MODIFICATION AGREEMENT
This modification agreement (the "Agreement") is made into as of the ___
day of May, 1997 by and among XXXXX GOVERNMENT INCOME TRUST, a
Massachusetts business trust ("GIT"), LOVE FUNDING CORPORATION, a Virginia
Corporation ("The First Mortgage"), McNAB-K C 3 LIMITED PARTNERSHIP, a
Massachusetts limited partnership ("The Partnership") and XXXXX XX, INC., a
Massachusetts corporation, XXXXXX XXXXX, an individual (collectively, the
"Partners")
WITNESSETH
WHEREAS, First Mortgage made a mortgage loan to the Partnership in the
principal sum Fourteen Million Four Thousand and no/100 dollars
($14,004,000.00) which loan was coinsured by the U.S. Department of Housing
and Urban Development (the "Coinsured loan");
WHEREAS, the Coinsured Loan was made with respect to the Xxxxxxx Lakes
Apartments (the "Project") located in Pompano Beach, Broward County,
Florida on the land described in Exhibit A attached hereto (the "Property")
and the terms of the following coinsured loan documents:
A. The Coinsured Loan is evidenced by a certain Mortgage note ("the
Coinsured Note") dated December 28, 1990 from the Partnership to the First
Mortgage in the original principal sum of $14,004,000.00;
B. The repayment of the indebtedness evidenced by the Coinsured Note is
secured by, among other things, (I) a Mortgage dated December 28, 1990 and
recorded in the Official Records of Broward County, Florida in Book 18030,
Page 946 ("the Coinsured Mortgage"); (II) a Regulatory Agreement ("the
Regulatory Agreement") dated December 28, 1990 and recorded in said
Official Records in book 18030, the Page 957 ( the Coinsured Note,
Coinsured Mortgage and Regulatory Agreement are collectively referred to as
the "First Mortgage Loan Documents");
WHEREAS, the First Mortgage obtained funding for the Coinsured Loan through
purchase of a Government National Mortgage Association ("GNMA") Mortgage
backed Security ("MBS") by GIT. The interest rates on the Coinsured Loan
were below the then prevailing interest rates for comparable loans and
securities and GIT was unwilling to participate in the Coinsured Loan,
unless the Partnership agreed to pay additional interest to GIT;
WHEREAS, the Partnership agreed to pay additional interest to GIT pursuant
to a Subordinated Promissory note ("the Subordinated Note") made by the
Partnership in favor of GIT which is secured by a Subordinated Multifamily
Mortgage, Assignment of Rents and Security Agreement ("the Subordinated
Mortgage") dated December 28, 1990 and recorded in the Official Records of
Broward County, Florida on January 2, 1991 under Clerk's File No. 91-002643
(collectively, the "Subordinated Loan Documents");
WHEREAS, the Partners have executed an Additional Loan Agreement and an
Additional Loan Note evidencing additional indebtedness of the Partners to
GIT of Two Million Four Hundred Seventy-One Thousand Two Hundred
Ninety-Four and no/100 Dollars ($2,471,294.00) ("Additional Loan") which
Additional Loan is secured by Pledge and Security Agreements and UCC
financing statements with all documents dated December 28, 1990
(collectively, the "Additional Loan Documents")
WHEREAS, the Project has experienced financial difficulties and the
Partnership and Partners have requested assistance from GIT in regards to
their obligation under the Coinsured Loan Documents and The Additional Loan
Documents;
WHEREAS, the Partnership, the Partners, the First Mortgage and GIT have
agreed to modify the Subordinated Note, the Additional Loan Agreement and
the Additional Loan Note based upon GIT's providing the financial
assistance described herein; and
WHEREAS, the Partnership, the Partners, the First Mortgage and GIT have
reached an agreement the terms and conditions of which agreement are set
forth herein.
NOW THEREFORE, in consideration of the foregoing and Ten and no/100 Dollars
($10.00) in hand paid to GIT, and other good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged, intending to
be legally bound, the Partnership, the Partners, the First Mortgage and GIT
hereby agree as follows:
1. Recitals Incorporated. The foregoing Recitals are hereby incorporated
herein to the same extent as hereafter fully set forth
2. Interest Rebate. The Partnership shall continue to make monthly debt
service payments in accordance with Coinsured Note. Effective January
1, 1997 and during a period of forty-eight (48) months thereafter (the
"Workout Term"), GIT will rebate monthly to the Partnership the
difference between (I) the interest rate (i.e. 8.75%) payable under
the Coinsured Note (the "Original Rate") and (ii) the following rates
for each of the following calendar years during the Workout Term
)collectively, the "Modified Rate");
Calendar Year Modified Rate Interest Rebate
1997 6.75% $275,298 (2%)
1998 7.75% $137,028 (1%)
1999 7.75% $136.352 (1%)
2000 7.75% $135,613 (1%)
TOTAL $684,291
The difference between the Original Rate and Modified Rate for each such
monthly payment in the aggregate (hereinafter the "Interest Rebate") shall
be treated as a loan by GIT to the Partnership and shall be repaid as
provided in Section 6 below.
