PROMISSORY NOTE
MODIFICATION AGREEMENT
THIS AGREEMENT made and entered into as of the 1st day of January, 1990
by and between FPI Chesterfield, L.P. (formerly known as FPI Chesterfield,
Ltd.), a Missouri limited partnership, hereinafter referred to as the
"Borrower" and Fogelman Mortgage L.P. I, a Tennessee limited partnership,
hereinafter referred to as the "Issuer". Capitalized terms used but not defined
herein shall have the respective meanings set forth in the Note (as hereinafter
defined).
W I T N E S S E T H
WHEREAS, the Borrower has heretofore executed and delivered to the Issuer a
Promissory Note (the "Note"), dated July 8, 1987, in the original principal
sum of $23,320,000, payable to the order of the Issuer;
WHEREAS, in connection with the Consensual Reorganization of the Business and
Affairs of Avron B. Fogelman and Related Entities as of July 31, 1990 it is
required that certain modifications be made to the Note after an independent
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advisor has rendered an opinion that such proposed modifications are fair and
reasonable;
WHEREAS, Prudential-Bache Properties, Inc., a general partner of the
Issuer, contracted with Marshall & Stevens, Incorporated ("Marshall") to
analyze the proposed modifications; and
WHEREAS, Marshall has rendered an opinion that the proposed
modifications "... are fair from a financial point of view and would be
considered reasonable and commercially acceptable to a prudent general
partner."
NOW, THEREFORE, in consideration of the debts and trusts aforesaid and of
the sum of $1.00 and other good and valuable consideration, each to the other
in hand paid, receipt whereof is hereby acknowledged, it is
hereby mutually covenanted and agreed as follows:
1. Section 1.4 of the Note shall be amended in its entirety to read as
follows:
"Section 1.4 Basic interest. (a) Basic Interest means an amount (the
"Base Amount") computed on the principal balance hereof equal to, and shall be
payable at the rate of (i) ten and one-half percent (10.5%) per annum from
April 23, 1987 to and including the Completion Date; and (ii) nine
and one-half percent (9.5%) per annum (the "Base Rate") thereafter
until payment in full of the principal hereof; provided, however, that if the
Base Amount for any given month exceeds Property Cash Flow for that month and
there are no funds in the Cash Collateral
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Account (as hereinafter defined), then Basic Interest for such month shall be
equal to the amount of Property Cash Flow for such month. The difference
between the Base Amount and Property Cash Flow shall be accounted
for in a separate account (the "Accrued Interest Account") which shall bear
interest at the Base Rate. The Borrower shall be obligated to pay to the Issuer
the amounts accounted for in the Accrued Interest Account on the terms
described in subparagraph (b) of this Section 1.4.
(b) For any month that Property Cash Flow exceeds the Base Amount, such
excess shall be applied toward the obligation, if any, accounted for in the
Accrued Interest Account until such obligation has been paid in full;
thereafter, any such excess shall be paid to the Issuer, and the Issuer shall
deposit such excess in a separate account (the "Cash Collateral Account") to
be held by the Issuer as additional security for Borrower's obligations
hereunder and applied by the Issuer as hereinafter provided. To the extent
that the Base Amount exceeds Property Cash Flow for any month in which funds
are being held by the Issuer in the Cash Collateral Account, an amount equal
to the lesser of (i) the amount by which the Base Amount exceeds Property Cash
Flow for that month or (ii) the balance of the Cash Collateral Account, shall
be payable to the Issuer. All payments required to be paid currently or
accrued under subparagraphs (a) and (b) of this Section 1.4 shall be
included within the meaning of the term "Basic Interest."
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(c) If Property Cash Flow exceeds the Base Amount for six (6) consecutive
months after the obligation accounted for in the Accrued Interest Account has
been paid in full, then the funds in the Cash Collateral Account shall be
deemed to be Contingent Interest (as hereinafter defined) and shall be paid
and distributed as provided in Section 1.5 hereof.
(d) If not sooner paid, the balance, if any, of the Borrower's obligation
accounted for in the Accrued Interest Account shall be due and payable upon
the earliest of (i) the sale or disposition of the Facility (as such term is
defined in the Loan Agreement dated as of July 8, 1987 between the Issuer and
the Borrower); (ii) the refinancing of the indebtedness evidenced hereby; or
(iii) the maturity of this Note, whether by acceleration or otherwise."
