SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
Annual Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the fiscal year
ended December 31, 1994 Commission file no. 0-16111
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XV
(Exact name of registrant as specified in its charter)
Illinois 36-3314827
(State of organization) (IRS Employer Identification No.)
900 North Michigan Ave., Chicago, IL 60611
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code 312/915-1987
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on
Title of each Class which registered
------------------- -----------------------------
None None
Securities registered pursuant to Section 12(g) of the Act:
LIMITED PARTNERSHIP INTERESTS
AND ASSIGNEE INTERESTS THEREIN
(Title of Class)
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
State the aggregate market value of the voting stock held by non-affiliates
of the registrant. Not applicable.
Documents Incorporated by Reference: None
TABLE OF CONTENTS
Page
----
PART I
Item 1. Business. . . . . . . . . . . . . . . . . . . . . . 1
Item 2. Properties. . . . . . . . . . . . . . . . . . . . . 8
Item 3. Legal Proceedings . . . . . . . . . . . . . . . . . 12
Item 4. Submission of Matters to a
Vote of Security Holders. . . . . . . . . . . . . . 12
PART II
Item 5. Market for the Partnership's Limited
Partnership Interests and Related
Security Holder Matters . . . . . . . . . . . . . . 12
Item 6. Selected Financial Data . . . . . . . . . . . . . . 13
Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations . . . 17
Item 8. Financial Statements and Supplementary Data . . . . 32
Item 9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure. . . . . . . 99
PART III
Item 10. Directors and Executive Officers
of the Partnership. . . . . . . . . . . . . . . . . 99
Item 11. Executive Compensation. . . . . . . . . . . . . . . 103
Item 12. Security Ownership of Certain Beneficial Owners
and Management. . . . . . . . . . . . . . . . . . . 104
Item 13. Certain Relationships and Related Transactions. . . 105
PART IV
Item 14. Exhibits, Financial Statement Schedules,
and Reports on Form 8-K . . . . . . . . . . . . . . 105
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . 110
i
PART I
ITEM 1. BUSINESS
Unless otherwise indicated, all references to "Notes" are to Notes to
Consolidated Financial Statements contained in this report.
The registrant, Carlyle Real Estate Limited Partnership-XV (the
"Partnership"), is a limited partnership formed in August of 1984 and
currently governed by the Revised Uniform Limited Partnership Act of the
State of Illinois to invest in income-producing commercial and residential
real property. On July 5, 1985, the Partnership commenced an offering to
the public of $250,000,000 (subject to increase by up to $250,000,000) in
Limited Partnership Interests and assigned interests therein ("Interests")
pursuant to a Registration Statement on Form S-11 under the Securities Act
of 1933 (No. 2-95382). A total of 443,711.76 Interests were sold to the
public at $1,000 per Interest. The holders of 224,569.10 Interests were
admitted to the Partnership in 1985; the holders of 219,142.66 Interests
were admitted to the Partnership in 1986. The offering closed on July 31,
1986. Subsequent to admittance to the Partnership, no holder of Interests
(hereinafter, a "Limited Partner") has made any additional capital
contribution. The Limited Partners of the Partnership share in their
portion of the benefits of ownership of the Partnership's real property
investments according to the number of Interests held.
The Partnership is engaged solely in the business of the acquisition,
operation and sale and disposition of equity real estate investments. Such
equity investments are held by fee title, leasehold estates and/or through
joint venture partnership interests. The Partnership's real property
investments are located throughout the nation and it has no real estate
investments located outside of the United States. A presentation of
information about industry segments, geographic regions, raw materials or
seasonality is not applicable and would not be material to an understanding
of the Partnership's business taken as a whole. Pursuant to the
Partnership Agreement, the Partnership is required to terminate on or
before December 31, 2035. Accordingly, the Partnership intends to hold the
real properties it acquires for investment purposes until such time as sale
or other disposition appears to be advantageous. Unless otherwise
described, the Partnership expects to hold its properties for long-term
investment. Due to current market conditions, the Partnership is not able
to determine the holding period for its remaining properties. At sale of a
particular property, the proceeds, if any, are generally distributed or
reinvested in existing properties rather than invested in acquiring
additional properties.
The Partnership has made the real property investments set forth in
the following table:
<TABLE>
<CAPTION>
SALE OR DISPOSITION
DATE OR IF OWNED
AT DECEMBER 31, 1994,
NAME, TYPE OF PROPERTY DATE OF ORIGINAL INVESTED
AND LOCATION (g) SIZE PURCHASE CAPITAL PERCENTAGE (a) TYPE OF OWNERSHIP (b)
---------------------- ---------- -------- ---------------------- ---------------------
<S> <C> <C> <C> <C>
1. 900 Third Avenue
Building
New York,
New York. . . . . . . 517,000 sq.ft. 8/20/84 9% fee ownership of land and
n.r.a improvements
(through joint venture
partnerships) (c)
2. Piper Jaffray Tower
Minneapolis,
Minnesota . . . . . . 723,755 sq.ft. 12/27/84 6% fee ownership of land and
n.r.a. improvements (through joint
venture partnerships) (c)
3. RiverEdge Place
Building
Fulton County
(Atlanta),
Georgia . . . . . . . 235,762 sq.ft. 6/10/85 3% fee ownership of land and
n.r.a. improvements
4. Wells Fargo Center -
IBM Tower
Los Angeles,
California. . . . . . 1,100,000 sq.ft. 6/28/85 18% fee ownership of land and
n.r.a. improvements (through a
joint venture partnership)
(c)(h)
5. Villa Solana
Apartments
Laguna Hills,
California. . . . . . 272 units 8/30/85 3/23/94 fee ownership of land and
improvements (through a
joint venture partnership)
(c)(k)
6. Eastridge Mall
Casper, Wyoming . . . 477,019 sq.ft. 9/10/85 3% fee ownership of land and
g.l.a. improvements (through a
joint venture partnership)
(c)
SALE OR DISPOSITION
DATE OR IF OWNED
AT DECEMBER 31, 1994,
NAME, TYPE OF PROPERTY DATE OF ORIGINAL INVESTED
AND LOCATION (g) SIZE PURCHASE CAPITAL PERCENTAGE (a) TYPE OF OWNERSHIP (b)
---------------------- ---------- -------- ---------------------- ---------------------
7. Woodland Hills
Apartments
DeKalb County
(Atlanta),
Georgia . . . . . . . 228 units 9/30/85 1% fee ownership of land and
improvements
8. Park at Countryside
Apartments
Port Orange
(Daytona Beach),
Florida . . . . . . . 120 units 11/27/85 5/5/94 fee ownership of land and
improvements (through a
joint venture partnership)
(c)(l)
9. 160 Spear Street
Building
San Francisco,
California. . . . . . 267,000 sq.ft. 11/27/85 4% fee ownership of improve-
n.r.a. ments and ground leasehold
interest in land (through a
joint venture partnership)
(c)(d)
10. 21900 Burbank
Boulevard
Building
Los Angeles
(Woodland Hills),
California . . . . . 87,000 sq.ft. 11/29/85 2% fee ownership of land and
n.r.a. improvements
11. 300 East Lombard
Building
Baltimore,
Maryland. . . . . . . 232,000 sq.ft. 11/29/85 9/30/91 fee ownership of improve-
n.r.a. ments and ground leasehold
interest in land (through
joint venture partnerships)
(e)
12. Boatmen's Center
Kansas City,
Missouri. . . . . . . 285,000 sq.ft. 12/16/85 8/31/89 fee ownership of land and
n.r.a. improvements (through a
joint venture partnership)
(c)(f)
SALE OR DISPOSITION
DATE OR IF OWNED
AT DECEMBER 31, 1994,
NAME, TYPE OF PROPERTY DATE OF ORIGINAL INVESTED
AND LOCATION (g) SIZE PURCHASE CAPITAL PERCENTAGE (a) TYPE OF OWNERSHIP (b)
---------------------- ---------- -------- ---------------------- ---------------------
13. 125 Broad Street
Building
New York,
New York. . . . . . . 1,336,000 sq.ft. 12/31/85 11/15/94 fee ownership of improve-
n.r.a. ments and ground leasehold
interest in land (through
joint venture partnerships)
(c)(d)(n)
14. Owings Mills
Shopping Center
Owings Mills
(Baltimore County),
Maryland. . . . . . . 325,000 sq.ft. 12/31/85 6/30/93 fee ownership of land and
g.l.a. improvements (through joint
venture partnerships)
(c)(j)
15. 260 Franklin
Street Building
Boston,
Massachusetts . . . . 348,901 sq.ft. 5/21/86 8% fee ownership of land and
n.r.a. improvements (through a
joint venture partnership)
(c)
16. 9701 Wilshire
Building
Beverly Hills,
California. . . . . . 98,721 sq.ft. 6/17/86 10/6/94 fee ownership of land and
n.r.a. improvements (m)
17. California Plaza
Walnut Creek,
California. . . . . . 368,290 sq.ft. 6/30/86 7% fee ownership of land and
n.r.a. improvements (through joint
venture partnerships) (c)
18. Dunwoody Crossing
Apartments
(Phase I, II,
and III)
DeKalb County
(Atlanta),
Georgia . . . . . . . 810 units 9/18/86 4% fee ownership of land and
improvements (through joint
venture partnerships)
(c)
SALE OR DISPOSITION
DATE OR IF OWNED
AT DECEMBER 31, 1994,
NAME, TYPE OF PROPERTY DATE OF ORIGINAL INVESTED
AND LOCATION (g) SIZE PURCHASE CAPITAL PERCENTAGE (a) TYPE OF OWNERSHIP (b)
---------------------- ---------- -------- ---------------------- ---------------------
19. NewPark Mall
Newark
(Alameda County),
California. . . . . . 423,748 sq.ft. 12/2/86 5% fee ownership of land and
g.l.a. improvements (through joint
venture partnerships) (c)
20. Springbrook Shopping
Center
Bloomingdale
(Chicago),
Illinois. . . . . . . 189,651 sq.ft. 7/5/89 3% fee ownership of land and
g.l.a. improvements
21. Erie-McClurg
Parking Facility
Chicago, Illinois . . 1,073 spaces 7/21/89 9/25/92 fee ownership of land and
improvements (i)<PAGE>
----------------
<FN>
(a) The computation of this percentage for properties held at
December 31, 1994 does not include amounts invested from sources other than
the original net proceeds of the public offering as described above and in
Item 7.
(b) Reference is made to Note 4 and to Note 3 of Notes to
Combined Financial Statements and to the Schedule IIIs to such Consolidated
and Combined Financial Statements filed with this annual report for the
current outstanding principal balances and a description of the long-term
mortgage indebtedness secured by the Partnership's real property
investments.
(c) Reference is made to Note 3 for a description of the joint
venture partnership or partnerships through which the Partnership made this
real property investment.
(d) Reference is made to Note 9(b) and Note 4(b) of Notes to
Combined Financial Statements filed with this annual report for a
description of the leasehold interest, under a ground lease, in the land on
which this real property investment is situated.
(e) Reference is made to Note 7 for a description of the sale of
the Partnership's interest in this property.
(f) Reference is made to Note 3(b)(i) for a description of the
disposition of this investment property.
(g) Reference is made to Item 8 - Schedule IIIs to the
Consolidated and Combined Financial Statements filed with this annual
report for further information concerning the real estate taxes and
depreciation.
(h) Reference is made to Item 6 - Selected Financial Data for
additional operating and lease expiration data concerning this investment
property.
(i) This property was sold September 25, 1992. Reference is made
to Note 7 for a description of the sale of the interest in this investment
property.
(j) The Partnership's interest in this property was sold June 30,
1993. Reference is made to Note 7 for a description of the sale of the
Partnership's interest in this investment property.
(k) This property was sold March 23, 1994. Reference is made to
Note 7 for a description of the sale of this investment property.
(l) Reference is made to Note 4(b)(i) for a description of the
disposition of this investment property.
(m) This property was sold October 6, 1994. Reference is made to
Note 7 for a description of the sale of this investment property.
(n) The Partnership's interest in this property was assigned to
an affiliate of the Partnership's unaffiliated venture partner in November
1994. Reference is made to Note 7 for a description of the sale of the
Partnership's interest in this investment property.
</TABLE>
The Partnership's real property investments are subject to competition
from similar types of properties (including in certain areas properties
owned or advised by affiliates of the General Partners or properties owned
by venture partners or their affiliates) in the respective vicinities in
which they are located. Such competition is generally for the retention of
existing tenants. Additionally, the Partnership is in competition for new
tenants in markets where significant vacancies are present. Reference is
made to Item 7 below for a discussion of competitive conditions and future
renovation and capital improvement plans of the Partnership and certain of
its significant investment properties. Approximate occupancy levels for
the properties are in the table in Item 2 below to which reference is
hereby made. The Partnership maintains the suitability and competitiveness
of its properties in its markets primarily on the basis of effective rents,
tenant allowances and service provided to tenants. In the opinion of the
Corporate General Partner of the Partnership, all of the investment
properties held at December 31, 1994 are adequately insured. Although
there is earthquake insurance coverage for a portion of the value of the
Partnership's investment properties, the Corporate General Partner does not
believe that such coverage for the entire replacement cost of the
investment properties is available on economic terms.
On March 23, 1994, the Partnership, through Villa Solana Associates,
sold the Villa Solana Apartments. The purchaser is not affiliated with the
Partnership or its General Partners. Reference is made to Note 7 for a
further description of such transaction.
On May 5, 1994, the lender for the Park at Countryside Apartments
realized upon its mortgage security interest and took title to the
property. Reference is made to the Partnership's report on Form 8-K (File
No. 0-16111) for May 5, 1994, which description is hereby incorporated
herein by reference. Reference is also made to Note 4(b)(i) for a further
description of such transaction.
On October 6, 1994, the Partnership sold the 9701 Wilshire Building.
The purchaser is not affiliated with the Partnership or its General
Partners. Reference is made to Note 7 for a further description of such
transaction.
In November 1994, effective as of October 31, 1994, JMB/125 Broad
Building Associates, L.P. ("JMB/125"), an Illinois limited partnership,
made an agreement with its venture partners in the 125 Broad Street Company
("125 Broad") to settle their dispute regarding 125 Broad and its property.
Pursuant to the agreement, JMB/125 assigned its approximate 48.25% interest
in 125 Broad, which owns the 125 Broad Street Building and a leasehold
interest in the underlying land located in New York, New York to an
affiliate of the venture partners and released the venture partners from
any claims of JMB/125 related to 125 Broad. The Partnership owns
indirectly an approximate 60% limited partnership interest in JMB/125. An
affiliate of the Partnership owns indirectly substantially all of the
remaining interest in JMB/125. In return for the assignment, JMB/125
received an unsecured promissory note in the principal amount of $5 million
bearing simple interest at 4.5% per annum with all principal and accrued
interest due at maturity in October 1999, subject to mandatory prepayments
of principal and interest or acceleration of the maturity date under
certain circumstances. In addition, JMB/125 received a release from any
claims of certain affiliates of the venture partner and will generally be
indemnified against any liability as a general partner of 125 Broad.
JMB/125 was also relieved of any obligation to contribute cash to 125 Broad
in the amount of its deficit capital account balance. The venture partners
subsequently filed a pre-arranged bankruptcy plan for reorganization of 125
Broad under Chapter 11 of the Bankruptcy Code in order to facilitate 125
Broad's transfer of the office building to the mortgage lender in
satisfaction of the mortgage debt and other claims. In January 1995, the
plan for reorganization was approved by the bankruptcy court, was
consummated, and the bankruptcy was concluded. Reference is made to Item 7
and Notes 3(c)(iv) and 7(f) for a further discussion of this property.
The mortgage note secured by the Wells Fargo Building and the
promissory note secured by the Partnership's interest in the South Tower
venture matured December 1, 1994 and are in default. The Partnership and
the joint venture have been in discussions with the respective lenders
regarding an extension of such notes. Reference is made to Item 7 and
Notes 3(c)(iii) and 4(b)(vii).
Reference is made to Note 9(a) and to Note 4 of Notes to Combined
Financial Statements filed with this annual report for a schedule of
minimum lease payments to be received in each of the next five years, and
in the aggregate thereafter, under leases in effect at the Partnership's
consolidated and combined properties as of December 31, 1994.
The Partnership has approximately 24 full-time personnel and one part-
time individual performing on-site duties at certain of the Partnership's
properties, none of whom are officers or directors of the Corporate General
Partner of the Partnership.
The terms of transactions between the Partnership, the General
Partners and their affiliates are set forth in Item 11 below to which
reference is hereby made for a description of such terms and transactions.
ITEM 2. PROPERTIES
The Partnership owned or owns directly or through joint venture
partnerships the properties or interests in the properties referred to
under Item 1 above to which reference is hereby made for a description of
said properties.
The following is a listing of principal businesses or occupations
carried on in and approximate occupancy levels by quarter during fiscal
years 1994 and 1993 for the Partnership's investment properties owned
during 1994:
<TABLE>
<CAPTION>
1993 1994
------------------------- -------------------------
At At At At At At At At
Principal Business 3/31 6/30 9/30 12/31 3/31 6/30 9/30 12/31
------------------ ---- ---- ---- ----- ---- ---- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1. 900 Third Avenue Building
New York, New York. . . . . . Legal Services/
Detective Agency/
Insurance 91% 94% 94% 95% 94% 94% 94% 94%
2. Piper Jaffray Tower
Minneapolis, Minnesota. . . . Legal/Advertising/
Financial Services 97% 98% 98% 98% 99% 99% 98% 98%
3. RiverEdge Place
Fulton County (Atlanta),
Georgia . . . . . . . . . . . Banking 85% 83% 84% 89% 87% 88% 89% 89%
4. Wells Fargo Center
- IBM Tower
Los Angeles,
California. . . . . . . . . . Business Informa-
tion Systems/
School District/
Legal Services 98% 98% 98% 98% 97% 97% 97% 96%
5. Villa Solana Apartments
Laguna Hills,
California. . . . . . . . . . Apartments 94% 91% 91% 91% N/A N/A N/A N/A
6. Eastridge Mall
Casper, Wyoming . . . . . . . Retail 90% 90% 90% 91% 91% 92% 92% 91%
7. Woodland Hills Apartments
DeKalb County (Atlanta),
Georgia . . . . . . . . . . . Apartments 96% 87% 98% 92% 89% 98% 100% 99%
8. Park at Countryside
Apartments
Port Orange (Daytona
Beach), Florida . . . . . . . Apartments 97% 95% 97% 99% 98% N/A N/A N/A
9. 160 Spear Street Building
San Francisco,
California. . . . . . . . . . Public Utility/
Government/
Insurance 93% 95% 94% 91% 91% 88% 88% 89%
10. 21900 Burbank Boulevard
Building
Los Angeles
(Woodland Hills),
California. . . . . . . . . . Insurance/
Financial Services 98% 98% 100% 99% 99% 100% 100% 100%
11. 125 Broad Street Building
New York, New York. . . . . . Insurance/
Legal Services 72% 72% 72% 54% 54% 54% 54% N/A
1993 1994
------------------------- -------------------------
At At At At At At At At
Principal Business 3/31 6/30 9/30 12/31 3/31 6/30 9/30 12/31
------------------ ---- ---- ---- ----- ---- ---- ----- -----
12. 260 Franklin Street
Building
Boston, Massachusetts . . . . Financial Services 97% 98% 97% 99% 99% 99% 99% 99%
13. 9701 Wilshire
Building
Beverly Hills,
California. . . . . . . . . . Banking/
Financial Services 92% 96% 93% 93% 89% 89% 89% N/A
14. California Plaza
Walnut Creek,
California. . . . . . . . . . Manufacturing/
Public Utility 94% 96% 97% 95% 95% 99% 98% 95%
15. Dunwoody Crossing
(Phase I, II and III)
Apartments
DeKalb County (Atlanta),
Georgia . . . . . . . . . . . Apartments 94% 96% 93% 90% 91% 93% 91% 88%
16. NewPark Mall
Newark (Alameda County),
California. . . . . . . . . . Retail 71% 73% 80% 81% 80% 80% 80% 81%
17. Springbrook
Shopping Center
Bloomingdale (Chicago),
Illinois. . . . . . . . . . . Retail 95% 95% 95% 74% 74% 71% 71% 71%
<FN>
--------------------
Reference is made to Item 6, Item 7 and to Note 9, and to Note 4 of
Notes to Combined Financial Statements, for further information regarding
property occupancy, competitive conditions and tenant leases at the
Partnership's investment properties.
An "N/A" indicates that the property, or Partnership's interest in the
property was sold or was not owned by the Partnership at the end of the
period.
</TABLE>
ITEM 3. LEGAL PROCEEDINGS
The Partnership is not subject to any material pending legal
proceedings. Reference is made to Note 3(c)(ii) for a discussion of
certain litigation involving the Partnership.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of security holders during
1994 and 1993.
PART II
ITEM 5. MARKET FOR THE PARTNERSHIP'S LIMITED PARTNERSHIP INTERESTS
AND RELATED SECURITY HOLDER MATTERS
As of December 31, 1994, there were 38,872 record holders of Interests
in the Partnership. There is no public market for Interests, and it is not
anticipated that a public market for Interests will develop. Upon request,
the Corporate General Partner may provide information relating to a
prospective transfer of Interests to an investor desiring to transfer his
Interests. The price to be paid for the Interests, as well as any other
economic aspect of the transaction, will be subject to negotiation by the
investor. There are certain conditions and restrictions on the transfer of
Interests, including, among other things, the requirement that the
substitution of a transferee of Interests as a Limited Partner of the
Partnership be subject to the written consent of the Corporate General
Partner. The rights of a transferee of Interests who does not become a
substituted Limited Partner will be limited to the rights to receive his
share of profits or losses and cash distributions from the Partnership, and
such transferee will not be entitled to vote such Interests. No transfer
will be effective until the first day of the next succeeding calendar
quarter after the requisite transfer form satisfactory to the Corporate
General Partner has been received by the Corporate General Partner. The
transferee consequently will not be entitled to receive any cash
distributions or any allocable share of profits or losses for tax purposes
until such next succeeding calendar quarter. Profits or losses from
operations of the Partnership for a calendar year in which a transfer
occurs will be allocated between the transferor and the transferee based
upon the number of quarterly periods in which each was recognized as the
holder of the Interests, without regard to the results of the Partnership's
operations during particular quarterly periods and without regard to
whether cash distributions were made to the transferor or transferee.
Profits or losses arising from the sale or other disposition of Partnership
properties will be allocated to the recognized holder of the Interests as
of the last day of the quarter in which the Partnership recognized such
profits or losses. Cash distributions to a holder of Interests arising
from the sale or other disposition of Partnership properties will be
distributed to the recognized holder of the Interests as of the last day of
the quarterly period with respect to which such distribution is made.
Reference is made to Note 5 for a discussion of the provisions of the
Partnership Agreement relating to cash distributions. Reference is made to
Item 6 below for a discussion of cash distributions made to the Limited
Partners.
<TABLE>
ITEM 6. SELECTED FINANCIAL DATA
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XV
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
DECEMBER 31, 1994, 1993, 1992, 1991 AND 1990
(NOT COVERED BY INDEPENDENT AUDITORS' REPORT)
<CAPTION>
1994 1993 1992 1991 1990
------------- ------------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Total income . . . . . . . . . $ 53,107,469 55,288,244 64,499,133 60,718,299 61,615,559
============ ============ =========== =========== ===========
Operating loss . . . . . . . . $(16,770,041) (27,390,383) (37,863,307) (20,060,387) (35,842,026)
Partnership's share of loss
from operations of uncon-
solidated ventures. . . . . . (15,190,416) (31,617,778) (24,576,481) (15,887,646) (9,615,653)
Venture partners' share of
loss from ventures'
operations. . . . . . . . . . 2,235,151 2,866,514 3,678,862 3,432,757 8,522,318
------------ ------------ ----------- ----------- -----------
Net operating loss . . . . . . (29,725,306) (56,141,647) (58,760,926) (32,515,276) (36,935,361)
Gain on sale or disposi-
tion of investment
properties (net of
venture partner's share
of $823,609 in 1994). . . . . 3,597,347 -- 506,446 -- --
Gain on sale or disposi-
tion of interests
in unconsolidated
ventures. . . . . . . . . . . 31,743,006 2,856,567 -- 9,041,533 --
------------ ------------ ----------- ----------- -----------
Income (loss) before
extraordinary item. . . . . . 5,615,047 (53,285,080) (58,254,480) (23,473,743) (36,935,361)
Extraordinary item . . . . . . -- -- -- 1,014,538 --
------------ ------------ ----------- ----------- -----------
Net income (loss). . . . . . . $ 5,615,047 (53,285,080) (58,254,480) (22,459,205) (36,935,361)
============ ============ =========== =========== ===========
1994 1993 1992 1991 1990
------------- ------------- ----------- ------------ ------------
Net earnings (loss)
per interest (b):
Net operating loss
per Interest (b). . . . . . $ (64.31) (121.46) (127.13) (70.35) (79.91)
Net gain on sale
or disposition
of investment
properties. . . . . . . . . 8.03 -- 1.13 -- --
Gain on sale or
disposition of
interests in uncon-
solidated ventures. . . . . 70.83 6.37 -- 20.17 --
Extraordinary item . . . . . -- -- -- 2.20 --
------------ ------------ ----------- ----------- -----------
Net income (loss). . . . . . . $ 14.55 (115.09) (126.00) (47.98) (79.91)
============ ============ =========== =========== ===========
Total assets . . . . . . . . . $327,662,913 371,886,177 414,132,574 473,874,338 503,848,026
Long-term debt . . . . . . . . $246,148,319 237,811,558 305,589,971 306,150,647 351,723,659
Cash distributions
per Interest (c). . . . . . . $ 5.00 .55 .50 4.25 8.75
============ ============ =========== =========== ===========
<FN>
-------------
(a) The above selected financial data should be read in conjunction with the consolidated financial
statements and the related notes appearing elsewhere in this annual report.
(b) The net loss per Interest is based upon the number of Interests outstanding at the end of the period
(443,717).
(c) Cash distributions to the Limited Partners since the inception of the Partnership have not resulted in
taxable income to such Limited Partners and have therefore represented a return of capital. Each Partner's
taxable income (loss) from the Partnership in each year is equal to his allocable share of the taxable income
(loss) of the Partnership, without regard to the cash generated or distributed by the Partnership.
</TABLE>
<TABLE>
SIGNIFICANT PROPERTY - SELECTED RENTAL AND OPERATING DATA AS OF DECEMBER 31, 1994
<CAPTION>
Property
--------
Wells Fargo Center a) The occupancy rate of net rentable square feet (NRF) and average base rent per square
foot as of December 31 for each of the last five years were as follows:
Avg. Annual
NRF Base Rent Per
December 31, Occupancy Rate Square Foot (1)
------------ -------------- ---------------
<S> <C> <C> <C>
1990. . . . . . . 100% $31.22
1991. . . . . . . 96% 31.84
1992. . . . . . . 98% 29.11
1993. . . . . . . 98% 30.66
1994. . . . . . . 96% 32.46
<FN>
(1) Average annual base rent per square foot is based on NRF occupied as of December 31
of each year.
</TABLE>
<TABLE>
<CAPTION>
Base Rent Scheduled Lease Lease
b) Significant Tenants Square Feet Per Annum Expiration Date Renewal Option(s)
------------------- ----------- --------- --------------- -----------------
<S> <C> <C> <C> <C> <C>
International Business 305,934 $21,596,668 12/1998 N/A
Machines Corporation (1)
(1)
Los Angeles Unified
School District (1) 273,559 $ 1,188,128 3/2002 N/A
(1)
(1) In March 1995, the Venture entered into a seven year direct lease with the Los
Angeles Unified School District ("LAUSD") for a portion of the space formerly occupied by International Business
Machines Corporation ("IBM"). In addition, IBM will reimburse the Venture for any shortfalls between amounts
collected under the LAUSD lease and amounts due under the IBM lease through December 1998. Base rent per annum
for LAUSD represents amounts due for 1995 from the effective date of its lease, March 1, 1995. Base rent per
annum for IBM includes reimbursement of shortfalls for 1995.
</TABLE>
<TABLE>
<CAPTION>
c) The following table sets forth certain information with respect to the expiration of
leases for the next ten years at Wells Fargo Center:
Annualized Percent of
Number of Approx. Total Base Rent Total 1994
Year Ending Expiring NRF of Expiring of Expiring Base Rent
December 31, Leases Leases (1) Leases Expiring
------------ --------- --------------- ----------- ----------
<S> <C> <C> <C> <C> <C>
1995 4 28,888 $ 446,320 1.3%
1996 9 88,372 2,319,765 6.8%
1997 5 26,191 935,018 2.7%
1998 25 301,480 11,209,026 32.7%
1999 2 24,327 150,298 0.4%
2000 -- -- -- --
2001 5 53,787 1,341,985 3.9%
2002 6 351,491 10,400,619 30.3%
2003 7 67,700 1,890,861 5.5%
2004 -- -- -- --
<FN>
(1) Excludes leases that expire in 1995 for which renewal leases or leases with
replacement tenants have been executed as of March 27, 1995.
</TABLE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
On July 5, 1985, the Partnership commenced an offering of $250,000,000
(subject to increase by up to $250,000,000) of Limited partnership
interests and assignee interests therein pursuant to a Registration
Statement on Form S-11 (File No. 2-95382) under the Securities Act of 1933.
A total of 443,711.76 Interests were sold to the public at $1,000 per
Interest (fractional interests are due to a Distribution Reinvestment
Program). The holders of such Interests were admitted to the Partnership
in 1985 and 1986.
After deducting selling expenses and other offering costs, the
Partnership had approximately $385,000,000 with which to make investments
in income-producing commercial and residential real property, to pay legal
fees and other costs (including acquisition fees) related to such
investments and to satisfy working capital requirements. A portion of the
proceeds has been utilized to acquire the properties described in Item 1
above.
At December 31, 1994, the Partnership and its consolidated ventures
had cash and cash equivalents of approximately $3,680,000. Such funds and
short-term investments of approximately $10,565,000 are available for the
Partnership's share of leasing costs and capital improvements at 160 Spear
Street Building, Springbrook Shopping Center, Eastridge Mall, 21900 Burbank
Building and 260 Franklin Street Building, and the Partnership's share of
operating deficits currently being incurred or expected at 260 Franklin
Street Building (to the extent not funded from escrowed reserves for 260
Franklin as discussed below), Eastridge Mall and Springbrook Shopping
Center as discussed below as well as distributions to partners and working
capital requirements, including the Partnership's share of potential future
deficits and financing costs at these and certain other of the
Partnership's investment properties. The Partnership currently has
adequate cash and cash equivalents to maintain the operations of the
Partnership. However, the Partnership has taken steps to preserve its
working capital by deciding to suspend operating distributions (except for
certain withholding requirements) to the Limited and General Partners
effective as of the first quarter of 1992. In addition, the General
Partners and their affiliates have previously deferred management and
leasing fees payable to them in an aggregate amount of $2,003,629
(approximately $5 per Interest) through December 31, 1994 pursuant to debt
modifications at the 260 Franklin and Piper Jaffray properties. An
affiliate of the General Partners has deferred (through reimbursements made
directly to the Partnership) $675,876 (included in the aggregate amount
above) for the Partnership's proportionate share of property management and
leasing fees paid by affiliated joint venture partnerships or their
underlying ventures, as the case may be. These reimbursements include the
proportionate share of property management fees of one unconsolidated
entity, which is not included in the consolidated financial statements.
The Partnership paid $847,752 of previously deferred reimbursements to the
Corporate General Partner and its affiliates in July 1994. The Partnership
also paid previously deferred partnership management fees and distributions
of $724,121 and $249,591, respectively, to the General Partners in August
1994. In December, 1994, the Partnership paid $3,422,391 of previously
deferred management and leasing fees to an affiliate of the General
Partners. Effective October 1, 1993, the Partnership and its consolidated
ventures began paying property management and leasing fees on a current
basis. Reference is made to Note 11 relating to this deferral and
subsequent partial payment of distributions, fees and reimbursements.
The Partnership and its consolidated ventures have currently budgeted
in 1995 approximately $3,411,000 for tenant improvements and other capital
expenditures. The Partnership's share of such items and its share of such
similar items for its unconsolidated ventures in 1995 is currently budgeted
to be approximately $4,376,000. Actual amounts expended in 1995 may vary
depending on a number of factors including actual leasing activity, results
of property operations, liquidity considerations and other market
conditions over the course of the year. The source of capital for such
items and for both short-term and long-term future liquidity requirements
and distributions is expected to be primarily through net cash generated by
the Partnership's investment properties, through an existing obligation of
a seller (or its affiliate) to fund deficits at the Woodland Hills
investment property and through the sale or refinancing of such investments
as well as cash and short-term investments currently held. However, most
of the Partnership's investment properties are either restricted as to
their use of excess cash flow by escrow agreements negotiated pursuant to
loan modifications or are currently experiencing deficits. In such regard,
reference is made to the Partnership's property specific discussions below
and also to the Partnership's disclosure of certain property lease
expirations in Item 6.
The borrowings of the Partnership and its ventures consist of separate
non-recourse mortgage loans secured by the investment properties and
individually are not obligations of the entire investment portfolio. For
any particular investment property incurring deficits, the Partnership or
its ventures, if deemed appropriate, may seek a modification or refinancing
of existing indebtedness and, in the absence of a satisfactory debt
modification or refinancing of existing indebtedness may decide, in light
of then existing and expected future market conditions for such investment
property, not to commit additional funds to such investment property. This
would generally result in the Partnership no longer having an ownership
interest in such property and would generally result in a gain to the
Partnership for financial reporting and Federal income tax purposes with no
corresponding distributable proceeds.
The mortgage loan secured by the Eastridge Mall investment property
matures in 1995 and will need to be extended or refinanced should a sale of
the property not occur as discussed below. In addition, certain other
mortgage loans secured by the Partnership's investment properties are the
subject of discussions with lenders for debt modifications or
restructuring, including the mortgage loans related to 21900 Burbank
Building, Wells Fargo Center, 160 Spear Street and RiverEdge Place. The
current status of the attempts to extend, refinance, modify or restructure
these loans, as well as other possible loan modifications, are discussed
below.
The mortgage note secured by the Villa Solana Apartments matured on
November 1, 1993. The venture had obtained extensions of this note from
the existing lender until August 1, 1994. The venture paid the lender
$125,000 in extension fees in connection with these extensions. The
monthly principal and interest payment, and the interest rate remained the
same on the loan as prior to the original maturity date. The venture sold
the investment property on March 23, 1994 for $16,600,000, before closing
costs, as described in Note 7. As a matter of prudent accounting practice,
the Partnership made a provision for value impairment of $916,309 at
September 30, 1993 for Villa Solana Apartments. Such provision reduced the
net carrying value of the investment property to an amount not in excess of
the proposed selling price of the investment. Reference is made to Note 1.
The first mortgage note secured by the Woodland Hills Apartments in
the principal amount of $6,800,000 was scheduled to mature on November 1,
1994 (due to the Partnership obtaining an extension from June 1, 1994 for
fees aggregating $35,000). The second mortgage note secured by the
property in the principal amount of $1,256,667 matured June 1, 1994. The
Partnership refinanced both notes with the lender of the second mortgage
note effective November 2, 1994. The new non-recourse first mortgage loan
matures October 1, 1997 and requires monthly payments of interest only at a
rate of 4% above the GECC commercial paper rate (approximately 8.7% at
December 31, 1994). The principal balance of the new mortgage note is
$8,175,000 at December 31, 1994. Reference is made to Note 4(c).
In October 1993, the joint venture ceased making the required debt
service payments on the mortgage note secured by Park at Countryside
Apartments, and commenced discussions with the lender regarding an
additional modification of the loan. However, the venture was unable to
secure an additional modification of the loan. Based on current and
anticipated market conditions, the Partnership and the joint venture
partners were unwilling to commit any additional amounts to the property
since the likelihood of recovering any such amounts was remote.
Consequently, the lender realized upon its mortgage security interest and
took title to the property on May 5, 1994. The loan in the principal
amount of $3,100,000, was classified at December 31, 1993 as a current
liability in the accompanying consolidated financial statements. Reference
is made to Note 4(b)(i).
The first mortgage loan secured by the Dunwoody Crossing Phases I and
III Apartments was scheduled to mature in October 1994. The joint venture
owning the property negotiated an extension of the mortgage loan until
December 15, 1994. The joint venture then reached an agreement with the
existing lender for a new loan, which requires monthly payments of
principal and interest (8.65% per annum) of $171,737 beginning February 15,
1995 and continuing through November 15, 1997, when the remaining balance
will be payable. Reference is made to Note 4.
In June 1993, JMB/Owings sold its interest in the Owings Mills
Shopping Center for $9,416,000 represented by a purchase price note.
Reference is made to Note 7.
On October 6, 1994, the Partnership sold the 9701 Wilshire Building
for $17,900,000 (before selling costs and prorations) as discussed below.
Reference is made to Note 7.
In November 1994, the Partnership assigned its interest in the 125
Broad Street Building to an affiliate of the unaffiliated venture partner
as discussed below. Reference is made to Note 7.
Piper Jaffray Tower
The Minneapolis office market remains competitive due to the
significant amount of new office building developments, which has caused
effective rental rates achieved at Piper Jaffray Tower to be below
expectations. During the fourth quarter of 1993, the joint venture
finalized a lease amendment with Popham Haik, Schnobrich & Kaufman, Ltd.
(104,843 square feet). The amendment provides for the extension of the
lease term from February 1, 1997 to January 31, 2003 in exchange for a rent
reduction effective February 1, 1994. In addition, the tenant will lease
an additional 10,670 square feet effective August 1, 1995. The rental rate
on the expansion space approximates market which is significantly lower
than the reduced rental rate on the tenant's current occupied space.
During the second quarter of 1994, Piper Jaffray, Inc. (275,758 square
feet) agreed to expand its leased space by 3,362 square feet in July 1995
and 19,851 square feet in December 1995. Such space is currently leased to
tenants whose leases expire just prior to the effective dates for Piper's
expansions. The expansion space lease expiration date will be coterminous
with Piper's existing lease expiration date of March 2000 and the net
effective rental rate approximates market.
Pursuant to the modification of the mortgage loan made in August 1992,
to the extent the investment property generates cash flow after leasing and
capital costs, and 25% of the ground rent, such amount will be paid to the
lender as a reduction of the principal balance of the mortgage loan. The
excess cash flow generated by the property in 1992 totalled $923,362 and
was remitted to the lender in September 1993. During 1993, the excess cash
flow generated under this agreement was $1,390,910 and was remitted to the
lender in May 1994. During 1994, the excess cash flow generated under this
agreement was $353,251 which is expected to be remitted to the lender
during the second quarter of 1995. The mortgage note provides for the
lender to earn a minimum internal rate of return which increases over the
term of the note. Accordingly, for financial reporting purposes, interest
expense has been accrued at a rate of 13.59% per annum which is the
estimated minimum internal rate of return per annum assuming the note is
held to maturity. On a monthly basis, the venture deposits the property
management fee into an escrow account to be used for future leasing costs
to the extent cash flow is not sufficient to cover such items. To date, no
escrow funds have been required to be used for leasing costs. The manager
of the property (which was an affiliate of the Corporate General Partner)
through November 1994 (see Note 11) has agreed to defer receipt of its
management fee until a later date. As of December 31, 1994, the manager
has deferred approximately $2,398,000 of management fees ($2,357,000 of
which represents fees deferred by the former affiliated manager). In order
for the Partnership to share in future net sale or refinancing proceeds,
there must be a significant improvement in current market and property
operating conditions resulting in a significant increase in value of the
property. Reference is made to Note 3(c)(i) for further discussion of this
investment property.
160 Spear Street Building
As more fully discussed in Note 4(b)(iii), effective February 1992,
the Venture reached an agreement with the lender to reduce the current debt
service payments and to extend the loan, which was scheduled to mature on
December 10, 1992, to February 10, 1999. Additionally, tenant leases
comprising approximately 69% of the building are scheduled to expire in
1995. Lease renewals and new leases are likely to be at rental rates less
than the rates on existing leases due to rental concessions and other
factors. In addition, new leases will likely require expenditures for
lease commissions and tenant improvements prior to occupancy. This
anticipated decline in rental rates, the anticipated increase in re-leasing
time and the costs upon releasing will result in a decrease in cash flow
from operations over the near term. The Partnership has decided not to
commit any significant additional funds for anticipated re-leasing costs
since the recovery of such amounts would be remote. The venture has
approached the lender regarding an additional modification to the loan.
However, the lender has indicated that it is not interested in providing an
additional modification, and intends to take title to the property. The
venture and the lender are currently discussing terms for a transfer of the
property to the lender. This will result in the Partnership no longer
having an ownership interest in the property, which would likely result in
the Partnership recognizing a gain for financial reporting and Federal
income tax purposes with no corresponding distributable proceeds.
125 Broad Street Building
In November 1994, JMB/125 and certain affiliates of Olympia & York
Developments, Ltd. ("O&Y") reached an agreement to settle their dispute
regarding 125 Broad and its property. Under the terms of the agreement,
JMB/125 assigned its interest in 125 Broad to an affiliate of O&Y and
released its venture partners (the "O&Y partners") from any claims related
to 125 Broad. In return, JMB/125 received an unsecured promissory note in
the principal amount of $5 million bearing simple interest at 4.5% per
annum with all principal and accrued interest due at maturity in October
1999, subject to mandatory prepayments of principal and interest or
acceleration of the maturity date under certain circumstances. In
addition, JMB/125 received a release from any claims of certain O&Y
affiliates and will generally be indemnified against any liability as a
general partner of 125 Broad. JMB/125 was also relieved of any obligation
to contribute cash to 125 Broad in the amount of its deficit capital
account balance. Affiliates of O&Y subsequently filed a pre-arranged
bankruptcy plan for reorganization of 125 Broad under Chapter 11 of the
Bankruptcy Code in order to facilitate 125 Broad's transfer of the office
building to the mortgage lender in satisfaction of the mortgage debt and
other claims. In January 1995, the plan for reorganization was approved by
the bankruptcy court, was consummated, and the bankruptcy was concluded.
Vacancy rates in the downtown Manhattan office market have increased
significantly over the last few years. As vacancy rates rise, competition
for tenants increases, which results in lower effective rental rates. The
increased vacancy rate in the downtown Manhattan office market has resulted
primarily from layoffs, cutbacks and consolidations by many of the
financial service companies which, along with related businesses, dominate
this submarket. The Partnership believed that these adverse market
conditions and the negative impact on effective rental rates would continue
over the next few years. The depressed market in downtown Manhattan has
significantly affected the 125 Broad Street Building as the occupancy had
decreased to 66% at the date of assignment partially as a result of a major
tenant vacating 395,000 square feet (30% of the building) at the expiration
of its lease during 1991. Additionally, in October 1993, 125 Broad entered
into an agreement with Salomon Brothers, Inc. to terminate its lease
covering approximately 231,000 square feet (17% of the building) at the
property on December 31, 1993 rather than its scheduled termination in
January 1997. In consideration for the early termination of the lease,
Salomon Brothers, Inc. paid 125 Broad approximately $26,500,000 plus
interest thereon of approximately $200,000, which 125 Broad in turn paid
its lender to reduce amounts outstanding under the mortgage loan. In
addition, Salomon Brothers, Inc. paid JMB/125 $1,000,000 in consideration
of JMB/125's consent to the lease termination. The property would be
adversely affected by lower than originally expected effective rental rates
to be achieved upon releasing of the space. The low effective rental rates
coupled with the lower occupancy during the releasing period were expected
to result in the property operating at a significant deficit in 1995 and
for the next several years. The O&Y partners were obligated to fund (in
the form of interest-bearing loans) operating deficits and costs of lease-
up and capital improvements through the end of 1995. However, as discussed
below, the O&Y partners were in default in respect to certain of their
funding obligations, and it appeared unlikely that the O&Y partners would
fulfill their obligations to 125 Broad and JMB/125. Releasing of the
vacant space would depend upon, among other things, the O&Y partners
advancing the costs associated with such releasing since JMB/125 did not
intend to contribute funds to 125 Broad to pay such costs. Based on the
facts discussed above and as described more fully in Note 3(c), 125 Broad
recorded a provision for value impairment as of December 31, 1991 to reduce
the net book value of the 125 Broad Street Building to the then outstanding
balance of the related non-recourse financing and O&Y partner loans due to
the uncertainty of the joint venture's ability to recover the net carrying
value of the investment property through future operations or sale.
O & Y and certain of its affiliates have been involved in bankruptcy
proceedings in the United States and Canada and similar proceedings in
England. In addition, a reorganization of the management of the company's
United States operations has been completed, and certain O&Y affiliates are
in the process of renegotiating or restructuring various loans affecting
properties in the United States in which they have an interest. In view of
the financial condition of O&Y and its affiliates and the anticipated
deficits for the property as well as the defaults of the O&Y partners, it
appeared unlikely that the O&Y partners would meet their financial and
other obligations to JMB/125 and 125 Broad.
The O&Y partners previously failed to advance necessary funds to 125
Broad as required under the joint venture agreement, and as a result, 125
Broad in June 1992 defaulted on its mortgage loan, which had an outstanding
principal balance of approximately $277,000,000, by failing to pay
approximately $4,722,000 of the semi-annual interest payment due on the
loan. In addition, during 1992 affiliates of O&Y defaulted on a "takeover
space" agreement with Johnson & Higgins, Inc. ("J&H"), one of the major
tenants at the 125 Broad Street Building, whereby such affiliates of O&Y
agreed to assume certain lease obligations of J&H at another office
building in consideration of J&H's leasing space in the 125 Broad Street
Building. As a result of this default, J&H offset rent payable to 125
Broad for its lease at the 125 Broad Street Building in the amount of
approximately $43,500,000 through the date of assignment, and it was
expected that J&H would continue to offset amounts due under its lease
corresponding to amounts by which the affiliates of O&Y were in default
under the "takeover space" agreement. As a result of the O&Y affiliates'
default under the "takeover space" agreement and the continuing defaults of
the O&Y partners to advance funds to cover operating deficits, as of the
date of assignment, the arrearage under the mortgage loan had increased to
approximately $69,447,000. However, as discussed above, approximately
$26,700,000 was remitted to the lender in October 1993 in connection with
the early termination of the Salomon Brothers lease, and was applied
towards the mortgage principal for financial reporting purposes. Due to
their obligations relating to the "takeover space" agreement, the
affiliates of O&Y were obligated for the payment of the rent receivable
associated with the J&H lease at the 125 Broad Street Building. Based on
the continuing defaults of the O&Y partners, 125 Broad reserved the entire
rent offset by J&H, $14,900,000, $19,300,000 and $9,300,000 in 1994, 1993
and 1992, respectively, and also reserved approximately $32,600,000 of
accrued rents receivable relating to such J&H lease in 1992, since the
ultimate collectability of such amounts depended upon the O&Y partners' and
the O&Y affiliates' performance of their obligations. The Partnership's
share of such losses was approximately $4,300,000, $5,587,000 and
$12,159,000 for 1994, 1993 and 1992, respectively, and is included in the
Partnership's share of loss from operations of unconsolidated ventures.
260 Franklin Street Building
The office market in the Financial District of Boston remains
competitive due to new office building developments and layoffs, cutbacks
and consolidations by financial service companies. The effective rental
rates achieved upon releasing have been substantially below the rates which
were received under the previous leases for the same space. In December
1991, 260 Franklin, the affiliated joint venture, reached an agreement with
the lender to modify the long-term mortgage note secured by the 260
Franklin Street Building. The property is currently expected to operate at
a deficit for 1995 and for several years thereafter. The loan modification
required that the affiliated joint venture establish an escrow account for
excess cash flow from the property's operations (computed without a
deduction for property management fees and leasing commissions to an
affiliate) to be used to cover the cost of capital and tenant improvements
and lease inducements, which are the primary components of the anticipated
operating deficits noted above, with the balance, if any, of such escrowed
funds available at the scheduled or accelerated maturity to be used for the
payment of principal and interest due to the lender. Beginning January 1,
1992, 260 Franklin began escrowing the payment of property management fees
and lease commissions owed to an affiliate of the Corporate General Partner
pursuant to the terms of the debt modification, which is more fully
described in Note 4(b), and accordingly, such fees and commissions remained
unpaid. The Partnership's share of such fees and lease commissions is
approximately $742,224 at December 31, 1994. In 1995, the leases of
tenants occupying approximately 107,000 square feet (approximately 31% of
the property) at the 260 Franklin Street Building expire. It is
anticipated that there will be significant costs related to releasing this
space. In addition, the long-term mortgage loan matures January 1, 1996.
The affiliated joint venture will attempt to refinance or extend this loan
when it matures, but there can be no assurance that the Partnership will be
able to obtain such financing. If the affiliated joint venture is unable
to refinance or extend the mortgage loan, it may decide not to commit any
significant additional funds. This may result in the Partnership no longer
having an ownership interest in the property. In such event, the
Partnership would recognize a gain for financial reporting and Federal
income tax purposes with no distributable proceeds.
900 Third Avenue Building
During the year, occupancy of this building decreased to 94%, down
from 95% in the previous year. The midtown Manhattan market remains
competitive. Approximately 53,000 square feet (approximately 10% of the
buildings leasable square footage) of leased space expires in 1995 and
1996. The property's operating cash flow will be adversely affected by
lower rental rates achieved and leasing costs incurred upon releasing this
space and may be adversely affected by increased vacancy during the
releasing period. During the fourth quarter, JMB/900 Third Avenue
Associates, on behalf of the property joint venture, successfully completed
an extension of its mortgage loan, which was scheduled to mature on
December 1, 1994. The loan has been extended to December 1, 2001 with
monthly payments of principal and interest based on an interest rate of
9.375% per annum and a 30 year principal amortization schedule. The
previous interest rate was 13% per annum. In addition, net cash flow after
debt service and capital will be paid into an escrow account controlled by
the lender to be used by the property joint venture for releasing costs
associated with leases which expire in 1999 and 2000 (approximately 240,000
square feet of space). The remaining proceeds in this escrow (including
interest earned thereon), if any, will be released to the property joint
venture once 90% of such leased space has been renewed or released.
300 East Lombard Building
Effective September 30, 1991, the Partnership sold, to an affiliate of
the joint venture partners, 62% of its interest in a joint venture that
owns a 55% interest in the 300 East Lombard investment property. In
conjunction with the sale, the Partnership and buyer established a put-call
option on the Partnership's remaining interest in the joint venture. In
January 1993, the Partnership sold its remaining interest in accordance
with the terms of the option. Reference is made to Note 7.
Wells Fargo Center
The Wells Fargo Center operates in the downtown Los Angeles office
market, which has become extremely competitive over the last several years
with the addition of several new buildings that has resulted in a high
vacancy rate of approximately 25% in the marketplace. In 1992, two major
law firm tenants occupying approximately 11% of the building's space
approached the joint venture indicating that they were experiencing
financial difficulties and desired to give back a portion of their leased
space in lieu of ceasing business altogether. The joint venture reached
agreements which resulted in a reduction of the space leased by each of
these tenants. Also, a major tenant, IBM, leasing approximately 58% of the
tenant space in the Wells Fargo Building, is sub-leasing a portion of its
space which is scheduled to expire in December 1998. In addition, the
joint venture has entered into a seven year direct lease with the Los
Angeles United School District ("LAUSD") for approximately one-half of
IBM's space with occupancy beginning March 1, 1995. Under the terms of an
agreement reached with IBM, the joint venture will be reimbursed by IBM for
all shortfalls between amounts due under the IBM lease and the LAUSD lease.
In early 1995, two major law firm tenants occupying approximately 5% of the
building's space notified the joint venture of their intentions to disband
each of these respective firms. The joint venture has been negotiating
separate termination agreements with these tenants which provide for a
combination of lump sum payments to be received by the joint venture upon
execution of the termination agreements, as well as additional monthly
payments to be received over a ten month period from one of these tenants.
The Partnership expects that the competitive market conditions and the
continued recession in Southern California will have an adverse affect on
the building through lower effective rental rates achieved on releasing of
existing space which expires or is given back over the next several years.
In addition, new leases will likely require expenditures for lease
commissions and tenant improvements prior to occupancy. This anticipated
decline in rental rates, the anticipated increase in re-leasing time and
the costs upon releasing will result in a decrease in cash flow from
operations over the near term. The Partnership's share of distributions
from the joint venture for 1992 and 1993 were insufficient to cover the
debt service on the promissory note secured by the Partnership's interest
in the joint venture. Such shortfall was due to rental concessions granted
to facilitate leasing of space taken back in 1992 from the two tenants
noted above and the expansion of one of the other major tenants in the
building. The property produced cash flow and distributed approximately
$3,926,000 to the Partnership in 1994.
The mortgage note secured by the property, as well as the promissory
note secured by the Partnership's interest in the joint venture matured
December 1, 1994. The Partnership and the joint venture have been in
discussions with the respective lenders regarding an extension of the
mortgage note and the promissory note. The Partnership and the joint
venture have reached an agreement with the lender of the mortgage note
whereby the lender will refrain from exercising its rights and remedies
under the loan documents through April 1, 1995 while the Partnership and
the venture continue to negotiate an extension or refinancing of the note
with the lender. The venture continues to make interest payments to the
lender under the original terms of the mortgage note and is required to
escrow all available cash flow. The Partnership has ceased making debt
service payments on the promissory note and an extension or refinancing
with the lender is likely to be dependent on the results of negotiations
with the lender of the mortgage note. There is no assurance that the joint
venture or the Partnership will be able to refinance these notes. In the
absence of an extension or refinancing of the notes, the Partnership may
decide not to commit any significant additional amounts to the property.
This would likely result in the Partnership no longer having an ownership
interest in the property, and would result in a gain for financial
reporting and for Federal income tax purposes with no corresponding
distributable proceeds. The promissory note secured by the Partnership's
interest in the joint venture has been classified at December 31, 1994 and
1993 as a current liability in the accompanying consolidated financial
statements. In view of, among other things, current and anticipated market
and leasing conditions affecting the property, including uncertainty
regarding the amount of space, if any, which IBM will renew when its lease
expires in December 1998 (on the space remaining after the direct leased
space to LAUSD), the South Tower Venture, as a matter of prudent accounting
practice, recorded a provision for value impairment of $67,479,871 (of
which $20,035,181 has been allocated to the Partnership and was reflected
in the Partnership's share of operations of unconsolidated ventures). Such
provision, made as of August 31, 1993, was recorded to reduce the net
carrying value of the Wells Fargo Center to the then outstanding balance of
the related non-recourse debt. The property did not sustain any
significant damage as a result of the January 1994 earthquake in southern
California. Reference is made to Notes 1, 3(c)(iii) and 4(b)(vii).
RiverEdge Place Building
The RiverEdge Place Building was 100% leased to an affiliate of the
major tenant, First American Bank, under a long-term over-lease executed in
connection with the purchase of the property. The Bank and its affiliate
approached the Partnership indicating that they were experiencing
significant financial difficulties. On June 23, 1992, the Partnership
reached an agreement with the Bank and received cash and U.S. Government
Securities valued at $9,325,000 for the buy-out of the Bank's over-lease
obligations. The termination of the Bank's over-lease obligation yielded
an approximately $1,591,000 reduction in accrued rents receivable. The
Partnership took this course of action due to the First American Bank's
deteriorating financial condition and the Federal Deposit Insurance
Corporation's ability to assume control of the Bank and to terminate the
over-lease obligation. The $9,325,000 buy-out was concurrently remitted to
the lender to reduce the mortgage secured by the RiverEdge Place Building
and the Partnership continues to negotiate with the lender to restructure
the mortgage note with a current balance of $18,166,294 in order to reduce
operating deficits anticipated as a result of the over-lease buy-out. In
connection with the Partnership's negotiations with the lender, the
Partnership ceased making debt service payments effective July 1, 1992. If
the Partnership's negotiations for mortgage note restructuring are not
successful, the Partnership would likely decide, based upon current market
conditions and other considerations relating to the property and the
Partnership's portfolio, not to commit significant additional amounts to
the property. This would result in the Partnership no longer having an
ownership interest in the property and would result in a gain for financial
reporting and Federal income tax purposes without any corresponding
distributable proceeds. The mortgage note has been classified as a current
liability in the accompanying consolidated financial statements.
Additionally, the tenant lease with First American Bank for approximately
120,000 square feet has been assigned to and assumed by SouthTrust Bank of
Georgia in connection with that bank's acquisition of most of the remaining
assets of First American Bank. Effective August 1, 1992, the Partnership
restructured the lease with SouthTrust Bank of Georgia reducing the
tenant's space to approximately 92,000 square feet, as well as reducing the
effective rent on the retained space in exchange for an extension of the
lease term from April, 1994 to July, 2002. The restructuring of SouthTrust
Bank's lease reduced the occupied space of the RiverEdge Place Building
from 96% to 85% at that time. The Partnership is actively pursuing
replacement tenants for the building's vacant space including the space
taken back from the SouthTrust lease restructuring. Due to the uncertainty
as to the Partnership's ability to recover the net carrying value of the
investment property through future operations and sale, as a matter of
prudent accounting practice, the Partnership made a provision for value
impairment of $6,149,632 recorded as of September 30, 1992. Such provision
was recorded to reduce the net carrying value of the investment property to
the September 30, 1992 outstanding balance of the related non-recourse
financing. Reference is made to Notes 1, 2(b) and 4(b)(iv).
21900 Burbank Building
The 21900 Burbank Building sustained some damage as a result of the
earthquakes that occurred in southern California on January 17, 1994. On
February 22, 1995, the City Council of the City of Los Angeles passed an
ordinance relating to the repair of welded steel moment frame buildings in
an area of the city that includes the 21900 Burbank Building. While a
complete determination of the requirements to comply with such ordinance is
not as yet completed, it is currently estimated that the cost of such
repairs, which has been reflected in the accompanying consolidated
financial statements, will be approximately $1,000,000. The Partnership
spent approximately $124,000 for repairs in 1994. Although the property
produced cash flow to the Partnership in 1993 and 1994, there is
uncertainty as to future cash flow as a result of the anticipated repairs
discussed above and the substantial amount of tenant space (approximately
80% of the building) under leases that are scheduled to expire during 1995
and 1996. Most of the tenant space expiring in 1995 and 1996 is occupied
by two tenants. The Partnership has been successful in renewing the lease
of one of the two tenants occupying 37,864 square feet (approximately 43%
of the building) at a lower effective rental rate. The Partnership is in
the process of negotiating a new lease with the other tenant. There can be
no assurance that the Partnership will be able to retain this tenant.
Lease renewals and new leases are likely to be at rental rates less than
the rates on existing leases due to the continued recession in Southern
California. In addition, new leases will likely require expenditures for
lease commissions and tenant improvements prior to occupancy. This
anticipated decline in rental rates, the anticipated increase in re-leasing
time and the costs upon re-leasing will result in a decrease in cash flow
from operations over the near term. The Partnership will approach the
lender regarding a modification of the loan which is scheduled to mature
December 1, 1996 due to the uncertainties discussed above. There is no
assurance that the Partnership will be able to obtain such modification.
In the absence of a modification to the mortgage note, the Partnership may
decide not to commit significant additional amounts to the property. This
would likely result in the Partnership no longer having an ownership
interest in the property, and would result in a gain for financial
reporting and for Federal income tax purposes with no corresponding
distributable proceeds. As a matter of prudent accounting practice, the
Partnership made a provision for value impairment of such investment
property of $1,740,533 recorded as of June 30, 1992. Such provision was
recorded to reduce the net carrying value of the investment property to the
then outstanding balance of the related non-recourse financing.
NewPark Associates
NewPark Associates commenced a renovation of NewPark Mall in early
1993 and such renovation was completed later that year. The approximate
$14,000,000 of excess proceeds from the refinancing of NewPark Associates'
loans were sufficient to pay for substantially all of the renovation as
well as tenant improvement costs incurred to date in connection with
leasing vacant space at the mall. The mortgage note secured by the
property matures November 1, 1995. The mortgage can be extended until
November 1, 2000 upon payment of a $250,000 option fee and satisfaction of
certain conditions (which the Partnership currently expects to be able to
satisfy if required). The joint venture has commenced discussions with the
existing lender regarding an extension of the loan. However there can be
no assurance that the joint venture will be able to obtain such an
extension. Reference is made to Note 3(c)(v).
California Plaza
The property operated at a deficit in 1993 due to the costs incurred
in connection with the leasing of space which was vacant or under leases
that expired in 1993. The property produced cash flow for 1994, however,
as discussed below, net cash flow is being escrowed pursuant to a loan
modification. Effective March 1, 1993, the joint venture ceased making the
scheduled debt service payments on the mortgage loan secured by the
property which was scheduled to mature on January 1, 1997. Subsequently,
the Partnership made partial debt service payments based on net cash flow
of the property through December, 1993 when an agreement was reached with
the lender to modify the loan on December 22, 1993. As more fully
discussed in Note 4(b)(vi), the loan modification reduced the pay rate of
monthly interest only payments to 8% per annum, effective February 1993,
extended the loan maturity date to January 1, 2000, and requires the net
cash flow of the property to be escrowed (as defined). The venture also
funded $500,000 into a reserve account as required by the modification
agreement. This reserve account is to be used to fund future costs,
including tenant improvements, leasing commissions and capital
improvements, approved by the lender (none used as of December 31, 1994).
Due to the uncertainty of the Partnership's ability to recover the net
carrying value of the California investment property, the Partnership made,
as a matter of prudent accounting practice, a provision for value
impairment of California Plaza at June 30, 1993 of $2,166,799 (which
included $1,558,492 relating to the venture partner's deficit investment
balance at that date). Such provision reduced the net carrying value of
the investment property to the then outstanding balance of the related non-
recourse mortgage note. Reference is made to Notes 1 and 4(b)(vi).
Erie-McClurg Parking Facility
On September 25, 1992, the Partnership, through Erie-McClurg
Associates, sold the Erie-McClurg Parking Facility located in Chicago,
Illinois. Concurrently, with the sale of the Erie-McClurg Parking
Facility, the Partnership entered into an agreement with the unaffiliated
manager of the parking facility to induce the manager to re-write the
existing long-term management agreement at less favorable terms to the
manager. This agreement guarantees the manager 100% of the compensation
which would have been earned under the agreement prior to the sale in years
one through five and 50% of any potential difference between the management
fee under the agreement prior to the sale and the renegotiated agreement
with the purchaser (as defined) in years six through eighteen. Reference
is made to Note 7.
In connection with this agreement, at closing the Partnership paid the
unaffiliated manager a partial settlement of $400,000 and has estimated the
present value of the remaining contingent liability to be $360,000. This
contingent liability is recorded as a long-term liability in the
accompanying consolidated financial statements. Reference is made to Note
7.
Springbrook Shopping Center
In October 1993, a tenant occupying 20% of the space at the
Springbrook Shopping Center vacated upon expiration of its lease. The
Partnership is actively pursuing replacement tenants for the vacant space,
but there is no assurance that any leases will be consummated. The
property is expected to operate at a deficit in 1995. As a matter of
prudent accounting practice, the Partnership made a provision for value
impairment of such investment property of $7,534,763 at December 31, 1993.
Such provision was recorded to reduce the net carrying value of the
investment property to the then outstanding balance of the related non-
recourse financing. Reference is made to Note 1.
Other
The mortgage note secured by Eastridge Mall is scheduled to mature on
October 1, 1995. There is no assurance that the venture will be able to
refinance or obtain alternative financing when the note matures. The
Partnership has entered into a letter of intent with its unaffiliated joint
venture partner for the sale of the property. There can be no assurance
that the Partnership will be able to finalize this sale. The potential
sale of the property would likely result in a gain for financial reporting
and federal income tax purposes. Although the property produced a small
amount of cash flow in 1994, excess cash is expected to be used to fund
anticipated operating deficits in 1995. As a matter of prudent accounting
practice, a provision at June 30, 1992 for value impairment of Eastridge
Mall of $5,752,710. Such provision reduced the net carrying value of the
investment property to the then outstanding balance of the related non-
recourse mortgage note.
Due to the uncertainty of the Partnership's ability to recover the net
carrying value of the 9701 Wilshire Building investment property, the
Partnership made, as a matter of prudent accounting practice, a provision
at September 30, 1992 for value impairment of 9701 Wilshire Building of
$12,504,079. Such provision reduced the net carrying value of the
investment property to the then outstanding balance of the related non-
recourse mortgage note. The mortgage note secured by the property matured
on January 1, 1994. The Partnership obtained extensions of this note from
the existing lender until September 30, 1994. The Partnership paid the
lender $110,000 in extension fees in connection with these extensions. The
monthly principal and interest payment, and the interest rate remained the
same on the loan as prior to the original maturity date. The unpaid
principal and interest matured on September 30, 1994 and was classified at
December 31, 1993 as a current liability in the accompanying consolidated
financial statements. On October 6, 1994, the property was sold for
$17,950,000 (before selling costs and prorations) and the outstanding debt
was retired as described in Note 7.
Certain of the Partnership's investments have been made through joint
ventures. There are certain risks associated with the Partnership's
investments including the possibility that the Partnership's joint venture
partner(s) in an investment might become unable or unwilling to fulfill its
(their) financial or other obligations, or that such joint venture
partner(s) may have economic or business interests or goals that are
inconsistent with those of the Partnership.
Though the economy has recently shown signs of improvement and
financing is generally becoming more available for certain types of higher-
quality properties in healthy markets, real estate lenders are typically
requiring a lower loan-to-value ratio for mortgage financing than in the
past. This has made it difficult for owners to refinance real estate
assets at their current debt levels unless the value of the underlying
property has appreciated significantly. As a consequence, and due to the
weakness of some of the local real estate markets in which the
Partnership's properties operate, the Partnership is taking steps to
preserve its working capital. Therefore, the Partnership is carefully
scrutinizing the appropriateness of any possible discretionary
expenditures, particularly in relation to the amount of working capital it
has available to it and its ventures. By conserving working capital, the
Partnership will be in a better position to meet future needs of its
properties without having to rely on external financing sources.
Due to the factors discussed above, it is likely that the Partnership
will hold certain of its investment properties longer than originally
anticipated in an effort to maximize the return to the Limited Partners.
On March 23, 1994, the Partnership received proceeds from the sale of the
Villa Solana Apartments as more fully described in Note 7. In August 1994,
$2,218,523 ($5 per Interest) was distributed to the Limited Partners and
$22,410 was distributed to the General Partners out of such proceeds. On
October 6, 1994, the Partnership received proceeds from the sale of the
9701 Wilshire Building as described in Note 7. In February 1995,
$3,549,636 ($8 per Interest) was distributed to the Limited Partners and
$35,854 was distributed to the General Partners out of such proceeds and
proceeds from the sale of other investment properties described in Note 7.
Although the Partnership expects to distribute sales proceeds from the
disposition of the Partnership's remaining assets, without a dramatic
improvement in market conditions Limited Partners will receive
significantly less than half of their original investment. However, in
connection with sales or other dispositions (including transfers to
lenders) of properties (or interests therein) owned by the Partnership or
its joint ventures, the Limited Partners may be allocated substantial gain
for Federal income tax purposes, regardless of whether any proceeds are
distributable from such sale or other disposition.
RESULTS OF OPERATIONS
The decrease in cash and cash equivalents and increase in short-term
investments at December 31, 1994 as compared to December 31, 1993 is
partially due to none of the Partnership's U.S. Government obligations
being classified as short-term investments at December 31, 1993 whereas
approximately $2,643,000 of U.S. Government obligations were classified as
short-term investments at December 31, 1994. Reference is made to Note 1.
The aggregate decrease in cash and cash equivalents and short-term
investments at December 31, 1994 as compared to December 31, 1993 is also
due to the payment in 1994 of amounts previously deferred to the General
Partners and their affiliates as described in Note 11.
The increase in interest, rents and other receivables at December 31,
1994 as compared to December 31, 1993 is primarily due to the timing of
rental payments received at the Cal Plaza Office Building.
The increase in the balance of escrow deposits and restricted
securities at December 31, 1994 as compared to December 31, 1993 is
primarily due to the continued escrow of excess cash flow pursuant to the
loan modifications at the 260 Franklin Street Building and the Cal Plaza
Office Building. Reference is made to Note 4(b).
The decrease in land, buildings and improvements, accumulated
depreciation, current portion of long-term debt and tenant security
deposits at December 31, 1994 as compared to December 31, 1993 is primarily
due to the sale of Villa Solana Apartments on March 23, 1994, to the
lenders obtaining legal title to the Park at Countryside Apartments on May
5, 1994, and to the sale of the 9701 Wilshire Building on October 6, 1994.
In addition, such transactions are the reason for the gain on sale or
disposition of investment properties for the year ended December 31, 1994
consisting of the $656,560 gain on sale of the Villa Solana Apartments, the
$1,418,043 gain on disposition of the Park at Countryside Apartments and
the $1,522,744 gain on sale of the 9701 Wilshire Building. Reference is
made to Note 4(b)(i) and Note 7. The gain on sale of investment property
in 1992 relates to the sale of the Erie-McClurg Parking Facility in
September 1992. Reference is made to Note 7.
The increase in venture partners' deficits in ventures at December 31,
1994 as compared to December 31, 1993 is primarily due to the venture
partners' allocations of 1994 losses from the 160 Spear Street and 260
Franklin investment properties, partially offset by the venture partners'
allocation of gain related to the lenders obtaining legal title to the Park
at Countryside Apartments on May 5, 1994. Reference is made to Note
4(b)(i).
The increases in accounts payable at December 31, 1994 as compared to
December 31, 1993 and property operating expenses for the year ended
December 31, 1994 as compared to the same period in 1993 are primarily due
to the accrual of $1,000,000 for potential repairs at the 21900 Burbank
Building as discussed in Note 2(c). Such increases are partially offset by
the sale of Villa Solana Apartments on March 23, 1994, to the lenders
obtaining title to the Park at Countryside Apartments on May 5, 1994 and to
the sale of the 9701 Wilshire Building on October 6, 1994. Reference is
made to Notes 4(b)(i) and 7.
The decrease in amounts due to affiliates at December 31, 1994 as
compared to December 31, 1993 is primarily due to the 1994 payment of
previously deferred salary and overhead reimbursements of $847,752 to the
Corporate General Partner and its affiliates, the payment of previously
deferred partnership management fees of $724,121 to the General Partners
and to the payment of $3,422,391 of previously deferred management and
leasing fees to an affiliate of the General Partner. Reference is made to
Note 11.
The increase in accrued interest payable at December 31, 1994 as
compared to December 31, 1993 is primarily due to the accrual of
approximately $2,520,000 in 1994 of unpaid interest on the mortgage loan
secured by the RiverEdge Place investment property. Reference is made to
Note 4(b)(iv). The increase is partially offset by the lenders obtaining
title to the Park at Countryside Apartments on May 5, 1994 and to the sale
of the 9701 Wilshire Building on October 6, 1994 which resulted in the
cancellation and retirement, respectively, in 1994 of the loans secured by
these properties. Reference is made to Note 4(b)(i) and Note 7.
The decrease in accrued real estate taxes at December 31, 1994 as
compared to December 31, 1993 is primarily due to the timing of payment of
taxes at the 160 Spear Street investment property.
The decrease in notes payable at December 31, 1994 as compared to
December 31, 1993 is due to the June, 1994 principal payment of $70,701 on
promissory notes related to the California Plaza Office Building.
Reference is made to Note 10.
The decrease in investment in unconsolidated ventures, at equity
reflected as a liability at December 31, 1994 as compared to December 31,
1993 is primarily due to the assignment of the Partnership's interest in
the 125 Broad investment property to an affiliate of the Partnership's
unaffiliated venture partner in November 1994, partially offset by the
Partnership's share of losses and distributions from certain ventures.
Such assignment is also for the reason for the $31,743,006 gain on sale of
interest in unconsolidated venture for the year ended December 31, 1994.
Reference is made to Notes 3(c)(iv) and 7.
The decrease in venture partners' subordinated equity in ventures at
December 31, 1994 as compared to December 31, 1993 is primarily due to the
venture partners' allocations of losses and distributions from the Dunwoody
investment property and the sale of the Villa Solana Apartments on March
23, 1994. Reference is made to Note 7(f).
The decreases in rental income, mortgage and other interest,
depreciation and amortization of deferred expenses for the year ended
December 31, 1994 as compared to the same periods in 1993 and 1992 are
primarily due to the lenders obtaining legal title to the Park at
Countryside Apartments on May 5, 1994, to the sale of the 9701 Wilshire
Building on October 6, 1994 and to the sale of Villa Solana Apartments on
March 23, 1994. Reference is made to Notes 4(b)(i) and 7. The decreases
in rental income are partially offset by the receipt of approximately
$395,000 of lease termination fees at the 9701 Wilshire Building in July
1994. The decrease in rental income for the year ended December 31, 1993
as compared to the same period in 1992 is primarily due to the June 30,
1992 buy-out of the First American Bank's over-lease obligations at
RiverEdge Place as discussed above, and the sale of the Erie-McClurg
Parking Facility in September 1992. Reference is made to Notes 2(b) and 7.
The increase in interest income for the year ended December 31, 1994
as compared to the same periods in 1993 and 1992 is primarily due to higher
effective yields being earned on U.S. Government obligations held by the
Partnership during 1994. The decrease in interest income for the year
ended December 31, 1993 as compared to the same period in 1992 is primarily
due to higher interest rates earned on the Partnership's short-term
investments in 1992.
The decrease in mortgage and other interest for the year ended
December 31, 1993 as compared to the same period in 1992 is primarily due
to the sale of the Erie-McClurg Parking Facility in September, 1992, a
reduction of the debt balance of RiverEdge Place investment property by
$9,325,000 in June 1992 and the modification of the loan at Cal Plaza which
decreased the effective interest rate. Reference is made to Notes 2(b),
4(b)(vi) and 7.
The decreases in depreciation expense and amortization of deferred
expenses for the year ended December 31, 1994 as compared to the same
periods in 1993 and 1992, and the decrease for the year and December 31,
1993 as compared to the same period in 1992 is also due to the provisions
for value impairment recorded at several of the Partnership's investment
properties in 1993 and 1992, which resulted in a lower basis of assets to
be depreciated in 1994 and 1993. The decrease for 1993 as compared to 1992
is also due to the sale in September 1992 of the Erie-McClurg Parking
Facility. Reference is made to Notes 1 and 7.
The decrease in professional services for the years ended December 31,
1994 and 1993 as compared to the same period in 1992 is primarily due to
Partnership's 1992 legal fees relating to the lawsuit against the joint
venture partner of the C-C California Plaza venture. Reference is made to
Note 3(b)(iii).
The provisions for value impairment for the year ended December 31,
1993 relate to provisions recorded for Cal Plaza, Villa Solana Apartments,
and Springbrook Shopping Center of $2,166,799, $916,309 and $7,534,763,
respectively. The provisions for value impairment for the year ended
December 31, 1992 relate to provisions recorded for Eastridge Mall, 21900
Burbank Boulevard Building, 9701 Wilshire Building and RiverEdge Place
investment properties of $5,752,710, $1,740,533, $12,504,079 and
$6,149,632, respectively. Reference is made to Note 1.
The decrease in Partnership's share of loss from operations of
unconsolidated ventures for the year ended December 31, 1994 as compared to
the same period in 1993 and the increase for 1993 as compared to 1992 is
primarily due to the provision for value impairment recorded at August 31,
1993 at Wells Fargo Center (of which the Partnership's share was
$20,035,181), offset by a decrease in the Partnership's share of losses of
JMB/125 due to the receipt of the Salomon Brothers lease termination fee
payment of approximately $26,500,000 (of which the Partnership's share was
approximately $7,700,000) in 1993.
The decrease in venture partners' share of ventures' operations for
the year ended December 31, 1994 as compared to the same period in 1993 is
primarily due to the write-off of the California Plaza venture partner's
deficit investment balance at June 30, 1993. Effective in 1993, the
venture partner at the California Plaza investment property is no longer
allocated any losses. Reference is made to Note 1.
The gain on sale of interests in unconsolidated ventures for the year
ended December 31, 1993 relates to the $2,627,427 gain on JMB/Owing's sale
of its interest in Owings Mills Limited Partnership ("OMLP") in June 1993,
and the $229,140 gain on sale of the Partnership's remaining interest in
Harbor Overlook Limited Partnership in January 1993. Reference is made to
Note 7.
INFLATION
Due to the decrease in the level of inflation in recent years,
inflation generally has not had a material effect on rental income or
property operating expenses.
To the extent that inflation in future periods does have an adverse
impact on property operating expenses, the effect will generally be offset
by amounts recovered from tenants as many of the long-term leases at the
Partnership's commercial and retail properties have escalation clauses
covering increases in the cost of operating and maintaining the properties
as well as real estate taxes. Therefore, there should be little effect on
net operating earnings if the properties remain substantially occupied. In
addition, substantially all of the leases at the Partnership's shopping
center investments contain provisions which entitle the property owner to
participate in gross receipts of tenants above fixed minimum amounts.
Future inflation may also cause capital appreciation of the
Partnership's investment properties over a period of time to the extent
that rental rates and replacement costs of properties increase.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XV
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
INDEX
Independent Auditors' Report
Consolidated Balance Sheets, December 31, 1994 and 1993
Consolidated Statements of Operations, years ended December 31, 1994,
1993 and 1992
Consolidated Statements of Partners' Capital Accounts (Deficits),
years ended December 31, 1994, 1993 and 1992
Consolidated Statements of Cash Flows, years ended December 31, 1994,
1993 and 1992
Notes to Consolidated Financial Statements
SCHEDULE
--------
Consolidated Real Estate and Accumulated Depreciation III
Schedules not filed:
All schedules other than the one indicated in the index have been
omitted as the required information is inapplicable or the information is
presented in the consolidated or combined financial statements or related
notes.
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XV
CERTAIN UNCONSOLIDATED VENTURES
INDEX
Independent Auditors' Report
Combined Balance Sheets, December 31, 1994 and 1993
Combined Statements of Operations, years ended December 31, 1994,
1993 and 1992
Combined Statements of Partners' Capital Accounts (Deficits),
years ended December 31, 1994, 1993 and 1992
Combined Statements of Cash Flows, years ended December 31, 1994,
1993 and 1992
Notes to Combined Financial Statements
SCHEDULE
--------
Combined Real Estate and Accumulated Depreciation III
Schedules not filed:
All schedules other than the one indicated in the index have been
omitted as the required information is inapplicable or the information is
presented in the consolidated or combined financial statements or related
notes.<PAGE>
INDEPENDENT AUDITORS' REPORT
The Partners
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XV:
We have audited the consolidated financial statements of Carlyle Real
Estate Limited Partnership - XV (a limited partnership) and Consolidated
Ventures as listed in the accompanying index. In connection with our
audits of the consolidated financial statements, we also have audited the
financial statement schedule as listed in the accompanying index. These
consolidated financial statements and financial statement schedule are the
responsibility of the General Partners of the Partnership. Our
responsibility is to express an opinion on these consolidated financial
statements and financial statement schedule 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 the General Partners of the
Partnership, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for
our opinion.
In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the financial position of
Carlyle Real Estate Limited Partnership - XV and Consolidated Ventures at
December 31, 1994 and 1993, and the results of their operations and their
cash flows for each of the years in the three-year period ended
December 31, 1994, in conformity with generally accepted accounting
principles. Also in our opinion, the related financial statement schedule,
when considered in relation to the basic consolidated financial statements
taken as a whole, presents fairly, in all material respects, the
information set forth therein.
Additionally, as discussed in Notes 3 and 4 of notes to consolidated
financial statements, a promissory note secured by the Partnership's
interest in the South Tower venture and a number of mortgage loans secured
by the Partnership's investment properties or investment properties owned
by ventures in which the Partnership has an interest, are currently due or
mature in 1995. The Partnership has commenced or intends to commence
discussions with the mortgage lenders in order to extend and/or modify such
loans. In the event that discussions with lenders are unsuccessful, the
Partnership and its venture partners may be unable or unwilling to commit
additional amounts to the investment properties. These circumstances could
result in the Partnership no longer having an ownership interest in certain
investment properties. The ultimate outcome of these circumstances cannot
presently be determined. The Partnership and ventures have recorded
provisions for value impairment, where applicable, to reduce the net book
value of such properties to the outstanding balance of the related non-
recourse financing (Notes 1 and 3 of notes to consolidated financial
statements).
