 and which was included in accrued expenses and other liabilities as of December 31, 1994. The Settlement Payments required an initial payment of $36,000 due on January 27, 1995 and require monthly payments of $3,221 commencing September 1995 through the earlier of September 2001 or the occurrence of certain events as defined in the agreement. The Settlement Payments are secured by 100% of HPP 1990's economic interest as a partner in the Venturers, as defined in the agreements; net sales and refinancing proceeds; cash flow; return of capital contributions; all of HPP 1990's cash and marketable securities in excess of $150,000; and all of the Venturers' cash in excess of the greater of $200,000 or reserves required by lenders. No distributions to the partners of HPP 1990 are permitted until all Settlement Payments are paid in full. As of December 31, 1995, unpaid Settlement Payments included in accrued expenses and other liabilities totaled $222,224. On August 23, 1993, the Ventures hired McKenna Management Associates, Inc. (McKenna) as the independent onsite property management company. The management agreement with McKenna originally expired in August 1995 and was extended until October 31, 1995. The agreement required the payment of $9,000 per month for the first year and $7,650 per month for the second year from the Ventures. On November 1, 1995, the Building and Marina Venture entered into property management contracts with Claremont Management Corporation (CMC), an unaffiliated Massachusetts corporation, to manage the apartment, inn and marina operations. The property management contracts provide for payment of management fees to CMC equal to 4% and 4.5% of apartment and inn gross receipts, as defined, respectively, and 9% of marina gross receipts, as defined. The agreements expire on June 30, 1997, and are automatically extended on a year to year basis unless otherwise terminated as provided for in the agreements. A condition of the agreements requires the Ventures to maintain with CMC, for the benefit of the Ventures, operating cash and contingency reserves of $190,000 and $70,000, respectively. To facilitate the transition of property management and through an arrangement with CMC, McKenna continued to provide management services to the apartment, inn and marina operations through December 31, 1995. Management fees paid to McKenna and CMC by the Ventures totaled $94,841, $102,600 and $38,334 for the years ended 1995, 1994 and 1993, respectively. (6) Transactions With Related Parties and Commitments (Continued) On January 1, 1992, HPP 1990 hired Hillcrest Asset Management, Inc. (Hillcrest), a company related to HMI through common ownership, to assist the general partner in providing accounting, asset management and investor services. Hillcrest provided such services for a management fee plus reimbursement of all its costs of providing such services. This contract expired on June 30, 1993 and was not renewed. For the period January 1, 1993 to June 30, 1993, management fees and expense reimbursements totaled $6,000 and $54,469, respectively. On July 1, 1993, HPP 1990 engaged Portfolio Advisory Services, Inc. (PAS), a Massachusetts corporation, which is related to BHP II through certain common ownership and management, to provide accounting, asset management and investor services. The original contract was for one year and was extended through September 30, 1995. PAS received no fee for its services, however it was reimbursed for all operating costs of providing these services. Expense reimbursements to PAS for the period January 1, 1995 through September 30, 1995, for the year ended December 31, 1994, and for the period July 1, 1993 to December 31, 1993, totaled $65,903 $46,063, and $24,964, respectively. On October 1, 1995, HPP 1990 engaged CMC to provide accounting, asset management and investor services. CMC provides such services for an annual management fee of $38,400, plus reimbursement of all its costs of providing these services. The initial term of the agreement expires on June 30, 1997, and is automatically extended on a year to year basis unless terminated as provided for in the agreement. For the period October 1, 1995 to December 31, 1995, CMC received management fees of $9,600 and expense reimbursement totaling $40,336. On November 1, 1995, the third party lender who eventually provided financing to HPP 1990 in February 1996, issued a commitment letter to provide the aforementioned financing. The third pary lender earned a loan placement fee of $90,000 which was recorded at closing of the financing on February 27, 1996. (7) Fair Value of Financial Investments The carrying amounts of cash, escrow deposits, accrued expenses and other liabilities, and security deposits approximate their fair values due to their short maturities. The fair value of the Building Venture's note payable is equal to its carrying amount based on the refinancing at the principal amount outstanding that occurred subsequent to year end. All financial statements are held for non-trading purposes. Independent Auditors' Report on Accompanying Information -------------------------------------------------------- The Partners Historic Preservation Properties 1990 L.P. Tax Credit Fund Quincy, Massachusetts We have audited, in accordance with generally accepted auditing standards, the consolidated financial statements of Historic Preservation Properties 1990 L.P. Tax Credit Fund as of December 31, 1995 and 1994, and for each of the years in the three year period ended December 31, 1995 included in this Form 10-K and have issued our report hereon dated March 7, 1996. Our audits were made for the purpose of forming an opinion on the 1995 and 1994 basic consolidated financial statements taken as a whole. The supplemental schedule is the responsibility of the Partnership's management and is presented for the purposes of complying with the Securities and Exchange Commission's rules and is not part of the basic consolidated financial statements. The information included in this schedule has been subjected to the auditing procedures applied in the audit of the basic consolidated financial statements, and in our opinion fairly states in all material respects the financial data required to be set forth therein in relation to the basic consolidated financial statements as a whole. Lefkowitz, Garfinkel, Champi & DeRienzo, P.C. Providence, Rhode Island March 7, 1996 HISTORIC PRESERVATION PROPERTIES 1990 L.P.TAX CREDIT FUND SCHEDULE III REAL ESTATE & ACCUMULATED DEPRECIATION DECEMBER 31, 1995 (IN THOUSANDS)
Cost Capitalized Initial Costs Subseq to Acquis Gross Amts (Note 6) ------------------------- -------------------- ------------------------- (Note 5) Building Building Accumul Description and Encum- Improve- Improve- Carrying Improve- Total Decprec Ownership % brances Land ments ments Costs Land ments (Note 2) (Note 3) - ------------------------------------------------------------------------------------------- Resid Building/Inn Henderson's Wharf L/P Baltimore, Md 99.9% $5,590 $ 97 $ 6,715 $ 7,671 $350 $ 97 $14,736 $ 14,833 $1,821 Marina L/P Baltimore, Md 49% (Note 5) 0 1,187 0 87 79 387 87 474 135 ------ ------- ------- ------ ----- ------- ------- -------- ------ $5,590 $ 1,284 $ 6,715 $7,758 $ 429 $ 484 $14,823 $ 15,307 $1,956 ====== ======= ======= ====== ===== ======= ======= ======== ====== Date of Date Deprec Constr or Interest Life Rehabil Acquired (years) --------- -------- ------- Residential Bldg/Inn 9/90 7/20/90 40 Marina n/a 7/20/90 40
Note 1: The aggregate cost of each property on a tax basis net of the reduction due to the rehabilitation tax credit at December 31 are as follows: 1995 1994 1993 Henderson's Wharf Baltimore $ 14,281 $ 14,281 $ 14,281 Henderson's Wharf Marina 527 527 527 -------- -------- -------- Total $ 14,808 $ 14,808 $ 14,808 ======== ======== ======== Note 2: The changes in total costs of land, building and improvements to the years ended December 31, 1995, 1994, and 1993 are as follows: 1995 1994 1993 Balance at the beg of period $ 15,307 $ 15,295 $ 15,295 Additions: Land,Bldg & improvements 0 12 12 -------- -------- -------- $ 15,307 $ 15,307 $ 15,307 ======== ======== ======== Note 3: The changes in accumulated depreciation for the period ended December 31 are as follows: 1995 1994 1993 Balance at beginning of period $ 1,554 $ 1,152 $ 750 Depreciation during the year Buildings and Improvements 402 402 402 -------- -------- ------- $ 1,956 $ 1,554 $ 1,152 ======== ======== ======= Note 4: This schedule excludes furniture and equipment with a cost of $964,000 and $950,000 and accumulated depreciation of $618,000 and $481,000 at December 31, 1995 and 1994, respectively. Note 5: In 1994, the Lender added $150,000 of unpaid extension fees and approximately $90,000 of unpaid interest to the original principal amount of Henderson's Wharf Baltimore Limited Partnership's purchase money note. Note 6: The Partnership has provided for a reserve for realization of Marina land and improvements in the amount of $879,000 net of accumulated depreciation of $34,000, based on fair market determined by independent appraisal and priority distribution of proceeds from capital transactions as provided for in The Third Amended and Restated Agreement of Limited Partnership. EX-99.2 3 ASSET MANAGEMENT AGREEMENT THIS ASSET MANAGEMENT AGREEMENT (the "Agreement") is made and entered into as of October 1, 1995, by and among HISTORIC PRESERVATION PROPERTIES LIMITED PARTNERSHIP, a Delaware limited partnership ("HPP 1987"), HISTORIC PRESERVATION PROPERTIES 1988 LIMITED PARTNERSHIP, a Delaware limited partnership ("HPP 1988"), HISTORIC PRESERVATION PROPERTIES 1989 LIMITED PARTNERSHIP, a Delaware limited partnership ("HPP 1989"), HISTORIC PRESERVATION PROPERTIES 1990 L.P. TAX CREDIT FUND, a Delaware limited partnership ("HPP 1990") and CLAREMONT MANAGEMENT CORPORATION, a Massachusetts corporation ("Claremont"). RECITALS A. HPP 1987, HPP 1988, HPP 1989 and HPP 1990 are sometimes individually referred to herein as an "HPP Partnership" and collectively referred to as the "HPP Partnerships." B. The HPP Partnerships were formed to organized and invest in certain joint ventures (the "Project Partnerships") which own real properties (the "Properties") which qualify for the rehabilitation tax credit under Section 48 of the Internal Revenue Code of 1986, as amended (the "Code"). C. The general partner of HPP 1987 is Boston Historic Partners Limited Partnership, a Massachusetts limited partnership ("BHP"). The business of HPP 1987 is governed by its Amended and Restated Limited Partnership Agreement dated as of May 15, 1987 (the "HPP 1987 Partnership Agreement"). HPP 1987 owns an interest in each of the Project Partnerships listed on Exhibit A attached hereto. D. The general partner of HPP 1988 is BHP. The business of HPP 1988 is governed by its Amended and Restated Limited Partnership Agreement dated as of February 24, 1988 (the "HPP 1988 Partnership Agreement"). HPP 1988 owns an interest in each of the Project Partnerships listed on Exhibit B attached hereto. E. The general partner of HPP 1989 is BHP. The business of HPP 1989 is governed by its Amended and Restated Limited Partnership Agreement dated as of December 19, 1988 (the "HPP 1989 Partnership Agreement"). HPP 1989 owns an interest in each of the Project Partnerships and the property listed on Exhibit C attached hereto. F. The general partner of HPP 1990 is Boston Historic Partners II Limited Partnership, a Massachusetts limited partnership ("BHP II"). The business of HPP 1990 is governed by its Amended and Restated Limited Partnership Agreement dated as of May 30, 1990 (the "HPP 1990 Partnership Agreement"). HPP 1990 owns an interest in each of the Project Partnerships listed on Exhibit D attached hereto. G. The HPP 1987 Partnership Agreement, HPP 1988 Partnership Agreement, HPP 1989 Partnership Agreement and HPP 1990 Partnership Agreement are sometimes individually referred to as an "HPP Partnership Agreement" and collectively referred to as the "HPP Partnership Agreements." H. Each of the HPP Partnerships desire to engage Claremont to manage certain of the business and affairs of the HPP Partnerships and provide the services set forth in this Agreement on the terms and conditions hereinafter set forth. I. Claremont desires to perform such services on the terms and conditions hereinafter set forth. NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: Section 1. Engagement of Claremont. Each HPP Partnership hereby engages and designate Claremont as the manager of certain of the business affairs of the HPP Partnerships as more fully set forth herein. Claremont hereby accepts such engagement and designation and hereby agrees to perform its obligations under this Agreement in a businesslike and professional manner. Claremont shall at all times act only at the specific direction of BHP or BHP II. Every act performed by Claremont or any agent or employee of Claremont pursuant to the authority granted by this Agreement shall be done as an independent contractor on behalf of the HPP Partnerships and all obligations or expenses incurred hereunder shall be for the account of and at the expense of the HPP Partnerships, except as otherwise specifically provided hereunder. Section 2. Duties of Claremont. 2.1 Duties. It shall be the obligation of Claremont to perform the following duties on behalf of HPP Partnerships (the "Services"): (a) Asset Management Services. Claremont shall assist BHP and BHP II in monitoring the operations of the Properties to the extent specifically directed by BHP and BHP II from time to time and shall periodically meet as reasonably requested with representatives of BHP and BHP II to discuss current property operations. Unless otherwise explicitly directed by BHP or BHP II in writing, a representative of Claremont will visit and meet with the independent third party property management company, where applicable, those properties (the "Properties") indicated on Exhibits A through D, at least once a year so long as such Properties are owned by an HPP Partnership or a Project Partnership having an HPP Partnership as a partner. A representative of Claremont will visit any other properties from time to time owned by an HPP Partnership of a Project Partnership only on an as-needed basis as specifically requested in writing by BHP or BHP II. (b) Accounting Services. Claremont will assist BHP and BHP II in maintaining all accounting records for the HPP Partnerships and preparing work paper packages and quarterly and annual financial statements for the HPP Partnerships as applicable, assist BHP and BHP II in the preparation of tax returns and other reports to investors as applicable. Claremont shall assist BHP and BHP II in keeping books and records relating to the HPP Partnerships in accordance with generally accepted accounting principles, uniformly and consistently applied from year to year, take all reasonable steps to assist the HPP Partnerships in keeping records of all transactions, make available for inspection by BHP and BHP II, at all reasonable times the books and records relating to the HPP Partnerships, and furnish such information concerning the HPP Partnerships to such persons as BHP and BHP II may, in writing, reasonably request. In addition, Claremont will assist BHP and BHP II in preparing and filing all reports required by the Securities and Exchange Commission, including those items required by Section 8.4 of each of the HPP 89 and HPP 90 Partnership Agreements. HPP 87 and HPP 88 do not file with the SEC based upon a hardship exemption but they do provide investors and brokers with a complete unaudited Annual Report. (c) Investor Services. Claremont will assist BHP and BHP II in the preparation and distribution of (i) quarterly and annual reports to the investors in HPP90 Partnership, annual reports for HPP 87, HPP 88, and HPP 89. (ii) the annual form K-1 that enables the investors to file their respective tax returns, and (iii) responding to and serving investors and their related broker/dealer and representatives as required. HPP 89 will also provide copies of the quarterly 10-Q upon request. Copies of the above correspondences shall be distributed to Brokers of Record and the DueDiligence officers of selling broker dealer firms consistent with prior levels of service. (d) Personnel.In performing Services, Claremont will utilize its staff and make available to the assignment, professional, competent individuals who can effectively perform the Services at a level anticipated by both Claremont and HPP. All employees shall be employees of Claremont, but are subject to reimbursement pursuant to Section 3.2. (e) Office Space. Claremont will provide allocable office space for its personnel as may be necessary to perform the Services. The HPP Partnerships hereby agree to pay the amount equal to allocable rent changes as set forth in the operating budget. (f) Support Staff. Claremont will provide or arrange for the provision of appropriate office support to perform the Services, including secretarial staff and office equipment, salaries of employees and other general overhead of Claremont, costs of accounting, statistical or bookkeeping services and computing on accounting equipment, travel, telephone communications and other general and administrative expenses. All costs are to be reimbursed pursuant to Section 3.2. (g) Cooperation by HPP. The HPP Partnerships shall deliver to Claremont copies of all documents in the possession of, or available to, the HPP Partnerships which relate to the HPP Partnerships and/or the financing, operation, management and leasing of each Property. The HPP Partnerships acknowledge that the Services provided by Claremont will be based in large part on information received from the HPP Partnerships. Claremont shall be entitled to assume that all such information (including, without limitation, financial statements and other financial data) received from the HPP Partnerships shall be complete and accurate, and that such information will not contain, or omit to contain, any statement of material fact known by the HPP Partnerships to be false or misleading. Claremont will not (and shall have no obligation to the HPP Partnerships to) undertake to make an independent verification of any such information unless specifically requested to do so by the HPP Partnerships in writing. The HPP Partnerships hereby represent to Claremont that no information furnished or to be furnished by the HPP Partnerships hereunder or in connection with the consulting services to be provided by Claremont hereunder, contains or will contain any untrue statement of a material fact, or omits or will omit to state a material fact necessary to make such information not misleading. The HPP Partnerships hereby agree that they have an affirmative obligation hereunder to disclose any material facts necessary to enable Claremont to provide its Services hereunder. 2.2 Amount of Time, Etc., Required of the Designated Personnel. The parties acknowledge that the officers, directors and employees of Claremont may engage in significant real estate, financial and securities-related businesses during the term of this Agreement in addition to those contemplated by this Agreement. Some of these activities may be competitive with the activities of the HPP Partnerships. The HPP Partnerships hereby consent to the officers, directors and employees of Claremont engaging in such competitive activities. Under no circumstances will Claremont or any of its personnel or agents be required to devote all of their time, resources or personnel to the performance of this Agreement but only will be required to devote such time, resources and personnel as is necessary for them to fulfill their obligations hereunder. Section 3.Compensation and Reimbursement. 3.1 Base Fee. The HPP Partnerships shall pay to Claremont a base monthly fee of $1,600 per property for each Property owned directly or indirectly by such HPP Partnership, as noted on Exhibits A, B, C or D (the "Base Fee"). The Base Fee shall be due and payable in monthly installments on the tenth business day of each month throughout the term of this Agreement. Such fee shall be prorated for any partial year for which services are performed hereunder. The Base Fee shall be in the following amounts through June 30, 1996 and will be adjusted at that time to properly reflect the number of properties/investee partnerships in place at that time for the next reporting period, ending June 30, 1997: HPP 1987 - $76,800 HPP 1988 - $76,800 HPP 1989 - $76,800 HPP 1990 - $38,400 3.2 Reimbursement. The HPP Partnerships shall pay the directly allocable costs incurred by Claremont in providing the Services and the costs and expenses set forth in the budget for the period October 1, 1995 thru June 30, 1996 attached hereto as Exhibit E (the "Budget"). The Budget has been approved by the HPP Partnerships. A new budget will be prepared for the period July 1, 1996 through June 30, 1997. Total charges which are more than 10% in excess of the Budget must be approved by the HPP Partnerships in advance. Payments to Claremont under this Section 3.2 will be made monthly. All such costs shall be allocated to and paid by the HPP Partnerships as follows for the period October 1, 1995 thru June 30, 1996 fiscal year: HPP 1987 -18.41 % HPP 1988 -28.22 % HPP 1989 -16.37 % HPP 1990 -37.00 % These allocations will be reviewed and reset if appropriate for the following fiscal year.Claremont shall provide a new annual budget by May 15, 1996 for fiscal year July 1,1996 - June 30, 1997. Expense allocations may change from year to year based on various factors. The July 1, 1996 - June 30, 1997 budget must be approved in advance by the HPP Partnerships by June 15, 1996. 3.3 Extra Services. If requested in writing from BHP or BHP II from time to time, in addition to the Services, Claremont shall provide extra services. Claremont shall bill the relevant HPP Partnership at the market rate for such services rendered. Bills for such extra services will be rendered and paid monthly. 3.4 Miscellaneous. This Agreement shall in no way obligate Claremont or any employee of Claremont to pay any costs or expenses of any HPP Partnership if monies are not available for the payment of such costs or expenses from the income or reserves established by or on behalf of such HPP Partnership. In addition, in the event that any of the fees or reimbursements described in this Section 3 are not paid when due, the accrued amounts owed to Claremont will bear interest at the Fleet prime rate until paid. 3.5 Allocation of Costs. In the event that any services are performed both for HPP Partnership and for other entities, Claremont will make such allocation of the expense of such services among the HPP Partnership and such other entities as Claremont determines is appropriate, any such allocation made in good faith by Claremont shall be final and binding on the parties hereto. Section 4.Indemnification. 4.1 Indemnification by Claremont. Claremont agrees to defend and hold the HPP Partnerships harmless from and indemnify the HPP Partnerships against any and all liability, loss, damages, court costs and reasonable expenses, including reasonable attorney's fees (hereinafter collectively referred to as "Liabilities") which the HPP Partnerships may incur or suffer, which Liabilities result from the gross negligence, bad faith, fraud or willful misconduct on the part of Claremont, its employees, agents or others under the direction or control of Claremont in performing its obligations under this Agreement. For purposes of this Section 4.1 only, the term "HPP Partnerships" shall also include any partner, officer, director, employee or agent of the HPP Partnerships in the event any such person incurs or suffers any such Liability as a result of such gross negligence, bad faith, fraud, or willful misconduct. This Section 4.1 shall survive any termination of the Agreement. 