<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q/A Amendment #1
(Mark One)
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended March 31, 1994
OR
/ /TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from _______________________ to ______________________
Commission file number: 0-15726
SUMMIT TAX EXEMPT L.P. II
- - --------------------------------------------------------------------------------
(Exact name of Registrant as specified in its charter)
Delaware 13-3370413
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(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification
No.)
625 Madison Ave., New York, N.Y. 10022
- - --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (212) 421-5333
N/A
- - --------------------------------------------------------------------------------
Former name, former address and former fiscal year, if changed since last report
Indicate by check CK 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. Yes _CK_ No __
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<PAGE>
This Exhibit is being filed as amendment #1 to Form 10-Q due to the
absence of the Exhibit (10ab) in the original filing.
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings--Incorporated by reference to Note D to the financial
statements filed herewith in Item 1 of Part I of the Registrant's
Quarterly Report.
Item 2. Changes in Securities--None
Item 3. Defaults Upon Senior Securities--None
Item 4. Submission of Matters to a Vote of Security Holders--None
Item 5. Other Information--On October 21, 1993, an affiliate of Prudential-Bache
Properties, Inc., Prudential Securities Incorporated (``PSI''), settled,
without admitting or denying the allegations contained therein, civil
and administrative proceedings with the Securities and Exchange
Commission, the National Association of Securities Dealers, Inc., and
various state regulators. These proceedings concerned, among other
things, the sale by PSI of limited partnership interests, including
interests of the Registrant during the period 1980 through 1990. The
settlement has no impact on the Registrant itself.
The Office of the United States Attorney for the Southern District of
New York is conducting an investigation relating to the sale by PSI of
limited partnership interests during the period 1980 through 1990. In
connection with this investigation, PSI has received grand jury
subpoenas and other requests for information. PSI has been complying
with and intends to continue to comply with these requests and the
investigation is ongoing. Furthermore, in the ordinary course of PSI's
business, it receives inquiries and document requests from various
states and regulatory authorities concerning the sales activities of
certain of its employees, some of which in the past, and may in the
future, relate to the Registrant.
Item 6. Exhibits and Reports on Form 8-K--
(a) Exhibits:
4(a)--Partnership Agreement, incorporated by reference to Exhibit A
to the Prospectus of Registrant, dated July 7, 1986, filed
pursuant to Rule 424(b) under the Securities Act of 1933, File
No. 33-5213.
4(b)--Certificate of Limited Partnership, incorporated by
reference to Exhibit 4 to Amendment No.1 to Registration
Statement on Form S-11. File No. 33-5213.
(10ab)--First Supplemental Indenture between The Industrial Development
Authority of the City of Kansas City, Missouri and Boatmen's
First National Bank of Kansas City dated January 24, 1994 (filed
herewith).
(b) Reports on Form 8-K:
No reports on Form 8-K were filed during the quarter.
13
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SIGNATURES
Pursuant to the requirements 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.
SUMMIT TAX EXEMPT L.P. II
By: Prudential-Bache Properties, Inc.
A Delaware corporation, General Partner
By: /s/ Robert J. Alexander Date: June 7, 1994
----------------------------------------
Robert J. Alexander
Vice President and Chief Accounting
Officer
By: Related Tax Exempt Associates II, Inc.
A Delaware corporation, General Partner
By: /s/ Alan P. Hirmes Date: June 7, 1994
----------------------------------------
Alan P. Hirmes
Vice President
14
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Execution Copy
FIRST SUPPLEMENTAL
INDENTURE
Between
THE INDUSTRIAL DEVELOPMENT
AUTHORITY OF THE CITY
OF KANSAS CITY, MISSOURI
and
BOATMEN'S FIRST NATIONAL BANK OF KANSAS CITY,
AS SUCCESSOR IN INTEREST
for
THE MERCHANTS BANK,
as Trustee
Relating to
$13,650,000
MULTIFAMILY HOUSING REVENUE BONDS
Series of 1986
(The Lakes Project)
<PAGE>
FIRST SUPPLEMENTAL INDENTURE
THIS FIRST SUPPLEMENTAL INDENTURE, dated as of January
__, 1994, is by and between THE INDUSTRIAL DEVELOPMENT AUTHORITY
OF THE CITY OF KANSAS CITY, MISSOURI, a Missouri Industrial
Development corporation organized under the laws of the State of
Missouri (the "Issuer"), and BOATMEN'S FIRST NATIONAL BANK OF
KANSAS CITY, as SUCCESSOR IN INTEREST for THE MERCHANTS BANK, as
Trustee (the "Trustee").
Recitals
In order to provide financing for a multifamily rental
housing development known as The Lakes Apartments (the
"Project"), which was to have been developed by Kansas City Ltd.,
a Missouri Limited Partnership ("Apartments"), the Issuer
authorized the issuance pursuant to the Indenture, dated as of
December 1, 1986, by and between the Issuer and the Trustee, to
which this is supplemental (the "Indenture"), of $13,650,000
aggregate principal amount of its Multifamily Housing Revenue
Bonds Series of 1986 (The Lakes Project) (the "Bonds"). The
Bonds were issued pursuant to Chapter 349, R.S. Mo. 1978, as
amended (collectively the "Law").
The Bonds were issued and sold on December 24, 1986 to
Summit Tax Exempt L.P. II, a Delaware limited partnership (the
"Partnership" or the "Owner"). The Owner continues to own the
Bonds. The Owner has approved of and consented to this First
Supplemental Indenture.
The proceeds of the Bonds were used to provide funds to
make a mortgage loan in the principal amount of $13,650,000 (the
"Mortgage Loan") to Apartments pursuant to a Loan Agreement
between Apartments and the Issuer (the "Loan Agreement"). The
Mortgage Loan is evidenced by a promissory note (the "Note") and
secured by a Deed of Trust on the Project (the "Mortgage").
