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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
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DECEMBER 31, 1995 0-18226
For the fiscal year Commission file number
ended
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NYLIFE GOVERNMENT MORTGAGE PLUS LIMITED PARTNERSHIP
(Exact name of registrant as specified in its charter)
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MASSACHUSETTS 13-3487910
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
51 MADISON AVENUE, NEW YORK, NEW YORK 10010
(Address of principal executive (Zip Code)
offices)
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Registrant's telephone number, including area code (212) 576-7300
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Securities Registered Pursuant to Section 12(b) of the Act:
NONE
Securities Registered Pursuant to Section 12(g) of the Act:
UNITS OF DEPOSITARY RECEIPTS REPRESENTING UNITS OF LIMITED PARTNER INTERESTS.
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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. Yes _X_ No ____
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be 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. _X_
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The Exhibit index begins on page 47.
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TABLE OF CONTENTS
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PAGE NO.
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PART I.................................................................................................. 3
Item 1. Business...................................................................................... 3
Item 2. Properties.................................................................................... 11
Item 3. Legal Proceedings............................................................................. 11
Item 4. Submission of Matters to a Vote of Security Holders........................................... 12
PART II................................................................................................. 13
Item 5. Market for Registrant's Units and Related Unitholder Matters.................................. 13
Item 6. Selected Financial Data....................................................................... 15
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations......... 15
Item 8. Financial Statements and Supplementary Data................................................... 17
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.......... 17
PART III................................................................................................ 18
Item 10. Directors and Executive Officers of the Registrant........................................... 18
Item 11. Executive Compensation....................................................................... 20
Item 12. Security Ownership of Certain Beneficial Owners and Management............................... 20
Item 13. Certain Relationships and Related Transactions............................................... 20
PART IV................................................................................................. 21
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K.............................. 21
Signatures............................................................................................ 25
Appendix A Financial Statements
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DEFINITIONS -- All capitalized terms not defined herein shall have the
meanings given to them in the Financial Statements attached hereto as Appendix
A, or if not defined therein, the meanings given to them in the registrant's
Amended and Restated Agreement of Limited Partnership (the "Partnership
Agreement").
PART I
ITEM 1. BUSINESS
The registrant NYLIFE Government Mortgage Plus Limited Partnership (referred
to herein as the "Partnership") is a limited partnership which was formed on
November 21, 1988 pursuant to the provisions of the Massachusetts Uniform
Limited Partnership Act. NYLIFE Realty Inc. (the "General Partner"), an indirect
wholly-owned subsidiary of New York Life Insurance Company ("New York Life"), is
the sole general partner of the Partnership.
Pursuant to a prospectus dated May 26, 1989, as supplemented, the
Partnership offered up to 25,000,000 of its units of depositary receipt (the
"Units") for $10 per Unit. The offering of Units in the Partnership was
terminated on September 30, 1991. The capital contributions received by the
Partnership from its offering of Units totaled $81,684,577 which reflected
purchase volume discounts of $143,319. After the return of $42,312,611 of
capital, the Partnership had 8,168,457.7 Units outstanding with a capital value
of $4.82 per Unit.
The Partnership Agreement authorizes the Partnership to acquire guaranteed
or federally insured or coinsured mortgages on multi-family residential
properties or residential care facilities directly, or through the purchase of
mortgage-backed securities ("MBSs"), guaranteed as to principal and Basic
Interest issued or originated under or in connection with the housing programs
of the department of Housing and Urban Development ("HUD") or Government
National Mortgage Association ("GNMA").
In connection with the purchase of such MBSs, and in consideration for
accepting a lower Basic Interest Rate on its MBSs, the Partnership was
authorized to acquire a right to participate in the surplus/operating revenues
and residual value, if any, of the properties subject to the mortgages
underlying the MBSs. Each such participation interest is evidenced by an
additional interest agreement between the Partnership and the grantor of the
mortgage that collateralizes the related MBS. The participation interests are
secured by, among other things, subordinated mortgages on the relevant
underlying properties. These participation interests are not insured by any
governmental agency, and in order to accelerate and enforce payments due under
an additional interest agreement, the Partnership would be required to terminate
the federal mortgage insurance contracts with respect to the related MBS.
Although the participation interests are not insured, and the MBSs are not
participating interests, for ease of reference, the MBSs and the additional
interest agreements under which the participation interests were created may be
collectively referred to herein as "Participating Insured Mortgages" or "PIMs".
The Partnership is also authorized to make loans to the equity investors
("Individual Investors") in the entities that own such properties (the
"Borrowers"). Such loans (the "PGLs") cannot be secured by any mortgage, but may
be secured by the Individual Investors' equity interests in the Borrowers. PGLs
are neither insured nor guaranteed, although the General Partner has guaranteed
a return to the Partnership of funds invested in PGLs. Such funds have been
returned to the Partnership and distributed to its investors. See "Guarantees of
PGLs." In addition to fixed interest, the PGLs may also allow the Partnership to
participate in the appreciation of the underlying properties and such
properties' surplus cash flows. Although the PGLs are not secured by mortgages,
for ease of reference, the PIMs and PGLs are collectively referred to herein as
the "Mortgages."
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Since the formation of the Partnership, the Partnership has purchased MBSs
collateralized by federally co-insured mortgages on three separate multi-family
residential properties ("the Properties"). As of December 31, 1995, the
Partnership held three MBSs. One such MBS was recently sold. See "Mortgages
- --the Highlands -- Recent Developments".
In connection with the purchase of each MBS, the Partnership also acquired a
participation interest evidenced by an additional interest agreement secured in
part by a subordinated mortgage. One of these participation interests was
released in connection with the sale of the underlying property in 1995. See
"Mortgages -- The Highlands".
The Partnership has also funded three PGLs with respect to the Properties.
These PGLs provide for fixed interest at rates of 10% to 15% and also provide
for additional Partnership participation of 10% to 15% in the Properties' net
cash flow and appreciation, if any. The General Partner guaranteed a return to
the Partnership, upon liquidation, of funds invested in PGLs, in excess of cash
payments received by the Partnership from all mortgages and loans, if any (other
than cash payments of principal and Basic Interest on MBSs). In 1995, one of the
PGLs was repaid and the General Partner's obligation to guarantee return of
principal invested in PGLs was satisfied. See "Mortgages -- The Highlands" and
"Guarantee of Mortgages".
The future performance of the Partnership depends on certain factors that
cannot be predicted. Such factors include the financial strength of the
Borrowers and the Individual Investors and regulatory actions by HUD and other
governmental agencies. In addition, the Partnership is subject to the risks
associated with real estate investments. These include reliance on the owners'
operating skills and ability to maintain occupancy levels, meet operating
expenses, maintain the property and maintain adequate insurance coverage, as
well as the impact of adverse changes in general economic conditions, adverse
local conditions, changes in governmental regulations, real estate zoning laws,
or tax laws and other circumstances over which the Partnership may have little
or no control.
The Partnership's investments are not subject to significant seasonal
fluctuations, although net income may vary somewhat from quarter to quarter
based upon the participation features of its investments, if any.
The Partnership considers itself to be engaged in only one industry segment,
namely investment in insured mortgages, mortgage backed securities, and related
participation interests and PGLs.
EMPLOYEES
As of December 31, 1995, there was no personnel employed by the Partnership.
During the years ended December 31, 1995 and 1994, certain employees of New
York Life Insurance Company and its affiliates performed accounting, secretarial
and administrative services for the Partnership. A portion of the costs of such
services allocable to the Partnership were reimbursed by the Partnership in
accordance with the Partnership Agreement.
MORTGAGES
A) CROSS CREEK
In 1990, the Partnership acquired a PIM (the "Cross Creek PIM") consisting
of (i) an MBS collateralized by a mortgage loan in the principal amount of up to
$7,230,000 (the "Cross Creek Mortgage") secured by a first mortgage on a 152
unit garden style apartment complex in Greenville, South Carolina known as
Halcyon at Cross Creek ("Cross Creek") and (ii) an uninsured participation
interest secured by a subordinated mortgage on Cross Creek. The borrower under
the Cross Creek Mortgage is Boiling Springs Apartments, Ltd. (the "Cross Creek
Borrower"). In addition, the Partnership made a PGL to the Individual Investors
in the Cross Creek Borrower (the "Individual Cross Creek Borrowers") in the
principal amount of up to $600,000 (the "Cross Creek PGL").
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PARTICIPATING INSURED MORTGAGE
To fund the construction of Cross Creek, the Partnership purchased from Love
Funding Corporation ("LFC"), mortgage-backed pass-through construction loan
certificates ("CLCs"), guaranteed as to timely payment of principal and Basic
Interest by GNMA, in the maximum principal amount of $7,230,000.
Following the maturity of the CLCs at the conclusion of the construction
period, and upon final endorsement ("Final Endorsement") of the promissory note
evidencing the Cross Creek Mortgage (the "Cross Creek Mortgage Note") by HUD,
which occurred on January 8, 1992, the Partnership received a mortgage-backed
permanent loan certificate ("PLC"), guaranteed as to the timely payment of
principal and Basic Interest by GNMA. The PLC has a face amount of $7,226,406,
and an issue date of February 1, 1992.
The Cross Creek Mortgage Note bears interest at an annual rate ("Basic
Interest Rate") of 8.50% during the permanent term. One quarter of one percent
(.25%) of the foregoing amount is retained by LFC and GNMA as a servicing and
guarantee fee; accordingly, the Partnership's MBS related to the Cross Creek
Mortgage bears interest at the rate of 8.25% per annum. The Cross Creek Borrower
is required to make equal monthly payments of principal and interest on the
Cross Creek Mortgage Note until its maturity on December 15, 2031.
The Cross Creek Mortgage is coinsured by LFC and HUD under Section 221(d)(4)
of the National Housing Act, which relates to new construction of multi-family
residential properties. The Cross Creek Mortgage Note is non-recourse to the
Cross Creek Borrower, except under limited circumstances, including fraud.
The Cross Creek Mortgage Note may be prepaid upon 30 days written notice
after, but not prior to, the tenth anniversary of the date of initial HUD
endorsement ("Initial Endorsement") of the Cross Creek Mortgage Note, with a
prepayment charge equal to 1% of the outstanding principal amount of the Cross
Creek Mortgage Note. Initial Endorsement of the Cross Creek Mortgage Note
occurred on February 22, 1990. Notwithstanding the foregoing, if HUD determines
that prepayment will avoid a mortgage insurance claim and is in the best
interest of the federal government, the Cross Creek Mortgage Note may be prepaid
at any time without the Partnership's consent and without any prepayment charge.
The Partnership has the option, upon six months written notice, to require
prepayment in full of the Cross Creek Mortgage Note on or after the tenth
anniversary of the date of the Initial Endorsement. No prepayment fee shall be
imposed if the Partnership exercises this option. Enforcement of this option
would require the termination of the coinsurance contract and the surrender of
the PLC.
The Partnership is entitled under the participation portion of the Cross
Creek PIM, in addition to monthly pass-through payments of principal and Basic
Interest to: (i) 50% of any increase in the value of Cross Creek in excess of
its base value (i.e., the outstanding principal amounts of the Cross Creek MBS
and PGL); the increase in value is measured from February 22, 1990 until the
sale of Cross Creek, or until the maturity, refinancing or prepayment of the
Cross Creek Mortgage; and (ii) 50% of Cross Creek's monthly net cash flow
(subject to certain HUD restrictions and reserve requirements) beginning with
the first month after completion of construction. The obligation of the Cross
Creek Borrower to make these participation payments is evidenced by an
additional interest agreement between the Cross Creek Borrower and the
Partnership, which is secured by a subordinated mortgage on Cross Creek, and is
non-recourse to the Cross Creek Borrower, except under limited circumstances,
including fraud. This obligation is further secured by a collateral assignment
by the Individual Cross Creek Borrowers of their interests in the Cross Creek
Borrower.
PARTICIPATING GUARANTEED LOAN
The Partnership has made a PGL of up to $600,000 to the Individual Cross
Creek Borrowers, who are jointly and severally liable for this obligation. The
Cross Creek PGL, which is non-recourse debt, is secured by a collateral
assignment by the Individual Cross Creek Borrowers of their partnership
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interests in the Cross Creek Borrower, constituting a second lien thereon. The
promissory note evidencing the Cross Creek PGL provides that the Individual
Cross Creek Borrowers will use the proceeds thereof to satisfy obligations of
the Cross Creek Borrower.
Of the maximum loan proceeds to be available under the Cross Creek PGL,
$400,000 had been advanced as of December 31, 1995. The Partnership's commitment
to advance additional funds under the PGL expired on January 8, 1993. The
unfunded loan commitment of $200,000, which had been included in the
Partnership's working capital reserve, was distributed to the Partnership's
investors on November 15, 1994.
The Cross Creek PGL bears interest at the rate of 10% per annum, payable
semi-annually, and provides that interest may be accrued up to $100,000 to the
extent Surplus Cash Distributions (as defined by HUD) to the Individual Cross
Creek Borrowers are insufficient to fully pay the interest obligation. Any such
accruals will be added to the outstanding principal balance of the PGL and shall
bear interest at the same rate. Accrued interest reached $100,000 on September
25, 1993. Accordingly, accrued interest became due and payable on October 1,
1993. Principal and unpaid interest, if any, shall be due and payable on
February 21, 2005, unless sooner paid.
No prepayments of the principal amount of the Cross Creek PGL will be
permitted prior to the tenth anniversary of the Initial Endorsement of the Cross
Creek Mortgage Note. Thereafter, the PGL may be prepaid in whole, but not in
part, subject to a prepayment fee equal to 1% of the principal amount prepaid.
Also, commencing on the tenth anniversary date, the Partnership will have the
right to call the Cross Creek PGL, in which case no prepayment fee shall be
paid.
The terms of the Cross Creek PGL entitle the Partnership to participations
in addition to Basic Interest equal to: (i) 15% of any increase in the value of
the Individual Cross Creek Borrowers' partnership interest in the Cross Creek
Borrower (determined by reference to the value of Cross Creek) over the base
value of the Individual Cross Creek Borrowers' partnership interest (based on
the outstanding principal amount of the Cross Creek Mortgage and the Cross Creek
PGL), such increase to be determined upon the sale of Cross Creek or upon the
refinancing, prepayment or maturity of the PGL; and (ii) 15% of the Individual
Cross Creek Borrowers' interest in Cross Creek's net cash flow (subject to
certain HUD restrictions and reserve requirements). The aforesaid 15%
participation provided by the Cross Creek PGL is over and above the 50%
participation provided by the Cross Creek PIM. The payment obligation of the
Individual Cross Creek Borrowers with respect to this participation is evidenced
by a supplemental interest agreement, and is non-recourse to the Individual
Cross Creek Borrowers, except under limited circumstances, including fraud.
These obligations are collateralized by a collateral assignment by the
Individual Cross Creek Borrowers of their partnership interests in the Cross
Creek Borrower (constituting a second lien thereon).
PARTICIPATION PAYMENTS
As of December 31, 1995, the Partnership had not received any participating
distributions with respect to either the Cross Creek PIM or the Cross Creek PGL
because HUD regulations generally do not permit the distribution of Surplus Cash
(as defined by HUD) until cash on hand at a particular month end exceeds the
amount of the required reserve. As outlined by HUD, the required reserve
generally includes reserves for obligations due within 30 days, such as accrued
mortgage interest payable; delinquent mortgage principal payments and deposits
to reserve for replacements, if any; accounts payable and accrued expenses due
within 30 days; loans and notes payable due within 30 days; deficient tax
insurance or mortgage insurance premium escrow deposits, if any; prepaid rents;
and tenant security deposits payable.
At December 31, 1995, the Cross Creek Borrower represented that it had cash
on hand of $32,009 while the required reserve was $127,572. Therefore, there was
no Surplus Cash available for distribution under HUD regulations at that time.
Since cash on hand and the required reserve fluctuate monthly based on property
performance, the General Partner cannot determine when participating
distributions will be received by the Partnership, if at all.
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PROPERTY DESCRIPTION
Cross Creek is a 152 unit garden style apartment complex situated on 21.66
acres of land in Greenville, South Carolina. Cross Creek consists of 19
two-story buildings of cedar siding and stucco accents with pitched roofs. All
upper floor units have covered wooden balconies and all ground floor units have
patios. Amenities at Cross Creek include two pools, two tennis courts, a
clubhouse with an exercise room, locker rooms, sauna and steam room.
Occupancy at Cross Creek was 94% at December 31, 1995. The average occupancy
rate for Cross Creek's primary submarket ranges between 94 and 97%. No rental
concessions were offered during the year ended December 31, 1995.
B) THE HIGHLANDS
In December 1990, the Partnership acquired a PIM (the "Highlands PIM")
consisting of (i) an MBS collateralized by a mortgage loan in the principal
amount of up to $13,154,200 (the "Highlands Mortgage") secured by a first
mortgage on a 272 unit garden style apartment complex located outside Tampa,
Florida (the "Highlands") and (ii) a participation interest evidenced by an
additional interest agreement and secured by a subordinated mortgage on the
Highlands. The borrower under the Highlands Mortgage was originally Highland
Oaks Associates Limited (the "Original Highlands Borrower"). The Original
Highlands Borrower sold the Highlands in 1995 as discussed in further detail
below. In addition, the Partnership made a PGL to the Individual Investors in
the Original Highlands Borrower (the "Individual Highlands Borrowers") in the
principal amount of up to $1,595,800 (the "Highlands PGL").
PARTICIPATING INSURED MORTGAGE
In 1990, to finance the construction of the Highlands, the Partnership
purchased from Related Mortgage Corporation ("RMC"), CLCs, guaranteed as to
timely payment of principal and Basic Interest by GNMA, in the maximum principal
amount of up to $13,154,200.
Upon the maturity of the CLCs at the conclusion of the construction period
and upon Final Endorsement of the Highlands Mortgage Note, which occurred on May
31, 1992, the Partnership received a PLC guaranteed as to the timely payment of
principal and Basic Interest by GNMA (the "Highlands PLC").
In connection with its purchase of the CLCs, the Partnership acquired a
participation interest in the Highlands pursuant to an additional interest
agreement with the Highlands Borrower. Under the additional interest agreement
the Partnership was entitled to (i) 50% of the net appreciation in the value of
the Highlands from Initial Endorsement until the sale of the Highlands; and (ii)
50% of the Highlands' net cash flow (subject to certain HUD restrictions and
reserve requirements). The obligations of the Original Highlands Borrower under
the additional interest agreement were secured in part by a second mortgage on
the Highlands.
PARTICIPATING GUARANTEED LOAN
Pursuant to the Highlands PGL, the Partnership advanced $1,095,800 to the
Individual Highlands Borrowers. The Highlands PGL was repaid in 1995 as
described below.
SALE OF THE HIGHLANDS
Effective January 31, 1995, the Original Highlands Borrower sold the
Highlands to Richland Properties, Inc. (the "New Highlands Borrower") for
$16,300,000. The sale closed in escrow pending the receipt by the Partnership of
a new GNMA certificate in the principal amount of $13,037,676, bearing interest
at 7.625% per annum (the "Highlands GNMA") in exchange for the Highlands PLC.
The Highlands GNMA certificate was received by the Partnership on February 15,
1995, at which time the sale was completed and the Partnership received the
payments described below, together with the other closing documents. In
addition, a mutual release was delivered, effective January 31, 1995,
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pursuant to which all obligations of, and claims against, the Original Highlands
Borrower and its general partners were released by the Partnership and RMC, and
all obligations of, and claims against, the Partnership and RMC were released by
the Original Highlands Borrower and its general partners.
In connection with the sale of the Highlands, the Highlands Mortgage
("Modified Mortgage") and related promissory note ("Modified Note") were
modified to provide for (a) prepayment at any time with a prepayment charge
payable to RMC, equal to 1% of the outstanding principal, and (b) a reduction in
the interest rate from 8.5% to 7.875% per annum, one-quarter of one percent of
which is retained by RMC and GNMA as a servicing and guarantee fee. Accordingly,
the Highlands GNMA bears interest at the rate of 7.625% per annum.
Concurrent with the sale of the Highlands as described above, the
participation interests in the Highlands PIM and the Highlands PGL were cashed
out and retired and principal and accrued interest of the Highlands PGL were
repaid as the Partnership received $2,463,060, which included $1,095,800 of PGL
principal, $210,798 of accrued interest, a prepayment fee of $324,000 and
participation in net cash flow and net appreciation of $832,462. The Partnership
distributed these proceeds to investors on May 15, 1995.
Also on January 31, 1995, the Partnership and the Original Highlands
Borrower (together with its partners) entered into a Special Closing Agreement,
pursuant to which two letters of credit held by the Partnership were each
reduced from $75,000 to $17,500. The two letters of credit were being held as
security for the obligations of the Original Highlands Borrower and its partners
under the Special Closing Agreement, pursuant to which the Original Highlands
Borrower agreed to pay a portion of any additional taxes determined to be due to
the State of Florida in connection with the recording of the original loan
documents. The State of Florida claimed that $136,800 of additional recording
taxes were due. The recording tax dispute was recently settled. See "Recent
Developments" below.
During the year ended December 31, 1995, the Partnership received interest
totaling $999,170.10 related to the Highlands GNMA, which has been distributed
to investors in connection with the Partnership's regular quarterly
distributions in accordance with the Partnership Agreement.
RECENT DEVELOPMENTS
On February 27, 1996, the Partnership sold the Highlands GNMA for cash in
the amount of $13,105,373.01. The Highlands GNMA was sold through Utendahl
Capital Partners, an unaffiliated broker dealer. The sales price represents
principal in the amount of $12,976,812.45, accrued interest in the amount of
$71,462.59 and a premium of $57,097.97. The Partnership was not charged any
separate fees or commissions in connection with the sale. The General Partner's
decision to sell the Highlands GNMA was based in part on what it perceived to be
a favorable market in which the Highlands GNMA could be sold at a premium.
The 1996 sale of the Highlands GNMA, together with the 1995 sale of the
Highlands and the related modification of the Highlands Mortgage, terminated the
Partnership's beneficial interest in the Highlands Mortgage and the Highlands.
The General Partner anticipates distributing the proceeds from the sale of
the Highlands GNMA in connection with the Partnership's regular quarterly
distribution to investors on May 15, 1996.
On March 12, 1996, the Partnership settled the $136,800 recording tax claim
of the State of Florida discussed above through a payment to the State of
Florida made on behalf of the Partnership in the amount of $64,000 ($53,800 of
which was funded by the General Partner and $10,150 of which was funded by the
Original Highlands Borrower). The Partnership recently received the signed
Closing Agreement from the State of Florida settling the claim and the letters
of credit being held under the Special Closing Agreement will be returned to the
Original Highlands Borrower.
C) SIGNATURE PLACE
In 1991, the Partnership acquired a PIM (the "Signature Place PIM")
consisting of (i) MBSs issued by LFC and collateralized by a mortgage loan in
the maximum principal amount of up to
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$9,800,000 (the "Signature Place Mortgage") secured by a first mortgage on a
232-unit multi-family residential apartment complex in Hampton, Virginia known
as Signature Place ("Signature Place") and (ii) a participation interest
evidenced by an additional interest agreement secured by a subordinated mortgage
on Signature Place. The borrower under the Signature Place Mortgage is HG
Partners Limited Partnership (the "Signature Place Borrower"). The Partnership
also made a PGL to the Individual Investors in the Signature Place Borrower (the
"Individual Signature Place Borrowers") in the original principal amount of up
to $1,200,000 (the "Signature Place PGL").
PARTICIPATING INSURED MORTGAGE
In 1991, the Partnership purchased MBSs from LFC in the form of CLCs,
guaranteed as to timely payment of principal and Basic Interest by GNMA, in the
maximum principal amount of $9,800,000 to fund the construction of Signature
Place.
Following the maturity of the CLCs at the conclusion of the construction
period and upon Final Endorsement of the promissory note evidencing the
Signature Place Mortgage (the "Signature Place Mortgage Note") by HUD, which
occurred on February 9, 1993, the Partnership received a PLC, guaranteed as to
timely payment of principal and Basic Interest by GNMA (the "Signature Place
PLC"). The Signature Place PLC has a face amount of $9,756,900, and an issue
date of February 1, 1993.
The Signature Place Mortgage Note bears interest at the Basic Interest Rate
of 8.25% during the permanent term. One quarter of one percent (.25%) of the
Basic Interest Rate is retained by LFC and GNMA as a servicing and guarantee
fee; accordingly the Signature Place PLC bears interest at the rate of 8% per
annum. The Signature Place Borrower is required to make equal monthly payments
of principal and interest until maturity of the Signature Place Mortgage Note on
January 15, 2033.
The Signature Place Mortgage is coinsured by LFC and HUD under Section
221(d)(4) of the National Housing Act. The Signature Place Mortgage Note is
non-recourse to the Signature Place Borrower, except under limited
circumstances, including fraud.
The Signature Place Mortgage Note may be prepaid in full upon 45 days
written notice after (but not prior to) the tenth anniversary of Initial
Endorsement, which occurred on May 10, 1991, with a prepayment charge equal to
1% of the principal amount prepaid, plus any additional interest due thereon.
Notwithstanding the foregoing, if HUD determines that prepayment will avoid a
mortgage insurance claim and is in the best interest of the federal government,
the Signature Place Mortgage Note may be prepaid at any time without the
Partnership's consent and without any prepayment charge. The Partnership has the
option, upon six months written notice, to require prepayment in full of the
Signature Place Mortgage Note on or after the tenth anniversary of Initial
Endorsement. No prepayment fee shall be imposed if the Partnership exercises
this option. Enforcement of this option would require the termination of the
coinsurance contract and the surrender of the Signature Place PLC.
The Partnership is entitled under the participation portion of the Signature
Place PIM, in addition to monthly pass-through payments of principal and Basic
Interest, of (i) 50% of the net appreciation in the value of Signature Place
from Initial Endorsement of the Signature Place Mortgage Note until the sale of
Signature Place or the maturity, refinancing or prepayment of the Signature
Place Mortgage; and (ii) 50% of Signature Place's net cash flow (subject to
certain HUD restrictions and reserve requirements) beginning after completion of
construction. The payment obligation of the Signature Place Borrower with
respect to this participation is evidenced by an additional interest agreement,
which is collateralized by a subordinated mortgage on Signature Place and is
non-recourse to the Signature Place Borrower, except under limited
circumstances, including fraud and environmental noncompliance.
PARTICIPATING GUARANTEED LOAN
The Partnership made the Signature Place PGL in the aggregate amount of up
to $1,200,000 to the Individual Signature Place Borrowers, jointly and
severally, in the form of a personal loan
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collateralized by the pledge of 100% of their partnership interests in the
Signature Place Borrower. Only $100 had been funded under the Signature Place
PGL as of December 31, 1995. The Partnership's obligation to advance funds under
the Signature Place PGL expired on August 8, 1994. The unfunded loan proceeds of
$1,199,900, which had been included in the Partnership's working capital
reserve, were distributed to the Partnership's Investors on November 15, 1994.
The Signature Place PGL bears interest at the rate of 15% per annum, payable
semi-annually, and provides that interest shall be accrued up to $100,000 to the
extent Surplus Cash is insufficient to fully pay the interest obligation. Any
such accruals will be added to the outstanding principal balance of the PGL and
shall bear interest at the same rate. At such time as accruals of interest
(including semi-annually compounded interest) exceed $100,000 or commencing with
the second anniversary of Final Endorsement (regardless of the balance of such
accruals), whichever occurs first, the Individual Signature Place Borrowers
shall pay interest on the outstanding principal amount semi-annually, whether or
not Surplus Cash is available. Principal and accrued interest, if any, shall be
due and payable on May 8, 2006.
Because less than $250,000 was funded under the Signature Place PGL,
$249,900 (the difference between $250,000 and the total amount funded) is
considered additional equity in the Signature Place Borrower ("Additional
Equity") contributed by the Individual Signature Place Borrowers. To the extent
the Individual Signature Place Borrowers' share of cash flow provides less than
a 10% cumulative annual return on the outstanding balance of Additional Equity
(compounded semi-annually) over the holding period of the investment, the
shortfall shall be paid to the Individual Investors out of the proceeds from the
sale of Signature Place or refinancing of the Signature Place Mortgage. All
participation earned by the Partnership with respect to the Signature Place PGL
shall be calculated after deducting the Borrowers' Additional Equity and
interest and principal paid on the Signature Place PIM and PGL.
No prepayments of the Signature Place PGL will be permitted prior to the
tenth anniversary of Initial Endorsement of the Signature Place Mortgage Note.
Thereafter, the Signature Place PGL may be prepaid in whole, but not in part,
upon 90 days prior written notice to the Partnership subject to a prepayment fee
equal to 1% of the principal amount prepaid. On the tenth anniversary date, the
Partnership will have the right to call the Signature Place PGL by six months
prior written notice to the Individual Signature Place Borrowers, in which case
no prepayment fee shall be paid.
The terms of the Signature Place PGL entitle the Partnership to
participation, in addition to Basic Interest, equal to (i) 10% of any increase
in the value of the partnership interests in the Signature Place Borrower
(determined by reference to the value of Signature Place) over the base value of
the partnership interests (based on the outstanding principal amount of the
Signature Place Mortgage and the Signature Place PGL), such increase to be
determined upon the sale of Signature Place or upon the refinancing, prepayment
or maturity of the PGL; and (ii) 10% of the Individual Investors' interest in
Signature Place's net cash flow (subject to certain HUD restrictions and reserve
requirements). The aforesaid 10% participation in Signature Place provided by
the Signature Place PGL are over and above the 50% participation in the
Signature Place PIM. The payment obligation of the Individual Signature Place
Borrowers with respect to this participation is evidenced by a supplemental
interest agreement, and is non-recourse to the Individual Signature Place
Borrowers, except under limited circumstances, including fraud.
PARTICIPATION PAYMENTS
To date, the Partnership has not received any participating distributions
with respect to either the Signature Place PIM or the Signature Place PGL
because HUD regulations generally do not permit the distribution of Surplus Cash
(as defined by HUD) until cash on hand at a particular month end exceeds the
amount of the required reserve. As outlined by HUD, the required reserve
generally includes reserves for obligations due within 30 days such as accrued
mortgage interest payable; delinquent mortgage principal payments and deposits
to reserve for replacements, if any; accounts
10
<PAGE>
payable and accrued expenses due within 30 days; loans and notes payable due
within 30 days; deficient tax insurance or mortgage insurance premium escrow
deposits, if any; prepaid rents; and tenant security deposits payable.
At December 31, 1995, the Signature Place Borrower represented that it had
cash on hand of $328,840 while the required reserve was approximately $183,659.
The General Partner is currently evaluating the Surplus Cash statement from the
Signature Place Borrower as of December 31, 1995 in order to determine what
amount of participation in Surplus Cash, if any, is due to the Partnership.
PROPERTY DESCRIPTION
Signature Place is a 232 unit apartment complex located in Hampton,
Virginia. The property is located in the Mercury Central section of Hampton, an
area which includes a regional mall and a wide range of retail and other
services, and convenient access from Interstate 64.
Signature Place consists of approximately 191,728 net rentable square feet
of building area in 13 two-and three-story buildings of wood frame construction
with siding and brick veneer exteriors. The complex contains eight floor plans
ranging from a 544 square foot one-bedroom unit to a 1,132 square foot three
bedroom, two-bath unit. Signature Place offers a clubhouse, swimming pool,
Jacuzzi spa, sauna, exercise room and tennis court, nine-foot ceilings, patios
or balconies, walk-in closets and washer/dryer hookups in all units, fireplaces
in 208 units, laundry equipment in 64 units, other amenities, and at least 375
surface parking spaces, including 42 garage spaces.
The overall occupancy rate in the area is approximately 94%. Occupancy at
Signature Place was 95% at December 31, 1995. No rental concessions are being
offered at this time. The economy in this region is impacted by the presence of
the military. The market has been somewhat impacted by base realignments and
closures but the overall outlook is cautiously optimistic, as various base
realignments should mitigate any base reductions in the area. Approximately 50%
of the tenants at Signature Place are employed by the military.
GUARANTEE OF PGLS
The General Partner agreed pursuant to the Partnership Agreement to
guarantee a return to the Partnership, in the aggregate, of the amount of
investments in the PGLs for Cross Creek, the Highlands and Signature Place.
Pursuant to this guarantee, on the date that dissolution and winding up of the
Partnership shall be completed, the General Partner agreed to pay to the
Partnership an amount, if any, by which (i) the funds invested by the
Partnership in all PGLs exceeds (ii) all cash payments received by the
Partnership with respect to all Mortgages, INCLUDING points, Basic Interest,
Additional Interest and repayment of principal, but EXCLUDING Basic Interest and
repayment of principal of MBSs and other insured/guaranteed Mortgages. As a
result of the sale of the Highlands as referred to in "Mortgages -- the
Highlands" above, the Partnership received cash in excess of the amount of funds
invested by the Partnership in all PGLs. Accordingly, the General Partner has no
remaining future obligation with respect to any of the PGLs.
COMPETITION
The real estate business is highly competitive and the Properties underlying
the PIMs have active competition for tenants from similar properties in their
respective vicinities.
ITEM 2. PROPERTIES
The Partnership does have any interest in any physical properties other than
as described in Item 1. BUSINESS above.
ITEM 3. LEGAL PROCEEDINGS
Two class action lawsuits have been filed against certain affiliates of the
General Partner in suits filed in the District Court of Harris County, Texas on
January 11, 1996, styled GRIMSHAWE V. NEW YORK LIFE INSURANCE CO., ET AL. (No.
96-001188) and SHEA V. NEW YORK LIFE INSURANCE CO., ET AL. (No. 96-001189)
alleging misconduct in connection with the original sale of investment units in
various partnerships, including violation of various federal and state laws and
regulations and claims
11
<PAGE>
of continuing fraudulent conduct. The plaintiffs have asked for compensatory
damages for their lost original investment, plus interest, costs (including
attorneys fees), punitive damages, disgorgement of any earnings, compensation
and benefits received by the defendants as a result of the alleged actions and
other unspecified relief to which plaintiffs may be entitled. These suits were
amended and refiled in a consolidated action in the United States District Court
for the Southern District of Florida (the "Court") on March 18, 1996, adding the
General Partner as a defendant and including allegations concerning the
Partnership. The plaintiffs purport to represent a class of all persons (the
"Class") who purchased or otherwise assumed rights and title to interests in
certain limited partnerships, including the Partnership and other programs
created, sponsored, marketed, sold, operated or managed by the defendants (the
"Proprietary Partnerships"). The Partnership is not a defendant in the
litigation.
The defendants expressly deny any wrongdoing alleged in the complaint and
concede no liability or wrongdoing in connection with the sale of the Units or
the structure of the Proprietary Partnerships. Nevertheless, to reduce the
burden of protracted litigation, the defendants have entered into a Stipulation
of Settlement ("Settlement Agreement") with the plaintiffs because in their
opinion such Settlement would (i) provide substantial benefits to the Class in a
manner consistent with New York Life's position that it had previously
determined to wind up most of the Proprietary Partnerships through orderly
liquidation as the continuation of the business no longer serves the intended
objectives of either the owners of interests in such Proprietary Partnerships or
the defendants and to offer investors an enhancement to the liquidating
distribution they would otherwise receive and (ii) provide an opportunity to
wind up the Partnership on a schedule favorable to the Class and resolve the
issues raised by the lawsuit.
In connection with the settlement, the General Partner will solicit consents
for the dissolution of the Partnership.
Under the terms of the Settlement Agreement, any settling Unitholders will
receive a complete return of their original investment, less distributions
received prior to the final settlement date, in exchange for a release of any
and all claims a Unitholder may have against the defendants in connection with
the Proprietary Partnerships, including the Partnership, and all activities
related to the dissolution and liquidation of such partnerships.
Preliminary approval of the Settlement Agreement was given by the Court on
March 19, 1996. The Settlement Agreement is further conditioned upon final
approval by the Court as well as certain other conditions and is subject to
certain rights of termination detailed in the consent solicitation material
being mailed to the Unitholders.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
12
<PAGE>
PART II
ITEM 5. MARKET FOR REGISTRANT'S UNITS AND RELATED UNITHOLDER MATTERS
All limited partner interests in the Partnerships were originally issued to
NYLIFE Depository Corporation (the "Corporate Limited Partner"), an indirect
wholly owned subsidiary of New York Life Insurance Company. The Units represent
the assigned economic rights attributable to the limited partner interests in
the Partnership of the Corporate Limited Partner. Each Unit originally
represented $10 of depositary interest in the Partnership. The Corporate Limited
Partner acts as depositary for and on behalf of the Partnership. Units were
issued in registered form only and can not be issued to nominee holders, except
at the sole discretion of the General Partner.
The Corporate Limited Partner assigned, to the extent permitted by the
Massachusetts Uniform Limited Partnership Act (the "Act"), all of its rights and
interest in the Partnership (except its $2,000 Limited Partner Interest) to
Unitholders upon their purchase of the Units. Currently, the rights and
interests assignable under the Act by the Corporate Limited Partner include the
right to distributions, profits and losses, and liquidating distributions of the
Partnership. As to the voting rights and the right to inspect or copy the
Partnership's books which are not assignable under the Act, Unitholders are
entitled to exercise their rights through the Corporate Limited Partner as if
they were limited partners of the Partnership under the Act, pursuant to the
Subscription Agreement and the Partnership Agreement. Accordingly, the Corporate
Limited Partner is required to exercise its rights and perform its obligations
as may be required by the Act solely in favor of, in the interest of, and at the
direction of the Unitholders pursuant to the Partnership Agreement.
The transfer of Units is subject to certain limitations contained in the
Partnership Agreement.
The Units may not be listed on a national securities exchange or a national
interdealer quotation system, unless the Partnership has obtained an opinion of
Counsel to the Partnership to the effect that tax-exempt Unitholders will not
incur unrelated business income as a result of such listing, an opinion which
cannot be rendered under present tax law. Even if such an opinion can be
rendered, there is no assurance that the Units will be so listed or that a
market for the Units will develop. In any event, transfer of Units is at all
times subject to certain restrictions. Such restrictions include the following:
(i) transfers are subject to suitability standards imposed by securities laws;
(ii) transfers to foreign persons are not permitted unless immediately after the
transfer the transferee holds a minimum of 5,000 Units and Limited Partner
Interests in the aggregate; (iii) transfers of fewer than 200 Units are not
permitted unless the transferor owns fewer than 200 Units and all of such Units
are transferred; (iv) transfers which would result in the assets of the
Partnership being "plan assets" or transactions of the Partnership being
"prohibited transactions" under ERISA or the Internal Revenue Code will not be
permitted; (v) transfers of 50% or more of the Units are not permitted in any
12-month period; and (vi) transfers which would result in the change of the
Partnership's status as a partnership for federal income tax purposes or which
might in certain cases result in the classification of the Partnership as a
publicly traded partnership are not permitted. In addition, the General Partner
has the right to impose other transfer restrictions. However, the General
Partner, in its discretion, may waive all but restriction (v) above in order to
comply with listing requirements of a national securities exchange or national
interdealer quotation system.
The General Partner has the authority, without a vote of Limited Partners or
Unitholders, to delist the Units from public trading markets and to impose
restrictions on transfers of Units or Limited Partner Interests, or to take any
other action should the General Partner deem it advisable or necessary to do so,
in order to preserve, to the extent possible, the tax status of the Partnership
as a pass-through entity for federal income tax purposes, provided such actions
do not adversely affect a majority in interest of the Unitholders and Limited
Partners, and do not cause the Partnership's assets to be deemed to be "plan
assets" under ERISA with respect to Unitholders or Limited Partners which are
Qualified Plans. The General Partner also has the ability, upon a vote of the
Limited
13
<PAGE>
Partners and Unitholders, to restructure the Partnership to enable it to qualify
as a real estate investment trust or, if possible, as a real estate mortgage
investment conduit for federal income tax purposes.
There will be a fee of not more than $10 (not including the normal sales
commissions charged by brokers) for each transfer of Units, a fee of the lesser
of $50 or actual costs for each conversion from a Unitholder to a Limited
Partner, and a fee of the lesser of $50 or actual costs for each assignment of
Limited Partner Interests. However, if conversion from Units to Limited Partner
Interests is required by law, there will be no charge of any fee to Unitholders.
The General Partner, in its sole discretion, may waive the Unit transfer fee in
order to comply with the listing requirements of a securities exchange or
interdealer quotation system, or for other reasons.
Unitholders who wish to exchange their Units for Limited Partner Interests
and become Limited Partners may do so by delivering to the Partnership
applications (which are available upon request from the General Partner) and
making payment of the appropriate fee per transaction. Unitholders exchanging
their Units to become Limited Partners will be admitted to the Partnership
monthly, following the submission of all required documents to the General
Partner. Limited Partner Interests will not be listed on a national securities
exchange or national interdealer quotation system, and it is not anticipated
that a public market will develop for such interests. Accordingly, holders of
Limited Partner Interests are expected to encounter greater difficulty in
selling their Limited Partner Interests, or in pledging their interests, than
Unitholders. Therefore, Limited Partner Interests should only be considered as a
long-term investment. Units which have been exchanged for Limited Partner
Interests will be canceled and will not be reissued. Investors who effect such
an exchange will not be able to re-exchange their Limited Partner Interests for
Units, and will not be able to sell their interests on a national securities
exchange or national interdealer quotation system if such Units are then listed
on such an exchange or qualified for trading on such a quotation system.
The Partnership makes quarterly distributions of Distributable Cash Flow
from operations remaining after payment of the Asset Management Fee within 45
days after the close of each quarter. The General Partner anticipates that the
Partnership will satisfy the investment objectives with regard to the
preservation and return of the capital investment by the Partners and the
realization of capital gains upon the repayment or sale of the Mortgages. There
is, however, no assurance that the Partnership will be successful in meeting its
investment objectives within the specified period, or that such objectives will
be attained at all.
The Partnership's ability to attain its investment objectives will be
subject to various risks. The Partnership's ability to make distributions of
Distributable Cash Flow will be, in part, subject to the performance of its
investments and to the performance of the properties underlying the Mortgages.
The Partnership's ability to generate cash flow through the participation
features of its PIMs and PGLs will be determined both by the operating
performance of the properties underlying such investments, and by factors
affecting real estate investments and interest rate environments in general over
which the Partnership may have little or no control. Such factors include the
demand for real property and economic conditions within the market areas where
the properties subject to such mortgages are located, as well as actions by HUD
and other regulatory authorities.
The offering period for the Partnership's Units terminated on September 30,
1991.
The number of investors holding Units as of December 31, 1995 was 5,912.
14
<PAGE>
Quarterly distributions for the years ended December 31, 1995 and 1994 were
as follows:
<TABLE>
<CAPTION>
1995 1994
--------------------------- -------------------------------
GENERAL GENERAL
PARTNER UNITHOLDERS (1) PARTNER UNITHOLDERS (1)
--------- ---------------- ------------- ----------------
<S> <C> <C> <C> <C>
1st Quarter.............................. $ 12,053 $ 590,581 $ 11,904 $ 583,291
2nd Quarter.............................. 12,043 3,053,186(3) 11,782 577,320
3rd Quarter.............................. 11,494 563,207 12,149 595,311
4th Quarter.............................. 11,524 564,678 51,415(2) 2,519,325(2)
--------- ---------------- ------------- ----------------
$ 47,114 $ 4,771,652 $ 87,250 $ 4,275,247
--------- ---------------- ------------- ----------------
--------- ---------------- ------------- ----------------
</TABLE>
- ------------------------
(1) During 1995 and 1994, the Partnership had 8,168,457.7 Units outstanding of
which the Corporate Limited Partner owned 200 Units.
(2) The 4th quarter 1994 distribution included a distribution of excess working
capital of $40,174 and $1,968,598 to the General Partner and the
Unitholders, respectively.
(3) The 2nd quarter 1995 distribution included proceeds from the sale of the
Highlands of $2,463,060, all of which was distributed to the Unitholders.
ITEM 6. SELECTED FINANCIAL DATA
The following table sets forth the selected financial information regarding
the Partnership's financial position and operating results as of and for each of
the five years ended December 31, 1995 (which have been derived from audited
financial statements for those years). This information should be read in
conjunction with Management's Discussion and Analysis of Financial Condition and
Results of Operations and the Financial Statements and Supplementary Data, which
are included in Items 7 and 8 of this report, respectively.
<TABLE>
<CAPTION>
1995 1994 1993 1992 1991
-------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
Total revenue........................... $ 3,268,459 $ 2,705,003 $ 2,550,740 $ 3,739,883 $ 3,905,073
-------------- -------------- -------------- -------------- --------------
-------------- -------------- -------------- -------------- --------------
Net income.............................. $ 2,953,032 $ 2,246,715 $ 2,142,774 $ 3,299,842 $ 3,638,562
-------------- -------------- -------------- -------------- --------------
-------------- -------------- -------------- -------------- --------------
Total assets at December 31............. $ 32,117,943 $ 34,070,778 $ 36,102,009 $ 36,259,215 $ 75,765,875
-------------- -------------- -------------- -------------- --------------
-------------- -------------- -------------- -------------- --------------
Total distributions for the years ended
December 31:
Distributable Cash Flow............... $ 2,355,706 $ 2,353,724 $ 2,330,574 $ 4,025,196 $ 3,807,228
Return of Capital..................... -- -- -- 42,312,611 --
Excess working capital reserves....... -- 2,008,773 -- -- --
Sales Proceeds........................ 2,463,060 -- -- -- --
-------------- -------------- -------------- -------------- --------------
Total Distributions................. $ 4,818,766 $ 4,362,497 $ 2,330,574 $ 46,337,807 $ 3,807,228
-------------- -------------- -------------- -------------- --------------
-------------- -------------- -------------- -------------- --------------
</TABLE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
The Partnership's cash and cash equivalents balance at December 31, 1995 of
$867,686 includes $426,266 of working capital reserves and $441,420 of cash
generated from operations net of accrued interest. The Partnership's working
capital reserves were invested in short-term obligations of the United States
government and other cash equivalents.