KPMG PEAT MARWICK LLP
Chicago, Illinois
March 27, 1995
<TABLE>
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XV
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1994 AND 1993
ASSETS
------
<CAPTION>
1994 1993
------------ -----------
<S> <C> <C>
Current assets:
Cash and cash equivalents (note 1) . . . . . . . . . . . . . . . . . . . . . $ 3,680,080 5,020,087
Short-term investments (note 1). . . . . . . . . . . . . . . . . . . . . . . 10,564,988 10,167,294
Interest, rents and other receivables (net of allowance
for doubtful accounts of $222,121 in 1994 and
$17,200 in 1993) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,430,849 1,092,658
Current portion of notes receivable (net of allowance
of $1,466,051 in 1994 and 1993) (note 8) . . . . . . . . . . . . . . . . . 11,967 34,073
Escrow deposits and restricted securities (notes 1 and 4(b)) . . . . . . . . 7,551,257 6,151,429
------------ ------------
Total current assets . . . . . . . . . . . . . . . . . . . . . . . . 23,239,141 22,465,541
------------ ------------
Investment properties, at cost (notes 1, 2 and 3) - Schedule III:
Land. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30,786,288 37,109,099
Buildings and improvements. . . . . . . . . . . . . . . . . . . . . . . . . 336,767,526 376,030,478
------------ ------------
367,553,814 413,139,577
Less accumulated depreciation . . . . . . . . . . . . . . . . . . . . . . . (106,168,986) (107,997,321)
------------ ------------
Total investment properties,
net of accumulated depreciation. . . . . . . . . . . . . . . . . . 261,384,828 305,142,256
------------ ------------
Investment in unconsolidated ventures,
at equity (notes 3 and 12) . . . . . . . . . . . . . . . . . . . . . . . . . 27,791,761 28,554,815
Deferred expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,991,141 4,305,261
Accrued rents receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,354,240 6,719,239
Venture partners' deficits in ventures . . . . . . . . . . . . . . . . . . . . 5,901,802 4,699,065
------------ ------------
$327,662,913 371,886,177
============ ============
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XV
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
CONSOLIDATED BALANCE SHEETS - CONTINUED
LIABILITIES AND PARTNERS' CAPITAL ACCOUNTS (DEFICITS)
-----------------------------------------------------
1994 1993
------------ -----------
Current liabilities:
Current portion of long-term debt (note 4) . . . . . . . . . . . . . . . . . $ 64,981,954 95,188,325
Current portion of notes payable (note 10) . . . . . . . . . . . . . . . . . 70,701 70,701
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,620,655 2,256,478
Amounts due to affiliates (note 11). . . . . . . . . . . . . . . . . . . . . 1,736,196 6,410,710
Accrued interest payable . . . . . . . . . . . . . . . . . . . . . . . . . . 7,147,878 6,130,382
Accrued real estate taxes. . . . . . . . . . . . . . . . . . . . . . . . . . 554,229 728,334
------------ ------------
Total current liabilities. . . . . . . . . . . . . . . . . . . . . . 77,111,613 110,784,930
Notes payable (note 10). . . . . . . . . . . . . . . . . . . . . . . . . . . . 290,434 361,135
Tenant security deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . 533,522 863,192
Investment in unconsolidated ventures, at equity (notes 3 and 12). . . . . . . 15,811,104 28,318,569
Other liabilities (note 7(a)). . . . . . . . . . . . . . . . . . . . . . . . . 360,000 360,000
Long-term debt, less current portion (note 4). . . . . . . . . . . . . . . . . 246,148,319 245,868,225
------------ ------------
Commitments and contingencies (notes 1, 2, 3, 4, 7 and 9)
Total liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . 340,254,992 386,556,051
Venture partners' subordinated equity in ventures. . . . . . . . . . . . . . . 8,854,639 9,901,367
Partners' capital accounts (deficits) (note 5):
General partners:
Capital contributions. . . . . . . . . . . . . . . . . . . . . . . . . . 20,000 20,000
Cumulative net losses. . . . . . . . . . . . . . . . . . . . . . . . . . (16,615,024) (15,779,416)
Cumulative cash distributions. . . . . . . . . . . . . . . . . . . . . . (872,867) (600,866)
------------ ------------
(17,467,891) (16,360,282)
------------ ------------
Limited partners (443,717 Interests):
Capital contributions, net of offering costs . . . . . . . . . . . . . . 384,978,681 384,978,681
Cumulative net losses. . . . . . . . . . . . . . . . . . . . . . . . . . (362,540,535) (368,991,190)
Cumulative cash distributions. . . . . . . . . . . . . . . . . . . . . . (26,416,973) (24,198,450)
------------ ------------
(3,978,827) (8,210,959)
------------ ------------
Total partners' capital accounts (deficits). . . . . . . . . . . . . (21,446,718) (24,571,241)
------------ ------------
$327,662,913 371,886,177
============ ============
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
<TABLE>
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XV
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
<CAPTION>
1994 1993 1992
------------ ------------ ------------
<S> <C> <C> <C>
Income:
Rental income. . . . . . . . . . . . . . . . . . . . . . $52,221,396 54,795,252 63,899,911
Interest income. . . . . . . . . . . . . . . . . . . . . 886,073 492,992 599,222
----------- ----------- -----------
53,107,469 55,288,244 64,499,133
----------- ----------- -----------
Expenses:
Mortgage and other interest. . . . . . . . . . . . . . . 33,160,181 34,767,530 36,863,527
Depreciation . . . . . . . . . . . . . . . . . . . . . . 11,490,889 12,370,095 13,296,137
Property operating expenses. . . . . . . . . . . . . . . 22,832,962 22,465,768 23,159,488
Professional services. . . . . . . . . . . . . . . . . . 644,763 605,331 957,340
Amortization of deferred expenses. . . . . . . . . . . . 1,138,527 1,223,341 1,322,442
Management fees to corporate general
partner (note 11). . . . . . . . . . . . . . . . . . . -- -- 15,407
General and administrative . . . . . . . . . . . . . . . 610,188 628,691 601,145
Provisions for value impairment (note 1) . . . . . . . . -- 10,617,871 26,146,954
----------- ----------- -----------
69,877,510 82,678,627 102,362,440
----------- ----------- -----------
Operating loss . . . . . . . . . . . . . . . . . (16,770,041) (27,390,383) (37,863,307)
Partnership's share of loss from operations of
unconsolidated ventures (note 12). . . . . . . . . . . . (15,190,416) (31,617,778) (24,576,481)
Venture partners' share of loss from ventures'
operations (note 3). . . . . . . . . . . . . . . . . . . 2,235,151 2,866,514 3,678,862
----------- ----------- -----------
Net operating loss . . . . . . . . . . . . . . . (29,725,306) (56,141,647) (58,760,926)
Gain on sale or disposition of investment
properties, net of venture partner's share
of gain of $823,609 in 1994 (notes 4(b)(i) and 7). . . . 3,597,347 -- 506,446
Gain on sale of interests in unconsolidated
ventures (notes 3(c)(iv) and 7). . . . . . . . . . . . . 31,743,006 2,856,567 --
----------- ----------- -----------
Net income (loss). . . . . . . . . . . . . . . . $ 5,615,047 (53,285,080) (58,254,480)
=========== =========== ===========
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XV
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
CONSOLIDATED STATEMENTS OF OPERATIONS - CONTINUED
1994 1993 1992
------------ ------------ ------------
Net income (loss) per limited partnership
interest (note 1):
Net operating loss . . . . . . . . . . . . . $ (64.31) (121.46) (127.13)
Net gain on sale or disposition of
investment property. . . . . . . . . . . . 8.03 -- 1.13
Gain on sale or disposition of interests
in unconsolidated ventures . . . . . . . . 70.83 6.37 --
----------- ----------- -----------
$ 14.55 (115.09) (126.00)
=========== =========== ===========
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
<TABLE>
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XV
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
CONSOLIDATED STATEMENTS OF PARTNERS' CAPITAL ACCOUNTS (DEFICITS)
YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
<CAPTION>
GENERAL PARTNERS LIMITED PARTNERS (443,717 INTERESTS)
----------------------------------------------------- ---------------------------------------------------
CONTRI-
BUTIONS
NET OF
CONTRI- NET CASH OFFERING NET CASH
BUTIONS LOSS DISTRIBUTIONS TOTAL COSTS LOSS DISTRIBUTIONS TOTAL
------- ---------- ------------- ----------- ----------- ----------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance
(deficit)
Decem-
ber 31,
1991. . . . . 20,000 (11,216,943) (600,866) (11,797,809) 384,978,681 (262,014,103) (23,731,467) 99,233,111
Net loss . . . -- (2,345,373) -- (2,345,373) -- (55,909,107) -- (55,909,107)
Cash distri-
butions
($.50 per
limited
partnership
interest) . . -- -- -- -- -- -- (221,859) (221,859)
------- ----------- --------- ----------- ----------- ------------ ------------ -----------
Balance
(deficit)
Decem-
ber 31,
1992. . . . . 20,000 (13,562,316) (600,866) (14,143,182) 384,978,681 (317,923,210) (23,953,326) 43,102,145
Net loss . . . -- (2,217,100) -- (2,217,100) -- (51,067,980) -- (51,067,980)
Cash distri-
butions
($.55 per
limited
partnership
interest) . . -- -- -- -- -- -- (245,124) (245,124)
------- ----------- --------- ----------- ----------- ------------ ------------ -----------
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XV
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
CONSOLIDATED STATEMENTS OF PARTNERS' CAPITAL ACCOUNTS (DEFICITS) - CONTINUED
GENERAL PARTNERS LIMITED PARTNERS (443,717 INTERESTS)
----------------------------------------------------- ---------------------------------------------------
CONTRI-
BUTIONS
NET OF
CONTRI- NET CASH OFFERING NET CASH
BUTIONS LOSS DISTRIBUTIONS TOTAL COSTS LOSS DISTRIBUTIONS TOTAL
------- ---------- ------------- ----------- ----------- ----------- ------------- -----------
Balance
(deficit)
Decem-
ber 31,
1993. . . . . 20,000 (15,779,416) (600,866) (16,360,282) 384,978,681 (368,991,190) (24,198,450) (8,210,959)
Net income
(loss). . . . -- (835,608) -- (835,608) -- 6,450,655 -- 6,450,655
Cash distri-
butions
($5.00 per
limited
partnership
interest) . . -- -- (272,001) (272,001) -- -- (2,218,523) (2,218,523)
------- ----------- --------- ----------- ----------- ------------ ------------ -----------
Balance
(deficit)
Decem-
ber 31,
1994. . . . .$20,000 (16,615,024) (872,867) (17,467,891) 384,978,681 (362,540,535) (26,416,973) (3,978,827)
======= =========== ========= =========== =========== ============ ============ ===========
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
<TABLE>
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XV
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
<CAPTION>
1994 1993 1992
----------- ----------- -----------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income (loss). . . . . . . . . . . . . . . . . . . . $ 5,615,047 (53,285,080) (58,254,480)
Items not requiring (providing) cash or
cash equivalents:
Depreciation . . . . . . . . . . . . . . . . . . . . . 11,490,889 12,370,095 13,296,137
Amortization of deferred expenses. . . . . . . . . . . 1,138,527 1,223,341 1,322,442
Long-term debt - deferred accrued interest . . . . . . 2,727,421 3,543,421 2,072,994
Partnership's share of loss from operations
of unconsolidated ventures . . . . . . . . . . . . . 15,190,416 31,617,778 24,576,481
Venture partners' share of ventures' loss from
operations and gain on sale or disposition
of investment properties . . . . . . . . . . . . . . (1,411,542) (2,866,514) (3,678,862)
Provisions for value impairment. . . . . . . . . . . . -- 10,617,871 26,146,954
Gain on sale or disposition of
investment properties (notes 4(b)(i) and 7). . . . . (4,420,956) -- (506,446)
Gain on sale of interests in unconsolidated
ventures (notes 3(c)(iv) and 7). . . . . . . . . . . (31,743,006) (2,856,567) --
Changes in:
Interest, rents and other receivables. . . . . . . . . (463,724) 195,969 163,945
Current portion of notes receivable. . . . . . . . . . 22,106 185,484 767,844
Notes receivable . . . . . . . . . . . . . . . . . . . -- -- 165,625
Escrow deposits and restricted securities
(note 4(b)). . . . . . . . . . . . . . . . . . . . . (1,399,828) (1,951,511) (529,901)
Accrued rents receivable, net. . . . . . . . . . . . . 1,231,693 1,056,311 2,612,964
Accounts payable . . . . . . . . . . . . . . . . . . . 762,407 (651,329) 410,584
Amounts due to affiliates. . . . . . . . . . . . . . . (4,674,514) 831,778 999,184
Accrued interest payable . . . . . . . . . . . . . . . 2,202,159 2,725,892 892,521
Accrued real estate taxes. . . . . . . . . . . . . . . (174,105) (64,510) (850,110)
Deposits and advances. . . . . . . . . . . . . . . . . -- (430,000) --
Tenant security deposits . . . . . . . . . . . . . . . (329,670) 50,712 70,393
------------ ----------- -----------
Net cash provided by (used in)
operating activities . . . . . . . . . . . . . (4,236,680) 2,313,141 9,678,269
------------ ----------- -----------
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XV
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED
1994 1993 1992
----------- ----------- -----------
Cash flows from investing activities:
Net sales, maturities (purchases) of
short-term investments . . . . . . . . . . . . . . . . (397,694) (442,084) (3,908,797)
Additions to investment properties . . . . . . . . . . . (1,279,820) (838,618) (1,728,484)
Partnership's distributions from
unconsolidated ventures. . . . . . . . . . . . . . . . 7,505,575 3,329,583 5,243,928
Partnership's contributions to
unconsolidated ventures. . . . . . . . . . . . . . . . (2,792,572) (740,111) (1,301,243)
Cash proceeds from sale of investment
properties (note 7). . . . . . . . . . . . . . . . . . 3,580,504 -- 10,680,440
Cash proceeds from sale of interest
in unconsolidated ventures (note 7). . . . . . . . . . -- 229,140 --
Payment of deferred expenses . . . . . . . . . . . . . . (886,493) (530,531) (1,192,057)
------------ ----------- -----------
Net cash provided by
investing activities . . . . . . . . . . . . . 5,729,500 1,007,379 7,793,787
------------ ----------- -----------
Cash flows from financing activities:
Payoff of bank notes payable . . . . . . . . . . . . . . -- -- (6,335,000)
Proceeds from refinancing of long-term debt
(note 4(b)) . . . . . . . . . . . . . . . . . . . . . 1,134,189 -- --
Principal payments on long-term debt . . . . . . . . . . (878,524) (1,017,356) (1,118,875)
Principal paydown or retirement on
long-term debt (notes 2(b) and 4(b)) . . . . . . . . . -- -- (18,791,830)
Proceeds from long-term debt (note 4(b)) . . . . . . . . -- -- 9,800,000
Principal payments on notes payable. . . . . . . . . . . (70,701) (70,701) (70,701)
Venture partners' contributions to venture . . . . . . . 249,450 30,000 182,116
Distributions to venture partners. . . . . . . . . . . . (776,717) (185,740) (359,270)
Distributions to general partners. . . . . . . . . . . . (272,001) -- --
Distributions to limited partners. . . . . . . . . . . . (2,218,523) (245,124) (221,859)
------------ ----------- -----------
Net cash used in financing activities . . . . . (2,832,827) (1,488,921) (16,915,419)
------------ ----------- -----------
Net increase (decrease) in cash and
cash equivalents. . . . . . . . . . . . . . . . (1,340,007) 1,831,599 556,637
Cash and cash equivalents,
beginning of year . . . . . . . . . . . . . . . 5,020,087 3,188,488 2,631,851
------------ ----------- -----------
Cash and cash equivalents,
end of year . . . . . . . . . . . . . . . . . . $ 3,680,080 5,020,087 3,188,488
============ =========== ===========
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XV
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED
1994 1993 1992
----------- ----------- -----------
Supplemental disclosure of cash flow
information:
Cash paid for mortgage and other interest. . . . . . . . $28,230,601 28,498,214 33,898,012
=========== =========== ===========
Non-cash investing and financing activities:
Non-cash gain recognized on sale of
interests in unconsolidated venture
(notes 3(c)(iv) and 7) . . . . . . . . . . . . . . . $31,743,006 2,627,427 --
=========== =========== ===========
Sale of investment properties (note 7):
Total sale proceeds, net of selling expenses . . . . . $33,604,213 -- 17,932,665
Contingent liability assumed upon sale . . . . . . . . -- -- 360,000
Principal balances due on mortgages payable. . . . . . (30,023,709) -- (7,612,225)
----------- ----------- -----------
Cash proceeds from sale of investment
property, net of selling expenses. . . . . . . $ 3,580,504 -- 10,680,440
=========== =========== ===========
Disposition of investment property (note 4(b)(i)):
Balance due on long-term debt cancelled. . . . . . . . $ 3,100,000 -- --
Accrued interest expense on accelerated
long-term debt . . . . . . . . . . . . . . . . . . . 970,317 -- --
Reduction of investment property, net. . . . . . . . . (2,023,953) -- --
Reduction of deferred expenses . . . . . . . . . . . . (16,467) -- --
Reduction of other liabilities . . . . . . . . . . . . 117,966 -- --
----------- ----------- -----------
Non-cash gain recognized due to lender
realizing upon security . . . . . . . . . . . . $ 2,147,863 -- --
=========== =========== ===========
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XV
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1994, 1993 AND 1992
(1) BASIS OF ACCOUNTING
The accompanying consolidated financial statements include the
accounts of the Partnership and its consolidated ventures, Eastridge
Development Company ("Eastridge"); Daytona Park Associates ("Park") (see
note 4(b)(i)); JMB/160 Spear Street Associates ("160 Spear"); Villa Solana
Associates ("Villa Solana") (sold March 23, 1994, see note 7); 260 Franklin
Street Associates ("260 Franklin"); C-C California Plaza Partnership ("Cal
Plaza"); Villages Northeast Associates ("Villages Northeast") and VNE
Partners, Ltd. ("VNE Partners"). The effect of all transactions between
the Partnership and the consolidated ventures has been eliminated.
The equity method of accounting has been applied in the accompanying
consolidated financial statements with respect to the Partnership's
interests in JMB/Piper Jaffray Tower Associates ("JMB/Piper") and JMB/Piper
Jaffray Tower Associates II ("JMB/Piper II"); 900 Third Avenue Associates
("JMB/900"); Maguire/Thomas Partners-South Tower ("South Tower"); Harbor
Overlook Limited Partnership ("Harbor"); JMB/Owings Mills Associates
("JMB/Owings") (sold June 30, 1993, see note 7); JMB/NewPark Associates,
L.P. ("JMB/NewPark"); Carlyle-XV Associates, L.P., which owns an interest
in JMB/125 Broad Building Associates, L.P. ("JMB/125"). In November 1994,
the Partnership through its indirect ownership of JMB/125 assigned its
interest in the 125 Broad Street Building (see notes 3(c)(iv) and 7(f)).
The Partnership's records are maintained on the accrual basis of
accounting as adjusted for Federal income tax reporting purposes. The
accompanying consolidated financial statements have been prepared from such
records after making appropriate adjustments to present the Partnership's
accounts in accordance with generally accepted accounting principles
("GAAP") and to consolidate the accounts of certain ventures as described
above. Such adjustments are not recorded on the records of the
Partnership. The effect of these items is summarized as follows for the
years ended December 31, 1994 and 1993:
<TABLE>
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XV
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
<CAPTION>
1994 1993
------------------------------- ------------------------------
GAAP BASIS TAX BASIS GAAP BASIS TAX BASIS
------------ ----------- ------------ -----------
<S> <C> <C> <C> <C>
Total assets . . . . . . . . . . . . . . $327,662,913 144,882,708 371,886,177 173,128,303
Partners' capital accounts
(deficit):
General partners . . . . . . . . . . (17,467,891) (19,285,157) (16,360,282) (23,818,870)
Limited partners . . . . . . . . . . (3,978,827) 20,986,144 (8,210,959) 27,985,249
Net income (loss):
General partners . . . . . . . . . . (835,608) 4,805,712 (2,217,100) 1,262,261
Limited partners . . . . . . . . . . 6,450,655 (4,780,582) (51,067,980) (13,202,010)
Net income (loss) per
limited partnership
interest . . . . . . . . . . . . . . . $ 14.55 (10.77) (115.09) (29.75)
============ ============ =========== ===========
</TABLE>
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XV
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
The net loss per limited partnership interest ("Interest") is based
upon the limited partnership interests outstanding at the end of each
period. Deficit capital accounts will result, through the duration of the
Partnership, in the recognition of net gain for financial reporting and
income tax purposes.
Statement of Financial Accounting Standards No. 95 requires the
Partnership to present a statement which classifies receipts and payments
according to whether they stem from operating, investing or financing
activities. The required information has been segregated and accumulated
according to the classifications specified in the pronouncement.
Partnership distributions from unconsolidated ventures are considered cash
flow from operating activities only to the extent of the Partnership's
cumulative share of net earnings. In addition, the Partnership records
amounts held in U.S. Government obligations and other securities at cost
which approximates market. For the purposes of these statements, the
Partnership's policy is to consider all such amounts held with original
maturities of three months or less ($2,642,881 and none at December 31,
1994 and 1993, respectively) as cash equivalents with any remaining amounts
(generally with maturities of one year or less) reflected as short-term
investments being held to maturity.
Escrow deposits and restricted securities primarily represent cash and
investments restricted as to their use by the Partnership.
Provisions for value impairment are recorded with respect to investment
properties whenever the estimated future cash flows from a property's
operations and projected sale are less than the property's net carrying
value. Such provisions generally reduce the net carrying values of the
investment properties to the then outstanding balance of the related non-
recourse mortgage notes. Due to the uncertainty of the Partnership's
ability to recover the net carrying value of the 125 Broad Street Building
(note 3(c)(iv), 260 Franklin Street Building, Eastridge Mall, 21900 Burbank
Boulevard Building, 9701 Wilshire Building, RiverEdge Place, California
Plaza, Wells Fargo Center - IBM Tower, Villa Solana Apartments and
Springbrook Shopping Center investment properties, the Partnership, or
ventures, as the case may be, made, as a matter of prudent accounting
practice, provisions for value impairment. A provision for value
impairment was recorded at June 30, 1992 of $5,752,710 and $1,740,533 for
Eastridge Mall and 21900 Burbank Boulevard Building, respectively, at
September 30, 1992 of $12,504,079 and $6,149,632 for 9701 Wilshire Building
and RiverEdge Place, respectively, at June 30, 1993, of $2,166,799 for
California Plaza, which included $1,558,492 relating to the venture
partner's deficit investment balance at that date, at August 31, 1993, of
$67,479,871 (of which, the Partnership's share is $20,035,181) at Wells
Fargo Center - IBM Tower, at September 30, 1993, of $916,309 at Villa
Solana Apartments, and at December 31, 1993 of $7,534,763 at Springbrook
Shopping Center.
Deferred expenses are comprised principally of deferred financing fees
which are amortized over the related debt term and deferred leasing fees
which are amortized over the related lease term.
Although certain leases of the Partnership provide for tenant
occupancy during periods for which no rent is due and/or increases in
minimum lease payments over the term of the lease, the Partnership accrues
prorated rental income for the full period of occupancy on a straight-line
basis.
Statement of Financial Accounting Standards No. 107 ("SFAS 107"),
"Disclosures about Fair Value of Financial Instruments", requires entities
with total assets exceeding $150 million at December 31, 1992 to disclose
the SFAS 107 value of all financial assets and liabilities for which it is
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XV
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
practicable to estimate. Value is defined in the Statement as the amount
at which the instrument could be exchanged in a current transaction between
willing parties, other than in a forced or liquidation sale. The
Partnership believes the carrying amount of its current assets and
liabilities (excluding current portion of long-term debt) approximates SFAS
107 value due to the relatively short maturity of these instruments. There
is no quoted market value available for any of the Partnership's other
instruments. As the debt secured by the RiverEdge Place Building
investment property and the Partnership's interest in the South Tower joint
venture has been classified by the Partnership as a current liability at
December 31, 1994 as a result of defaults (see notes 4(b)(vii) and
4(b)(iv)), and because the resolution of such defaults is uncertain, the
Partnership considers the disclosure of the SFAS 107 value of such long-
term debt to be impracticable. The remaining debt, with a carrying balance
of $270,213,979, has been calculated to have a SFAS 107 value of
$240,782,125 by discounting the scheduled loan payments to maturity. Due
to restrictions on transferability and prepayment, and the inability to
obtain comparable financing due to previously modified debt terms or other
property specific competitive conditions, the Partnership would be unable
to refinance these properties to obtain such calculated debt amounts
reported (see note 4). The Partnership has no other significant financial
instruments.
Certain reclassifications have been made to the 1993 and 1992
consolidated financial statements to conform with the 1994 presentation.
No provision for State or Federal income taxes has been made as the
liability for such taxes is that of the partners rather than the
Partnership. However, in certain instances, the Partnership has been
required under applicable law to remit directly to the tax authorities
amounts representing withholding from distributions paid to partners.
(2) INVESTMENT PROPERTIES
(a) General
The Partnership has acquired, either directly or through joint
ventures, interests in four apartment complexes, twelve office buildings,
four shopping centers and one parking facility. The Partnership's
aggregate cash investment, excluding certain related acquisition costs, was
$299,637,926. During 1989, the Partnership disposed of its interest in the
investment property owned by CBC Investment Company ("Boatmen's") (note
3(b)(i)). During 1991, the Partnership sold 62% of its interest in Harbor
and in 1993 sold its remaining 38% interest in Harbor (note 7). In
September 1992, the Partnership sold the Erie-McClurg Parking Facility
(note 7). In June 1993, the Partnership sold (through JMB/Owings) its
interest in Owings Mills Shopping Center (note 7). In March 1994, the
Partnership, through Villa Solana Associates, sold the Villa Solana
Apartments (note 7). In May 1994, the lender realized upon its security
interest in the Park at Countryside Apartments (note 4(b)(i)). In October
1994, the Partnership sold the 9701 Wilshire Office Building (note 7). In
November 1994, the Partnership assigned its interest in the JMB/125 venture
to an affiliate of its unaffiliated venture partner (notes 3(c)(iv) and 7).
All of the remaining properties owned at December 31, 1994 were completed
and operating.
The cost of the investment properties represents the total cost to the
Partnership or its ventures plus miscellaneous acquisition costs reduced
for provisions for value impairment where applicable. Depreciation on the
operating properties has been provided over the estimated useful lives of
5-30 years using the straight-line method.
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XV
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
The borrowings of the Partnership and its ventures consist of separate
non-recourse mortgage loans secured by the investment properties and
individually are not obligations of the entire investment portfolio.
However, for any particular investment property that is incurring deficits
or for which the existing financing has matured, the Partnership or its
ventures may seek a modification or refinancing of existing indebtedness
and, in the absence of a satisfactory debt modification or refinancing, may
decide, in light of the then existing and expected future market conditions
for such investment property, not to commit additional funds to such
investment property. This would likely result in the Partnership no longer
having an ownership interest in such property and would generally result in
gain to the Partnership for financial reporting and Federal income tax
purposes with no corresponding distributable proceeds.
The mortgage loan secured by the Eastridge Mall investment property
matures in 1995 and will need to be extended or refinanced should a sale of
the property not occur. In addition, certain other mortgage loans secured
by the Partnership's investment properties are the subject of discussions
with lenders for debt modifications or restructuring, including the
mortgage loans related to 21900 Burbank Building, Wells Fargo Center and
RiverEdge Place (see Note 4).
Maintenance and repair expenses are charged to operations as incurred.
Significant betterments and improvements are capitalized and depreciated
over their estimated useful lives.
(b) RiverEdge Place Building
The RiverEdge Place Building (formerly the First American Bank
Building) was 100% leased to an affiliate of the major tenant, First
American Bank, under a long-term over-lease executed in connection with the
purchase of the property. The Bank and its affiliate approached the
Partnership and indicated that they were experiencing significant financial
difficulties. On June 23, 1992, the Partnership reached an agreement with
the Bank and received cash and U.S. Government securities valued at
$9,325,000 for the buy-out of the Bank's over-lease obligations. The
Partnership took this course of action due to the First American Bank's
deteriorating financial condition and the Federal Deposit Insurance
Corporation's ability to assume control of the Bank and to terminate the
over-lease obligation. The $9,325,000 buy-out was concurrently remitted
to the lender to reduce the mortgage note secured by the RiverEdge Place
Building and the Partnership continues to negotiate with the lender to
restructure the mortgage note in order to reduce operating deficits
anticipated as a result of the over-lease buy-out (see note 4(b)(iv)).
Additionally, the tenant lease with First American Bank for approximately
120,000 square feet of space was assigned to and assumed by SouthTrust Bank
of Georgia in connection with that bank's acquisition of most of the
remaining assets of First American Bank. Effective August 1, 1992, the
Partnership restructured the lease with SouthTrust Bank of Georgia reducing
the tenant's space to approximately 92,000 square feet, as well as,
reducing the effective rent on the retained space in exchange for an
extension of the lease term from April 1994 to July 2002. The
restructuring of SouthTrust Bank's lease reduced the occupied space of the
RiverEdge Place Building from 96% to 85% at that time. The Partnership is
actively pursuing replacement tenants for the building's vacant space
including the space taken back from the SouthTrust lease restructuring.
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XV
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(c) 21900 Burbank Boulevard Building
The 21900 Burbank Building sustained some damage as a result of the
earthquakes that occurred in January 1994 in southern California. On
February 22, 1995, the City Council of the City of Los Angeles passed an
ordinance relating to the repair of welded steel moment frame buildings in
an area of the city that includes the 21900 Burbank Building. While a
complete determination of the requirements to comply with such ordinance is
not as yet completed, it is currently estimated that the cost of such
repairs, which has been reflected in the accompanying consolidated
financial statements, will be approximately $1,000,000. The Partnership
spent approximately $124,000 for repairs in 1994. In 1995 and 1996,
approximately 80% of the tenant space, most of which is occupied by two
tenants, expires. The Partnership has been successful in renewing one of
the tenants who occupies approximately 43% of the building at a lower
effective renewal rate. The Partnership is attempting to negotiate a new
lease with the other tenant. Lease renewals and new leases are likely to
be at rental rates less than the rates on existing leases due to the
continued recession in southern California.
(d) Springbrook Shopping Center
In October 1993, a tenant occupying 20% of the space at the
Springbrook Shopping Center vacated upon expiration of its lease. The
Partnership is actively pursuing replacement tenants for the vacant space.
(e) Erie-McClurg Parking Facility
On September 25, 1992, the Partnership sold the Erie-McClurg Parking
Facility to an unaffiliated third party for a price of $18,700,000 (before
selling costs and prorations) (note 7).
(f) Woodland Hills Apartments
The seller/manager has agreed to guarantee a level of cash flow from
the property equal to the underlying debt service in return for a
subordinated level of cash flow (payable as an incentive management fee)
from operations and sale or refinancing of the property. The underlying
debt which consisted of first and second mortgage notes secured by the
property was scheduled to mature in June 1994. The maturity date of the
first mortgage loan was extended to November 1, 1994 and both mortgage
notes were refinanced November 2, 1994 (see note 4(c)).
(3) VENTURE AGREEMENTS
(a) Introduction
The Partnership (or Carlyle-XV Associates, L.P., in which the
Partnership holds a limited partnership interest) has entered into eight
joint venture agreements (JMB/Piper, JMB/Piper II, JMB/900, JMB/Owings,
JMB/125, 260 Franklin, Villages Northeast and JMB/NewPark) with Carlyle
Real Estate Limited Partnership-XIV ("Carlyle-XIV") or Carlyle Real Estate
Limited Partnership-XVI (or Carlyle-XVI Associates, L.P., in which Carlyle
Real Estate Limited Partnership-XVI holds a limited partnership interest)
("Carlyle-XVI")), partnerships sponsored by the Corporate General Partner,
and eight joint venture agreements with unaffiliated venture partners.
Pursuant to such agreements, the Partnership made initial capital
contributions of approximately $247,300,000 (before legal and other
acquisition costs and its share of operating deficits as discussed below).
The terms of these affiliated partnerships provide, in general, that the
benefits of ownership, including tax effects, net cash receipts and sale
and refinancing proceeds, are allocated between or distributed to, as the
case may be, the Partnership and the affiliated partner in proportion to
their respective capital contributions to the affiliated venture.
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XV
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
There are certain risks associated with the Partnership's investments
made through joint ventures including the possibility that the
Partnership's joint venture partner(s) in an investment might become unable
or unwilling to fulfill its (their) financial or other obligations, or that
such joint venture partner(s) may have economic or business interests or
goals that are inconsistent with those of the Partnership. Under certain
circumstances, either pursuant to the venture agreements or due to the
Partnership's obligations as a general partner, the Partnership may be
required to contribute additional amounts to the venture.
During 1989, the Partnership disposed of its interest in the Boatmen's
venture (note 3(b)(i)). During 1991, the Partnership sold a portion of its
interest in the Harbor venture (note 7). In January 1993, the Partnership
sold the remaining portion of its interest in the Harbor venture and in
June 1993, the Partnership sold its interest in the JMB/Owings Mills joint
venture (note 7). In March 1994, the Partnership, through Villa Solana
Associates, sold the Villa Solana Apartments (note 7), in May 1994, the
lender realized upon its security interest in the Park at Countryside
Apartments (note 4(b)(i)) and in December 1994, the Partnership assigned
its interest in the JMB/125 venture to an affiliate of its unaffiliated
venture partner (see notes 3(c)(iv) and 7).
(b) Consolidated Ventures
The terms of the 260 Franklin venture have been described, in general,
above (note 3(a)). The terms of the Eastridge, Park, 160 Spear, Villa
Solana, Cal Plaza and VNE Partners ventures can be described in general, as
follows:
In most instances, these properties were acquired (as completed) for a
fixed purchase price; however, certain properties were developed by the
ventures and in those instances, the contributions of the Partnership are
generally fixed. The joint venture partner was required to contribute any
excess of cost over the aggregate amount available from Partnership
contributions and financing. To the extent such funds exceed the aggregate
costs, the venture partner was entitled to retain such excesses. The
venture properties have been financed under various long-term debt
arrangements as described in note 4.
The Partnership generally has a cumulative preferred interest in net
cash receipts (as defined) from the properties. Such preferential interest
relates to a negotiated rate of return on contributions made by the
Partnership. After the Partnership receives its preferential return, the
venture partner is generally entitled to a non-cumulative return on its
interest in the venture; additional net cash receipts are generally shared
in a ratio relating to the various ownership interests of the Partnership
and its venture partners. During 1994, 1993 and 1992, five, three and
four, respectively, of the ventures' properties produced net cash receipts.
The Partnership also has preferred positions (related to the Partnership's
cash investment in the ventures) with respect to distribution of net sale
or refinancing proceeds from the ventures.
In general, operating profits and losses are shared in the same ratio
as net cash receipts; however, if there are no net cash receipts, sub-
stantially all profits or losses are allocated to the Partnership. In
addition, generally amounts equal to certain expenses paid from capital
contributions by the Partnership or venture partners are allocated to the
contributing partner or partners.
(i) Boatmen's
During 1989 the joint venture defaulted on the mortgage loan secured
by the property, and the lender obtained title to the property. As a
result, the Partnership has no further ownership interest in the property.
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XV
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
On May 31, 1990, the Partnership entered into an agreement with the
joint venture partners to settle certain claims against the joint venture
partners. The settlement provided that the Partnership would receive
payments totalling $2,325,000. As of December 31, 1994, the Partnership
has received cash payments totalling $1,910,937. Two of the venture
partners were delinquent under the scheduled payments in the amount of
$414,063 as of December 31, 1994. These joint venture partners had
requested extensions of the promissory notes and the Partnership is
currently considering their requests. To preserve its legal rights, the
Partnership served the delinquent partners with notices of default in 1993.
The Partnership has recognized revenue on the settlement to the extent of
the cash collected. There is no assurance that the remaining delinquent
payments will be collected.
(ii) Park
In November 1991, Park modified the mortgage note secured by Park at
Countryside Apartments effective January 1, 1990 (note 4(b)). In October
1993, the joint venture ceased making the required debt service payments,
and after discussions with the lender, the venture was unable to secure an
additional modification to the loan. On May 5, 1994, the lender realized
upon its mortgage security and took title to the property (see note
4(b)(i)).
(iii) Cal Plaza
In August 1990, the joint venture partner filed a lawsuit against the
Partnership, the General Partners of the Partnership and certain of their
affiliates, alleging, among other things, breaches of the joint venture
agreement and fraud. The Partnership filed a counter claim against the
joint venture partner for breaches of the joint venture agreement and
property management agreement. In November 1991, the Partnership and the
joint venture partner reached a settlement resolving certain claims between
the two parties. Under the terms of the settlement agreement, the
obligation of the venture partner to indemnify Cal Plaza for payment on
promissory notes issued to a tenant was revised (see note 10).
In December 1993, the venture reached an agreement with the lender to
modify the mortgage note, effective February 1993. The accrual rate of the
note remains at 10.375%, but the interest only monthly payments are based
on an interest rate of 8% per annum. The maturity date of the note has
been extended from January 1, 1997 to January 1, 2000, and all property
cash flows are required to be escrowed as more fully described in note
4(b)(vi).
(c) Significant Unconsolidated Ventures
(i) JMB/Piper
In 1984, the Partnership acquired, through a joint venture partnership
"JMB/Piper", with Carlyle-XIV, an interest in a 42-story office building
known as the Piper Jaffray Tower in Minneapolis, Minnesota with the
developer and certain limited partners. In April 1986, JMB/Piper II, a
joint venture partnership between the Partnership and Carlyle - XIV,
acquired the developer's interest in the OB Joint Venture. As of December
31, 1994, JMB/Piper holds its interest in the property through three
existing joint ventures (OB Joint Venture, OB Joint Venture II and 222
South Ninth Street Limited Partnership, together "Piper").
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XV
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
The terms of the JMB/Piper and JMB/Piper II venture agreements
generally provide that JMB/Piper's and JMB Piper II's respective shares of
Piper's annual cash flow, sale or refinancing proceeds and profits and
losses will be distributed or allocated to the Partnership in proportion to
its 50% share of capital contributions.
JMB/Piper invested approximately $19,915,000 for its 71% interest in
Piper. JMB/Piper is obligated to loan amounts to Piper to fund operating
deficits (as defined). The loans bear interest at a rate of not more than
14.36% per annum, provide for payments of interest only from net cash flow,
if any, and are repayable from net sale or refinancing proceeds. Such
loans and accrued interest was approximately $72,272,000 and $63,214,000 at
December 31, 1994 and 1993, respectively.
In August 1992, the venture signed an agreement with the lender,
effective April 1, 1991, to modify the terms of the mortgage notes which
are secured by the investment property. The principal balance of the
mortgage notes has been consolidated into one note in the amount of
$100,000,000. Under the terms of the modification, commencing on April 1,
1991 and continuing through and including January 30, 2020, fixed interest
will accrue and is payable on a monthly basis at a $10,250,000 per annum
level. Contingent interest is payable in annual installments on April 1
and is computed at 50% of gross receipts, as defined, for each fiscal year
in excess of $15,200,000; none was due for 1992, 1993 or 1994. In
addition, to the extent the investment property generates cash flow after
payment of the fixed interest on the mortgage, contingent interest, leasing
and capital costs, and 25% of the ground rent, such amount will be paid to
the lender as a reduction of the principal balance of the mortgage loan.
The excess cash flow generated by the property in 1992 totalled $923,362
and was remitted to the lender during September of 1993. During 1993, the
excess cash flow generated under this agreement was $1,390,910 which was
remitted to the lender in May 1994. During 1994, the excess cash flow
generated under this agreement was $353,251 which is expected to be
remitted to the lender during the second quarter of 1995. On a monthly
basis, the venture deposits the property management fee into an escrow
account to be used for future leasing costs to the extent cash flow is not
sufficient to cover such items. To date, no escrow funds have been
required to be used for leasing costs. The manager of the property (which
is an affiliate of the Corporate General Partner) has agreed to defer
receipt of its management fee until a later date. As of December 31, 1994,
the manager has deferred approximately $2,398,000 of management fees
($2,357,000 of which represents fees deferred by the former affiliate of
the manager). If upon sale or refinancing as discussed below, there are
funds remaining in this escrow after payment of amounts owed to the lender,
such funds will be paid to the manager to the extent of its deferred and
unpaid management fees. Any remaining unpaid management fees would be
payable out of the venture's share of sale or refinancing proceeds.
Additionally, pursuant to the terms of the loan modification, effective
January 1992, OB Joint Venture, as majority owner of the underlying land,
began deferring receipt of it share of land rent. These deferrals will be
payable from potential net sale or refinancing proceeds, if any.
Furthermore, pursuant to the loan modification, the venture can prepay
the mortgage note beginning February 1, 1996 subject to a prepayment fee.
The prepayment fee is calculated pursuant to a formula to provide the
lender a minimum return of 13.59% per annum (if the loan is held to
maturity) plus a participation in excess sale and refinancing proceeds, if
any. For financial reporting purposes, interest expense has been accrued
at a rate of 13.59% per annum. In order for the venture to share in future
net sale or refinancing proceeds, there must be a significant improvement
in current market and property operating conditions resulting in a
significant increase in value of the property.
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XV
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
The Piper venture agreements provide that any net cash flow, as
defined, will be used to pay principal and interest on the operating
deficit loans (as described above) with any excess generally distributable
71% to JMB/Piper and 29% to the venture partners, subject to certain
adjustments (as defined). In general, operating profits or losses are
allocated in relation to the economic interests of the venture partners.
Accordingly, operating profits and losses (excluding depreciation and
amortization) were allocated 71% to JMB/Piper and 29% to the venture
partners during 1994 and 1993 and 100% to JMB/Piper during 1992.
The Piper venture agreements further provide that, in general, upon
any sale or refinancing of the property, the principal and any accrued
interest outstanding on any operating deficit loans will be repaid. Any
remaining proceeds will be distributable 71% to JMB/Piper and 29% to the
joint venture partners, subject to certain adjustments, as defined.
During the fourth quarter 1991, Larkin, Hoffman, Daly & Lindgren, Ltd.
(23,344 square feet) approached the joint venture indicating that it was
experiencing financial difficulties and desired to give back a portion or
all of its leased space. Larkin's lease was scheduled to expire in January
2005 and provided for annual rental payments which were significantly
higher than current market rental rates. Larkin was also a limited partner
with partial interests in the building and the land under the building. On
January 15, 1992, the joint venture agreed to terminate Larkin's lease in
return for its partial interest in the land under the building and a
$1,011,798 note payable to the joint venture. The note payable provides
for monthly payments of principal and interest at 8% per annum with full
repayment over ten years. Larkin may prepay all or a portion of the note
payable at any time. As of the date of this report, all amounts due under
the note payable have been received.
During the fourth quarter of 1993, the joint venture finalized a lease
amendment with Popham, Haik, Schnobrich & Kaufman, Ltd. (104,843 square
feet). The amendment provides for the extension of the lease term from
February 1, 1997 to January 31, 2003 in exchange for a rent reduction
effective February 1, 1994. In addition, the tenant will lease an
additional 10,670 square feet effective August 1, 1995. The rental rate on
the expansion space approximates market which is significantly lower than
the reduced rental rate on the tenant's current occupied space.
During the second quarter of 1994, a major tenant and joint venture
partner, Piper Jaffray, Inc. (275,758 square feet) agreed to expand its
leased space by 3,362 square feet in July 1995 and 19,851 square feet in
December 1995. Such space is currently leased to tenants whose leases
expire just prior to the effective dates for Piper Jaffray, Inc.'s
expansions. The expansion space lease expiration date will be coterminous
with Piper Jaffray, Inc.'s existing lease expiration date of March 2000 and
the net effective rental rate approximates market.
(ii) JMB/900
In 1984, the Partnership acquired, through JMB/900, an interest in an
existing joint venture ("Progress Partners") which owns a 36-story office
building known as the 900 Third Avenue Building in New York, New York. The
partners of Progress Partners were the developer of the property and an
original affiliate of the developer (the "Venture Partners") and JMB/900.
In 1986, one of the unaffiliated partners transferred a portion of its
interest to another partnership in which it and a major tenant of the
building (Central National Bank) were partners. In 1987, the bank failed
and the Federal Deposit Insurance Corporation ("FDIC") assumed its position
as a partner in this unaffiliated partnership.
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XV
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
The terms of the JMB/900 venture agreement generally provide that
JMB/900's share of Progress Partners' cash flow, sale or refinancing
proceeds and profits and losses will be distributed or allocated to the
Partnership in proportion to its 66-2/3% share of capital contributions.
JMB/900 has made capital contributions to Progress Partners and
certain payments to an affiliate of the developer, in the aggregate amount
of $18,270,000, subject to the obligation to make additional capital
contributions as described below.
JMB/900 has also made a loan to the developer in the amount of
$20,000,000 which is secured by the Venture Partners' interest in Progress
Partners. The loan bears interest at the rate of 16.4% per annum and is
payable in monthly installments of interest only until maturity on the
earlier of the sale or refinancing of the property or August 2004. For
financial reporting purposes, the loan is classified as an additional
investment in Progress Partners and any related interest received would be
accounted for as distributions (none in 1992, 1993 and 1994). To the
extent that JMB/900 has not received annual distributions equal to the
interest payable on such loan, the deficiency becomes a cumulative
preferred return payable out of future net cash flow or net sale or
refinancing proceeds.
The Progress Partners venture agreement provides that the venture is
required to pay the Venture Partners a stated return of $3,285,000 per
annum payable quarterly. Generally, JMB/900 is required to contribute
funds to the venture, to the extent net cash flow is not sufficient, to
enable the venture to make this payment. As a result of the lawsuit
discussed below, such amounts have not been contributed by JMB/900 to pay
the venture partner, and consequently, interest has not been received by
JMB/900 on the $20,000,000 loan discussed above. Under the terms of the
Progress Partners' venture agreement, the Venture Partners are generally
entitled to receive a non-cumulative preferred return of net cash flow (net
after the $3,285,000 per annum stated return payable to the Venture
Partners discussed above) of approximately $3,414,000 per annum, with any
remaining net cash flow distributable 49% to JMB/900 and 51% to the Venture
Partners.
The Progress Partners venture agreement further provides that net sale
or refinancing proceeds are distributable to JMB/900 and the Venture
Partners, on a pro rata basis, in an amount equal to the sum of any
deficiencies in the receipt of their respective cumulative preferred
returns of net cash flow plus certain contributions to the venture made by
JMB/900 to pay for the Venture Partner stated return. Next, proceeds will
be distributable to the Venture Partners in an amount equal to $20,000,000.
JMB/900 is entitled to receive the next $21,000,000 and the Venture
Partners will receive the next $42,700,000. Any remaining net proceeds are
to be distributed 49% to JMB/900 and 51% to the Venture Partners. As
discussed above, the $20,000,000 loan to the Venture Partners matures upon
sale or refinancing (under certain conditions) of the property.
Consequently, the $20,000,000 distribution level to the Venture Partners
would be used to pay off the $20,000,000 loan from JMB/900. Furthermore,
to the extent that JMB/900 has not received annual distributions equal to
the interest payable on the $20,000,000 loan discussed above, JMB/900's
preferred return deficiency is increased by the amounts not received.
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XV
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Operating profits, in general, are allocated 49% to JMB/900 and 51% to
the Venture Partners. Operating losses, in general, are allocated 90% to
JMB/900 and 10% to the venture partners.
As a result of certain defaults by one of the unaffiliated joint
venture partners, an affiliate of the General Partners assumed management
responsibility for the property as of August 1987 for a fee computed as a
percentage of certain revenues. In December 1994, the affiliated property
manager entered into a sub-management contract with an unaffiliated third
party. Pursuant to the sub-management agreement, the unaffiliated property
manager is managing the property.
Through December 31, 1991, it was necessary for JMB/900 to contribute
approximately $4,364,000 ($2,909,000 of which was contributed by the
Partnership) to pay past due property real estate taxes and to pay certain
costs, including litigation settlement costs, which were the responsibility
of one of the unaffiliated joint venture partners under the terms of the
joint venture agreement to the extent such funds were not available from
the investment property.
In July 1989, JMB/900 filed a lawsuit in federal court against the
former manager and one of the unaffiliated venture partners to recover the
amounts contributed and to recover for certain other joint venture
obligations on which the unaffiliated partner has defaulted. This lawsuit
was dismissed on jurisdictional grounds. Subsequently, however, the
Federal Deposit Insurance Corporation ("FDIC") filed a complaint, since
amended, in a lawsuit against the joint venture partner, the Partnership
and, Carlyle-XIV ("C-XIV") and JMB/900 which has enabled the Partnership
and C-XIV to refile its previously asserted claims against the joint
venture partner as part of that lawsuit in Federal Court. There is no
assurance that JMB/900 will recover the amounts of its claims as a result
of the litigation. Due to the uncertainty, no amounts in addition to the
amounts advanced to date, noted above, have been recorded in the financial
statements. Settlement discussions with one of the venture partners and
the FDIC continue. In addition, it appears that the unaffiliated venture
partners may not have the financial capabilities to repay amounts advanced
on their behalf. Consequently, a final settlement may involve redirecting
to JMB/900 amounts otherwise payable to the unaffiliated venture partners
in accordance with the venture agreement. Under certain circumstances,
JMB/900 may consider purchasing one or all of the unaffiliated venture
partners, position in Progress Partners in order to resolve this and
potential future disputes. There are no assurances that a settlement will
be finalized or that the Partnership and affiliated partner will be able to
recover any amounts from the unaffiliated venture partners.
During the fourth quarter of 1994, JMB/900, on behalf of Progress
Partners, successfully completed an extension of its mortgage loan, which
was scheduled to mature on December 1, 1994. As a result, the loan has
been extended to December 1, 2001 with monthly payments of principal and
interest based on an interest rate of 9.375% per annum and a 30 year
principal amortization schedule. The previous interest rate was 13% per
annum. In addition, net cash flow after debt service and capital will be
paid into an escrow account controlled by the lender to be used, including
interest earned thereon, by the joint venture for releasing costs
associated with leases which expire in 1999 and 2000 (approximately 240,000
square feet of space). The remaining proceeds in this escrow plus interest
earned thereon, if any, will be released to the joint venture once 90% of
such leased space has been renewed or released.
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XV
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(iii) South Tower
In June 1985, the Partnership acquired an interest in a joint venture
partnership ("South Tower") which owns a 44-story office building in Los
Angeles, California. The joint venture partners of the Partnership include
Carlyle Real Estate Limited Partnership-XIV ("Affiliated Partner"), one of
the sellers of the interests in South Tower, and another unaffiliated
venture partner.
The Partnership and the Affiliated Partner purchased their interests
for $61,592,000. In addition, the Partnership and the Affiliated Partner
made capital contributions to South Tower totaling $48,400,000 for general
working capital requirements and certain other obligations of South Tower.
The Partnership's share of the purchase price, capital contributions (net
of additional financing) and interest thereon totaled $53,179,000.
The terms of the South Tower agreement generally provide that the
Partnership and Affiliated Partner's aggregate share of the South Tower's
annual cash flow, net sale or refinancing proceeds, and profits and losses
are to be distributed or allocated to the Partnership and the Affiliated
Partner in proportion to their aggregate capital contributions.
Annual cash flow will be distributed 80% to the Partnership and
Affiliated Partner and 20% to another partner until the Partnership and the
Affiliated Partner have received, in the aggregate, a cumulative preferred
return of $8,050,000 per annum. The remaining cash flow is to be
distributable 49.99% to the Partnership and the Affiliated Partner, and the
balance to the other joint venture partners. Additional contributions to
South Tower were contributed 49.99% by the Partnership and the Affiliated
Partner until all partners had contributed $10,000,000 in aggregate.
Operating profits and losses, in general, are to be allocated 49.99%
to the Partnership and the Affiliated Partner and the balance to the other
joint venture partners. Substantially all depreciation and certain
expenses paid from the Partnership's and Affiliated Partner's capital
contributions are to be allocated to the Partnership and Affiliated
Partner. In addition, operating profits, up to the amount of any annual
cash flow distribution, are allocated to all partners in proportion to such
distributions of annual cash flow.
In general, upon sale or refinancing of the property, net sale or
refinancing proceeds will be distributed 80% to the Partnership and the
Affiliated Partner and 20% to another partner until the Partnership and the
Affiliated Partner have received the amount of any deficiency in their
preferred cash flow distributions described above plus an amount equal to
their "Disposition Preference" (which, in general, begins at $120,000,000
and increases annually by $8,000,000 to a maximum of $200,000,000). Any
remaining net sale or refinancing proceeds will be distributed 49.99% to
the Partnership and the Affiliated Partner and the remainder to the other
partners.
The office building is being managed by an affiliate of one of the
venture partners under a long-term agreement pursuant to which the
affiliate is entitled to receive a monthly management fee of 2-1/2% of
gross project income, a tenant improvement fee of 10% of the cost of tenant
improvements, and commissions on new leases.
The mortgage note secured by the property, as well as the promissory
note secured by the Partnership's interest in the joint venture matured
December 1, 1994. The Partnership and the joint venture have been in
discussions with the respective lenders regarding an extension of the
mortgage note and the promissory note. The Partnership and the joint
venture have reached an agreement with the lender of the mortgage note
whereby the lender will refrain from exercising its rights and remedies
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XV
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
under the loan documents through April 1, 1995 while the Partnership and
the venture continue to negotiate an extension or refinancing of the note
with the lender. The venture continues to make interest payments to the
lender under the original terms of the mortgage note and is required to
escrow all available cash flow. The Partnership has ceased making debt
service payments on the promissory note and is negotiating an extension or
refinancing with the venture. Such extension or refinancing is likely to
be dependent on the results of negotiations with the lender of the mortgage
note. There is no assurance that the joint venture or the Partnership will
be able to refinance these notes. In March 1995, the venture entered into
a seven year direct lease with the Los Angeles Unified School District
("LAUSD") for approximately one-half of a major tenant's (IBM's) space.
Under the terms of an agreement reached with IBM, the joint venture will be
reimbursed by IBM for all shortfalls between amounts due under the LAUSD
and the IBM leases. In early 1995, two major law firm tenants occupying
approximately 5% of the building's space notified the joint venture of
their intentions to disband each of these respective firms. The joint
venture has been negotiating separate termination agreements with these
tenants which provide for a combination of lump sum payments to be received
by the joint venture upon execution of the termination agreements, as well
as additional monthly payments to be received over a ten month period from
one of these tenants. In the absence of an extension or refinancing of the
notes, and due to the uncertainty that IBM will renew any of its remaining
space, the Partnership may decide not to commit any significant additional
amounts to the property. This would likely result in the Partnership no
longer having an ownership interest in the property, which would result in
a gain for financial reporting and for Federal income tax purposes with no
corresponding distributable proceeds. The promissory note secured by the
Partnership's interest in the joint venture has been classified at December
31, 1994 and 1993 as a current liability in the accompanying consolidated
financial statements.
(iv) JMB/125
In November 1994, the Partnership through its indirect ownership of
JMB/125 assigned its interest in the 125 Broad Street Building (note 7(f)).
In December 1985, the Partnership, through the JMB/125 joint venture
partnership, acquired an interest in an existing joint venture partnership
("125 Broad") which owns a 40-story office building, together with a
leasehold interest in the underlying land, located at 125 Broad Street in
New York, New York. In addition to JMB/125, the other partners (the "O&Y
partners") of 125 Broad include O&Y 25 Realty Company L.P., Olympia & York
Broad Street Holding Company L.P. (USA) and certain other affiliates of
Olympia & York Development, Ltd. ("O&Y").
JMB/125 is a joint venture between Carlyle-XV Associates, L.P. (in
which the Partnership holds a 99% limited partnership interest), Carlyle-
XVI Associates, L.P. and Carlyle Advisors, Inc. The terms of the JMB/125
venture agreement generally provide that JMB/125's share of 125 Broad's
annual cash flow and sale or refinancing proceeds will be distributed or
allocated to the Partnership in proportion to its (indirect) approximate
60% share of capital contributions to JMB/125. In April 1993 JMB/125,
originally a general partnership, was converted to a limited partnership,
and the Partnership's interest in JMB/125, which previously has been held
directly, was converted to a limited partnership interest and was
contributed to Carlyle-XV Associates, L.P. in exchange for a limited
partnership interest in Carlyle-XV Associates, L.P. As a result of these
transactions, the Partnership currently holds, indirectly through Carlyle-
XV Associates, L.P., an approximate 60% limited partnership interest in
JMB/125. The general partner in each of JMB/125 and Carlyle-XV Associates,
L.P. is an affiliate of the Partnership. For financial reporting purposes,
profits and losses of JMB/125 are generally allocated 60% to the
Partnership.
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XV
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
JMB/125 acquired an approximately 48.25% interest in 125 Broad for a
purchase price of $16,000,000, subject to a first mortgage loan of
$260,000,000 and a note payable to an affiliate of the joint venture
partners in the amount of $17,410,516 originally due September 30, 1989.
In June 1987, the note payable was consolidated with the first mortgage
loan forming a single consolidated note in the principal amount of
$277,410,516. The consolidated note bore interest at a rate of 10-1/8% per
annum payable in semi-annual interest only payments and was to mature on
December 27, 1995. JMB/125 has also contributed $14,055,500 to 125 Broad
to be used for working capital purposes and to pay an affiliate of O&Y for
its assumption of JMB/125's share of the obligations incurred by 125 Broad
under the "takeover space" agreement described below. In addition, JMB/125
contributed $24,222,042, plus interest thereon of approximately $1,089,992
on June 30, 1986 for working capital purposes. Thus, JMB/125's original
cash investment (exclusive of acquisition costs) was $55,367,534, of which
the Partnership's share was approximately $33,220,000.
The land underlying the office building is subject to a ground lease
which has a term through June 2067 and provides for annual rental payments
of $1,075,000. The terms of the ground lease grant 125 Broad a right of
first refusal to acquire the fee interest in the land in the event of any
proposed sale of the land during the term of the lease and an option to
purchase the fee interest in the land for $15,000,000 at 10-year intervals.
The partnership agreement of 125 Broad, as amended, provided that the
O&Y partners were obligated to make advances to pay operating deficits
incurred by 125 Broad from the earlier of 1991 or the achievement of a 95%
occupancy rate of the office building through 1995. In addition, from
closing through 1995, the O&Y partners were required to make capital
contributions to 125 Broad for the cost of tenant improvements and leasing
expenses up to certain specified amounts and to make advances to 125 Broad
to the extent such costs exceeded such specified amounts and such costs
were not paid for by the working capital provided by JMB/125 or the cash
flow of 125 Broad. The amount of all costs for such tenant improvements
and leasing expenses over the specified amounts and the advances for
operating deficits from the earlier of the achievement of a 95% occupancy
rate of the office building or 1991 were treated by 125 Broad as non-
recourse loans bearing interest, payable monthly, at the floating prime
rate of an institutional lender. Due to a major tenant vacating in 1991
and the O&Y affiliates' default under the "takeover space" agreement, the
property operated at a deficit in 1994 and was expected to operate at a
deficit for the next several years. Such deficits were required to be
funded by additional loans from the O&Y partners, although as discussed
below the O&Y partners were in default of such funding obligation since
June 1992. The outstanding principal balance and any accrued and unpaid
interest of such loans were to be payable from 125 Broad's annual cash flow
or net sale or refinancing proceeds, as described below. Any unpaid
principal of such loans and any accrued and unpaid interest thereon would
be due and payable on December 31, 2000. JMB/125 and the O&Y partners were
obligated to make capital contributions, in proportion to their respective
interests in 125 Broad, in amounts sufficient to enable 125 Broad to pay
any excess expenditures not covered by the capital contributions or
advances of the O&Y partners described above.
The 125 Broad partnership agreement also provided that beginning in
1991 annual cash flow, if any, was distributable first to JMB/125 and to
the O&Y partners in certain proportions up to certain specified amounts.
Next, the O&Y partners were entitled to repayment of principal and any
accrued but unpaid interest on the loans for certain tenant improvements,
leasing expenses and operating deficits described above, and remaining
annual cash flow, if any, was distributable approximately 48.25% to JMB/125
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XV
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
and approximately 51.75% to the O&Y partners. In general, operating
profits or losses were allocable approximately 48.25% to JMB/125 and
approximately 51.75% to the O&Y partners, except for certain specified
items of profits or losses which were allocable to JMB/125 or the O&Y
partners.
The 125 Broad partnership agreement further provided that, in general,
upon sale or refinancing of the property, net sale or refinancing proceeds
(after repayment of the outstanding principal balance and any accrued and
unpaid interest on any loans from the O&Y partners described above) were
distributable approximately 48.25% to JMB/125 and approximately 51.75% to
the O&Y partners.
As a result of the assignment by JMB/125 of its interest in 125 Broad
to an affiliate of the O&Y partners and the release of JMB/125 of claims
related to 125 Broad, JMB/125 was relieved of any obligation to contribute
any additional amounts to 125 Broad, including any amount of its deficit
capital account to 125 Broad. Reference is made to Note 7(f).
In October 1993, 125 Broad entered into an agreement with Salomon
Brothers, Inc. to terminate its lease covering approximately 231,000 square
feet (17% of the building) at the property on December 31, 1993 rather than
its scheduled termination in January 1997. In consideration for the early
termination of the lease, Salomon Brothers, Inc. paid 125 Broad
approximately $26,500,000, plus interest thereon of approximately $200,000,
which 125 Broad in turn paid its lender to reduce amounts outstanding under
the mortgage loan. In addition, Salomon Brothers, Inc. paid JMB/125
$1,000,000 in consideration of JMB/125's consent to the lease termination.
Due to the O&Y partners' failure to advance necessary funds to 125
Broad as required under the joint venture agreement, 125 Broad defaulted on
its mortgage loan in June 1992 by failing to pay approximately $4,722,000
of the semi-annual interest payment due on the loan. As a result of this
default, the loan agreement provided for a default interest rate of 13-1/8%
per annum on the unpaid principal amount. In addition, during 1992
affiliates of O&Y defaulted on a "takeover space" agreement with Johnson &
Higgins, Inc. ("J&H"), one of the major tenants at the 125 Broad Street
Building, whereby such affiliates of O&Y agreed to assume certain lease
obligations of J&H at another office building in consideration of J&H's
leasing space in the 125 Broad Street Building. As a result of this
default, J&H offset rent payable to 125 Broad for its lease at the 125
Broad Street Building in the amount of approximately $43,500,000 through
the date of its assignment, and it was expected that J&H would continue to
offset amounts due under its lease corresponding to amounts by which the
affiliates of O&Y were in default under the "takeover space" agreement. As
a result of the O&Y affiliates' default under the "takeover space"
agreement and the continuing defaults of the O&Y partners to advance funds
to cover operating deficits, as of the date of the assignment, the
arrearage under the mortgage loan had increased to approximately
$69,447,000. As discussed above, approximately $26,700,000 was remitted to
the lender in October 1993 in connection with the early termination of the
Salomon Brothers lease, and was applied towards mortgage principal for
financial reporting purposes. Due to their obligations relating to the
"takeover space" agreement, the affiliates of O&Y were obligated for the
payment of the rent receivable associated with the J&H lease at the 125
Broad Street Building. Based on the continuing defaults of the O&Y
partners, 125 Broad reserved for the entire rent offset by J&H,
$14,900,000, $19,300,000 and $9,300,000 in 1994, 1993 and 1992,
respectively, and also reserved approximately $32,600,000 of accrued rents
receivable relating to such J&H lease, since the ultimate collectability of
such amounts depended upon the O&Y partners' and the O&Y affiliates'
performance of their obligations. The Partnership's share of such losses
was approximately $4,300,000, $5,587,000 and $12,159,000 for the years
ended December 31, 1994, 1993 and 1992, respectively, and is included in
the Partnership's share of loss from operations of unconsolidated venture.
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XV
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
The office building was managed pursuant to a long-term agreement with
an affiliate of the O&Y partners. Under the terms of the management
agreement, the manager was obligated to manage the office building, collect
all receipts from operations and to the extent available from such receipts
pay all expenses of the office building. The manager was entitled to
receive a management fee equal to 1% of gross receipts of the property.
(v) JMB/NewPark
In December 1986, the Partnership, through a joint venture partnership
("JMB/NewPark"), acquired an interest in an existing joint venture
partnership ("NewPark Associates") with the developer which owns an
interest in an existing enclosed regional shopping center in Newark,
California known as NewPark Mall.
JMB/NewPark acquired its 50% interest in NewPark Associates for a
purchase price of $32,500,000 paid in cash at closing, subject to an
existing first mortgage loan of approximately $23,556,000 and certain loans
from the joint venture partner of approximately $6,300,000.
In 1990, NewPark Associates reached an agreement with J.C. Penney to
open an anchor store at NewPark Mall, which opened in November 1991. Under
the terms of the agreement, J.C. Penney built its own store and NewPark
Associates constructed a parking deck to accommodate the addition of J.C.
Penney to the center. NewPark Associates incurred costs of approximately
$10,400,000 related to this addition, of which $2,000,000 was reimbursed by
J.C. Penney. The unaffiliated joint venture partner loaned NewPark
Associates all of the funds to cover the costs incurred related to the
addition. In December 1992, proceeds from the refinancing described below
were used to repay all amounts due to the unaffiliated joint venture
partner.
On December 31, 1992, NewPark Associates refinanced the shopping
center with an institutional lender. The new mortgage note payable in the
principal amount of $50,620,219 is due on November 1, 1995. Monthly
payments of interest only of $369,106 are due through November 30, 1993.
Commencing on December 1, 1993 through October 30, 1995, principal and
interest are due in monthly payments of $416,351 with a final balloon
payment due November 1, 1995. Interest on the note payable accrues at
8.75% per annum. The joint venture has an option to extend the term of the
mortgage note payable to November 1, 2000 upon payment of a $250,000 option
fee and satisfaction of certain conditions (which the Partnership currently
expects to be able to satisfy if requested) as specified in the mortgage
note. The joint venture has commenced discussions with the existing lender
regarding an extension of the loan, however, there can be no assurance that
the joint venture will be able to obtain such an extension. A portion of
the proceeds from the note payable were used to pay the outstanding balance
including accrued interest, under the previous mortgage note payable and
outstanding notes payable to the unaffiliated joint venture partner.
NewPark Associates commenced a renovation of approximately $14,000,000 at
NewPark Mall in early 1993 that was completed later that year.
The NewPark Associates partnership agreement provides that JMB/NewPark
and the joint venture partner are each entitled to receive 50% of profits
and losses, net cash flow and net sale or refinancing proceeds of NewPark
Associates and are each obligated to advance 50% of any additional funds
required under the terms of the NewPark Associates partnership agreement.
The portion of the shopping center owned by NewPark Associates is
managed by the unaffiliated joint venture partner under a long-term
agreement pursuant to which it is obligated to manage the property and
collect all receipts from operations of the property. The joint venture
partner is paid a management fee equal to 4% of the fixed and percentage
rent.
<TABLE>
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XV
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(4) LONG-TERM DEBT
(a) Long-term debt consists of the following at December 31, 1994 and 1993:
<CAPTION>
1994 1993
------------ -----------
<S> <C> <C>
13.875% mortgage note; secured by the RiverEdge Place Building;
monthly payments of $302,821 are due through December 1, 1995;
the outstanding balance of principal and accrued interest is
due January 1, 1996; in default since July 1992 (see note 4(b)). . . . . . . $18,166,294 18,166,294
12.0% promissory note; secured by the Partnership's interest in
the South Tower venture; payable interest only through
November 30, 1994; principal balance of $22,750,000
was payable December 1, 1994 and currently in default; see
note 4(b). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22,750,000 22,750,000
8.5% mortgage note; secured by the Villa Solana Apartments;
principal and interest payments of $107,648 were due monthly
through August 1, 1994 as extended when the unpaid
principal and interest balance would have been due;
retired upon sale of property in March, 1994 (see note 7(d)) . . . . . . . . -- 13,481,503
11.155% mortgage note; secured by the Eastridge Mall;
principal and interest payments of $241,010 are due monthly;
unpaid balance of principal and interest of approximately
$23,352,312 is due on October 1, 1995. . . . . . . . . . . . . . . . . . . . 23,336,259 23,608,492
12.8% first mortgage note; secured by the Woodland Hills Apartments;
monthly payments of interest only were required until maturity on
November 1, 1994 as extended; refinanced in November, 1994
(see note 4(c)). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -- 6,800,000
11.7% second mortgage note; secured by the Woodland Hills Apartments;
monthly payments of interest only were required until maturity
on June 1, 1994; refinanced in November, 1994 (see note 4(c)). . . . . . . . -- 1,256,667
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XV
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
1994 1993
------------ -----------
Variable rate mortgage note; secured by the Woodland Hills Apartments;
payable in monthly installments of interest only of varying amounts
related to a market index until October 1, 1997 when the principal
balance of $8,175,000 is payable (see note 4(c)) . . . . . . . . . . . . . . 8,175,000 --
11.25% mortgage note; secured by Park at Countryside Apartments;
monthly payments of interest only were required until scheduled
maturity on January 1, 1996 when the unpaid balance of principal
and interest was payable (the note was satisfied in 1994 due to
the lender realizing upon its security, see note 4(b)) . . . . . . . . . . . -- 3,100,000
9.3% first mortgage note; secured by the 160 Spear Street Building;
monthly payments of interest only are required through March 10,
1995; principal and interest payments of $278,877 are due monthly
from April 10, 1995 through January 10, 1999; the unpaid balance
of principal and interest of approximately $32,772,760 is due
on February 10, 1999 (see note 4(b)) . . . . . . . . . . . . . . . . . . . . 33,750,000 33,750,000
12.55% second mortgage note; secured by the 160 Spear Street Building;
monthly payments of interest only are required through March 10,
1995; principal and interest of $58,216 are due monthly from
April 10, 1995 through January 10, 1999; the unpaid balance of
principal and interest of approximately $5,351,910 is due on
February 10, 1999 (see note 4(b)). . . . . . . . . . . . . . . . . . . . . . 5,434,894 5,434,894
9.5% mortgage note; secured by the 21900 Burbank Boulevard Building;
requiring monthly principal and interest payments of $106,789
through November 1, 1996 with the balance of the unpaid principal
and interest of approximately $11,563,066 due on December 1, 1996. . . . . . 11,806,786 11,958,681
11.0% mortgage note; secured by the 260 Franklin Street Building;
monthly payments of interest only of $374,455 are due from
June 1991 through January 1, 1992, monthly payments of interest
only of $499,273 are due from February 1, 1992 through December 1,
1995, the unpaid balance of approximately $74,891,013 plus unpaid
accrued interest is due on January 1, 1996. Additional interest
payable upon maturity to provide an 11% return to lender and 60%
of the greater of net sales or refinancing proceeds or appraised
value, as defined (see note 4(b)). . . . . . . . . . . . . . . . . . . . . . 85,376,896 83,629,438
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XV
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
1994 1993
------------ -----------
9.0% mortgage note; secured by the 9701 Wilshire Building;
principal and interest payments of $136,850 were due monthly
through December 1, 1993; the unpaid balance of principal and
interest of approximately $16,431,634 was originally due on
January 1, 1994; the maturity date was extended to
September 30, 1994; monthly principal and interest payments of
$136,850 were due monthly through August 1, 1994 when the
unpaid principal and interest balance would have been
due; property was sold and the loan was retired in
October 1994 (see note 7(e)) . . . . . . . . . . . . . . . . . . . . . . . . -- 16,475,465
10.375% Mortgage note; secured by the California Plaza Building;
interest only payments of $501,458 were due monthly through
January 1, 1992; principal and interest payments of $525,136
were due monthly from February 1, 1992 through December 1, 1996;
the unpaid balance of principal and interest of approximately
$56,673,315 was due on January 1, 1997; modified in December 1993
to require interest only payments of $384,505 (8.00%) due monthly
effective February 1993 through January 1, 2000; interest accrues
at 10.375% through January 1, 2000 when the unpaid principal and
interest is due; see note 4(b) . . . . . . . . . . . . . . . . . . . . . . . 60,329,126 59,349,163
7.64% mortgage note; secured by Dunwoody Crossing (Phase II),
principal and interest payments of $73,316 are due monthly
from November 1, 1992 through October 31, 1997; the unpaid
balance of principal and interest of approximately
$9,004,930 is due on November 1, 1997 (see note 4(b)). . . . . . . . . . . . 9,505,018 9,652,454
9.75% mortgage note; secured by Dunwoody Crossing (Phase I and III),
principal and interest payments of $180,425 were due monthly
from May 1991 through September 1994; the unpaid balance of
principal and interest of approximately $20,692,324 was due
on October 1, 1994. (The note was modified and satisfied
in 1994 by the loan immediately below, see note 4(b)). . . . . . . . . . . . -- 20,643,499
8.65% mortgage note; secured by Dunwoody Crossing (Phases I and III),
principal and interest payments of $171,737 are due monthly
from February 15, 1995 to October 15, 1997; the unpaid balance
of principal and interest of approximately $20,878,209 is due
on November 15, 1997 (see note 4(b)) . . . . . . . . . . . . . . . . . . . . 21,500,000 --
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XV
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
1994 1993
------------ -----------
9.53% mortgage note; secured by the Springbrook Shopping Center;
monthly payments of interest only are required through May 1,
1995; principal and interest payments of $92,735 are due monthly
from June 1, 1995 through April 1, 1997; the unpaid balance of
principal and interest of approximately $10,951,198 is due on
May 1, 1997. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,000,000 11,000,000
------------ ------------
Total debt. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 311,130,273 341,056,550
Less current portion of long-term debt. . . . . . . . . . . . . . . . . . 64,981,954 95,188,325
------------ ------------
Total long-term debt. . . . . . . . . . . . . . . . . . . . . . . . . . . $246,148,319 245,868,225
============ ============
</TABLE>
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XV
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Included in the above total long-term debt is $13,139,304, $10,411,883
and $6,868,462 for 1994, 1993 and 1992, respectively, which represents
mortgage interest accrued but not currently payable pursuant to the terms
of the notes.
Five year maturities of long-term debt are as follows:
1995. . . . . . . . $ 64,981,954
1996. . . . . . . . 87,251,913
1997. . . . . . . . 49,598,650
1998. . . . . . . . 304,452
1999. . . . . . . . 38,178,292
============
(b) Debt Modifications
(i) Park
On May 5, 1994, the lender concluded proceedings to realize upon its
security and took title to the property as described below.
In October 1993, the joint venture ceased making the required debt
service payments, but after discussions with the lender, the venture was
unable to secure an additional modification of the loan. Therefore, the
loan had been classified at December 31, 1993 as a current liability in the
accompanying consolidated financial statements. On May 5, 1994, the lender
realized upon its mortgage security and took title to the property. Since
the Partnership had received, through the date of disposition, losses and
distributions in excess of its original cash investment in the property,
the Partnership recognized a gain on disposition in 1994 of $1,418,043 (net
of the venture partner's share of $729,820) for financial reporting
purposes. In addition, the Partnership recognized a gain in 1994 of
$801,665 (net of venture partner's share of $54,737) for Federal income tax
purposes, with no corresponding distributable proceeds. The venture
remitted approximately $123,000 of cash flow debt service payments to the
lender in 1994.
(ii) 260 Franklin
The affiliated joint venture reached an agreement with the lender to
modify the terms of the long-term mortgage note secured by the 260 Franklin
Street Building in December 1991. The modified mortgage note currently
provides for monthly payments of interest only based upon the then
outstanding balance at a rate of 8% per annum. Upon the scheduled or
accelerated maturity, or prepayment of the mortgage loan, the affiliated
joint venture shall be obligated to pay an amount sufficient to provide the
lender with an 11% per annum yield on the mortgage note from January 1,
1991 through the date of maturity or prepayment. In addition, upon
maturity (scheduled to be January 1996) or prepayment, the affiliated joint
venture is obligated to pay to the lender a residual interest amount equal
to 60% of the highest amount, if any, of (i) net sales proceeds, (ii) net
refinancing proceeds, or (iii) net appraisal value, as defined. No amounts
have been required to be accrued for such contingent payments. The
affiliated joint venture is required to (i) escrow excess cash flow from
operations, beginning in 1991, to cover future cash flow deficits (ii) make
an initial contribution to the escrow account of $250,000, of which the
Partnership's share was $175,000, and (iii) make annual escrow
contributions through January 1995, of $150,000, of which the Partnership's
share is $105,000. The escrow account is to be used to cover the costs of
capital and tenant improvement and lease inducements which are the primary
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XV
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
components of the anticipated operating deficits noted above ($1,151,566
used as of December 31, 1994), as defined, with the balance, if any, of
such escrowed funds available at the scheduled or accelerated maturity to
be used for the payment of principal and interest due to the lender as
described above.
(iii) 160 Spear Street Building
During 1992, the venture reached an agreement with the first mortgage
lender to modify and extend the mortgage note secured by the 160 Spear
Street investment property, which was scheduled to mature on December 10,
1992. The maturity of the loan was extended to February 10, 1999.
Additionally, the venture is required to escrow net cash flow (as defined)
thirty days following each quarter end which can be withdrawn for
expenditures approved by the lender, by the lender upon default of the note
or by the venture on February 10, 1997 when the escrow agreement
terminates. As of December 31, 1994, $198,036 has been placed in the
escrow account, and $170,985 has been withdrawn for expenditures approved
by the lender.
The venture has approached the lender for an additional loan
modification due to anticipated re-leasing expected to be incurred at the
property. However, the lender has indicated that it is not interested in
providing an additional modification, and intends to take title to the
property. The venture and the lender are currently discussing terms for a
transfer of the property to the lender. This will likely result in the
Partnership no longer having an ownership interest in the property, which
would likely result in the Partnership recognizing a gain for financial
reporting and Federal income tax purposes with no corresponding
distributable proceeds.
(iv) RiverEdge Place Building
The Partnership ceased making its monthly debt service payments
effective July 1, 1992. The Partnership is currently negotiating with the
lender to restructure the mortgage note (with a balance of $18,166,294 at
December 31, 1994) in order to reduce operating deficits anticipated as a
result of the over-lease buy-out. If the Partnership's negotiations for
mortgage note restructuring are not successful, the Partnership would
likely decide, based upon current market conditions and other
considerations relating to the property and the Partnership's portfolio,
not to commit significant additional amounts to the property. This would
result in the Partnership no longer having an ownership interest in the
property and would result in the recognition of a gain for financial
statement and Federal income tax purposes without any corresponding
distributable proceeds. As of December 31, 1994, the amount of such
principal and interest payments in arrears is approximately $9,084,855.
The loan has been classified at December 31, 1994 and 1993 as a current
liability in the accompanying consolidated financial statements.
(v) Villages Northeast
Effective October 6, 1992, the Villages Northeast joint venture,
through a joint venture ("Post Associates") refinanced the first mortgage
loan secured by the Dunwoody (Phase II) Apartments which had a principal
balance at the date of refinancing of approximately $9,467,000.
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XV
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
The first mortgage loan of $9,800,000 (from an institutional lender)
bears interest of 7.64% per annum, is collateralized by the property and
requires monthly payments of principal and interest of $73,316 beginning
November 1, 1992 and continuing through November 1, 1997, when the
remaining balance is payable.
The first mortgage loan secured by the Dunwoody Crossing Phases I and
III Apartments was scheduled to mature in October 1994. The joint venture
owning the property negotiated an extension of the mortgage loan until
December 15, 1994. The joint venture then reached an agreement with the
existing lender for a new loan, which requires monthly payments of
principal and interest (8.65% per annum) of $171,737 beginning February 15,
1995 and continuing through November 15, 1997, when the remaining balance
will be payable.
(vi) Cal Plaza
Effective March 1, 1993, the joint venture ceased making the scheduled
debt service payments on the mortgage loan secured by the property which
was scheduled to mature on January 1, 1997. Subsequently, the Partnership
made partial debt service payments based on net cash flow of the property
through December 1993 when an agreement was reached with the lender to
modify the loan. The accrual rate of the modified loan remains at 10.375%
per annum while the pay rate is reduced to 8% per annum. The loan
modification reduced the monthly payments to $384,505, effective with the
March 1, 1993 payment. The maturity date is extended, as a result of this
modification, to January 1, 2000 when the unpaid balance of principal and
interest is due (including the difference between the accrual interest and
pay rate interest). Additionally, the joint venture entered into a cash
management agreement which requires monthly net cash flow to be escrowed
(as defined). The excess (of approximately $2,681,000) of the monthly cash
flow paid from March 1993 to December 1994 above the 8% interest pay rate
was put into escrow for the future payment of insurance premiums, real
estate taxes, and to fund a reserve account to be used to cover future
costs, including tenant improvements, lease commissions, and capital
improvements, approved by the lender (none was used as of December 31,
1994). If at any time the balance in the escrow account exceeds
$2,120,000, the excess will be used to first pay off deferred interest,
then pay principal on the mortgage loan. Any amounts remaining in the
escrow account at the maturity date will be applied towards the remaining
balances of principal and interest on the loan. The joint venture also was
required to fund $500,000 into the reserve account.
(vii) Wells Fargo Center
The mortgage note secured by the Wells Fargo Center as well as the
promissory note secured by the Partnership's interest in the joint venture
matured December 1, 1994. The Partnership and the joint venture have been
in discussions with the respective lenders regarding an extension of the
mortgage note and the promissory note. The Partnership and the joint
venture have reached an agreement with the lender of the mortgage note
whereby the lender will refrain from exercising its rights and remedies
under the loan documents through April 1, 1995 while the Partnership and
the venture continue to negotiate an extension or refinancing of the note
with the lender. The venture continues to make interest payments to the
lender under the original terms of the mortgage note and is required to
escrow all available cash flow. The Partnership has ceased making debt
service payments on the promissory note and is negotiating an extension or
refinancing with the venture. Such extension or refinancing is likely to
be dependent on results from negotiations with the lender of the mortgage
note. There is no assurance that the joint venture or the Partnership will
be able to refinance these notes. In the absence of an extension or
refinancing of the notes, the Partnership may decide not to commit any
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XV
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
significant additional amounts to the property. This would likely results
in the Partnership no longer having an ownership interest in the property,
and would result in a gain for financial reporting and for Federal income
tax purposes with no corresponding distributable proceeds. The promissory
note secured by the Partnership's interest in the joint venture has been
classified at December 31, 1994 and 1993 as a current liability in the
accompanying consolidated financial statements.
(c) Woodland Hills Apartments
In February 1991, the Partnership entered into an agreement with the
seller of Woodland Hills Apartments. Under the terms of this agreement,
the seller canceled its wrap-around mortgage note receivable from the
Partnership and assumed management of the property (see notes 2(f) and 6).
The obligations to make payments on the two underlying mortgage loans were
assumed by the Partnership. The mortgage note receivable originally
wrapped around and was subordinate to a first and a second mortgage loan in
the principal amounts of $6,800,000 and $1,256,667, respectively. The
first mortgage loan required monthly payments of interest only in arrears
at the rate of 12.8% per annum through June 1, 1994. The first mortgage
loan was extended to November 1, 1994 based on the original terms of the
note, for fees aggregating $35,000. The second mortgage loan required
monthly payments of interest only in arrears at 11.7% per annum until June
1, 1994. On November 2, 1994, the Partnership refinanced the first and
second mortgage loans with the lender of the second mortgage loan. The new
non-recourse first mortgage loan in the amount of $8,175,000, which is
collateralized by the property, requires monthly payments of interest only
at a rate of 4% above the GECC commercial paper rate (approximately 8.7% at
December 31, 1994) through October 1, 1997 when the principal balance is
due and payable.
(5) PARTNERSHIP AGREEMENT
Pursuant to the terms of the Partnership Agreement, net profits and
losses of the Partnership from operations are allocated 96% to the Limited
Partners and 4% to the General Partners. Profits from the sale or other
dispositions of investment properties will be allocated first to the
General Partners in an amount equal to the greater of the General Partners'
share of cash distributions from the proceeds of any such sale or other
dispositions (as described below) or 1% of the total profits from any such
sales or other dispositions, plus an amount which will reduce deficits (if
any) in the General Partners' capital accounts to a level consistent with
the gain anticipated to be realized from the sale of investment properties.
Losses from the sale or other disposition of investment properties will be
allocated 1% to the General Partners. The remaining sale or other
disposition profit and losses will be allocated to the Limited Partners.
The General Partners are not required to make any additional capital
contributions except under certain limited circumstances upon dissolution
and termination of the Partnership. "Net cash receipts" from operations of
the Partnership will be allocated 90% to the Limited Partners and 10% to
the General Partners (of which 6.25% constitutes a management fee to the
Corporate General Partner for services in managing the Partnership).
The Partnership Agreement provides that subject to certain conditions,
the General Partners shall receive as a distribution from the sale of a
real property by the Partnership up to 3% of the selling price, and that
the remaining proceeds (net after expenses and retained working capital) be
distributed 85% to the Limited Partners and 15% to the General Partners.
However, prior to such distribution being made, the Limited Partners are
entitled to receive 99% and the General Partners l% of net sale or
refinancing proceeds until the Limited Partners (i) have received cash
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XV
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
distributions of "sale proceeds" or "refinancing proceeds" in an amount
equal to the Limited Partners' aggregate initial capital investment in the
Partnership and (ii) have received cumulative cash distributions from the
Partnership's operations which, when combined with "sale proceeds" or
"refinancing proceeds" previously distributed, equal a 6% annual return on
the Limited Partners' average capital investment for each year (their
initial capital investment as reduced by "sale proceeds" or "refinancing
proceeds" previously distributed) commencing with the first fiscal quarter
of 1990. Accordingly, up to $561,000 of sale proceeds from Erie-McClurg
Parking Facility , $498,000 of sale proceeds for the sale of the Villa
Solana Apartments and $538,500 of sale proceeds for the sale of the 9701
Wilshire Building distributable to the General Partners have been deferred
(see note 7).
(6) MANAGEMENT AGREEMENTS
Certain of the Partnership's properties are managed by affiliates of
the General Partners or their assignees for fees computed as a percentage
of certain rents received by the properties. In December 1994, one of the
affiliated property managers sold substantially all of its assets and
assigned its interest in its management contracts to an unaffiliated third
party. In addition, certain of the management personnel of the property
manager became management personnel of the purchaser and its affiliates.
The successor to the affiliated property manager is acting as property
manager of the 21900 Burbank Boulevard Building, the 260 Franklin Street
Building, the Dunwoody Crossing Apartments and the RiverEdge Place Building
on the same terms that existed prior to the sale.
The Partnership has also entered into agreements with certain joint
venture partners or affiliates of the joint venture partners for the
operation and management of properties owned by Eastridge, 160 Spear, Park,
Boatmen's, Cal Plaza and VNE Partners. Certain of these agreements have
been terminated. Reference is made to note 3(b). Such agreements
generally provided for initial terms during which the managers or their
affiliates pay all expenses of the properties and retain the excess, if
any, of the cash revenues from operations over costs and expenses, as
defined (including debt service requirements), as a management fee.
In February 1991, management of the Woodland Hills Apartments was
reassumed by the seller of this property (see notes 2(f) and 4(c)).
(7) SALE OF INVESTMENT PROPERTIES
(a) Erie-McClurg Parking Facility
On September 25, 1992, the Partnership, through Erie-McClurg
Associates, sold the Erie-McClurg Parking Facility located in Chicago,
Illinois. The sale price was $18,700,000 (before selling costs and
prorations), all of which was paid in cash at closing. A portion of the
cash proceeds (approximately $7,612,000) was used to retire the first
mortgage note secured by the property. An additional $6,335,000 of the
proceeds was used to retire the Partnership's unsecured, non-revolving line
of credit.
Concurrently, with the sale of the Erie-McClurg Parking Facility, the
Partnership entered into an agreement with the unaffiliated manager of the
parking facility to induce the manager to re-write the existing long-term
management agreement at less favorable terms to the manager (see note
2(e)). This agreement guarantees the manager 100% of the compensation
which would have been earned under the agreement prior to the sale in years
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XV
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
one through five and 50% of any potential difference between the management
fee under the agreement prior to the sale and the re-negotiated agreement
with the purchaser (as defined) in years six through eighteen.
In connection with this agreement, at closing the Partnership paid the
unaffiliated manager a partial settlement of $400,000 and has estimated the
remaining contingent liability to be $360,000. This contingent liability
is recorded as a long-term liability in the accompanying consolidated
financial statements.
The sale of the property resulted in the Partnership's recognition of
a gain of $506,446 for financial reporting purposes and $1,296,367 for
Federal income tax purposes in 1992.
(b) Owings Mills
On June 30, 1993, JMB/Owings sold its partnership interest in Owings
Mills Limited Partnership ("OMLP"), which owns an allocated portion of the
land, building and related improvements of the Owings Mills Mall located in
Owings Mills, Maryland. The purchaser, O.M. Investment II Limited
Partnership, is an affiliate of the Partnership's joint venture partner in
OMLP.
The sale price of the interest in OMLP was $9,416,000, all of which
was received in the form of a promissory note. In addition, the
Partnership and Carlyle-XVI were relieved of their allocated portion of the
debt secured by the property. The promissory note (which is secured by a
guaranty from an affiliate of the purchaser and of the Partnership's joint
venture partner in OMLP) bears interest at a rate of 7% per annum unless a
certain specified event occurs, in which event the rate would increase to
8% per annum for the remainder of the term of the note. The promissory
note requires principal and interest payments of approximately $109,000 per
month with the remaining principal balance of approximately $5,500,000 due
and payable on June 30, 1998. The monthly installment of principal and
interest would be adjusted for the increase in the interest rate if
applicable. Early prepayment of the promissory note may be required under
certain circumstances, including the sale or further encumbrance of Owings
Mills Mall.
The net cash proceeds and gain from sale of the interest in OMLP was
allocated 50% to the Partnership and 50% to Carlyle-XVI in accordance to
the JMB/Owings Mills Associates partnership agreement.
For financial reporting purposes, JMB/Owings recognized, on the date
of sale, gain of $5,254,855, of which the Partnership's share is
$2,627,427, attributable to JMB/Owings being relieved of its obligations
under the OMLP partnership agreement pursuant to the terms of the sale
agreement. The Partnership has adopted the cost recovery method until such
time as the purchaser's initial investment is sufficient in order to
recognize gain under Statement of Financial Accounting Standards No. 66
("SFAS #66"). At December 31, 1994, the total deferred gain of JMB/Owings
including principal and interest payments of $1,858,572 received and
distributed through December 31, 1994 is $10,305,310 of which the
Partnership's share is $5,152,655. The Partnership expects to recognize a
portion of the deferred gain in 1995 when it collects a sufficient amount
of the purchaser's investment in accordance with SFAS #66.
(c) Harbor
During 1991, the Partnership sold, 62% of its general partnership
interest in Harbor, to an affiliate of the Harbor unaffiliated joint
venture partners. The Partnership owned an 80% interest in Harbor prior to
sale. Harbor owned a 55% general partnership interest in a joint venture
which owned the leasehold interest on the land and owned the building and
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XV
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
related improvements of the 300 East Lombard office building located in
Baltimore, Maryland. In conjunction with the sale, the Partnership
established a put-call option with the buyer on the Partnership's remaining
interest in Harbor. On January 19, 1993, the Partnership sold the
remaining 38% of its limited partnership interest in Harbor based on the
buyer's exercise of the put-call option. The sale price for the
Partnership's remaining interest was $229,140, plus $24,294 of interest
accrued at 10% per annum from September 30, 1991 through the closing date,
all of which was received in cash at closing. For financial reporting
purposes in 1993, the Partnership recognized a gain on sale of the
remaining interest of $229,140, which is included in gain on sale of
interests in unconsolidated ventures in the accompanying financial
statements.
(d) Villa Solana Apartments
On March 23, 1994 the Partnership, through Villa Solana Associates,
sold the Villa Solana Apartments located in Laguna Hills, California. The
purchaser is not affiliated with the Partnership or its General Partners.
The sale price was $16,600,000 (before selling costs and prorations). The
venture received net sale proceeds after selling costs and the retirement
of the debt secured by the property, of $2,563,197, of which the
Partnership's share is $2,332,509.
For financial reporting purposes, the venture recognized, on the date
of sale, gain of $750,349 of which the Partnership's share is $656,560.
The venture's gain for Federal income taxes was approximately $2,614,000,
of which the Partnership's share was approximately $2,575,000.