The Project has been completed. The Initial Period
ended on February 1, 1989; the Second Period ended on July 25,
1990; and the Third Period commenced on July 26, 1990. Ownership
of the Project was transferred from Apartments to Lakes Project
Investors, Inc., which assumed the Mortgage Loan ("Borrower").
Borrower and Owner wish to revise the terms of the
Bonds as provided herein.
All things necessary to constitute this First
Supplemental Indenture a valid and binding amendment to the
Indenture have been done and performed, and the execution and
delivery of this First Supplemental Indenture have in all
respects been duly authorized.
NOW, THEREFORE, the Issuer and the Trustee, in
consideration of the premises, hereby agree as follows.
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ARTICLE I
DEFINITIONS AND CONSTRUCTION
Section 1.01. Definitions. As used in this First
Supplemental Indenture and the Indenture, unless the context
otherwise shall require, capitalized terms shall have the
meanings ascribed to them in the Indenture, except that, for
purposes of the Indenture and the Bonds from and after the
Effective Date, the following terms shall have the meanings
ascribed to them herein and in the event of conflict with defined
terms in the Indenture, the defined terms herein shall prevail
for all purposes of this First Supplemental Indenture and the
Indenture, as amended hereby.
"Bond Payment Date" means each date on which principal
or redemption price or interest shall be payable on any of the
Bonds according to their respective terms (including without
limitation each payment date specified in paragraph (e) of
Section 3.06 hereof, maturity date, date due by acceleration or
redemption date) so long as any Bonds are Outstanding.
"Borrower" means Lakes Project Investors, Inc. or its
successors and assigns as owner of the Project.
"Borrower's Equity Return" means an amount equal to an
internal rate of return of 14% per annum on a notional principal
amount of $800,000, i.e., a return to the Borrower of $800,000
plus a yield on $800,000 of 14% per annum from the Effective Date
to but not including the Borrower's Equity Return Satisfaction
Date, calculated as if interest were not paid until the
Borrower's Equity Return Satisfaction Date and unpaid interest
were compounded annually at a rate of 14% per annum.
"Borrower's Equity Return Satisfaction Amount" means as
of any date of measurement an amount which, together with (x) all
Net Cash Flow minus the payment of interest on the Bonds on the
basis of Net Cash Flow between the Effective Date and such date
(inclusive) and (y) all Net Sale or Refinancing Proceeds minus
all interest paid on the Bonds on the basis of Net Sale or
Refinancing Proceeds between the Effective Date and such date
(inclusive), will equal the Borrower's Equity Return.
"Borrower's Equity Return Satisfaction Date" means the
first payment date for interest specified in any of paragraphs 1,
2 or 3 of Section 3.06(e) as of which the total of (x) and (y)
equals the Borrower's Equity Return, where (x) equals all Net
Cash Flow minus all interest paid on the basis of Net Cash Flow
between the Effective Date and the payment date (inclusive) and
(y) equals all Net Sale or Refinancing Proceeds minus all
interest paid on the Bonds on the basis of Net Sale or
Refinancing Proceeds between the Effective Date and the payment
date (inclusive).
"Borrower's Priority Return" means, on any payment date
specified in paragraph (e)(2) of Section 3.06, the total of (x)
and (y) where (x) equals $112,000 for the current calendar year
(pro rated for partial years on a daily basis) and (y) equals the
amount by which Net Cash Flow in each previous calendar year (pro
rated for partial years on a daily basis) from and after the
Effective Date did not at least equal $112,000 after subtracting
from Net Cash Flow any Primary Contingent Interest or Primary
Deferred Interest paid from or on the basis of Net Cash Flow
during such year (or portion thereof).
"Cash Flow" means all cash receipts from the operations
of the Project, including investment income on any reserves held
by the Project (but excluding tenant security deposits, income
thereon and interest earned on the Replacement Reserve Fund).
"Contingent Interest" means Primary Contingent
Interest, Supplemental Contingent Interest and Deferred Interest.
"Deferred Interest" means Primary Deferred Interest and
Supplemental Deferred Interest.
"Disposition Factor" means, with respect to a Sale of
the Project, (a) in the case of an interest in the Project, the
percentage of interest in the Project sold, transferred or
otherwise disposed of or (b) in the case of an interest in an
entity which owns an interest in the Project, the product of the
percentage of interest in such entity (the "Transferred Entity")
that is being sold, transferred or otherwise disposed of times
the percentage of interest that such entity owns in the Project.
If the Transferred Entity does not own an interest in the
Project, but owns an interest in another entity which owns an
interest in the Project (the "Ownership Entity"), then for
purposes of clause (b) of this definition the Transferred Entity
shall be deemed to own an interest in the Project that is equal
to the product of the percentage of interest which the
Transferred Entity owns in the Ownership Entity times the
percentage of interest which the Ownership Entity owns in the
Project. If the Transferred Entity does not own an interest
directly in the Ownership Entity, but does own an interest
indirectly in the Ownership Entity through one or more other
entities, then the percentage of interest which the Transferred
Entity owns in the Ownership Entity shall be the result of
applying the calculation set forth in the preceding sentence to
the ownership relationships of the entities through which the
Transferred Entity owns an interest in the Ownership Entity.
"Effective Date" means January __, 1994, the date as of
which the First Supplemental Indenture is effective in accordance
with Section 6.01.
"Event of Sale or Refinancing" means the event or
occurrence which is or gives rise to a Sale of the Project or
Refinancing of the Project including the last event or occurrence
among a number or series of events or occurrences, if that be the
case.
"Excess Super Priority Deferred Interest" means Excess
Super Priority Deferred Interest as defined in Section
3.06(c)(3).
"Final Payment Date" shall mean the Maturity Date or
earlier due date for all Outstanding Bonds by acceleration,
redemption or otherwise.