The Partnership derives its income primarily from its investments in MBSs,
which are long-term, fixed interest rate GNMA securities, guaranteed as to the
timely payment of principal and interest by GNMA and backed by the full faith
and credit of the United States government. The Partnership's only operating
expenses are general and administrative expenses which include audit and tax
return preparation fees, printing and postage costs for quarterly and annual
reports, quarterly investor distribution processing, investor K-1 processing,
and reimbursement to the General Partner for
15
<PAGE>
reimbursable expenses incurred in accordance with the Partnership Agreement In
addition, the Partnership pays an Asset Management Fee to the General Partner of
.5% annually of the average aggregate amount invested in the Cross Creek
Mortgage and the Signature Place Mortgage. As discussed in Item 1. BUSINESS --
"Mortgages -- the Highlands", in connection with the 1995 sale of the Highlands,
the Partnership is no longer entitled to any participation in net cash flow or
net appreciation of the Highlands. Accordingly, effective January 31, 1995 the
General Partner decided to forego an Asset Management Fee with respect to the
aggregate amount invested in the Highlands Modified Mortgage. After payment of
general and administrative expenses, the Partnership distributes all of its
income plus principal repayments on the MBSs to the Partners on a quarterly
basis.
The PIMs and PGLs related to Cross Creek and Signature Place entitle the
Partnership to participate in the cash flow of the properties above certain
levels and in any appreciation upon sale or refinancing. As a result of the
repayment of the Highlands PGL upon the sale of the Highlands, which is more
fully described in Item 1. above, the Partnership received $2,463,060
representing principal and accrued interest on the Highlands PGL, a prepayment
fee and participations in net cash flow and appreciation. The Partnership
distributed such proceeds to investors on May 15, 1995.
Net cash provided by operating activities for 1995 was $3,514,222. In 1994,
net cash provided by operating activities was $2,286,337. As discussed below,
this increase was the result of proceeds received in conjunction with the sale
of the Highlands as offset by decreased interest income resulting from the
repayment of the PGL and the interest rate reduction on the Modified Mortgage.
Going forward, the Partnership's cash flow is expected to decline due to the
sale of the Highlands GNMA as discussed in Item 1. "BUSINESS -- Mortgages -- the
Highlands." Interest income on MBSs will decrease due to the sale of the
Highlands GNMA. Additionally, interest income on cash and cash equivalents will
decrease as the Partnership will no longer receive funds associated with the
Highlands GNMA which would have been invested in United States Government
obligations before being distributed to investors quarterly.
RESULTS OF OPERATIONS -- 1995
The Partnerships net income for the year ended December 31, 1995 increased
by $706,317 from the prior year primarily as a result of other income recognized
in connection with the sale of the Highlands as discussed in Item 1. BUSINESS --
"Mortgages -- the Highlands", and decreases in general and administrative
expenses and Asset Management Fees as offset by decreases in interest income
earned on cash and cash equivalents and the Mortgages.
Interest income on cash and cash equivalents decreased by $18,980 for the
year ended December 31, 1995 as compared to the prior year primarily due to the
distribution on November 15, 1994 of excess working capital which had previously
been invested in short term obligations of the United States government.
Interest income on Mortgages for the year ended December 31, 1995 decreased
by $573,026 from the prior year due to the repayment of the Highlands PGL and
the interest rate reduction on the Modified Mortgage as resulting from the sale
of the Highlands as discussed in Item 1. BUSINESS -- "Mortgages -- the
Highlands."
Other income for the year ended December 31, 1995 increased by $1,155,462
from the prior year due to the receipt of a prepayment charge of $324,000 and
participations in net appreciation and cash flow of $832,462 received in
connection with the sale of the Highlands as discussed in Item 1. BUSINESS --
"Mortgages -- the Highlands."
General and administrative expenses for the year ended December 31, 1995
decreased by $77,549 from the prior year as all legal fees incurred in
connection with the sale of the Highlands and the mutual release delivered in
connection therewith had been paid or accrued as of December 31, 1994. Partially
offsetting this decrease in legal fees was an increase in tax fees and slight
increases in costs related to quarterly investor distribution processing and
investor K-1 processing.
16
<PAGE>
Asset Management Fees for the year ended December 31, 1995 decreased by
$65,312 from the prior year as the General Partner had decided to forego an
asset management fee with respect to the aggregate amount invested in the
Highlands GNMA as, in accordance with the Amended and Restated Agreement, the
Partnership would no longer be entitled to participations in net cash flow or
net appreciation in value of the Highlands.
RESULTS OF OPERATIONS -- 1994
The Partnership's net income for the year ended December 31, 1994 increased
by $103,941 from the prior year primarily as a result of interest income on the
PGLs. Interest income from PGLs increased by $177,708 over 1993, as semi-annual
interest payments became due and payable on the Cross Creek PGL and the
Highlands PGL during the latter half of 1993. Accordingly, the Partnership
realized 12 months worth of interest income on the Cross Creek PGL and the
Highlands PGL during 1994. In addition, the Partnership's 1994 general and
administrative expenses increased from the prior year as a result of
professional fees associated with the Highlands litigation previously described
in the Partnership's annual report on Form 10-K for the year ended December 31,
1994.
RESULTS OF OPERATIONS -- 1993
The Partnership's net income for the year ended December 31, 1993 decreased
by $1,157,068 from the prior year resulting primarily from a decrease in
interest income on cash and cash equivalents. Cash and cash equivalents includes
unfunded net proceeds which are invested in short-term obligations. Unfunded net
proceeds declined throughout 1992 and the first quarter of 1993 as additional
investments in Mortgages were funded. Additionally, there was a decrease in
interest income on Mortgages resulting from the reduction of the interest rate
on the Signature Place MBS from 10% to 8% upon conversion of the Signature Place
Mortgage to permanent status in March, 1993. The decrease in income for the year
more than offset a 10% decrease in general and administrative expenses.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
See Appendix A to this report.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
17
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The principal business occupations during the past five years for the
Directors and executive officers of the Partnership's General Partner, NYLIFE
Realty Inc., are set forth below. Messrs. Micucci, Nocera, Boyce, Topp, Calhoun,
Warga, Ziegler and Zuccaro hold similar positions with (i) NYLIFE Equity Inc.,
which is the general partner of three series of publicly offered oil and gas
limited partnerships known as NYLOG I, NYLOG II and NYLOG III, and (ii) (except
for Mr. Calhoun, who is an officer but not a director or manager) NYLIFE
Structured Asset Management Company Ltd. ("NYLIFE and SAMCO"), which has sold
notes in a public offering. In addition, Messrs. Micucci, Nocera, Boyce and Topp
hold similar positions with NYLIFE Depositary Corporation ("Depositary"), which
is the General Partner of NAFCO Auto Funding, L.P., the originator of NAFCO Auto
Trust -- 1, NAFCO Auto Trust -- 2 and NAFCO Auto Trust -- 3 which has sold
certificates of beneficial interest pursuant to public offerings. Mr. Calhoun
and Mr. Zuccaro are officers, but not Directors of Depositary.
In addition, Messrs. Boyce, Topp, Calhoun and Warga are directors of NYLIFE
Securities Inc. ("NYLSEC"), the sales agent for the Partnership in its public
offering of Units, and Messrs. Topp (as President and Chief Executive Officer),
Boyce, Warga, Calhoun, Micucci and Zuccaro are officers of NYLSEC. NYLIFE Realty
Inc., NYLIFE Equity Inc., NYLIFE SAMCO, Depositary and NYLSEC are indirect
wholly-owned subsidiaries of New York Life Insurance Company.
<TABLE>
<CAPTION>
NAME POSITION
- ----------------------- -------------------------------------------------------
<S> <C>
Kevin M. Micucci Director, President and Controller
Richard A. Topp Director and Vice President
Jefferson C. Boyce Director
Michael J. Nocera Director
Frank J. Ollari Director and Vice President of Investment
Jay S. Calhoun Director, Vice President and Treasurer
Robert Ziegler Vice President of Administration and Secretary
Thomas J. Warga Vice President and General Auditor
Richard W. Zuccaro Tax Vice President
</TABLE>
KEVIN M. MICUCCI, age 36, is a Director, President and Controller of the
General Partner. Prior to February 1996, he was a Vice President and Controller
of the General Partner. Mr. Micucci has been recently promoted to Vice President
of New York Life in the Structured Finance Department, where he had been a
Corporate Vice President since March 1991, an Assistant Vice President from July
1989 and a Director of Financial Reporting from August 1987 to July 1989. He was
a Senior Accountant in the Direct Investments Department of E.F. Hutton &
Company Inc. from 1984 to 1987 and was a Senior Accountant in the Audit
Department of Alexander Grant & Company from 1981 to 1984. Mr. Micucci received
a B.S. degree from St. John's University and is a Certified Public Accountant.
RICHARD A. TOPP, age 50, is a Director and Vice President of the General
Partner. Mr. Topp has resigned from these positions effective March 31, 1996; no
successor has been nominated or elected. Mr. Topp has been a Director and the
President and Chief Executive Officer of NYLIFE Securities Inc. since January
1989 and President and Chief Executive Officer of NYLIFE Distributors Inc. since
November 1993. He was a Vice President of Mutual Life Insurance Company of New
York, a life insurance and financial services company, from 1987 to 1989 and,
prior to such time, was the President of MONY Securities Corp., an
insurance-affiliated broker-dealer, from 1981 to 1987. Mr. Topp received a
B.B.A. degree in Accounting and his M.B.A. in Finance from Pace University.
JEFFERSON C. BOYCE, age 38, is a Director of the General Partner. Mr. Boyce
has been a Senior Vice President of New York Life Insurance Company since
February 1994, where he is in charge of the
18
<PAGE>
Mutual Funds and Structured Finance Departments and of the broker/dealer
operations. Since 1995, Mr. Boyce has been Senior Vice President of the MainStay
Funds and MainStay Institutional Funds Inc. Prior to that position, he was Vice
President in charge of coordinating activities across New York Life's pension,
money management and real estate activities, and was responsible for Magnus
Software, Inc. Previously, he was Vice President responsible for the Pension
Departments investment and underwriting operations. Prior thereto, Mr. Boyce was
a Managing Director of Monitor Capital Advisors. Mr. Boyce received a B.B.S.
degree in Finance from Baruch College.
MICHAEL J. NOCERA, age 50, is a Director of the General Partner and CNP
Realty Investments Inc. He was President of the General Partner from October
1990 to February 1996. Mr. Nocera is currently the President and Chief Executive
Officer of New York Life WorldWide Holding, Inc. Mr. Nocera joined New York Life
as Vice President effective as of October 1, 1990. He was a Senior Vice
President at PaineWebber Properties Inc. from April 1990 to September 1990 and a
Senior Vice President of PaineWebber Incorporated, engaged in investment banking
activities from May 1988 to April 1990. Prior to joining PaineWebber, Mr. Nocera
had been engaged in investment banking activities with Shearson Lehman Hutton
Inc. and predecessor firm, E.F. Hutton & Company Inc., since 1982. From 1973 to
1982, Mr. Nocera was employed by the Securities and Exchange Commission. His
last position was Branch Chief in the Division of Corporation Finance. Mr.
Nocera received a B.A. degree from Boston College and his M.B.A. in Finance from
the American University.
FRANK J. OLLARI, age 49, is a Director and Vice President of Investment of
the General Partner. Mr. Ollari has been a Senior Vice President in the Mortgage
Finance Department of New York Life Insurance Company since October 1989, and
prior thereto was Vice President in that department since November 1985. He was
a Real Estate Vice President from 1982 to 1985 and an Assistant Vice President
from 1980 to 1982. Mr. Ollari received a B.B.A. degree from St. John's
University.
JAY S. CALHOUN, age 40, is a Director, Vice President and Treasurer of the
General Partner and has been Vice President and Treasurer of New York Life since
November 1992. He was named Vice President and Associate Treasurer in March 1992
and, prior to that, served as a Corporate Vice President in the Treasury
Department of New York Life. Mr. Calhoun received a B.A. degree from Princeton
University and an M.S. degree in Business Policy from Columbia University.
ROBERT ZIEGLER, age 41, is a Vice President of Administration and Secretary
of the General Partner. Mr. Ziegler has been recently promoted to Vice President
of New York Life in the Structured Finance Department and prior thereto had been
a Corporate Vice President in the Structured Finance Department since January
1989. He was an Assistant Vice President from July 1987 to December 1988. He was
a Vice President of B&D Equities Inc. and Damson Investor Services Corporation
from 1986 to 1987 and was an Assistant Vice President of Citibank, N.A. from
1981 to 1986. Mr. Ziegler received a B.B.A. degree and his M.B.A. degree from
Baruch College.
THOMAS J. WARGA, age 49, is a Vice President and General Auditor of the
General Partner. Mr. Warga has been a Vice President and General Auditor of New
York Life Insurance Company since March 1989. Prior to his current
responsibilities, he was Associate General Auditor from 1988 to 1989 and
Assistant General Auditor from 1985 to 1988. Mr. Warga received a B.S. degree
from Fairfield University and an M.B.A. degree from Long Island University and
is a Certified Internal Auditor, a Chartered Life Underwriter and a Chartered
Financial Consultant.
RICHARD W. ZUCCARO, age 46, is Tax Vice President of the General Partner.
Mr. Zuccaro has been a Vice President of New York Life since April 1995, and
prior thereto had been a Corporate Vice President since May 1986. Prior to his
current responsibilities, he was an Assistant Vice President of New York Life
Insurance Company from November 1981 to May 1986. Mr. Zuccaro received a B.B.A.
degree in Accounting from the University of Oklahoma.
19
<PAGE>
ITEM 11. EXECUTIVE COMPENSATION
The Partnership has no directors or executive officers. Certain fees and
reimbursable expenses are paid to the General Partner and its affiliates (See
Footnote 7 of Notes to Financial Statements in Appendix A of this report on Form
10-K).
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
As of December 31, 1995, no person is known to the Registrant to be the
beneficial owner of more than 5% of the Partnership's 8,168,257.7 outstanding
Units. The ownership interests held by management or its affiliates consist of
its General Partner and Corporate Limited Partner interests; no interests are
held by executive officers and directors. In addition, as of December 31, 1995,
the General Partner holds [11,869.86 UNITS].
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
See Notes to Financial Statements in Appendix A of this Form 10-K.
20
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a)1. Financial Statements -- see Index of Financial Statements, on page F-2
of Appendix A to this report.
2. All schedules for which provision is made in the applicable
accounting regulations of the Securities and Exchange Commission have
been omitted since either (1) the information required is disclosed in the
financial statements and the notes thereto; (2) the schedules are not
required under the related instructions; or (3) the schedules are
inapplicable.
3. Exhibits:
NUMBER AND DESCRIPTION UNDER REGULATION S-K
The following reflects all applicable Exhibits required under Item 601 of
Regulation S-K:
<TABLE>
<C> <S>
(4) INSTRUMENTS DEFINING THE RIGHTS OF SECURITY HOLDERS INCLUDING INDENTURES:
(4.1) Amended and Restated Agreement of Limited Partnership dated as of May 15, 1989,
incorporated by reference to Exhibit A to the Prospectus included in Amendment No.
2 of Registrant's Registration Statement of Form S-11 dated May 17, 1989 (File No.
0-18226).*
(4.2) Subscription Agreement whereby a subscriber agrees to purchase Units and adopts the
provisions of the Agreement of Limited Partnership, incorporated by reference to
Exhibit C to the Prospectus included in Amendment No. 2 of the Registrant's
Registration Statement on Form S-11 dated May 17, 1989 (File No. 0-18226).*
(4.3) Copy of First Amendment to and Restatement of Certificate of Limited Partnership
filed with the Massachusetts Secretary of State on May 12, 1989, incorporated by
reference to Exhibit 4.4 to Amendment No. 2 of Registrant's Registration Statement
on Form S-11 dated May 17, 1989 (File No. 0-18226).*
(10) MATERIAL CONTRACTS (each of which relates to acquisition of the Cross Creek,
Highlands and Signature Place Mortgages):
CROSS CREEK:
(10.1) GNMA Securities Sale and Purchase Agreement between NYLIFE Government Mortgage Plus
Limited Partnership ("Partnership") and Love Funding Corporation ("LFC"),
incorporated by reference to Exhibit 28.1 to Registrant's Report on Form 8-K dated
February 21, 1990 (File No. 0-18226).*
(10.2) Regulatory Agreement for Multi-family Housing Projects Coinsured by HUD,
incorporated by reference to Exhibit 28.2 to Registrant's Report on Form 8-K dated
February 21, 1990 (File No. 0-18226).*
(10.3) Mortgage note (as endorsed by HUD), issued by Boiling Springs Apartments, Ltd.
("Borrower") to LFC, incorporated by reference to Exhibit 28.3 to Registrant's
Report on Form 8-K dated February 21, 1990 (File No. 0-18226).*
(10.4) Mortgage, Assignment of Rents and Security Agreement by Borrower for the Benefit of
LFC, incorporated by reference to Exhibit 28.4 to Registrant's Report on Form 8-K
dated February 21, 1990 (File No. 0-18226).*
(10.5) Building Loan Agreement between Borrower and LFC, incorporated by reference to
Exhibit 28.5 to Registrant's Report on Form 8-K dated February 21, 1990 (File No.
0-18226).*
(10.6) Security Agreement between Borrower and LFC, incorporated by reference to Exhibit
28.6 to Registrant's Report on Form 8-K dated February 21, 1990 (File No.
0-18226).*
</TABLE>
21
<PAGE>
<TABLE>
<C> <S>
(10.7) Assignment of Leases, Rents and Profits by Borrower to LFC, incorporated by
reference to Exhibit 28.7 to Registrant's Report on Form 8-K dated February 21,
1990 (File no. 0-18226).*
(10.8) Subordinated Mortgage, Assignment of Leases and Rents and Security Agreement
between Borrower and Partnership, incorporated by reference to Exhibit 28.8 to
Registrant's Report on Form 8-K dated February 21, 1990 (File No. 0-18226).*
(10.9) Additional Interest Agreement between Borrower and Partnership, incorporated by
reference to Exhibit 28.9 to Registrant's Report on Form 8-K dated February 21,
1990 (File No. 0-18226).*
(10.10) Form of Security Agreement between Partnership and each of Borrower's partners
("Individual Borrowers") relating to Additional Interest Agreement, incorporated by
reference to Exhibit 28.10 to Registrant's Report on Form 8-K dated February 21,
1990 (File No. 0-18226).*
(10.11) Promissory Note issued by Individual Borrowers to Partnership, incorporated by
reference to Exhibit 28.11 to Registrant's Report on Form 8-K dated February 21,
1990 (File No. 0-18226).*
(10.12) Supplemental Interest Agreement between Partnership and Individual Borrowers,
incorporated by reference to Exhibit 28.12 to Registrant's Report on Form 8-K dated
February 21, 1990 (File No. 0-18226).*
(10.13) Form of Security Agreement with Individual Borrowers relating to Promissory Note
and Supplemental Interest Agreement, incorporated by reference to Exhibit 28.13 to
Registrant's Report on Form 8-K dated February 21, 1990 (File No. 0-18226).*
THE HIGHLANDS:
(10.14) GNMA Security Purchase Agreement between NYLIFE Government Mortgage Plus Limited
Partnership ("Partnership") and Related Mortgage Corporation ("Related"),
incorporated by reference to Exhibit 28.1 to Registrant's Report on Form 8-K dated
January 30, 1991 (File No. 0-18226).*
(10.15) Regulatory Agreement for Multi-family Housing Projects Coinsured by HUD,
incorporated by reference to Exhibit 28.2 to Registrant's Report on Form 8-K dated
January 30, 1991 (File No. 0-18226).*
(10.16) Mortgage note (as endorsed by HUD), issued by H.O. Associates, Ltd. ("Borrower") to
Related, incorporated by reference to Exhibit 28.3 to Registrant's Report on Form
8-K dated January 30, 1991 (File No. 0-18226).*
(10.17) Mortgage by Borrower for the benefit of Related, incorporated by reference to
Exhibit 28.4 to Registrant's Report on Form 8-K dated January 30, 1991 (File No.
0-18226).*
(10.18) Building Loan Agreement between Borrower and Related, incorporated by reference to
Exhibit 28.5 to Registrant's Report on Form 8-K dated January 30, 1991 (File No.
0-18226).*
(10.19) Security Agreement between Borrower and Related, incorporated by reference to
Exhibit 28.6 to Registrant's Report on Form 8-K dated January 30, 1991 (File No.
0-18226).*
(10.20) Assignment of Rents and Leases by Borrower to Related, incorporated by reference to
Exhibit 28.7 to Registrant's Report on Form 8-K dated January 30, 1991 (File No.
0-18226).*
(10.21) Subordinated Mortgage between Borrower and Partnership, incorporated by reference
to Exhibit 28.8 to Registrant's Report on Form 8-K dated January 30, 1991 (File No
0-18226).*
</TABLE>
22
<PAGE>
<TABLE>
<C> <S>
(10.22) Additional Interest Agreement between Borrower and Partnership, incorporated by
reference to Exhibit 28.9 to Registrant's Report on Form 8-K dated January 30, 1991
(File No. 0-18226).*
(10.23) Form of Pledge of Partnership Interests and Security Agreements between Partnership
and each of Borrower's partners ("Individual Borrowers") relating to Additional
Interest Agreement, incorporated by reference to Exhibit 28.10 to Registrant's
Report on Form 8-K dated January 30, 1991 (File No. 0-18226).*
(10.24) Promissory Note issued by Individual Borrowers to Partnership, incorporated by
reference to Exhibit 28.11 to Registrant's Report on Form 8-K dated January 30,
1991 (File No. 0-18226).*
(10.25) Supplemental Interest Agreement between Partnership and Individual Borrowers,
incorporated by reference to Exhibit 28.12 to Registrant's Report on Form 8-K dated
January 30, 1991 (File No. 0-18226).*
(10.26) Form of Pledge of Partnership Interests and Security Agreement with Individual
Borrowers relating to Promissory Note and Supplemental Interest Agreement,
incorporated by reference to Exhibit 28.13 to Registrant's Report on Form 8-K dated
January 30, 1991 (File No. 0-18226).*
(10.39) Modification of Mortgage Note of H.O. Associates, Ltd. payable to Related Mortgage
Corporation dated as of January 31, 1995, as endorsed by HUD.**
(10.40) Modification of Mortgage dated as of January 31, 1995 between H.O. Associates, Ltd.
and Related Mortgage Corporation.**
(10.41) Modification of Collateral Assignment of Rents and Leases dated January 31, 1995
between H.O. Associates, Ltd. and Related Mortgage Corporation.**
(10.42) Amendment to Regulatory Agreement for Multifamily Housing Projects Coinsured by HUD
dated January 31, 1995 by and between H.O. Associates, Ltd. and Related Mortgage
Corporation (original recorded instrument forwarded to Chemical Bank as Ginnie Mae
Custodian by certified mail).**
(10.43) Modification of Security Agreement dated as of January 31, 1995 between H.O.
Associates, Ltd. and Related Mortgage Corporation.**
(10.44) Amended and Restated Agreement dated January 31, 1995 by and between Richland
Properties, Inc. and NYLIFE Government Mortgage Plus Limited Partnership.**
(10.45) Amended and Restated Subordinated Mortgage and Security Agreement dated January 31,
1995 by Richland Properties, Inc. to NYLIFE Government Mortgage Plus Limited
Partnership.**
(10.46) Release Agreement dated January 31, 1995 by and among NYLIFE Government Mortgage
Plus Limited Partnership, Related Mortgage Corporation, H.O. Associates, Ltd.,
Robert M. Schiffman and Edwin B. Branch.**
(10.47) Agreement Regarding Termination of Contract of Coinsurance dated January 31, 1995
by Richland Properties, Inc. and Related Mortgage Corporation.**
(10.48) Amended and Restated Coinsuring Lender/Holder Agreement dated January 31, 1995 by
and between NYLIFE Government Mortgage Plus Limited Partnership and Related
Mortgage Corporation.**
(10.49) Special Closing Agreement dated January 31, 1995 by and among NYLIFE Government
Mortgage Plus Limited Partnership, H.O. Associates, Ltd., Robert M. Schiffman,
Edwin B. Branch, Markborough Development Company and Foley & Lardner.**
</TABLE>
23
<PAGE>
<TABLE>
<C> <S>
SIGNATURE PLACE:
(10.27) GNMA Purchase Agreement between NYLIFE Government Mortgage Plus Limited Partnership
("Partnership") and Love Funding Corporation ("LFC"), incorporated by reference to
Exhibit 28.1 to Registrant's Report on Form 8-K dated June 14, 1991 (File No.
0-18226).*
(10.28) Regulatory Agreement for Multi-family Housing Projects Coinsured by HUD,
incorporated by reference to Exhibit 28.2 to Registrant's Report on Form 8-K dated
June 14, 1991 (File No. 0-18226).*
(10.29) Deed of Trust Note (as endorsed by HUD), issued by H.G. Partners Limited
Partnership. ("Borrower") to LFC, incorporated by reference to Exhibit 28.3 to
Registrant's Report on Form 8-K dated June 14, 1991 (file No. 0-18226).*
(10.30) Deed of Trust, Assignment of Rents and Security Agreement by Borrower for the
benefit of LFC, incorporated by reference to Exhibit 28.4 to Registrant's Report on
Form 8-K dated June 14, 1991 (File No. 0-18226).*
(10.31) Building Loan Agreement between Borrower and LFC, incorporated by reference to
Exhibit 28.5 to Registrant's Report on Form 8-K dated June 14, 1991 (File No.
0-18226).*
(10.32) Security Agreement between Borrower and LFC, incorporated by reference to Exhibit
28.6 to Registrant's Report on Form 8-K dated June 14, 1991 (File No. 0-18226).*
(10.33) Additional Interest Deed of Trust, Security Agreement and Assignment of Leases,
Rents and Profits between Borrower and Partnership, incorporated by reference to
Exhibit 28.7 to Registrant's Report on Form 8-K dated June 14, 1991 (File no.
0-18226).*
(10.34) Additional Interest Agreement between Borrower and Partnership, incorporated by
reference to Exhibit 28.8 to Registrant's Report on Form 8-K dated June 14, 1991
(File No. 0-18226).*
(10.35) Form of Pledge of Partnership Interests and Security Agreement between Partnership
and each of Borrower's partners ("Individual Borrowers") relating to Additional
Interest Agreement, incorporated by reference to Exhibit 28.9 to Registrant's
Report on Form 8-K dated June 14, 1991 (File No. 0-18226).*
(10.36) Promissory Note issued by Individual Borrowers to Partnership, incorporated by
reference to Exhibit 28.10 to Registrant's Report on Form 8-K dated June 14, 1991
(File No. 0-18226).*
(10.37) Supplemental Interest Agreement between Partnership and Individual Borrowers,
incorporated by reference to Exhibit 28.11 to Registrant's Report on Form 8-K dated
June 14, 1991 (File No. 0-18226).*
(10.38) Form of Pledge of Partnership Interests and Security Agreement with Individual
Borrowers relating to Promissory Note and Supplemental Interest Agreement,
incorporated by reference to Exhibit 28.12 to Registrant's Report on Form 8-K dated
June 14, 1991 (File No. 0-18226).*
(27.1) Financial Data Schedule.**
</TABLE>
- ------------------------
*Previously filed.
**Filed herewith.
(b)REPORTS ON FORM 8-K
No reports on Form 8-K were filed during the last quarter of the period
covered by this report.
24
<PAGE>
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.
NYLIFE Government Mortgage
Plus Limited Partnership
By: NYLIFE Realty Inc.
General Partner
By: /s/ KEVIN M. MICUCCI
--------------------------------
Kevin M. Micucci,
President and Controller
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------------------------ ------------------------------------- ------------------
<C> <S> <C>
President, Controller and Director of
/s/ KEVIN M. MICUCCI NYLIFE Realty Inc. (Principal
------------------------------------------- Executive Officer and Principal
Kevin M. Micucci Accounting and Financial Officer) March 29, 1996
/s/ MICHAEL J. NOCERA Director of NYLIFE Realty Inc.
-------------------------------------------
Michael J. Nocera March 29, 1996
/s/ JEFFERSON C. BOYCE Director of NYLIFE Realty Inc.
-------------------------------------------
Jefferson C. Boyce March 29, 1996
/s/ RICHARD A. TOPP Vice President and Director of NYLIFE
------------------------------------------- Realty Inc.
Richard A. Topp March 29, 1996
/s/ FRANK J. OLLARI Vice President of Investment and
------------------------------------------- Director of NYLIFE Realty Inc.
Frank J. Ollari March 29, 1996
/s/ JAY S. CALHOUN Vice President, Treasurer and
------------------------------------------- Director of NYLIFE Realty Inc.
Jay S. Calhoun March 29, 1996
</TABLE>
25
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
APPENDIX A
ANNUAL REPORT ON FORM 10-K
ITEM 8, ITEM 14 (A) (1) AND (2)
FINANCIAL STATEMENTS AS OF
DECEMBER 31, 1995 AND 1994
NYLIFE GOVERNMENT MORTGAGE PLUS
LIMITED PARTNERSHIP
F-1
<PAGE>
FORM 10-K -- ITEM 8, ITEM 14, (A) (1) AND (2)
NYLIFE GOVERNMENT MORTGAGE PLUS LIMITED PARTNERSHIP
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
NO.
----
<S> <C>
Report of Independent Accountants................................ F-3
Balance Sheets as of December 31, 1995 and 1994.................. F-4
Statements of Income for the Years Ended December 31, 1995, 1994
and 1993........................................................ F-5
Statements of Partners' Capital for the Years Ended December 31,
1995, 1994 and 1993............................................. F-6
Statements of Cash Flows for the Years Ended December 31, 1995,
1994 and 1993................................................... F-7
Notes to Financial Statements.................................... F-8
</TABLE>
All schedules for which provision is made in the applicable accounting
regulations of the Securities and Exchange Commission have been omitted since
either (1) the information required is disclosed in the financial statements and
the notes thereto; (2) the schedules are not required under the related
instructions; or (3) the schedules are inapplicable.
F-2
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Partners and Unitholders
of NYLIFE Government Mortgage
Plus Limited Partnership:
We have audited the accompanying balance sheets of NYLIFE Government Mortgage
Plus Limited Partnership (a Massachusetts limited partnership, the
"Partnership") as of December 31, 1995 and 1994, and the related statements of
income, partners' capital and cash flows for each of the three years in the
period ended December 31, 1995. These financial statements are the
responsibility of the General Partner. 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 disclosures 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.
As further discussed in Note 9, in connection with the settlement of litigation
involving the General Partner of the Partnership, the general partner will
solicit consents of the limited partners for the dissolution of the Partnership.
The financial statements do not include any adjustments that might result should
the Unitholders consent to liquidate the Partnership.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of NYLIFE Government Mortgage Plus
Limited Partnership as of December 31, 1995 and 1994 and the results of its
operations and its cash flows for each of the three years in the period ended
December 31, 1995 in conformity with generally accepted accounting principles.
Coopers & Lybrand L.L.P.
New York, New York
March 22, 1996
F-3
<PAGE>
NYLIFE GOVERNMENT MORTGAGE PLUS LIMITED PARTNERSHIP
BALANCE SHEETS
AS OF DECEMBER 31, 1995 AND 1994
<TABLE>
<CAPTION>
ASSETS 1995 1994
------------ ------------
<S> <C> <C>
Cash and cash equivalents.............................. $ 867,686 $ 950,967
Interest receivable.................................... 208,392 280,773
Investments in Participating Insured Mortgages......... 29,765,800 29,891,263
Investments in Participating Guaranteed Loans.......... 400,100 1,495,900
Deferred acquisition fees and expenses -- net.......... 875,965 1,451,875
------------ ------------
Total assets....................................... $ 32,117,943 $ 34,070,778
------------ ------------
------------ ------------
LIABILITIES AND PARTNERS' CAPITAL
Due to affiliates...................................... $ 21,729 $ 100,000
Accrued liabilities.................................... 79,423 88,253
------------ ------------
Total liabilities.................................. 101,152 188,253
------------ ------------
Commitments and contingencies
Partners' capital:
Capital contributions net of public offering
expenses............................................ 36,028,557 36,028,557
Accumulated earnings................................. 17,372,364 14,419,332
Cumulative distributions............................. (21,384,130) (16,565,364)
------------ ------------
Total partners' capital............................ 32,016,791 33,882,525
------------ ------------
Total liabilities and partners' capital............ $ 32,117,943 $ 34,070,778
------------ ------------
------------ ------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-4
<PAGE>
NYLIFE GOVERNMENT MORTGAGE PLUS LIMITED PARTNERSHIP
STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994, AND 1993
<TABLE>
<CAPTION>
1995 1994 1993
---------- ---------- ----------
<S> <C> <C> <C>
INCOME
Interest -- cash and cash equivalents.................. $ 64,991 $ 83,971 $ 79,410
Interest -- Mortgages (net of write-off and
amortization of deferred acquisition costs)........... 2,047,006 2,620,032 2,463,163
Other income........................................... 1,156,462 1,000 8,167
---------- ---------- ----------
Total income....................................... 3,268,459 2,705,003 2,550,740
---------- ---------- ----------
EXPENSES
General and administrative............................. 222,572 300,121 250,000
Asset Management Fees.................................. 92,855 158,167 157,966
---------- ---------- ----------
Total expenses..................................... 315,427 458,288 407,966
---------- ---------- ----------
Net income....................................... $2,953,032 $2,246,715 $2,142,774
---------- ---------- ----------
---------- ---------- ----------
NET INCOME ALLOCATED
General Partner........................................ $ 43,654 $ 44,934 $ 42,856
Corporate Limited Partner.............................. 71 55 51
Unitholders............................................ 2,909,307 2,201,726 2,099,867
---------- ---------- ----------
$2,953,032 $2,246,715 $2,142,774
---------- ---------- ----------
---------- ---------- ----------
Net income per Unit.................................... $ .36 $ .27 $ .26
---------- ---------- ----------
---------- ---------- ----------
Number of Units........................................ 8,168,457.7 8,168,457.7 8,168,457.7
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-5
<PAGE>
NYLIFE GOVERNMENT MORTGAGE PLUS LIMITED PARTNERSHIP
STATEMENTS OF PARTNERS' CAPITAL
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994, AND 1993
<TABLE>
<CAPTION>
CORPORATE TOTAL
LIMITED GENERAL PARTNERS'
UNITHOLDERS PARTNER PARTNER CAPITAL
-------------- ----------- ---------- --------------
<S> <C> <C> <C> <C>
Balance at January 1, 1993............................... $ 36,178,886 $ 970 $ 6,251 $ 36,186,107
Net income............................................... 2,099,867 51 42,856 2,142,774
Distributions............................................ (2,283,906) (56) (46,612) (2,330,574)
-------------- ----------- ---------- --------------
Balance at December 31, 1993............................. $ 35,994,847 $ 965 $ 2,495 $ 35,998,307
Net income............................................... 2,201,726 55 44,934 2,246,715
Distributions............................................ (4,275,142) (105) (87,250) (4,362,497)
-------------- ----------- ---------- --------------
Balance at December 31, 1994............................. 33,921,431 915 (39,821) 33,882,525
Net income............................................... 2,909,307 71 43,654 2,953,032
Distributions............................................ (4,771,535) (117) (47,114) (4,818,766)
-------------- ----------- ---------- --------------
Balance at December 31, 1995............................. $ 32,059,203 $ 869 $ (43,281) $ 32,016,791
-------------- ----------- ---------- --------------
-------------- ----------- ---------- --------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-6
<PAGE>
NYLIFE GOVERNMENT MORTGAGE PLUS LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994, AND 1993
<TABLE>
<CAPTION>
1995 1994 1993
----------- ----------- -----------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income............................................. $ 2,953,032 $ 2,246,715 $ 2,142,774
----------- ----------- -----------
Adjustments to reconcile net income to net cash flows
from operating activities:
Amortization of acquisition costs.................... 575,910 17,948 16,494
Changes in assets and liabilities:
Decrease (increase) in interest receivable......... 72,381 (62,877) 28
(Decrease) increase in due to affiliates........... (78,271) 100,000 --
(Decrease) increase in accrued liabilities......... (8,830) (15,449) 30,594
----------- ----------- -----------
Total adjustments................................ 561,190 39,622 47,116
----------- ----------- -----------
Net cash provided by operating activities........ 3,514,222 2,286,337 2,189,890
----------- ----------- -----------
Cash flows from investing activities:
Repayment of Participating Insured Mortgages......... 125,463 108,069 94,191
Investment in Participating Insured Mortgages........ -- -- (391,900)
Repayment of Participating Guaranteed Loans.......... 1,095,800 -- --
----------- ----------- -----------
Net cash provided by (used in) investing
activities...................................... 1,221,263 108,069 (297,709)
----------- ----------- -----------
Cash flows from financing activities:
Distributions to partners............................ (4,818,766) (4,362,497) (2,330,574)
----------- ----------- -----------
Net cash used in financing activities............ (4,818,766) (4,362,497) (2,330,574)
----------- ----------- -----------
Net decrease in cash and cash equivalents.............. (83,281) (1,968,091) (438,393)
Cash and cash equivalents at beginning of period....... 950,967 2,919,058 3,357,451
----------- ----------- -----------
Cash and cash equivalents at end of period............. $ 867,686 $ 950,967 $ 2,919,058
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-7
<PAGE>
NYLIFE GOVERNMENT MORTGAGE PLUS
LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION AND NATURE OF BUSINESS
NYLIFE Government Mortgage Plus Limited Partnership (the "Partnership") is a
limited partnership which was formed on November 21, 1988 pursuant to the
provisions of the Massachusetts Uniform Limited Partnership Act. The
Partnership's general partner, NYLIFE Realty Inc. (the "General Partner"), an
indirect wholly-owned subsidiary of New York Life Insurance Company ("New York
Life"), was issued all of the general partner interests in exchange for a
capital contribution of $3,000. The Partnership also issued all of the limited
partner interests to NYLIFE Depositary Corporation, an indirect wholly-owned
subsidiary of New York Life (the "Corporate Limited Partner"), in exchange for a
capital contribution of $2,000.
Limited partner interests ("Limited Partner Interests") are defined as the
interests of any partner having an ownership interest representing an initial
capital contribution of $10 together with the obligations of such partner to
comply with all terms and provisions of the Partnership Agreement, but excluding
any claims which the partner may have as a creditor.
A unit is defined as the interest of a unitholder in the Partnership
(hereafter referred to as "Units" and "Unitholders"). Upon the purchase of Units
by Unitholders, the Corporate Limited Partner contributed to the Partnership
cash in the amount of the subscription prices paid by the Unitholders and the
Unitholders received Limited Partner Interests in return. In addition, the
Corporate Limited Partner assigned all of the economic rights attributable to
the Limited Partner Interests to the Unitholders to the extent permitted by
Massachusetts law, and exercised all rights with respect to such Limited Partner
Interests as directed by the Unitholders, pursuant to the Partnership Agreement.
The offering period for the Partnership's Units expired on September 30,
1991.
The Partnership Agreement authorizes the Partnership to acquire guaranteed
or federally insured or coinsured mortgages on multi-family residential
properties or residential care facilities directly or through the purchase of
mortgage-backed securities ("MBSs") guaranteed as to principal and Basic
Interest issued or originated under or in connection with the housing programs
of the department of Housing and Urban Development ("HUD"), or Government
National Mortgage Association ("GNMA"). The Partnership may also acquire
uninsured participation interests secured by subordinated mortgages
("Participation Interests"), which may provide for Partnership participation in
the operating revenues and residual value, if any, of the underlying properties.
In addition, the Partnership may invest in uninsured loans ("Participating
Guaranteed Loans" or "PGLs") with respect to the same properties underlying the
MBSs, which may also provide for such participations. Although the Participation
Interests are not guaranteed or insured by any government agency and the PGLs
are not secured by any real estate mortgage, for ease of reference, the MBSs and
the Participation Interests are collectively referred to herein as the
"Participating Insured Mortgages" or "PIMs" and PIMs and PGLs are collectively
referred to herein as the "Mortgages."
Since its formation, the Partnership has invested in three PIMs consisting
of (i) MBSs collateralized by federally coinsured mortgages on multi-family
residential properties pursuant to the coinsurance programs of Section 221(d)(4)
of the National Housing Act and (ii) participating interests evidenced by
additional interest agreements and secured by subordinated mortgages on those
properties. Each MBS is guaranteed as to principal and Basic Interest by GNMA.
As described in Note 9, one such MBS was sold on February 27, 1996. The Cross
Creek and Signature Place PIMs also provide for the Partnership to participate
in 50% of the underlying property's net cash flow and appreciation, if any. The
Partnership has funded three PGLs with respect to the same properties underlying
the
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<PAGE>
NYLIFE GOVERNMENT MORTGAGE PLUS
LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
1. ORGANIZATION AND NATURE OF BUSINESS (CONTINUED)
Partnership's PIMs. The General Partner has guaranteed a return to the
Partnership, upon liquidation, of funds invested in PGLs, if any, in excess of
cash payments received by the Partnership from all mortgages and loans (other
than cash payments of principal and Basic Interest on MBSs). The PIMs and PGLs
are further described in Note 5.
"Basic Interest" is defined as interest which is generally payable monthly,
and is calculated on the unpaid balance of the underlying mortgage loan or PGL
at an annual percentage rate (the "Basic Interest Rate") specified in the
documents establishing such mortgage loan or PGL.
The Partnership terminates on December 31, 2028, unless terminated earlier
by the occurrence of certain events as set forth in the Partnership Agreement.
At January 1, 1992, the Partnership had committed $33,580,000 for investment
in MBSs and Participation Interests related to three properties, known as Cross
Creek, the Highlands and Signature Place. This represented 48.2% of the funds
available for investment by the Partnership. Since it was unable to invest its
remaining available net proceeds, the Partnership returned $42,312,611 of its
capital to investors during 1992. This amount included $37,020,024 of proceeds
which were not committed for Mortgages, as well as $5,292,587 of fees and
expense reimbursements previously paid to the General Partner and its
affiliates, of which $3,596,572 were credited to capital and $1,696,015 reduced
deferred acquisition costs. This distribution represented a $5.18 per unit
return of capital. Accordingly, subsequent to such distribution, the Partnership
has 8,168,457.7 Units with a capital value of $4.82 per unit.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Partnership uses the following accounting policies for financial
reporting purposes:
CASH AND CASH EQUIVALENTS
Highly liquid debt instruments (including short-term obligations of the
United States government) purchased with a maturity of three months or less, are
considered cash equivalents and are stated at cost, which approximates market
value. Included in cash and cash equivalents is a working capital reserve of
$426,266 which may be used to meet the Partnership's operating expenses and
liabilities.
PARTICIPATING INSURED MORTGAGES
In 1995, mortgage-backed permanent loan certificates ("PLCs") are carried at
current market value and are classified as available-for-sale. PLCs were carried
at amortized cost in 1994 and were classified as held to maturity (See Note 5).
PARTICIPATING GUARANTEED LOANS ("PGLS")
In 1995, PGLs are carried at current market value and are classified as
available-for-sale. PGLs were carried at amortized cost and were classified as
held to maturity in 1994 (See Note 5). Although interest accrues on the PGLs,
the Partnership does not recognize such income on its books until it is
realizable.
DEFERRED ACQUISITION FEES AND EXPENSES
Acquisition expenses, which were paid upon the receipt of gross offering
proceeds, were deferred and, upon conversion of the construction loan
certificates ("CLCs") to a PLC, are currently being amortized over the term of
the PLC, using the effective interest method. Amounts paid to the
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<PAGE>
NYLIFE GOVERNMENT MORTGAGE PLUS
LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Partnership as origination fees relating to the acquisition of Mortgages were
netted against acquisition costs, and are also currently being amortized over
the term of the PLC using the effective interest method.
INCOME TAXES
No provision for income taxes has been made in the financial statements
because these taxes are the responsibility of the individual partners rather
than the Partnership.
PUBLIC OFFERING EXPENSES
Reimbursement to the General Partner for organization and offering expenses
and amounts paid to NYLIFE Securities Inc. ("NYLIFE Securities"), pursuant to a
sales agent agreement, were charged directly to the capital accounts upon the
admission of Unitholders through September 30, 1991. Organization and offering
expenses included costs of preparing the Partnership for registration, and
thereafter offering and selling Units to the public, and included advertising
expenses and any sales commissions paid to broker-dealers relating to the sale
of the Units. In 1992 a portion of these public offering expenses were returned
to the Partnership (See Note 1).
OTHER
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 dates of the financial
statements and the reported amounts of revenues and expenses during the
reporting periods. Actual results could differ from those estimates.
3. CAPITAL CONTRIBUTIONS AND ALLOCATION OF NET INCOME TO THE CORPORATE
LIMITED PARTNER AND UNITHOLDERS
As of December 31, 1995, the Partnership had 8,168,457.7 Units outstanding
which originally sold for $81,684,577 and which reflected purchase volume
discounts of $143,319.
4. THE PARTNERSHIP AGREEMENT
In accordance with the Partnership Agreement, Distributable Cash Flow, as
defined below, of the Partnership remaining after payment of the Asset
Management Fee, as defined, is distributed quarterly, 98% to the class comprised
of the Unitholders (which includes the Corporate Limited Partner) and 2% to the
General Partner.
"Distributable Cash Flow" is defined as i) the net cash provided by the
Partnership's normal operations for each fiscal year, or portion thereof,
including, without limitation, Basic Interest, Minimum Additional Interest and
Shared Income Interest from Mortgages, points, interest from interim investments
and from funds held in escrow and amounts released from operating reserve
accounts available for distribution, after the general expenses and current
liabilities of the Partnership for such period (other than the Asset Management
Fee) are paid, less ii) amounts set aside for reserves.
"Asset Management Fee" is defined as an amount paid by the Partnership to
the General Partner on a quarterly basis equal to .5% per annum of the value of
the Total Invested Assets of the Partnership. Under no circumstances may the
aggregate of the Asset Management Fee paid since the organization of the
Partnership and the distributions to the General Partner of Distributable Cash
Flow paid since the organization of the Partnership exceed 10% of the aggregate
Distributable Cash Flow since the organization of the Partnership. The General
Partner may subcontract all or a portion of the services rendered for the Asset
Management Fee.
