May 17, 1995
U.S. Securities and Exchange Commission
Operations Center, Stop 0-7
6432 General Green Way
Alexandria, Virginia 22312
Re: JMB/245 Park Avenue Associates, Ltd.
Commission File No. 0-13545
Form 10Q/A
Gentlemen:
Enclosed, for the above-captioned registrant, is the electronically filed
copy of registrant's current report on Form 10Q/A dated May 17, 1995.
Thank you.
Very truly yours,
JMB/245 PARK AVENUE ASSOCIATES, LTD.
By: JMB Park Avenue, Inc.
Corporate General Partner
By: C. SCOTT NELSON
________________________________
C. Scott Nelson, Vice President
Accounting Officer
CSN:jo
Enclosures
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10Q/A
AMENDMENT NO. 1
Filed pursuant to Section 12, 13, or 15(d) of the
Securities Exchange Act of 1934
JMB/245 PARK AVENUE ASSOCIATES, LTD.
(Exact name of registrant as specified in its charter)
The undersigned registrant hereby amends the following sections of its
Report for March 31, 1995 on Form 10Q as set forth in the pages attached
hereto:
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
PAGES 22-24
EXHIBITS
Pursuant to the requirements 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.
JMB/245 PARK AVENUE ASSOCIATES, LTD.
BY: JMB Park Avenue Inc.
Corporate General Partner
C. SCOTT NELSON
----------------
C. Scott Nelson, Vice President
Accounting Officer
Dated: May 17, 1995
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
3-A. Amended and Restated Agreement of Limited Partnership of
the Partnership is hereby incorporated by reference to Exhibit 3 to the
Partnership's Form 10-K Report for December 31, 1992 (File No. 0-13545)
filed on March 19, 1993.
3-B. Amendment to the Amended and Restated Agreement of
Limited Partnership of JMB/245 Park Avenue Associates, Ltd. by and between
JMB Park Avenue, Inc. and Park Associates, L.P. dated January 1, 1994 is
filed herewith.
4-A. Second Mortgage Note and related agreements between
Canadian Imperial Bank of Commerce and 245 Park Avenue Company is hereby
incorporated by reference to Exhibit 4-A to the Partnership's Registration
Statement on Form 10 (as amended) of the Securities Exchange Act of 1934
(File No. 0-13545) filed on April 29, 1985.
4-B. Loan agreement dated June 27, 1984 between JMB/245 Park
Avenue Associates and Continental Illinois National Bank and Trust Company
of Chicago is hereby incorporated by reference to Exhibit 4-B to the
Partnership's Registration Statement on Form 10 (as amended) of the
Securities Exchange Act of 1934 (File No. 0-13545) filed on April 29, 1985.
4-C. Promissory Notes dated December 30, 1983 between JMB/245
Park Avenue Associates and Continental Illinois National Bank and Trust
Company of Chicago is hereby incorporated by reference to Exhibit 4-C to
the Partnership's Registration Statement on Form 10 (as amended) of the
Securities Exchange Act of 1934 (File No. 0-13545) filed on April 29, 1985.
4-D. $173,196,124.20 Mortgage Note dated September 28, 1983
between Aetna Life Insurance Company and O&Y Equity Corporation is hereby
incorporated by reference to Exhibit 4-D to the Partnership's Registration
Statement on Form 10 (as amended) of the Securities Exchange Act of 1934
(File No. 0-13545) filed on April 29, 1985.
4-E. $20,000,000 Mortgage Note dated September 28, 1983
between Aetna Life Insurance Company and O&Y Equity Corporation is hereby
incorporated by reference to Exhibit 4-E to the Partnership's Registration
Statement on Form 10 (as amended) of the Securities Exchange Act of 1934
(File No. 0-13545) filed on April 29, 1985.
4-F. Consolidation and Extension Agreement dated September
28, 1983 between Olympia and York Estates Company, O&Y Equity Corporation
and Aetna Life Insurance Company is hereby incorporated by reference to
Exhibit 4-F to the Partnership's Registration Statement on Form 10 (as
amended) of the Securities Exchange Act of 1934 (File No. 0-13545) filed on
April 29, 1985.
4-G. $20,000,000 refinanced Mortgage Note and Agreement dated
September 7, 1989 between Dai-Ichi Kangyo Bank and 245 Park Avenue Company
is hereby incorporated by reference to Exhibit 4-G to the Partnership's
Form 10-K Report for December 31, 1989 (File No. 0-13545) filed on March
28, 1990.<PAGE>
4-H. $17,000,000 Mortgage Note dated September 7, 1989
between Dai-Ichi Kangyo Bank and 245 Park Avenue Company is hereby
incorporated by reference to Exhibit 4-H to the Partnership's Form 10-K
Report for December 31, 1989 (File No. 0-13545) filed on March 28, 1990.
4-I. $4,000,000 Mortgage Note representing the $4,000,000
draw made in June 1990 is hereby incorporated by reference to Exhibit 4-I
to the Partnership's Form 10-K Report for December 31, 1989 (File No. 0-
13545) filed on March 28, 1990.
4-J. $4,000,000 Mortgage Note representing the $4,000,000
draw made in June 1991 is hereby incorporated by reference to Exhibit 4-J
to the Partnership's Form 10-K Report for December 31, 1991 (File No. 0-
13545) filed on March 27, 1992.
4-K. $17,000,000 Loan Agreement dated September 7, 1989
between 245 Park Avenue Company and Dai-Ichi Kangyo Bank is hereby
incorporated by reference to Exhibit 4-K to the Partnership's Form 10-K
Report for December 31, 1992 (File No. 0-13545) filed on March 19, 1993.
4-L. $4,000,000 Loan Agreement dated July 3, 1990 between 245
Park Avenue Company and Dai-Ichi Kangyo Bank is hereby incorporated by
reference to Exhibit 4-L to the Partnership's Form 10-K Report for December
31, 1992 (File No. 0-13545) filed on March 19, 1993.
4-M. Assignment of $147,500,000 mortgage dated September 7,
1989 between Canadian Imperial Bank of Commerce and Dai-Ichi Kangyo Bank,
Ltd. is hereby incorporated by reference to Exhibit 4-M to the
Partnership's Form 10-K Report for December 31, 1992 (File No. 0-13545)
filed on March 19, 1993.
4-N. Amended guaranty agreement dated April 15, 1991 between
JMB/245 Park Avenue Associates and Continental Bank N.A. (formerly,
Continental Illinois National Bank and Trust Company of Chicago) is hereby
incorporated by reference to Exhibit 4-N to the Partnership's Form 10-K
Report for December 31, 1992 (File No. 0-13545) filed on March 19, 1993.
4-O. $25,000,000 Guaranteed Promissory Note and related
documents dated December 31, 1993 between JMB/245 Park Avenue Associates
and Continental Bank are hereby incorporated by reference to Exhibit 4-O to
the Partnership's Form 10-K report for December 31, 1993 (File No. 0-13545)
filed on March 25, 1994.
4-P. $25,000,000 Fixed Rate Promissory Note and related
documents dated December 31, 1993 between JMB/245 Park Avenue Associates
and Continental Bank are hereby incorporated by reference to Exhibit 4-P to
the Partnership's Form 10-K report for December 31, 1993 (File No. 0-13545)
filed on March 25, 1994.