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"Initial Period" means the period of time from the date
of initial issuance and delivery of the Bonds through the Project
Completion Date, February 1, 1989.
"Interest Payment Date" means (i) with respect to the
payment of Base Interest, the first day of each month, commencing
with February 1, 1994 or the next Business Day if such day is not
a Business Day; and (ii) with respect to the payment of any
Contingent Interest or any Deferred Interest, the first day of
each January, April, July and October, respectively, commencing
with April 1, 1994 or the Next Business Day if such day is not a
Business Day.
"Make-Up Contingent Interest" means Make-Up Contingent
Interest as defined in Section 3.06(c)(1).
"Maximum Primary Contingent Interest" means, on any
payment date for Contingent Interest and Deferred Interest
specified in paragraph (e) of Section 3.06 hereof, the product of
the Primary Contingent Interest Rate and the aggregate principal
amount of the Bonds times a fraction, the numerator of which is
the number of days since the last payment date during the Third
Period for Contingent Interest and Deferred Interest (or the
Effective Date if there has occurred no such previous payment
date since the Effective Date) and the denominator of which is
365.
"Maximum Supplemental Contingent Interest" means, on
any payment date for Contingent Interest and Deferred Interest
specified in paragraph (e) of Section 3.06 hereof, the product of
the Supplemental Contingent Interest Rate and the aggregate
principal amount of the Bonds times a fraction, the numerator of
which is the number of days since the last payment date during
the Third Period for Contingent Interest and Deferred Interest
(or the Effective Date if there has occurred no such previous
payment date since the Effective Date) and the denominator of
which is 365.
"Net Cash Flow" means the Cash Flow remaining after
subtracting the payment of Operating Expenses of the Project and
the deposit in the Replacement Reserve Fund specified in the Loan
Agreement.
"Net Cash Flow Change Date" means the first payment
date for interest specified in any of paragraphs 1, 2 or 3 of
Section 3.06(e) as of which all Net Cash Flow minus all interest
paid on the basis of Net Cash Flow between the Effective Date and
the payment date (inclusive) equals $800,000 plus $112,000 for
each calendar year (pro rated for partial years on a daily basis)
from and after the Effective Date, to and including the payment
date.
"Net Sale or Refinancing Proceeds" means the amount
remaining from the Sale or Refinancing Proceeds (if a positive
number) after deducting the Cost Basis (except in the case of a
Refinancing of the Project described in clause (iii) of the
definition thereof, in which case there shall be no deduction).
The "Cost Basis" for purposes of this definition (except as
provided in the ensuing sentence) shall mean (i) for the Borrower
named herein as of the Effective Date the amount of $14,370,000
and (ii) for each other Borrower thereafter, the sum of (a) the
principal amount of Bonds Outstanding at the time such Borrower
acquired the Project and (b) all amounts in addition to such
principal amount of the Bonds included in the Sale or Refinancing
Proceeds arising out of the acquisition of the Project by such
Borrower.
Notwithstanding the preceding sentence, in the context
of a Sale of the Project, "Cost Basis" shall be modified by
multiplying the amount determined according to the preceding
sentence by a fraction, the numerator of which is the Disposition
Factor (treated as a whole number and not a percentage) for the
sale, transfer or other disposition in question and the
denominator of which is 100.
"Notice Address" means for the Issuer, 20 East 5th
Street, Suite 200, Kansas City, Missouri 64106; for the Borrower,
7301 N.W. Donovan Drive, Kansas City, Missouri 64153; for the
Trustee, 920 Main Street, Kansas City, Missouri 64105.
<PAGE>
"Operating Expenses" means the reasonable and customary
costs and expenses directly attributable to operating the
Project, including without limitation the costs and expenses
of taxes (which shall not be reduced by any Property Tax
Adjustment), assessments, wages and benefits, utilities,
management (including those paid to Borrower or an affiliate of
Borrower acting as Project Manager equal to 5% per annum of gross
collected income at the Project), marketing, pest control,
insurance premiums, surety bonds, maintenance, repairs and
security, but not, any costs or expenses that could be
capitalized for federal income tax purposes. Operating Expenses
shall not include any allowance for depreciation or any principal
payments on the Borrower Note or any other debt obligation;
Operating Expenses shall include interest paid on the Borrower
Note in order to pay Base Interest. Operating Expenses shall
include all costs incurred by the Borrower in converting the
Project to condominium ownership. Except as aforesaid, Operating
Expenses shall not include any interest on borrowed or unpaid
funds other than interest on any secondary financing secured by a
lien on the Project in conformity with the Mortgage after
excluding the amount of such interest that accrued on the portion
of such secondary financing that was (i) retained by the
Borrower, (ii) not paid as Contingent Interest on the Bonds and
(iii) not applied as an expenditure on the Project and included
in the Borrower's capital base in the Project for tax purposes.
"Primary Contingent Interest" means Primary Contingent
Interest as defined in Section 3.06(c)(1).
"Primary Contingent Interest Rate" means a per annum
interest rate on the Bonds from and after the Effective Date
during the Third Period of 0.37% per annum.
"Primary Deferred Interest" means Primary Deferred
Interest as defined in Section 3.06(c)(1).
"Project Completion Date" or "Completion Date" means
February 1, 1989, the actual completion date of the Project
established pursuant to the Loan Agreement.
"Proposed Refinancing" means Proposed Refinancing as
defined in Section 4.01(j).