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<PAGE>
NYLIFE GOVERNMENT MORTGAGE PLUS
LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
4. THE PARTNERSHIP AGREEMENT (CONTINUED)
"Total Invested Assets" is defined as the portion of the net proceeds of the
offering which is invested in Mortgages.
Upon the occurrence of a Capital Transaction, as defined below, the General
Partner will apply the proceeds first to the payment of all debts and
liabilities of the Partnership then due, and then fund any reserves for
contingent liabilities which it deems appropriate. "Capital Transaction" is
defined as a principal repayment or Mortgage prepayment to the extent that it is
classified as a return of capital for federal income tax purposes.
The remaining Net Cash Proceeds if any, as defined below, will be
distributed as follows: FIRST, to the class comprising the Unitholders until
they have received a return of their total Invested Capital; SECOND, to the
General Partner until it has received a return of its total Invested Capital;
THIRD, 99% to the class comprising the Unitholders and 1% to the General Partner
until the class comprising the Unitholders have received any deficiency in their
12% per annum Cumulative Return on Invested Capital through fiscal years ended
prior to the date of the Capital Transaction; and FOURTH, as to any remaining
proceeds, 90% to the class comprised of the Unitholders and 10% to the General
Partner.
"Net Cash Proceeds" is defined as cash received by the Partnership as a
result of a Capital Transaction, less any reinvested amounts, all debts and
liabilities of the Partnership required to be paid as a result of the
Transaction, and any reserves for contingent liabilities, to the extent deemed
reasonable by the General Partner. This is provided that, at the expiration of
such period as the General Partner shall deem advisable, the balance of such
reserves remaining after payment of such contingencies shall be distributed in
the manner provided in this Agreement for Net Cash Proceeds. If the Partnership
takes back a mortgage note in connection with a Capital Transaction, all
payments received with respect to it shall be included in the Net Cash Proceeds
of that Transaction.
"Invested Capital" means, with respect to the General Partner, its capital
contributions (other than capital contributions represented by any Guarantee
Payments, as described in Note 5) and, with respect to the Limited Partners and
Unitholders, $10.00 for each Limited Partner Interest or Unit, in either case
reduced by any amounts received as distributions of Distributable Cash Flow.
The Cumulative Return is defined as a 12% return per annum on the invested
capital of the class made up of the Unitholders calculated from the respective
dates on which the Units are deemed to be outstanding through the most recent
fiscal year completed prior to the Capital Transaction giving rise to the
computation.
Net income or loss from operations for any fiscal year is allocated 98% to
the class comprised of the Unitholders and 2% to the General Partner.
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<PAGE>
NYLIFE GOVERNMENT MORTGAGE PLUS
LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
5. INVESTMENTS IN MORTGAGES
The Partnership's net proceeds of $33,580,000 had been committed for
investment in Mortgages. Of this total amount committed, $1,946,594 had been
included in the Partnership's working capital reserve and subsequently
distributed to its Partners on November 15, 1994 and the following amounts have
been funded as of December 31, 1995 and 1994:
<TABLE>
<CAPTION>
1995 (1) 1994 (1)
-------------- -----------
<S> <C> <C> <C>
Halcyon at Cross Creek........................ -PIM $ 7,226,406 $ 7,226,406
-PGL 400,000 400,000
The Highlands................................. -PIM 13,037,676(2) 13,154,200
-PGL -- (2) 1,095,800
Signature Place............................... -PIM 9,756,900 9,756,900
-PGL 100 100
-------------- -----------
$ 30,421,082 $31,633,406
-------------- -----------
-------------- -----------
</TABLE>
- ------------------------
(1) As of December 31, 1995 and 1994 cumulative principal repayments on the PIMS
of $371,707 and $246,244 have been received, respectively.
(2) Effective January 31, 1995, as part of the sale of the Highlands, as
described below, the participation feature of the Highlands PIM was
released, a new MBS was issued to the Partnership and the related PGL was
repaid. As described in Note 9, the MBS was subsequently sold in 1996.
MORTGAGE BACKED SECURITIES
Effective January 1, 1994, the Partnership adopted the provisions of
Statement of Financial Accounting Standards No. 115 "Accounting for Certain
Investments in Debt and Equity Securities" ("SFAS No. 115"). The Partnership had
considered its PIMs and PGLs to be held-to-maturity as defined by SFAS No. 115
in 1994.
SFAS No. 115 addresses the definition of, accounting for and disclosure of
debt and equity securities. In accordance with the statement, securities are
classified when purchased as either securities held to maturity, securities
available for sale or trading securities.
In November 1995, the Financial Accounting Standards Board ("FASB") issued a
Special Report, "A Guide to Implementation of Statement 115 on Accounting for
Certain Investments in Debt and Equity Securities." Concurrent with the initial
adoption of this implementation guidance, but no later than December 31, 1995,
the FASB permitted a one-time opportunity to reassess the appropriateness of the
classification of all securities. Accordingly, on December 31, 1995, the
Partnership reclassified its held-to-maturity investments to available-for-sale,
based on a one-time assessment of the portfolio. The impact of the assessment
was to transfer securities with an amortized cost of approximately $30,200,000
(which approximates market value of $30,700,000) from held-to-maturity to
available-for-sale. Market value has been calculated by management by
discounting future cash flows using interest rates based on treasury bills with
similar maturities.
A) CROSS CREEK
In 1990, the Partnership acquired a PIM (the "Cross Creek PIM") consisting
of (i) a MBS collateralized by a first mortgage loan in the principal amount of
up to $7,230,000 (the "Cross Creek Mortgage") with respect to a 152 unit garden
style apartment complex in Greenville, South Carolina known as Halcyon at Cross
Creek ("Cross Creek") and (ii) a participation interest in Cross Creek evidenced
by an additional interest agreement and secured by a subordinated mortgage on
Cross
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<PAGE>
NYLIFE GOVERNMENT MORTGAGE PLUS
LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
5. INVESTMENTS IN MORTGAGES (CONTINUED)
Creek. The borrower is Boiling Springs Apartments Limited (the "Cross Creek
Borrower"). In addition, the Partnership agreed to make a PGL to the Cross Creek
Borrower's partners ("Individual Cross Creek Borrowers") of up to $600,000.
PARTICIPATING INSURED MORTGAGE
To fund the construction of Cross Creek, the Partnership purchased from Love
Funding Corporation ("LFC") mortgage-backed pass-through construction loan
certificates ("CLCs"), guaranteed as to timely payment of principal and Basic
Interest by GNMA, in the maximum principal amount of $7,230,000.
Upon the maturity of the CLCs at the conclusion of the construction period
and upon final endorsement ("Final Endorsement") of the Cross Creek Mortgage
Note by HUD, which occurred on January 8, 1992, the Partnership received a
mortgage-backed permanent loan certificate ( the "Cross Creek PLC"), guaranteed
as to the timely payment of principal and Basic Interest by GNMA. The Cross
Creek PLC has a face amount of $7,226,406, and an issue date of February 1,
1992.
The Cross Creek Mortgage Note bears interest at a Basic Interest Rate of
8.50% during the permanent term. One quarter of one percent (.25%) of the
foregoing amount is retained by LFC and GNMA as a servicing and guarantee fee;
accordingly, the Cross Creek PLC bears an interest rate of 8.25% per annum. The
Cross Creek Borrower is required to make equal monthly payments of principal and
interest on the Cross Creek Mortgage Note until maturity on December 15, 2031.
The Cross Creek Mortgage is coinsured by LFC and HUD under Section 221(d)(4)
of the National Housing Act for new construction of multi-family residential
properties. The Cross Creek Mortgage Note, which is non-recourse to the Cross
Creek Borrower, except under limited circumstances, including fraud, is
collateralized by a first mortgage on Cross Creek.
The Cross Creek Mortgage Note may be prepaid upon 30 days written notice
after, but not prior to, the tenth anniversary of the date of Initial
Endorsement, with a prepayment charge equal to 1% of the outstanding principal
on the Cross Creek Mortgage. Notwithstanding the foregoing, if HUD determines
that prepayment will avoid a mortgage insurance claim and is in the best
interest of the federal government, the Cross Creek Mortgage Note may be prepaid
at any time without the Partnership's consent and without any prepayment charge.
The Partnership has the option, upon six months written notice, to require
prepayment in full on or after the tenth anniversary of the date of the Initial
Endorsement. No prepayment fee shall be imposed if the Partnership exercises
this option. Enforcement of this option would require the termination of the
coinsurance contract and the surrender of the Cross Creek PLC.
The Partnership is entitled under the Cross Creek PIM to participations, in
addition to monthly pass-through payments of principal and Basic Interest, of:
(i) 50% of any increase in the value of Cross Creek in excess of its base value
(i.e., the outstanding principal amounts of the Cross Creek Mortgage and PGL);
the increase in value is measured from February 22, 1990 until the sale of Cross
Creek, or until the maturity, refinancing or prepayment of the Cross Creek
Mortgage; and (ii) 50% of Cross Creek's monthly net cash flow (subject to
certain HUD restrictions and reserve requirements) beginning with the first
month after completion of construction. The obligation of the Cross Creek
Borrower to pay these participations is evidenced by an additional interest
agreement, which is collateralized by a subordinated mortgage on Cross Creek and
is non-recourse to the Cross Creek Borrower, except under limited circumstances,
including fraud. This obligation is further collateralized by a collateral
assignment by the Individual Cross Creek Borrowers of their interests in the
Cross Creek Borrower.
F-13
<PAGE>
NYLIFE GOVERNMENT MORTGAGE PLUS
LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
5. INVESTMENTS IN MORTGAGES (CONTINUED)
PARTICIPATING GUARANTEED LOAN
The Partnership agreed to make a PGL of up to $600,000 to the Individual
Cross Creek Borrowers who are jointly and severally liable for this obligation.
The PGL, which is non-recourse debt, is collateralized by a collateral
assignment by the Individual Borrowers of their partnership interests in the
Cross Creek Borrower, constituting a second lien thereon. The promissory note
evidencing the PGL provides that the Individual Borrowers will use the proceeds
thereof to satisfy obligations of the Cross Creek Borrower.
Of the maximum loan proceeds to be available under the PGL, $400,000 has
been advanced as of December 31, 1995. In addition, up to $200,000 of the
maximum loan proceeds was to be advanced at the rate of $10.00 for each $1.00 of
net operating income in excess of $750,000 earned by Cross Creek at any time up
to and including one year after Final Endorsement of the Cross Creek Mortgage.
The one year anniversary of Final Endorsement was January 8, 1993 and no
additional amounts were advanced under the PGL. The unfunded loan proceeds of
$200,000, which had been included in the Partnership's working capital reserve,
were distributed to its Partners on November 15, 1994.
The PGL bears interest at the rate of 10% per annum, payable semi-annually,
and provides that interest shall be accrued up to $100,000 to the extent Surplus
Cash distributions (as defined by HUD) to the Individual Borrowers are
insufficient to fully pay the interest obligation. Any such accruals will be
added to the outstanding principal balance of the PGL and shall bear interest at
the same rate. At such time as accruals of interest (including semi-annually
compounded interest) exceed $100,000, the Individual Borrowers shall pay
interest on the outstanding principal amount semi-annually, whether or not
Surplus Cash is available. Accrued interest reached $100,000 on September 25,
1993. Accordingly, accrued interest became due and payable on October 1, 1993.
Semi-annual interest payments of $25,000 will be due and payable on each April 1
and October 1. Principal and unpaid interest, if any, shall be due and payable
on February 21, 2005.
No prepayments of the PGL will be permitted prior to the tenth anniversary
of the Initial Endorsement of the Cross Creek Mortgage. Thereafter, the PGL may
be prepaid in whole, but not in part, subject to a prepayment fee equal to 1% of
the principal amount prepaid. Also, commencing on the tenth anniversary date,
the Partnership will have the right to call the PGL, in which case no prepayment
fee shall be paid.
The terms of the PGL entitle the Partnership to participations in addition
to Basic Interest equal to: (i) 15% of any increase in the value of the
Individual Borrowers' partnership interest in the Cross Creek Borrower
(determined by reference to the value of Cross Creek) over the base value of the
Individual Borrowers' partnership interest (based on the outstanding principal
amount of the Cross Creek Mortgage and the PGL), such increase to be determined
upon the sale of Cross Creek or upon the refinancing, prepayment or maturity of
the PGL; and (ii) 15% of the Individual Borrowers' interest in Cross Creek's net
cash flow (subject to certain HUD restrictions and reserve requirements). The
aforesaid 15% participations in the PGL are over and above the 50%
participations in the Cross Creek Mortgage. The obligation of the Individual
Borrowers to pay these participations is evidenced by a supplemental interest
agreement, and is non-recourse to the Individual Borrowers, except under limited
circumstances, including fraud. These obligations are collateralized by a
collateral assignment by the Individual Borrowers of their partnership interests
in the Cross Creek Borrower (constituting a second lien thereon).
F-14
<PAGE>
NYLIFE GOVERNMENT MORTGAGE PLUS
LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
5. INVESTMENTS IN MORTGAGES (CONTINUED)
B) THE HIGHLANDS
In 1990, the Partnership acquired a PIM consisting of (i) an MBS
collateralized by a mortgage loan in the principal amount of up to $13,154,200
(the "Highlands Mortgage") secured by a first mortgage on a 272 unit garden
style apartment complex located outside Tampa, Florida (the "Highlands") and
(ii) a participation interest in the Highlands evidenced by an additional
interest agreement and secured by a subordinated mortgage on the Highlands. The
original borrower under the Highlands Mortgage was Highland Oaks Associates
Limited (the "Original Highlands Borrower").
PARTICIPATING INSURED MORTGAGE
To fund the construction of the Highlands, the Partnership entered into a
purchase agreement with Related Mortgage Corporation ("RMC"), pursuant to which
it agreed to purchase CLCs, guaranteed as to timely payment of principal and
Basic Interest by GNMA, in the maximum principal amount of up to $13,154,200.
Upon the maturity of the CLCs at the conclusion of the construction period
and upon Final Endorsement of the Highlands Mortgage Note by HUD, which occurred
on May 31, 1992, the Partnership received a PLC guaranteed as to the timely
payment of principal and Basic Interest by GNMA. The PLC had a face amount of
$13,154,200 and an issue date of June 1, 1992.
Effective January 31, 1995, the Original Highlands Borrower sold the
Highlands to Richland Properties, Inc. (the "New Highlands Borrower") for
$16,300,000 in accordance with the terms and conditions of the Purchase and Sale
Agreement dated October 14, 1994. The sale closed in escrow pending the receipt
by the Partnership of a new GNMA certificate in the principal amount of
$13,037,676, and bearing interest at 7.625% per annum. The new GNMA certificate
was received by the Partnership on February 15, 1995, at which time the sale was
completed and the Partnership received the payments described below, together
with the other closing documents. In addition, a mutual release was delivered,
effective January 31, 1995, pursuant to which all obligations of, and claims
against, the Highlands Borrower and its general partners were released by the
Partnership and Related Mortgage Corporation ("RMC"), and all obligations of,
and claims against, the Partnership and RMC were released by the Highlands
Borrower and its general partners.
The Partnership retained its beneficial interest in the Highlands Mortgage
("Modified Mortgage") and related promissory note ("Modified Note"), which were
modified to provide for (a) prepayment at any time with a prepayment charge
payable to RMC, equal to 1% of the outstanding principal, and (b) a reduction in
the interest rate from 8.5% to 7.875% per annum, one-quarter of one percent of
which is retained by RMC and GNMA as a servicing and guarantee fee. Accordingly,
the Partnership earns an interest rate of 7.625% per annum. The New Highlands
Borrower is required pursuant to the Modified Note and Modified Mortgage to make
equal monthly payments of principal and interest until maturity on May 15, 2032.
The Modified Mortgage is coinsured by RMC and HUD under Section 221(d)(4), of
the National Housing Act for new construction of multi-family residential
properties.
The Partnership has the option, upon six months written notice, to require
prepayment in full of the Modified Note on or after January 31, 2005. No
prepayment fee will be imposed if the Partnership exercises this option.
Enforcement of this option would require the termination of the coinsurance
contract and the surrender of the new GNMA certificate.
The Additional Interest Agreement has been amended and restated ("Amended
and Restated Agreement") to provide that the Partnership will no longer be
entitled to any participations in net cash flow or net appreciation in value of
the Highlands.
F-15
<PAGE>
NYLIFE GOVERNMENT MORTGAGE PLUS
LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
5. INVESTMENTS IN MORTGAGES (CONTINUED)
Concurrent with the sale of the Highlands as described above, the Highlands
PGL was repaid as the Partnership received $2,463,060, which included $1,095,800
of principal, $210,798 of accrued interest, a prepayment fee of $324,000 and
participations of $832,462. Such prepayment fee and participation are included
in other income for the year ended December 31, 1995. The Partnership
distributed these proceeds to its partners on May 15, 1995. In addition, the
Supplemental Interest Agreement was terminated, and the Partnership and the New
Highlands Borrower entered into an Amended and Restated Subordinated Mortgage
and Security Agreement to secure the Partnership's call option, as described
above.
As described in Note 9, the Highlands GNMA was sold on February 27, 1996.
Also on January 31, 1995, the Partnership and the Original Highlands
Borrower (together with its partners) entered into a Special Closing Agreement,
pursuant to which two letters of credit held by the Partnership were each
reduced from $75,000 to $17,500. The two letters of credit were being held as
security for the obligations of the Original Highlands Borrower and its partners
under the Special Closing Agreement, pursuant to which the Original Highlands
Borrower agreed to pay a portion of any additional taxes determined to be due in
connection with the recording of the original loan documents to the State of
Florida. In 1996, the recording tax claim was settled with the State of Florida
as described in Note 9.
During the year ended December 31, 1995, the Partnership received interest
totaling $999,170.10 related to the Highlands GNMA, which has been distributed
to investors in connection with the Partnership's regular quarterly
distributions in accordance with the Partnership's partnership agreement.
C) SIGNATURE PLACE
On May 8, 1991, the Partnership agreed to acquired a PIM (the "Signature
Place PIM") consisting of (i) an MBS collateralized by a federally coinsured
mortgage loan in the maximum principal amount of up to $9,800,000 (the
"Signature Place Mortgage") and (ii) a Participation Interest evidenced by an
additional interest agreement and secured by a subordinated mortgage on
Signature Place. The borrower of the Signature Place Mortgage is HG Partners
Limited Partnership (the "Signature Place Borrower"), which used the funds to
finance the construction of a 232-unit multi-family residential apartment
complex in Hampton, Virginia known as Signature Place ("Signature Place"). In
addition, the Partnership agreed to make a PGL to each of the Individual
Borrowers in the aggregate amount of up to $1,200,000.
PARTICIPATING INSURED MORTGAGES
The Partnership entered into a GNMA purchase agreement with LFC, pursuant to
which it agreed to purchase CLCs, guaranteed as to timely payment of principal
and Basic Interest by GNMA, in the maximum principal amount of $9,800,000. The
proceeds of the Signature Place Mortgage were disbursed to the Signature Place
Borrower in stages during the construction of Signature Place.
Upon the maturity of the CLCs at the conclusion of the construction period
and upon Final Endorsement of the Signature Place Mortgage note by HUD, which
occurred on February 9, 1993, the Partnership received a PLC (the "Signature
Place PLC"), guaranteed as to timely payment of principal and Basic Interest by
GNMA. The Signature Place PLC has a face amount of $9,756,900, and an issue date
of February 1, 1993.
The Signature Place Mortgage Note bears interest at a Basic Interest Rate of
8.25% during the permanent term. One quarter of one percent (.25%) of the
foregoing amount is retained by LFC and
F-16
<PAGE>
NYLIFE GOVERNMENT MORTGAGE PLUS
LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
5. INVESTMENTS IN MORTGAGES (CONTINUED)
GNMA as a servicing and guarantee fee; accordingly the Signature Place PLC bears
an interest rate of 8% per annum. The Signature Place Borrower will make equal
monthly payments of principal and interest until maturity on January 15, 2033.
The Signature Place Mortgage is coinsured by LFC and HUD under Section
221(d)(4) of the National Housing Act for new construction of multi-family
residential properties. The Signature Place Mortgage note, which is non-recourse
to the Signature Place Borrower, except under limited circumstances, including
fraud, is secured by a first mortgage on Signature Place.
The Signature Place Mortgage Note may be prepaid in full upon 45 days
written notice after (but not prior to) the tenth anniversary of Initial
Endorsement with a prepayment charge equal to 1% of the principal amount
prepaid, plus any additional interest due thereon. Notwithstanding the
foregoing, if HUD determines that prepayment will avoid a mortgage insurance
claim and is in the best interest of the federal government, the Signature Place
Mortgage Note may be prepaid at any time without the Partnership's consent and
without any prepayment charge. The Partnership has the option, upon six months
written notice, to require prepayment in full of the Signature Place Mortgage
Note on or after the tenth anniversary of Initial Endorsement. No prepayment fee
shall be imposed if the Partnership exercises this option. Enforcement of this
option would require the termination of the coinsurance contract and the
surrender of the Signature Place PLC.
The Partnership is entitled to participations under the Signature Place PIM
in addition to monthly pass-through payments of principal and Basic Interest,
equal to: (i) 50% of the net appreciation in the value of Signature Place from
Initial Endorsement until the sale of Signature Place or the maturity,
refinancing or prepayment of the Signature Place Mortgage; and (ii) 50% of
Signature Place's net cash flow (subject to certain HUD restrictions and reserve
requirements) beginning after completion of construction. The obligation of the
Signature Place Borrower to pay these participations is evidenced by an
additional interest agreement, which is collateralized by a subordinated
mortgage on Signature Place and is non-recourse to the Signature Place Borrower,
except under limited circumstances, including fraud and environmental
noncompliance.
PARTICIPATING GUARANTEED LOAN
The Partnership has also agreed to make a PGL in the aggregate amount of up
to $1,200,000 to the Individual Borrowers, jointly and severally, in the form of
a personal loan collateralized by the pledge of 100% of their partnership
interests in the Signature Place Borrower. Of the maximum loan proceeds to be
available under the PGL, $100 was funded as of December 31, 1995. In addition,
up to $499,900 of the loan proceeds were to be advanced at the rate of $6.25 for
each $1.00 of net operating income in excess of $960,000 per annum, and up to an
additional $700,000 of loan proceeds were to be advanced at the rate of $9.50
for each $1.00 of net operating income in excess of $1,040,000 per annum, earned
by the Signature Place Borrower at any time up to and including eighteen months
after Final Endorsement of the Signature Place Mortgage (the "Earn-Out"). The
Earn-Out period expired on August 8, 1994 and no additional amounts were
advanced under the PGL. The unfunded loan proceeds of $1,199,900, which had been
included in the Partnership's working capital reserve, were distributed to its
Partners on November 15, 1994.
The PGL bears interest at the rate of 15% per annum, payable semi-annually,
and provides that interest shall be accrued up to $100,000 to the extent Surplus
Cash (as defined by HUD) is insufficient to fully pay the interest obligation.
Any such accruals will be added to the outstanding principal balance of the PGL
and shall bear interest at the same rate. At such time as accruals of interest
(including semi-annually compounded interest) exceed $100,000 or commencing with
the second
F-17
<PAGE>
NYLIFE GOVERNMENT MORTGAGE PLUS
LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
5. INVESTMENTS IN MORTGAGES (CONTINUED)
anniversary of Final Endorsement (regardless of the balance of such accruals),
whichever occurs first, the Individual Borrowers shall pay interest on the
outstanding principal amount semi-annually, whether or not Surplus Cash is
available. Principal and accrued interest, if any, shall be due and payable on
May 8, 2006.
Since less than $250,000 was funded under the PGL, $249,900 (the difference
between $250,000 and the total amount funded) shall be considered additional
equity ("Additional Equity") contributed by the Individual Borrowers. To the
extent the Individual Borrowers' share of cash flow provides less than a 10%
cumulative annual return on the outstanding balance of Additional Equity
(compounded semi-annually) over the holding period of the investment, the
shortfall shall be paid out of the proceeds from the sale or refinancing of the
Signature Place Mortgage. All participations earned by the Partnership shall be
calculated after deducting interest and principal paid on the PIM, PGL and the
Additional Equity.
No prepayments of the PGL will be permitted prior to the tenth anniversary
of Initial Endorsement of the Signature Place Mortgage. Thereafter, the PGL may
be prepaid in whole, but not in part, upon 90 days prior written notice to the
Partnership subject to a prepayment fee equal to 1% of the principal amount
prepaid. On the tenth anniversary date, the Partnership will have the right to
call the PGL by six months prior written notice to the Individual Borrowers, in
which case no prepayment fee shall be paid.
The terms of the PGL entitle the Partnership to participations in addition
to Basic Interest equal to: (i) 10% of any increase in the value of the
partnership interests in the Signature Place Borrower (determined by references
to the value of Signature Place) over the base value of the partnership
interests (based on the outstanding principal amount of the Signature Place
Mortgage and the PGL), such increase to be determined upon the sale of Signature
Place or upon the refinancing, prepayment or maturity of the PGL; and (ii) 10%
of the Individual Borrowers' interest in Signature Place's net cash flow
(subject to certain HUD restrictions and reserve requirements). The aforesaid
10% participations in the PGL are over and above the 50% participations in the
Signature Place Mortgage. The obligation of the Individual Borrowers' to pay
these participations is evidenced by a Supplemental Interest Agreement, and is
non-recourse to such partners, except under limited circumstances, including
fraud.
6. THE GUARANTEE OF PGLS (ALL PROPERTIES)
The General Partner has agreed to guarantee a return to the Partnership, in
the aggregate, of all amounts invested in PGLs. Pursuant to the Guarantee, on
the date that dissolution and winding-up of the Partnership shall be completed,
the General Partner agreed to pay to the Partnership an amount, if any, by which
(i) the funds invested by the Partnership in PGLs exceeds (ii) all cash payments
received by the Partnership with respect to all Mortgages, INCLUDING points,
Basic Interest, Additional Interest and repayment of principal, but EXCLUDING
Basic Interest and repayment of principal of MBSs and other insured/guaranteed
Mortgages. As a result of the sale of the Highlands as referred to in
"Mortgages-the Highlands" above, the Partnership received cash in excess of the
amount of funds invested by the Partnership in PGLs. Accordingly, the General
Partner has no remaining future obligation with respect to any of the PGLs.
F-18
<PAGE>
NYLIFE GOVERNMENT MORTGAGE PLUS
LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
7. TRANSACTIONS WITH THE GENERAL PARTNER AND AFFILIATES
The following is a summary of the fees earned and reimbursements paid or
payable to the General Partner and its Affiliates for the years ended December
31, 1995, 1994 and 1993, pursuant to the Partnership Agreement:
<TABLE>
<CAPTION>
1995 1994 1993
----------- ----------- -----------
<S> <C> <C> <C> <C>
(1) Asset Management Fees....................................... $ 92,855 $ 158,167 $ 157,966
(2) Reimbursement of general and administrative expenses to the
General Partner............................................ 100,000 100,000 125,000
----------- ----------- -----------
$ 192,855 $ 258,167 $ 282,966
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
- ------------------------
(1) For services rendered in managing the business of the Partnership, the
Partnership is obligated to pay on a quarterly basis to the General Partner
an Asset Management Fee equal to 0.5% per annum of the value of the Total
Invested Assets of the Partnership.
(2) The Partnership Agreement allows the Partnership to reimburse the General
Partner for certain general and administrative expenses paid in connection
with the management of the Partnership.
8. DEFERRED ACQUISITION FEES
Deferred acquisition fees as of December 31, 1995 and 1994 consisted of:
<TABLE>
<CAPTION>
1995 1994
----------- -------------
<S> <C> <C>
Acquisition expenses..................................................... $ 908,701 $ 1,945,006
Loan origination fees.................................................... -- (451,600)
Accumulated amortization................................................. (32,736) (41,531)
----------- -------------
Net deferred acquisition fees............................................ $ 875,965 $ 1,451,875
----------- -------------
----------- -------------
</TABLE>
9. SUBSEQUENT EVENTS
A) DISTRIBUTIONS TO PARTNERS
On February 15, 1996, the Partnership distributed $547,798 to the Partners,
which represented the Partnership's Distributable Cash Flow for the three months
ended December 31, 1995. The distribution to other Unitholders, the Corporate
Limited Partner and the General Partner was $536,829, $13 and $10,956,
respectively.
B) THE HIGHLANDS
RECENT DEVELOPMENTS
On February 27, 1996, the Partnership sold the Highlands GNMA for cash in
the amount of $13,105,373.01. The Highlands GNMA was sold through Utendahl
Capital Partners, an unaffiliated broker dealer, pursuant to which the Highlands
Borrower agreed to pay a portion of any additional taxes determined by the State
of Florida to be due in connection with the recording of the original loan
documents. The State of Florida claimed that $136,800 in additional recording
taxes were due. On March 12, 1996, the Partnership settled the recording tax
claim of the State of Florida discussed in Note 5 through a payment made on
behalf of the Partnership in the amount of $64,000 ($53,850 of which was funded
by the General Partner and $10,150 of which was funded by the Original Highlands
Borrower). The Partnership has recently received the signed Closing Agreement
settling the claim from the State of Florida and the letters of credit discussed
in Note 5 will be returned to the Original Highlands Borrower. The sales price
represents principal in the amount of $12,976,812.45, accrued interest in the
amount of $71,462.59 and a premium of $57,097.97. The Partnership was not
charged any separate fees or commissions in connection with the sale. The
General Partner of the Partnership
F-19
<PAGE>
NYLIFE GOVERNMENT MORTGAGE PLUS
LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
9. SUBSEQUENT EVENTS (CONTINUED)
decided to sell the Highlands GNMA to take advantage of what it perceived to be
a favorable market in which the Highlands GNMA could be sold at a premium. The
Partnership intends to distribute such proceeds to its partners on May 15, 1996,
the next scheduled distribution date.
The sale of the Highlands GNMA, together with the 1995 sale of the Highlands
and the related modification of the Highlands Mortgage, terminated the
Partnership's beneficial interest in the Highlands Mortgage and the Highlands.
C) CLASS ACTION LAWSUIT
Two class action lawsuits were filed against certain affiliates of the
General Partner in the District Court of Harris County, Texas on January 11,
1996, styled GRIMSHAWE V. NEW YORK LIFE INSURANCE CO., ET AL. (No. 96-001188)
and SHEA V. NEW YORK LIFE INSURANCE CO., ET AL. (No. 96-001189) alleging
misconduct in connection with the original sale of investment units in various
partnerships, including violation of various federal and state laws and
regulations and claims of continuing fraudulent conduct. The plaintiffs have
asked for compensatory damages for their lost original investment, plus
interest, costs (including attorneys fees), punitive damages, disgorgement of
any earnings, compensation and benefits received by the defendants as a result
of the alleged actions and other unspecified relief to which plaintiffs may be
entitled. These suits were amended and refiled in a consolidated action in the
United States District Court for the Southern District of Florida (the "Court")
on March 18, 1996. In the federal action, the plaintiffs added the General
Partner as a defendant and included allegations concerning the Partnership. The
plaintiffs purport to represent a class of all persons (the "Class") who
purchased or otherwise assumed rights and title to interests in certain limited
partnerships, including the Partnership, and other programs created, sponsored,
marketed, sold, operated or managed by the defendants (the "Proprietary
Partnerships"). The Partnership is not a defendant in the litigation.
The defendants expressly deny any wrongdoing alleged in the complaint and
concede no liability or wrongdoing in connection with the sale of the Units or
the structure of the Proprietary Partnerships. Nevertheless, to reduce the
burden of protracted litigation, the defendants have entered into a Stipulation
of Settlement ("Settlement Agreement") with the plaintiffs because in their
opinion such Settlement would (i) provide substantial benefits to the Class in a
manner consistent with New York Life's position that it had previously
determined to wind up most of the Proprietary Partnerships through orderly
liquidation as the continuation of the business no longer serves the intended
objectives of either the owners of interests in such Proprietary Partnerships or
the defendants and to offer investors an enhancement to the liquidating
distribution they would otherwise receive and (ii) provide an opportunity to
wind up such partnerships on a schedule favorable to the Class and resolve the
issues raised by the lawsuit.
In connection with the proposed settlement (the "Settlement"), the General
Partner will solicit consents of the Unitholders for the dissolution of the
Partnership.
Under the terms of the Settlement Agreement, any settling Unitholders will
receive at least a complete return of their original investment, less
distributions received prior to the final settlement date, in exchange for a
release of any and all claims a Unitholder may have against the defendants in
connection with the Proprietary Partnership, including the Partnership, and all
activities related to the dissolution and liquidation of such partnerships.
F-20
<PAGE>
NYLIFE GOVERNMENT MORTGAGE PLUS
LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
9. SUBSEQUENT EVENTS (CONTINUED)
Preliminary approval of the Settlement Agreement was given by the Court on
March 19, 1996. The Settlement Agreement is further conditioned upon final
approval by the Court as well as certain other conditions and is subject to
certain rights of termination detailed in the consent solicitation material
being mailed to the Unitholders.
If the necessary consents of Unitholders for dissolution are obtained, the
Partnership will be dissolved even if all necessary approvals for the Settlement
Agreement are not obtained or the Settlement Agreement is otherwise terminated.
In general, upon the dissolution of the Partnership, tax consequences will
accrue to the partners. If the necessary consents of the Unitholders for
dissolution are not obtained, the Partnership will continue to own the Mortgages
and will continue to receive payments thereon.
The financial statements do not include any adjustments that might result
should the Unitholders vote to liquidate the Partnership.
F-21
<PAGE>
INDEX TO EXHIBITS
NUMBER AND DESCRIPTION UNDER REGULATION S-K
The following reflects all applicable Exhibits required under Item 601 of
Regulation S-K:
<TABLE>
<C> <S>
(4) INSTRUMENTS DEFINING THE RIGHTS OF SECURITY HOLDERS INCLUDING INDENTURES:
(4.1) Amended and Restated Agreement of Limited Partnership dated as of May 15, 1989,
incorporated by reference to Exhibit A to the Prospectus included in Amendment No.
2 of Registrant's Registration Statement of Form S-11 dated May 17, 1989 (File No.
0-18226).*
(4.2) Subscription Agreement whereby a subscriber agrees to purchase Units and adopts the
provisions of the Agreement of Limited Partnership, incorporated by reference to
Exhibit C to the Prospectus included in Amendment No. 2 of the Registrant's
Registration Statement on Form S-11 dated May 17, 1989 (File No. 0-18226).*
(4.3) Copy of First Amendment to and Restatement of Certificate of Limited Partnership
filed with the Massachusetts Secretary of State on May 12, 1989, incorporated by
reference to Exhibit 4.4 to Amendment No. 2 of Registrant's Registration Statement
on Form S-11 dated May 17, 1989 (File No. 0-18226).*
(10) MATERIAL CONTRACTS (each of which relates to acquisition of the Cross Creek,
Highlands and Signature Place Mortgages):
CROSS CREEK:
(10.1) GNMA Securities Sale and Purchase Agreement between NYLIFE Government Mortgage Plus
Limited Partnership ("Partnership") and Love Funding Corporation ("LFC"),
incorporated by reference to Exhibit 28.1 to Registrant's Report on Form 8-K dated
February 21, 1990 (File No. 0- 18226).*
(10.2) Regulatory Agreement for Multi-family Housing Projects Coinsured by HUD,
incorporated by reference to Exhibit 28.2 to Registrant's Report on Form 8-K dated
February 21, 1990 (File No. 0-18226).*
(10.3) Mortgage note (as endorsed by HUD), issued by Boiling Springs Apartments, Ltd.
("Borrower") to LFC, incorporated by reference to Exhibit 28.3 to Registrant's
Report on Form 8-K dated February 21, 1990 (File No. 0-18226).*
(10.4) Mortgage, Assignment of Rents and Security Agreement by Borrower for the Benefit of
LFC, incorporated by reference to Exhibit 28.4 to Registrant's Report on Form 8-K
dated February 21, 1990 (File No. 0- 18226).*
(10.5) Building Loan Agreement between Borrower and LFC, incorporated by reference to
Exhibit 28.5 to Registrant's Report on Form 8-K dated February 21, 1990 (File No.
0-18226).*
(10.6) Security Agreement between Borrower and LFC, incorporated by reference to Exhibit
28.6 to Registrant's Report on Form 8-K dated February 21, 1990 (File No.
0-18226).*
(10.7) Assignment of Leases, Rents and Profits by Borrower to LFC, incorporated by
reference to Exhibit 28.7 to Registrant's Report on Form 8- K dated February 21,
1990 (File no. 0-18226).*
(10.8) Subordinated Mortgage, Assignment of Leases and Rents and Security Agreement
between Borrower and Partnership, incorporated by reference to Exhibit 28.8 to
Registrant's Report on Form 8-K dated February 21, 1990 (File No. 0-18226).*
(10.9) Additional Interest Agreement between Borrower and Partnership, incorporated by
reference to Exhibit 28.9 to Registrant's Report on Form 8- K dated February 21,
1990 (File No. 0-18226).*
</TABLE>
<PAGE>
<TABLE>
<C> <S>
(10.10) Form of Security Agreement between Partnership and each of Borrower's partners
("Individual Borrowers") relating to Additional Interest Agreement, incorporated by
reference to Exhibit 28.10 to Registrant's Report on Form 8-K dated February 21,
1990 (File No. 0- 18226).*
(10.11) Promissory Note issued by Individual Borrowers to Partnership, incorporated by
reference to Exhibit 28.11 to Registrant's Report on Form 8-K dated February 21,
1990 (File No. 0-18226).*
(10.12) Supplemental Interest Agreement between Partnership and Individual Borrowers,
incorporated by reference to Exhibit 28.12 to Registrant's Report on Form 8-K dated
February 21, 1990 (File No. 0-18226).*
(10.13) Form of Security Agreement with Individual Borrowers relating to Promissory Note
and Supplemental Interest Agreement, incorporated by reference to Exhibit 28.13 to
Registrant's Report on Form 8-K dated February 21, 1990 (File No. 0-18226).*
THE HIGHLANDS:
(10.14) GNMA Security Purchase Agreement between NYLIFE Government Mortgage Plus Limited
Partnership ("Partnership") and Related Mortgage Corporation ("Related"),
incorporated by reference to Exhibit 28.1 to Registrant's Report on Form 8-K dated
January 30, 1991 (File No. 0-18226).*
(10.15) Regulatory Agreement for Multi-family Housing Projects Coinsured by HUD,
incorporated by reference to Exhibit 28.2 to Registrant's Report on Form 8-K dated
January 30, 1991 (File No. 0-18226).*
(10.16) Mortgage note (as endorsed by HUD), issued by H.O. Associates, Ltd. ("Borrower") to
Related, incorporated by reference to Exhibit 28.3 to Registrant's Report on Form
8-K dated January 30, 1991 (File No. 0-18226).*
(10.17) Mortgage by Borrower for the benefit of Related, incorporated by reference to
Exhibit 28.4 to Registrant's Report on Form 8-K dated January 30, 1991 (File No.
0-18226).*
(10.18) Building Loan Agreement between Borrower and Related, incorporated by reference to
Exhibit 28.5 to Registrant's Report on Form 8-K dated January 30, 1991 (File No.
0-18226).*
(10.19) Security Agreement between Borrower and Related, incorporated by reference to
Exhibit 28.6 to Registrant's Report on Form 8-K dated January 30, 1991 (File No.
0-18226).*
(10.20) Assignment of Rents and Leases by Borrower to Related, incorporated by reference to
Exhibit 28.7 to Registrant's Report on Form 8-K dated January 30, 1991 (File No.
0-18226).*
(10.21) Subordinated Mortgage between Borrower and Partnership, incorporated by reference
to Exhibit 28.8 to Registrant's Report on Form 8- K dated January 30, 1991 (File No
0-18226).*
(10.22) Additional Interest Agreement between Borrower and Partnership, incorporated by
reference to Exhibit 28.9 to Registrant's Report on Form 8- K dated January 30,
1991 (File No. 0-18226).*
(10.23) Form of Pledge of Partnership Interests and Security Agreements between Partnership
and each of Borrower's partners ("Individual Borrowers") relating to Additional
Interest Agreement, incorporated by reference to Exhibit 28.10 to Registrant's
Report on Form 8-K dated January 30, 1991 (File No. 0-18226).*
(10.24) Promissory Note issued by Individual Borrowers to Partnership, incorporated by
reference to Exhibit 28.11 to Registrant's Report on Form 8-K dated January 30,
1991 (File No. 0-18226).*
</TABLE>
<PAGE>
<TABLE>
<C> <S>
(10.25) Supplemental Interest Agreement between Partnership and Individual Borrowers,
incorporated by reference to Exhibit 28.12 to Registrant's Report on Form 8-K dated
January 30, 1991 (File No. 0-18226).*
(10.26) Form of Pledge of Partnership Interests and Security Agreement with Individual
Borrowers relating to Promissory Note and Supplemental Interest Agreement,
incorporated by reference to Exhibit 28.13 to Registrant's Report on Form 8-K dated
January 30, 1991 (File No. 0-18226).*
(10.39) Modification of Mortgage Note of H.O. Associates, Ltd. payable to Related Mortgage
Corporation dated as of January 31, 1995, as endorsed by HUD.**
(10.40) Modification of Mortgage dated as of January 31, 1995 between H.O. Associates, Ltd.
and Related Mortgage Corporation.**
(10.41) Modification of Collateral Assignment of Rents and Leases dated January 31, 1995
between H.O. Associates, Ltd. and Related Mortgage Corporation.**
(10.42) Amendment to Regulatory Agreement for Multifamily Housing Projects Coinsured by HUD
dated January 31, 1995 by and between H.O. Associates, Ltd. and Related Mortgage
Corporation (original recorded instrument forwarded to Chemical Bank as Ginnie Mae
Custodian by certified mail).**
(10.43) Modification of Security Agreement dated as of January 31, 1995 between H.O.
Associates, Ltd. and Related Mortgage Corporation.**
(10.44) Amended and Restated Agreement dated January 31, 1995 by and between Richland
Properties, Inc. and NYLIFE Government Mortgage Plus Limited Partnership.**
(10.45) Amended and Restated Subordinated Mortgage and Security Agreement dated January 31,
1995 by Richland Properties, Inc. to NYLIFE Government Mortgage Plus Limited
Partnership.**
(10.46) Release Agreement dated January 31, 1995 by and among NYLIFE Government Mortgage
Plus Limited Partnership, Related Mortgage Corporation, H.O. Associates, Ltd.,
Robert M. Schiffman and Edwin B. Branch.**
(10.47) Agreement Regarding Termination of Contract of Coinsurance dated January 31, 1995
by Richland Properties, Inc. and Related Mortgage Corporation.**
(10.48) Amended and Restated Coinsuring Lender/Holder Agreement dated January 31, 1995 by
and between NYLIFE Government Mortgage Plus Limited Partnership and Related
Mortgage Corporation.**
(10.49) Special Closing Agreement dated January 31, 1995 by and among NYLIFE Government
Mortgage Plus Limited Partnership, H.O. Associates, Ltd., Robert M. Schiffman,
Edwin B. Branch, Markborough Development Company and Foley & Lardner.**
SIGNATURE PLACE:
(10.27) GNMA Purchase Agreement between NYLIFE Government Mortgage Plus Limited Partnership
("Partnership") and Love Funding Corporation ("LFC"), incorporated by reference to
Exhibit 28.1 to Registrant's Report on Form 8-K dated June 14, 1991 (File No.
0-18226).*
(10.28) Regulatory Agreement for Multi-family Housing Projects Coinsured by HUD,
incorporated by reference to Exhibit 28.2 to Registrant's Report on Form 8-K dated
June 14, 1991 (File No. 0-18226).*
(10.29) Deed of Trust Note (as endorsed by HUD), issued by H.G. Partners Limited
Partnership. ("Borrower") to LFC, incorporated by reference to Exhibit 28.3 to
Registrant's Report on Form 8-K dated June 14, 1991 (file No. 0-18226).*
(10.30) Deed of Trust, Assignment of Rents and Security Agreement by Borrower for the
benefit of LFC, incorporated by reference to Exhibit 28.4 to Registrant's Report on
Form 8-K dated June 14, 1991 (File No. 0-18226).*
</TABLE>
<PAGE>
<TABLE>
<C> <S>
(10.31) Building Loan Agreement between Borrower and LFC, incorporated by reference to
Exhibit 28.5 to Registrant's Report on Form 8-K dated June 14, 1991 (File No.
0-18226).*
(10.32) Security Agreement between Borrower and LFC, incorporated by reference to Exhibit
28.6 to Registrant's Report on Form 8-K dated June 14, 1991 (File No. 0-18226).*
(10.33) Additional Interest Deed of Trust, Security Agreement and Assignment of Leases,
Rents and Profits between Borrower and Partnership, incorporated by reference to
Exhibit 28.7 to Registrant's Report on Form 8- K dated June 14, 1991 (File no.
0-18226).*
(10.34) Additional Interest Agreement between Borrower and Partnership, incorporated by
reference to Exhibit 28.8 to Registrant's Report on Form 8- K dated June 14, 1991
(File No. 0-18226).*
(10.35) Form of Pledge of Partnership Interests and Security Agreement between Partnership
and each of Borrower's partners ("Individual Borrowers") relating to Additional
Interest Agreement, incorporated by reference to Exhibit 28.9 to Registrant's
Report on Form 8-K dated June 14, 1991 (File No. 0-18226).*
(10.36) Promissory Note issued by Individual Borrowers to Partnership, incorporated by
reference to Exhibit 28.10 to Registrant's Report on Form 8-K dated June 14, 1991
(File No. 0-18226).*
(10.37) Supplemental Interest Agreement between Partnership and Individual Borrowers,
incorporated by reference to Exhibit 28.11 to Registrant's Report on Form 8-K dated
June 14, 1991 (File No. 0-18226).*
(10.38) Form of Pledge of Partnership Interests and Security Agreement with Individual
Borrowers relating to Promissory Note and Supplemental Interest Agreement,
incorporated by reference to Exhibit 28.12 to Registrant's Report on Form 8-K dated
June 14, 1991 (File No. 0-18226).*
(27.1) Financial Data Schedule.**
</TABLE>
- ------------------------
*Previously filed.
