Exhibit 7
SETTLEMENT AGREEMENT
This Settlement Agreement and Release (this "Agreement") is
made and entered into as of the 27th day of June, 1996, by and between The Krupp
Corporation ("Krupp"), a Massachusetts corporation with a principal place of
business at 470 Atlantic Avenue, Boston, Massachusetts 02210, and Liquidity
Financial Group, L.P. ("Liquidity") individually and on behalf of certain
Affiliates as hereinafter defined, a California limited partnership with a
principal place of business at 2200 Powell Street, Suite 700, Emeryville,
California 94608.
W I T N E S S E T H
WHEREAS, Liquidity is engaged in the business of sponsoring
and managing funds which invest in, among other things, real estate limited
partnerships;
WHEREAS, Krupp and certain affiliates sponsored and are
engaged in the business of managing, among other things, real estate limited
partnerships;
WHEREAS, Liquidity sponsored and manages Liquidity Fund #33 LP
as well as other investment funds, and may in the future sponsor and manage
and/or provide investment advice to additional investment funds (collectively,
the "Liquidity Funds"), and Krupp sponsored and manages Krupp Realty Fund,
Ltd.-III ("Realty III") and Krupp Realty Limited Partnership-V ("Realty-V") as
well as other investment funds, and may in the future sponsor or manage
additional investment funds (individually a "Krupp Fund" and collectively, the
"Krupp Funds");
WHEREAS, Liquidity has, on behalf of certain of the Liquidity
Funds sought to obtain from Krupp lists of the investors in certain of the Krupp
Funds for the stated purpose of contacting such investors in order to attempt to
acquire their units in the Krupp Funds;
WHEREAS, Krupp has refused to provide lists of the investors
to Liquidity, alleging that they are not entitled to obtain such lists and
Liquidity has stated that, absent a satisfactory resolution, its present
intention is to litigate the issue;
WHEREAS, the parties have conferred through their respective
counsel and are desirous of resolving and settling Liquidity's claims, upon the
terms and conditions hereinafter set forth.
NOW THEREFORE, for good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto
hereby agree as follows:
1. DELIVERY OF LISTS: Within ten (10) business days of the date of this
Agreement, Krupp will deliver to Liquidity lists of investors (containing the
names, addresses and capital contributions of such investors) in Realty III and
Realty V. The lists will be sorted alphabetically and delivered in both paper
format and on 3.5" IBM Compatible computer diskette in ASCII format. Any
additional lists delivered pursuant to paragraph 3 below will also be delivered
in both paper format and on 3.5" IBM Compatible computer diskette in ASCII
format.
2. PAYMENT FOR LISTS: Within ten (10) business days of the date of
this Agreement, Liquidity will deliver to Krupp payment for the estimated cost
of reproducing and delivering such lists in the total amount of $600.00.
3. PROVISION OF ADDITIONAL LISTS: From time to time during the twelve
(12) month period commencing on the date hereof and expiring on the first
anniversary date of this Agreement, Krupp will, upon written request from
Liquidity, deliver to Liquidity within fifteen (15) business days of receipt of
such written request, updated lists of investors in Realty III and Realty V, or,
to the extent a Liquidity Fund is a Limited Partner or Shareholder (as the case
may be) in any other Krupp Fund, current lists of investors in such other Krupp
Fund, provided such request includes an undertaking by Liquidity to pay the cost
of reproducing and delivering such lists within ten business days after receipt
of such lists.
4. RESTRICTION ON ACTIVITIES: For a period commencing on the date
hereof and continuing for thirty (30) months from the last date an investor list
in a Krupp Fund is delivered to Liquidity in response to Liquidity's request,
Liquidity and any person or entity controlling, controlled, managed or advised
by Liquidity or its subsidiaries (including the Liquidity Funds) or under common
control with Liquidity ("Liquidity Affiliates") shall not, without the prior
written consent of Krupp, which may be granted or withheld in Krupp's sole and
exclusive discretion and for any reason, or no reason:
(a) vote its interests in any Krupp Fund on any issue other
than in proportion to the votes of all other interest holders who vote on such
issue;
(b) in any manner acquire, attempt to acquire, or make a
proposal to acquire, directly or indirectly, more than a 25% interest in any
Krupp Fund;
(c) propose, or propose to enter into, directly or indirectly,
any merger, consolidation, business combination, sale or acquisition of assets,
liquidation or other similar transaction involving any Krupp Fund;
(d) form, join or otherwise participate in a "group" within
the meaning of Section 13(d)(3) of the Securities and Exchange Act of 1934, as
amended, with respect to any voting securities of a Krupp Fund;
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(e) make or participate in any way, directly or indirectly, in
any solicitation of "proxies" or "consents" (as such terms are used in the proxy
rules of the Securities and Exchange Commission) to vote, or seek to advise or
influence any person with respect to the voting of any voting securities of any
Krupp Fund.