4-Q. $2,194,631.25 Interest Exchange Agreement Promissory
Note and related documents dated December 31, 1993 between JMB/245 Park
Avenue Associates and Continental Bank are hereby incorporated by reference
to Exhibit 4-Q to the Partnership's Form 10-K report for December 31, 1993
(File No. 0-13545) filed on March 25, 1994.
4-R. Subordinated Demand Note dated December 31, 1993 between
JMB/245 Park Avenue and JMB Realty Corporation is hereby incorporated by
reference to Exhibit 4-R to the Partnership's Form 10-K report for
December 31, 1993 (File No. 0-13545) filed on March 25, 1994.
4-S. Letter of Commitment dated August 3, 1994 from Aetna and
245 Park Company detailing proposed terms to refinance the first mortgage
loan hereby incorporated by reference to Exhibit 4-S to the Partnership's
Form 10-K report for December 31, 1994 (File No. 0-13545) filed on March
27, 1995.
4-T. Letter Agreement dated April 6, 1995 from Aetna to 245
Park Avenue Company pertaining to the modification and extension of the
first mortgage loan is filed herewith.
10-A.Acquisition documents dated December 29, 1983 relating
to the purchase by the Partnership of an interest in the American Brands
Building in New York, New York is hereby incorporated by reference to
Exhibit 10-A to the Partnership's Registration Statement on Form 10 (as
amended) of the Securities Exchange Act of 1934 (File No. 0-13545) filed on
April 29, 1985.
10-B.Agreement dated December 29, 1983 between 245 Park
Avenue Company and O&Y Management Corporation relating to the management of
the American Brands Building in New York, New York is hereby incorporated
by reference to Exhibit 10-B to the Partnership's Registration Statement on
Form 10 (as amended) of the Securities Exchange Act of 1934 (File No. 0-
13545) filed on April 29, 1985.
10-C.Pledge and Security Agreements dated June 27, 1984
between JMB/245 Park Avenue Associates and JMB Realty Corporation and
Continental Illinois National Bank and Trust Company relating to guarantees
of Limited Partnership contributions by the Limited Partners is hereby
incorporated by reference to Exhibit 10-C to the Partnership's Registration
Statement on Form 10 (as amended) of the Securities Exchange Act of 1934
(File No. 0-13545) filed on April 29, 1985.
10-D.Financial Guarantee Bond date June 17, 1984 between JMB
Realty Corporation and JMB/245 Park Avenue Associates is hereby
incorporated by reference to Exhibit 10-D to the Partnership's Registration
Statement on Form 10 (as amended) of the Securities Exchange Act of 1934
(File No. 0-13545) filed on April 29, 1985.
10-E.Lease Agreement between Olympia and York 245 Lease
Company and 245 Park Avenue Company and Bear Stearns Companies, Inc. dated
March 6, 1987 is hereby incorporated by reference to Exhibit 10-E to the
Partnership's Form 10-K Report for December 31, 1988 (File No. 0-13545)
filed on March 27, 1989.
10-F.Side letter agreement dated March 6, 1987 between
Olympia & York 245 Lease Company, 245 Park Avenue Company and JMB/245 Park
Avenue Associates, Ltd. relating to the division of economic benefits and
costs of the Bear Stearns Companies, Inc. lease is hereby incorporated by
reference to Exhibit 10-F to the Partnership's Form 10-K Report for
December 31, 1992 (File No. 0-13545) filed on March 19, 1993.
27. Financial Data Schedule
(b) No reports on Form 8-K have been filed for the quarter
covered by this report.
AMENDMENT TO THE AMENDED AND RESTATED AGREEMENT
OF LIMITED PARTNERSHIP OF
JMB/245 PARK AVENUE ASSOCIATES, LTD.
------------------------------------
This Amendment to the Amended and Restated Agreement of Limited
Partnership of JMB/245 Park Avenue Associated, Ltd. made and entered into
as of January 1, 1994 by and between JMB Park Avenue, Inc., an Illinois
corporation (hereinafter "JMB"), as Corporate General Partner and Park
Associates, L.P., an Illinois limited partnership, as Associate General
Partner (hereinafter "AGP"; JMB and AGP shall hereinafter be collectively
referred to as the "General Partners").
WITNESSETH
-----------
WHEREAS, the parties hereto have formed, or ratified the formation
of, JMB/245 Park Avenue Associated, Ltd. pursuant to the revised Uniform
Limited Partnership Act as in effect in the State of Illinois, as amended
(hereinafter the "Partnership"); and
WHEREAS, the parties hereto have entered into, or ratified the
execution of, an Agreement of Limited Partnership of the Partnership (the
agreement, as it may have been subsequently amended, the "Agreement"); and
WHEREAS, the Partners desire to amend Section 9 of the Agreement to
provide that profits or losses attributable to the payment of interest
expense relating to any borrowing of the Partnership, which, though payable
by the Partnership, is actually funded by a loan from JMB Realty
Corporation, a Delaware corporation ("Realty"), an affiliate of the General
Partners of the Partnership (or any affiliate of the General Partners),
shall be allocated 100% to the Associate General Partner; and
WHEREAS, Section 19(d) of the Agreement empowers the Corporate
General Partner to amend Section 9 of the Agreement without the consent of
any of the Limited Partners provided that such amendment shall be done in
order to make allocation of profits or losses consistent with, and in
accordance to, Treasury Regulations or other developments in Federal income
tax law. Additionally, such an amendment may only be done if the
Partnership is advised by the Partnership's accountants or legal counsel
that such an amendment is permitted within the scope of Section 19(d). The
Corporate General Partner, having received such advise from the
partnership's accountant, desires to affect the aforementioned amendment.
NOW, THEREFORE, in accordance with the provisions of Section 19(d) of
the Agreement, Section 9 of the Agreement is hereby amended as hereinabove
provided effective as of the date hereof.
IN WITNESS WHEREOF, the undersigned have executed this Amendment to
the Amended and Restated Agreement of Limited Partnership, as amended as of
the date first hereinabove written.
CORPORATE GENERAL PARTNER ASSOCIATE GENERAL PARTNER
- ------------------------- --------------------------
JMB Park Avenue, Inc. Park Associates, L.P.
By: JMB Park Avenue, Inc.
General Partner
By: By:
---------------------- -----------------
JMB/245 Park Avenue Associates, Ltd.
c/o JMB Park Avenue, Inc.
900 North Michigan Avenue
Chicago, IL 60611
April 6, 1995
O&Y Equity Company, L.P.
237 Park Avenue
New York, New York 10017
Attn: Mr. David G. King
Re: 245 Park Avenue
---------------
Gentlemen:
Please refer to the letter agreement captioned "Binding Letter
Agreement" ("Letter Agreement") dated April 6, 1995 from Aetna Life
Insurance Company/The Aetna Casualty and Surety Company ("Aetna") to 245
Park Avenue Company ("Company") pertaining to the modification and
extension of the existing mortgage loan in the original principal amount of
$220,000,000 ("Loan") to the Company secured by the property ("Property")
located at 245 Park Avenue in New York City.