**Filed herewith.
<PAGE>
Highland Oaks Apartments
Tampa, Florida
FHA Project No. 067-36672
RENEWAL NOTE: FLORIDA DOCUMENTARY STAMPS TAXES ARE
NOT REQUIRED BY LAW AS THIS RENEWAL NOTE RENEWS
AN EXISTING OBLIGATION UPON WHICH FLORIDA
DOCUMENTARY STAMPS HAVE BEEN PAID
MODIFICATION TO MORTGAGE NOTE
OF
H.O. ASSOCIATES, LTD., A FLORIDA LIMITED PARTNERSHIP
PAYABLE TO
RELATED MORTGAGE CORPORATION, a DELAWARE CORPORATION
OR ORDER
DATED DECEMBER 13, 1990 IN THE ORIGINAL
PRINCIPAL SUM OF $13,154,200.00
THIS MODIFICATION TO MORTGAGE NOTE (hereinafter referred to as the "Modification
to Note") dated as of January 31, 1995 is made by and between H.O. ASSOCIATES,
LTD., a limited partnership organized and existing under the laws of the State
of Florida, having its principal office and place of business at 1430 Wynnton
Road, Columbus, GA 31906, hereinafter called the "Maker" and RELATED MORTGAGE
CORPORATION, a corporation organized and existing under the laws of the State of
Delaware, having its principal office and place of business at 625 Madison
Avenue, New York, NY 10022, hereinafter called the "Holder."
W I T N E S S E T H :
WHEREAS, Maker is the owner of certain real property located in the City of
Tampa in Hillsborough County of the State of Florida as further described in
this Agreement on which is constructed a certain rental apartment project known
as Highland Oaks Apartments, FHA Project No. 067-36672 (hereinafter referred to
collectively as the "Project"); and
WHEREAS, Maker executed and delivered to Holder, its Mortgage Note (hereinafter
referred to as the "Mortgage Note") dated December 13, 1990 in the original
amount of THIRTEEN MILLION ONE HUNDRED FIFTY FOUR THOUSAND TWO HUNDRED AND
NO/100ths DOLLARS ($13,154,200.00) (hereinafter referred to as the "Mortgage
Loan"). The Mortgage Note is secured by: (i) a certain Mortgage (hereinafter
referred to as the "Mortgage") dated December 13, 1990 which was executed by
Maker and delivered to Holder and thereafter recorded on December 13, 1990,
against the real property component of the Project in O.R. Book 6153, Page 212
of the Public Records of Hillsborough County, Florida; (ii) a certain Assignment
of Rents and Leases (hereinafter referred to as the "Collateral Assignment")
dated December 13, 1990 which was executed by Maker and delivered to Holder and
thereafter recorded on December 13, 1990 in O.R. Book 6153, Page 231 of the
Public Records of Hillsborough County, Florida; (iii) a certain Security
Agreement (hereinafter referred to as the "Security Agreement") dated December
13, 1990 by and between Maker and Holder, and (iv) certain UCC Financing
Statements (hereinafter referred to as the "UCC Financing Statements") executed
by the Maker in favor of Holder and filed or recorded as applicable, on December
14, 1990 with the Secretary of State of Florida as Document No. 900000310323 and
on December 13, 1990 in O.R. Book 6153, Page 235 of the Public Records of
Hillsborough County, Florida. The Mortgage, the Collateral Assignment, the
Security Agreement and the UCC Financing Statements created a first lien
security interest in favor of Holder in and to the Project and various items of
personal property currently or thereafter owned by the Maker with respect to the
Project; and
WHEREAS, said Mortgage Note has been Finally Endorsed for Coinsurance by the
Secretary of the Department of Housing and Urban Development acting by and
through the Federal Housing Commissioner (hereinafter referred to as "HUD" or
the "Commissioner" as the context may require) pursuant to Section 221(d)(4) and
Section 244 of the National Housing Act, as amended, and the Regulations
promulgated pursuant thereto; and
WHEREAS, the Mortgage Note and Mortgage provide for the payment of interest
after Final Endorsement for Coinsurance at the rate of Eight and One Half
Percent (8.50%) per annum
________________________________________________________________________________
Modification to Mortgage Note: Highland Oaks
Page 1
<PAGE>
(hereinafter referred to as the "Permanent Rate") over the remaining term of the
Mortgage Loan; and
WHEREAS, the current outstanding principal balance due under the Mortgage Note
is $13,037,676.07 (hereinafter referred to as the "Outstanding Principal
Balance"); and
WHEREAS, the remaining term of Mortgage Loan under the Mortgage Note and
Mortgage is 446 months (hereinafter referred to as the "Remaining Term"); and
WHEREAS, Paragraph 5a of Rider 1 to the Mortgage Note provides for a prepayment
lockout (hereinafter referred to as the "Prepayment Lockout") by indicating that
the Mortgage Note "may not be prepaid in whole or in part prior to December 14,
2000 which date is ten (10) years from the date of Initial Endorsement for
Coinsurance of the Note by the Secretary of Housing and Urban Development acting
by and through the Federal Housing Commissioner (hereafter referred to as the
"Initial Endorsement Date");"
WHEREAS, the parties have agreed to modify the terms of the Mortgage Note (i) to
reduce the Permanent Rate of interest therein provided from Eight and One Half
per centum (8.50%) per annum to Seven and Seven Eighths per centum (7.875%) per
annum effective as of February 1, 1995, (ii) to revise the amount of principal
and interest payable monthly by Maker to Holder under the Mortgage Note as a
result of such reduction in interest rate and to reamortize in full the Mortgage
Loan over the remaining term thereof, (iii) to eliminate the Prepayment
Lockout, and (iv) to amend the Mortgage Note in certain other respects as herein
described.
NOW, THEREFORE, for and in consideration of the premises, the sum of Ten and
No/lOOths Dollars ($10.00) and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged by each of the parties
hereto, and in further consideration of the agreements, covenants and
stipulations hereinafter set forth, the parties for themselves and for their
respective successors and assigns, do hereby agree and covenant as follows:
1. The foregoing recitals are hereby incorporated by reference as if set forth
fully herein. All capitalized terms not otherwise defined in this Agreement
shall have the same meanings ascribed thereto in the Mortgage.
2. The said Mortgage is amended to provide that the principal amount of the
obligation of Maker to Holder secured by the Mortgage and evidenced by the
Mortgage Note, as amended by the Modification to Note, shall equal the
Outstanding Principal Balance.
3. The Permanent Rate is hereby amended to be Seven and Seven Eighths Percent
(7.875%) per annum (hereinafter referred to as the "Reduced Rate")
effective as of February 1, 1995.
4. Maker and Holder agree to amortize the Outstanding Principal Balance of the
Mortgage Loan over the Remaining Term with interest payable monthly at the
Reduced Rate.
5. The obligation of Maker under the Mortgage Note to make monthly payments of
principal and/or interest is hereby amended by (a) deleting the indented
paragraph on page one of the Mortgage Note and (b) inserting in lieu
thereof the following:
Interest shall accrue on the unpaid principal balance of the Note from
the date hereof at the rate of Eight and One Half per centum (8.50%)
per annum up to and including January 31, 1995 and thereafter interest
shall bc payable at the Reduced Rate as follows: Interest only at the
existing Permanent Rate shall be payable on February 1, 1995.
Thereafter and commencing on the first day of March 1995, monthly
installments of interest and principal shall be paid in the sum of
$90,451.24 each, such payments to continue monthly thereafter on the
first day of each succeeding month until the entire indebtedness has
been paid. In any event, the balance of principal (if any) remaining
unpaid, plus accrued interest, shall be due and payable on May 1,
2032. The installments of interest and principal shall be applied
first to interest at the rate of 7.875% per annum upon the principal
sum or so much thereof as shall from time to time remain unpaid, and
the balance thereof shall be applied on account of principal. In the
event any installment, or part of any installment due under this
Mortgage Note becomes delinquent for more than fifteen (15) days,
there shall bc due, in addition to other sums then due
- --------------------------------------------------------------------------------
Modification to Mortgage Note: Highland Oaks
Page 2
<PAGE>
hereunder, a sum equal to four percent (4%) of the amount of principal
and interest so delinquent. Whenever, under the laws of the
jurisdiction where the property is located, the amount of a "late
charge" is considered to be additional interest, this provision shall
not be used if the rate of interest specified in the Mortgage Note,
together with the amount of the "late charge," would aggregate an
amount in excess of the maximum rate of the interest permitted and
would constitute usury.
6. Paragraphs 5a and 5b of Rider 1 to the Mortgage Note are amended by
deleting Paragraphs 5a and 5b and inserting in lieu thereof the following:
a. PREPAYMENT PREMIUM. Except as provided in Paragraphs 3 and 4 above,
the Note may be prepaid in whole at any time provided all of the
requirements and conditions of this Paragraph 5 are complied with and
said prepayment is accompanied by a prepayment premium equal to one
percent of the outstanding loan balance.
b. APPLICABILITY. The provisions of this Paragraph 5 shall apply to
any prepayment irrespective of whether said prepayment is voluntary or
involuntary, including any prepayment occurring due to an acceleration
of the debt by the Holder as a result of any default by the Borrower
or in the event the debt is satisfied or released by foreclosure
(whether by power of sale or by judicial proceeding), deed in lieu of
foreclosure, or by any other means. The restrictions on prepayment
contained in this Paragraph 5 shall not be waived, modified, altered,
amended or deleted without the written consent of the Holder.
7. Maker acknowledges and affirms to Holder that, as of the date of this
Modification to Note, there are no defenses, set-offs or counter-claims,
whether legal or equitable, to Maker's obligations under the Mortgage Note,
and Maker hereby waives the right to raise or assert any such defenses,
set-offs or counter-claims which Maker may have had with respect to any
suit, proceeding or foreclosure action under the Mortgage Note that the
Holder may or could have brought against Maker prior to the date hereof.
8. Maker and Holder acknowledge and agree that the terms of this Modification
to Note are subject to the approval thereof by the Commissioner, which
approval shall be evidenced by the written consent of the Commissioner
affixed to this Modification to Note where indicated below. Maker and
Holder further acknowledge and agree that the terms of this Modification to
Note and the transaction evidenced by this Modification to Note shall not
be deemed effective unless and until the Commissioner executes the consent
as aforesaid.
9. Notwithstanding any provision of this Modification to Note to the contrary,
Maker and Holder hereby acknowledge and agree that the Commissioner and the
Holder retain all rights and remedies arising under the Contract of
Coinsurance under Section 244 and pursuant to Section 221(d)(4) of the
National Housing Act, as amended, and all regulations and administrative
guidelines promulgated by the Commissioner thereunder.
10. From and after the date hereof, the Mortgage Note and this Modification to
Note shall be taken and read together as one, single and continuing
instrument evidencing a single debt owed by the Maker to the Holder in the
amount set forth hereinabove, as may be unpaid from time to time. Nothing
contained herein shall be taken or construed to create a novation or new
agreement by and between Maker and Holder; it being the intention of the
parties solely (a) to reduce the per annum rate of interest applicable to
the Mortgage Loan (b) to revise the amount of monthly installments of
principal and interest payable thereunder as a result of such reduction in
interest rate so as to reamortize in full the Mortgage Loan over the
remaining term thereof, and (c) to revise certain other provision of the
Mortgage Note, as reflected by this Modification to Note, and for no other
purpose. Furthermore, nothing herein contained shall in any way impair the
Mortgage Note or the security now held for such indebtedness, or alter,
waive, annul, vary or affect any provision, condition, covenant herein
except as herein provided, nor impair any rights, powers or remedies of
Holder under the Mortgage Note, it being the intent of the parties that the
terms and provisions of the Mortgage Note shall continue in full force and
effect as modified hereby.
- --------------------------------------------------------------------------------
Modification to Mortgage Note: Highland Oaks
Page 3
<PAGE>
11. Notwithstanding anything herein contained, if any one or more of the
provisions of this Modification to Note shall for any reason whatsoever be
held to be illegal, invalid, or unenforceable in any respect, such
illegality, invalidity or unenforceability shall not affect any other
provision of this Modification to Note, but this Modification to Note shall
be construed as if such illegal, invalid, or unenforceable provision had
never been contained herein.
12. Maker and Holder agree to execute such other documents as may be necessary
to implement the terms and provisions of this Modification to Note, and the
transaction evidenced thereby, including but not limited to that certain
Modification of Mortgage (the "Modification Agreement") of even date
herewith by and between Maker and Holder.
13. From and after the date hereof, all references contained in the Mortgage
Note to the Mortgage shall hereafter be deemed to refer to and include the
Mortgage, as amended by the Modification Agreement.
14. The Mortgage Note, as amended by this Modification to Note, may not be
further amended except by all instrument in writing executed by each of the
parties hereto.
15. This Modification to Note shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and assigns.
16. This Modification to Note may be executed in any number of counterparts and
all counterparts shall be construed together and shall constitute but one
Agreement.
- --------------------------------------------------------------------------------
Modification to Mortgage Note: Highland Oaks
Page 4
<PAGE>
Signed and sealed this 31 day of January, 1995.
-- -------
MAKER:
H.O. Associates, Ltd.
By: /s/ Robert M. Schiffman
--------------------------------------
Robert M. Schiffman, General Partner
By: /s/ Edwin B. Branch
--------------------------------------
Edwin B. Branch, General Partner
HOLDER:
Related Mortgage Corporation
By: /s/ Bruce H. Brown
-------------------------------------
Bruce H. Brown, Vice President
CONSENT TO MODIFICATION
TO MORTGAGE NOTE:
The undersigned hereby consents to and approves the foregoing Modification to
Mortgage Note as of the date set forth below
SECRETARY OF HOUSING AND
URBAN DEVELOPMENT OF
WASHINGTON, D.C., acting
by and through the Federal
Housing Commissioner
By: /s/ Albert B. Sullivan
-------------------------
Date: January 31, 1995
------------------------
CERTIFICATION OF MORTGAGE NOTE
STATE OF FLORIDA
COUNTY OF HILLSBOROUGH
This is to certify that this Modification to Mortgage Note amends the Note
described in and secured by the Mortgage, as amended by that certain
Modification of Mortgage, between the Maker and Holder of even date herewith in
the same principal amount as herein stated, and secured by real estate situated
in the County of Hillsborough, State of Florida.
Dated this 31 day of January, 1995.
/s/ Sherry Logsdon
------------------------
Notary Public
[Notary Stamp]
- --------------------------------------------------------------------------------
Modification to Mortgage Note: Highland Oaks
Page 5
<PAGE>
This document prepared by and
after recording returned to: Robert B. Joselow
1990 M St., N.W., Suite 410
Washington, D.C. 20036
THIS AGREEMENT RENEWS AN EXISTING OBLIGATION UPON
WHICH FLORIDA DOCUMENTARY AND INTANGIBLE TAXES HAVE
BEEN PREVIOUSLY PAID
MODIFICATION OF MORTGAGE
THIS MODIFICATION OF MORTGAGE (hereinafter referred to as the "Agreement") dated
as of the 31st day of January, 1995 is made by and between H.O. ASSOCIATES,
LTD., a limited partnership organized and existing under the laws of the State
of Florida, having its principal office and place of business at 1430 Wynnton
Road, Columbus, GA 31906, hereinafter called the "Mortgagor" and RELATED
MORTGAGE CORPORATION, a corporation organized and existing under the laws of the
State of Delaware, having its principal office and place of business at 625
Madison Avenue, New York, NY 10022, hereinafter called the "Mortgagee."
W I T N E S S E T H :
WHEREAS, Mortgagor is the owner of certain real property located in the City of
Tampa in Hillsborough County of the State of Florida as further described in
this Agreement on which is constructed a certain rental apartment project known
as Highland Oaks Apartments, FHA Project No. 067-36672 (hereinafter referred to
collectively as the "Project"); and
WHEREAS, Mortgagor executed and delivered to Mortgagee, its Mortgage Note
(hereinafter referred to as the "Mortgage Note") dated December 13, 1990 in the
original amount of THIRTEEN MILLION ONE HUNDRED FIFTY FOUR THOUSAND TWO HUNDRED
AND NO/lOOths DOLLARS ($13,154,200.00) (hereinafter referred to as the "Mortgage
Loan"). The Mortgage Note is secured by: (i) a certain Mortgage (hereinafter
referred to as the "Mortgage") dated December 13, 1990 which was executed by
Mortgagor and delivered to Mortgagee and thereafter recorded on December 13,
1990, against the real property component of the Project in O.R. Book 6153, Page
212 of the Public Records of Hillsborough County, Florida as further described
in Exhibit A attached hereto and hereby incorporated by reference; (ii) a
certain Assignment of Rents and Leases (hereinafter referred to as the
"Collateral Assignment") dated December 13, 1990 which was executed by Mortgagor
and delivered to Mortgagee and thereafter recorded on December 13, 1990 in O.R.
Book 6153, Page 231 of the Public Records of Hillsborough County, Florida; (iii)
a certain Security Agreement (hereinafter referred to as the "Security
Agreement") dated December 13, 1990 by and between Mortgagor and Mortgagee, and
(iv) certain UCC Financing Statements (hereinafter referred to as the "UCC
Financing Statements") executed by the Mortgagor in favor of Mortgagee and filed
or recorded as applicable, on December 14, 1990 with the Secretary of State of
Florida as Document No. 900000310323 and on December 13,1990 against the real
property described in Exhibit A to this Agreement in O.R. Book 6153, Page 235 of
the Public Records of Hillsborough County, Florida. The Mortgage, the Collateral
Assignment, the Security Agreement and the UCC Financing Statements created a
first lien security interest in favor of Mortgagee in and to the Project and
various items of personal property currently or thereafter owned by the
Mortgagor with respect to the Project; and
WHEREAS, said Mortgage Note has been Finally Endorsed for Coinsurance by the
Secretary of the Department of Housing and Urban Development acting by and
through the Federal Housing Commissioner (hereinafter referred to as the
"Secretary") pursuant to Section 221(d)(4)
- --------------------------------------------------------------------------------
Modification of Mortgage: Highland Oaks
Page 1
<PAGE>
and Section 244 of The National Housing Act, as amended, and the Regulations
promulgated pursuant thereto; and
WHEREAS, Mortgagor and Mortgagee previously executed that certain Regulatory
Agreement for Multifamily Housing Projects Coinsured by HUD (hereinafter
referred to as the "Regulatory Agreement") dated December 13, 1990 and recorded
December 13, 1990 in O.R. Book 6153, Page 220 of the Public Records of
Hillsborough County, Florida, against the real property described in Exhibit A
of this Agreement, which Regulatory Agreement is incorporated by reference into
and made a part of the Mortgage; and
WHEREAS, Mortgagor and Mortgagee now desire to amend the Mortgage to reference
the fact that the Regulatory Agreement is concurrently herewith being amended by
a certain Amendment to Regulatory Agreement for Multifamily Housing Projects
Coinsured by HUD (the "Amendment to Regulatory Agreement) of even date herewith
by and between the Mortgagor, the Secretary and the Mortgagee which Amendment to
Regulatory Agreement is to be incorporated by reference into the Mortgage, as
amended by this Agreement, and recorded with the Public Records of Hillsborough
County, Florida concurrently with this Agreement. For purposes hereof, the
Regulatory Agreement, as amended by the Amendment to Regulatory Agreement shall
hereinafter be referred to collectively as the "HUD Regulatory Agreement".
WHEREAS, the Mortgage Note and Mortgage provide for the payment of interest
after Final Endorsement for Coinsurance at the rate of Eight and One Half
Percent (8.50%) per annum (hereinafter referred to as the "Permanent Rate")
over the remaining term of the Mortgage Loan; and
WHEREAS, the current outstanding principal balance due under the Mortgage Note
is $13,037,676.07 (hereinafter referred to as the "Outstanding Principal
Balance"); and
WHEREAS, the remaining term of Mortgage Loan under the Mortgage Note and
Mortgage is 446 months (hereinafter referred to as the "Remaining Term"); and
WHEREAS, pursuant to the terms of that certain Modification to Mortgage Note
(hereinafter referred to as the "Modification to Note") of even date herewith,
Mortgagor and Mortgagee have agreed as of February 1, 1995 to modify the terms
of the Mortgage Note (i) to reduce the Permanent Rate of interest therein
provided from Eight and One Half per centum (8.50%) per annum to Seven and Seven
Eighths per annum (7.875%) per centum effective as of February 1, 1995, (ii) to
revise the amount of principal and interest payable monthly by Mortgagor to
Mortgagee under the Mortgage Note as a result of such reduction in interest rate
and to reamortize in full the Mortgage Loan over the remaining term thereof, and
(iii) to amend the Mortgage Note in certain other respects as therein described.
The parties hereto now desire to amend the Mortgage to conform the terms thereof
to the Mortgage Note, as amended by the Modification to Note, and to amend the
Mortgage in certain other respects as hereinafter described.
NOW, THEREFORE, for and in consideration of the premises, the sum of Ten and
No/100ths Dollars ($10.00) and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged by all of the
parties hereto, and in further consideration of the agreements, covenants and
stipulations hereinafter set forth, the parties for themselves and for their
respective successors and assigns, do hereby agree and covenant as follows:
1. The foregoing recitals are hereby incorporated by reference as if set forth
fully herein. All capitalized terms not otherwise defined in this Agreement
shall have the same meanings ascribed thereto in the Mortgage.
2. The said Mortgage is amended to provide that the principal amount of the
obligation of Mortgagor to Mortgagee secured by the Mortgage and evidenced
by the Mortgage Note, as amended by the Modification to Note, shall equal
the Outstanding Principal Balance.
3. The Permanent Rate is amended as of February 1, 1995 to be Seven and Seven
Eighths Percent (7.875%) per annum (hereinafter referred to as the "Reduced
Rate").
4. Mortgagor and Mortgagee agree to amortize the Outstanding Principal Balance
of the Mortgage Loan over the Remaining Term with interest payable monthly
at the Reduced Rate.
5. The Mortgage is hereby amended as necessary to reflect the modification of
the obligation of Mortgagor to make payments of principal and/or interest
under the
- --------------------------------------------------------------------------------
Modification of Mortgage: Highland Oaks
Page 2
<PAGE>
Mortgage Loan as set forth in the Mortgage Note, as amended by the
Modification to Note, and as incorporated into and made a part of the
Mortgage, and thereby to provide that said payments shall be payable as
follows:
Interest shall accrue on the unpaid principal balance of the Note from
the date hereof at the rate of Eight and One Half per centum (8.50%)
per annum up to and including January 31, 1995 and thereafter interest
shall be payable at the Reduced Rate as follows: Interest only at the
existing Permanent Rate shall be payable on February 1, 1995.
Thereafter and commencing on the first day of March 1995, monthly
installments of interest and principal shall be paid in the sum of
$90,451.24 each, such payments to continue monthly thereafter on the
first day of each succeeding month until the entire indebtedness has
been paid. In any event, the balance of principal (if any) remaining
unpaid, plus accrued interest, shall be due and payable on May 1,
2032. The installments of interest and principal shall be applied
first to interest at the rate of 7.875% per annum upon the principal
sum or so much thereof as shall from time to time remain unpaid, and
the balance thereof shall be applied on account of principal. In the
event any installment, or part of any installment due under the
Mortgage Note becomes delinquent for more than fifteen (15) days,
there shall be due, in addition to other sums then due hereunder, a
sum equal to four percent (4%) of the amount of principal and interest
so delinquent. Whenever, under the laws of the jurisdiction where the
property is located, the amount of a "late charge" is considered to be
additional interest, this provision shall not be used in the rate of
interest specified in the Mortgage Note, together with the amount of
the "late charge," would aggregate an amount in excess of the maximum
rate of the interest permitted and would constitute usury.
6. The Mortgage is amended to conform to the revisions aforesaid to the
Mortgage Note by reflecting payment of interest on the Outstanding
Principal Balance at the Reduced Rate effective as of February 1, 1995.
7. The HUD Regulatory Agreement by and between Mortgagor and Mortgagee, which
is to be recorded against the Project, is hereby incorporated by reference
into the Mortgage and made a part hereof pursuant to Mortgagor's covenant
number 3 on page 2 of the Mortgage. Upon default under this HUD Regulatory
Agreement and upon request by the Mortgagee or the Secretary, the Mortgagee
may declare this Mortgage in default and may declare the whole of the
indebtedness secured hereby to be due and payable.
8. All references contained in the Mortgage to the (a) "Note" and/or (b)
Regulatory Agreement shall hereafter be deemed to refer respectively to (x)
the Note, as amended by the Modification to Note, and (y) the HUD
Regulatory Agreement.
9. Nothing in this Agreement shall waive, compromise, impair or prejudice any
right the Mortgagee or the Secretary may have to such judicial recourse for
any breach of the HUD Regulatory Agreement that may have occurred prior to
or that may occur subsequent to the date of this Agreement. In the event
that the Mortgagee or Secretary initiates an action for breach of the HUD
Regulatory Agreement and recovers funds, on the Mortgagee's or Secretary's
behalf or on behalf of the Project or the Mortgagor, those funds may be
applied at the discretion of the Mortgagee or Secretary to payment of the
delinquent amounts due under the Mortgage or as a partial prepayment of the
Mortgage Loan. Notwithstanding the foregoing, in the event of a transfer of
the Project and assumption of the Mortgage, it is understood that the
Mortgagee or the Secretary shall have the right to such judicial recourse
for any breach of the HUD Regulatory Agreement against the Mortgagor but
not against a transferee of the Mortgagor or the Project, under the HUD
Regulatory Agreement, where said transferee entered into a new Regulatory
Agreement.
10. Nothing herein contained shall in any way impair the Mortgage Note, as
amended by the Modification to Note, or the security now held for the
indebtedness evidenced by the Mortgage Note, as amended by the Modification
to Note, or alter, waive, annul, vary or affect any provision, covenant or
condition of the Mortgage or the HUD Regulatory Agreement, except as
specifically modified and amended herein, nor affect or impair
- --------------------------------------------------------------------------------
Modification of Mortgage: Highland Oaks
Page 3
<PAGE>
any rights, powers or remedies Or the Mortgagee under the Mortgage Note, as
amended by the Modification to Note, the Mortgage, as amended by this
Agreement, or the HUD Regulatory Agreement, nor create a novation or new
agreement by and between the parties thereto, it being the intent of the
parties to this Agreement that all of the terms, covenants, conditions and
agreements of the Mortgage Note, as amended by the Modification to Note,
the Mortgage and the HUD Regulatory Agreement are expressly approved,
ratified and confirmed, shall continue and remain in full force and effect
except as modified hereby and that the lien of the Mortgage and the HUD
Regulatory Agreement and the priority thereof shall be unchanged.
11. Mortgagor hereby acknowledges and affirms to Mortgagee that as of the
effective date of this Agreement, there are no counter-claims, defenses or
set-offs, whether legal or equitable, to Mortgagor's obligations under
either the Mortgage or the Mortgage Note, and Mortgagor hereby waives the
right to assert or raise any such counter-claims, defenses or set-offs
which Mortgagor may have had with respect to any suit, proceeding or
foreclosure action under the Mortgage that the Mortgagee, or any of its
predecessors in interest in and to the Mortgage Loan, may or could have
brought against Mortgagor prior the effective date of this Agreement.
12. Notwithstanding anything herein contained, if any one or more of the
provisions of this Agreement shall for any reason whatsoever be held to be
illegal, invalid, or unenforceable in any respect, such illegality,
invalidity or unenforceability shall not affect any other provision of this
Agreement, but this Agreement shall be construed as if such illegal,
invalid, or unenforceable provision had never been contained herein.
13. In the event of a conflict between the provisions of this Agreement and the
provisions of the Mortgage, the provisions of this Agreement will prevail.
14. The Mortgage, as amended by this Agreement, may not be further modified
except by an instrument in writing executed by each of the parties hereto.
15. This Agreement shall be binding upon and shall inure to the benefit of the
parties hereto, and their respective successors and assigns.
16. This Agreement may be executed in any number of counterparts and all
counterparts shall be construed together and shall constitute but one
Agreement.
- --------------------------------------------------------------------------------
Modification of Mortgage: Highland Oaks
Page 4
<PAGE>
IN WITNESS WHEREOF, Mortgagor and Mortgagee have caused this instrument to be
executed as of the day and year first above written.
MORTGAGOR:
/s/ Patricia Anderson H.O. Associates, Ltd.
- --------------------------
Patricia Anderson
- -------------------------- By: /s/ Robert M. Schiffman
Print Name ------------------------------------
Robert M. Schiffman, General Partner
/s/ Douglas Flair
- --------------------------
Douglas Flair
- --------------------------
Print Name
/s/ Patricia Anderson
- --------------------------
Patricia Anderson By: /s/ Edwin B. Branch
- -------------------------- ------------------------------------
Print Name Edwin B. Branch, General Partner
/s/ Douglas Flair
- --------------------------
Douglas Flair
- --------------------------
Print Name
MORTGAGEE:
ATTEST: Related Mortgage Corporation
/s/ Robert B. Joselow By: /s/ Bruce H. Brown
- -------------------------- -----------------------------
Robert B. Joselow Bruce H. Brown, Vice President
STATE OF FLORIDA )
)SS:
COUNTY OF HILLSBOROUGH )
I hereby certify that on this data, before me, an officer duly authorized in the
State aforesaid and in the County aforesaid to take acknowledgments, personally
appeared Robert M. Schiffman and Edwin B. Branch, to me known to be the persons
described in and who executed the foregoing instrument as the General Partners
of H.O. ASSOCIATES, LTD., and acknowledged before me that they executed the same
as such General Partners in the name and on behalf of said Partnership.
Witness my hand and official seal for the County and State aforesaid, this 31st
day of January, 1995.
/s/ Sherry Logsdon
[NOTARY STAMP] --------------------------
Notary Public
STATE OF FLORIDA
COUNTY OF HILLSBOROUGH
The foregoing instrument was acknowledged before me this 31 day of January, 1995
-- -------
by Bruce H. Brown, as Vice President of Related Mortgage Corporation, Delaware
-------------- --------------
corporation on behalf of the corporation. He is personally known to me or who
has produced DL as identification and who did/did not take an oath.
--
/s/ Sherry Logsdon
[NOTARY STAMP] --------------------------
Notary Public
- --------------------------------------------------------------------------------
Modification of Mortgage: Highland Oaks
Page 5
<PAGE>
EXHIBIT A
LEGAL DESCRIPTION
FEDERAL HOUSING ADMINISTRATION
PROJECT NO. 067-36672
Highland Oaks Apartments
Parcel 22B, HUNTER'S GREEN, as per map or plat thereof as recorded in Plat Book
69, Page 5, of the Public Records of Hillsborough County, Florida.
<PAGE>
This document prepared by and
after recording returned to: Robert B. Joselow
1990 M St., N.W. Suite 410
Washington, D.C. 20036
Highland Oaks Apartments
Tampa, Florida
FHA Project No. 067-36672
MODIFICATION OF COLLATERAL
ASSIGNMENT OF RENTS AND LEASES
This MODIFICATION OF COLLATERAL OF RENTS AND LEASES (the "Modification
Agreement") is made as of the 31st day of January, 1995 between H.O. Associates,
Ltd., a Florida limited partnership ("Assignor") and Related Mortgage
Corporation ("Assignee").
PRELIMINARY STATEMENT
1. On December 13, 1990, H.O. Associates, Ltd. and Assignee executed an
Assignment of Rents and Leases (the "Assignment of Rents Agreement") which
was recorded on December 13, 1990 in Book 6153, Page 231, in the land
records of Hillsborough County, Florida relating to the real property
described on Exhibit A attached hereto.
2. The parties hereto desire to amend the Assignment of Rents Agreement to
reflect certain changes therein.
NOW THEREFORE, in consideration of the amendments set forth below and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. All references in the Assignment of Rents Agreement to the "Note" shall be
construed as referring to the Note as amended by a Modification to Mortgage
Note between the parties hereto and bearing the same date as this
Modification of Collateral Assignment of Rents and Leases and all
references in the Assignment of Rents Agreement to the "Mortgage" shall be
construed as referring to the Mortgage as amended by a Modification of
Mortgage between the parties hereto and bearing the same date as this
Modification of Collateral Assignment of Rents and Leases.
2. The execution and delivery of this Modification Agreement shall not
constitute a novation of the Assignment of Rents Agreement or of Assignor's
obligations thereunder.
3. Except as expressly modified hereby, the Assignment of Rents Agreement
shall remain unchanged and in full force and effect.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Modification of
Collateral Assignment of Rents and Leases as of the date first above written.
ASSIGNOR:
/s/ Patricia Anderson H.O. Associates, Ltd.
- --------------------------
Patricia Anderson By: /s/ Robert M. Schiffman
- -------------------------- ------------------------------------
Print Name Robert M. Schiffman, General Partner
/s/ Douglas Flair
- ---------------------------
Douglas Flair
- ---------------------------
Print Name
/s/ Patricia Anderson
- ---------------------------
Patricia Anderson By: /s/ Edwin B. Branch
- --------------------------- -------------------------------------
Print Name Edwin B. Branch, General Partner
/s/ Douglas Flair
- ---------------------------
Douglas Flair
- ---------------------------
Print Name
ASSIGNEE:
ATTEST: Related Mortgage Corporation
/s/ Robert B. Joselow By: /s/ Bruce H. Brown
- --------------------------- --------------------------------
Robert B. Joselow Bruce H. Brown, Vice President
<PAGE>
EXHIBIT A
LEGAL DESCRIPTION
FEDERAL HOUSING ADMINISTRATION
PROJECT NO. 067-36672
Highland Oaks Apartments
Parcel 22B, HUNTER'S GREEN, as per map or plat thereof as recorded in Plat Book
69, Page 5, of the Public Records of Hillsborough County, Florida.
<PAGE>
STATE OF FLORIDA )
)SS:
COUNTY OF HILLSBOROUGH )
I hereby certify that on this date, before me, an officer duly authorized in the
State aforesaid and in the County aforesaid to take acknowledgments, personally
appeared Robert M. Schiffman and Edwin B. Branch, to me known to be the persons
described in and who executed the foregoing instrument as the General Partners
of H.O. ASSOCIATES, LTD., and acknowledged before me that they executed the same
as such General Partners in the name and on behalf of said Partnership.
Witness my hand and official seal in the County and State aforesaid, this 31st
day of January, 1995.
[Notary Stamp] /s/ Sherry Logsdon
------------------
Notary Public
STATE OF FLORIDA
COUNTY OF HILLSBOROUGH
The foregoing instrument was acknowledged before me this 31st day of January
1995 by Bruce H. Brown, as Vice President of Related Mortgage Corporation,
Delaware corporation on behalf of the corporation. He is personally known to me
or who has produced driver's license as identification and who did/did not take
an oath.
[Notary Stamp /s/ Sherry Logsdon
-----------------------
Notary Public
<PAGE>
This document prepared by and
after recording returned to: Robert B. Joselow
1990 M St., N.W., Suite 410
Washington, D.C. 20036
HIGHLAND OAKS APARTMENTS
TAMPA, FLORIDA
FHA PROJECT NO. 067-36672
AMENDMENT TO REGULATORY AGREEMENT
FOR MULTIFAMILY HOUSING PROJECTS COINSURED BY HUD
THIS AMENDMENT TO REGULATORY AGREEMENT FOR MULTIFAMILY HOUSING PROJECTS
COINSURED BY HUD (hereinafter referred to as the "Agreement") dated as of the
31st day of January, 1995 is made by and between H.O. ASSOCIATES, LTD., a
limited partnership organized and existing under the laws of the State of
Florida, its successors, heirs and assigns (the "Owners") having its principal
office and place of business at 1430 Wynnton Road, Columbus, Georgia 31906 and
RELATED MORTGAGE CORPORATION, a corporation organized and existing under the
laws of the State of Delaware (the "Mortgagee"), having its principal place of
business at 625 Madison Avenue, New York, NY 10022.
W I T N E S S E T H :
WHEREAS, Owners are the owners of certain real property located in the City of
Tampa in Hillsborough County of the State of Florida as further described in
this Agreement of which is constructed a certain rental apartment project known
as Highland Oaks Apartments, FHA Project No. 067-36672 (hereinafter referred to
collectively as the "Project"); and
WHEREAS, Owners executed and delivered to Mortgagee, their Mortgage Note
(hereinafter referred to as the "Mortgage Note") dated December 13, 1990 in the
original amount of THIRTEEN MILLION ONE HUNDRED FIFTY FOUR THOUSAND TWO HUNDRED
AND NO/1OOths DOLLARS ($13,154,200.00) (hereinafter referred to as the "Mortgage
Loan"). The Mortgage Note is secured by: (i) a certain Mortgage (hereinafter
referred to as the "Mortgage") dated December 13, 1990 which was executed by
Owners and delivered to Mortgagee and thereafter recorded on December 13, 1990,
against the real property component of the Project in O.R. Book 6153, Page 212
of the Public Records of Hillsborough County, Florida as further described in
Exhibit A attached hereto and hereby incorporated by reference; (ii) a certain
Assignment of Rents and Leases (hereinafter referred to as the "Collateral
Assignment") dated December 13, 1990 which was executed by Owners and delivered
to Mortgagee and thereafter recorded on December 13, 1990 in O.R. Book 6153,
Page 231 of the Public Records of Hillsborough County, Florida; (iii) a certain
Security Agreement (hereinafter referred to as the "Security Agreement") dated
December 13, 1990 by and between Mortgagor and Mortgagee, and (iv) certain UCC
Financing Statements (hereinafter referred to as the "UCC Financing Statements")
executed by the Owners in favor of Mortgagee and filed or recorded as
applicable, on December 14, 1990 with the Secretary of State of Florida as
Document No. 900000310323 and on December 13, 1990 against the real property
described in Exhibit A to this Agreement in O.R. Book 6153, Page 235 of the
Public Records of Hillsborough County, Florida. The Mortgage, the Collateral
Assignment, the Security Agreement and the UCC Financing Statements created a
first lien security interest in favor of Mortgagee in and to the Project and
various items of personal property currently or thereafter owned by the Owners
with respect to the Project; and
WHEREAS, said Mortgage which has been Finally Endorsed for Coinsurance by the
Secretary of the Department of Housing and Urban Development acting by and
through the Federal
- --------------------------------------------------------------------------------
Amendment to Regulatory Agreement: Highland Oaks
Page 1
<PAGE>
Housing Commissioner (hereinafter referred to as the "Secretary") pursuant to
Section 221(d)(4) and Section 244 of the National Housing Act, as amended, and
the Regulations promulgated pursuant thereto; and
WHEREAS, Owners and Mortgagee previously executed that certain Regulatory
Agreement for Multifamily Housing Projects Coinsured by HUD (hereinafter
referred to as the "Regulatory Agreement") dated December 13, 1990 and recorded
December 13, 1990 in O.R. Book 6153, Page 220 of the Public Records of
Hillsborough County, Florida, against the real property described in Exhibit A
of this Agreement, which Regulatory Agreement is incorporated by reference into
and made a part of the Mortgage; and
WHEREAS, the Mortgage Note and Mortgage provide for the payment of interest
after Final Endorsement for Coinsurance at the rate of Eight and One Half
Percent (8.50%) per annum (hereinafter referred to as the "Permanent Rate")
over the remaining term of the Mortgage Loan; and
WHEREAS, the current outstanding principal balance due under the Mortgage Note
is $13,037,676.07 (hereinafter referred to as the "Outstanding Principal
Balance"); and
WHEREAS, the remaining term of Mortgage Loan under the Mortgage Note and
Mortgage is 446 months (hereinafter referred to as the "Remaining Term"); and
WHEREAS, the parties hereto have agreed to modify the terms of the Mortgage Note
and the Mortgage as of February l, 1995 (i) to reduce the Permanent Rate of
interest therein provided from Eight and One Half per centum (8.50%) per annum
to Seven and Seven Eighths per centum (7.875%) per annum effective as of
February l, 1995, (ii) to revise the amount of principal and interest payable
monthly by Owners to Mortgagee under the Mortgage Note as a result of such
reduction in interest rate and to reamortize in full the Mortgage Loan over the
remaining term thereof, and (iii) to amend Mortgage Note and Mortgage in certain
other respects as described in that certain Modification of the Mortgage Note
(the "Modification to Note") and Modification to Mortgage (the "Modification
Agreement") executed concurrently herewith by the Owners and the Mortgagee and
dated as of the date of this Agreement.
WHEREAS, the Owners and the Mortgagee have agreed to execute this Agreement to
amend the Regulatory Agreement (i) to reflect the revisions to the Mortgage
Note and Mortgage contained in the Modification to Note and Modification
Agreement, (ii) to revise the Regulatory Agreement in certain other respects and
(iii) to reaffirm the Owner's obligations under the Regulatory Agreement as
hereinafter described.
NOW, THEREFORE, for and in consideration of the above premises, the sum of Ten
Dollars ($10.00) in hand paid and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged by each of the parties
hereto, the parties, for themselves and for their respective successors and
assigns, do hereby agree that the terms of the Regulatory Agreement to which
this Agreement is appended are hereby amended as follows:
1. The foregoing recitals are hereby incorporated by reference as if set forth
fully herein. All capitalized terms not defined in this Agreement shall
have the same meanings ascribed thereto in the Regulatory Agreement.
2. From and after the date hereof, all references in the Regulatory Agreement
to the "Note" and the "Mortgage" shall be construed, respectively, as
referring to the Mortgage Note, as amended by the Modification to Note and
the Mortgage, as amended by the Modification Agreement.
3. Owners acknowledges and affirms to the Mortgagee and the Secretary that, as
of the effective date hereof, there are no defenses, set-offs or counter-
claims, whether legal or equitable, to Owners' obligations under the
Regulatory Agreement, and Owners hereby waive the right to raise or assert
any such defenses, set-offs or counter-claims which Owners may have held
with respect to any suit, proceeding or foreclosure action under the
Regulatory Agreement that Mortgagee or the Secretary or any of its
predecessors in interest in and to the Mortgage Loan, may or could have
brought against the Owners prior to the effective date hereof.
4. Nothing herein contained shall in any way impair the rights and remedies
available to the Mortgagee or the Secretary under the Regulatory Agreement,
or the security interest of the Mortgagee or the Secretary in and to the
property described in the Regulatory Agreement or alter, waive, annul, vary
or affect any provision, covenant or condition of the Regulatory Agreement,
except as specifically modified and amended herein; nor
- --------------------------------------------------------------------------------
Amendment to Regulatory Agreement: Highland Oaks
Page 2
<PAGE>
affect or impair any rights, powers or remedies of the Mortgagee or the
Secretary under any other document or agreement entered into by the parties
hereto with respect to the Mortgage Loan, nor create a novation or new
agreement by and between the parties thereto, it being the intent of the
parties to this Agreement that all of the terms, covenants, conditions and
agreements of the Regulatory Agreement are hereby expressly approved,
ratified and confirmed, shall continue and remain in full force and effect
except as modified hereby and that the lien of the Mortgagee and the
Secretary in and to the property subject to the Regulatory Agreement, as
amended by this Agreement and the priority thereof shall be unchanged.
5. Notwithstanding anything herein contained, if any one or more of the
provisions of this Agreement shall for any reason whatsoever be held to be
illegal, invalid, or unenforceable in any respect, such illegality,
invalidity, or unenforceability shall not affect any other provision of
this Agreement, but this Agreement shall be construed as if such illegal,
invalid, or unenforceable provision had never been contained herein.
6. The Regulatory Agreement, as amended by this Agreement, may not be further
modified except by an instrument in writing executed by each of the parties
hereto.
7. This Agreement shall be binding upon and shall inure to the benefit of the
parties hereto, and their-respective successors and assigns.
8. This Agreement may be executed in any number of counterparts and all
counterparts shall be construed together and shall constitute but on
Agreement.
- --------------------------------------------------------------------------------
Amendment to Regulatory Agreement: Highland Oaks
Page 3
<PAGE>
IN WITNESS WHEREOF, the Owners, the Mortgagee and the Secretary have caused this
Agreement to be executed and made effective as of the day and year first above
written.
OWNERS:
/s/ Patricia Anderson H.O. Associates, Ltd.
- ----------------------------
Patricia Anderson
- ---------------------------- By: /s/ Robert M. Schiffman
Print Name ----------------------------------
Robert M. Schiffman, General Partner
/s/ Douglas Flair
- ----------------------------
Douglas Flair
- ----------------------------
Print Name
/s/ Patricia Anderson
- ----------------------------
Patricia Anderson By: /s/ Edwin B. Branch
- ---------------------------- ----------------------------------
Print Name Edwin B. Branch, General Partner
/s/ Douglas Flair
- ----------------------------
Douglas Flair
- ----------------------------
Print Name
MORTGAGEE:
ATTEST: Related Mortgage Corporation
/s/ Robert B. Joselow By: /s/ Bruce H. Brown
- --------------------------- ----------------------------
Robert B. Joselow Bruce H. Brown, Vice President
- --------------------------------------------------------------------------------
Amendment to Regulatory Agreement: Highland Oaks
Page 4
<PAGE>
EXHIBIT A
LEGAL DESCRIPTION
FEDERAL HOUSING ADMINISTRATION
PROJECT NO. 067-36672
HIGHLAND OAKS APARTMENTS
Parcel 22B, HUNTER'S GREEN, as per map or plat thereof as recorded in Plat Book
69, Page 5, of the Public Records of Hillsborough County, Florida.
<PAGE>
Highland Oaks Apartments
Tampa, Florida
FHA Project No. 067-36672
MODIFICATION OF SECURITY AGREEMENT
THIS MODIFICATION OF SECURITY AGREEMENT (hereinafter referred to as the
"Agreement") dated as of the 31st day of January, 1995 is made by and between
H.O. ASSOCIATES, LTD, a limited partnership organized and existing under the
laws of the State of Florida, having its principal office and place of
business at 1430 Wynnton Road, Columbus, GA 31906, hereinafter called the
"Debtor" and RELATED MORTGAGE CORPORATION, a corporation organized and
existing under the laws of the State of Delaware, having its principal office
and place of business at 625 Madison Avenue, New York, NY 10022, hereinafter
called the "Secured Party."