(e) 9701 Wilshire Building
On October 6, 1994, the Partnership sold the 9701 Wilshire Building.
The purchaser is not affiliated with the Partnership or its General
Partners.
The sale price for the 9701 Wilshire Building was $17,950,000 (before
selling costs and prorations), all of which was received in cash at
closing. The Partnership received net sale proceeds after selling costs
and the retirement of the debt secured by the property of $1,017,307. As a
result of the sale, the Partnership recognized a gain in 1994 of $1,522,744
for financial reporting purposes and a loss of $3,180,699 for Federal
income tax purposes.
(f) JMB/125
On November 15, 1994, JMB/125 and certain affiliates of Olympia & York
Developments, Ltd. ("O&Y") reached an agreement to settle their dispute
regarding 125 Broad and its property. Under the terms of the agreement,
JMB/125 assigned its interest in 125 Broad to an affiliate of O&Y and
released its venture partners (the "O&Y Partners") from any claims related
to 125 Broad. In return, JMB/125 received an unsecured promissory note in
the principal amount of $5 million bearing simple interest at 4.5% per
annum with all principal and accrued interest due at maturity in October
1999, subject to mandatory prepayments of principal and interest or
acceleration of the maturity date under certain circumstances. As of
December 31, 1994, the note has been fully reserved for by JMB/125. In
addition, JMB/125 received a release from any claims of certain O&Y
affiliates and will generally be indemnified against any liability as a
general partner of 125 Broad. JMB/125 was also relieved of any obligation
to contribute cash to 125 Broad in the amount of its deficit capital
account balance. Affiliates of O&Y subsequently filed a prearranged
bankruptcy plan for reorganization of 125 Broad under Chapter 11 of the
Bankruptcy Code in order to facilitate 125 Broad's transfer of the office
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XV
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
building to the mortgage lender in satisfaction of the mortgage debt and
other claims. In January 1995, the plan for reorganization was approved by
the bankruptcy court, was consummated, and the bankruptcy was concluded.
As a result of the assignment of its interest, JMB/125 no longer has an
ownership interest in the office building and recognized in 1994 gains of
$53,412,105 and $49,616,240 for financial reporting and Federal income tax
purposes, respectively. The Partnership's share of such gains is
$31,743,006 and $26,678,693 for financial reporting and Federal income tax
purposes, respectively.
(8) NOTES RECEIVABLE
In 1987 and 1988, the Partnership advanced funds to pay for certain
deficits at the 21900 Burbank Boulevard Building which were the obligation
of an affiliate of the seller. Such advances, including unpaid interest,
were approximately $2,159,000 as of the date of this report. The
Partnership received demand notes from the seller which are personally
guaranteed by certain of its principals. The seller had been paying
interest on the note at a rate equal to 3% over the prime rate. In
February 1991, the seller ceased paying monthly interest required under
terms of the note. The Partnership put the seller in default and effective
October 31, 1991, the notes began accruing interest at the default rate.
During 1994, two of the principals which guaranteed the notes became
subject to Chapter 7 bankruptcy proceedings. Subsequently, these
individual's obligations, including their obligations under the notes, were
discharged. Additionally, it appears that the remaining principals
guaranteeing the notes have little or no assets which the Partnership could
pursue for collection. Therefore, it appears unlikely that any further
amounts will be collected. As a matter of prudent accounting policy, a
reserve for uncollectibility for the entire amount recorded for financial
reporting purposes ($1,466,051) has been reflected in the accompanying
consolidated financial statements at December 31, 1994 and 1993.
(9) LEASES
(a) As Property Lessor
At December 31, 1994, the Partnership and its consolidated ventures'
principal assets are five office buildings, two apartment complexes and two
shopping centers. The Partnership has determined that all leases relating
to these properties are properly classified as operating leases; therefore,
rental income is reported when earned and the cost of each of the
properties, excluding cost of land, is depreciated over the estimated
useful lives. Leases with commercial tenants range in term from one to 30
years and provide for fixed minimum rent and partial to full reimbursement
of operating costs. In addition, substantially all leases with shopping
center tenants provide for additional rent based upon percentages of tenant
sales volume. With respect to the Partnership's shopping center
investments, a substantial portion of the ability of retail tenants to
honor their leases is dependent upon the retail economic sector.
Apartment complex leases in effect at December 31, 1994 are generally
for a term of one year or less and provide for annual rents of
approximately $8,954,905.
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XV
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Cost and accumulated depreciation of the leased assets are summarized
as follows at December 31, 1994:
Office buildings:
Cost. . . . . . . . . . . . . . . . . $256,689,309
Accumulated depreciation. . . . . . . 73,477,689
------------
183,211,620
------------
Shopping centers:
Cost. . . . . . . . . . . . . . . . . 46,909,391
Accumulated depreciation. . . . . . . 14,460,908
------------
32,448,483
------------
Apartment complexes:
Cost. . . . . . . . . . . . . . . . . 63,955,114
Accumulated depreciation. . . . . . . 18,230,389
------------
45,724,725
------------
Total . . . . . . . . . . . . $261,384,828
============
Minimum lease payments including amounts representing executory costs
(e.g., taxes, maintenance, insurance), and any related profit in excess of
specific reimbursements, to be received in the future under the above
operating commercial lease agreements, are as follows:
1995. . . . . . . . . . . $ 28,086,086
1996. . . . . . . . . . . 20,006,492
1997. . . . . . . . . . . 15,622,769
1998. . . . . . . . . . . 13,549,773
1999. . . . . . . . . . . 12,204,831
Thereafter. . . . . . . . 24,826,849
------------
Total . . . . . . . . $114,296,800
============
(b) As Property Lessee
The following lease agreement has been determined to be an operating
lease:
The Partnership owns through 160 Spear, a leasehold interest which
expires in 2033 in the land underlying the 160 Spear Street Building. The
ground lease provides that through the end of the lease term and each of
the two ten-year renewal option periods, the rental payments will increase
annually to equal the lesser of (i) 105-1/2% of $252,000, compounded
annually, or (ii) $252,000 increased by the increase in a price index from
August 1, 1987 through the commencement date of each subsequent lease year.
Future minimum rental commitments under the lease are as follows:
1995. . . . . . . . . . . $ 374,724
1996. . . . . . . . . . . 374,724
1997. . . . . . . . . . . 374,724
1998. . . . . . . . . . . 374,724
1999. . . . . . . . . . . 374,724
Thereafter. . . . . . . . 12,740,616
-----------
Total. . . . . . . . $14,614,236
===========
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XV
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(10) NOTES PAYABLE
Pursuant to the terms of a tenant lease at Cal Plaza, promissory notes
(for certain sub-leasing costs) aggregating $707,009 were issued by the Cal
Plaza joint venture to a tenant of the investment property. Commencing on
July 1, 1990 and on each July 1st thereafter until the notes are paid in
full, one tenth of the original principal balance together with 12% annual
interest on the outstanding balance of the notes shall be payable. As the
result of a settlement agreement between the Partnership and its joint
venture partner, the joint venture partner is obligated to pay 40% of the
amounts owed under the promissory notes and the Partnership is obligated to
pay 60% of such amounts (see note 3(b)(iii)). During July 1992, July 1993
and June 1994, $70,701 of principal was paid and $68,788; $60,304 and
$51,820 of interest, respectively was paid, to the tenant from cash flow
generated from operations of the property. As of December 31, 1994, the
outstanding balance of the notes was $361,135.
(11) TRANSACTIONS WITH AFFILIATES
The Corporate General Partner and its affiliates are entitled to
reimbursement for salaries and direct expenses of officers and employees of
the Corporate General Partner and its affiliates relating to the
administration of the Partnership and the operation of the Partnership's
properties.
Fees, commissions and other expenses required to be paid by the
Partnership (or in the case of property management and leasing fees, by the
Partnership's consolidated ventures) to the General Partners and their
affiliates as of December 31, 1994 and for the years ended December 31,
1994, 1993 and 1992 are as follows:
<TABLE>
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XV
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
<CAPTION>
UNPAID AT
DECEMBER 31,
1994 1993 1992 1994
---------- -------- -------- --------------
<S> <C> <C> <C> <C>
Property management and
leasing fees . . . . . . . . . . . . . . . $ 749,801 900,177 852,116 1,060,320
Insurance commissions. . . . . . . . . . . . 42,442 63,740 62,616 --
Management fees to
corporate general partner. . . . . . . . . -- -- 15,407 --
Reimbursement (at cost) for
accounting services. . . . . . . . . . . . 201,829 154,763 157,732 16,820
Reimbursement (at cost) for
legal services . . . . . . . . . . . . . . 19,116 11,702 31,220 17,748
Reimbursement (at cost) for
administrative services and
other out-of-pocket expenses . . . . . . 71,315 71,511 45,407 69,266
Reimbursement (at cost) for
out-of-pocket salary and salary
related expenses relating to
on-site and other costs
for the Partnership and its
investment properties. . . . . . . . . . . 110,171 94,637 166,426 --
---------- --------- --------- ---------
$1,194,674 1,296,530 1,330,924 1,164,154
========== ========= ========= =========
</TABLE>
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XV
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
The General Partners and their affiliates have previously deferred
management and leasing fees payable to them in an aggregate amount of
$2,003,629 (approximately $5 per Interest) through December 31, 1994
pursuant to debt modifications at the 260 Franklin and Piper Jaffray
properties. In addition, an affiliate of the General Partner has deferred
(through reimbursements made directly to the Partnership) $675,876 for the
Partnership's proportionate share of property management and leasing fees
paid by affiliated joint venture partnerships or their underlying ventures,
as the case may be (these reimbursements are not reflected in the above
table). These reimbursements include the proportionate share of property
management fees of one unconsolidated entity, which is not included in the
consolidated financial statements. The Partnership paid $847,752 of
previously deferred reimbursements to the Corporate General Partner and its
affiliates in July 1994. The Partnership also paid previously deferred
partnership management fees and distributions of $724,121 and $249,591,
respectively, to the General Partners in August 1994. In December 1994,
the Partnership paid $3,422,391 of previously deferred management and
leasing fees to an affiliate of the General Partners. Effective October 1,
1993, the Partnership and its consolidated ventures began paying property
management and leasing fees on a current basis. The cumulative deferred
amounts do not bear interest and are expected to be paid in future periods.
In addition, up to approximately $561,000 of sale proceeds from the sale of
the Erie-McClurg Parking Facility, $498,000 of sale proceeds from the sale
of the Villa Solana Apartments and $538,500 of sale proceeds from the sale
of the 9701 Wilshire Building for the General Partners is subordinated to
the satisfaction of certain conditions (see note 5).
In December 1994, one of the affiliated property managers sold
substantially all of its assets and assigned its interest in its management
contracts to an unaffiliated third party (see note 6). All amounts payable
to the General Partners and their affiliates do not bear interest and are
expected to be paid in future periods.
(12) INVESTMENT IN UNCONSOLIDATED VENTURES
Summary financial information for South Tower, JMB/125, 125 Broad
Street Company (through effective date of JMB/125's assignment - October
31, 1994), JMB/Piper, JMB/Piper II, JMB/900 and JMB/Owings and OMLP
(through the date of sale - June 30, 1993), for the years ended 1994 and
1993 follows:
1994 1993
------------ ------------
Current assets . . . . . . . . . . . . $ 12,916,368 26,856,872
Current liabilities
(including $198,010,055
of debt in default at
December 31, 1994,
see note 3(c)). . . . . . . . . . . . (210,151,680) (605,831,086)
------------ ------------
Working capital (deficit). . . . . (197,235,312) (578,974,214)
------------ ------------
Other assets . . . . . . . . . . . . . 19,510,912 35,572,682
Deferred expenses. . . . . . . . . . . 21,267,960 36,260,962
Investment properties, net . . . . . . 327,384,410 578,380,706
Other liabilities. . . . . . . . . . . (4,511,969) (26,255,281)
Long-term debt . . . . . . . . . . . . (203,251,770) (104,965,875)
Ventures partners' equity. . . . . . . 29,165,306 39,401,388
------------ ------------
Partnership's capital (deficit). . $ (7,670,463) (20,579,632)
============ ============
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XV
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONCLUDED
1994 1993
------------ ------------
Represented by:
Invested capital . . . . . . . . . . $ 185,846,328 183,054,556
Cumulative distributions . . . . . . (57,278,864) (50,471,893)
Cumulative losses. . . . . . . . . . (136,237,927) (153,162,295)
------------- ------------
$ (7,670,463) (20,579,632)
============= ============
Total income . . . . . . . . . . . . . $ 121,161,958 166,451,322
Expenses applicable to
operating loss . . . . . . . . . . . 165,863,948 265,781,606
------------- ------------
Operating loss . . . . . . . . . . . . (44,701,990) (99,330,284)
Gain on assignment of interest
in unconsolidated venture
(note 7(f)). . . . . . . . . . . . . 52,412,102 --
Gain on sale of investment
property (note 7). . . . . . . . . . -- 5,254,855
------------- ------------
Net income (loss) (note 3(c)). . . . . $ 7,710,112 (94,075,429)
============= ============
The total income, expenses applicable to operating loss and net loss
for the above ventures for the year ended December 31, 1992 were
$152,565,623, $230,900,798 and $78,335,175, respectively.
(13) Subsequent Event
In February 1995, the Partnership paid a sales distribution of
$3,549,636 ($8 per Interest) to the Limited Partners and $35,854 to the
General Partners.
<TABLE> CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XV SCHEDULE III
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
CONSOLIDATED REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1994
<CAPTION>
COSTS
CAPITALIZED
CAPITALIZED
INITIAL COST TO SUBSEQUENT TO GROSS AMOUNT AT WHICH CARRIED
PARTNERSHIP (A) TO ACQUISITION AT CLOSE OF PERIOD (B)
-------------------------- -------------- ------------------------------------------
LAND AND BUILDINGS LAND AND LAND AND BUILDINGS
LEASEHOLD AND BUILDINGS AND LEASEHOLD AND
DESCRIPTION ENCUMBRANCE INTERESTS IMPROVEMENTS IMPROVEMENTS INTEREST IMPROVEMENTS TOTAL
----------- ------------ ----------- ------------ ------------- ---------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C> <C>
APARTMENT COMPLEXES:
Woodland Hills
DeKalb County
(Atlanta),
Georgia . . . . . . $ 8,175,000 1,617,433 10,425,264 104,113 1,617,433 10,529,377 12,146,810
Dunwoody Crossing
(Phase I, II & III)
DeKalb County
(Atlanta),
Georgia (D) . . . . 31,005,018 4,827,220 46,139,432 841,652 4,827,220 46,981,084 51,808,304
OFFICE BLDGS:
First American
Bank Building
Fulton County
(Atlanta),
Georgia . . . . . . 18,166,294 3,185,826 28,389,541 (5,811,507)(F) 2,397,888 23,365,972 25,763,860
160 Spear Street
San Francisco,
California(C)(D). . 39,184,894 -- 47,552,813 2,948,277 -- 50,501,090 50,501,090
21900 Burbank Blvd
Los Angeles
(Woodland Hills),
California. . . . . 11,806,786 4,072,552 11,797,054 (750,445)(F) 3,562,658 11,556,503 15,119,161
260 Franklin Street
Boston, Massac-
husetts (D) . . . . 85,376,896 8,169,209 97,607,593 (13,879,174)(E) 6,662,200 85,235,428 91,897,628
</TABLE>
<TABLE>
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XV SCHEDULE III - CONTINUED
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
CONSOLIDATED REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1994
<CAPTION>
LIFE ON WHICH
DEPRECIATION
IN LATEST
INCOME 1994
ACCUMULATED DATE OF DATE STATEMENT REAL ESTATE
DEPRECIATION(J) CONSTRUCTION ACQUIRED IS COMPUTED TAXES
---------------- ------------ ---------- --------------- -----------
<S> <C> <C> <C> <C> <C>
APARTMENT COMPLEXES:
Woodland Hills
DeKalb County (Atlanta),
Georgia. . . . . . . . . . . . . $ 3,429,474 1984 09/30/85 5-30 years 165,025
Dunwoody Crossings
(Phase I, II and III)
DeKalb County (Atlanta),
Georgia (D) (H). . . . . . . . . 14,800,915 1981-1983 09/18/86 5-30 years 647,820
OFFICE BUILDINGS:
First American Bank
Building
Fulton County (Atlanta),
Georgia (F). . . . . . . . . . . 8,537,464 1984 06/10/85 5-30 years 242,379
160 Spear Street
San Francisco,
California (C)(D). . . . . . . . 15,960,882 1985 11/27/85 5-30 years 170,675
21900 Burbank Boulevard
Los Angeles (Woodland
Hills), California . . . . . . . 3,556,571 1985 11/29/85 5-30 years 47,456
260 Franklin Street
Boston, Massachusetts
(D). . . . . . . . . . . . . . . 26,377,605 1985 05/21/86 5-30 years 2,017,073
</TABLE>
<TABLE>
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XV SCHEDULE III - CONTINUED
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
CONSOLIDATED REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1994
<CAPTION>
COSTS
CAPITALIZED
CAPITALIZED
INITIAL COST TO SUBSEQUENT TO GROSS AMOUNT AT WHICH CARRIED
PARTNERSHIP (A) TO ACQUISITION AT CLOSE OF PERIOD (B)
-------------------------- -------------- ------------------------------------------
LAND AND BUILDINGS LAND AND LAND AND BUILDINGS
LEASEHOLD AND BUILDINGS AND LEASEHOLD AND
ENCUMBRANCE INTERESTS IMPROVEMENTS IMPROVEMENTS INTEREST IMPROVEMENTS TOTAL
------------ ----------- ------------ ------------- ---------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C> <C>
California Plaza
Walnut Creek,
California (D). . . 60,329,126 6,010,604 62,029,222 5,367,744 (G) 5,949,997 67,457,573 73,407,570
SHOPPING CENTERS:
Eastridge Mall
Casper, Wyoming
(D) . . . . . . . . 23,336,259 4,817,201 33,876,882 (5,519,806)(F) 3,884,668 29,289,609 33,174,277
Springbrook Shopping
Center
Bloomingdale,
Illinois. . . . . . 11,000,000 3,164,708 17,913,485 (7,343,079)(G) 1,884,224 11,850,890 13,735,114
------------ ---------- ----------- ------------ ---------- ----------- -----------
Total. . . . . . $288,380,273 35,864,753 355,731,286 (24,042,225) 30,786,288 336,767,526 367,553,814
============ ========== =========== =========== ========== =========== ===========
</TABLE>
<TABLE>
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XV SCHEDULE III - CONTINUED
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
CONSOLIDATED REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1993
<CAPTION>
LIFE ON WHICH
DEPRECIATION
IN LATEST
INCOME 1994
ACCUMULATED DATE OF DATE STATEMENT REAL ESTATE
DEPRECIATION(J) CONSTRUCTION ACQUIRED IS COMPUTED TAXES
---------------- ------------ ---------- --------------- -----------
<S> <C> <C> <C> <C> <C>
California Plaza
Walnut Creek,
California (D). . . . . . . . . . 19,045,167 1985 06/30/86 5-30 years 602,229
SHOPPING CENTERS:
Eastridge Mall
Casper, Wyoming
(D)(F). . . . . . . . . . . . . . 11,408,010 1983 09/10/85 5-30 years 171,141
Springbrook Shopping Center
Bloomingdale,
Illinois. . . . . . . . . . . . . 3,052,898 1980 07/05/89 5-30 years 456,614
----------- ---------
Total. . . . . . . . . . . . . 106,168,986 4,520,412
=========== =========
<FN>
Notes:
(A) The initial cost to the Partnership represents the original purchase price of the properties,
including amounts incurred subsequent to acquisition which were contemplated at the time the property was
acquired.
(B) The aggregate cost of real estate owned at December 31, 1994 for Federal income tax purposes was
$367,773,820.
(C) Property operated under ground lease; see Note 9(b).
(D) Properties owned and operated by joint venture; see Note 3(b).
(E) In 1990, the Partnership recorded a provision for value impairment. The portion allocated to real
estate totalled $17,120,734; see Note 1.
(F) In 1992, the Partnership recorded provisions for value impairment. The portion allocated to real
estate totalled totalling $25,994,317; see Note 1.
(G) In 1993, the Partnership recorded provisions for value impairment. The portion allocated to real
estate totalled $8,972,831; see Note 1.
</TABLE>
<TABLE>
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XV SCHEDULE III - CONTINUED
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
CONSOLIDATED REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1994
(I) Reconciliation of real estate owned as of December 31, 1994, 1993 and 1992:
<CAPTION>
1994 1993 1992
------------ ----------- -----------
<S> <C> <C> <C>
Balance at beginning of period. . . . . . . . . . . . . . . . . $413,139,577 421,273,790 464,553,348
Additions during period . . . . . . . . . . . . . . . . . . . . 1,279,820 838,618 1,728,484
Provisions for value impairment (H) . . . . . . . . . . . . . . -- (8,972,831) (25,994,317)
Sales and dispositions during period. . . . . . . . . . . . . . (46,865,583) -- (19,013,725)
------------ ----------- -----------
Balance at end of period. . . . . . . . . . . . . . . . . . . . $367,553,814 413,139,577 421,273,790
============ =========== ===========
(J) Reconciliation of accumulated depreciation:
Balance at beginning of period. . . . . . . . . . . . . . . . . $107,997,321 95,627,226 83,918,595
Depreciation expense. . . . . . . . . . . . . . . . . . . . . . 11,490,889 12,370,095 13,296,137
Sales and dispositions during period. . . . . . . . . . . . . . (13,319,224) -- (1,587,506)
------------ ----------- -----------
Balance at end of period. . . . . . . . . . . . . . . . . . . . $106,168,986 107,997,321 95,627,226
============ =========== ===========
</TABLE>
INDEPENDENT AUDITORS' REPORT
The Partners
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XV:
We have audited the combined financial statements of Certain
Unconsolidated Joint Ventures of Carlyle Real Estate Limited Partnership -
XV (Note 1) as listed in the accompanying index. In connection with our
audits of the combined financial statements, we also have audited the
financial statement schedule as listed in the accompanying index. These
combined financial statements and financial statement schedule are the
responsibility of the General Partners of the Partnership. Our
responsibility is to express an opinion on these combined financial
statements and financial statement schedule 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 the General Partners of the
Partnership, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for
our opinion.
In our opinion, the combined financial statements referred to above
present fairly, in all material respects, the combined financial position
of Certain Unconsolidated Joint Ventures of Carlyle Real Estate Limited
Partnership - XV at December 31, 1994 and 1993, and the results of their
operations and their cash flows for each of the years in the three-year
period ended December 31, 1994, in conformity with generally accepted
accounting principles. Also in our opinion, the related financial
statement schedule, when considered in relation to the basic combined
financial statements taken as a whole, presents fairly, in all material
respects, the information set forth therein.
The accompanying combined financial statements and financial statement
schedule have been prepared assuming that the ventures comprising Certain
Unconsolidated Ventures of Carlyle Real Estate Limited Partnership - XV
will continue as going concerns. The South Tower venture comprises 100%,
60.1% and 2.6% of the combined assets, revenues and net operating loss,
respectively, in the accompanying combined financial statements as of and
for the year ended December 31, 1994. As discussed in notes 1, 2 and 3 of
notes to the combined financial statements, the mortgage loan secured by
the property owned by the South Tower venture matured in December 1994.
The South Tower venture has entered into a forbearance agreement with the
mortgage lender through April 1, 1995 whereby the lender has agreed not to
proceed with default remedies. In the event the South Tower venture is not
successful in extending or refinancing the mortgage loan, the Partnership
and its venture partners may be unable or unwilling to commit additional
amounts to South Tower. These circumstances could result in the
Partnership no longer having an ownership interest in South Tower and raise
substantial doubt about South Tower venture's ability to retain its
ownership in the property and continue as a going concern. The General
(Continued)
Partners' plans with regard to this matter are described in Note 3(c)(iii)
and 4(b)(vii) of the Partnership's notes to consolidated financial
statements, incorporated by reference in Notes 2 and 3 of the combined
financial statements. The accompanying combined financial statements and
financial statement schedule do not include any adjustments that might
result from the outcome of this uncertainty.
KPMG PEAT MARWICK LLP
Chicago, Illinois
March 27, 1995
<TABLE>
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XV
CERTAIN UNCONSOLIDATED VENTURES
COMBINED BALANCE SHEETS
DECEMBER 31, 1994 AND 1993
ASSETS
------
<CAPTION>
1994 1993
------------ ------------
<S> <C> <C>
Current assets:
Cash and cash equivalents (note 1) . . . . . . . . . . . . . . . . . . . . . $ 1,707 903,777
Short-term investments (note 1). . . . . . . . . . . . . . . . . . . . . . . -- 2,862,784
Interest, rents and other receivables, net of allowance for doubtful
accounts of approximately $28,600,000 at December 31, 1993 . . . . . . . . 834,136 2,967,817
Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,030,988 874,359
Escrow deposits - restricted (note 3). . . . . . . . . . . . . . . . . . . . 3,128,089 --
------------ ------------
Total current assets . . . . . . . . . . . . . . . . . . . . . . . . 4,994,920 7,608,737
------------ ------------
Investment properties, at cost (notes 1, 2, 3 and 4) - Schedule III:
Land and leasehold interests . . . . . . . . . . . . . . . . . . . . . 27,528,045 27,528,045
Buildings and improvements . . . . . . . . . . . . . . . . . . . . . . 255,269,343 600,791,977
------------ ------------
282,797,388 628,320,022
Less accumulated depreciation. . . . . . . . . . . . . . . . . . . . . (99,843,914) (199,333,463)
------------ ------------
Total investment properties,
net of accumulated depreciation. . . . . . . . . . . . . . . . . . 182,953,474 428,986,559
Deferred expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,065,462 30,142,441
Accrued rents receivable, net of provision for losses
of approximately $32,600,000 at December 31, 1993. . . . . . . . . . . . . 6,459,551 13,931,452
Notes receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 815,286 948,807
------------ ------------
$200,288,693 481,617,996
============ ============
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XV
CERTAIN UNCONSOLIDATED VENTURES
COMBINED BALANCE SHEETS - CONTINUED
LIABILITIES AND PARTNERS' CAPITAL ACCOUNTS (DEFICITS)
-----------------------------------------------------
1994 1993
------------ ------------
Current liabilities:
Current portion of long-term debt (notes 2 and 3). . . . . . . . . . . . . . $198,010,055 447,216,935
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,141,689 3,541,281
Unearned rents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,092,694 2,043,073
Accrued interest payable . . . . . . . . . . . . . . . . . . . . . . . . . . 2,145,109 48,180,063
Other current liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . 576,000 458,000
------------ ------------
Total current liabilities. . . . . . . . . . . . . . . . . . . . . . 202,965,547 501,439,352
Tenant security deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . 51,374 42,791
Advances from venture partners . . . . . . . . . . . . . . . . . . . . . . . . -- 14,650,326
Other long-term liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . 2,166,077 2,537,327
------------ ------------
Commitments and contingencies (notes 2, 3 and 4)
Total liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . 205,182,998 518,669,796
Partners' capital accounts (deficits) (note 2):
Carlyle-XV:
Capital contributions. . . . . . . . . . . . . . . . . . . . . . . . . . . 114,851,682 114,851,682
Cumulative cash distributions. . . . . . . . . . . . . . . . . . . . . . . (36,019,462) (32,093,462)
Cumulative net losses. . . . . . . . . . . . . . . . . . . . . . . . . . . (85,874,760) (106,352,914)
------------ ------------
(7,042,540) (23,594,694)
------------ ------------
Venture partners:
Capital contributions. . . . . . . . . . . . . . . . . . . . . . . . . . . 271,751,539 271,751,539
Cumulative distributions (cash and non-cash) . . . . . . . . . . . . . . . (59,294,588) (79,253,018)
Cumulative net losses. . . . . . . . . . . . . . . . . . . . . . . . . . . (210,308,716) (205,955,627)
------------ ------------
2,148,235 (13,457,106)
------------ ------------
Total partners' capital accounts (deficits). . . . . . . . . . . . . (4,894,305) (37,051,800)
------------ ------------
$200,288,693 481,617,996
============ ============
<FN>
See accompanying notes to combined financial statements.
</TABLE>
<TABLE>
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XV
CERTAIN UNCONSOLIDATED VENTURES
COMBINED STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
<CAPTION>
1994 1993 1992
----------- ----------- -----------
<S> <C> <C> <C>
Income:
Rental income. . . . . . . . . . . . . . . . . . . . . . $ 76,633,618 86,432,476 90,067,395
Interest income. . . . . . . . . . . . . . . . . . . . . 336,772 443,047 464,734
Other income (note 1). . . . . . . . . . . . . . . . . . -- 26,670,778 --
------------ ----------- -----------
76,970,390 113,546,301 90,532,129
------------ ----------- -----------
Expenses:
Mortgage and other interest. . . . . . . . . . . . . . . 48,315,864 55,840,305 55,369,279
Depreciation . . . . . . . . . . . . . . . . . . . . . . 17,369,009 21,023,113 22,625,958
Property operating expenses. . . . . . . . . . . . . . . 30,413,965 34,521,719 36,180,789
Amortization of deferred expenses. . . . . . . . . . . . 2,285,224 4,007,632 3,367,762
Provision for value impairment (note 1). . . . . . . . . -- 67,479,871 --
Loss on disposal of assets . . . . . . . . . . . . . . . -- 905,466 --
Provision for uncollectible rents and accrued
rents receivable (note 1). . . . . . . . . . . . . . . 14,873,365 19,289,459 41,945,558
------------ ----------- -----------
113,257,427 203,067,565 159,489,346
------------ ----------- -----------
Net operating loss . . . . . . . . . . . . . . . (36,287,037) (89,521,264) (68,957,217)
Gain on assignment of JMB/125's ownership interest
in 125 Broad Street Company (note 1) . . . . . . . . . . 52,412,102 -- --
------------ ----------- -----------
Net income (loss). . . . . . . . . . . . . . . . $ 16,125,065 (89,521,264) (68,957,217)
============ =========== ===========
<FN>
See accompanying notes to combined financial statements.
</TABLE>
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XV
CERTAIN UNCONSOLIDATED VENTURES
COMBINED STATEMENTS OF PARTNERS' CAPITAL ACCOUNTS (DEFICITS)
YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
VENTURE
CARLYLE-XV PARTNERS TOTAL
----------- ------------- ------------
Balance at December 31,
1991 . . . . . . . . . . $27,567,774 99,556,807 127,124,581
Capital contributions. . . 600 400 1,000
Cash distributions . . . . (1,144,000) (1,056,000) (2,200,000)
Net loss . . . . . . . . . (21,116,150) (47,841,067) (68,957,217)
------------ ------------ ------------
Balance at December 31,
1992 . . . . . . . . . . 5,308,224 50,660,140 55,968,364
Capital contributions. . . 990 110 1,100
Cash distributions . . . . (1,888,060) (1,611,940) (3,500,000)
Net loss . . . . . . . . . (27,015,848) (62,505,416) (89,521,264)
------------ ------------ ------------
Balance at December 31,
1993 . . . . . . . . . . (23,594,694) (13,457,106) (37,051,800)
Capital contributions. . . -- -- --
Cash distributions . . . . (3,926,000) (3,477,237) (7,403,237)
Net operating loss . . . . (11,264,666) (25,022,371) (36,287,037)
Gain on assignment of
JMB/125's ownership
interest in 125 Broad
Street Company
(note 1) . . . . . . . . 31,742,820 20,669,282 52,412,102
------------ ------------ ------------
(7,042,540) (21,287,432) (28,329,972)
Transfer of 125 Broad
Street Company net
assets to unaffiliated
venture partner. . . . . -- 23,435,667 23,435,667
------------ ------------ ------------
Balance at December 31,
1994 . . . . . . . . . . $ (7,042,540) 2,148,235 (4,894,305)
============ ============ ============
See accompanying notes to combined financial statements.
<TABLE>
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XV
CERTAIN UNCONSOLIDATED VENTURES
COMBINED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
<CAPTION>
1994 1993 1992
----------- ----------- -----------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income (loss). . . . . . . . . . . . . . . . . . . . $ 16,125,065 (89,521,264) (68,957,217)
Item not requiring (providing)
cash or cash equivalents:
Depreciation . . . . . . . . . . . . . . . . . . . . . 17,369,009 21,023,113 22,625,958
Amortization of deferred expenses. . . . . . . . . . . 2,285,224 4,007,632 3,367,762
Accrued rents receivable . . . . . . . . . . . . . . . (3,663,823) 2,870,908 1,371,466
Loss on disposal of assets . . . . . . . . . . . . . . -- 905,466 --
Provision for value impairment . . . . . . . . . . . . -- 67,479,871 --
Provision for uncollectible rents and
accrued rents receivable . . . . . . . . . . . . . . 14,873,365 19,289,459 41,945,558
Gain on assignment of JMB/125's ownership
interest in 125 Broad Street Company . . . . . . . . (52,412,102) -- --
Changes in:
Interest, rents and other receivables. . . . . . . . . (14,278,148) (17,331,609) (12,229,860)
Prepaid expenses . . . . . . . . . . . . . . . . . . . (156,629) (170,046) (101,654)
Escrow deposits - restricted . . . . . . . . . . . . . (3,128,089) -- --
Accounts payable . . . . . . . . . . . . . . . . . . . (1,235,382) (779,483) 307,108
Unearned rent. . . . . . . . . . . . . . . . . . . . . 496,649 (1,566,443) 1,560,622
Accrued interest payable . . . . . . . . . . . . . . . 24,223,122 28,477,923 18,999,945
Other current liabilities. . . . . . . . . . . . . . . 205,000 205,000 205,000
Tenant security deposits . . . . . . . . . . . . . . . 8,583 9,310 --
------------ ------------ -----------
Net cash provided by operating activities. . . . 711,844 34,899,837 9,094,688
------------ ------------ -----------
Cash flows from investing activities:
Net sales and maturities (purchases) of
short-term investments . . . . . . . . . . . . . . . 2,862,784 (665,608) 1,327,824
Payments on notes receivable . . . . . . . . . . . . . 133,521 115,197 100,543
Additions to investment properties . . . . . . . . . . (184,898) (2,913,093) (4,809,749)
Payment of deferred expenses . . . . . . . . . . . . . (376,813) (509,321) (2,581,514)
------------ ------------ -----------
Net cash provided by (used in)
investing activities . . . . . . . . . . . . . 2,434,594 (3,972,825) (5,962,896)
------------ ------------ -----------
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XV
CERTAIN UNCONSOLIDATED VENTURES
COMBINED STATEMENTS OF CASH FLOWS - CONTINUED
1994 1993 1992
----------- ----------- -----------
Cash flows from financing activities:
Principal payments on long-term debt . . . . . . . . . $ (467,142) (29,121,045) (395,654)
Advances from (repayments to) venture partners,
net. . . . . . . . . . . . . . . . . . . . . . . . . 4,880,000 2,596,221 (539,702)
Contributions to ventures. . . . . . . . . . . . . . . -- 1,100 1,000
Cash distributed to venture partner upon
assignment of interest . . . . . . . . . . . . . . . (1,058,129) -- --
Distributions to partners. . . . . . . . . . . . . . . (7,403,237) (3,500,000) (2,200,000)
------------ ------------ -----------
Net cash used in financing activities. . . . . . (4,048,508) (30,023,724) (3,134,356)
------------ ------------ -----------
Net increase (decrease) in cash and
cash equivalents . . . . . . . . . . . . . . . (902,070) 903,288 (2,564)
Cash and cash equivalents,
beginning of year. . . . . . . . . . . . . . . 903,777 489 3,053
------------ ------------ -----------
Cash and cash equivalents,
end of year. . . . . . . . . . . . . . . . . . $ 1,707 903,777 489
============ ============ ===========
Supplemental disclosure of cash flow information:
Cash paid for mortgage and other interest. . . . . . . . $ 23,627,108 27,362,382 36,369,334
============ ============ ===========
Non-cash investing and financing activities:
Disposals of assets. . . . . . . . . . . . . . . . . . $ -- 1,343,470 1,469,162
Write-off of related accumulated depreciation. . . . . -- (438,004) --
------------ ------------ -----------
Loss on disposal of assets . . . . . . . . . . . . . . $ -- 905,466 1,469,162
============ ============ ===========
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XV
CERTAIN UNCONSOLIDATED VENTURES
COMBINED STATEMENTS OF CASH FLOWS - CONTINUED
1994 1993 1992
----------- ----------- -----------
Assignment of JMB/125's ownership interest in
125 Broad Street (note 5):
Reduction of investment property,
net of accumulated depreciation. . . . . . . . . . . (228,848,974) -- --
Reduction of deferred expenses . . . . . . . . . . . . (22,710,318) -- --
Balance due on mortgage payable. . . . . . . . . . . . 248,739,738 -- --
Reduction of accrued interest. . . . . . . . . . . . . 69,447,311 -- --
Reduction of accounts receivable
and accrued rents. . . . . . . . . . . . . . . . . . (12,674,188) -- --
Reduction of accounts payable
and accrued expenses . . . . . . . . . . . . . . . . 22,952,329 -- --
Non-cash gain on assignment. . . . . . . . . . . . . . (52,412,102) -- --
Non-cash transfer to unaffiliated
venture partner. . . . . . . . . . . . . . . . . . . (23,435,667) -- --
------------ ------------ -----------
Cash retained by unaffiliated
venture partner. . . . . . . . . . . . . . . . $ 1,058,129 -- --
============ ============ ===========
<FN>
See accompanying notes to combined financial statements.
</TABLE>
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XV
CERTAIN UNCONSOLIDATED VENTURES
NOTES TO COMBINED FINANCIAL STATEMENTS
DECEMBER 31, 1994, 1993 AND 1992
(1) ORGANIZATION AND BASIS OF ACCOUNTING
The accompanying combined financial statements have been prepared for
the purpose of complying with Rule 3.09 of Regulation S-X of the Securities
and Exchange Commission. They include the accounts of certain of the
unconsolidated joint ventures in which Carlyle Real Estate Limited
Partnership-XV ("Carlyle-XV") owns a direct interest. Also included are
the accounts of one of the joint venture partnerships (underlying ventures)
in which Carlyle-XV owned an indirect interest through one of the
unconsolidated joint ventures. The entities included in the combined
financial statements are as follows:
DATE
VENTURE ACQUIRED
------- --------
1. Maguire/Thomas Partners - South Tower
("South Tower") (a) 06/28/85
2. Carlyle - XV Associates, L.P. (a)
- JMB/125 Broad Building Associates, L.P. 12/31/85
("JMB/125") (a)
- 125 Broad Street Company (b)
(a) Represents an unconsolidated venture in which Carlyle-XV
owns a direct ownership interest.
(b) Represents a joint venture in which Carlyle-XV owned an
indirect ownership interest through an unconsolidated venture.
For purposes of preparing the combined financial statements, the effect of
all transactions between an unconsolidated joint venture and an underlying
venture has been eliminated.
In November 1994, effective October 31, 1994, the Partnership through
its indirect ownership of JMB/125 assigned its interest in the 125 Broad
Street Building to the unaffiliated venture partner. Reference is made to
Notes 3(c)(iv) and 7(f) of Notes to Consolidated Financial Statements of
Carlyle-XV. Therefore, the balance sheet presented as of December 31, 1994
does not contain 125 Broad Street Company as the net assets were deemed to
be distributed to the venture partners as of the assignment date. The
statements of operations and cash flows for the year ended December 31,
1994 contain 125 Broad Street Company operations through October 31, 1994.
The records of the ventures are maintained on the accrual basis of
accounting as adjusted for Federal income tax reporting purposes. The
accompanying combined financial statements have been prepared from such
records after making appropriate adjustments to present the ventures'
accounts in accordance with generally accepted accounting principles. Such
adjustments are not recorded on the records of the ventures.
Statement of Financial Accounting Standards No. 95 requires the
ventures to present a statement which classifies receipts and payments
according to whether they stem from operating, investing or financing
activities. The required information has been segregated and accumulated
according to the classifications specified in the pronouncement. In
addition, the ventures record amounts held in U.S. Government obligations
and other securities at cost which approximates market. For the purposes
of these statements, the ventures' policy is to consider all such amounts
held with original maturities of three months or less (none at December 31,
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XV
CERTAIN UNCONSOLIDATED VENTURES
NOTES TO COMBINED FINANCIAL STATEMENTS - CONTINUED
1994 and 1993) as cash equivalents with any remaining amounts reflected as
short-term investments.
As more fully described in Note 3 (c)(iv) of Notes to the Consolidated
Financial Statements of Carlyle Real Estate Limited Partnership-XV, JMB/125
reserved for certain receivables relating to one of the major tenants at
125 Broad Street. In 1992, 125 Broad reserved for approximately
$32,600,000 of accrued rents receivable relating to such tenant's lease.
Additionally, 125 Broad provided for additional losses of approximately
$14,900,000, $19,300,000 and $9,300,000 in 1994, 1993 and 1992,
respectively, relating to amounts then currently due from the O&Y partners
relating to such tenant's lease.
In October 1993, 125 Broad entered into an agreement with Salomon
Brothers, Inc. to terminate its lease covering approximately 236,000 square
feet at the property on December 31, 1993 rather than its scheduled
termination in January 1997. In consideration for the early termination of
the lease, Salomon Brothers, Inc. paid 125 Broad approximately $26,700,000,
which 125 Broad in turn paid to its lender to reduce principal outstanding
under the mortgage loan. In addition, Salomon Brothers, Inc. paid JMB/125
$1,000,000 in consideration of JMB/125's consent of the lease termination.
The mortgage note secured by Wells Fargo Center matured December 1,
1994. The Partnership and the joint venture have been in discussions with
the lender of the mortgage note regarding an extension (see Note 3 and Note
4(b) of Notes to Consolidated Financial Statements to Carlyle-XV). There
is no assurance that the venture will be able to obtain such an extension.
In view of, among other things, current and anticipated market and leasing
conditions affecting the property, including uncertainty regarding the
amount of space, if any, which IBM will renew when its lease expires in
1998, the venture may then decide not to commit any significant additional
amounts to the property. This may result in the venture no longer having
an ownership interest in the property, and would result in a gain for
financial reporting and for Federal income tax purposes with no
corresponding distributable proceeds. As a matter of prudent accounting
practice, the South Tower Venture recorded a provision for value impairment
of $67,479,871 as of August 31, 1993, to reduce the net carrying value of
the Wells Fargo Center to the then outstanding balance of the related non-
recourse debt.
Deferred expenses are comprised of deferred leasing costs, which are
amortized using the straight-line method over the terms of the related
leases and financing costs which are amortized over the term of the related
debt.
Depreciation on the investment properties has been provided over the
estimated useful lives of 5 to 30 years using the straight-line method.
The investment property is pledged as security for the long-term debt,
for which generally there is no recourse to the ventures.
Maintenance and repair expenses are charged to operations as incurred.
Significant betterments and improvements are capitalized and depreciated
over their estimated useful lives. Provisions for value impairment are
recorded with respect to the investment properties whenever the estimated
future cash flows from a property's operations and projected sale are less
than the property's net carrying value. Such provisions generally reduce
the net carrying values of the investment properties to the then
outstanding balance of the related non-recourse mortgage notes.
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XV
CERTAIN UNCONSOLIDATED VENTURES
NOTES TO COMBINED FINANCIAL STATEMENTS - CONTINUED
Although certain leases of the ventures provide for tenant occupancy
during periods for which no rent is due, the ventures accrue prorated
rental income for the full period of occupancy. In addition, although
certain leases provide for step increases in rent during the lease term,
the ventures recognize the total rent due on a straight-line basis over the
entire lease.
Statement of Financial Accounting Standards No. 107 ("SFAS 107"),
"Disclosures about Fair Value of Financial Instruments", requires entities
with total assets exceeding $150 million at December 31, 1994 to disclose
the SFAS 107 value of all financial assets and liabilities for which it is
practicable to estimate. Value is defined in the Statement as the amount
at which the instrument could be exchanged in a current transaction between
willing parties, other than in a forced or liquidation sale. The venture
believes the carrying amount of its current assets and liabilities
(excluding current portion of long-term debt) approximates SFAS 107 value
due to the relatively short maturity of these instruments. There is no
quoted market value available for any of the venture's other instruments.
The debt secured by the Wells Fargo investment property is in default and
has been classified as a current liability at December 31, 1994 (see note
3). Because the resolution of this matter is uncertain, South Tower
considers the disclosure of the SFAS 107 value of such long-term debt to be
impracticable. The venture has no other significant financial instruments.
Certain reclassifications have been made to the 1993 and 1992 combined
financial statements to conform with the 1994 presentation.
No provision for State or Federal income taxes has been made as the
liability for such taxes is that of the venture partners rather than the
ventures.
(2) VENTURE AGREEMENTS
A description of the significant venture agreements is contained in
Note 3 of Carlyle Real Estate Limited Partnership-XV. Such note is
incorporated herein by reference.
(3) LONG-TERM DEBT
Long-term debt consists of the following at December 31, 1994 and
1993:
1994 1993
------------ ------------
13% mortgage note; secured by the
South Tower; payable in monthly
installments of principal and
interest of $2,190,000 until
December 1994 when the remaining
principal balance was due (see
Note 4(b) of Notes to Consolidated
Financial Statements to Carlyle-XV) . . . $198,010,055 198,477,197
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XV
CERTAIN UNCONSOLIDATED VENTURES
NOTES TO COMBINED FINANCIAL STATEMENTS - CONTINUED
1994 1993
------------ ------------
10.125% mortgage note; secured by the
125 Broad Street Building; semi-annual
payments of interest were required
through December 23, 1995; any
outstanding principal and unpaid
interest would have been due on
December 27, 1995. In default as of
June 1992, JMB/125 assigned its
interest in the 125 Broad Street
Building to its unaffiliated venture
partner in November 1994. Reference
is made to Notes 3(c) and 7(f) of
Notes to Consolidated Financial
Statements to Carlyle-XV. . . . . . . . . -- 248,739,738
------------ ------------
Total debt . . . . . . . . . . . 198,010,055 447,216,935
Less current portion of
long-term debt . . . . . . . . 198,010,055 447,216,935
------------ ------------
Total long-term debt . . . . . . $ -- --
============ ============
The mortgage note secured by the Wells Fargo Center matured December
1, 1994 and is in default. Therefore, the loan has been classified at
December 31, 1994 and 1993 as a current liability in the accompanying
combined financial statements. The South Tower venture has entered into a
forbearance agreement with the mortgage lender through April 1, 1995
whereby the lender has agreed not to proceed with default remedies. In
connection with the forbearance agreement, the venture has also entered
into an agreement which requires the venture to escrow cash flow generated
by South Tower. Reference is made to Note 4(b) of Notes to the
Consolidated Financial Statements of Carlyle Real Estate Limited
Partnership-XV.
Five year maturities of long-term debt are as follows:
1995 . . . . . . . . . $198,010,055
1996 . . . . . . . . . --
1997 . . . . . . . . . --
1998 . . . . . . . . . --
1999 . . . . . . . . . --
============
(4) LEASES
As Property Lessor
At December 31, 1994, the only remaining property in the combined
group consists of the Wells Fargo office building. The venture has
determined that all leases relating to the property are properly classified
as operating leases; therefore, rental income is reported when earned and
the cost of the property, excluding cost of land, is depreciated over its
estimated useful life. Leases with commercial tenants range in term from
one to 20 years and provide for fixed minimum rent and partial to full
reimbursement of operating costs.
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XV
CERTAIN UNCONSOLIDATED VENTURES
NOTES TO COMBINED FINANCIAL STATEMENTS - CONCLUDED
Minimum lease payments including amounts representing executory costs
(e.g., taxes, maintenance, insurance), and any related profit in excess of
specific reimbursements, to be received in the future under the above
operating commercial lease agreements, are as follows:
1995 . . . . . . . . . . . $ 33,736,353
1996 . . . . . . . . . . . 33,864,275
1997 . . . . . . . . . . . 32,026,212
1998 . . . . . . . . . . . 31,966,463
1999 . . . . . . . . . . . 10,077,016
Thereafter . . . . . . . . 60,921,494
------------
Total. . . . . . $202,591,813
============
<TABLE>
SCHEDULE III
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XV
CERTAIN UNCONSOLIDATED VENTURES
COMBINED REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1994
<CAPTION>
COSTS
CAPITALIZED
INITIAL COST TO SUBSEQUENT TO GROSS AMOUNT AT WHICH CARRIED
UNCONSOLIDATED VENTURES(A) TO ACQUISITION AT CLOSE OF PERIOD (B)(C)
-------------------------- -------------- ------------------------------------------
LAND AND BUILDINGS LAND, LAND AND BUILDINGS
LEASEHOLD AND BUILDINGS AND LEASEHOLD AND
ENCUMBRANCE INTERESTS IMPROVEMENTS IMPROVEMENTS INTEREST IMPROVEMENTS TOTAL (D)
------------ ----------- ------------ ------------- ---------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C> <C>
OFFICE BUILDING:
Wells Fargo
Center South
Tower
Los Angeles,
California . . $198,010,055 36,009,872 291,684,146 (44,896,630)(C) 27,528,045 255,269,343 282,797,388
============ ========== =========== ========== ========== =========== ===========
</TABLE>
<TABLE>
SCHEDULE III - CONTINUED
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XV
CERTAIN UNCONSOLIDATED VENTURES
COMBINED REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1994
<CAPTION>
LIFE ON WHICH
DEPRECIATION
IN LATEST
INCOME 1994
ACCUMULATED DATE OF DATE STATEMENT REAL ESTATE
DEPRECIATION(E) CONSTRUCTION ACQUIRED IS COMPUTED TAXES
---------------- ------------ ---------- --------------- -----------
<S> <C> <C> <C> <C> <C>
OFFICE BUILDING:
Wells Fargo Center
South Tower
Los Angeles,
California . . . . . . . . . . . $99,843,914 1983 06/28/85 5-30 years 2,895,243
=========== =========
SCHEDULE III - CONTINUED
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XV
CERTAIN UNCONSOLIDATED VENTURES
COMBINED REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1994
<FN>
-----------------
Notes:
(A) The initial cost to the Unconsolidated Ventures represents the original purchase price of the property,
including amounts incurred subsequent to acquisition which were contemplated at the time the property was
acquired.
(B) The aggregate cost of real estate owned at December 31, 1994 for Federal income tax purposes was
$250,914,712.
(C) In 1993, the affiliated joint venture recorded a provision for value impairment. The portion allocated to
real estate totalled $65,837,633; see Note 1 of Notes to Combined Financial Statements.
</TABLE>
<TABLE>
<CAPTION>
(D) Reconciliation of real estate owned as of December 31, 1994, 1993 and 1992:
1994 1993 1992
------------ ----------- -----------
<S> <C> <C> <C>
Balance at beginning of period. . . . . . . . . . . . . . . . . $ 628,320,022 692,588,032 689,247,445
Additions during period . . . . . . . . . . . . . . . . . . . . 184,898 2,913,093 4,809,749
Provision for value impairment. . . . . . . . . . . . . . . . . -- (65,837,633) --
Reductions/disposals during period (F). . . . . . . . . . . . . (345,707,532) (1,343,470) (1,469,162)
------------- ----------- -----------
Balance at end of period. . . . . . . . . . . . . . . . . . . . $ 282,797,388 628,320,022 692,588,032
============= =========== ===========
(E) Reconciliation of accumulated depreciation:
Balance at beginning of period. . . . . . . . . . . . . . . . . $ 199,333,463 178,748,354 157,591,558
Depreciation expense. . . . . . . . . . . . . . . . . . . . . . 17,369,009 21,023,113 22,625,958
Reductions/disposals during period (F). . . . . . . . . . . . . (116,858,558) (438,004) (1,469,162)
------------- ----------- -----------
Balance at end of period. . . . . . . . . . . . . . . . . . . . $ 99,843,914 199,333,463 178,748,354
============= =========== ===========
(F) In November 1994, JMB/125 assigned its interest in 125 Broad Street Company to the unaffiliated venture
partner; see Notes 3(c)(iv) and 7(f) of Notes to Consolidated Financial Statements of Carlyle-XV.
</TABLE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
There were no changes of or disagreements with accountants during
fiscal year 1994 and 1993.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE PARTNERSHIP
The Corporate General Partner of the Partnership is JMB Realty
Corporation ("JMB"), a Delaware corporation. The outstanding shares of JMB
are owned by certain of its officers and directors and members of their
families. JMB has responsibility for all aspects of the Partnership's
operations, subject to the requirement that purchases and sales of real
property must be approved by the Associate General Partner of the
Partnership, Realty Associates-XV, L.P., an Illinois limited partnership
with JMB as the sole general partner. The Associate General Partner shall
be directed by a majority in interest of its limited partners (who are
generally officers, directors and affiliates of JMB or its affiliates) as
to whether to provide its approval of any sale of real property (or any
interest therein) of the Partnership. The Partnership is subject to
certain conflicts of interest arising out of its relationships with the
General Partners and their affiliates as well as the fact that the General
Partners and their affiliates are engaged in a range of real estate
activities. Certain services have been and may in the future be provided
to the Partnership or its investment properties by affiliates of the
General Partners, including property management services and insurance
brokerage services. In general, such services are to be provided on terms
no less favorable to the Partnership than could be obtained from
independent third parties and are otherwise subject to conditions and
restrictions contained in the Partnership Agreement. The Partnership
Agreement permits the General Partners and their affiliates to provide
services to, and otherwise deal and do business with, persons who may be
engaged in transactions with the Partnership, and permits the Partnership
to borrow from, purchase goods and services from, and otherwise to do
business with, persons doing business with the General Partners or their
affiliates. The General Partners and their affiliates may be in
competition with the Partnership under certain circumstances, including, in
certain geographical markets, for tenants for properties and/or for the
sale of properties. Because the timing and amount of cash distributions
and profits and losses of the Partnership may be affected by various
determinations by the General Partners under the Partnership Agreement,
including whether and when to sell or refinance a property, the
establishment and maintenance of reasonable reserves, the timing of
expenditures and the allocation of certain tax items under the Partnership
Agreement, the General Partners may have a conflict of interest with
respect to such determinations.
The names, positions held and length of service therein of each
director and executive officer and certain officers of the Corporate
General Partner are as follows:
SERVED IN
NAME OFFICE OFFICE SINCE
---- ------ ------------
Judd D. Malkin Chairman 5/03/71
Director 5/03/71
Neil G. Bluhm President 5/03/71
Director 5/03/71
Burton E. Glazov Director 7/01/71
Stuart C. Nathan Executive Vice President 5/08/79
Director 3/14/73
A. Lee Sacks Director 5/09/88
SERVED IN
NAME OFFICE OFFICE SINCE
---- ------ ------------
John G. Schreiber Director 3/14/73
H. Rigel Barber Chief Executive Officer 1/02/87
Executive Vice President 8/01/93
Glenn E. Emig Executive Vice President 1/01/93
Chief Operating Officer 1/01/95
Jeffrey R. Rosenthal Managing Director-Corporate 4/22/91
Chief Financial Officer 8/01/93
Douglas H. Cameron Executive Vice President 1/01/95
Gary Nickele Executive Vice President 1/01/92
General Counsel 2/27/84
Ira J. Schulman Executive Vice President 6/01/88
Gailen J. Hull Senior Vice President 6/01/88
Howard Kogen Senior Vice President 1/02/86
Treasurer 1/01/91
There is no family relationship among any of the foregoing directors
or officers. The foregoing directors have been elected to serve a one-year
term until the annual meeting of the Corporate General Partner to be held
on June 7, 1995. All of the foregoing officers have been elected to serve
one-year terms until the first meeting of the Board of Directors held after
the annual meeting of the Corporate General Partner to be held on June 7,
1995. There are no arrangements or understandings between or among any of
said directors or officers and any other person pursuant to which any
director or officer was elected as such.
JMB is the corporate general partner of Carlyle Real Estate Limited
Partnership-VII ("Carlyle-VII"), Carlyle Real Estate Limited Partnership-IX
("Carlyle-IX"), Carlyle Real Estate Limited Partnership-X ("Carlyle-X"),
Carlyle Real Estate Limited Partnership-XI ("Carlyle-XI"), Carlyle Real
Estate Limited Partnership-XII ("Carlyle-XII"), Carlyle Real Estate Limited
Partnership-XIII ("Carlyle-XIII"), Carlyle Real Estate Limited
Partnership-XIV ("Carlyle-XIV"), Carlyle Real Estate Limited Partnership-
XVI ("Carlyle-XVI"), Carlyle Real Estate Limited Partnership-XVII
("Carlyle-XVII"), JMB Mortgage Partners, Ltd. ("Mortgage Partners"), JMB
Mortgage Partners, Ltd.-II ("Mortgage Partners-II"), JMB Mortgage Partners,
Ltd.-III ("Mortgage Partners-III"), JMB Mortgage Partners, Ltd.-IV
("Mortgage Partners-IV"), Carlyle Income Plus, Ltd. ("Carlyle Income Plus")
and Carlyle Income Plus, Ltd.-II ("Carlyle Income Plus-II") and the
managing general partner of JMB Income Properties, Ltd.-IV ("JMB
Income-IV"), JMB Income Properties, Ltd.-V ("JMB Income-V"), JMB Income
Properties, Ltd.-VI ("JMB Income-VI"), JMB Income Properties, Ltd.-VII
("JMB Income-VII"), JMB Income Properties, Ltd.-VIII ("JMB Income-VIII"),
JMB Income Properties, Ltd.-IX ("JMB Income-IX"), JMB Income Properties,
Ltd.-X ("JMB Income-X"), JMB Income Properties, Ltd.-XI ("JMB Income-XI"),
JMB Income Properties, Ltd.-XII ("JMB Income-XII"), JMB Income Properties,
Ltd.-XIII ("JMB Income-XIII"). Most of the foregoing officers and
directors are also officers and/or directors of various affiliated
companies of JMB including Arvida/JMB Managers, Inc. (the general partner
of Arvida/JMB Partners, L.P. ("Arvida")), Arvida/JMB Managers-II, Inc. (the
general partner of Arvida/JMB Partners, L.P.-II ("Arvida-II)) and Income
Growth Managers, Inc. (the corporate general partner of IDS/JMB Balanced
Income Growth, Ltd. ("IDS/BIG")). Most of such directors and officers are
also partners, directly or indirectly, of certain partnerships which are
associate general partners in the following real estate limited partner-
ships: The Partnership, Carlyle-VII, Carlyle-IX, Carlyle-X, Carlyle-XI,
Carlyle-XII, Carlyle-XIII, Carlyle-XIV, Carlyle-XVI, Carlyle-XVII, JMB
Income-VI, JMB Income-VII, JMB Income-VIII, JMB Income-IX, JMB Income-X,
JMB Income-XI, JMB Income-XII, JMB Income-XIII, Mortgage Partners, Mortgage
Partners-II, Mortgage Partners-III, Mortgage Partners-IV, Carlyle Income
Plus, Carlyle Income Plus-II and IDS/BIG. Certain of such officers are
also officers and the sole directors of Carlyle Advisors, Inc., the general
partner of JMB/125. Reference is made to Note 7(f).
The business experience during the past five years of each such
director and officer of the Corporate General Partner of the Partnership in
addition to that described above is as follows:
Judd D. Malkin (age 57) is an individual general partner of JMB
Income-IV and JMB Income-V. Mr. Malkin has been associated with JMB since
October, 1969. Mr. Malkin is a director of Urban Shopping Centers, Inc.,
an affiliate of JMB that is a real estate investment trust in the business
of owning, managing and developing shopping centers, and is a director of
Catellus Development Corporation, a major diversified real estate
development company. He is a Certified Public Accountant.
Neil G. Bluhm (age 57) is an individual general partner of JMB
Income-IV and JMB Income-V. Mr. Bluhm has been associated with JMB since
August, 1970. Mr. Bluhm is a director of Urban Shopping Centers, Inc., an
affiliate of JMB that is a real estate investment trust in the business of
owning, managing and developing shopping centers. He is a member of the
Bar of the State of Illinois and a Certified Public Accountant.
Burton E. Glazov (age 56) has been associated with JMB since June,
1971 and served as an Executive Vice President of JMB until December 1990.
He is a member of the Bar of the State of Illinois and a Certified Public
Accountant.
Stuart C. Nathan (age 53) has been associated with JMB since July,
1972. Mr. Nathan is also a director of Sportmart Inc., a retailer of
sporting goods. He is a member of the Bar of the State of Illinois.
A. Lee Sacks (age 61) (President and Director of JMB Insurance Agency,
Inc.) has been associated with JMB since December, 1972.
John G. Schreiber (age 48) has been associated with JMB since
December, 1970 and served as an Executive Vice President of JMB until
December 1990. Mr. Schreiber is President of Schreiber Investments, Inc.,
a company which is engaged in the real estate investing business. He is
also a senior advisor and partner of Blackstone Real Estate Partners, an
affiliate of the Blackstone Group, L.P. Since 1994, Mr. Schreiber has also
served as a Trustee of Amli Residential Property Trust, a publicly-traded
real estate investment trust that invests in multi-family properties. Mr.
Schreiber is also director of Urban Shopping Centers, Inc., an affiliate of
JMB that is a real estate investment trust in the business owning, managing
and developing shopping centers. He is also director of a number of
investment companies advised by T. Rowe Price Associates and its
affiliates. He holds a Masters degree in Business Administration from
Harvard University Graduate School of Business.
H. Rigel Barber (age 45) has been associated with JMB since March,
1982. He holds a J.D. degree from the Northwestern Law School and is a
member of the Bar of the State of Illinois.
Glenn E. Emig (age 47) has been associated with JMB since December,
1979. Prior to becoming Executive Vice President of JMB in 1993. Mr. Emig
was Executive Vice President and Treasurer of JMB Institutional Realty
Corporation. He holds a Masters degree in Business Administration from the
Harvard University Graduate School of Business and is a Certified Public
Accountant.
Jeffrey R. Rosenthal (age 43) has been associated with JMB since
December, 1987. He is a Certified Public Accountant.
Douglas H. Cameron (age 45) has been associated with JMB since April,
1977. Prior to becoming Executive Vice President of JMB in 1995, Mr.
Cameron was Managing Director of Capital Markets-Property Sales from June,
1990. He holds a Masters degree in Business Administration from the
University of Southern California.
Gary Nickele (age 42) has been associated with JMB since February,
1984. He holds a J.D. degree from the University of Michigan Law School
and is a member of the Bar of the State of Illinois.
Ira J. Schulman (age 43) has been associated with JMB since February,
1983. He holds a Masters degree in Business Administration from the
University of Pittsburgh.
Gailen J. Hull (age 46) has been associated with JMB since March,
1982. He holds a Masters degree in Business Administration from Northern
Illinois University and is a Certified Public Accountant.
Howard Kogen (age 59) has been associated with JMB since March, 1973.
He is a Certified Public Accountant.<PAGE>
ITEM 11. EXECUTIVE COMPENSATION
The Partnership has no officers or directors. The Partnership is
required to pay a management fee to the Corporate General Partner and the
General Partners are entitled to receive a share of cash distributions,
when and as cash distributions are made to the Limited Partners, and a
share of profits or losses as described in Notes 5 and 11. In 1994, 1993
and 1992, the General Partners were entitled to distributions of $0, $0 and
$9,244, respectively, and earned management fees of $0, $0 and $15,407,
respectively, all of which were paid at December 31, 1994. Through
December 31, 1994, $1,736,196 of property management fees and leasing fees
have been deferred (including direct reimbursements made to the
Partnership) by an affiliate of the General Partner, or approximately $4
per Interest in the aggregate. The Partnership paid $847,752 of previously
deferred reimbursements to the Corporate General Partner and its affiliates
in July 1994. The Partnership also paid previously deferred partnership
management fees and distributions of $724,121 and $249,591, respectively,
to the General Partners in August 1994. In December 1994, the Partnership
paid $3,422,391 of previously deferred management and leasing fees to an
affiliate of the General Partners. Effective October 1, 1993, the
Partnership and its consolidated ventures began paying property management
and leasing fees on a current basis. The General Partners received a share
of the Partnership's long-term capital gain for tax purposes aggregating
$5,891,666 in 1994. In addition, the General Partners received a share of
the Partnership's operating losses for tax purposes aggregating $1,085,954
in 1994. Such operating losses may benefit the General Partners or the
partners thereof to the extent that such losses may be offset against
taxable income from the Partnership or other sources.
The Partnership is permitted to engage in various transactions
involving the General Partners and their affiliates of the Partnership
certain of which may involve conflicts of interest, as discussed in Item 10
above. The relationship of the Corporate General Partner (and its
directors and officers) to its affiliates is set forth above in Item 10 and
Exhibit 21 hereto.
Affiliates of the Corporate General Partner provided property
management services in 1994 for six investment properties. Such affiliates
earned property management and leasing fees amounting to $749,801 in 1994
all of which were paid as of December 31, 1994. Through December 31, 1994,
$1,060,320 in property management and leasing fees have been unpaid. As
set forth in the Prospectus of the Partnership, the Corporate General
Partner must negotiate such agreements on terms no less favorable to the
Partnership than those customarily charged for similar services in the
relevant geographical area (but in no event at rates greater than 6% of the
gross income from a property), and such agreements must be terminable by
either party thereto, without penalty, upon 60 days notice.
JMB Insurance Agency, Inc., affiliate of the Corporate General
Partner, earned and received insurance brokerage commissions in 1994
aggregating $42,442 in connection with providing insurance coverage for
certain of the real property investments of the Partnership. Such
commissions are at rates set by insurance companies for the classes of
coverage provided.
The General Partners of the Partnership or their affiliates may be
reimbursed for their direct expenses or out-of-pocket expenses and salaries
relating to the administration of the Partnership and the operation of the
Partnership's real property investments. In 1994, the Corporate General
Partner of the Partnership was due reimbursement for such out-of-pocket
expenses in the amount of $181,486, of which $69,266 was unpaid as of
December 31, 1994.
Additionally, the General Partners are also entitled to reimbursements
for administrative legal, accounting and data processing services. Such
costs for 1994 were $220,945, of which $34,568 was unpaid as of December
31, 1994. Reference is made to Note 11.
<TABLE>
<CAPTION>
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
(a) No person or group is known by the Partnership to own beneficially more than 5% of the outstanding
Interests of the Partnership.
(b) The Corporate General Partner and its officers and directors own the following Interests of the
Partnership:
NAME OF AMOUNT AND NATURE
BENEFICIAL OF BENEFICIAL PERCENT
TITLE OF CLASS OWNER OWNERSHIP OF CLASS
-------------- ---------- ----------------- --------
<S> <C> <C> <C>
Limited Partnership
Interests and Assignee
Interests therein JMB Realty Corporation 5 Interests (1) indirectly Less than 1%
Limited Partnership Corporate General Partner 9.8 Interests(1)(2) Less than 1%
Interests and Assignee and its officers and
Interests therein directors as a group
<FN>
----------
(1) Includes 5 Interests owned by the Initial Limited Partner of the Partnership for which JMB, as its
indirect majority shareholder, is deemed to have sole voting and investment power.
(2) Includes 4.8 Interests owned by officers or their relatives for which each officer has sole investment
and voting power as to such Interests so owned.
No officer or director of the Corporate General Partner of the Partnership possesses a right to acquire
beneficial ownership of Interests of the Partnership.
(c) There exists no arrangement, known to the Partnership, the operation of which may at a subsequent
date result in a change in control of the Partnership.
Section 16(a) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), requires the General
Partners, the executive officers and directors of the Corporate General Partner and persons who own more than ten
percent of the Interests to file an initial report of ownership or changes in ownership of Interests on Form 3, 4
or 5 with the Securities and Exchange Commission (the "SEC"). Such persons are also required by SEC rules to
furnish the Partnership with copies of all Section 16(a) forms they file. Timely filing of an initial report of
ownership on Form 3 or Form 5 was not made on behalf of Glenn Emig.
</TABLE>
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
There were no significant transactions or business relationships with
the Corporate General Partner, affiliates or their management other than
those described in Items 10 and 11 above.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) The following documents are filed as part of this report:
(1) Financial Statements (See Index to Financial Statements
filed with this annual report).
(2) Exhibits.
3. Amended and Restated Agreement of Limited
Partnership, is hereby incorporated by reference to Exhibit 3 to the
Partnership's Form 10-K (File No. 0-16111) for December 31, 1992 dated
March 19, 1993.
4-A. Assignment Agreement set forth as Exhibit B to the
Prospectus is hereby incorporated herein by reference to Exhibit 4-A to the
Partnership's Report on Form 10-K (File No. 0-16111) for December 31, 1992
dated March 19, 1993.
4-B. Documents relating to the modification of the
mortgage loan secured by 260 Franklin Street Building are hereby
incorporated herein by reference to the Partnership's Report on Form 10-K
(File No. 0-16111) for December 31, 1992 dated March 19, 1993.
4-C. Documents relating to the modification of the
mortgage loans secured by the 160 Spear Street Building are hereby
incorporated herein by reference to Exhibit 4-C to the Partnership's Report
on Form 10-K (File No. 0-16111) for December 31, 1992 dated March 19, 1993.
4-D. Documents relating to the refinancing of the
mortgage note secured by the Post Crest Apartments are hereby incorporated
herein by reference to Exhibit 4-D to the Partnership's Report on Form 10-K
(File No. 0-16111) for December 31, 1992 dated March 19, 1993.
10-A. Escrow Deposit Agreement is hereby incorporated
herein by reference to the Partnership Registration Statement on Form S-11
(File No. 2-95382) dated January 18, 1985.
10-B. Acquisition documents relating to the purchase by
the Partnership of an interest in the 900 Third Avenue Building in New
York, New York, are hereby incorporated herein by reference to the Partner-
ship's Registration Statement on Form S-11 (File No. 2-95382) dated January
18, 1985.
10-C. Acquisition documents relating to the purchase by
the Partnership of an interest in the Piper Jaffray Tower in Minneapolis,
Minnesota, are hereby incorporated herein by reference to the Partnership's
Registration Statement on Form S-11 (File No. 2-95382) dated January 18,
1985.
10-D. Acquisition documents relating to the purchase by
the Partnership of the NBG Building in Fulton County, Georgia, are hereby
incorporated herein by reference to the Partnership's Registration
Statement on Amendment No. 2 to Form S-11 (File No. 2-95382) dated July 5,
1985.
10-E. Acquisition documents relating to the purchase by
the Partnership of an interest in the Crocker Center South Tower in Los
Angeles, California, are hereby incorporated herein by reference to the
Partnership's Registration Statement on Amendment No. 2 to Form S-11 (File
No. 2-95382) dated July 5, 1985.
10-F. Acquisition documents relating to the purchase by
the Partnership of an interest in the Villa Solana Apartments in Laguna
Hills, California, are hereby incorporated herein by reference to the
Partnership's Registration Statement on Post-Effective Amendment No. 1 to
Form S-11 (File No. 2-95382) dated September 13, 1985.
10-G. Acquisition documents relating to the purchase by
the Partnership of an interest in the Eastridge Mall in Casper, Wyoming,
are hereby incorporated herein by reference to the Partnership's
Registration Statement on Post Effective Amendment No. 1 to Form S-11 (File
No. 2-95382) dated September 13, 1985.
10-H. Acquisition documents relating to the purchase by
the Partnership of the Summit Hills Apartments in DeKalb County, Georgia,
are hereby incorporated herein by reference to the Partnership's Registra-
tion Statement on Post Effective Amendment No. 2 to Form S-11 (File No.
2-95382) dated December 13, 1985.
10-I. Acquisition documents relating to the purchase by
the Partnership of an interest in the 160 Spear Street Building in San
Francisco, California, are hereby incorporated herein by reference to the
Partnership's Registration Statement on Post-Effective Amendment No. 3 to
Form S-11 (File No. 2-95382) dated March 13, 1986.
10-J. Acquisition documents relating to the purchase by
the Partnership of an interest in the Baltimore Federal Financial Building
in Baltimore, Maryland, are hereby incorporated herein by reference to the
Partnership's Registration Statement on Post-Effective Amendment No. 3 to
Form S-11 (File No. 2-95382) dated March 13, 1986.
10-K. Acquisition documents relating to the purchase by
the Partnership of the Arthur D. Little Building in Woodland Hills,
California, are hereby incorporated herein by reference to the
Partnership's Registration Statement on Post-Effective Amendment No. 3 to
Form S-11 (File No. 2-95382) dated March 13, 1986.
10-L. Acquisition documents relating to the purchase by
the Partnership of an interest in the Park at Countryside Apartments in
Port Orange, Florida, are hereby incorporated herein by reference to the
Partnership's Registration Statement on Post-Effective Amendment No. 3 to
Form S-11 (File No. 2-95382) dated March 13, 1986.
10-M. Acquisition documents relating to the purchase by
the Partnership of an interest in the Owings Mills Shopping Center in
Owings Mills, Maryland, are hereby incorporated herein by reference to the
Partnership's Registration Statement on Post-Effective Amendment No. 3 to
Form S-11 (File No. 2-95382) dated March 13, 1986.
10-N. Acquisition documents relating to the purchase by
the Partnership of an interest in the 125 Broad Street Building, New York,
New York, are hereby incorporated herein by reference to the Partnership's
Registration Statement on Post-Effective Amendment No. 3 to Form S-11 (File
No. 2-95382) dated March 13, 1986.
10-O. Acquisition documents relating to the purchase by
the Partnership of an interest in the Boatmen's Center in Kansas City,
Missouri, are hereby incorporated herein by reference to the Partnership's
Registration Statement on Post-Effective Amendment No. 3 to Form S-11 (File
No. 2-95382) dated March 13, 1986.
10-P. Acquisition documents relating to the purchase by
the Partnership of an interest in the 260 Franklin Street Building in
Boston, Massachusetts, are hereby incorporated herein by reference to the
Partnership's Registration Statement on Post-Effective Amendment No. 4 to
Form S-11 dated April 30, 1986.
10-Q. Acquisition documents relating to the purchase by
the Partnership of an interest in the Mitsui Manufacturers Bank Building in
Beverly Hills, California, are hereby incorporated herein by reference to
the Partnership's Registration Statement on Post-Effective Amendment No. 5
to Form S-11 dated July 31, 1986.
10-R. Acquisition documents relating to the purchase by
the Partnership of an interest in the California Plaza office building in
Walnut Creek, California are hereby incorporated herein by reference to the
Partnership's Registration Statement on Post-Effective Amendment No. 5 to
Form S-11 dated July 31, 1986.
10-S. Acquisition documents relating to the purchase by
the Partnership of the Springbrook Shopping Center in Bloomingdale,
Illinois, are hereby incorporated herein by reference.
10-T. Acquisition documents relating to the purchase by
the Partnership of the Erie-McClurg Parking Facility in Chicago, Illinois
are hereby incorporated herein by reference.
10-U.* Real Estate Purchase Agreement dated June 30,
1992, between Erie-McClurg Associates ("Beneficiary") and The Streeterville
Corporation ("Purchaser") for the sale of Erie-McClurg Parking Facility, is
hereby incorporated herein by reference.
10-V.* First Amendment to Real Estate Purchase Agreement
dated August 26, 1992, between Erie-McClurg Associates ("Beneficiary") and
The Streeterville Corporation ("Purchaser") for the sale of Erie-McClurg
Parking Facility, is hereby incorporated herein by reference.
10-W.* Second Amendment to Real Estate Purchase Agreement
dated September 3, 1992, between Erie-McClurg Associates ("Beneficiary")
and The Streeterville Corporation ("Purchaser") for the sale of Erie-
McClurg Parking Facility, is hereby incorporated herein by reference.
10-X. Agreement of Limited Partnership of Carlyle-XV
Associates, L.P., dated April 19, 1993 between the Partnership and Carlyle
Partners, Inc. relating to the 125 Broad Street Building, is hereby
incorporated herein by reference to the Partnership's report for December
31, 1993 on Form 10-K (File No. 0-16111) dated March 28, 1994.
10-Y. Documents relating to the modification of the
mortgage loan secured by California Plaza are hereby incorporated herein by
reference to the Partnership's report for December 31, 1993 on Form 10-K
(File No. 0-16111) dated March 28, 1994.
10-Z. Agreement for Purchase and Sale of Real Estate and
Related Property related to the sale of Villa Solana Apartments dated
February 7, 1994 between Villa Solana Associates ("Seller") and EQR-Villa
Solana Vistas, Inc. ("Purchasers") is incorporated herein by reference to
the Partnership's report for June 30, 1994 on Form 10-Q (File No. 0-16111)
dated August 12, 1994.
10-AA. Amendment to the Agreement for Purchase and Sale
of Real Estate and Related Property related to the sale of Villa Solana
Apartments dated February 25, 1994 between Villa Solana Associates
("Seller") and EQR-Villa Solana Vistas, Inc. ("Purchasers") is incorporated
herein by reference to the Partnership's report for June 30, 1994 on Form
10-Q (File No. 0-16111) dated August 12, 1994.
10-BB. Second Amendment to Agreement for Purchase and
Sale of Real Estate and Related Property related to the sale of Villa
Solana Apartments dated March 4, 1994 between Villa Solana Associates
("Seller") and EQR-Villa Solana Vistas, Inc. ("Purchaser") is incorporated
herein by reference to the Partnership's report for June 30, 1994 on Form
10-Q (File No. 0-16111) dated August 12, 1994.
10-CC. Takeover agreement relating to Johnson & Higgins
space at the 125 Broad Building is incorporated herein by reference to the
Partnership's report for March 31, 1994 on Form 10-Q (File No. 0-16111)
dated May 11, 1994.
10-DD. First Amendment to Loan Documents relating to the
mortgage loan secured by Dunwoody Crossing Apartments (Phases I and III) is
incorporated herein by reference to the Partnership's report for September
30, 1994 on Form 10-Q (File No. 0-16111) dated November 10, 1994.
10-EE. Documents relating to the extension of the
mortgage loan secured by the 900 Third Building are filed herewith.
10-FF. Documents relating to the lender realizing upon
its mortgage security interest in the Park at Countryside Apartments are
incorporated herein by reference to the Partnership's report for May 5,
1994 on Form 8-K dated May 5, 1994.
10-GG. Documents relating to the refinancing of the
Woodlands Hills Apartments are filed herewith.
10-HH. Purchase Agreement between the Partnership and
9701 Wilshire Boulevard, Inc. ("Purchaser") for the sale of the 9701
Wilshire Building is filed herewith.
10-II. Documents relating to the assignment of the
Partnership's interest in the 125 Broad Street Building to O&Y Plaza Corp.
("Assignee") are incorporated herein by reference to the Partnership's
report for October 15, 1994 on Form 8-K dated November 15, 1994.
10-JJ. Lockbox and forbearance agreements related to the
mortgage note secured by the Wells Fargo Building are filed herewith.
21. List of Subsidiaries.
24. Powers of Attorney.
27. Financial Data Schedule.
99-A. Form 8-K for Park at Countryside Apartments.
99-B. Form 8-K for 125 Broad.
-----------------
* Previously filed as Exhibits 10-U, 10-V and 10-W,
respectively, to the Partnership's Report for December 31, 1992 on Form 10-
K of the Securities Exchange Act of 1934 (File No. 0-16111) dated March 19,
1993 and hereby incorporated herein by reference.
(b) The following report on Form 8-K was required or filed since
the beginning of the last quarter of the period covered by this report.
(i) The Partnership's report on Form 8-K for October 15, 1994
(describing the assignment of the Partnership's interest in the 125 Broad
Street Building) was filed. This report was dated November 15, 1994.
No annual report for the fiscal year 1994 or proxy material has
been sent to the Partners of the Partnership. An annual report will be
sent to the Partners subsequent to this filing.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Partnership has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XV
By: JMB Realty Corporation
Corporate General Partner
GAILEN J. HULL
By: Gailen J. Hull
Senior Vice President
Date: March 27, 1995
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.
By: JMB Realty Corporation
Corporate General Partner
JUDD D. MALKIN*
By: Judd D. Malkin, Chairman and Director
Date: March 27, 1995
NEIL G. BLUHM*
By: Neil G. Bluhm, President and Director
Date: March 27, 1995
H. RIGEL BARBER*
By: H. Rigel Barber, Chief Executive Officer
Date: March 27, 1995
GLENN E. EMIG*
By: Glenn E. Emig, Chief Operating Officer
Date: March 27, 1995
JEFFREY R. ROSENTHAL*
By: Jeffrey R. Rosenthal, Chief Financial Officer
Principal Financial Officer
Date: March 27, 1995
GAILEN J. HULL
By: Gailen J. Hull, Senior Vice President
Principal Accounting Officer
Date: March 27, 1995
A. LEE SACKS*
By: A. Lee Sacks, Director
Date: March 27, 1995
STUART C. NATHAN*
By: Stuart C. Nathan, Executive Vice President
and Director
Date: March 27, 1995
*By: GAILEN J. HULL, Pursuant to a Power of Attorney
GAILEN J. HULL
By: Gailen J. Hull, Attorney-in-Fact
Date: March 27, 1995
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XV
EXHIBIT INDEX
Document
Incorporated
By Reference Page
------------ ----
3. Amended and Restated Agreement Yes
of Limited Partnership of the
Partnership, included as Exhibit A
to the Partnership's Prospectus
dated July 5, 1985.
4-A. Assignment Agreement, included as Yes
Exhibit B to the Partnership's
Prospectus dated July 5, 1985.
4-B. Documents relating to the modification
of the mortgage loan secured by
the 260 Franklin Street Building Yes
4-C. Documents relating to the modification
of the mortgage loans secured by
the 160 Spear Street Building Yes
4-D. Documents relating to the refinancing
of the mortgage loan secured by
the Post Crest Apartments Yes
10-A. through
10-R. * Exhibits 10.A through 10.R Yes
are hereby incorporated herein by
reference.
10-S. through
10-DD. Exhibits 10-S. through 10-DD.
are hereby incorporated herein by
reference. Yes
10-EE. Documents relating to the extension of the
mortgage loan secured by the 900 Third
Building are filed herewith No
10-FF. Documents relating to the lender realizing
upon its mortgage security interest in the
Park at Countryside Apartments are
incorporated by reference. Yes
10-GG. Documents relating to the refinancing of
the Woodland Hills Apartments are
filed herewith. No
10-HH. Purchase agreement relating to the sale
of the 9701 Wilshire Building is
filed herewith. No
10-II. Documents relating to the assignment of the
Partnership's interest in the 125 Broad
Street Building are incorporated by
reference. Yes
10-JJ. Lockbox and forbearance agreements related
to the mortgage note secured by the
Wells Fargo Building are filed herewith. No
21. List of Subsidiaries No
24. Powers of Attorney No
27. Financial Data Schedule No
99-A. Form 8-K for Park at Countryside
Apartments No
99-B. Form 8-K for 125 Broad No
-------------------
* Previously filed as Exhibits to the Partnership's Registration Statement
(as amended) on Form S-11 (Filed No. 2-95382) of the Securities Act of
1933.
DEED TO SECURE DEBT AND
SECURITY AGREEMENT
Dated , 1994
in the amount of $8,175,000.00
between
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XV
900 North Michigan
Chicago, Illinois 60611-1575
(the "Grantor")
and
GENERAL ELECTRIC CAPITAL CORPORATION
Suite 900, One Georgia Center
600 West Peachtree, N.W.
Atlanta, Georgia 30308
(the "Grantee")
LOCATION OF PREMISES
3471 North Druid Hills Road
Atlanta, DeKalb County, Georgia
------------------------------------------------------------------
After recording, please return to:
Thomas K. Dotzenrod, Esq.
King & Spalding
191 Peachtree Street
Atlanta, Georgia 30303-1763
This instrument was prepared by the above named attorney.
THIS INSTRUMENT IS ALSO TO BE INDEXED IN THE INDEX OF UNIFORM
COMMERCIAL CODE FINANCING STATEMENTS.