"Refinancing of the Project" means (i) any redemption
of the Bonds in whole (or the requirement that the Bonds be
redeemed in whole)(including such a redemption or requirement
pursuant to a Sale of the Project described in clause (ii) of the
definition thereof, but excluding such a redemption or
requirement pursuant to a Sale of the Project described in clause
(i) of the definition thereof), (ii) Reserved, (iii) a secondary
financing of the Project in which the Project is further
encumbered to secure the financing and not all of the net
proceeds of which are applied to finance replacements, repairs or
improvements to the Project or (iv) a payment in full of the
Bonds upon maturity, acceleration or otherwise on or before the
Maturity Date (including such a payment or requirement that is a
redemption or requirement for redemption pursuant to a Sale of
the Project described in clause (ii) of the definition thereof
but excluding such a payment or requirement that is a redemption
or requirement for redemption pursuant to a Sale of the Project
described in clause (i) of the definition thereof).
"Related Person or Entity" means any of the following
persons or entities:
(a) Gordon J. Peterson Jr., his wife and any of their
children or trusts of which they and no others are
beneficiaries (other than contingent remaindermen,
if any); and
(b) J.A. Peterson Enterprises, Inc. or any wholly
owned subsidiary thereof or entity under common
control therewith.
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"Sale of the Project" means (i) a sale, transfer or
other disposition of more than a 15% interest in the Project in
any one transaction or more than one transaction occurring within
any three year period (aggregating all dispositions during any
such period for purposes of calculation), or (ii) a sale,
transfer or other disposition of more than a 50% interest in the
entity or entities which own, directly or indirectly, more than a
50% interest in the Project within any three year period
(including, when measured for purposes of a "Sale" of the Project
by a Borrower, the three year period immediately prior to
acquisition of the Project by such Borrower) to one or more
persons or entities acting in concert (aggregating all
dispositions during any such period for purposes of calculation).
There shall be excluded, however from clauses (i) and (ii) of the
preceding sentence, however, any transfer to a Related Person or
Entity for no consideration or for consideration that is not in
excess of nominal consideration and from clause (ii) of the
preceding sentence a transfer on account of death without
consideration. Indirect ownership by an entity or entities of an
interest in the Project shall be measured by multiplying the
percentage of interest such entity or entities own in the entity
or entities that own directly an interest in the Project times
the percentage of interest in the Project so owned directly. For
purposes of this definition, an interest in the Project or an
entity or entities shall include, without limitation, an interest
representing legal ownership, an equitable interest or an
economic interest.
"Sale or Refinancing Proceeds" means (A) in the event
of a Sale of the Project described in clause (i) of the
definition thereof, the actual sales price (including any debt
financed by the Bonds that is assumed by a new Borrower or to
which a new Borrower's interest in the Project is subject and any
purchase money debt extended by the selling Borrower to the new
Borrower) and any other consideration to be paid (net of all
customary and reasonable costs), plus the balance on deposit in
the Replacement Reserve Fund if the Bonds are redeemed pursuant
to Section 4.01(f) hereof, and in the event of a Sale of the
Project described in clause (ii) of the definition thereof, there
shall be no sale proceeds or (B) in the event of a Refinancing of
the Project, the fair market value of the Project as determined
in accordance with Section 3.06(g) hereof, plus the balance on
deposit in the Replacement Reserve Fund, except if the
Refinancing of the Project is described in clause (iii) of the
definition thereof, in which case the Refinancing Proceeds shall
be the net amount of the secondary financing (after deducting all
expenses incurred in obtaining such financing) not applied to
finance repairs, replacements or improvements to the Project.
"Second Period" means the period of time commencing
March 1, 1989, the day following the last day of the Initial
Period through July 25, 1990, the date 540 days later.
"Super Priority Deferred Interest" means so much of
Deferred Interest (and any Maximum Primary Contingent Interest,
Make-Up Contingent Interest and Maximum Supplemental Interest
that is Unpaid But Not Deferred, but without duplication) as is
equal to an amount which, together with all interest paid on the
Bonds from and after the Effective Date to and including the date
on which Super Priority Deferred Interest is then payable, will
produce a simple (with no compounded interest) annual return of
8.0% on the principal amount of the Bonds Outstanding from time
to time during that period of time.
"Supplemental Contingent Interest" means Supplemental
Contingent Interest as defined in Section 3.06(c)(2).
"Supplemental Contingent Interest Rate" means a per
annum interest rate on the Bonds from and after the Effective
Date during the Third Period of 10.76%.
"Supplemental Deferred Interest" means Supplemental
Deferred Interest as defined in Section 3.06(c)(2).
<PAGE>
"Third Period" means the period of time commencing with
July 26, 1990, the day following the last day of the Second
Period, to (but not including) the Final Payment Date.
"Unpaid But Not Deferred" means, with respect to
Maximum Primary Contingent Interest, Make-Up Contingent Interest
and Maximum Supplemental Contingent Interest but excluding
Deferred Interest, on any payment date for interest on the Bonds
that is payable on the basis of Net Sale or Refinancing Proceeds
the amount of Maximum Primary Contingent Interest, Make-Up
Contingent Interest or Maximum Supplemental Contingent Interest,
as the case may be, measured as of such payment date that is not
paid on the basis of Net Cash Flow on the payment date.
ARTICLE II
AMENDMENTS TO ARTICLE III OF INDENTURE
Section 2.01. Amendments. Those subsections of
Article III of the Indenture set forth below in this Section 2.01
are hereby amended to read in their entirety from and after the
Effective Date as follows.
Section 3.06. Interest on the Bonds.
(a) General. Subject to Section 3.13, the Bonds shall
bear interest as provided in Section 3.06(b) through (g)
until the Final Payment Date.
(b) Base Interest. From and after the Effective Date,
the Bonds shall bear interest calculated and payable as
follows (which shall be referred to herein as "Base
Interest"):
(1) The Bonds shall bear Base Interest at the
rate of 4.87% per annum from and after the Effective
Date, payable on each payment date specified in
paragraph (e)(1) of this Section 3.06; provided that
the amount of Base Interest so payable shall be subject
to reduction monthly by the Property Tax Adjustment
(defined below in paragraph (b)(2) and allocated
ratably over twelve separate months in each calendar
year to the maximum extent practicable based upon
Borrower's good faith estimate (for any calendar year
not to exceed property taxes on the Project for the
immediately preceding calendar year by more than 5%
unless a higher amount of property taxes for the
current calendar year is actually known) and subject to
reconciliation at the end of each calendar based upon
the actual facts for such year, with overpayment of
Base Interest refundable to the Borrower and
underpayment payable to the Owner) as certified in
writing to the Trustee by the Borrower from time to
time.