4.2 Indemnification by HPP Partnership. Claremont and the HPP Partnerships hereby acknowledge that the acts of Claremont hereunder are solely as agent for the HPP Partnerships and Claremont shall not be liable to the HPP Partnerships or any other person or entity for any of its actions or services provided hereunder in relation to the management and operation of the Properties or otherwise. Each HPP Partnership agrees to defend and hold Claremont harmless from and indemnify Claremont against any and all liabilities which Claremont may incur or suffer as a result of any claim against Claremont arising out of any action taken, omitted, or suffered by it in good faith and in accordance with general of specific instructions from the HPP Partnerships of the General Partners, except where such liabilities result from the negligence, bad faith, fraud or willful misconduct on the part of Claremont, its employees, agents or others under the direction or control of Claremont. For purposes of this Section 4.2 only, the term "Claremont" shall also include any officer, director, employee or agent of Claremont in the event any such person incurs or suffers any such liability as a result of activities undertaken on behalf of or under the direction or control of Claremont in connection with its services performed for the HPP Partnerships. Such indemnification shall include payment by the HPP Partnerships of all reasonable expenses and reasonable legal fees incurred in defending a civil or criminal action or proceeding in advance of the final disposition of such action or proceeding, receipt of an undertaking by the party or person indemnified to repay such payment if it, he or she shall be adjudicated to be not entitled to indemnification under this Section 4.2; and provided further, that no indemnification shall be provided for Claremont, its directors, officers, agents or employees with resect to any matter as to which it shall have been finally adjudicated in any action or proceeding that Insignia, its directors, officers, agents or employees had acted with negligence, willful misconduct or fraud. This Section 4.2 shall survive any termination of the Agreement. Section 5.Term and Termination. 5.1 Term. The term of this Agreement shall commence on October 1, 1995 (the "Commencement Date"), and shall terminate on June 30, 1997, unless previously terminated by the parties hereto pursuant to Section 5.2 or extended pursuant to Section 5.3. 5.2 Termination. This agreement will expire on June 30, 1997, subject to the following terms and conditions: (a) If the HPP Partnerships elect to terminate this Agreement, they must perform or cause to be performed all of the following items: (i) Settlement to Claremont of all amounts due Claremont under this Agreement by payment or documentation of a binding mutually agreed to Note Agreement. (ii) Effect the termination of any liability that Claremont has entered into. 5.3 Extension. This Agreement shall automatically be extended from year to year on the same terms and conditions unless terminated in accordance with this Section 5 or unless any party provides notice no later than sixty (60) days (May 1, 1997 for the initial term) in advance of the expiration date of its intention not to extend the Agreement. 5.4 Breach. This Agreement may be terminated by the HPP Partnership or Claremont upon the default by the other party of any of such other party's material obligations hereunder; provided, however, that the non-defaulting party shall have delivered to the other party a written notice specifying such default in reasonable detail and that the defaulting party shall not have cured such default within thirty (30) days after receipt of such notice. 5.5 Payment of Fees. Upon any termination pursuant to this Section 5, Claremont shall have the right to receive any unpaid fees or unreimbursed expense owed to it under Section 3. Any such amount shall be prorated on a per diem basis from the date of the last monthly fee payment to the effective date of any such termination. If any individual HPP Partnership is unable to pay its share of liabilities because of a lack of cash, then such debts shall be formally recognized in a binding mutually agreed to Note Agreement. Section 6.Miscellaneous Provisions. 6.1 Notices. Any notice or communication hereunder must be in writing, and shall be personally delivered or mailed postage prepaid, by registered or certified mail, return receipt requested, and if given by registered or certified mail same shall be deemed to have been given and received when personally delivered or three (3) days after its mailing. Such notices or communications shall be given to the parties hereto at their respective following addresses: If to the HPP Partnerships:c/o Boston Bay Capital, Inc. One Liberty Square Boston, MA 02109 Attn: Terrence P. Sullivan If to Claremont: Charles M. Moran, Jr. Claremont Management Corporation Batterymarch Park III Quincy, MA 02169 with a copy to: Sherburne, Powers and Needham One Beacon Street Boston, MA 02108 Attn: William Machen, Esq. James E. McDermott, Esq. Any party hereto may at any time by giving ten (10) days' written notice to the other party hereto designate any other address in substitution of the foregoing address to which such notice or communication shall be given. 6.2 Severability. If any term, covenant, or condition of this Agreement or the application thereof to any person or circumstance shall, to any extent, be invalid or unenforceable, the remainder of this Agreement or the application of such term, covenant or condition to persons or circumstances other than those to which it is held invalid or unenforceable, shall not be affected thereby, and each term, covenant or condition of this Agreement or such other documents shall be valid and shall be enforced to the fullest extent permitted by law. 6.3 Applicable Law. This Agreement shall be governed and construed in accordance with the law as of the Commonwealth of Massachusetts. 6.4 Successors and Assigns. No party hereto may assign any of its rights or duties hereunder except with the prior written consent of the other parties. 6.5 Captions. Captions in this Agreement are inserted for convenience or reference only and do not define, describe or limit the scope or intent of this Agreement or any of the terms hereof. 6.6 No Partnership. Nothing contained in this Agreement or in the relationship of the HPP Partnerships and Claremont shall be deemed to constitute a partnership, joint venture or any other relationship and Claremont shall at all times be deemed an independent contractor for purposes of this Agreement. 6.7 No Assignment. Claremont may not assign or in any way voluntarily transfer this Agreement without the prior written approval of BHP and BHP II. 6.8 Modification or Amendment. This Agreement (including the exhibits hereto) constitutes the entire agreement between the parties hereto with respect to the subject matter hereof, supersedes all prior agreements between the parties relating to the matters contained herein and may not be modified, waived or terminated orally and may only be amended by an agreement in writing signed by the parties hereto. IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date first above written. HISTORIC PRESERVATION PROPERTIES LIMITED PARTNERSHIP, a Delaware limited partnership, by its general partner, BOSTON HISTORIC PARTNERS LIMITED PARTNERSHIP, a Massachusetts limited partnership, by its general partners PORTFOLIO ADVISORY SERVICES, INC., a Massachusetts corporation By Terrence P. Sullivan, President By Terrence P. Sullivan, General Partner HISTORIC PRESERVATION PROPERTIES 1988 LIMITED PARTNERSHIP, a Delaware limited partnership, by its general partner, BOSTON HISTORIC PARTNERS LIMITED PARTNERSHIP, a Massachusetts limited partnership, by its general partners PORTFOLIO ADVISORY SERVICES, INC., a Massachusetts corporation By Terrence P. Sullivan, President By Terrence P. Sullivan, General Partner HISTORIC PRESERVATION PROPERTIES 1989 LIMITED PARTNERSHIP, a Delaware limited partnership, by its general partner, BOSTON HISTORIC PARTNERS LIMITED PARTNERSHIP, a Massachusetts limited partnership, by its general partners PORTFOLIO ADVISORY SERVICES, INC. a Massachusetts corporation By Terrence P. Sullivan, President By Terrence P. Sullivan, General Partner HISTORIC PRESERVATION PROPERTIES 1990 L.P.TAX CREDIT FUND, a Delaware limited partnership, by its general partner, BOSTON HISTORIC PARTNERS II LIMITED PARTNERSHIP, a Massachusetts limited partnership, by its general partners PORTFOLIO ADVISORY SERVICES II, INC., a Massachusetts corporation By Terrence P. Sullivan, President By Terrence P. Sullivan, General Partner BOSTON HISTORIC PARTNERS II LIMITED PARTNERSHIP, a Massachusetts limited partnership, by its general partner, BHP II ADVISORS LIMITED PARTNERSHIP, by its general partners PORTFOLIO ADVISORY SERVICES II, INC., a Massachusetts corporation By Terrence P. Sullivan, President By Terrence P. Sullivan, General Partner CLAREMONT MANAGEMENT CORPORATION a Massachusetts Corporation By Patrick Carney, Chairman By Charles M. Moran, President Exhibit A LIST OF PROPERTIES - HPP 1987 Name of Project Partnership Name of Project Location 1027 Arch Street Associates Pitcairn Building Philadelphia, PA Limited Partnership 432 Julia Street Associates Gallery Row New Orleans, LA Limited Partnership Ceresota Mill Limited Ceresota Mill Minneapolis, MN Partnership Locke Mill Plaza Associates Locke Mill Plaza Concord, NC Limited Partnership Exhibit B LIST OF PROPERTIES - HPP 1988 Name of Project Partnership Name of Project Location Union Station Associates Union Station Providence, RI 330 Julia Street Associates The Rotunda New Orleans, LA Limited Partnership New Bedford Historic Stores CWT Building New Bedford, MA Associates Limited Partnership Coastline Associates Limited Coastline Center Wilmington, NC Exhibit C LIST OF PROPERTIES - HPP 1989 Name of Project Partnership Name of Project Location Historic Preservation PropertiesThe Cosmopolitan St. Paul, MN 1989 L.P. Building Jenkins Court Associates Jenkins Court Jenkintown, PA Limited Partnership Portland Lost Associates Honeyman Hardware Portland, OR Limited Partnership Lofts 402 Julia Street Associates The Lofts New Orleans, LA Limited Partnership Exhibit B LIST OF PROPERTIES - HPP 1990 Name of Project Partnership Name of Project Location Henderson's Wharf Baltimore, Henderson's Wharf Baltimore, MD L.P. (Inn/Apartments) Henderson's Wharf Marina, Henderson's Wharf Baltimore, MD L.P. Marina EX-99.3 4 MANAGEMENT AGREEMENT This Agreement is made this 1st day of November 1995, by and between Henderson's Wharf Baltimore, L.P. (the "Owner") and Claremont Management Corporation (the "Agent"). Section 1 - APPOINTMENT OF MANAGING AGENT 1.1 APPOINTMENT OF MANAGING ACCEPTANCE Owner hereby appoints Agent as sole and exclusive agent of Owner to lease and manage the property described in paragraph 1.2 upon the terms and conditions provided herein. Agent accepts the appointment and agrees to furnish the services of its organization for the leasing and management of the Premises; and Owner agrees to pay all expenses in connection with those services. 1.2 DESCRIPTION OF PREMISE The property to be managed by Agent under this Agreement (the "Premises") is known as Henderson's Wharf located at 1000 Fell Street, Baltimore, MD, consisting of the land, building, and other improvements described as 128 units of residential rental in the state of Maryland. 1.3 TERM The terms of the Agreement shall be for an initial period of 20 months (the "initial term") from the 1st day of November 1995, to including the 30th day of June 1997; and thereafter shall be automatically renewed from year to year unless terminated as provided in sections 21 or 27 herein. Each of said one-year renewal periods is referred to as a "term year". 1.4 MANAGEMENT OFFICE Owner shall provide adequate space on the Premises for a management office. This office can be shared with other properties. Owner shall pay all expenses related to such office, including, but not limited to, furnishings, equipment, postage and office supplies, electricity and other utilities, and telephone. All costs to be prorated to appropriate properties. 1.5 APARTMENT FOR ON-SITE STAFF Owner shall provide a suitable apartment(s) on the Premises, if deemed appropriate by mutual consent of both parties, for the use of an on-site manager and/or a resident janitor and their families, rent free, except that such resident staff shall pay for heat and utilities in the same manner as other tenants. The specific apartment(s) shall be the Owner's choice. Section 2 - Bank Accounts The various bank accounts established under this Agreement shall at all times be established in Owner's name but under Agent's control. Agent's and Owner's designees shall be the only parties authorized to draw upon such accounts. No amounts deposited in any accounts established under this Agreement shall in any event be commingled with any other funds of Agent. 2.1 OPERATING (AND/OR) RESERVE ACCOUNT(S) Agent shall establish a separate account(s) known as the Henderson's Wharf Baltimore L.P. Apartments Operating (and/or) Reserve Account(s), separate and apart from Agent's corporate accounts, for the deposit of receipts collected as described herein, in a bank or other institution whose deposits are insured by the federal government. Such depository shall be selected by the Agent upon the consent of the Owner. However, Agent shall not be held liable in the event of bankruptcy or failure of a depository. Funds in the Operating (and/or) Reserve Account(s) remain the property of Owner subject to disbursement of expenses by Agent as described in the Agreement. 2.1.1 INITIAL DEPOSIT AND CONTINGENCY RESERVE Immediately upon commencement of this Agreement, Owner shall remit to Agent the sum $135,000 to be deposited in the Operating (and/or) Reserve Account(s) as an initial deposit representing the estimated disbursements to be made in the first month following the commencement of this Agreement, plus an additional sum of $50,000 as a contingency reserve. If this contingency reserve is drawn down, then they shall be replenished from operations as soon as economically feasible. Owner and Agent shall review the amount of the contingency reserve from time to time and shall agree in writing on a new contingency reserve amount when such is required. 2.2 SECURITY DEPOSIT ACCOUNT Agent shall, if required by law, maintain a separate interest bearing account for tenant security deposits and advance rentals. Such account shall be maintained in accordance with applicable state or local laws, if any. 2.3 FIDELITY BOND The Agent will furnish, at its own expense, a fidelity bond in the principal sum of $1,000,000, which is at least equal to the gross potential income for two months and is conditioned to protect the Owner and the Mortgagee against misappropriation of funds of the Premises by the Agent and its employees. The Agent will obtain a bond of like kind to cover the on-site personnel expressed in Section 9.1 and it shall be paid for from Premises income. The other terms and conditions of the bond, and the surety thereon, will be subject to approval of the Owner and the Mortgagee. Section 3 - COLLECTION OF RENTS AND OTHER RECEIPTS 3.1 AGENT'S AUTHORITY Agent shall collect (and give receipts for, if necessary) all rents, charges and other amounts receivable on Owner's account in connection with the management and operation of the Premises. Such receipts (except tenants' security deposits and advance rentals, which shall be handled as specified in paragraphs 2.2 and 3.3 hereof; and special charges, which shall be handled as specified in paragraph 3.2 hereof) shall be deposited in the Operating (and/or) Reserve Account(s) maintained by Agent for the Premises. 3.2 SPECIAL CHARGES If permitted by applicable law, Agent may collect from tenants any or all of the following: and administrative charge for late payment of rent, a charge for returned or non-negotiable checks, a credit report fee, an administrative charge and/or commission for subleasing. 3.3 SECURITY DEPOSITS Agent shall collect, deposit, and disburse tenants' security deposits in accordance with the terms of each tenant's lease. Agent shall pay from operations tenants interest upon such security deposits only if required by law to do so. Agent shall comply with all applicable state or local laws concerning the responsibility for security deposits and interest, if any. Section 4 - DISBURSEMENT FROM OPERATING (AND/OR) RESERVE ACCOUNT(S) 4.1 OPERATING EXPENSES From the Operating (and/or) Reserve Account(s), Agent is hereby authorized to pay or reimburse itself for all expenses and costs of operating the Premises in accordance with approved annual budget under Section 6.2 and for all other sums due Agent under this Agreement, including Agent's compensation under section 17. 4.2 DEBT SERVICE Owner shall give Agent advance written notice of at least 10 days if Owner desires Agent to make any additional monthly or recurring payments (such as mortgage indebtedness, general taxes, or special assessments, or fire, steam boiler, or other insurance premiums) out of the proceeds from the Premises. If Owner notifies Agent to make such payments after the beginning of the term of this Agreement, Agent shall have the authority to name a new contingency, and Owner shall maintain this new contingency reserve amount at all times in the Operating (and/or) Reserve Account(s). 4.3 NET PROCEEDS To the extent that funds are available, and after maintaining the cash contingency reserve amount as specified in paragraph 2.1.1, Agent shall transmit cash balances to Owner periodically, as follows. Such periodic cash balances shall be remitted to the following person(s), in the percentage(s) specified, address(es) shown: as directed from time to time by Owner. Section 5 - AGENT NOT REQUIRED TO ADVANCE FUNDS In the event the balance in the Operating (and/or) Reserve Account(s) is at any time insufficient to pay disbursements due and payable under paragraphs 4.1, 4.2 and 6.2. Owner shall immediately upon notice, remit to Agent sufficient funds to cover the deficiency and replenish the contingency reserve. In no event shall Agent be required to use its own funds to pay such disbursements. Nor shall Agent be required to advance any monies to Owner, to the Security Deposit Account, or to the Operating (and/or) Reserve Account(s). If Agent elects to advance any money in connection with the Premises to pay any expenses for Owner, such advances shall be considered a loan subject to repayment with interest, and Owner hereby agrees to reimburse Agent, including interest as provided in paragraph 17.7 and hereby authorizes Agent to deduct such amounts from any monies due Owner. Section 6 - FINANCIAL AND OTHER REPORTS 6.1 REPORTING REQUIREMENTS By the 20th day of each month, Agent will provide to the Owner the following schedules for the preceding month, which include, but are not limited to: balance sheet, income statement with comparisons to budget, general ledger, rent roll, bank statements and cash reconciliations, aged listing of accounts receivables, listing of prepaids, additions to fixed assets over $500, intercompany reconciliation, listing of accruals and other prepaids, tenant security deposit listing, and cash flow statement. In addition, Agent shall, on a mutually acceptable schedule, prepare and submit to Owner such other reports as are agreed on by both parties. 6.2 BUDGETS Annual operating budgets for the Premises will be approved by the Owner. Except as permitted under Section 10.1 below, annual disbursements for each type of operating expenses itemized in the budget shall not materially exceed the amount authorized by the approved budget without prior consent of the Owner. The Agent will prepare a recommended operating budget for each fiscal year beginning during the term of this Agreement, and will submit the same to the Owner at least forty-five (45) days before the beginning of the fiscal year. The Owner will promptly inform the Agent of any changes incorporated in the approved budget, and the Agent will keep the Owner informed of any anticipated deviation from the receipts or disbursements stated in the approved budget. 6.3 OWNER'S RIGHT TO AUDIT Owner shall have the right to request periodic audits of all applicable accounts managed by Agent, and the cost of such audit(s) shall be paid by Owner. 6.4 TAX ASSESSMENTS Agent will inform Owner of changes in the amount of real or personal property tax assessments and assist Owner in compiling all necessary information in connection with any contest or appeal of any assessments. Section 7 - ADVERTISING Agent is authorized to advertise the Premises or portions thereof for rent using periodicals, signs, plans, brochures, or displays, or such other means as Agent may deem proper and advisable and in accordance with Section 6.2. Agent is authorized to place signs on the Premises advertising the Premises for rent, provided such signs comply with applicable laws. The cost of such advertising shall be paid out of the Operating (and/or) Reserve Account(s). All advertising shall make clear that Agent is the manager and NOT the Owner of the Premises. Newspaper ads that share space with other properties managed by the Agent shall be prorated on a reasonable basis. Section 8 - LEASING AND RENTING 8.1 AGENT'S AUTHORITY TO LEASE PREMISES Agent shall use all reasonable efforts to keep the Premises rented by procuring tenants for the Premises. Agent is authorized to negotiate, prepare, and execute all leases, including all renewals and extensions of leases (and expansions of space in the Premises, if applicable) and to cancel and modify existing leases. Agent shall execute all leases as Agent for the Owner. All costs of leasing shall be paid out of the Operating (and/or) Reserve Account(s). No lease shall be in excess of two year(s) without written approval of Owner. The form of the lease shall be agreed upon by Owner and Agent. 8.2 NO OTHER RENTAL AGENT During the time of this Agreement. Owner shall not authorize any other person, firm, or corporation to negotiate or act as leasing or rental agent with respect to any leases for space in the Premises. Owner agrees to promptly forward all inquiries about leases to Agent. 8.3 RENTAL RATES Agent, with the consent of the Owner, is authorized to establish and change or revise all rents, fees, or deposits, and any other charges chargeable with respect to the Premises. 8.4 ENFORCEMENT OF LEASES Agent is authorized to institute, in Owner's name, all legal actions or proceedings for the enforcement of any lease term, for the collection of rent or other income from the Premises or for the evicting or dispossessing of tenants or other persons from the Premises. Agent is authorized to sign and serve such notices as Agent deems necessary for lease enforcement, including the collection of rent or other income. Agent is authorized, when expedient, to settle, compromise, and release such legal actions or suits or reinstate such tenancies. Any monies for such settlements paid out by Agent shall not exceed $5,000 without prior approval by Owner. Attorney's fees, filing fees, court costs, and other necessary expenses incurred in connection with such actions and not recovered from tenants shall be paid out of the Operating (and/or) Reserve Account(s) or reimbursed directly to Agent by Owner. Agent may select the attorney of its choice to handle such litigation upon the advise and consent of Owner. Section 9 - EMPLOYEES 9.1 AGENT'S AUTHORITY TO HIRE Agent is authorized to hire, supervise, discharge, and pay all servants, employees, contractors or other personnel necessary to be employed in the management, maintenance, and operation of the Premises in accordance with the approved budget mentioned in Section 6.2. All employees shall be deemed employees of the Agent. 