**Exhibit 10.25**

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**FOURTH MODIFICATION AGREEMENT**

 

This Fourth Modification Agreement is made and entered into as of the31st day of December, 2002 by and among KRUPP GOVERNMENT INCOMETRUST, a Massachusetts business trust (“GIT”), MC NAB-K C 3 LIMITED PARTNERSHIP,a Massachusetts limited partnership (the “Partnership”), and KRUPP GP, INC., aMassachusetts corporation, GEORGE KRUPP, an individual and DOUGLAS KRUPP, anindividual (collectively, the “Partners”).

 

WHEREAS, the Partnership agreed to pay additional interest to GITpursuant to a Subordinated Promissory Note (the “Subordinated Note”) made bythe Partnership in favor of GIT, which is secured by a Subordinated MultifamilyMortgage, Assignment of Rents and Security Agreement (the “SubordinatedMortgage”) dated December 28, 1990 (collectively, the “Subordinated LoanDocuments”);

 

WHEREAS, the Partners have executed an Additional Loan Agreement and anAdditional Loan Note evidencing additional indebtedness of the Partners to GITof Two Million Four Hundred Seventy-One Thousand Two Hundred Ninety-Four andNo/100 Dollars ($2,471,294.00) (the “Additional Loan”), which Additional Loanis secured by Pledge and Security Agreements and UCC financing statements withall documents dated December 28, 1990 (collectively, the “Additional LoanDocuments”);

 

WHEREAS, certain terms of the Subordinated Loan Documents and theAdditional Loan Documents have been modified in the Modification Agreementdated May 1997, the Extension and Second Modification to the Additional Loan Agreementand Additional Loan Note dated July 1, 2002 and the Extension of and ThirdModification to the Additional Loan Agreement and Additional Loan Note datedSeptember 1, 2002 (collectively, the “Modification Agreements”);

 

WHEREAS, in accordance with the terms of the Subordinated LoanDocuments, the Additional Loan Documents and the Modification Agreements,unless extended, the terms of the Additional Loan Note expire on December 31,2002;

 

WHEREAS, the undersigned parties have mutually agreed to extend theterms of the Additional Loan Documents and to further modify the terms of theSubordinated Loan Documents and the Additional Loan Documents;

 

NOW THEREFORE, in consideration of the foregoing recitals, the mutualcovenants hereinafter set forth, and other good and valuable consideration, thereceipt and sufficiency of which are hereby acknowledged, intending to belegally bound, the undersigned parties hereby agree as follows:

 

1.             Extension of Additional Loan Note

 

Section A of the Additional Loan Note, which previously has beenamended in certain of the Modification Agreements, is amended to read in itsentirety as follows:

 

A.      Unless otherwiseaccelerated as provided herein or in the Additional Loan Agreement, theoutstanding principal balance shall be payable on December 31, 2003 (the“Payment Date”).

 

2.             Acceleration of Maturity

 

Section 3.A. of the Subordinated Promissory Note is hereby amended toreduce from twelve (12) calendar months to six (6) calendar months the periodby which GIT must give written notice to the Partnership of GIT’s decision toaccelerate the Maturity Date of the Subordinated Note in accordance withSection 3 of the Subordinated Note.

 

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Section 6. of the Additional Loan Agreement is hereby amended to reducefrom twelve (12) calendar months to six (6) calendar months the period by whichGIT must give written notice to the Partners of GIT’s decision to acceleratethe Payment Date of the Additional Loan Note in accordance with Section 6 ofthe Additional Loan Agreement.

 

3.             Determination of Project Value

 

Notwithstanding any provision to the contrary contained in theSubordinate Loan Documents, the Additional Loan Documents or the ModificationAgreements, the undersigned parties agree that the value of the Project, forpurposes of determining the Payment Obligations under the Section 6 of theModification Agreement shall be as follows:

 

•                  A.            In the event that the Project issold, the Payment Obligation shall be based on the sales price of the Project,provided there is an executed purchase and sale agreement for a bone fidearms-length transaction with a non-related third party purchaser no later thanJuly 1, 2003.  If the Project is notunder such a purchase and sale agreement by July 1, 2003, the PaymentObligation shall be based on the greater of any ensuing sales price or a$19,000,000 Value.