Aetna has requested that the Letter Agreement be accepted and agreed
to by both O&Y Equity Company, L.P. ("O&Y") and JMB/245 Park Avenue
Associates, Ltd. ("JMB"). O&Y has advised JMB that it intends to execute
the Letter Agreement and has requested that JMB also execute the same.
Pursuant to O&Y's request, JMB has executed the Letter Agreement and
encloses the same with this letter. However, this letter confirms that JMB
has executed and delivered the Letter Agreement on the understanding that
neither the execution and delivery of the Letter Agreement nor the
agreement of O&Y and JMB to the terms thereof, shall constitute a waiver
of any claim or right between JMB or any of its affiliates, on the one
hand, and O&Y or any of its affiliates, on the other hand, pertaining to
the Borrower or the Property, including, but not limited to, any claim for
default under the partnership agreement of the Borrower or any asset
management agreement to management agreement related thereto, or any claim
based on the terms set forth in the Letter Agreement or a delay in the
Conclusion of the negotiations pertaining to<PAGE>
O&Y Equity Company, L.P.
April 7, 1995
Page 2
the Loan or the penalty interest charged in connection therewith or the
fees charged by Lazard Freres in connection with the modification of the
Loan, nor shall the same constitute JMB's agreement to any fees, expenses
or allowances permitted to be charged by O&Y or any of irs affiliates under
the Loan Agreement.
Very Truly Yours,
JMB/245 PARK AVENUE ASSOCIATES, LTD.
By: JMB Park Avenues, Inc.
General Partner
By:
---------------------------
Its:
---------------------
Acknowledged and agreed to:
O&Y EQUITY COMPANY, L.P.
By: O&Y Equity General Partner Corp.
General Partner
By:
--------------------------------
David G. King
Senior Vice President - Finance
BINDING LETTER AGREEMENT
TO: 245 Park Avenue Company FROM: Aetna Life Insurance
(the "Borrower") Company/
c/o Olympia and York Companies (USA) The Aetna Casualty and
Surety
237 Park Avenue Company ("Aetna")
New York, NY 10017 c/o Aetna Investment Group
Attn: David G. King. Jr. 242 Trumbell Street IG4J
Hartford, CT 06156
Date: April 6, 1995 Attn: Linda C. Spevacek
Phone No. (203)275-3180
Fax No (203)275-4751
Re: Approximately 1,617,783 square feet
of office building improvements and
the land thereunder, which constitutesPrincipals of Borrower:
the fee, term and leasehold interests O&Y Equity Company, L.P.
held by the Borrower, commonly known asJMB/245 Park Avenue
245 Park Avenue in New York, NY. Associates, Ltd.
Aetna Loan Nos.: 1-003-514 & 575 (the "Loan")Original Principal Amount:
$220,000,000
Existing Maturity Date: October 1, 1993 Existing Interest Rate:
Pay rate: 12% per annum
Accrual Rate: 18% per annum
ECONOMIC TERMS OF THE MODIFICATIONS AND EXTENSION
Principal Amount on projected Effective Date of the Modification:
Outstanding principal balance at closing after application of all payments
made prior to closing.
Contract Interest Rate: The interest rate shall be as described in the
existing Note through the date of closing, and thereafter fixed as of the
closing date at the mortgage equivalent of the U.S. Treasury Security
maturing on or about five years from the date of closing plus 300 basis
points (the "New Rate") plus the accrual pursuant to Provision 21.
Borrower acknowledges that the Note Contract Interest Rate is 18% as of
October 1, 1993 and that the difference between the Contract Interest Rate
and the Pay Rate has accrued to $14,557,921.51 as of March 1, 1995.
Borrower agrees to pay $8 million to Aetna on or before April 7, 1995,
which Aetna shall apply toward the accrual interest balance.
Provided that the Borrower shall not enter into any bankruptcy filing prior
to July 7, 1995 and makes the debt service payments required herein, Aetna
shall waive the accrual of the difference between the Contract Interest
Rate and the Pay Rate for the period from March 1, 1995 through June 30,
1995 regardless of whether or not a closing occurs, provided, further, that
such waiver shall not be applicable if (a) Aetna is prevented from applying
the $8 million to the accrual interest balance, or (b) if such $8 million
has been so applied but Aetna is required to disgorge such payment.
At the closing, (a) Borrower may elect to defer payment of $5 million of
the accrual interest balance to the Extended Maturity Date, which
obligation to pay the deferred amount shall not bear further interest and
shall be secured by a third mortgage on the Property (which third mortgage
shall be fully subordinate to all of the DKB mortgages which combined shall
constitute a second mortgage for purposes of the Binding Letter Agreement)
and (b) Aetna shall waive the remaining accrued interest balance through
March 1, 1995 of $1,557,921.51 plus any accrual interest for the period
from July 1, 1995 through July 31, 1995.
Pay Rate: 12% per annum (or the Contract Interest Rate during a portion of
the extension period as provided in Provision 22) until closing, then New
Rate.
Amortization Schedule: 30 Years
Principal and Interest Payment: Monthly based on Contract Interest Rate
(or Pay rate until July 31, 1995) and Amortization Schedule noted above.
Effective Date of the Modification and Extension: The date of closing.
Date First Payment is Due under the Modification and Extension: The first
day of the month following the Closing.
Extended Maturity Date: Five years from the first day of the month
following the date of closing.
Prepayable: at any time with a fee which shall be greater of (i) 1% of the
Loan balance, or (ii) a yield maintenance premium based on comparable
maturity Treasury obligations plus (a) 50 basis points during the first 3
years of the loan term or (b) 100 basis points during the final 2 years of
the loan term. Prepayable at par during the 120 days prior to maturity.
Extension Fee: $2,000,000; payable at closing of the transaction
contemplated herein.
Escrows and Reserves to be Collected For:
(i) Real Property Taxes - 1/12 of annual amount payable monthly, as
estimated by Aetna using the most recent tax bill (or, in the case of a
reassessment of the Property the resulting tax liability), and any
applicable tax agreement with New York City.
(ii) Capital Reserve - An annual amount equal to $.75/sf in the
Property shall be reserved in accordance with Provision 14 below.
(iii)Operating Reserve - In accordance with Provision 13 below.
All such escrow and reserve deposits are to be made by the 15th of each
monthly.
Transaction Cost Retainer: $100,000 (previously received by Aetna)
Other Provisions: See Provisions 13 to 22 under Additional Terms
Please execute this letter in the space provided below to indicate
your acceptance of the terms hereof, and your willingness to be bound
hereby. This Binding Letter Agreement must be returned to Aetna, as
countersigned and dated as of April 6, 1995, together with the Real
Property Tax Escrow and accrued interest amounts due hereunder wired to
Aetna (or its agent in the case of the Real Property Tax Escrow amount)
pursuant to the wiring instructions attached hereto by April 7, 1995,
otherwise this letter will become null, void and of no further effect. If
Borrower fails to close hereunder on or before July 1, 1995 (subject to the
extension period provided for in Paragraph 22 herein and any other
extensions granted by Aetna), then this Binding Letter Agreement shall
terminate, all rights and obligations of the parties hereunder shall be
extinguished, and Aetna shall immediately be entitled to pursue, as its
sole remedy, its remedies under the existing loan documents, provided
however that the waiver of accrued interest provision regarding the period
from March 1, 1995 through June 30, 1995 in the Economic Terms section
hereof shall remain in effect. The Standard Terms and Conditions and
Additional Terms attached hereto are incorporated herein by this reference,
and shall constitute a part of this Binding Letter Agreement. If the terms
and conditions of the existing loan documents conflict in any respect with
the terms and conditions hereof, this Binding Letter Agreement shall, in
all events, control (but not in any event, the exculpation provisions of
the loan documents shall apply to the obligations of Borrower hereunder and
thereunder). Signatures sent by facsimile shall be deemed as originals for
purposes of this Binding Letter Agreement.