9.2 OWNER PAYS EMPLOYEE EXPENSES All wages and fringe benefits payable to such employees hired per paragraph 9.1 above, and all local, state, and federal taxes and assessment (including but not limited to Social Security taxes, unemployment insurance and workers' compensation insurance) incident to the employment of such personnel, shall be reimbursed to the Agent out of the Operating (and/or) Reserve Account(s) in accordance with the approved budget, and shall be treated as operating expenses. 9.3 AGENT'S AUTHORITY TO FILE RETURNS Agent shall do and perform all acts required of an employer with respect to the Premises and shall execute and file all tax and other returns required under the applicable federal, state and local laws, regulations, and/or ordinances governing employment, and all other statements and reports pertaining to labor employed in connection with the Premises and under any similar federal or state law now or hereafter in force. In connection with such filing, Owner shall be responsible for all amounts required to be paid under the foregoing laws, and Agent shall pay the same from the Operating (and/or) Reserve Account(s). Any penalties assessed to Owner and incurred due to the negligence of Agent shall be paid for by Agent. 9.4 WORKER'S COMPENSATION INSURANCE Agent shall, at Owner's expense, maintain worker's compensation insurance covering all liability of the employer under established worker's compensation laws. 9.5 HOLD HARMLESS, LABOR LAWS Agent shall be responsible for compliance with all applicable state or federal labor laws. Owner shall indemnify, defend, and save Agent harmless from all claims, investigations, and suites, or from Owner's action or failures to act, with respect to any alleged or actual violation of state or federal labor laws. Conversely, Agent shall indemnify, defend and save Owner harmless from all claims, investigations, and suits, or from Agent's actions or failure to act with respect to any alleged or actual violations of state or federal labor laws. Agent's or Owner's obligation with respect to such violation(s) shall include payment of all settlements, judgments, damages, liquidated damages, penalties, forfeitures, back pay awards, court costs, litigation expenses, and attorney's fees. Section 10 - MAINTENANCE AND REPAIR Agent is authorized to make or cause to be made, through contracted services or otherwise, all ordinary repairs and replacements reasonably necessary to preserve the Premises in its present condition and for the operating efficiency of the Premises, and all alterations required to comply with lease requirements, governmental regulations, or insurance requirements. Agent is also authorized to decorate the Premises and to purchase or rent, on Owner's behalf, all equipment, tools, appliances, materials, maintenance, or operation of the Premises. Such maintenance and decorating expenses shall be made in accordance to approved budget and shall be paid out of the Operating (and/or) Reserve Account(s). This section applies except where decorating and/or maintenance are at tenants' expense as stipulated in a lease. 10.1 APPROVAL FOR EXCEPTIONAL MAINTENANCE EXPENSE The expense to be incurred for any one item of maintenance alteration, refurbishing, or repair shall not exceed the sum of $5,000 unless such expense is specifically authorized by Owner or is incurred under such circumstances as Agent shall reasonable deem to be an emergency. In an emergency where repairs are immediately necessary for the preservation and safety of the Premises, or to avoid the suspension of any essential service to the Premises, or to avoid danger to life or property, or to comply with federal, state, or local law, such emergency repairs shall be made by Agent at Owner's expense prior approval. Section 11 - CONTRACTS, UTILITIES AND SERVICES Agent is authorized to negotiate contracts for non-recurring items of expense, not to exceed $5,000, unless approved by Owner, and to enter into agreements in Owner's name for all necessary repairs, maintenance, minor alterations, and utility services. Agent shall, in Owner's name and at Owner's expense, make contracts on Owner's behalf for electricity, gas, telephone, fuel, or water, and such other services as Agent shall deem necessary or prudent for the operation of the Premises. All utility deposits shall be the Owner's responsibility, except that Agent may pay same from the Operating (and/or) Reserve Account(s) at Owner's request. Section 12 - RELATIONSHIP OF AGENT TO OWNER The relationship of the parties to this Agreement shall be that of Principal and Agent, and all duties to be performed by Agent under this Agreement shall be for and on behalf of Owner, in Owner's name and for Owner's account. In taking any under the Agreement, Agent shall be acting only as Agent for Owner, and nothing in this Agreement shall be construed as creating a partnership, joint venture, or any other relationship between the parties to this Agreement except that of Principal and Agent, or as requiring Agent to bear any portion of losses arising out of or connected with the ownership or operation of the Premises. Nor shall Agent at any time during the period of this Agreement to be considered a direct employee of Owner. Neither party shall have the owner to bind or obligate the other except as expressly set forth in this Agreement except that Agent is authorized to act with such additional authority and power as may be necessary to carry out the spirit and intent of this Agreement. Section 13 - SAVE HARMLESS The Owner will indemnify the Agent harmless against and hold the Agent harmless from and against any liabilities, damages, costs and expenses (including reasonable attorney's fees) sustained or incurred for injury to any person or property in, about, and in conjunction with the buildings, unless such injury shall be caused by the Agent's own negligence or willful misconduct; and any liability, damages, penalties, costs and expenses (including reasonable attorney's fees) statutory or otherwise, for all acts performed by the Agent in accordance with the terms of this Agreement or pursuant to the instructions of the Owner, provided, in each of the foregoing instances, that the Agent promptly advises the Owner of its receipt of information concerning any such injury and the amount of any such liability, damages, penalties, costs and expenses. The Agent will indemnify the Owner harmless against and hold the Owner harmless from and against; any liabilities, damages, costs and expenses (including reasonable attorney's fees) sustained or incurred for injury to any person or property in, about, and in conjunction with the buildings caused by the Agent's own negligence or willful misconduct; and any liability, damages, penalties, costs and expenses (including reasonable attorney's fees) statutory or otherwise, for all acts performed by the Agent not in accordance with the terms of this Agreement or not pursuant to the instructions of the Owners. Section 14 - LIABILITY INSURANCE Owner and Agent shall obtain and keep in force adequate insurance against physical damage (e.g. fire with extended coverage endorsement, boiler and machinery, etc.) and against liability for loss, damage, or injury to property or persons which might arise out of the occupancy, management, operation, or maintenance of the Premises. The amounts and types of insurance shall be acceptable to both Owner and Agent, and any deductible required under each insurance policies shall be Owner's expense. Agent shall be covered as additional insured on all liability insurance maintained with respect to the Premises. Liability insurance shall be adequate to protect the interest of both Owner and Agent and in form, substance, and amounts reasonable satisfactory to Agent. Owner agrees to furnish Agent with certificates evidencing such insurance or with duplicate copies of such policies within 10 days of the execution of this Agreement. If Owner fails to do so, Agent may but shall not be obligated to place said insurance and charge the cost thereof to the Operating (and/or) Reserve Account(s). Said policies shall provide that notice of default or cancellation shall be sent to Agent as well as Owner and shall require a minimum of 30 days written notice to Agent before any cancellation of or changes to said policies. Section 15 - AGENT ASSUMES NO LIABILITY Agent assumes no liability whatsoever for any acts or omissions of Owner or any previous owners of the Premises, or any previous management or other agent of either. Agent assumes no liability for any failure of or default by any tenant in the payment of any rent or other charges due Owner or in the performance of any obligations owned by any tenant to Owner pursuant to any lease or otherwise. Nor does Agent assume any liability for previously unknown violations or environmental or other regulations which may become unknown during the period of this Agreement is in effect. Any such regulatory violations or hazards discovered by Agent shall be brought to the attention of the Owner in writing and Owner shall promptly cure them. Section 16 - OWNER RESPONSIBLE FOR ALL EXPENSES OF LITIGATION Owner shall reimburse all reasonable expenses incurred by Agent, including but not limited to, attorneys' fee and Agent's costs and time, any liability, fines, penalties or the like, in connection with any claim, proceeding, or suit involving an alleged violation by Agent or Owner, or both, of any law pertaining to fair employment, fair credit reporting, environmental protection, rent control, taxes, or fair housing, including, but not limited to, any law prohibiting or making illegal discrimination on the basis or race, sex, creed, color, religion, national origin, or mental or physical handicap, provided, however, that Owner shall not be responsible to Agent for any such expenses in the event Agent is finally adjudged to have personally, and not in a representative capacity, violated any such law. Nothing contained in this Agreement shall obligate Agent to employ legal counsel to represent Owner in any such proceeding or suit. 16.1 FEES FOR LEGAL ADVICE Owner shall pay reasonable expenses incurred by Agent in obtaining legal advice regarding compliance with any law affecting the Premises or activities related to them. If such expenditure also benefits others for whom Agent in this Agreement acts in a similar capacity, Owner agrees to pay an apportioned amount of such expense. Section 17 - AGENT'S COMPENSATION AND EXPENSES As compensation for the services provided by Agent under this Agreement (and exclusive of reimbursement of expenses to which Agent is entitled hereunder). Owner shall pay Agent as follows: 17.1 FOR MANAGEMENT SERVICES The greater of (i) $ N/A per month or (ii) 4% of the total monthly gross receipts from the premises, payable by the 10th day of the current month for the duration of this Agreement. Payments due Agent for Periods of less than a calendar month shall be prorated over the number of days for which compensation is due. The percentage amount set forth in (ii) above shall be based upon the total gross receipts from the premises during the preceding month. The term "gross receipts" shall be deemed to include all collected rents and other income and charges from the normal operation of the Premises, including, but not limited to, rents, parking fees, laundry income, forfeited security deposits, pet deposits, other fees and deposits, special charges listed in paragraph 3.2, or excess interest on security deposits (from paragraph 3.3), and other miscellaneous income. Gross receipts shall NOT be deemed to include the value of units provided to on-site staff nor income arising out of the sale of real property or settlement of fire or other casualty losses and items of a similar nature. 17.2 FOR APARTMENT LEASING N/A. 17.3 FOR COMMERCIAL LEASING N/A. 17.4 FOR MODERNIZATION (REHABILITATION/CONSTRUCTION) N/A. 17.5 FOR FIRE RESTORATION 10% of total restoration if Claremont Management Corporation acts as general contractor. 17.6 FOR OTHER ITEMS OF MUTUAL AGREEMENT To be determined if situation arises. 17.7 INTEREST ON UNPAID SUMS Any sums due Agent under any provisions of this Agreement, and not paid within 30 days after such sums have become due, shall bear interest at the rate of the Fleet prime rate. Section 18 - REPRESENTATIONS Owner represents and warrants: That Owner has full power and authority to enter this Agreement; that there are no written or oral agreements affecting the Premises other than tenant leases, copies of which have been furnished to Agent; that there are no recorded easements, restrictions, reservations, or rights of way which adversely affect the use of the Premises for the purposes intended under this Agreement; that to the best of Owner's knowledge, the property is zoned for the intended use; that all leasing and other permits for the operation of the Premises have been secured and are current; that the building and its been secured and are current; that the building and its construction and operation do not violate any applicable statutes, laws, ordinances, rules regulations, orders, or the like (including, but not limited to, those pertaining to hazardous or toxic substances); that the building does not contain any asbestos, urea, formaldehyde, radon, or other toxic or hazardous substance; and that no unsafe conditions exists. Section 19 - STRUCTURAL CHANGES Owner expressly withholds from Agent any power or authority to make any structural changes in any building, or to make any other major alterations or additions in or to any such building or to any equipment to any such building, or to incur any expense chargeable to Owner other than expenses related to exercising the express powers vested in Agent through this Agreement, without the prior written consent of the following person or his designee: Terrence Sullivan Boston Bay Capital, Inc. One Liberty Square Boston, MA 02109 However, such emergency repairs as may be required because of danger to life or property, or which are immediately necessary for the preservation and safety of the Premises or the safety of the tenants and occupants thereof, or required to avoid the suspension of any necessary service to the Premises, or to comply with any applicable federal, state, or local laws, regulations, or ordinances, shall be authorized pursuant to paragraph 10.1 of this Agreement, and Agent shall notify Owner appropriately. Section 20 - BUILDING COMPLIANCE Agent does not assume and is given no responsibility for compliance of the Premises or any building thereon or any equipment therein with the requirements of any building codes or with any statue, ordinance, law, or regulation or any governmental body or of any public authority or official thereof having jurisdiction, except to notify Owner promptly or forward to Owner promptly any complaints, warnings, notices, or summons received by Agent relating to such matters. Owner represents that to the best of Owner's knowledge the Premises and all such equipment comply with all such requirements, and Owner authorizes Agent to disclose the ownership of the Premises to any such officials and agrees to indemnify and hold Agent, its representatives, servants, and employees, harmless of and from all loss, cost, expense, and liability whatsoever which may be imposed by reason of any present or future violation or alleged violation of such laws, ordinances, statues, or regulations. Section 21 - TERMINATION 21.1 TERMINATION BY EITHER PARTY This Agreement may be terminated by either Owner or Agent, with or without cause, at the end of the initial term or of any following term year upon the giving of 30 days' written notice prior to the end of said initial term or following terming year. 21.2 TERMINATION FOR CAUSE Notwithstanding the foregoing, the Agreement shall terminate in any event, and all obligations of the parties hereunder shall cease (except as to liabilities or obligations which have accrued or arisen prior to such termination, or which accrue pursuant to paragraph 21.3 as a result of such termination, and obligations to insure and indemnify), upon the occurrence of any of the following events: a. BREACH OF AGREEMENT - Thirty (30) days after the receipt of notice by either party to the other specifying in detail a material breach of this Agreement, if such breach has not been cured within said thirty (30) day period; or if such breach is of a nature that it cannot be cured within said (30) day period but can not be cured with a reasonable time thereafter, if efforts to cure such breach have not commenced or/and such efforts are not proceeding and being continued diligently both during and after such thirty (30) day period prior to the breach being cured. HOWEVER, the breach of any obligation of either party hereunder to pay any monies to the other party under the terms of this Agreement shall be deemed to be curable within thirty (30) days. 21.2 TERMINATION FOR CAUSE (Cont.) b. FAILURE TO ACT, ETC. - In the event that any insurance required of Owner is not maintained without any lapse, or it is alleged or charged that the Premises, or any portion thereof, or any act or failure to act by Owner, its agent and employees with respect to the Premises, fails to comply with any law or regulations, or any order or ruling of any public authority, and Agent, in its sole discretion, considers that the action or position of Owner or its representatives with respect thereto may result in damage or liability to Agent, or disciplinary proceeding with respect to Agent's license. Agent shall have the right to terminate this Agreement at any time by written notice to Owner of its election to do so, which termination shall be effective upon the service of such notice. Such termination shall not release the indemnities of Owner set forth herein. c. EXCESSIVE DAMAGE - Upon the destruction of or substantial damage to the Premises by any cause, or the taking of all or a substantial portion of the Premise of the Premises by eminent domain, in either case making it impossible or impracticable to continue operation of the Premises. d. INADEQUATE INSURANCE - If Agent deems that the liability insurance obtained by Owner per section 14 is not reasonable satisfactory to protect its interest under this Agreement, and if Owner and Agent cannot agree as to adequate insurance. Agent shall have the right to cancel this Agreement upon the service of notice to Owner. 21.3 TERMINATION COMPENSATION If (i) Owner terminates this Agreement before the end of the initial term or any subsequent term year as provided in paragraph 21.1 above for any reason other than for a breach by Agent under paragraph 21.2 (a) above, or if (ii) Agent terminates this Agreement for a breach by Owner under paragraph 21.2 (a) above or pursuant to the provisions of paragraph 21.2 (b) or 21.2 (d) above, then in any such event, Owner shall be obligated to pay Agent as liquidated damages an amount equal to the management fee earned by Agent, as determined under paragraph 17.1 above, for the calendar month immediately preceding the month in which the notice of termination is given to Agent or to Owner, multiplied by the number of months and/or portions thereof remaining from the termination date until the end of the initial term or term year in which the termination occurred. Such damages, plus any amounts accruing to Agent prior to such termination, shall be due and payable upon termination of this Agreement. To the extent that funds are available, such sums shall be payable from the Operating (and/or) Reserve Account(s). Any amount due in excess of the funds available from the Operating (and/or) Reserve Account(s) shall be paid by Owner to Agent upon demand. 21.4 OWNER RESPONSIBLE FOR PAYMENTS Upon Termination or withdrawal from this Agreement, Owner shall assume the obligations of any contract or outstanding bill executed by Agent under this Agreement for and on behalf of Owner and responsibility for payment of all unpaid bills. In addition, Owner shall furnish Agent security, in an amount satisfactory to Agent, against any obligations or liabilities with Agent may have properly incurred on Owner's behalf under this Agreement. Agent may withhold funds for ninety (90) days after the end of the month in which this Agreement is terminated, in order to pay bills previously incurred by not yet invoiced and to close accounts. Agent shall deliver to Owner, within ninety (90) days after the end of the month in which this Agreement is terminated, any balance of monies due Owner or of tenant security deposits, or both which were held by Agent with respect to the Premises, as well as a final accounting reflecting the balance of income and expenses with respect to the Premises as of the date of termination or withdrawal, and all records, contracts, leases, receipts for deposits, and other papers or documents which pertain to the Premises. 