DEED TO SECURE DEBT AND
SECURITY AGREEMENT
THIS DEED TO SECURE DEBT AND SECURITY AGREEMENT, made
and given this 2ND day of November, 1994, by CARLYLE REAL ESTATE
LIMITED PARTNERSHIP - XV, an Illinois limited partnership having
JMB Realty Corporation and Realty Associates - XV, L.P. as its
only general partners and having its principal place of business
at 900 North Michigan Avenue, Chicago, Illinois 60611-1575,
Attention: Stephen A. Lovelette (herein called "Grantor"); and
GENERAL ELECTRIC CAPITAL CORPORATION, a New York corporation
having an office at Suite 900, One Georgia Center, 600 West
Peachtree Street, N.W., Atlanta, Fulton County, Georgia 30308
(herein called "Grantee"):
W I T N E S S E T H: That:
THAT FOR AND IN CONSIDERATION of the sum of TEN AND NO/
100 DOLLARS ($10.00) and other valuable consideration, the receipt
and sufficiency whereof are hereby acknowledged, and in order to
secure (i) the indebtedness of Grantor hereinafter set forth, (ii)
all amounts, sums and expenses paid hereunder by Grantee according
to the terms hereof and (iii) all other obligations and
liabilities of Grantor hereunder, together with interest on the
said indebtedness, obligations, liabilities, amounts, sums and
expenses (all of the aforesaid are hereinafter collectively
referred to as the "Indebtedness"), Grantor hereby grants,
bargains, sells, warrants, conveys, aliens, remises, releases,
assigns, sets over and confirms to Grantee:
ALL THOSE CERTAIN lot(s), piece(s) or parcel(s) of land
described in Exhibit "A", attached hereto and by this reference
incorporated herein and made a part hereof;
TOGETHER WITH the buildings, structures and improvements now
or hereafter located on said land and all right, title and
interest, if any, of Grantor in and to the streets and roads
abutting said land to the center lines thereof, the strips and
gores within or adjoining said land, the air space and right to
use said air space above said land, all rights of ingress and
egress by pedestrians and motor vehicles to parking facilities on
or within said land, and all easements now or hereafter affecting
said land, royalties and all rights appertaining to the use and
enjoyment of said land, including, without limitation, alley,
drainage, sewer, mineral, water, oil and gas rights, rights-of-
way, vaults, ways, passages, water courses, water rights and
powers, and all estates, rights, titles, interests, privileges,
liberties, tenements, hereditaments and appurtenances whatsoever,
in any way belonging, relating or appertaining to the land or any
part thereof, or which hereafter shall in any way belong, relate
or be appurtenant thereto, whether now owned or hereafter acquired
by Grantor and the reversion and reversions, remainder and
remainders (said land, together with said buildings and
improvements, the property and other rights, privileges and
interests encumbered and conveyed hereby, are hereinafter
collectively referred to as the "Premises");
TOGETHER WITH all right, title, and interest now held or
hereafter acquired by Grantor in and to all fixtures and articles
of personal property and all appurtenances and additions thereto
and substitutions or replacements thereof, now or hereafter
attached to, contained in, used or intended to be incorporated in
or used in connection with the Premises or placed on any part
thereof, though not attached thereto, including, but not limited
to, all building materials, screens, awnings, shades, blinds,
curtains, draperies, carpets, rugs, furniture and furnishings,
heating, lighting, plumbing, ventilating, air conditioning,
refrigerating, incinerating and elevator plants, stoves, ovens
(microwave, convection and others), refrigerators, freezers,
ranges, vacuum cleaning systems, call systems, sprinkler systems
and other fire prevention and extinguishing apparatus and
materials, motors, machinery, pipes, appliances, equipment,
fittings, fixtures and articles of personal property all of which
are hereby declared and shall be deemed to be fixtures and
accessions to the freehold and a part of the Premises as between
the parties hereto and all persons claiming by, through or under
them, and which shall be deemed to be a portion of the security
for the Indebtedness secured by this Security Deed, and the name
"Woodland Hills Apartments" and all other trade names, trademarks,
tradestyles, service marks, copyrights, service contracts,
computers and computer software, telephone equipment and systems,
warranties, guarantees, business and building licenses and
permits, architects' and engineers' plans, blueprints and
drawings, good will and books and records owned by Grantor and
relating to the business operated on the Premises; together with
all proceeds of all of the foregoing; together with all of
Grantor's present and future "equipment, contract
rights,"accounts" and "general intangibles" (as said quoted terms
are defined in the Georgia Uniform Commercial Code) (the Premises
and said fixtures and articles of personal property and said
"equipment", "contract rights", "accounts" and "general
intangibles" and proceeds encumbered and conveyed hereby are
hereinafter sometimes called the "Secured Property") and Grantee
shall have, in addition to all rights and remedies provided
herein, and in any other agreements, commitments and undertakings
made by Grantor to Grantee, all of the rights and remedies of a
"secured party" under the said Uniform Commercial Code; and if the
lien of this Security Deed is subject to a security interest or
lease covering any such personal property, then together with all
of the right, title and interest of Grantor in and to any and all
such property, together with the benefits of all deposits and
payments now or hereafter made thereon by Grantor; provided,
however, there shall be excluded from this granting clause any
personal property, inventory, and trade fixtures, accounts,
contract rights and general intangibles owned by any tenant (other
than by Grantor and other than any personal property, inventory or
fixtures leased to any such tenant by Grantor as lessor) now or
hereafter occupying the Premises and sold or used by such tenant,
to the extent that the same does not become the property of
Grantor as landlord under the lease with such tenant or pursuant
to applicable law;
TOGETHER WITH all leases, lettings and licenses of the
Premises or any part thereof now or hereafter entered into and all
right, title and interest of Grantor thereunder, and the rents,
issues, profits, accounts receivable and revenues of the Premises
from time to time accruing (including without limitation all
payments under leases or tenancies, tenant security deposits and
escrow funds), and all the estate, right, title, interest,
property, possession, claim and demand whatsoever at law, as well
as in equity, of Grantor of, in and to the same and including,
without limitation, the right to receive and collect the rents,
issues and profits payable thereunder;
TOGETHER WITH all unearned premiums, accrued, accruing or to
accrue under insurance policies now or hereafter obtained by
Grantor and all proceeds of the conversion, voluntary or
involuntary, of the Secured Property or any part thereof into cash
or liquidated claims, including, without limitation, proceeds of
hazard and title insurance and all awards and compensation
heretofore and hereafter made to the present and all subsequent
owners of the Secured Property by any governmental or other lawful
authorities for the taking by eminent domain, condemnation or
otherwise, of all or any part of the Secured Property or any
easement therein, including awards for any change of grade of
streets;
TOGETHER WITH all right, title and interest of Grantor in
and to all extensions, improvements, betterments, renewals,
substitutes and replacements of, and all additions and
appurtenances to, the Secured Property, hereafter acquired by, or
released to, Grantor, or constructed, assembled or placed by
Grantor or by others for Grantor's benefit on the Secured
Property, and all conversions of the security constituted thereby,
immediately upon such acquisition, release, construction,
assembling, placement or conversion, as the case may be, and in
each such case, without any further conveyance, assignment or
other act by Grantor, shall become subject to the lien of this
Security Deed as fully and completely, and with the same effect,
as though now owned by Grantor and specifically described herein.
TO HAVE AND TO HOLD the Secured Property and all parts,
rights, members and appurtenances thereof, to the use, benefit and
behoof of Grantee, its successors and assigns, IN FEE SIMPLE
forever.
THIS CONVEYANCE is intended to operate and is to be
construed as a deed passing title to the Secured Property to
Grantee and is made under those provisions of the existing laws of
the State of Georgia relating to deeds to secure debt, and not as
a mortgage, and is given to secure the following described
indebtedness:
(a) The debt evidenced by that certain Promissory Note (the
"Note") dated of even date herewith, made by Grantor to the order
of Grantee in the principal face amount of EIGHT MILLION ONE
HUNDRED SEVENTY-FIVE THOUSAND AND NO/100 DOLLARS ($8,175,000.00),
with the final payment being due on October 1, 1997, to evidence a
loan or loans (the "Loan") made or to be made by Grantee to
Grantor, together with any and all renewal or renewals and
extension or extensions of the indebtedness evidenced by the Note;
(b) Any and all additional advances made by Grantee to
protect or preserve the Secured Property or the lien hereof on the
Secured Property, or to pay taxes on the Secured Property, to pay
premiums on insurance on the Secured Property or to repair or
maintain the Secured Property, or to complete improvements on the
Secured Property (whether or not the original Grantor remains the
owner of the Secured Property at the time of such advances and
whether or not the original Grantee remains the owner of the
Indebtedness and this instrument);
(c) Any and all out of pocket expenses incident to the
collection of the Indebtedness secured hereby and the foreclosure
hereof by action in any court or by exercise of the power of sale
herein contained;
(d) Any and all other indebtedness now owing or which may
hereafter be owing by Grantor to Grantee with respect to the
Secured Property, however and whenever incurred or evidenced,
whether direct or indirect, absolute or contingent, due or to
become due, together with any and all renewal or renewals and
extension or extensions of said other indebtedness; and
(e) The full and prompt payment and performance of any and
all obligations or covenants of Grantor to Grantee under the terms
of any other agreements, assignments or other instruments now or
hereafter evidencing, securing or otherwise relating to the
indebtedness evidenced by the Note, including, without limitation,
the Hazardous Substances Indemnity Agreement dated as of even date
herewith (the "Indemnity") and any assignment of rents and leases
given by Grantor to Grantee (any and all such agreements,
assignments and other instruments, together with the Note and this
Security Deed, are herein collectively called the "Loan
Documents").
Should the Indebtedness secured by this Security Deed be
paid according to the tenor and effect thereof when the same shall
become due and payable, and should Grantor perform all covenants
herein contained in a timely manner, then this Deed shall be
canceled and surrendered.
AND Grantor covenants and agrees with Grantee as follows:
ARTICLE I.
Covenants of Grantor
Section 1.01. Payment of the Indebtedness. Grantor shall
punctually pay the Indebtedness as provided herein and in the
Note, all in the coin and currency of the United States of America
which is legal tender for the payment of public and private debts.
Section 1.02. Title to the Secured Property. Grantor
warrants that: (i) it has fee simple title to the Secured Property
subject only to the matters enumerated on Exhibit "B", attached
hereto and by this reference incorporated herein and made a part
hereof; (ii) it has full power and lawful authority to encumber
the Secured Property in the manner and form herein set forth;
(iii) except for articles of personal property, inventory and
trade fixtures owned or leased by a tenant or an unaffiliated
third party property manager, and except for personal property
having an aggregate value of not more than $50,000 which Grantor
may lease from an unaffiliated third party, it owns or will own
all fixtures and articles of personal property now or hereafter
affixed and/or used in connection with the Premises, including any
substitutions or replacements thereof, free and clear of liens,
security interests and claims, subject only to the matters
enumerated on Exhibit "B" hereto; (iv) this Security Deed is and
will remain a valid and enforceable security title, security
interest and lien on the Secured Property; and (v) it will
preserve such title, and will forever warrant and defend the same
to Grantee and will forever warrant and defend the validity and
priority of the lien hereof against the claims of all persons and
parties whomsoever, except only for the matters set forth on
Exhibit "B" hereto.
Section 1.03. Maintenance of the Secured Property.
(a) Grantor shall maintain the Secured Property in good
repair, shall comply with the requirements of any governmental
authority claiming jurisdiction over the Secured Property within
(i) thirty (30) days after an order containing such requirement
has been issued by any such authority if no time limit is
specified therein or (ii) the time period permitted for such
compliance by such order subject to the rights of tenants. Grantor
shall permit Grantee to enter upon the Premises and
inspect the Secured Property at all reasonable hours and without
prior notice; provided, however, that so long as there exists no
Event of Default, Grantee shall provide Grantor at least 48 hours
written notice prior to inspecting the Premises (except in the
case of an emergency). Grantor shall not, without the prior
written consent of the Grantee, threaten, commit, permit or suffer
to occur any waste, material alteration, demolition or removal of
the Secured Property or any part thereof; provided, however, that
fixtures and articles of personal property constituting Secured
Property may be removed from the Premises if Grantor concurrently
therewith replaces the same with similar items of equal or greater
value, free of any lien, security interest, charge or claim of
superior title, except for the matters enumerated on Exhibit "B"
hereto.
(b) Notwithstanding the requirements of subsection (a) of
this Section 1.03, Grantor shall have the right, in good faith and
at its own expense, to contest the imposition of a governmental
requirement relating to the Secured Property by appropriate legal
proceedings so long as (i) such proceedings operate to prevent the
collection or imposition of any obligation imposed upon Grantor or
other realization on the Secured Property and the sale or
forfeiture of the Secured Property or any part thereof to satisfy
the same, (ii) the contested requirement does not adversely affect
the health, safety or welfare of the tenants, occupants or
invitees of the Premises, and (iii) and during such contest
Grantor shall, at the option of Grantee, provide security or other
evidence of Grantor's financial capacity satisfactory to Grantee,
assuring the discharge of Grantor's obligation under subsection
(a) of this Section 1.03 and of any additional interest, charge,
penalty or expense arising from or incurred as a result of such
contest; and provided, further, that if at any time payment of any
obligation imposed upon Grantor by subsection (a) of this Section
1.03 shall become necessary to prevent a lien foreclosure sale of
the Secured Property or any portion thereof because of nonpayment,
then Grantor shall pay the same in sufficient time to prevent the
foreclosure sale.
Section 1.04. Insurance; Restoration.
(a) Until the Indebtedness shall have been paid in full and
until Grantor shall have performed all covenants herein contained,
Grantor shall maintain and keep in full force and effect the
following types and kinds of insurance with respect to the Secured
Property (as now or hereafter constituted) and Grantor's
ownership, operation and management thereof: (i) casualty
insurance against all risks of physical loss for the full
insurable value thereof without deduction for depreciation or
coinsurance, but in no event less than the outstanding principal
amount of the Indebtedness; (ii) use and occupancy insurance
covering either rental income or business interruption with
coverage in an amount not less than twelve (12) months'
anticipated gross rental income or twelve (12) months' gross
business earnings whichever may be applicable; and (iii)
comprehensive general liability insurance providing for limits of
liability of not less than $5,000,000.00 for both injury to or
death of a person and for property damage per occurrence. Such
policies may provide for deductible amounts from the coverages
afforded thereby in amounts of no more than $2,500.00. In
addition, Grantee may require Grantor to carry such other
insurance on the buildings and improvements now or hereafter
located within the Premises, in such amounts as may from time to
time be reasonably required by institutional lenders, against
insurable casualties (including risks of war, nuclear explosion,
earthquake, including subsidence, and contingent liability from
operation of any building laws or codes pertaining to non-
conforming property) which at the time are commonly insured
against in the case of premises similarly situated, due regard
being given to the site and the type of the building, the
construction, location, utilities and occupancy or any
replacements or substitutions therefor. Grantor shall additionally
keep the buildings, improvements and equipment located therein and
thereon now or hereafter located on the Premises insured against
loss by flood (including surface waters) if the Premises are
located in an area identified by the Secretary of Housing and
Urban Development as an area having special flood hazards and in
which flood insurance has been made available under the National
Flood Insurance Act of 1968 (and any successor act thereto) in an
amount at least equal to the outstanding principal amount of the
Indebtedness or the maximum limit of coverage available with
respect to the buildings under said Act, whichever is less. In
addition, from time to time, upon the occurrence of any change in
the use, operation or value of the Premises, or in the
availability of insurance in the area in which the Premises are
located, Grantor shall, within thirty (30) days after demand by
Grantee, take out such additional amounts and/or such other kinds
of insurance as Grantee may reasonably require. Grantor shall
assign and deliver certificates acceptable to Grantee evidencing
the policy or policies of such insurance to Grantee. Grantee and
its successors and assigns shall at all times have and hold the
said policy or policies as collateral and further security for the
payment of the Indebtedness until the full payment of the
Indebtedness. Otherwise, Grantor shall not take out any separate
or additional insurance which is contributing in the event of loss
unless it is properly endorsed and otherwise satisfactory to
Grantee in all respects. The proceeds of insurance paid on account
of any damage or destruction to the Premises or any part thereof
shall be paid over to Grantee to be applied as hereinafter
provided.
(b) Grantee shall have the option in its sole discretion to
apply any insurance proceeds it may receive pursuant to this
Section 1.04 to the payment of the Indebtedness or to allow all or
a portion of such proceeds to be used for the restoration of the
Premises. Notwithstanding the foregoing provision of this
subsection 1.04(b), Grantee agrees to make available to Grantor
for restoration of the Premises pursuant to clauses (1) through
(6) of this subsection 1.04(b), any net
insurance proceeds received by Grantee under this Security Deed as
a result of any casualty loss, provided (i) the damage or
destruction can be repaired and restored within the earlier to
occur of (A) the maturity date of the Indebtedness or (B) one
hundred twenty (120) days after the date of such damage or
destruction, (ii) the net insurance proceeds received by Grantor
are less than or equal to $400,00.00, (iii) the damage or
destruction can be repaired and restored at a cost not exceeding
the sum of the net insurance proceeds received by Grantee plus any
additional funds of Grantor deposited with Grantee for such
purpose, (iv) the ownership and control of the Premises remains in
the Grantor named on the first page hereof or any assignee
permitted under Section 1.17 hereof, and (v) no Event of Default
and no event or condition which with notice or lapse of time or
both would constitute an Event of Default shall have occurred or
exist and be continuing. In the event that any portion of such
proceeds shall be used to reduce the Indebtedness, the same shall
be applied (a) first to the payment of delinquency or late
charges, if any, (b) then to accrued and unpaid interest then due
and owing, (c) then to advances made pursuant to this Security
Deed, and (d) finally to the then unpaid installments of principal
outstanding under the Note; provided, however, that the provisions
of the Note shall govern the application of such proceeds in the
event of any conflict between this provision and the provisions of
the Note. In the event that such proceeds are to be used for the
restoration of the Premises as provided above, then such use of
the proceeds shall be governed as hereinafter provided:
(1) In the event of damage or destruction to the Premises,
Grantor shall give prompt written notice thereof to Grantee and
shall promptly commence and diligently continue to perform repair,
restoration and rebuilding of the Premises so damaged or destroyed
(hereinafter referred to as the "work") to restore the Premises in
full compliance with all legal requirements and so that the
Premises shall be at least equal in value and general utility as
they were prior to the damage or destruction, and if the work to
be done is structural or if the cost of the work as estimated by
Grantee shall exceed TWO HUNDRED THOUSAND DOLLARS ($200,000.00)
(hereinafter referred to as "Major Work"), then Grantor shall,
prior to the commencement of the work, furnish to Grantee: (A)
complete plans and specifications for the work (approved by all
governmental authorities whose approval is required and then
obtainable), for Grantee's approval, which approval shall not be
unreasonably withheld; said plans and specifications shall bear
the signed approval thereof by an architect selected by Grantor
and reasonably satisfactory to Grantee (hereinafter referred to as
the "Architect") and shall be accompanied by the Architect's
signed estimate, bearing the Architect's seal, or other evidence
(such as contractor bids or a signed construction contract)
reasonably acceptable to Grantee of the entire cost of completing
the work; (B) certified or photostatic copies of all permits and
approvals required by law in connection with the commencement
and conduct of the work; and (C) a surety bond for, guaranty
of, or other evidence reasonably satisfactory to Grantee insuring
the payment for and completion of, the work, which bond or
guaranty shall be in form satisfactory to Grantee and shall be
signed by a surety or sureties, or guarantor or guarantors, as the
case may be, who are acceptable to Grantee, and in an amount not
less than the Architect's estimate of the entire cost of
completing the work, less the amount of insurance proceeds, if
any, then held by Grantee for application toward the cost of the
work.
(2) Grantor shall not commence any of the work until Grantor
shall have complied with the applicable requirements referred to
in subsection 1.04(b)(1) above, if any, and after commencing the
work Grantor shall perform the work diligently and in good faith
in accordance with the plans and specifications referred to in
subsection 1.04(b)(1)(A) above, if applicable.
(3) All insurance proceeds recovered by Grantee on account
of damage or destruction to the Premises less the out of pocket
cost, if any, to Grantee of such recovery and of paying out such
proceeds (including reasonable attorneys' fees and costs allocable
to inspecting the work and the plans and specifications therefor),
shall, upon the written request of Grantor, be applied by Grantee
to the payment of the cost of the work referred to in subsection
1.04(b)(1) above and shall be paid out from time to time to
Grantor and/or, at Grantee's option exercised from time to time
during the existence of an uncured Event of Default, directly to
the contractor, subcontractors, materialmen, laborers, engineers,
architects and other persons rendering services or materials for
the work, as said work progresses except as otherwise hereinafter
provided, but subject to the following conditions, any of which
Grantee may waive:
(A) If the work to be done is structural or if it is
Major Work, as determined by Grantee, the Architect shall
supervise the work;
(B) Each request for payment shall be made on seven
(7) days' prior written notice to Grantee and shall be accompanied
by a certificate of the Architect if one is required pursuant to
subsection 1.04(b)(1) above, otherwise by an executive or fiscal
officer of the Grantor (if Grantor is a corporation) or by a
general partner of Grantor (if Grantor is a partnership), stating
(i) that all of the work completed has been done in compliance
with the approved plans and specifications, if any are required
pursuant to said subsection 1.04(b)(1), and in accordance with all
provisions of law; (ii) that the sum requested is justly due to
the contractor, subcontractors, materialmen, laborers, engineers,
architects or other persons rendering services or materials for the
work (giving a brief description of such services and materials), and
that when added to all sums, if any, previously paid out by Grantee,
the sum requested does not exceed the value of the work done to the date
of such certificate; and (iii) that the amount of such proceeds
remaining in the hands of Grantee will be sufficient on completion
of the work to pay for the same in full (giving in such reasonable
detail as Grantee may require an estimate of the cost of such
completion);
(C) Each request shall be accompanied by waivers of
liens satisfactory to Grantee covering that part of the work
previously paid for, if any (and upon completion of the work and
payment in full therefor, an affidavit from the general contractor
sufficient to dissolve any statutory liens), and by a search
prepared by a title company or licensed abstractor or by other
evidence satisfactory to Grantee, showing that there has not been
filed with respect to the Premises any mechanic's lien or claim
thereof, or other lien, claim thereof or instrument for the
retention of title in respect of any part of the work not
discharged of record and that there exist no encumbrances on or
affecting the Premises other than encumbrances, if any, which are
set forth in the title policy issued to Grantee insuring the lien
of this Security Deed;
(D) Leases under which tenants are occupying in the
aggregate more than twenty percent (20%) of the space in the
Premises immediately prior to the damage or destruction shall not
have been canceled and not replaced or not covered by rental
interruption insurance as required by this Security Deed;
(E) No Event of Default and no event or condition
which with notice or lapse of time or both would constitute an
Event of Default shall have occurred or exist and be continuing
under this Security Deed or under any other Loan Document;
(F) The request for any payment after the work has
been completed shall be accompanied by a copy of any certificate
or certificates which may be temporarily required by law to render
occupancy of the Premises legal; and
(G) Under no circumstance shall damage or destruction
of the Premises or restoration or repair thereof be deemed to
extend the stated maturity of the Note or relieve Grantor of its
obligations to make monthly or other periodic payments of interest
and/or principal specified in the Note.
(4) Upon completion of the work and payment in full
therefor, or upon failure on the part of Grantor promptly to
commence or diligently to continue the work (after written notice
from Grantee and the expiration of any applicable cure period), or
at any time upon request by Grantor, Grantee may apply the amount
of any such proceeds then or thereafter in the hands of Grantee to
the payment of the Indebtedness; provided, however, that nothing
herein contained shall prevent Grantee from applying at any time
the whole or any part of such proceeds to the curing of any Event
of Default under this Security Deed or the Note.
(5) In the event the work to be done is not Major Work, then
the net insurance proceeds held by Grantee for application thereto
shall be paid to Grantor by Grantee upon completion of the work
or, if the work takes longer than thirty (30) days to complete
while diligently prosecuting the same, in installments not more
frequently than once each month, in each case subject to the
provisions of the foregoing subsections 1.04(b)(1), (2) and (3),
except those provisions which are applicable only if the work to
be done is structural or it is Major Work as determined by
Grantee.
(6) If, within sixty (60) days after the occurrence of any
damage or destruction to the Premises requiring structural work or
Major Work in order to restore the Premises, subject to "Force
Majeure," in which case such sixty (60) day period shall be
extended for the lesser of the number of days delayed as a result
of such Force Majeure event or until one hundred twenty (120) days
after the occurrence of such damage or destruction (for purposes
of this subsection 1.04(b)(6) "Force Majeure" shall mean cause or
causes beyond Grantor's control, including, but not limited to,
riots, war, or acts of God), Grantor shall not have submitted to
Grantee and received Grantee's approval of plans and
specifications for the repair, restoration and rebuilding of the
Premises so damaged or destroyed (approved by the Architect and by
all governmental authorities whose approval is required), or if,
after such plans and specifications are approved by the Architect,
all such governmental authorities and Grantee, Grantor shall fail
to commence promptly such repair, restoration and rebuilding, or
if thereafter Grantor fails diligently to continue such repair,
restoration and rebuilding or is delinquent in the payment to
mechanics, materialmen or others of the costs incurred in
connection with such work, or, in the case of any damage or
destruction requiring neither structural work nor Major Work, as
determined by Grantee in order to restore the Premises, if Grantor
shall fail to repair, restore and rebuild promptly the Premises so
damaged or destroyed, then, in addition to all other rights herein
set forth, and after giving Grantor ten (10) days' written notice
of the nonfulfillment of one or more of the foregoing conditions,
Grantee, or any lawfully appointed receiver of the Premises,
may at their respective options, perform or cause to be
performed such repair, restoration and rebuilding, and except for
Grantee's or its receiver's gross negligence or willful
misconduct, may take such other steps as they deem advisable to
perform such repair, restoration and rebuilding, and Grantor
hereby waives, for Grantor and all others holding under Grantor,
any claim against Grantee and such receiver arising out of
anything done by Grantee or such receiver, for all amounts
expended or incurred by them, respectively, in connection with the
performance of such work, and any excess out of pocket costs shall
be secured by this Security Deed and shall be paid by Grantor to
Grantee within ten (10) days after written demand.
(c) All hazard, casualty, business interruption or rental
and flood insurance policies required pursuant to this Section
1.04 shall be endorsed to name Grantee as a mortgagee thereunder,
with loss payable to Grantee, without contribution, under a
standard New York (or local equivalent) mortgagee clause. All
liability coverage shall name Grantee only as additional insured.
All such insurance policies and endorsements shall be fully paid
for and contain such provisions and expiration dates and be in
such form and issued by such insurance companies licensed to do
business in the State of Georgia, with a rating of or better as
established by Best's Rating Guide or an equivalent rating with
such other publication of a similar nature as shall be in current
use, as shall be approved by Grantee. Without limiting the
foregoing, each policy shall provide that such policy may not be
canceled or materially changed except upon thirty (30) days' prior
written notice of intention of nonrenewal, cancellation or
material change to Grantee [ten (10) days in event of cancellation
or nonrenewal resulting solely from nonpayment of premium] and
that no act or thing done by Grantor shall invalidate the policy
as against Grantee. In the event Grantor fails to maintain
insurance in compliance with this Section 1.04, Grantee may, but
shall not be obligated to, obtain such insurance and pay the
premium therefor and Grantor shall, within ten (10) days of
written demand, reimburse Grantee for all sums, advances and
expenses incurred in connection therewith. All such sums, advances
and expenses incurred by Grantee shall be secured by this Security
Deed. Grantor shall deliver copies of all original policies,
certified by the insurance company or authorized agent as being
true copies or other evidence of insurance reasonably acceptable
to Grantee, to Grantee together with the endorsements thereto
required hereunder. Notwithstanding anything to the contrary
contained herein or in any provision of applicable law of the
State of Georgia, the proceeds of insurance policies coming into
the possession of Grantee shall not be deemed trust funds, may be
held by it without interest and may be commingled by Grantee with
its general funds; Grantee shall be entitled to dispose of such
proceeds as herein provided; and Grantee shall not be obligated to
see to the proper application of any such proceeds paid over to
Grantor.
(d) Grantee is hereby authorized and empowered, at its
option, to adjust or compromise any loss under any insurance
policies maintained pursuant to this Section 1.04, and to collect
and receive the proceeds from any such policy or policies;
provided, however, so long as there is no Default or Event of
Default hereunder and so long as no event has occurred which with
the passage of time or notice or both would constitute a Default
or Event of Default hereunder, Grantor shall be entitled to adjust
or compromise any loss under any hazard insurance policy
maintained pursuant to this Section 1.04, and Grantee shall have
the right to participate, at its option, in any such adjustment or
compromise. Each insurance company if hereby authorized and
directed to make payment for all such losses directly to Grantee,
instead of to Grantor and Grantee, jointly. In the event any
insurance company fails to disburse directly and solely to Grantee
but disburses instead either solely to Grantor or to Grantor and
Grantee, jointly, Grantor shall promptly endorse and transfer such
proceeds to Grantee. Upon Grantor's failure to do so, Grantee may
execute such endorsements or transfers for and in the name of
Grantor and Grantor hereby irrevocably appoints Grantee as
Grantor's agent and attorney-in-fact so to do; provided, however,
that no actions taken by Grantee as such attorney-in-fact shall
increase Grantor's liability under Section 3.13 hereof. Grantee
shall not be held responsible for any failure to collect any
insurance proceeds due under the terms of any policy regardless of
the cause of such failure.
(e) At least thirty (30) days prior to the expiration date
of each policy maintained pursuant to this Section 1.04, a renewal
or replacement thereof (or other evidence of insurance)
satisfactory to Grantee shall be delivered to Grantee. Grantor
shall deliver to Grantee receipts evidencing the payment for all
such insurance policies and renewals and replacements. The
delivery of any insurance policies or other evidence of insurance
satisfactory to Grantee hereunder shall constitute an assignment
of all unearned premiums as further security hereunder. In the
event of the foreclosure of this Security Deed or any other
transfer of title to the Premises in full or partial
extinguishment of the Indebtedness, all right, title and interest
of Grantor in and to all insurance policies then in force shall
pass to the purchaser or grantee.
(f) Notwithstanding anything to the contrary contained in
this Security Deed, including, without limitation, this Section
1.04 and Section 1.08 hereof, in the event of any damage or
destruction to the Premises or in the event of any condemnation or
taking of all or any part of or any interest in the Premises, and
in the event Grantee allows Grantor to use the proceeds thereof
for repairs or rebuilding, then Grantor shall, within sixty (60)
days after such damage, destruction or condemnation, deposit with
Grantee in cash an amount which, when added to such proceeds, will
be sufficient to cover all costs reasonably anticipated to be
incurred in the repair, restoration and rebuilding of the Premises
so damaged, destroyed or condemned, or,
with Grantee's prior consent, provide other evidence that such
funds will be available which evidence shall be satisfactory to
Grantee in its sole discretion. In the event Grantor fails to pay
such amount to Grantee in accordance with the preceding sentence
or if there shall occur any material uninsured damage to or loss,
theft or destruction to the Secured Property or to any other
collateral furnished to Grantee as security for the Loan, then, in
either case, Grantee may declare the entire unpaid Indebtedness
secured hereby, but without prepayment premium or penalty, to be
immediately due and payable and Grantor shall pay to Grantee in
full and upon demand the Indebtedness secured hereby, and upon
Grantor's failure so to pay the Indebtedness secured hereby in
accordance with this subparagraph 1.04(f), Grantee shall and may
exercise any and all of its rights and remedies provided under
Article II in case of the occurrence of an Event of Default.
Section 1.05. Maintenance of Existence. Grantor shall, so
long as it is the owner of the Secured Property, do all things
necessary to preserve and keep in full force and effect its
existence, franchises, rights and privileges under the laws of the
State of Georgia and comply with all regulations, rules,
ordinances, statutes, orders and decrees of any governmental
authority or court applicable to Grantor or to the Secured
Property or any part thereof.
Section 1.06. Taxes and Other Charges.
(a) Grantor shall pay and discharge when due all taxes of
every kind and nature, water rates, sewer rents and assessments,
levies, permits, inspection and license fees and all other charges
imposed upon or assessed against the Secured Property or any part
thereof or upon the revenues, rents, issues, income and profits of
the Premises or arising in respect of the occupancy, uses or
possession thereof and, unless Grantor is making monthly deposits
with Grantee in accordance with Section 1.14 hereof, Grantor shall
exhibit to Grantee within ten (10) days after the same shall have
become due, validated receipts showing the payment of such taxes,
assessments, water rates, sewer rents, levies, fees and other
charges which may be or become a prior lien on the Secured
Property. Should Grantor default in the payment of any of the
foregoing taxes, assessments, water rates, sewer rents, or other
charges, Grantee may, but shall not be obligated to, pay the same
or any part thereof, and amounts so paid shall be secured by this
Security Deed, and Grantor shall, within ten (10) days after
written demand, reimburse Grantee for all amounts so paid.
(b) Nothing in this Section 1.06 shall require the payment
or discharge of any obligation imposed upon Grantor by
subparagraph (a) of this Section 1.06 so long as Grantor shall in
good faith and at its own expense contest the same or the validity
thereof by appropriate legal proceedings, which proceedings must
operate to prevent the collection thereof or other realization
thereon and the sale or forfeiture of the Secured Property or any
part thereof to satisfy the same; provided that during such
contest the Grantor shall have either (i) deposited with such
taxing authority sums sufficient, as determined in Grantee's
reasonable discretion after deducting from such amounts all sums
held by Grantee in escrow on account thereof pursuant to Section
1.14 of this Deed, to assure the discharge of Grantor's
obligations under Section 1.06(a), or (ii) purchased a bond in
favor of Grantee which adequately secures, as determined in
Grantee's reasonable discretion after deducting from such amounts
all sums held by Grantee in escrow on account thereof pursuant to
Section 1.14 of this Deed, the discharge of Grantor's obligations
under Section 1.06(a); and provided, further, that if at any time
payment of any obligation imposed upon Grantor by subsection (a)
of this Section 1.06 shall become necessary to prevent a lien
foreclosure sale of the Secured Property or any portion thereof
because of nonpayment, then Grantor shall pay the same in
sufficient time to prevent the foreclosure sale.
Section 1.07. Mechanics' and Other Liens. Grantor shall pay,
or otherwise satisfy or bond in a manner reasonably approved in
writing by Grantee, from time to time when the same shall become
due, all lawful claims and demands of mechanics, materialmen,
laborers, brokers, and others which, if unpaid, might result in,
or permit the creation of, a lien or claim of lien on the Secured
Property or any part thereof, or on the revenues, rents, issues,
income or profits arising therefrom and, in general, Grantor shall
do, or cause to be done, at the cost of Grantor and without
expense to Grantee, everything necessary to fully preserve the
lien of this Security Deed. In the event Grantor fails to make
payment of such claims and demands (after written notice and the
expiration of any applicable cure period), Grantee may, but shall
not be obligated to, make payment thereof, all sums so expended
shall be secured by this Security Deed, and Grantor shall, within
ten (10) days after written demand, reimburse Grantee for all sums
so expended.
Section 1.08. Condemnation Awards.
(a) Grantor, promptly upon obtaining written or actual
knowledge of the institution of any proceedings for the
condemnation of the Premises or any portion thereof, will notify
Grantee of the pendency of such proceedings. Grantee may
participate in any such proceedings and Grantor from time to time
will deliver to Grantee all instruments requested by it to permit
such participation. All awards and compensation for condemnation
or other taking or purchase in lieu thereof, of the Premises or
any part thereof, are hereby assigned to and shall be paid to
Grantee. Grantor hereby authorizes Grantee to collect and receive
such awards and compensation, to give proper receipts and
acquittances therefor, and, in Grantee's sole discretion, to apply
the same toward the payment of the Indebtedness, but without
prepayment premium or penalty, notwithstanding the fact that the
Indebtedness may not then be due and payable, or to the
restoration of the Premises. In the event that any portion of the
<PAGE>
condemnation awards or compensation shall be used to reduce the
Indebtedness, the same shall be applied (i) first to the payment
of delinquency or late charges, if any, (ii) then to accrued and
unpaid interest then due and owing, (iii) then to advances made
pursuant to this Security Deed, and (iv) finally to the principal
outstanding under the Note; provided, however, that the provisions
of the Note shall govern the application of such proceeds in the
event of any conflict between this provision and the provisions of
the Note. Grantor, upon request by Grantee, shall make, execute
and deliver any and all instruments requested for the purpose of
confirming the assignment of the aforesaid awards and compensation
to Grantee free and clear of any liens, charges or encumbrances of
any kind or nature whatsoever. Grantee shall be entitled to the
payment by Grantor of interest at the applicable rate provided for
herein or in the Note on the outstanding principal balance of the
Note unless and until such awards and compensation have been
received by Grantee and applied by Grantee to reduce such balance,
and Grantee shall not be limited to the interest paid on any such
award or compensation by the party seeking the condemnation.
(b) If any condemnation, eminent domain or other taking
proceeding shall have been commenced against all or any material
portion of the Premises (for purposes of this subsection 1.08(b),
a "material" portion of the Premises shall be a taking of (i) more
than ten percent (10%) of the land constituting the Premises, (ii)
more than ten percent (10%) of the parking for the buildings on
the Premises unless such parking can be replaced, and, in fact, is
replaced, (iii) any part of the buildings on the Premises, (iv) a
means of access to the Premises unless alternative means of access
exist which in Grantee's judgment are adequate to serve the
Premises, or (v) any part of the Premises which would materially
adversely affect the use or value of the Premises), then Grantee
may declare the entire unpaid Indebtedness secured hereby, but
without prepayment premium or penalty, to be immediately due and
payable and Grantor shall pay to Grantee in full and upon demand
the Indebtedness secured hereby, and upon Grantor's failure so to
pay the Indebtedness secured hereby in accordance with this
subparagraph 1.08(b), Grantee shall and may exercise any and all
of its rights and remedies provided under Article II in case of
the occurrence of an Event of Default.
Section 1.09. Security Deed Authorized. Grantor hereby
warrants and represents that: the execution and delivery of this
Security Deed, the Note and the other Loan Documents have been
duly authorized and that there is no provision in its articles or
certificate of incorporation or by-laws (if Grantor is a
corporation) or its partnership agreement (if Grantor is a
partnership), as same may have been amended, requiring further
consent for such action by any other entity or person; it is duly
organized, validly existing and in good standing under the laws of
the State of Illinois and is qualified to transact business in the
State of Georgia and has (a) all necessary licenses,
authorizations, registrations and approvals and (b) full power and
authority to own its properties and carry on its business as
presently conducted; and the execution and delivery by and
performance of its obligations under this Security Deed and the
Note will not result in Grantor being in default under any
provision of its articles or certificate of incorporation or by-
laws (if Grantor is a corporation) or its partnership agreement
(if Grantor is a partnership), as the same may have been amended,
or of any other note, security deed, mortgage, deed of trust or
security, credit or other agreement to which it is a party.
Section 1.10. Costs of Defending and Upholding the Lien. If
any action or proceeding is commenced to which action or
proceeding Grantee is made a party or in which it becomes
necessary to defend or uphold the lien of this Security Deed,
Grantor shall, within ten (10) days after written demand,
reimburse Grantee for all out of pocket expenses (including,
without limitation, reasonable attorneys' fees and appellate
attorneys' fees) incurred by Grantee in any such action or
proceeding and all such expenses shall be secured by this Security
Deed. In any action or proceeding to foreclose this Security Deed
or to recover or collect the Indebtedness, the provisions of law
relating to the recovering of costs, disbursements and allowances
shall prevail unaffected by this covenant.
Section 1.11. Additional Advances and Disbursements. Grantor
shall pay when due all payments and charges on all security deeds,
mortgages, deeds of trust, deeds to secure debt, security
agreements, liens, encumbrances, ground and other leases, and
security interests which may be or become superior or inferior to
the lien of this Security Deed, and in default thereof (after the
expiration of any applicable notice and cure period), Grantee
shall have the right, but shall not be obligated, to pay, without
notice to Grantor, such payments and charges and Grantor shall,
within ten (10) days after written demand, reimburse Grantee for
amounts so paid. In addition, upon default (after the expiration
of any applicable notice and cure period) of Grantor in the
performance of any other terms, covenants, conditions or
obligations by it to be performed under any such prior or
subordinate lien, encumbrance, lease or security interest, Grantee
shall have the right, but shall not be obligated, to cure such
default in the name and on behalf of Grantor. All sums advanced
and reasonable out of pocket expenses incurred at any time by
Grantee pursuant to this Section 1.11 or as otherwise provided
under the terms and provisions of this Security Deed or under
applicable law shall bear interest from the date that such sum is
advanced or expense incurred, to and including the date of
reimbursement, computed at the Default Rate (as such term is
defined in the Note), or, if such advance is in an amount less
than Three Thousand Dollars ($3,000), the lesser of such Default
Rate or sixteen percent (16%) per annum, and all such sums,
together with interest thereon, shall be secured by this Security
Deed.
Section 1.12. Costs of Enforcement. Grantor agrees to bear
and pay all expenses (including reasonable attorneys' fees and
appellate attorneys' fees) of or incidental to the perfection and
enforcement of any provision hereof, or the enforcement,
compromise or settlement of this Security Deed or the
Indebtedness, and for the curing thereof, or for defending or
asserting the rights and claims of Grantee in respect thereof, by
litigation or otherwise. All rights and remedies of Grantee shall
be cumulative and may be exercised singularly or concurrently.
Notwithstanding anything herein contained to the contrary,
Grantor: (a) will not (i) at any time insist upon, or plead, or in
any manner whatever claim or take any benefit or advantage of any
stay or extension or moratorium law, any exemption from execution
or sale of the Secured Property or any part thereof, wherever
enacted, now or at any time hereafter in force, which may affect
the covenants and terms of performance of this Security Deed, nor
(ii) claim, take or insist upon any benefit or advantage of any
law now or hereafter in force providing for the valuation or
appraisal of the Secured Property, or any part thereof, prior to
any sale or sales thereof which may be made pursuant to any
provision herein, or pursuant to the decree, judgment or order of
any court of competent jurisdiction, nor (iii) after any such sale
or sales, claim or exercise any right under any statute heretofore
or hereafter enacted to redeem the property so sold or any part
thereof; (b) hereby expressly waives all benefit or advantage of
any such law or laws; and (c) covenants not to hinder, delay or
impede the execution of any power herein granted or delegated to
Grantee, but to suffer and permit the execution of every power as
though no such law or laws had been made or enacted; and (d)
hereby expressly waives any and all benefits Grantor may have
under O.C.G.A. Section 44-14-85 to claim or assert that the
Indebtedness has been reinstated in accordance with its terms
following the withdrawal of any foreclosure proceedings by
Grantee, and acknowledges and agrees that reinstatement shall
occur only upon written agreement of Grantee. Grantor, for itself
and all who may claim under it, waives, to the extent that it
lawfully may, all right to have the Secured Property marshalled
upon any foreclosure hereof.
Section 1.13. Security Deed Taxes. Grantor shall pay any and
all taxes, charges, filing, registration and recording fees,
excises and levies imposed upon Grantee by reason of its ownership
of the Note, this Security Deed, any assignment of rents and
leases securing the Note, or by reason of the recording or filing
thereof, or any security instrument supplemental hereto, any
security instrument or Uniform Commercial Code financing statement
with respect to any fixtures or personal property owned by Grantor
at the Premises and any instrument of further assurance (other
than income, franchise and doing business taxes), and shall pay
all stamp or intangible taxes and other taxes required to be paid
on the Note. In the event Grantor fails to make such payment
within ten (10) days after written notice thereof from Grantee,
then Grantee shall have the right, but shall not be obligated, to
pay the amount due, and Grantor shall, within ten (10) days of
<PAGE>
demand, reimburse Grantee for said amount, and until so paid said
amount shall become part of the Indebtedness secured hereby. The
provisions of this Section shall survive the repayment of the
Indebtedness.
Section 1.14. Escrow Deposits. Grantor shall deposit with
Grantee, monthly, one-twelfth (1/12th) of the annual charges for
real estate taxes, assessments, and other similar charges which
might become a lien upon the Secured Property, and, at Grantee's
option after the occurrence of an Event of Default, one-twelfth
(1/12th) of the annual charges for insurance premiums, water and
sewer charges and other charges that may become a lien upon the
Secured Property. In addition, if required by Grantee, Grantor
shall simultaneously therewith deposit with Grantee a sum of money
which together with the monthly installments aforementioned will
be sufficient to make each of the payments aforementioned at least
thirty (30) days prior to the date such payments are due. Should
said charges not be ascertainable at the time any deposit is
required to be made with Grantee, the deposit shall be made on the
basis of the charges estimated by Grantee, in its sole discretion,
and when the charges are fixed for the then current year, Grantor
shall deposit any deficiency with Grantee. All funds so deposited
with Grantee shall be held by it without interest, may be
commingled by Grantee with its general funds and, provided that no
Event of Default shall have occurred and be continuing, shall be
applied in payment of the charges aforementioned when and as
payable, to the extent Grantee shall have such funds on hand. Any
funds so deposited with Grantee and held by Grantee after payment
in full of the Indebtedness and satisfaction of all of Grantor's
other obligations under this Deed shall be returned to Grantor.
Should an Event of Default occur and be continuing, the funds
deposited with Grantee, as aforementioned, may be applied in
payment of the charges for which such funds shall have been
deposited or to the payment of the Indebtedness or any other
charges affecting the security of Grantee, as Grantee sees fit,
but no such application shall be deemed to have been made by
operation of law or otherwise until actually made by Grantee as
herein provided. If deposits are being made with Grantee, Grantor
shall furnish Grantee with bills for the charges for which such
deposits are required to be made hereunder and/or such other
documents necessary for the payment of same, at least fifteen (15)
days prior to the date on which the charges first become payable.
In the event Grantor fails to pay any such amount, Grantee may,
but shall not be obligated to, make payment thereof, and Grantor
shall, within ten (10) days after written demand, reimburse
Grantee for all sums so expended, and until Grantee has been so
reimbursed, such amount shall be added to the Indebtedness secured
hereby.
Section 1.15. Late Charges.
(a) Late Charges. In the event Grantor fails to pay any
installment of principal or interest required to be paid by the
terms of the Note, which failure has continued for a period of
<PAGE>
five (5) days after its due date, Grantee may, at its option,
impose a "Late Charge" equal to five percent (5%) of the amount of
each and every such past due installment notwithstanding the date
on which such payment is actually paid to Grantee. Any Late Charge
imposed by Grantee in accordance with this Section 1.15 shall be
due and payable within ten (10) days after written demand.
(b) Liquidated Damages; Not Interest. Grantor agrees that
any such Late Charge shall not be deemed to be additional interest
or a penalty, but shall be deemed to be liquidated damages because
of the difficulty in computing the actual amount of damages in
advance. If any such Late Charge is in excess of the amount
permitted to be charged to Grantor under applicable law, Grantee
shall be entitled to collect the Late Charge at the highest rate
permitted by such law.
(c) Secured. Until any and all Late Charges are paid in
full, the amount thereof shall be added to the Indebtedness
secured hereby.
Section 1.16. Financial Statements.
(a) Within one hundred and twenty (120) days after the end
of each calendar year and forty five (45) days after the end of
each calendar quarter, Grantor shall furnish to Grantee a balance
sheet, statement of profit and loss and an annual report (or
quarterly report, if applicable) of Grantor prepared on a review
basis in accordance with generally accepted accounting principles
consistently applied and certified by a general partner in
Grantor. For purposes of satisfying the requirements of this
paragraph, Grantor may deliver its lOQ and lOR reports filed with
the Securities and Exchange Commission with respect to the periods
in question.
(b) [INTENTIONALLY OMITTED].
(c) In addition, on or before the thirtieth (30th) day of
each January, April, July and October, during the term hereof,
Grantor shall furnish to Grantee a written statement prepared on a
modified cash basis of receipts and disbursements of the Premises
for the three calendar months immediately preceding the month in
which such statement is due in reasonable detail and stating in
comparative form the figures as of the end of the calendar quarter
and calendar year-to-date and Grantor's current budget for said
period prepared in accordance with generally accepted accounting
principles consistently applied. Concurrently with the delivery of
the statements described in this subsection 1.16(c), Grantor shall
furnish to Grantee a written statement containing the names of all
tenants of the Premises, the terms of their respective tenancies,
the spaces occupied and the rentals paid therefor. Each such
written statement shall be prepared on a review basis in
accordance with generally accepted accounting principles
consistently applied and certified by a general partner in
Grantor.
(d) In addition, at any other time within twenty (20)days
after request therefor (10 days if request is made after the 10th
of the month) by Grantee (but not more often than once in each
calendar month), Grantor shall furnish to Grantee a written
statement of receipts and disbursements of the Premises for the
calendar month immediately preceding the month in which the
request is made in reasonable detail and stating in comparative
form the figures as of the end of the calendar month and calendar
year-to-date and Grantor's current budget for said period prepared
in accordance with generally accepted accounting principles
consistently applied. Concurrently with the delivery of the
statements described in this subsection 1.16(d), Grantor shall
furnish to Grantee a written statement containing the names of all
tenants of the Premises, the terms of their respective tenancies,
the spaces occupied and the rentals paid therefor. Each such
written statement shall be certified by a general partner in
Grantor.
(e) [INTENTIONALLY OMITTED].
(f) At any time upon three (3) days prior written notice
during normal business hours (but not more often than once in any
calendar year unless the costs thereof is paid by Grantee) and at
Grantor's expense (not to exceed $500 per examination if all
records and other materials reasonably required by Grantee to
conduct such examination are kept on or transported to the Secured
Property at no cost to Grantee), Grantor shall permit Grantee to
examine in the city where Grantor's records with regard to the
Secured Property are kept or at the Premises, such records, books
and papers of Grantor which reflect upon its financial condition
and the income and expenses relative to the Premises and the
business conducted thereat.
(g) All financial statements of Grantor and each guarantor,
if any, shall be delivered in duplicate, and, in the case of
Grantor, shall be accompanied by the certificate of a general
partner of Grantor (if Grantor is a partnership) or the principal
financial or accounting officer of Grantor (if Grantor is a
corporation), dated within five (5) days of the delivery of such
statements to Grantee, stating that he knows of no Event of
Default, nor of any event or condition which, after notice or
lapse of time, or both, would constitute an Event of Default,
which has occurred or exists and is continuing, or, if such event,
condition or Event of Default has occurred or exists and is
continuing, specifying the nature and period of existence thereof
and what action Grantor has taken or proposes to take with respect
thereto, and, except as otherwise specified, stating that Grantor
has fulfilled all its obligations under this Security Deed which
are required to be fulfilled on or prior to the date of such
certificate.
1.17. Additional Covenants
(a) Without the prior written consent of Grantee, Grantor
shall not: (i) execute or permit to exist any lease of all or any
portion of the Premises except in accordance with subsection
1.17(c) hereof; (ii) modify or vary, surrender or terminate,
either orally or in writing, any lease affecting the Premises
except in the case of the tenant's default thereunder and then
only in accordance with sound business judgment or except in
accordance with subsection 1.17(c) hereof; (iii) discount any
rents or collect the same for a period of more than one month in
advance, except for security or damage deposits which are handled
by Grantor in accordance with Section 1.19 hereof; (iv) cancel any
lease affecting the Premises except in the case of the tenant's
default thereunder or otherwise in accordance with sound business
judgment; (v) except as expressly permitted hereunder, execute any
conditional bill of sale, chattel mortgage, security agreement or
other security instruments covering any furniture, furnishings,
fixtures and equipment, intended to be incorporated in the
Premises or the appurtenances thereto, or covering articles of
personal property placed in the Premises, or purchase any of such
furniture, furnishings, fixtures and equipment so that ownership
of the same will not vest unconditionally in Grantor, free from
encumbrances on delivery to the Premises; (vi) further assign the
leases and rents affecting the Premises; (vii) further encumber,
alienate, hypothecate, grant a security interest in or grant any
other interest whatsoever in the Secured Property, or any part
thereof; or (viii) enter into any agreement whereby the holder of
any prior or subordinate mortgage, deed of trust, deed to secure
debt or security agreement, waives, extends or modifies any of the
terms of the prior or subordinate security instrument.
(b) Without the prior written consent of Grantee and except
for any leases of space within the Premises for occupancy by a
tenant and made in accordance with the Leasing Plan (as
hereinafter defined in subsection 1.17(c) hereof and except as
maybe otherwise permitted in this subsection (b) or in subsection
1.17 (d) hereof, Grantor shall not, and shall not permit any
person or entity (herein called an "Owning Entity') owning ten
percent (10%) or more of any stock, equity, partnership, ownership
or other beneficial interest in Grantor (if Grantor is a
corporation, partnership, joint venture, trust or other type of
business association or legal entity) to, do any of the following
(herein collectively called a "Disposition"): (i) sell, lease,
exchange, assign, convey, transfer or otherwise dispose of, the
Secured Property or any part thereof or any interest therein,
including, without limitation, the leases, rents or income
thereof, or grant or permit to exist any other mortgage, deed to
secure debt, deed of trust, security agreement or other lien,
security interest, charge or encumbrance against the Secured
Property or any part thereof or any interest therein, including,
without limitation, the leases, rents or income thereof, whether
superior or inferior to this Security Deed or (ii) sell, lease,
exchange, assign, convey, transfer, mortgage, encumber or
otherwise dispose of, whether absolutely or to secure a debt, all
or any portion of such Owning Entity's stock, partnership,
ownership, or other beneficial interest in Grantor (if Grantor is
a corporation, partnership, joint venture, trust or other type of
business association or legal entity). Notwithstanding anything
to the contrary contained herein, transfers by any general partner
in Grantor shall be permitted provided that, immediately following
the occurrence of any such transfer, JMB Realty Corporation, a
Delaware corporation ("JMB"), or JMB Institutional Realty
Corporation, an Illinois Corporation ("Institutional"), or one or
more of the direct or indirect subsidiaries, or affiliates of JMB
or Institutional, or the shareholders of JMB or Institutional,
shall control and shall beneficially own directly or indirectly,
(A) at least 10% of the partnership interests and 51% of the
general partnership interests in Grantor or (B) 49% of the
Premises. Notwithstanding anything to the contrary contained
herein, no transfer of any interest by a limited partner in
Borrower or of any limited partner which is a partner in Borrower
or of any shareholder in a corporation which is a partner in
Borrower shall constitute a Disposition hereunder.
(c) Grantee has advised Grantor in writing of the terms and
conditions under which Grantor may rent or lease space within the
Premises (such approved lease form and the other terms and
conditions are herein called the "Leasing Plan"). Any leases or
other occupancy agreements, expansions, extensions, renewals,
modifications or other actions made or taken by Grantor in
accordance with the Leasing Plan shall be deemed to have been
consented to by Grantee within the meaning of this Section 1.17.
No material deviation from the Leasing Plan shall be made without
Grantee's prior written approval.
(d) Notwithstanding anything contained herein to the
contrary, if at the time of a transfer described in this
subsection 1.17(d) there is no Event of Default nor any event or
condition which, with the giving of notice, the passage of time,or
both, would result in an Event of Default hereunder, then Grantor
shall be entitled to transfer title to the Secured Property to an
entity in which JMB Realty Corporation or JMB Institutional Realty
Corporation or both or any affiliate or subsidiary thereof owns
not less than five percent (5%) of the ownership interests in the
aggregate and which is under control of or under common control
with any such entity or entities or the owners thereof, so long as
Grantor provides Grantee not less than 30 days prior written
notice of each such transfer and
(i) Grantee is reimbursed for all reasonable out of
pocket costs and expenses incurred by Grantee in connection with
such transfer, (including, a transfer fee in the amount of $1,500
to cover the costs of documenting the transfer in its records for
each transfer after the first transfer within any 12-month period
and its reasonable attorney's fees of outside counsel incurred in
connection with such transfer;
(ii) simultaneously with the transfer, the transferee
expressly assumes the payment of the Indebtedness and
performance of the obligations secured hereby (without the release
of Carlyle Real Estate Limited Partnership-XV from liability under
the Indemnity unless Grantee agrees to a substitute Indemnitor);
(iii) simultaneously with the transfer, the transferee
executes and delivers to Grantee assumption agreements,
modification agreements, supplemental security documents and
financing statements (including, without limitation, a
reaffirmation of Carlyle Real Estate Limited Partnership-XV's
liability under the Indemnity), reasonably satisfactory in form
and substance to Grantee;
(iv) simultaneously with the transfer, the transferee
delivers (at its sole cost and expense) to Grantee endorsements
to any existing mortgagee title insurance policies during
Grantee's liens and security interests covering the Secured
Property satisfactory in form and substance to Grantee;
(v) within thirty (30) days after the transfer (or
such additional time as is required because of inability to
obtain recorded documents) the transferee delivers (at its sole
cost and expense) to Grantee copies of all conveyance and other
documents relating to the transfer reasonably satisfactory in form
and substance to grantee; and
(vi) Grantor and/or the transferee deliver (at their
cost and expense) to Grantee such other documents and items and
perform such other obligations as Grantee shall reasonably
request;
provided, however, that such other documents, items and
obligations shall be subject to the exculpatory provisions of the
Note and shall not otherwise modify the Loan Documents.
(e) Until the Indebtedness is paid in full, Grantor shall
employ a property manager reasonably acceptable to Grantee,which
manager (the "Manager") shall be and remain the person or entity
responsible for the day to day management of the Premises and
Grantor shall not terminate Manager except in case of the
Manager's default and then only in accordance with sound business
judgment. Grantor shall have the right during the term hereof,with
the prior written consent of Grantee (which consent shall not be
unreasonably withheld), to replace the Manager with another
Manager of good reputation with equal or greater competence and
experience in the management of properties of comparable type and
size to the Premises. Without the prior written consent of
Grantee, Grantor shall not permit Manager or any replacement
Manager to assign, transfer or delegate its duties and
responsibilities with respect to the Premises. Grantee hereby
approves as Manager Calibre Properties, Inc. or JMB Properties
Company (or any successor to all or substantially all of the
assets and obligations of JMB Properties Company).
(f) In determining whether to grant or withhold its consent
under subsection 1.17(b) hereof (but without implying that
Grantee's consent is required for the transfers permitted without
consent pursuant to the last two sentences of subsection
1.17(b)),Grantee may (but is not obligated to), among other
things, (1) consider the creditworthiness of the party to whom
such Disposition or other transfer will be made and its management
ability with respect to the Secured Property, (2) consider whether
or not the security for repayment of the Indebtedness and the
performance of the obligations secured hereby, or Grantee's
ability to enforce its rights, remedies and recourses with respect
to such security, will be impaired in any way by the proposed
Disposition or other transfer, (3) require as a condition to
granting such consent an increase in the rate of interest payable
under the Note or any other change in terms and provisions of the
Note and other Loan Documents, (4) require that Grantee be
reimbursed for all costs and expenses incurred by Grantee in
investigating the creditworthiness and management ability of the
party to whom such Disposition or other transfer will be made and
in determining whether Grantee's security will be impaired by the
proposed Disposition or other disposition, (5) require the payment
to Grantee of a transfer fee to cover the cost of documenting the
Disposition or other transfer in its records, (6) require the
payment of its reasonable attorneys' fees in connection with such
Disposition or other transfer, (7) require the express assumption
of payment of the Indebtedness and performance of the obligations
secured hereby by the party to whom such Disposition or other
transfer will be made (with or without the release of Grantor or
any guarantor from liability for such Indebtedness, unless Grantee
agrees to a substitute Indemnitor), (8) require the execution of
assumption agreements, modification agreements, supplemental
security documents and financing statements, satisfactory in form
and substance to Grantee, (9) require endorsements (to the extent
available under applicable law) to any existing mortgagee title
insurance policies or construction binders insuring Grantee's
liens and security interests covering the Secured Property, and
(10) require additional security for the payment of the
Indebtedness and performance of the obligations secured hereby.
Section 1.18. Estoppel Certificates. Grantor, within five
(5) days upon request in person or within ten (10) days upon
request by mail, shall furnish to Grantee a written statement,
duly acknowledged, setting forth the amount due under this
Security Deed, the terms of payment and maturity date of the Note,
the date to which interest has been paid, whether any offsets or
defenses exist against the Indebtedness and, if any are alleged to
exist, the nature thereof shall be set forth in detail.
Section 1.19. Security Deposits. All security deposits of
tenants of the Premises shall be treated as trust funds not to be
commingled with any other funds of Grantor. Within ten (10) days
after request by Grantee, Grantor shall furnish satisfactory
evidence of compliance with this Section 1.19 together with a
statement of all security deposits deposited by the tenants and
copies of all leases not theretofore delivered to Grantee,
certified by Grantor; provided, however, that Grantor shall not
have to furnish Grantee with copies of all leases not theretofore
delivered to Grantee if such leases are available for review at
the Property.
Section 1.20. Assignment of Rents. Grantor hereby assigns
to Grantee, as further security for the payment of the
Indebtedness, the rents, issues and profits of the Premises,
together with all leases and other documents evidencing such
rents, issues and profits now or hereafter in effect and any and
all deposits held as security under said leases. Nothing
contained in the foregoing sentence shall be construed to bind
Grantee to the performance of any of the covenants, conditions or
provisions contained in any such lease or other document or
otherwise to impose any obligation on Grantee (including, without
limitation, any liability under the covenant of quiet enjoyment
contained in any lease or in any law of any applicable state in
the event that any tenant shall have been joined as a party
defendant in any action to foreclose this Security Deed and shall
have been barred and foreclosed thereby of all right, title and
interest and equity of redemption in the Premises), except that
Grantee shall be accountable for any money actually received
pursuant to such assignment. Grantor hereby further grants to
Grantee the right (i) to enter upon and take possession of the
Premises for the purpose of collecting the said rents, issues and
profits, (ii) to dispossess by the usual summary proceedings any
tenant defaulting in the payment thereof to Grantee, (iii) to let
the Premises, or any part thereof, and (iv) to apply said rents,
issues and profits, after payment of all necessary charges and
expenses, on account of said Indebtedness. Such assignment and
grant shall continue in effect until the Indebtedness is paid, the
execution of this Security Deed constituting and evidencing the
irrevocable consent of Grantor to the entry upon and taking
possession of the Premises by Grantee pursuant to such grant,
whether foreclosure has been instituted or not and without
applying for a receiver. Grantor shall have a revokable license
to collect and receive such rents, issues and profits. Grantor
agrees to use said rents, issues and profits in payment of
principal and interest becoming due under this Security Deed and
in payment of taxes, assessments, water rates, sewer rents and
carrying charges becoming due against the Premises. Such right of
Grantor to collect and receive such rents, issues and profits
maybe revoked by Grantee without notice upon the occurrence of an
Event of Default. In the event Grantor has executed a separate
assignment of rents and leases, then the provisions of such
separate assignment shall supersede the provisions of this
Section. Grantee agrees that, to the extent it uses the services
of Grantor's property manager with respect to any of its rights
under this Section 1.20, it shall pay the reasonable costs and
expenses of such manager: provided, however, that nothing in this
section shall in any way impair or limit Grantee's ability to
terminate such manager upon the occurrence of an Event of Default.
Section 1.21. Leases and Other Agreements Affecting
Property. Grantor will duly and punctually perform all terms,
covenants, conditions and agreements binding upon it under any
lease or any other agreement which involves or affects the Secured
Property or any part thereof. Grantor will furnish Grantee with
executed copies of all leases hereafter created upon the Secured
Property or any part thereof within ten (10) days of being
executed; provided, however, that Grantor shall not have to
furnish copies of all leases hereafter created if such leases are
available for review at the Secured Property. All present and
future lease forms used by the Grantor with respect to the tenants
of the Premises shall be approved by Grantee in accordance with
subsection 1.17(c) hereof, and no substantive modifications shall
be made thereto without Grantee's consent. The term and rental of
all future leases are to be approved by Grantee in accordance with
subsection 1.17(c) hereof.
Section 1.22. Indemnity. Grantor shall indemnify and hold
Grantee harmless from and against any and all suits, actions,
claims, proceedings (including third party proceedings) damages,
losses, liabilities and expenses (including, without limitation,
reasonable outside attorneys' fees and disbursements) which may be
incurred by or asserted against Grantee as the result of its
having made the loan secured hereby, including, but not limited
to, claims for brokerage commissions or finder's fees for
arranging the loan secured by this Security Deed, claims of
persons claiming mechanics' or similar liens, claims of tenants of
the Premises and claims for recording taxes, filing fees, transfer
taxes and similar claims relating to this Security Deed but
excluding any claims, costs or fees, which result from Grantee's
gross negligence or willful misconduct. The provisions of this
Section shall survive the repayment of the Indebtedness secured
hereby.
Section 1.23. Security Agreement.
(a) Insofar as the machinery, apparatus, equipment,
fittings, fixtures, building supplies and materials, articles of
personal property, contract rights, accounts and general
intangibles either referred to or described in this Security Deed,
or in any way connected with the use and enjoyment of the Secured
Property is concerned, this Security Deed is hereby made and
declared to be a security agreement, encumbering each and every
item of personal property included herein, in compliance with the
provisions of the Uniform Commercial Code as enacted in the State
of Georgia. A financing statement or statements reciting this
Security Deed to be a security agreement, affecting all of said
personal property aforementioned, shall be executed by Grantor and
appropriately filed. The remedies for any violation of the
covenants, terms and conditions of the security agreement herein
contained shall be (i) as prescribed herein, or (ii) as prescribed
by general law, or (iii) as prescribed by the specific statutory
consequences now or hereafter enacted and specified in said
Uniform Commercial Code, all at Grantee's sole election. Grantor
and Grantee agree that the filing of such financing statement(s)
in the records normally having to do with personal property shall
never be construed as in anywise derogating from or impairing this
declaration and hereby stated intention of Grantor and Grantee
that everything owned by Grantor and located at the Premises or
used exclusively in connection with the production of income from
the Secured Property and/or adapted for use therein and/or which
is described or reflected in this Security Deed, is, and at all
times and for all purposes and in all proceedings both legal or
equitable shall be, regarded as part of the real estate
irrespective of whether (a) any such item is physically attached
to the Premises, (b) serial numbers are used for the better
identification of certain items capable of being thus identified
in a recital contained herein, or (c) any such item is referred to
or reflected in any such financing statement(s) so filed at any
time. Similarly, the mention in any such financing statement(s of
the rights in and to (aa) the proceeds of any fire, casualty
and/or hazard insurance policy, or (bb) any award in condemnation
proceedings for a taking or for loss of value, or (cc) Grantor's
interest as lessor in any present or future lease or rights to
income growing out of the use and/or occupancy of the Secured
Property, whether pursuant to lease or otherwise, shall never be
construed as in anywise altering any of the rights of Grantee as
determined by this instrument or impugning the priority of
Grantee's lien granted hereby or by any other recorded document,
but such mention in such financing statement(s) is declared to be
for the protection of Grantee in the event any court shall at any
time hold with respect to the foregoing (aa), (bb) or (cc), that
notice of Grantee's priority of interest to be effective against a
particular class of persons, must be filed in the Uniform
Commercial Code records.
(b) Grantor shall execute and deliver to Grantee, inform
and substance satisfactory to Grantee, such "financing statements"
and such further assurances as Grantee may from time to time
reasonably consider necessary to create, perfect and preserve
Grantee's security interest herein granted, and Grantee may cause
such statements and assurances to be recorded and filed at such
times and places as may be required or permitted by law to so
create, perfect and preserve such security interest.
(c) The assignment and security interest herein granted
shall not be deemed or construed to constitute Grantee as "trustee
in possession" of the Secured Property, to obligate Grantee to
lease the Secured Property or attempt to do same, or to take any
action, incur any expense or perform or discharge any obligation,
duty or liability whatsoever under any of the leases or otherwise.
(d) This Security Deed shall constitute a "fixture filing"
for the purposes of Chapter 9 of the Georgia Uniform Commercial
Code. All or part of the Secured Property is or is to become
fixtures; information concerning the security interest herein
granted may be obtained at the addresses set forth on Page 1
hereof. For purposes of the security interest herein granted, the
address of Debtor (Grantor) and the address of Secured Party
(Grantee) are set forth on Page 1 hereof.
Section 1.24. [INTENTIONALLY OMITTED].
Section 1.25. [INTENTIONALLY OMITTED].
Section 1.26. Environmental Matters. Except as disclosed
in that certain Phase I Environmental Site Assessment and Limited
Radon Survey, dated July 24, 1994, prepared by Law Engineering,
Inc.
(a) Grantor represents and covenants that (i) Grantor has
not caused or suffered to occur and Grantor will not hereafter
cause or suffer to occur, any deposit, storage, disposal, burial,
discharge, spillage, uncontrolled loss, seepage or filtration is
hereinafter called a "spill") of oil, petroleum or chemical
liquids or solids, liquid or gaseous products or any hazardous
waste or hazardous substances (collectively, "Hazardous
Substances"), as those terms are used in the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980 or
in any other federal, state or local law governing Hazardous
Substances, as such laws may be amended from time to time
(collectively, hereinafter called the "Act"), at, upon, under or
within the Premises in violation of any Act; (ii) except as
described in writing to Grantee prior to the date hereof, neither
Grantor nor, to Grantor's knowledge after operations at or near
the Premises which could lead to the imposition on Grantor or any
other owner of the Premises of liability or the creation of a lien
on the Premises, under any Actor under similar applicable laws or
regulations; and (iii) Grantor has not permitted and to the extent
commercially practicable will not permit any tenant or occupant of
the Premises to engage in any activity in violation of any Act
that could lead to the imposition of liability on such tenant or
occupant, Grantor or any other owner of any of the Premises, or
the creation of a lien on the Premises, under any Act or any
similar applicable laws or regulations.
(b) Grantor shall comply strictly and in all respects with
the requirements of any Act and related regulations and with all
similar applicable laws and regulations and shall notify Grantee
promptly in the event Grantor learns of any spill of a Hazardous
Substance upon the Premises in violation of any Act, and shall
promptly forward to Grantee copies of all orders, notices,
permits, applications or other communications and reports received
by Grantor in connection with any such spill or any other matters
relating to any Act or related regulations or any similar
applicable laws or regulations, as they may affect the Premises.
(c) If Grantee at any time reasonably believes that (i)
Hazardous Substances exist on the Premises in violation of any
Act, or (ii) the Premises are not in compliance with any Act,
promptly upon the written request of Grantee, Grantor shall
provide Grantee, at Grantor's expense, with an environmental site
assessment or environmental audit report certified to Grantee and
prepared by an environmental engineering firm acceptable to
Grantee, to assess with a reasonable degree of certainty the
presence or absence of any Hazardous Substances and the potential
costs in connection with abatement, cleanup or removal of any
Hazardous Substances found on, under, at or within the Premises.
(d) Excluding Grantee's gross negligence and wilful
misconduct, Grantor shall, subject to subsection 1.26(f) below,
indemnify and hold harmless Grantee against and from any and all
claims, suits, actions, debts, damages, losses, obligations,
judgments, and all out of pocket cost, charges, and expenses, of
any nature whatsoever suffered or incurred by Grantee, whether as
holder of the Security Deed, as mortgagee in possession, or as
successor-in-interest to Grantor by foreclosure deed or deed in
lieu of foreclosure, under or on account of any Act or any similar
laws or regulations, including the assertion of any lien
thereunder, with respect to:
(i) any discharge of Hazardous Substances in
violation of any Act, the threat of a discharge of any Hazardous
Substances in violation of any Act, or the presence of any
Hazardous Substances affecting the Secured Property in violation
of any Act whether or not the same originates or emanates from the
Secured Property or any contiguous real estate including any loss
of value of the Secured Property as a result of any of the
foregoing;
(ii) any cost of removal or remedial action incurred
by the United States Government or any costs incurred by any other
person or damages from injury to, destruction of, or loss of
natural resources, including reasonable costs of assessing such
injury, destruction or loss incurred pursuant to any Act;
(iii) liability for personal injury or property damage
arising under any statutory or common law tort theory on account
of a violation of any Act, including, without limitation, damages
assessed for the maintenance of a public or private nuisance or
for the carrying on of an abnormally dangerous activity at or near
the Secured Property; and/or
(iv) any other environmental matter affecting the
Secured Property within the jurisdiction of the Environmental
Protection Agency, any other federal agency, or any state or local
environmental agency.
Grantor's obligations under this Security Deed shall arise upon
the discovery of the presence of any Hazardous Substance in
violation of any Act, whether or not the Environmental Protection
Agency, any other federal agency or any state or local
environmental agency has taken or threatened any action in
connection with the presence of any Hazardous Substances.
(e) In the event of any spill of Hazardous Substances in
violation of any Act, the threat of a discharge of any Hazardous
Substances in violation of any Act, or the presence of any
Hazardous Substances affecting the Secured Property in violation
of any Act, whether or not the same originates or emanates from
the Secured Property or any contiguous real estate, and/or if
Grantor shall fail to comply with any of the requirements of any
Act or related regulations or any other environmental law or
regulation affecting the Secured Property or Grantor, Grantee may
at its election, but without the obligation so to do, give such
notices and/or cause such work to be performed at the Secured
Property and/or take any and all other actions as Grantee shall
deem necessary or advisable in order to abate the discharge of any
Hazardous Substance, remove the Hazardous Substance or cure
Grantor~s noncompliance. Prior to giving such notices and/or
causing such work to be performed and/or taking any other actions,
Grantee shall endeavor to give Grantor written or oral (to be
followed with written) notice thereof, but no failure to give any
notice shall in any way affect or impair Grantor's obligations and
liabilities hereunder or subject Grantee to any liability
whatsoever on account thereof or on account of any such work,
notices, or other actions.
(f) (i) Grantor obligations under the indemnity given in
subsection 1.26(d) above shall continue until the earlier of (a)
two years from the date of foreclosure or conveyance in lieu
thereof, or (b) one year from the date of repayment of the Loan,
unless Grantee has notified Grantor before such expiration date of
an event or condition giving rise to a claim by Grantee under
subsection 1.26(d) hereof or that a violation or suspected
violation has been discovered or claimed, in which case Grantor's
obligations under the indemnity given in subsection 1.26(d) above
shall continue as to the events and conditions listed in such
notice for as long a period thereafter as is permitted by law, and
(ii) Grantor shall not be liable for a claim to the extent it
relates to an event or condition occurring after the date Grantee
or Grantee's successors, assigns or affiliates, takes title to the
Secured Property (as distinguished from those occurring prior to
the date Grantee or its successors, assigns or affiliates take
title but are not discovered until after such date). The notice
given by Grantee pursuant to this subsection 1.26(f) to extend the
date of Grantor's liability hereunder shall state the grounds
for the claim under the indemnity or the nature of the violation
or suspected violation of any Acts that has been discovered or
claimed.
ARTICLE II
Default and Remedies
Section 2.01. Events of Default. Any one or more of the
following events or conditions shall constitute Events of Default
under this Security Deed:
(a) failure of Grantor to pay (i) within five (S) days after
the same shall be due and payable, whether by maturity or
otherwise (except for maturity by acceleration), any interest,
principal or other amounts required to be paid on the Note, or
(ii) within ten (10) days after the same shall be due and payable,
any other amounts required to be paid under any of the Loan
Documents; or
(b) failure by Grantor to observe or perform any of the
terms, covenants or conditions contained in this Security Deed
(other than in Paragraph (a) hereof) and Grantor's failure to cure
the same within thirty (30) days after written notice thereof from
Grantee; provided, however, that if the nature of such failure to
observe or perform is such that the same cannot be cured within
such 30 day period, such failure to observe or perform shall not
be deemed an Event of Default if within such 30 day period Grantor
commences to cure the failure to observe or perform and thereafter
diligently prosecutes the cure of such failure to observe or
perform and cures such failure to observe or perform within ninety
(90) days after its receipt of the written notice thereof from
Grantee; and provided further that such grace period set forth in
this subparagraph (b) shall not apply to any other Event of
Default expressly set forth in this Section 2.01 or to any other
covenant or condition with respect to which a limitation as to
time or grace period or right to cure is expressly provided in
this Security Deed or in any other Loan Document; or
(c) if any representation or warranty made by Grantor to
Grantee contained herein or in any of the other Loan Documents or
in any other certificate or document furnished to Grantee in
connection with the Loan or in furtherance of the requirement of
any of the Loan Document shall be incorrect in any material
respect at the time when made and Grantor's failure to change the
facts or circumstances which cause such representation or warranty
to be incorrect within thirty (30) days after written notice
thereof from Grantee; provided, however, that if the nature of
such representation or warranty is such that the same cannot be
made correct within such 30 day period, such incorrect
representation or warranty shall not be deemed an Event of Default
if within such 30 day period Grantor commences to cause such
representation or warranty to become correct and thereafter
diligently prosecutes the correction thereof and corrects the
facts or circumstances which cause such representation or warranty
to be incorrect within ninety (90) days after its receipt of the
written notice thereof from Grantee; and provided further that
such grace period set forth in this subparagraph (c) shall not
apply to any other Event of Default expressly set forth in this
Section 2.01 or to any other covenant or condition with respect to
which a limitation as to time or grace period or right to cure is
expressly provided in this Security Deed or in any other Loan
Document; or
(d) if, as expressly permitted hereunder, Grantor executes
any conditional sale agreement, chattel mortgage, title retention
agreement or other security agreement covering any materials,
fixtures or articles intended to be used in the operation of the
improvements located on the Premises or intended to be
incorporated in such improvements or the appurtenances thereto or
covering articles of personal property placed in such
improvements, or files or permits to be filed a financing
statement or similar document publishing notice of or having the
effect or purpose of perfecting such security agreement, or if any
of such materials, fixtures or articles are not purchased so that
ownership thereof will vest unconditionally in Grantor free from
encumbrances on delivery at the Premises, or if Grantor does not
produce to Grantee upon demand the contracts, bills of sale,
statements, receipted vouchers or agreements, or any of them,
under which Grantor claims title to such materials, fixtures or
articles; or
(e) subject to Section 1.04 hereof, if a lien or claim of
lien (other than an inchoate lien for ad valorem taxes) for the
performance of work or the supply of materials or any other lien,
charge or encumbrance, whether for federal, state or local taxes
or otherwise is filed against Grantor, the Premises or any part
thereof and remains unsatisfied or unbonded (in a manner approved
in writing by Grantee) for a period of thirty (30) days after
Grantor has received notice of the filing of such lien, charge or
encumbrance; or
(f) subject to Grantor's rights to contest the same granted
pursuant to subparagraph (b) of Section 1.06, failure by Grantor
to pay or cause to be paid, before any fine, penalty, interest or
cost may be added thereto, all franchise taxes and charges, and
other governmental charges, general and special, ordinary and
extraordinary, unforeseen as well as foreseen, of any kind and
nature whatsoever, including but not limited to, assessments for
public improvements or benefits which are assessed, levied,
confirmed, imposed or become a lien upon the Secured Property or
any part thereof or become payable during the term of the Loan, or
if Grantor enters into any agreement either oral or written, which
has the effect of deferring the payment of any taxes or other
charges which are or can be assessed, levied, confirmed or imposed
or become a lien upon the Secured Property or become payable
during the term of the Loan; or
(g) failure by Grantor to observe or perform any of the
terms, covenants or conditions contained in the Note, the
Indemnity or any of the other Loan Documents which are not set
listed in this Section 2.01 and Grantor's failure to cure the same
within thirty (30) days after written notice thereof from Grantee;
provided, however, that if the nature of such failure to observe
or perform is such that the same cannot be cured within such 30
day period, such failure to observe or perform shall not be deemed
an Event of Default if within such 30 day period Grantor commences
to cure the failure to observe or perform and thereafter
diligently prosecutes the cure of such failure to observe or
perform and cures such failure to observe or perform within ninety
(90) days after its receipt of the written notice thereof from
Grantee; and provided further that such grace period set forth in
this subparagraph (g) shall not apply to any other Event of
Default expressly set forth in this Section 2.01 or to any other
covenant or condition with respect to which a limitation as to
time or grace period or right to cure is expressly provided in
this Security Deed or in any other Loan Document; or
(h) if a default or an event of default shall occur under
any deed to secure debt, deed of trust or mortgage on the Premises
or any part thereof or any interest therein which is superior or
inferior to this Security Deed; provided, however, that this
provision shall not be deemed to be a consent by Grantee for the
creation or imposition of any such other deed to secure debt, deed
of trust or mortgage; or
(i) if a receiver, liquidator or trustee of Grantor or any
guarantor, or of any substantial portion of its or his respective
properties, shall be appointed, and the same is not withdrawn,
dismissed, cancelled or terminated within ninety (90) days; or
(j) if a petition in bankruptcy or for reorganization or for
protection under any Debtor Relief laws shall have been filed
against Grantor or any guarantor and the same is not withdrawn,
dismissed, cancelled or terminated within ninety (90) days; or
(k) unless permitted in accordance with Section 1.17 hereof,
if any Disposition is made by Grantor of the Secured Property or
any part thereof or any interest therein or if any Disposition or
other transfer is made by an Owning Entity of any of its interest
in Grantor; or
(l) if Grantor makes an assignment for the benefit of
creditors or files or consents to the filing of a petition in
bankruptcy or commences or consents to the commencement of any
proceeding under Title 11 of the United States Code or under any
other federal or state law, now or hereafter in effect, relating
to the reorganization or liquidation of Grantor or the arrangement
or rearrangement or readjustment of the debts of Grantor having
the effect of enjoining or staying the exercise of rights or
remedies by creditors, it being understood that the filing against
Grantor of such a petition by a general partner, officer or
stockholder of Grantor, shall be deemed to be a filing with the
consent of Grantor, as the case may be; or
(m) if there is an attachment or sequestration of or
relating to the Secured Property or of or to any other substantial
portion of any other assets of Grantor and the same is not
discharged within ninety (90) days; or
(n) if Grantor or any of its constituent partners or
shareholders institute or fail to contest any proceeding for the
dissolution or termination of Grantor; or
(o) if Grantor ceases to do business or terminates its
business as presently conducted for any reason whatsoever; or
(p) if Grantor is in default under leases under which
tenants are occupying in the aggregate more than twenty percent
(20~) of the space in the Premises; or
(q) if Grantor shall fail to provide or to maintain
insurance in accordance with the requirements of this Security
Deed, or shall fail to pay the premiums therefor in a timely
manner as required by this Security Deed; or
(r) failure of Grantor to complete the Deferred Maintenance
Work required by Section 14.3 of the Note to Grantee's reasonable
satisfaction on or before July 1, 1995.
Section 2.02. Remedies.
(a) Upon the occurrence of any Event of Default, Grantor
acknowledges and agrees that Grantee may take such action, without
notice or demand, as it deems advisable to protect and enforce its
rights against Grantor and in and to the Secured Property,
including, but not limited to, the following actions, each of
which may be pursued concurrently or otherwise, at such time and
in such order as Grantee may determine, in its sole discretion,
without impairing or otherwise affecting the other rights and
remedies of Grantee: (1) declare the entire unpaid Indebtedness to
be immediately due and payable; or (2) notify all tenants of the
Premises and all others obligated on leases of any part of the
Premises that all rents and other sums owing on leases have been
assigned to Grantee and are to be paid directly to Grantee, and to
enforce payment of all obligations owing on leases, by suit,
ejectment, cancellation, releasing, reletting or otherwise,
whether or not Grantee has taken possession of the Premises, and
to exercise whatever rights and remedies Grantee may have under
any assignment of rents and leases; or (3) enter into or upon the
Premises, either personally or by its agents, nominees or
attorneys and dispossess Grantor and its agents and servants
therefrom, and thereupon Grantee may (i) use, operate, manage,
control, insure, maintain, repair, restore and otherwise deal with
all and every part of the Premises and conduct the business
thereat; (ii) complete any construction on the Premises in such
manner and form as Grantee deems advisable; (iii) make
alterations, additions, renewals, replacements and improvements to
or on the Secured Property; (iv) exercise all rights and power of
Grantor with respect to the Premises, whether in the name of
Grantor, or otherwise, including, without limitation, the right to
make, cancel, enforce or modify leases, obtain and evict tenants,
and demand, sue for, collect and receive all earnings, revenues,
rents, issues, profits and other income of the Premises and every
part thereof, which rights shall not be in limitation of Grantee's
rights under any assignment of rents and leases securing the Loan;
and (v) apply the receipts from the Premises to the payment of the
Indebtedness, after deducting therefrom all out of pocket expenses
(including reasonable attorneys' fees) incurred in connection with
the aforesaid operations and all amounts necessary to pay the
taxes, assessments, insurance and other charges in connection with
the Secured Property, as well as just and reasonable compensation
for the services of Grantee, its counsel, agents and employees; or
(4) institute proceedings for the complete foreclosure of this
Security Deed either at law, in equity or pursuant to Section
2.02(b) herein, in which case the Secured Property may be sold for
cash or upon credit in one or more parcels; or (5) with or without
entry, to the extent permitted and pursuant to the procedures
provided by applicable law, institute proceedings for the partial
foreclosure of this Security Deed for the portion of the
Indebtedness then due and payable (if Grantee shall have elected
not to declare the entire Indebtedness to be immediately due and
owing), subject to the continuing lien of this Security Deed for
the balance of the Indebtedness not then due; or (6) sell for cash
or upon credit the Secured Property or any part thereof and all
estate, claim, demand, right, title and interest of Grantor
therein and rights of redemption thereof, pursuant to power of
sale or otherwise, at one or more sales, a~ an entity or in
parcels, at such time and place, upon such terms and after such
notice thereof as may be required or permitted by law, and in the
event of a sale, by foreclosure or otherwise, of less than all of
the Secured Property, this Security Deed shall continue as a lien
on the remaining portion of the Secured Property; or (7) institute
an action, suit or proceeding in equity for the specific
performance of any covenant, condition or agreement contained
herein or in the Note; or (8) obtain judgment on the Note either
before, during or after any proceedings for the enforcement of
this Security Deed; or (9) obtain from any court of competent
jurisdiction the appointment of a trustee, receiver, liquidator or
conservator of the Secured Property, without regard for the
adequacy of the security for the Indebtedness and without regard
for the solvency of Grantor, any guarantor, or any other person,
firm or other entity liable for the payment of the Indebtedness,
and without regard for any other statutory or common law
requirements otherwise applicable to the appointment of a trustee,
receiver, liquidator or conservator; or (10) pay or perform any
default in the payment, performance or observance of any term,
covenant or condition of this Security Deed, and all payments made
or out of pocket costs or expenses incurred by Grantee in
connection therewith, shall be secured hereby and shall be,
without demand, immediately repaid by Grantor to Grantee with
interest thereon as provided in Section 1.11 hereof, the necessity
for any such actions and of the amounts to be paid to be in the
sole judgment of Grantee, and Grantee may enter and authorize
others to enter upon the Secured Property or any part thereof for
the purpose of performing or observing any such defaulted term,
covenant or condition without thereby becoming liable to Grantor
or any person in possession holding under Grantor; or (11) pursue
such other remedies as Grantee may have under applicable law, in
equity or under the Note, this Security Deed or any of the other
Loan Documents.
(b) If an Event of Default shall have occurred, Grantee, at
its option, may sell the Secured Property or any part of the
Secured Property at public sale or sales before the door of the
courthouse of the county in which the Secured Property or any part
of the Secured Property is situated, to the highest bidder for
cash, in order to pay the Indebtedness secured hereby and accrued
interest thereon and insurance premiums, liens, assessments, taxes
and charges, including utility charges, if any, with accrued
interest thereon, and all expenses of the sale and of all
proceedings in connection therewith, including reasonable
attorneys' fees, if incurred, after advertising the time, place
and terms of sale once a week for four (4) weeks immediately
preceding such sale (but without regard to the number of days) in
a newspaper in which Sheriff's sales are advertised in said
county. At any such public sale, Grantee may execute and deliver
to the purchaser a conveyance of the Secured Property or any part
of the Secured Property in fee simple, with full warranties of
title (or without warranties if Grantee shall so elect) and to
this end, Grantor hereby constitutes and appoints Grantee the
agent and attorney-in-fact of Grantor to make such sale and
conveyance, and thereby to divest Grantor of all right, title,
interest, equity and equity of redemption that Grantor may have in
and to the Secured Property and to vest the same in the purchaser
or purchasers at such sale or sales, and all the acts and doings
of said agent and attorney-in-fact are hereby ratified and
confirmed and any recitals in said conveyance or conveyances as to
facts essential to a valid sale shall be binding upon Grantor;
provided, however, that no actions taken by Grantee as such
attorney-in-fact shall increase Grantor's liability under Section
3.13 hereof. The aforesaid power of sale and agency hereby granted
are coupled with an interest and are irrevocable by death or
otherwise, are granted as cumulative of the other remedies
provided hereby or by law for collection of the Indebtedness
secured hereby and shall not be exhausted by one exercise thereof
but may be exercised until full payment of all Indebtedness
secured hereby. In the event of any such foreclosure sale by
Grantee, Grantor shall be deemed a tenant holding over and shall
forthwith deliver possession to the purchaser or purchasers
at such sale or be summarily dispossessed according to provisions
of law applicable to tenants holding over.