AETNA LIFE INSURANCE COMPANY/
THE AETNA CASUALTY AND SURETY COMPANY
By:
-------------------------------------------
Its:
----------------------------------------------
c: P. Ahern
A. Solomon
J. Gillies
J. Scheinfeldt
T. Solecki
E. Sarsynski
AGREED TO AND ACCEPTED BY:
245 PARK AVENUE COMPANY
By: O&Y EQUITY COMPANY, L.P. General Partner
By: O&Y Equity General Partner Corp., General Partner
By:
----------------------------------------------------
Its:
----------------------------------------------------
Dated: As of April 6, 1995
----------------------------------------------------
BY: JMB/245 PARK AVENUE ASSOCIATES, LTD., General Partner
By: JMB Park Avenue, Inc., General Partner
By:
----------------------------------------------------
Its:
----------------------------------------------------
Dated: As of April 6, 1995
----------------------------------------------------
STANDARD TERMS AND CONDITIONS
1. ESCROWS AND RESERVES: The modification documents shall provide
that all required escrow deposits will be payable to Aetna or Aetna's
designee on the fifteenth day of each month. Failure to timely make any
required escrow or reserve deposit within ten (10) days after the due date
shall constitute an event of default under the loan documents. All escrow
and reserve deposits shall secure the Loan and, upon any monetary event of
default under the loan documents including nonpayment of real property
taxes, insurance, and debt service, or any other material nonmonetary event
of default materially affecting the economics of the Property or Aetna's
abilities to enforce its rights under the loan documents, or upon the
Extended Maturity Date if the Loan has not been paid off in full on or
prior to such date, may be applied by Aetna, at Aetna's option, to the
payment of any indebtedness or any obligation thereunder to the extent
permitted by applicable law, subject to the limitation on the Real Property
Tax Escrow described in Provision 5(b)(ii) hereof which limitation shall be
reflected in the Real Property Tax Escrow agreement.
2. LATE CHARGE, DEFAULT INTEREST AND NOTICE PERIOD: The
modification documents shall provide that any payment not received on or
before the relevant due date, including, but not limited to, debt service
payments and escrow deposits, will be subject to a late charge which will
be lesser of 6% of the payment due, or the maximum amount permitted by law.
In the event of any default under the loan documents, the Loan will bear
interest at a default rate of interest which will be the lesser of 6% above
the Contract Interest Rate, or the maximum amount permitted by law, and
will be effective from the occurrence of any event of default until all
defaults are cured. The modification documents will provide Borrower with
(i) notice of default under the loan documents, and (ii) a cure period
following any default under the loan documents to the same extent as the
existing loan documents afford Borrower any such entitlements, before a
default will become an "event of default".
3. RESTRICTIONS ON TRANSFER AND ENCUMBRANCE: Subject to
Provisions 5 and 16 below, the provisions of the existing Aetna mortgage
with respect to transfers or encumbrances of the Property or of interests
in the Borrower shall remain the same except that JMB/245 Park Avenue
Associates, Ltd. shall be substituted for Fame Associates.
4. EXCULPATION: The modification documents shall provide that
Aetna will enforce collection of the Loan solely against the Property and
any other collateral given to secure the Loan, except as hereinafter
provided. Borrower and each of its Principals, identified as O&Y Equity
Company, L.P. ("O&Y") and JMB/245 Park Avenue Associates, Ltd. ("JMB"),
shall each indemnify, defend and hold Aetna harmless from and against any
losses, costs or claims, including attorney's fees and expenses, arising
from or relating to (i) the fraud or criminal acts of such indemnitor or
its partners, officers, directors, employees, agents, principals or
affiliates; (ii) the misappropriation or misapplication by such indemnitor
of rents, issues, profits, or revenues generated by the Property or any
leases relating thereto during any period when an event of default has
occurred and is continuing under the loan documents: (iii) security
deposits paid by tenants of the Property to such indemnitor and not
previously returned to, or forfeited by, such tenants; (iv) the
application by such indemnitor of insurance proceeds, condemnation awards,
or any similar compensation given in consideration for taking, other than
in accordance with the provisions of the loan documents; (v) any activity
of such indemnitor which is violative of the restrictions on transfer or
encumbrance imposed by the Loan Documents. Neither O&Y nor JMB will be
liable for the acts of the other (or of the other's partners, officers
directors, employees, agents, principals or affiliates). The indemnity
obligations will be binding upon the successors and assigns of the Borrower
and each of its Principals. To the extent that the activities described in
section (i), (ii), (iii), and (iv) result from actions of an affiliate of
an indemnitor, such indemnitor will be liable and if such activities result
from the actions of an unaffiliated third party, the indemnitors will be
jointly and severally liable. The indemnity shall exclude any liability
for (a) the cost of asbestos removal and (b) third party claims which stem
from occurrences after Aetna takes title to the Property.
5. SUBORDINATION AND CONSENT: (a) Borrower shall deliver or
cause to be delivered to Aetna at or prior to the Closing, a written
consent, subordination, and, if appropriate, attornment agreement, in form
and consent satisfactory to Aetna (to the extent that the same have not
heretofore been delivered to Aetna), from each and every party, if any,
holding a lien on, a ground leased fee interest in, or a leasehold interest
in the property, to provide, (i) their consent in all respects to the
transaction contemplated hereby, and(ii) the continued subordination of
their respective interest to the loan documents, as modified. The mortgage
held by The Dai-Ichi Kangyo Bank ("DKB") will continue to be subordinate to
Aetna's first mortgage. DKB's loan shall be extended to correspond with
the maturity of Aetna's loan, at an interest rate no greater than Aetna's
New Rate, an amortization schedule no less than 30 years, an extension fee
of not greater than $2,500,000 (which fee may be paid at closing or over
the first 24 months of the loan term, or may be paid in the form of
additional basis points of interest in which case DKB's interest rate may
exceed Aetna's New Rate to the extent necessary to pay the unpaid portion
of such fee), and all other terms to be no more onerous than Aetna's loan.
DKB and Aetna will enter into a mutually satisfactory inter creditor
agreement in which DKB confirms such subordination and agrees to limit, in
a manner satisfactory to Aetna, DKB's rights to exercise remedies against
the Property (but such agreement will not require DKB to stand still in the
event of a default. No other subordinate financing (other than the Aetna
third mortgage) will be permitted.