3. Additional Equity Contribution The Partnership and/or Partners will
provide upon execution of this agreement an additional equity contribution
of $133,036 to be deposited in the Project operating accountable and used
for such Project related costs as may be approved by GIT
4. Payment of participating Income and Base Interest
Section 1. A. Of the Subordinated Promissory Note is hereby amended to
include the following paragraph:
The Maker agrees that Surplus shall be calculated in accordance with the
Regulatory Agreement twice each year as of June 30 and December 31 until
Coinsured Loan and Additional Loan have been paid in full. Furthermore, the
Maker agrees that the Holder's 50% share of any distributable Surplus Cash
calculated as of (a) June 30 shall be distributed no later than August 31
of the same year, or (b) December 31 shall be distibuted no later than
March 31 of next year.
Section 2. A. of the Additional Loan Agreement is hereby deleted in its
entirety and the following is substituted in lieu thereof:
A. Base Interest shall be payable only to the extent that the Holder
receives 50% of distributable Surplus Cash at participating Income
Interest pursuant to the Subordinated Promissory Note. Any unpaid Base
Interest pursuant to the Subordinated Promissory Note. Any unpaid base
Interest shall accrue and shall be repaid as provided in Section 6 of
the Modification Agreement dated May___, 1997
5. Definition and Payment of Preferred Interest. Section 1 (n) of the
Additional Loan Agreement is deleted in it's entirety and substituted in
lieu thereof is the following:
(n) "Preferred Interest" shall mean and refer to the amount which, as of
the time of calculation, would be equal to a cumulative, noncompounded
preferred return to the Holder of ten percent (10%) per annum simple
interest from the date of Final Endorsement to the date of such calculation
on the outstanding balance of the Holder's total capital investment in the
Coinsured Loan and the Additional Loan, which total capital investment
shall include the aggregate principal amount of the Coinsured Loan and the
Additional Loan, which outstanding balance shall be reduced from time to
time by the aggregate amount of any prepayments of principal under the
Coinsured loan and/or the Additional Loan, less (A) interest payments
received by holder pursuant to the GNMA MBS, (B) Participating Income
Interest as set forth in the Subordinated Note, and (C) Base Interest
payments made under the Additional Loan Note.
Section 2.B. (I) of the Additional Loan Agreement is deleted in its
entirety and the following is substituted in lieu thereof:
(I) ten percent (10%) per annum simple interest from the date of Final
Endorsement to the date of calculation of such interest on the outstanding
balance of the Coinsured Loan plus the Additional Loan, which outstanding
balance shall be reduced from time to time by the aggregate amount of any
permitted prepayments of principal under Coinsured Loan and/or the
Additional Loan, until the Coinsured Loan and the Additional Loan have been
paid in full, less (a) interest payments received by the Holder pursuant to
the GNMA MBS, (b) Participating Income Interest made under the Subordinated
Note, and (c) Base Interest payments made under the Additional Loan Note.
6. Payment Obligation Priorities: Notwithstanding any provisions to the
contrary contained in the Subordinated Note, Additional Loan Agreement of
the Additional Loan Note, the undersigned parties agree that the priority
and payment of the following shall occur upon the earlier of (I) Sale or
Refinancing, (II) prepayment of the Additional Loan, (III) prepayment of
the Coinsured Loan, (IV) the Accelerated Maturity Date, (V) the Payment
Date or (VI) the Maturity of the Coinsured Loan and shall be paid in the
following order:
(a) Payment of principal and interest of the Coinsured Loan
(b) Payment of the principal of the Additional Loan
(c) Payment of any unpaid or accrued Interest Rebate.
(d) Payment of any unpaid or accrued Base Interest
(e) Repayment of the $133,036 deposit as provided in Section 3 above and
any Capital Call advance made by the Partners in accordance with
Section 3 of the Additional Loan Agreement, as modified by this
Agreement, pari- passu with any Capital Call advance made by GIT.
(f) Any remaining proceeds shall be split 50% to the Partnership and 50%
to GIT until all Preferred Interest has been paid to GIT in full.
Thereafter, any remaining proceeds shall be paid 100% to the
Partnership.
7. Reduction of Management Fee The Partnership agrees that, until payment
in full of the Coinsured Loan and the Additional Loan, the management fee
paid to the Partnership or any affiliate thereof with respect to the
management of the Project shall be limited to 3% of monthly gross rental
income.
8. Certain Definitions. All Capitalized terms unless defined herein shall
have the same meaning as the term is defined in the Subordinated Note, the
Additional Loan Agreement and the Additional Loan Note.