(c) The purchase money proceeds or avails of any sale made
under or by virtue of this Article II, together with any other
sums which then may be held by Grantee under this Security Deed,
whether under the provisions of this Article II or otherwise,
shall be applied as follows:
First: To the payment of the costs and expenses of any
such sale, including reasonable compensation to Grantee, its
agents and outside counsel, and of any judicial proceedings
wherein the same may be made, and of all out of pocket expenses,
liabilities and advances made or incurred by Grantee under this
Security Deed, together with interest as provided herein on all
advances made by Grantee and all taxes or assessments, except any
taxes, assessments or other charges subject to which the Secured
Property shall have been sold.
Second: To the payment of the whole amount then due,
owing or unpaid upon the Note for principal, together with any and
all applicable interest and late charges.
Third: To the payment of any other sums required to be
paid by Grantor pursuant to any provision of this Security Deed or
of the Note or other Loan Documents.
Fourth: To the payment of the surplus, if any after
the payment of all the Indebtedness, to whomsoever may be lawfully
entitled to receive the same. Grantee and any receiver of the
Secured Property, or any part thereof, shall be liable to account
for only those rents, issues and profits actually received by it.
(d) Grantee may adjourn from time to time any sale by it to
be made under or by virtue of this Security Deed by announcement
at the time and place appointed for such sale or for such
adjourned sale or sales; and, except as otherwise provided by any
applicable provision of law, Grantee, without further notice or
publication, may make such sale at the time and place to which the
same shall be so adjourned.
(e) Upon the completion of any sale or sales made by Grantee
under or by virtue of this Article II, Grantee, or an officer of
any court empowered to do so, shall execute and deliver to the
accepted purchaser or purchasers a good and sufficient instrument,
or good and sufficient instruments, conveying, assigning and
transferring all estate, right, title and interest in and to the
property and rights sold. Grantee is hereby irrevocably appointed
the true and lawful attorney of Grantor, in its name and stead, to
make all necessary conveyances, assignments, transfers and
deliveries of the Secured Property and rights so sold and for that
purpose Grantee may execute all necessary instruments of conveyance,
assignment and transfer, and may substitute one or more persons with
like power, Grantor hereby ratifying and confirming all that its said
attorney or such substitute or substitutes shall lawfully do by virtue
hereof; provided, however, that no actions taken by Grantee as such
attorney-in-fact shall increase Grantor's liability under Section
3.13 hereof. Any such sale or sales made under or by virtue of
this Article II, whether made under the power of sale herein
granted or under or by virtue of judicial proceedings or of a
judgment or decree of foreclosure and sale, shall operate to
divest all the estate, right, title, interest, claim and demand
whatsoever, whether at law or in equity, of Grantor in and to the
properties and rights so sold, and shall be a perpetual bar both
at law and in equity against Grantor and against any and all
persons claiming or who may claim the same, or any part thereof
from, through or under Grantor.
(f) In the event of any sale made under or by virtue of this
Article II (whether made under the power of sale herein granted or
under or by virtue of judicial proceedings or of a judgment or
decree of foreclosure and sale) the entire Indebtedness, if not
previously due and payable, immediately thereupon shall, anything
in the Note or in this Security Deed to the contrary
notwithstanding, become due and payable.
(g) Upon any sale made under or by virtue of this Article II
(whether made under the power of sale herein granted or under or
by virtue of judicial proceedings or of a judgment or decree of
foreclosure and sale), Grantee may bid for and acquire the Secured
Property or any part thereof and in lieu of paying cash therefor
may make settlement for the purchase price by crediting upon the
Indebtedness the net sales price after deducting therefrom the out
of pocket expenses of the sale and the costs of the action and any
other sums which Grantee is authorized to deduct under this
Security Deed.
(h) No recovery of any judgment by Grantee and no levy of an
execution under any judgment upon the Secured Property or upon any
other property of Grantor shall affect in any manner or to any
extent, the lien and title of this Security Deed upon the Secured
Property or any part thereof, or any liens, titles, rights, powers
or remedies of Grantee hereunder, but such liens, titles, rights,
powers and remedies of Grantee shall continue unimpaired as
before.
(i) Grantor agrees, to the fullest extent permitted by law,
that upon the occurrence of an Event of Default, neither Grantor
nor anyone claiming through or under it shall or will set up,
claim or seek to take advantage of any appraisement, valuation,
stay, extension, homestead, exemption or redemption laws now or
hereafter in force, in order to prevent or hinder the enforcement
or foreclosure of this Security Deed, or the absolute sale of the
Secured Property, or the final and absolute putting into
possession thereof, immediately after such sale, of the
purchasers thereat, and Grantor, for itself and all who may at any
time claim through or under it, hereby waives to the full extent
that it may lawfully so do, the benefit of all such laws, and any
and all right to have the assets comprised in the security
intended to be created hereby marshalled upon any foreclosure of
the lien or title hereof.
(j) Grantee, at its option, is authorized to foreclose this
Security Deed subject to the rights of any tenants of the
Premises, and the failure to make any such tenants parties to any
such foreclosure proceedings and to foreclose their rights will
not be, nor be asserted to be by Grantor, a defense to any
proceedings instituted by Grantee to collect the sums secured
hereby.
(k) Grantee, at its option, upon application to a court of
competent jurisdiction, shall be entitled as a matter of strict
right without notice and without regard to the occupancy or value
of any security for the Indebtedness secured hereby or the
solvency of any party bound for its payment, to the appointment of
a receiver to take possession of and to operate the Premises and
to collect and apply the rents, issues, profits and revenues
thereof. The receiver shall have all of the rights and powers
permitted under the laws of the State of Georgia. Grantor will pay
to Grantee within ten (10) days after demand all out of pocket
expenses, including receiver's fees, reasonable attorney's fees
actually incurred, costs and agent's compensation, incurred
pursuant to the provisions of this subsection (k); and all such
expenses shall be secured by this Deed as part of the
Indebtedness.
Section 2.03. Payment of Indebtedness After Default.
Upon the occurrence of any Event of Default and the acceleration
of the maturity of the Note, if, at any time prior to foreclosure
sale, Grantor or any other person tenders payment of the amount
necessary to satisfy the Indebtedness, the same shall constitute
an evasion of the payment terms of the Note and shall be deemed to
be a voluntary prepayment thereunder, in which case such payment
must include the premium required under the prepayment provision,
if any, contained herein, in the Note or, if at that time there is
no privilege of prepayment, then the payment will include a
premium of five percent (5%) of the then unpaid Indebtedness. This
provision shall be of no force or effect if at the time that such
tender of payment is made Grantor has the right under this
Security Deed or the Note to prepay the Indebtedness without
penalty or premium.
Section 2.04. Possession of the Premises. Possession of the
Premises during the existence of the Indebtedness by Grantor, or
any person claiming under Grantor, shall be that of a tenant under
Grantee and its successors and assigns. Upon the occurrence of any
Event of Default hereunder, it is agreed that the then owner of
the Premises, if it is the occupant of the Premises or any part
thereof, shall immediately surrender possession of the Premises
so occupied to Grantee, and if such occupant is permitted to remain
in possession, the possession shall be as tenant of Grantee and, on
demand, such occupant (a) shall pay to Grantee monthly, in advance,
a reasonable rental for the space so occupied, and (b) in default
thereof may be dispossessed by the usual summary proceedings. The covenants
herein contained may be enforced by a receiver of the Secured
Property or any part thereof. Nothing in this Section 2.04 shall
be deemed to be a waiver of the provisions of this Security Deed
prohibiting the sale or other disposition of the Secured Property
without Grantee's consent.
Section 2.05. Interest After Acceleration. If Grantee
shall declare the entire unpaid Indebtedness to be immediately due
and payable as provided in Section 2.02, then and in such event,
Grantor shall pay interest thereon from and after the date of such
declaration at the Default Rate (as such term is defined in the
Note) and such interest shall be due and payable, on demand, at
such rate until the entire amount due is paid to Grantee, whether
or not any action shall have been taken or proceeding commenced to
recover the same or to foreclose this Security Deed. x Nothing in
this Section 2.05 or in any other provision of this Security Deed
shall constitute an extension of the time of payment of the
Indebtedness.
Section 2.06. Grantor's Actions After Default. After the
happening of any Event of Default and immediately upon the
commencement of any action, suit or other legal proceedings by
Grantee to obtain judgment for the Indebtedness, or of any other
nature in aid of the enforcement of the Note or of this Security
Deed, Grantor will (a) waive the issuance and service of process
and enter its voluntary appearance in such action, suit or
proceeding, and (b) if required by Grantee, consent to the
appointment of a receiver or receivers of the Secured Property and
of all the earnings, revenues, rents, issues, profits and income
thereof. Nothing herein shall be deemed to require the
commencement of a suit or the consent of Grantor as a condition
precedent for Grantee's right to the appointment of a receiver or
the exercise of any other rights or remedies available to Grantee.
Section 2.07. Control by Grantee After Default.
Notwithstanding the appointment of any receiver, liquidator or
trustee of Grantor, or of any of its property, or of the Secured
Property or any part thereof, Grantee shall be entitled to retain
possession and control of all property now and hereafter covered
by this Security Deed.
Section 2.08. WAIVER-OF GRANTOR'S RIGHTS. BY EXECUTION OF
THIS SECURITY DEED AND BY INITIALING THIS SECTION 2.08, GRANT OR
EXPRESSLY: (A) ACKNOWLEDGES THE RIGHT TO ACCELERATE THE
INDEBTEDNESS EVIDENCED BY THE NOTE AND THE POWER OF ATTORNEY GIVEN
HEREIN TO GRANTEE TO SELL THE SECURED PROPERTY BY NONJUDICIAL
FORECLOSURE UPON DEFAULT BY GRANTOR WITHOUT ANY JUDICIAL HEARING
AND WITHOUT ANY NOTICE; (B) WAIVES ANY AND ALL RIGHTS WHICH
GRANTOR MAY HAVE UNDER THE CONSTITUTION OF THE UNITED STATES
(INCLUDING THE FIFTH AND FOURTEENTH AMENDMENTS THEREOF), THE
VARIOUS PROVISIONS OF THE CONSTITUTIONS FOR THE SEVERAL STATES, OR
BY REASON OF ANY OTHER~ APPLICABLE LAW, TO NOTICE AND TO JUDICIAL
HEARING PRIOR TO THE EXERCISE BY GRANTEE OF ANY RIGHT OR REMEDY
HEREIN PROVIDED TO GRANTEE; (C) ACKNOWLEDGES THAT GRANTOR HAS READ
THIS SECURITY DEED AND ITS PROVISIONS HAVE BEEN EXPLAINED FULLY TO
GRANTOR AND GRANTOR HAS CONSULTED WITH COUNSEL OF GRANTOR'S CHOICE
PRIOR TO EXECUTING THIS SECURITY DEED; AND (D) ACKNOWLEDGES THAT
ALL WAIVERS OF THE AFORESAID RIGHTS OF GRANTOR HAVE BEEN MADE
KNOWINGLY, INTENTIONALLY AND WILLINGLY BY GRANTOR AS PART OF A
BARGAINED FOR LOAN TRANSACTION:
INITIALED BY GRANTOR:
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XV,
an Illinois limited partnership
By: JMB Realty Corporation, a Delaware
corporation, general partner
By:
ARTICLE III
Miscellaneous
Section 3.01. Credits Waive. Grantor will not claim nor
demand nor be entitled to any credit or credits against the
Indebtedness for so much of the taxes assessed against the Secured
Property or any part thereof as is equal to the tax rate applied
to the amount due on this Security Deed or any part thereof, and
no deductions shall otherwise be made or claimed from the taxable
value of the Secured Property or any part thereof by reason of
this Security Deed or the Indebtedness.
Section 3.02. No Release. Grantor agrees, that in the event
the Secured Property is sold other than to a permitted transferee
under Section 1.17 hereof and Grantee enters into any agreement
with the then owner of the Secured Property extending the time of
payment of the Indebtedness, or otherwise modifying the terms
hereof, Grantor shall continue to be liable to pay the
Indebtedness according to the tenor of any such agreement unless
expressly released and discharged in writing by Grantee.
Section 3.03. Notices. All notices hereunder shall be in
writing, and shall be deemed to have been sufficiently given, or
served for all purposes when delivered in person or sent by
express mail or by courier or by certified mail, return receipt
requested, to any party hereto at its address above stated (in the
case of Grantee, to the attention of Manager - Commercial Real
Estate Department) or at such other address of which it shall have
notified the party giving such notice in writing as aforesaid. The
provisions of this Section 3.03 do not apply to Grantee's monthly
billings or invoices for interest and/or principal payment or to
routine requests for information.
Section 3.04. Binding Obligations. The provisions and
covenants of this Security Deed shall run with the land, shall be
binding upon Grantor and shall inure to the benefit of
Grantee,subsequent holders of this Security Deed and their
respective successors and assigns. For the purpose of this
Security Deed, the term "Grantor" shall mean Grantor named herein,
any subsequent owner of the Secured Property, and their respective
heirs, executors, legal representatives, successors and assigns.
If there is more than one Grantor, all their undertakings
hereunder shall be deemed joint and several.
Section 3.05. Captions. The captions of the Sections of
this Security Deed are for the purpose of convenience only and are
not intended to be a part of this Security Deed and shall not be
deemed to modify, explain, enlarge or restrict any of the
provisions hereof.
Section 3.06. Further Assurances. Subject to the
provisions of Section 3.13 below, Grantor shall do,
execute,acknowledge and deliver, at the sole cost and expense of
Grantor,all and every such further acts, deeds, conveyances,
assignments,estoppel certificates, notices of assignment,
transfers and assurances as Grantee may reasonably require from
time to time in order to better assure, convey, assign, transfer
and confirm unto Grantee, the rights now or hereafter intended to
be granted to Grantee under this Security Deed, any other
instrument executed in connection with this Security Deed or any
other instrument under which Grantor may be or may hereafter
become bound to convey, transfer or assign to Grantee for carrying
out the intention of facilitating the performance of the terms of
this Security Deed.
Section 3.07. Severability. Any provision of this Security
Deed which is prohibited or unenforceable in any jurisdiction
shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the
remaining provisions hereof or affecting the validity or
enforceability of such provisions in any other jurisdiction.
Section 3.08. General Conditions.
(a) All covenants hereof shall be construed as affording to
Grantee rights additional to and not exclusive of the rights
conferred under the provisions of applicable laws of the State of
Georgia.
(b) This Security Deed cannot be altered, amended, modified
or discharged orally and no agreement shall be effective to modify
or discharge it in whole or in part, unless it is in
writing and signed by the party against whom enforcement of the
modification, alteration, amendment or discharge is sought.
(c) No remedy herein conferred upon or reserved to Grantee
is intended to be exclusive of any other remedy or remedies, and
each and every such remedy shall be cumulative, and shall be in
addition to every other remedy given hereunder or now or hereafter
existing at law or in equity or by statute. No delay or omission
of Grantee in exercising any right or power accruing upon any
Event of Default shall impair any such right or power, or shall be
construed to be a waiver of any such Event of Default, or any
acquiescence therein. Acceptance of any payment after the
occurrence of an Event of Default shall not be deemed to waive or
cure such Event of Default; and every power and remedy given by
this Security Deed to Grantee may be exercised from time to time
as often as may be deemed expedient by Grantee. Nothing in this
Security Deed or in the Note shall affect the obligation of
Grantor to pay the Indebtedness in the manner and at the time and
place therein respectively expressed.
(d) No waiver by Grantee will be effective unless it is in
writing and then only to the extent specifically stated.Without
limiting the generality of the foregoing, any payment made by
Grantee for insurance premiums, taxes, assessments, water rates,
sewer rentals or any other charges affecting the Secured Property,
shall not constitute a waiver of Grantor's default in making such
payments and shall not obligate Grantee to make any further
payments.
(e) Grantee shall have the right to appear in and defend
any action or proceeding, in the name and on behalf of Grantor
which Grantee, in its discretion, feels may adversely affect the
Secured Property or this Security Deed. Grantee shall also have
the right to institute any action or proceeding which Grantee, in
its discretion, feels should be brought to protect its interest in
the Secured Property or its rights hereunder;provided, however,
that no actions taken by Grantee pursuant hereto shall increase
Grantor's liability under Section 3.13 hereof. All out of pocket
costs and expenses incurred by Grantee in connection with such
actions or proceedings, including, without limitation, reasonable
attorneys' fees and appellate attorneys' fees, shall be paid by
Grantor, on demand
(f) In the event of the passage after the date of this
Security Deed of any law of any governmental authority having
jurisdiction, deducting the Indebtedness from the value of the
Premises for the purpose of taxation, affecting any lien thereon
or changing in any way the laws of the taxation of security deeds
or debts secured by security deeds for federal, state or local
purposes, or the manner of the collection of any such taxes, so as
to affect this Security Deed, Grantor shall promptly pay to
Grantee, on demand, all taxes, costs and charges for which Grantee
is or may be liable as a result thereof, provided said payment
shall not be prohibited by law or render the Note usurious, in
which event Grantee may declare the Indebtedness to be due and
payable without prepayment premium or penalty on the earlier of
(i) 180 days after the date of such declaration, or (ii) the day
prior to the date Grantee shall be liable for the payment of any
such taxes, costs or charges.
(g) Grantor acknowledges that it has received a true copy
of this Security Deed.
(h) For the purposes of this Security Deed, all defined
terms and personal pronouns contained herein shall be
construed,whenever the context of this Security Deed so requires,
so that the singular shall be construed as the plural and vice
versa and so that the masculine, feminine or neuter gender shall
be construed to include all other genders.
(i) No provision of this Security Deed shall be construed
against or interpreted to the disadvantage of Grantor or Grantee
by any court or other governmental or judicial authority by reason
of such party having or being deemed to have drafted, prepared,
structured or dictated such provision.
(j) Whenever any payment to be made here under or under the
Note or any other Loan Document shall be stated to be due on a
Saturday, Sunday or a public holiday under the laws of the State
of Georgia, such payment may be made on the next succeeding
business day, and such extension of time shall in such case be
included in the computation of payment of interest hereunder or
under the Note or such other Loan Document.
(k) Upon receipt of evidence reasonably satisfactory to
Grantor of the loss, theft, destruction or mutilation of the Note,
and in the case of any such loss, theft or destruction, upon
delivery of an indemnity agreement reasonably satisfactory to
Grantor or, in the case of any such mutilation, upon surrender and
cancellation of the Note, Grantor shall execute and deliver, in
lieu thereof, a replacement Note, identical in form and substance
to the Note and dated as of the date of the Note and upon such
execution and delivery all references in this Security Deed and
the other Loan Documents to the Note shall be deemed to refer to
such replacement Note.
(l) Time is of the essence with respect to each and every
covenant, agreement and obligation of Grantor and any guarantor
under this Security Deed, the Note and the other Loan Document.
(m) Whenever this Security Deed, the Note or any other Loan
Document requires the consent, approval, waiver, acceptance,
satisfaction or expression of opinion of, or the taking of any
discretionary act by, Grantee [all of the foregoing being referred
to as "Consent" in this subsection 3.08(m)], the right, power,
privilege and option of Grantee to withhold or grant its Consent
shall not be exhausted by the exercise thereof on one or more
occasions, but shall be a continuing right, power, privilege and
option of Grantee with respect to any such matters.
Section 3.09. Promotional Material. Grantor authorizes
Grantee to issue press releases, advertisements and other
promotional materials in connection with Grantee's own business
promotional and marketing activities, describing the loan referred
to in this Security Deed and the matters giving rise to such loan;
provided, however, that Grantee shall submit all such press
releases, advertisements and other promotional materials to
Grantor for approval prior to release thereof, such approval not
to be unreasonably withheld or delayed.
Section 3.10. Legal Construction. The enforcement of this
Security Deed shall be governed, construed and interpreted by the
laws of the State of Georgia. Nothing in this Security Deed, the
Note or in any other agreement between Grantor and Grantee shall
require Grantor to pay, or Grantee to accept, interest in an
amount which would subject Grantee to any penalty under applicable
law. In the event that the payment of any interest due hereunder
or under the Note or any such other agreement would subject
Grantee to any penalty under applicable law, then automatically
the obligations of Grantor to make such payment shall be reduced
to the highest rate authorized under applicable law.
Section 3.11. Waiver of Jury Trial. Grantor and Grantee, on
behalf of themselves and their respective successors and assigns,
waive all right to trial by jury in any action or proceeding to
enforce or defend any rights or remedies under the Note, this
Security Deed or under any of the other Loan Documents or relating
thereto.
Section 3.12. No Partnership or Joint Venture. Nothing
contained herein or in the Note or any other Loan Documents, nor
the acts of the parties hereto, shall be construed to create a
partnership or joint venture between Grantor and Grantee. The
relationship between Grantor and Grantee is the relationship of
debtor" and "creditor.
Section 3.13. Exculpation Provision. This Security Deed is
subject to the provisions of Article 12 of the Note, which
provisions are made a part hereof as though set forth at length
herein.
IN WITNESS WHEREOF, this Security Deed has been duly
executed and delivered under seal as of the day and year first
above written.
CARLYLE REAL ESTATE LIMITED PARTNERSHIP -
XV, an Illinois limited partnership
Sworn to and subscribed By: JMB Realty Corporation, a
before me this 31st day corporation, general partner
of October, 1994.
By:
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Unofficial Witness Title:
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Notary Attest:
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My Commission Expires: Title:
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[NOTARIAL SEAL]
[CORPORATE SEAL]
ASSIGNMENT OF RENTS AND LEASES
THIS ASSIGNMENT, made this day of , 1994, by CARLYLE
REAL ESTATE LIMITED PARTNERSHIP - XV, an Illinois limited
partnership, having JMB Realty Corporation and Realty Associates -
XV, L.P. as its only general partners and having its principal
place of business at 900 North Michigan Avenue, Chicago, Illinois
60611-1575 ("Assignor"), to GENERAL ELECTRIC CAPITAL CORPORATION,
a New York corporation having an office and address at Suite 900,
One Georgia Center, 600 West Peachtree Street, N.W., Atlanta,
Georgia 30308 ("GECC").
WITNESSETH:
For and in consideration of Ten Dollars ($10.00) and other
good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, Assignor hereby transfers, assigns
and sets over to GECC all of Assignor's right, title and interest
in and to (a) all leases, subleases, licenses, rental contracts
and other agreements relating to the occupancy now existing or
hereafter entered into and affecting that certain real property
located in DeKalb County as described in Exhibit "A" attached
hereto and made a part hereof (the "Property"), together with all
guarantees, modifications, extensions and renewals thereof which
now exist or may hereafter be made (collectively, the "Leases"),
and (b) all rents, issues, profits, income and proceeds due or to
become due from tenants of the Property, including but not limited
to, rentals under all present and future Leases, together with all
deposits of tenants thereunder, including, without limitation,
security deposits, now or hereafter held by Assignor in connection
with the Property (the "Rents").
In connection with and as part of the foregoing assignment,
Assignor hereby makes the following grants, covenants, agreements,
representations and warranties:
1. GECC shall have the right, power and authority to take
any and all actions which GECC deems necessary or appropriate in
connection with (a) entering upon, taking possession of and
operating the Property; (b) leasing all or any part of the
Property; and (c) collecting all or any of the Rents and enforcing
the rights of the lessor under all or any of the Leases in
accordance with the Leases, including, without limitation,
bringing, prosecuting, defending or settling legal proceedings
against tenants. Notwithstanding anything herein to the contrary,
GECC shall not be obligated to perform or discharge, and GECC does
not undertake to perform or discharge, any obligation, duty or
liability with respect to the Leases or the Rents under or by
reason of this Assignment. This Assignment shall not operate to
place responsibility for the control, care, maintenance or repair
of the Property upon GECC, or to make GECC responsible or liable
for any waste committed on the Property by any tenant or other
person, for any dangerous or defective condition of the Property,
or for any negligence in the management, upkeep, repair or control
of the Property.
2. GECC shall have the right, power and authority to use and
apply any Rents received hereunder (a) for the payment of any and
all out of pocket costs and expenses incurred in connection with
enforcing or defending the terms of this Assignment or the rights
of GECC hereunder, and collecting any Rents; and (b) for the
operation and maintenance of the Property and the payment of all
out of pocket costs and expenses in connection therewith
including, without limitation, the payment of (i) interest,
principal or other amounts with respect to any and all loans
secured by mortgages on the Property, including, without
limitation, that certain Deed to Secure Debt and Security
Agreement dated as of even date herewith given by Assignor in
favor of GECC relating to the Property and to be recorded in
DeKalb County, Georgia records (the "Deed"), (ii) taxes,
assessments, water charges and sewer rents and other governmental
charges levied, assessed or imposed against the Property or any
part thereof, (iii) insurance premiums, (iv) out of pocket costs
and expenses with respect to any litigation affecting the
Property, the Leases or the Rents, and (v) out of pocket wages and
salaries of employees, commissions of agents and attorneys' fees.
After the payment of all such costs and expenses and after GECC
shall have set up such reserves as it, in its sole discretion,
shall deem necessary for the proper management of the Property,
GECC shall apply all remaining Rents collected and received by it
to the reduction of the indebtedness secured by the Loan Documents
(as hereinafter defined). Exercise or nonexercise by GECC of the
rights granted in this Assignment, or collection and application
of Rents, by GECC or its agent shall not be a waiver of any
default by Assignor under this Assignment, the Deed, any note
referred to therein, or any other document or agreement relating
thereto (the "Loan Documents"). Subject only to the provisions of
Paragraph 6 hereof, no action or failure to act by GECC with
respect to any of the obligations of Assignor evidenced by the
Loan Documents, to any security or guarantee given for the payment
or performance thereof, or to any other document or instrument
evidencing or relating to such obligations, shall in any manner
affect, impair or prejudice any of GECC's rights and privileges
under this Assignment or discharge, release or modify any of
Assignor's duties or obligations hereunder. This Assignment is
intended by Assignor and GECC to create, and shall be construed to
create, an absolute assignment to GECC, subject only to the terms
and provisions hereof, and not as an assignment as security for.
the performance of the obligations evidenced by the Loan
Documents, or any other indebtedness of Assignor.
3. Assignor shall have a revocable license to collect and
receive the Rents and to retain, use and enjoy such Rents
(including, but not limited to, the rights to hold and maintain
the security deposits in accordance with the Leases) and all of
the rights, benefits and privileges of Lessor under the Leases.
Such license may be revoked by GECC, without notice to Assignor,
only upon the occurrence of an Event of Default, as defined in the
Deed. Unless and until such license is so revoked, Assignor agrees
to apply the proceeds of Rents to the payment of the amounts due
under the Loan Documents and of taxes, assessments, water rates,
sewer rents, and to operation and maintenance charges relating to
the Property which are due and payable at the time of collection
of such proceeds of Rents before using such proceeds for any other
purpose. Assignor shall (a) observe and perform faithfully every
material obligation which Assignor is required to perform under
the Leases; (b) enforce, or secure the performance of, at its sole
cost and expense, every material obligation to be performed by the
landlord under the Leases; (c) promptly give notice to GECC of any
written notice of default received by Assignor from any lessee
under the Leases, together with a copy of such notice; (d) not
collect any Rents for more than one month in advance of the time
when the same shall become due, or anticipate any payments under
any of the Leases, except for bona fide security deposits not in
excess of an amount equal to one (1) month's rent; (e) except with
GECC's prior written consent or as may be expressly permitted by
the Loan Documents, not further assign any of the Leases or the
Rents; (f) except with GECC's prior written consent, not waive,
condone or in any manner discharge any tenants from their
obligations under the Leases; (g) except with GECC's prior written
consent or except in accordance with sound business practices, not
cancel, abridge or accept surrender or termination of any of the
Leases; (h) except with GECC's prior written consent or as may be
expressly permitted by the Loan Documents, not modify or amend, by
sufferance or otherwise, any of the Leases or any of the terms,
provisions or covenants thereof, other than in the ordinary course
of business and in a manner which will not decrease the value of
the Property; (i) provide in all future Leases that any
cancellation, abridgement, surrender, modification or amendment of
such Leases, without the prior written consent of GECC, except as
permitted by the provisions of this Assignment, shall be voidable
as against GECC, at its option; (j) comply with all laws, rules,
orders, ordinances and requirements of all governmental
authorities relating to the Property; (k) deliver copies of all
future Leases to GECC; and (1) appear in and defend against, at
Assignor's sole cost and expense, any action or proceeding arising
under, or in any manner connected with the Leases, the Rents or
the Obligations, duties or liabilities of the lessor, tenants or
guarantors thereunder.
4. This Assignment shall continue in full force and effect
until (a) all sums due and payable under the Loan Documents shall
have been fully paid and satisfied, together with any and all
other sums which may become due and owing under this
Assignment, and (b) all other obligations of Assignor under the
Loan Documents have been satisfied. At such time this Assignment
and the authority and powers herein granted by Assignor to GECC
shall cease and terminate and Assignor shall assume payment of all
unmatured or unpaid charges, expenses or obligations incurred or
undertaken by GECC, if any, in connection with the management of
the Property.
5. Subject to Section 13 below, Assignor hereby irrevocably
constitutes and appoints GECC its true and lawful attorney in
fact, to undertake and execute any or all of the rights or powers
described herein with the same force and effect as if undertaken
or executed by Assignor, and Assignor hereby ratifies and confirms
any and all things done or omitted to be done by GECC, its agents,
servants, employees or attorneys in, to or about the Property in
the exercise of this power of attorney.
6. GECC shall not in any way be liable to Assignor for any
act done or anything omitted to be done to the Property, the
Leases or the Rents by or on behalf of GECC in good faith in
connection with this Assignment except for the consequences of its
own gross negligence or willful misconduct. GECC shall not be
liable for any act or omission of its agents, servants, employees
or attorneys. GECC shall be accountable to Assignor only for
monies actually received by GECC pursuant to this Assignment.
7. Subject to the limitations set forth in Paragraphs 6 and
13 hereof, Assignor shall indemnify and hold GECC harmless from
and against any and all liability, loss, damage, out of pocket
cost or expense, including attorneys' fees, which it may incur
under any of the Leases, or with respect to this Assignment or any
action or failure to act of GECC hereunder, and from and against
any and all claims and demands whatsoever which may be asserted
against GECC by reason of any alleged obligation or undertaking on
its part to perform or discharge any of the terms, covenants and
conditions any of the Leases or with respect to any Rents. In the
event that GECC incurs any such liability, loss, damage, out of
pocket cost or expense, the amount thereof, together with interest
therein from the date such amount was suffered or incurred by GECC
until the same is paid by Assignor to GECC, at a rate equal to the
lesser of (i) five percent (5%) per annum in excess of the regular
rate of interest that would then have been applicable to the
indebtedness under the note described in the Deed, or (ii) the
maximum rate permitted by applicable law, shall be payable by
Assignor to GECC within 10 days after written demand, or at the
option of GECC, GECC may reimburse itself therefor out of any
Rents collected by GECC in accordance with the terms of this
Assignment.
8. Upon written request of GECC, Assignor shall execute and
deliver to GECC, such further instruments as GECC may deem
reasonably necessary to effect this Assignment and the covenants
of Assignor contained herein. Assignor shall cause such further
instruments to be recorded in such manner and in such places as
may be required by GECC.
9. All of the representations, warranties, covenants,
agreements and provisions in this Assignment by or for the benefit
of GECC shall bind and inure to the benefit of its successors and
assigns.
10. This Assignment 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.
11. This Assignment shall be governed by, construed and
enforced in accordance with, the laws of the State of Georgia.
12. Any notice required to be given hereunder shall be
governed by the applicable provisions of the Loan Documents.
13. This Assignment is subject to the provisions of Article
12 of the note described in the Deed, which provisions are made a
part hereof as though set forth at length herein.
IN WITNESS WHEREOF, Assignor has caused this Assignment to
be duly executed and delivered on the date first above written.
CARLYLE REAL ESTATE LIMITED PARTNERSHIP -
XV, an Illinois limited partnership
Sworn to and subscribed By: JMB Realty Corporation, a
before me this 31st day Delaware corporation, general
of October, 1994. partner
By:
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Unofficial Witness Title:
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Notary Attest:
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My Commission Expires: Title:
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[NOTARIAL SEAL]
[CORPORATE SEAL]
EXHIBIT "A"
ALL THAT TRACT OF LAND in Land Lot 102 of the 18th District
of DeKalb County, Georgia, described as follows:
BEGINNING AT AN IRON PIN set at the intersection of the land
lot line dividing Land Lot 101 and Land Lot 102 and the south
right-of-way line of North Druid Hills Road (which right-of-way
line is located 50 feet from the centerline of North Druid Hills
Road); thence along said land lot line South 01 degree 33 minutes
37 seconds East 682.01 feet to an iron pin set; thence South 88
degrees 20 minutes 37 seconds West 1,706.62 feet to an iron pin
set; thence North 55 degrees 46 minutes 48 seconds East 1,466.20
feet to an iron pin set on the south right-of-way line of North
Druid Hills Road; thence following said right-of-way line 487.60
feet along the arc of the curve which is south of the chord (chord
bearing South 78 degrees 52 minutes 05 seconds East, chord
distance 484.07 feet) to THE POINT OF BEGINNING; containing
approximately 18.968 acres.
After recording, return to:
Karin L. Krajec
King & Spalding
191 Peachtree Street, N.E.
Atlanta, Georgia 30303-1763
GEORGIA, COUNTY:
NOTICE OF FIXTURE FILING PURSUANT TO O.C.G.A. Section 11-9-402(5)
KNOWN ALL MEN BY THESE PRESENTS that a Financing Statement has
been filed in DeKalb County, Georgia, on or about , 1994,
bearing file number .
DEBTOR: Carlyle Real Estate Limited Partnership-XV
900 North Michigan Avenue
Chicago, Illinois 60611-1575
DEBTOR TAX IDENTIFICATION NUMBER:36-3314827
SECURED PARTY: General Electric Capital Corporation
Suite 900
600 West Peachtree Street, N.W.
Atlanta, Georgia 30308
REAL ESTATE: See Schedule Exhibit A attached hereto and
incorporated herein by this reference.
COLLATERAL: See Exhibit I attached hereto and incorporated
herein by this reference.
RECORD OWNER OF
REAL ESTATE: Carlyle Real Estate Limited Partnership - XI
DEBTOR:
Signed, sealed and CARLYLE REAL ESTATE LIMITED
PARTNERSHIP
delivered in the -XV, an Illinois limited
partnership
presence of:
By: JMB Realty Corporation,a
Delaware corporation
By:
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Witness Name:
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Notary Public Title:
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My Commission Expires:
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[NOTARIAL SEAL]
[CORPORATE SEAL]
<PAGE>
Signed, sealed and SECURED PARTY
delivered in the
presence of: GENERAL ELECTRIC CAPITAL
CORPORATION,
a New York corporation
By:
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Witness Name:
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Notary Public Title:
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My Commission Expires:
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[NOTARIAL SEAL]
[CORPORATE SEAL]
Schedule I
The types or items of property covered by this Financing Statement
and the land upon which the same are located are described below.
The security agreement for which this financing statement is filed
is contained in that certain Deed to Secure Debt and Security
Agreement given by Debtor to Secured Party which is filed or will
be filed contemporaneously herewith in the DeKalb County, Georgia
records.
The types or items of property covered hereby are described as
follows:
ALL THOSE CERTAIN lots, pieces or parcels of land described
below;
TOGETHER WITH the buildings, structures and improvements now
or hereafter located on said land and all right, title and
interest, if any, of Debtor in and to the streets and roads
abutting said land to the center lines thereof, the strips and
gores within or adjoining said land, the air space and right to
use said air space above said land, all rights of ingress and
egress by pedestrians and motor vehicles to parking facilities on
or within said land, and all easements now or hereafter affecting
said land, royalties and all rights appertaining to the use and
enjoyment of said land, including, without limitation, alley,
drainage, sewer, mineral, water, oil and gas rights, rights-of-
way, vaults, ways, passages, water courses, water rights and
powers, and all estates, rights, titles, interests, privileges,
liberties, tenements, hereditaments and appurtenances whatsoever,
in any way belonging, relating or appertaining to the land or any
part thereof, or which hereafter shall in any way belong, relate
or be appurtenant thereto, whether now owned or hereafter acquired
by Debtor and the reversion and reversions, remainder and
remainders (said land, together with said buildings and
improvements, the property and other rights, privileges and
interests encumbered and conveyed hereby, are hereinafter
collectively referred to as the "Premises");
TOGETHER WITH all right, title, and interest now held or
hereafter acquired by Debtor in and to all fixtures and articles
of personal property and all appurtenances and additions thereto
and substitutions or replacements thereof, now or hereafter
attached to, contained in, used or intended to be incorporated in
or used in connection with the Premises or placed on any part
thereof, though not attached thereto, including, but not limited
to, all building materials, screens, awnings, shades, blinds,
curtains, draperies, carpets, rugs, furniture and furnishings,
heating, lighting, plumbing, ventilating, air conditioning,
refrigerating, incinerating and elevator plants, stoves, ovens
(microwave, convection and others), refrigerators, freezers,
ranges, vacuum cleaning systems, call systems, sprinkler systems
and other fire prevention and extinguishing apparatus and
materials, motors, machinery, pipes, appliances, equipment,
fittings, fixtures and articles of personal property all of which
are hereby declared and shall be deemed to be fixtures and
accessions to the freehold and a part of the Premises as between
Debtor and Secured Party and all persons claiming by, through or
under them, and which shall be deemed to be a portion of the
security for the indebtedness secured hereby, and all trade names,
trademarks, tradestyles, service marks, copyrights, service
contracts, computers and computer software, telephone equipment
and systems, warranties, guarantees, business and building
licenses and permits, architects' and engineers' plans, blueprints
and drawings, good will and books and records relating to the
business operated on the Premises; together with all proceeds of
all of the foregoing; together with all of Debtor's present and
future "equipment", "contract rights," "accounts" and general
intangibles" (as said quoted terms are defined in the Georgia
Uniform Commercial Code) (the Premises and said fixtures and
articles of personal property and said "equipment", "contract
rights", "accounts and ~general intangibles~ and proceeds
encumbered hereby and described herein are hereinafter sometimes
called the "Secured Property") and Secured Party shall have, in
addition to all rights and remedies provided herein, and in any
other agreements, commitments and undertakings made by Debtor to
Secured Party, all of the rights and remedies of a 'secured party"
under the said Uniform Commercial Code; and if the lien of this
financing statement is subject to a security interest or lease
covering any such personal property, then together with all of the
right, title and interest of Debtor in and to any and all such
property, together with the benefits of all deposits and payments
now or hereafter made thereon by Debtor; provided, however, there
shall be excluded here from any personal property, inventory, and
trade fixtures, accounts, contract rights and general intangibles
owned by any tenant (other than by Debtor or an affiliate of
Debtor and other than any personal property, inventory or fixtures
leased to any such tenant by Debtor or an affiliate of Debtor as
lessor) occupying the Premises and sold or used by such tenant, to
the extent that the same does not become the property of Debtor as
landlord under the lease with such tenant or pursuant to
applicable law;
TOGETHER WITH all leases, lettings and licenses of the
Premises or any part thereof now or hereafter entered into and all
right, title and interest of Debtor thereunder, and the rents,
issues, profits, accounts receivable and revenues of the Premises
from time to time accruing (including without limitation all
payments under leases or tenancies, tenant security deposits and
escrow funds), and all the estate, right, title, interest,
property, possession, claim and demand whatsoever at law, as well
as in equity, of Debtor of, in and to the same and including,
without limitation, the right to receive and collect the rents,
issues and profits payable thereunder;
TOGETHER WITH all unearned premiums, accrued, accruing or to
accrue under insurance policies now or hereafter obtained by
Debtor and all proceeds of the conversion, voluntary or
involuntary, of the Secured Property or any part thereof into cash
or liquidated claims, including, without limitation, proceeds of
hazard and title insurance and all awards and compensation
heretofore and hereafter made to the present and all subsequent
owners of the Secured Property by any governmental or other lawful
authorities for the taking by eminent domain, condemnation or
otherwise, of all or any part of the Secured Property or any
easement therein, including awards for any change of grade of
streets;
TOGETHER WITH all right, title and interest of Debtor in and
to all extensions, improvements, betterments, renewals,
substitutes and replacements of, and all additions and
appurtenances to, the Secured Property, hereafter acquired by, or
released to, Debtor, or constructed, assembled or placed by Debtor
or by others for Debtor's benefit on the Secured Property, and all
conversions of the security constituted thereby, immediately upon
such acquisition, release, construction, assembling, placement or
conversion, as the case may be, and in each such case, without any
further conveyance, assignment or other act by Debtor, shall
become subject to the lien hereof as fully and completely, and
with the same effect, as though now owned by Debtor and
specifically described herein.
The improved property (the "Premises") in or upon which the
above-described property is or will be located is owned by Debtor
and is more particularly described on Exhibit "A".
EXHIBIT "A"
ALL THAT TRACT OF LAND in Land Lot 102 of the 18th District of
Dekalb County, Georgia, described as follows:
BEGINNING AT AN IRON PIN set at the intersection of the land lot
line dividing Land Lot 101 and Land Lot 102 and the south right-
of-way line of North Druid Hills Road (which right-of-way line is
located 50 feet from the centerline of North Druid Hills Road);
thence along said land lot line South 01 degree 33 minutes 37
seconds East 682.01 feet to an iron pin set; thence South 88
degrees 20 minutes 37 seconds West 1,706.62 feet to an iron pin
set; thence North 55 degrees 46 minutes 48 seconds East 1,466.20
feet to an iron pin set on the south right-of-way line of North
Druid Hills Road; thence following said right-of-way line 487.60
feet along the arc of the curve which is south of the chord (chord
bearing South 78 degrees 52 minutes 05 seconds East, chord
distance 484.07 feet) to THE POINT OF BEGINNING; containing
approximately 18.968 acres.
After recording, return to:
Karin L. Krajec
King & Spalding
191 Peachtree Street, N.E.
Atlanta, Georgia 30303-1763
GEORGIA, COUNTY:
NOTICE OF FIXTURE FILING PURSUANT TO O.C.G.A. Section 11-9-402(5)
KNOWN ALL MEN BY THESE PRESENTS that a Financing Statement has
been filed in DeKalb County, Georgia, on or about , 1994,
bearing file number .
DEBTOR: Carlyle Real Estate Limited Partnership-XV
900 North Michigan Avenue
Chicago, Illinois 60611-1575
DEBTOR TAX IDENTIFICATION NUMBER: 36-3314827
SECURED PARTY: General Electric Capital Corporation
Suite 900
600 West Peachtree Street, N.W.
Atlanta, Georgia 30308
REAL ESTATE: See Exhibit A attached hereto and incorporated
herein by this reference.
COLLATERAL: See Exhibit I attached hereto and incorporated
herein by this reference.
RECORD OWNER OF
REAL ESTATE: Carlyle Real Estate Limited Partnership - XI
DEBTOR:
Signed, sealed and CARLYLE REAL ESTATE LIMITED PARTNERSHIP -
delivered in the XV, an Illinois limited partnership
presence of:
By: JMB Realty Corporation, a
Delware corporation
By:
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Witness Name:
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Notary Public Title:
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My Commission Expires:
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[NOTARIAL SEAL]
[CORPORATE SEAL]
<PAGE>
Signed, sealed and SECURED PARTY
delivered in the
presence of: GENERAL ELECTRIC CAPITAL
CORPORATION, a New York
corporation
By:
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Witness Name:
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Notary Public Title:
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My Commission Expires:
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[NOTARIAL SEAL]
[CORPORATE SEAL]
Schedule I
The types or items of property covered by this Financing Statement
and the land upon which the same are located are described below.
The security agreement for which this financing statement is filed
is contained in that certain Deed to Secure Debt and Security
Agreement given by Debtor to Secured Party which is filed or will
be filed contemporaneously herewith in the DeKalb County, Georgia
records.
The types or items of property covered hereby are described as
follows:
ALL THOSE CERTAIN lots, pieces or parcels of land described
below;
TOGETHER WITH the buildings, structures and improvements now
or hereafter located on said land and all right, title and
interest, if any, of Debtor in and to the streets and roads
abutting said land to the center lines thereof, the strips and
gores within or adjoining said land, the air space and right to
use said air space above said land, all rights of ingress and
egress by pedestrians and motor vehicles to parking facilities on
or within said land, and all easements now or hereafter affecting
said land, royalties and all rights appertaining to the use and
enjoyment of said land, including, without limitation, alley,
drainage, sewer, mineral, water, oil and gas rights, rights-of-
way, vaults, ways, passages, water courses, water rights and
powers, and all estates, rights, titles, interests, privileges,
liberties, tenements, hereditaments and appurtenances whatsoever,
in any way belonging, relating or appertaining to the land or any
part thereof, or which hereafter shall in any way belong, relate
or be appurtenant thereto, whether now owned or hereafter acquired
by Debtor and the reversion and reversions, remainder and
remainders (said land, together with said buildings and
improvements, the property and other rights, privileges and
interests encumbered and conveyed hereby, are hereinafter
collectively referred to as the "Premises");
TOGETHER WITH all right, title, and interest now held or
hereafter acquired by Debtor in and to all fixtures and articles
of personal property and all appurtenances and additions thereto
and substitutions or replacements thereof, now or hereafter
attached to, contained in, used or intended to be incorporated in
or used in connection with the Premises or placed on any part
thereof, though not attached thereto, including, but not limited
to, all building materials, screens, awnings, shades, blinds,
curtains, draperies, carpets, rugs, furniture and furnishings,
heating, lighting, plumbing, ventilating, air conditioning,
refrigerating, incinerating and elevator plants, stoves, ovens
(microwave, convection and others), refrigerators, freezers,
ranges, vacuum cleaning systems, call systems, sprinkler systems
and other fire prevention and extinguishing apparatus and
materials, motors, machinery, pipes, appliances, equipment,
fittings, fixtures and articles of personal property all of which
are hereby declared and shall be deemed to be fixtures and
accessions to the freehold and a part of the Premises as between
Debtor and Secured Party and all persons claiming by, through or
under them, and which shall be deemed to be a portion of the
security for the indebtedness secured hereby, and all trade names,
trademarks, tradestyles, service marks, copyrights, service
contracts, computers and computer software, telephone equipment
and systems, warranties, guarantees, business and building
licenses and permits, architects' and engineers' plans, blueprints
and drawings, good will and books and records relating to the
business operated on the Premises; together with all proceeds of
all of the foregoing; together with all of Debtor's present and
future "equipment", "contract rights," "accounts" and general
intangibles" (as said quoted terms are defined in the Georgia
Uniform Commercial Code) (the Premises and said fixtures and
articles of personal property and said "equipment", "contract
rights", "accounts and ~general intangibles~ and proceeds
encumbered hereby and described herein are hereinafter sometimes
called the "Secured Property") and Secured Party shall have, in
addition to all rights and remedies provided herein, and in any
other agreements, commitments and undertakings made by Debtor to
Secured Party, all of the rights and remedies of a "secured party"
under the said Uniform Commercial Code; and if the lien of this
financing statement is subject to a security interest or lease
covering any such personal property, then together with all of the
right, title and interest of Debtor in and to any and all such
property, together with the benefits of all deposits and payments
now or hereafter made thereon by Debtor; provided, however, there
shall be excluded here from any personal property, inventory, and
trade fixtures, accounts, contract rights and general intangibles
owned by any tenant (other than by Debtor or an affiliate of
Debtor and other than any personal property, inventory or fixtures
leased to any such tenant by Debtor or an affiliate of Debtor as
lessor) occupying the Premises and sold or used by such tenant, to
the extent that the same does not become the property of Debtor as
landlord under the lease with such tenant or pursuant to
applicable law;
TOGETHER WITH all leases, lettings and licenses of the
Premises or any part thereof now or hereafter entered into and all
right, title and interest of Debtor thereunder, and the rents,
issues, profits, accounts receivable and revenues of the Premises
from time to time accruing (including without limitation all
payments under leases or tenancies, tenant security deposits and
escrow funds), and all the estate, right, title, interest,
property, possession, claim and demand whatsoever at law, as well
as in equity, of Debtor of, in and to the same and including,
without limitation, the right to receive and collect the rents,
issues and profits payable thereunder;
TOGETHER WITH all unearned premiums, accrued, accruing or to
accrue under insurance policies now or hereafter obtained by
Debtor and all proceeds of the conversion, voluntary or
involuntary, of the Secured Property or any part thereof into cash
or liquidated claims, including, without limitation, proceeds of
hazard and title insurance and all awards and compensation
heretofore and hereafter made to the present and all subsequent
owners of the Secured Property by any governmental or other lawful
authorities for the taking by eminent domain, condemnation or
otherwise, of all or any part of the Secured Property or any
easement therein, including awards for any change of grade of
streets;
TOGETHER WITH all right, title and interest of Debtor in and
to all extensions, improvements, betterments, renewals,
substitutes and replacements of, and all additions and
appurtenances to, the Secured Property, hereafter acquired by, or
released to, Debtor, or constructed, assembled or placed by Debtor
or by others for Debtor's benefit on the Secured Property, and all
conversions of the security constituted thereby, immediately upon
such acquisition, release, construction, assembling, placement or
conversion, as the case may be, and in each such case, without any
further conveyance, assignment or other act by Debtor, shall
become subject to the lien hereof as fully and completely, and
with the same effect, as though now owned by Debtor and
specifically described herein.
The improved property (the "Premises") in or upon which the
above-described property is or will be located is owned by Debtor
and is more particularly described on Exhibit "A".
EXHIBIT "A"
ALL THAT TRACT OF LAND in Land Lot 102 of the 18th District of
Dekalb County, Georgia, described as follows:
BEGINNING AT AN IRON PIN set at the intersection of the land lot
line dividing Land Lot 101 and Land Lot 102 and the south right-
of-way line of North Druid Hills Road (which right-of-way line is
located 50 feet from the centerline of North Druid Hills Road);
thence along said land lot line South 01 degree 33 minutes 37
seconds East 682.01 feet to an iron pin set; thence South 88
degrees 20 minutes 37 seconds West 1,706.62 feet to an iron pin
set; thence North 55 degrees 46 minutes 48 seconds East 1,466.20
feet to an iron pin set on the south right-of-way line of North
Druid Hills Road; thence following said right-of-way line 487.60
feet along the arc of the curve which is south of the chord (chord
bearing South 78 degrees 52 minutes 05 seconds East, chord
distance 484.07 feet) to THE POINT OF BEGINNING; containing
approximately 18.968 acres.
OWNER'S CERTIFICATE
THIS CERTIFICATE, made as of the day of October, 1994,
by CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XV, an Illinois
limited partnership having JMB Realty Corporation, as its
corporate general partner ("Owner"), to and for the benefit of
GENERAL ELECTRIC CAPITAL CORPORATION, a New York corporation
("GECC");
WITNESSETH: That,
WHEREAS, contemporaneously with the execution of this
Certificate, Owner, as maker, has executed and delivered to GECC,
as payee, its Promissory Note (the "Note") in the original
principal face amount of EIGHT MILLION ONE HUNDRED SEVENTY-FIVE
THOUSAND AND NO/100 DOLLARS ($8,175,000.00), or so much thereof as
may be advanced from time to time, in evidence of the loan (the
"Loan") made this date by GECC to Owner and governed, in certain
respects, by that certain Loan Agreement, dated of even date
herewith, by and between Owner and GECC (the "Loan Agreement") and
NOW, THEREFORE, in order to induce GECC to fund the Loan,
Owner hereby certifies and agrees to and with GECC as follows:
Title
1. Owner owns the improved real property (hereinafter
referred to as the "Property") located in DeKalb County, Georgia
and described in Exhibit "A", attached hereto and by this
reference incorporated herein and made a part hereof, subject only
to (i) those matters set forth in Exhibit "B", attached hereto and
by this reference incorporated herein and made a part hereof, and
(ii) the mortgage and related loan documents executed in favor of
(ii) General Electric Capital Corporation with respect to the
Property.
2. Except as may be set forth on Exhibit "B" hereto and
except for the rights of tenants in possession or with possessory
rights pursuant to written leases, as tenants only, no other
person or entity has made a claim to Owner that it is entitled to
the right to possession of the Property.
3. Except as may be set forth on Exhibit "B" hereto and
except for the mortgage and related loan documents executed in
favor of General Electric Capital Corporation with respect to the
Property, there are no unpaid or unsatisfied security deeds,
mortgages, claims of lien, special assessments for sewerage or
street improvements or taxes, which constitute a lien against the
Property or any improvements thereon or any part thereof.
4. Except as may be set forth in Exhibit "B" hereto and
except for the mortgage and related loan documents executed in
favor of General Electric Capital Corporation with respect to the
Property, there is no outstanding indebtedness for equipment,
appliances or other fixtures owned by Owner and attached to or
located on the Property.
5. Except as described on Exhibit "C", attached hereto and
by this reference incorporated herein and made a part hereof,
there are no pending or threatened suits, proceedings, judgements,
bankruptcies, liens or executions against Owner which affect or
concern the Property.
6. Improvements have been made on the Property during the
95 days immediately preceding this date, but, except as set forth
on Exhibit "F", all bills incurred for labor or materials used in
making such improvements on said Property have been paid in full.
7. Except as set forth on Exhibit "D" attached hereto and
by this reference incorporated herein and made a part hereof, (i)
Owner has not engaged any Broker's services (as defined in
O.C.G.A. Section 44-14-601) with regard to the management, sale,
purchase, lease, option or other conveyance of any interest in the
Property, or either of them, and (ii) no notice of lien for any
such services has been received by Owner or its general partners.
8. Owner maintains its principal office and place of
business at 900 North Michigan Avenue, Chicago, Illinois 60611-
1575. Owner maintains its principal office and place of business
in the State of Georgia at Corporation Process Company, 180
Cherokee St., N.E., Marietta, GA 30060.
Leases
9. Attached hereto as Exhibit "D" and by this reference
incorporated herein and made a part hereof is a true, correct and
complete statement as of October 30, 1994, of all leases,
tenancies and occupancies (written or oral) in effect at the
Property relating to the leasing of space (the "Leases"), setting
forth for each the tenant's name, apartment number, the date for
rental payments, the lease expiration date and the monthly rental
rate (the "Rent Roll").
10. There are no leases, subleases, tenancies, occupancies,
usufructs or other agreements, written or oral, pertaining to the
occupancy of the Property other than as set forth in the Rent
Roll.
11. Except for the payment of rent which is not more than
thirty (30) days in arrears and unless otherwise shown on Exhibit
"C" or Exhibit "D" hereto, Owner knows of no uncured defaults by
any of the tenants under the Leases. There exist no uncured
defaults on the part of the lessor or landlord under any of the
Leases and no tenants under any of the Leases have any offsets,
counterclaims or defenses against Owner.
12. No concessions, rebates, allowances or other
considerations for free or reduced rent in the future have been
granted to any tenant under any of the Leases, except as set forth
in the written lease agreement between landlord and such tenant,
copies of which are in the possessio of General Electric Capital
Corporation.
Partnership
13. Attached hereto as Exhibit "E" are true, correct and
complete copies of (a) the Limited Partnership Agreement and
Certificate of Limited Partnership of Owner, and (b) the Articles
of Incorporation and By-Laws of JMB Realty Corporation
(collectively, the "Agreements").
14. The Agreements are in full force and effect on the date
hereof and, except as may be attached hereto as Exhibit "E", have
not been further amended, modified or restated.
15. Owner has not been dissolved and no proceeding for its
dissolution or liquidation or for any accounting or other similar
relief is presently pending.
16. The only general partners in Owner are JMB Realty
Corporation and Realty Associates-XV, L.P., an Illinois limited
partnership.
17. This Certificate is subject to the provisions of
Article 12 of the Note, which provisions are made a part hereof as
though set forth at length herein.
WITNESS the execution of this Owner's Certificate under seal
as of the date first above written.
OWNER:
CARLYLE REAL ESTATE LIMITED PARTNERSHIP -
XV, an Illinois limited partnership
BY: JMB Realty Corporation, a Delaware
corporation, general partner
By:----------------------------------
Title--------------------------
Attest:------------------------------
Title: ------------------------
[CORPORATE SEAL]
EXHIBIT "A"
ALL THAT TRACT OF LAND in Land Lot 102 of the 18th District of
DeKalb County, Georgia, described as follows:
BEGINNING AT AN IRON PIN set at the intersection of the land lot
line dividing Land Lot 101 and Land Lot 102 and the south right-
of-way line of North Druid Hills Road (which right-of-way line is
located 50 feet from the centerline of North Druid Hills Road);
thence along said land lot line South 01 degree 33 minutes 37
seconds East 682.01 feet to an iron pin set; thence South 88
degrees 20 minutes 37 seconds West 1,706.62 feet to an iron pin
set; thence North 55 degrees 46 minutes 48 seconds East 1,466.20
feet to an iron pin set on the south right-of-way line of North
Druid Hills Road; thence following said right-of-way line 487.60
feet along the arc or the curve which is south of the chord (chord
bearing South 78 degrees 52 minutes 05 seconds East, chord
distance 484.07 feet) to THE POINT OF BEGINNING; containing
approximately 18.968 acres.
EXHIBIT "B"
1. Taxes for the year 1995 and subsequent years, not yet due
and payable.
2. Easement from Summit hills to Georgia Power Company, dated
March 23, 1983, filed April 4, 1983 and recorded in Deed Book
4738, Page 58, DeKalb County Records.
3. Conveyance of 100-foot strip or strips located on lands
adjacent to the southwestern portion of caption property, from
E.V. Camp to Georgia Power Company, dated 4/8/42, recorded in Deed
Book 573, Page 591, DeKalb County Records, and dated 4/28/50,
recorded in Deed Book 806, Page 501, aforesaid records, contains
easements across caption property for ingress and egress to
construct and maintain transmission lines and appurtenances within
said strip or strips.
NOTE: Georgia Power Company has represented that it will
use existing streets as much as possible for ingress and egress to
its right-of-way and will only make use of its ingress and egress
rights across caption property when there are no other practical
routes to reach the right-of-way.
EXHIBIT "C"
(Pending or Threatened Suits)
EXHIBIT "D"
NONE
EXHIBIT "E"
(Current Rent Roll)
EXHIBIT "E"
(Partnership and General Partner Documentation)
EXHIBIT "F"
(list of unpaid bills for labor or materials)
LOAN CLOSING STATEMENT
LENDER: GENERAL ELECTRIC CAPITAL CORPORATION, a New York
Corporation
BORROWER: CARLYLE REAL ESTATE LIMITED PARTNERSHIP-XV, an
Illinois limited partnership
ESCROW AGENT TICOR TITLE INSURANCE COMPANY
LOAN AMOUNT $8,175,000.00
PROPERTY: Woodland Hills Apartments
3471 North Druid Hills Road
Decatur, GA
DATE: November 2, 1994
Lender, Borrower and Escrow Agent hereby acknowledge that attached
hereto as Schedule 1 is a true and correct copy of that certain
Loan Closing Statement with respect to the above referenced
transaction.
All items referenced herein correspond to items shown on the Loan
Closing Statement attached hereto as Schedule 1.
Lender is authorized to wire transfer $6,901,099.86 as delineated
in Section I.A. of Schedule 1 and Borrower will wire transfer
$98,916.15 as delineated in Section I.B. of Schedule 1, directly
to the Escrow Agent's bank account pursuant to the following
instructions;
Bank Name: NationsBank of Georgia, NA
Bank Location: Atlanta, GA
Bank ABA#: 061 000 052
Account Name: TICOR Title Insurance Co. Custodial Account
Account #: 02320257
Reference: GECC/Carlyle Loan Closing
Attn: Tammie P. Warner @ TICOR
(404) 303-6300
Escrow Agent shall not make any disbursements until Escrow Agent
shall have received all such funds from Lender and Borrower.
<PAGE>
All funds wired to the Escrow Agent by Lender and Borrower shall
be disbursed by Escrow Agent as follows:
1. Items II.A. shall be disbursed by wire transfer to
Connecticut General Life Insurance Company ("CIGNA") pursuant to
the wire transfer instructions enumerated on CIGNA's payoff
letter.
2. Items II.B.1 to 4 shall be disbursed by check to
the indicated party,
Borrower acknowledges receipt of $8.175,000.00 under the Loan
which constitutes the total Loan Advance set forth in the Loan
Closing Statement. Borrower acknowledges that a portion of the
initial loan advance in the total amount of $1,273,900.14 has been
applied by Lender to Items I.A.1. to 4. by bookkeeping entry.
Borrower acknowledges that the legal fees of King of Spalding set
forth in Schedule 1, is a estimate of its fees and expenses
including post closing matters. Accordingly, Borrower agrees to
pay any additional legal fees of King & Spalding and King &
Spalding agrees to refund any overpayment directly to the
Borrower.
All escrow fees due Escrow Agent will be paid by Borrower outside
of closing and Lender will have no liability therefore.
The parties hereto, authorize the disbursement and payments set
forth in Schedule 1 and by their respective execution of the Loan
Closing Statement, Borrower and Lender agree that the provisions
and calculations set forth in Schedule 1 are true and correct.
Borrower: Carlyle Real Estate LimitedLender: General Electric
Partnership - XV Capital Corporation
By: JMB Realty Corporation,
general partner
By: ------------------ By: ------------------
Name: -------- Name:-----------
Title:-------- Title:----------
Escrow Agent: TICOR Title Insurance Company
By: LINDA S. ANDREOZZ
-----------------
Name: Linda S. Andreozz
Title: Vice President
Schedule 1
Loan Closing Statement For
Woodland Hills Apartments
(11/2/94)
1. SOURCE OF FUNDS
A. Loan Proceeds
$8,175,000.00
Maximum Loan Amount ($0.00)
Less: Holdbacks -------------
TOTAL INITIAL LOAN ADVANCE $8,175,000.00
Less: Amounts Retained
by Lender for;
1. Balance of Commitment Fee ($0.00)
2. Out-of-Pocket Expenses
(Ref. Exhibit "A") ($4.163.80)
3. Initial R.E. Tax Escrow ($0.00)
4. Payoff of existing
2nd mortgage to
GEREE:
Principal $1,256,667.00
Interest from
10/1 to 11/1 $13,069.34
-------------
Total due GEREE ($1,269,736.34)
Total Retained By Lender ($1,273,900.14)
--------------
TOTAL WIRE TRANSFERRED BY LENDER $6,901,099.86
B. Cash due from Borrower $98.916.15
TOTAL SOURCE OF FUNDS $7,000,016.01
II. DISBURSEMENTS
A. To Connecticut General Life
Insurance Company
("CIGNA") TO PAYOFF EXISTING
1ST MORTGAGE:
Principal $6,800,800.00
Interest from 10/1 to 11/1 $74,951.00
-------------
Total Due CIGNA $6,874,951.11
B. Closing Costs
1. To Pircher, Nichols
& Meeks for Legal Fees
on behalf of Borrower P.O.C.
2. To King & Spalding for
estimated Legal Fees
on behalf of Lender $15,500.00
3. To Ticor Title Insurance
Co. for
a. Title Insurance
Premium, exam,
etc. $8,956.25
b. Estimated
Recording fees $250.00
-------------
Total due Ticor
Title Insurance Co. $9,206.25
4. To Rochester Associates
for Updated survey. $5,500.00
5. To DeKalb County Tax
Commissioner for
payment of balance of 1994
Real Estate Taxes $94,858.65
Total Closing Costs ----------
$125,964.90
TOTAL DISBURSEMENTS $7,000,016.01
=============
EXHIBIT "A"
GECC OUT-OF-POCKET EXPENSES
FOR WOODLAND HILLS APARTMENTS
ITEM/DESCRIPTION AMOUNT
ENGINEERING REPORT Eckland Consultants $1,512.76
ENVIRONMENTAL REPORT Law Engineering $2,600.00
MARKET REPORTS $0.00
CREDIT REPORTS $0.00
PHOTO'S & AERIALS $51.04
OVERNIGHT MAIL $0.00
PRO-JECT CONSULTANT $0.00
TRAVEL & LIVING TOTAL
Airfare $0.00
Hotel $0.00
Meals $0.00
Rental Car $0.00
Mileage $0.00
Parking $0.00
-----
TOTAL TRAVEL & LIVING $0.00
---------
TOTAL GECC OUT-OF-POCKET EXPENSES $4,163.80
=========
PROMISSORY NOTE
$8.175,000.00 Atlanta, Georgia
, 1994
1. Promise to Pay. FOR VALUE RECEIVED, CARLYLE REAL ESTATE
LIMITED PARTNERSHIP - XV, an Illinois limited partnership having
JMB Realty Corporation and Realty Associates - XV, L.P. as its
only general partners and having its principal place of business
at 900 North Michigan Avenue, Chicago, Illinois 60611-1575,
Attention : Stephen A. Lovelette (hereinafter referred to as the
"Maker"), hereby promises to pay to the order of GENERAL ELECTRIC
CAPITAL CORPORATION, a New York corporation [hereinafter referred
to as the "Payee"; the Payee, together with any subsequent
holder(s) hereof, sometimes hereinafter collectively referred to
as the "Holder"], at CREF, P.O. Box 102771, Atlanta, Georgia
30368-0771, or at such other place as may be designated by the
Holder hereof, on October 1, 1997, the principal sum of EIGHT
MILLION ONE HUNDRED SEVENTY-FIVE THOUSAND AND NO/100 DOLLARS
($8,175,000.00), or so much thereof as may be outstanding,
together with any and all interest, including Base Interest, and
together with any and all Late Charges, all computed and payable
as hereinafter provided (as such terms are hereinafter defined).
2. Security. This Note is secured, in part, by (i) the
Security Deed and (ii) the Assignment (as such terms are
hereinafter defined).
3. Certain Defined Terms. As used herein, the following
terms shall have the following meanings (such meanings to be
applicable to both the singular and plural form of the terms
defined):
3.1. "Approved Repair and Replacement Work" shall
mean the capital repair and replacement work listed on Exhibit
"A", attached hereto and by this reference made a part hereof (as
distinguished from routine repair and maintenance work and as
further distinguished from capital improvements and/or additions),
performed and to be performed at the Property, and approved by
Payee.
3.2. "Assignment" shall mean that certain Assignment
of Rents and Leases dated as of even date herewith given by Maker
in favor of Payee and to be recorded in Dekalb County, Georgia
Records.
3.3. "Base Interest" shall mean the interest which is
payable on this Note at the Contract Interest Rate in accordance
with Article 4 hereof.
3.4. "Capital Repair and Replacement Reserve Account"
shall mean the account to be established pursuant to the
provisions of Article 14 hereof.
3.5. "Contract Interest Rate" shall mean a per annum
rate of interest, as the same may change form time to time, equal
to four (4.0) percentage points per annum in excess of the GECC
Composite Commercial Paper Rate, as the same may change from time
to time.
3.6. "Default Rate" shall mean a per annum rate of
interest, as the same may change from time to time, equal to five
(5.0) percentage points per annum in excess of the Contract
Interest Rate.
3.7. "Event of Default" shall have the meaning
specified in the Security Deed.
3.8. "GECC Composite Commercial Paper Rate" shall
mean the "Average Interest Expense", as hereinafter defined, on
the actual principal amount of the GECC Composite Commercial Paper
outstanding for General Electric Capital Corporation's full fiscal
month preceding the interest billing month. "GECC Composite
Commercial Paper" shall mean General Electric Capital
Corporation's outstanding commercial paper for terms of twelve
(12) months or less from sources within the United States of
America but excluding the current portion of General Electric
Capital Corporation's long term debt and GECC Financial
Corporation's borrowings and interest expense. "Average Interest
Expense" shall mean the percentage obtained by dividing the
interest expense on GECC Composite Commercial Paper for such
fiscal month by the average daily principal amount of GECC
Composite Commercial Paper outstanding during such fiscal month,
divided by the actual number of days in such fiscal month and
multiplied by the actual number of days in the calendar year. The
GECC Composite Commercial Paper Rate shall be determined by
General Electric Capital Corporation and evidenced by a
certificate issued by an authorized General Electric Capital
Corporation employee.
3.9. "Hazardous Substances Indemnity" shall mean that
certain Hazardous Substances Indemnity Agreement dated as of even
date herewith given by Maker in favor of Payee.
3.10. "Late Charges" shall have the meaning specified
in Article 7 hereof.
3.11. "Loan" shall mean the loan made and to be made
by Holder to Maker in accordance with and subject to the terms and
conditions of this Note.
3.12. "Loan Documents" shall mean, collectively, this
Note, the Security Deed, the Assignment, the Hazardous Substances
Indemnity and any other documents, instruments or agreements
evidencing or securing the Loan.
3.13. "Maturity Date" shall mean the earliest of (i)
October 1, 1997, (ii) the date on which the entire indebtedness
evidenced by this Note is otherwise required by the terms of this
Note or the Loan Documents to be paid in full, or (iii) the date
to which Holder accelerates payment of this Note after an Event of
Default.
3.14. "Maturity Obligations" shall mean the entire
outstanding principal amount of this Note, together with all
accrued but unpaid interest thereon, and all other sums due and
unpaid hereunder and under the other Loan Documents.
3.15. "Maximum Rate" shall mean the maximum lawful
rate which may be contracted for, charged, taken, received or
reserved by Holder in accordance with the applicable laws of the
State of Georgia (or applicable United States of America federal
law to the extent that it exempts Holder from the applicable
provisions of Georgia law or permits Holder to contract for,
charge, take, receive or reserve a greater amount of interest than
under Georgia law), taking into account all fees and charges due
under the Loan.
3.16. "Property" shall mean the real property,
together with any improvements located thereon, located in DeKalb
County, Georgia and commonly known as the "Woodland Hills
Apartments", as more particularly described in the Security Deed.
3.17. "Security Deed" shall mean that certain Deed to
Secure Debt and Security Agreement dated as of even date herewith
give by Maker in favor of Payee and to be recorded in DeKalb
County, Georgia Records.
4. Base Interest. Subject to Articles 6 and 13 hereof,
interest only at the Contract Interest Rate on the outstanding
balance of principal on this Note shall accrue and shall be due
and payable in arrears monthly on the first day of each and every
month beginning December 1, 1994, to and including October 1,
1997. The Maturity Obligations shall be due and payable on the
Maturity Date. Interest at the Contract Interest Rate shall be
computed on the basis of a fraction, the denominator of which is
three hundred and sixty (360) and the numerator of which is the
actual number of days elapsed from the date hereof or the date of
the preceding interest installment due date, as the case may be,
to the date of the next succeeding interest installment due date.
5. Limitation on Interest. Notwithstanding anything in the
preceding Article to the contrary, if at any time the interest
payable at the Contract Interest Rate, together with interest at
the Default Rate, if any, and together with all fees and charges,
if any, and any and all other amounts owing under the Loan
Documents which are treated as interest under applicable law,
computed over the full term of this Note, exceeds the Maximum
Rate, the rate of interest payable hereunder, including any
default interest, together with all charges, shall be limited to
the Maximum Rate. If at any time the interest specified above
would exceed the Maximum Rate thereby causing the interest on the
indebtedness evidenced hereby to be limited to the Maximum Rate,
then any subsequent reduction in the Contract Interest Rate which
would otherwise occur under the terms of this Note shall not
reduce the rate of interest on the indebtedness evidenced hereby
below the Maximum Rate until the total amount of interest accrued
on the indebtedness evidenced hereby equals the amount of interest
which would have accrued on the indebtedness evidenced hereby if
the entire interest otherwise accruing hereunder had not been
reduced pursuant to this Article 5. Nothing in this Article 5
shall in any way alter or amend the express intent of Maker and
Holder that none of the charges or other amounts payable hereunder
except for interest computed at the Contract Interest Rate and
interest computed at the Default Rate, are or shall be deemed to
be, interest payable on account of the Loan or otherwise, and
Maker acknowledges that the interest computed at the Contract
Interest Rate and interest computed the Default Rate is the only
interest payable hereunder.
6. Place of Payment; Prepayment.
6.1. Place of Payment. All payments on this Note are
payable at Payee's office addressed to General Electric Capital
Corporation - CREF, Post Office Box 102771, Atlanta, Georgia
30368-0771, or at such other place as Payee or other holder hereof
shall notify Maker in writing.
6.2. Application of Payments. All payments received
by Holder on this Note shall be applied by Holder as follows:
first, to the payment of delinquency, or Late Charges, if any;
second, to accrued and unpaid interest at the Contract Interest
Rate; and third, to the reduction of principal.
6.3. Prepayment. Except as otherwise expressly
provide in the Security Deed, neither this Note nor the Maturity
Obligations may be prepaid in whole or in part at any time prior
to July 31, 1995. From and after August 1, 1995 until October 31,
1996, Maker may prepay this Note in whole (but not in part) (i)
upon at least ten (10) days prior written notice to Holder, (ii)
on any regularly scheduled due date hereof for the payment of
interest, and (iii) except as otherwise expressly provided in the
Security Deed, upon the payment of a prepayment premium equal to
one percent (1.0%) of the then outstanding principal balance of
the Loan, so prepaid. From and after November 1, 1996, this Note
and the Maturity Obligations may be prepaid in whole (but not in
part) at any time without any prepayment penalty, premium or
unearned interest. Prepayment resulting from a condemnation or
other casualty may be made by Maker at any time without penalty,
premium or unearned interest.
6.4. Method of Payment. Holder reserves the right to
require any prepayment or final payment on this Note to be by
wired federal funds or other immediately available funds.
7. Late Charges
7.1. Late Charges. In the event Maker fails to pay
any installment of principal or interest required to be paid by
the terms of the Note, which failure has continued for a period of
five (5) days after its due date, Holder may, at its option,
impose one "Late Charge" equal to five percent (5%) of the amount
of each and every such past due installment notwithstanding the
date on which such payment is actually paid to Holder. Any Late
Charge imposed by Holder in accordance with this Section 7.1 shall
be due and payable on written demand.
7.2. Liquidated Damages; Not Interest. Maker agrees
that any such Late Charge shall not be deemed to be additional
interest or a penalty, but shall be deemed to be liquidated
damages because of the difficulty in computing the actual amount
of damages in advance. If any such Late Charge is in excess of
the amount permitted to be charged to Maker under applicable law,
Holder shall be entitled to collect the Late Charge at the highest
rate permitted by such law.
7.3. Secured. Until any and all Late Charges are
paid in full, the amount thereof shall be added to the
indebtedness secured by the Loan Documents.
8. Acceleration. In the event Maker fails to pay any
installment of principal and/or interest on this Note within five
(5) days after the due date thereof, or upon the happening of any
other "Event of Default," then and in any such event Holder may at
its option declare the entire unpaid balance of this Note,
together with interest accrued thereon, and together with all
other Maturity Obligations to be immediately due and payable and
Holder may proceed to exercise any rights or remedies that it may
have under the Loan Documents or such other rights and remedies
which Holder may have at law, equity or otherwise. From and after
the Maturity Date (whether by acceleration, passage of time or
otherwise), interest shall accrue on the outstanding principal
balance of this Note (including capitalized interest) at the
Default Rate. In the event of such acceleration, Maker may
discharge its obligations to Holder by paying the unpaid principal
balance hereof as of the date of such payment, plus accrued
interest, Late Charges computed in the manner set forth above, if
any, plus any advances made by Holder pursuant to the Security
Deed and the Loan Agreement and all other Maturity Obligations.
9. Attorney's Fees. After an Event of Default, in addition
to principal, interest, and Late Charges, if any, Holder shall be
entitled to collect all out of pocket costs of collection,
including, but not limited to, reasonable attorneys' fees incurred
in connection with the protection or realization of collateral or
in connection with any of Holder's collection efforts, whether or
not suit on this Note or any foreclosure proceeding is filed, and
all such costs and expenses shall be payable on demand and until
paid shall also be secured by the Loan Documents and by all other
collateral held by Holder with respect to the Loan as security for
Maker's obligations to Holder.
10. Non-Waiver by Holder. No failure on the part of Holder
or other holder hereof to exercise any right or remedy hereunder,
whether before or after the happening of an Event of Default,
shall constitute a waiver thereof, and no waiver of any past Event
of Default shall constitute waiver of any future Event of Default
or of any other Event of Default. No failure to accelerate the
debt evidence hereby by reason of default hereunder, or acceptance
of a past due installment of principal or interest, or indulgence
granted from time to time shall be construed to be a waiver of the
right to insist upon prompt payment thereafter or the right to
impose Late Charges retroactively or with respect to any late
payments occurring thereafter, or shall be deemed to be a novation
of this Note or as a reinstatement of the debt evidenced hereby or
as a waiver of such right of acceleration or any other right, or
be construed so as to preclude the exercise of any right which
Holder may have, whether by the laws of the state governing this
Note, by agreement or otherwise; and Maker and each endorser or
guarantor hereby expressly waives the benefit of any statute or
rule of law or equity which would produce a result contrary to or
in conflict with the foregoing. This Note may not be changed
orally, but only by an agreement in writing signed by the party
against whom such agreement is sought to be enforced.
11. Waiver by Maker. Maker, and each endorser of this Note
hereby waives presentment, protest, demand, diligence, notice of
dishonor and of nonpayment, and waives and renounces all rights to
the benefits of any statute of limitations and any moratorium,
appraisement, marshalling of assets, exemption and homestead now
provided or which may hereafter be provided by any federal or
state statute, including, but not limited to, exemptions provided
by or allowed under Title 11 of the United States Code, as at any
time amended, both as to itself personally and as to all of its or
their property, whether real or personal, against the enforcement
and collection of the obligations evidenced by this Note and any
and all extensions, renewals and modifications hereof.
12. Exculpation. Notwithstanding andy provision herein or
in any other Loan Document to the contrary, except for the
personal obligation and liability of Maker to Payee pursuant to
the Hazardous Substances Indemnity and except as otherwise
provided in this Article 12, Maker shall not be personally liable
for the repayment of any of the principal of, or Base Interest,
interest at the Default Rate, or Late Charges on, or any other
costs or charges evidenced by this Note or costs incurred in
connection with the collection of, the indebtedness evidenced by
this Note or any other indebtedness evidenced or secured by the
Loan Documents or for any deficiency judgment which Holder may
obtain after foreclosure of the Property after default by Maker or
for the breach of any other obligation under the Loan Documents;
it being understood that the recourse of Holder and each of its
successors and assigns under or in connection with this Note, any
other Loan Documents, and any certificates and instruments
executed in connection therewith, as amended or supplemented from
time to time, shall, except for the personal obligation and
liability of Maker to Payee pursuant to the Hazardous Substances
Indemnify and except as otherwise provided in this Article 12, be
limited to Maker's interest in the Property only, and Holder and
each of its successors and assigns does hereby waive any such
liability.
Notwithstanding the foregoing, Maker shall not be exonerated or
exculpated for any actual deficiency, loss or damage suffered by
Holder as a result of failure by Maker to comply with any of the
terms or conditions (other than the provisions relating to the
payment of principal, Base Interest, interest at the Default Rate,
or Late Charges) of this Note, the other Loan Documents or any
other documents evidencing, pertaining to, or securing the Loan
which relate to losses resulting form the following:
(a) Maker's failure to perform its obligations to properly
account to Holder for any proceeds of insurance or condemnation
awards as required by the Security Deed; or
(b) any application by Maker of insurance proceeds,
condemnation awards, security deposits or trust funds in
violation of the provisions of the Security Deed or
the Assignment; or
(c) Maker's failure to comply with provisions of the
Security Deed prohibiting the sale or further encumbering of the
Property; or
(d) Maker's failure to apply proceeds of rents and other
income of the Property:
(i) to the payment of insurance premiums, debt
service (principal and interest), taxes, assessments, water and
sewer bills and any other lien claims and indebtedness to the
extent that the Loan Documents require such rents and income to be
so applied, and
(ii) to the payment of costs of maintenance and
operation of the Property and to capital expenditures (including
payments required to be made to the Capital Repair and Replacement
Reserve Account, if any) and other expenses relating to the
Property before using such proceeds for any other purpose;
provided, however, that Maker shall have no liability under this
clause (d) unless, at the time Maker used such proceeds for
purposes other than those described in subsections (i) and (ii) of
this clause, Maker or Manager [which will be defined in section
1.17 of the Security Deed] had knowledge that any items described
in subsections (i) and (ii) of this clause were then due and
payable or had knowledge that, if such proceeds were then used for
other purposes, Maker would not have sufficient funds to pay the
items described in subsections (i) and (ii) that would become due
and payable within sixty (60) days thereafter; and, provided
further, that Maker's liability under this clause (d) shall be
limited to the actual amount of such proceeds used for purposes
other than those described in subsections (i) and (ii) of this
clause.
(e) Maker's entering into or modifying leases in violation
of the Security Deed or the Assignment, other than in the normal
course of business; or
(f) the collection of rentals under leases for periods of
mare than two months in advance; or
(g) Maker's intentional physical damage or destruction to
the Property; or
(h) claims arising by, through or under Maker for
brokerage commissions or finders' fees for arranging the Loan
evidenced by this Note; or
(i) claims made by Maker, its successors and assigns, any
partner in Maker, any affiliate of Maker, any affiliate of any
partner in Maker, any creditor of Maker, or any other person or
entity that this Note or the transactions evidenced hereby
establish a joint venture or partnership arrangement between Maker
and Holder.
The foregoing limitations on Maker's personal liability shall
neither impair the validity of the indebtedness evidenced by this
Note or the lien of or security interest of the Loan Documents or
the right of Holder to foreclose and/or enforce the Loan Documents
after the occurrence of an Event of Default by Maker. Nothing
herein shall be deemed to be a waiver of any right which Holder
may have under Section 506(1), 506(b), 1111(b) or any other
provision of the Bankruptcy Reform Act of 1978 to file a claim for
the full amount of the debt owing to Holder by Maker or to require
that the Property shall continue to secure all of the indebtedness
evidenced by this Note in accordance with the Loan Documents. The
foregoing limitations on Maker's personal liability shall not
impair or waive any of the rights of Holder to enforce the
Hazardous Substances Indemnity.
Notwithstanding anything herein contained or in any Loan
Documents to the contrary, no present or future constituent
partner in or agent of maker or its respective successors and
assigns, nor any shareholder, officer, director, employee,
trustee, beneficiary or agent of or any corporation or trust or
agent of Maker or of any constituent partner in Maker shall be
personally liable, directly or indirectly under or in connection
with this Note or any other Loan Document, or any instrument or
certificate securing or otherwise executed in connection with this
Note or any other Loan Document or any amendments or modifications
thereto made at any times heretofore or hereafter and Holder and
Holder's successors and assigns hereby waive such personal
liability. Accordingly, with respect to the foregoing exceptions
to the non-recourse provisions contained in this Section 12,
Holder's recourse shall be limited solely to the assets of Maker.
For the purposes of this Note, each of the other Loan
Documents and any such instruments and certificates and any
amendments or modifications thereto, neither the negative capital
account of any constituent partner in Maker nor any obligation of
any constituent partner in Maker to restore a negative capital
account or to contribute capital to Maker or to any other
constituent partner in Maker, shall at any time be deemed to be
the property or an asset of Maker or any such constituent partner
(and neither Holder nor any of its successors or assigns shall
have any right to collect, enforce or proceed against or with
respect to any such negative capital account or a partner's
obligation to restore or contribute). As used herein, a
"constituent partner" in Maker shall mean any present or future
partner in Maker or in any partnership that has a direct or
indirect interest (through one or more partnerships) in Maker.
13. Compliance with Usury Laws.
13.1. Notwithstanding anything to the contrary
contained in this Note or any of the other Loan Documents, in no
event shall the sum of all interest paid or payable on the
outstanding principal of the Loan or otherwise hereunder or under
the Loan Documents exceed the amount of interest which would have
accrued on all such amounts from time to time outstanding at the
rate of five percent (5%) per month. As used in this Section
13.1, the term "interest" shall mean and include all Base
Interest, interest at the Default Rate, and all other fees,
charges, requirements, and other amounts now or hereafter deemed
under law to be interest or charges for the use of money advanced
or to be advanced under this Note or any of the other Loan
Documents which a court of competent jurisdiction may deem
applicable hereto.
13.2. It is the intention of the parties to conform
strictly to the usury laws, whether state or federal, that are
applicable to this Note. All agreements between Maker and Holder,
whether now existing or hereafter arising and whether oral or
written, are hereby expressly limited so that in no contingency or
event whatsoever, whether by acceleration of maturity hereof or
otherwise, shall the amount paid or agreed to be paid to Payee or
the holder hereof, or collected by Payee or such holder, for the
use, forbearance or detention of the money to be loaned hereunder
or otherwise, or for the payment or performance of any covenant or
obligation contained herein or in the Loan Documents, or in any
other document evidencing, securing or pertaining to the
indebtedness evidenced hereby, exceed the maximum amount
permissible under applicable federal or state usury laws. If
under any circumstances whatsoever fulfillment of any provision
hereof or of the Loan Documents or any other documents, at the
time performance of such provision shall be due, shall involve
exceeding the limit of validity prescribed by law, than ipso
facto, the obligation to be fulfilled shall be reduced to the
limit of such validity; and if under any circumstances Payee or
other holder hereof shall ever receive an amount deemed interest
by applicable law, which would exceed the highest lawful rate,
such amount that would be excessive interest under applicable
usury laws shall be applied to the reduction of the principal
amount owing hereunder or to other indebtedness secured by the
Loan Documents and not to the payment of interest, or if such
excessive interest exceeds the unpaid balance of principal and
such other indebtedness, the excess shall be deemed to have been a
payment made by mistake and shall be refunded to Maker or to any
other person making such payment on Maker's behalf. All sums paid
or agreed to be paid to the Holder for the use, forbearance or
detention of the indebtedness of Maker evidence hereby,
outstanding from time to time shall, to the extent permitted by
applicable law, and to the extent necessary to preclude exceeding
the limit of validity prescribed by law, be amortized, prorated,
allocated and spread from the date of disbursement of the proceeds
of this Note until payment in full of the Loan so that the actual
rate of interest on account of such indebtedness is uniform
throughout the term hereof. The terms and provisions of this
Article 13 shall control and supersede every other provision of
all agreements between Maker and Holder.