(b) Within the inter-creditor agreement, Aetna shall agree
(i) not to waive collection of any of the escrow or reserves
called for herein without the approval of DKB;
(ii) not to apply any amounts held in the Real Property Tax
Escrow toward the Aetna indebtedness (except to offset any advances for
real estate property taxes) until the earlier of (x) the Extended Maturity
Date or (y) the date of which Aetna takes title to the Property;
(iii) in the event that the Aetna loan is in default SOLELY due
to the cross default provision with DKB (in other words, the DKB loan is in
default), therefore, the Aetna Loan which otherwise would not be in
default, is put in to default), Aetna agrees not to accrue default interest
ahead of DKB provided that all of the Aetna loan obligations continue to be
met, including repayment on the Extended Maturity Date and further provided
that no bankruptcy of the Borrower has occurred or does occur.
Aetna shall further agree that in the event Aetna intends to sell its
entire loan, it shall offer it first to DKB under a mutually satisfactory
agreement. This agreement shall not be operative in the event of a
participation or partial sale of the loan by Aetna.
6. CONSENT TO RELIEF FROM STAY IN BANKRUPTCY: The modification
documents shall include agreements and stipulations by the Borrower: (i)
waiving, as part of the modification documents, and any and all entitlement
Borrower may have to the protections and benefits of the stay arising under
11 U.S.C. Section 362 at the time of the modification and thereafter; (ii)
that this modification is in lieu of and renders unnecessary any bankruptcy
by the Borrower; (iii) that Borrower's waiver is consideration for the
modification and acknowledging Aetna's reliance upon this waiver in
agreeing to the modification; and, (iv) that, in the event that the
Borrower commences a case under 11 U.S.C. Sec. 101 ET SEQ., as amended (the
"Bankruptcy Code"), or in the event that a case is commenced against the
Borrower thereunder, Aetna shall thereupon immediately be entitled, and the
Borrower shall consent, to relief from any automatic stay imposed by 11
U.S.C. Section 362. The Borrower further agrees that it shall, immediately
upon the request of Aetna, take all actions necessary to afford such relief
to Aetna, including, without limitation, the execution of such documents
and the filing of including, but not limited to, an agreed order or
stipulation granting relief from the stay. Said agreement shall specifically
acknowledge that Aetna is expressly relying upon the terms of this paragraph
6 in agreeing to the modification and/or extension contemplated hereby.
7. RELEASE: The modification documents shall include a waiver and
release given by the Borrower in favor of Aetna which shall (i)
acknowledge that there are no offsets, counterclaims or defenses with
respect to the obligations of the Borrower under the loan documents, and,
to the extent that the Borrower has any such offsets, counterclaims or
defenses of any nature whatsoever, known or unknown, related to the
Property or to the loan documents, shall expressly waive and release any
and all such offset, counterclaims, or defenses which may exist on the date
of Closing; and (ii) release and forever discharge Aetna and all of its
directors, officers, employees, administrators, agents, subsidiaries,
affiliates, attorneys, successors and assigns from any and all causes, of
action, demands, claims, debts, accounts, liabilities, costs, expenses,
contracts, promises, agreements and damages whatsoever in respect to the
Property, the loan documents, or the transaction contemplated by this
Binding Letter Agreement which arose prior to, or which are based, directly
or indirectly, on acts, omissions, or circumstances which occurred or
existed prior to, the Closing.
8. DOCUMENTATION: Aetna will engage outside counsel for the
preparation and review of relevant documentation, and to address all legal
matters pertaining to the Loan and the modification and/or extension
contemplated hereby. The modification and/or extension will be evidenced
either by amendments to the existing loan documents or, at the option of
Aetna or its counsel, replacement loan documents, and will include, without
limitation, (i) any documentation which Aetna deems necessary or
appropriate to perfect its security interest in the rents, income, accounts
receivable and any other revenues generated by, and personalty at, the
Property, and (ii) an affirmative indemnification from the Borrower and its
principals in respect to the matters addressed in Provision 4 above. All
documentation must be in form and content satisfactory to Aetna and its
counsel.
9. NET CASH FLOW: For purposes of this Binding Letter of
Agreement, Net Cash Flow ("NCF") is defined as gross cash receipts
generated from or by Property operations (which shall include income and
revenues from any source, but shall exclude security deposits until such
time as the Borrower is no longer obligated to return them), from which
there will be deducted amounts actually paid for: debt service on the
first and permitted second mortgage loans and reasonable and necessary
operating expenditures of the Property, including, but not limited to, real
estate taxes, or escrow deposits therefor; insurance premiums; utility
costs; payroll costs for building management and service personnel;
elevator and HVAC maintenance charges; janitorial and other cleaning
expenses; repairs and maintenance; property management fee, but not the
asset management fee, referenced herein in Provision 17, general
administrative costs which relate directly to the operation of the Property
(excluding any expenses related solely to the operations of the borrowing
entity except the cost of the audit required in Provision 20), any costs
directly associated with the closing of this transaction as defined in
Provision 11 below, and Capital Reserve deposits references herein in
Provision 14 and Operating Reserve deposits (after the initial deposit at
closing) referenced herein in Provision 13. Tenant improvement costs,
leasing commissions, and costs for asbestos removal which are to be funded
from the Operating Reserve) and capital expenditure (which are to be funded
from the Capital reserve) shall not be deductions for purposes of computing
NCF.
10. THIRD PARTY DELIVERIES: The following items must be delivered
to Aetna at or prior to the Closing, in form and content satisfactory to
Aetna and its counsel:
A. A current written opinion of the Borrower's counsel to the
effect that, INTER ALIA,
(i) the Borrower is a duly organized and existing Partnership under
the law of the State of New York, is duly authorized to enter into the
contemplated modification and/or extension, and the signatory to the
relevant documentation has been duly empowered to execute and deliver the
same;
(ii) the Loan is not usurious or otherwise illegal under applicable
law; and
(iii) the loan documents, as modified, are valid and binding upon
the Borrower, and are enforceable in accordance with their respective
terms, subject to customary exceptions, and excluding specifically the term
of Provision 6.
B. Aetna has retained an environmental consultant to prepare a
report which Aetna will use to evaluate the environmental risk associated
with the Property. Aetna acknowledges that it has reviewed and accepted a
Phase I- Environmental Site Assessment Report dated April 12, 1994 from
Hill Environmental, Inc. Aetna will require the Borrower to provide to
Aetna documentation demonstrating that an Asbestos Operations and
Management program and a staged removal program for asbestos have been
implemented in the building, in compliance with Provision 18 herein.
C. Aetna has retained an architect to inspect the Property in
accordance with the requirements of Aetna. Aetna acknowledges that it has
reviewed and accepted the Physical Condition Survey dated April 28, 1994
prepared by Merritt & Harris, Inc. Aetna will review the capital
improvements budget required by Provision 14 herein in conjunction with
Merritt & Harris' report.
D. Borrower shall deliver or cause to be delivered to Aetna an
endorsement to Aetna's existing loan policy of title insurance (i) down-
dating said policy to the date of the recording of the mortgage or deed or
trust modification, (ii) increasing the coverage to include the $5 million
third mortgage and the Accrual referred to in Provision 21 below, and (iii)
ensuring that the loan documents, as modified, constitute a first and prior
lien (except for Aetna's $5 million third mortgage and the Accrual) on the
property. Such endorsement must be in form and content satisfactory to
Aetna, and shall show only such exceptions as Aetna may approve.