21.5 SALE OF PREMISES In the event that the Premises are sold by Owner during the period of this Agreement, Agent may, upon agreement with Owner and in accordance with Owner's partnership agreement, obtain rights of representation in the sale as stated in a specific sales agreement to be negotiated separately. Upon transfer of ownership, this Agreement shall terminate by mutual consent of Owner and Agent under the term and conditions set forth below: The agreement shall automatically terminate upon sale of premises to a bona fide Third Party without penalty. A minimum of sixty days notice is required. Section 22 - INDEMNIFICATION SURVIVES TERMINATION All representatives and warranties of the parties contained herein shall survive the termination of this Agreement. All provisions of this Agreement that require Owner to have insured or to defend, reimburse, or indemnify Agent (including, but not limited to, paragraphs, 2.1, 2.3, 5, 8.4, 9.2, 13, 14, 15, 16, 17.7, 20, 21.3 and 21.4) shall survive any termination; and if Agent is or becomes involved in any proceedings or litigation by reason of having been Owner's Agent, such provisions shall apply as if this Agreement were still in effect. Section 23 - HEADINGS All headings and subheadings employed within this Agreement and in the accompanying List of Provisions are inserted only for convenience and ease of reference and are not to be considered in the construction or interpretation of any provision of this Agreement. Section 24 - FORCE MAJEUR Any delays in the performance of any obligation of Agent under this Agreement shall be excused to the extent that such delays are caused by wars, national emergencies, natural disasters, strikes, labor disputes, utility failures, governmental regulations, riots, adverse weather, and other similar causes not within the control of Agent, and any time periods required for performance shall be extended accordingly. Section 25 - COMPLETE AGREEMENT This Agreement, including any specified attachments, constitutes the entire agreement between Owner and Agent with respect to the management and operation of the Premises and supersedes and replaces any and all previous management agreements entered into or/and negotiated between Owner and Agent relating to the Premises covered by this Agreement. No change to this Agreement shall be valid unless made by supplemental written agreement executed and approved by Owner and Agent. Except as otherwise provided herein, any and all amendments, additions, or deletions to this Agreement shall be null and void unless approved by Owner and Agent in writing. Each party to this Agreement hereby acknowledges and agrees that the other party has made no warranties, representations, covenants, or agreements, express or implied, to such party, other than those expressly set forth herein, and that each party, in entering into and executing this Agreement, has relied upon no warranties, representations, covenants, or agreement, express or implied, to such party, other than those expressly set forth herein. Section 26 - RIGHTS CUMULATIVE; NO WAIVER No right or remedy herein conferred upon or reserved to either of the parties to this Agreement is extended to be exclusive of any other right or remedy, and each and every right and remedy shall be cumulative and in addition to any other right or remedy given under this Agreement or now or thereafter legally existing upon the occurrence of an event or default under this Agreement. The failure of either party to this Agreement to insist at any time upon the strict observance or performance of any of the provisions of this Agreement, or to exercise any right or remedy as provided in this Agreement, shall not impair any such right or remedy with respect to subsequent defaults. Every right and remedy given by this Agreement to the parties to it may be exercised from time to time and as often as may be deemed expedient by those parties. Section 27 - APPLICABLE LAW AND PARTIAL INVALIDITY The Execution, interpretation, and performance of this Agreement shall in all respects be controlled and governed by the laws of the State of Massachusetts. If any part of this Agreement shall be declared invalid or unenforceable, Agent shall have the option to terminate this Agreement by notice to Owner. Any notices, demands, consents, and report necessary or provided for under this Agreement shall be in writing and shall be addressed as follows, or at such other address as Owner and Agent individually may specify hereafter in writing: Agent: Claremont Management Corporation Batterymarch Park II Quincy, MA 02169 ATTN: Charles M. Moran, Jr. Owner: Henderson's Wharf Baltimore L.P. c/o Boston Bay Capital, Inc. One Liberty Square Boston, MA 02109 ATTN: Terrence P. Sullivan Such notice or other communication may be mailed by United States registered or certified mail, return receipt requested, postage prepaid, and may be deposited in a United States Post Office or a depository for the receipt of mail regularly maintained by the post office. Such notices, demands, consents, and reports may also be delivered by hand or by any other receipted method or means permitted by law. For purposes of this Agreement, notices shall be deemed to have been "given" or "delivered" upon personal delivery thereof forty-eight (48) hours after having been deposited in the United States mails as provided herein. Section 28 - AGREEMENT BINDING UPON SUCCESSORS AND ASSIGNS This Agreement shall be binding the parties hereto and their respective personal representatives, heirs, administrators, executors, successors and assigns. SIGNATURES IN WITNESS WHEREOF, the parties hereto have affixed or caused to be affixed their respective signatures this _________ day of _______________ 1995. Witnesses: Henderson's Wharf Baltimore, L.P. a Delaware Limited Partnership ("Borrower") By: Henderson's Wharf Development Corporation. a Delaware Corporation, General Partner of Henderson's Wharf Baltimore, L.P. __________________________ By: _________________________________ Terrence P. Sullivan, President By: Historic Preservation Properties 1990 L.P. TAX CREDIT FUND, a Delaware L.P., General Partner of Henderson's Wharf Baltimore, L.P. By: Boston Historic Partners II L.P., General Partner of Historic Preservation Properties 1990 L.P. Tax Credit Fund By: Portfolio Advisory Services II, Inc. General Partner of BHP II Advisors L.P. ___________________________ By: ____________________________ Terrence P. Sullivan, President of Portfolio Advisory Services II, Inc. ___________________________ By: _________________________________ Terrence P. Sullivan, General Partner of BHP II Advisors L.P. Agent: Firm: Claremont Management Corporation ___________________________ By: _______________________________ Charles M. Moran, Jr., President EX-99.4 5 MANAGEMENT AGREEMENT This Agreement is made this 1st day of November 1995, by and between The Council of Unit Owners of the Residences and Inn at Henderson's Wharf, A Condominium, Inc. (the "Owner") and Claremont Management Corporation (the "Agent"). Section 1 - APPOINTMENT OF MANAGING AGENT 1.1 APPOINTMENT OF MANAGING ACCEPTANCE Owner hereby appoints Agent as sole and exclusive agent of Owner to manage the property described in paragraph 1.2 upon the terms and conditions provided herein. Agent accepts the appointment and agrees to furnish the services of its organization for the management of the Premises; and Owner agrees to pay all expenses in connection with those services. 1.2 DESCRIPTION OF PREMISE The property to be managed by Agent under this Agreement (the "Premises") is known as The Council of Unit Owners of the Residences and Inn at Henderson's Wharf, A Condominium, Inc., located at 1000 Fell Street, Baltimore, MD, consisting of the land, building, and other improvements described as 137 residential units and a 38 room inn, all of which constitute the condominium association in the state of Maryland. 1.3 TERM The terms of the Agreement shall be for an initial period of 20 months (the "initial term") from the 1st day of November 1995, to including the 30th day of June 1997; and thereafter shall be automatically renewed from year to year unless terminated as provided in sections 19 or 25 herein. Each of said one-year renewal periods is referred to as a "term year". 1.4 MANAGEMENT OFFICE Owner shall provide adequate space on the Premises for a management office. This office can be shared with other properties. Owner shall pay all expenses related to such office, including, but not limited to, furnishings, equipment, postage and office supplies, electricity and other utilities, and telephone. All costs to be prorated to appropriate properties. Section 2 - Bank Accounts The various bank accounts established under this Agreement shall at all times be established in Owner's name but under Agent's control. Agent's and Owner's designees shall be the only parties authorized to draw upon such accounts. No amounts deposited in any accounts established under this Agreement shall in any event be commingled with any other funds of Agent. 2.1 OPERATING (AND/OR) RESERVE ACCOUNT(S) Agent shall establish a separate account(s) known as the Council of Unit Owners of the Residences and Inn at Henderson's Wharf, a Condominium, Inc., Operating (and/or) Reserve Account(s), separate and apart from Agent's corporate accounts, for the deposit of receipts collected as described herein, in a bank or other institution whose deposits are insured by the federal government. Such depository shall be selected by the Agent upon the consent of the Owner. However, Agent shall not be held liable in the event of bankruptcy or failure of a depository. Funds in the Operating (and/or) Reserve Account(s) remain the property of Owner subject to disbursement of expenses by Agent as described in the Agreement. 2.1.1 INITIAL DEPOSIT AND CONTINGENCY RESERVE Within the first two weeks of the commencement of this Agreement, Owner shall see that the Agent is remitted the sum of $25,000 to be deposited in the Operating (and/or) Reserve Account(s) as an initial deposit representing the estimated disbursements to be made in the first month following the commencement of this Agreement, plus an additional sum of $1,000 as a contingency reserve. If this contingency reserve is drawn down, then they shall be replenished from operations as soon as economically feasible. Owner and Agent shall review the amount of the contingency reserve from time to time and shall agree in writing on a new contingency reserve amount when such is required. 2.2 FIDELITY BOND The Agent will furnish, at its own expense, a fidelity bond in the principal sum of $1,000,000, which is at least equal to the gross potential income for two months and is conditioned to protect the Owner and the Mortgagee against misappropriation of funds of the Premises by the Agent and its employees. The Agent will obtain a bond of like kind to cover the on-site personnel expressed in Section 7.1 and it shall be paid for from Premises income. The other terms and conditions of the bond, and the surety thereon, will be subject to approval of the Owner and the Mortgagee. Section 3 - COLLECTION OF RENTS AND OTHER RECEIPTS 3.1 AGENT'S AUTHORITY Agent shall collect (and give receipts for, if necessary) all charges and other amounts receivable on Owner's account in connection with the management and operation of the Premises. Such receipts shall be deposited in the Operating (and/or) Reserve Account(s) maintained by Agent for the Premises. 3.2 SPECIAL CHARGES If permitted by applicable law, Agent may collect from owners any or all of the following: and administrative charge for late payment of fees, a charge for returned or non-negotiable checks, and other administrative charges as required. Section 4 - DISBURSEMENT FROM OPERATING (AND/OR) RESERVE ACCOUNT(S) 4.1 OPERATING EXPENSES From the Operating (and/or) Reserve Account(s), Agent is hereby authorized to pay or reimburse itself for all expenses and costs of operating the Premises in accordance with approved annual budget under Section 6.2 and for all other sums due Agent under this Agreement, including Agent's compensation under section 15. 4.2 RECURRING PAYMENTS Owner shall give Agent advance written notice of at least 10 days if Owner desires Agent to make any additional monthly or recurring payments (such as general taxes, or special assessments, or fire, steam boiler, or other insurance premiums) out of the proceeds from the Premises. If Owner notifies Agent to make such payments after the beginning of the term of this Agreement, Agent shall have the authority to name a new contingency, and Owner shall maintain this new contingency reserve amount at all times in the Operating (and/or) Reserve Account(s). 4.3 NET PROCEEDS To the extent that funds are available, and after maintaining the cash contingency reserve amount as specified in paragraph 2.1.1, Agent shall transmit cash balances to Owner periodically, as follows. Such periodic cash balances shall be remitted to the following person(s), in the percentage(s) specified, address(es) shown: as directed from time to time by Owner. Section 5 - AGENT NOT REQUIRED TO ADVANCE FUNDS In the event the balance in the Operating (and/or) Reserve Account(s) is at any time insufficient to pay disbursements due and payable under paragraphs 4.1, 4.2 and 6.2. Owner shall immediately upon notice, remit to Agent sufficient funds to cover the deficiency and replenish the contingency reserve. In no event shall Agent be required to use its own funds to pay such disbursements. Nor shall Agent be required to advance any monies to Owner, or to the Operating (and/or) Reserve Account(s). If Agent elects to advance any money in connection with the Premises to pay any expenses for Owner, such advances shall be considered a loan subject to repayment with interest, and Owner hereby agrees to reimburse Agent, including interest as provided in paragraph 15.4 and hereby authorizes Agent to deduct such amounts from any monies due Owner. Section 6 - FINANCIAL AND OTHER REPORTS 6.1 REPORTING REQUIREMENTS By the 20th day of each month, Agent will provide to the Owner the following schedules for the preceding month, which include, but are not limited to: balance sheet, income statement with comparisons to budget, general ledger, rent roll, bank statements and cash reconciliations, aged listing of accounts receivables, listing of prepaids, additions to fixed assets over $500, intercompany reconciliation, listing of accruals and other prepaids, tenant security deposit listing, and cash flow statement. In addition, Agent shall, on a mutually acceptable schedule, prepare and submit to Owner such other reports as are agreed on by both parties. 6.2 BUDGETS Annual operating budgets for the Premises will be approved by the Owner. Except as permitted under Section 8.1 below, annual disbursements for each type of operating expenses itemized in the budget shall not materially exceed the amount authorized by the approved budget without prior consent of the Owner. The Agent will prepare a recommended operating budget for each fiscal year beginning during the term of this Agreement, and will submit the same to the Owner at least forty-five (45) days before the beginning of the fiscal year. The Owner will promptly inform the Agent of any changes incorporated in the approved budget, and the Agent will keep the Owner informed of any anticipated deviation from the receipts or disbursements stated in the approved budget. 6.3 OWNER'S RIGHT TO AUDIT Owner shall have the right to request periodic audits of all applicable accounts managed by Agent, and the cost of such audit(s) shall be paid by Owner. Section 7 - EMPLOYEES 7.1 AGENT'S AUTHORITY TO HIRE Agent is authorized to hire, supervise, discharge, and pay all servants, employees, contractors or other personnel necessary to be employed in the management, maintenance, and operation of the Premises in accordance with approved budget mentioned in Section 6.2. All employees shall be deemed employees of the Agent. 7.2 OWNER PAYS EMPLOYEE EXPENSES All wages and fringe benefits payable to such employees hired per paragraph 7.1 above, and all local, state, and federal taxes and assessment (including but not limited to Social Security taxes, unemployment insurance and workers' compensation insurance) incident to the employment of such personnel, shall be reimbursed to the Agent out of the Operating (and/or) Reserve Account(s) in accordance with the approved budget and shall be treated as operating expenses. 7.3 AGENT'S AUTHORITY TO FILE RETURNS Agent shall do and perform all acts required of an employer with respect to the Premises and shall execute and file all tax and other returns required under the applicable federal, state and local laws, regulations, and/or ordinances governing employment, and all other statements and reports pertaining to labor employed in connection with the Premises and under any similar federal or state law now or hereafter in force. In connection with such filing, Owner shall be responsible for all amounts required to be paid under the foregoing laws, and Agent shall pay the same from the Operating (and/or) Reserve Account(s). Any penalties assessed to Owner and incurred due to the negligence of Agent shall be paid for by Agent. 7.4 WORKER'S COMPENSATION INSURANCE Agent shall, at Owner's expense, maintain worker's compensation insurance covering all liability of the employer under established worker's compensation laws. 7.5 HOLD HARMLESS, LABOR LAWS Agent shall be responsible for compliance with all applicable state or federal labor laws. Owner shall indemnify, defend, and save Agent harmless from all claims, investigations, and suites, or from Owner's action or failures to act, with respect to any alleged or actual violation of state or federal labor laws. Conversely, Agent shall indemnify, defend and save Owner harmless from all claims, investigations, and suits, or from Agent's actions or failure to act with respect to any alleged or actual violations of state or federal labor laws. Agent's or Owner's obligation with respect to such violation(s) shall include payment of all settlements, judgments, damages, liquidated damages, penalties, forfeitures, back pay awards, court costs, litigation expenses, and attorney's fees. Section 8 - MAINTENANCE AND REPAIR Agent is authorized to make or cause to be made, through contracted services or otherwise, all ordinary repairs and replacements reasonably necessary to preserve the Premises in its present condition and for the operating efficiency of the Premises, and all alterations required to comply with the condominium document requirements, governmental regulations, or insurance requirements. Agent is also authorized to decorate the Premises and to purchase or rent, on Owner's behalf, all equipment, tools, appliances, materials, maintenance, or operation of the Premises. Such maintenance and decorating expenses shall be paid out of the Operating (and/or) Reserve Account(s). 8.1 APPROVAL FOR EXCEPTIONAL MAINTENANCE EXPENSE The expense to be incurred for any one item of maintenance alteration, refurbishing, or repair shall not exceed the sum of $5,000 unless such expense is specifically authorized by Owner or is incurred under such circumstances as Agent shall reasonable deem to be an emergency. In an emergency where repairs are immediately necessary for the preservation and safety of the Premises, or to avoid the suspension of any essential service to the Premises, or to avoid danger to life or property, or to comply with federal, state, or local law, such emergency repairs shall be made by Agent at Owner's expense prior approval. Section 9 - CONTRACTS, UTILITIES AND SERVICES Agent is authorized to negotiate contracts for non- recurring items of expense, not to exceed $5,000, unless approved by Owner, and to enter into agreements in Owner's name for all necessary repairs, maintenance, minor alterations, and utility services. Agent shall, in Owner's name and at Owner's expense, make contracts on Owner's behalf for electricity, gas, telephone, fuel, or water, and such other services as Agent shall deem necessary or prudent for the operation of the Premises. All utility deposits shall be the Owner's responsibility, except that Agent may pay same from the Operating (and/or) Reserve Account(s) at Owner's request. Section 10 - RELATIONSHIP OF AGENT TO OWNER The relationship of the parties to this Agreement shall be that of Principal and Agent, and all duties to be performed by Agent under this Agreement shall be for and on behalf of Owner, in Owner's name and for Owner's account. In taking any under the Agreement, Agent shall be acting only as Agent for Owner, and nothing in this Agreement shall be construed as creating a partnership, joint venture, or any other relationship between the parties to this Agreement except that of Principal and Agent, or as requiring Agent to bear any portion of losses arising out of or connected with the ownership or operation of the Premises. Nor shall Agent at any time during the period of this Agreement to be considered a direct employee of Owner. Neither party shall have the owner to bind or obligate the other except as expressly set forth in this Agreement except that Agent is authorized to act with such additional authority and power as may be necessary to carry out the spirit and intent of this Agreement. Section 11 - SAVE HARMLESS The Owner will indemnify the Agent harmless against and hold the Agent harmless from and against any liabilities, damages, costs and expenses (including reasonable attorney's fees) sustained or incurred for injury to any person or property in, about, and in conjunction with the buildings, unless such injury shall be caused by the Agent's own negligence or willful misconduct; and any liability, damages, penalties, costs and expenses (including reasonable attorney's fees) statutory or otherwise, for all acts performed by the Agent in accordance with the terms of this Agreement or pursuant to the instructions of the Owner, provided, in each of the foregoing instances, that the Agent promptly advises the Owner of its receipt of information concerning any such injury and the amount of any such liability, damages, penalties, costs and expenses. The Agent will indemnify the Owner harmless against and hold the Owner harmless from and against; any liabilities, damages, costs and expenses (including reasonable attorney's fees) sustained or incurred for injury to any person or property in, about, and in conjunction with the buildings caused by the Agent's own negligence or willful misconduct; and any liability, damages, penalties, costs and expenses (including reasonable attorney's fees) statutory or otherwise, for all acts performed by the Agent not in accordance with the terms of this Agreement or not pursuant to the instructions of the Owners. Section 12 - LIABILITY INSURANCE Owner and Agent shall obtain and keep in force adequate insurance against physical damage (e.g. fire with extended coverage endorsement, boiler and machinery, etc.) and against liability for loss, damage, or injury to property or persons which might arise out of the occupancy, management, operation, or maintenance of the Premises. The amounts and types of insurance shall be acceptable to both Owner and Agent, and any deductible required under each insurance policies shall be Owner's expense. Agent shall be covered as additional insured on all liability insurance maintained with respect to the Premises. Liability insurance shall be adequate to protect the interest of both Owner and Agent and in form, substance, and amounts reasonable satisfactory to Agent. Owner agrees to furnish Agent with certificates evidencing such insurance or with duplicate copies of such policies within 10 days of the execution of this Agreement. If Owner fails to do so, Agent may but shall not be obligated to place said insurance and charge the cost thereof to the Operating (and/or) Reserve Account(s) said policies shall provide that notice of default or cancellation shall be sent to Agent as well as Owner and shall require a minimum of 30 days written notice to Agent before any cancellation of or changes to said policies. Section 13 - AGENT ASSUMES NO LIABILITY Agent assumes no liability whatsoever for any acts or omissions of Owner or any previous owners of the Premises, or any previous management or other agent of either. Agent assumes no liability for any failure of or default by any tenant in the payment of any rent or other charges due Owner or in the performance of any obligations owned by any tenant to Owner pursuant to any lease or otherwise. Nor does Agent assume any liability for previously unknown violations or environmental or other regulations which may become unknown during the period of this Agreement is in effect. Any such regulatory violations or hazards discovered by Agent shall be brought to the attention of the Owner in writing and Owner shall promptly cure them. Section 14 - OWNER RESPONSIBLE FOR ALL EXPENSES OF LITIGATION Owner shall reimburse all reasonable expenses incurred by Agent, including but not limited to, attorneys' fee and Agent's costs and time, any liability, fines, penalties or the like, in connection with any claim, proceeding, or suit involving an alleged violation by Agent or Owner, or both, of any law pertaining to fair employment, fair credit reporting, environmental protection, rent control, taxes, or fair housing, including, but not limited to, any law prohibiting or making illegal discrimination on the basis or race, sex, creed, color, religion, national origin, or mental or physical handicap, provided, however, that Owner shall not be responsible to Agent for any such expenses in the event Agent is finally adjudged to have personally, and not in a representative capacity, violated any such law. Nothing contained in this Agreement shall obligate Agent to employ legal counsel to represent Owner in any such proceeding or suit. 14.1 FEES FOR LEGAL ADVICE Owner shall pay reasonable expenses incurred by Agent in obtaining legal advice regarding compliance with any law affecting the Premises or activities related to them. If such expenditure also benefits others for whom Agent in this Agreement acts in a similar capacity, Owner agrees to pay an apportioned amount of such expense. Section 15 - AGENT'S COMPENSATION AND EXPENSES As compensation for the services provided by Agent under this Agreement (and exclusive of reimbursement of expenses to which Agent is entitled hereunder). Owner shall pay Agent as follows: 15.1 FOR MANAGEMENT SERVICES The sum of $850 per month to be paid on the first of each month in advance. 