(f) sell, transfer or assign any interests in any Krupp Fund
to any person or entity not bound by the terms and conditions of this Agreement;
(g) disclose any intention, plan or arrangement inconsistent
with the terms of this Agreement;
(h) loan money to, advise, assist or encourage any person in
connection with any of the actions restricted or prohibited by this Agreement.
5. USE OF LISTS, PROHIBITION ON FURNISHING TO OTHERS: Any investor list
obtained by Liquidity or Liquidity Affiliates relative to any Krupp Fund will be
utilized only for the purpose of contacting investors to inquire as to whether
they wish to sell their units in such Krupp Fund to a Liquidity Fund, and for no
other purpose. The lists will not be furnished by Liquidity or Liquidity
Affiliates to any other person or entity.
6. THIRD PARTIES: If at any time Liquidity or Liquidity Affiliates is
approached or contacted by any third party concerning participation in a
transaction involving the assets, businesses or securities of any Krupp Fund or
involving any of the actions proscribed by Section 4 hereof or otherwise by this
Agreement, Liquidity or Liquidity Affiliates, as the case may be, will
immediately notify such party of its inability to participate in such a
transaction and its obligation to notify Krupp and will thereafter promptly (and
in any event, within five (5) business days) notify Krupp of the nature of such
contact and the parties thereto. Krupp will indemnify, defend and hold harmless
Liquidity and the Liquidity Affiliates from and against any and all claims,
demands or liabilities that may arise as a result of Liquidity's or any
Liquidity Affiliates' strict compliance with the terms of this paragraph.
7. COMPLIANCE WITH SECURITIES AND OTHER LAWS: Liquidity and Liquidity
Affiliates acknowledge their obligations under the Securities Laws and Rules of
the Securities and Exchange Commission.
8. PROVISION OF COPIES OF ALL COMMUNICATIONS: Liquidity and Liquidity
Affiliates covenant and agree that they shall deliver to Krupp at least five (5)
business days before mailing or otherwise distributing to investors in any Krupp
Fund any communication to be given to one or more investors in any Krupp Fund.
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9. FIDUCIARY DUTIES OF KRUPP; SAFE HARBOR PROVISION, PROTECTION OF
PARTNERSHIP STATUS: Liquidity acknowledges that:
(a) Krupp and its affiliates have significant fiduciary
obligations to the investors in the Krupp Funds, and has stated that it is
entering into this Agreement to, among other things, fulfill those fiduciary
obligations;
(b) Krupp may need to take certain further action to meet its
fiduciary obligations, including, without limitation, suspending the acceptance
of transfer paperwork in one or more Krupp Funds to avoid the termination of
such Krupp Fund's status as a partnership under the Internal Revenue Code of
1986 (the "Code"), as amended; avoid the treatment of such Krupp Fund as a
Publicly Traded Partnership under the Code; or cause the Krupp Fund to fall
outside any so-called "Safe Harbor" provision relating to taxation or tax
status, including provisions relating to Publicly Traded Partnerships; and
(c) That the suspension of the acceptance of transfer
paperwork by Krupp would mean that notwithstanding the presentment of valid
transfer paperwork and the terms of this Agreement, transfers requested by
Liquidity or a Liquidity Affiliate would not be processed nor reflected on the
books and records of the Krupp Fund.
Nothing herein shall be construed, however, as an
acknowledgment or agreement by Liquidity that Krupp has the right under any
particular circumstances to suspend the acceptance of transfer paperwork, or as
a waiver of any future claims of Liquidity arising out of any such suspension or
other similar action.