14. Capital Work.
14.1. Approved Repair and Replacement Work. Maker
shall on January 31, 1995 deposit with Payee an amount equal to
the difference between (x) $7,600.00 and (y) the actual costs and
expenses incurred by Maker during the period from the date hereof
through and including December 31, 1994 for Approved Repair and
Replacement Work to the Property. In the event the actual costs
and expenses incurred by Borrower for Approved Repair and
Replacement Work to the Property during such period exceeds
$7,600.00, then Maker may apply such difference to the payment or
payments due by Maker to Payee under this Section 14.1 for the
following calendar year or years, as the case may be. In
addition, Maker shall, commencing on January 31, 1996 and
continuing on the thirty first (31st) day after the end of each
subsequent calendar year during the term hereof, deposit with
Payee an amount equal to the difference between (x) $45,600.00 and
(y) the actual costs and expenses incurred by Maker during the
prior calendar year for Approved Repair and Replacement Work to
the Property. In the event the actual costs and expenses incurred
by Borrower for Approved Repair and Replacement Work to the
Property during any calendar year exceeds $45,600.00, then Maker
may apply such difference to the payment or payments due by Maker
to Payee under this Section 14.1 for the following calendar year
or years, as the case may be.
14.2. Repair and Replacement Reserve Account. All
funds deposited with Payee pursuant to Section 14.1 above shall be
held by it in a separate interest bearing account which is
segregated from Payee's general funds (the "Capital Repair and
Replacement Reserve Account"), and , provided that no Event of
Default shall have occurred and be continuing, shall be applied in
payment of costs and expenses incurred by Maker for any Approved Repair and
Replacement Work with respect to the Property, to the extent such
funds have not previously been advanced. Should an Event of
Default occur and remain uncured, the funds deposited with Payee,
as aforementioned, to the extent such funds have not previously
been advanced, may be applied in payment of the costs and expenses
for which such funds shall have been deposited or to the payment
of the Loan or any other charges affecting the security of Holder,
as Holder sees fit, but no such application shall be deemed to
have been made by operation of law or otherwise until actually
made by Holder as herein provided.
14.3. Deferred Maintenance Work. At Maker's sole
cost and expense, Maker shall on or before July 1, 1995 perform or
cause to be performed at the Property all of the work listed on
Exhibit "B", attached hereto and by this reference made a part
hereof, to the reasonable satisfaction of Payee.
15. Governing Law. This Note shall be governed by and
construed under the laws of the State of Georgia. Maker hereby
submits to personal jurisdiction in said State for the enforcement
of Maker's obligations hereunder and under the Loan Documents, and
waives any and all personal rights under the law of any other
state to object to jurisdiction within such State for the purposes
of litigation to enforce such obligations of Maker. In the event
such litigation is commenced, Maker agrees that service of process
may be made and personal jurisdiction over Maker obtained, by
service of a copy of the summons, complaint and other pleadings
required to commence such litigation upon Maker's appointed Agent
for Service of Process in such State, which Agent Maker hereby
designates to be:
Corporation Process Company
180 Cherokee St., N.E.
Marietta, GA 30060
IN WITNESS WHEREOF, Maker has duly made and issued this Note
under seal as of the date and year first above written.
CARYLYLE REAL ESTATE LIMITED PARTNERSHIP -
XV, an Illinois limited partnership
BY: JMB Realty Corporation, a Delaware
corporation, general partner
By: ----------------------
Title: ---------------
Attest: ------------------
Title: ---------------
[CORPORATE SEAL]
Recording Requested By and |
When Recorded Mail To: |
|
9701 Wilshire Boulevard, Inc. |
c/o CT Capital International, Inc.|
575 Fifth Avenue |
New York, New York 10017 |
Attention: Mr. John P. Oswald |
|
| APN No.:
4343-026-004
DOCUMENTARY TRANSFER TAX - SEE SEPARATE TRANSFER TAX STATEMENT
GRANT DEED
FOR VALUE RECEIVED, CARLYLE REAL ESTATE LIMITED PARTNERSHIP-XV,
an Illinois limited partnership ("Grantor"), grants to 9701 WILSHIRE
BOULEVARD, INC., a California corporation ("Grantee"), all that certain
real property (the "Property") situated in the City of Beverly Hills,
County of Los Angeles, State of California, and more particularly described
in Exhibit A attached hereto and incorporated herein by reference.
MAIL TAX STATEMENTS TO:
9701 Wilshire Boulevard, Inc.
c/o CT Capital International, Inc.
575 Fifth Avenue
New York, New York 10017
Attention: Mr. John P. Oswald
The Property is conveyed to Grantee subject to all liens,
encumbrances, easements, covenants, conditions, restrictions and matters of
record.
IN WITNESS WHEREOF, the undersigned has executed this Grant
Deed on October __, 1994.
CARLYLE REAL ESTATE LIMITED PARTNERSHIP-XV,
an Illinois limited partnership
By: JMB REALTY CORPORATION,
a Delaware corporation,
General Partner
By:
Name: Gary M. Laughlin
Title: Authorized Signatory
STATE OF CALIFORNIA )
) ss.
COUNTY OF LOS ANGELES )
On , 1994, before me, , a Notary
Public in and for said State, personally appeared Gary M. Laughlin,
personally known to me (or proved to me on the basis of satisfactory
evidence) to be the person whose name is subscribed to the within
instrument and acknowledged to me that he/she executed the same in his/her
authorized capacity, and that by his/her signature on the within instrument
such person, or the entity upon behalf of which such person acted, executed
such instrument.
WITNESS my hand and official seal.
Signature (Seal)
CERTIFICATION OF NON-FOREIGN STATUS
Section 1445 of the Internal Revenue Code provides that a
transferee (buyer) of a U.S. real property interest must withhold tax if
the transferor (seller) is a foreign person. To inform the transferee
(buyer) that withholding of tax is not required upon the disposition of a
U.S. real property interest by CARLYLE REAL ESTATE LIMITED PARTNERSHIP-XV,
an Illinois limited partnership ("Seller"), the undersigned hereby swears,
affirms and certifies the following on behalf of Seller:
1. Seller is not a foreign corporation, foreign partnership,
foreign trust, or foreign estate (as those terms are defined in the
Internal Revenue Code and Income Tax Regulations).
2. Seller's U.S. employer identification number is 36-331487.
3. Seller's office address is:
c/o JMB Realty Corporation
900 North Michigan Avenue
Chicago, Illinois 60611
Attention: Mr. Robert J. Chapman
4. Seller understands that this certification may be
disclosed to the Internal Revenue Service by the transferee (buyer) and
that any false statement contained herein could be punished by fine,
imprisonment, or both.
Under penalties of perjury, the undersigned declares that he
has examined this certification and to the best of his knowledge and belief
it is true, correct and complete, and he further declares that he has the
authority to sign this document on behalf of Seller.
Executed as of the ______ day of October, 1994, at Los Angeles,
California.
CARLYLE REAL ESTATE LIMITED PARTNERSHIP-XV,
an Illinois limited partnership
By: JMB REALTY CORPORATION,
a Delaware corporation,
General Partner
By:
Name: Gary M. Laughlin
Title: Authorized Signatory
October , 1994
Los Angeles County Recorder
P.O. Box 115
Los Angeles, California 90053
Dear County Clerk/Recorder:
In accordance with Section 11932 of the California Revenue
and Taxation Code, the undersigned hereby requests that this
statement of documentary transfer tax not be recorded with the
attached Grant Deed (the "Deed"), but be affixed to the Deed
after recordation and before return as directed on the Deed.
The Deed names Carlyle Real Estate Limited Partnership-XV,
as grantor, and 9701 Wilshire Boulevard, Inc., as grantee. The
property that is the subject of the Deed is located in the
County of Los Angeles, State of California.
The amount of documentary transfer tax due on the attached
Deed is $ , computed on the full value of the
property less any encumbrances remaining on the property.
CARLYLE REAL ESTATE LIMITED PARTNERSHIP-XV,
an Illinois limited partnership
By: JMB REALTY CORPORATION,
a Delaware corporation,
General Partner
By:
Name: Gary M. Laughlin
Title: Authorized Signatory
"Grantor"
October __, 1994
9701 Wilshire Boulevard, Inc.
c/o CT Capital International, Inc.
570 Fifth Avenue
New York, New York 10017
Attention: Mr. John P. Oswald
Re: 9701 Wilshire Boulevard
Beverly Hills, California
Gentlemen:
Reference is made to that certain purchase agreement and joint escrow
instructions ("Purchase Agreement") dated as of September 1, 1994 between
Carlyle Real Estate Limited Partnership-XV ("Seller"), and 9701 Wilshire
Boulevard, Inc. ("Buyer"), providing for, among other matters, the purchase
and sale of certain premises located at 9701 Wilshire Boulevard in Beverly
Hills, California. Further reference is made to that certain lease
termination agreement ("Termination Agreement") dated as of July 15, 1994,
among the Mortgage Capital Group, Gary W. Hampar, Esq., Inc. (formerly
known as Youner & Hampar) ("Hampar") and Seller, true and correct copies of
which have been previously delivered to Buyer.
Please be advised that Seller has entered into no agreements, oral or
written, with Hampar except for the termination Agreement and the Lease
referenced therein. Without limitation on the foregoing, Seller has not
entered into any binding agreement, oral or written, with respect to the
relocation of Hampar contemplated therein.
Very truly yours,
CARLYLE REAL ESTATE LIMITED
PARTNERSHIP-V, an Illinois limited
partnership
By: JMB Realty Corporation, a
Delaware corporation
General Partner
By: _______________________
Gary M. Laughlin
Authorized Signatory
October 5, 1994
9701 Wilshire Boulevard, Inc.
c/o CT Capital International, Inc.
575 Fifth Avenue
New York, New York 10017
Attention: Mr. John P. Oswald
Re: 9701 Wilshire Boulevard
Beverly Hills, California
Gentlemen:
Reference is made to that certain Purchase Agreement and Joint Escrow
Instructions ("Purchase Agreement") dated as of September 1, 1994, between
Carlyle Real Estate Limited Partnership-XV ("Seller") and 9701 Wilshire
Boulevard, Inc. ("Buyer"), providing for, among other matters, the purchase
and sale of premises located at 9701 Wilshire Boulevard, Beverly Hills,
California. Except as otherwise specifically set forth herein, all
capitalized terms used in a defined manner herein shall have the meaning
set forth for such terms in the Purchase Agreement.
In consideration of the premises and the mutual undertakings of the
parties hereto, it is hereby agreed as follows:
1. Notwithstanding the provisions of the Purchase Agreement,
monthly rents due under the leases for October, 1994 have been prorated on
the basis that all such rents were received (notwithstanding that certain
amounts have not yet been received or collected by Seller). If any such
monthly rent for October 1994 is not received within 10 days of the date
hereof, Buyer will reasonably cooperate with Seller and pursue the
collection thereof in good faith. If within a reasonable time thereafter
such rents still remain unpaid, Buyer and Seller shall reasonably agree on
a proper and appropriate method for seeking to collect such rents as soon
as reasonably possible. Notwithstanding the provisions of the Purchase
Agreement limiting the obligations of Buyer to litigate or declare a
default in connection with any such delinquencies, Buyer agrees that it
will litigate or declare a default under the lease if requested by Seller;
provided, however, if Buyer pays the amount due Seller with respect to such
rents Buyer shall not thereafter be required to litigate or declare a
default on the lease with respect to such amounts so paid. Buyer shall
promptly deliver to Seller any checks (endorsed over to Seller) or amounts
received by Buyer with respect to October, 1994 rents. Nothing contained
herein shall modify the Purchase Agreement respecting rents other than the
monthly rents for October, 1994 (and, without limitation thereon, Buyer
shall not be obligated to litigate or declare a default with respect to
delinquent rents for periods prior to October, 1994).
2. The parties acknowledge that the current tax reduction
proceedings by Seller for tax years 1992-93 and 1993-94 have not yet been
finalized. Notwithstanding the same, for ease of administration the
parties have provided for a credit in favor of Buyer of $75,000.00 with
respect to anticipated tax reimbursements, a portion of which may
ultimately be required to be delivered to the tenants or otherwise. The
parties agree that such credit does not represent a final accounting of any
amounts which are due tenants or otherwise and that the applicable amounts
will be prorated at such times as the information necessary to accurately
make such determinations is available (and each party shall promptly
deliver or cause to be delivered to the tenants or the other party, as
appropriate, the amounts due such tenants or other party by such party).
Nothing contained herein shall limit the obligations of a party to deliver
any amounts either received by or credited to such party with respect to
amounts ultimately to be reimbursed to tenants or the other party and each
such party shall indemnify, defend and hold the other party harmless from
any failure by such party to deliver such amounts due. In order to further
assure that the amounts ultimately due to tenants for tax reimbursements
for the applicable years are properly paid, the parties acknowledge that
they will use good faith efforts to coordinate with Seller's tax counsel,
Katten, Muchen & Zavis, to insure that the anticipated tax reimbursements
are ultimately available to Seller and Buyer for such purposes.
3. The tenant estoppel certificate delivered by Prudential Bache
contains allegations of a breach of the Prudential Bache lease by Seller
for failure to permit Prudential Bache to audit operating expenses. Seller
denies any and all such breaches. Seller hereby agrees to indemnify, defend
and hold Buyer harmless from loss, damage, cost of expenses (including
reasonable attorneys fees) incurred by Buyer in the event that Seller's
actions shall be determined to be a breach by Seller of such lease.
Except as specifically set forth herein, the Purchase Agreement is
unmodified and remains in full force and effect (and, without limitation
thereon, the provisions hereof are subject to the limitations contained in
paragraph 10B of the Purchase Agreement).
Please indicate your consent to the foregoing by signing where noted
below.
Very truly yours,
CARLYLE REAL ESTATE LIMITED PARTNERSHIP-XV,
an Illinois limited partnership
By: JMB REALTY CORPORATION,
a Delaware corporation,
General Partner
By:
Name: Gary M. Laughlin
Title: Authorized Signatory
ACKNOWLEDGED AND AGREED TO
AS OF THIS ____ DAY OF OCTOBER, 1994
9701 WILSHIRE BOULEVARD, INC.
a California corporation
By: _______________________________
John P. Oswald, President
LOCKBOX AGREEMENT
Maguire/Thomas Partners-South Tower
Borrower
Aetna Life Insurance Company
Lender
CB Commercial Real Estate Group, Inc.
Agent
December 1, 1994
LOCKBOX AGREEMENT
THIS LOCKBOX AGREEMENT (this "AGREEMENT"), is made as of
December 1, 1994, by and among MAGUIRE/THOMAS PARTNERS-SOUTH TOWER, a
California limited partnership ("Borrower"), AETNA LIFE INSURANCE COMPANY,
a Connecticut corporation ("Lender"), and CB COMMERCIAL REAL ESTATE GROUP,
INC., a Delaware corporation ("Agent").
R E C I T A L S:
A. Borrower is the owner of that certain real property and
all appurtenances thereto and improvements thereon commonly known as the
IBM Tower at Wells Fargo Center located in Los Angeles, California (the
"Premises"), which property is more particularly described on Exhibit A to
the Deed of Trust (as defined herein).
B. Borrower executed and delivered to The Aetna Casualty and
Surety Company ("Aetna Casualty and Surety") that certain Promissory Note
in the original principal amount of two hundred million dollars
($200,000,000) dated November 26, 1984 (the "Note"); which Note and the
indebtedness evidenced thereby (the "Indebtedness"), is secured by, inter
alia, that certain Deed of Trust, Assignment of Rents and Security
Agreement ("Deed of Trust") executed by Borrower, as Trustor, in favor of
Ticor Title Insurance Company of California, as trustee, and naming Aetna
Casualty and Surety as Beneficiary, dated November 26, 1984, encumbering,
inter alia, the Premises and recorded on November 28, 1984, in the Official
Records of the Los Angeles County Recorder's office (the "Land Records"),
as Instrument Number 84-1399775 and that certain Assignment of Rents and
Leases (the "Assignment of Rents") executed by Borrower, as Assignor, in
favor of Aetna Casualty and Surety, as Assignee, dated November 26, 1984,
with respect to all leases affecting the Premises and recorded in the Land
Records on November 28, 1984 as Instrument Number 84-1399776. The Note,
the Deed of Trust, the Assignment of Rents and all other documents
evidencing or securing the Indebtedness are hereinafter collectively
referred to as the "Loan Documents."
C. Aetna Casualty and Surety assigned its rights under the
Loan Documents to Lender pursuant to an Assignment dated October 29, 1986
and recorded in the Land Records on December 4, 1986 as Instrument Number
86-167563.
D. Borrower has an existing lockbox arrangement and
associated deposit account (the Existing Account defined below) with Bank
of America NT & SA ("Bank of America") in order to collect all receipts
which are or may became due and payable under all leases of any part of the
Premises and under any other agreement or contract with respect to the
Premises. In order to effectuate the transactions provided for in this
Agreement:
(1) Lender has established a new deposit account with
Bank of America, in the name of Agent, as agent for Lender (the
Deposit Account provided for herein);
(2) simultaneously with the execution of this Agreement,
Borrower and Lender have irrevocably instructed Bank of America that
all funds which are hereafter received in the Bank of America lockbox
originally established for the Existing Account shall instead be
deposited into the Deposit Account; and
(3) Borrower and Lender have agreed that all funds from
time to time held in said Deposit Account, and in the Tax and
Insurance Escrow Account provided for herein, shall be held,
withdrawn and disbursed by Agent in accordance with the terms of this
Agreement.
E. Borrower has also agreed to the establishment of a tax
and insurance escrow (the Tax and Insurance Escrow Account provided for
herein) and has agreed to deposit certain funds therein to serve as
additional security for the Indebtedness and as a source of payment of real
property taxes and assessments and insurance premiums in respect of the
Premises.
F. Lender has requested Agent to act as its agent with
respect to the Deposit Account and the Tax and Insurance Escrow Account.
Agent has accepted its appointment in accordance with the terms of this
Agreement, has agreed to establish the Deposit Account and the Tax and
Insurance Escrow Account, and has agreed, in its capacity as agent for
Lender, to hold, disburse and otherwise pay over all funds from time to
time held in the Deposit Account and the Tax and Insurance Escrow Account
(the "Funds") in accordance with this Agreement.
NOW, THEREFORE, in consideration of the matters described in
the foregoing recitals (which are hereby incorporated fully into the terms
of this Agreement), and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the undersigned
hereby covenant and agree as follows:
1. Deposit Account and Tax and Insurance Escrow Account.
(a) Borrower has an existing lockbox arrangement with
Bank of America (the "Lockbox") and an associated deposit account, Account
No. 14200-51462 (the "Existing Account"), in order to collect receipts
which are or may became due and payable with respect to the Premises.
(b) In connection with the transactions provided for
herein:
(1) Lender has established a new deposit account,
Account No. 1233-31968 (the "Deposit Account") with Bank of America,
in the name of Agent, as agent for Lender; and
(2) simultaneously with the execution of this
Agreement, Borrower and Lender have irrevocably instructed Bank of
America that, from and after the date of execution of this Agreement
until the Indebtedness and all other sums due and owing to Lender
have been paid in full, the Lockbox arrangements with Bank of America
shall be transferred from the Existing Account to the Deposit
Account, and all funds which are received in the Lockbox shall
instead be deposited into the Deposit Account, notwithstanding any
contrary provisions of the agreement(s) between Maguire Thomas
Partners, on behalf of Borrower and Bank of America regarding the
Existing Account and the Lockbox arrangements originally associated
therewith. In connection therewith, Agent, as agent for Lender,
shall be substituted for Maguire Thomas Partners and Borrower for all
purposes of such Lockbox arrangements with Bank of America, other
than obligations to pay fees to Bank of America (Borrower shall
remain liable for all such fees), including, without limitation,
receiving documents, correspondence and other materials delivered to
the Lockbox, for receiving notices and statements from Bank of
America, and for making withdrawals or other disbursements of funds
on deposit in the Deposit Account and in the Tax and Insurance Escrow
Account.
Borrower acknowledges and agrees that such transactions have been entered
in order that the Deposit Account will exclusively be used collect, hold
and disburse any and all Gross Receipts (as defined in Section 4 below)
which are or may became due and payable under all leases of any part of the
Premises and under any other agreement or contract with respect to the
Premises. Any such lease, contract, license, concession or other agreement
is herein collectively referred to as a "LEASE" and the party or parties
thereto, other than Borrower, are referred to herein as a "TENANT." All
Funds from time to time deposited and held in said Deposit Account and in
the Tax and Insurance Escrow Account shall be held, withdrawn and disbursed
by Agent in accordance with the terms of this Agreement.
(c) On or before the date of execution of this
Agreement:
(1) Borrower has paid, as an Approved Operating
Cost (as defined in Section 6 below) the first installment of 1994-95
ad valorem taxes on the Premises, in the amount of $1,464,017.17;
(2) Borrower has paid, as an Approved Operating
Cost, the annual premium for casualty and earthquake insurance on the
Premises for the period through November 30, 1995, in the amount of
$1,028,241.50 (as provided for in paragraph (2) of Section 2(e)
below, an additional insurance premium for such coverage is to be
paid by Borrower);
(3) Lender has established a new deposit account,
Account No. 1233-761942 (the "Tax and Insurance Escrow Account"), an
interest bearing money market account with Bank of America, in the
name of Agent, as agent for Lender. Borrower shall, not later than
December 30, 1994, pay to Agent for deposit into the Tax and
Insurance Escrow Account, the sum of $413,000.
Funds deposited into the Tax and Insurance Escrow Account shall be solely
the property of Lender, to be disbursed for the payment of either taxes and
assessments or insurance premiums for the Premises or applied to the
Indebtedness in accordance with the terms and conditions of this Agreement.
(d) In addition to the initial deposit into the Tax and
Insurance Escrow Account pursuant to Section 1(c)(3) above, and the monthly
deposits into such Account pursuant to Section 5(a)(3) below, additional
Funds shall be deposited by Borrower into the Tax and Insurance Escrow
Account after the date of execution of this Agreement from time to time in
accordance with Paragraphs 1.04 and 1.08(e) of the Deed of Trust.
(e) In connection with such Tax and Insurance Escrow
Account;
(1) Borrower shall deliver, or shall cause to be
delivered, to Agent and to Lender, promptly after receipt thereof by
Borrower, but in no event later than 30 days prior to the date any
such taxes are due, all invoices for real property taxes and
assessments in respect to the Premises. Lender shall direct Agent in
writing to disburse funds from the Tax and Insurance Escrow Account
(to the extent, and only to the extent, funds are then available
therein) and to pay such invoices directly to the taxing authority,
and Agent shall pay the same in accordance with the terms of said
direction on or prior to the date such payments are due.
(2) Borrower shall deliver, or shall cause to be
delivered, to Agent and to Lender, promptly after receipt thereof by
Borrower, but in no event later than 30 days prior to the date any
such insurance premiums are due, all invoices for premiums for the
insurance required to be maintained by Borrower pursuant to
Paragraphs 1.03 and 5.20 of the Deed of Trust. Lender shall direct
Agent in writing to disburse funds from the Tax and Insurance Escrow
Account (to the extent, any only to the extent, funds are then
available therein) and to pay such invoices directly to the
applicable insurance carrier, and Agent shall pay the same in
accordance with the terms of said direction on or prior to the date
such payments are due.
(3) Notwithstanding the provisions of paragraphs
(1) and (2) of this Section 1(e), however, (i) Lender shall not be
required to direct Agent to make any such disbursement from the Tax
and Insurance Escrow Account upon the occurrence and during the
continuance of an Event of Default hereunder, and (2) at any time and
from time to time during the continuance of any Event of Default
hereunder or under the Loan Documents, upon request of Lender, Agent
shall withdraw all funds then on deposit in the Tax and Insurance
Escrow Account and disburse such sums to Lender to be applied to the
Indebtedness or any other sums then due and owing to Lender under the
Loan Documents in such order as Lender shall determine in its sole
discretion.
(e) On or before the date of execution of this
Agreement, Borrower has paid to Lender the sum of Two Million One Hundred
Ninety Thousand Three Hundred Ninety-Six Dollars ($2,190,396), which
payment has been applied by Lender to the Indebtedness.
2. COMMENTS OF BORROWER. Borrower hereby covenants,
agrees, represents and warrants to Lender as follows:
(a) With respect to the Tenants: (1) Borrower
represents that Borrower has delivered to certain existing Tenants as of
the date of execution of this Agreement a written notice instructing such
existing Tenants to make all payments of Gross Receipts required pursuant
to its Lease directly to the Lockbox (not all such notified Tenants,
however, have complied with such notices), (2) simultaneously with the
execution of this Agreement, Borrower and Lender shall jointly give a
notice instructing International Business Machines Corporation, an existing
Tenant, to make all payments of Gross Receipts required pursuant to its
Lease directly to the Lockbox (3) promptly following execution of this
Agreement, Borrower shall deliver to each other existing Tenant who is not
now making payments to the Lockbox, a written notice instructing such
existing Tenant to make all payments of Gross Receipts required pursuant to
its Lease directly to the Lockbox, and (4) promptly upon execution of any
Lease for any part of the Premises after the date of execution of this
Agreement, Borrower shall deliver, or cause to be delivered, a written
notice instructing each such Tenant to make all payments of Gross Receipts
required pursuant to its Lease directly to the Lockbox. Each such written
notice to a Tenant is herein referred to as a "Payment Notice." Borrower
shall not give any instructions to any Tenant for any payments that are
inconsistent with the requirements of this Agreement or with the Payment
Notice delivered to such Tenant.
(b) If Borrower shall receive, directly or indirectly
through its managers, agents or partners, any cash or any checks, drafts,
or other instruments (hereinafter collectively referred to as "Checks")
from any Tenant in payment of Gross Receipts, Borrower shall immediately
endorse and deposit same into the Deposit Account.
(c) Until the Indebtedness and all other sums due and
owing to Lender have been paid in full, Borrower also agrees that Borrower
shall not, and shall have no right to, amend, terminate or modify in any
way the agreement(s) with Bank of America pertaining to the Tax and
Insurance Escrow Account or to the Deposit Account or the Lockbox
arrangements applicable thereto. Only persons designated by Agent, in its
discretion, shall have the authority to make withdrawals or disbursements
from the Deposit Account or the Tax and Insurance Escrow Account, and
Borrower shall have no right to withdraw or otherwise transfer funds from
the Deposit Account or the Tax and Insurance Escrow Account, to close the
Deposit Account or the Tax and Insurance Escrow Account, or to otherwise
modify or exercise any authority over the Deposit Account, the Tax and
Insurance Escrow Account or any Funds on deposit in either.
(d) Effective on and after December 1,1994, until the
Indebtedness and all other sums due and owing to Lender have been paid in
full, Borrower agrees that no Gross Receipts, Funds or any other amounts
shall be paid or distributed, and no other property shall be distributed,
to any partner of Borrower, except for such distributions by Borrower.
(1) of the excess Balance Distribution approved by
Lender in accordance with Section 2(f) below;
(2) of not more than $100,000 for the month of
December, 1994, from Borrower's Operating Account as provided for in
Section 2(e)(6) below; and
(3) of not more than $100,000 per month, starting
with the month of January, 1995, from amounts disbursed by Agent from
the Deposit Account to Borrower for such purpose, as provided for in
Section 5(a)(4) of this Agreement.
(e) Borrower represents, warrants, covenants and agrees
with Lender as follows:
(1) that Borrower has paid the first installment
of 1994-95 ad valorem taxes on the Premises in the amount of
$1,464,017.17;
(2) that for casualty and earthquake insurance on
the Premises, Borrower has paid the sum of $1,028,241.50 and prior to
February 28, 1995, Borrower shall pay an additional amount (estimated
to be approximately $227,000), and that such amounts represent the
annual premium for casualty and earthquake insurance on the Premises
for the period through November 30, 1995;
(3) that on or about the date of execution of
this Agreement, Borrower has paid or shall pay Agent $500, as Agent's
fee for services in connection with the Deposit Account for the month
of December,1994;
(4) that all funds in the Existing Account
representing Gross Receipts applicable to the period after November
30,1994 (e.g., without limitation, any rents for the month of
December, 1994) have been transferred to the Deposit Account or to
Borrower's Account No. 142 0703576 with Bank of America (the
"Operating Account");
(5) that the Existing Account is being closed
simultaneously with the execution of this Agreement, that any funds
deposited in the Existing Account on or following the date of
execution of this Agreement until such Existing Account is closed
shall be immediately deposited into the Operating Account or the
Deposit Account, and that except for the Operating Account, and the
balances on deposit therein, Borrower has no deposit accounts, cash,
certificates of deposit, securities or other case equivalents;
(6) that Borrower has made, or shall be permitted
to make from the Operating Account, a single distribution to its
partners for the month of December, 1994, in an amount not to exceed
$100,000 and that, except for such $100,000 distribution, and any
Excess Balance Distribution in accordance with Section 2(f) below, no
other distributions to Borrower's partners have been made since
December 1,1994 or shall be permitted to be made during the month of
December,1994;
(7) that solely from Gross Receipts attributable
to the period through November 30,1994, and after (i) payment of all
costs and expenses of the Premises attributable to such period, (ii)
payment or provision for (i.e., deduction) of the first installment
of property taxes in accordance with Section 2(e)(1) above, and (iii)
payment of or provision for the insurance premium described in
Section 2(e)(2) above (but before establishment of a cash working
capital reserve for the Premises), as of November 30, 1994, Borrower
had a cash balance in the amount of Six Hundred Thousand Dollars
($600,000) (the "Excess Balance"), which Borrower desires to
distribute to its partners in accordance with Section 2(f) below;
(8) that as of December 19,1994, the total
outstanding balance on deposit in the Existing Account was
$3,649,993, including the Excess Balance, plus an additional amount
sufficient (i) to pay any remaining unpaid Approved Operating Costs
(as defined below) of Borrower through December 31, 1994, and (ii) to
make, to the extent not yet made, the $100,000 December, 1994
distribution to Borrower's partners permitted pursuant to Section
2(d)(2) and Section 2(e)(6) above; and
(9) that on or before January 3, 1995, Borrower
shall transfer from the Operating Account to the Deposit Account the
amount, if any, by which the aggregate balance in the Operating
Account exceeds the sum of (i) any undistributed balance of the
Excess Balance Distribution, plus (ii) if not then paid, the sum of
$227,000 for the additional insurance premium described in Section
2(e)(2) above, plus (iii) a working capital balance of $250,000 (to
the extent such working capital balance is less than $250,000,
Borrower may request additional funds to maintain such a working
capital balance in accordance with Section 6(b) below.
(f) Following execution and delivery of this Agreement,
Borrower shall be entitled to distribute the amount of the Excess Balance
(as specified in Section 2(e)(7) above) to its partners (the "Excess
Balance Distribution").
(g) Notwithstanding any provision of the Loan Documents
to the contrary, in the event of any breach by Borrower of its covenants,
agreement, representations or warranties set forth in this Section 2, the
direct and indirect general partners of Borrower (but not (i) JMB Realty
Corporation, or (ii) any shareholder of the indirect general partners of
Borrower) shall be personally obligated to Lender for any amounts which
would have been, but for such breach, deposited into the Deposit Account
and disbursed to Lender in accordance with the terms and conditions of this
Agreement; provided, however, that such amounts for which the direct and
indirect general partners of Borrower are personally liable to Lender shall
not include any amounts which, although not deposited into the Deposit
Account, were expended by Borrower in good faith for reasonable operating
costs and expenses of the Premises.
3. APPOINTMENT OF AND GRANT OF AUTHORITY TO AGENT. Lender
hereby appoints Agent as its agent and bailee hereunder. Agent accepts
such appointment and agrees to receive, hold and disburse the Funds in
accordance with the terms of this Agreement. Borrower hereby consents to
the appointment of Agent as the agent of Lender for the purpose of
performing the duties and obligations provided for by this Agreement, and
in connection therewith, Borrower hereby grants to Agent the following
authority and rights:
(a) to make withdrawals and disbursements from the
Deposit Account and the Tax and Insurance Escrow Account in
accordance with the terms and conditions of this Agreement;
(b) to open all mail and other documents sent either to
the Lockbox or to Agent at its address hereunder, whether such mail
is addressed to Borrower, Lender or any other person; provided,
however, that Agent shall forward all such mail addressed to Borrower
(exclusive of Gross Receipts) to Borrower at the address set forth
herein;
(c) to endorse in the name of Borrower or any of its
affiliates, or Lender, without recourse to Agent, Lender or Borrower,
all Checks in payment of the Gross Receipts and to deposit such
checks into the Deposit Account with Bank of America;
(d) upon request by Lender, to deliver copies of all
mail or other documents received by Agent to Lender or such other
party as Lender may designate; and
(e) to take such other action is respect of the Deposit
Account and the Tax and Insurance Escrow Account as may be necessary
or appropriate within the discretion of Agent for the purpose of
collecting and depositing the Gross Receipts (but without any
obligation to enforce the obligations of any Tenant under any Lease)
and disbursing the same to the persons and in the order of priority
set forth in Section 5 hereof, and to otherwise carry out the duties
and obligations imposed upon Agent pursuant to the terms of this
Agreement.
Borrower hereby irrevocably and unconditionally authorizes Agent, and
grants Agent, for the term hereof, a continuing, irrevocable, and
unconditional power of attorney (which power of attorney is coupled with an
interest) in the name of Borrower, without notice to or further consent or
authorization from Borrower, to receive, endorse, if necessary (as agent
for the payee but without recourse to Borrower), and forward for collection
any and all cash or Checks and to perform such other acts as may be
reasonably necessary under the terms of this Agreement. Borrower agrees to
indemnify, defend and hold Agent harmless from and against any and all
claims, actions, liabilities, judgments, costs, and expenses (including
attorneys' fees) arising out of the exercise of the foregoing power of
attorney, except for claims, actions, judgments, costs and expenses
resulting from Agent's gross negligence, intentional misconduct or bad
faith.
4. GROSS RECEIPTS. As used herein, "GROSS RECEIPTS" shall
mean, during the period commencing on December 1, 1994 and continuing until
the Indebtedness and all other sums due and owing to Lender have been paid
in full, the aggregate gross revenues derived or generated by or from the
Premises and received during such period by or for the account or benefit
of Borrower, including, without limitation, (A) all payments for use or
occupancy of all or any part of the Premises or for any services,
equipment or furnishings provided in connection with any such use or
occupancy, whether as rent, fees, charges, expense recoveries or otherwise
(but excluding security deposits until they are no longer subject to being
returned), (B) all revenues from any concessions, franchises or other
operations on or from the Premises, (C) all refunds, rebates and
reimbursements of any expenses or taxes related to the Premises previously
paid, (D) all insurance proceeds, condemnation awards and similar
compensation relating to all or any part of the Premises that are not
applied to payment of the Indebtedness or, to the extent permitted under
the Deed of Trust, to restoration of the portion of the Premises to which
such proceeds, awards or compensation related, (E) except to the extent
otherwise agreed by Lender in writing or expressly provided for in the Loan
Documents, all proceeds of any sale or other disposition of all or any part
of the Premises that are not applied to payment of the Indebtedness, but
excluding any funds withdrawn or otherwise disbursed from the Deposit
Account or the Tax and Insurance Escrow Account (the foregoing not
constituting any consent to the sale or disposition of any portion of the
Premises except in accordance with the Deed of Trust), and (F) the proceeds
of any rental interruption insurance.
5. DISBURSEMENTS FROM DEPOSIT ACCOUNT.
(a) As used herein, the "DISBURSEMENT DATE" means the
date each calendar month, commencing with the month of January 1995, which
is the first business day during such calendar month on which the aggregate
balance available for withdrawal from the Deposit Account first equals or
exceeds an amount equal to the sum of the amounts distributable for such
calendar month under clauses (1), (2), (3) and (4) below plus $2,190,396.
Until the Indebtedness and all other sums due and owing to Lender have been
paid in full, Agent shall withdraw all good, collected funds held in the
Deposit Account and remit such Funds as follows:
(1) first, on the Disbursement Date of each
calendar month, to Agent to pay all fees and expenses of Agent,
pursuant to this Agreement;
(2) second, on the Disbursement Date of each
calendar month, to Borrower, for deposit into Borrower's Operating
Account, an amount equal to the amount of any Approved Operating
Costs (as provided for below) for such calendar month in accordance
with the notice of approval thereof received by Agent from Lender in
accordance with Section 6 below -- all such amounts disbursed to
Borrower hereunder shall be used by Borrower solely to pay Approved
Operating Costs incurred or to be incurred in the operation of the
Premises, or approved for distribution to the partners of Borrower,
in either case only in accordance with the approved budget therefor
pursuant to Section 6 and in accordance with Borrower's usual custom
and practice for such operating costs, and any excess of such
disbursement over the amount of such Approved Operating Costs
actually paid by Borrower shall be credited against (and reduce) the
amount of the disbursement to Borrower under this clause (2) for the
next calendar month;
(3) third, on the Disbursement Date of each
calendar month, to Agent, for deposit into the Tax and Insurance
Escrow Account:
(i) the sum of $519,819 for each of the
months of January, February and March, 1995;
(ii) the sum of $304,819 for each of
the months of April through October,1995; and
(iii) the sum of $352,606 per month for
November, 1995 and each month thereafter (an amount equal
to $244,003 per month with respect to property taxes and
$108,603 per month for insurance);
or such other amount as determined by Lender in accordance with
Section 1(d) above:
(4) fourth, on the Disbursement Date of each
calendar month, to Borrower, for distribution to the partners of
Borrower that month, the sum of One Hundred Thousand Dollars
($100,000); and
(5) fifth, to Lender, on the Disbursement Date of
each calendar month and at any other time as may be requested from
time to time by Lender (by written notice to Agent), an amount equal
to all of the remaining Funds in the Deposit Account, to be applied
against the Indebtedness in accordance with the Loan Documents.
Notwithstanding the foregoing, however, if on the fifth day of any calendar
month, commencing January 5, 1995, the aggregate balance available for
withdrawal from the Deposit Account is less than the minimum sum provided
for above to qualify for the Disbursement Date, and provided that no Event
of Default has then occurred and is continuing, then:
(i) on such date (or the next business day, if the
fifth of such calendar month is not a business day), Lender shall
authorize Agent to make a supplemental distribution to Borrower for a
portion of Approved Operating Costs in an amount equal to the
aggregate utility costs and expenses for the Premises (electricity,
gas, water, trash and similar costs, but excluding management fees
and other payments to entities affiliated with Borrower or its
general partners) payable during such month (and Borrower represents
and warrants to Lender that such utility costs and expenses are
approximately $250,000 to $300,000 per month);
(ii) Borrower shall use such funds to pay all such
utility costs on or before the tenth day of such month; and
(iii) the amount of any distribution to Borrower of
Approved Operating Costs pursuant to Section 5(a)(2) above on the
Disbursement Date shall be reduced by the amount of any such
supplemental distribution (and such adjustment shall be taken into
account in the determination of whether or not there is a sufficient
balance in the Deposit Account to satisfy the criteria for the
Disbursement Date).
(b) Agent shall hold the Funds in trust in the Deposit
Account and in the Tax and Insurance Escrow Account as Lender's agent and
bailee, and Agent shall disburse such Funds, as Lender's agent, in
accordance with the foregoing until directed by Lender to disburse or
otherwise pay over such Funds in accordance with the terms of this
Agreement. All amounts disbursed to Lender pursuant to this Agreement
shall be paid, in immediately available funds, by wire transfer as follows:
Bank: Bank of America
REID Deposit Center - Los Angeles 1420
525 South Flower Street
Los Angeles, California 90071
ABA Number:121000358
Account Name: Aetna Life Insurance Company
Account No.: 14206-70255
Reference: CB Commercial/Maguire Investor Number 101
Within 15 days after the end of each month, and on any other date as Lender
shall request, Agent shall deliver to Borrower and Lender a statement in
reasonable detail showing the amount of the Funds then held in the Deposit
Account and the Tax and Insurance Escrow Account, and the amount and payee
of all Funds distributed from each of said Accounts in accordance with the
terms of this Agreement.
6. APPROVED OPERATING COSTS.
(a) On the date of execution of this Agreement, with
respect to such projected operating costs and expenses for December, 1994
and January, 1995, and by January 15,1995, and the 15th day of each month
thereafter until the Indebtedness has been repaid in full, with respect to
such projected operating costs and expenses for the following calendar
month, Borrower shall deliver to Lender and Agent a schedule (in reasonable
detail acceptable to Lender) of projected operating costs and expenses to
be paid by Borrower during the next following calendar month in connection
with the ownership and operation of the Premises (which costs and expenses
may include, without limitation, utility payments, professional fees in
connection with the negotiation of this Agreement and the operation,
maintenance or leasing of the Premises, payments due tenants under leases
(e.g., rental reimbursements for space vacated in other projects prior to
moving to the Premises) and payments to IBM of sublease rental received by
Borrower, payments under asset management contracts (e.g., elevator
maintenance, security, and parking), management fees, leasing commissions,
costs of repairs and maintenance and tenant improvement costs for the
Premises; provided, however, that such costs and expenses shall exclude,
without limitation, (i) real property taxes and assessments and insurance
premiums which are to be paid from the Tax and Insurance Escrow Account,
(ii) professional fees incurred in connection with any dispute,
negotiations or agreement by or between the partners in the Borrower or any
transaction related thereto and (iii) any costs or expenses in connection
with any proposed sale or financing of the Premises). To the extent such
operating costs or expenses will be paid by Borrower to any affiliate of
Borrower or any of the general partners of Borrower, Borrower shall
identify such proposed affiliate payments in such schedule. To the extent
such costs and expenses for the following month are approved by Lender,
Lender shall notify Borrower and Agent of such approval, whereupon such
approved costs and expenses shall constitute "Approved Operating Costs"
hereunder for purposes of the next monthly disbursement to Borrower in
accordance with Section 5(a) above.
(b) In connection with the foregoing, Borrower may
maintain a working capital balance in Borrower's Operating Account of Two
Hundred Fifty Thousand Dollars ($250,000) at any time. In no event,
however, shall the aggregate amount on deposit in the Operating Account at
any time exceed the sum of (i) $250,000, plus (ii) amounts disbursed to
Borrower for Approved Operating Costs and the monthly distribution to
partners pursuant to Section 5(a) above, minus (iii) the amounts of such
Approved Operating Costs paid by Borrower and the amounts of such
authorized monthly distributions made by Borrower. If at any time such
working capital balance is less than $250,000, in order to allow Borrower
to maintain such balance, Borrower may request additional funds as proposed
Approved Operating Costs in accordance with this Agreement.
(c) On the date of execution of this Agreement and on
January 15,1995, and on the 15th day of each succeeding month until the
Indebtedness and all other sums due and owing to Lender have been paid in
full, Borrower shall deliver to Lender and Agent a statement showing, in
reasonable detail (acceptable to Lender), the amounts of all payments of
operating costs and expenses for the Premises actually made by Borrower
during the immediately preceding calendar month, reconciling such payments
with the amounts distributed to Borrower therefor (i.e., for such
components of Approved Operating Costs) pursuant to Section 5(a) above,
together with a statement as to the balance on deposit in Borrower's
Operating Account as of the last day of such month. Borrower shall also
deliver to Agent each month, (i) copies of the invoices Borrower sends to
each Tenant for rent each month, and (ii) a copy of Borrower's "balance
forward" report, reflecting application of rental payments received to
amounts owed by each Tenant.
7. EXPENSES, INDEMNIFICATION AND COMPENSATION.
(a) Borrower shall pay, indemnify and hold Agent
harmless from and against all claims, actions, judgments, costs and
expenses (including reasonable attorneys' fees), incurred by Agent in the
performance, of its duties under this Agreement, except for claims,
actions, judgments, costs and expenses resulting from Agent's gross
negligence, intentional misconduct or bad faith. The provisions of this
subsection (a) shall survive the termination of this Agreement.
(b) In consideration for the services to be rendered by
Agent hereunder in connection with the Deposit Account, Borrower agrees to
pay the fees (not to exceed $500 per month) and expenses of Agent. In
consideration for the services to be rendered by Agent hereunder in
connection with the Tax and Insurance Escrow Account, Borrower agrees to
pay the fees (not to exceed $500 per year or portion thereof) and expenses
of Agent. Borrower acknowledges that notwithstanding Borrower's payment of
the compensation of Agent hereunder, Agent is acting solely as the agent of
Lender for the purposes of this Agreement. Borrower agrees that Agent has
the right to deduct the amount of such compensation from the amounts
deposited and collected in the Deposit Account as provided in Section 5
hereof. Without in any manner limiting the foregoing, Borrower agrees that
if (i) Borrower fails to pay Agent's fees and expenses, in violation of the
foregoing, and (ii) if insufficient Funds exist for payment of such Agent's
fees and expenses, then Lender may, at Lender's option, pay such fees and
expenses and such fees and expenses shall constitute an advance under the
Loan Documents.
8. ASSIGNMENT OF RENTS AND LEASES.
(a) The Payment Notices furnished to the Tenants under
the Leases and all other persons shall for all purposes be deemed given
pursuant to the Assignment of Rents. The Payment Notices shall be deemed
sufficient authorization for any such Tenant or other person to make all
payments of Gross Receipts directly to the Lockbox for the Deposit Account,
and each such Tenant or other person shall be entitled to rely on this
Agreement in making such payments and shall have no liability to Borrower
for any Gross Receipts duly and punctually paid to the Lockbox for the
Deposit Account in accordance with the terms of such Tenant's Lease or
other agreement. To the extent the interest of Lender in and to Gross
Receipts prior to the date hereof is deemed by any applicable state law as
an unperfected interest, this Agreement shall for purposes of any such law
be deemed a conversion of Lender's interest in and to the Gross Receipts
from an unperfected interest to a perfected interest for all purposes of
applicable state law; and provided further that the receipt by Lender of
such payments and the application thereof to the Indebtedness pursuant to
this Agreement shall be deemed to be an agreed method of payment between
Borrower and Lender and shall not constitute an "action" within the meaning
of California Code of Civil Procedure Section 726, or other similar law,
and Borrower hereby waives any and all rights with respect thereto.
(b) Lender and Borrower hereby acknowledge and agree
that upon the filing of a bankruptcy petition by or against Borrower under
the Bankruptcy Code, the Gross Receipts (whether then already in the
Deposit Account or the Tax and Insurance Escrow Account, or then due or
becoming due thereafter) shall be deemed not to be property of the
Borrower's bankruptcy estate within the meaning of Section 541 of the
Bankruptcy Code. In the event, however, that a court of competent
jurisdiction determines that, notwithstanding the foregoing
characterization of the Gross Receipts by Borrower and Lender, the Gross
Receipts do constitute property of the Borrower's bankruptcy estate, then
Lender and Borrower hereby further acknowledges and agree that all such
Gross Receipts whether due and payable before or after the filing of the
petition is and shall be cash collateral of Lender Borrower acknowledges
that Lender does not consent to Borrower's use of such cash collateral
(except to the extent expressly provided for in this Agreement or ordered
by a bankruptcy court) and that, in the event Lender elects (in its sole
discretion) to give such consent, such consent shall only be effective if
given in writing. Except as provided in the immediately preceding
sentence, Borrower shall have no right to use or apply or require the use
or application of such cash collateral (i) unless Borrower shall have
received a court order authorizing the use of the same, and (ii) Borrower
shall have provided such adequate protection to Lender as shall be required
by the bankruptcy court.
9. EVENT OF DEFAULT REMEDIES. The occurrence of any one or
more of the following events shall constitute an "Event of Default" under
this Agreement.
(a) If Borrower spends or uses any Funds disbursed to it
from the Deposit Account of the Tax and Insurance Escrow
Account in violation of the terms and conditions of this
Agreement; or
(b) If Borrower fails to comply with any of the terms
and conditions of this Agreement and such failure has not been
cured within five (5) business days following written notice
from Lender; or
(c) If an Event of Default, as defined in the Loan
Documents, occurs and is continuing.
Upon the occurrence of an Event of Default, Lender shall be entitled to
exercise any and all rights and remedies available to Lender under this
Agreement or the other Loan Documents, at law, or in equity.
10. SECURITY AGREEMENT AND REMEDIES.
(a) To the extent Borrower has any interest in the
Funds and in the Deposit Account or the Tax and Insurance Escrow Account,
Borrower hereby pledges to Lender, and grants to Lender a security interest
in, the Funds, the Deposit Account and the Tax and Insurance Escrow
Account, as additional security for the Indebtedness and for the
obligations of Borrower under the Loan Documents and this Agreement.
Borrower also hereby pledges Lender, and grants to Lender a security
interest in, the Gross Receipts (subject to the provisions of Section 8(b)
above), and Borrower's interest in all accounts, accounts receivable,
deposit accounts (including, without limitation, the Operating Account) and
all funds deposited therein, cash, instruments, negotiable documents,
letters of credit, securities, certificates of deposit, chattel paper,
contract rights, general intangibles, and all proceeds of any of the
foregoing (collectively, "Collateral"), as additional security for the
Indebtedness and for the obligations of Borrower under the Loan Documents
and this Agreement. In addition to Lender's other rights and remedies
under this Agreement, the other Loan Documents and applicable law, Borrower
hereby grants Lender all rights and remedies relating to the Funds, the
Deposit Account, the Tax and Insurance Escrow Account, and the Collateral,
of a secured party under the Uniform Commercial Code of the California.
The foregoing grant of a security interest is not intended to derogate from
the parties' intent that all Funds are and shall be the sole property of
Lender but, rather, is intended to protect Lender's interest in the Funds
in the event that a court, contrary to the parties' intent, determines that
Borrower has a legal or equitable interest in the Funds. To the extent
Lender had a security interest in any of the Collateral prior to the date
of execution of this Agreement, the foregoing shall be construed to confirm
such security interest.
(b) Concurrently with the execution and delivery of this
Agreement:
(1) Borrower and Lender shall execute and deliver
one or more UCC-2 Statements, amending the existing UCC-1 Financing
Statements which name Lender as Secured Party, to reflect the change
in Borrower's name from "Maguire Partners - Crocker Properties -
South Tower;"
(2) Borrower and Lender shall execute and deliver a
UCC-1 Financing Statement reflecting the security interest of Lender
in the Funds, the Deposit Account, the Tax and Insurance Escrow
Account and the Collateral, as provided for herein; and
(3) Borrower and Lender shall jointly notify Bank
of America confirming Lender's security interest in the Funds, the
Deposit Account, the Tax and Insurance Escrow Account and the
Collateral, as provided for herein.
(c) Lender hereby designates and appoints Agent as
Lender's bailee for purposes of taking possession of the Funds, and as
Lender's agent for purposes of controlling the disbursement of the Funds,
as security for the Indebtedness and for the obligations of Borrower under
the Loan Documents and for purposes of effectuating Lender's rights and
remedies relating to the Funds. Borrower hereby irrevocably consents and
agrees to such appointment and to Agent's actions that may be taken in that
capacity in accordance with this Agreement.
(d) Without limiting the rights of Lender pursuant to
Section 5(a)(5) above, Lender may, at, or at any time after, the occurrence
of an Event of Default, in addition to exercising any or all of its other
rights and remedies under the Loan Documents, direct Agent, in writing, to
pay over to Lender all or any part of the Funds specified by Lender in such
written direction, without demand or notice to Borrower. Promptly after
receiving such written direction, Agent shall pay over to Lender all of the
Funds or the part thereof specified in such written direction, as the case
may be. Lender may, at its option, without demand or notice, (i) setoff or
recoup or otherwise apply all or any part of the Funds so received by
Lender against all or any part of the Indebtedness (whether matured or
unmatured), in such order and priority as Lender may determine, or (ii)
apply all or any part of the Funds so received by Lender to satisfy any of
the other obligations of Borrower under the Loan Documents.
(e) No application of all or any part of the Funds
pursuant to this Agreement shall in any way release, satisfy or discharge
any of the unpaid Indebtedness, except to the extent applied to such
Indebtedness by the Lender pursuant to this Agreement. No delay or
omissions of Lender to exercise any of its rights or remedies shall waive,
exhaust or impair any of Lender's rights or remedies under the Loan
Documents. Notwithstanding any such delay or omission, Lender thereafter
shall have the right, from time to time and as often as Lender deems
advisable, to exercise any of its rights or remedies.
11. LIMITATION OF LIABILITY OF AGENT. Agent shall not be
responsible or liable in any manner whatsoever for the correctness,
genuineness or validity of any document or instrument, or any signature
thereon, deposited with or delivered to Agent pursuant to this Agreement,
except for acts or omissions resulting from Agent's gross negligence,
intentional misconduct or bad faith; provided nothing contained herein
shall relieve Agent from its obligation and responsibility to account for
all Funds received and held by Agent from time to time.
12. FURTHER ASSURANCES. Borrower shall cooperate with Lender
and shall execute and deliver, or cause to be executed and delivered, all
financing statements, payment notices and other documents and instruments,
and shall take all such other action as Lender may reasonably request from
time to time in order to accomplish and satisfy the provisions and purposes
of this Agreement.
13. REPLACEMENT OF AGENT.
(a) Agent (or any other agent and bailee from time to
time acting in those capacities under this Agreement) may resign as agent
and bailee under this Agreement by written notice to Lender specifying the
time and date when such resignation shall take effect (which shall be at
least sixty (60) days; after the giving of such notice). Such resignation
shall take effect at such time and date unless a successor agent and bailee
shall have been sooner appointed pursuant to this Agreement, in which event
such resignation shall take effect immediately upon the appointment of such
successor.
(b) Agent (or any other agent and bailee from time to
time acting in those capacities under this Agreement) may be removed as
agent and bailee under this Agreement by written notice from Lender to
Agent (or such other agent and bailee) and Borrower, specifying the time
and date when such removal is to take effect. Such removal shall take
effect at such time and date unless a successor agent and bailee shall have
been sooner appointed pursuant to this Agreement, in which event such
removal shall take effect immediately upon the appointment of such
successor.
(c) In the event of, or in connection with, any such
resignation or removal of the Agent by Lender. Borrower hereby irrevocably
authorizes Lender to make any such appointment of a successor Agent as
Lender deems advisable, and Borrower hereby irrevocably consents and agrees
to any such appointment. If Lender shall not have made any such
appointment within thirty (30) days after the giving of any such
resignation or removal notice, then a successor agent and bailee may be
appointed upon application of Borrower or the Agent, by any court of
competent jurisdiction.
(d) Any successor Agent appointed pursuant to this
Agreement shall execute and deliver to Lender, Borrower and the resigning
Agent an instrument pursuant to which such successor accepts such
appointment and agrees to hold, disburse and pay over the Funds in
accordance with this Agreement and to comply with all obligations and
duties of Agent under this Agreement from and after the effectiveness of
such appointment. Upon the execution and delivery of such instrument, the
resigning Agent shall deliver to such successor Agent all Funds and other
property (if any) then held by the resigning Agent, together with any and
all instruments, powers and authorizations required to enable such
successor Agent to perform and satisfy its obligations and duties under
this Agreement, and all books and records maintained by the resigning Agent
in connection with its duties hereunder. Thereupon, such successor shall
be immediately vested with all rights and responsibilities of Agent under
or relating to this Agreement, and the resigning Agent shall be immediately
discharged and released of all continuing obligations and duties as Agent
under this Agreement.
(e) Neither the resignation nor the removal of any Agent
from time to time acting in those capacities under this Agreement shall
release, discharge or satisfy any of Borrower's obligations under this
Agreement. Borrower and Lender shall deal with any successor Agent in the
manner prescribed in this Agreement.
14. NOTICES. Any notice, report, demand, request or other
instrument or communication which any party hereto may be required or may
desire to give hereunder to any other party hereto shall be in writing and
shall be deemed to have been properly given or delivered, if addressed to
the party intended to receive the same at the address of such party set
forth below, (a) when delivered at such address by hand or by overnight
courier or delivery service, or (b) three (3) business days after the same
shall have been deposited in the United States Mail as first class
registered or certified mail, return receipt requested, postage prepaid,
whether or not the same actually shall have been received by such party:
If to Borrower:
Maguire/Thomas Partners-South Tower
c/o Maguire/Thomas Partners, Inc.
355 South Grand Avenue, Suite 4500
Los Angeles, California 90071
Attention: Thomas E. McCarthy
Fax: (213) 687-4758<PAGE>
and
Maguire/Thomas Partners-South Tower
c/o Carlyle Real Estate Limited Partnership XIV
and Carlyle Real Estate Limited Partnership XV
c/o JMB Realty Corporation
900 North Michigan Avenue, Suite 1900
Chicago, Illinois 60611
Attention: General Counsel
Fax: (312) 915-2310
with a copy to:
Gilchrist & Rutter
1299 Ocean Avenue, Suite 900
Santa Monica, California 90401
Attention: Paul S. Rutter, Esq.
Fax: (310) 394-4700
and
Paul, Hastings, Janofsky & Walker
555 South Flower Street, 23rd Floor
Los Angeles, California 90071-2371
Attention: Paul R. Walker, Esq.
Fax: (213) 627-0705
If to Lender:
Aetna Life Insurance Company
c/o Aetna Investment Group
242 Trumbull Street IG4F
Hartford, Connecticut 06156
Attn: Thomas A. Brome
Fax: (203) 275-2974
with a copy to:
O'Melveny & Myers
153 East 53rd Street
New York, New York 10022
Attn: Laurence G. Preble, Esq.
Fax: (212) 326-2061
If to Agent:
CB Commercial Real Estate Group, Inc.
533 South Fremont Avenue
Los Angeles, California 90071
Attention: Odette De Lusignan
Fax: (213) 613-3060
with a copy to:
CB Commercial Real Estate Group, Inc.
533 South Fremont Avenue
Los Angeles, California 90071
Attention: John Thornton
Fax: (213) 613-3008
Any party may change the address to which any such notice, report, demand,
request or other instrument or communication intended to be received by
such party is to be delivered or mailed, by giving written notice of such
change to the other parties hereto, but no such notice of change shall be
effective against any party unless and until such notice of change shall
have been received by such party.
15. LENDER'S DISCRETION. Except as otherwise provided
herein, each and every decision, election, determination, estimate,
request, consent, approval or similar matter to be made or given by Lender
from time to time pursuant to or in connection with this Agreement shall,
unless and until an Event of Default exists, be made or given using
Lender's reasonable discretion, but upon and during the existence of an
Event of Default, such decision, election, determination, estimate,
request, requirement, consent, approval or similar matter shall be made
using Lender's sole and absolute discretion.
16. CHANGES, WAIVERS, ETC. Neither this Agreement nor any
provision hereof may be changed, waived, released, discharged, withdrawn,
revoked or terminated orally, or by any action or inaction. In order to he
effective and enforceable, any such change, waiver, release, discharge,
withdrawal, revocation or termination must be evidenced by a written
document or instrument signed by the party against which enforcement of
such change, waiver, release, discharge, withdrawal, revocation or
termination is sought, and then shall be effective and enforceable only to
the extent specifically provided in such document or instrument.
17. GOVERNING LAW; SEVERABILITY. This Agreement shall be
construed, interpreted, enforced and governed by and in accordance with the
internal laws of the State of California, without regard to principles of
conflicts of laws. All rights and remedies provided in this Agreement may
be exercised only to the extent that the exercise thereof does not violate
any applicable law and are intended to be limited to the extent necessary
to avoid rendering this Agreement invalid, illegal or unenforceable. In
the vent that any of the provisions of this Agreement shall be deemed
invalid, illegal or unenforceable in any respect, the validity, legality
and enforceability of the remaining provisions of this Agreement shall in
no way be affected, prejudiced or disturbed thereby.
18. MEANING OF CERTAIN TERMS. Each reference in this
Agreement to any gender shall be deemed also to include any other gender,
and the use in this Agreement of the singular shall be deemed also to
include the plural and vice versa unless the context requires otherwise.
As used in this Agreement, the term "person" shall mean and refer to any
and all individuals, sole proprietorships, partnerships, joint ventures,
associations, trusts, estates, business trusts, limited liability
companies, corporations (non-profit or otherwise), financial institutions,
governments (and agencies, instrumentalities and political subdivisions
thereof), and other entities and organizations.
19. HEADINGS. The headings and captions of the Sections,
paragraphs and other subdivisions of this Agreement are for convenience of
reference only, are not to be considered part of this Agreement and shall
not limit, expand or otherwise affect any of the provisions of this Agreement.
20. COUNTERPARTS. This 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.
21. BINDING EFFECT. This Agreement shall bind and inure to
the benefit of the parties hereto and their respective successors and
assigns. Each reference in this Agreement to Borrower, Lender or Agent
shall be deemed also to include the successors and assigns of such party.
Nothing set forth in this Section shall be deemed or construed to create,
recognize or allow any assignment or transfer rights not otherwise provided
for in this Agreement.
22. EXCLUSIVE BENEFIT. This Agreement and the obligations of
Lender, Borrower and Agent hereunder are and at all times shall be deemed
to be for the exclusive benefit of such parties and their respective
successors and permitted assigns. Nothing set forth herein shall be deemed
to be for the benefit of any other person.
23. TERMINATION OF AGREEMENT. This Agreement shall survive
the maturity date of the Loan under the Loan Documents and shall continue
so long as the Indebtedness remains outstanding and so long as any other
sums due and owing to Lender under the Loan Documents remain unpaid. Upon
the termination of this Agreement, all collected and available Funds shall
be disbursed to the Lender, to be held and applied or released in
accordance with this Agreement and the Loan Documents.
24. SURVIVAL OF LATTER AGREEMENT. Lender and Borrower have
entered into that letter agreement dated November 18, 1994 (the "Letter
Agreement"). While this Agreement constitutes a "fully approved, signed
and delivered written agreement" as contemplated by the Letter Agreement.
Lender and Borrower hereby agree that the Letter Agreement shall survive
the execution and delivery of this Agreement and shall remain enforceable
between Lender and Borrower with respect to any future discussions or
negotiations they may have regarding the Indebtedness, the Loan Documents
or the Premises.
25. RECOURSE. Except as otherwise provided for in Section
2(g) above, the liability of Borrower and its partners for the obligations
of Borrower under this Agreement shall be limited in accordance with the
provisions of Paragraph 5.27 of the Deed of Trust, which is incorporated by
reference as if set forth in full herein.
26. LOAN DOCUMENTS. The rights, powers, authorities,
remedies, interests and benefits conferred upon the Lender by this
Agreement are intended to supplement, and be in addition to (and shall not
in any way replace, supersede, amend, limit or restrict), the rights,
powers, authorities, remedies, interests, and benefits conferred by the
Loan Documents. Borrower acknowledges and agrees that under the Loan
Documents, the maturity of the Indebtedness is December 1, 1994 and
Borrower has failed to repay the Indebtedness as required by the Loan
Documents. Lender hereby agrees, in consideration of the execution and
delivery of this Agreement by Borrower and the consummation of the
transactions provided for herein, that until February 1, 1995 Lender shall
forebear from exercising its rights and remedies under the Loan Documents
with respect to such failure to repay the Indebtedness on December 1,
1994. Borrower acknowledges and agrees that, except as provided in the
preceding sentence, (i) Lender has not waived and does not waive, by
execution of this Agreement or consummation of the transactions provided
for herein, any existing or future breach or default by or with respect to
Borrower under the terms and conditions of the Loan Documents or this
Agreement, (ii) Lender shall continue to have all rights and remedies
specified or provided for in the Loan Documents and in this Agreement, and
all rights and remedies otherwise permitted by law, with respect to any
such breach or default, and (iii) this Agreement shall survive and continue
after February 1, 1995 pursuant to the provisions of Section 23 hereof
notwithstanding a default by Borrower hereunder or under the Loan Documents
and the exercise by Lender of any right or remedy provided in the Loan
Documents or this Agreement. Subject to the foregoing, the Loan Documents,
as supplemented by this Agreement, shall remain in full force and effect
and are hereby ratified and affirmed in all respects by Lender and
Borrower.
27. NO MORTGAGEE IN POSSESSION, NO JOINT VENTURE. Borrower
agrees that neither Lender nor Agent is a mortgagee in possession with
respect to the Premises and that this Agreement does not create any
obligation on the part of Lender or Agent to manage or operate the Premises
or give lender or Agent any control over the Premises; it being agreed that
the obligation to manage and operate and the right to control the Premises
remains with Borrower. The relationship between Lender and Borrower is
that of creditor and debtor and not that of partners or joint venturers.
Borrower agrees that neither Lender nor Agent shall have any fiduciary
obligations or trust obligations with respect to managing or operating the
Premises.
28. CONFIDENTIALITY. The terms and provisions of this
Agreement, and activities conducted pursuant to the terms thereof, shall
remain confidential and shall not be disclosed by Lender or Agent without
the consent of Borrower except (i) as is reasonably required in connection
with the transactions provided for herein, in connection with the
perfection of rights under this Agreement or in connection with
communications with Lender or (2) to such party's directors, officers,
partners, employees, legal counsel, accountants, engineers, architects,
financial advisors and similar professionals and consultants to the extent
such party deems it necessary or appropriate in connection with the
transactions contemplated hereunder (and such party shall inform each of
the foregoing parties of such party's obligations under this paragraph and
shall secure the agreement of such parties to be bound by the terms hereof)
or (3) as otherwise required by law or regulation. Notwithstanding the
foregoing, however, Lender and Agent shall have no obligations under this
Section 28 during the existence of any Event of Default.
29. LEGAL FEES AND EXPENSES. Borrower shall be obligated to
reimburse all of the legal fees and expenses of O'Melveny & Myers, counsel
to Lender, in connection the default by Borrower under the Loan Documents
(including advice to Lender with respect to its rights and remedies
thereunder), the execution and delivery of this Agreement and the
transactions provided for herein.
30. MISCELLANEOUS. This Agreement constitutes the entire
agreement between the parties concerning the matters provided for herein,
and all prior or contemporaneous understandings, oral representations or
agreements had among the parties with respect to such matters are merged in
this Agreement. Each party executing this Agreement represents that such
party has the full authority and legal power to do so and acknowledges that
it was represented by counsel in the negotiation and execution of this
Agreement.
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be
executed and delivered as of the date first above written.
MAGUIRE/THOMAS PARTNERS-SOUTH
TOWER, a California limited partnership
By: MAGUIRE PARTNERS-BUNKER HILL,
LTD., a California limited partnership,
General Partner
By: MAGUIRE/THOMAS PARTNERS,
INC., a California corporation,
General Partner
By: ____________________________
Title:
By: CARLYLE REAL ESTATE LIMITED
PARTNERSHIP-XIV, an Illinois limited
partnership, General Partner
By: JMB REALTY CORPORATION,
a Delaware corporation
Its general partner
By:
_____________________________
Title:
By: CARLYLE REAL ESTATE LIMITED
PARTNERSHIP-XV, an Illinois limited
partnership, General Partner
By: JMB REALTY CORPORATION,
a Delaware corporation
Its general partner
By:
_____________________________
Title:
AETNA LIFE INSURANCE COMPANY, a
Connecticut corporation
By: ______________________________________
Title:
CB COMMERCIAL REAL ESTATE GROUP,
INC., a Delaware corporation
By: _______________________________________
Title:
March 1, 1995
Maguire Thomas Partners-South Tower
c/o Mr. Thomas McCarthy
Maguire Thomas Partners
355 South Grand Avenue, Suite 4500
Los Angeles, CA 90071
Dear Tom:
The purpose of this letter is to advise you that the date for Aetna's
forbearance in the exercise of it's legal remedies referenced in paragraph
26 of a Lockbox Agreement dated December 1, 1994 between Maguire Thomas
Partners, Aetna Life Insurance Company and CB Commercial has been further
extended from March 1, 1995 to April 1, 1995. All other terms and
conditions shall remain the same.
As I stated in my previous correspondence dated February 1, 1995, I have
attempted to communicate Aetna's perspective on the current status of this
loan. The discussion which preceded the decision to grant additional time
through the forbearance extension raised issues which I would like to share
with you now. My primary purpose of reiterating our position is to insure
there are no misunderstandings and provide notice so that over this
additional forbearance period you can work on addressing Aetna's concerns
and requirements.
Through the forbearance mechanism we have provided ownership an additional
period in which to pay off the outstanding debt obligation. We have done
this in large part in reliance upon your verbal representations that the
raising of the capital necessary to pay the Aetna debt off in full was
proceeding smoothly, on track and had the requisite likelihood of success.
We have also done this in large part based on good faith, your reputation
and the protections inherent in the lockbox agreement executed by the
parties.
At this point, Aetna's grant of the additional forbearance referenced in
the first paragraph will be contingent upon your submission to Aetna of a
written list of prospective parties to the REIT together with a copy of
your counter proposal with respect to the REIT which we discussed during my
visit to the property the week of February 14, 1995.
Sincerely,
Thomas A. Brome
Investment Officer
cc: William Cooney
Larry Preble
Jane Boyle
Margaret Egazarian
Jack Gillies
CB Commercial<PAGE>
February 1, 1995
Maguire Thomas Partners-South Tower
c/o Mr. Thomas McCarthy
Maguire Thomas Partners
355 South Grand Avenue, Suite 4500
Los Angeles, CA 90071
Dear Tom:
The purpose of this letter is to advise you that the date for Aetna's
forbearance in the exercise of it's legal remedies referenced in paragraph
26 of a Lockbox Agreement dated December 1, 1994 between Maguire Thomas
Partners, Aetna Life Insurance Company and CB Commercial has been extended
from February 1, 1995 to March 1, 1995. All other terms and conditions
shall remain the same.
I have attempted in the past to communicate Aetna's perspective on the
current status of this loan. The discussion which preceded the decision to
grant additional time through the forbearance extension raised issues which
I would like to share with you now. My primary purpose in reiterating our
position is to insure there are no misunderstandings and provide notice so
that over the next 29 days you can work on addressing Aetna's concerns and
requirements.
Through the forbearance mechanism we have provided ownership an additional
three month period in which to pay off the outstanding debt obligation. We
have done this in large part in reliance upon your verbal representations
that the raising of the capital necessary to pay the Aetna debt off in full
was proceeding smoothly, on track and had the requisite likelihood of
success. We have also done this in large part based on good faith, your
reputation and the protections inherent in the lockbox agreement executed
by the parties.
At this point in the matter, I must advise you that Aetna will require
further assurances of the future success of private financing. In short,
our willingness to grant additional extensions of time will be directly
proportional to the degree of success associated with the recapitalization
and your willingness to exhibit or demonstrate the applicable commitment of
the respective parties to the deal. I do not believe this to be an
unreasonable request in that we are already more than two months into the
deal and at some point, you should be in a position to evaluate based on
the information available to you the risk of "going hard". I see no point
in granting additional time, without some tangible evidence of progress and
commitment.
Whether that is through an earnest money deposit, letter of credit or some
other consideration can be the subject of a future conversation. My
purpose in raising the subject now is so that you will be advised that it
is something which we will expect.
Sincerely,
Thomas A. Brome
Investment Officer
cc: William Cooney
Larry Preble
Jane Boyle
Margaret Egazarian
Jack Gillies
CB Commercial
PURCHASE AGREEMENT AND JOINT ESCROW INSTRUCTIONS
(9701 Wilshire Boulevard; Los Angeles, California)
THIS AGREEMENT is made and entered into as of the day of
August, 1994, by and between CARLYLE REAL ESTATE LIMITED PARTNERSHIP-XV,
an Illinois limited partnership (hereinafter called "Seller"), and 9701
WILSHIRE BOULEVARD, INC., a California corporation (hereinafter called
"Buyer").
R E C I T A L S
A. Seller is the owner of that certain real property located at
9701 Wilshire Boulevard, in the City of Beverly Hills, County of Los
Angeles, State of California, consisting primarily of an office building
(the "Premises") sometimes known as "Mitsui Manufacturers Bank Building".
B. Buyer desires to purchase such Premises on the terms and
conditions hereinafter documented.
NOW, THEREFORE, in consideration of the mutual undertakings of the
parties hereto, it is hereby agreed as follows:
1. Purchase and Sale. Seller shall sell to Buyer, and Buyer shall
purchase from Seller, the land (the "Land") described in Exhibit "A",
attached hereto and made a part hereof, and all improvements, structures,
supplies and fixtures owned by Seller located upon the Land, together with
all right, title and interest of Seller in and to any items of personal
property owned by Seller (and not by tenants) located upon or about the
Land (provided, however, except to the extent of Seller's interest in any
of the foregoing computer items which are utilized to operate the HVAC or
other mechanical systems at the Property, the personal property shall not
include any computer equipment, computer programs or related software), all
right, title and interest of Seller in and to the names "Mitsui
Manufacturers Bank Building" and "9701 Wilshire Boulevard", to the extent
assignable, all right, title and interest of Seller in and to all leases,
contract rights, agreements, tenant lists, advertising material and
telephone exchange numbers (hereinafter, collectively, the "Property"), all
upon the terms, covenants and conditions hereinafter set forth.
2. Purchase Price. The purchase price (the "Purchase Price") for
the Property shall be the sum of $17,950,000.00.
3. Payment of Purchase Price. The Purchase Price shall be paid to
Seller by Buyer as follows:
A. Escrow Deposits. Buyer has heretofore delivered $150,000.00
(the "Initial Escrow Deposit") to First American Title Insurance Company,
at its offices at 100 North LaSalle Street, Suite 2115, Chicago, Illinois
60602, Attention: Mary Lou Kennedy (which company, in its capacity as
escrow holder hereunder, is called "Escrow Holder"). Concurrently
herewith, Buyer shall deliver an additional $350,000 (the "Additional
Escrow Deposit") to Escrow Holder. The Additional Escrow Deposit shall be
made by wire transfer of immediately available federal funds or by bank or
cashier's check drawn on a national bank reasonably satisfactory to Seller.
The amounts deposited hereunder shall be held by Escrow Holder as a deposit
against the Purchase Price in accordance with the terms and provisions of
this Agreement. As used herein, the term "Escrow Deposit" shall mean the
Initial Escrow Deposit, together with the Additional Escrow Deposit from
and after the date the same is deposited hereunder, together with all
interest earned on the foregoing sums while such deposits are held by
Escrow Holder. At all times that the Escrow Deposit is being held by the
Escrow Holder, the Escrow Deposit shall be invested by Escrow Holder in the
following investments ("Approved Investments"): (i) United States Treasury
obligations, (ii) United States Treasury-backed repurchase agreements
issued by a major money center banking institution reasonably acceptable to
Seller, or (iii) such other manner as may be reasonably agreed to by Seller
and Buyer. The Escrow Deposit shall be disposed of by Escrow Holder only
as provided in this Agreement.
B. Closing Payment. The Purchase Price, as adjusted by the
application of the Escrow Deposit and by the prorations and credits
specified herein, shall be paid in cash on the "Closing Date", as
hereinafter defined (the amount to be paid under this subparagraph B being
herein called the "Closing Payment").
4. Conditions Precedent
A. Title Matters.
(1) Title Report. Seller has delivered to Buyer a copy of
preliminary title report ("Preliminary Title Report") No. 9413861-21
covering the Property from First American Title Insurance Company (which
company, in its capacity as title insurer hereunder, is herein called the
"Title Company"). In addition, Seller has delivered to Buyer a copy of a
survey of the Property prepared in February, 1994 by Dubron & Associates
("Survey"). Buyer has approved the exceptions to title specified in the
Preliminary Title Report (other than exceptions 5, 7 and 8 thereto) (such
approved exceptions being herein called the "Permitted Exceptions") and the
matters disclosed on the Survey (provided, however, the Survey shall, on or
before the Closing Date, be recertified to Buyer and "Lender", as
hereinafter defined). Approval by Buyer of any additional exceptions to
title or survey matters disclosed after the date hereof shall be a
condition precedent to Buyer's obligation to purchase the Property. Unless
Buyer gives written notice that it disapproves any such additional
exceptions to title or survey matters, stating the exceptions so
disapproved, on or before the sooner to occur of 10 days after receipt of
written notice thereof or the Closing Date, Buyer shall be deemed to have
approved said exceptions or survey matters. If, for any reason, on or
before the Closing Date Seller does not cause such exceptions to title or
survey matters which Buyer disapproves (to the extent Buyer is permitted
hereunder to so disapprove) to be removed at no cost or expense to Buyer
(Seller having the right but not the obligation to do so), the obligation
of Seller to sell, and Buyer to buy, the Property as herein provided shall
terminate (and Seller and Buyer shall have no further obligations in
connection herewith). Buyer shall have the option to waive the condition
precedent set forth in this paragraph 4A(1) by notice to Seller. In the
event of such waiver, such condition shall be deemed satisfied.
(2) Exceptions to Title. Buyer shall be obligated to accept title
to the Property, subject to the following exceptions to title:
(a) Real estate taxes and assessments (including supplemental
and/or adjusted taxes) not yet due and payable;
(b) The "Loan Documents" (as hereinafter defined); and
(c) The Permitted Exceptions and such other exceptions to title as
may be approved by Buyer pursuant to the provisions of subparagraph A(1)
above.
Conclusive evidence of the availability of such title shall be the
willingness of Title Company to issue to Buyer on the Closing Date a
standard form ALTA owner's title insurance policy ("Owner's Policy"), in
the face amount of the Purchase Price, which policy shall show (i) title to
the Property to be vested of record in Buyer, and (ii) the items specified
in clauses (a), (b) and (c) above to be the only Schedule B-Section 2
exceptions to title.
B. Completed Due Diligence.
(1) Price Reflective of Reviews. Buyer has completed all of
Buyer's due diligence examinations, reviews and inspections of all matters
pertaining to the purchase of the Property, including all leases, service
contracts, survey and title matters, and all physical, environmental and
compliance matters and conditions respecting the Property. Buyer
acknowledges that Buyer and Seller have discussed the results of Buyer's
due diligence examinations, reviews and inspections and that the Purchase
Price has been adjusted, and closing credits provided, to appropriately
take such due diligence matters into account to Buyer's satisfaction.
(2) Conduct of Reviews. Buyer hereby represents and warrants to
Seller that Buyer at all times conducted its due diligence review,
inspections and examinations in a manner so as to not cause damage, loss,
cost or expense to Seller or the Property and so as to not interfere with
or disturb any tenant at the Property, and Buyer will indemnify, defend,
and hold Seller and the Property harmless from and against any such damage,
loss, cost or expense (the foregoing obligation surviving any termination
of this Agreement). Buyer further represents and warrants to Seller that
Buyer did not make any intrusive physical testing (environmental,
structural or otherwise) at the Property (such as soil borings or the like)
without Seller's prior written consent (and in all events promptly returned
the Property to its prior condition and repair thereafter). If for any
reason the transactions hereunder shall fail to close, Buyer shall promptly
deliver to Seller true, accurate and complete copies of any written reports
relating to the Property prepared for or on behalf of Buyer by any third
party and shall return all documents and other materials furnished by
Seller hereunder. Buyer shall keep all information or data received or
discovered in connection with any of the inspections, reviews or
examinations strictly confidential.
C. Tenant Estoppel Certificates. Receipt of estoppel certificates
("Tenant Estoppel Certificates") from (i) Manufacturers Bank, Prudential
Bache Securities, Inc., and City National Bank and (ii) a sufficient number
of other tenants at the Premises such that estoppel certificates shall have
been received pursuant to clauses (i) and (ii) hereof with respect to not
less than 85% of the total net rentable square footage of the Premises
covered by Leases in effect as of the Closing Date, shall be a condition
precedent to Buyer's obligation to purchase the Property hereunder. Each
Tenant Estoppel Certificate shall either be substantially in the applicable
form provided in Exhibit "C" attached hereto and made a part hereof (with
changes thereto subject to Buyer's reasonable approval) or in the form, if
any, prescribed in the applicable Lease or other operative document.
Seller's sole obligation hereunder shall be to utilize commercially
reasonable efforts to obtain Tenant Estoppel Certificates in the form of
Exhibit "C" attached hereto from each tenant (such reasonable efforts
obligation not including any obligation to institute legal proceedings or
to expend any monies therefor). If on or before the Closing Date such
condition is not satisfied (or waived), then this Agreement shall
terminate. Without limitation on the foregoing, if any Tenant Estoppel
Certificate discloses material adverse matters which are not cured or
satisfied by Seller on or before the Closing Date, then Buyer shall have
the right to terminate this Agreement on the Closing Date.
D. Loan Matters. Buyer has obtained a commitment ("Loan
Commitment") for a loan (the "Loan") from The Prudential Insurance Company
of America ("Lender") for approximately $10,750,000 in connection with its
acquisition of the Property. Entities related to or affiliated with Buyer
have obtained so-called "Pru-Express" loans from Lender prior hereto.
Buyer has, however, identified the following areas of concern ("Open
Issues") regarding the current status of negotiations regarding the Loan
Documents:
(1) The non-recourse provisions;
(2) The permitted uses which may be made of the monies to be held
in the reserve account respecting re-leasing of the Manufacturer's Hanover
and Prudential-Bache spaces and the method of obtaining a release of such
reserve account funds; and
(3) The approval rights of Lender respecting leases.
Buyer shall continue to diligently and in good faith pursue negotiating and
finalizing the loan documents ("Loan Documents") and complying with the
terms of the Loan Commitment in connection therewith. If Buyer is unable,
after using diligent and good faith efforts, to cause the Lender to fund
the Loan solely because (i) Lender and Buyer are unable to agree on
mutually acceptable provisions regarding the Open Issues, (ii) estoppel
certificate and/or subordination agreement requirements of Lender regarding
leases at the Property are not satisfied or waived by Lender, or (iii)
Lender disapproves the results of third party due diligence reports
delivered to Lender by Buyer prior thereto, then Buyer shall have the right
to terminate this Agreement. Except as specifically set forth in the
preceding sentence, Buyer shall have no right to terminate this Agreement
as a result of matters respecting or relating to the Loan.
5. Closing Procedure Transactions. The sale and purchase herein
provided shall be consummated at a closing conference ("Closing
Conference"), which shall be held on the Closing Date at the offices of
Seller's counsel, Pircher, Nichols & Meeks at 1999 Avenue of the Stars,
Suite 2600, Los Angeles, California 90067. As used herein, "Closing Date"
means September 15, 1994, or such earlier date as may be agreed upon by
Buyer and Seller.
A. Escrow. Prior to the Closing Date, the parties shall deliver
to Title Company, at its office in Los Angeles, California, the following:
(1) by Seller, a duly executed and acknowledged original grant deed
("Deed") in favor of Buyer, in the form of Exhibit "D" attached hereto and
made a part hereof, and (2) by Buyer, the Closing Payment in immediately
available federal funds. Such deliveries shall be made pursuant to escrow
instructions ("Escrow Instructions") to be executed among Buyer, Seller and
Title Company in form reasonably acceptable to such parties in order to
effectuate the intent hereof. The conditions to the closing of such escrow
shall include the Title Company's receipt of the Deed, the Closing Payment
and an authorization notice from each of Buyer and Seller (and each of
Buyer and Seller shall be obligated to deliver such authorization notice at
the Closing Conference as soon as it is reasonably satisfied that the other
party is in a position to deliver the items to be delivered by such other
party under subparagraph B below).
B. Delivery to Parties. Upon the satisfaction of the conditions
set forth in the Escrow Instructions, then (1) the Deed shall be delivered
to Buyer by Title Company's depositing the same for recordation, (2) the
Closing Payment (and the Deposit) shall be delivered to Seller and (3) at
the Closing Conference, the following items shall be delivered:
(1) Seller Deliveries. Seller shall deliver to Buyer the
following:
(a) A duly executed and acknowledged bill of sale, assignment and
assumption agreement ("Assignment and Assumption Agreement") in the form of
Exhibit "E" attached hereto and made a part hereof;
(b) Duly executed and acknowledged certificates regarding the "non-
foreign" status of Seller satisfying both federal and state law
requirements;
(c) Evidence reasonably satisfactory to Buyer and Escrow Holder
respecting the due organization of Seller and the due authorization and
execution of this Agreement and the documents required to be delivered
hereunder;
(d) To the extent in Seller's possession, keys (tagged for
identification), plans, specifications, tenant leases, contracts, and
operating manuals respecting the Property (to the extent not previously
delivered to Buyer);
(e) Written evidence of the termination of the existing management
agreement respecting the Property; and
(f) Such additional documents as may be reasonably required by
Buyer and Title Company in order to consummate the transactions hereunder
(provided the same do not materially increase the costs to, or liability or
obligations of, Seller in a manner not otherwise provided for herein).
(2) Buyer Deliveries. Buyer shall deliver to Seller the following:
(a) A duly executed and acknowledged Assignment and Assumption
Agreement;
(b) Evidence reasonably satisfactory to Seller and Escrow Holder
respecting the due organization of Buyer and the due authorization and
execution of this Agreement and the documents required to be delivered
hereunder; and
(c) Such additional documents as may be reasonably required by
Seller and Title Company in order to consummate the transactions hereunder
(provided the same do not materially increase the costs to, or liability or
obligations of, Buyer in a manner not otherwise provided for herein).
C. Closing Costs. Seller shall pay (i) one-half of the escrow
fees of Escrow Holder, (ii) the title insurance premium (at a rate not in
excess of standard issue rates) attributable to standard CLTA coverage
respecting the Owner's Policy, (iii) the costs of the Survey, and (iv)
documentary transfer taxes attributable to the Grant Deed. Buyer shall pay
(i) one-half of the escrow fees of Escrow Holder, (ii) the title insurance
premium attributable to the Owner's Policy in excess of standard CLTA
coverage, as well as any costs attributable to ALTA or for so-called
"extended coverage" or any endorsements to the Owner's Policy, to the
extent any of the foregoing is requested by Buyer, (iii) all costs and
expenses related to Buyer's due diligence examinations, reviews and
inspections (including, without limitation, those relating to appraisers,
inspectors, auditors and environmental or engineering consultants), (iv)
all costs and expenses related to the Loan (including any additional title
charges in connection therewith), and (v) all recording charges
attributable to the recordation of any documents contemplated in this
Agreement. Seller and Buyer shall each pay its respective shares of
prorations as hereinafter provided.
D. Prorations.
(1) Items to be Prorated. The following shall be prorated between
Seller and Buyer as of the Closing Date:
(a) All real estate and personal property taxes and assessments on
the Property for the current year. In no event shall Seller be charged
with or be responsible for any increase in the taxes on the Property
resulting from the sale of the Property or from any improvements made or
leases entered into on or after the Closing Date. In the event that any
assessments on the Property are payable in installments, then the
installment for the current period shall be prorated (with Buyer assuming
the obligation to pay any installments due after the Closing Date). The
parties acknowledge that the Property is currently the subject of tax
reduction proceedings by Seller and that the parties will reasonably agree
on appropriate and equitable adjustments of the prorations hereunder to
take into account such tax reduction proceedings (including the costs
thereof, reimbursements of amounts received after closing for periods prior
thereto and requirements, if any, for return of amounts to tenants with
respect thereto).