15.2 FOR FIRE RESTORATION 10% of total restoration if Claremont Management Corporation acts as general contractor. 15.3 FOR OTHER ITEMS OF MUTUAL AGREEMENT To be determined if situation arises. 15.4 INTEREST ON UNPAID SUMS Any sums due Agent under any provisions of this Agreement, and not paid within 30 days after such sums have become due, shall bear interest at the rate of Fleet prime rate. Section 16 - REPRESENTATIONS Owner represents and warrants: That Owner has full power and authority to enter this Agreement; that there are no written or oral agreements affecting the Premises other than tenant leases, copies of which have been furnished to Agent; that there are no recorded easements, restrictions, reservations, or rights of way which adversely affect the use of the Premises for the purposes intended under this Agreement; that to the best of Owner's knowledge, the property is zoned for the intended use; that all leasing and other permits for the operation of the Premises have been secured and are current; that the building and its been secured and are current; that the building and its construction and operation do not violate any applicable statutes, laws, ordinances, rules regulations, orders, or the like (including, but not limited to, those pertaining to hazardous or toxic substances); that the building does not contain any asbestos, urea, formaldehyde, radon, or other toxic or hazardous substance; and that no unsafe conditions exists. Section 17 - STRUCTURAL CHANGES Owner expressly withholds from Agent any power or authority to make any structural changes in any building, or to make any other major alterations or additions in or to any such building or to any equipment to any such building, or to incur any expense chargeable to Owner other than expenses related to exercising the express powers vested in Agent through this Agreement, without the prior written consent of the following person or his designee: Terrence Sullivan Boston Bay Capital, Inc. One Liberty Square Boston, MA 02109 However, such emergency repairs as may be required because of danger to life or property, or which are immediately necessary for the preservation and safety of the Premises or the safety of the tenants and occupants thereof, or required to avoid the suspension of any necessary service to the Premises, or to comply with any applicable federal, state, or local laws, regulations, or ordinances, shall be authorized pursuant to paragraph 8.1 of this Agreement, and Agent shall notify Owner appropriately. Section 18 - BUILDING COMPLIANCE Agent does not assume and is given no responsibility for compliance of the Premises or any building thereon or any equipment therein with the requirements of any building codes or with any statue, ordinance, law, or regulation or any governmental body or of any public authority or official thereof having jurisdiction, except to notify Owner promptly or forward to Owner promptly any complaints, warnings, notices, or summons received by Agent relating to such matters. Owner represents that to the best of Owner's knowledge the Premises and all such equipment comply with all such requirements, and Owner authorizes Agent to disclose the ownership of the Premises to any such officials and agrees to indemnify and hold Agent, its representatives, servants, and employees, harmless of and from all loss, cost, expense, and liability whatsoever which may be imposed by reason of any present or future violation or alleged violation of such laws, ordinances, statues, or regulations. Section 19 - TERMINATION 19.1 TERMINATION BY EITHER PARTY This Agreement may be terminated by either Owner or Agent, with or without cause, at the end of the initial term or of any following term year upon the giving of 30 days' written notice prior to the end of said initial term or following terming year. 19.2 TERMINATION FOR CAUSE Notwithstanding the foregoing, the Agreement shall terminate in any event, and all obligations of the parties hereunder shall cease (except as to liabilities or obligations which have accrued or arisen prior to such termination, or which accrue pursuant to paragraph 19.3 as a result of such termination, and obligations to insure and indemnify), upon the occurrence of any of the following events: a. BREACH OF AGREEMENT - Thirty (30) days after the receipt of notice by either party to the other specifying in detail a material breach of this Agreement, if such breach has not been cured within said thirty (30) day period; or if such breach is of a nature that it cannot be cured within said (30) day period but can not be cured with a reasonable time thereafter, if efforts to cure such breach have not commenced or/and such efforts are not proceeding and being continued diligently both during and after such thirty (30) day period prior to the breach being cured. HOWEVER, the breach of any obligation of either party hereunder to pay any monies to the other party under the terms of this Agreement shall be deemed to be curable within thirty (30) days. 19.2 TERMINATION FOR CAUSE (Cont.) b. FAILURE TO ACT, ETC. - In the event that any insurance required of Owner is not maintained without any lapse, or it is alleged or charged that the Premises, or any portion thereof, or any act or failure to act by Owner, its agent and employees with respect to the Premises, fails to comply with any law or regulations, or any order or ruling of any public authority, and Agent, in its sole discretion, considers that the action or position of Owner or its representatives with respect thereto may result in damage or liability to Agent, or disciplinary proceeding with respect to Agent's license. Agent shall have the right to terminate this Agreement at any time by written notice to Owner of its election to do so, which termination shall be effective upon the service of such notice. Such termination shall not release the indemnities of Owner set forth herein. c. EXCESSIVE DAMAGE - Upon the destruction of or substantial damage to the Premises by any cause, or the taking of all or a substantial portion of the Premise of the Premises by eminent domain, in either case making it impossible or impracticable to continue operation of the Premises. d. INADEQUATE INSURANCE - If Agent deems that the liability insurance obtained by Owner per section 12 is not reasonable satisfactory to protect its interest under this Agreement, and if Owner and Agent cannot agree as to adequate insurance. Agent shall have the right to cancel this Agreement upon the service of notice to Owner. 19.3 TERMINATION COMPENSATION If (i) Owner terminates this Agreement before the end of the initial term or any subsequent term year as provided in paragraph 19.1 above for any reason other than for a breach by Agent under paragraph 19.2 (a) above, or if (ii) Agent terminates this Agreement for a breach by Owner under paragraph 19.2 (a) above or pursuant to the provisions of paragraph 19.2 (b) or 19.2 (d) above, then in any such event, Owner shall be obligated to pay Agent as liquidated damages an amount equal to the management fee earned by Agent, as determined under paragraph 15.1 above, for the calendar month immediately preceding the month in which the notice of termination is given to Agent or to Owner, multiplied by the number of months and/or portions thereof remaining from the termination date until the end of the initial term or term year in which the termination occurred. Such damages, plus any amounts accruing to Agent prior to such termination, shall be due and payable upon termination of this Agreement. To the extent that funds are available, such sums shall be payable from the Operating (and/or) Reserve Account(s). Any amount due in excess of the funds available from the Operating (and/or) Reserve Account(s) shall be paid by Owner to Agent upon demand. 19.4 OWNER RESPONSIBLE FOR PAYMENTS Upon Termination or withdrawal from this Agreement, Owner shall assume the obligations of any contract or outstanding bill executed by Agent under this Agreement for and on behalf of Owner and responsibility for payment of all unpaid bills. In addition, Owner shall furnish Agent security, in an amount satisfactory to Agent, against any obligations or liabilities with Agent may have properly incurred on Owner's behalf under this Agreement. Agent may withhold funds for ninety (90) days after the end of the month in which this Agreement is terminated, in order to pay bills previously incurred by not yet invoiced and to close accounts. Agent shall deliver to Owner, within ninety (90) days after the end of the month in which this Agreement is terminated, any balance of monies due Owner or of tenant security deposits, or both which were held by Agent with respect to the Premises, as well as a final accounting reflecting the balance of income and expenses with respect to the Premises as of the date of termination or withdrawal, and all records, contracts, leases, receipts for deposits, and other papers or documents which pertain to the Premises. Section 20 - INDEMNIFICATION SURVIVES TERMINATION All representatives and warranties of the parties contained herein shall survive the termination of this Agreement. All provisions of this Agreement that require Owner to have insured or to defend, reimburse, or indemnify Agent (including, but not limited to, paragraphs, 2.1, 2.2, 5, 7.2, 11, 12, 13, 14, 15.4, 18, 19.3 and 19.4) shall survive any termination; and if Agent is or becomes involved in any proceedings or litigation by reason of having been Owner's Agent, such provisions shall apply as if this Agreement were still in effect. Section 21 - HEADINGS All headings and subheadings employed within this Agreement and in the accompanying List of Provisions are inserted only for convenience and ease of reference and are not to be considered in the construction or interpretation of any provision of this Agreement. Section 22 - FORCE MAJEUR Any delays in the performance of any obligation of Agent under this Agreement shall be excused to the extent that such delays are caused by wars, national emergencies, natural disasters, strikes, labor disputes, utility failures, governmental regulations, riots, adverse weather, and other similar causes not within the control of Agent, and any time periods required for performance shall be extended accordingly. Section 23 - COMPLETE AGREEMENT This Agreement, including any specified attachments, constitutes the entire agreement between Owner and Agent with respect to the management and operation of the Premises and supersedes and replaces any and all previous management agreements entered into or/and negotiated between Owner and Agent relating to the Premises covered by this Agreement. No change to this Agreement shall be valid unless made by supplemental written agreement executed and approved by Owner and Agent. Except as otherwise provided herein, any and all amendments, additions, or deletions to this Agreement shall be null and void unless approved by Owner and Agent in writing. Each party to this Agreement hereby acknowledges and agrees that the other party has made no warranties, representations, covenants, or agreements, express or implied, to such party, other than those expressly set forth herein, and that each party, in entering into and executing this Agreement, has relied upon no warranties, representations, covenants, or agreement, express or implied, to such party, other than those expressly set forth herein. Section 24 - RIGHTS CUMULATIVE; NO WAIVER No right or remedy herein conferred upon or reserved to either of the parties to this Agreement is extended to be exclusive of any other right or remedy, and each and every right and remedy shall be cumulative and in addition to any other right or remedy given under this Agreement or now or thereafter legally existing upon the occurrence of an event or default under this Agreement. The failure of either party to this Agreement to insist at any time upon the strict observance or performance of any of the provisions of this Agreement, or to exercise any right or remedy as provided in this Agreement, shall not impair any such right or remedy with respect to subsequent defaults. Every right and remedy given by this Agreement to the parties to it may be exercised from time to time and as often as may be deemed expedient by those parties. Section 25 - APPLICABLE LAW AND PARTIAL INVALIDITY The Execution, interpretation, and performance of this Agreement shall in all respects be controlled and governed by the laws of the State of Massachusetts. If any part of this Agreement shall be declared invalid or unenforceable, Agent shall have the option to terminate this Agreement by notice to Owner. Any notices, demands, consents, and report necessary or provided for under this Agreement shall be in writing and shall be addressed as follows, or at such other address as Owner and Agent individually may specify hereafter in writing: Agent: Claremont Management Corporation Batterymarch Park II Quincy, MA 02169 ATTN: Charles M. Moran, Jr. Owner: The Council of Unit Owners of the Residences and Inn at Henderson's Wharf, A Condominium, Inc. c/o Boston Bay Capital, Inc. One Liberty Square Boston, MA 02109 ATTN: Terrence P. Sullivan Such notice or other communication may be mailed by United States registered or certified mail, return receipt requested, postage prepaid, and may be deposited in a United States Post Office or a depository for the receipt of mail regularly maintained by the post office. Such notices, demands, consents, and reports may also be delivered by hand or by any other receipted method or means permitted by law. For purposes of this Agreement, notices shall be deemed to have been "given" or "delivered" upon personal delivery thereof forty- eight (48) hours after having been deposited in the United States mails as provided herein. Section 26 - AGREEMENT BINDING UPON SUCCESSORS AND ASSIGNS This Agreement shall be binding the parties hereto and their respective personal representatives, heirs, administrators, executors, successors and assigns. SIGNATURES IN WITNESS WHEREOF, the parties hereto have affixed or caused to be affixed their respective signatures this _________ day of _______________ 1995. Witnesses: The Council of Unit Owners of the Residences and Inn at Henderson's Wharf, __________________________ A Condominium, Inc. By: _______________________________ Terrence P. Sullivan, President Agent: Firm: Claremont Management Corporation __________________________ By: _______________________________ Charles M. Moran, Jr., President EX-99.5 6 MANAGEMENT AGREEMENT This Agreement is made this 1st day of November 1995, by and between Henderson's Wharf Baltimore, L.P. (the "Owner") and Claremont Management Corporation (the "Agent"). Section 1 - APPOINTMENT OF MANAGING AGENT 1.1 APPOINTMENT OF MANAGING ACCEPTANCE Owner hereby appoints Agent as sole and exclusive agent of Owner to operate and manage the property described in paragraph 1.2 upon the terms and conditions provided herein. Agent accepts the appointment and agrees to furnish the services of its organization for the operation and management of the Premises; and Owner agrees to pay all expenses in connection with those services. 1.2 DESCRIPTION OF PREMISE The property to be managed by Agent under this Agreement (the "Premises") is known as The Inn At Henderson's Wharf located at 1000 Fell Street, Baltimore, MD, consisting of the land, building, and other improvements described as a 38 room inn in the state of Maryland. 1.3 TERM The terms of the Agreement shall be for an initial period of 20 months (the "initial term") from the 1st day of November 1995, to including the 30th day of June 1997; and thereafter shall be automatically renewed from year to year unless terminated as provided in sections 21 or 27 herein. Each of said one-year renewal periods is referred to as a "term year". 1.4 MANAGEMENT OFFICE Owner shall provide adequate space on the Premises for a management office. This office can be shared with other properties. Owner shall pay all expenses related to such office, including, but not limited to, furnishings, equipment, postage and office supplies, electricity and other utilities, and telephone. All costs to be prorated to appropriate properties. 1.5 APARTMENT FOR INN MANAGER Owner shall provide a suitable apartment(s) on the Premises, if deemed appropriate by mutual consent of both parties, for the use of an on-site manager and/or a resident janitor and their families, rent free, except that such resident staff shall pay for heat and utilities in the same manner as other tenants. The specific apartment(s) shall be the Owner's choice. Section 2 - Bank Accounts The various bank accounts established under this Agreement shall at all times be established in Owner's name but under Agent's control. Agent's and Owner's designees shall be the only parties authorized to draw upon such accounts. No amounts deposited in any accounts established under this Agreement shall in any event be commingled with any other funds of Agent. 2.1 OPERATING (AND/OR) RESERVE ACCOUNT(S) Agent shall establish a separate account(s) known as the The Inn At Henderson's Wharf Operating (and/or) Reserve Account(s), separate and apart from Agent's corporate accounts, for the deposit of receipts collected as described herein, in a bank or other institution whose deposits are insured by the federal government. Such depository shall be selected by the Agent upon the consent of the Owner. However, Agent shall not be held liable in the event of bankruptcy or failure of a depository. Funds in the Operating (and/or) Reserve Account(s) remain the property of Owner subject to disbursement of expenses by Agent as described in the Agreement. 2.1.1 INITIAL DEPOSIT AND CONTINGENCY RESERVE Immediately upon commencement of this Agreement, Owner shall remit to Agent the sum $50,000 to be deposited in the Operating (and/or) Reserve Account(s) as an initial deposit representing the estimated disbursements to be made in the first month following the commencement of this Agreement, plus an additional sum of $15,000 as a contingency reserve. If this contingency reserve is drawn down, then they shall be replenished from operations as soon as economically feasible. Owner and Agent shall review the amount of the contingency reserve from time to time and shall agree in writing on a new contingency reserve amount when such is required. 2.2 SECURITY DEPOSIT ACCOUNT Agent shall, if required by law, maintain a separate interest bearing account for tenant/guests security deposits and advance rentals. Such account shall be maintained in accordance with applicable state or local laws, if any. 2.3 FIDELITY BOND The Agent will furnish, at its own expense, a fidelity bond in the principal sum of $1,000,000, which is at least equal to the gross potential income for two months and is conditioned to protect the Owner and the Mortgagee against misappropriation of funds of the Premises by the Agent and its employees. The Agent will obtain a bond of like kind to cover the on-site personnel expressed in Section 9.1 and it shall be paid for from Premises income. The other terms and conditions of the bond, and the surety thereon, will be subject to approval of the Owner and the Mortgagee. Section 3 - COLLECTION OF RENTS AND OTHER RECEIPTS 3.1 AGENT'S AUTHORITY Agent shall collect (and give receipts for, if necessary) all room income, rents, charges and other amounts receivable on Owner's account in connection with the management and operation of the Premises. Such receipts (except tenants'/guests' advance rentals, which shall be handled as specified in paragraph 2.2 hereof; and special charges, which shall be handled as specified in paragraph 3.2 hereof) shall be deposited in the Operating (and/or) Reserve Account(s) maintained by Agent for the Premises. 3.2 SPECIAL CHARGES If permitted by applicable law, Agent may collect from tenants/guests any or all of the following: an administrative charge for late payments and a charge for returned or non-negotiable checks. Section 4 - DISBURSEMENT FROM OPERATING (AND/OR) RESERVE ACCOUNT(S) 4.1 OPERATING EXPENSES From the Operating (and/or) Reserve Account(s), Agent is hereby authorized to pay or reimburse itself for all expenses and costs of operating the Premises in accordance with approved annual budget under Section 6.2, and for all other sums due Agent under this Agreement, including Agent's compensation under section 17. 4.2 DEBT SERVICE Owner shall give Agent advance written notice of at least 10 days if Owner desires Agent to make any additional monthly or recurring payments (such as mortgage indebtedness, general taxes, or special assessments, or fire, steam boiler, or other insurance premiums) out of the proceeds from the Premises. If Owner notifies Agent to make such payments after the beginning of the term of this Agreement, Agent shall have the authority to name a new contingency, and Owner shall maintain this new contingency reserve amount at all times in the Operating (and/or) Reserve Account(s). 4.3 NET PROCEEDS To the extent that funds are available, and after maintaining the cash contingency reserve amount as specified in paragraph 2.1.1, Agent shall transmit cash balances to Owner periodically, as follows. Such periodic cash balances shall be remitted to the following person(s), in the percentage(s) specified, address(es) shown: as directed from time to time by Owner. Section 5 - AGENT NOT REQUIRED TO ADVANCE FUNDS In the event the balance in the Operating (and/or) Reserve Account(s) is at any time insufficient to pay disbursements due and payable under paragraphs 4.1, 4.2 and 6.2. Owner shall immediately upon notice, remit to Agent sufficient funds to cover the deficiency and replenish the contingency reserve. In no event shall Agent be required to use its own funds to pay such disbursements. Nor shall Agent be required to advance any monies to Owner, or to the Operating (and/or) Reserve Account(s). If Agent elects to advance any money in connection with the Premises to pay any expenses for Owner, such advances shall be considered a loan subject to repayment with interest, and Owner hereby agrees to reimburse Agent, including interest as provided in paragraph 17.7 and hereby authorizes Agent to deduct such amounts from any monies due Owner. Section 6 - FINANCIAL AND OTHER REPORTS 6.1 REPORTING REQUIREMENTS By the 20th day of each month, Agent will provide to the Owner the following schedules for the preceding month, which include, but are not limited to: balance sheet, income statement with comparisons to budget, general ledger, rent roll, bank statements and cash reconciliations, aged listing of accounts receivables, listing of prepaids, additions to fixed assets over $500, intercompany reconciliation, listing of accruals and other prepaids, tenant security deposit listing, and cash flow statement. In addition, Agent shall, on a mutually acceptable schedule, prepare and submit to Owner such other reports as are agreed on by both parties. 6.2 BUDGETS Annual operating budgets for the Premises will be approved by the Owner. Except as permitted under Section 10.1 below, annual disbursements for each type of operating expenses itemized in the budget shall not materially exceed the amount authorized by the approved budget without prior consent of the Owner. The Agent will prepare a recommended operating budget for each fiscal year beginning during the term of this Agreement, and will submit the same to the Owner at least forty-five (45) days before the beginning of the fiscal year. The Owner will promptly inform the Agent of any changes incorporated in the approved budget, and the Agent will keep the Owner informed of any anticipated deviation from the receipts or disbursements stated in the approved budget. 