(2) For purposes of adjusting Base Interest
payable from and after the Effective Date, and subject
to the second ensuing sentence, Property Tax Adjustment
shall mean the amount by which (x) exceeds (y). For
this purpose: (x) shall equal the amount by which the
annual real property taxes on the Project shall have
increased over the Property Tax Base ("Property
Taxes"); "Property Tax Base" shall mean the amount of
such taxes for the year ended December 31, 1992; and
(y) shall equal the amount of a 3% cumulative annual
increase in Property Taxes over the Property Tax Base.
Notwithstanding the foregoing, in no event shall the
Property Tax Adjustment exceed $50,000 in any one
twelve month period ending on December 31 in each year
(except that this limit shall be $30,000 for the twelve
months ended December 31, 1994).
<PAGE>
Base Interest shall be calculated on the basis of a year of
365 days, actual days elapsed.
(c) Contingent Interest. Subject to Section 4.01 of
the First Supplemental Indenture, from and after the
Effective Date, the Bonds shall bear contingent interest
calculated and payable exclusively on the basis and to the
extent of Net Cash Flow and Net Sale or Refinancing Proceeds
as herein provided, and not otherwise if there is no Net
Cash Flow and there are no Net Sale or Refinancing Proceeds,
as follows:
(1) Primary Contingent Interest on the Basis of
Net Cash Flow. During each calendar year, or part
thereof, from and after the Effective Date, the Bonds
shall bear contingent interest at an annual rate equal
to the Primary Contingent Interest Rate payable (A)
solely on the basis and to the extent of 100% of Net
Cash Flow for each such year or part thereof or (B) to
the extent not so paid, then (as part of Super Priority
Deferred Interest) solely on the basis and to the
extent of Net Sale or Refinancing Proceeds as described
in paragraph (c)(4) of this Section 3.06.
Contingent Interest equal to Maximum Primary
Contingent Interest (together with the amount of any
Property Tax Adjustment taken as a reduction in Base
Interest for the calendar quarter ended during the
period for which Maximum Primary Contingent Interest is
then being calculated and not previously taken into
account as Primary Contingent Interest or Primary
Deferred Interest, which amount is referred to as
"Make-Up Contingent Interest") shall be payable on the
Bonds on each payment date specified in paragraph
(e)(2) of this Section 3.06 solely on the basis and to
the extent of 100% of Net Cash Flow, measured for
purposes of such payment and subject to the adjustments
and reconciliation as specified in paragraph (f) of
this Section 3.06. If 100% of Net Cash Flow is
insufficient, then there shall be payable the maximum
amount possible to the extent of 100% of Net Cash Flow
(which amount is referred to as the "Primary Contingent
Interest").
The amount by which the sum of Maximum Primary
Contingent Interest and Make-Up Contingent Interest
exceed Primary Contingent Interest for any calculation
period in any calendar year shall be deferred without
interest until paid (such difference is referred to
collectively together with all such amounts previously
deferred and remaining unpaid as "Primary Deferred
Interest") and shall thereafter be payable on the
earliest possible payment dates specified in paragraph
(e)(2) of this Section 3.06 solely from and to the
extent of 100% of Net Cash Flow after deducting any
Primary Contingent Interest then due, measured for
purposes of such payment and subject to the adjustments
and reconciliation as specified in paragraph (f) of
this Section 3.06. Net Cash Flow shall be applied to
such payments of any Primary Contingent Interest prior
to the payment of Primary Deferred Interest.
To the extent that all Primary Deferred Interest,
any Maximum Primary Contingent Interest that is Unpaid
But Not Deferred and any Make-Up Contingent Interest
that is Unpaid But Not Deferred are not paid on the
basis of Net Cash Flow on a payment date specified in
paragraph (e)(2)(iii) of this Section 3.06, they shall
be payable (if not sooner paid) as part of Super
Priority Deferred Interest solely on the basis of Net
Sale or Refinancing Proceeds in accordance with Section
3.06(c)(4).
(2) Supplemental Contingent Interest on the Basis
of Net Cash Flow. During each calendar year, or part
thereof, from and after the Effective Date, the Bonds
shall bear contingent interest at an annual rate equal
to the Supplemental Contingent Interest Rate payable
solely on the basis and to the extent of 35% (50% from
and after the Net Cash Flow Change Date) of so much of
Net Cash Flow for each such year, or part thereof, as
remains after reducing Net Cash Flow by the total of
(x) the Borrower's Priority Return at such time and (y)
any payment of Primary Contingent Interest or Primary
Deferred Interest as specified above in paragraph
(c)(1).
Contingent Interest equal to Maximum Supplemental
Contingent Interest shall be payable on the Bonds on
each payment date specified in paragraph (e)(2) of this
Section 3.06 solely on the basis and to the extent of
35% (50% from and after the Net Cash Flow Change Date)
of so much of the Net Cash Flow as remains after
reducing Net Cash Flow by the total of (x) the
Borrower's Priority Return at such time and (y) any
payment of Primary Contingent Interest or Primary
Deferred Interest as specified above in paragraph
(c)(1), measured for purposes of such payment and
subject to the adjustments and reconciliation as
specified in paragraph (f) of this Section 3.06. If
35% (50% from and after the Net Cash Flow Change Date)
of Net Cash Flow after such reduction is insufficient
to pay the Maximum Supplemental Contingent Interest
payable on any payment date specified in paragraph
(e)(2) of this Section 3.06, then there shall be
payable the maximum amount possible solely on the basis
of and to the extent of 35% (50% from and after the Net
Cash Flow Change Date) of Net Cash Flow after such
reduction (which amount is referred to as the
"Supplemental Contingent Interest").