W I T N E S S E T H:
WHEREAS, Debtor is the owner of certain real property located in the City of
Tampa in Hillsborough County of the State of Florida as further described in
this Agreement on which is constructed a certain rental apartment project known
as Highland Oaks Apartments, FHA Project No. 067-36672 (hereinafter referred to
collectively as the "Project"); and
WHEREAS, Debtor executed and delivered to Secured Party, its Mortgage Note
(hereinafter referred to as the "Mortgage Note") dated December 13, 1990 in
the original amount of THIRTEEN MILLION ONE HUNDRED FIFTY FOUR THOUSAND TWO
HUNDRED AND NO/1OOths DOLLARS ($13,154,200.00) (hereinafter referred to as
the "Mortgage Loan"). The Mortgage Note is secured by: (i) a certain Mortgage
(hereinafter referred to as the "Mortgage") dated December 13, 1990 which was
executed by Debtor and delivered to Secured Party and thereafter recorded on
December 13, 1990, against the real property component of the Project in O.R.
Book 6153, Page 212 of the Public Records of Hillsborough County, Florida as
further described in Exhibit A attached hereto and hereby incorporated by
reference; (ii) a certain Assignment of Rents and Leases (hereinafter
referred to as the "Collateral Assignment") dated December 13, 1990 which was
executed by Debtor and delivered to Secured Party and thereafter recorded on
December 13, 1990 in O.R. Book 6153, Page 231 of the Public Records of
Hillsborough County, Florida; (iii) a certain Security Agreement (hereinafter
referred to as the "Security Agreement") dated December 13, 1990 by and
between Debtor and Secured Party, and (iv) certain UCC Financing Statements
(hereinafter referred to as the "UCC Financing Statements") executed by the
Debtor in favor of Secured Party and filed or recorded as applicable, on
December 14, 1990 with the Secretary of State of Florida as Document No
900000310323 and on December 13, 1990 against the real property described in
Exhibit A to this Agreement in O.R. Book 6153, Page 235 of the Public Records
of Hillsborough County, Florida. The Mortgage, the Collateral Assignment, the
Security Agreement and the UCC Financing Statements created a first lien
security interest in favor of Secured Party in and to the Project and various
items of personal property currently of thereafter owned by the Debtor with
respect to the Project; and
WHEREAS, said Mortgage Note has been Finally Endorsed for Coinsurance by the
Secretary of the Department of Housing and Urban Development acting by and
through the Federal Housing Commissioner (hereinafter referred to as the
"Secretary") pursuant to Section 221(d)(4) and Section 244 of the National
Housing Act, as amended, and the Regulations promulgated pursuant thereto; and
WHEREAS, Debtor and Secured Party entered into a certain Regulatory Agreement
for Multifamily Housing Projects Coinsured by HUD (hereinafter referred to as
the "Regulatory Agreement") dated December 13, 1990 and recorded December 13,
1990 in O.R. Book 6153, Page 220 of the Public Records of Hillsborough County,
Florida, against the real property described in Exhibit A of this Agreement,
which Regulatory Agreement is incorporated by reference into and made a part of
the Mortgage; and
WHEREAS, the Mortgage Note and Mortgage provide for the payment of interest
after Final Endorsement for Coinsurance at the rate of Eight and One Half
Percent (8.50%) per annum (hereinafter referred to as the "Permanent Rate") over
the remaining term of the Mortgage Loan; and
- --------------------------------------------------------------------------------
Modification of Security Agreement: Highland Oaks
Page 1
<PAGE>
WHEREAS, the current outstanding balance of amounts due under the Mortgage Note
is $13,037,676.07 (hereinafter referred to as the "Outstanding Principal
Balance"); and
WHEREAS, the remaining term of Mortgage Loan under the Mortgage Note and
Mortgage is 446 months (hereinafter referred to as the "Remaining Term"); and
WHEREAS, the parties hereto have agreed to amend the terms of the Mortgage Note
pursuant to the terms of that certain Modification to Mortgage Note (hereinafter
referred to as the "Modification to Note") of even date herewith, and to amend
the terms of the Mortgage pursuant to the terms of that certain Modification of
Mortgage (hereinafter referred to as the "Modification Agreement"), of even date
herewith, Debtor and Secured Party have agreed to modify the terms of the
Mortgage Note and the Mortgage effective as of February 1, 1995 (i) to reduce
the Permanent Rate of interest therein provided from Eight and One Half per
centum (8.50%) per annum to Seven and Seven Eighths per centum (7.875%) per
annum, (ii) to revise the amount of principal and interest payable monthly by
Debtor to Secured Party under the Mortgage Note as a result of such reduction in
interest rate and to reamortize in full the Outstanding Principal Balance of the
Mortgage Loan over the Remaining Term thereof, and (iii) to amend the Mortgage
Note and the Mortgage in certain other respects as therein described; and
WHEREAS, the Regulatory Agreement is concurrently herewith being amended by a
certain Amendment to Regulatory Agreement for Multifamily Housing Projects
Coinsured by HUD (the "Amendment to Regulatory Agreement") of even date herewith
by and between the Debtor and the Secured Party which Amendment to Regulatory
Agreement is to be incorporated by reference into the Mortgage pursuant to the
Modification Agreement and is to be recorded with the Public Records of
Hillsborough County, Florida concurrently with the Modification Agreement. For
purposes hereof, the Regulatory Agreement, as amended by the Amendment to
Regulatory Agreement, shall hereinafter be referred to collectively as the "HUD
Regulatory Agreement".
WHEREAS, the Debtor and the Secured Party have agreed to execute this Agreement
to amend the Security Agreement (i) to reference the revisions to the Mortgage
Note and Mortgage contained, respectively, in the Modification to Note and
Modification Agreement, (ii) to reference the Regulatory Agreement as amended by
the Amendment to Regulatory Agreement, (iii) to revise the Security Agreement in
certain other respects and (iv) to reaffirm the Debtor's obligations under the
Security Agreement, as amended, as hereinafter described.
NOW, THEREFORE, for and in consideration of the premises, the sum of Ten and
No/100ths Dollars ($10.00) and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged by each of the
parties hereto, the parties for themselves and for their respective
successors and assigns, do hereby agree that the terms of the Security
Agreement to which this Agreement is appended is hereby amended as follows:
1. The foregoing recitals are hereby incorporated by reference as if set forth
fully herein. All capitalized terms not otherwise defined in this Agreement
shall have the same meanings ascribed thereto in the Security Agreement.
2. From and after the date hereof, all references in the Security Agreement to
the "Note", "Mortgage" and "Regulatory Agreement" shall be construed,
respectively, as referring to the Mortgage Note, as amended by the
Modification to Note, and the Mortgage, as amended by the Modification
Agreement, and the HUD Regulatory Agreement.
3. Nothing herein contained shall in any way impair the rights and remedies
available to the Secured Party under the Security Agreement, or the
security interest of the Secured Party in and to the Collateral described
in the Security Agreement or alter, waive, annul vary or affect any
provision, covenant or condition of the Security Agreement, except as
specifically modified and amended herein, nor affect or impair any rights,
powers of remedies of the Secured Party under any other document of
agreement entered into by the parties hereto with respect to the Mortgage
Loan, nor create a novation of new agreement by and between the parties
thereto, it being the intent of the parties to this Agreement that all of
the terms, covenants, conditions and agreements of the Security Agreement
are expressly approved, ratified and confirmed, shall continue and remain
in full force and effect except as modified hereby and that the lien of the
Secured Party in and to the Collateral and the priority thereof shall be
unchanged.
4. Notwithstanding anything herein contained, if any one of more of the
provisions of this Agreement shall for any reason whatsoever be held to be
illegal, invalid, or unenforceable in any respect, such illegality,
invalidity or unenforceability shall not
- --------------------------------------------------------------------------------
Modification of Security Agreement: Highland Oaks
Page 2
<PAGE>
affect any other provision of this Agreement, but this Agreement shall be
construed as if such illegal, invalid, of unenforceable provision had never
been contained herein.
5. The Security Agreement, as amended by this Agreement, may not be further
modified except by an instrument in writing executed by each of the parties
hereto.
6. This Agreement shall be binding upon and shall inure to the benefit of the
parties hereto, and their respective successors and assigns.
7. This Agreement may be executed in any number of counterparts and all
counterparts shall be construed together and shall constitute but one
Agreement.
IN WITNESS WHEREOF, the Debtor and Secured Party have caused this Agreement to
be executed as of the day and year first above written.
Debtor:
/s/ Patricia Anderson H.O. Associates, Ltd.
- ----------------------------
Patricia Anderson
- ---------------------------- By: /s/ Robert M. Schiffman
Print Name ----------------------------------
Robert M. Schiffman, General Partner
/s/ Douglas Flair
- ----------------------------
Douglas Flair
- ----------------------------
Print Name
/s/ Patricia Anderson
- ----------------------------
Patricia Anderson By: /s/ Edwin B. Branch
- ---------------------------- ----------------------------------
Print Name Edwin B. Branch, General Partner
/s/ Douglas Flair
- ----------------------------
Douglas Flair
- ----------------------------
Print Name
Secured Party:
ATTEST: Related Mortgage Corporation
/s/ Robert B. Joselow By: /s/ Bruce H. Brown
- --------------------------- ----------------------------
Robert B. Joselow Bruce H. Brown, Vice President
- --------------------------------------------------------------------------------
Modification of Security Agreement: Highland Oaks
Page 3
<PAGE>
EXHIBIT A
LEGAL DESCRIPTION
FEDERAL HOUSING ADMINISTRATION
PROJECT NO. 067-36672
Highland Oaks Apartments
Parcel 22B, HUNTER'S GREEN, as per map or plat thereof as recorded in Plat Book
69, Page 5, of the Public Records of Hillsborough County, Florida.
<PAGE>
AMENDED AND RESTATED AGREEMENT
THIS AMENDED AND RESTATED AGREEMENT ("Agreement") made as of this 31st day
of January, 1995, by and between RICHLAND PROPERTIES, INC., a Delaware
corporation (the "Mortgagor") and NYLIFE GOVERNMENT MORTGAGE PLUS LIMITED
PARTNERSHIP, a Massachusetts limited partnership (hereinafter, together with its
successors and assigns, referred to as "Holder").
R E C I T A L S:
A. On December 13, 1990, Holder entered into an Additional Interest
Agreement (the "Original Agreement") with H.O. Associates, Ltd. (the "Original
Mortgagor") with respect to a property located in Tampa, Florida more
particularly described in Schedule A (the "Land") and a multifamily housing
project to be constructed on the Land (the land and such project being
collectively the "Project").
B. The Original Mortgagor constructed the Project through a construction
and permanent mortgage loan in the principal amount of $13,154,200.00 (the
"Loan") made to the Original Mortgagor by Related Mortgage Corporation (together
with its successors and assigns as holder of the Loan) (the "Coinsuring
Lender");
C. The Loan was evidenced by a Mortgage Note (the "Original Note") executed
by the Original Mortgagor in favor of the Coinsuring Lender, and which Original
Note was (i) secured by a first Mortgage (the "Original Mortgage") on the
Project, and
<PAGE>
(ii) coinsured by the United Stated Department of Housing and Urban Development
("HUD") under Section 221(d)(4) pursuant to Section 244 of the National Housing
Act, as amended;
D. The Coinsuring Lender financed the Loan through the issuance by the
Coinsuring Lender of fully-modified mortgage-backed pass-through construction
loan certificates ("CLCs") guaranteed as to the timely payment of principal and
interest by the Government National Mortgage Association and, upon the
redemption of such CLCs, a fully-modified mortgage-backed pass-through permanent
loan certificate ("PLC") guaranteed as to the timely payment of principal and
interest by the Government National Mortgage Association, which PLC was backed
by the Loan (the CLCs and PLC are sometimes hereinafter referred to as the
"Original GNMA Certificates");
E. The Coinsuring Lender obtained funding for the Loan through the issuance
of the Original GNMA Certificates to Holder. The interest rate on the Note and,
correspondingly, on the Original GNMA Certificates, were at rates below those
for comparable loans advanced and comparable securities issued, at the time the
Original Note was made.
F. To induce the Coinsuring Lender to issue the Original GNMA Certificates
at a rate below those available in the market for GNMA securities at the time of
their issuance and to induce the Holder to acquire said Original GNMA
Certificates at that below-market rate, the Original Mortgagor agreed to provide
to the Holder certain other additional interest not set forth in the
2
<PAGE>
Original Note or Original Mortgage as provided in the Original Agreement.
G. Holder, pursuant to a separate letter agreement dated as of June 22,
1994 with the Original Mortgagor (the "Letter Agreement"), has agreed to accept
certain sums payable out of the proceeds of the sale of the Project to the
Mortgagor and the performance of the Original Mortgagor undertakings under the
Letter Agreement in satisfaction of all Additional Interest due under the
Original Agreement;
H. The Mortgagor has agreed to purchase the Project from the Original
Mortgagor upon certain conditions including, but not limited to, the condition
that the Loan be modified to, among other things, reduce the interest rate to
7.875% per annum and that the Original Agreement and the documents securing the
Original Agreement be modified in certain respects.
I. The Original Mortgagor and the Coinsuring Lender have agreed to modify
the Original Note and the Original Mortgage pursuant to, among other documents,
a Modification of the Mortgage Note and Modification of the Mortgage and the
Mortgagor has agreed to assume the Loan as so modified.
J. Modification of the Loan requires the agreement of the Holder to the
reduction in interest rate and other modifications and the agreement of the
Holder to relinquish the Original GNMA Certificates and accept in substitution
therefor a new GNMA mortgage backed security bearing interest at the rate of
7.625% per annum (the "New GNMA Certificate").
3
<PAGE>
K. Holder has further agreed to a reduction of the interest rate on the
Loan and the other modifications to the Loan and the substitution of the New
GNMA Certificate for the Original GNMA Certificates in express reliance upon and
in consideration of the right of Holder to call the Loan due and payable in ten
(10) years as more particularly provided herein and the covenants and
undertakings of Borrower contained herein and in the documents securing this
Agreement.
NOW, THEREFORE, in consideration of the foregoing, of the Loan, as modified,
and other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, subject to the requirements of the Secretary of Housing
and Urban Development as specified in Section 8 hereof, the Mortgagor and the
Holder hereby amend and restate the Original Agreement in its entirety and agree
as follows:
SECTION 1. DEFINITIONS.
Unless otherwise defined in this Agreement, the captioned terms herein
shall have the respective meanings set forth below:
(a) "ACCELERATED MATURITY DATE" shall mean the date to which the
Maturity Date has been accelerated pursuant to the provisions of Section 5(A).
(b) "ADDITIONAL INTEREST" shall mean and include "Shared Income
Interest" and "Shared Appreciation Interest," as such terms were defined in
Section 2 of the Original Agreement.
(c) "AGREEMENT" shall mean this Amended and Restated Agreement.
4
<PAGE>
(d) "COINSURANCE COVERAGE" shall refer to that certain insurance
coverage provided to the Holder of the Note by the Coinsuring Lender and the
United States Department of Housing and Urban Development, acting by and through
the Federal Housing Commissioner, in accordance with Section 207 pursuant to
Sections 221(d)(4) pursuant to Section 244 of the National Housing Act, as
amended and the applicable regulations promulgated thereunder, which insurance
coverage is evidenced by the endorsement on the Note by the Federal Housing
Commissioner.
(e) "COLLATERAL" shall mean that real and personal property in which a
security interest has been granted to the Holder in accordance with Section 3 of
this Agreement.
(f) "DEFAULT" shall mean any of the following:
(1) the Mortgagor shall fail to pay when due any installment of
principal, interest or other amount due under the Note or Mortgage or there is
otherwise a default under any of the Loan Documents, monetary or non-monetary,
and such failure to pay or default shall continue beyond any applicable grace
period contained in the Note, Mortgage or Loan Documents or any documents
executed in connection therewith, as applicable;
(2) the Mortgagor shall fail to pay the Outstanding Indebtedness
as and when required pursuant to Section 5 hereof or otherwise fail to observe
or perform any covenant or any other agreement or obligation to be observed or
performed by it under Section 11 hereof, and such failure to observe and perform
under Section 11 hereof shall continue for thirty (30)
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days after notice thereof from the Holder (or such other grace period as may be
provided for in any applicable document);
(3) the Mortgagor shall voluntarily seek liquidation or
reorganization under the United States Bankruptcy Code, as amended from time to
time, or consent to the institution of any involuntary petition thereunder
against it; or file a petition, answer or consent or otherwise institute any
similar proceeding under any other applicable federal or state law; or apply
for, or by consent or acquiescence there shall be an appointment of, a receiver,
liquidator, sequestrator, trustee or other officer with similar power; or make
an assignment for the benefit of creditors; or admit in writing its inability to
pay its indebtedness generally as it becomes due; or if an involuntary petition
shall be commenced seeking the liquidation or reorganization of the Mortgagor
under the United States Code or any similar proceeding shall be commenced under
any other applicable federal, state or provincial law and (a) the petition
commencing the involuntary action is not timely controverted, (b) the petition
commencing the involuntary action is not dismissed within sixty (60) days of its
filing, (c) an interim trustee is appointed to take possession of all or a
portion of the property, and/or to operate all or any part of the business of
Mortgagor, or (d) an order for relief shall have been issued or entered therein,
or a decree or order of a court having jurisdiction in the premises for the
appointment of a receiver, liquidator, sequestrator, trustee or other officer
having similar power for
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Mortgagor or for all or a part of its property, shall have been entered; or any
similar relief shall be granted under any applicable federal or state law.
(g) "HUD" shall mean the United States Department of Housing and Urban
Development, including the Secretary of Housing and Urban Development of the
United States or the authorized representative of such Secretary.
(h) "INITIAL ENDORSEMENT" shall mean the initial endorsement of the
Loan for coinsurance by the Secretary of Housing and Urban Development under
Section 221(d)(4) pursuant to Section 244 of the National Housing Act.
(i) "Loan" shall mean the mortgage loan to the Mortgagor from the
Coinsuring Lender in the original principal amount of $13,154,200.00 evidenced
by the Note and secured by the Mortgage.
(j) "LOAN DOCUMENTS" shall mean, collectively, the Note, the Mortgage,
together with all other documents by and between the Mortgagor and the
Coinsuring Lender evidencing or securing the Loan. "Loan Documents" does not
include this Agreement or any other document required solely by virtue of this
Agreement.
(k) "MATURITY DATE" shall mean the maturity date of the Loan, May 1,
2032.
(l) "MORTGAGE" shall mean that certain mortgage from the Original
Mortgagor granting a first lien on the Project for the benefit of the Coinsuring
Lender and securing the repayment
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of the Note, as amended by that certain Modification of Mortgage between the
Original Mortgagor and Coinsuring Lender of even date herewith.
(m) "NOTE" shall mean the promissory note of the Original Mortgagor
given to the Coinsuring Lender to evidence the Loan, as amended by a
Modification of Mortgage Note between the Original Mortgagor and the Coinsuring
Lender of even date herewith.
(n) "OUTSTANDING INDEBTEDNESS" shall mean:
(1) the unpaid principal balance of the Loan and all accrued and
unpaid interest thereon;
(2) any and all other sums then due and owing by the Mortgagor to
the Coinsuring Lender in accordance with the Note and Mortgage, including,
without limitation, (a) all late charges and any applicable premiums and fees,
(b) all amounts which the Coinsuring Lender may have advanced to pay obligations
of the Mortgagor under the Mortgage (including, without limitation, insurance
premiums, taxes, costs of maintenance and repair of the Project, title costs,
filing fees and charges, and attorneys fees), together with interest thereon at
the rate stipulated in the Note, and (c) all insurance proceeds or condemnation
awards to which the Coinsuring Lender shall then be entitled; and
(3) all amounts then due and owing by the Mortgagor to the Holder
for attorney fees, court costs or other charges in accordance with this
Agreement.
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(o) "PROJECT" shall mean that multi-family rental apartment complex
commonly known as Highland Oaks Apartments, located in Tampa, Florida,
containing 272 units and which complex is identified by the Coinsuring Lender as
FHA Project No. 067-36672.
(p) "REGULATORY AGREEMENT" shall mean that agreement regulating the
use and operation of the Project executed by and between the Mortgagor and
Coinsuring Lender dated of even date herewith; it being understood and agreed
that in the event Coinsurance Coverage is terminated pursuant to Section 5(C)
hereof, the Regulatory Agreement shall continue in full force and effect with
Holder assuming all rights, but not obligations, arising thereunder.
(q) "SUBORDINATED MORTGAGE" shall mean that Amended and Restated
Subordinated Mortgage from the Mortgagor of even date herewith granting a second
lien on the Project for the benefit of the Holder and securing the obligations
arising under this Agreement.
(r) "TPA" shall mean a Transfer of Physical Assets, as that term is
used in the regulations and administrative requirements of HUD relating to
projects financed by coinsured mortgage loans.
SECTION 2. RESTATEMENT OF OBLIGATIONS.
The parties acknowledge and agree that this Agreement amends and restates
and supersedes the Original Agreement in its entirety and that the Mortgagor is
not assuming any of the
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Original Mortgagor's obligations under the Original Agreement or any other
agreement between the Holder and the Original Mortgagor. Mortgagor's obligations
to Holder are embodied in this Agreement, the Subordinated Mortgage and in other
express written agreements or undertakings of the Mortgagor with or to Holder.
Without limiting the foregoing, Mortgagor shall have no obligation to pay any
Additional Interest to Holder or to pay any documentary stamps or intangible tax
on the subordinated mortgage executed by the Original Mortgagor securing the
Original Agreement or the Subordinated Mortgage.
SECTION 3. SECURITY FOR OBLIGATIONS.
A. As security for the performance of its obligations set forth in this
Agreement, the Mortgagor, subject to any prior rights of the Coinsuring Lender:
(i) has granted, of even date herewith, to the Holder, its successors and
assigns the Subordinated Mortgage in a form appropriate for recordation,
securing the obligations of Mortgagor as set forth in this Agreement, which
Subordinated Mortgage is subordinate and subject only to the Mortgage; and (ii)
hereby grants to the Holder, its successors and assigns, a second lien security
interest in tangible Project personal property more particularly described in
Schedule B attached hereto.
B. The Mortgagor and the Holder agree that this Agreement shall be and does
constitute a "Security Agreement", as that term is defined in the version of the
Uniform Commercial Code in effect in the State of Florida or any other
applicable
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jurisdiction, with respect to the security interests granted in subparagraphs
(i) and (ii) of paragraph A of this Section. The Mortgagor, upon request of the
Holder, will execute such financing statements, notices of lien, notices of
assignment, and continuations or amendments to any of the foregoing and other
documents (and pay the costs reasonably deemed necessary by the Holder) and do
such other acts and things, all as the Holder may from time to time reasonably
request in order to establish and maintain a valid security interest in the
Collateral provided for hereunder in order to secure the payment of the
obligations and liabilities of Mortgagor to the Holder hereunder. The provisions
hereof are in addition to, and not in derogation of, the Subordinated Mortgage.
C. The Mortgagor will reimburse the Holder for all expenses, including
reasonable attorneys' fees and disbursements, incurred by the Holder in seeking
to collect any sums due hereunder or enforce any rights hereunder in the case of
Default.
SECTION 4. [THIS SECTION RESERVED].
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SECTION 5. ACCELERATION OF MATURITY DATE: REMEDIES ON DEFAULT.
A. On or after the tenth (10th) anniversary date of the date of this
Agreement, the Holder, upon at least six (6) calendar months' prior notice to
Mortgagor of Holder's intention, may accelerate, in its sole discretion, the
Maturity Date of the Loan to a date specified in said written notice. In such
event, the Holder and, if applicable, the Coinsuring Lender (subject to Section
5(C)) may demand that Mortgagor pay over on the Accelerated Maturity Date all of
the Outstanding Indebtedness.
B. In the event that the Holder elects to accelerate the maturity date of
all of the Outstanding Indebtedness (subject to the additional requirements in
connection with an acceleration of the Note and Mortgage set forth in Section
5(C)):
(1) The Holder shall require the Coinsuring Lender to declare all sums
due under the Mortgage and the Note to be immediately due and payable on the
Accelerated Maturity Date.
(2) If the Mortgagor fails to pay the Outstanding Indebtedness which
has been accelerated pursuant to this Section 5 on the Accelerated Maturity
Date, such failure shall constitute a Default under this Agreement.
(3) Failure to pay such Outstanding Indebtedness which has been
accelerated on the Accelerated Maturity Date as required hereunder shall entitle
the Holder, at its option, to do any one or more of the following, subject only
to the provisions contained in Section 5(C) hereof:
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(a) foreclose upon the Note and the Mortgage, if they have been
accelerated pursuant to the terms hereof; or
(b) avail itself of any one or all of the remedies provided in
this Agreement or in any security agreement referred to in this Agreement or the
Subordinated Mortgage or by law with respect to the Collateral or otherwise,
including, without limitation, to foreclose upon the Collateral and to retain,
dispose of or sell the Collateral and/or the proceeds thereof to pay all amounts
due to the Holder hereunder; or
(c) exercise any and all other remedies available to it at law or
in equity.
C. In the event that the Holder elects to accelerate the maturity date of
the Note and Mortgage under Section 5(B), the Coinsuring Lender shall deliver a
notice of acceleration of such maturity date to Mortgagor on such terms and
conditions as Holder may require consistent with the Coinsuring Lender/Holder
Agreement (as hereinafter defined), provided that, unless otherwise required or
agreed by HUD and the Coinsuring Lender, the Coinsurance Contract must be
terminated on or before the Accelerated Maturity Date set forth in such notice
and that, in connection with such termination, the Coinsuring Lender must first,
at the direction of the Holder, take such steps as are required of it under that
certain Amended and Restated Agreement between the Coinsuring Lender and Holder
("Coinsuring Lender/Holder Agreement") of even date herewith to: (a) cancel the
New GNMA Certificate; (b) terminate the Mortgage Coinsurance
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Coverage by completing Form HUD-9807 (Request for Termination of Multifamily
Mortgage Insurance) or such other forms as shall then be required by HUD to
effect such termination (which forms shall also be executed by the Mortgagor);
and (c) assign the Note and Mortgage to the Holder in accordance with the
Coinsuring Lender/Holder Agreement. Upon assignment of the Note and Mortgage to
Holder, both the Note and Mortgage shall be amended to provide that a Default
under this Agreement is a default under the Note and Mortgage. In accordance
with Section 11 hereof Mortgagor grants to the Holder an irrevocable and
unconditional power of attorney coupled with an interest to execute Form HUD-
9807 or other appropriate documents for and on behalf of Mortgagor in such
instance to cancel Coinsurance Coverage. The election of the Holder to
accelerate the Maturity Date pursuant to the foregoing provision shall not
affect the outstanding balance of principal and interest under the Note and the
Holder may not enforce an acceleration of the Note and a foreclosure on the
Mortgage unless and until the Coinsurance Coverage is terminated by the
Coinsuring Lender as provided in this Section 5(C) unless otherwise required or
agreed by HUD and the Coinsuring Lender; provided however that the Coinsuring
Lender shall deliver the aforementioned notice of acceleration, at Holder's
direction, on the terms and conditions set forth above. Any assignment of the
Holder's interest in this Agreement under Section 12(N) shall be subject to this
continuing obligation of the Coinsuring Lender unless the Coinsurance Coverage
has been
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cancelled. In the event the Coinsurance Coverage is terminated in accordance
herewith, all rights (but not obligations) of HUD and the Coinsuring Lender
shall be assigned to Holder and all Loan Documents shall be assigned to Holder.
D. In addition to the foregoing, the Holder may accelerate the Maturity
Date of all or a portion of the Outstanding Indebtedness in accordance with and
subject to the terms and conditions set forth in Sections 5(B) and 5(C) or
exercise other remedies available under the Subordinate Mortgage or at law or in
equity at any time upon an event of Default hereunder which is not cured within
any applicable grace period.
E. In pursuing any of the options set forth in this Section 5, the Holder
and the Coinsuring Lender shall comply with any applicable HUD rules,
regulations, procedures and requirements to the extent applicable, including,
without limitation, any applicable TPA requirements. Notwithstanding anything
contained herein to the contrary, Holder shall have the right to cancel the
Coinsurance Coverage in its sole discretion subject to compliance with the terms
and conditions set forth herein, in which event Holder shall become assignee of
all rights of the Coinsuring Lender.
F. The Holder, at any time or from time to time, including after a notice
of acceleration of the Maturity Date as provided herein, may elect to extend the
Maturity Date by giving written notice of such election to Mortgagor.
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G. All rights and remedies of Holder provided for herein upon an event of
Default hereunder, which include, without limitation, direction to the
Coinsuring Lender to require immediate prepayment of the Loan and action in law
against the Mortgagor, shall be cumulative one to another, and shall not be in
derogation of any other legal or equitable rights or remedies of Holder.
SECTION 6. COINSURANCE COVERAGE.
A. If the Holder has caused the Coinsuring Lender to cancel the Coinsurance
Coverage pursuant to Section 5(C) above, the Coinsuring Lender shall first
cancel the New GNMA Certificate in accordance with GNMA requirements and then
terminate the Coinsurance Coverage in accordance with the requirements of HUD.
(1) The Mortgagor, in accordance with Section 11 of this Agreement,
has given to the Holder a Consent and Power of Attorney in order to effect a
termination of the Coinsurance Coverage.
(2) As more specifically provided for in Section 11, the Mortgagor
hereby consents to such termination of the Coinsurance Coverage, and the
Holder hereby is empowered to take such actions, if any, required on behalf
of the Mortgagor as its attorney-in-fact coupled with an interest, to
terminate the Coinsurance Coverage in such event, subject to the
responsibilities of the Coinsuring Lender.
B. Immediately upon cancellation of the Coinsurance
Coverage, the Note and Mortgage shall be assigned to the Holder
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by the Coinsuring Lender and all of the obligations of the Mortgagor pursuant to
this Agreement shall be deemed automatically to be inserted into and become a
part of the Note and the Mortgage as of the cancellation of Coinsurance Coverage
and to be secured by the Mortgage from and after such date to the same extent as
if such obligations were an original part of the Note and, the Mortgage; it
being further agreed that all rights (but not obligations) of HUD and the
Coinsuring Lender shall be assigned to Holder and all other Loan Documents,
including but not limited to the Regulatory Agreement, shall be assigned to
Holder and all references to HUD or the Coinsuring Lender shall be deemed to
refer to Holder.
C. In the event the Coinsurance Coverage has been cancelled, Mortgagor
hereby agrees to continue to pay monthly to the Holder, for so long as any
amounts remain outstanding under the Note and the Mortgage, in addition to all
other amounts becoming due thereunder, an amount equal to the monthly mortgage
insurance premium previously paid to the Coinsuring Lender and HUD as an
additional fee under this Agreement.
SECTION 7. MORTGAGE PRESERVATION.
If the Holder does not elect to accelerate the Maturity Date, or if the
Coinsuring Lender does not cancel the New GNMA Certificate(s) and terminate the
Coinsurance Coverage, then all of the Holder's rights and remedies under this
Agreement shall remain in full force and effect. So long as no merger of title
occurs under state law, the Holder or its assigns may continue to
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exercise and maintain all of its rights hereunder even if the ownership
interests of the Mortgagor may have been acquired pursuant to a Default
hereunder.
SECTION 8.
REQUIREMENTS OF THE SECRETARY OF HOUSING AND URBAN DEVELOPMENT.
A. The undertakings and obligations of Mortgagor hereunder are separate and
independent from its undertakings and obligations under the Note, the Mortgage
and the Regulatory Agreement. So long as the Coinsurance Coverage remains in
force, no default or breach of warranty or covenant by Mortgagor under this
Agreement shall constitute a default under the Note and/or Mortgage or give rise
to any claim under or in respect to the Coinsurance Coverage unless such default
also constitutes a default or breach of warranty or covenant under the Note,
Mortgage or other Loan Documents. In no event shall the Holder, its successors
or assigns be entitled to seek recovery of any coinsurance benefits or seek
other remedies against the Secretary of Housing and Urban Development with
respect to any sums due under this Agreement.
B. So long as the Secretary of Housing and Urban Development or his
successor or assignee, is the coinsurer of the Note, Mortgagor shall have no
obligation to make any payments hereunder other than from (i) distributable
Surplus Cash (as that term is defined in the Regulatory Agreement referred to
and incorporated in the Mortgage) to the extent permitted by the Regulatory
Agreement, and (ii) capital contributions of its
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stockholders, net proceeds of sale, proceeds of refinancing or other funds or
assets of Mortgagor whose distribution is not restricted by the terms of the
Regulatory Agreement. Nothing contained herein is intended to relieve or modify
the obligations of Mortgagor to pay any and all sums due on or under the terms
of the Note, the Mortgage and the Regulatory Agreement nor is it intended to
limit the remedies of the Holder set forth in this Agreement, including without
limitation, Section 5 hereof, upon Default in the collection of Surplus Cash or
unrestricted cash.
C. Nothing herein is intended to alter or conflict with the terms,
conditions, and provisions of the HUD regulations, handbooks, administrative
requirements, and lender notices in effect at the time of Initial Endorsement of
the Note for coinsurance by HUD, or the documents required to be executed by the
Mortgagor in connection with the Initial Endorsement of the Note for coinsurance
by HUD; and to the extent that they do so, the HUD regulations handbooks,
administrative requirements, lender notices and documents shall control, and
this Agreement shall be amended or deemed amended so as not to alter or conflict
with the aforesaid regulations, handbooks, administrative requirements, notices
or documents.
D. The provisions of this Section 8 shall automatically terminate and be of
no further force or effect upon cancellation or termination of the Coinsurance
Coverage with respect to the Note.
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E. No right or remedy of the Holder contained herein shall be in derogation
of any grace period or right to cure which Mortgagor may have under the Note.
Mortgage or any other Loan Documents.
F. Holder may not disapprove or impede a HUD TPA that has been approved by
the Coinsuring Lender or HUD to protect the interests of HUD's insurance funds.
SECTION 9. WAIVER OF PREPAYMENT CHARGE.
If the Holder has elected to accelerate the Maturity Date of the Note and
Mortgage pursuant to Section 5 and the Mortgagor thereafter timely pays the Loan
in full on or prior to the Accelerated Maturity Date without action having been
taken by the Holder to foreclose or otherwise exercise remedies by reason of the
Mortgagor's failure to timely pay the Loan, the Holder agrees to waive the one
percent (1%) prepayment charge provided in the Note. The Holder agrees to
provide appropriate notice and instructions to the Coinsuring Lender to confirm
such waiver upon such timely payment of the Loan.
SECTION 10. REPRESENTATIONS AND WARRANTIES.
The Mortgagor hereby represents and warrants as of the date of execution of
this Agreement, which representations and warranties shall survive the execution
of this Agreement and closing of the Loan:
A. The Mortgagor is the lawful owner of the Collateral;
B. The Mortgagor has full power and authority to execute this Agreement and
to perform the obligations hereunder and to
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subject the Collateral to the security interest granted hereunder;
C. The execution, delivery and performance of this Agreement by the
Mortgagor will not result in the violation of the Mortgagor's organizational
documents or bylaws, any mortgage, indenture, material contract, instrument,
agreement, judgment, decree, order, statute, rule or regulation to which the
Mortgagor is subject or is bound.
D. To the best of Mortgagor's knowledge, there is no litigation now pending
or threatened by or against the Mortgagor which, if adversely decided, would
materially impair the ability of the Mortgagor to pay and perform its
obligations.
SECTION 11. POWER OF ATTORNEY.
In order for the Holder to undertake certain rights and remedies to which
it is entitled under this Agreement, the Coinsurance Coverage must be cancelled.
Under HUD regulation 24 C.F.R. Section 255.813(a)(5), the Mortgagor and the
Coinsuring Lender must jointly request the termination of the Coinsurance
Coverage in the event the parties should desire to cancel any insurance benefits
thereunder even in the event the cancellation results from an acceleration of
the Maturity Date.
The parties therefore mutually agree and the Mortgagor hereby consents to
the appointment of the Holder (its successors and assigns) as the Mortgagor's
true and lawful attorney-in-fact for the purpose of cancelling the Coinsurance
Coverage solely at
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the request and direction of the Holder, its successors or as provided for under
this Agreement.
The Mortgagor agrees to execute any and all documents, at the request of
the Holder, which the Holder, in its reasonable discretion, deems necessary or
appropriate to cancel the Coinsurance Coverage including a separate document
which may be in a different form but which may be required by local law to
create a valid power of attorney.
The Mortgagor has made, constituted and appointed, and by these presents
does make, constitute and appoint the Holder, its successors and assigns, its
true and lawful attorney-in-fact, in its name or otherwise to do any and all
acts and to execute any and all documents which may be necessary or, in the
reasonable opinion of the Holder, desirable to effect the termination of the
Coinsurance Coverage. This Power of Attorney is irrevocable, coupled with an
interest and is given with full power of substitution, and the Mortgagor hereby
ratifies and confirms all that the Holder or substitute shall lawfully do or
cause to be done by virtue hereof.
This Power of Attorney shall remain in full force and effect until this
Agreement is paid in full in current funds and all obligations arising hereunder
are otherwise satisfied in all respects.
SECTION 12. GENERAL PROVISIONS.
A. Amounts payable pursuant to this Agreement shall be payable to Holder at
the same address as notices are to be
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delivered or at such other place as the Holder may designate in writing.
B. The failure of the Holder to exercise its option for acceleration of
maturity, foreclosure, or either, following any Default as aforesaid or to
exercise any other option granted to it hereunder or the acceptance by the
Holder of partial payments or partial performance, shall not constitute a waiver
of any such Default or option but such rights of the Holder shall remain
continuously in force. Acceleration of maturity or other rights granted to the
Holder hereunder, once claimed hereunder by the Holder after a Default
hereunder, may at its option be rescinded or extended by written notice to that
effect. The tender and acceptance of partial payment or partial performance
alone shall not in any way affect or rescind an acceleration of maturity by the
Holder.
C. If the Outstanding Indebtedness is not paid by Mortgagor as and when
required under Section 5, Mortgagor agrees to pay all costs of collection,
including but not limited to, court costs and reasonable attorney's fees,
whether or not suit is filed thereon.
D. Mortgagor (i) waives presentment, protest and demand, notice of protest,
notice of dishonor and nonpayment of amounts due hereunder, and every other
notice of any kind respecting this Agreement; and (ii) to the extent not
prohibited by law, waives the benefit of any law or rule of law intended for its
advantage or protection which would enable its release or discharge from
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liability hereon, in whole or in part, for any reason other than full and
complete payment of all amounts due hereunder; and (iii) expressly agrees that
this Agreement, or any payment hereunder, may be extended from time to time in
the sole discretion of the Holder without in any way affecting the liability of
Mortgagor, its successors and assigns.
E. In the event that any one or more of the provisions contained herein
are, for any reason, held to be invalid, illegal or unenforceable in any
respect, such invalidity, illegality or unenforceability shall not affect any
other provision of this Agreement and this Agreement shall be construed as if
such invalid, illegal or unenforceable provision had never been contained
herein.
F. Notwithstanding anything to the contrary herein contained or implied,
neither the Coinsuring Lender nor the Holder, by executing this Agreement, the
Note or the Mortgage or by any action pursuant thereto, shall be deemed a
partner of or joint venturer with the Mortgagor. The relationship between
Mortgagor and the Holder created hereunder is solely that of debtor/creditor,
and neither party shall hold itself out as a partner, agent or affiliate of the
other.
G. This Agreement may not be changed orally, but only by an agreement in
writing signed by the party against whom enforcement of any waiver, change,
modification or discharge is sought.
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H. The rights granted to the Holder in this Agreement are in addition to,
and are not in derogation of, any and all rights which the Holder may have under
the Loan Documents and otherwise may have to sell, assign or transfer the New
GNMA Certificate.
I. From time to time, the Mortgagor and Holder shall furnish to each other,
upon the reasonable request of the other, an estoppel certificate setting forth
any known defaults hereunder or under any of the Loan Documents and the
Mortgagor and Holder shall make respective determinations of the total amounts
then due to the Holder hereunder. Any such estoppel certificate shall be binding
upon the party issuing the estoppel certificate and may be relied upon by the
party to whom the estoppel certificate is addressed.
J. Notwithstanding anything contained herein to the contrary, the Mortgagor
agrees, upon the request of the Holder made at any time after the termination of
the Coinsurance Coverage, to modify the Mortgage so that the Mortgage will
thereafter set forth all of the Holder's rights under this Agreement and the
remedies available to the Holder under this Agreement, including, without
limitation, the Holder's right to an acceleration.
K. All notices given pursuant to this Agreement shall be in writing and
shall be hand delivered or mailed, registered U.S. Mail, return receipt
requested to the parties at the address specified below or to such other address
as may be specified by a party upon notice in compliance with this paragraph.
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If to Mortgagor:
Richland Properties, Inc.
c/o Newco Management Company
6320 Canoga Avenue, Suite 1430
Woodland Hills, CA 91367-2591
Attn: Vahe M. Melkonian
If to Holder:
NYLife Government Mortgage Plus Limited
Partnership
c/o NYLife Realty, Inc., as general partner
51 Madison Avenue, Room 1710
New York, N.Y. 10010
with a copy to:
New York Life Insurance Company
51 Madison Avenue
New York, New York 10010
Attention: Senior Vice President
Mortgage Finance Department
L. This Agreement shall be given effect and construed by application of the
laws of the State of Florida.
M. The rights under and interests in this Agreement shall be freely
assignable on the part of the Holder so long as the New GNMA Certificate are
simultaneously assigned to the same assignee. The Holder shall not be required
to assign this Agreement to an assignee which takes an assignment of the GNMA
Certificate(s) to which this Agreement relates but any such assignment of this
New GNMA Certificate without simultaneous assignment of this Agreement shall
operate to automatically terminate this Agreement. It is recognized that the
responsibility to actually terminate the Coinsurance Coverage is not assignable
by the Coinsuring Lender and at all times will be retained by the Coinsuring
Lender. However, the Holder has the
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right to cause the Coinsurance Coverage to be cancelled by the Coinsuring Lender
in accordance with Section 5(C) of this Agreement and this right may be assigned
along with the other rights and obligations provided for herein. Whenever the
Holder assigns its rights hereunder, the Coinsuring Lender shall acknowledge its
responsibilities hereunder to the assignee in said assignment.
The Coinsuring Lender hereby agrees to take all actions required of it by
the Holder to terminate the Coinsurance Coverage in accordance with Section 5(C)
and the Coinsuring Lender/Holder Agreement in the event it is directed to do so
by an assignee of the Holder of this Agreement and further agrees that this
undertaking on its part is intended to survive the assignment of Holder's rights
hereunder.
N. (1) In the event of any Default hereunder, Holder shall have full
recourse to the Subordinated Mortgage and to the other Collateral given by
Mortgagor to secure the obligations arising hereunder; provided however, that
subject to subparagraphs (2) and (3) hereof, the liability and obligations of
Mortgagor to perform, observe, pay and make good the monetary obligations or the
performance or observance of any of the covenants or other non-monetary
obligations of Mortgagor hereunder or under any of the Loan Documents shall not
be enforced by any action or proceeding wherein damages or any money judgment
shall be sought against Mortgagor or any of its officers, directors or
shareholders, except a foreclosure action or other appropriate
27
<PAGE>
action or proceeding required to enable Mortgagee to enforce and realize upon
the Loan Documents and the mortgage lien, security interest and creditors'
rights of any other nature related to the Project or any other real or personal
property described in the Loan Documents, but any judgment in any such action or
proceeding shall be enforced against Mortgagor only to the extent of Mortgagor's
interest in the Mortgaged Property and the other real and personal property
which is the subject of the Loan Documents, with Holder precluded from suing
for, seeking or demanding a deficiency judgment against Mortgagor or any of its
officers, directors or shareholders in any such action or proceeding.
(2) (a) Notwithstanding anything to the contrary continued in
subparagraph (1) hereof, the provisions of subparagraph (1) shall not:
(i) impair in any way the mortgage lien of the Subordinated
Mortgage and the security interest of this Agreement upon the Project or the
right of Holder to collect all monetary obligations in any manner except through
pursuit of personal liability of Mortgagor or any of its officers, shareholders
or directors;
(ii) prevent the failure to pay the outstanding indebtedness
as required by Section 5, from constituting a Default;
(iii) prejudice the right of Holder as to any covenants and
conditions of the Loan Documents excluding rights to recover monetary damages.
28
<PAGE>
(b) Notwithstanding anything contained in this paragraph N to the
contrary, the provisions of subparagraph (1) hereof shall be inapplicable and
Mortgagor shall be personally liable and a personal judgment may be sought
against Mortgagor or the principals of Mortgagor in the event of any fraud or
misrepresentation of Mortgagor with respect to the Loan Documents and/or the
consummation of the transaction contemplated by the Loan Documents.
(3) Nothing in this paragraph N shall be deemed to be a waiver of any
right which Holder may have under Sections 506(a), 506(b), 1111(b) or any other
provision of Bankruptcy Reform Act of 1978 or any amendments thereto (the
"Bankruptcy Act"), to file a claim for the full amount of the debt owing to
Holder by Mortgagor or to require that all collateral shall continue to secure
all of the monetary and nonmonetary obligations in accordance with the Loan
Documents, but the Holder's rights with respect to any such claim shall be
subject to the limitations on personal liability contained in subparagraphs (1)
and (2).
O. The captions and headings of the paragraphs of this Agreement are for
convenience only and are not to be used to interpret or define the provisions
hereof.
P. If the Coinsuring Lender acquires title to the Project, following a
default, and the contract of coinsurance is in force, all of Holder's rights and
benefits hereunder and under the Subordinated Mortgage shall terminate. If the
Loan shall be
29
<PAGE>
assigned to HUD following a default thereunder, (following its assignment to
GNMA), Holder shall assign to HUD its rights and benefits under this Agreement
and the Subordinated Mortgage.