6.3 OWNER'S RIGHT TO AUDIT Owner shall have the right to request periodic audits of all applicable accounts managed by Agent, and the cost of such audit(s) shall be paid by Owner. 6.4 TAX ASSESSMENTS Agent will inform Owner of changes in the amount of real or personal property tax assessments and assist Owner in compiling all necessary information in connection with any contest or appeal of any assessments. Section 7 - ADVERTISING Agent is authorized to advertise the Premises or portions thereof, using periodicals, signs, plans, brochures, or displays, or such other means as Agent may deem proper and advisable and in accordance with Section 6.2. Agent is authorized to place signs on the Premises advertising the Premises, provided such signs comply with applicable laws. The cost of such advertising shall be paid out of the Operating (and/or) Reserve Account(s). All advertising shall make clear that Agent is the manager and NOT the Owner of the Premises. Newspaper ads that share space with other properties managed by the Agent shall be prorated on a reasonable basis. Section 8 - LEASING AND RENTING 8.1 AGENT'S AUTHORITY TO LEASE PREMISES Agent shall use all reasonable efforts to keep the Premises occupied by procuring tenants/guests for the Premises. Agent is authorized to negotiate, prepare, and execute room rates. Agent shall operate the inn as Agent for the Owner. 8.2 NO OTHER RENTAL AGENT During the time of this Agreement. Owner shall not authorize any other person, firm, or corporation to negotiate or act as hotel consultant or agent for the Premises. Owner agrees to promptly forward all inquiries about room availability to the Agent. 8.3 RENTAL RATES Agent, with the consent of the Owner, is authorized to establish and change or revise all room rates, rents, fees, or deposits, and any other charges chargeable with respect to the Premises. 8.4 ENFORCEMENT OF LEASES Agent is authorized to institute, in Owner's name, all legal actions or proceedings for the enforcement of any room occupancy term, for the collection of room income, rent or other income from the Premises or for the evicting or dispossessing of tenants/guests or other persons from the Premises. Agent is authorized to sign and serve such notices as Agent deems necessary for enforcement, including the collection of room income, rent or other income. Agent is authorized, when expedient, to settle, compromise, and release such legal actions or suits or reinstate such tenancies. Any monies for such settlements paid out by Agent shall not exceed $5,000 without prior approval by Owner. Attorney's fees, filing fees, court costs, and other necessary expenses incurred in connection with such actions and not recovered from tenants/guests shall be paid out of the Operating (and/or) Reserve Account(s) or reimbursed directly to Agent by Owner. Agent may select the attorney of its choice to handle such litigation upon the advise and consent of Owner. Section 9 - EMPLOYEES 9.1 AGENT'S AUTHORITY TO HIRE Agent is authorized to hire, supervise, discharge, and pay all servants, employees, contractors or other personnel necessary to be employed in the management, maintenance, and operation of the Premises in accordance with approved budget mentioned in Section 6.2. All employees shall be deemed employees of the Agent. 9.2 OWNER PAYS EMPLOYEE EXPENSES All wages and fringe benefits payable to such employees hired per paragraph 9.1 above, and all local, state, and federal taxes and assessment (including but not limited to Social Security taxes, unemployment insurance and workers' compensation insurance) incident to the employment of such personnel, shall be reimbursed to the Agent out of the Operating (and/or) Reserve Account(s) in accordance with the approved budget and shall be treated as operating expenses. 9.3 AGENT'S AUTHORITY TO FILE RETURNS Agent shall do and perform all acts required of an employer with respect to the Premises and shall execute and file all tax and other returns required under the applicable federal, state and local laws, regulations, and/or ordinances governing employment, and all other statements and reports pertaining to labor employed in connection with the Premises and under any similar federal or state law now or hereafter in force. In connection with such filing, Owner shall be responsible for all amounts required to be paid under the foregoing laws, and Agent shall pay the same from the Operating (and/or) Reserve Account(s). Any penalties assessed to Owner and incurred due to the negligence of Agent shall be paid by Agent. 9.4 WORKER'S COMPENSATION INSURANCE Agent shall, at Owner's expense, maintain worker's compensation insurance covering all liability of the employer under established worker's compensation laws. 9.5 HOLD HARMLESS, LABOR LAWS Agent shall be responsible for compliance with all applicable state or federal labor laws. Owner shall indemnify, defend, and save Agent harmless from all claims, investigations, and suites, or from Owner's action or failures to act, with respect to any alleged or actual violation of state or federal labor laws. Conversely, Agent shall indemnify, defend and save Owner harmless from all claims, investigations, and suits, or from Agent's actions or failure to act with respect to any alleged or actual violations of state or federal labor laws. Agent's or Owner's obligation with respect to such violation(s) shall include payment of all settlements, judgments, damages, liquidated damages, penalties, forfeitures, back pay awards, court costs, litigation expenses, and attorney's fees. Section 10 - MAINTENANCE AND REPAIR Agent is authorized to make or cause to be made, through contracted services or otherwise, all ordinary repairs and replacements reasonably necessary to preserve the Premises in its present condition and for the operating efficiency of the Premises, and all alterations required to comply with lease requirements, governmental regulations, or insurance requirements. Agent is also authorized to decorate the Premises and to purchase or rent, on Owner's behalf, all equipment, tools, appliances, materials, maintenance, or operation of the Premises. Such maintenance and decorating expenses shall be made in accordance to approved budget and shall be paid out of the Operating (and/or) Reserve Account(s). This section applies except where decorating and/or maintenance are at tenants' expense as stipulated in a lease. 10.1 APPROVAL FOR EXCEPTIONAL MAINTENANCE EXPENSE The expense to be incurred for any one item of maintenance alteration, refurbishing, or repair shall not exceed the sum of $5,000 unless such expense is specifically authorized by Owner or is incurred under such circumstances as Agent shall reasonable deem to be an emergency. In an emergency where repairs are immediately necessary for the preservation and safety of the Premises, or to avoid the suspension of any essential service to the Premises, or to avoid danger to life or property, or to comply with federal, state, or local law, such emergency repairs shall be made by Agent at Owner's expense prior approval. Section 11 - CONTRACTS, UTILITIES AND SERVICES Agent is authorized to negotiate contracts for non- recurring items of expense, not to exceed $5,000, unless approved by Owner, and to enter into agreements in Owner's name for all necessary repairs, maintenance, minor alterations, and utility services. Agent shall, in Owner's name and at Owner's expense, make contracts on Owner's behalf for electricity, gas, telephone, fuel, or water, and such other services as Agent shall deem necessary or prudent for the operation of the Premises. All utility deposits shall be the Owner's responsibility, except that Agent may pay same from the Operating (and/or) Reserve Account(s) at Owner's request. Section 12 - RELATIONSHIP OF AGENT TO OWNER The relationship of the parties to this Agreement shall be that of Principal and Agent, and all duties to be performed by Agent under this Agreement shall be for and on behalf of Owner, in Owner's name and for Owner's account. In taking any under the Agreement, Agent shall be acting only as Agent for Owner, and nothing in this Agreement shall be construed as creating a partnership, joint venture, or any other relationship between the parties to this Agreement except that of Principal and Agent, or as requiring Agent to bear any portion of losses arising out of or connected with the ownership or operation of the Premises. Nor shall Agent at any time during the period of this Agreement to be considered a direct employee of Owner. Neither party shall have the owner to bind or obligate the other except as expressly set forth in this Agreement except that Agent is authorized to act with such additional authority and power as may be necessary to carry out the spirit and intent of this Agreement. Section 13 - SAVE HARMLESS The Owner will indemnify the Agent harmless against and hold the Agent harmless from and against any liabilities, damages, costs and expenses (including reasonable attorney's fees) sustained or incurred for injury to any person or property in, about, and in conjunction with the buildings, unless such injury shall be caused by the Agent's own negligence or willful misconduct; and any liability, damages, penalties, costs and expenses (including reasonable attorney's fees) statutory or otherwise, for all acts performed by the Agent in accordance with the terms of this Agreement or pursuant to the instructions of the Owner, provided, in each of the foregoing instances, that the Agent promptly advises the Owner of its receipt of information concerning any such injury and the amount of any such liability, damages, penalties, costs and expenses. The Agent will indemnify the Owner harmless against and hold the Owner harmless from and against; any liabilities, damages, costs and expenses (including reasonable attorney's fees) sustained or incurred for injury to any person or property in, about, and in conjunction with the buildings caused by the Agent's own negligence or willful misconduct; and any liability, damages, penalties, costs and expenses (including reasonable attorney's fees) statutory or otherwise, for all acts performed by the Agent not in accordance with the terms of this Agreement or not pursuant to the instructions of the Owners. Section 14 - LIABILITY INSURANCE Owner and Agent shall obtain and keep in force adequate insurance against physical damage (e.g. fire with extended coverage endorsement, boiler and machinery, etc.) and against liability for loss, damage, or injury to property or persons which might arise out of the occupancy, management, operation, or maintenance of the Premises. The amounts and types of insurance shall be acceptable to both Owner and Agent, and any deductible required under each insurance policies shall be Owner's expense. Agent shall be covered as additional insured on all liability insurance maintained with respect to the Premises. Liability insurance shall be adequate to protect the interest of both Owner and Agent and in form, substance, and amounts reasonable satisfactory to Agent. Owner agrees to furnish Agent with certificates evidencing such insurance or with duplicate copies of such policies within 10 days of the execution of this Agreement. If Owner fails to do so, Agent may but shall not be obligated to place said insurance and charge the cost thereof to the Operating (and/or) Reserve Account(s). Said policies shall provide that notice of default or cancellation shall be sent to Agent as well as Owner and shall require a minimum of 30 days written notice to Agent before any cancellation of or changes to said policies. Section 15 - AGENT ASSUMES NO LIABILITY Agent assumes no liability whatsoever for any acts or omissions of Owner or any previous owners of the Premises, or any previous management or other agent of either. Agent assumes no liability for any failure of or default by any tenant in the payment of any rent or other charges due Owner or in the performance of any obligations owned by any tenant to Owner pursuant to any lease or otherwise. Nor does Agent assume any liability for previously unknown violations or environmental or other regulations which may become unknown during the period of this Agreement is in effect. Any such regulatory violations or hazards discovered by Agent shall be brought to the attention of the Owner in writing and Owner shall promptly cure them. Section 16 - OWNER RESPONSIBLE FOR ALL EXPENSES OF LITIGATION Owner shall reimburse all reasonable expenses incurred by Agent, including but not limited to, attorneys' fee and Agent's costs and time, any liability, fines, penalties or the like, in connection with any claim, proceeding, or suit involving an alleged violation by Agent or Owner, or both, of any law pertaining to fair employment, fair credit reporting, environmental protection, rent control, taxes, or fair housing, including, but not limited to, any law prohibiting or making illegal discrimination on the basis or race, sex, creed, color, religion, national origin, or mental or physical handicap, provided, however, that Owner shall not be responsible to Agent for any such expenses in the event Agent is finally adjudged to have personally, and not in a representative capacity, violated any such law. Nothing contained in this Agreement shall obligate Agent to employ legal counsel to represent Owner in any such proceeding or suit. 16.1 FEES FOR LEGAL ADVICE Owner shall pay reasonable expenses incurred by Agent in obtaining legal advice regarding compliance with any law affecting the Premises or activities related to them. If such expenditure also benefits others for whom Agent in this Agreement acts in a similar capacity, Owner agrees to pay an apportioned amount of such expense. Section 17 - AGENT'S COMPENSATION AND EXPENSES As compensation for the services provided by Agent under this Agreement (and exclusive of reimbursement of expenses to which Agent is entitled hereunder). Owner shall pay Agent as follows: 17.1 FOR MANAGEMENT SERVICES The greater of (i) $ N/A per month or (ii) 4.5% of the total monthly gross receipts from the premises, payable by the 10th day of the current month for the duration of this Agreement. Payments due Agent for Periods of less than a calendar month shall be prorated over the number of days for which compensation is due. The percentage amount set forth in (ii) above shall be based upon the total gross receipts from the premises during the preceding month. The term "gross receipts" shall be deemed to include all collected room income, and other income and charges from the normal operation of the Premises, including, but not limited to, room income, rents, parking fees, food and beverage income, guest services and meetings income, and special charges listed in paragraph 3.2, and other miscellaneous income. Gross receipts shall NOT be deemed to include the value of units provided to on-site staff if applicable, nor income arising out of the sale of real property or settlement of fire or other casualty losses and items of a similar nature. 17.2 FOR APARTMENT LEASING N/A. 17.3 FOR COMMERCIAL LEASING N/A. 17.4 FOR MODERNIZATION (REHABILITATION/CONSTRUCTION) N/A. 17.5 FOR FIRE RESTORATION 10% of total restoration if Claremont Management Corporation acts as general contractor. 17.6 FOR OTHER ITEMS OF MUTUAL AGREEMENT To be determined if situation arises. 17.7 INTEREST ON UNPAID SUMS Any sums due Agent under any provisions of this Agreement, and not paid within 30 days after such sums have become due, shall bear interest at the rate of the Fleet prime rate. Section 18 - REPRESENTATIONS Owner represents and warrants: That Owner has full power and authority to enter this Agreement; that there are no written or oral agreements affecting the Premises; that there are no recorded easements, restrictions, reservations, or rights of way which adversely affect the use of the Premises for the purposes intended under this Agreement; that to the best of Owner's knowledge, the property is zoned for the intended use; that all leasing and other permits for the operation of the Premises have been secured and are current; that the building and its been secured and are current; that the building and its construction and operation do not violate any applicable statutes, laws, ordinances, rules regulations, orders, or the like (including, but not limited to, those pertaining to hazardous or toxic substances); that the building does not contain any asbestos, urea, formaldehyde, radon, or other toxic or hazardous substance; and that no unsafe conditions exists. Section 19 - STRUCTURAL CHANGES Owner expressly withholds from Agent any power or authority to make any structural changes in any building, or to make any other major alterations or additions in or to any such building or to any equipment to any such building, or to incur any expense chargeable to Owner other than expenses related to exercising the express powers vested in Agent through this Agreement, without the prior written consent of the following person or his designee: Terrence Sullivan Boston Bay Capital, Inc. One Liberty Square Boston, MA 02109 However, such emergency repairs as may be required because of danger to life or property, or which are immediately necessary for the preservation and safety of the Premises or the safety of the tenants and occupants thereof, or required to avoid the suspension of any necessary service to the Premises, or to comply with any applicable federal, state, or local laws, regulations, or ordinances, shall be authorized pursuant to paragraph 10.1 of this Agreement, and Agent shall notify Owner appropriately. Section 20 - BUILDING COMPLIANCE Agent does not assume and is given no responsibility for compliance of the Premises or any building thereon or any equipment therein with the requirements of any building codes or with any statue, ordinance, law, or regulation or any governmental body or of any public authority or official thereof having jurisdiction, except to notify Owner promptly or forward to Owner promptly any complaints, warnings, notices, or summons received by Agent relating to such matters. Owner represents that to the best of Owner's knowledge the Premises and all such equipment comply with all such requirements, and Owner authorizes Agent to disclose the ownership of the Premises to any such officials and agrees to indemnify and hold Agent, its representatives, servants, and employees, harmless of and from all loss, cost, expense, and liability whatsoever which may be imposed by reason of any present or future violation or alleged violation of such laws, ordinances, statues, or regulations. Section 21 - TERMINATION 21.1 TERMINATION BY EITHER PARTY This Agreement may be terminated by either Owner or Agent, with or without cause, at the end of the initial term or of any following term year upon the giving of 30 days' written notice prior to the end of said initial term or following terming year. 21.2 TERMINATION FOR CAUSE Notwithstanding the foregoing, the Agreement shall terminate in any event, and all obligations of the parties hereunder shall cease (except as to liabilities or obligations which have accrued or arisen prior to such termination, or which accrue pursuant to paragraph 21.3 as a result of such termination, and obligations to insure and indemnify), upon the occurrence of any of the following events: a. BREACH OF AGREEMENT - Thirty (30) days after the receipt of notice by either party to the other specifying in detail a material breach of this Agreement, if such breach has not been cured within said thirty (30) day period; or if such breach is of a nature that it cannot be cured within said (30) day period but can not be cured with a reasonable time thereafter, if efforts to cure such breach have not commenced or/and such efforts are not proceeding and being continued diligently both during and after such thirty (30) day period prior to the breach being cured. HOWEVER, the breach of any obligation of either party hereunder to pay any monies to the other party under the terms of this Agreement shall be deemed to be curable within thirty (30) days. 21.2 TERMINATION FOR CAUSE (Cont.) b. FAILURE TO ACT, ETC. - In the event that any insurance required of Owner is not maintained without any lapse, or it is alleged or charged that the Premises, or any portion thereof, or any act or failure to act by Owner, its agent and employees with respect to the Premises, fails to comply with any law or regulations, or any order or ruling of any public authority, and Agent, in its sole discretion, considers that the action or position of Owner or its representatives with respect thereto may result in damage or liability to Agent, or disciplinary proceeding with respect to Agent's license. Agent shall have the right to terminate this Agreement at any time by written notice to Owner of its election to do so, which termination shall be effective upon the service of such notice. Such termination shall not release the indemnities of Owner set forth herein. c. EXCESSIVE DAMAGE - Upon the destruction of or substantial damage to the Premises by any cause, or the taking of all or a substantial portion of the Premise of the Premises by eminent domain, in either case making it impossible or impracticable to continue operation of the Premises. d. INADEQUATE INSURANCE - If Agent deems that the liability insurance obtained by Owner per section 14 is not reasonable satisfactory to protect its interest under this Agreement, and if Owner and Agent cannot agree as to adequate insurance. Agent shall have the right to cancel this Agreement upon the service of notice to Owner. 21.3 TERMINATION COMPENSATION If (i) Owner terminates this Agreement before the end of the initial term or any subsequent term year as provided in paragraph 21.1 above for any reason other than for a breach by Agent under paragraph 21.2 (a) above, or if (ii) Agent terminates this Agreement for a breach by Owner under paragraph 21.2 (a) above or pursuant to the provisions of paragraph 21.2 (b) or 21.2 (d) above, then in any such event, Owner shall be obligated to pay Agent as liquidated damages an amount equal to the management fee earned by Agent, as determined under paragraph 17.1 above, for the calendar month immediately preceding the month in which the notice of termination is given to Agent or to Owner, multiplied by the number of months and/or portions thereof remaining from the termination date until the end of the initial term or term year in which the termination occurred. Such damages, plus any amounts accruing to Agent prior to such termination, shall be due and payable upon termination of this Agreement. To the extent that funds are available, such sums shall be payable from the Operating (and/or) Reserve Account(s). Any amount due in excess of the funds available from the Operating (and/or) Reserve Account(s) shall be paid by Owner to Agent upon demand. 21.4 OWNER RESPONSIBLE FOR PAYMENTS Upon Termination or withdrawal from this Agreement, Owner shall assume the obligations of any contract or outstanding bill executed by Agent under this Agreement for and on behalf of Owner and responsibility for payment of all unpaid bills. In addition, Owner shall furnish Agent security, in an amount satisfactory to Agent, against any obligations or liabilities with Agent may have properly incurred on Owner's behalf under this Agreement. Agent may withhold funds for ninety (90) days after the end of the month in which this Agreement is terminated, in order to pay bills previously incurred by not yet invoiced and to close accounts. Agent shall deliver to Owner, within ninety (90) days after the end of the month in which this Agreement is terminated, any balance of monies due Owner or of tenant security deposits, or both which were held by Agent with respect to the Premises, as well as a final accounting reflecting the balance of income and expenses with respect to the Premises as of the date of termination or withdrawal, and all records, contracts, leases, receipts for deposits, and other papers or documents which pertain to the Premises. 