11. TRANSACTION COSTS: Borrower shall pay, at or prior to the
Closing, all costs associated with the transaction contemplated hereby
including, without limitation, the fees and expenses of Aetna's Counsel,
Borrower's Counsel, Borrower's Partners and DKB, environmental,
engineering, architectural and other consultants, appraisal fees, title and
UCC search charges, recording fees, transfer or stamp taxed, mortgage
taxes, and title insurance endorsement premiums. Borrower has remitted to
Aetna the Transaction Cost Retainer identified in the Economic Terms
hereof. It is understood and acknowledged that the retainer is not an
estimate of the aggregate costs which may be incurred in connection with
the proposed modification and/or extension, and shall be applied to, but
shall not limit the Borrower's obligation to pay ALL such costs, fees and
expenses actually incurred on behalf of Aetna, regardless of whether the
contemplated modification and/or extension is consummated. It is
understood and acknowledged that the Borrower's failure to pay any such
cost, fee, or expense upon demand shall constitute an event of default
under the loan documents, and will entitle Aetna to proceed forthwith to
pursue its rights and remedies thereunder.
12. INTEGRATION: These Standard Terms and Conditions shall form a
part of the Binding Letter Agreement between the parties, and shall be
construed, considered, and interpreted in conjunction therewith. This
Binding Letter Agreement embodies the entire agreement by and between the
Borrower and Aetna, and any and all previous correspondence, discussions or
negotiations (other than the existing loan documents) are merge herein.
The acceptance by Aetna of any reduced payments under the loan documents
prior to the Closing shall not be deemed to be a waiver of Aetna's right to
require payment in full accord with the existing loan documents in the
event that the transaction contemplated hereby is not timely closed, provided
however that the waiver of accrued interest provision regarding the period
from March 1, 1995 through June 30, 1995 in the Economic Terms section
hereof shall remain in effect.
ADDITIONAL TERMS
13. OPERATING RESERVE: (a) Borrower agrees to fund a reserve to
cover anticipated Leasing Costs for the Property which are forecasted to be
incurred over the life of the Loan. The reserve shall be funded as
follows: (i) with amounts already held by Aetna for those purposes; plus
(ii) monthly deposits of $1,333,334 on the 15th of each month from April
15, 1995 through closing, plus (iii) a further deposit of $20.5 million
(less any amounts totalling up to $8.5 million already held by Aetna or
others or previously expended by Borrower for the new Rabobank, Vestar
Capital Partners, and Commercial Bank of Korea leases) at closing; plus
(iv) monthly deposits on the 15th of each month during the life of the loan
on amounts to be agreed upon, sufficient to cover anticipated leasing costs
for the property which are forecasted to be incurred over the life of the
Loan. The initial forecast of the monthly deposits shall be as shown on
Exhibit A and thereafter revised from time to time with the prior written
consent of Aetna, which shall not be unreasonably delayed or withheld, to
account for actual leasing transactions and the Leasing Costs payable in
connection therewith. Until such time as an agreement governing the
Operating Reserve is in place, the monthly deposits referred to in (ii)
hereof shall be placed in the Real Property Tax escrow to be used toward
the next applicable real property tax bill.
It is intended that the forecasted required monthly deposits be adjusted
not less than annually pursuant to a budget, which shall forecast Leasing
Costs for the remaining term of the Loan, to be approved by Aetna and DKB.
Thereafter, the required monthly deposits shall be immediately increased to
account for any projected deficit in the amount of reserve funds available
for Leasing Costs as the result of any leasing transactions which occur
throughout the year, as well as any funds being withdrawn for operating
deficits and Aetna and/or DKB debt service shortfalls pursuant to Provision
13 (c)(i), provided that Borrower shall not be required to make any
additional deposits on account of such increase except to the extent of
future NCF. Aetna shall not agree to any reduction on the required monthly
deposits throughout the year without approval of DKB.
"Leasing Costs" shall include without limitation, leasing commissions,
tenant improvements and allowances (including asbestos removal), and other
tenant inducements, but shall not include a forecasted amount for operating
deficits and Aetna debt service shortfalls. The Operating Reserve funds
shall be reserved in an account, in a mutually satisfactory manner, and
disbursed to pay for Leasing Costs and operating deficits and/or Aetna debt
shortfalls pursuant to Provisions 13(b) and 13(c) hereof. Notwithstanding
the established levels of reserves, all NCF will be required to be paid to
Aetna upon any monetary event of default under the loan documents including
non-payment of real property taxes, insurance, and debt service, or any
other material nonmonetary event of default materially affecting economics
of the Property or Aetna's abilities to enforce its rights under the loan
documents, or upon the Extended Maturity Date if the Loan has not been paid
off in full on or prior to such date.
(b) Aetna agrees to release to Borrower from time to time within 10
days after Borrowers's request therefor, portions of the Operating Reserve
to pay or reimburse Borrower for Leasing Costs incurred by Borrower paid or
payable by Borrower in connection with the leasing of space (including,
without limitation, new Leases and renewals and extensions of, and
expansions of space under, existing Leases) in the Building, provided that
(i) such Leasing Costs are payable pursuant to or as a consequence of the
entry by Borrower into (or the exercise by the tenant of an option under) a
Lease (or a Lease modification) that has been or is approved by Aetna (or
that Borrower was or is entitled to enter into without Aenta's approval) in
accordance with the Aetna Mortgage, and (ii) such release is requested by
Borrower in a writing; signed by a general partner of Borrower, in which
Borrower certifies that the amount requested will be used to pay for
Leasing Costs that conform to the requirements of the foregoing clause (i).
Aetna shall have the right to require, in its reasonable judgement,
submission by Borrower of additional information concerning the release of
funds. including, without limitation, detailed information concerning costs
being paid and executed leases. Aetna shall also have the right, at its
option, to require photographs and/or inspections of work in progress in
the case of Leasing Costs that are payable by Borrower based upon the
progress or completion of tenant improvements.
Upon occupancy of the tenants for home funds have been requested (but not
as a condition to Aetna's funding as set forth above), Borrower will use
good faith efforts to provide Aetna with satisfactory tenant estoppels.
Should a Borrower be unable to obtain a tenant estoppel from the tenant,
Aetna will accept a Landlord estoppel satisfactory to Aetna which certifies
that the tenant is in occupancy, paying rent under the terms of their
lease, and that the lease is in full force and effect with no defaults.
Borrower will covenant that all amounts release from the Operating Reserves
pursuant to this provision 13(b) will be used solely for Leasing Cost. Any
minimum leasing parameters established within the DKB mortgage and approval
by Aetna shall be incorporated into Aetna's lease approval and release of
funds processes.
With regard to the administration and funding of the Operating Reserve,
Aetna agree to work diligently with the Borrower to expedite fundings from
the Operating Reserve.
Notwithstanding all of the foregoing and provided that the loan is not in
default, Borrower may draw funds from the Operating Reserve in the event of
a life or Property threatening emergency without prior Aetna approval
provided borrower certifies as such in writing to Aetna upon making such
draw.