<PAGE>
The amount by which Maximum Supplemental
Contingent Interest exceeds Supplemental Contingent
Interest for any calculation period in each year shall
be deferred without interest (such difference being
referred to collectively with all such amounts
previously deferred and remaining unpaid as
"Supplemental Deferred Interest"). Supplemental
Deferred Interest and any Maximum Supplemental
Contingent Interest that is Unpaid But Not Deferred
shall be payable in accordance with Section 3.06(c)(4)
as part of Super Priority Deferred Interest and
otherwise in accordance with Section 3.06(c)(5).
(3) Super Priority Deferred Interest on the Basis
of Net Sale or Refinancing Proceeds. Unpaid Super
Priority Deferred Interest shall be payable solely on
the basis and to the extent of 50% of the balance of
Net Sale or Refinancing Proceeds remaining after
reducing such amount by the Borrower's Equity Return
Satisfaction Amount on the earliest possible payment
dates specified in paragraph (e)(3) of this Section
3.06.
If the Disposition Factor for the Event of Sale or
Refinancing giving rise to Net Sale or Refinancing
Proceeds is less than 100, then Net Sale or Refinancing
Proceeds shall be reduced in such instance by only so
much of the Borrower's Equity Return Satisfaction
Amount as equals, as a percentage, such Disposition
Factor.
Super Priority Deferred Interest paid on such
basis shall be credited first against all unpaid
Primary Deferred Interest, any Maximum Primary
Contingent Interest that is Unpaid But Not Deferred and
any Make-Up Contingent Interest that is Unpaid But Not
Deferred and second, to the extent the Super Priority
Deferred Interest so paid exceeds such Primary Deferred
Interest, any Maximum Primary Contingent Interest that
is Unpaid But Not Deferred and any Make-Up Contingent
Interest that is Unpaid But Not Deferred, against all
unpaid Supplemental Deferred Interest and any Maximum
Supplemental Contingent Interest that is Unpaid But Not
Deferred (the amount of such excess being referred to
as "Excess Super Priority Deferred Interest").
(4) Supplemental Deferred Interest on the Basis
of Net Sale or Refinancing Proceeds. After reduction
of Supplemental Deferred Interest and any Maximum
Supplemental Contingent Interest that is Unpaid But Not
Deferred by credit for the amount of any Excess Super
Priority Deferred Interest then paid and not previously
taken as a credit against Supplemental Deferred
Interest, the remaining unpaid amount of Supplemental
Deferred Interest and such Maximum Supplemental
Contingent Interest shall be payable solely on the
basis of and to the extent of 35% of the excess of Net
Sale or Refinancing Proceeds over the sum of (x) the
Super Priority Deferred Interest then paid on account
of the same event of Sale or Refinancing, (y) the
Borrower's Equity Return Satisfaction Amount and
(z) any Contingent Interest or Deferred Interest
previously paid on the Bonds on the basis of Net Sale
or Refinancing Proceeds arising out of an earlier Event
of Sale or Refinancing that occurred while the Project
was owned by the then current Borrower, on the earliest
possible payment dates specified in paragraph (e)(3) of
this Section 3.06.
(d) Reserved.
(e) Payment Dates for Interest. The interest payable
on the Bonds as provided above in this Section 3.06 shall be
payable in arrears on the following dates:
(1) Base Interest shall be payable (i) on each
Interest Payment Date for Base Interest, (ii) on the
Final Payment Date and (iii) on each redemption date
(but only with respect to the Bonds redeemed).
(2) Contingent Interest payable on the basis of
Net Cash Flow shall be payable (i) on each Interest
Payment Date for Contingent Interest and Deferred
Interest to and including the Final Payment Date,
(ii) on each redemption date (but only with respect to
the Bonds redeemed), (iii) on each date on which
Contingent Interest and Deferred Interest is payable
from Net Sale or Refinancing Proceeds (as provided in
paragraph (e)(3) below) and (iv) on the Final Payment
Date.
(3) Contingent Interest and Deferred Interest
payable on the basis of Net Sale or Refinancing
Proceeds shall be payable on the next Interest Payment
Date for any interest succeeding by at least 30 days
the date of the Event of Sale or Refinancing relating
to the Sale of the Project or Refinancing of the
Project which has occurred, except in the case of:
<PAGE>
(x) a Refinancing of the Project described
in clause (i) or (iv) of the definition thereof,
in which case it shall be payable on the
redemption date or payment date specified therein,
as the case may be or
(y) a Sale of the Project described in
clause (i) of the definition thereof resulting in
a call of the Bonds for redemption pursuant to
Section 4.01(f) hereof, in which case it shall be
payable on the redemption date.
(f) Calculation of Net Cash Flow.
(1) (i) No later than thirty days before each
payment date for Contingent Interest specified in
paragraph (e)(2) of Section 3.06 hereof (or such lesser
number of days as shall be the maximum number of days
possible if the payment date was not known to the
Borrower until less than 40 days before the payment
date), the Borrower shall calculate Net Cash Flow for
the three month period ending on the last day of the
third preceding month before such payment date and
shall provide the Trustee and the Partnership (A) the
analysis of such Net Cash Flow, (B) unaudited financial
statements of the Project for such three month period
and (C) a calculation of the amount of Contingent
Interest and Deferred Interest then payable. Thus for
example, if Contingent Interest is payable on April 1st
in any year, and this payment date had been known at
least 40 days in advance, no later than March 1st the
Borrower shall calculate Net Cash Flow for the three
month period ended January 31 of the same year.