Q. Upon the satisfaction of all obligations arising hereunder the Loan
Documents, this Agreement shall cease, terminate, and be absolutely null and
void.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
30
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed
this Agreement as of the day and year first above written.
MORTGAGOR:
RICHLAND PROPERTIES, INC.,
a Delaware corporation
By: /s/ Vahe M. Melkonian
---------------------------
Name: Vahe M. Melkonian
-------------------------
Title: Vice President
------------------------
HOLDER:
NYLIFE GOVERNMENT MORTGAGE PLUS
LIMITED PARTNERSHIP, a
Massachusetts limited partnership
By: NYLife Realty, Inc.,
General Partner
By: /s/ Kevin M. Micucci
----------------------
Name: Kevin M. Micucci
--------------------
Title: Vice President
-------------------
31
<PAGE>
RELATED MORTGAGE CORPORATION hereby consents and agrees to this Amended and
Restated Agreement as of the 3lst day of January, 1995 subject to the terms of
the Amended and Restated Coinsuring Lender/Holder Agreement between NYLIFE
Government Mortgage Plus Limited Partnership and Related Mortgage Corporation of
even date. Said Amended and Restated Coinsuring Lender/Holder Agreement shall be
controlling as to any interpretation of the obligations or undertakings of
Related Mortgage Corporation under this Agreement.
RELATED MORTGAGE CORPORATION
By: /s/ Bruce H. Brown
------------------------
Name: Bruce H. Brown
------------------------
Title: Vice President
-----------------------
32
<PAGE>
STATE OF FLORIDA )
) ss:
COUNTY OF HILLSBOROUGH)
On this, the 31 day of January, 1995, before me personally appeared Vahe
Melkonian, to me known, who, being by me duly sworn, did depose and say, that
he/she is the V.P. of Richland Properties, Inc., a Delaware corporation, the
corporation described in and which executed the above instrument; that he/she
knows the seal of the corporation; that the seal affixed to said instrument
is such corporate seal; that it was so affixed by the order of the Board of
Directors of said corporation, and that he/she signed his/her name thereto by
like order.
/s/ Sherry Logsdon
---------------------------
Notary Public
[SEAL]
My Commission expires:
[Notary Stamp]
- ---------------------
STATE OF FLORIDA )
) ss:
COUNTY OF HILLSBOROUGH)
On this, the 31 day of January, 1995, before me personally appeared
Kevin Micucci, to be known, who, being by me duly sworn, did depose and say,
that he/she is the V.P. of NYLIFE REALTY, INC., general partner of NYLIFE
GOVERNMENT MORTGAGE PLUS LIMITED PARTNERSHIP, a Massachusetts limited
partnership, the corporation described in and which executed the above
instrument; that he/she knows the seal of the corporation; that the seal affixed
to said instrument is such corporate seal; that it was so affixed by the order
of the Board of Directors of said corporation, and that he/she signed his/her
name thereto by like order.
/s/ Sherry Logsdon
---------------------------
Notary Public
[SEAL]
My Commission expires:
[Notary Stamp]
- ---------------------
33
<PAGE>
STATE OF FLORIDA )
) ss:
COUNTY OF HILLSBOROUGH)
On this, the 31 day of January, 1995, before me personally appeared
Bruce Brown, to me known, who, being by me duly sworn, did depose and say,
that he/she is the V.P. of Related Mortgage Corporation, a Delaware
corporation, the corporation described in and which executed the above
instrument; that he/she knows the seal of the corporation; that the seal
affixed to said instrument is such corporate seal; that it was so affixed by
the order of the Board of Directors of said corporation, and that he/she
signed his/her name thereto by like order.
/s/ Sherry Logsdon
---------------------------
Notary Public
[SEAL]
My Commission expires:
[Notary Stamp]
- ---------------------
34
<PAGE>
SCHEDULE A
LEGAL DESCRIPTION
Parcel 22B, HUNTER'S GREEN, as per map or plat thereof as recorded in Plat Book
69, Page 5, of the Public Records of Hillsborough County, Florida.
<PAGE>
SCHEDULE B
DESCRIPTION OF PERSONAL PROPERTY
1. All materials now owned or hereafter acquired by the Debtor and intended
for construction, reconstruction, alteration and repair of any building,
structure or improvement now or hereafter erected or placed on the property
described in Exhibit "A" (the "Property"), all of which materials shall be
deemed to be included within the Project immediately upon the delivery
thereof to the Project.
2. All of the walks, fences, shrubbery, driveways, fixtures, machinery,
apparatus, equipment, fittings, and other goods and other personal property
of every kind and description whatsoever, now owned or hereafter acquired
by the Debtor and attached to or contained in and used or usable in
connection with any present or future operation of the Project, including,
by way of example rather than of limitation, all lighting, laundry,
incinerating and power equipment; all engines, boilers, machines, motors,
furnaces, compressors and transformers; all generating equipment; all
pumps, tanks, ducts, conduits, wire, switches, electrical equipment and
fixtures, fans and switchboards; all telephone equipment; all piping,
tubing, plumbing equipment and fixtures; all heating, refrigeration, air
conditioning, cooling, ventilating, sprinkling, water, power and
communications equipment, systems and apparatus; all water coolers and
water heaters; all fire prevention, alarm and extinguishing systems and
apparatus; all cleaning equipment; all lift, elevator and escalator
equipment and apparatus; all partitions, shades, blinds, awnings, screens,
screen doors, storm doors, exterior and interior signs, gas fixtures,
stoves, ovens, refrigerators, garbage disposals, dishwashers, cabinets,
mirrors, mantles, floor coverings, carpets, rugs, draperies and other
furnishings and furniture installed or to be installed or used or usable in
the operation of any part of the Project or facilities erected or to be
erected in or upon the Property; and every renewal or replacement thereof
or articles in substitution therefor, whether or not the same are now or
hereafter attached to the Property in any manner; all except for any right,
title or interest therein owned by any tenant (it being agreed that all
personal property owned by the Debtor and placed by it on the Property
shall, so far as permitted by law, be deemed to be affixed to the Property,
appropriated to its use, and covered by the each of the Security Documents
to which this Exhibit is attached).
3. All of the Debtor's rights, title and interest in and to any and all
judgments, awards of damages (including but not limited to severance and
consequential damages), payments, proceeds, settlements or other
compensation (collectively, the "Awards") heretofore or hereafter made,
including interest thereon, and the right to receive the same, as a result
of, in connection with, or in lieu of (i) any taking of the Property or any
part thereof by the exercise of the power of condemnation or eminent
domain, or the police power, (ii) any change or alteration of the grade of
any street, or (iii) any other injury or decrease in the value of the
Property or any part thereof (including but not limited to destruction or
decrease in value by fire or other casualty), all of which Awards, rights
thereto and shares therein are hereby assigned to the Secured Party, who is
hereby authorized to collect and receive the proceeds thereof and to give
property receipts and acquittances therefor and to apply, at its option,
the net proceeds thereof, after deducting expenses of collection, as a
credit upon any portion, as selected by the Secured Party, of the
indebtedness secured by the Security Documents.
4. All of the Debtor's right, title and interest in and to any and all
payments, proceeds, settlements or other compensation heretofore or
hereafter made, including any interest thereon, and the right to receive
the same from any and all insurance policies covering the Property or any
portion thereof, or any of the other property described herein.
<PAGE>
5. The interest of the Debtor in and to all of the rents, royalties, issues,
profits, revenues, income and other benefits of the Property, or arising
from the use or enjoyment of all or any portion thereof, or from any lease
or agreement pertaining thereto, and all right, title and interest of the
Debtor in and to, and remedies under, all contract rights, accounts
receivable and general intangibles arising out of or in connection with any
and all leases and subleases of the Property, or any part thereof, and of
the other property described herein, or any part thereof, both now in
existence or hereafter entered into, together with all proceeds (cash and
non-cash) thereof; and including, without limitation, all cash or
securities deposited thereunder to secure performance by the lessees of
their obligations thereunder.
6. All of the Debtor's rights, options, powers and privileges in and to (but
not the Debtor's obligations and burdens under) any construction contract,
architectural and engineering agreements and management contract pertaining
to the construction, development, ownership, equipping and management of
the Property and all of the Debtor's right, title and interest in and to
(but not the Debtor's obligations and burdens under) all architectural,
engineering and similar plans, specifications, drawings, reports, surveys,
plats, permits and the like, contracts for construction, operation and
maintenance of, or provision of services to, the Property or any of the
other property described herein, and all sewer taps and allocations,
agreements for utilities, bonds and the like, all relating to the Property.
7. All intangible personal property, accounts, licenses, permits, instruments,
contract rights, and chattel paper of the Debtor, including but not limited
to cash; accounts receivable; bank accounts; certificates of deposit;
securities; promissory notes; rents; rights (if any) to amounts held in
escrow; insurance proceeds; condemnation rights; deposits; judgments,
liens and causes of action; warranties and guarantees.
8. The interest of the Debtor in any cash escrow fund and in any and all
funds, securities, instruments, documents and other property which are at
any time paid to, deposited with, under the control of, or in the
possession of the Secured Party, or any of its agents, branches,
affiliates, correspondents or others acting on its behalf, which rights
shall be in addition to any right of set-off or right of lien that the
Secured Party may otherwise enjoy under applicable law, regardless of
whether the same arose out of or relates in any way, whether directly or
indirectly, to the Project located upon the Property.
9. The interest of the Debtor in and to any and all funds created or
established and held by the Trustee pursuant to any indenture of trust or
similar instrument authorizing the issuance of bonds or notes for the
purpose of financing the Project located upon the Property.
10. Any collateral provided by the Debtor or for its account to each and every
issuer of a letter of credit, subject to the prior claim of the issuer of
any such letter of credit to such collateral.
11. All inventory, including raw materials, components, work-in-process,
finished merchandise and packing and shipping materials.
12. Proceeds, products, returns, additions, accessions and substitutions of and
to any or all of the above.
13. Any of the above arising or acquired by the Debtor or to which the Debtor
may have a legal or beneficial interest in on the date hereof and at any
time in the future.
14. Any of the above which may become fixtures by virtue of attachment to
Property.
15. All of the records and books of account now or hereafter maintained by or
on behalf of the Debtor in connection with the Project.
16. All names now or hereafter used in connection with the Project and the
goodwill associated therewith.
-2-
<PAGE>
PREPARED BY AND
AFTER RECORDING RETURN TO:
Ballard, Spahr, Andrews & Ingersoll
555 13th N.W., Suite 9O0 East
Washington, D.C. 20004
Attention: Allan R. Winn
AMENDED AND RESTATED SUBORDINATED MORTGAGE
AND SECURITY AGREEMENT
THIS AMENDED AND RESTATED SUBORDINATED MORTGAGE AND SECURITY AGREEMENT
(this "Mortgage") made as of the 31st day of January, 1995, by RICHLAND
PROPERTIES, INC., a Delaware corporation having its principal place of business
at c/o Newco Management Company, 6320 Canoga Avenue, Suite 1430, Woodland Hills,
CA 91367-2591 ("Mortgagor") to NYLlFE GOVERNMENT MORTGAGE PLUS LIMITED
PARTNERSHIP, a Massachusetts limited partnership having an address at c/o NYLife
Realty, Inc., 51 Madison Avenue, New York, New York, 10010 ("Mortgagee").
PREAMBLE:
A. On January 13, 1990, Mortgagee entered into an Additional
Interest Agreement (the "Original Agreement") with H.O. Associates, Ltd.
("Original
- --------------------------------------------------------------------------------
NOTE TO CLERK: THIS INSTRUMENT SECURES THE RIGHT OF MORTGAGEE TO ACCELERATE
THE MATURITY OF A SEPARATION LOAN SECURED BY A MORTGAGE RECORDED AT
OFFICIAL RECORDS BOOK 6153, PAGE 212 OF HILLSBOROUGH COUNTY PUBLIC
RECORDS, AS AMENDED, ON WHICH DOCUMENTARY STAMP AND INTANGIBLE TAXES HAVE
BEEN PAID, WHICH RIGHT HAS NO ASCERTAINABLE VALUE. ACCORDINGLY, NO
DOCUMENTARY STAMPS ARE BEING PAID UPON THE FILING OF THIS MORTGAGE.
<PAGE>
Mortgagor") with respect to a property located in Tampa, Florida more
particularly described in Schedule A (the "Land") and a multifamily housing
project to be constructed on the Land (the Land and such project being
collectively referred to as the "Project").
B. Payment and performance by Original Mortgagor to Mortgagee of the
obligations of the Original Mortgagor under the terms of the Original Agreement
was secured by, among other things, a Subordinated Mortgage recorded May 15,
1992 in O.R. Book 6612 at Page 403 in the Public Records of Hillsborough County,
Florida (the "Original Subordinated Mortgage").
C. Original Mortgagor constructed the Project through a construction
and permanent mortgage loan in the principal amount of $13,154,200.00 (the
"Loan") made to the Original Mortgagor by Related Mortgage Corporation (the
"Coinsuring Lender").
D. The Loan was evidenced by a Mortgage Note (the "Original Note")
executed by Original Mortgagor in favor of the Coinsuring Lender, which Original
Note was (i) secured by a first lien Mortgage (the "Original Mortgage") on the
Project, which Original Mortgage was recorded prior to the Original Subordinated
Mortgage and (ii) coinsured by the United Stated Department of Housing and Urban
Development ("HUD") under Section 221(d)(4) pursuant to Section 244 of the
National Housing Act, as amended.
E. The Coinsuring Lender financed the Loan through the issuance by
the Coinsuring Lender of fully-modified Mortgage-backed pass-through
construction loan certificates ("CLCs") guaranteed as to the timely payment of
principal and interest by the Government National Mortgage Association ("GNMA")
and, upon the redemption of such CLCS, a fully-modified Mortgage-backed
pass-through permanent loan certificate ("PLC") guaranteed as to the timely
payment of principal and interest by the GNMA, which PLC was backed by the Loan
(the CLCs and PLC are sometimes hereinafter referred to as the "Original GNMA
Certificates").
F. Coinsuring Lender obtained funding for the Loan through the
issuance of the Original GNMA Certificates to Mortgagee. The interest rate on
the Original Note and, correspondingly, on the Original GNMA Certificates, were
at rates below those for comparable loans advanced and comparable securities
issued, at the time the Original Note was made.
2
<PAGE>
G. To induce the Coinsuring Lender to issue the Original GNMA
Certificates at a rate below those available in the market for GNMA securities
at the time of their issuance and to induce Mortgagee to acquire said Original
GNMA Certificates at that below-market rate, Original Mortgagor agreed to
provide to Mortgagee certain other additional interest not set forth in the
Original Note or Original Mortgage as provided in the Original Agreement.
H. Mortgagee has agreed to accept certain sums payable out of the
proceeds of the sale of the Project to Mortgagor and the performance by Original
Mortgagor of certain other undertakings in satisfaction of all obligations of
Original Mortgagor, including the payment of Additional Interest as defined
under and to be paid pursuant to the Original Agreement.
I. Mortgagor has agreed to purchase the Project from Original
Mortgagor upon certain conditions including, but not limited to, the condition
that the Loan be modified to reduce the interest rate to 7.875% per annum.
J. Original Mortgagor and Coinsuring Lender have agreed to modify
the Original Note and the Original Mortgage pursuant to, among other things, a
certain Modification of Mortgage Note and a certain Modification of Mortgage of
even date herewith and Mortgagor has agreed to assume the Loan as so modified.
The Original Note, as modified by the Modification of Mortgage Note dated of
even date herewith, is hereinafter referred to as the "First Note"; and the
Original Mortgage, as modified by the Modification of Mortgage dated of even
date herewith and recorded prior to recordation of this Mortgage, is hereinafter
referred to as the "First Mortgage".
K. Modification of the Loan requires the agreement of Mortgagee to
the reduction in interest rate and other modifications and the agreement of
Mortgagee to relinquish the Original GNMA Certificates and accept in
substitution therefor a new GNMA Mortgage backed security bearing interest at
the rate of 7.625% per annum (the "New GNMA Certificate").
L. Mortgagee has further agreed to the reduction of the interest
rate on the Loan and other modifications and the substitution of the New GNMA
Certificate for the Original GNMA Certificates in express reliance upon and in
consideration of the right of Mortgagee to call the Loan due and payable in ten
(10) years and the covenants and
3
<PAGE>
undertakings of Mortgagor contained in the Amended and Restated Agreement
between Mortgagor and Mortgagee of even date herewith (the "Agreement") which
amends and restates the Original Agreement in its entirety.
M. Mortgagor and Mortgagee desire to amend and restate the terms of
the Original Subordinated Mortgage to, among other things, (i) amend and restate
the Original Subordinated Mortgage in its entirety as herein provided and (ii)
confirm that this Mortgage secures the obligations of Mortgagor and rights of
Mortgagee under the Agreement.
NOW THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereby amend and restate the Original Subordinated
Mortgage in its entirety as follows:
WITNESSETH, that for divers good and valuable considerations Mortgagor
does hereby grant, bargain, sell, alien, remise, release, convey and confirm
unto Mortgagee, its successors and assigns forever, the Land situated in the
County of Hillsborough and State of Florida, described in Schedule A attached
hereto as a part hereof.
TOGETHER with the property described in Schedule B attached hereto as
part hereof; and
TOGETHER with all buildings and improvements of every kind and
description now or hereafter erected or placed thereon, and all fixtures,
including but not limited to all gas and electric fixtures, engines and
machinery, radiators, heaters, furnaces, heating, incinerating, laundry, and
air-conditioning equipment, steam and hot-water boilers, stoves, ranges,
elevators and motors, bathtubs, sinks, water closets, basins, pipes, faucets and
other plumbing and heating fixtures, mantels, refrigerating plant and
refrigerators, whether mechanical or otherwise, cooking apparatus and
appurtenances, furniture, shades, awnings, screens, blinds and other
furnishings; and
TOGETHER with all building materials and equipment now or hereafter
delivered to said premises and intended to be installed therein; and
TOGETHER with all rents, issues, proceeds, and profits accruing and to
accrue from said premises, all of which are included within the foregoing
description and the
4
<PAGE>
habendum thereof; also all articles of personal property now or hereafter
attached to or used in and about the building or buildings now erected or
hereafter to be erected on the Land which are necessary to the complete and
comfortable use and occupancy of such building or buildings for the purposes for
which they were or are to be erected, including all goods, chattels, and
personal property as are ever used or furnished in operating a building, or the
activities conducted therein, similar to the one herein described and referred
to, and all renewals or replacements thereof or articles in substitution
therefor, whether or not the same are or shall be attached to said building or
buildings in any manner.
The property described in Schedules A and B to this Mortgage and the
foregoing granting clauses is collectively referred to herein as the "Secured
Property".
TO HAVE AND TO HOLD the same, together with all and singular the
tenements, hereditaments, and appurtenances thereunto belonging or in anywise
appertaining, and the reversion and reversions, remainder or remainders, rents,
issues, and profits thereof, and also all the estate, right, title, interest,
homestead, dower and right of dower, separate estate, possession, claim, and
demand whatsoever, as well in law as in equity, of Mortgagor in and to the same,
and every part thereof, with the appurtenances, and every part and parcel
thereof unto Mortgagee in fee simple, subject, however to the matters described
in Schedule C attached hereto and incorporated herein by reference (the
"Permitted Exceptions").
Mortgagor hereby covenants with Mortgagee, that it is indefensibly
seized of said Land in fee simple; that it has full power and lawful right to
convey the same in fee simple as aforesaid; that it shall be lawful for
Mortgagee at all times peaceably and quietly to enter upon, hold, occupy, and
enjoy said Land, and every part thereof; that the Land is and will remain free
from all encumbrances, except for the Permitted Exceptions; that Mortgagor will
make such further assurances to prove the fee simple title to said Land in
Mortgagee as may be reasonably required; and that Mortgagor does hereby fully
warrant the title to said Land, and every part thereof, except for the Permitted
Exceptions, and will defend the same against the lawful claims of all persons
whomsoever, except those claiming under the Permitted Exceptions.
Mortgagor is obligated to Mortgagee under the terms of that certain
Agreement described in the recitals to this Mortgage and all of its terms are
incorporated herein by reference. This Mortgage secures performance of all
obligations and liabilities of Mortgagor under the Agreement, and any
modifications or extensions thereof, and under any
5
<PAGE>
other document or instrument contemporaneously therewith or hereafter executed
by or on behalf of Mortgagor securing, evidencing or relating to the Agreement
(collectively, the "Second Lien Documents"), including, without limitation, this
Mortgage, as the same may be modified or supplemented from time to time,
including all sums, amounts and expenses which Mortgagee may advance, readvance,
pay or incur under or in connection with the Second Lien Documents.
PROVIDED ALWAYS, and these presents are on this express condition,
that these presents and the estate hereby granted shall cease, determine, and be
absolutely null and void, upon termination of the Agreement.
Mortgagor further covenants and agrees as follows:
1. The recitals to this Mortgage are incorporated herein by
reference and made a part hereof for all purposes.
2. Mortgagor will perform its obligations under the Agreement at the
times and in the manner provided therein.
3. Mortgagor will not permit or suffer the use of any of the Secured
Property for any purpose other than the use for which the same was intended at
the time this Mortgagee was executed.
4. All rents, profits and income from the property covered by this
Mortgage are hereby assigned to Mortgagee for the purpose of discharging the
obligations hereby secured. Permission is hereby given to Mortgagor so long as
no Event of Default (as hereinafter defined) exists hereunder, to collect such
rents, profits and income. Upon an Event of Default hereunder Mortgagee shall be
entitled to the appointment of a receiver by any court having jurisdiction,
without notice, to take possession and protect the Secured Property and operate
same and collect the rents, profits and income therefrom.
5. Mortgagor will permit, commit, or suffer no waste, impairment, or
deterioration of the Secured Property or any part thereof; and in the event of
the failure of Mortgagor to keep the buildings on said Land, or improvements
thereon, in good repair, Mortgagee may make such repairs as in its discretion it
may deem necessary for the proper preservation thereof, and the full amount of
each and every such payment shall be secured by the lien of this Mortgage.
6
<PAGE>
6. Mortgagor will pay all and singular the costs, charges and
expenses, including reasonable attorney's fees, and costs of abstracts of title,
incurred or paid at any time by Mortgagee because of the failure on the part of
Mortgagor promptly and fully to perform the agreements and covenants of the
Agreement and this Mortgage, and said costs, charges, and expenses shall be
secured by the lien of this Mortgage.
7. Mortgagor will give immediate notice by mail to Mortgagee of any
fire damage or other casualty to the Secured Property, or of any conveyance,
transfer, or change of ownership of the Land.
8. (a) For purposes of this paragraph 8, the term "Environmental
Laws" shall mean and include the Resource Conservation and Recovery Act, as
amended by the Hazardous and Solid Waste Amendments of 1984, the Comprehensive
Environmental Response, Compensation and Liability Act, the Hazardous Materials
Transportation Act, the Toxic Substances Control Act, the Federal Insecticide,
Fungicide and Rodenticide Act, applicable state and local environmental laws,
and the regulations, rules and ordinances adopted and publications promulgated
pursuant to said laws and ordinances, as any of the foregoing laws, ordinances,
regulations and rules may be amended from time to time hereafter, and any other
federal, state or local laws or ordinances, now or hereafter existing, relating
to regulation or control of toxic or hazardous substances or materials. For
purposes of this paragraph 8, the term "Regulated Substance" shall mean and
include substances or materials which are regulated pursuant to any
Environmental Laws including but not limited to any such substances or materials
which now are or hereafter will be defined or deemed to be "regulated
substances," "hazardous waste," "hazardous substances,", "hazardous materials,"
"toxic substances," "pesticides" or any similar or like classification,
categorization or designation.
(b) Mortgagor hereby represents and warrants to Mortgagee and agrees
with Mortgagee, with regard to the Secured Property, as follows:
(i) For so long as Mortgagor has owned or has had any interest
in the Secured Property, Mortgagor has not violated any Environmental Laws or
used, generated, managed, treated, stored or disposed of on, under or about the
Secured Property or transported to or from the Secured Property any Regulated
Substance;
7
<PAGE>
(ii) Mortgagor has no knowledge without independent inquiry that
any party who owned the Secured Property prior to Mortgagor's acquisition of the
Secured Property has violated any Environmental Laws or used, generated,
managed, treated, stored or disposed of on, under or about the Secured Property
any Regulated Substance;
(iii) Mortgagor has no knowledge without independent inquiry that
any suit, action or other legal proceeding arising out of or related to any
Environmental Laws with respect to the Secured Property is pending or threatened
before any court, agency or governmental entity;
(iv) Mortgagor has not received any written notice of any
Environmental Laws;
(v) For so long as Mortgagor shall own the Secured Property,
Mortgagor will manage and operate the Secured Property and will use best efforts
to cause each tenant of any portion of the Secured Property to occupy its
demised portion of the Secured Property in compliance with all Environmental
Laws; and
(vi) For so long as Mortgagor shall own the Secured Property,
Mortgagor shall not install or permit to be installed on the Secured Property
any Regulated Substance except de minimus amounts associated with the
residential use of the Secured Property which do not constitute material
violations of any Environmental Laws.
(c) Mortgagor hereby agrees to indemnify and hold Mortgagee free and
harmless from and against any and all loss, liability, damage and expense,
including attorney's fees, suffered or incurred by Mortgagee with respect to the
presence of any Regulated Substance affecting the Secured Property.
(d) Notwithstanding anything to the contrary contained in this
Mortgage, a breach of any of Mortgagor's representations, warranties or
covenants contained paragraph 8(a) or (b) above shall not constitute a default
hereunder unless such breach also constitutes a Default under the Agreement.
9. Mortgagor will not voluntarily create or permit to be created
against the Property any lien or liens inferior or superior to the lien of this
Mortgage (except the First Mortgage and other Permitted Exceptions) and further
that it will keep and maintain the same
8
<PAGE>
free from the claim of all persons supplying labor or materials which will enter
into the construction of any and all buildings now being erected or to be
erected on said Land.
10. This Mortgage shall also constitute a security agreement under
Article 9 of the Uniform Commercial Code as enacted in the State of Florida (the
"Code") with respect to the personal property described herein. Mortgagor hereby
appoints Mortgagee as its attorney-in-fact to execute and file on Mortgagor's
behalf, subject to five (5) business days prior notice to Mortgagor, any
financing statements, continuation statements or other statements in connection
therewith that Mortgagee deems necessary or reasonably advisable to preserve and
maintain the priority of the lien hereof, or to extend the effectiveness
thereof, under the Code or any other similar laws which may hereafter become
applicable. This power, being coupled with an interest, shall be irrevocable so
long as this Mortgage is in effect. Mortgagor shall reimburse Mortgagee for any
and all costs and expenses incurred by Mortgagee in connection with the filing
of any such statements including, without limitation, reasonable attorneys' fees
and any such amounts shall constitute sums secured by this Mortgage.
11. At any time, and from time to time, upon Mortgagee's reasonable
request, Mortgagor shall make, execute and deliver or cause to be made, executed
and delivered to Mortgagee, any and all other instruments, certificates and
other documents as may, in the reasonable opinion of Mortgagee, be necessary or
desirable in order to effectuate, complete, perfect or to continue and preserve
the obligations of Mortgagor under the Agreement and the Second Lien Documents.
Upon any failure by Mortgagor to so do, Mortgagee may make, execute and record
any and all such instruments, certificates and documents for and in the name of
Mortgagor and Mortgagor hereby irrevocably appoints Mortgagee the agent and
attorney-in-fact of Mortgagor to do so. Mortgagor will reimburse Mortgagee for
any sums expended by Mortgagee in making, executing and recording any such
instruments, certificates and documents and any such amounts shall constitute
sums secured by this Mortgage.
12. (a) If Mortgagor shall fail to pay any interest or amortization
on the First Note, or any real estate tax, assessment, or other government levy
or change or any imposition, or to make any other payment required to be paid by
Mortgagor under the First Mortgage at the time and in the manner provided, or if
Mortgagor shall fail to perform or observe any other term, covenant, condition
or liability required to be performed or observed by Mortgagor under the
9
<PAGE>
First Mortgage, without limiting the generality of any other provision of this
Mortgage and without waiving or releasing Mortgagor from any of its liabilities,
and provided all applicable notice and cure periods shall have expired such that
an Event of Default shall exist hereunder, Mortgagee shall have the right, but
shall be under no obligation to pay any such interest, amortization, tax,
assessment, levy, charge, imposition, or other payment, and may perform any
other act or take such action as may be appropriate to cause such other term,
covenant, condition, or liability to be promptly performed or observed on behalf
of Mortgagor, to the end that Mortgagor's rights, in, to and under the First
Mortgage shall be kept unimpaired and free from default, and Mortgagor shall
permit Mortgagee to enter upon Secured Property with or without notice and to do
anything thereon or thereto which Mortgagee shall deem necessary or prudent for
such purpose of curing such default.
(b) If Mortgagee shall make any payment or perform any act or take
action in accordance with this paragraph 12, Mortgagee, within sixty (60) days
thereafter, will give to Mortgagor written notice of the making of any such
payment, the performance of any such act or the taking of any such action. All
monies expended by Mortgagee in connection therewith (including, but not limited
to, legal expenses including reasonable attorneys' fees and disbursements),
together with interest thereon at the highest lawful rate from the date of such
expenditure, shall be paid by Mortgagor to Mortgagee forthwith upon demand by
Mortgagee, and shall be secured by this Mortgage.
(c) If the holder of the First Mortgage shall deliver to Mortgagee a
duplicate copy of any notice given to Mortgagor under the First Mortgage, such
notice may be relied upon by Mortgagee and shall constitute full protection to
Mortgagee for any action take or omitted to be taken by Mortgagee, in good
faith, in reliance thereon.
13. The mailing of a written notice or demand addressed to the owner
of record of the Secured Property, or directed to the said owner at the last
address actually furnished to Mortgagee, or directed to said owner at the
Secured Property, and mailed by the United States mails, shall be sufficient
notice and demand in any case arising under this Mortgage and required by the
provisions hereof or by law.
14. Mortgagor will pay or reimburse Mortgagee for all reasonable
attorney's fees, costs and expenses incurred by Mortgagee in any proceedings
involving the estate of a decedent or an insolvent, or in any action, legal
proceeding or dispute of any kind in which Mortgagee is made a party, or appears
as party plaintiff defendant, affecting the
10
<PAGE>
Secured Property, including but not limited to, any foreclosure under this
Mortgage, any condemnation action involving the Secured Property or any action
to protect the security hereof or upon the reasonable concern of Mortgagee with
the condition of the Secured Property, and any such amounts paid by Mortgagee
shall be secured by this Mortgage. If this Mortgage is referred to attorneys for
collection, foreclosure or for any other remedial action, Mortgagor shall pay
all expenses incurred by Mortgagee, including reasonable attorneys' fees,
interest, all costs of collection, litigation costs, and costs (which may be
estimated as to items to be expensed after entry of the decree) of procuring
title insurance policies, whether or not obtained, and similar assurance with
respect to title and value as Mortgagee may deem reasonably necessary together
with all statutory costs, with or without the institution of an action or
proceeding. All such sums shall be deemed to be secured by this Mortgage.
15. The occurrence of any of the following events which is not cured
within any applicable grace period shall be deemed an "Event of Default" (and
herein so called) under this Mortgage:
(i) The occurrence of a Default under the Agreement;
(ii) Should any suit be commenced to foreclose the First
Mortgage;
(iii) If Mortgagor fails to repay Mortgagee within thirty (30)
days after written demand any amount which Mortgagee may have paid on
the First Mortgage, together with interest thereon at the highest
lawful rate, pursuant and subject to the provisions of paragraph 12
hereof.
16. Upon the occurrence and continuance of an Event of Default
hereunder, Mortgagee may foreclose this Mortgage. Notwithstanding anything to
the contrary set forth in this Mortgage, the Agreement or any other Second Lien
Document, Mortgagee shall not have the right to foreclose the lien of this
Mortgage unless an Event of Default shall have occurred.
17. The unenforceability or invalidity of any provision or provisions
of this Mortgage as to any persons or circumstances shall not render that
provision or those provisions unenforceable or invalid as to any other persons
or circumstances, and all provisions hereof, in all other respects, shall remain
valid and enforceable.
11
<PAGE>
18. The covenants herein contained shall bind, and the benefits and
advantages shall inure to, the respective successors and assigns of the parties
hereto. Whenever used, the singular number shall include the plural, the plural
the singular, and the use of any gender shall include all genders.
19. (a) Mortgagee shall not have the right to disapprove or
otherwise impede a Transfer of Physical Assets (as defined in the Regulatory
Agreement as defined in the Agreement) that has been approved by the Coinsuring
Lender or HUD to protect the interests of HUD's insurance funds.
(b) The parties hereby agree and acknowledge (i) that no breach of
any of the obligations under this Mortgage shall constitute a default under the
First Mortgage or the First Note, nor serve as the basis for a claim under the
Coinsurance Coverage (as defined in the Agreement and herein referred to as the
"Coinsurance Contract") unless and to the extent that such obligation is also
contained in the First Mortgage, (ii) that this Mortgage is in all respects
subject to and subordinate to the First Note, First Mortgage and the Regulatory
Agreement, and the rights and powers of Mortgagee are subordinate to the rights
and powers of the Coinsuring Lender under those documents, and so long as the
Coinsurance Contract is in force, the provisions of such documents and of
applicable HUD regulations shall take precedence in the event of any conflict
with the provisions of this Mortgage, and (iii) without limiting the generality
of the foregoing subparagraphs, Mortgagor shall not be required to pay any
amounts pursuant to this Mortgage except from Surplus Cash (as defined in the
Regulatory Agreement) available for distribution under the Regulatory Agreement
or other sources whose use is not restricted by HUD for as long as the
Coinsurance Contract is in force. So long as the Coinsurance Contract is in
effect, nothing contained herein shall be deemed to create or constitute an
assignment of rents, or a security interest in the proceeds of the Loan from
Mortgagor to the Coinsuring Lender or a security interest in any account of the
Secured Property or in any reserve or other reserve or deposit required by
Coinsuring Lender or HUD in connection with the Loan.
(c) For as long as the Coinsurance Contract is in effect, the lien of
this Mortgage shall automatically terminate upon either Coinsuring Lender (or
its designee) or HUD acquiring title to the Secured Property by a deed in lieu
of foreclosure of the First Mortgage.
12
<PAGE>
(d) For as long as the Coinsurance Contract is in effect, acquisition
of title to the Secured Property by Mortgagee or by any third party, by either
foreclosure or deed in lieu of foreclosure, shall be subject to all applicable
requirements of HUD relating to Transfer of Physical Assets. Any advertisement
relating to foreclosure of this Mortgage shall state that the sale of the
Property to any purchaser who proposes to take title subject to the First
Mortgage is subject to HUD's TPA requirements, and that HUD will assume no
liability in connection with any proposed sale if TPA approval is not granted.
(e) For as long as the Coinsurance Contract is in effect, if a
receiver is appointed as provided hereinafter or if Mortgagee becomes a
Mortgagee-in-possession, no rents or other income of the Property collected by
the receiver or Mortgagee-in-possession, other than Surplus Cash available for
distribution under the Regulatory Agreement, shall be used to pay the
obligations, or other charges under this Mortgage, and the receiver or
Mortgagee-in-possession shall operate the Project in accordance with the
provisions of the Regulatory Agreement and the First Mortgage.
(f) Nothing herein is intended to alter or conflict with the terms,
conditions and provisions of the HUD regulations, handbooks, administrative
requirements and Mortgagee notices in effect at the time of initial endorsement
of the First Note, or the documents required to be executed by Mortgagor in
connection with initial endorsement of the First Note, and to the extent that
they do so, the HUD regulations, handbooks, administrative requirements,
Mortgagee notices and documents shall control and this Mortgage shall be amended
or deemed amended so as not to alter or conflict with the aforesaid regulations,
notices or documents.
(g) The provisions of this paragraph 19 shall automatically terminate
and be void and of no further force and effect upon termination of the
Coinsurance Contract with HUD with respect to the First Note.
20. It is the intention of Mortgagor and Mortgagee to conform
strictly to the usury laws now or hereafter in force in the State of Florida and
any interest payable under the Agreement, this Mortgage, and/or any of the other
Second Lien Documents executed by Mortgagor, to the extent that any sums secured
hereby or the advancing of such sums by Mortgagee shall not be exempt from such
laws, shall be subject to reduction to the amount not in excess of the maximum
non-usurious amount allowed under the usury laws of Florida as now or hereafter
construed by the courts having jurisdiction over such matters. The
13
<PAGE>
aggregate of all interest (whether designated as interest, service charges,
points or otherwise) contracted for, chargeable, or receivable under the
Agreement, this Mortgage or any other document executed in connection with this
transaction shall under no circumstances exceed the maximum legal rates. In the
event such interest does exceed the maximum legal rate, it shall be deemed a
mistake and such excess shall be canceled automatically and if theretofore paid,
rebated to Mortgagor or credited on the principal amount of any sums secured
hereby, or if such sums have been repaid, then such excess shall be rebated to
Mortgagor.
21. The execution and delivery of this Mortgage is not intended to be
and shall not alter or affect the priority of the lien and encumbrance of the
Original Subordinated Mortgage, which lien and encumbrance shall retain the same
second priority position as existed when originally filed for record in the
Public Records of Hillsborough County, Florida subordinate only to the First
Mortgage.
22. This Mortgage may be executed in two or more counterparts, each
of which shall constitute an original, but which, when taken together, shall
constitute but one instrument.
23. Notwithstanding, however, any other provision contained herein or
in the Agreement or any Second Lien Document, it is agreed that in the event of
a default, the Mortgagee shall look solely to the Secured Property and to the
rents, issues and profits thereof in satisfaction of the obligations secured
hereby and will not seek or obtain my deficiency or personal judgment against
Mortgagor except such judgment or decree as may be necessary to foreclose and
bar its interest in the subject to this Mortgage and all other property
mortgaged, pledged, conveyed or assigned to secure Mortgagor's obligations under
the Agreement; provided that nothing in this condition and no action so taken
shall operate to impair the lien and security interest of this Mortgage. This
provision shall be inapplicable and Mortgagor shall be personally liable in the
event of any fraud of Mortgagor.
[SIGNATURES ON FOLLOWING PAGE]
14
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Amended and
Restated Subordinated Mortgage and Security Agreement as of the date first above
written, and such Amended and Restate Subordinated Mortgage shall be effective
as of such date.
WITNESSES: MORTGAGOR:
RICHLAND PROPERTIES, INC.
a Delaware corporation
/s/ Patricia Anderson By: /s/ Vahe M. Melkonian
- ------------------------------ --------------------------------
Name: Patricia Anderson Name: Vahe M. Melkonian
------------------------- -------------------------
/s/ Douglas Flair Title: Vice President
- ------------------------------ ------------------------
Name: Douglas Flair
-------------------------
WITNESSES: MORTGAGEE:
NYLIFE GOVERNMENT MORTGAGE PLUS
- ------------------------------ LIMITED PARTNERSHIP
Name: a Massachusetts limited partnership
-------------------------
By: NYLIFE REALTY, INC., general partner
/s/ Yvonne M. Reynolds
- ------------------------------- By: /s/ Kevin M. Micucci
Name: Yvonne M. Reynolds --------------------------------
-------------------------- Name: Kevin M. Micucci
-----------------------
Title: Vice President
----------------------
[ACKNOWLEDGMENTS CONTAINED ON FOLLOWING PAGES]
15
<PAGE>
STATE OF NEW YORK }
}
COUNTY OF NEW YORK }
I hereby certify that on this 30 day of January, 1995, before me, the
subscriber, a notary public in and for the jurisdiction aforesaid, personally
appeared Kevin M. Micucci oF NYLIFE REALTY, INC., being personally known to me
(or who produced ___________ as identification) the person who executed the
foregoing instrument in his or her capacity described above and did acknowledge
the foregoing instrument to be his or her act and deed in the capacity
aforesaid.
Witness my hand and official seal this 30 day of January 1995.
/s/ Barbara A. Curci
--------------------
Notary Public
[SEAL]
My Commission Expires: [NOTARY STAMP]
12/15/96
- ----------------------
16
<PAGE>
STATE OF FLORIDA }
}
COUNTY OF HILLSBOROUGH }
I hereby certify that on this 31 day of Jan, before me, the subscriber,
a notary public in and for the jurisdiction aforesaid, personally appeared
Vahe Melkonian of Richland Properties being personally known to me (or who
produced ____________ as identification) the person who executed the
foregoing instrument in his or her capacity described above and did
acknowledge the foregoing instrument to be his or her act and deed in the
capacity aforesaid.
Witness my hand and official seal this 31 day of Jan, 1995.
/s/ Sherry Logsdon
-------------------------
Notary Public
[SEAL]
My Commission Expires: [NOTARY STAMP]
- ----------------------
17
<PAGE>
SCHEDULE A
Parcel 22B, Hunter's Green, according to the map or plat thereof, recorded in
Plat Book 69, Page 5, of the Public Records of Hillsborough County, Florida;
together with the right, title and interest of Mortgagor and in to the perpetual
nonexclusive easements described in Section 1 of Article VI of the Declarations
of Covenants, Conditions and Restrictions of Hunter's Green, as recorded in O.R.
Book 5243, Page 1979, ET SEQ., Public Records of Hillsborough County, Florida;
together with the right, title and interest of Mortgagor in nonexclusive of
rights of ingress and egress in and to "TRACT A" of HUNTER'S GREEN PHASE 1,
according to the Plat thereof as recorded in Plat Book 64, Page 16, of the
Public Records of Hillsborough County, Florida.
<PAGE>
?????
SCHEDULE B
DESCRIPTION OF PERSONAL PROPERTY
1. All materials now owned or hereafter acquired by the Debtor and intended
for construction, reconstruction, alteration and repair of any building,
structure or improvement now or hereafter erected or placed on the property
described in Exhibit "A" (the "Property"), all of which materials shall be
deemed to be included within the Project immediately upon the delivery
thereof to the Project.
2. All of the walks, fences, shrubbery, driveways, fixtures, machinery,
apparatus, equipment, fittings, and other goods and other personal property
of every kind and description whatsoever, now owned or hereinafter acquired
by the Debtor and attached to or contained in and used or usable in
connection with any present or future operation of the Project, including,
by way of example rather than of limitation, all lighting, laundry,
incinerating and power equipment; all engines, boilers, machines, motors,
furnaces, compressors and transformers; all generating equipment; all
pumps, tanks, ducts, conduits, wire, switches, electrical equipment and
fixtures, fans and switchboards; all telephone equipment; all piping,
tubing, plumbing equipment and fixtures; all heating, refrigeration, air
conditioning, cooling, ventilating, sprinkling, water, power and
communications equipment, systems and apparatus; all water coolers and
water heaters; all fire prevention, alarm and extinguishing systems and
apparatus; all cleaning equipment; all lift, elevator and escalator
equipment and apparatus; all partitions, shades, blinds, awnings, screens,
screen doors, storm doors, exterior and interior signs, gas fixtures,
stoves, ovens, refrigerators, garbage disposals, dishwashers, cabinets,
mirrors, mantles, floor coverings, carpets, rugs, draperies and other
furnishings and furniture installed or to be installed or used or usable in
the operation of any part of the Project or facilities erected or to be
erected in or upon the Property; and every renewal or replacement thereof
or articles in substitution therefor, whether or not the same are now or
hereafter attached to the Property in any manner; all except for any right,
title or interest therein owned by any tenant (it being agreed that all
personal property owned by the Debtor and placed by it on the Property
shall, so far as permitted by law, be deemed to be affixed to the Property,
appropriated to its use, and covered by the each of the Security Documents
to which this Exhibit is attached).
3. All of the Debtor's rights, title and interests in and to any and all
judgments, awards of damages (including but not limited to severance and
consequential damages), payments, proceeds, settlements or other
compensation (collectively, the "Awards") heretofore or hereafter made,
including interest thereon, and the right to receive the same, as a result
of, in connection with, or in lieu of (i) any taking of the Property or any
part thereof by the exercise of the power of condemnation or eminent
domain, or the police power, (ii) any change or alteration of the grade of
any street, or (iii) any other injury or decrease in the value of the
Property or any part thereof (including but not limited to destruction or
decrease in value by fire or other casualty), all of which Awards, rights
therein and shares therein are hereby assigned to the Secured Party, who is
hereby authorized to collect and receive the proceeds thereof and to give
property receipts and acquittances therefor and to apply, at its option,
the net proceeds thereof, after deducting expenses of collection, as a
credit upon any portion, as selected by the Secured Party, of the
indebtedness secured by the Security Documents.
4. All of the Debtor's right, title and interest in and to any and all
payments, proceeds, settlements or other compensation heretofore or
hereafter made, including any interest thereon, and the right to receive
the same from any and all insurance policies covering the Property or any
portion thereof, or any of the other property described herein.
<PAGE>
5. The interest of the Debtor in and to all of the rents, royalties, issues,
profits, revenues, income and other benefits of the Property, or arising
from the use or enjoyment of all or any portion thereof, or from any lease
or agreement pertaining thereto, and all right, title and interest of the
Debtor in and to, and remedies under, all contract rights, accounts
receivable and general intangibles arising out of or in connection with any
and all leases and subleases of the Property, or any part thereof, and of
the other property described herein, or any part thereof, both now in
existence or hereafter entered into, together with all proceeds (cash and
non-cash) thereof; and including, without limitation, all cash or
securities deposited thereunder to secure performance by the lessees of
their obligations thereunder.
6. All of the Debtor's rights, options, powers and privileges in and to (but
not the Debtor's obligations and burdens under) any construction contract,
architectural and engineering agreements and management contract pertaining
to the construction, development, ownership, equipping and management of
the Property and all of the Debtor's right, title and interest in and to
(but not the Debtor's obligations and burdens under) all architectural,
engineering and similar plans, specifications, drawings, reports, surveys,
plats, permits and the like, contracts for construction, operation and
maintenance of, or provision of services to, the Property or any of the
other property described herein, and all sewer taps and allocations,
agreements for utilities, bonds and the like, all relating to the Property.