(b) All fixed and additional rentals under the Leases, security
deposits and other tenant charges. Seller shall deliver or provide a
credit in an amount equal to all prepaid rentals for periods after the
Closing Date and all security deposits owed to tenants under the Leases by
Seller (to the extent not applied or forfeited prior to the Closing Date)
to Buyer on the Closing Date. If any such security deposits are in the
form of certificates of deposit, letters of credit or the like, such
instruments shall be assigned to Buyer (and Seller and Buyer shall
reasonably cooperate in causing the transfer of the same). Rents which are
delinquent as of the Closing Date shall not be prorated on the Closing
Date. Buyer shall include such delinquencies in its normal billing and
shall pursue the collection thereof in good faith after the Closing Date
(but Buyer shall not be required to litigate or declare a default in any
Lease). To the extent Buyer receives rents (other than "Additional
Amounts", as hereinafter defined) on or after the Closing Date, such
payments shall be applied first toward then current rent owed to Buyer in
connection with the applicable Lease for which such payments are received,
and any excess monies received shall be applied toward the payment of any
delinquent rents, with Seller's share thereof being promptly delivered to
Seller. Buyer may not waive any delinquent rents nor modify a Lease so as
to reduce or otherwise affect amounts owed thereunder for any period in
which Seller is entitled to receive a share of charges or amounts without
first obtaining Seller's written consent. Common area charges, taxes,
operating expense and other similar expense reimbursement obligations of
the tenants under the Leases, as well as any percentage payable thereunder
(collectively, "Additional Amounts") shall be prorated effective as of the
Closing Date. All Additional Amounts received by Seller before the Closing
Date shall be retained by Seller until the year-end adjustments provided
hereafter; all such amounts received by Buyer on or after the Closing Date
shall be retained by Buyer until such year-end adjustments. At the end of
an appropriate year-end period (i.e., end of calendar year 1994 or end of
Lease year, as provided under the applicable Lease; the applicable period
being herein called the "Applicable Period"), the aggregate amount of all
Additional Amounts attributable to the Applicable Period shall be
calculated in accordance with the provisions of the Leases and Seller and
Buyer shall be each entitled to their respective "allocable shares" of each
such amount actually received. As used herein, Seller's "allocable share"
with respect to a Lease means a fraction, the numerator of which is the
number of days during the Applicable Period in which such Lease is in
effect prior to the Closing Date and the denominator of which is the number
of days in which such Lease is in effect during the entire Applicable
Period; Buyer's "allocable share" with respect to such Lease shall be the
remaining fractional balance based on the number of days such Lease is in
effect during the Applicable Period from and after the Closing Date. To
the extent that either party has retained amounts in excess of the amount
due said party, such excess amount shall be delivered to the other party
within 15 days of such determination. After the Closing Date, Buyer shall
promptly and accurately bill all tenants for all Additional Amounts in
accordance with the terms of the applicable Lease and shall pursue
collection thereof in good faith (but Buyer shall not be required to
litigate or declare a default in any Lease). Buyer shall make all year-end
adjustments promptly following the end of the Applicable Period and shall
deliver to Seller such information as Seller shall reasonably request in
connection therewith. Seller hereby reserves the right to pursue any
remedy against any tenant owing delinquent rents, Additional Amounts and
any other amounts to Seller. Buyer shall reasonably cooperate with Seller
in any collection efforts hereunder (but shall not be required to litigate
or declare a default in any Lease). With respect to delinquent rents,
Additional Amounts and any other amounts or other rights of any kind
respecting tenants who are no longer tenants of the Property as of the
Closing Date, Seller shall retain all rights relating thereto. In addition
to the foregoing, the parties acknowledge that a lease termination
agreement ("Lease Termination Agreement") dated as of July 15, 1994, has
been entered into among Seller, The Mortgage Capital Group ("TMCG") and
Gary W. Hampar, Esq., formerly known as Youner & Hampar ("Hampar"), with
respect to space leased to TMCG and Hampar on the 10th floor at the
Property. Buyer acknowledges that it has approved such Lease Termination
Agreement and that Seller shall be entitled to all payments due under such
Lease Termination Agreement, as well as any lease payments which may at any
time be made by TMCG and/or Hampar through November 30, 1994. Buyer shall
promptly deliver to Seller any such amounts which may be paid to Buyer.
Seller reserves the right to pursue any remedies against TMCG and Hampar
and Buyer shall reasonably cooperate with Seller in any collection efforts
hereunder (but shall not be required to litigate or declare a default in
any Lease). Notwithstanding anything contained herein, the monthly
payments of $2,087.63 from Paul Chamberlain International pursuant to a
Space Reduction Agreement dated May 1, 1992 for rent deferrals shall be
prorated (with Seller being entitled to all such amounts for periods prior
to the Closing Date and Seller being entitled to such amounts for periods
from and after the Closing Date, the monthly payment for the month in which
the Closing Date shall occur being equitably prorated).
(c) To the extent the work specified in Exhibit "F" attached hereto
is not completed by Seller prior to the Closing Date, Buyer shall be
entitled to the appropriate credits as more particularly described in
Paragraph 7D(4) below.
(d) All other operating expenses and, except as otherwise provided
herein, other operating income from the Property (including parking income
payable to the owner of the Property).
(2) Calculation. The prorations and payments shall be made on the
basis of a written statement submitted to Buyer and Seller by Escrow Holder
prior to the Close of Escrow and approved by Buyer and Seller. In the
event any prorations or apportionments made under this subparagraph D shall
prove to be incorrect for any reason, then any party shall be entitled to
an adjustment to correct the same. Any item which cannot be finally
prorated because of the unavailability of information shall be tentatively
prorated on the basis of the best data then available and reprorated when
the information is available.
6. Condemnation or Destruction of Property. In the event that,
after the date hereof but prior to the Closing Date, either any portion of
the Property is taken pursuant to eminent domain proceedings or any of the
improvements on the Property are damaged or destroyed by any casualty,
Seller shall have no obligation to repair or replace any such damage or
destruction. Seller shall, upon consummation of the transaction herein
provided, assign to Buyer all claims of Seller respecting any condemnation
or casualty insurance coverage, as applicable, and all condemnation
proceeds or proceeds from any such casualty insurance received by Seller on
account of any casualty (the damage from which shall not have been repaired
by Seller prior to the Closing Date), as applicable. In the event the
condemnation award or the cost of repair of damage to the Property on
account of a casualty, as applicable, shall exceed $100,000, Buyer may, at
its option, terminate this Agreement by notice to Seller, given on or
before the Closing Date (whereupon the Escrow Deposit shall be returned to
Buyer).
7. Representations, Warranties and Covenants.
A. Representations, Warranties and Covenants of Seller.
(1) General Disclaimer. Except as specifically set forth in
paragraph 7A(2) below, the sale of the Property hereunder is and will be
made on an "as is" basis, without representations and warranties of any
kind or nature, express, implied or otherwise, including, but not limited
to, any representation or warranty concerning title to the Property, the
physical condition of the Property (including, but not limited to, the
condition of the soil or the Improvements), the environmental condition of
the Property (including, but not limited to, the presence or absence of
hazardous substances on or respecting the Property), the compliance of the
Property with applicable laws and regulations (including, but not limited
to, zoning and building codes, requirements relating to the Americans With
Disabilities Act or the status of development or use rights respecting the
Property), the financial condition of the Property or any other
representation or warranty respecting income, expenses, charges, liens or
encumbrances, rights or claims on, affecting or pertaining to the Property
or any part thereof. Buyer acknowledges that, during the Due Diligence
Period, Buyer will examine, review and inspect all matters which in Buyer's
judgment bear upon the Property and its value and suitability for Buyer's
purposes. Except as to matters specifically set forth in paragraph 7A(2)
below, Buyer will acquire the Property solely on the basis of its own
physical and financial examinations, reviews and inspections and the title
insurance protection afforded by the Owner's Policy.
(2) Limited Representations and Warranties of Seller. Seller
hereby represents and warrants to Buyer that, except as set forth in
Exhibit "G" attached hereto and made a part hereof (Seller hereby
acknowledging that the following representations and warranties are
excluded from the general disclaimers provided for in paragraph 7A(1)
above):
(a) Rent Roll. To Seller's knowledge, (a) attached as Exhibit "H"
and made a part hereof is a true, complete and accurate list, as of the
date thereof, of all tenant leases respecting the Property (true and
correct copies of which have been given or made available to Buyer), and
(2) Seller has not received any written notice of a material default under
any of such tenant leases that remains uncured.
(b) Litigation. To Seller's knowledge, there is no pending action,
litigation, condemnation or other proceeding against the Property or
against Seller with respect to the Property.
(c) Compliance. To Seller's knowledge, Seller has received no
written notice from any governmental authority having jurisdiction over the
Property to the effect that the Property is not in compliance with
applicable laws and ordinances.
(d) Service Agreements. To Seller's knowledge, (1) other than
those which are cancelable on 30 days' notice, Seller has not entered into
any service agreements or contracts ("Service Agreements") or other
agreements (other than as set forth in this Agreement) relating to the
Property which will be in force on the Closing Date, except as described in
Exhibit "I" attached hereto (true and correct copies of which have been
given or made available to Buyer), and (2) Seller has not received any
written notice of any material default thereunder that remains uncured.
(e) Due Authority. This Agreement and all agreements, instruments
and documents herein provided to be executed or to be caused to be executed
by Seller are and on the Closing Date will be duly authorized, executed and
delivered by and are binding upon Seller. Seller is a limited partnership,
duly organized and validly existing under the laws of the State of
Illinois, and is duly authorized and qualified to do all things required of
it under this Agreement. Seller has the capacity and authority to enter
into this Agreement and consummate the transactions herein provided.
(f) Title. Seller has not previously conveyed the Property and the
Property is free from all encumbrances done, made or suffered by Seller or
persons claiming by, through or under Seller; provided, however, the
foregoing representation and warranty is subject to the tenant leases and
all matters of record.
(g) Environmental Matters. Seller has not received any written
notice of, nor to Seller's knowledge has Seller caused, the existence,
deposit, storage, removal, burial or discharge of any "Hazardous Material"
at, upon, under or within the Property, in an amount which would, as of the
date hereof, give rise to an "Environmental Compliance Cost". The term
"Hazardous Material" shall mean (i) asbestos and any chemicals, flammable
substances or explosives, any radioactive materials (including radon), any
hazardous wastes or substances which have, as of the date hereof, been
determined by any applicable Federal, State or local government law to be
hazardous or toxic by the U.S. Environmental Protection Agency, the U.S.
Department of Transportation, and/or any instrumentality now or hereafter
authorized to regulate materials and substances in the environment which
has jurisdiction over the Property ("Environmental Agency"), and (ii) any
oil, petroleum or petroleum derived substance, any drilling fluids,
produced waters and other wastes associated with the exploration,
development or production of crude oil, which materials listed under items
(i) and (ii) above cause the Property (or any part thereof) to be in
material violation of any applicable environmental laws or the regulations
of any Environmental Agency; provided, however, that the term "Hazardous
Material" shall not include motor oil and gasoline contained in or
discharged from vehicles not used primarily for the transport of motor oil
or gasoline. The term "Environmental Compliance Cost" means any reasonable
out-of-pocket cost, fee or expense incurred directly to satisfy any
requirement imposed by an Environmental Agency to bring the Property into
compliance with applicable Federal, State and local laws and regulations
directly relating to the existence on the Property of any Hazardous
Material.
(3) Seller's Knowledge. The terms "to Seller's knowledge" or "to
the knowledge of Seller" or other similar phrases respecting Seller's
knowledge shall mean the present actual knowledge of James G. Abbey,
Stephanie Perry and Gail Wong; provided, however, that solely for the
purposes of the representation and warranty contained in paragraph
7A(2)(g), such phrase shall also include the present actual knowledge of
the current building engineer, Robert Howard. Seller represents and
warrants to Buyer that the foregoing persons are persons who are or have
been sufficiently involved in the operations or sale of the Property so as
to be reasonably informed with respect to the matters which are the subject
of paragraph 7A(2) hereof.
B. Representations and Warranties of Buyer. This Agreement and
all agreements, instruments and documents herein provided to be executed or
to be caused to be executed by Buyer are and on the Closing Date will be
duly authorized, executed and delivered by and are binding upon Buyer.
Buyer is a corporation, duly organized and validly existing and in good
standing under the laws of the State of California, and is duly authorized
and qualified to do all things required of it under this Agreement. Buyer
has the capacity and authority to enter into this Agreement and consummate
the transactions herein provided.
C. Survival. Any cause of action of a party for a breach of the
foregoing representations and warranties shall survive until the date which
is one year after the Closing Date, at which time such representations and
warranties (and any cause of action resulting from a breach thereof not
then in litigation) shall terminate. Notwithstanding the foregoing, if
Buyer shall have actual knowledge as of the Closing Date that any of the
representations or warranties of Seller contained herein are false or
inaccurate or that Seller is in breach or default of any of its obligations
under this Agreement, and Buyer nonetheless closes the transactions
hereunder and acquires the Property, then Seller shall have no liability or
obligation respecting such false or inaccurate representations or
warranties or other breach or default (and any cause of action resulting
therefrom shall terminate upon such closing hereunder). In connection with
the foregoing, Buyer shall be deemed to have knowledge of the matters
disclosed in any reports prepared by or on behalf of Buyer in connection
with its due diligence reviews hereunder (including, without limitation,
any environmental or engineering reports).
D. Interim Covenants of Seller. Until the Closing Date or the
sooner termination of this Agreement:
(1) Seller shall maintain the Property in the same manner as prior
hereto pursuant to its normal course of business (such maintenance
obligations not including extraordinary capital expenditures or
expenditures not incurred in such normal course of business), subject to
reasonable wear and tear and further subject to destruction by casualty or
other events beyond the control of Seller.
(2) Seller shall not enter into any additional service contracts or
other similar agreements without the prior consent of Buyer, except those
deemed reasonably necessary by Seller which are cancelable on 30 days' notice.
(3) Seller shall continue to offer the Property for lease in the
same manner as prior hereto pursuant to its normal course of business and
shall keep Buyer reasonably informed as to the status of leasing prior to
the Closing Date. Seller shall not enter into any new leases or material
modifications of existing leases hereafter without the consent of Buyer
(which consent will not be unreasonably withheld or materially delayed).
In no event shall Seller have any obligation to enter into any new lease or
modify any existing lease unless Buyer shall agree to pay or reimburse
Seller on the Closing Date for all tenant improvement costs and leasing
commissions incurred by Seller under or in connection therewith (Buyer's
agreement to pay or reimburse for such amounts not to be unreasonably
withheld).
(4) Seller shall complete the following work to the reasonable
satisfaction of Seller and Buyer prior to the Closing Date: remove damaged
and dislodged gypsum wall board ("GWB") sheathing in shaft walls of entire
height of the two stair towers of the office tower, replace same with new
GWB panels and fasten to existing metal studs in accordance with
requirements for seismic resistance. In addition, Seller shall have the
option to either (i) complete the work specified in Exhibit "F" hereto
prior to the Closing Date to the reasonable satisfaction of Buyer and
Seller or (ii) credit Buyer with the unpaid amount necessary to complete
any such work which remains uncompleted as of the Closing Date, as such
amount is reasonably agreed upon by Seller and Buyer (provided, however, in
no event shall any such credit exceed the maximum credit for the applicable
work specified in Exhibit "F" hereto).
8. Indemnification.
A. By Buyer. Buyer shall hold harmless, indemnify and defend
Seller from and against: (1) any and all third party claims for Buyer's
torts or breaches of contract related to the Property and occurring on or
after the Closing Date, (2) any and all loss, damage or third party claims
in any way arising from Buyer's inspections or examinations of the Property
prior to the Closing Date; and (3) all costs and expenses, including
reasonable attorney's fees, incurred by Seller as a result of the
foregoing.
B. By Seller. Seller shall hold harmless, indemnify and defend
Buyer from and against: (1) any and all third party claims for Seller's
torts or breaches of contract related to the Property and occurring prior
to the Closing Date; and (2) all costs and expenses, including reasonable
attorney's fees, incurred by the Buyer as a result of such claims. The
foregoing indemnity shall not cover any matters relating to title or
marketability of the Property (Buyer relying on the coverage provided by
the Owner's Policy as to such matters).
C. Generally. Each indemnification under this Agreement shall be
subject to the following provisions: The indemnitee shall notify
indemnitor of any such claim against indemnitee within 30 days after it has
notice of such claim, but failure to notify indemnitor shall in no case
prejudice the rights of indemnitee under this Agreement unless indemnitor
shall be prejudiced by such failure and then only to the extent of such
prejudice. Should indemnitor fail to discharge or undertake to defend
indemnitee against such liability within 10 days after the indemnitee gives
the indemnitor written notice of the same, then indemnitee may settle such
liability, and indemnitor's liability to indemnitee shall be conclusively
established by such settlement, the amount of such liability to include
both the settlement consideration and the reasonable costs and expenses,
including attorneys' fees, incurred by indemnitee in effecting such
settlement.
9. DISPOSITION OF DEPOSITS. IF THE TRANSACTION HEREIN PROVIDED
SHALL NOT BE CLOSED BY REASON OF SELLER'S DEFAULT UNDER THIS AGREEMENT OR
THE FAILURE OF SATISFACTION OF THE CONDITIONS DESCRIBED IN PARAGRAPH 4
HEREOF OR THE TERMINATION OF THIS AGREEMENT IN ACCORDANCE WITH PARAGRAPH 6
HEREOF, AND BUYER SHALL NOT HAVE DEFAULTED UNDER THIS AGREEMENT, THEN THE
ESCROW DEPOSIT SHALL BE RETURNED TO BUYER, AND NEITHER PARTY SHALL HAVE ANY
FURTHER OBLIGATION OR LIABILITY TO THE OTHER; PROVIDED, HOWEVER, IF THE
TRANSACTIONS HEREUNDER SHALL FAIL TO CLOSE SOLELY BY REASON OF SELLER'S
DEFAULT, AND BUYER SHALL HAVE FULLY PERFORMED ITS OBLIGATIONS HEREUNDER AND
SHALL BE READY, WILLING AND ABLE TO CLOSE, THEN BUYER SHALL BE ENTITLED TO
SPECIFICALLY ENFORCE THIS AGREEMENT (BUT NO OTHER ACTION, FOR DAMAGES OR
OTHERWISE, SHALL BE PERMITTED). IN THE EVENT THE TRANSACTION HEREIN
PROVIDED SHALL NOT CLOSE BY REASON OF BUYER'S DEFAULT HEREUNDER, THEN THE
ESCROW DEPOSIT SHALL BE DELIVERED TO SELLER AS FULL COMPENSATION AND
LIQUIDATED DAMAGES UNDER AND IN CONNECTION WITH THIS AGREEMENT. IN THE
EVENT THE TRANSACTION HEREIN PROVIDED SHALL CLOSE, THE ESCROW DEPOSIT SHALL
BE APPLIED AS A PARTIAL PAYMENT OF THE PURCHASE PRICE. IN CONNECTION WITH
THE FOREGOING, THE PARTIES RECOGNIZE THAT SELLER WILL INCUR EXPENSE IN
CONNECTION WITH THE TRANSACTION CONTEMPLATED BY THIS AGREEMENT AND THAT THE
PROPERTY WILL BE REMOVED FROM THE MARKET; FURTHER, THAT IT IS EXTREMELY
DIFFICULT AND IMPRACTICABLE TO ASCERTAIN THE EXTENT OF DETRIMENT TO SELLER
CAUSED BY THE BREACH BY BUYER UNDER THIS AGREEMENT AND THE FAILURE OF THE
CONSUMMATION OF THE TRANSACTION CONTEMPLATED BY THIS AGREEMENT OR THE
AMOUNT OF COMPENSATION SELLER SHOULD RECEIVE AS A RESULT OF BUYER'S BREACH
OR DEFAULT. IN THE EVENT THE SALE OF THE PROPERTY SHALL NOT BE CONSUMMATED
ON ACCOUNT OF BUYER'S DEFAULT, THEN THE RETENTION OF THE ESCROW DEPOSIT
SHALL BE SELLER'S SOLE AND EXCLUSIVE REMEDY UNDER THIS AGREEMENT BY REASON
OF SUCH DEFAULT, SUBJECT TO THE PROVISIONS OF PARAGRAPH 10I HEREOF.
Seller's Initials Buyer's Initials
10. Miscellaneous.
A. Brokers.
(1) Except as provided in subparagraph (2) below, Seller represents
and warrants to Buyer, and Buyer represents and warrants to Seller, that no
broker or finder has been engaged by it, respectively, in connection with
any of the transactions contemplated by this Agreement or to its knowledge
is in any way connected with any of such transactions. In the event of a
claim for broker's or finder's fee or commissions in connection herewith,
then Seller shall indemnify and defend Buyer from the same if it shall be
based upon any statement or agreement alleged to have been made by Seller,
and Buyer shall indemnify and defend Seller from the same if it shall be
based upon any statement or agreement alleged to have been made by Buyer.
The indemnification obligations under this paragraph 10 A(1) shall survive
the closing of the transactions hereunder or the earlier termination of
this Agreement.
(2) In addition, if and only if the sale contemplated herein
closes, Seller agrees to pay a brokerage commission to Whitney Cressman and
Cushman & Wakefield (collectively, the "Brokers") pursuant to a separate
agreement with such brokers. The foregoing payments shall be the sole
commissions, fees or payments payable to either of the Brokers in
connection with the transactions hereunder. No commission, fee or payment
shall be payable to either of the Brokers except in the event of a sale
hereunder and if such sale does not close for any reason (including by
reason of a default by Seller or Buyer hereunder), no commission, fee or
other payment of any kind shall be payable to Broker by Seller. The
Brokers may divide the commission with other licensed real estate brokers;
provided, however, that notwithstanding any agreement for the division of
the commission, Seller shall be fully protected in paying the commission
solely to the Brokers, as provided herein.
(3) Each of the Brokers is being asked to join in the execution of
this Agreement by Seller in order to confirm its understanding of and
agreement with the foregoing provisions. However, it is expressly
understood by Buyer and Seller that execution by either of the Brokers is
not a condition to the validity of this Agreement between Buyer and seller,
and neither of the Brokers shall, under any circumstances, be deemed a
third party beneficiary of this Agreement.
B. Limitations of Liability.
(1) Notwithstanding anything to the contrary contained herein, if
the closing of the transactions hereunder shall have occurred (and Buyer
shall not have waived, relinquished or released any applicable rights in
further limitation), the aggregate liability of Seller arising pursuant to
or in connection with the representations, warranties, indemnifications,
covenants or other obligations (whether express or implied) of Seller under
this Agreement (or any document executed or delivered in connection
herewith) shall not exceed $750,000.
(2) No constituent partner in or agent of Seller, nor any advisor,
trustee, director, officer, employee, beneficiary, shareholder,
participant, representative or agent of any corporation or trust that is or
becomes a constituent partner in Seller (including, but not limited to, JMB
Realty Corporation and the individuals named in paragraph 7A(2) of this
Agreement) shall have any personal liability, directly or indirectly, under
or in connection with this Agreement or any agreement made or entered into
under or pursuant to the provisions of this Agreement, or any amendment or
amendments to any of the foregoing made at any time or times, heretofore or
hereafter, and Buyer and its successors and assigns and, without
limitation, all other persons and entities, shall look solely to Seller's
assets for the payment of any claim or for any performance, and Buyer, on
behalf of itself and its successors and assigns, hereby waives any and all
such personal liability. Notwithstanding anything to the contrary
contained in this Agreement, neither the negative capital account of any
constituent partner in Seller (or in any other constituent partner of
Seller), nor any obligation of any constituent partner in Seller (or in any
other constituent partner of Seller) to restore a negative capital account
or to contribute capital to Seller (or to any other constituent partner of
Seller), shall at any time be deemed to be the property or an asset of
Seller or any such other constituent partner (and neither Buyer nor any of
its successors or assigns shall have any right to collect, enforce or
proceed against or with respect to any such negative capital account of
partner's obligation to restore or contribute).
(3) No advisor, trustee, director, officer, employee, beneficiary,
shareholder, participant, representative or agent of Buyer shall have any
personal liability, directly or indirectly, under or in connection with
this Agreement or any agreement made or entered into under or pursuant to
the provisions of this Agreement, or any amendment or amendments to any of
the foregoing made at any time or times, heretofore or hereafter, and
Seller and its successors and assigns shall look solely to Buyer's assets
(and/or the Deposit, if applicable pursuant to the terms of this
Agreement), for the payment of any claim or for any performance, and
Seller, on behalf of itself and its successors and assigns, hereby waives
any and all such personal liability.
C. Entire Agreement. This Agreement contains the entire agreement
between the parties respecting the matters herein set forth and supersedes
all prior agreements between the parties hereto respecting such matters.
This Agreement may not be modified or amended except by written agreement
signed by both parties.
D. Time of the Essence. Time is of the essence of this Agreement.
E. Interpretation. Paragraph headings shall not be used in
construing this Agreement. Each party acknowledges that such party and its
counsel, after negotiation and consultation, have reviewed and revised this
Agreement. As such, the terms of this Agreement shall be fairly construed
and the usual rule of construction, to the effect that any ambiguities
herein should be resolved against the drafting party, shall not be employed
in the interpretation of this Agreement or any amendments, modifications or
exhibits hereto or thereto.
F. Governing Law. This Agreement shall be construed and enforced
in accordance with the laws of the State of California.
G. Successors and Assigns. Buyer may not assign or transfer its
rights or obligations under this Agreement without the prior written
consent of Seller (in which event such transferee shall assume in writing
all of the transferor's obligations hereunder, but such transferor shall
not be released from its obligations hereunder); provided, however, Buyer
may assign its interest in this Agreement to a limited partnership in which
Buyer is the managing general partner and has not less than a 51% interest
in capital and profits in such limited partnership. No consent given by
Seller to any transfer or assignment of Buyer's rights or obligations
hereunder shall be construed as a consent to any other transfer or
assignment of Buyer's rights or obligations hereunder. No transfer or
assignment in violation of the provisions hereof shall be valid or
enforceable. Subject to the foregoing, this Agreement and the terms and
provisions hereof shall inure to the benefit of and be binding upon the
successors and assigns of the parties.
H. Notices. Any notice which a party is required or may desire to
give the other shall be in writing and shall be sent by personal delivery
or by mail (either [i] by United States registered or certified mail,
return receipt requested, postage prepaid, or [ii] by Federal Express or
similar generally recognized overnight carrier regularly providing proof of
delivery), addressed as follows (subject to the right of a party to
designate a different address for itself by notice similarly given):
To Buyer:
c/o CT Capital International, Inc.
575 Fifth Avenue
New York, New York 10017
Attention: Mr. John P. Oswald
With Copy to:
c/o Falcon Real Estate Investment Company, Ltd.
599 Lexington Avenue
Suite 2300
New York, New York 10022
Attention: Mr. Jack Miller
And:
Brand Farrar Dziubla Freilich & Kolstad
515 South Flower Street
Suite 3500
Los Angeles, California 90071-2201
Attention: Michael A. Brand, Esq.
To Seller:
c/o JMB Realty Corporation
900 North Michigan Avenue
19th Floor
Chicago, Illinois 60611
Attention: Mr. James G. Abbey
With Copy To:
Pircher, Nichols & Meeks
1999 Avenue of the Stars
Suite 2600
Los Angeles, California 90067
Attention: Real Estate Notices (GML)
To Escrow Holder:
First American Title Insurance Company
100 North LaSalle Street
Suite 2115
Chicago, Illinois 60602
Attention: Mary Lou Kennedy
Any notice so given by mail shall be deemed to have been given as of the
date of delivery (whether accepted or refused) established by U.S. Post
Office return receipt or the overnight carrier's proof of delivery, as the
case may be. Any such notice not so given shall be deemed given upon
receipt of the same by the party to whom the same is to be given.
I. Legal Costs. The parties hereto agree that they shall pay
directly any and all legal costs which they have incurred on their own
behalf in the preparation of this Agreement, all deeds and other agreements
pertaining to this transaction and that such legal costs shall not be part
of the closing costs. In addition, if either Buyer or Seller brings any
suit or other proceeding with respect to the subject matter or the
enforcement of this Agreement, the prevailing party (as determined by the
court, agency or other authority before which such suit or proceeding is
commenced), in addition to such other relief as may be awarded, shall be
entitled to recover reasonable attorneys' fees, expenses and costs of
investigation actually incurred. The foregoing includes, but is not
limited to, attorneys' fees, expenses and costs of investigation
(including, without limitation, those incurred in appellate proceedings),
costs incurred in establishing the right to indemnification, or in any
action or participation in, or in connection with, any case or proceeding
under Chapter 7, 11 or 13 of the Bankruptcy Code (11 United States Code
Sections 101 et seq.), or any successor statutes.
J. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be an original, and all of which
constitute one and the same agreement
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the date first above written.
CARLYLE REAL ESTATE LIMITED PARTNERSHIP-XV,
an Illinois limited partnership
By: JMB REALTY CORPORATION,
a Delaware corporation,
General Partner
By:
Name:
Title:
"Seller"
9701 WILSHIRE BOULEVARD, INC.,
a California corporation
By:
Name:
Title:
"Buyer"
<PAGE>
ESCROW HOLDER'S ACKNOWLEDGEMENT
The undersigned hereby executes this Agreement to evidence its
agreement to act as Escrow Holder in accordance with the terms of this
Agreement.
Date: ________________FIRST AMERICAN TITLE INSURANCE COMPANY,
a California corporation
By: ___________________________________
Name: _____________________________
Title: ____________________________
"Escrow Holder"
BROKERS' ACKNOWLEDGMENT
Each of the Brokers has executed this Agreement for the purpose of
evidencing its agreement to the terms of paragraph 10A(2) of this
Agreement. No consent by either of the Brokers shall be required to amend
any other terms of this Agreement.
Date: ________________WHITNEY CRESSMAN,
a _____________________________________
By: ___________________________________
Name: _____________________________
Title: ____________________________
Date: ________________CUSHMAN & WAKEFIELD
a _____________________________________
By: ___________________________________
Name: _____________________________
Title: ____________________________
EXHIBIT LIST
"A" - Property Description
"B" - Intentionally Omitted
"C" - Form of Tenant Estoppel Certificate
"D" - Deed
"E" - Assignment and Assumption Agreement
"F" - Pre-Closing Work/Closing Credit Matters
"G" - Exceptions to Seller's Representations and
Warranties
"H" - Rent Roll
"I" - Service Agreements
TAXES AND RESERVE ESCROW AGREEMENT
THIS TAXES AND RESERVE ESCROW AGREEMENT (hereinafter called this
"Agreement") is made as of the 1st day of December, 1994, by and among
PROGRESS PARTNERS, a New York general partnership having an office at
900 Third Avenue, New York, New York 10022 (hereinafter called
"Borrower"), TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF AMERICA, a
New York corporation, whose address is 730 Third Avenue, New York, New
York 10017 (hereinafter called "Lender") and LASALLE NATIONAL TRUST,
N.A., a national bank organized and existing under the laws of the
United States of America, whose address is 135 South LaSalle Street,
Chicago, Illinois 60603 (hereinafter called "Escrow Agent").
W I T N E S S E T H:
WHEREAS, Borrower and Lender are simultaneously herewith executing
and delivering to each other that certain Agreement of Modification of
Mortgages, Mortgage Notes and Assignment of Lessor's Interest in Leases
(the "Modification Agreement");
WHEREAS, the "Note" (as defined in the Modification Agreement)
represents a valid indebtedness owed by Borrower to Lender and the
"Mortgage" (as defined in the Modification Agreement) constitutes a
first mortgage on certain real property improved with an office
building, lying and being in New York County, New York and commonly
known as 900 Third Avenue, as more particularly described in the
Mortgage (herein referred to as the " Premises"), and the Note, the
Mortgage, the Assignment of Leases (as defined in the Modification
Agreement), the Modification Agreement and all other documents
evidencing or securing the loan evidenced by the Note, together with the
Environmental Indemnity (as defined in the Modification Agreement, are
herein collectively referred to as the "Loan Documents" (it being
understood, however, that the Environmental Indemnity is entirely
independent of the loan evidenced by the Note and that the Environmental
Indemnity does not secure the Loan);
WHEREAS, the Loan Documents provide, among other things, for the
execution of a Taxes and Reserve Escrow Agreement, pursuant to which a
reserve escrow fund would be established with and implemented by Escrow
Agent as additional security for the Note and the indebtedness evidenced
and secured by the Loan Documents; and
WHEREAS, Borrower, Lender and Escrow Agent desire to execute this
Agreement to establish such reserve escrow fund and the terms and
conditions for the implementation, administration and application of
such fund.
1. Definitions. Certain definitions applicable to this
Agreement are set forth in Paragraphs 13(m) and 13(n) hereof. In
addition, for purposes of this Agreement:
(a) "Additional Required Amount" is defined in Paragraph
3(b) hereof.
(b) "Additional Tax Deposit" is defined in Paragraph 3(b)
hereof.
(c) "Agreement" is defined in the introductory paragraph
hereof.
(d) "Approved Budget" shall mean, as to any calendar year,
collectively, the operating budget and capital budget for the Premises
for such year, if and to the extent approved by Lender, including, from
and after approval thereof by Lender, any changes to such budgets.
(e) "Assignment of Leases" is defined in the Modification
Agreement.
(f) "Borrower" is defined in the introductory paragraph
hereof.
(g) "Cash Flow" shall mean, for any period, the excess, if
any, of Gross Receipts for such period over the sum of (i) Operating
Expenses for such period, (ii) Additional Tax Deposits to the extent
paid from Gross Receipts for such period and (iii) the unreturned
balances of Qualified Partner Contributions as of the date a Cash Flow
Deposit is being made in respect of such period to the extent, if any,
that such unreturned balance may be deducted from such Gross Receipts in
accordance with Paragraph 3(c) hereof.
(h) "Cash Flow Deposit" is defined in Paragraph 3(c)
hereof.
(i) "Cash Flow Deposit Date" is defined in Paragraph 3(c)
hereof.
(j) "Environmental Indemnity" is defined in the
Modification Agreement.
(k) "Escrow Agent" is defined in the introductory paragraph
hereof.
(l) "Escrow Fee" is defined in Paragraph 9 hereof.
(m) "Existing Security Deposits" is defined in Paragraph
3(a) hereof.
(n) "General Reserve Fund" shall mean a separate account
maintained by the Escrow Agent in accordance with the terms of this
Agreement for the purpose of holding deposits by Borrower which are not
tenant security deposits.
(o) "Gross Receipts" shall mean, for any period, an amount
determined on a cash basis equal to the aggregate of all fixed, minimum
and guaranteed rents, overage rentals, percentage or participation
rentals, contributions towards real estate taxes, other taxes, insurance
premiums, or other operating expenses (and capital improvements), all
rentals and receipts from licenses and concessions, all payments
received for lease terminations, all proceeds of rental interruption or
loss of rents insurance and all other cash receipts of a non-rental
nature, received by or on behalf of Borrower (including receipt by
agents, representatives, successors, assigns or property managers but
excluding receipt by Lender or any receiver appointed for the Premises
and excluding receipt by a successor or assign which takes title to the
Premises through or after a foreclosure or other exercise of rights
under the Mortgage or by conveyance in lieu of such exercise of rights
under the Mortgage) during such period from, or by reason of, the
operation, or ownership, of the Premises. Notwithstanding anything set
forth herein to the contrary, Gross Receipts shall not include (i)
capital contributions or loans to Borrower from equity holders in
Borrower (including without limitation Qualified Partner Contributions),
(ii) condemnation awards (other than for temporary use), (iii) insurance
proceeds (other than proceeds of rental insurance), and (iv) proceeds
from a sale or refinancing of the Premises, and (v) security deposits
received from tenants at the Premises (including without limitation,
security deposits to be deposited into the Security Deposit Fund
pursuant to Paragraph 4(b) below).
(p) Individually Approved Expenses" shall mean specific
expenses of ownership or operation of the Premises (i) which are not
contained in an Approved Budget or (ii) as to which Borrower has already
exhausted the amount specified for such expense in the Approved Budget
applicable to the year in which such specific expense is due, provided,
however, that no such specific expense shall constitute an "Individually
Approved Expense" except if and to the extent Lender has approved the
same in writing.
(q) "Individually Approved Request Letter" is defined in
Paragraph 6(b) hereof.
(r) "Initial Tax Deposit" is defined in Paragraph 3(a)
hereof.
(s) "Kellner Lease" shall mean the lease of space in the
Premises from Borrower to Kellner, Dileo & Co.
(t) "Lender" is defined in the introductory paragraph
hereof.
(u) "Loan Documents" is defined in the second WHEREAS
paragraph hereof.
(v) "Modification Agreement" is defined in the first
WHEREAS paragraph hereof.
(w) "Mortgage" is defined in the second WHEREAS paragraph
hereof.
(x) "Note" is defined in the second WHEREAS paragraph
hereof.
(y) "Operating Expenses" shall mean, for any period,
without duplication, (i) all normal and customary expenses paid during
such period by Borrower (or on Borrower's behalf by Borrower's agent's,
representatives or property managers) in connection with the ownership
or operation of the Premises, including without limitation payments made
for operating expenses, insurance premiums, management fees, consultant
and professional fees, capital items; payments for leasing commissions,
tenant improvements and lease inducements (other than those items paid
from condemnation awards or insurance proceeds), all to the extent the
expenses referred to above constitute Permitted Expenses or Individually
Approved Expenses (but excluding any Tax Charges), (ii) all payments of
principal and interest paid during such period to Lender from time to
time under the Loan Documents and (iii) the Escrow Fee. Operating
Expenses shall not include, however, the following:
(i) Any leasing or brokerage commissions or other
expenses incurred in order to obtain leases of space in the
Premises, unless such commissions and expenses constitute
Permitted Expenses;
(ii) Any expenses incurred for or in connection with
the improvement, alteration, decoration or furnishing of leased
space within the Premises or otherwise incurred in connection with
the construction of tenant improvements, unless such expenses
constitute Permitted Expenses;
(iii) Any management fees other than such as are
incurred and actually paid pursuant to that certain Management
Agreement dated December 1, 1987 with JMB Property Management
Company, or its successors or assigns, as manager, or any other
management agreement in effect with respect to the management of
the Premises, if and to the extent such management agreement has
been approved by Lender (which approval shall not be unreasonably
withheld);
(iv) Any costs or expenses incurred in connection
with any income or revenue which is excluded from the definition
of Gross Receipts; and
(v) Depreciation, amortization and other non-cash
expenses.
(z) "Other Indemnitors" is defined in Paragraph 6(c)
hereof.
(aa) "Periodic Required Amount" is defined in Paragraph
3(b) hereof.
(bb) "Periodic Tax Charges" is defined in Paragraph 3(b)
hereof.
(cc) "Periodic Tax Deposits" is defined in Paragraph 3(b)
hereof.
(dd) "Permitted Expenses" shall mean, as of any date,
without duplication, (i) all payments then due Lender, or otherwise
specifically required to be made by Borrower, under the Loan Documents
(excluding Tax Charges and any amount required to be paid into the
General Reserve Fund or the Security Deposit Fund but including any
amount then payable under the Environmental Indemnity), (ii) all
operating expenses and other expenses then due to the extent, and
subject to the limitations, in the applicable Approved Budget and (iii)
all Permitted Non-Budget Expenses.
(ee) "Permitted Non-Budget Expenses" shall mean any
expenditures for the Premises made by Borrower (or on Borrower's behalf
by Borrower's agents, representatives or property managers) in the
ordinary course of business which (i) are for emergency repairs to the
Premises which, in Borrower's reasonable judgment, are required to be
made for the preservation and safety of the Premises or to avoid
imminent suspension of any service (such as a utility service) to the
Premises or to avoid physical damage to life or property, as to which
emergency repairs Borrower has been unable to give Lender sufficient
notice in order to obtain Lender's approval, (ii) are expended in
connection with a lease or sublease which has been specifically approved
by Lender (such as, but not limited to, the Kellner Lease), including
without limitation, expenditures for tenant improvements and leasing
commissions pursuant thereto, but subject, as to all expenditures
covered by this clause (ii), to the limits, as to amounts for each
category of expenditures, which were the basis for Lender's approval or
(iii) are for utility services, insurance or governmental impositions.
(ff) "Premises" is defined in the second WHEREAS paragraph
hereof.
(gg) "Qualified Partner Contributions" is defined in
Paragraph 6(c) hereof.
(hh) "Quarter" is defined in Paragraph 3(c) hereof.
(ii) "Request Letters" is defined in Paragraph 6(a) hereof.
(jj) "Reserve Escrow" shall mean, collectively,, the
General Reserve Fund and the Security Deposit Fund.
(kk) "Revenue Inadequacy" shall mean, as of any date, the
excess, if any, of (i) the aggregate amount of the Permitted Expenses,
Tax Charges and Individually Approved Expenses then due over (ii) the
sum of (a) Gross Receipts in Borrower's accounts on such date
(including, without limitation, the Working Capital Reserve), (b) all
amounts previously released to Borrower from the General Reserve Fund
but not yet expended as of such date, and (c) the amount in the General
Reserve Fund on such date.
(ll) "Rollover Space" is defined in Paragraph 10 hereof.
(mm) "Security Deposit Fund" shall mean a separate account
for security deposits maintained by the Escrow Agent in accordance with
the terms of this Agreement.
(nn) "Shortfalls" shall mean, as of any date, the excess of
(i) all Permitted Expenses then due and payable over (ii) the sum of (a)
Gross Receipts in Borrower's accounts on such date (including, without
limitation, the Working Capital Reserve) and (b) all amounts previously
released to Borrower from the General Reserve Fund but not yet expended
as of such date.
(oo) "Tax Charges" shall mean all of the following with
respect to the Premises: all real estate taxes and assessments, other
than those, if any, payable directly by any tenant to the taxing
authorities.
(pp) "Tax Deposit Date" is defined in Paragraph 3(b)
hereof.
(qq) "Tax Due Date" is defined in Paragraph 3(b) hereof.
(rr) "Termination Date" shall mean the date that this
Agreement is terminated in accordance with its terms.
(ss) "Working Capital Reserve" shall mean a reserve fund,
up to the maximum amount described in Paragraph 4(a) hereof, held by
Borrower in order to effectively and efficiently run the day-to-day
operations of the Premises to take into account the timing of receipts
and expenses.
1. Escrow Agent. Borrower hereby appoints and designates
LaSalle National Trust, N.A. as Escrow Agent for the purposes set forth
herein. Lender hereby consents to such appointment and designation, and
Escrow Agent hereby accepts such appointment and designation.
2. Escrow. (a) On the date hereof, Borrower shall deposit
with Escrow Agent the amount of (i) $2,615,760 (such deposit being
herein referred to as the "Initial Tax Deposit") and (ii) $431,751.54
(such deposit being herein referred to as the "Existing Security
Deposits"). The Initial Tax Deposit shall be held by Escrow Agent in
the General Reserve Fund and the Existing Security Deposits shall be
held by Escrow Agent in the Security Deposit Fund, each to be applied in
accordance with the terms hereof.
(a) Commencing April 20, 1995, on the twentieth (20th) day
of each April and October hereafter until the Termination Date (each
such day a "Tax Deposit Date"), Borrower shall deposit with Escrow Agent
(such deposits being herein referred to as the "Periodic Tax Deposits")
a sum (each such sum, the "Periodic Required Amount") equal to the
excess, if any, of (x) the amount (each such amount, the "Periodic Tax
Charges") which is one-half (1/2) of the budgeted Tax Charges next
coming due on July 1 or January 1, as the case may be (each such date
being herein referred to as a "Tax Due Date"), over (y) the sum of (i)
the amount on deposit in the General Reserve Fund immediately prior to
any deposit of Cash Flow on such Tax Deposit Date pursuant to Paragraph
3(c) below, and (ii) the amount of Cash Flow which is deposited in the
General Reserve Fund on such Tax Deposit Date pursuant to Paragraph 3(c)
below (deposits by Borrower pursuant to this sentence which equal the
Periodic Required Amount being herein referred to as "Periodic Tax
Deposits"). Periodic Tax Deposits shall be held in the General Reserve
Fund and applied in accordance with the terms of this Agreement. In
addition to the Periodic Tax Deposits, no later than thirty (30) days
before a Tax Due Date, Borrower shall make a deposit with Escrow Agent
of a sum (each such sum, the "Additional Required Amount") equal to the
excess, if any, of (x) the aggregate amount (each such aggregate amount,
the "Total Tax Charges") of all of the Tax Charges (regardless of
whether such Tax Charges have been included in an Approved Budget or
otherwise budgeted) coming due on such Tax Due Date over (y) the amount
on deposit in the General Reserve Fund on the date that the deposit
contemplated by this sentence is required to be made (or, if earlier,
the date the deposit contemplated by this sentence is actually made)
(deposits by Borrower pursuant to this sentence which equal the
Additional Required Amount described above being herein referred to as
"Additional Tax Deposits"). The Additional Tax Deposits shall be held
in the General Reserve Fund and applied in accordance with the terms
hereof. Regardless of the amount or adequacy of Cash Flow, Borrower
shall be unconditionally obligated to make the Periodic Tax Deposits and
all required Additional Tax Deposits, and failure to make any Periodic
Tax Deposit in the Periodic Required Amount or any Additional Tax
Deposit in the Additional Required Amount, all in the manner and on the
date set forth herein, shall constitute an Event of Default hereunder
and under the Mortgage and other Loan Documents if such failure shall
continue for five (5) days after written notice to Borrower from Lender
or Escrow Agent that such Periodic Tax Deposit or Additional Tax Deposit
was due. If Borrower fails to make any Periodic Tax Deposit or
Additional Tax Deposit, Escrow Agent shall, not later than the next
business day after such amount was due, notify Borrower and Lender of
such failure. Notwithstanding anything herein to the contrary, until
the payment to the taxing authority of the Total Tax Charges on any Tax
Due Date, the Borrower shall not request a withdrawal from the General
Reserve Fund, and the Escrow Agent shall not make a withdrawal from the
General Reserve Fund (except for payment of the Tax Charges to the
taxing authority) if either (1) during the period from the date a
Periodic Tax Deposit is made in respect of the Tax Charges coming due on
such Tax Due Date (or, if earlier, the date such Periodic Tax Deposit is
required to be made hereunder) to the earlier of (x) the date an
Additional Tax Deposit is made or (y) the thirtieth (30th) day before
such Tax Due Date, after giving effect to such withdrawal the remaining
balance of the General Reserve Fund would be less than the Periodic Tax
Charges or (2) from the end of the period described in clause (1) above
to the date the Total Tax Charges due on such Tax Due Date are actually
paid to the taxing authority, after giving effect to such withdrawal the
remaining balance of the General Reserve Fund would be less than the
Total Tax Charges.
(b) Commencing with April 20, 1995, and continuing until
the Termination Date, not later than the twentieth (20th) day of each
April, July, October and January (each such day, a "Cash Flow Deposit
Date") Borrower shall deposit with Escrow Agent a sum equal to the Cash
Flow of the Premises during the three month period (but for the first
such deposit in April 1995, the four-month period) immediately preceding
the month in which such Cash Flow Deposit Date occurs (each such period,
a " Quarter"). As used herein, the term "Cash Flow Deposit" shall mean
a deposit by Borrower pursuant to the immediately preceding sentence
which equals the amount of Cash Flow applicable to such deposit. Each
Cash Flow Deposit shall be held in the General Reserve Fund and applied
in accordance with the terms hereof. Notwithstanding anything herein to
the contrary, for purposes of determining the amount of Cash Flow to be
deposited in respect of any Quarter, (i) Borrower shall have the right
to withhold from the applicable Cash Flow Deposit amounts required for
the Working Capital Reserve to the extent provided in Paragraph 4(a)
below (but such withholding from the Cash Flow Deposit shall not limit
or reduce Borrower's obligations to make Periodic Tax Deposits or
Additional Tax Deposits) and (ii) Borrower shall not deduct from Gross
Receipts, or repay to any partner or principal of Borrower, any
Qualified Partner Contributions if the effect of such deduction and
repayment would be to leave Borrower, even after taking the Working
Capital Reserve into account, with inadequate funds to pay anticipated
Operating Expenses.
3. Working Capital Reserve; Security Deposits.
(a) Except for Periodic Tax Deposits and Additional Tax
Deposits, Borrower shall not be obligated to deposit any funds into the
General Reserve Fund which would cause the amount maintained in
Borrower's accounts as the Working Capital Reserve to fall below
$250,000 (or such other amount, more or less, as Lender and Borrower
shall mutually agree upon from time-to-time pursuant to an Approved
Budget, to reflect actual working capital requirements). Borrower shall
only use the Working Capital Reserve to pay Permitted Expenses, and,
upon request by Lender, shall provide Lender with written notice of the
amount of Permitted Expenses paid from the Working Capital Reserve and
all such information and supporting documentation concerning same as
Lender reasonably requires. Under no circumstances shall the Working
Capital Reserve be used to repay Qualified Partner Contributions if such
repayment would cause the Working Capital Reserve to fall below $250,000
(or such other amount, more or less, as Lender and Borrower shall
mutually agree upon as aforesaid), and, upon the occurrence of a default
hereunder beyond any applicable notice or grace periods or the
occurrence of a default beyond any applicable notice or grace periods
under any of the Loan Documents, Borrower shall, immediately upon demand
by Lender, pay the full amount then in the Working Capital Reserve to
Lender or as Lender shall direct.
(b) Until the Termination Date, within ten (10) days after
the date Borrower either (i) receives security deposits in the future in
the form of cash, certificates of deposit or other cash equivalents from
tenants with respect to any leases for space at the Premises, or (ii)
collects cash or cash equivalents pursuant to any draw on letters of
credit or other liquidation of non-cash security deposits from such
tenants, Borrower shall deposit all such amounts with Escrow Agent
hereunder. Escrow Agent shall hold all such security deposits in the
Security Deposit Fund. To the extent Borrower receives any right to all
or any portion of any funds in the Security Deposit Fund which is not to
be refunded to a tenant, such funds, after ten (10) days' notice to
Lender, shall be transferred by Escrow Agent to Borrower and such funds
shall be considered as Gross Receipts. Upon any acquisition of title by
foreclosure, deed in lieu of foreclosure or otherwise by Lender or any
designee or nominee of Lender, all moneys held in the Security Deposit
Fund shall be transferred in accordance with Lender's written
directions, provided that such directions are in compliance with
applicable law. Upon payment in full of the indebtedness evidenced by
the Note, Borrower may deliver to Escrow Agent a copy of the recorded
satisfaction of mortgage, as certified as an accurate copy by the
recording office, whereupon Escrow Agent shall transfer all money held
in the Security Deposit Fund in accordance with Borrower's written
direction.
4. Required Borrower Reports and Budgets. (a) Commencing with
the Quarter ending March 31, 1995, Borrower shall submit to Lender a
detailed statement of Gross Receipts, Operating Expenses and Cash Flow
for the Premises for each Quarter (with the understanding that the
statement for the first such Quarter ending March 31, 1995 shall also
include such items for December, 1994), with such reports being due on
the Cash Flow Deposit Date for each such Quarter. All such reports
shall be certified as true and complete by a general partner of
Borrower. By March 31st of 1996 and each year thereafter, Borrower
shall submit to Lender, with respect to the immediately preceding
calendar year, a reconciliation of the budgeted Gross Receipts,
Operating Expenses and Cash Flow for the Premises against the actual
Gross Receipts, Operating Expenses and Cash Flow for such year. By
April 30th of 1996 and each year thereafter, Borrower shall submit to
Lender audited financial statements of Gross Receipts, Operating
Expenses and Cash Flow for the Premises for the preceding year. Lender
shall have the right from time to time, but not more than once in any
calendar year, to audit all such statements submitted by Borrower and,
for purposes of such audits, Borrower hereby agrees to give Lender and
its agents access at Borrower's offices in the Premises at all
reasonable times to all books and records maintained by Borrower which
are relevant to such audit. Each such audit shall be performed by
auditors of Lender's choosing who may be employees of Lender or an
independent firm of auditors, and the fees and expenses of such auditors
shall be paid by Lender unless such audit discovers an error
understating Cash Flow by more than $25,000, in which event the
reasonable fees and expenses of such auditors, if an independent
auditing firm, shall be paid by Borrower and treated as an Operating
Expense hereunder. If any audit by Lender reveals an underpayment of
Cash Flow into the General Reserve Fund, Borrower shall, immediately
upon notice thereof, deposit the amount of such underpayment with Escrow
Agent. Borrower shall retain and preserve all books and records,
including, without limitation, original source documents from which
financial data are gathered, in accordance with good accounting
practices and applicable law and in any event for a period of not less
than three (3) years after the calendar year to which such books and
records relate.
(a) Not later than November 15 of each calendar year,
Borrower shall prepare and submit to Lender, for Lender's approval, (i)
an operating budget for the Premises outlining the anticipated operating
revenues and expenses for the calendar year immediately following such
submission and (ii) a capital budget for the Premises outlining the
anticipated capital expenditures which will be necessary during the
calendar year immediately following such submission as well as the
anticipated sources of funds therefor. Such proposed budgets shall
include and establish rental and leasing guidelines and levels for
payments of leasing commissions, tenant improvements and lease
inducements. Such budgets shall be in the form approved by the Lender
and shall in all respects be subject to approval by Lender. The budget
approval process and the implementation of the Approved Budgets shall be
as follows:
(i)Lender's approval of any budget shall not be unreasonably
withheld. If Lender does not disapprove any such budget within sixty
(60) days after the receipt thereof, such budget shall be deemed approved.
If Lender shall disapprove any such budget, it shall notify Borrower to
that effect within such sixty (60) day period and of the reasons
therefor, and Borrower and Lender shall negotiate in good faith to
resolve their differences as promptly as possible. During the
pendency of any negotiations over a budget or following
disapproval of a budget by Lender, Borrower shall adhere to the
last Approved Budget, subject to increases in utility charges,
property taxes, insurance premiums and other increases in costs
not within the reasonable control of Borrower.
(ii)Lender acknowledges that Borrower has heretofore submitted
proposed operating and capital budgets for the 1995 calendar year. Until
an Approved Budget is established for calendar year 1995, Borrower shall
continue to operate the Premises, make expenditures and incur
obligations in the ordinary course and in accordance with
Borrower's budget for calendar year 1994.
(iii) Borrower shall operate the Premises in
accordance with the Approved Budget, and Borrower may, without the
need for further approval by Lender, make the expenditures and
incur the obligations provided for therein, including the right to
request withdrawals from the General Reserve Fund as provided for
herein in connection therewith. As often as reasonably necessary
during the period covered by any such Approved Budget, Borrower
shall submit to Lender for Lender's approval (which approval shall
not be unreasonably withheld) an updated budget or plan
incorporating such changes as shall be necessary to reflect
leasing experience, cost overruns and the like during such period,
provided, however, that Borrower shall submit an updated budget
for approval (i) with reasonable promptness after Borrower incurs
any Permitted Non-Budget Expenses and (ii) promptly, and in any
event within thirty (30) days, after Borrower incurs any
Individually Approved Expenses.
(iv)Notwithstanding anything set forth herein to the contrary,
Borrower shall not be
required to obtain Lender's approval (whether through the budget
process or otherwise) for Permitted Non-Budget Expenses, provided,
however, that as soon as practicable after Borrower obtains
knowledge of an emergency which will cause Borrower to make
expenditures for emergency repairs included in Permitted Non-
Budget Expenses, Borrower shall notify Lender of the nature of the
emergency and the anticipated amount of such expenditures.
5. Periodic Withdrawal Terms. (a) Borrower shall, or Lender
may from time to time, submit bills or invoices to Escrow Agent in
respect to Tax Charges together with a written request in the form of
Exhibit A hereto (herein called "Request Letters"). Unless Escrow Agent
has previously received notice from Lender that Borrower is in default
under the Loan Documents (unless Escrow Agent has received a subsequent
notice from Lender withdrawing such notice of default) Escrow Agent
shall promptly, and in any event before late payment charges are due
thereon, pay such bills and invoices for Tax Charges to the payee
indicated on such bill or invoice from the General Reserve Fund, and
Escrow Agent shall promptly thereafter notify Borrower and Lender of
such action. Nothing contained herein shall relieve Borrower of its
obligation under the Loan Documents to pay Tax Charges when due.
(a) Borrower shall, from time to time, but no more
frequently than one time per month, (i) submit a Request Letter to
Escrow Agent for the payment out of the General Reserve Fund of
Shortfalls or (ii) submit a written request in the form of Exhibit B-1
hereto (herein called "Individually Approved Request Letters") to Escrow
Agent for the payment out of the General Reserve Fund for Individually
Approved Expenses. Copies of such Request Letters and Individually
Approved Request Letters shall be submitted simultaneously to Lender
together with, in the case of an Individually Approved Request Letter,
(i) an affidavit signed by an authorized representative of one of
Borrower's general partners in the form of Exhibit B-2 attached hereto
and (ii) such other supporting documentation as Lender shall reasonably
require. Within five (5) days of receipt of a Request Letter relating
to a Shortfall, Escrow Agent shall make payment of the amounts requested
from the General Reserve Fund to Borrower and/or to the appropriate
payee listed in Borrower's Request Letter without further authorization
or approval of Lender. Escrow Agent shall not, however, have the
authority to make any payment to the Borrower and/or to the appropriate
payee listed in Borrower's request with respect to Individually Approved
Expenses, unless Escrow Agent receives a written approval of such
payment from Lender, which approval Lender agrees shall not be
unreasonably withheld. Notwithstanding any provision herein to the
contrary, (x) if Escrow Agent has received a notice from Lender that
Borrower is in default under the Loan Document and Escrow Agent has not
been subsequently notified by Lender that such notice of default has
been withdrawn, Escrow Agent shall not withdraw any amounts from the
General Reserve Fund pursuant to any Request Letter or Individually
Approved Request Letter or other notice from Borrower, and (y) Borrower
shall have no right to request a withdrawal of funds from the General
Reserve Fund after any Tax Deposit Date or after the making of any
Periodic Tax Deposit, except upon compliance with the limitations of
Paragraph 3(b) above. Borrower shall pay any such expenses promptly,
and in no event later than ten (10) days, after receipt of the funds
therefor. Borrower shall obtain, where customary or as reasonably
requested by Lender, lien waivers for such payment and shall forward
same to Lender promptly upon Borrower's receipt of same. Borrower shall
also obtain such other evidence as Lender may reasonably request to the
effect that the services or materials for which payment was requested
have been properly completed or delivered in good condition, as
appropriate, and shall forward same to Lender promptly. If necessary to
pay any amount properly requested by Lender or Borrower to be paid from
the Reserve Escrow in its entirety, Escrow Agent may, after no less than
five days' prior notice to the other party, redeem, prior to its stated
maturity, any time deposit held in the Reserve Escrow, even if such
early redemption results in a penalty.
(b) In the event that a Revenue Inadequacy exists in any
Quarter or in the event Borrower reasonably determines that a Revenue
Inadequacy will exist in any Quarter, any one or more of Borrower's
partners may (but shall not be obligated to) make during or after such
Quarter additional capital contributions or loans to Borrower to cover
any such Revenue Inadequacy. As between Carlyle-XIV, Carlyle-XV or
Associates (collectively, the "Other Indemnitors") and Borrower, any
amounts paid by the Other Indemnitors to Lender, and any other amounts
paid by the Other Indemnitors which were reasonably necessary to pay and
perform the obligations of the Borrower and the Other Indemnitors, under
the Environmental Indemnity in accordance with the terms of the
Environmental Indemnity shall be considered to be additional capital
contributions or loans to Borrower to cover a Revenue Inadequacy,
provided, however, that no amounts paid with Gross Receipts or other
funds of Borrower shall be considered to be capital contributions or
loans to Borrower (it being understood that amounts properly applied in
repayment of Qualified Partner Contributions shall, upon such repayment,
not thereafter be considered as Gross Receipts or funds of Borrower for
purposes of the foregoing proviso). Any such partner contribution or
loan described in the two immediately preceding sentences shall herein
be deemed to be, and referred to as, a "Qualified Partner Contribution"
at such time as all of the following have been satisfied in full: (a)
Lender has been furnished with documentation reasonably satisfactory to
Lender that sets forth the amount of the capital contribution or loan
made, the Revenue Inadequacy actually covered by such capital
contribution or loan (with receipted bills or other reasonably
satisfactory evidence of payment therefor), and (b) Lender is reasonably
satisfied based on Lender's review of the reports required hereunder and
under the other Loan Documents that the Cash Flow generated by the
Premises (including the Working Capital Reserve) and the amounts on
deposit in the General Reserve Fund were insufficient to make the
applicable payment when due. Without limitation of the foregoing,
Borrower hereby represents and warrants to Lender that (i) as of the
date of this Agreement, (x) one or more of the direct or indirect
partners of Borrower has made capital contributions or loans to Borrower
in the aggregate amount of $2,615,760 in order to cover the Initial Tax
Deposit, and (y) Borrower has paid $152,415 and one or more direct or
indirect partners of Borrower has made capital contributions or loans to
Borrower in the aggregate amount of $221,868 in connection with the
Kellner Lease and in connection with the refinancing of the Note and the
Mortgage by Lender, and (ii) after the date hereof, one or more direct
or indirect partners of Borrower expect to make capital contributions or
loans to Borrower in the aggregate amount of up to $237,574 in order to
cover additional amounts to be paid by Borrower in connection with
unpaid costs incurred or to be incurred by Borrower in connection with
such refinancing. Lender acknowledges that such capital contributions,
loans or payments referred to in clause (i) of the immediately preceding
sentence in the aggregate amount of $2,990,043 shall be deemed to
constitute Qualified Partner Contributions and that, subject to Lender's
receipt and approval of reasonably satisfactory evidence of payment of
the applicable costs, such capital contributions or loans referred to in
clause (ii) of the immediately preceding sentence shall constitute
Qualified Partner Contributions.
(c) Upon presentation of written instructions from
Borrower to Escrow Agent (with a simultaneous copy to Lender) setting
forth the name of the tenant, the amount of the security deposit to be
released and certifying that the amount was delivered to Escrow Agent as
part of the Existing Security Deposits or pursuant to Paragraph 4(b)
hereof and that such tenant's lease has been terminated and/or the
tenant is justly entitled to such money, Escrow Agent will pay out of
funds in the Security Deposit Fund directly to the tenant the amount of
the security deposit that Borrower states is then due and payable on the
tenth (10th) day after Borrower submits such written instruction. Upon
presentation of (i) written instructions from Borrower to Escrow Agent
(with a simultaneous copy to Lender) setting forth the name of the
tenant, the amount of the security deposit to be released and certifying
that the amount was delivered to Escrow Agent as part of the Existing
Security Deposits or pursuant to Paragraph 4(b) hereof and that Borrower
is justly entitled to such money, and (ii) confirmation that Lender has
approved the same (which approval Lender agrees will not be unreasonably
withheld or denied), Escrow Agent will pay out of funds in the Security
Deposit Fund to Borrower the amount of the security deposit that
Borrower states is then due and payable within five (5) days after
Borrower submits such written instruction. Upon any such release to
Borrower (as opposed to a release to a tenant), such funds shall be
included within Gross Receipts hereunder.
(d) Neither the General Reserve Fund nor the Security
Deposit Fund may be commingled with each other or any other account held
by Escrow Agent. Escrow Agent agrees that it shall not release any
funds held by it except as expressly permitted by the terms of this
Agreement.
(e) All disbursements made by Escrow Agent to Lender or
Borrower shall be made via federal wire transfer in immediately
available funds to the appropriate account as follows:
Lender: Morgan Guaranty Trust Company
New York, New York
ABA No. 021000238
Credit: TIAA (Teachers Insurance and
Annuity Association of America)
Acct. no. 121-84-968
Borrower: Bank of America Illinois
Chicago, Illinois
ABA No. 071000039
Credit: Progress Partners
Acct. no. 7926642
All disbursements made by Escrow Agent to a tenant or a third party
vendor shall be made by check payable and delivered to such entity.
(a) Borrower hereby appoints Associates (as hereinafter
defined), and Associates shall have full power and authority, to act on
behalf of Borrower with respect to the administration of Borrower's
obligations hereunder, including without limitation the preparation,
execution and delivery of Request Letters, Individually Approved Request
Letters and such other supporting documentation as Borrower may be
required to provide to Lender hereunder (including without limitation
affidavits substantially in the form attached hereto as Exhibit B-2).
Borrower hereby acknowledges that any document executed by Associates
pursuant to the terms hereof shall be binding upon Borrower.
1. Security for Borrower's Obligation. Borrower and Lender
acknowledge and agree that the Reserve Escrow and all of Borrower's
rights under this Agreement are pledged, and that Lender has a security
interest in the Reserve Escrow and such rights, pursuant to the Mortgage
as additional security for the performance of Borrower's obligations to
pay installments of interest, the Prepayment Premium (as such term is
defined in the Note), principal and all other payments required under
the Loan Documents, when due, and as security for the performance of
Borrower's obligations under this Agreement and the Loan Documents. The
aforesaid security interest in the Security Deposit Fund is only in and
to Borrower's rights to any proceeds from such account and is subject to
the terms of the applicable tenant leases and all provisions of
applicable law. Lender hereby notifies Escrow Agent of such security
interest, and Escrow Agent hereby acknowledges and consents to the
security interest in the Reserve Escrow granted herein by Borrower to
Lender.
2. Escrow Agent Reports. As soon as possible and, in all
cases, within ten (10) days after the end of each month, Escrow Agent
shall provide Borrower and Lender, separately as to each of the General
Reserve Fund and the Security Deposit Fund, with a statement of account
activity separately itemizing the balance of both accounts, deposits
thereto, withdrawals therefrom and interest earned thereon. In addition
to the monthly statements as aforesaid, Escrow Agent shall also submit
to Borrower and Lender (i) notice of every deposit to the Reserve
Escrow, within five (5) days after each such deposit, and (ii) by
February 1st of each year an annual reconciliation of the Cash Flow of
the Reserve Escrow for the preceding calendar year. The statements
referred to in clause (ii) of the immediately preceding sentence shall
be certified to Lender and Borrower as being true and correct by an
authorized financial officer of Escrow Agent and shall contain such
additional information as Borrower or Lender may reasonably request.
Escrow Agent will invest the funds on deposit from time to time in the
Reserve Escrow in accordance with the Borrower's written instructions,
in the following investments: (i) certificates of deposit, money market
funds and/or savings accounts with Escrow Agent, all with maturity dates
of not more than one year and insured by the Federal Deposit Insurance
Corporation up to its maximum limit, (ii) United States Treasury issues
or issues of any Federal government agency, or (iii) any corporate bond
rated the highest quality rating by Moody's Investor's Service, Inc. and
Standard and Poor's Corporation or any commercial paper issued by an
issuer rated the highest quality rating by Moody's Investor's Service,
Inc. and Standard and Poor's Corporation and with a maturity of not
greater than three (3) months from the date of purchase. All interest
accruing on the Reserve Escrow shall, subject to Lender's security
interest, belong to and be the income of Borrower or Borrower's tenants,
as provided under applicable law, but shall be held in and become part
of whichever fund, i.e., the General Reserve Fund or the Security
Deposit Fund, to which such interest is attributable. Escrow Agent
shall open up the books and records relating to the Reserve Escrow and
make the same available to Lender and Borrower and all employees, agents
and representatives of Lender and Borrower at such time as Lender,
Borrower or such employees, agents and representatives desire but only
at reasonable intervals.
3. Escrow Agent's Fees. Escrow Agent shall be paid an annual
fee of $3,500.00 (the "Escrow Fee") to compensate it for maintaining the
Reserve Escrow (with the Escrow Fee for the first year including an
additional $500.00 for establishing the Reserve Escrow and the review
and acceptance of this Agreement) with said Escrow Fee also compensating
Escrow Agent for the administration of the Reserve Escrow (including
receipt of deposits and processing of approved disbursements and
preparation and distribution of the reports and statements required
hereunder). Said Escrow Fee includes all fees for postage, fax,
telephone, overnight delivery services and all other expenses. Such fee
shall be an Operating Expense and shall be billed directly to Borrower
on a quarterly basis. Borrower hereby agrees to pay the Escrow Fee
within ten (10) days of receipt of each invoice for any installment
thereof.
4. Termination. (a) The requirement for Borrower's depositing
Cash Flow to fund the General Reserve Fund and security deposits to fund
the Security Deposit Fund hereunder shall terminate when Lender provides
Escrow Agent with written notification that ninety percent (90%) of the
tenant space at the Premises identified on Exhibit C hereto (the
"Rollover Space ") has been re-leased or had existing leases renewed or
extended pursuant to leases or renewals approved by Lender and Lender
has determined that it is reasonably likely that the Gross Receipts less
the sum of (i) all Operating Expenses (other than debt service) and (ii)
all Tax Charges will be sufficient, for the remaining term of the loan
evidenced by the Note, to pay debt service required under the Loan
Documents. Lender agrees that it shall use reasonable efforts to
provide Escrow Agent with such notice promptly upon satisfaction of the
foregoing conditions. Upon Escrow Agent's receipt of the aforesaid
termination notice from Lender, Escrow Agent shall promptly transfer the
remaining funds in the Reserve Escrow as follows: (i) any portion of the
remaining funds which Lender determines are required to be held in an
escrow for Tax Charges pursuant to the Mortgage (other than security
deposits) shall be transferred as Lender shall direct and (ii) any
amount remaining after application pursuant to clause (i) above,
including, without limitation, the security deposits, shall be
transferred to Borrower. Notwithstanding the aforesaid to the contrary
(i) if Lender shall notify Escrow Agent that Borrower has defaulted
hereunder or under the Loan Documents beyond any applicable notice and
cure periods and such default remains outstanding, the then remaining
balance in the General Reserve Fund, after payment of all Escrow Fees
then due, shall be disbursed forthwith by Escrow Agent to Lender and
Lender shall credit the same to the indebtedness evidenced and secured
by the Loan Documents; provided, however, that Lender agrees not to give
such notice for purposes of causing such disbursement to Lender until
after expiration of any applicable notice and cure periods and provided,
further, that amounts in the Security Deposit Fund shall only be
credited to such indebtedness after compliance with the applicable
provisions of the Mortgage and with applicable laws. Lender shall, at
the same time and in the same manner as any notices given to Escrow
Agent under this paragraph, provide Borrower with copies of same.
(a) Borrower hereby represents and warrants to Lender that
all of the information on Exhibit C is true and complete in all material
respects. In connection with any alleged breach by Borrower with
respect to the immediately preceding sentence, Lender's determinations
as to materiality shall be conclusive and binding upon Borrower.
(b) If not sooner terminated, this Agreement, and the
Reserve Escrow shall terminate when Lender provides Escrow Agent with
written notification that the loan evidenced and secured by the Loan
Documents has been satisfied in full, which notice Lender agrees to use
reasonable efforts to give to Escrow Agent promptly upon such
satisfaction. Upon Escrow Agent's receipt of the notice described in
this Paragraph 10(c) from Lender, Escrow Agent shall promptly transfer
the remaining funds in the Reserve Escrow to Borrower.
5. Successor Escrow Agent. (a) Lender may at any time and
from time to time terminate Escrow Agent's responsibilities and
substitute a new escrow agent. The new escrow agent shall be subject to
Borrower's approval, which approval shall not be unreasonably withheld.
Within thirty (30) days after notification from Lender in writing that a
new escrow agent has been substituted for it, Escrow Agent shall
transfer over to the new escrow agent the entire Reserve Escrow and
shall be relieved of any liability hereunder arising thereafter except
for the obligation to give the reports required by Paragraph 8 hereof.
Contemporaneously with such transfer, Escrow Agent shall deliver to
Lender and Borrower a report showing the amount transferred and a final
accounting of the Reserve Escrow.
(a) Escrow Agent may resign as escrow agent hereunder at
any time by giving sixty (60) days' notice to Lender and Borrower. In
such event Lender shall select a new escrow agent who shall be subject
to approval by Borrower, which approval shall be unreasonably withheld.
Promptly after notification from Lender in writing of the identity of
the new escrow agent, Escrow Agent shall transfer over to the new escrow
agent the entire Reserve Escrow and shall be relieved of any liability
hereunder arising thereafter except for the obligation to give the
reports required by Paragraph 8 hereof. Contemporaneously with such
transfer, Escrow Agent shall deliver to Lender and Borrower report
showing the amount transferred and a final accounting of the Reserve
Escrow.
(b) If Escrow Agent resigns upon written notice as
provided for hereinabove and a successor escrow agent is not appointed
within sixty (60) days after such notice, then Escrow Agent may petition
a federal or New York State court of competent jurisdiction sitting in
New York County, New York, to name a successor. Escrow Agent may
include the cost of such action in its unpaid Escrow Fees.
6. Defaults. Notwithstanding any provision herein to the
contrary, in the event of any default hereunder on the part of Borrower
beyond any applicable notice and cure periods, Lender shall be entitled,
immediately and without notice, to enforce its remedies therefor
provided hereunder or under any of the other Loan Documents, provided,
however, that (i) in the case of a default in the making of a payment to
the Reserve Escrow or the making of a payment to Lender required under
this Agreement, Lender shall have such enforcement rights hereunder only
after such default shall have continued uncorrected for five (5) days
after notice thereof by Lender or Escrow Agent to Borrower, (ii)
notwithstanding the clause (i) above, if Lender or Escrow Agent shall
have sent a notice to Borrower in respect of any such default by
Borrower hereunder, Lender shall have such enforcement rights hereunder,
as to any additional such default prior to the first anniversary of such
notice to Borrower, after such default shall have continued uncorrected
for five (5) days without any requirement for any notice of such
additional default, (iii) in the case of a default which is not covered
by clauses (i) and (ii) above, Lender shall have such enforcement rights
hereunder only after such default shall have continued uncorrected for
ten (10) days after notice thereof by Lender or Escrow Agent to Borrower
(or, if such default is not susceptible of cure within such ten day
period, a longer period, but in no event in excess of thirty (30) days
after such notice, so long as Borrower commences cure within such ten
(10) day period and thereafter diligently prosecutes such cure to
completion), and (iv) notwithstanding clause (iii) above, if Lender or
Escrow Agent shall have sent a notice to Borrower in respect of any such
default by Borrower hereunder, Lender shall have such enforcement rights
hereunder, as to any additional such default prior to the first
anniversary of such notice to Borrower, after such default shall have
continued uncorrected for ten (10) days (or, if such default is not
susceptible of cure within such ten day period, a longer period, but in
no event in excess of thirty (30) days after such default occurs, so
long as Borrower commences cure within such ten (10) day period and
thereafter diligently prosecutes such cure to completion) without, in
any such case covered by this clause (iv), any requirement for any
notice of such additional default. Any default by Borrower hereunder
beyond any applicable notice and cure periods shall constitute an event
of default under the Mortgage and the Note without further notice or
opportunity to cure.
7. Miscellaneous. (a) The failure of Lender to enforce strict
performance of the terms and conditions hereof shall not constitute a
waiver of its rights hereunder or under the Loan Documents. If any
term, covenant or condition of this Agreement shall be held to be
invalid, illegal or unenforceable in any respect, this Agreement shall
be construed without such provision. This Agreement may not be
modified, amended, changed or terminated orally, but only by an
agreement in writing signed by the party against whom the enforcement of
the modification, amendment, change or termination is sought.
(a) Escrow Agent may act in reliance upon any writing or
instrument or signature which it, in good faith, believes to be genuine,
may assume the validity and accuracy of any statement or assertion
contained in such a writing or instrument and may assume that any person
purporting to give any writing, notice, advice or instruction in
connection with the provisions hereof has been duly authorized so to
do.
(b) Escrow Agent's duties under this Agreement shall be
limited to:
(i)Accepting the escrowed funds for deposit into the Reserve Escrow;
(ii)Investing and reinvesting such sums from time to time pursuant to
the terms of this Agreement in permitted investments and in accordance
with Borrower's written instructions;
(iii)Causing to be paid, from time to time out of escrowed funds, the
bills for costs and expenses to be paid from the Reserve Escrow and
otherwise causing sums to be disbursed from the Reserve Escrow in
accordance with the terms of this Agreement; and
(iv)Such other express duties as Escrow Agent has undertaken pursuant
to the express language hereof.
(c) Escrow Agent undertakes to perform only said duties as
are expressly set forth herein and no implied duties or obligations
shall be read into this Agreement against Escrow Agent. Escrow Agent
acknowledges that it has received copies of the Modification Agreement,
the Initial Consolidated Mortgage and the Consolidation Agreement (as
such terms are defined in the Modification Agreement), the Environmental
Indemnity and this Agreement.
(d) (i) Borrower hereby agrees to indemnify Escrow
Agent and hold it harmless from any and all claims, liabilities,
losses, actions, suits or proceedings at law or in equity, or any
other expense, fees or charges of any character or nature, which
it may incur by reason of its acting as Escrow Agent under this
Agreement, unless the same arise out of the gross negligence or
wilful misconduct of Escrow Agent and in connection therewith, to
indemnify Escrow Agent against any and all expenses, including
attorney's fees and the cost of defending any action, suit or
proceeding or resisting any claim covered by the aforesaid
indemnity.
(e) If the parties hereto shall be in disagreement about
the interpretation of this Agreement, or about their rights and
obligations hereunder, or the propriety of any action contemplated by
Escrow Agent hereunder, or if Lender files an objection to a request for
reimbursement, any party hereto may, at its discretion, file an action
in a federal or New York State court of competent jurisdiction sitting
in New York County, New York to resolve such disagreement. Escrow Agent
shall be indemnified by Borrower for all costs, including attorney's
fees, in co9nnection with any such action, and shall be fully protected
in suspending all or a part of its activities under this Agreement until
a final judgment in the action is received.
(f) Escrow Agent shall not be deemed to be in violation of
this Agreement if it is complying with a court order, including an
attachment, garnishment or levy.
(g) All notices and communications hereunder shall be in
writing and shall be deemed to be duly given if sent by registered or
certified mail, return receipt requested, postage prepaid, or via
Federal Express, to the addresses set forth in the preamble of this
Agreement, in the case of Lender to the attention of its Mortgage and
Real Estate Division. The name or place to which notice must be given
may be changed by thirty (30) days' prior written notice thereof. This
Agreement may be executed in one or more counterparts and/or with
counterpart signature pages, each of which shall constitute one and the
same agreement. (i) This Agreement shall inure to the benefit
of and shall be binding upon the parties hereto and upon their
respective successors and assigns; provided, however, that this
Agreement may only be assigned by Lender in connection with an
assignment of the Loan Documents.
(h) This Agreement shall be construed, enforced and
interpreted under the laws of the State of New York, without regard to
principles of conflict of laws.
In the event of any litigation hereunder between
Borrower and Lender, the prevailing party shall be entitled to its
reasonably attorneys' fees and other costs incurred in such litigation.
(j) The headings used herein are for convenience only and
are not to be used in interpreting this Agreement.
(k) This Paragraph 13(m) consists of subparagraphs 1
through 6, inclusive, as set forth below:1. Notwithstanding any
provisions in the Note or in the Mortgage or in any other Loan Document
(as hereinafter defined) to the contrary, (except as provided in
subparagraphs 2 and 3 of this Paragraph 13(m)) it is expressly
understood and agreed that if Lender at any time takes action to enforce
the collection of the indebtedness secured by the Mortgage or by any
other Loan Document, Lender will proceed to foreclose the Mortgage
instead of instituting suit upon the Note. If a lesser sum is realized
from the foreclosure of the Mortgage and sale of the Premises than the
amount then due and owing under or arising out of the Note, the
Mortgage, or any other Loan Document, Lender will never (except as
provided in subparagraphs 2 and 3 of this Paragraph 13(m)) institute any
action, suit, claim or demand in law or in equity against Borrower, or
against any individual or entity that is a Recourse Entity (as
hereinafter3 defined) or that was, is or becomes a partner, directly or
indirectly through one or more other partnerships, in (or any other
affiliated or related persons or entities of) Borrower, for or on
account of the deficiency. Notwithstanding any provisions in the Note
or in the Mortgage or in any other Loan Document to the contrary,
(except as provided in subparagraphs 2 and 3 of this Paragraph 13(m)) it
is expressly understood and agreed that if Lender at any time takes
action to enforce (or to recover any loss or damage by reason of a
breach or failure of performance of) any agreement or obligation of
Borrower under the Mortgage or under any other Loan Document (other than
an action to enforce the collection of the indebtedness secured by the
Mortgage or by any other Loan Document or the collection of any
deficiency in respect of such indebtedness, all such actions to enforce
or recover as to collection being subject to the two immediately
preceding sentences) (any action or suit to enforce or recover as to any
such agreement or obligation (excluding actions to enforce collection,
as aforesaid) being herein referred to as "Non-Collection Actions"), (i)
Lender will not institute any action, suit, claim or demand in law or in
equity against any individual or entity that is a Recourse Entity (as
hereinafter defined) or that was, is or becomes a partner, directly or
indirectly through one or more other partnerships, in (or any other
affiliated or related persons or entities of) Borrower, except to the
extent such action, suit, claim or demand is necessary or appropriate in
order to either (x) institute an action, suit, claim or demand against
Borrower or (y) enforce (without collection of such indebtedness or such
deficiency) Lender's rights with respect to the Premises or any other
collateral for the Note or for such indebtedness, and (ii)
notwithstanding the foregoing exception in clause (i) above, Lender
shall not, in any Non-Collection Action, recover against any individual
or entity that is a Recourse Entity or that was, is or becomes a
partner, directly or indirectly through one or more other partnerships,
in (or any other affiliated or related persons or entities of) Borrower,
provided, however, that nothing in this sentence shall limit or affect
Lender's right to institute any action, suit, claim or demand against
Borrower itself.
2. Subject in all events to the provisions of subparagraphs
4 and 5 of this Paragraph 13(m), nothing contained in
subparagraph 1 of this Paragraph 13(m) will in any way
affect or impair:
(a) the lien of the Mortgage which will remain in
full force and inure to the benefit of Lender;
(b) subject to the last two sentences of this subparagraph
2, any representation or warranty of title made in the Mortgage,
all of which will remain in full force and inure to the benefit of
Lender;
(c) Lender's rights, as against Borrower or any
Recourse Entities (as hereinafter defined), to the extent
provided for under the Environmental Indemnity (as
hereinafter defined), subject to the provisions of Paragraph
7 of the Environmental Indemnity;
(d) subject to the last sentence of this subparagraph 2,
Lender's rights, as against Borrower or any Recourse Entities,
under Paragraph 10 of Section V of the Initial Consolidated
Mortgage, to the extent costs and expenses covered by said
Paragraph 10 relate to upholding or defending the Mortgage as
having been duly authorized, executed and delivered (provided,
however, that, so long as (i) Borrower and the Recourse Entities
acknowledge their continuing liability under this Paragraph 13(m)
and (ii) Borrower and the Recourse Entities are defending and
upholding the validity of the Mortgage as an enforceable first
lien, this clause (d) shall not cover costs and expenses of
upholding or defending the due authorization, execution and
delivery of the Mortgage Amendment (as hereinafter defined);
(e) Either or both of (i) Lender's rights to proceed
against any collateral under this Agreement or to exercise
any such collateral or other amounts recovered pursuant to
this Agreement in accordance with this Agreement so long as
Lender does not commence or prosecute an action or
proceeding to enforce personal liability except to the
extent permitted under the provisions of this
Paragraph 13(m) (other than this clause (e)) and
(ii) Lender's rights to proceed against any collateral under
the New NY Escrow Agreement (as defined in Paragraph 13(n)
hereof) or to exercise any of Lender's rights under the New
NY Escrow Agreement or to apply any such collateral or other
amounts recovered pursuant to the New NY Escrow Agreement in
accordance with the New NY Escrow Agreement (subject, as to
this clause (e)(ii), to the provisions of the New NY Escrow
Agreement which correspond to the provisions of this
Paragraph 13(m)); or
(f) Lender's rights to proceed against any
collateral under the Assignment of Leases (as defined in the
Modification Agreement (as hereinafter defined)) or to
exercise any of Lender's rights under the Assignment of
Leases or to apply any such collateral or other amounts
recovered pursuant to the Assignment of Leases in accordance
with the Assignment of Leases (subject, as to this clause
(f), to the provisions of Paragraph 15 of the Assignment of
Leases).
If and to the extent that Lender determines that the matters as to
which Borrower has liability under subparagraph (b) or (d) of the
immediately preceding sentence, as the case may be, are also
matters as to which Lawyers Title Insurance Corporation, TICOR
Title Guarantee Company and TICOR Title Insurance Company, or
their successors or assigns (collectively, the "Title Companies")
are liable under the title insurance policies issued to Lender in
connection with the Modification Agreement, Lender will not
commence an action or proceeding to enforce personal liability
pursuant to subparagraph (b) or (d), as the case may be, with
respect to such matters until Lender (i) has sought recourse
against the Title Companies for such matters and (ii) has
determined that such recourse against the Title Companies either
will not result in reasonably prompt payment of all claims of
Lender or will not provide full protection of Lender's rights as
to such matters (Lender's determinations as described in this
clause (ii) shall be conclusive and binding), provided, however,
that nothing in this sentence shall prevent Lender from taking
such actions as Lender reasonably deems necessary (including,
without limitation, the filing of proofs of claim) to preserve
Lender's rights against any or all of Borrower and the Recourse
Entities and provided, further, that nothing in this subparagraph
2 of this Paragraph 13(m) shall limit any rights or remedies of
Lender other than, to the extent restricted by this subparagraph
2, the right to commence or prosecute an action or proceeding to
enforce personal liability. Any determination by Lender that the
Title Companies are not liable shall, as between Borrower and
Lender, be conclusive and binding for purposes of this
subparagraph 2, but such determination shall not waive or limit in
any manner the rights of any party against the Title Companies.
3. The following are excluded and excepted from the
provisions of subparagraph 1 of this Paragraph 13(m) and
Lender may recover personally against Borrower and the
Recourse Entities (subject in all events to the provisions
of subparagraphs 4 and 5 of this Paragraph 13(m)) for the
following:
(i) all losses, damages or liabilities suffered by
Lender arising out of any fraud or wilful or intentional
misrepresentation by Borrower or 900 3rd Avenue Associates,
an Illinois general partnership ("Associates") in connection
with (a) the execution and delivery of any of the Loan
Documents (excluding any fraud or misrepresentation relating
thereto by or on behalf of any partner of Borrower (other
than Associates)), or (b) Borrower's performance of any of
its obligations under the Loan Documents after December 1,
1994.