9. Notice Requirement
a) All notices and other communication required or permitted under this
Agreement shall be in writing and, if mailed by prepaid United States
first-class, certified mail, return receipt requested, at any other
than a general discontinuance of postal service due to strike, lockout
or otherwise, shall be deemed to be received on the earlier of the
date shown on the return receipt or three (3) business days after the
postmarked day thereof. In addition, notices hereunder may be
delivered by hand or by overnight courier, in which event the notice
shall be deemed effective when delivered. All notices and other
communications under this Agreement shall be given to the parties
hereto at the following addresses:
If the Partnership or the Partners
x/x XxXxx-X X 0 Xxxxxxx Xxxxxxxxxxx
000 Xxxxxxxx Xxxxxx
Xxxxxx, XX 00000
Attn: Xxxxx Xxxxxxx
If to the First Mortgagee:
Love Funding Corporation
0000 Xxxxxxxxxx Xxxxxx, X.X.
Xxxxx 000
Xxxxxxxxxx, XX 00000
If to GIT:
c/o Berkshire Mortgage Finance Corporation
000 Xxxxxxxx Xxxxxx
Xxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxxxx
with a copy to:
Xxxxxxxx, Xxxxx & Xxxxxx
Xxx Xxxxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxx, XX 00000
Attn: Xxxxx X. Xxxxxx, Esq.
b) Any party hereto may change the address to which notices shall be
directed under this section 9 by giving ten (10) days written notice
of such change to the other parties.
10. Loan Documents Not Impaired Except as expressly set forth herein with
respect to the Subordinated Note, the Additional Loan Agreement and the
Additional Loan Note, the agreements set forth herein are not intended to
affect or alter the obligations of the Partnership and/or the Partners
under the First Mortgage Documents, the Subordinated Loan Document or the
Additional Loan Documents and this Agreement shall not be construed as a
novation, renegotiation or release under any of these documents.
11. Representation of Borrower. The Partnership and the Partners hereby
acknowledge and confirm with the First Mortgage and GIT that:
a) They have no offset, counterclaim or defense with respect to the
obligations under the First Mortgage Loan Document, the Subordinated
Loan Documents or the Additional Loan Documents and to the extent that
they have any offset, counterclaim or defense with respect to the
obligations thereunder, they hereby waive and release such offset,
counterclaim and defense.
b. The Partnership and the Partners ratify and affirm all obligations
under the First Mortgage Loan Documents, the Subordinated Loan
Documents and the Additional Loan Documents.
c. Except for the matters expressly set forth herein, the Partnership and
the Partners hereby release and forever discharge the First Mortgagee
and GIT and all its directors, officers, employees, administrators,
agents subsidiaries, affiliates, appraisers, inspectors, accountants,
attorneys, successors, and assigns from any and all present existing
causes of action, demands, claims, debts, accounts liabilities, costs,
expenses, contracts, promises, agreements and damages whatsoever
(hereinafter referred to individually and collectively as the
"Claims") which related to the First Mortgage Loan Documents, the
Subordinated Loan Documents and/or the Additional Loan Documents and
also including, without limitation, any and all Claims arising out of
or relating to the exercise by the First Mortgagee or GIT of any
rights pursuant thereto.
12. Execution in Counterparts. This Agreement may be signed in counterparts
by the parties and shall be effective upon the signature of the second
party to sign the Agreement.
13. Binding Effect. The terms and provisions of this Agreement shall be
binding upon the parties hereto and their heirs, successors and assigns.
14. Time of Essence. Time is of the essence in this Agreement.
15. Governing Law. This Agreement shall be construed under the laws of the
State of Florida and if any provisions of this Agreement are held by a
court of competent jurisdiction to be illegal, invalid or unenforceable,
then such illegality, invalidity or unenforceability shall not affect the
legality, validity or enforceability of the other provisions of this
Agreement.
IN WITNESS WHEREOF, the undersigned parties have caused this instrument to
be executed as of the day, month and year first written above.
PARTNERSHIP:
McNab-K C 3 Limited Partnership, a
Massachusetts limited partnership
By: Xxxxx XX, Inc. a Massachusetts
corporation, general partner
By: __________________________
Name:
Title
PARTNERS
Xxxxx XX, Inc., a Massachusetts Corporation
By: _________________________
Name:
Title
Xxxxxx Xxxxx, individually
Xxxxxxx Xxxxx, individually
GIT:
Xxxxx Government Income Trust, a
Massachusetts business trust
By: Berkshire Mortgage Advisors Limited
Partnership, its advisor
By: BRF Corporation, its general partner
By:
Name: Xxxxxx X. Xxxxxxx
Title:
FIRST MORTGAGEE
Love Funding Corporation
By:
Name:
Title:
Exhibit "A"
LEGAL DESCRIPTION
ALL OF TRACT A, ACCORDING TO THE PLAT OF McNAB ESTATES, AS RECORDED IN PLAT
BOOK 142 AT PAGE 29 OF THE PUBLIC RECORES OF BROWARD COUNTY, FLORIDA
RECORDED IN THE OFFICIAL RECORDS BOOK
OF BROWARD COUNTY, FLORIDA
X.X. XXXXXX
COUNTY ADMINISTRATOR
BK 18030PG0956
246CP4071E