(ii) Notwithstanding the foregoing in
clause (i):
(A) except as may result from adjustments
and reconciliation provided below in this
paragraph (f), the period of time for which Net
Cash Flow is measured for purposes of a payment
date for Contingent Interest and Deferred Interest
on any Bonds specified in paragraph (e)(2) of
Section 3.06 hereof shall not include any time for
which Net Cash Flow has been measured for purposes
of a previous payment date for Contingent Interest
and Deferred Interest on such Bonds specified in
paragraph (e)(2) of Section 3.06 hereof, and
(B) the calculation of Net Cash Flow and the
amount of Contingent Interest payable on the basis
thereof on the Final Payment Date shall be
reconciled and adjusted to give effect to (x) the
actual amount of Net Cash Flow for the current
calendar year (and the preceding calendar year if
the Final Payment Date falls before delivery of
the audit referred to in Section 3.06(f)(2) hereof
in the current calendar year) up to but not
including the Final Payment Date (such actual
amount of Net Cash Flow being measured by the
actual amount known as of the most recent possible
date and an amount reasonably estimated to be
earned between such date and the Final Payment
Date) and (y) all Contingent Interest paid during
the current calendar year (and the preceding
calendar year if the Final Payment Date falls
before delivery of the audit referred to in
Section 3.06(f)(2) hereof in the current calendar
year) in the manner described below in paragraph
(f)(3) of this Section 3.06, except that any
underpayments or overpayments of Contingent
Interest shall be paid or refunded, as the case
may be, on the Final Payment Date.
(iii) The amount of Net Cash Flow reflected in
the analysis described above, as adjusted in the case
of the analysis in connection with the Final Payment
Date, shall provide the basis for the calculation of
Contingent Interest payable on the basis of Net Cash
Flow on each payment date therefor specified in
paragraph (e)(2) of Section 3.06 hereof, except as
provided below. The Trustee (if it has accepted the
duties as Acting Party in Article VIII) or the
Partnership may each request further substantiation of
the Borrower's calculation of Net Cash Flow and may
verify and correct as necessary the calculations
thereof. If the Trustee or the Partnership do
reasonably modify such calculation, the Trustee or
Partnership shall notify the Borrower and the Trustee
or Partnership (whoever did not initiate notice) of
such reasonable modified calculations no later than ten
Business Days before such payment date (or such lesser
number of days as shall be the maximum number of days
practicable if the Trustee or Partnership received the
calculation of Net Cash Flow less than 30 days before
the payment date) and such modified calculation shall
be the basis of Contingent Interest payable on the
basis of Net Cash Flow on the payment date. Except to
the extent provided in this paragraph (f)(1) with
respect to the Final Payment Date, the analysis and
payment on the basis of Net Cash Flow described in this
paragraph (f)(1) is intended to provide a preliminary
payment of Contingent Interest on the basis of Net Cash
Flow prior and subject to the adjustment and
reconciliation process described in paragraphs (f)(2)
and (f)(3) hereof.
<PAGE>
(2) No later than April 1 of each calendar year
(up to and, unless the Final Payment Date falls before
delivery of the audit, including the calendar year in
which the Final Payment Date occurs), the Borrower
shall provide to the Issuer, the Trustee and the
Partnership an audit of the operations of the Project
for the preceding calendar year prepared and certified
by an Accountant acceptable to the Trustee and the
Partnership in accordance with generally accepted
auditing standards. The audit shall state the actual
amount of the Net Cash Flow for that calendar year and
shall calculate all Contingent Interest paid and
payable from Net Cash Flow during such calendar year
pursuant to this Section 3.06.
(3) The audit prepared in accordance with
paragraph (f)(2) shall state the amount of Contingent
Interest payable and paid during the subject calendar
year. If the amounts of Contingent Interest payable on
the basis of Net Cash Flow (measured on the basis of
actual Net Cash Flow for such calendar year according
to the audit) exceeded the amount paid, then there
shall be payable, without interest, to the Owners of
the Bonds any such payable and unpaid amounts on the
payment date for Contingent Interest and Deferred
Interest specified in paragraph (e)(2) of this Section
3.06 immediately following the receipt of the audit by
the Trustee and the said Owners. If the amount of
Contingent Interest payable on the basis of Net Cash
Flow (measured on the basis of actual Net Cash Flow for
such calendar year according to the audit) is less than
the amount actually paid, the Partnership shall notify
the Trustee of such overpaid amount which the Trustee
shall credit against any other interest payments
(whether Base Interest or Contingent Interest) or other
payments due under this Indenture to the Owners of the
Bonds on the Bond Payment Date (or Bond Payment Dates)
immediately following the receipt by the Trustee and
the said Owners of the audit and the Owners shall not
be required to refund any such amount unless the
crediting does not exhaust the overpayment, in which
case the balance of the overpayment will be refunded by
the Owners to the Trustee on the Final Payment Date.
Such payment or crediting shall be for the account of
the Owners of record on the date such payment or
crediting is made. On the Final Payment Date the
Trustee shall credit to the loan payments due from the
Borrower the amount of any overpayment repaid by the
Owners.
(4) The Issuer and the Trustee (unless the
Trustee has accepted the duties of the Acting Party
specified in Section 8.01 hereof) may conclusively rely
on the determinations by the Borrower and Partnership
herein, and shall not have any responsibility
therefor."