10. RELEASE: FOR AND IN CONSIDERATION OF THE AGREEMENTS HEREIN MADE,
LIQUIDITY, INDIVIDUALLY AND ON BEHALF OF THE LIQUIDITY AFFILIATES, DOES HEREBY
REMISE, RELEASE AND ACQUIT KRUPP AND ALL OF ITS PARTNERS, OFFICERS, DIRECTORS,
AFFILIATES, PREDECESSORS, SUCCESSORS AND ASSIGNS AND EACH OF THEIR PARTNERS,
OFFICERS, DIRECTORS, AFFILIATES, PREDECESSORS, SUCCESSORS AND ASSIGNS, FROM AND
AGAINST ANY AND ALL CLAIMS, DAMAGES, COSTS, EXPENSES, ACTIONS AND CAUSES OF
ACTION WHICH LIQUIDITY AND THE LIQUIDITY AFFILIATES (INCLUDING THEIR PARTNERS,
OFFICERS, DIRECTORS, AFFILIATES, SUCCESSORS AND ASSIGNS AND ALL OF THEIR
PARTNERS, OFFICERS, DIRECTORS, AFFILIATES, PREDECESSORS, SUCCESSORS AND ASSIGNS)
HAD IN THE PAST, NOW HAS, OR MAY IN THE FUTURE ACQUIRE, ARISING FROM OR RELATED
TO THE FAILURE OR REFUSAL OF KRUPP TO PRODUCE AN INVESTOR LIST OF ANY KRUPP
FUND, EXCEPT FOR SUCH A FAILURE OR REFUSAL IN VIOLATION OF THE PROVISIONS OF
THIS AGREEMENT.
11. NOTICES: Any and all notices required or permitted hereunder shall
be in writing and shall be deemed given or served, as the case may be, upon
actual delivery to the parties at the following addresses:
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If to Liquidity: Liquidity Financial Group, L.P.
220 Powell Street, Suite 700
Emeryville, California 94608
Attention: Brent Donaldson
With a copy to: Roger B. Mead, Esq.
Folger & Levin
Embarcadero Center West Tower
275 Battery Park, 23rd Floor
San Francisco, California 94111
If to Krupp: The Krupp Corporation
470 Atlantic Avenue
Boston, Massachusetts 02210
Attention: Laurence Gerber
With a copy to: Scott D. Spelfogel, Esq.
Vice President and General Counsel
The Berkshire Group
470 Atlantic Avenue
Boston, Massachusetts 02210
12. NO ADMISSIONS, CONFIDENTIALITY: The parties agree that this
Agreement is being entered into solely to settle disputed claims, and nothing
herein shall be deemed to constitute an admission of liability on the part of
Krupp, all such liability being expressly contested. The parties agree that
their discussions prior to entering into this Agreement, the nature, existence
and terms of this Agreement, and all matters relating to the dispute and
settlement shall be strictly confidential and not disclosed by either party to
any individual or entity, not be admissible in court for any purpose.
Notwithstanding the foregoing, should either party believe that it must produce
this Agreement in response to subpoena or other lawful process, it shall first
notify the other party and provide the other party with at least fifteen (15)
business days in which to seek to quash or limit any such subpoena or process,
before producing this Agreement. To the extent the second party does not have
standing to seek to quash or limit the subpoena, the first party shall cooperate
in such efforts, provided such cooperation does not result in the incurring of
any costs on the part of said first party.
13. ENFORCEMENT: The parties agree that each shall be entitled to
equitable relief, including injunctive relief and specific performance, in the
event of any breach of the provisions of this Agreement, in addition to all
other remedies available at law or in equity. In the event either party must
refer this Agreement to an attorney for enforcement, the prevailing party shall
be entitled to all costs of enforcement, including attorney's fees.
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14. GOVERNING LAW; VENUE AND JURISDICTION: This Agreement shall be
governed by the laws of the Commonwealth of Massachusetts without regard to
principles of conflict of law thereof. The parties agree that the Federal and
state courts located within the Commonwealth of Massachusetts shall have
exclusive jurisdiction over disputes arising hereunder, and the parties hereby
consent to such venue and submit to the jurisdiction of such courts.
15. CAPTIONS: Captions and section headings used herein are for
convenience of reference only, are not part of this Agreement and are not to
affect the construction of, or to be taken into consideration in interpreting,
this Agreement.
16. AMENDMENTS: This Agreement may be amended, changed, modified,
altered or terminated only by written instrument or written instruments signed
by all of the parties hereto.
17. SEVERABILITY: In the event any provision of this Agreement shall be
held invalid or unenforceable by any court of competent jurisdiction, such
holding shall not invalidate or render unenforceable any other provision hereof.
IN WITNESS WHEREOF, the parties have executed this Agreement
under seal as of the date first above written.
LIQUIDITY FINANCIAL GROUP, L.P.
By: Liquidity Financial Corporation, its
general partner
By: S/Brent Donaldson
----------------------------
Brent Donaldson
President
THE KRUPP CORPORATION
By: S/Laurence Gerber
----------------------------
Laurence Gerber
President
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