 

•                  B.            In the event that the Project isrefinanced, the Payment Obligation shall be based on the greater of the valueof the Project as determined by an appraisal that is prepared in accordancewith the Subordinate Loan Documents at the time of the refinancing transactionor a $19,000,000 Value.  At that time,GIT may exercise discretion as to whether it will agree to an appraised valueprepared for the refinancing lender in lieu of requiring a separate appraisal.

 

•                  C.            In the event that the Project isneither sold nor refinanced prior to the Payment Date, the Payment Obligationshall be based on a $19,000,000 Value if a permitted prepayment occurs prior toJuly 31, 2003 or based on the greater of an appraisal that is prepared inaccordance with the Subordinate Loan Documents at the time of the prepayment ora $19,000,000 Value.

 

4.             ConditionsPrecedent

 

Notwithstanding any contrary provision, this document is not effectiveunless and until GIT receives counterparts of this document executed by eachparty named on the signature page or pages of this document.

 

5.             Ratifications

 

To induce GIT to enter into this document, the Partnership and thePartners (a) ratify and confirm all provisions of the Subordinate LoanDocuments, the Additional Loan Documents and the Modification Agreements asamended by this document, (b) ratify and confirm that all guaranties,assurances, and Liens (as defined in the Subordinate Loan Documents, theAdditional Loan Documents and the Modification Agreements) granted, conveyed,or assigned to GIT under the Subordinate Loan Documents, the Additional LoanDocuments and the Modification Agreements (as they have been renewed, extended,and amended) are not released, reduced, or otherwise adversely affected by thisdocument and continue to guarantee, assure, and secure full payment andperformance of the present and future indebtedness arising hereunder, and (c)agree to perform those acts and duly authorize, execute, acknowledge, deliver,file, and record those additional documents as GIT may request in order tocreate, perfect, preserve, and protect those guarantees, assurances, and Liens.

 

6.             Representations

 

To induce GIT to enter into this document, the Partnership and Partnersrepresent and warrant to GIT that 

 

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as of the date of this document (a) the Partnership and Partners haveall requisite authority and power to execute, deliver and perform theirrespective obligations under this document, which execution, delivery, andperformance have been duly authorized by all necessary corporate action in thecase of Krupp GP, Inc., require no action by or filing with any governmentalauthority, do not violate any of Krupp GP, Inc.’s organizational documents orviolate any law applicable to any of the Partnership’s or Partners or anymaterial agreement to which they or their assets are bound, (b) upon executionand delivery by all parties to it, this document will constitute thePartnership’s and Partners’ legal and binding obligation, enforceable againsteach of them in accordance with this document’s terms except as thatenforceability may be limited by debtor relief laws and general principles ofequity, (c) all other representations and warranties in the Subordinated LoanDocuments, the Additional Loan Documents and the Modification Agreements aretrue and correct in all material respects except to the extent that any of themspeak to a different specific date, and (d) no Default or Event of Defaultexists.

 

7.             Miscellaneous

 

Except as specifically amended and modified in this document, theSubordinate Loan Documents, the Additional Loan Documents and the ModificationAgreements are unchanged and continue in full force and effect.

 

The parties hereto have caused this Fourth Modification Agreement to beduly executed as of the date first written above.

 

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| Partnership:                                                         |                                 |
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| McNab-K C 3 Limited Partnership, a Massachusetts limited partnership |                                 |
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| By:                                                                  |                                 | Krupp GP, Inc., a Massachusetts corporation, general partner |   |
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| By:                                                                  |                                 |   |   |
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| Partners:                                                            |                                 |
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| Krupp GP, Inc., a Massachusetts corporation                          |                                 |
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| By:                                                                  |                                 |   |   |
|                                                                 | Name:                                |   |
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|                                                                 | George Krupp, an individual          |   |
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|                                                                 | Douglas Krupp, an individual         |   |
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| GIT:                                                                 |                                 |
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| Krupp Government Income Trust, a Massachusetts business trust        |                                 |
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| By:                                                                  |                                 | Berkshire Mortgage Advisors Limited Partnership, its advisor |   |
| By:                                                                  | BRF Corporation, its general partner |   |
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