2. The following phrase shall be inserted after the word "and" in line
two of Section 1.5 of the Note:
", subject to Section 1.4,"
3. Section 1.9 of the Note shall be amended in its entirety to read as
follows:
"1.9 Default Rate. From and after the occurrence of an Event of Default, the
Base Rate shall be equal to the greater of (i) the Prime Rate plus two and
one-half percent (2.5%) per annum and (ii) sixteen percent (16%) per annum
from and after the date such Event of Default occurred and until such
Event of Default has been cured."
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4. There shall be added to the Note a Section 1.10, which shall read as
follows:
"Section 1.10 Escrow Account. (a) The Borrower shall establish an
interest-bearing account (the "Escrow Account") with an escrow agent
acceptable to the Issuer and shall deposit into the Escrow Account the
sum of $144,432. Commencing on June 1, 1990, and on the first day of each
month thereafter during the term of this Note, the Borrower shall make
deposits ("Escrow Deposits") into the Escrow Account in an amount equal to
one-twelfth (1/12) of the estimated annual real estate tax liability of the
Borrower for the current twelve-month period in which such taxes are due.
(b) Commencing in 1991, and each year thereafter during the term of
this Note, on the first day of the month following the month in which the
Borrower pays its real estate taxes for the preceding twelve-month period (or,
if paid in more than one installment, the month of the final installment
thereof) [the "Final Installment"], the Escrow Deposits shall be adjusted to
equal one-twelfth (1/12) of the Borrower's estimated real estate tax liability
for the succeeding twelve-month period, after first deducting from such
estimated liability the amount of any balance remaining in the Escrow Account
after payment of the Final Installment.
(c) Thirty (30) days before the date when any installment of real estate taxes
would become delinquent, the Borrower shall present to the Escrow Agent a copy
of the bill for
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such installment of real estate taxes, and the Escrow Agent shall immediately
release funds from the Escrow Account to the Borrower in the amount of such
installment (to the extent there exist such funds in the Escrow Account) and
the Borrower shall pay and discharge such real estate tax liabilities prior to
their becoming delinquent and prior to the assessment of any penalties
thereon.
(d) In the event that the funds in the Escrow Account are insufficient to pay
any installment of real estate taxes, then the Borrower shall pay the amount
of such deficiency. If after payment of any Final Installment there is a
balance remaining in the Escrow Account, such balance shall be applied as
described in subparagraph (b) of this Section 1.10."
5. This Agreement does not create any new or further indebtedness or
additional liability of any party not originally liable under the terms of
the Note nor does it release or increase the liability of any guarantor
thereof. Nothing contained herein shall adversely affect or invalidate the
security now held by the Issuer, nor impair nor release any covenant,
condition or agreement in the Note, which, except as modified by this
Agreement, shall continue in full force and effect in accordance with its
terms.
6. The Issuer agrees, upon the execution of this Agreement, to make a
notation on the Note as follows: "This Note is modified by
that certain Promissory Note Modification Agreement dated as of January 1,
1990".
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7. The agreements herein shall bind, and the benefits hereof shall
inure to, the respective successors and assigns of the parties hereto.
8. By his execution hereof in his capacity as general partner of the
Borrower, Avron B. Fogelman acknowledges that this Agreement satisfies all
notice requirements contained in the first sentence of Paragraph 6 of that
certain Guaranty, dated as of July 8, 1987, by Avron B. Fogelman in favor of
the Issuer in respect of the indebtedness evidenced by the Note.
IN WITNESS WHEREOF, this Agreement has been executed as of the date and
year first above written by the duly authorized general partners of the
Borrower and the Issuer.
FPI CHESTERFIELD, L.P.,
a Missouri limited partnership
By: /s/ Avron B. Fogelman
----------------------------
Avron B. Fogelman
General Partner
FOGELMAN MORTGAGE L.P. I,
a Tennessee limited partnership
By: PRUDENTIAL-BACHE PROPERTIES, INC.,
a Delaware corporation
General Partner
By: /s/ Chester A. Piskorowski
--------------------------
Chester A. Piskorowski
Vice President
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