(c) Aetna will also release, subject to the terms and conditions of
the escrow documentation, portions of the Operating Reserve to Borrower
from time to time within 10 days after Borrower's request (i) to pay
operating and/or Aetna and/or DKB debt service shortfalls, provided that
the total of the amounts withdrawn for any such aetna debt service
shortfalls shall not exceed $5 million outstanding at any point in time and
the total of the amounts withdrawn for any such DKB debt service shortfalls
shall not exceed $1 million outstanding at any point in time (in both cases
net of any amounts which may have been replenished through increased
deposits from NCF pursuant to adjustments of the required reserve deposits
called for in Provision 13 (a) hereof) and (ii) in the event the forecasted
Operating Reserve (based on required monthly future deposits from NCF)
exceeds forecasted Leasing Costs ( as a consequence of actual Leasing Costs
being lower than initially forecasted), (A) Aetna shall release a portion
of the Operating Reserve which in its reasonable estimation, will not be
necessary (in view of future monthly deposits of NCF) to fund forecasted
Leasing Costs, or (B) Aetna may elect to reduce the future monthly deposit
requirements such that, together with the amounts held in reserve for
Leasing Costs, the totals match the newly forecasted future Leasing Costs.
Provided that the Loan is not in monetary default under the loan documents
including nonpayment of real property taxed, insurance, and debt service,
or any other material nonmonetary default materially affecting the
economics of the Property or Aetna's abilities to enforce its rights under
the loan documents, Aetna shall not hold any forecasted amount for
operating deficits and/or Aetna and/ or DKB debt service shortfalls back
from the funds available to pay current Leasing Costs, except any amounts
necessary to pay any current month's operating deficit and/or Aetna and/or
DKB debt service payment up to the amounts allowed above.
(d) Aetna will have a perfected first priority security interest in
this account (as well as any escrow or other reserve accounts). Aetna will
not be able obligated to permit any release of funds if any event of
monetary default has occurred, including nonpayment of real property taxes,
insurance, and debt service, or any other material nonmonetary default
materially affecting the economics of the Property or Aetna's abilities to
enforce its rights under the loan documents, and in such event, any funds
may be released to Aetna and applied, at Aetna's option, to reimburse
Aetna's expenses, to satisfy delinquent payments, and/or to reduce the loan
balance. Any funds remaining in such account when the loan matures will be
applied by Aetna, at its option, in accordance with the preceding sentence.
DKB will have a perfected second priority interest in all escrow or other
reserve accounts.
Borrower may direct the investment of funds in the escrow and reserve
accounts provided that all investments shall be in United States treasury
obligations, commercial paper rated A-1 or P-1 or better, or certificates
of deposit from commercial banks with a credit rating of not less than AA.
All investment instruments shall have maturities of (i) in the case of the
real property Tax escrow, not greater than the next applicable tax payment
date, or (ii) in the case of the Capital Reserve and Operating Reserve
accounts, not greater than 24 months.
14. CAPITAL RESERVE: An amount equal to $.75/sf per year in the
property shall be reserved, in a mutually satisfactory manner, and
disbursed when needed to pay for capital improvements in accordance with
annual budgets approved by Aetna. The Borrower will deposit from NCF, on a
monthly basis, 1/12th% of the required annual deposit this account.
Borrower shall deposit with Aetna (a) on or before April 7,
1995, an amount into the Real Estate Property Tax Escrow which will be
sufficient to pay the next accruing tax bill, and (b) thereafter monthly on
the 15th of each month from April 15, 1995 until closing the monthly
amounts required for the Capital Reserve account. Until such time as an
agreement governing the Capital Reserve is in place, the monthly deposits
referred to herein shall be placed in the Real Property Tax escrow to be
used toward the next applicable real property tax bill.
15. UNRESERVED CASH. Any remaining NCF will be available for the
asset management fee and distribution of Borrower. Aetna has no objection
to unreserved Cash being held in reserve or applied for the benefit of the
DKB indebtedness.
16. O&Y CONTROL. Neither the cessation of majority ownership
and/or management control of the Property by Olympia & York (U.S.A.) nor a
Chapter 11 filing by a partner in Borrower owned by Olympia & York
(U.S.A.), pursuant to a consensual, pre-arranged or pre-negotiated plan of
reorganization that does not adversely impact or effect Aetna or any of its
rights, powers or privileges under its Loan documents and is in all
material respects satisfactory to Aetna (provided that Aetna shall not
unreasonably withhold or delay its consent to any issues or matters related
to any such plan), will be default so long as a property manager
experienced in the management and leasing of firs-class office buildings in
Manhattan, and approved by Aetna in its reasonable discretion, manages the
building. To the extent that the DKB loan documents contain provisions
entitling DKB to terminate Olympia & York or its affiliate as property
manager, any such termination and the replacement property manager shall be
subject to Aetna's consent and approval.
17. MANAGEMENT FEES. An Olympia and York Affiliate will provide
both property management and asset management services to the Property
owner and will be compensated as follows: (i) a property management fee
equal to 2% of collected gross revenues from existing leases and 1% of
collected gross revenues from all future leases, to be funded from NCF;
(ii) an annual asset management fee equal to 0.5% of Property value in 1995
and 1996, and 0.35% of Property value thereafter (with Property value to be
determined annually by applying a 9% capitalization rate to the prior
year's net operating income (i.e., revenues minus operating expenses and
property management fees, but without deducting asset management fees, debt
service or capital expenditures), to be funded from Unreserved Cash, and
(iii) leasing commissions for leasing transactions equal to (A) a full
standard commission for leasing transactions if the tenant is not
represented by an outsider broker (B) a 50% override on commissions paid to
an outside broker, to be funded from the Operating Reserve referred to in
Provision 13 above.
The fee structures provide for herein shall be effective as of January 1,
1995.
18. ASBESTOS REMOVAL. Borrower agrees to provide, before closing,
a plan of asbestos removal for Aetna's approval. Borrower covenants to
perform asbestos removal throughout the term of the Loan in accordance with
Borrower's plan of removal as approved by Aetna, to be funded from the
Operating Reserve as described in Paragraph 13 above.
19. TENANT ESTOPPELS. Borrower will use good faith efforts to
obtain tenant estoppels from all tenants. At a minimum, Borrower will
obtain tenant estoppels from all tenants occupying more than 50,000 sf
each, and cumulatively the total of all estoppels will cover 80% of the
Property. Aetna will accept a Landlord estoppel, in form satisfactory to
Aetna, for the remaining tenants.
20. CASH MANAGEMENT AND REPORTING REQUIREMENTS. A lock box
arrangement satisfactory to Aetna shall be established to collect rents,
pay Property expenses including property ;management fees, all debt
service, and fund escrows and reserves called for herein. Following full
payment and funding of these amounts, excess cash shall be released to
Borrower and may be used to pay the Asset Management Fee pursuant to
Provision 17 (ii) hereof. Aetna shall have a perfected first priority
interest in this arrangement. Prior to closing, Aetna may apply the
proceeds of this arrangement to Property operating expenses, capital needs
and leading expenses, but not to Aetna's indebtedness. Following closing,
Aetna may apply the proceeds of these accounts in accordance with Provision
1 and 13(d) hereof. Following closing, DKB shall have a perfected second
priority interest in any accounts pursuant to this arrangement. Borrower
will provide to Lender annually a monthly operating budget for each
calendar or fiscal year. The budget will provide the same level of detail
as cash flow projections previously provided to Lender. In addition,
Borrower shall provide as soon as the same become necessary, updates to
forecasted Leasing Costs, in such detail as Aetna may reasonably require.