ARTICLE III
AMENDMENTS TO ARTICLE IV OF INDENTURE
Section 3.01. Amendments. (a) Section 4.01 of the
Indenture is hereby amended by adding a new subsection (i) to
read as follows:
"(i) subject to the proviso stated at the end of this
clause (i), in whole on January 1, 2006 (the "Redemption
Date") if there has been filed with the Trustee not less
than ninety (90) days before the Redemption Date an
irrevocable commitment from a financial or commercial
institution regularly engaged in the business of making
commercial or residential mortgage loans by which such
institution, subject to closing conditions specified therein
to which the Borrower does not unreasonably object after
written notice thereof and an opportunity for review,
irrevocably commits to extend financing to the Borrower on
or before the Redemption Date for the purpose of refinancing
the Bonds on terms that include the terms listed below and
other terms to which the Borrower does not unreasonably
object after written notice thereof and an opportunity for
review (the "Proposed Refinancing"):
<PAGE>
(A) term to maturity of not less than three years,
(B) annual interest rate not to exceed 7.75% per annum
and annual interest and principal amortization
(not including principal payment at maturity), in
the aggregate, also not in excess of 7.75% per
annum (and no other form of interest including
contingent or participating),
(C) security limited to a first mortgage on the
Project and assignment of rents and leases,
(D) the Borrower will not be obligated (i) to pay fees
and closing costs in connection with the
refinancing in excess of 1% of the principal
amount of the Bonds then outstanding or (ii) make
further investment in the Project or post
additional collateral or guarantees, and
(E) non-recourse to Borrower.
provided, however, that this redemption shall not take place
if the Proposed Refinancing is not consummated on or before
the scheduled redemption date. It shall be deemed
reasonable for Borrower to object to the Proposed Financing
if the Proposed Financing varies materially and adversely to
the Borrower from the terms of financing provided by the
Bonds, except as set forth above.
(b) Section 4.01(h) of Article IV of the Indenture is
hereby deleted.
(c) Section 4.03 is hereby amended by replacing each
Redemption Price in the table except the Redemption Price for
1996 and thereafter with the number 100% and by adding the
following sentence at the end thereof: "It is the intent of this
Section that the interest payable upon a redemption of Bonds
shall be equal to and not exceed interest due on the Bonds as of
the redemption date, as if the redemption date were a regularly
scheduled Interest Payment Date for interest payable under the
applicable circumstances.
<PAGE>
ARTICLE IV
ACCRUED AND UNPAID INTEREST ON
THE BONDS THROUGH THE EFFECTIVE DATE
Section 4.01. Certain Accrued and Unpaid Interest
Abrogated. Notwithstanding anything else in the Indenture or
anywhere else, any accrued and unpaid interest on the Bonds and
any interest on the Bonds otherwise established but not paid,
including any Contingent Interest or Deferred Interest on the
Bonds established on or before the Effective Date, whether
payable before, on or after the Effective Date, in excess of
$500,000 is hereby abrogated and discharged effective on and as
of the Effective Date.
ARTICLE V
AMENDMENT TO SECTION 6.05 OF THE INDENTURE
Section 5.01. Amendment to Section 6.05. Section 6.05
of the Indenture is hereby amended to read in its entirety as
follows:
Section 6.05. Replacement Reserve Fund. There shall
be deposited in the Replacement Reserve Fund all moneys
received by the Trustee from the Borrower pursuant to
Section 2.2(g) to the Loan Agreement. Moneys in the
Replacement Reserve Fund shall be disbursed to the Borrower
to be applied to repairs of or replacements in part of the
Project (which shall include, without limitation, painting,
carpeting, appliances, heating/ventilating/air conditioning
systems and improvements (other than improvements to which
the Owner reasonably objects as being new (as opposed to a
replacement) and in the nature of cosmetic)), upon receipt
of a written request of the Borrower, upon which the Trustee
may conclusively rely, specifying the purposes for and
amounts of such disbursements; except that upon the
occurrence and continuance of an Event of Default hereunder
and an acceleration of the Bonds pursuant thereto, all
moneys and investments in the Replacement Reserve Fund
(other than moneys held to pay costs required to be paid but
not yet payable) shall be transferred to the Revenue Fund
and applied to the payment of the Bonds. Before funding any
disbursement request from the Replacement Reserve Fund, the
Trustee shall obtain the Owner's approval; the Trustee shall
inform the Owner of the disbursement request in writing and
if the Owner does not reasonably object within fifteen (15)
days thereafter, the Owner shall be deemed to have approved
the request. Upon the payment in full of the Bonds and the
fees and expenses of the Issuer and the Trustee (including
those incurred in connection with a remarketing of the
Bonds), any amounts remaining in the Replacement Reserve
Fund shall be paid to the Borrower as soon as practicable
upon its request therefor.
ARTICLE VI
EFFECTIVE DATE OF FIRST SUPPLEMENTAL INDENTURE
Section 6.01. Effective Date. The terms and
provisions of this First Supplemental Indenture shall take effect
on January __, 1994.
IN WITNESS WHEREOF, the parties hereto have caused this
First Supplemental Indenture to be duly executed in their
respective names, all as of the date and year first above
written.
INDUSTRIAL DEVELOPMENT AUTHORITY
OF THE CITY OF KANSAS CITY,
MISSOURI
By
[SEAL]
Attest:
BOATMEN'S FIRST NATIONAL BANK
OF KANSAS CITY, as SUCCESSOR
IN INTEREST for THE MERCHANTS
BANK,
as Trustee
By
<PAGE>
The Summit Tax Exempt L.P. II, as sole owner of all of
the Bonds referred to in the foregoing First Supplemental
Indenture, does hereby consent to the adoption and effectiveness
of the same on and as of , 199 .
SUMMIT TAX EXEMPT L.P. II
By: Related Tax Exempt
Associates II, Inc.,
a general partner
By:
Name:
Title:
By: Prudential-Bache
Properties, Inc.,
a general partner
By:
Name:
Title:
Lakes Project Investors, Inc., the Borrower referred to
in the foregoing First Supplemental Indenture, does hereby
consent to the adoption and effectiveness of the same on and as
of , 199 .
LAKES PROJECT INVESTORS, INC.
By:
Name:
Title:
EXHIBIT A
REVISED FORM OF BOND
<PAGE>