21.5 SALE OF PREMISES In the event that the Premises are sold by Owner during the period of this Agreement, Agent may, upon agreement with Owner and in accordance with Owner's partnership agreement, obtain rights of representation in the sale as stated in a specific sales agreement to be negotiated separately. Upon transfer of ownership, this Agreement shall terminate by mutual consent of Owner and Agent under the term and conditions set forth below: The agreement shall automatically terminate upon sale of premises to a bona fide Third Party without penalty. A minimum of sixty days notice is required. Section 22 - INDEMNIFICATION SURVIVES TERMINATION All representatives and warranties of the parties contained herein shall survive the termination of this Agreement. All provisions of this Agreement that require Owner to have insured or to defend, reimburse, or indemnify Agent (including, but not limited to, paragraphs, 2.1, 2.3, 5, 8.4, 9.2, 13, 14, 15, 16, 17.7, 20, 21.3 and 21.4) shall survive any termination; and if Agent is or becomes involved in any proceedings or litigation by reason of having been Owner's Agent, such provisions shall apply as if this Agreement were still in effect. Section 23 - HEADINGS All headings and subheadings employed within this Agreement and in the accompanying List of Provisions are inserted only for convenience and ease of reference and are not to be considered in the construction or interpretation of any provision of this Agreement. Section 24 - FORCE MAJEUR Any delays in the performance of any obligation of Agent under this Agreement shall be excused to the extent that such delays are caused by wars, national emergencies, natural disasters, strikes, labor disputes, utility failures, governmental regulations, riots, adverse weather, and other similar causes not within the control of Agent, and any time periods required for performance shall be extended accordingly. Section 25 - COMPLETE AGREEMENT This Agreement, including any specified attachments, constitutes the entire agreement between Owner and Agent with respect to the management and operation of the Premises and supersedes and replaces any and all previous management agreements entered into or/and negotiated between Owner and Agent relating to the Premises covered by this Agreement. No change to this Agreement shall be valid unless made by supplemental written agreement executed and approved by Owner and Agent. Except as otherwise provided herein, any and all amendments, additions, or deletions to this Agreement shall be null and void unless approved by Owner and Agent in writing. Each party to this Agreement hereby acknowledges and agrees that the other party has made no warranties, representations, covenants, or agreements, express or implied, to such party, other than those expressly set forth herein, and that each party, in entering into and executing this Agreement, has relied upon no warranties, representations, covenants, or agreement, express or implied, to such party, other than those expressly set forth herein. Section 26 - RIGHTS CUMULATIVE; NO WAIVER No right or remedy herein conferred upon or reserved to either of the parties to this Agreement is extended to be exclusive of any other right or remedy, and each and every right and remedy shall be cumulative and in addition to any other right or remedy given under this Agreement or now or thereafter legally existing upon the occurrence of an event or default under this Agreement. The failure of either party to this Agreement to insist at any time upon the strict observance or performance of any of the provisions of this Agreement, or to exercise any right or remedy as provided in this Agreement, shall not impair any such right or remedy with respect to subsequent defaults. Every right and remedy given by this Agreement to the parties to it may be exercised from time to time and as often as may be deemed expedient by those parties. Section 27 - APPLICABLE LAW AND PARTIAL INVALIDITY The Execution, interpretation, and performance of this Agreement shall in all respects be controlled and governed by the laws of the State of Massachusetts. If any part of this Agreement shall be declared invalid or unenforceable, Agent shall have the option to terminate this Agreement by notice to Owner. Any notices, demands, consents, and report necessary or provided for under this Agreement shall be in writing and shall be addressed as follows, or at such other address as Owner and Agent individually may specify hereafter in writing: Agent: Claremont Management Corporation Batterymarch Park II Quincy, MA 02169 ATTN: Charles M. Moran, Jr. Owner: Henderson's Wharf Baltimore, L.P. c/o Boston Bay Capital, Inc. One Liberty Square Boston, MA 02109 ATTN: Terrence P. Sullivan Such notice or other communication may be mailed by United States registered or certified mail, return receipt requested, postage prepaid, and may be deposited in a United States Post Office or a depository for the receipt of mail regularly maintained by the post office. Such notices, demands, consents, and reports may also be delivered by hand or by any other receipted method or means permitted by law. For purposes of this Agreement, notices shall be deemed to have been "given" or "delivered" upon personal delivery thereof forty- eight (48) hours after having been deposited in the United States mails as provided herein. Section 28 - AGREEMENT BINDING UPON SUCCESSORS AND ASSIGNS This Agreement shall be binding the parties hereto and their respective personal representatives, heirs, administrators, executors, successors and assigns. SIGNATURES IN WITNESS WHEREOF, the parties hereto have affixed or caused to be affixed their respective signatures this _________ day of _______________ 1995. Witnesses: Henderson's Wharf Baltimore, L.P. a Delaware Limited Partnership ("Borrower") By: Henderson's Wharf Development Corporation. a Delaware Corporation, General Partner of Henderson's Wharf Baltimore, L.P. __________________________ By: _________________________________ Terrence P. Sullivan, President By: Historic Preservation Properties 1990 L.P. TAX CREDIT FUND, a Delaware L.P., General Partner of Henderson's Wharf Baltimore, L.P. By: Boston Historic Partners II L.P., General Partner of Historic Preservation Properties 1990 L.P. Tax Credit Fund By: Portfolio Advisory Services II, Inc. General Partner of BHP II Advisors L.P. ___________________________ By: ____________________________ Terrence P. Sullivan, President of Portfolio Advisory Services II, Inc. ___________________________ By: _________________________________ Terrence P. Sullivan, General Partner of BHP II Advisors L.P. Agent: Firm: Claremont Management Corporation ___________________________ By: _______________________________ Charles M. Moran, Jr., President EX-99.6 7 MANAGEMENT AGREEMENT This Agreement is made this 1st day of November 1995, by and between Henderson's Wharf Marina L.P. (the "Owner") and Claremont Management Corporation (the "Agent"). Section 1 - APPOINTMENT OF MANAGING AGENT 1.1 APPOINTMENT OF MANAGING ACCEPTANCE Owner hereby appoints Agent as sole and exclusive agent of Owner to lease and manage the property described in paragraph 1.2 upon the terms and conditions provided herein. Agent accepts the appointment and agrees to furnish the services of its organization for the leasing and management of the Premises; and Owner agrees to pay all expenses in connection with those services. 1.2 DESCRIPTION OF PREMISE The property to be managed by Agent under this Agreement (the "Premises") is known as Henderson's Wharf Marina located at 1000 Fell Street, Baltimore, MD, consisting of the land, and other improvements described as a 256 slip marina in the state of Maryland. 1.3 TERM The terms of the Agreement shall be for an initial period of 20 months (the "initial term") from the 1st day of November 1995, to including the 30th day of June 1997; and thereafter shall be automatically renewed from year to year unless terminated as provided in sections 21 or 27 herein. Each of said one-year renewal periods is referred to as a "term year". 1.4 MANAGEMENT OFFICE Owner shall provide adequate space on or near the Premises for a management office. This office can be shared with other properties. Owner shall pay all expenses related to such office, including, but not limited to, furnishings, equipment, postage and office supplies, electricity and other utilities, and telephone. All costs to be prorated to appropriate properties. Section 2 - Bank Accounts The various bank accounts established under this Agreement shall at all times be established in Owner's name but under Agent's control. Agent's and Owner's designees shall be the only parties authorized to draw upon such accounts. No amounts deposited in any accounts established under this Agreement shall in any event be commingled with any other funds of Agent. 2.1 OPERATING (AND/OR) RESERVE ACCOUNT(S) Agent shall establish a separate account(s) known as the Henderson's Wharf Marina L.P. Operating (and/or) Reserve Account(s), separate and apart from Agent's corporate accounts, for the deposit of receipts collected as described herein, in a bank or other institution whose deposits are insured by the federal government. Such depository shall be selected by the Agent upon the consent of the Owner. However, Agent shall not be held liable in the event of bankruptcy or failure of a depository. Funds in the Operating (and/or) Reserve Account(s) remain the property of Owner subject to disbursement of expenses by Agent as described in the Agreement. 2.1.1 INITIAL DEPOSIT AND CONTINGENCY RESERVE Immediately upon commencement of this Agreement, Owner shall remit to Agent the sum $5,000 to be deposited in the Operating (and/or) Reserve Account(s) as an initial deposit representing the estimated disbursements to be made in the first month following the commencement of this Agreement, plus an additional sum of $5,000 as a contingency reserve. If this contingency reserve is drawn down, then they shall be replenished from operations as soon as economically feasible. Owner and Agent shall review the amount of the contingency reserve from time to time and shall agree in writing on a new contingency reserve amount when such is required. 2.2 SECURITY DEPOSIT ACCOUNT Agent shall, if required by law, maintain a separate interest bearing account for tenant security deposits and advance rentals. Such account shall be maintained in accordance with applicable state or local laws, if any. 2.3 FIDELITY BOND The Agent will furnish, at its own expense, a fidelity bond in the principal sum of $1,000,000, which is at least equal to the gross potential income for two months and is conditioned to protect the Owner and the Mortgagee against misappropriation of funds of the Premises by the Agent and its employees. The Agent will obtain a bond of like kind to cover the on-site personnel expressed in Section 9.1 and it shall be paid for from Premises income. The other terms and conditions of the bond, and the surety thereon, will be subject to approval of the Owner and the Mortgagee. Section 3 - COLLECTION OF RENTS AND OTHER RECEIPTS 3.1 AGENT'S AUTHORITY Agent shall collect (and give receipts for, if necessary) all rents, charges and other amounts receivable on Owner's account in connection with the management and operation of the Premises. Such receipts (except tenants' security deposits and advance rentals, which shall be handled as specified in paragraphs 2.2 and 3.3 hereof; and special charges, which shall be handled as specified in paragraph 3.2 hereof) shall be deposited in the Operating (and/or) Reserve Account(s) maintained by Agent for the Premises. 3.2 SPECIAL CHARGES If permitted by applicable law, Agent may collect from tenants any or all of the following: and administrative charge for late payment of rent, a charge for returned or non-negotiable checks, a credit report fee, and any administrative charges. 3.3 SECURITY DEPOSITS Agent shall collect, deposit, and disburse tenants' security deposits in accordance with the terms of each tenant's lease. Agent shall pay from operations tenants interest upon such security deposits only if required by law to do so. Agent shall comply with all applicable state or local laws concerning the responsibility for security deposits and interest, if any. Section 4 - DISBURSEMENT FROM OPERATING (AND/OR) RESERVE ACCOUNT(S) 4.1 OPERATING EXPENSES From the Operating (and/or) Reserve Account(s), Agent is hereby authorized to pay or reimburse itself for all expenses and costs of operating the Premises in accordance with approved annual budget under Section 6.2, and for all other sums due Agent under this Agreement, including Agent's compensation under section 17. 4.2 DEBT SERVICE Owner shall give Agent advance written notice of at least 10 days if Owner desires Agent to make any additional monthly or recurring payments (such as mortgage indebtedness, general taxes, or special assessments, or fire, steam boiler, or other insurance premiums) out of the proceeds from the Premises. If Owner notifies Agent to make such payments after the beginning of the term of this Agreement, Agent shall have the authority to name a new contingency, and Owner shall maintain this new contingency reserve amount at all times in the Operating (and/or) Reserve Account(s). 4.3 NET PROCEEDS To the extent that funds are available, and after maintaining the cash contingency reserve amount as specified in paragraph 2.1.1, Agent shall transmit cash balances to Owner periodically, as follows. Such periodic cash balances shall be remitted to the following person(s), in the percentage(s) specified, address(es) shown: as directed from time to time by Owner. Section 5 - AGENT NOT REQUIRED TO ADVANCE FUNDS In the event the balance in the Operating (and/or) Reserve Account(s) is at any time insufficient to pay disbursements due and payable under paragraphs 4.1, 4.2 and 6.2. Owner shall immediately upon notice, remit to Agent sufficient funds to cover the deficiency and replenish the contingency reserve. In no event shall Agent be required to use its own funds to pay such disbursements. Nor shall Agent be required to advance any monies to Owner, to the Security Deposit Account, or to the Operating (and/or) Reserve Account(s). If Agent elects to advance any money in connection with the Premises to pay any expenses for Owner, such advances shall be considered a loan subject to repayment with interest, and Owner hereby agrees to reimburse Agent, including interest as provided in paragraph 17.7 and hereby authorizes Agent to deduct such amounts from any monies due Owner. Section 6 - FINANCIAL AND OTHER REPORTS 6.1 REPORTING REQUIREMENTS By the 20th day of each month, Agent will provide to the Owner the following schedules for the preceding month, which include, but are not limited to: balance sheet, income statement with comparisons to budget, general ledger, rent roll, bank statements and cash reconciliations, aged listing of accounts receivables, listing of prepaids, additions to fixed assets over $500, intercompany reconciliation, listing of accruals and other prepaids, tenant security deposit listing, and cash flow statement. In addition, Agent shall, on a mutually acceptable schedule, prepare and submit to Owner such other reports as are agreed on by both parties. 6.2 BUDGETS Annual operating budgets for the Premises will be approved by the Owner. Except as permitted under Section 10.1 below, annual disbursements for each type of operating expenses itemized in the budget shall not materially exceed the amount authorized by the approved budget without prior consent of the Owner. The Agent will prepare a recommended operating budget for each fiscal year beginning during the term of this Agreement, and will submit the same to the Owner at least forty-five (45) days before the beginning of the fiscal year. The Owner will promptly inform the Agent of any changes incorporated in the approved budget, and the Agent will keep the Owner informed of any anticipated deviation from the receipts or disbursements stated in the approved budget. 6.3 OWNER'S RIGHT TO AUDIT Owner shall have the right to request periodic audits of all applicable accounts managed by Agent, and the cost of such audit(s) shall be paid by Owner. 6.4 TAX ASSESSMENTS Agent will inform Owner of changes in the amount of real or personal property tax assessments and assist Owner in compiling all necessary information in connection with any contest or appeal of any assessments. Section 7 - ADVERTISING Agent is authorized to advertise the Premises or portions thereof for rent using periodicals, signs, plans, brochures, or displays, or such other means as Agent may deem proper and advisable and in accordance with Section 6.2. Agent is authorized to place signs on the Premises advertising the Premises for rent, provided such signs comply with applicable laws. The cost of such advertising shall be paid out of the Operating (and/or) Reserve Account(s). All advertising shall make clear that Agent is the manager and NOT the Owner of the Premises. Newspaper ads that share space with other properties managed by the Agent shall be prorated on a reasonable basis. Section 8 - LEASING AND RENTING 8.1 AGENT'S AUTHORITY TO LEASE PREMISES Agent shall use all reasonable efforts to keep the Premises rented by procuring tenants for the Premises. Agent is authorized to negotiate, prepare, and execute all leases, including all renewals and extensions of leases (and expansions of space in the Premises, if applicable) and to cancel and modify existing leases. Agent shall execute all leases as Agent for the Owner. All costs of leasing shall be paid out of the Operating (and/or) Reserve Account(s). No lease shall be in excess of two year(s) without written approval of Owner. The form of the lease shall be agreed upon by Owner and Agent. 8.2 NO OTHER RENTAL AGENT During the time of this Agreement. Owner shall not authorize any other person, firm, or corporation to negotiate or act as leasing or rental agent with respect to any leases for space in the Premises. Owner agrees to promptly forward all inquiries about leases to Agent. 8.3 RENTAL RATES Agent, with the consent of the Owner, is authorized to establish and change or revise all rents, fees, or deposits, and any other charges chargeable with respect to the Premises. 8.4 ENFORCEMENT OF LEASES Agent is authorized to institute, in Owner's name, all legal actions or proceedings for the enforcement of any lease term, for the collection of rent or other income from the Premises or for the evicting or dispossessing of tenants or other persons from the Premises. Agent is authorized to sign and serve such notices as Agent deems necessary for lease enforcement, including the collection of rent or other income. Agent is authorized, when expedient, to settle, compromise, and release such legal actions or suits or reinstate such tenancies. Any monies for such settlements paid out by Agent shall not exceed $5,000 without prior approval by Owner. Attorney's fees, filing fees, court costs, and other necessary expenses incurred in connection with such actions and not recovered from tenants shall be paid out of the Operating (and/or) Reserve Account(s) or reimbursed directly to Agent by Owner. Agent may select the attorney of its choice to handle such litigation upon the advise and consent of Owner. Section 9 - EMPLOYEES 9.1 AGENT'S AUTHORITY TO HIRE Agent is authorized to hire, supervise, discharge, and pay all servants, employees, contractors or other personnel necessary to be employed in the management, maintenance, and operation of the Premises in accordance with approved budget mentioned in Section 6.2. All employees shall be deemed employees of the Agent. 9.2 OWNER PAYS EMPLOYEE EXPENSES All wages and fringe benefits payable to such employees hired per paragraph 9.1 above, and all local, state, and federal taxes and assessment (including but not limited to Social Security taxes, unemployment insurance and workers' compensation insurance) incident to the employment of such personnel, shall be reimbursed to the Agent out of the Operating (and/or) Reserve Account(s) and shall be treated as operating expenses. 9.3 AGENT'S AUTHORITY TO FILE RETURNS Agent shall do and perform all acts required of an employer with respect to the Premises and shall execute and file all tax and other returns required under the applicable federal, state and local laws, regulations, and/or ordinances governing employment, and all other statements and reports pertaining to labor employed in connection with the Premises and under any similar federal or state law now or hereafter in force. In connection with such filing, Owner shall be responsible for all amounts required to be paid under the foregoing laws, and Agent shall pay the same from the Operating (and/or) Reserve Account(s). Any penalties assessed to Owner and incurred due to the negligence of Agent shall be paid for by Agent. 9.4 WORKER'S COMPENSATION INSURANCE Agent shall, at Owner's expense, maintain worker's compensation insurance covering all liability of the employer under established worker's compensation laws. 9.5 HOLD HARMLESS, LABOR LAWS Agent shall be responsible for compliance with all applicable state or federal labor laws. Owner shall indemnify, defend, and save Agent harmless from all claims, investigations, and suites, or from Owner's action or failures to act, with respect to any alleged or actual violation of state or federal labor laws. Conversely, Agent shall indemnify, defend and save Owner harmless from all claims, investigations, and suits, or from Agent's actions or failure to act with respect to any alleged or actual violations of state or federal labor laws. Agent's or Owner's obligation with respect to such violation(s) shall include payment of all settlements, judgments, damages, liquidated damages, penalties, forfeitures, back pay awards, court costs, litigation expenses, and attorney's fees. Section 10 - MAINTENANCE AND REPAIR Agent is authorized to make or cause to be made, through contracted services or otherwise, all ordinary repairs and replacements reasonably necessary to preserve the Premises in its present condition and for the operating efficiency of the Premises, and all alterations required to comply with lease requirements, governmental regulations, or insurance requirements. Agent is also authorized to decorate the Premises and to purchase or rent, on Owner's behalf, all equipment, tools, appliances, materials, maintenance, or operation of the Premises. Such maintenance and decorating expenses shall be made in accordance to approved budget and shall be paid out of the Operating (and/or) Reserve Account(s). This section applies except where decorating and/or maintenance are at tenants' expense as stipulated in a lease. 