Borrower shall collect rents from tenants and apply them to operating and
other expenses, which shall be in accordance with the annual budget except
for (i) expense overruns within 10% of the line item therefor in such
budget, and (ii) expenses reasonably incurred in an emergency, and (iii)
uncontrollable expenses (such as real estate taxes and utilities).
Borrower must submit to Aetna on a quarterly basis (on or before the
20th day of January, April, July and October of each year) unaudited
financial statements covering the operation of the Premises for the
preceding quarter, certified to be accurate by Borrower's chief financial
officer or managing general partner. Such reports should include a
reconciliation of the calculation of NCF, all escrow and reserve deposits
and unreserved cash. Borrower should also submit quarterly, at the same
time, a current rent roll listing all leases, subleases, tenancies,
concessions, security deposits, expense reimbursements and renewal options
where applicable.
Additionally, Borrower must submit to Aetna, within 120 days of the
end of the fiscal year, at Borrower's expense, audited financial statement
setting forth the results of operations of the Property for the preceding
fiscal year (which shall be the same as the calendar year) and current year
to date to include:
1. Balance sheet of the Property at the end of such periods,
2. Statement of income, surplus and changes in financial position
for such periods, and
3. Statement of changes and reconciliations of the Operating Reserve
setting forth in each case, in comparative form, the figures for the
previous fiscal year, all in reasonable detail and accompanied by an
unqualified opinion thereon by Margolin, Winer, & Evins or other
independent certified public accountants of recognized national standing
approved by Aetna. The opinion shall state that such financial statements
fairly present the financial condition of the Premises being reported upon,
have been prepared in accordance with generally accepted accounting
principles consistently applied (except for changes in application in which
such accountants concur) and that the examination of such accountant in
connection with such financial statements has been made in accordance with
generally accepted auditing standards and such other auditing procedures as
were considered necessary in the circumstances.
21. ACCRUAL. In addition to the New Rate, an additional 3% per
annum shall accrue and be payable by Borrower (the "Accrual"); provided
however that upon repayment of the loan in full on or before the Extended
Maturity Date, or, consummation of a foreclosure of he Aetna first
mortgage, the Accrual shall be forgiven by Aetna provided that the Borrower
has not filed a voluntary bankruptcy petition or contested any lawful
foreclosure action by Lender as a consequence of an event of default under
the Aetna mortgage. The accrual would also be payable if a general partner
of Borrower files an involuntary petition against the partnership. The
Accrual will be subordinate to the DKB loan and the $5 million Aetna third
mortgage.
22. CLOSING EXTENSION. Borrower may elect to extend the scheduled
Closing Date of not later than July 1, 1995 for up to six months (in any
increments or series of extension periods the Borrower chooses) by paying,
on a current monthly basis, the Pay Rate of 12% per annum for the period
from July 1, 1995 through July 31, 1995, and the Note Contract Interest
Rate of 18% per annum during the balance of the extension period.
END OF BINDING LETTER AGREEMENT
EXHIBIT A
Operating Reserve Deposits
Calendar Year
($000's) 1995 1996 1997 1998 19992000
Initial Deposit $20,500*
Monthly Deposits 1,333 1,250 0 417 250167
(effective as of
1/1 of each year,
but payable on the
15th of each month)
* less any amounts totalling up to $8.5 million already held by Aetna or
others or previously expended by Borrower for the new Rabobank, Vestar
Capital Partners, and Commercial Bank of Korea leases.
April 6, 1995
245 Park Avenue Company
c/o O&Y Equity Company, L.P.
237 Park Avenue
New York, New York 10017
Re: Aetna Life Insurance Company ("Aetna")
Mortgage Loans Nos. 191806, 575, 196432 and 196433
245 Park Avenue Company ("Borrower")
Mortgaged Property: 245 Park Avenue, New York, New York
Ladies and Gentlemen:
This letter will confirm that Borrower has agreed to deliver to
Dorman & Wilson, Inc., as agent for Aetna (the "Correspondent"), $9,115,000
pursuant to the wire transfer instructions set forth on EXHIBIT A attached
hereto and incorporated herein, to fund a tax escrow with respect to the
Mortgaged Property.
Aetna agrees that it shall direct the Correspondent to apply such
funds (or any other funds deposited with Correspondent for the payment of
real estate taxes) to payment of real estate taxes and assessments when due
with respect to the Mortgaged Property. Such funds shall not be applied
for any other purpose except as provided in the last sentence of this
paragraph; and, pending such application, such funds shall be invested in
accordance with the Binding Letter Agreement dated April 6, 1995 between
Aetna and Borrower. All such funds shall be held and maintained by
Correspondent pursuant to Part C, Article 24, of the Consultation and
Extension Agreement 1983 (Fee and Leasehold Mortgage) dated as of September
28, 1983, between Aetna and Borrower, as amended. This letter shall be
deemed to supersede and amend that certain Supplementary Agreement made as
of September 28, 1983, between Lender and Olympia & York Estates Company.
In the event Aetna shall acquire title to the Mortgaged Property, whether
by foreclosure of other wise, Aetna's undertakings under this letter shall
be of no further force and effect and Aetna may use and apply such funds in
accordance with Aetna's rights under the instruments and agreements
evidencing and securing the loan.
This letter agreement may be executed in one or more counterparts,
each of which shall be deemed to be an original and all of which shall be
deemed to be one and the same agreement.<PAGE>
245 Park Avenue Company
April 6, 1995
Page 2
Please confirm Borrower's consent and agreement to the terms hereof
by countersigning a copy of this letter in the space provided below.
Very truly yours,
AETNA LIFE INSURANCE COMPANY
By:
--------------------------------
Name:
Title:
245 PARK AVENUE COMPANY
By: O&Y Equity Company, L.P.
General Partner
By: O&Y Equity General Partner Corp.,
General Partner
By:
--------------------------------
Name:
Title:
By: JMB/245 Park Avenue Associates, Ltd.,
General Partner
By: JMB Park Avenue, Inc.,
General Partner
By:
--------------------------------
Name:
Title:
EXHIBIT A
Tax Escrow Deposit of $9,115,000 should be wired to:
Bank Name: First Bank, N.A.
Minneapolis, Minnesota
ABA No. 091-000-022
Account Name: Aetna Life Insurance Company
Account No.: 1-702-251-40392
Reference: Loan Nos. 1-003-514 & 575
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
THE REGISTRANT'S FORM 10-Q FOR THE THREE MONTHS ENDED MARCH 31,
1995 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS INCLUDED IN SUCH REPORT.
</LEGEND>
<CIK> 0000747159
<NAME> JMB/245 PARK AVENUE ASSOCIATES, LTD.
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> MAR-31-1995
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 0
<CURRENT-LIABILITIES> 16,751,376
<BONDS> 39,590,631
<COMMON> 0
0
0
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</TABLE>