7. All intangible personal property, accounts, licenses, permits, instruments,
contract rights, and chattel paper of the Debtor, including but not limited
to cash; accounts receivable; bank accounts; certificates of deposit;
securities; promissory notes; rents; rights (if any) to amounts held in
escrow; insurance proceeds; condemnation rights; deposits; judgments,
liens and causes of action; warranties and guarantees.
8. The interest of the Debtor in any cash escrow fund and in any and all
funds, securities, instruments, documents and other property which are at
any time paid to, deposited with, under the control of, or in the
possession of the Secured Party, or any of its agents, branches,
affiliates, correspondents or others acting on its behalf, which rights
shall be in addition to any right of set-off or right of lien that the
Secured Party may otherwise enjoy under applicable law, regardless of
whether the same arose out of or relates in any way, whether directly or
indirectly, to the Project located upon the Property.
9. The interest of the Debtor in and to any and all funds created or
established and held by the Trustee pursuant to any indenture of trust or
similar instrument authorizing the issuance of bonds or notes for the
purpose of financing the Project located upon the Property.
10. Any collateral provided by the Debtor or for its account to each and every
issuer of a letter of credit, subject to the prior claim of the issuer of
any such letter of credit to such collateral.
11. All inventory, including raw materials, components, work-in-process,
finished merchandise and packing and shipping materials.
12. Proceeds, products, returns, additions, accessions and substitutions of and
to any or all of the above.
13. Any of the above arising or acquired by the Debtor or to which the Debtor
may have a legal or beneficial interest in on the date hereof and at any
time in the future.
14. Any of the above which may become fixtures by virtue of attachment to
Property.
15. All of the records and books of account now or hereafter maintained by or
on behalf of the Debtor in connection with the Project.
16. All names now or hereafter used in connection with the Project and the
goodwill associated therewith.
-2-
<PAGE>
Schedule C
PERMITTED ENCUMBRANCES
(Page 1 of 2)
1. Taxes for the year 1995 and any taxes and assessments levied or assessed
subsequent to the date hereof.
2. Covenants, restrictions, easements and other matters as denoted on the
plat of Hunter's Green, Parcel 22B recorded in Plat Book 69, Page 5.
3. Easement in favor of Tampa Electric Company by instrument recorded in O.R.
Book 6215, Page 443.
4. Easement in favor of GTE Florida by instrument recorded in O.R. Book 6265,
Page 1604.
5. Restrictions as recited in Warranty Deed recorded in O.R. Book 6153, Page
205.
6. Easement in favor of Hunter's Green Community Association, Inc., a Florida
corporation, by instrument recorded in O.R. Book 6231, Page 1502.
7. Cable Television Installation and Wiring Agreement executed by and between
Highland Oaks Associates, a Florida limited partnership and Cable TV Fund 12-BCD
Venture, a Colorado Joint Venture, dated April 25, 1991, recorded in O.R. Book
6295, Page 515.
8. Instrument recorded in O.R. Book 5243, Page 1979 and the First Amendment
thereto recorded in O.R. Book 6722, Page 1059.
9. Development Order executed by and between Markborough Florida, Inc., and
the Representatives of the City of Tampa, the Tampa Bay Regional Planning
Council, recorded in O.R. Book 5128, Page 1848, together with the First
Amendment recorded in O.R. Book 5358, Page 1856, the Second Amendment recorded
in O.R. Book 6776, Page 1377, the Third Amendment recorded in O.R. Book 6935,
Page 1724, the Fourth Amendment recorded in O.R. Book 7259, Page 769 and the
Fifth Amendment recorded in O.R. Book 7455, Page 366.
10. Parties in possession under unrecorded residential leases of one year or
less as tenants only.
11. The following matters shown on a survey of the premises prepared by Heidt
& Associates, Inc., first dated February 28, 1992, and bearing Order No.
SIP-HG-014:
a. E.P.C.H.C. Westland Line and 30 foot wetland setback.
b. Encroachment of 9.3' X 9.3' concrete storm structure and concrete headwall
mitered end sections.
<PAGE>
Schedule C
PERMITTED ENCUMBRANCES
(Page 2 of 2)
12. Terms and Conditions of that certain Agreement for Sale and Purchase of
Land dated and recorded December 13, 1990, by and between Markborough Florida,
Inc., a Florida corporation and H.O. Associates, Ltd., a Florida limited
partnership, a memorandum of which is recorded in O.R. Book 6153, Page 207, as
amended by Termination of Agreement and Amendment to Memorandum of Agreement
recorded contemporaneously herewith.
13. Mortgage executed by H.O. Associates, Ltd. to Related Mortgage
Corporation, dated and recorded December 13, 1990, in O.R. Book 6153, Page 212,
given to secure the original principal amount of $13,154,200.00, as modified by
Modification of Mortgage recorded prior hereto and further modified by
Modification of Mortgage and Mortgage Note and Mortgage recorded
contemporaneously herewith and further modified by Agreement of Release and
Assumption of Mortgage Note and Mortgage between H.O. Associates, Ltd., Related
Mortgage Corporation and Richland Properties, Inc. recorded contemporaneously
herewith.
14. Assignment of Rents and Leases executed by H.O. Associates, Ltd. to
Related Mortgage Corporation, dated and recorded December 13, 1990, in O.R. Book
6153, Page 231, as modified by Modification of Collateral Assignment of Rents
and Leases recorded contemporaneously herewith and further modified by Agreement
of Release and Assumption of Mortgage Note and Mortgage between H.O. Associates,
Ltd., Related Mortgage Corporation and Richland Properties, Inc. recorded
contemporaneously herewith.
15. Regulatory Agreement for Multifamily Housing Projects Coinsured by HUD
between Related Mortgage Corporation and Richland Properties, Inc., recorded
contemporaneously herewith.
NOTE: All recording references are to the Public Records of Hillsborough County,
Florida.
<PAGE>
PREPARED BY AND
AFTER RECORDING RETURN TO:
Ballard, Spahr, Andrews & Ingersoll
555 13th N.W., Suite 900 East
Washington, D.C. 20004
Attention: Allan R. Winn
AMENDED AND RESTATED SUBORDINATED MORTGAGE
AND SECURITY AGREEMENT
THIS AMENDED AND RESTATED SUBORDINATED MORTGAGE AND SECURITY AGREEMENT
(this "Mortgage") made as of the 31st day of January, 1995, by RICHLAND
PROPERTIES, INC., a Delaware corporation having its principal place of business
at c/o Newco Management Company, 6320 Canoga Avenue, Suite 1430, Woodland Hills,
CA 91367-2591 ("Mortgagor") to NYLIFE GOVERNMENT MORTGAGE PLUS LIMITED
PARTNERSHIP, a Massachusetts limited partnership having an address at c/o NYLife
Realty, Inc., 51 Madison Avenue, New York, New York 10010 ("Mortgagee").
PREAMBLE:
A. On January 13, 1990, Mortgagee entered into an Additional Interest
Agreement (the "Original Agreement") with H.O. Associates, Ltd. ("Original
- -------------------------------------------------------------------------------
NOTE TO CLERK: THIS INSTRUMENT SECURES THE RIGHT OF MORTGAGEE TO
ACCELERATE THE MATURITY OF A SEPARATE LOAN SECURED BY A MORTGAGE RECORDED
AT OFFICIALS RECORD BOOK 6153, PAGE 212 OF HILLSBOROUGH COUNTY PUBLIC
RECORDS, AS AMENDED, ON WHICH DOCUMENTARY STAMP AND INTANGIBLE TAXES
HAVE BEEN PAID, WHICH RIGHT HAS NO ASCERTAINABLE VALUE, ACCORDINGLY, NO
DOCUMENTARY STAMPS ARE BEING PAID UPON THE FILING OF THIS MORTGAGE.
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Mortgagor") with respect to a property located in Tampa, Florida more
particularly described in Schedule A (the "Land") and a multifamily housing
project to be constructed on the Land (the Land and such project being
collectively referred to as the "Project").
B. Payment and performance by Original Mortgagor to Mortgagee of the
obligations of the Original Mortgagor under the terms of the Original Agreement
was secured by, among other things, a Subordinated Mortgage recorded May 15,
1992 in O.R. Book 6612 at Page 403 in the Public Records of Hillsborough County,
Florida (the "Original Subordinated Mortgage").
C. Original Mortgagor constructed the Project through a construction
and permanent mortgage loan in the principal amount of $13,154,200.00 (the
"Loan") made to the Original Mortgagor by Related Mortgage Corporation (the
"Coinsuring Lender").
D. The Loan was evidenced by a Mortgage Note (the "Original Note")
executed by Original Mortgagor in favor of the Coinsuring Lender, which Original
Note was (i) secured by a first lien Mortgage (the "Original Mortgage") on the
Project, which Original Mortgage was recorded prior to the Original Subordinated
Mortgage and (ii) coinsured by the United States Department of Housing and Urban
Development ("HUD") under Section 221(d)(4) pursuant to Section 244 of the
National Housing Act, as amended.
E. The Coinsuring Lender financed the Loan through the issuance by the
Coinsuring Lender of fully-modified Mortgage-backed pass-through construction
loan certificates ("CLCs") guaranteed as to the timely payment of principal and
interest by the Government National Mortgage Association ("GNMA") and, upon the
redemption of such CLCS, a fully-modified Mortgage-backed pass-through permanent
loan certificate ("PLC") guaranteed as to the timely payment of principal and
interest by the GNMA, which PLC was backed by the Loan (the CLCs and PLC are
sometimes hereinafter referred to as the "Original GNMA Certificates").
F. Coinsuring Lender obtained funding for the Loan through the
issuance of the Original GNMA Certificates to Mortgagee. The interest rate on
the Original Note and, correspondingly, on the Onginal GNMA Certificates, were
at rates below those for comparable loans advanced and comparable securities
issued, at the time the Original Note was made.
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G. To induce the Coinsuring Lender to issue the Original GNMA
Certificates at a rate below those available in the market for GNMA securities
at the time of their issuance and to induce Mortgagee to acquire said Original
GNMA Certificates at that below-market rate, Original Mortgagor agreed to
provide to Mortgagee certain other additional interest not set forth in the
Original Note or Original Mortgage as provided in the Original Agreement.
H. Mortgagee has agreed to accept certain sums payable out of the
proceeds of the sale of the Project to Mortgagor and the performance by
Original Mortgagor of certain other undertakings in satisfaction of all
obligations of Original Mortgagor, including the payment of Additional
Interest as defined under and to be paid pursuant to the Original Agreement.
I. Mortgagor has agreed to purchase the Project from Original
Mortgagor upon certain conditions including, but not limited to, the condition
that the Loan be modified to reduce the interest rate to 7.875% per annum.
J. Original Mortgagor and Coinsuring Lender have agreed to modify the
Original Note and the Original Mortgage pursuant to, among other things, a
certain Modification of Mortgage Note and a certain Modification of Mortgage of
even date herewith and Mortgagor has agreed to assume the Loan as so modified.
The Original Note, as modified by the Modification of Mortgage Note dated of
even date herewith, is hereinafter referred to as the "First Note", and the
Original Mortgage, as modified by the Modification of Mortgage dated of even
date herewith and recorded prior to recordation of this Mortgage, is hereinafter
referred to as the "First Mortgage".
K. Modification of the Loan requires the agreement of Mortgagee to the
reduction in interest rate and other modifications and the agreement of
Mortgagee to relinquish the Original GNMA Certificates and accept in
substitution therefor a new GNMA Mortgage backed security bearing interest at
the rate of 7.625% per annum (the "New GNMA Certificate").
L. Mortgagee has further agreed to the reduction of the interest rate
on the Loan and other modifications and the substitution of the New GNMA
Certificate for the Original GNMA Certificates in express reliance upon and in
consideration of the right of Mortgagee to call the Loan due and payable in ten
(10) years and the covenants and
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undertakings of Mortgagor contained in the Amended and Restated Agreemcnt
between Mortgagor and Mortgagee of even date herewith (the "Agreement") which
amends and restates the Original Agreement in its entirety.
M. Mortgagor and Mortgagee desire to amend and restate the terms of
the Original Subordinated Mortgage to, among other things, (i) amend and restate
the Original Subordinated Mortgage in its entirety as herein provided and (ii)
confirm that this Mortgage secures the obligations of Mortgagor and rights of
Mortgagee under the Agreement.
NOW THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereby amend and restate the Original Subordinated
Mortgage in its entirety as follows:
WITNESSETH, that for divers good and valuable considerations Mortgagor
does hereby grant, bargain, sell, alien, remise, release, convey and confirm
unto Mortgagee, its successors and assigns forever, the Land situated in the
County of Hillsborough and State of Florida, described in Schedule A attached
hereto as a part hereof.
TOGETHER with the property described in Schedule B attached hereto as
part hereof; and
TOGETHER with all buildings and improvements of every kind and
description now or hereafter erected or placed thereon, and all fixtures,
including but not limited to all gas and electric fixtures, engines and
machinery, radiators, heaters, furnaces, heating, incinerating, laundry, and
air-conditioning equipment, steam and hot-water boilers, stoves, ranges,
elevators and motors, bathtubs, sinks, water closets, basins, pipes, faucets and
other plumbing and heating fixtures, mantels, refrigerating plant and
refrigerators, whether mechanical or otherwise, cooking apparatus and
appurtenances, furniture, shades, awnings, screens, blinds and other
furnishings; and
TOGETHER with all building materials and equipment now or hereafter
delivered to said premises and intended to be installed therein; and
TOGETHER with all rents, issues, proceeds, and profits accruing and
to accrue from said premises, all of which are included within the foregoing
description and the
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habendum thereof, also all articles of personal property now or hereafter
attached to or used in and about the building or buildings now erected or
hereafter to be erected on the Land which are necessary to the complete and
comfortable use and occupancy of such building or buildings for the purposes for
which they were or are to be erected, including all goods, chattels, and
personal property as are ever used or furnished in operating a building, or the
activities conducted therein, similar to the one herein described and referred
to, and all renewals or replacements thereof or articles in substitution
therefor, whether or not the same are or shall be attached to said building or
buildings in any manner.
The property described in Schedules A and B to this Mortgage and the
foregoing granting clauses is collectively referred to herein as the "Secured
Property".
TO HAVE AND TO HOLD the same, together with all and singular the
tenements, hereditaments, and appurtenances thereunto belonging or in anywise
appertaining, and the reversion and reversions, remainder or remainders, rents,
issues, and profits thereof, and also all the estate, right, title, interest,
homestead, dower and right of dower, separate estate, possession, claim, and
demand whatsoever, as well in law as in equity, of Mortgagor in and to the same,
and every part thereof, with the appurtenances, and every part and parcel
thereof unto Mortgagee in fee simple, subject, however to the matters described
in Schedule C attached hereto and incorporated herein by reference (the
"Permitted Exceptions").
Mortgagor hereby covenants with Mortgagee, that it is indefensibly
seized of said Land in fee simple; that it has full power and lawful right to
convey the same in fee simple as aforesaid; that it shall be lawful for
Mortgagee at all times peaceably and quietly to enter upon, hold, occupy, and
enjoy said Land, and every part thereof; that the Land is and will remain free
from all encumbrances, except for the Permitted Exceptions; that Mortgagor will
make such further assurances to prove the fee simple title to said Land in
Mortgagee as may be reasonably required; and that Mortgagor does hereby fully
warrant the title to said Land, and every part thereof, except for the Permitted
Exceptions, and will defend the same against the lawful claims of all persons
whomsoever, except those clairning under the Permitted Exceptions.
Mortgagor is obligated to Mortgagee under the terms of that certain
Agreement described in the recitals to this Mortgage and all of its terms are
incorporated herein by reference. This Mortgage secures performance of all
obligations and liabilities of Mortgagor under the Agreement, and any
modifications or extensions thereof, and under any
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other document or instrument contemporaneously therewith or hereafter executed
by or on behalf of Mortgagor securing, evidencing or relating to the Agreement
(collectively, the "Second Lien Documents"), including, without limitation,
this Mortgage, as the same may be modified or supplemented from time to time,
including all sums, amounts and expenses which Mortgagee may advance, readvance,
pay or incur under or in connection with the Second Lien Documents.
PROVIDED ALWAYS, and these presents are on this express condition,
that these presents and the estate hereby granted shall cease, determine, and be
absolutely null and void, upon termination of the Agreement.
Mortgagor further covenants and agrees as follows:
1. The recitals to this Mortgage are incorporated herein by reference
and made a part hereof for all purposes.
2. Mortgagor will perform its obligations under the Agreement at the
times and in the manner provided therein.
3. Mortgagor will not permit or suffer the use of any of the Secured
Property for any purpose other than the use for which the same was intended at
the time this Mortgage was executed.
4. All rents, profits and income from the property covered by this
Mortgage are hereby assigned to Mortgagee for the purpose of discharging the
obligations hereby secured. Permission is hereby given to Mortgagor so long as
no Event of Default (as hereinafter defined) exists hereunder, to collect such
rents, profits and income. Upon an Event of Default hereunder Mortgagee shall be
entitled to the appointment of a receiver by any court having jurisdiction,
without notice, to take possession and protect the Secured Property and operate
same and collect the rents, profits and income therefrom.
5. Mortgagor will permit, commit, or suffer no waste, impairment, or
deterioration of the Secured Property or any part thereof; and in the event of
the failure of Mortgagor to keep the buildings on said Land, or improvements
thereon, in good repair, Mortgagee may make such repairs as in its discretion it
may deem necessary for the proper preservation thereof, and the full amount of
each and every such payment shall be secured by the lien of this Mortgage.
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6. Mortgagor will pay all and singular the costs, charges and
expenses, including reasonable attorney's fees, and costs of abstracts of title,
incurred or paid at any time by Mortgagee because of the failure on the part of
Mortgagor promptly and fully to perform the agreements and covenants of the
Agreement and this Mortgage, and said costs, charges, and expenses shall be
secured by the lien of this Mortgage.
7 . Mortgagor will give immediate notice by mail to Mortgagee of any
fire damage or other casualty to the Secured Property, or of any conveyance,
transfer, or change of ownership of the Land.
8. (a) For purposes of this paragraph 8, the term "Environmental
Laws" shall mean and include the Resource Conservation and Recovery Act, as
amended by the Hazardous and Solid Waste Amendments of 1984, the Comprehensive
Environmental Response, Compensation and Liability Act, the Hazardous Materials
Transportation Act, the Toxic Substances Control Act, the Federal Insecticide,
Fungicide and Rodenticide Act, applicable state and local environmental laws,
and the regulations, rules and ordinances adopted and publications promulgated
pursuant to said laws and ordinances, as any of the foregoing laws, ordinances,
regulations and rules may be amended from time to time hereafter, and any other
federal, state or local laws or ordinances, now or hereafter existing, relating
to regulation or control of toxic or hazardous substances or materials. For
purposes of this paragraph 8, the term "Regulated Substance" shall mean and
include substances or materials which are regulated pursuant to any
Environmental Laws including but not limited to any such substances or materials
which now are or hereafter will be defined or deemed to be "regulated
substances," "hazardous waste," "hazardous substances," "hazardous materials,"
"toxic substances," "pesticides" or any similar or like classification,
categorization or designation.
(b) Mortgagor hereby represents and warrants to Mortgagee and agrees
with Mortgagee, with regard to the Secured Property, as follows:
(i) For so long as Mortgagor has owned or has had any interest in
the Secured Property, Mortgagor has not violated any Environmental Laws or used,
generated, managed, treated, stored or disposed of on, under or about the
Secured Property or transported to or from the Secured Property any Regulated
Substance;
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(ii) Mortgagor has no knowledge without independent inquiry that
any party who owned the Secured Property prior to Mortgagor's acquisition of the
Secured Property has violated any Environmental Laws or used, generated,
managed, treated, stored or disposed of on, under or about the Secured Property
any Regulated Substance;
(iii) Mortgagor has no knowledge without independent inquiry that
any suit, action or other legal proceeding arising out of or related to any
Environmental Laws with respect to the Secured Property is pending or
threatened before any court, agency or governmental entity;
(iv) Mortgagor has not received any written notice of any
Environmental Laws;
(v) For so long as Mortgagor shall own the Secured Property,
Mortgagor will manage and operate the Secured Property and will use best efforts
to cause each tenant of any portion of the Secured Property to occupy its
demised portion of the Secured Property in compliance with all Environmental
Laws; and
(vi) For so long as Mortgagor shall own the Secured Property,
Mortgagor shall not install or permit to be installed on the Secured Property
any Regulated Substance except de minimus amounts associated with the
residential use of the Secured Property which do not constitute material
violations of any Environmental Laws.
(c) Mortgagor hereby agrees to indemnify and hold Mortgagee free and
harmless from and against any and all loss, liability, damage and expense,
including attorney's fees, suffered or incurred by Mortgagee with respect to the
presence of any Regulated Substance affecting the Secured Property.
(d) Notwithstanding anything to the contrary contained in this
Mortgage, a breach of any of Mortgagor's representations, warranties or
covenants contained paragraph 8(a) or (b) above shall not constitute a default
hereunder unless such breach also constitutes a Default under the Agreement.
9. Mortgagor will not voluntarily create or permit to be created
against the Property any lien or liens inferior or superior to the lien of this
Mortgage (except the First Mortgage and other Permitted Exceptions) and further
that it will keep and maintain the same
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free from the claim of all persons supplying labor or materials which will enter
into the construction of any and all buildings now being erected or to be
erected on said Land.
10. This Mortgage shall also constitute a security agreement under
Article 9 of the Uniform Commercial Code as enacted in the State of Florida (the
"Code") with respect to the personal property described herein. Mortgagor hereby
appoints Mortgagee as its attorney-in-fact to execute and file on Mortgagor's
behalf, subject to five (5) business days prior notice to Mortgagor, any
financing statements, continuation statements or other statements in connection
therewith that Mortgagee deems necessary or reasonably advisable to preserve and
maintain the priority of the lien hereof, or to extend the effectiveness
thereof, under the Code or any other similar laws which may hereafter become
applicable. This power, being coupled with an interest, shall be irrevocable so
long as this Mortgage is in effect. Mortgagor shall reimburse Mortgagee for any
and all costs and expenses incurred by Mortgagee in connection with the filing
of any such statements including, without limitation, reasonable attorneys' fees
and any such amounts shall constitute sums secured by this Mortgage.
11. At any time, and from time to time, upon Mortgagee's reasonable
request, Mortgagor shall make, execute and deliver or cause to be made, executed
and delivered to Mortgagee, any and all other instruments, certificates and
other documents as may, in the reasonable opinion of Mortgagee, be necessary or
desirable in order to effectuate, complete, perfect or to continue and preserve
the obligations of Mortgagor under the Agreement and the Second Lien Documents.
Upon any failure by Mortgagor to so do, Mortgagee may make, execute and record
any and all such instruments, cenificates and documents for and in the name of
Mortgagor and Mortgagor hereby irrevocably appoints Mortgagee the agent and
attorney-in-fact of Mortgagor to do so. Mortgagor will reimburse Mortgagee for
any sums expended by Mortgagee in making, executing and recording any such
instruments, certificates and documents and any such amounts shall constitute
sums secured by this Mortgage.
12. (a) If Mortgagor shall fail to pay any interest or amortization on
the First Note, or any real estate tax, assessment, or other government levy
or change or any imposition, or to make any other payment required to be paid by
Mortgagor under the First Mortgage at the time and in the manner provided, or if
Mortgagor shall fail to perform or observe any other term, covenant, condition
or liability required to be performed or observed by Mortgagor under the
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First Mortgage, without limiting the generality of any other provision of this
Mortgage and without waiving or releasing Mortgagor from any of its liabilities,
and provided all applicable notice and cure periods shall have expired such that
an Event of Default shall exist hereunder, Mortgagee shall have the right, but
shall be under no obligation to pay any such interest, amortization, tax,
assessment, levy, charge, imposition, or other payment, and may perform any
other act or take such action as may be appropriate to cause such other term,
covenant, condition, or liability to be promptly performed or observed on behalf
of Mortgagor, to the end that Mortgagor's rights, in, to and under the First
Mortgage shall be kept unimpaired and free from default, and Mortgagor shall
permit Mortgagee to enter upon Secured Property with or without notice and to do
anything thereon or thereto which Mortgagee shall deem necessary or prudent for
such purpose of curing such default.
(b) If Mortgagee shall make any payment or perform any act or take
action in accordance with this paragraph 12, Mortgagee, within sixty (60) days
thereafter, will give to Mortgagor written notice of the making of any such
payment, the performance of any such act or the taking of any such action. All
monies expended by Mortgagee in connection therewith (including, but not limited
to, legal expenses including reasonable attorneys' fees and disbursements),
together with interest thereon at the highest lawful rate from the date of such
expenditure, shall be paid by Mortgagor to Mortgagee forthwith upon demand by
Mortgagee, and shall be secured by this Mortgage.
(c) If the holder of the First Mortgage shall deliver to Mortgagee a
duplicate copy of any notice given to Mortgagor under the First Mortgage, such
notice may be relied upon by Mortgagee and shall constitute full protection to
Mortgagee for any action taken or omitted to be taken by Mortgagee, in good
faith, in reliance thereon.
13. The mailing of a written notice or demand addressed to the owner
of record of the Secured Property, or directed to the said owner at the last
address actually furnished to Mortgagee, or directed to said owner at the
Secured Property, and mailed by the United States mails, shall be sufficient
notice and demand in any case arising under this Mortgage and required by the
provisions hereof or by law.
14. Mortgagor will pay or reimburse Mortgagee for all reasonable
attorney's fees, costs and expenses incurred by Mortgagee in any proceedings
involving the estate of a decedent or an insolvent, or in any action, legal
proceeding or dispute of any kind in which Mortgagee is made a party, or appears
as party plaintiff or defendant, affecting the
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Secured Property, including but not limited to, any foreclosure under this
Mortgage, any condemnation action involving the Secured Property or any action
to protect the security hereof or upon the reasonable concern of Mortgagee with
the condition of the Secured Property, and any such amounts paid by Mortgagee
shall be secured by this Mortgage. If this Mortgage is referred to attorneys for
collection, foreclosure or for any other remedial action, Mortgagor shall pay
all expenses incurred by Mortgagee, including reasonable attorneys' fees,
interest, all costs of collection, litigation costs, and costs (which may be
estimated as to items to be expensed after entry of the decree) of procuring
title insurance policies, whether or not obtained, and similar assurance with
respect to title and value as Mortgagee may deem reasonably necessary together
with all statutory costs, with or without the institution of an action or
proceeding. All such sums shall be deemed to be secured by this Mortgage.
15. The occurrence of any of the following events which is not cured
within any applicable grace period shall be deemed an "Event of Default" (and
herein so called) under this Mortgage:
(i) The occurrence of a Default under the Agreement;
(ii) Should any suit be commenced to foreclose the First Mortgage;
(iii) If Mortgagor fails to repay Mortgagee within thirty (30) days
after written demand any amount which Mortgagee may have paid on the
First Mortgage, together with interest thereon at the highest lawful
rate, pursuant and subject to the provisions of paragraph 12 hereof.
16. Upon the occurrence and continuance of an Event of Default
hereunder, Mortgagee may foreclose this Mortgage. Notwithstanding anything to
the contrary set forth in this Mortgage, the Agreement or any other Second Lien
Document, Mortgagee shall not have the right to foreclose the lien of this
Mortgage unless an Event of Default shall have occurred.
17. The unenforceability or invalidity of any provision or provisions
of this Mortgage as to any persons or circumstances shall not render that
provision or those provisions unenforceable or invalid as to any other persons
or circumstances, and all provisions hereof, in all other respects, shall remain
valid and enforceable.
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18. The covenants herein contained shall bind, and the benefits and
advantages shall inure to, the respective successors and assigns of the parties
hereto. Whenever used, the singular number shall include the plural, the plural
the singular, and the use of any gender shall include all genders.
19. (a) Mortgagee shall not have the right to disapprove or otherwise
impede a Transfer of Physical Assets (as defined in the Regulatory Agreement as
defined in the Agreement) that has been approved by the Coinsuring Lender or HUD
to protect the interests of HUD's insurance funds.
(b) The parties hereby agree and acknowledge (i) that no breach of any
of the obligations under this Mortgage shall constitute a default under the
First Mortgage or the First Note, nor serve as the basis for a claim under the
Coinsurance Coverage (as defined in the Agreement and herein referred to as the
"Coinsurance Contract") unless and to the extent that such obligation is also
contained in the First Mortgage; (ii) that this Mortgage is in all respects
subject to and subordinate to the First Note, First Mortgage and the Regulatory
Agreement, and the rights and powers of Mortgagee are subordinate to the rights
and powers of the Coinsuring Lender under those documents, and so long as the
Coinsurance Contract is in force, the provisions of such documents and of
applicable HUD regulations shall take precedence in the event of any conflict
with the provisions of this Mortgage, and (iii) without limiting the generality
of the foregoing subparagraphs, Mortgagor shall not be required to pay any
amounts pursuant to this Mortgage except from Surplus Cash (as defined in the
Regulatory Agreement) available for distribution under the Regulatory Agreement
or other sources whose use is not restricted by HUD for as long as the
Coinsurance Contract is in force. So long as the Coinsurance Contract is in
effect, nothing contained herein shall be deemed to create or constitute an
assignment of rents, or a security interest in the proceeds of the Loan from
Mortgagor to the Coinsuring Lender or a security interest in any account of the
Secured Property or in any reserve or other reserve or deposit required by
Coinsuring Lender or HUD in connection with the Loan.
(c) For as long as the Coinsurance Contract is in effect, the lien of
this Mortgage shall automatically terminate upon either Coinsuring Lender (or
its designee) or HUD acquiring title to the Secured Property by a deed in lieu
of foreclosure of the First Mortgage.
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(d) For as long as the Coinsurance Contract is in effect, acquisition
of title to the Secured Property by Mortgagee or by any third party, by either
foreclosure or deed in lieu of foreclosure, shall be subject to all applicable
requirements of HUD relating to Transfer of Physical Assets. Any advertisement
relating to foreclosure of this Mortgage shall state that the sale of the
Property to any purchaser who proposes to take title subject to the First
Mortgage is subject to HUD's TPA requirements, and that HUD will assume no
liability in connection with any proposed sale if TPA approval is not granted.
(e) For as long as the Coinsurance Contract is in effect, if a
receiver is appointed as provided hereinafter or if Mortgagee becomes a
Mortgagee-in-possession, no rents or other income of the Property collected by
the receiver or Mortgagee-in-possession, other than Surplus Cash available for
distribution under the Regulatory Agreement, shall be used to pay the
obligations, or other charges under this Mortgage, and the receiver or
Mortgagee-in-possession shall operate the Project in accordance with the
provisions of the Regulatory Agreement and the First Mortgage.
(f) Nothing herein is intended to alter or conflict with the terms,
conditions and provisions of the HUD regulations, handbooks, administrative
requirements and Mortgagee notices in effect at the time of initial endorsement
of the First Note, or the documents required to be executed by Mortgagor in
connection with initial endorsement of the First Note; and to the extent that
they do so, the HUD regulations, handbooks, administrative requirements,
Mortgagee notices and documents shall control and this Mortgage shall be amended
or deemed amended so as not to alter or conflict with the aforesaid regulations,
notices or documents.
(g) The provisions of this paragraph 19 shall automatically
terminate and be void and of no further force and effect upon termination of
the Coinsurance Contract with HUD with respect to the First Note.
20. It is the intention of Mortgagor and Mortgagee to conform strictly
to the usury laws now or hereafter in force in the State of Florida and any
interest payable under the Agreement, this Mortgage, and/or any of the other
Second Lien Documents executed by Mortgagor, to the extent that any sums secured
hereby or the advancing of such sums by Mortgagee shall not be exempt from such
laws, shall be subject to reduction to the amount not in excess of the maximum
non-usurious amount allowed under the usury laws of Florida as now or hereafter
construed by the courts having jurisdiction over such matters. The
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aggregate of all interest (whether designated as interest, service charges,
points or otherwise) contracted for, chargeable, or receivable under the
Agreement, this Mortgage or any other document executed in connection with this
transaction shall under no circumstances exceed the maximum legal rates. In the
event such interest does exceed the maximum legal rate, it shall be deemed a
mistake and such excess shall be canceled automatically and if theretofore paid,
rebated to Mortgagor or credited on the principal amount of any sums secured
hereby, or if such sums have been repaid, then such excess shall be rebated to
Mortgagor.
21. The execution and delivery of this Mortgage is not intended to be
and shall not alter or affect the priority of the lien and encumbrance of the
Original Subordinated Mortgage, which lien and encumbrance shall retain the same
second priority position as existed when originally filed for record in the
Public Records of Hillsborough County, Florida subordinate only to the First
Mortgage.
22. This Mortgage may be executed in two or more counterparts, each of
which shall constitute an original, but which, when taken together, shall
constitute but one instrument.
23. Notwithstanding, however, any other provision contained herein or
in the Agreement or any Second Lien Document, it is agreed that in the event of
a default, the Mortgagee shall look solely to the Secured Property and to the
rents, issues and profits thereof in satisfaction of the obligations secured
hereby and will not seek or obtain my deficiency or personal judgment against
Mortgagor except such judgment or decree as may be necessary to foreclose and
bar its interest in the subject to this Mortgage and all other property
mortgaged, pledged, conveyed or assigned to secure Mortgagor's obligations under
the Agreement; provided that nothing in this condition and no action so taken
shall operate to impair the lien and security interest of this Mortgage. This
provision shall be inapplicable and Mortgagor shall be personally liable in the
event of any fraud of Mortgagor.
[SIGNATURES ON FOLLOWING PAGE]
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IN WITNESS WHEREOF, the parties hereto have executed this Amended and
Restated Subordinated Mortgage and Security Agreement as of the date first above
written, and such Amended and Restate Subordinated Mortgage shall be effective
as of such date.
WITNESSES: MORTGAGOR:
RICHLAND PROPERTIES, INC.
a Delaware corporation
/s/ Patricia Anderson By: /s/ Vahe M. Melkonian
- ------------------------------ --------------------------------
Name: Patricia Anderson Name: Vahe M. Melkonian
------------------------ -------------------------
Title: Vice President
/s/ Douglas Flair ------------------------
- ------------------------------
Name: Douglas Flair
-------------------------
WITNESSES: MORTGAGOR:
NYLIFE GOVERNMENT MORTGAGE PLUS
- ------------------------------ LIMITED PARTNERSHIP
Name: a Massachusetts limited partnership
-------------------------
By: NYLIFE REALTY, INC. general partner
/s/ Yvonne M. Reynolds By: /s/ Kevin M. Micucci
- ------------------------------ --------------------------------
Name: Yvonne M. Reynolds Name: Kevin M. Micucci
-------------------------
Title: Vice President
------------------------
[ACKNOWLEDGMENTS CONTAINED ON FOLLOWING PAGES]
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STATE OF NEW YORK }
}
COUNTY OF NEW YORK }
I hereby certify that on this 30 day of January 1995, before me, the
subscriber, a notary public in and for the jurisdiction aforesaid, personally
appeared Kevin M. Micucci, of NY Life Realty, Inc., being personally known to me
(or who produced _______________ as identification) the person who executed the
foregoing instrument in his or her capacity described above and did acknowledge
the foregoing instrument to be his or her act and deed in the capacity
aforesaid.
Witness my hand and official seal this 30 day of January 1995.
/s/ Barbara A. Curci
--------------------
Notary Public
[SEAL]
My Commission Expires: [NOTARY STAMP]
12/15/96
- ----------------------
16
<PAGE>
STATE OF FLORIDA }
}
COUNTY OF HILLSBOROUGH }
I hereby certify that on this 31 day of Jan., before me, the subscriber, a
notary public in and for the jurisdiction aforesaid, personally appeared
Vahe Melkonian, of RICHLAND PROPERTIES, being personally known to me (or who
produced _____________ as identification) the person who executed the foregoing
instrument in his or her capacity described above and did acknowledge the
foregoing instrument to be his or her act and deed in the capacity aforesaid.
Witness my hand and official seal this 31 day of January, 1995.
/s/ Sherry Logsdon
------------------
Notary Public
[SEAL]
[NOTARY STAMP]
My Commission Expires:
- ----------------------
17
<PAGE>
EXHIBIT A
Parcel 22B, Hunter's Green, according to the map or plat thereof, recorded in
Plat Book 69, Page 5, of the Public Records of Hillsborough County, Florida;
together with the right, title and interest of Mortgagor and in to the perpetual
nonexclusive easements described in Section 1 of Article VI of the Declarations
of Covenants, Conditions and Restrictions of Hunter's Green, as recorded in O.R.
Book 5243, Page 1979, ET SEQ., Public Records of Hillsborough County, Florida;
together with the right, title and interest of Mortgagor in nonexclusive of
rights of ingress and egress in and to "TRACT A" of HUNTER'S GREEN PHASE 1,
according to the Plat thereof as recorded in Plat Book 64, Page 16, of the
Public Records of Hillsborough County, Florida.
<PAGE>
SCHEDULE B
DESCRIPTION OF PERSONAL PROPERTY
1. All materials now owned or hereafter acquired by the Debtor and intended
for construction, reconstruction, alteration and repair of any building,
structure or improvement now or hereafter erected or placed on the property
described in Exhibit "A" (the "Property"), all of which materials shall be
deemed to be included within the Project immediately upon the delivery
thereof to the Project.
2. All of the walks, fences, shrubbery, driveways, fixtures, machinery,
apparatus, equipment, fittings, and other goods and other personal property
of every kind and description whatsoever, now owned or hereafter acquired
by the Debtor and attached to or contained in and used or usable in
connection with any present or future operation of the Project, including,
by way of example rather than of limitation, all lighting, laundry,
incinerating and power equipment; all engines, boilers, machines, motors,
furnaces, compressors and transformers; all generating equipment; all
pumps, tanks, ducts, conduits, wire, switches, electrical equipment and
fixtures, fans and switchboards; all telephone equipment; all piping,
tubing, plumbing equipment and fixtures; all heating, refrigeration, air
conditioning, cooling, ventilating, sprinkling, water, power and
communications equipment, systems and apparatus; all water coolers and
water heaters; all fire prevention, alarm and extinguishing systems and
apparatus; all cleaning equipment; all lift, elevator and escalator
equipment and apparatus; all partitions, shades, blinds, awnings, screens,
screen doors, storm doors, exterior and interior signs, gas fixtures,
stoves, ovens, refrigerators, garbage disposals, dishwashers, cabinets,
mirrors, mantles, floor coverings, carpets, rugs, draperies and other
furnishings and furniture installed or to be installed or used or usable in
the operation of any part of the Project or facilities erected or to be
erected in or upon the Property; and every renewal or replacement thereof
or articles in substitution therefor, whether or not the same are now or
hereafter attached to the Property in any manner; all except for any right,
title or interest therein owned by any tenant (it being agreed that all
personal property owned by the Debtor and placed by it on the Property
shall, so far as permitted by law, be deemed to be affixed to the Property,
appropriated to its use, and covered by the each of the Security Documents
to which this Exhibit is attached).
3. All of the Debtor's rights, title and interest in and to any and all
judgments, awards of damages (including but not limited to severance and
consequential damages), payments, proceeds, settlements or other
compensation (collectively, the "Awards") heretofore or hereafter made,
including interest thereon, and the right to receive the same, as a result
of, in connection with, or in lieu of (i) any taking of the Property or any
part thereof by the exercise of the power of condemnation or eminent
domain, or the police power, (ii) any change or alteration of the grade of
any street, or (iii) any other injury or decrease in the value of the
Property or any part thereof (including but not limited to destruction or
decrease in value by fire or other casualty), all of which Awards, rights
thereto and shares therein are hereby assigned to the Secured Party, who is
hereby authorized to collect and receive the proceeds thereof and to give
property receipts and acquittances therefor and to apply, at its option,
the net proceeds thereof, after deducting expenses of collection, as a
credit upon any portion, as selected by the Secured Party, of the
indebtedness secured by the Security Documents.
4. All of the Debtor's right, title and interest in and to any and all
payments, proceeds, settlements or other compensation heretofore or
hereafter made, including any interest thereon, and the right to receive
the same from any and all insurance policies covering the Property or any
portion thereof, or any of the other property described herein.
<PAGE>
5. The interest of the Debtor in and to all of the rents, royalties, issues,
profits, revenues, income and other benefits of the Property, or arising
from the use or enjoyment of all or any portion thereof, or from any lease
or agreement pertaining thereto, and all right, title and interest of the
Debtor in and to, and remedies under, all contract rights, accounts
receivable and general intangibles arising out of or in connection with any
and all leases and subleases of the Property, or any part thereof, and of
the other property described herein, or any part thereof, both now in
existence or hereafter entered into, together with all proceeds (cash and
non-cash) thereof; and including, without limitation, all cash or
securities deposited thereunder to secure performance by the lessees of
their obligations thereunder.
6. All of the Debtor's rights, options, powers and privileges in and to (but
not the Debtor's obligations and burdens under) any construction contract,
architectural and engineering agreements and management contract pertaining
to the construction, development, ownership, equipping and management of
the Property and all of the Debtor's right, title and interest in and to
(but not the Debtor's obligations and burdens under) all architectural,
engineering and similar plans, specifications, drawings, reports, surveys,
plats, permits and the like, contracts for construction, operation and
maintenance of, or provision of services to, the Property or any of the
other property described herein, and all sewer taps and allocations,
agreements for utilities, bonds and the like, all relating to the Property.
7. All intangible personal property, accounts, licenses, permits, instruments,
contract rights, and chattel paper of the Debtor, including but not limited
to cash; accounts receivable; bank accounts; certificates of deposit;
securities; promissory notes; rents; rights (if any) to amounts held in
escrow; insurance proceeds; condemnation rights; deposits; judgments,
liens and causes of action; warranties and guarantees.
8. The interest of the Debtor in any cash escrow fund and in any and all
funds, securities, instruments, documents and other property which are at
any time paid to, deposited with, under the control of, or in the
possession of the Secured Party, or any of its agents, branches,
affiliates, correspondents or others acting on its behalf, which rights
shall be in addition to any right of set-off or right of lien that the
Secured Party may otherwise enjoy under applicable law, regardless of
whether the same arose out of or relates in any way, whether directly or
indirectly, to the Project located upon the Property.
9. The interest of the Debtor in and to any and all funds created or
established and held by the Trustee pursuant to any indenture of trust or
similar instrument authorizing the issuance of bonds or notes for the
purpose of financing the Project located upon the Property.
10. Any collateral provided by the Debtor or for its account to each and every
issuer of a letter of credit, subject to the prior claim of the issuer of
any such letter of credit to such collateral.
11. All inventory, including raw materials, components, work-in-process,
finished merchandise and packing and shipping materials.
12. Proceeds, products, returns, additions, accessions and substitutions of and
to any or all of the above.
13. Any of the above arising or acquired by the Debtor or to which the Debtor
may have a legal or beneficial interest in on the date hereof and at any
time in the future.
14. Any of the above which may become fixtures by virtue of attachment to
Property.
15. All of the records and books of account now or hereafter maintained by or
on behalf of the Debtor in connection with the Project.
16. All names now or hereafter used in connection with the Project and the
goodwill associated therewith.
-2-
<PAGE>
Schedule C
PERMITTED ENCUMBRANCES
(Page 1 of 2)
1. Taxes for the year 1995 and any taxes and assessments levied or
assessed subsequent to the date hereof.
2. Covenants, restrictions, easements and other matters as denoted on the
plat of Hunter's Green, Parcel 22B recorded in Plat Book 69, Page 5.
3. Easement in favor of Tampa Electric Company by instrument recorded in
O.R. Book 6215, Page 443.
4. Easement in favor of GTE Florida by instrument recorded in O.R. Book
6265, Page 1604.
5. Restrictions are recited in Warranty Deed recorded in O.R. Book 6153,
Page 205.
6. Easement in favor of Hunter's Green Community Association, Inc., a
Florida corporation, by instrument recorded in O.R. Book 6231, Page 1502.
7. Cable Television Installation and Wiring Agreement executed by and
between Highland Oaks Associates, a Florida limited partnership and Cable TV
Fund 12-BCD Venture, a Colorado Joint Venture, dated April 25, 1991, recorded in
O.R. Book 6295, Page 515.
8. Instrument recorded in O.R. Book 5243, Page 1979 and the First
Amendment thereto recorded in O.R. Book 6722, Page 1059.
9. Development Order executed by and between Markborough Florida, Inc.,
and the Representatives of the City of Tampa, the Tampa Bay Regional Planning
Council, recorded in O.R. Book 5128, Page 1848, together with the First
Amendment recorded in O.R. Book 5358, Page 1856, the Second Amendment recorded
in O.R. Book 6776, Page 1377, the Third Amendment recorded in O.R. Book 6935,
Page 1724, the Fourth Amendment recorded in O.R. Book 7259, Page 769 and the
Fifth Amendment recorded in O.R. Book 7455, Page 366.
10. Parties in possession under unrecorded residential leases of one year
or less as tenants only.
11. The following matters shown on a survey of the premises prepared by
Heidt & Associates, Inc., first dated February 28, 1992, and bearing Order No.
SIP-HG-014:
a. E.P.C.H.C. Westland Line and 30 foot wetland setback.
b. Encroachment of 9.3' X 9.3' concrete storm structure and concrete
headwall mitered end sections.
<PAGE>
Schedule C
PERMITTED ENCUMBRANCES
(Page 2 of 2)
12. Terms and Conditions of that certain Agreement for Sale and Purchase
of Land dated and recorded December 13, 1990, by and between Markborough
Florida, Inc., a Florida corporation and H.O. Associates, Ltd., a Florida
limited partnership, a memorandum of which is recorded in O.R. Book 6153, Page
207, as amended by Termination of Agreement and Amendment to Memorandum of
Agreement recorded contemporaneously herewith.
13. Mortgage executed by H.O. Associates, Ltd. to Related Mortgage
Corporation, dated and recorded December 13, 1990, in O.R. Book 6153, Page 212,
given to secure the original principal amount of $13,154,200.00, as modified by
Modification of Mortgage recorded prior hereto and further modified by
Modification of Mortgage and Mortgage Note and Mortgage recorded
contemporaneously herewith and further modified by Agreement of Release and
Assumption of Mortgage Note and Mortgage between H.O. Associates, Ltd., Related
Mortgage Corporation and Richland Properties, Inc. recorded contemporaneously
herewith.