10.1 APPROVAL FOR EXCEPTIONAL MAINTENANCE EXPENSE The expense to be incurred for any one item of maintenance alteration, refurbishing, or repair shall not exceed the sum of $5,000 unless such expense is specifically authorized by Owner or is incurred under such circumstances as Agent shall reasonable deem to be an emergency. In an emergency where repairs are immediately necessary for the preservation and safety of the Premises, or to avoid the suspension of any essential service to the Premises, or to avoid danger to life or property, or to comply with federal, state, or local law, such emergency repairs shall be made by Agent at Owner's expense prior approval. Section 11 - CONTRACTS, UTILITIES AND SERVICES Agent is authorized to negotiate contracts for non- recurring items of expense, not to exceed $5,000, unless approved by Owner, and to enter into agreements in Owner's name for all necessary repairs, maintenance, minor alterations, and utility services. Agent shall, in Owner's name and at Owner's expense, make contracts on Owner's behalf for electricity, gas, telephone, fuel, or water, and such other services as Agent shall deem necessary or prudent for the operation of the Premises. All utility deposits shall be the Owner's responsibility, except that Agent may pay same from the Operating (and/or) Reserve Account(s) at Owner's request. Section 12 - RELATIONSHIP OF AGENT TO OWNER The relationship of the parties to this Agreement shall be that of Principal and Agent, and all duties to be performed by Agent under this Agreement shall be for and on behalf of Owner, in Owner's name and for Owner's account. In taking any under the Agreement, Agent shall be acting only as Agent for Owner, and nothing in this Agreement shall be construed as creating a partnership, joint venture, or any other relationship between the parties to this Agreement except that of Principal and Agent, or as requiring Agent to bear any portion of losses arising out of or connected with the ownership or operation of the Premises. Nor shall Agent at any time during the period of this Agreement to be considered a direct employee of Owner. Neither party shall have the owner to bind or obligate the other except as expressly set forth in this Agreement except that Agent is authorized to act with such additional authority and power as may be necessary to carry out the spirit and intent of this Agreement. Section 13 - SAVE HARMLESS The Owner will indemnify the Agent harmless against and hold the Agent harmless from and against any liabilities, damages, costs and expenses (including reasonable attorney's fees) sustained or incurred for injury to any person or property in, about, and in conjunction with the buildings, unless such injury shall be caused by the Agent's own negligence or willful misconduct; and any liability, damages, penalties, costs and expenses (including reasonable attorney's fees) statutory or otherwise, for all acts performed by the Agent in accordance with the terms of this Agreement or pursuant to the instructions of the Owner, provided, in each of the foregoing instances, that the Agent promptly advises the Owner of its receipt of information concerning any such injury and the amount of any such liability, damages, penalties, costs and expenses. The Agent will indemnify the Owner harmless against and hold the Owner harmless from and against; any liabilities, damages, costs and expenses (including reasonable attorney's fees) sustained or incurred for injury to any person or property in, about, and in conjunction with the buildings caused by the Agent's own negligence or willful misconduct; and any liability, damages, penalties, costs and expenses (including reasonable attorney's fees) statutory or otherwise, for all acts performed by the Agent not in accordance with the terms of this Agreement or not pursuant to the instructions of the Owners. Section 14 - LIABILITY INSURANCE Owner and Agent shall obtain and keep in force adequate insurance against physical damage (e.g. fire with extended coverage endorsement, boiler and machinery, etc.) and against liability for loss, damage, or injury to property or persons which might arise out of the occupancy, management, operation, or maintenance of the Premises. The amounts and types of insurance shall be acceptable to both Owner and Agent, and any deductible required under each insurance policies shall be Owner's expense. Agent shall be covered as additional insured on all liability insurance maintained with respect to the Premises. Liability insurance shall be adequate to protect the interest of both Owner and Agent and in form, substance, and amounts reasonable satisfactory to Agent. Owner agrees to furnish Agent with certificates evidencing such insurance or with duplicate copies of such policies within 10 days of the execution of this Agreement. If Owner fails to do so, Agent may but shall not be obligated to place said insurance and charge the cost thereof to the Operating (and/or) Reserve Account(s). Said policies shall provide that notice of default or cancellation shall be sent to Agent as well as Owner and shall require a minimum of 30 days written notice to Agent before any cancellation of or changes to said policies. Section 15 - AGENT ASSUMES NO LIABILITY Agent assumes no liability whatsoever for any acts or omissions of Owner or any previous owners of the Premises, or any previous management or other agent of either. Agent assumes no liability for any failure of or default by any tenant in the payment of any rent or other charges due Owner or in the performance of any obligations owned by any tenant to Owner pursuant to any lease or otherwise. Nor does Agent assume any liability for previously unknown violations or environmental or other regulations which may become unknown during the period of this Agreement is in effect. Any such regulatory violations or hazards discovered by Agent shall be brought to the attention of the Owner in writing and Owner shall promptly cure them. Section 16 - OWNER RESPONSIBLE FOR ALL EXPENSES OF LITIGATION Owner shall reimburse all reasonable expenses incurred by Agent, including but not limited to, attorneys' fee and Agent's costs and time, any liability, fines, penalties or the like, in connection with any claim, proceeding, or suit involving an alleged violation by Agent or Owner, or both, of any law pertaining to fair employment, fair credit reporting, environmental protection, rent control, taxes, or fair housing, including, but not limited to, any law prohibiting or making illegal discrimination on the basis or race, sex, creed, color, religion, national origin, or mental or physical handicap, provided, however, that Owner shall not be responsible to Agent for any such expenses in the event Agent is finally adjudged to have personally, and not in a representative capacity, violated any such law. Nothing contained in this Agreement shall obligate Agent to employ legal counsel to represent Owner in any such proceeding or suit. 16.1 FEES FOR LEGAL ADVICE Owner shall pay reasonable expenses incurred by Agent in obtaining legal advice regarding compliance with any law affecting the Premises or activities related to them. If such expenditure also benefits others for whom Agent in this Agreement acts in a similar capacity, Owner agrees to pay an apportioned amount of such expense. Section 17 - AGENT'S COMPENSATION AND EXPENSES As compensation for the services provided by Agent under this Agreement (and exclusive of reimbursement of expenses to which Agent is entitled hereunder). Owner shall pay Agent as follows: 17.1 FOR MANAGEMENT SERVICES The greater of (i) $ N/A per month or (ii) 9% of the total monthly gross receipts from the premises, payable by the 10th day of the current month for the duration of this Agreement. Payments due Agent for Periods of less than a calendar month shall be prorated over the number of days for which compensation is due. The percentage amount set forth in (ii) above shall be based upon the total gross receipts from the premises during the preceding month. The term "gross receipts" shall be deemed to include all collected slip rents and other income and charges from the normal operation of the Premises, including, but not limited to, rents, parking fees, forfeited security deposits, other fees and deposits, special charges listed in paragraph 3.2, or excess interest on security deposits (from paragraph 3.3), and other miscellaneous income. 17.2 FOR APARTMENT LEASING N/A. 17.3 FOR COMMERCIAL LEASING N/A. 17.4 FOR MODERNIZATION (REHABILITATION/CONSTRUCTION) N/A. 17.5 FOR FIRE RESTORATION 10% of total restoration if Claremont Management Corporation acts as general contractor. 17.6 FOR OTHER ITEMS OF MUTUAL AGREEMENT To be determined if situation arises. 17.7 INTEREST ON UNPAID SUMS Any sums due Agent under any provisions of this Agreement, and not paid within 30 days after such sums have become due, shall bear interest at the rate of Fleet prime rate. Section 18 - REPRESENTATIONS Owner represents and warrants: That Owner has full power and authority to enter this Agreement; that there are no written or oral agreements affecting the Premises other than tenant leases, copies of which have been furnished to Agent; that there are no recorded easements, restrictions, reservations, or rights of way which adversely affect the use of the Premises for the purposes intended under this Agreement; that to the best of Owner's knowledge, the property is zoned for the intended use; that all leasing and other permits for the operation of the Premises have been secured and are current; that the land and its been secured and are current; that the land and its construction and operation do not violate any applicable statutes, laws, ordinances, rules regulations, orders, or the like (including, but not limited to, those pertaining to hazardous or toxic substances); that the land does not contain any asbestos, urea, formaldehyde, radon, or other toxic or hazardous substance; and that no unsafe conditions exists. Section 19 - STRUCTURAL CHANGES Owner expressly withholds from Agent any power or authority to make any changes in any land, or to make any other major alterations or additions in or to any such land or improvements, or to incur any expense chargeable to Owner other than expenses related to exercising the express powers vested in Agent through this Agreement, without the prior written consent of the following person or his designee: Terrence Sullivan Boston Bay Capital, Inc. One Liberty Square Boston, MA 02109 However, such emergency repairs as may be required because of danger to life or property, or which are immediately necessary for the preservation and safety of the Premises or the safety of the tenants and occupants thereof, or required to avoid the suspension of any necessary service to the Premises, or to comply with any applicable federal, state, or local laws, regulations, or ordinances, shall be authorized pursuant to paragraph 10.1 of this Agreement, and Agent shall notify Owner appropriately. Section 20 - BUILDING COMPLIANCE Agent does not assume and is given no responsibility for compliance of the Premises or any building thereon or any equipment therein with the requirements of any building codes or with any statue, ordinance, law, or regulation or any governmental body or of any public authority or official thereof having jurisdiction, except to notify Owner promptly or forward to Owner promptly any complaints, warnings, notices, or summons received by Agent relating to such matters. Owner represents that to the best of Owner's knowledge the Premises and all such equipment comply with all such requirements, and Owner authorizes Agent to disclose the ownership of the Premises to any such officials and agrees to indemnify and hold Agent, its representatives, servants, and employees, harmless of and from all loss, cost, expense, and liability whatsoever which may be imposed by reason of any present or future violation or alleged violation of such laws, ordinances, statues, or regulations. Section 21 - TERMINATION 21.1 TERMINATION BY EITHER PARTY This Agreement may be terminated by either Owner or Agent, with or without cause, at the end of the initial term or of any following term year upon the giving of 30 days' written notice prior to the end of said initial term or following terming year. 21.2 TERMINATION FOR CAUSE Notwithstanding the foregoing, the Agreement shall terminate in any event, and all obligations of the parties hereunder shall cease (except as to liabilities or obligations which have accrued or arisen prior to such termination, or which accrue pursuant to paragraph 21.3 as a result of such termination, and obligations to insure and indemnify), upon the occurrence of any of the following events: a. BREACH OF AGREEMENT - Thirty (30) days after the receipt of notice by either party to the other specifying in detail a material breach of this Agreement, if such breach has not been cured within said thirty (30) day period; or if such breach is of a nature that it cannot be cured within said (30) day period but can not be cured with a reasonable time thereafter, if efforts to cure such breach have not commenced or/and such efforts are not proceeding and being continued diligently both during and after such thirty (30) day period prior to the breach being cured. HOWEVER, the breach of any obligation of either party hereunder to pay any monies to the other party under the terms of this Agreement shall be deemed to be curable within thirty (30) days. 21.2 TERMINATION FOR CAUSE (Cont.) b. FAILURE TO ACT, ETC. - In the event that any insurance required of Owner is not maintained without any lapse, or it is alleged or charged that the Premises, or any portion thereof, or any act or failure to act by Owner, its agent and employees with respect to the Premises, fails to comply with any law or regulations, or any order or ruling of any public authority, and Agent, in its sole discretion, considers that the action or position of Owner or its representatives with respect thereto may result in damage or liability to Agent, or disciplinary proceeding with respect to Agent's license. Agent shall have the right to terminate this Agreement at any time by written notice to Owner of its election to do so, which termination shall be effective upon the service of such notice. Such termination shall not release the indemnities of Owner set forth herein. c. EXCESSIVE DAMAGE - Upon the destruction of or substantial damage to the Premises by any cause, or the taking of all or a substantial portion of the Premise of the Premises by eminent domain, in either case making it impossible or impracticable to continue operation of the Premises. d. INADEQUATE INSURANCE - If Agent deems that the liability insurance obtained by Owner per section 14 is not reasonable satisfactory to protect its interest under this Agreement, and if Owner and Agent cannot agree as to adequate insurance. Agent shall have the right to cancel this Agreement upon the service of notice to Owner. 21.3 TERMINATION COMPENSATION If (i) Owner terminates this Agreement before the end of the initial term or any subsequent term year as provided in paragraph 21.1 above for any reason other than for a breach by Agent under paragraph 21.2 (a) above, or if (ii) Agent terminates this Agreement for a breach by Owner under paragraph 21.2 (a) above or pursuant to the provisions of paragraph 21.2 (b) or 21.2 (d) above, then in any such event, Owner shall be obligated to pay Agent as liquidated damages an amount equal to the management fee earned by Agent, as determined under paragraph 17.1 above, for the calendar month immediately preceding the month in which the notice of termination is given to Agent or to Owner, multiplied by the number of months and/or portions thereof remaining from the termination date until the end of the initial term or term year in which the termination occurred. Such damages, plus any amounts accruing to Agent prior to such termination, shall be due and payable upon termination of this Agreement. To the extent that funds are available, such sums shall be payable from the Operating (and/or) Reserve Account(s). Any amount due in excess of the funds available from the Operating (and/or) Reserve Account(s) shall be paid by Owner to Agent upon demand. 21.4 OWNER RESPONSIBLE FOR PAYMENTS Upon Termination or withdrawal from this Agreement, Owner shall assume the obligations of any contract or outstanding bill executed by Agent under this Agreement for and on behalf of Owner and responsibility for payment of all unpaid bills. In addition, Owner shall furnish Agent security, in an amount satisfactory to Agent, against any obligations or liabilities with Agent may have properly incurred on Owner's behalf under this Agreement. Agent may withhold funds for ninety (90) days after the end of the month in which this Agreement is terminated, in order to pay bills previously incurred by not yet invoiced and to close accounts. Agent shall deliver to Owner, within ninety (90) days after the end of the month in which this Agreement is terminated, any balance of monies due Owner or of tenant security deposits, or both which were held by Agent with respect to the Premises, as well as a final accounting reflecting the balance of income and expenses with respect to the Premises as of the date of termination or withdrawal, and all records, contracts, leases, receipts for deposits, and other papers or documents which pertain to the Premises. 21.5 SALE OF PREMISES In the event that the Premises are sold by Owner during the period of this Agreement, Agent may, upon agreement with Owner and in accordance with Owner's partnership agreement, obtain rights of representation in the sale as stated in a specific sales agreement to be negotiated separately. Upon transfer of ownership, this Agreement shall terminate by mutual consent of Owner and Agent under the term and conditions set forth below: The agreement shall automatically terminate upon sale of premises to a bona fide Third Party without penalty. A minimum of sixty days notice is required. Section 22 - INDEMNIFICATION SURVIVES TERMINATION All representatives and warranties of the parties contained herein shall survive the termination of this Agreement. All provisions of this Agreement that require Owner to have insured or to defend, reimburse, or indemnify Agent (including, but not limited to, paragraphs, 2.1, 2.3, 5, 8.4, 9.2, 13, 14, 15, 16, 17.7, 20, 21.3 and 21.4) shall survive any termination; and if Agent is or becomes involved in any proceedings or litigation by reason of having been Owner's Agent, such provisions shall apply as if this Agreement were still in effect. Section 23 - HEADINGS All headings and subheadings employed within this Agreement and in the accompanying List of Provisions are inserted only for convenience and ease of reference and are not to be considered in the construction or interpretation of any provision of this Agreement. Section 24 - FORCE MAJEUR Any delays in the performance of any obligation of Agent under this Agreement shall be excused to the extent that such delays are caused by wars, national emergencies, natural disasters, strikes, labor disputes, utility failures, governmental regulations, riots, adverse weather, and other similar causes not within the control of Agent, and any time periods required for performance shall be extended accordingly. Section 25 - COMPLETE AGREEMENT This Agreement, including any specified attachments, constitutes the entire agreement between Owner and Agent with respect to the management and operation of the Premises and supersedes and replaces any and all previous management agreements entered into or/and negotiated between Owner and Agent relating to the Premises covered by this Agreement. No change to this Agreement shall be valid unless made by supplemental written agreement executed and approved by Owner and Agent. Except as otherwise provided herein, any and all amendments, additions, or deletions to this Agreement shall be null and void unless approved by Owner and Agent in writing. Each party to this Agreement hereby acknowledges and agrees that the other party has made no warranties, representations, covenants, or agreements, express or implied, to such party, other than those expressly set forth herein, and that each party, in entering into and executing this Agreement, has relied upon no warranties, representations, covenants, or agreement, express or implied, to such party, other than those expressly set forth herein. Section 26 - RIGHTS CUMULATIVE; NO WAIVER No right or remedy herein conferred upon or reserved to either of the parties to this Agreement is extended to be exclusive of any other right or remedy, and each and every right and remedy shall be cumulative and in addition to any other right or remedy given under this Agreement or now or thereafter legally existing upon the occurrence of an event or default under this Agreement. The failure of either party to this Agreement to insist at any time upon the strict observance or performance of any of the provisions of this Agreement, or to exercise any right or remedy as provided in this Agreement, shall not impair any such right or remedy with respect to subsequent defaults. Every right and remedy given by this Agreement to the parties to it may be exercised from time to time and as often as may be deemed expedient by those parties. Section 27 - APPLICABLE LAW AND PARTIAL INVALIDITY The Execution, interpretation, and performance of this Agreement shall in all respects be controlled and governed by the laws of the State of Massachusetts. If any part of this Agreement shall be declared invalid or unenforceable, Agent shall have the option to terminate this Agreement by notice to Owner. Any notices, demands, consents, and report necessary or provided for under this Agreement shall be in writing and shall be addressed as follows, or at such other address as Owner and Agent individually may specify hereafter in writing: Agent: Claremont Management Corporation Batterymarch Park II Quincy, MA 02169 ATTN: Charles M. Moran, Jr. Owner: Henderson's Wharf Marina L.P. c/o Boston Bay Capital, Inc. One Liberty Square Boston, MA 02109 ATTN: Terrence P. Sullivan Such notice or other communication may be mailed by United States registered or certified mail, return receipt requested, postage prepaid, and may be deposited in a United States Post Office or a depository for the receipt of mail regularly maintained by the post office. Such notices, demands, consents, and reports may also be delivered by hand or by any other receipted method or means permitted by law. For purposes of this Agreement, notices shall be deemed to have been "given" or "delivered" upon personal delivery thereof forty- eight (48) hours after having been deposited in the United States mails as provided herein. Section 28 - AGREEMENT BINDING UPON SUCCESSORS AND ASSIGNS This Agreement shall be binding the parties hereto and their respective personal representatives, heirs, administrators, executors, successors and assigns. SIGNATURES IN WITNESS WHEREOF, the parties hereto have affixed or caused to be affixed their respective signatures this _________ day of _______________ 1995. Witnesses: Henderson's Wharf Marina, L.P. a Delaware Limited Partnership ("Borrower") By: Henderson's Wharf Development Corporation. a Delaware Corporation, General Partner of Henderson's Wharf Baltimore, L.P. __________________________ By: _________________________________ Terrence P. Sullivan, President By: Historic Preservation Properties 1990 L.P. TAX CREDIT FUND, a Delaware L.P., General Partner of Henderson's Wharf Baltimore, L.P. By: Boston Historic Partners II L.P., General Partner of Historic Preservation Properties 1990 L.P. Tax Credit Fund By: Portfolio Advisory Services II, Inc. General Partner of BHP II Advisors L.P. ___________________________ By: ____________________________ Terrence P. Sullivan, President of Portfolio Advisory Services II, Inc. ___________________________ By: _________________________________ Terrence P. Sullivan, General Partner of BHP II Advisors L.P. Agent: Firm: Claremont Management Corporation ___________________________ By: _______________________________ Charles M. Moran, Jr., President -----END PRIVACY-ENHANCED MESSAGE-----