14. Assignment of Rents and Leases executed by H.O. Associates, Ltd. to
Related Mortgage Corporation, dated and recorded December 13, 1990, in O.R. Book
6153, Page 231, as modified by Modification of Collateral Assignment of Rents
and Leases recorded contemporaneously herewith and further modified by Agreement
of Release and Assumption of Mortgage Note and Mortgage between H.O. Associates,
Ltd., Related Mortgage Corporation and Richland Properties, Inc. recorded
contemporaneously herewith.
15. Regulatory Agreement for Multifamily Housing Projects Coinsured by HUD
between Related Mortgage Corporation and Richland Properties, Inc., recorded
contemporaneously herewith.
NOTE: All recording references are to the Public Records of Hillsborough
County, Florida.
<PAGE>
RELEASE AGREEMENT
THIS RELEASE AGREEMENT (hereinafter referred to as this "Agreement"), is
made and entered into this 31 day of January, 1995, by and among NYLIFE
GOVERNMENT MORTGAGE PLUS LIMITED PARTNERSHIP, a Massachusetts limited
partnership ("NYLIFE"), RELATED MORTGAGE CORPORATION, a Delaware corporation
(hereinafter referred to as "Related"), H.O. ASSOCIATES, LTD., a Florida limited
partnership (hereinafter referred to as "Borrower"), ROBERT M. SCHIFFMAN and
EDWIN B. BRANCH (hereinafter referred to as "Schiffman" and "Branch",
respectively; Borrower, Schiffman and Branch being hereinafter sometimes
referred to collectively as the "Borrower Parties").
STATEMENT OF BACKGROUND
On December 13, 1990, Related made a loan to Borrower in the amount of
$13,154,200.00 (hereinafter referred to as the "First Mortgage Loan") for the
purpose of financing, among other things, the construction of certain
improvements on property located in the City of Tampa, Hillsborough County,
Florida, consisting of a residential apartment project known as the "Highland
Oaks Apartments" (hereinafter referred to as the "Project"). The First Mortgage
Loan is evidenced by that certain Mortgage Note, dated December 13, 1990, made
by Borrower to the order of Related in the principal face amount of
$13,154,200.00 (hereinafter referred to as the "First Mortgage Note"). The First
Mortgage Loan is secured by, among other things, that certain Mortgage, from
Borrower in favor of Related, dated December 13, 1990 and recorded in O.R. Book
6153, page 212, in the Official Records of Hillsborough County, Florida
(hereinafter referred to as the "First Mortgage"). The First Mortgage Loan is
further evidenced by that certain Regulatory Agreement for Multifamily Housing
Projects Co-Insured by HUD, by and between Borrower and Related, dated December
13, 1990 and recorded in O.R. Book 6153, page 220, aforesaid records
(hereinafter referred to as the "Regulatory Agreement"; the Note, the First
Mortgage, the Regulatory Agreement and any and all other documents and
instruments evidencing, securing or otherwise relating to the First Mortgage
Loan are hereinafter referred to collectively as the "First Mortgage Loan
Documents"). In connection with the First Mortgage Loan, certain Government
National Mortgage Association mortgage-backed securities (hereinafter referred
to as the "GNMA, were issued to and purchased by NYLIFE, and NYLIFE is presently
the owner and holder of the GNMA Securities.
NYLIFE is also the owner and holder of a supplemental participating loan,
in the maximum principal amount of $1,595,800.00, plus an interest in, among
other things, net flow and net sales proceeds, if any, which was made in
connection with the construction of the Project (hereinafter referred to as
<PAGE>
the "Supplemental Loan"). The Supplemental Loan is evidenced by that certain
Promissory Note, dated December 13, 1990, made by Schiffman and Branch to the
order of NYLIFE in the principal face amount of $1,595,800.00 (the "Supplemental
Note"), and Additional Interest Agreement and a Supplemental Interest Agreement.
The Supplemental Loan is secured by, among other things, two letters of credit,
each in the stated amount of $250,000.00, issued by Royal Bank of Canada and
Columbus Bank & Trust Company, respectively, in favor of NYLIFE (hereinafter
referred to collectively as the "Letters of Credit"; the Supplemental Note, the
Additional Interest Agreement, the Supplemental Interest Agreement, the Letters
of Credit and any and all other documents evidencing, securing or otherwise
relating to the Supplemental Loan, as amended to date, are hereinafter referred
to collectively as the "Supplemental Loan Documents)".
Certain disputes arose between the Borrower Parties, Related and NYLIFE
and, as a result of such disputes, certain litigation was commenced in the
Muskogee County, Georgia Superior Court as Civil Action File No. SU 93 CV 4829
(hereinafter referred to as the "Lawsuit"). In connection with such disputes and
litigation, the Borrower Parties, Related and NYLIFE entered into that certain
letter agreement, dated June 22, 1994 (hereinafter, as amended to date, referred
to as the "Letter Agreement"), pursuant to which the Lawsuit was dismissed
without prejudice and the parties agreed to execute certain releases upon a sale
of the Project.
Contemporaneously with the execution hereof, the sale of the Project is
being consummated, and in connection therewith, the Supplemental Loan is being
paid and satisfied in full and the First Mortgage Loan is being assumed by the
Purchaser. This Release Agreement is being entered into by the parties pursuant
to the Letter Agreement and in connection with such sale of the Project.
STATEMENT OF AGREEMENT
FOR AND IN CONSIDERATION of the sum of Ten and No/100 Dollars ($10.00) in
hand paid, the mutual covenants herein contained, and other good and valuable
considerations, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto do hereby covenant and agree as follows:
1. STATEMENT OF BACKGROUND. The matters set forth in the Statement of
Background are true and correct and are incorporated herein by this reference.
2. RELEASE BY NYLIFE. NYLIFE, on behalf of itself and its successors and
assigns, does hereby remise, release, acquit, satisfy and forever discharge the
Borrower Parties, and each of them, and all of the respective past, present and
future general
-2-
<PAGE>
and limited partners, employees, agents, attorneys, representatives, heirs,
successors and assigns of the Borrower Parties, and each of them, from any and
all manner of debts, accountings, bonds, warranties, representations, covenants,
promises, contracts, controversies, agreements, liabilities, obligations,
expenses, damages, judgments, executions, actions, claims, demands and causes of
action of any nature whatsoever, whether at law or in equity, whether known or
unknown, either now accrued or hereafter maturing, which NYLIFE now has or
hereafter can, shall or may have by reason of any matter, cause or thing, from
the being of the world to and including the date of this Agreement, including
specifically, but without limitation, matters arising out of or relating to (a)
the First Mortgage Loan, (b) the First Mortgage Loan Documents or the
indebtedness evidenced and secured thereby, (c) the Project or the development,
financing and operation thereof, (d) the Litigation and the subject matter
thereof, and any claims and counterclaims asserted or which could have been
asserted therein, or arising from or in connection with the filing thereof, (e)
the Supplemental Loan, (f) the Supplemental Loan Documents or the indebtedness
evidenced and secured thereby, and (g) any other agreement or transaction
between the Borrower Parties, or any of them, and NYLIFE; and NYLIFE, for itself
and its successors and assigns, hereby covenants and agrees never to institute
or cause to be instituted or continue prosecution of any suit or other form of
action or proceeding of any kind or nature whatsoever against the Borrower
Parties or any of them, or any of their past, present or future general or
limited partners, employees, agents, attorneys, representatives, heirs,
successors or assigns, by reason of or in connection with any of the foregoing
matters, claims or causes of action; provided, however, that the foregoing
excludes any rights to an accounting and payment in favor of NYLIFE as set forth
in Paragraph 6 of the Letter Agreement, to the extent the same has not been
finally settled as of this date.
3. RELEASE BY RELATED. Related, on behalf of itself and its successors
and assigns, does hereby remise, release, acquit, satisfy and forever discharge
the Borrower Parties, and each of them, and all of the respective past, present
and future general and limited partners, employees, agents, attorneys,
representatives, heirs, successors and assigns of the Borrower Parties, and each
of them, from any and all manner of debts, accountings, bonds, warranties,
representations, covenants, promises, contracts, controversies, agreements,
liabilities, obligations, expenses, damages, judgments, executions, actions,
claims, demands and causes of action of any nature whatsoever, whether at law or
in equity, whether known or unknown, either now accrued or hereafter maturing,
which Related now has or hereafter can, shall or may have by reason of any
matter, cause or thing, from the being of the world to and including the date of
this Agreement, including specifically, but without limitation, matters arising
out of or relating to (a) the First Mortgage Loan, (b) the First Mortgage Loan
Documents or the indebtedness evidenced and secured thereby, (c) the Project or
the
-3-
<PAGE>
development, financing and operation thereof, (d) the Litigation, and the
subject matter thereof, and any claims and counterclaims asserted or which could
have been asserted therein, or arising from or in connection with the filing
thereof, and (e) any other agreement or transaction between the Borrower
Parties, or any of them, and Related; and Related, for itself and its successors
and assigns, hereby covenants and agrees never to institute or cause to be
instituted or continue prosecution of any suit or other form of action or
proceeding of any kind or nature whatsoever against the Borrower Parties or any
of them, or any of their past, present or future general or limited partners,
employees, agents, attorneys, representatives, heirs, successors or assigns, by
reason of or in connection with any of the foregoing matters, claims or causes
of action.
4. RELEASE BY BORROWER PARTIES. The Borrower Parties, and each of them,
severally, on behalf of themselves and all of their respective heirs, successors
and assigns, do hereby remise, release, acquit, satisfy and forever discharge
the Related and NYLIFE, and each of them, and all of the respective past,
present and future general and limited partners, employees, agents, attorneys,
representatives, heirs, successors and assigns of Related and NYLIFE, and each
of them, from any and all manner of debts, accountings, bonds, warranties,
representations, covenants, promises, contracts, controversies, agreements,
liabilities, obligations, expenses, damages, judgments, executions, actions,
claims, demands and causes of action of any nature whatsoever, whether at law or
in equity, whether known or unknown, either now accrued or hereafter maturing,
which the Borrower Parties, or any of them, now has or hereafter can, shall or
may have by reason of any matter, cause or thing, from the being of the world to
and including the date of this Agreement, including specifically, but without
limitation, matters arising out of or relating to (a) the First Mortgage Loan,
(b) the First Mortgage Loan Documents or the indebtedness evidenced and secured
thereby, (c) the Project or the development, financing and operation thereof,
(d) the Litigation, and the subject matter thereof, and any claims and
counterclaims asserted or which could have been asserted therein, or arising
from or in connection with the filing thereof, (e) the Supplemental Loan, (f)
the Supplemental Loan Documents or the indebtedness evidenced and secured
thereby, and (g) any other agreement or transaction between the Borrower
Parties, or any of them, and Related or NYLIFE; and the Borrower Parties, and
each of them, severally, on behalf of themselves and all of their respective
heirs, successors and assigns, do hereby covenant and agree never to institute
or cause to be instituted or continue prosecution of any suit or other form of
action or proceeding of any kind or nature whatsoever against NYLIFE or Related,
or either of them, or any of their past, present or future general or limited
partners, employees, agents, attorneys, representatives, heirs, successors or
assigns, by reason of or in connection with any of the foregoing matters, claims
or causes of action.
-4-
<PAGE>
5. SUCCESSORS OR ASSIGNS. All of the covenants and agreements contained
in this Agreement shall bind and inure to the benefit of the parties hereto, and
their respective heirs, executors, legal representatives, successors,
successors-in-title and assigns. Each of the parties hereto hereby represents
and warrants to each of the other parties hereto that it has not assigned to any
other party any of the rights, claims or other matters released pursuant to this
Agreement, or any interest therein.
6. NO ADMISSIONS. The parties hereto expressly acknowledge and agree that
the releases and covenants not to sue contained in this Agreement shall not be
construed as an admission of wrongdoing, liability or culpability on the part of
any of the parties hereto, or as an admission of the existence of any claims of
any party hereto against any other party hereto.
7. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Florida.
8. COUNTERPARTS. This Agreement may be executed in multiple counterparts,
each of which shall be deemed an original, and all such counterparts together
shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement under seal, as of the day and year first above written.
BORROWER:
H.O. ASSOCIATES, LTD., a Florida limited
partnership, by all of its general
partners
Signed, sealed & delivered in the
presence of:
/s/ Patricia Anderson By: /s/ Robert M. Schiffman (SEAL)
- ----------------------------------- -------------------------------
Witness Robert M. Schiffman
Name: Patricia Anderson General Partner
----------------------------
(Type or Print)
/s/ Douglas Flair
- -----------------------------------
Witness
Name: Douglas Flair
----------------------------
(Type or Print)
-5-
<PAGE>
Signed, sealed & delivered in the
presence of:
/s/ Patricia Anderson By: /s/ Edwin B. Branch (SEAL)
- ----------------------------------- -------------------------------
Witness Edwin B. Branch
Name: Patricia Anderson General Partner
----------------------------
(Type or Print)
/s/ Douglas Flair
- -----------------------------------
Witness
Name: Douglas Flair
----------------------------
(Type or Print)
SCHIFFMAN:
Signed, sealed & delivered in the
presence of:
/s/ Patricia Anderson By: /s/ Robert M. Schiffman (SEAL)
- ----------------------------------- -------------------------------
Witness Robert M. Schiffman
Name: Patricia Anderson
----------------------------
(Type or Print)
/s/ Douglas Flair
- -----------------------------------
Witness
Name: Douglas Flair
----------------------------
(Type or Print)
BRANCH:
Signed, sealed & delivered in the
presence of:
/s/ Patricia Anderson By: /s/ Edwin B. Branch (SEAL)
- ----------------------------------- -------------------------------
Witness Edwin B. Branch
Name: Patricia Anderson
----------------------------
(Type or Print)
/s/ Douglas Flair
- -----------------------------------
Witness
Name: Douglas Flair
----------------------------
(Type or Print)
-6-
<PAGE>
NYLIFE:
NYLIFE GOVERNMENT MORTGAGE
PLUS LIMITED PARTNERSHIP, a
Massachusetts limited partnership,
Signed, sealed & delivered by its general partner
in the presence of:
By: NYLIFE REALTY, INC.,
general partner
- ------------------------------------
Witness
Name:
------------------------------
(Type or Print) By:
--------------------------------
Title: Vice President
- ----------------------------------- (CORPORATE SEAL)
Witness
Name:
------------------------------
(Type or Print)
RELATED:
RELATED MORTGAGE CORPORATION,
Signed, sealed & delivered a Delaware corporation
in the presence of:
- ------------------------------------
Witness
Name:
------------------------------
(Type or Print) By:
--------------------------------
/s/ Douglas Flair Title: Vice President
- ----------------------------------- (CORPORATE SEAL)
Witness
Name: Douglas Flair
------------------------------
(Type or Print)
-7-
<PAGE>
ACKNOWLEDGMENT
STATE OF FLORIDA
COUNTY OF HILLSBOROUGH
I do hereby certify that on this 31 day of January, 1995, before me, the
undersigned notary public in and for the county and state aforesaid, and duly
commissioned, personally appeared Robert M. Schiffman and Edwin B. Branch, with
whom I am personally acquainted, and acknowledged under oath to and before me
that they are all of the general partners of H.O. Associates, Ltd., a Florida
limited partnership, the Borrower named in and which executed the foregoing
instrument, and that on behalf of and in the name of said partnership, as
general partners thereof, and being duly authorized thereby, they signed, sealed
and delivered the foregoing instrument for the uses and purposes therein set
forth, as their free and voluntary act and as the free and voluntary act of said
partnership.
In Witness Whereof, I have hereunto set my hand and affixed my official
seal in the county and state aforesaid.
/s/ Sherry Logsdon
- -----------------------------------
Notary Public
Name: Sherry Logsdon
------------------------------
(Type or Print)
(NOTARIAL SEAL)
My Commission Expires:
-8-
<PAGE>
ACKNOWLEDGMENT
STATE OF FLORIDA
COUNTY OF HILLSBOROUGH
I do hereby certify that on this 31 day of January, 1995, before me, the
undersigned notary public in and for the county and state aforesaid, and duly
commissioned, personally appeared Bruce H. Brown and Robert Joselow, with whom
I am personally acquainted, and acknowledged under oath to and before me that
they are the Vice President and Asst. Treas., respectively, of Related Mortgage
Corporation, a Delaware corporation, one of the parties named in and which
executed the foregoing instrument, and that on behalf of and in the name of said
corporation, as such officers thereof, and being duly authorized by the order of
its board of directors, they signed, sealed and delivered the foregoing
instrument for the uses and purposes therein set forth, as their free and
voluntary act and as the free and voluntary act of said corporation.
In Witness Whereof, I have hereunto set my hand and affixed my official
seal in the county and state aforesaid.
/s/ Sherry Logsdon
- -----------------------------------
Notary Public
Name: Sherry Logsdon
------------------------------
(Type or Print)
(NOTARIAL SEAL)
My Commission Expires:
-9-
<PAGE>
STATE OF NEW YORK }
}
COUNTY OF NEW YORK }
I hereby certify that on this 30 day of January, 1995, before me, the
subscriber, a notary public in and for the jurisdiction aforesaid, personally
appeared Kevin M. Micucci, of NYLIFE Realty Inc., being personally known to
me (or who produced _____________________ as identification) the person who
executed the foregoing instrument in his or her capacity described above and
did acknowledge the foregoing instrument to be his or her act and deed in the
capacity aforesaid.
Witness my hand and official seal this 30 day of January 1995.
/s/ Barbara A. Curci
--------------------
Notary Public
[SEAL]
My Commission Expires:
12/15/96
- ----------------------
16
<PAGE>
ACKNOWLEDGMENT
STATE OF FLORIDA
COUNTY OF HILLSBOROUGH
I do hereby certify that on this 31 day of January, 1995, before me, the
undersigned notary public in and for the county and state aforesaid, and duly
commissioned, personally appeared Robert M. Schiffman, with whom I am personally
acquainted, one of the parties named in and which executed the foregoing
instrument, and acknowledged under oath to and before me that he signed, sealed
and delivered the foregoing instrument for the uses and purposes therein set
forth, as his free and voluntary act.
In Witness Whereof, I have hereunto set my hand and affixed my official
seal in the county and state aforesaid.
/s/ Sherry Logsdon
- -----------------------------------
Notary Public
Name: Sherry Logsdon
------------------------------
(Type or Print)
(NOTARIAL SEAL)
My Commission Expires:
-11-
<PAGE>
ACKNOWLEDGMENT
STATE OF FLORIDA
COUNTY OF HILLSBOROUGH
I do hereby certify that on this 31 day of January, 1995, before me, the
undersigned notary public in and for the county and state aforesaid, and duly
commissioned, personally appeared Edwin B. Branch, with whom I am personally
acquainted, one of the parties named in and which executed the foregoing
instrument, and acknowledged under oath to and before me that he signed, sealed
and delivered the foregoing instrument for the uses and purposes therein set
forth, as his free and voluntary act.
In Witness Whereof, I have hereunto set my hand and affixed my official
seal in the county and state aforesaid.
/s/ Sherry Logsdon
- -----------------------------------
Notary Public
Name: Sherry Logsdon
------------------------------
(Type or Print)
(NOTARIAL SEAL)
My Commission Expires:
-12-
<PAGE>
AGREEMENT REGARDING TERMINATION
OF CONTRACT OF COINSURANCE
THIS AGREEMENT, made as of the 3lst day of January, 1995, by RICHLAND
PROPERTIES, INC., a Delaware corporation (the "Borrower") and RELATED MORTGAGE
CORPORATION, a Delaware corporation, its successors and assigns (the "Coinsuring
Lender").
WITNESSETH:
WHEREAS, the Coinsuring Lender made a mortgage loan in the original
principal amount of $13,154,200.00 (the "Coinsured Mortgage Loan") to H.O.
Associates, Ltd. ("H.O. Associates") to finance a multifamily rental housing
project known as Highland Oaks Apartments, identified as FHA Project No.
067-36672, located in Tampa, Florida (the "Project"), which Coinsured Mortgage
Loan was coinsured by the Coinsuring Lender and HUD under Section 221(d)(4),
pursuant to Section 244, of the National Housing Act. The Coinsured Mortgage
Loan is evidenced by a Mortgage Note dated December 13, 1990, as amended by a
Modification of Mortgage Note of even date herewith (hereinafter the "Coinsured
Mortgage Note") and secured by a Mortgage recorded in the Public Records of
Hillsborough County, Florida on May 15, 1992 in O.R. Book 6612, Page 403, as
amended by a Modification of Mortgage of even date herewith (hereinafter the
"Coinsured Mortgage").
WHEREAS, NYLIFE GOVERNMENT MORTGAGE PLUS LIMITED PARTNERSHIP, a
Massachusetts limited partnership ("NYLIFE"), agreed to finance the Coinsured
Mortgage Loan to the Borrower through the exchange with the Coinsuring Lender of
certain GNMA-guaranteed securities now owned by NYLIFE for certain modified GNMA
guaranteed securities backed by the modified Coinsured Mortgage Loan ("GNMA
Guaranteed Securities") upon the execution and delivery by the Borrower to
NYLIFE of a certain Amended and Restated Agreement (the "Agreement") and other
instruments evidencing and securing the obligations of the Borrower under the
Agreement;
WHEREAS, NYLIFE has the right to accelerate the maturity date of the
Coinsured Mortgage Note (such accelerated maturity date being the "Designated
Date") under certain circumstances provided in the Agreement by giving notice to
Borrower;
WHEREAS, NYLIFE has the right to direct the Coinsuring Lender to cancel the
GNMA Guaranteed Securities and terminate the contract of coinsurance;
<PAGE>
WHEREAS, HUD does not permit the Coinsured Mortgage Note or the Coinsured
Mortgage to refer to NYLIFE's rights to direct the Coinsuring Lender to cancel
the GNMA Guaranteed Securities and terminate the contract of coinsurance and the
parties therefore intend by this Agreement Regarding Termination of Contract of
Coinsurance that Borrower acknowledge and confirm directly to the Coinsuring
Lender such rights of NYLIFE and powers of the Coinsuring Lender with respect
thereto.
NOW THEREFORE, in consideration of the premises, the parties agree as
follows:
1. The Borrower acknowledges that the Coinsuring Lender, and any
successor mortgagee under the Coinsured Mortgage Loan, in addition to its right
to accelerate the Coinsured Mortgage Loan in the event of default under the
Coinsured Mortgage Note or the Coinsured Mortgage, also has the right and
obligation, when directed to do so by NYLIFE, to cancel the GNMA Guaranteed
Securities, terminate the contract of coinsurance, and assign the Coinsured Note
and Coinsured Mortgage to NYLIFE, even though the Coinsured Mortgage Note and
the Coinsured Mortgage do not contain any provisions authorizing or referring to
such an acceleration.
2. The parties acknowledge that so long as the contract of
coinsurance is in effect, in the absence of a default under the Coinsured
Mortgage Note or the Coinsured Mortgage, the HUD coinsurance must be terminated
on or before the Designated Date. In this regard, the Borrower has agreed to
join in a request to HUD for a termination of the contract of coinsurance, and
the Borrower has given NYLIFE an irrevocable power of attorney to execute such a
request on the Borrower's behalf.
3. The parties acknowledge that this Agreement shall not constitute
an amendment to the Coinsured Mortgage Note and the Coinsured Mortgage, but
shall constitute a confirmation to the Coinsuring Lender of the rights and
powers of the Coinsuring Lender to cause the contract of insurance to be
terminated when directed to do so by NYLIFE in accordance with the provisions of
the Amended and Restated Agreement.
4. This Agreement shall not amend or modify the rights of the
Coinsuring Lender to accelerate the Coinsured Mortgage Loan pursuant to the
terms of the Coinsured Mortgage Note and the Coinsured Mortgage as a result of
or in connection with a default under the Coinsured Mortgage Note or the
Coinsured Mortgage. This Agreement does not purport to be a complete or
definitive restatement of the provisions of the Amended and Restated Agreement
relating to acceleration of the Coinsured Mortgage Loan, cancellation of the
GNMA Guaranteed Securities or
2
<PAGE>
termination of the contract of coinsurance, and shall not be deemed to amend or
modify those provisions.
5. This Agreement shall inure to the benefit of NYLIFE and its
successors and assigns, as holder of the Amended and Restated Additional
Interest Agreement.
6. Nothing herein is intended to alter or conflict with the terms,
conditions and provisions of the HUD regulations, handbooks, administrative
requirements and lender notices in effect at the time of initial endorsement of
the Coinsured Mortgage Note, or the documents required to be executed by
Mortgagor in connection with initial endorsement of the Coinsured Mortgage Note;
and to the extent that they do so, the HUD regulations, handbooks,
administrative requirements, lender notices and documents shall control and this
document shall be amended or deemed amended so as not to alter or conflict with
the aforesaid regulations, notices or documents. This provision shall terminate
and be void upon termination of HUD coinsurance of the Coinsured Mortgage Loan.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
3
<PAGE>
IN WITNESS WHEREOF the parties have executed this Agreement as of the day
and year hereinabove f first written.
BORROWER:
RICHLAND PROPERTIES, INC.
By: /s/ Vahe M. Melkonian
--------------------------------
Name: Vahe M. Melkonian
------------------------------
Title: Vice President
-----------------------------
COINSURING LENDER:
RELATED MORTGAGE CORPORATION
By: /s/ Bruce H. Brown
--------------------------------
Name: Bruce H. Brown
------------------------------
Title: Vice President
-----------------------------
ACKNOWLEDGED AND AGREED TO:
NYLIFE GOVERNMENT MORTGAGE PLUS LIMITED
PARTNERSHIP
By: NYLIFE Realty, Inc.,
General Partner
By: /s/ Kevin M. Micucci
--------------------------------
Name: Kevin M. Micucci
------------------------------
Title: Vice President
-----------------------------
4
<PAGE>
AMENDED AND RESTATED
COINSURING LENDER/HOLDER AGREEMENT
This Agreement made as of this 31st of January, 1995, by and between NYLIFE
GOVERNMENT MORTGAGE PLUS LIMITED PARTNERSHIP, a Massachusetts limited
partnership, ("NYLIFE") and RELATED MORTGAGE CORPORATION, a Delaware corporation
(the "Mortgagee").
WITNESSETH:
WHEREAS, the Mortgagee made a certain construction and permanent loan in
the face principal amount of $13,154,200.00 (which as modified as described
below constitutes the "Loan") to H. O. ASSOCIATES, LTD., a Florida limited
partnership ("H. O. Associates"), in connection with a multifamily residential
apartment project identified as FHA Project No. 067-36672 (the "Project") which
loan was (a) evidenced by a Mortgage Note (the "Original Note") executed by H.O.
Associates in favor of the Mortgagee, and which Original Note was (i) secured by
a first Mortgage (the "Original Mortgage') on the Project, and which Mortgage
incorporated by reference the terms and conditions of a certain Regulatory
Agreement by and among H.O. Associates and the Mortgagee, and (ii) coinsured by
the United States Department of Housing and Urban Development ("HUD") under
Section 221(d)(4) pursuant to Section 244 of the National Housing Act, as
amended (sometimes referred to as the "Coinsurance Contract");
WHEREAS, Mortgagee agreed to finance the Loan through the issuance by the
Mortgagee of fully-modified mortgage-backed pass-through construction loan
certificates ("CLCs) guaranteed as to the timely payment of principal and
interest by the Government National Mortgage Association and, upon the maturity
or earlier redemption of such CLCs, a fully-modified mortgage-backed passthrough
permanent loan certificate ("PLC") guaranteed as to the timely payment of
principal and interest by the Government National Mortgage Association, which
CLCs and PLC were backed by the Loan (the CLCs and PLC are sometimes hereinafter
referred to as the "Original GNMA Certificates");
WHEREAS, the Mortgagee obtained funding for the Loan through the issuance
of the Original GNMA Certificates to NYLIFE. The interest rate on the Note and,
correspondingly, on the Original GNMA Certificates, were at rates below those
for comparable loans advanced, and comparable securities issued, at the time the
Note was made;
WHEREAS, to induce the Mortgagee to issue the Original GNMA Certificates at
a rate below those then available in the market for Original GNMA securities
such as the Original GNMA Certificates and to induce NYLIFE to acquire said GNMA
Certificates at that below-market rate, H.O. Associates agreed to
<PAGE>
provide to NYLIFE certain other additional interest not set forth in the Note or
Mortgage and to evidence and secure such additional interest obligations, NYLIFE
and H.O. Associates executed certain agreements and instruments with respect to
such obligations, including without limitation, that certain Additional Interest
Agreement dated December 13, 1990, between NYLIFE and H.O. Associates (the
"Additional Interest Agreement"), a Subordinated Mortgage of the same date
securing the Additional Interest Agreement (the "Subordinated Mortgage") and
certain other documents;
WHEREAS, contemporaneously with this Agreement, the Project is being sold
to Richland Properties, Inc. ("Mortgagor"); and
WHEREAS, contemporaneously with this Agreement and the purchase of the
Project by the Mortgagor the Original Note and the Original Mortgage are being
modified by a Modification to Mortgage Note and a Modification of Mortgage (the
Original Note and Original Mortgage as so modified being the "Note" and
"Mortgage"); and
WHEREAS, in connection with the modification of the Loan, the Mortgagee has
agreed to accept in substitution for the Original GNMA Certificates, a new GNMA
certificate (the "GNMA certificate") backed by the Loan; and
WHEREAS, the Additional Interest Agreement and the Subordinated Mortgage
are being amended and restated in their entirety pursuant to the Amended and
Restated Additional Loan Documents described below;
WHEREAS, the Amended and Restated Additional Loan Documents contemplate
certain actions to be undertaken by the Mortgagee at the request of or at the
direction of NYLIFE and NYLIFE and the Mortgagee desire to evidence their
agreement that the Mortgagee shall take such actions at the request of or at the
direction of NYLIFE and set forth certain other responsibilities with respect
thereto;
NOW, THEREFORE, in consideration of the mutual consents contained herein
and other good and valuable consideration, the receipt of which is acknowledged
hereby, the parties hereto agree as follows:
1. Attached hereto as Exhibits are conformed copies of the following
documents (the "Amended and Restated Additional Loan Documents"):
2
<PAGE>
a. Amended and Restated Agreement (which amends and restates the
Additional Interest Agreement with H.O. Associates);
b. Amended and Restated Subordinated Mortgage and Security Agreement;
c. Agreement Regarding Termination of Contract of Coinsurance;
d. UCC-l Financing Statements
Mortgagee represents that it is familiar with the provisions of the Amended and
Restated Additional Loan Documents, and has no objection to any provision
therein.
2. Mortgagee hereby consents to recordation of the Amended and Restated
Subordinated Mortgage and Security Agreement (the "Restated Subordinated
Mortgage" following recordation of the Modification of Mortgage. Said Restated
Subordinated Mortgage shall remain subordinate to (i) the mortgage evidencing
the First Mortgage Loan as amended by the Modification of Mortgage, (ii) the
Amended Regulatory Agreement with the Mortgagor, (iii) UCC financing statements
in favor of Mortgagee, and (iv) such other documents as may be reasonably
required by Mortgagee in connection with the closing of amendment to the Loan.
The Mortgagee agrees to take the following actions contemplated under the
Amended and Restated Agreement at the times set forth below, as applicable:
a. In the event that (i) there is a Default under the Amended and
Restated Agreement (as the term "Default" is defined therein); or (ii) NYLIFE
otherwise accelerates the maturity date of the Loan and as a result of any of
such events, NYLIFE elects, pursuant to the terms of the Amended and Restated
Agreement, to direct the Mortgagee to accelerate the maturity date of the Loan,
then the Mortgagee shall:
(i) first, within five (5) business days after the Mortgagee's
receipt of NYLIFE's direction in writing to require acceleration if the Loan
declare the entire principal balance and all interest and all other sums due
under the Mortgage and the Note to be due and payable as to be specified at
NYLIFE's direction (the "Acceleration Maturity Date");
(ii) second, undertake, at NYLIFE's direction (subject to Section
2(c) hereof), to terminate the Coinsurance Contract effective on or immediately
before the Accelerated Maturity Date of the Loan in accordance with all
applicable HUD regulations by completing Form HUD-9807 (Request for Termination
of Multifamily Mortgage Insurance) or such other instructions as shall be
required by HUD to effect such termination and complying with all applicable HUD
regulations with respect to the
3
<PAGE>
termination of the Coinsurance Contract; it being understood and agreed that
Mortgagee shall have no liability in the event the Coinsurance Contract is not
terminated because of the actions or inactions of parties other than itself;
(iii) third, upon the Accelerated Maturity Date (or upon the
termination of the Coinsurance Contract if such termination occurs prior to the
Accelerated Maturity Date) assign, without recourse or warranty, all legal and
beneficial interest in the Loan, together with the Note and Mortgage and all
other documents executed in connection with the Loan, to NYLIFE or its agent or
assigns upon the termination of the Coinsurance Contract, free of any right or
claim of Mortgagee or GNMA, to the extent, with respect to GNMA, within the
control of Mortgagee. Following such assignment, at the request of NYLIFE and at
Mortgagee's discretion, Mortgagee may undertake a foreclosure, or otherwise
realize on the collateral, on behalf of, and as agent for, NYLIFE, provided that
Mortgagee shall have no obligations with respect to such foreclosure unless
Mortgagee and NYLIFE agree on appropriate compensation to be paid to Mortgagee
for such services including appropriate fees for servicing the Loan; and
(iv) promptly in concert with NYLIFE, commence all administrative
actions necessary to cancel the GNMA Certificates in accordance with GNMA
requirements.
b. In the event NYLIFE elects only to pursue its separate remedies
under the Amended and Restated Additional Loan Documents, the Mortgagee shall
preserve in full force and effect all of the Mortgagee's rights and remedies
under the Coinsurance Contract and shall not cancel the GNMA Certificate or the
Coinsurance Contract, nor assign the Note and Mortgage to NYLIFE.
c. If, following an exercise of NYLIFE's option to require
prepayment of the Loan, the Mortgagor shall fail to pay the indebtedness then
due to NYLIFE and the Mortgagee, as applicable, on the Accelerated Maturity
Date, and NYLIFE, at its option, elects to rescind the notice of prepayment or
NYLIFE otherwise elects not to accelerate the Loan, the Mortgagee shall, upon
its receipt of notice from NYLIFE in writing of such rescission election,
rescind its notice of prepayment of the sums due under the Mortgage and the Note
and terminate any proceedings or actions it has pending against the Mortgagor
with respect to the failure of the Mortgagor to pay to the Mortgagee the sums
due and payable by the Mortgagor; provided that NYLIFE shall reimburse Mortgagee
for its costs and expenses incurred in connection with the undertakings set
forth in this Section 2(c);
d. preserve in full force and effect all of the Mortgagee's rights
and remedies under the Coinsurance Contract so
4
<PAGE>
long as NYLIFE does not elect to terminate or rescinds its direction to
terminate the Coinsurance Contract;
e. take any and all actions reasonably necessary or desirable to
perform the specific actions set forth in this paragraph 2 at the times provided
in this paragraph 2 including the exercise of the authority to act by Mortgagor
under the Power of Attorney given to NYLIFE in the Amended and Restated
Agreement; and
f. take any and all actions requested by NYLIFE which are reasonably
necessary or desirable to implement or give effect to the provisions of the
Amended and Restated Additional Interest Agreement.
3. Notwithstanding anything contained in this Agreement to the contrary,
the Mortgagee shall not be required to take any action which is in conflict with
any applicable HUD or GNMA (as the case may be) rules or regulations (including
without limitation statutes, regulations, handbooks or other expression
thereof); it being understood and agreed that Mortgagee will service and
administer the Loan in a timely manner and perform as issuer of GNMA
Certificates consistent with HUD and GNMA requirements, and shall in a timely
manner perform all duties and acts required of a coinsuring lender and issuer of
GNMA Certificates.
4. The Mortgagee agrees to recognize any actions taken by NYLIFE pursuant
to the Power of Attorney granted to NYLIFE in the Amended and Restated
Additional Interest Agreement as the actions of the Mortgagor, but only to the
extent otherwise permissible by HUD.
5. Mortgagee will not (except as may be directed by HUD or a court)
knowingly take any action to permit any material breach by Mortgagor of
Mortgagor's obligations under the Amended and Restated Additional Loan
Documents. Without limiting the generality of the foregoing, Mortgagee will
notify NYLIFE of any contemplated or impending sale of the project. NYLIFE shall
not have the right to disapprove or otherwise impede a Transfer of Physical
Assets that has been approved by the Mortgagee or HUD to protect the interests
of HUD's insurance funds.
6. Mortgagee will promptly notify NYLIFE if and when any of the following
events affecting the Loan shall come to the attention of Mortgagee:
(i) any monetary or non-monetary default with respect to the Loan;
5
<PAGE>
(ii) the commencement, by or against the Mortgagor of any bankruptcy or
other insolvency proceeding;
(iii) any proposed transfer of the title to the project or other transfer
requiring HUD TPA approval.
In connection with the delivery of notice required hereunder with respect to a
default, Mortgagee shall provide NYLIFE the opportunity to cure any default
under the Note and Mortgage, said cure to be undertaken within such periods of
time as are permitted under the terms of the Note, Mortgage and HUD regulations.
In the event NYLIFE elects to cure the default, it shall so notify Mortgagee of
such election and diligently undertake to cure the default, it being expressly
understood and agreed that NYLIFE shall have no obligation whatsoever to cure a
default under the Note and Mortgage.
Within ten (10) days after written request from NYLIFE, the Mortgagee shall
provide NYLIFE with such other information in Mortgagee's possession relating to
the Loan and the servicing of such Loan as NYLIFE may from time to time
reasonably request, including, but not limited to:
(a) verification of fire, hazard and such other insurance as is required
by the Loan;
(b) copies of all reports relating to the physical inspection of the
property;
(c) periodic audits and reports prepared by or on behalf of the Mortgagor,
to the extent received by the Mortgagee.
Additionally, Mortgagee will provide access to its servicing records
respecting the Loan during regular business hours to NYLIFE or its agents and
permit copying at NYLIFE's expense.
7. NYLIFE and Mortgagee agree that each will comply with the applicable
requirements set forth in HUD Mortgagee Letter No. 88-14, dated July 21, 1988
("Letter 88-14") as in effect on the date hereof. This agreement shall be
interpreted at all times in compliance with Letter 88-14 and shall be deemed
amended to the extent necessary to make it consistent therewith.
8. Nothing herein is intended to alter or conflict with the terms,
conditions and provisions of the HUD regulations, handbooks, administrative
requirements and lender notices in effect at the time of initial endorsement of
the Note, or the documents required to be executed by Mortgagor in connection
with initial endorsement of the Note; and to the extent that they do so, the HUD
regulations, handbooks, administrative requirements, lender notices and
documents shall control and this document
6
<PAGE>
shall be amended or deemed amended so as not to alter or conflict with the
aforesaid regulations, notices or documents.
The provisions of this paragraph 8 and other comparable requirements set
forth herein shall terminate and be void upon termination of HUD coinsurance of
the Loan.
9. Except as may be required by HUD or GNMA, Mortgagee shall not assign
the Loan or its servicing to an approved FHA lender without the advance written
consent of NYLIFE, which NYLIFE may grant or deny in its sole discretion.
Mortgagee shall give immediate written notice to NYLife of any events,
circumstances or causes which come to the attention of the Mortgagee which could
lead to an assignment of the Loan; including but not limited to any actual or
pending or threatened default by the Mortgagee under the Guarantee Agreement
with GNMA with respect to the Loan. If Mortgagee is required to assign the Loan
or its servicing, it shall, subject to HUD approval, assign to a Mortgagee
designated by NYLIFE. No assignment shall be permitted or effective unless the
assignee has agreed to assume and be fully bound by the terms and provisions of
the Commitment for Purchase of GNMA Securities and this Agreement.
10. All notices, demands, directions, requests, communications or the like
("Notices") required or permitted hereunder shall be given both by telephone and
in writing by overnight delivery service addressed to the other party hereto, at
the addresses as the parties may for themselves designate in writing for the
purposes of receiving Notices hereunder.
11. This Agreement shall be binding upon the successors and assigns of
each of the parties.
12. This Agreement may not be changed, terminated or modified orally or in
any manner other than an instrument in writing signed by the parties hereto.
13. This Agreement shall be construed in accordance with the laws of the
state of New York.
14. This Agreement may be executed in one or more counterparts, each of
which shall be considered an original.
15. Each party hereto shall have all remedies available to it at law or in
equity in the event of a breach of the terms and conditions of this Agreement.
7
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first above written.
WITNESS/ATTEST: NYLIFE GOVERNMENT MORTGAGE PLUS LIMITED
PARTNERSHIP
By: NYLife Realty, Inc.
General Partner
By:
- ------------------------------ -------------------------------
Name:
------------------------------
Title: Vice President
-----------------------------
RELATED MORTGAGE CORPORATION
By: /s/ Bruce H. Brown
- ------------------------------ -------------------------------
Name: Bruce H. Brown
------------------------------
Title: Vice President
-----------------------------
8
<PAGE>
SPECIAL CLOSING AGREEMENT
This Special Closing Agreement is made and effective as of January 31, 1995,
between and among NYLife Government Mortgage Plus Limited Partnership
("NYLife"), H.O. Associates, Ltd. ("HOA"), Robert M. Schiffman and Edwin B.
Branch (herein collectively the "General Partners"), Markborough Development
Company Limited ("Markborough"), and Foley & Lardner, as escrow agent ("Escrow
Agent").
WHEREAS, on this date HOA sold certain real property in Hillsborough County,
Florida (the "Property"), to Richland Properties, Inc.; and
WHEREAS, in connection with such sale, NYLife, HOA, the General Partners and
Related Mortgage Corporation ("Related") executed and delivered a Release
Agreement dated this date; and
WHEREAS, the Florida Department of Revenue ("DOR"), on or about April 1,
1994, initiated an inquiry (the "Inquiry") with respect to the nonpayment of
Florida documentary stamp taxes in connection with a Subordinated Mortgage
executed by HOA to and in favor of NYLife ("Subordinated Mortgage"); and
WHEREAS, as of this date DOR has not made a final determination with respect
to the Inquiry; and
WHEREAS, on this date NYLife, Related, HOA and others entered into a Closing
and Escrow Agreement (the "Closing Agreements"), pursuant to which the Escrow
Agent thereunder is holding two $75,000.00 letters of credit, one from
Markborough and one from the General Partners, as further described on Schedule
4 of the Closing Agreement; and
WHEREAS, the parties desire to establish a mechanism to fund the payment due,
if any, should the Inquiry be determined adversely.
NOW, THEREFORE, for valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the parties agree as follows:
1. If the Inquiry is determined adversely, and neither HOA nor NYLife
determine to contest such matter, but rather to pay documentary stamps, interest
thereon and penalties, if any (the "Liability"), or if contested by either party
the contest is adversely determined, then and in any such an event, NYLife shall
pay the first $35,000.00 of the Liability, and the remainder of the Liability
shall be paid 65% by NYLife and 35% by HOA.
2. As promptly as is reasonably practical after the date hereof, the General
Partners and Markborough shall deliver to Escrow Agent an amendment to their
respective letters of credit reducing the amount thereof to $17,500.00 each.
Anything to the
<PAGE>
contrary in the Closing Agreement notwithstanding, Escrow Agent shall, and is
hereby authorized and directed, to return to NYLife the letters of credit, as so
amended, upon their receipt, provided that the Final Closing as set forth in the
Closing Agreement has occurred. The Escrow Agent shall be in receipt of said
amended letters of credit prior to any release of the original letters of credit
to the General Partners and Markborough. If the Final Closing under the Closing
Agreement does not occur, Escrow Agent shall return both the original $75,000.00
letters of credit to NYLife as provided in the Closing Agreement, and shall
return the amendments thereto to the General Partners and to Markborough,
respectively. The letters of credit, as amended, shall be held by NYLife as
security for the performance of HOA's obligations under this Special Closing
Agreement. When HOA's obligations under this Agreement are fully performed and
discharged, or if the results of the Inquiry are such that HOA has no liability
under this Agreement, NYLife shall promptly return the letters of credit to the
Escrow Agent, who shall see to their proper distribution. Until the Inquiry is
finally resolved, Markborough and the General Partners shall renew their
respective letters of credit within 20 days of their negotiated expiration dates
such that they do not expire, failing which NYLife may draw upon the expiring
letter(s) of credit and hold the proceeds thereof as security for the
performance of HOA's obligations hereunder.
3. The obligations of HOA, the General Partners and Markborough under this
Agreement are new obligations of such parties, and as such, such parties agree
that the obligations expressly set forth herein have arisen immediately after
the execution and delivery of the Release Agreement.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Special Closing Agreement
as of the date and year first above written.
NYLife Government Mortgage Plus /s/ Robert M. Schiffman
Limited Partnership, a ------------------------------
Massachusetts limited partnership By: Robert M. Schiffman
By: NYLife Realty, Inc., its
general partner
/s/ Edwin B. Branch
By: ------------------------------
--------------------------- Edwin B. Branch
Its: Vice President
Markborough Development Company
Limited, a Texas limited
partnership, formerly known as
H.O. Associates, Ltd. Markborough Florida, Inc., a
Florida corporation
/s/ Robert M. Schiffman
- ------------------------------ By: MPI Corp., its general partner
By: Robert M. Schiffman
Its: General Partner By:
---------------------------
Its: Asst Vice President
--------------------------
/s/ Edwin B. Branch
- ------------------------------
By: Edwin B. Branch Foley & Lardner
Its: General Partner
By:
---------------------------
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 7
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<DEBT-HELD-FOR-SALE> 0
<DEBT-CARRYING-VALUE> 0
<DEBT-MARKET-VALUE> 0
<EQUITIES> 0
<MORTGAGE> 0
<REAL-ESTATE> 0
<TOTAL-INVEST> 30,165,900
<CASH> 867,686
<RECOVER-REINSURE> 0
<DEFERRED-ACQUISITION> 0
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