(ii) in the event of any material default by Borrower
under any of the Loan Documents that is not cured prior to
the expiration of the applicable notice or grace period, if
any, under such Loan Document (Lender's determinations as to
whether a default is material shall be conclusive and
binding) (such material defaults being herein called
"Recourse Income Defaults"), all Income (as hereinafter
defined) which is either:
(A) received after the Default Date (as
hereinafter defined) by or on behalf of Borrower (including
receipt by Borrower or Borrower's agents, representatives,
property managers, successors or assigns but excluding
receipt by Lender or any receiver (a "Receiver") appointed
for the Premises and excluding receipt by a successor or
assign (a "Lender Successor") which takes title to the
Premises through or after a foreclosure or other exercise of
rights under the Mortgage or by conveyance in lieu of such
exercise of rights under the Mortgage); or
(B) on deposit on the Default Date in one or
more accounts used by Borrower or Borrower's agents,
representatives, property managers, successors or assigns
(excluding Lender or any Receiver or Lender Successor) in
connection with the operation of the Premises;
except to the extent any such Income is (x) so long as this
Agreement is in effect, either (I) deposited into the
General Reserve Fund (as such term is defined in this
Agreement) pursuant to this Agreement, or (II) applied to
Permitted Expenses or to Individually Approved Expenses (as
such terms are defined in this Agreement) to the extent
permitted under this Agreement, or (y) from and after the
date this Agreement ceases to be in effect, properly applied
to the normal and customary expenses and operations of the
Premises (subject to all of the aforesaid deposits and
applications being documented by evidence reasonably
satisfactory to Lender) (all such Income described in
clauses (ii)(A) or (ii)(B) above in respect of which
documentation of the aforesaid deposit or application is
either not furnished to Lender or is not reasonably
satisfactory to Lender being herein referred to as "Recourse
Income"), provided, however, that if any such Recourse
Income Default shall have been fully cured prior to
acceleration of the maturity of the indebtedness evidenced
by the Note, then, solely for purposes of determining the
liability of Borrower and the Recourse Entities under this
clause (ii) of this subparagraph 3, such Recourse Income
Default shall be treated as if it had not occurred (but
without limiting any rights or remedies of Lender in respect
of such default other than rights or remedies relating to
personal liability, personal recourse, or personal
recovery);
(iii) an amount equal to all security deposits
collected by or on behalf of Borrower (including collection
by Borrower or Borrower's agents, representatives, property
managers, successors or assigns but excluding collection by
Lender or any Receiver or Lender Successor) and not either
(x) properly refunded to tenants to the extent required
under the terms of the applicable leases, (y) paid to the
Escrow Agent or the NY Escrow Holder (as such terms are
defined in this Agreement) in accordance with this Agreement
or the New NY Escrow Agreement (as such term is defined in
this Agreement) or (z) paid to Lender to the extent
permitted by law and in accordance with the Loan Documents,
and all advance rents collected by or on behalf of Borrower
(including collection by Borrower or Borrower's agents,
representatives, property managers, successors or assigns
but excluding collection by Lender or any Receiver or Lender
Successor) (i.e., rents paid more than one month in advance)
and not properly applied in due course (proper refunding or
application being documented by evidence reasonably
satisfactory to Lender);
(iv) in the event of any Recourse Income Default, the
replacement cost of any items of personalty or any fixtures
which constitute security for the indebtedness secured by
the Mortgage and which are removed from the Premises by
Borrower or by any person or any entity on behalf of
Borrower on or after the Default Date, provided, however,
that if any such Recourse Income Default shall have been
fully cured prior to acceleration of the maturity of the
indebtedness evidenced by the Note, then, solely for
purposes of determining the liability of Borrower and the
Recourse Entities under this clause (iv) of this
subparagraph 3, such Recourse Income Default shall be
treated as if it had not occurred (but without limiting any
rights or remedies of Lender in respect of such default
other than rights or remedies relating to personal
liability, personal recourse, or personal recovery);
(v) all losses, damages or liabilities suffered by
Lender arising from any acts of commission or omission by
Borrower that result in waste (as such term is defined under
the laws of the State of New York) upon the Premises; and
(vi) any insurance or condemnation proceeds
attributable to the Premises that are received by or on
behalf of Borrower (with such receipt being determined in
the same manner as receipt of Income under subparagraph
3(ii)(A) above of this Paragraph 13(m)) and not applied in
accordance with the terms of the Mortgage or any insurance
and condemnation proceeds that were received by or on behalf
of Borrower (with such receipt being determined as
aforesaid) and not paid to Lender when required under the
terms of the Mortgage.
4. Notwithstanding the foregoing provisions of this
Paragraph 13(m) or any other provisions of the Mortgage, the
Note or any of the other terms or provisions of the Loan
Documents, none of JMB Realty Corporation, a Delaware
corporation ("JMB Realty"), Progress Properties, Inc., a New
York corporation ("PPI"), J.R.A. Realty Corp., a New York
corporation ("JRA"), or P-C 900 Third Associates, a New York
limited partnership ("P-C") (JMB Realty, PPI, JRA and P-C
being herein collectively referred to as the "Initial Exempt
Entities"), nor any Additional Exempt Persons (as
hereinafter defined) shall have any direct or indirect
personal liability to Lender under, for or in connection
with any of the obligations set forth in the Mortgage, the
Note or any other of the Loan Documents, including, but
without limitation, any of the provisions set forth in
subparagraphs 2 and 3 of this Paragraph 13(m), provided,
however, that in no event shall the Initial Exempt Entities
or the Additional Exempt Persons include the Recourse
Entities or an Owner Entity (as hereinafter defined).
Unless such successor or assign is an Owner Entity or a
Recourse Entity, Initial Exempt Entities shall include
successors or assigns of Initial Exempt Entities.
Notwithstanding the foregoing provisions of this Paragraph
13(m) or any other provisions of the Mortgage, the Note or
any of the other terms or provisions of the Loan Documents,
if title to the Premises is conveyed to a creditworthy
entity which is either acceptable to Lender, in Lender's
sole discretion or which Lender approves in accordance with
subparagraph (g) of Paragraph 17 of the Initial Consolidated
Mortgage (such creditworthy entity which is either
acceptable to Lender in Lender's sole discretion or which
Lender so approves in accordance with said subparagraph (g)
being herein referred to as an "Approved Transferee"), and
such Approved Transferee duly authorizes, executes,
acknowledges and delivers to Lender an assumption agreement,
in recordable form and otherwise satisfactory to Lender in
all respects, pursuant to which such Approved Transferee
assumes and agrees to pay and perform all liabilities and
obligations (as such liabilities and obligations are limited
pursuant to this Paragraph 13(m)) of Borrower and the
Recourse Entities (whether such liabilities and obligations
arise before, during or after such conveyance) under the
Mortgage, the Note, this Agreement and all the other Loan
Documents (other than the Environmental Indemnity), then,
upon approval in writing by Lender of such Approved
Transferee and approval in writing by Lender of such
assumption agreement executed and acknowledged by such
Approved Transferee, Lender shall, at Borrower's expense,
execute and deliver to Borrower a release pursuant to which
Borrower and the Recourse Entities shall be released by
Lender from all liabilities and obligations under the
Mortgage, the Note, this Agreement and all the other Loan
Documents (other than the Environmental Indemnity),
provided, however, that unless and until all of the
conditions of this sentence shall have been satisfied in
full and Lender shall have executed and delivered such
release to Borrower, all of the liabilities and obligations
of the Borrower and the Recourse Entities under the
Mortgage, the Note, the Environmental Indemnity, this
Agreement and all the other Loan Documents shall remain
unchanged and in full force and effect (subject to the first
sentence of this subparagraph 4 of this Paragraph 13(m)) and
provided, further that in no event shall any transfer,
approval or release referred to the Mortgage or any other
Loan Document (other than the Environmental Indemnity) limit
or affect the liability of Borrower and the Recourse
Entities under the Environmental Indemnity, which
Environmental Indemnity shall remain in full force and
effect (subject to the provisions of Paragraph 7 of the
Environmental Indemnity) unless and until terminated in
accordance with the terms of the Environmental Indemnity.
5. Notwithstanding the foregoing provisions of this
Paragraph 13(m) or any other provisions of the Mortgage, the
Note or any other Loan Document, for purposes of the Note,
the Mortgage and each other Loan Document, neither the
deficit capital account of any direct or indirect partner in
Borrower, nor any obligation of any direct or indirect
partner in Borrower to restore a deficit capital account or
to contribute capital to Borrower or to any direct or
indirect partner in Borrower, shall be deemed to be the
property or asset of Borrower or the applicable direct or
indirect partner in Borrower, as the case may be, and Lender
shall not have the right to collect, enforce or proceed
against or with respect to any such deficit capital account
or obligation to restore or contribute.
6. As used herein:
(i) the term "Associates" shall mean 900 3rd Avenue
Associates, an Illinois general partnership,
(ii) the term "Carlyle-XIV" shall mean Carlyle Real Estate
Limited Partnership - XIV, an Illinois limited partnership,
(iii) the term "Carlyle-XV" shall mean Carlyle Real Estate
Limited Partnership-XV, an Illinois limited partnership,
(iv) the term "Loan Documents" shall mean the Note,
the Mortgage and all other documents evidencing or securing
or otherwise executed or delivered in connection with the
loan evidenced by the Note and also including the
Environmental Indemnity, as any of the foregoing shall be
amended or modified from time to time in accordance with
their respective terms (it being understood, however, that
the Environmental Indemnity is entirely independent of said
loan and does not evidence or secure said loan),
(v) the term "Environmental Indemnity" shall mean
the Environmental Indemnity dated as of December 1, 1994
from Borrower, Associates, Carlyle-XIV and Carlyle-XV, as
amended or modified from time to time in accordance with its
terms,
(vi) the term "Escrow Agreement" shall mean the Taxes
and Reserve Escrow Agreement dated as of December 1, 1994
among Borrower, Lender and the escrow agent referred to
therein, as amended or modified from time to time in
accordance with its terms,
(vii) the term "Recourse Entities" shall mean all the
following: (a) Associates (but excluding, solely as to this
clause (a), any partners (directly or indirectly) of a
partner of Associates), (b) Carlyle-XIV (but excluding,
solely as to this clause (b), any partners (directly or
indirectly) of Carlyle-XIV), (c) Carlyle-XV (but excluding,
solely as to this clause (c), any partners (directly or
indirectly) of Carlyle-XV) and (d) the respective successors
and assigns of the entities covered by clauses (a), (b) and
(c) above, but excepting, as to all of clauses (a), (b), (c)
and (d) above, their respective employees and authorized
agents, (it being understood that the exclusion of any
partner under any of clauses (a), (b) or (c) shall not
constitute per se an exclusion under any of the other
clauses),
(viii) the term "Owner Entity" shall mean Progress
Partners, a New York general partnership, but excluding (a) PPI,
JRA, P-C 900 and their respective successors and assigns, (b) any
direct or indirect partners (an "Excluded Partner") in a partner
of (I) Associates or (II) any successor or assign of Associates
and (c) the successors or assigns of any Excluded Partners,
(ix) the term "Additional Exempt Persons" shall mean all
of the following: (a) any individual or entity that was, is or
become9s a partner in Carlyle-XIV, Carlyle-XV, PPI, JRA or P-C,
directly or indirectly through one or more other partnerships, (b)
any officer, director, employee, shareholder, trustee, beneficiary
or agent of JMB Realty Corporation, PPI, JRA or P-C or of any such
direct or indirect partner in Carlyle-XIV, Carlyle XV, PPI, JRA or
P-C, and (c) the respective successors or assigns of such
individuals or entities covered under clause (a) above and the
respective successors or assigns of the officers, directors,
employees, shareholders, trustees, beneficiaries or agents covered
under clause (b) above, provided, however, that in no event shall
the Additional Exempt Persons include the Recourse Entities or an
Owner Entity,
(x) the term "Initial Consolidated Mortgage" shall
mean the Agreement of Consolidation and Modification of
Mortgages and Mortgage Notes dated November 7, 1984 between
Borrower and Lender,
(xi) the term "Default Date" shall mean the date a
Recourse Income Default by Borrower occurs (whether or not
notice of the default constituting such Recourse Income
Default has been given and whether or not any applicable
grace period has expired and regardless of when Lender makes
the determination that such default is a material default),
(xii) the term "Income" shall mean all rents and
other revenues, payments or reimbursements of any kind
whatsoever (including all payments and contributions from
tenants for taxes, insurance, operating expenses, and common
area maintenance charges) derived from the Premises (it
being understood that, at such time as any security deposits
or the proceeds thereof become property of Borrower free and
clear of any obligations in respect thereof to any tenants,
such security deposits or proceeds shall be considered as
included in Income), and
(xiii) the term "Modification Agreement" shall mean the
Agreement of Modification of Mortgages and Mortgage Notes in
Leases dated as of December 1, 1994 between Borrower and Lender.
(i) In order to induce Lender to enter into
this Agreement and the other Loan Documents, Borrower hereby
represents, warrants and covenants as follows:
I. Borrower represents and warrants that (i) on the date
hereof, the Existing Security Deposits are being held by Chemical Bank
pursuant to the letter agreement between Chemical Bank and Borrower
dated January 17, 1989 (the "Existing Security Escrow"), (ii) Exhibit D
attached hereto is a true, correct and complete copy of the Existing
Security Escrow, which has not been modified, amended or terminated and
(iii) on the date hereof, the balance on deposit under the Existing
Security Escrow is not less than the amount referred to in Paragraph
3(a) of this Agreement as the amount of the Existing Security Deposits.
Borrower acknowledges that Borrower is required by law to keep the
Existing Security Deposits, as well as all amounts which were
contemplated to have been deposited from time to time in the Security
Deposit Fund in accordance with this Agreement (the Existing Security
Deposits and all such other amounts, collectively, the "Security
Deposits"), in a New York bank (or a national bank having a place of
business in New York State). Borrower agrees to (x) execute and deliver
to Chemical Bank a notification to Chemical Bank of Lender's security
interest in the Existing Security Deposits to the extent of Borrower's
interest therein, if any, and any other amounts held by Chemical Bank
pursuant to the Existing Security Escrow to the extent of Borrower's
interest therein, if any, which form shall include a request for
acknowledgement of such security interest and such other
acknowledgements by Chemical Bank as Lender shall reasonably request and
(y) use reasonable efforts to obtain such acknowledgement from Chemical
Bank. Upon the execution of the New NY Escrow Agreement (as hereinafter
defined) by the parties thereto, Borrower shall promptly, and in no
event later than ten (10) days after the execution by Borrower and
Lender of the New NY Escrow Agreement, cause Chemical Bank to transfer
all Security Deposits held by Chemical Bank to the NY Escrow Holder (as
hereinafter defined) to be held pursuant to the New NY Escrow Agreement,
provided, however, that if Chemical Bank enters into the New NY Escrow
Agreement as the NY Escrow Holder, Chemical Bank shall only transfer
Security Deposits to the extent, if any, required under the New NY
Escrow Agreement.
II. Borrower agrees that, in order to comply with
Borrower's obligations to Lender under the other provisions of this
Agreement in respect of the Security Deposits, Borrower will need to
provide a new escrow agreement among Borrower, Lender and Chemical Bank
or another New York bank (or national bank having a place of business in
New York State) satisfactory to Lender (Chemical Bank or such bank
satisfactory to Lender being herein referred to as the "NY Escrow
Holder"). Accordingly, Borrower agrees that Borrower shall submit to
Lender for Lender's approval, no later than December 15, 1994, a
proposed form of such new escrow agreement and, if Chemical Bank will
not become the NY Escrow Holder, the name of the bank proposed as the NY
Escrow Holder. Borrower agrees to cause a new escrow agreement
reasonably satisfactory to Lender to be entered into by Borrower, Lender
and the NY Escrow Holder no later than December 31, 1994 (such new
escrow agreement which is reasonably satisfactory to Lender and is
entered into by Borrower, Lender and the NY Escrow Holder being herein
referred to as the "New NY Escrow Agreement"). Borrower also agrees
that (a) Borrower shall duly execute and deliver to Lender such
amendments to the Mortgage (including, without limitation, the
definition of Additional Property thereunder) and such UCC-1 or UCC-3
financing statements and other documents or agreements as Lender shall
reasonably require in order to confirm that Lender continues to have a
first, perfected security interest in Borrower's interest therein, if
any (subject to the limitations set forth in the Mortgage and to the
extent permitted by law) in (i) the contractual rights and all other
rights of Borrower in and under the New NY Escrow Agreement, (ii) the
sums now or hereafter deposited or on deposit with the NY Escrow Holder,
and all monies, certificates of deposit, accounts, United States
Treasury issues or issues of any government agency or other investments
held in connection with the New NY Escrow Agreement, together with all
interest or other amounts earned thereon, and (iii) all proceeds of the
foregoing, (b) Borrower shall duly execute and deliver to Lender and
Escrow Agent an amendment to this Agreement (the "Security Deposit
Amendment") pursuant to which the provisions of this Agreement are
modified, as Lender shall reasonably require in order to reflect the
deletion therefrom of the Security Deposit Fund and (c) Borrower will
pay all reasonable fees and expenses incurred by Lender (including
reasonable fees and expenses of Lender's outside counsel) in connection
with the preparation, negotiation and execution of any of the documents
or instruments referred to in this Paragraph 13(n), which fees &
expenses shall be Permitted Expenses under the this Escrow Agreement.
(a) Lender agrees to enter into the New NY Escrow
Agreement provided that said New NY Escrow Agreement is reasonably
satisfactory to Lender and provides protections to Lender with respect
to (x) Lender's security interest under the Mortgage and (y) Lender's
rights as to Security Deposits and the withdrawal thereof from the
account(s) maintained by the NY Escrow Holder which are, as to all such
protections, substantially the same as the protections intended to be
afforded to Lender pursuant to this Agreement (disregarding the effect
of Paragraph 13(n) and this Paragraph 13(o)) as to the Security Deposit
Fund. Escrow Agent agrees to execute and deliver to Lender and Borrower
the Security Deposit Amendment provided that the Security Deposit
Amendment deletes from this Agreement the provisions hereof with respect
to the Security Deposit Fund and is otherwise reasonably satisfactory to
Escrow Agent.<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first above written.
PROGRESS PARTNERS, a New York General
Partnership
By: Progress Properties, Inc., a New York
Corporation, a General Partner
By:_______________________________
Albert Schwartz,
Authorized signatory
By: 900 3rd Avenue Associates, an Illinois
General Partnership, a General Partner
By: Carlyle Real Estate Limited
Partnership-XIV, an Illinois
Limited Partnership, a General
Partner
By: JMB Realty Corporation, a
Delaware Corporation, its
General Partner
By:
Deborah A. Schenk
Vice President
By: Carlyle Real Estate Limited
Partnership-XV, an Illinois
Limited Partnership, a General
Partner
By: JMB Realty Corporation, a
Delaware Corporation,
its General Partner
By:
Deborah A. Schenk
Vice President
TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF
AMERICA, a New York Corporation
By: ____________________________
Marita K. Hornby
Assistant Secretary
LASALLE NATIONAL TRUST, N.A., a
National Bank
By: ____________________________
Name:
Title:
EXHIBIT A
REQUEST LETTER
(Permitted Expenses and Tax Charges)
Date:
[Escrow Agent]
Teachers Insurance and Annuity
Association of America
730 Third Avenue
New York, NY 10017
Re: TIAA Mortgage No. 000384400
900 Third Avenue, New York, New York
Gentlemen:
We refer to the Taxes and Reserve Escrow Agreement dated as
of December 1, 1994 among each of you and the undersigned (as amended or
modified from time to time in accordance with its terms, the "Escrow
Agreement"). Terms used herein without definition shall have the
meanings ascribed thereto in the Escrow Agreement.
We request that Escrow Agent disburse from the Reserve
Escrow pursuant to the Escrow Agreement the sum of $_______________ as
follows:
1 to Borrower $________________;
2
(1. to the following other persons and entities:
[list].
We agree that of such sum:
1. $___________, is to be withdrawn from the General
Reserve Fund and applied in respect of the following
Permitted Expenses:
[Borrower to provide amounts, detailed description of
Permitted Expenses.]
2. $___________, is to be withdrawn from the General
Reserve Fund and applied directly by the Escrow Agent
to Tax Charges as more particularly set forth on the
invoice or bill attached hereto.
The undersigned certifies to both of you that (i) the
remittance requested above is in accordance with the applicable
provisions of the Escrow Agreement and the Mortgage, including, without
limitation, as to withdrawals for Permitted Expenses, compliance with
the limitations set forth in Paragraph 3(b) of the Escrow Agreement and
(ii) the parties executing this letter for and on behalf of Borrower
have the full power and authority to bind the partnership constituting
Borrower.
The provisions of Paragraph 13(m) of the Escrow Agreement
are hereby incorporated herein by reference as if fully set forth in
this letter.
PROGRESS PARTNERS, a New York General
Partnership
By: 900 3rd Avenue Associates, an Illinois
General Partnership, a General Partner
By: Carlyle Real Estate Limited
Partnership-XIV, an Illinois
Limited Partnership, a General
Partner
By: JMB Realty Corporation, a
Delaware Corporation, its
General Partner
By:
Name:
Title:
By: Carlyle Real Estate Limited
Partnership-XV, an Illinois
Limited Partnership, a General
Partner
By: JMB Realty Corporation, a
Delaware Corporation,
its General Partner
By:
Name:
Title:
EXHIBIT B-1
INDIVIDUALLY APPROVED REQUEST LETTER
(Individually Approved Expenses)
Date:
[Escrow Agent]
Teachers Insurance and Annuity
Association of America
730 Third Avenue
New York, NY 10017
Re: TIAA Mortgage No. 000384400
900 Third Avenue, New York, New York
Gentlemen:
We refer to the Taxes and Reserve Escrow Agreement dated as
of December 1, 1994 among each of you and the undersigned (as amended or
modified from time to time in accordance with its terms, the "Escrow
Agreement"). Terms used herein without definition shall have the
meanings ascribed thereto in the Escrow Agreement.
We request that, upon Escrow Agent's receipt of a copy of
this letter executed by Lender, Escrow Agent disburse from the Reserve
Escrow pursuant to the Escrow Agreement the sum of $_______________ as
follows:
1 to Borrower $________________;
2
3 to the following other persons and entities:
[list].
We agree that of such sum of $___________ is to be withdrawn
from the General Reserve Fund and applied in respect of the following
Individually Approved Expenses:
[Borrower to provide amounts, detailed description of Individually
Approved Expenses.]
The undersigned certifies to both of you that (i) the
remittance requested above is in accordance with the applicable
provisions of the Escrow Agreement and the Mortgage and (ii) the parties
executing this letter for and on behalf of Borrower have the full power
and authority to bind the partnership constituting Borrower.
The provisions of Paragraph 13(m) of the Escrow Agreement
are hereby incorporated herein by reference as if fully set forth in
this letter.
We acknowledge that no disbursement shall be made unless and
until Escrow Agent receives approval in writing from Lender.
PROGRESS PARTNERS, a New York General
Partnership
By: 900 3rd Avenue Associates, an
Illinois General Partnership, a
General Partner
By: Carlyle Real Estate Limited
Partnership-XIV, an
Illinois Limited
Partnership, a General
Partner
By: JMB Realty
Corporation, a
Delaware Corporation,
its General Partner
By:
Name:
Title:
By: Carlyle Real Estate Limited
Partnership-XV, an Illinois
Limited Partnership, a
General Partner
By: JMB Realty
Corporation, a
Delaware
Corporation, its
General Partner
By:
Name:
Title:
Accepted and approved:
TEACHERS INSURANCE AND
ANNUITY ASSOCIATION OF AMERICA
By: _________________________
Name:
Title:
EXHIBIT B-2
AFFIDAVIT
STATE OF ________________
COUNTY OF _______________
The undersigned submits this Affidavit to [______] ("Escrow
Agent") and Teachers Insurance and Annuity Association of America
("Lender") pursuant to the Taxes and Reserve Escrow Agreement dated as
of December 1, 1994 (as amended or modified from time to time in
accordance with its terms, the "Escrow Agreement") by and among Progress
Partners ("Borrower"), Escrow Agent and Lender in connection with the
"Premises" and the loans evidenced by the "Note" (such quoted terms
being defined in the Escrow Agreement).
The undersigned hereby certifies to Escrow Agent and Lender
that:
1 The sum being requested is $________, which is to be
used to pay for Individually Approved Expenses (as defined in the Escrow
Agreement) as set forth on Schedule I attached hereto, specifying the
parties to whom money is owed and the amounts owed for services
rendered, materials actually acquired or supplies furnished in
connection with such Individually Approved Expenses.
1. Copies of all billing statements, vouchers or invoices
from the parties set forth in Schedule I are attached hereto as Schedule
II.
2. To the best of the undersigned's knowledge, the
mortgage loan in favor of Lender pursuant to which the Premises are
encumbered is not in default.
3. To the best of the undersigned's knowledge, there are
no actions, proceedings or material claims asserted or pending before
any court, quasi-judicial body or administrative agency with respect to
the Premises except as listed on Schedule III attached hereto.
4. All sums dealt with by this Affidavit are being
expended to benefit the Premises directly or indirectly.
5. The undersigned has full authority and has been
authorized by Borrower to execute this Affidavit on Borrower's behalf.
6. Borrower continues to be the owner of the Premises.
7. Nothing set forth herein nor any act of Lender shall
in any way act as a waiver of any rights or remedies Lender may possess
in connection with the mortgage loan described herein.
8. As used in this Affidavit, the term "to the best of
the undersigned's knowledge" and phrases of similar import shall mean
the current actual knowledge, after appropriate investigation of the
files pertaining to the Premises which are under the control of the
applicable individual, of (x) Douglas Welker (Asset Manager), and Gene
Haran (Property Manager), and (y) any individuals who have succeeded, as
of the date of this Affidavit and as to the Premises, to the positions
or responsibilities of the individuals listed in clause (x) above or to
the position of assistant property manager.
9. The provisions of Paragraph 13(m) of the Escrow
Agreement are hereby incorporated herein by reference as if fully set
forth in this Affidavit.
PROGRESS PARTNERS, a New York General
Partnership
By: 900 3rd Avenue Associates, an Illinois
General Partnership, a General Partner
By: Carlyle Real Estate Limited
Partnership-XIV, an Illinois
Limited Partnership, a General
Partner
By: JMB Realty Corporation, a
Delaware Corporation, its
General Partner
By:
Name:
Title:
By: Carlyle Real Estate Limited
Partnership-XV, an Illinois
Limited Partnership, a General
Partner
By: JMB Realty Corporation, a
Delaware Corporation, its
General Partner
By:
Name:
Title:
Sworn to before me this
____ day of ________, 199_
Notary Public
EXHIBIT C
The Rollover Space is the space in the Premises leased
pursuant to those leases which expire in the years 1999 and 2000; the
following is a true and complete list of such leases and of the
location, expiration date and area applicable thereto (with the
exception of the 1,000 square feet of storage space located in
Suite S120, occupied by World Gold, and expiring in March 1999):
Tenant Suites Expiration Date Area
World Gold 2600 March, 1999 15,600
S. African Air 900 July, 1999 14,700
Shaw, Pittman 1800 July, 1999 5,250
Worms & Comp. 2700-2800 September, 1999 31,200
First Sterling Corp. 3500 September, 1999 3,600
Shiseido 1500 September, 2000 14,700
Gruss & Co. 2900 November, 1999 15,600
Newman Tannenbaum 1300 December, 1999 14,700
Dean Witter 300 January, 2000 15,791
Shulte, Roth & Zabel 2000-2500 May, 2000 106,900
Bank Burniputra 1100 September, 2000 12,958
Total 250,999
AGREEMENT OF MODIFICATION OF
MORTGAGES AND MORTGAGE NOTES
THIS AGREEMENT made as of the 1st day of December, 1994 by and
between (1) PROGRESS PARTNERS, a New York general partnership having an
office at 900 Third Avenue, New York, New York 10022 (hereinafter
referred to as the "Mortgagor"), the sole general partners of which are
Progress Properties, Inc., a New York corporation having an address c/o
Proskauer Rose Goetz & Mendelsohn, 1585 Broadway, New York, New York
10036 ("PPI"), J.R.A. Realty Corp., a New York corporation having an
address c/o Proskauer Rose Goetz & Mendelsohn, 1585 Broadway, New York,
New York 10036 ("JRA"), P-C 900 Third Associates, a New York limited
partnership having an address c/o Proskauer Rose Goetz & Mendelsohn,
1585 Broadway, New York, New York 10036 ("P-C"), the sole general
partner of which is PPI, and 900 3rd Avenue Associates, an Illinois
general partnership having an address at 900 N. Michigan Avenue, Suite
1900, Chicago, Illinois, 60611 ("Associates"), the sole general partners
of which are Carlyle Real Estate Limited Partnership - XIV, an Illinois
limited partnership having an address at 900 N. Michigan Avenue, Suite
1900, Chicago, Illinois, 60611, and Carlyle Real Estate Limited
Partnership - XV, an Illinois limited partnership having an address at
900 N. Michigan Avenue, Suite 1900, Chicago, Illinois, 60611, and (2)
TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF AMERICA, a New York
corporation having an office at 730 Third Avenue, New York, New York
10017 (hereinafter referred to as the "Mortgagee").
WITNESSETH:
WHEREAS, the Mortgagee has heretofore made a loan to the Mortgagor
in the aggregate principal amount of NINETY-ONE MILLION SEVEN HUNDRED
FIFTY THOUSAND AND 00/100THS ($91,750,000.00) DOLLARS (hereinafter
referred to as the "Loan");
WHEREAS, on November 7, 1984, the Mortgagee made the first
disbursement under the Loan to the Mortgagor in the amount of EIGHTY-
EIGHT MILLION SEVEN HUNDRED FORTY-SEVEN THOUSAND FIVE HUNDRED AND
00/100THS ($88,747,500.00) DOLLARS (hereinafter referred to as the
"First Disbursement") and in order to evidence the First Disbursement,
the Mortgagee acquired from the Chase Manhattan Bank, N.A. by due
negotiation and assignment eighteen (18) Mortgage Notes owned and held
by The Chase Manhattan Bank, N.A. (hereinafter referred to as the
"Chase Notes") secured by eighteen (18) Mortgages numbered 1 through 18,
inclusive, more particularly described in Exhibit A attached hereto and
hereby made a part hereof (hereinafter referred to as the "Chase
Mortgages"), which constituted a first mortgage on the premises more
particularly described in Exhibit B attached hereto and hereby made a
part hereof (hereinafter referred to as the "Premises");
WHEREAS, on November 7, 1984, the Mortgagor and the Mortgagee
executed that certain Agreement of Consolidation and Modification of
Mortgages and Mortgage Notes dated November 7, 1984, and recorded on
November 13, 1984 in the Register's Office of New York County in the
State of New York (the "Register's Office") in Reel 847, beginning at
Page 303 (hereinafter referred to as the "Initial Consolidation
Agreement"), which consolidated, combined and modified, in certain
respects, the Chase Notes (as so consolidated, combined and modified,
hereinafter collectively referred to as the "Initial Note") and the
Chase Mortgages (as so consolidated, combined and modified, hereinafter
collectively referred to as the "Initial Consolidated Mortgage");
WHEREAS, the Initial Note is also secured by an Assignment of
Lessor's Interest in Leases dated November 7, 1984 made by the Mortgagor
to the Mortgagee, recorded on November 13, 1984 in the Register's Office
in Reel 847, beginning at Page 372 (hereinafter referred to as the
"Initial Assignment of Leases");
WHEREAS, on April 8, 1985, the Mortgagee made the second and final
disbursement under the Loan to the Mortgagor in the sum of THREE MILLION
TWO THOUSAND FIVE HUNDRED AND 00/100THS ($3,002,500.00) DOLLARS
(hereinafter referred to as the "Second Disbursement") and, in order to
evidence the Second Disbursement, the Mortgagee acquired from PPI, by
due negotiation and assignment, three (3) Mortgage Notes owned and held
by PPI, as the same were assigned and consolidated (hereinafter
collectively referred to as the "Second Note"), secured by three (3)
Mortgages, numbered 19 through 21, inclusive, in said Exhibit A, as the
same were assigned, consolidated and modified (hereinafter collectively
referred to as the "Second Consolidated Mortgage"), which constituted a
second mortgage on the Premises;
WHEREAS, on April 8, 1985, the Mortgagor and the Mortgagee
executed that certain Second Agreement of Consolidation and Modification
of Mortgages and Mortgage Notes dated April 8, 1985 and recorded on
April 11, 1985 in the Register's Office in Reel 896, beginning at Page
1772 (hereinafter referred to as the "Consolidation Agreement"), which
(i) consolidated, combined and modified the Initial Consolidated
Mortgage and the Second Consolidated Mortgage (as so consolidated,
combined and modified, hereinafter collectively referred to as the
"Original Mortgages"), (ii) consolidated, combined and modified the
Initial Note and the Second Note (as so consolidated, combined and
modified, hereinafter collectively referred to as the "Original Notes")
and (iii) modified the Initial Assignment of Leases (as so modified,
hereinafter referred to as the "Assignment of Leases");
WHEREAS, as of December 1, 1994, there is owing on the Original
Mortgages and Original Notes the aggregate principal balance of EIGHTY
NINE MILLION NINE HUNDRED AND FIFTY THREE THOUSAND NINE HUNDRED FIFTY
NINE AND 11/100THS ($89,953,959.11) DOLLARS and interest (said principal
balance, interest and all other sums which may or shall become due under
the Original Notes and/or the Original Mortgages, as heretofore
combined, consolidated, modified and amended, being hereinafter
collectively referred to as the "Debt"); and
WHEREAS, the Mortgagor and the Mortgagee have agreed in the manner
hereinafter set forth (i) to modify the time and manner of payment of
the Debt, including the extension of the maturity date thereof, and to
modify other terms and provisions of the Original Notes and the Original
Mortgages and (ii) to modify certain terms and provisions of the
Assignment of Leases.
NOW, THEREFORE, in consideration of the premises and other good
and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Mortgagor hereby represents and warrants to and
covenants and agrees with the Mortgagee as follows:
I. Ratification, Confirmation and Spreading of Mortgages. The
Mortgagor hereby acknowledges, confirms and agrees that the Original
Mortgages constitute in law but one single, consolidated mortgage, a
first and prior lien covering and encumbering the entire Mortgaged
Property (as defined in the Original Mortgages) and securing the
consolidated principal sum of EIGHTY NINE MILLION NINE HUNDRED AND FIFTY
THREE THOUSAND NINE HUNDRED FIFTY NINE AND 11/100THS ($89,953,959.11)
DOLLARS, together with interest thereon as hereinafter provided, and
shall hereafter be deemed to contain only all of the terms, covenants,
agreements, obligations, conditions and provisions with respect to the
Original Mortgages as are contained in the Initial Consolidated Mortgage
and the Second Consolidated Mortgage, as such terms, covenants,
agreements, obligations, conditions and provisions are modified by the
Consolidation Agreement and as further modified hereby (the Original
Mortgages, as modified, amended, restated, ratified and confirmed
pursuant to the provisions of this Agreement herein set forth, being
hereinafter collectively referred to interchangeably as the "Mortgage"
or this "Mortgage").
The Mortgage and the lien thereof is hereby spread to cover
the Additional Property (as hereinafter defined), and the Mortgagor does
hereby grant, convey and mortgage unto the Mortgagee, and grant a
security interest in favor of the Mortgagee in, the Additional Property.
As used herein and in the Mortgage, the term "Additional Property" shall
mean all of the right, title, estate and interest of the Mortgagor, now
owned, or hereafter acquired, in and to (i) the contractual rights and
all other rights of the Mortgagor in and under the Taxes and Reserve
Escrow Agreement dated as of December 1, 1994 among the Mortgagor, the
Mortgagee and the escrow agent (the "T&R Escrow Agent") referred to
therein (collectively with any amendments or modifications thereto, and
any replacements or restatements thereof, entered into by the parties
from time to time, the "T&R Escrow Agreement"), (ii) the sums now or
hereafter deposited or on deposit with the T&R Escrow Agent, and all
monies, certificates of deposit, accounts, United States Treasury issues
or issues of any government agency or other investments held in
connection with the Escrow Agreement, together with all interest or
other amounts earned thereon, (iii) to the extent permitted by law, the
contractual rights and all other rights of the Debtor in and under the
letter agreement dated January 17, 1989 by and between Chemical Bank and
Mortgagor, referred to therein as "the trustee" (collectively with any
amendments and modifications thereto and any restatements and
replacements thereof from time to time, the "Existing Security Escrow")
and the New NY Escrow Agreement" (as defined in the T&R Escrow
Agreement; the T&R Escrow Agreement, the Existing Security Escrow and
the New NY Escrow Agreement are herein collectively referred to as the
"Escrow Agreement"), (iv) to the extent permitted by law, the sums now
or hereafter deposited or on deposit with Chemical Bank and/or another
bank serving as the "NY Escrow Holder" as defined in the T&R Escrow
Agreement, or any successor escrow agent under the Existing Security
Escrow or the New NY Escrow Agreement (the "Security Escrow Agent"; and,
together with the T&R Escrow Agent, collectively, the "Escrow Agent"),
and (to the extent permitted by law) all monies, certificates of
deposit, accounts, United States Treasury issues or issues of any
government agency or other investments held in connection with the
Escrow Agreement, together with all interest or other amounts earned
thereon and (v) all proceeds of the foregoing (to the extent permitted
by law). It is expressly understood that all amounts deposited from
time to time in the Security Deposit Fund (as such term is defined in
the Escrow Agreement) are to be applied subject to compliance with the
terms of the applicable leases of the Premises and applicable law.
Accordingly, Section I of the Initial Consolidated Mortgage is hereby
modified by the addition, immediately after the word "and" on the last
line thereof on page 5 of the Initial Consolidated Mortgage, of the
following new paragraph:
"(i) the Additional Property (as such term is defined in the
Agreement of Modification of Mortgages, Mortgage Notes and
Assignment of Lessor's Interest in Leases dated as of December 1,
1994 between the Mortgagor and the Mortgagee)."
All references herein and in the Mortgage to the term "Mortgaged
Property" shall be deemed to include the Additional Property.
I. Ratification and Confirmation of Notes. The Mortgagor
hereby acknowledges, confirms and agrees that the Original Notes
constitute one single note evidencing a coordinated indebtedness in the
principal sum of EIGHTY NINE MILLION NINE HUNDRED AND FIFTY THREE
THOUSAND NINE HUNDRED FIFTY NINE AND 11/100THS ($89,953,959.11) DOLLARS,
together with interest thereon as hereinafter provided, and the
Mortgagor acknowledges, confirms and agrees that it is justly indebted
to the Mortgagee for the principal sum of EIGHTY NINE MILLION NINE
HUNDRED AND FIFTY THREE THOUSAND NINE HUNDRED FIFTY NINE AND 11/100THS
($89,953,959.11) DOLLARS, together with interest thereon as hereinafter
provided. The Original Notes shall hereafter be deemed to contain only
all of the terms, covenants, agreements, obligations, conditions and
provisions with respect to the Original Notes as are contained in the
Initial Consolidated Mortgage and the Second Consolidated Mortgage, as
such terms, covenants, agreements, obligations, conditions and
provisions are modified by the Consolidation Agreement and as further
modified hereby (the Original Notes, as modified and amended pursuant to
the provisions of this Agreement hereinafter set forth, being
hereinafter collectively referred to as the "Note").
II. Modification of Time and Manner of Payment of the Note. The
terms for the time and manner of payment of the Note as set forth in the
Note and in the Initial Consolidated Mortgage and the Consolidation
Agreement are hereby deleted (which deleted terms constitute (x) the
entire portion of Section IV of the Initial Consolidated Mortgage, which
appears on pages 6 and 7 thereof, prior to Paragraph A of said Section
IV and (y) the entirety of Section IV of the Consolidation Agreement,
which appears on pages 8 and 9 of the Consolidation Agreement), and the
manner and the time for the payment of the aggregate principal amount of
EIGHTY NINE MILLION NINE HUNDRED AND FIFTY THREE THOUSAND NINE HUNDRED
FIFTY NINE AND 11/100THS ($89,953,959.11) DOLLARS evidenced by the Note
and secured by the Mortgage is hereby modified so that the Mortgagor
promises and shall pay to the Mortgagee, or order, at 730 Third Avenue,
New York, New York 10017, or at such other place as may be designated,
from time to time, in writing by the Mortgagee, the principal sum of
EIGHTY NINE MILLION NINE HUNDRED AND FIFTY THREE THOUSAND NINE HUNDRED
FIFTY NINE AND 11/100THS ($89,953,959.11) DOLLARS, in lawful money of
the United States of America, with interest thereon from the date of
this Agreement at the rate of nine and thirty-seven and one-half one
hundredths percent (9.375%) per annum (hereinafter referred to as the
"Applicable Interest Rate") as follows:
(i) Commencing on January 1, 1995 and monthly thereafter on
the first day of each of the next succeeding eighty-two (82)
consecutive calendar months to and including November 1, 2001,
installments of SEVEN HUNDRED FORTY-EIGHT THOUSAND ONE HUNDRED AND
NINETY-ONE AND 48/100THS ($748,191.48) DOLLARS each shall be due
and payable each of which installments shall be applied first to
the payment in full of interest accrued and unpaid on the
principal balance of the Note calculated at the Applicable
Interest Rate and then in reduction of the principal balance of
the Note; and
(ii) The entire unpaid principal balance of the Note,
together with all interest accrued and unpaid thereon calculated
at the Applicable Interest Rate and all other sums due under the
Note and the Mortgage, shall be due and payable on December 1,
2001 (hereinafter referred to as the "Maturity Date").
The Mortgagor acknowledges that the monthly installments of
principal and interest provided for in clause (i) above will not fully
repay the principal of the Note and that a balloon payment of the entire
unpaid principal balance, together with accrued and unpaid interest
thereon, shall be due on the Maturity Date. The Mortgagee has made no
agreement to make financing available to the Mortgagor in connection
with such balloon payment.
I. Further Modification of Time and Manner of Payment of the
Note. In addition to the modifications hereinabove set forth, the
Initial Consolidated Mortgage is hereby further modified as follows:
A. Paragraph A of Section IV of the Initial Consolidated
Mortgage, which appears on pages 7 and 8 thereof, is hereby deleted and
the following new paragraph is hereby substituted therefor:
"A. The indebtedness evidenced by the Note may not be
prepaid prior to December 1, 1998. From and after December 1,
1998, such indebtedness may be prepaid, in whole, but not in part,
upon not less than sixty (60) days prior written notice to the
Mortgagee and upon simultaneous payment of the greater of (a) an
amount equal to the Prepayment Percentage (as hereinafter defined)
times the then outstanding principal balance of the Note, or (b)
the amount by which the sum of the Discounted Values (as
hereinafter defined) of all Note Payments (as hereinafter defined)
from the date of prepayment to and including the Maturity Date,
calculated at the Discount Rate (as hereinafter defined), exceeds
the amount of the prepaid principal. The indebtedness evidenced
by the Note may be prepaid without premium during the one hundred
and twenty (120) day period immediately preceding the Maturity
Date. As used in this Mortgage, the following terms shall have
the respective meanings set forth below:
'Discount Rate' shall mean the yield on a U.S. Treasury
issue selected by the Mortgagee, as published in the Wall
Street Journal, two weeks prior to prepayment, having a
maturity date corresponding (or most closely corresponding,
if not identical) to December 1, 2001, and a coupon rate
corresponding (or most closely corresponding, if not
identical) to nine and thirty-seven and one-half one
hundredths percent (9.375%) per annum;
'Discounted Value' shall mean the discounted value of a Note
Payment based on the following formula:
NP = Discounted Value
(1 + R/12)n
NP = Amount of Note Payment
R = Discount Rate
n = the number of months between the date of
prepayment and the scheduled date of the Note
Payment in question, rounded to the nearest
integer;
'Note Payments' shall mean (i) any scheduled payments of
principal and/or interest on the indebtedness evidenced by
the Note (but excluding all other payments under the Note,
the Mortgage, the Reserve Escrow Agreement (as hereinafter
defined) and any other documents which evidence or secure
such indebtedness) for the period between the date of
prepayment and the Maturity Date and (ii) the scheduled
repayment of the principal balance of the Note at the
Maturity Date.
'Prepayment Percentage' shall mean (a) from December 1, 1998
to November 30, 1999, Six Percent (6%) and (b) for each
successive twelve (12) month period thereafter, One-Half
(1/2) of One Percent (1%) less than the percentage
applicable in the immediately preceding twelve (12) month
period."
A. Paragraph B of Section IV of the Initial Consolidated
Mortgage, which appears on page 8 thereof, is hereby modified by the
addition, on line 4 of said Paragraph B immediately following the words
"the Mortgage", of the following: "or the Taxes and Reserve Escrow
Agreement dated as of December 1, 1994 among Mortgagor, Mortgagee and
the escrow agent referred to therein" and by the substitution on line 16
for the words "eighteen percent (18%)" the words "fourteen and thirty-
seven and one-half one hundredths percent (14.375%)".
B. Paragraph F of Section IV of the Initial Consolidated
Mortgage, which appears on pages 9 and 10 thereof, is hereby deleted and
replaced by the following:
"F. This Paragraph F consists of subparagraphs 1 through 6,
inclusive, as set forth below:
1. Notwithstanding any provisions in the Note or in the
Mortgage or in any other Loan Document (as hereinafter
defined) to the contrary, (except as provided in
subparagraphs 2 and 3 of this Paragraph F) it is expressly
understood and agreed that if Mortgagee at any time takes
action to enforce the collection of the indebtedness secured
by the Mortgage or by any other Loan Document, Mortgagee
will proceed to foreclose the Mortgage instead of
instituting suit upon the Note. If a lesser sum is realized
from the foreclosure of the Mortgage and sale of the
Mortgaged Property than the amount then due and owing under
or arising out of the Note, the Mortgage, or any other Loan
Document, Mortgagee will never (except as provided in
subparagraphs 2 and 3 of this Paragraph F) institute any
action, suit, claim or demand in law or in equity against
Mortgagor, or against any individual or entity that is a
Recourse Entity (as hereinafter defined) or that was, is or
becomes a partner, directly or indirectly through one or
more other partnerships, in (or any other affiliated or
related persons or entities of) Mortgagor, for or on account
of the deficiency. Notwithstanding any provisions in the
Note or in the Mortgage or in any other Loan Document to the
contrary, (except as provided in subparagraphs 2 and 3 of
this Paragraph F) it is expressly understood and agreed that
if Mortgagee at any time takes action to enforce (or to
recover any loss or damage by reason of a breach or failure
of performance of) any agreement or obligation of Mortgagor
under the Mortgage or under any other Loan Document (other
than an action to enforce the collection of the indebtedness
secured by the Mortgage or by any other Loan Document or the
collection of any deficiency in respect of such
indebtedness, all such actions to enforce or recover as to
collection being subject to the two immediately preceding
sentences) (any action or suit to enforce or recover as to
any such agreement or obligation (excluding actions to
enforce collection, as aforesaid) being herein referred to
as "Non-Collection Actions"), (i) Mortgagee will not
institute any action, suit, claim or demand in law or in
equity against any individual or entity that is a Recourse
Entity (as hereinafter defined) or that was, is or becomes a
partner, directly or indirectly through one or more other
partnerships, in (or any other affiliated or related persons
or entities of) Mortgagor, except to the extent such action,
suit, claim or demand is necessary or appropriate in order
to either (x) institute an action, suit, claim or demand
against Mortgagor or (y) enforce (without collection of such
indebtedness or such deficiency) Mortgagee's rights with
respect to the Mortgaged Property or any other collateral
for the Note or for such indebtedness, and (ii)
notwithstanding the foregoing exception in clause (i) above,
Mortgagee shall not, in any Non-Collection Action, recover
against any individual or entity that is a Recourse Entity
or that was, is or becomes a partner, directly or indirectly
through one or more other partnerships, in (or any other
affiliated or related persons or entities of) Mortgagor,
provided, however, that nothing in this sentence shall limit
or affect Mortgagee's right to institute any action, suit,
claim or demand against Mortgagor itself.
2. Subject in all events to the provisions of subparagraphs
4 and 5 of this Paragraph F, nothing contained in
subparagraph 1 of this Paragraph F will in any way affect or
impair:
(a) the lien of the Mortgage which will remain in
full force and inure to the benefit of Mortgagee;
(b) subject to the last two sentences of this subparagraph
2, any representation or warranty of title made in the Mortgage,
all of which will remain in full force and inure to the benefit of
Mortgagee;
(c) Mortgagee's rights, as against Mortgagor or any
Recourse Entities (as hereinafter defined), to the extent
provided for under the Environmental Indemnity (as
hereinafter defined), subject to the provisions of Paragraph
7 of the Environmental Indemnity;
(d) subject to the last sentence of this subparagraph 2,
Mortgagee's rights, as against Mortgagor or any Recourse Entities,
under Paragraph 10 of Section V of the Initial Consolidated
Mortgage, to the extent costs and expenses covered by said
Paragraph 10 relate to upholding or defending the Mortgage as
having been duly authorized, executed and delivered (provided,
however, that, so long as (i) Mortgagor and the Recourse Entities
acknowledge their continuing liability under this Paragraph F and
(ii) Mortgagor and the Recourse Entities are defending and
upholding the validity of the Mortgage as an enforceable first
lien, this clause (d) shall not cover costs and expenses of
upholding or defending the due authorization, execution and
delivery of the Mortgage Amendment (as hereinafter defined);
(e) Mortgagee's rights to proceed against any
collateral under the Escrow Agreement (as hereinafter
defined) or the New NY Escrow Agreement (as such term is
defined in the Escrow Agreement) or to exercise any of
Mortgagee's rights under the Escrow Agreement or the New NY
Escrow Agreement or to apply any such collateral or other
amounts recovered pursuant to the Escrow Agreement or the
New NY Escrow Agreement in accordance with the Escrow
Agreement or in accordance with the New NY Escrow Agreement,
as the case may be (subject, as to this clause (e), to the
provisions of Paragraph 13(m) of the Escrow Agreement and
the corresponding provisions of the New NY Escrow
Agreement); or
(f) Mortgagee's rights to proceed against any
collateral under the Assignment of Leases (as defined in the
Modification Agreement (as hereinafter defined)) or to
exercise any of Mortgagee's rights under the Assignment of
Leases or to apply any such collateral or other amounts
recovered pursuant to the Assignment of Leases in accordance
with the Assignment of Leases (subject, as to this clause
(f), to the provisions of Paragraph 15 of the Assignment of
Leases).
If and to the extent that Mortgagee determines that the matters as
to which Mortgagor has liability under subparagraph (b) or (d) of
the immediately preceding sentence, as the case may be, are also
matters as to which Lawyers Title Insurance Corporation, TICOR
Title Guarantee Company and TICOR Title Insurance Company, or
their successors or assigns (collectively, the "Title Companies")
are liable under the title insurance policies issued to Mortgagee
in connection with the Modification Agreement, Mortgagee will not
commence an action or proceeding to enforce personal liability
pursuant to subparagraph (b) or (d), as the case may be, with
respect to such matters until Mortgagee (i) has sought recourse
against the Title Companies for such matters and (ii) has
determined that such recourse against the Title Companies either
will not result in reasonably prompt payment of all claims of
Mortgagee or will not provide full protection of Mortgagee's
rights as to such matters (Mortgagee's determinations as described
in this clause (ii) shall be conclusive and binding), provided,
however, that nothing in this sentence shall prevent Mortgagee
from taking such actions as Mortgagee reasonably deems necessary
(including, without limitation, the filing of proofs of claim) to
preserve Mortgagee's rights against any or all of Mortgagor and
the Recourse Entities and provided, further, that nothing in this
subparagraph 2 of this Paragraph F shall limit any rights or
remedies of Mortgagee other than, to the extent restricted by this
subparagraph 2, the right to commence or prosecute an action or
proceeding to enforce personal liability. Any determination by
Mortgagee that the Title Companies are not liable shall, as
between Mortgagor and Mortgagee, be conclusive and binding for
purposes of this subparagraph 2, but such determination shall not
waive or limit in any manner the rights of any party against the
Title Companies.
3. The following are excluded and excepted from the
provisions of subparagraph 1 of this Paragraph F and
Mortgagee may recover personally against Mortgagor and the
Recourse Entities (subject in all events to the provisions
of subparagraphs 4 and 5 of this Paragraph F) for the
following:
(i) all losses, damages or liabilities suffered by
Mortgagee arising out of any fraud or wilful or intentional
misrepresentation by Mortgagor or 900 3rd Avenue Associates,
an Illinois general partnership ("Associates") in connection
with (a) the execution and delivery of any of the Loan
Documents (excluding any fraud or misrepresentation relating
thereto by or on behalf of any partner of Mortgagor (other
than Associates)), or (b) Mortgagor's performance of any of
its obligations under the Loan Documents after December 1,
1994.
(ii) in the event of any material default by
Mortgagor under any of the Loan Documents that is not cured
prior to the expiration of the applicable notice or grace
period, if any, under such Loan Document (Mortgagee's
determinations as to whether a default is material shall be
conclusive and binding) (such material defaults being herein
called "Recourse Income Defaults"), all Income (as
hereinafter defined) which is either:
(A) received after the Default Date (as
hereinafter defined) by or on behalf of Mortgagor (including
receipt by Mortgagor or Mortgagor's agents, representatives,
property managers, successors or assigns but excluding
receipt by Mortgagee or any receiver (a "Receiver")
appointed for the Mortgaged Property and excluding receipt
by a successor or assign (a "Mortgagee Successor") which
takes title to the Mortgaged Property through or after a
foreclosure or other exercise of rights under the Mortgage
or by conveyance in lieu of such exercise of rights under
the Mortgage); or
(B) on deposit on the Default Date in one or
more accounts used by Mortgagor or Mortgagor's agents,
representatives, property managers, successors or assigns
(excluding Mortgagee or any Receiver or Mortgagee Successor)
in connection with the operation of the Mortgaged Property;
except to the extent any such Income is (x) so long as the
Escrow Agreement is in effect, either (I) deposited into the
General Reserve Fund (as such term is defined in the Escrow
Agreement) pursuant to the Escrow Agreement, or (II) applied
to Permitted Expenses or to Individually Approved Expenses
(as such terms are defined in the Escrow Agreement) to the
extent permitted under the Escrow Agreement, or (y) from and
after the date the Escrow Agreement ceases to be in effect,
properly applied to the normal and customary expenses and
operations of the Mortgaged Property (subject to all of the
aforesaid deposits and applications being documented by
evidence reasonably satisfactory to Mortgagee) (all such
Income described in clauses (ii)(A) or (ii)(B) above in
respect of which documentation of the aforesaid deposit or
application is either not furnished to Mortgagee or is not
reasonably satisfactory to Mortgagee being herein referred
to as "Recourse Income"), provided, however, that if any
such Recourse Income Default shall have been fully cured
prior to acceleration of the maturity of the indebtedness
evidenced by the Note, then, solely for purposes of
determining the liability of Mortgagor and the Recourse
Entities under this clause (ii) of this subparagraph 3, such
Recourse Income Default shall be treated as if it had not
occurred (but without limiting any rights or remedies of
Mortgagee in respect of such default other than rights or
remedies relating to personal liability, personal recourse,
or personal recovery);
(iii) an amount equal to all security deposits
collected by or on behalf of Mortgagor (including collection
by Mortgagor or Mortgagor's agents, representatives,
property managers, successors or assigns but excluding
collection by Mortgagee or any Receiver or Mortgagee
Successor) and not either (x) properly refunded to tenants
to the extent required under the terms of the applicable
leases, (y) paid to the Escrow Agent or the NY Escrow Holder
(as such terms are defined in the Escrow Agreement) in
accordance with the Escrow Agreement or the New NY Escrow
Agreement (as such term is defined in the Escrow Agreement)
or (z) paid to Mortgagee to the extent permitted by law and
in accordance with the Loan Documents, and all advance rents
collected by or on behalf of Mortgagor (including collection
by Mortgagor or Mortgagor's agents, representatives,
property managers, successors or assigns but excluding
collection by Mortgagee or any Receiver or Mortgagee
Successor) (i.e., rents paid more than one month in advance)
and not properly applied in due course (proper refunding or
application being documented by evidence reasonably
satisfactory to Mortgagee);
(iv) in the event of any Recourse Income Default, the
replacement cost of any items of personalty or any fixtures
which constitute security for the indebtedness secured by
the Mortgage and which are removed from the Mortgaged
Property by Mortgagor or by any person or any entity on
behalf of Mortgagor on or after the Default Date, provided,
however, that if any such Recourse Income Default shall have
been fully cured prior to acceleration of the maturity of
the indebtedness evidenced by the Note, then, solely for
purposes of determining the liability of Mortgagor and the
Recourse Entities under this clause (iv) of this
subparagraph 3, such Recourse Income Default shall be
treated as if it had not occurred (but without limiting any
rights or remedies of Mortgagee in respect of such default
other than rights or remedies relating to personal
liability, personal recourse, or personal recovery);
(v) all losses, damages or liabilities suffered by
Mortgagee arising from any acts of commission or omission by
Mortgagor that result in waste (as such term is defined
under the laws of the State of New York) upon the Mortgaged
Property; and
(vi) any insurance or condemnation proceeds
attributable to the Mortgaged Property that are received by
or on behalf of Mortgagor (with such receipt being
determined in the same manner as receipt of Income under
subparagraph 3(ii)(A) above of this Paragraph F) and not
applied in accordance with the terms of the Mortgage or any
insurance and condemnation proceeds that were received by or
on behalf of Mortgagor (with such receipt being determined
as aforesaid) and not paid to Mortgagee when required under
the terms of the Mortgage.
4. Notwithstanding the foregoing provisions of this
Paragraph F or any other provisions of the Mortgage, the
Note or any of the other terms or provisions of the Loan
Documents, none of JMB Realty Corporation, a Delaware
corporation ("JMB Realty"), Progress Properties, Inc., a New
York corporation ("PPI"), J.R.A. Realty Corp., a New York
corporation ("JRA"), or P-C 900 Third Associates, a New York
limited partnership ("P-C") (JMB Realty, PPI, JRA and P-C
being herein collectively referred to as the "Initial Exempt
Entities"), nor any Additional Exempt Persons (as
hereinafter defined) shall have any direct or indirect
personal liability to Mortgagee under, for or in connection
with any of the obligations set forth in the Mortgage, the
Note or any other of the Loan Documents, including, but
without limitation, any of the provisions set forth in
subparagraphs 2 and 3 of this Paragraph F, provided,
however, that in no event shall the Initial Exempt Entities
or the Additional Exempt Persons include the Recourse
Entities or an Owner Entity (as hereinafter defined).
Unless such successor or assign is an Owner Entity or a
Recourse Entity, Initial Exempt Entities shall include
successors or assigns of Initial Exempt Entities.
Notwithstanding the foregoing provisions of this Paragraph F
or any other provisions of the Mortgage, the Note or any of
the other terms or provisions of the Loan Documents, if
title to the Mortgaged Property is conveyed to a
creditworthy entity which is either acceptable to Mortgagee,
in Mortgagee's sole discretion or which Mortgagee approves
in accordance with subparagraph (g) of Paragraph 17 of the
Initial Consolidated Mortgage (such creditworthy entity
which is either acceptable to Mortgagee in Mortgagee's sole
discretion or which Mortgagee so approves in accordance with
said subparagraph (g) being herein referred to as an
"Approved Transferee"), and such Approved Transferee duly
authorizes, executes, acknowledges and delivers to Mortgagee
an assumption agreement, in recordable form and otherwise
satisfactory to Mortgagee in all respects, pursuant to which
such Approved Transferee assumes and agrees to pay and
perform all liabilities and obligations (as such liabilities
and obligations are limited pursuant to this Paragraph F) of
Mortgagor and the Recourse Entities (whether such
liabilities and obligations arise before, during or after
such conveyance) under the Mortgage, the Note, the Escrow
Agreement and all the other Loan Documents (other than the
Environmental Indemnity), then, upon approval in writing by
Mortgagee of such Approved Transferee and approval in
writing by Mortgagee of such assumption agreement executed
and acknowledged by such Approved Transferee, Mortgagee
shall, at Mortgagor's expense, execute and deliver to
Mortgagor a release pursuant to which Mortgagor and the
Recourse Entities shall be released by Mortgagee from all
liabilities and obligations under the Mortgage, the Note,
the Escrow Agreement and all the other Loan Documents (other
than the Environmental Indemnity), provided, however, that
unless and until all of the conditions of this sentence
shall have been satisfied in full and Mortgagee shall have
executed and delivered such release to Mortgagor, all of the
liabilities and obligations of the Mortgagor and the
Recourse Entities under the Mortgage, the Note, the
Environmental Indemnity, the Escrow Agreement and all the
other Loan Documents shall remain unchanged and in full
force and effect (subject to the first sentence of this
subparagraph 4 of this Paragraph F) and provided, further
that in no event shall any transfer, approval or release
referred to the Mortgage or any other Loan Document (other
than the Environmental Indemnity) limit or affect the
liability of Mortgagor and the Recourse Entities under the
Environmental Indemnity, which Environmental Indemnity shall
remain in full force and effect (subject to the provisions
of Paragraph 7 of the Environmental Indemnity) unless and
until terminated in accordance with the terms of the
Environmental Indemnity.
5. Notwithstanding the foregoing provisions of this
Paragraph F or any other provisions of the Mortgage, the
Note or any other Loan Document, for purposes of the Note,
the Mortgage and each other Loan Document, neither the
deficit capital account of any direct or indirect partner in
Mortgagor, nor any obligation of any direct or indirect
partner in Mortgagor to restore a deficit capital account or
to contribute capital to Mortgagor or to any direct or
indirect partner in Mortgagor, shall be deemed to be the
property or asset of Mortgagor or the applicable direct or
indirect partner in Mortgagor, as the case may be, and
Mortgagee shall not have the right to collect, enforce or
proceed against or with respect to any such deficit capital
account or obligation to restore or contribute.
6. As used herein:
(i) the term "Associates" shall mean 900 3rd Avenue
Associates, an Illinois general partnership,
(ii) the term "Carlyle-XIV" shall mean Carlyle Real Estate
Limited Partnership - XIV, an Illinois limited partnership,
(iii) the term "Carlyle-XV" shall mean Carlyle Real Estate
Limited Partnership-XV, an Illinois limited partnership,
(iv) the term "Loan Documents" shall mean the Note,
the Mortgage and all other documents evidencing or securing
or otherwise executed or delivered in connection with the
loan evidenced by the Note and also including the
Environmental Indemnity, as any of the foregoing shall be
amended or modified from time to time in accordance with
their respective terms (it being understood, however, that
the Environmental Indemnity is entirely independent of said
loan and does not evidence or secure said loan),
(v) the term "Environmental Indemnity" shall mean
the Environmental Indemnity dated as of December 1, 1994
from Mortgagor, Associates, Carlyle-XIV and Carlyle-XV, as
amended or modified from time to time in accordance with its
terms,
(vi) the term "Escrow Agreement" shall mean the Taxes
and Reserve Escrow Agreement dated as of December 1, 1994
among Mortgagor, Mortgagee and the escrow agent referred to
therein, as amended or modified from time to time in
accordance with its terms,
(vii) the term "Recourse Entities" shall mean all the
following: (a) Associates (but excluding, solely as to this
clause (a), any partners (directly or indirectly) of a
partner of Associates), (b) Carlyle-XIV (but excluding,
solely as to this clause (b), any partners (directly or
indirectly) of Carlyle-XIV), (c) Carlyle-XV (but excluding,
solely as to this clause (c), any partners (directly or
indirectly) of Carlyle-XV) and (d) the respective successors
and assigns of the entities covered by clauses (a), (b) and
(c) above, but excepting, as to all of clauses (a), (b), (c)
and (d) above, their respective employees and authorized
agents, (it being understood that the exclusion of any
partner under any of clauses (a), (b) or (c) shall not
constitute per se an exclusion under any of the other
clauses),
(viii) the term "Owner Entity" shall mean Progress
Partners, a New York general partnership, but excluding (a) PPI,
JRA, P-C 900 and their respective successors and assigns, (b) any
direct or indirect partners (an "Excluded Partner") in a partner
of (I) Associates or (II) any successor or assign of Associates
and (c) the successors or assigns of any Excluded Partners,
(ix) the term "Additional Exempt Persons" shall mean all
of the following: (a) any individual or entity that was, is or
becomes a partner in Carlyle-XIV, Carlyle-XV, PPI, JRA or P-C,
directly or indirectly through one or more other partnerships, (b)
any officer, director, employee, shareholder, trustee, beneficiary
or agent of JMB Realty Corporation, PPI, JRA or P-C or of any such
direct or indirect partner in Carlyle-XIV, Carlyle XV, PPI, JRA or
P-C, and (c) the respective successors or assigns of such
individuals or entities covered under clause (a) above and the
respective successors or assigns of the officers, directors,
employees, shareholders, trustees, beneficiaries or agents covered
under clause (b) above, provided, however, that in no event shall
the Additional Exempt Persons include the Recourse Entities or an
Owner Entity,
(x) the term "Initial Consolidated Mortgage" shall
mean the Agreement of Consolidation and Modification of
Mortgages and Mortgage Notes dated November 7, 1984 between
Mortgagor and Mortgagee,
(xi) the term "Default Date" shall mean the date a
Recourse Income Default by Mortgagor occurs (whether or not
notice of the default constituting such Recourse Income
Default has been given and whether or not any applicable
grace period has expired and regardless of when Mortgagee
makes the determination that such default is a material
default),
(xii) the term "Income" shall mean all rents and
other revenues, payments or reimbursements of any kind
whatsoever (including all payments and contributions from
tenants for taxes, insurance, operating expenses, and common
area maintenance charges) derived from the Mortgaged
Property (it being understood that, at such time as any
security deposits or the proceeds thereof become property of
Mortgagor free and clear of any obligations in respect
thereof to any tenants, such security deposits or proceeds
shall be considered as included in Income), and
(xiii) the term "Modification Agreement" shall mean the
Agreement of Modification of Mortgages and Mortgage Notes in
Leases dated as of December 1, 1994 between Mortgagor and
Mortgagee."
A. Except as modified hereby, Paragraphs A through G,
inclusive of Section IV of the Initial Consolidated Mortgage, which
appear on pages 8 through 10, inclusive, thereof, remain unchanged and
in full force and effect.
I. Modification of Initial Consolidated Mortgage and Second
Consolidated Mortgage. In addition to the modifications hereinabove set
forth, the Initial Consolidated Mortgage and the Second Consolidated
Mortgage are hereby further modified as follows:
A. Paragraph 3 of Section V of the Initial Consolidated
Mortgage (as modified by the Second Consolidated Mortgage and the
Consolidation Agreement) is (i) hereby entitled Paragraph 3(a) and (ii)
hereby modified by the addition, at the end of said Paragraph 3(a), of
the following:
"During the period that the Escrow Agreement (as defined below in
Paragraph 3(b)) is in effect, the foregoing provisions of this
Paragraph 3(a) shall not apply, and from and after the termination
of the Escrow Agreement, this Paragraph 3(a) shall be in full
force and effect."
In addition, the following new paragraph is hereby added immediately
after said Paragraph 3(a), such new paragraph being entitled 3(b):
"3(b). Taxes and Reserve Escrow Agreement. The Mortgagor
and the Mortgagee have entered into a Taxes and Reserve Escrow
Agreement dated as of December 1, 1994 (as amended or modified
from time to time in accordance with its terms, the 'Escrow
Agreement'). Subject to the provisions of the Escrow Agreement,
the Mortgagor shall deposit into the escrows provided for under
the Escrow Agreement, on such dates as are set forth in the Escrow
Agreement, Tax Charges and Cash Flow (as such terms are defined in
the Escrow Agreement), which payments shall be held and applied in
accordance with the Escrow Agreement."
A. Paragraph 17 of Section V of the Initial Consolidated
Mortgage (as modified by the Second Consolidated Mortgage and the
Consolidation Agreement) is hereby modified by (i) the addition before
the word "and", at the end of clause (ii) of the first sentence of said
Paragraph 17 on page 28 of the Initial Consolidated Mortgage, of the
following: "and P-C 900 Third Associates, a New York limited
partnership", (ii) the addition, immediately before the words "the sole
shareholder(s)" at the beginning of clauses (iii) and (iv) of the first
sentence of Paragraph 17 on page 28 of the Initial Consolidated
Mortgage, of the words "to the best knowledge of Mortgagor," (iii) the
addition, immediately following clause (v) of said first sentence on
page 29 of the Initial Consolidated Mortgage, of the following new
clause: "and (vi) the sole general partner of P-C 900 Third Associates
is Progress Properties, Inc., a New York corporation", (iv) the deletion
after the word "changed," appearing in Paragraph 17 on line 17 of said
page 29 of the Initial Consolidated Mortgage of the following clause:
", or if any shareholders of any corporate general partner of the
Mortgagor should transfer any shares in said corporate general
partner,"
and the substitution therefor of the following new clause:
"or, if Mortgagor transfers the Premises to another entity (the
"Successor Owner") in full compliance with all of the provisions
of this Mortgage, but thereafter the partnership composition of
such Successor Owner is changed (if such Successor Owner is a
partnership) or the ownership (through shareholdings or otherwise)
of such Successor Owner is changed (if such Successor Owner is not
a partnership), such that, as to any of the cases described above
in this sentence, none of Associates, either of the Carlyle
Partners or a Carlyle Affiliate, as such terms are hereinafter
defined (collectively, the "Associates Group" and individually, an
"Associates Group Member") is a general partner of Mortgagor or
the Successor Owner (if the Successor Owner is a partnership) or
the owner of interests in the Successor Owner (if the Successor
Owner is not a partnership) or such that, as to any of the cases
described above in this sentence, the Ownership/Control Conditions
(as hereinafter defined) which are applicable to Mortgagor or the
Successor Owner, as the case may be, are not satisfied in full at
all times (as reasonably determined by Mortgagee)",
(v) the deletion of subparagraph (a) appearing on said page 29 of the
Initial Consolidated Mortgage and the substitution therefor of the
following new paragraph:
"(a) without the prior consent of the Mortgagee (except with
respect to Mortgagee's determination as to satisfaction of the
Ownership/Control Conditions), a transfer of the Mortgaged
Property to a Successor Owner if all of the following conditions
are satisfied in full: (1) such Successor Owner is capable of
holding and conveying real property under the laws of the State of
New York, (2) an Associates Group Member is a general partner of
such Successor Owner (if such Successor Owner is a partnership) or
an Associates Group Member is the owner of interests in such
Successor Owner (if such Successor Owner is not a partnership) and
(3) the Ownership/Control Conditions which are applicable to a
Successor Owner are satisfied in full at all times (as reasonably
determined by Mortgagee);"
(vi) the deletion of subparagraphs (b), (c) and (f) of said Paragraph 17
which appear on pages 29 and 30 of the Initial Consolidated Mortgage
(and any references thereto which appear in Paragraph 17), (vii) the
deletion of the word "three" from the third line of subparagraph (e),
appearing on page 30 of the Initial Consolidated Mortgage, and the
addition, at the end of said subparagraph (e), of the words "and P-C 900
Third Associates, a New York limited partnership ("P-C"), provided that,
solely as to any transfer by Associates or its successors and assigns
(without restricting transfers by Progress Properties, Inc. ("PPI"),
J.R.A. Realty Corp. ("JRA") or P-C), the Ownership/Control Conditions as
to Mortgagor must be satisfied in full at all times (as reasonably
determined by Mortgagee)," (viii) the deletion, from said Paragraph 17
appearing on page 31 of the Initial Consolidated Mortgage, of the
following sentence:
"Upon the execution of the aforesaid assumption agreement and
notice letter by the transferee(s) pursuant to any transfer made
under clauses (a), (b), (c) or (g) above, the transferor(s) shall
be released from any liability hereunder.",
and the substitution therefor of the following new sentences:
"With respect to any transfer made pursuant to clause (a) above,
upon satisfaction in full of all of the following conditions: (i)
delivery to Mortgagee of a Group Transfer Confirmation (as
hereinafter defined), (ii) Mortgagee's determination that the
Ownership/Control Conditions have been satisfied in full and (iii)
execution of the aforesaid assumption agreement and notice letter
by the transferee, the transferor shall be released from any
liability hereunder. With respect to any transfer to an Approved
Transferee (as such term is defined in Paragraph 43 below) made
pursuant to clause (g) above, a release shall be given to the
transferor, with respect to the liability of transferor,
Associates and the Carlyle Partners under all of the Loan
Documents other than the Environmental Indemnity (as such terms
are defined in Paragraph 43 below) in accordance with,
subparagraph 4 of Paragraph 43 below if and to the extent that the
conditions to the giving of such a release as set forth in said
subparagraph 4 are satisfied in full.",
and (ix) the addition, after the word "paragraph" and before the
"period" at the end of Paragraph 17, appearing on page 32 of the Initial
Consolidated Mortgage, of the following:
", and provided, further, that the foregoing provisions of this
Paragraph 17 shall not prohibit or restrict transfers, assignments
and conveyances by the general partners of Mortgagor (other than
Associates and its successors and assigns) as well as by the
partners or shareholders of such general partners of Mortgagor
(other than Associates and its successors and assigns), direct or
indirect, of their respective ownership interests in the
particular partnership, corporation or other entity, without
constituting a default hereunder and without causing Mortgagee to
have the right to declare the Debt immediately due and payable,
except that nothing contained in this proviso shall limit or
affect the requirement that, notwithstanding any transfers,
assignments and conveyances, the Ownership/Control Conditions as
to Mortgagor must be satisfied in full at all times. It is
expressly understood and agreed that the parenthetical references
in the last proviso to the immediately preceding sentence to the
phrase "other than Associates and its successors and assigns"
shall mean that (x) Associates and its successors and assigns
shall be prohibited and restricted as to transfers, assignments
and conveyances in accordance with the provisions of this
Paragraph 17 which precede said proviso and (y) such last proviso
shall not remove or limit any prohibitions and restrictions on
such transfers, assignments and conveyances by Associates and its
successors and assigns. Nothing contained in this Paragraph 17
shall limit or reduce the liability of Associates or the Carlyle
Partners pursuant to Paragraph 43 hereof (as such liability is
described in, and limited by, said Paragraph 43) or pursuant to
the other Loan Documents (as such term is defined in Paragraph 43
hereof) (as such liability is set forth in, and limited by, said
other Loan Documents). As used in this Paragraph 17, the
following terms shall have the respective meanings set forth
below:
(i) the term "Carlyle XIV" shall mean Carlyle Real
Estate Limited Partnership - XIV, an Illinois limited
partnership,
(ii) the term "Carlyle XV" shall mean Carlyle Real
Estate Limited Partnership - XV, an Illinois limited
partnership,
(iii) the term "Carlyle Affiliate" shall mean a
partnership (general or limited), corporation or other
entity that, directly or indirectly, controls, is under
common control with, or is controlled by, the Carlyle
Partners, or either of them, or JBM Realty Corporation,
(iv) the term "Carlyle Partners" shall mean,
collectively, Carlyle XIV and XV,
(v) the term "Ownership/Control Conditions" shall
mean (A) as to Mortgagor, (1) the ownership by one or more
Associates Group Members, in the aggregate, of at least 49%
of the partnership interests in Mortgagor, (2) the retention
by one or more Associates Group Members of at least the
control (such control being herein referred to as the
"Required Control") over Mortgagor held, as of December 1,
1994, by Associates pursuant to the Mortgagor Agreement, (3)
in the case of a transfer by Associates of its partnership
interest in Mortgagor, delivery to Mortgagee of a
confirmation in writing, set forth in an instrument
reasonably satisfactory to Mortgagee, which has been duly
executed by Associates and the Carlyle Partners, of their
continuing liability to Mortgagee under the Loan Documents
(as such liability is limited in accordance with the
respective terms of the Loan Documents) (such duly executed
instrument reasonably satisfactory to Mortgagee being herein
referred to as a "Group Transfer Confirmation"), and (4) in
the case of a transfer by one or both Carlyle Partners of
its or their partnership interests in Associates, delivery
to Mortgagee of a confirmation in writing, set forth in an
instrument reasonably satisfactory to Mortgagee, which has
been duly executed by the Carlyle Partner(s) which are so
transferring its or their interests, of its or their
continuing liability to Mortgagee under the Loan Documents
(as such liability is limited in accordance with the
respective terms of the Loan Documents), (B) as to a
Successor Owner which is a partnership, (1) the ownership by
one or more Associates Group Members, in the aggregate, of
at least 49% of the partnership interests in such Successor
Owner, (2) the holding by one or more Associates Group
Members of control over such Successor Owner which is, as to
such Successor Owner, equivalent to or greater than the
Required Control and (3) delivery to Mortgagee of a Group
Transfer Confirmation, and (C) as to a Successor Owner which
is not a partnership, (1) the ownership by one or more
Associates Group Members, in the aggregate, of at least 49%
each class of stock of such Successor Owner (if such
Successor Owner is a corporation) or 49% of each category of
ownership interests of such Successor Owner (in all other
cases), (2) the holding by one or more Associates Group
Members of control over such Successor Owner which is, as to
such Successor Owner, equivalent to or greater than the
Required Control and (3) delivery to Mortgagee of a Group
Transfer Confirmation, and
(vi) the term "Mortgagor Agreement" shall mean the
Amended and Restated Agreement of General Partnership for
Progress Partners, dated August 20, 1984, among Associates,
PPI and JRA as amended by Amendment No. 1 to Amended and
Restated Agreement of General Partnership for Progress
Partners, dated February 26, 1986, among Associates, PPI,
JRA and P-C 900 Third Associates, without taking into
account any amendments, modifications or terminations of
such documents.
A. Paragraph 18 of Section V of the Initial Consolidated
Mortgage, which appears on page 32 of the Initial Consolidated Mortgage,
is hereby modified by the addition, on line 9 of said Paragraph 18
immediately following the word "herein", of the following: "or in the
Escrow Agreement or in the Environmental Indemnity dated as of December
1, 1994 from Mortgagor, Associates and the Carlyle Partners".
B. Paragraph 27 of Section V of the Initial Consolidated
Mortgage, which appears on page 35 of the Initial Consolidated Mortgage,
is hereby deleted and the following new paragraphs are substituted
therefor:
"27. Evasion of Prepayment Premium. After default
and acceleration of maturity under the Note, this Mortgage, the
Escrow Agreement or any of the documents which evidence or secure
the indebtedness evidenced by the Note, a tender of payment of
(i) the amount necessary to satisfy the entire indebtedness made
at any time thereafter, (ii) any judgment of foreclosure, or
(iii) any sum due at foreclosure (including sale under power of
sale) and any tender of payment during any redemption period after
foreclosure, to the extent permitted by law, will be required to
include an evasion of prepayment premium; such required evasion of
prepayment premium shall be equal to the greater of (a) an amount
equal to nine percent (9%) times the then outstanding principal
balance of the Note, or (b) the amount by which the sum of the
Discounted Values (as defined in Paragraph A of Section IV of the
Agreement of Modification of Mortgages and Mortgage Notes dated as
of December 1, 1994 between Mortgagor and Mortgagee (the "Mortgage
Amendment")) of all Note Payments (as defined in Paragraph A of
Section IV of the Mortgage Amendment) from the date of prepayment
to the Maturity Date (as defined in Section III of the Mortgage
Amendment), calculated at the Default Discount Rate (as herein-
after defined), exceeds the amount of prepaid principal. As used
in this Mortgage, the term 'Default Discount Rate' shall mean the
Discount Rate (as defined in Paragraph A of Section IV of the
Mortgage Amendment) less 300 basis points."
C. That Paragraph 32 thereof of Section V of the Initial
Consolidated Mortgage (as modified by the Second Consolidated Mortgage
and the Consolidation Agreement) is hereby modified by (i) the deletion
of:
"Progress Partners
900 Third Avenue
New York, New York
ATTN: Mr. Myles Itkin
900 3rd Avenue Associates
875 North Michigan Avenue
Suite 1900
Chicago, Illinois 60611
ATTN: Mr. Robert Chapman
Shea & Gould
330 Madison Avenue
New York, NY 10017
ATTN: S. Fodor, Esq."
from the list of recipients of notices to the Mortgagor and (ii) the
substitution therefor of:
"Progress Partners
900 Third Avenue
New York, New York
ATTN: Property Manager
With copies to:
900 3rd Avenue Associates
900 North Michigan Avenue
Suite 1200
Chicago, Illinois 60611
ATTN: Douglas Welker"
A. Paragraph 43 of Section V of the Initial Consolidated
Mortgage and Section XVI of the Second Consolidated Mortgage are both
hereby deleted and the following new paragraph is in each case hereby
substituted therefor:
"43. Exculpation. This Paragraph 43 consists of subparagraphs 1
through 6, inclusive, as set forth below:
1. Notwithstanding any provisions in the Note or in the
Mortgage or in any other Loan Document (as hereinafter
defined) to the contrary, (except as provided in
subparagraphs 2 and 3 of this Paragraph 43) it is expressly
understood and agreed that if Mortgagee at any time takes
action to enforce the collection of the indebtedness secured
by the Mortgage or by any other Loan Document, Mortgagee
will proceed to foreclose the Mortgage instead of
instituting suit upon the Note. If a lesser sum is realized
from the foreclosure of the Mortgage and sale of the
Mortgaged Property than the amount then due and owing under
or arising out of the Note, the Mortgage, or any other Loan
Document, Mortgagee will never (except as provided in
subparagraphs 2 and 3 of this Paragraph 43) institute any
action, suit, claim or demand in law or in equity against
Mortgagor, or against any individual or entity that is a
Recourse Entity (as hereinafter defined) or that was, is or
becomes a partner, directly or indirectly through one or
more other partnerships, in (or any other affiliated or
related persons or entities of) Mortgagor, for or on account
of the deficiency. Notwithstanding any provisions in the
Note or in the Mortgage or in any other Loan Document to the
contrary, (except as provided in subparagraphs 2 and 3 of
this Paragraph 43) it is expressly understood and agreed
that if Mortgagee at any time takes action to enforce (or to
recover any loss or damage by reason of a breach or failure
of performance of) any agreement or obligation of Mortgagor
under the Mortgage or under any other Loan Document (other
than an action to enforce the collection of the indebtedness
secured by the Mortgage or by any other Loan Document or the
collection of any deficiency in respect of such
indebtedness, all such actions to enforce or recover as to
collection being subject to the two immediately preceding
sentences) (any action or suit to enforce or recover as to
any such agreement or obligation (excluding actions to
enforce collection, as aforesaid) being herein referred to
as "Non-Collection Actions"), (i) Mortgagee will not
institute any action, suit, claim or demand in law or in
equity against any individual or entity that is a Recourse
Entity (as hereinafter defined) or that was, is or becomes a
partner, directly or indirectly through one or more other
partnerships, in (or any other affiliated or related persons
or entities of) Mortgagor, except to the extent such action,
suit, claim or demand is necessary or appropriate in order
to either (x) institute an action, suit, claim or demand
against Mortgagor or (y) enforce (without collection of such
indebtedness or such deficiency) Mortgagee's rights with
respect to the Mortgaged Property or any other collateral
for the Note or for such indebtedness, and (ii)
notwithstanding the foregoing exception in clause (i) above,
Mortgagee shall not, in any Non-Collection Action, recover
against any individual or entity that is a Recourse Entity
or that was, is or becomes a partner, directly or indirectly
through one or more other partnerships, in (or any other
affiliated or related persons or entities of) Mortgagor,
provided, however, that nothing in this sentence shall limit
or affect Mortgagee's right to institute any action, suit,
claim or demand against Mortgagor itself.
2. Subject in all events to the provisions of subparagraphs
4 and 5 of this Paragraph 43, nothing contained in
subparagraph 1 of this Paragraph 43 will in any way affect
or impair:
(a) the lien of the Mortgage which will remain in
full force and inure to the benefit of Mortgagee;
(b) subject to the last two sentences of this subparagraph
2, any representation or warranty of title made in the Mortgage,
all of which will remain in full force and inure to the benefit of
Mortgagee;
(c) Mortgagee's rights, as against Mortgagor or any
Recourse Entities (as hereinafter defined), to the extent
provided for under the Environmental Indemnity (as
hereinafter defined), subject to the provisions of Paragraph
7 of the Environmental Indemnity;
(d) subject to the last sentence of this subparagraph 2,
Mortgagee's rights, as against Mortgagor or any Recourse Entities,
under Paragraph 10 of Section V of the Initial Consolidated
Mortgage, to the extent costs and expenses covered by said
Paragraph 10 relate to upholding or defending the Mortgage as
having been duly authorized, executed and delivered (provided,
however, that, so long as (i) Mortgagor and the Recourse Entities
acknowledge their continuing liability under this Paragraph 43 and
(ii) Mortgagor and the Recourse Entities are defending and
upholding the validity of the Mortgage as an enforceable first
lien, this clause (d) shall not cover costs and expenses of
upholding or defending the due authorization, execution and
delivery of the Mortgage Amendment (as hereinafter defined);
(e) Mortgagee's rights to proceed against any
collateral under the Escrow Agreement (as hereinafter
defined) or the New NY Escrow Agreement (as such term is
defined in the Escrow Agreement) or to exercise any of
Mortgagee's rights under the Escrow Agreement or the New NY
Escrow Agreement or to apply any such collateral or other
amounts recovered pursuant to the Escrow Agreement or the
New NY Escrow Agreement in accordance with the Escrow
Agreement or in accordance with the New NY Escrow Agreement,
as the case may be (subject, as to this clause (e), to the
provisions of Paragraph 13(m) of the Escrow Agreement and
the corresponding provisions of the New NY Escrow
Agreement); or
(f) Mortgagee's rights to proceed against any
collateral under the Assignment of Leases (as defined in the
Modification Agreement (as hereinafter defined)) or to
exercise any of Mortgagee's rights under the Assignment of
Leases or to apply any such collateral or other amounts
recovered pursuant to the Assignment of Leases in accordance
with the Assignment of Leases (subject, as to this clause
(f), to the provisions of Paragraph 15 of the Assignment of
Leases).
If and to the extent that Mortgagee determines that the matters as
to which Mortgagor has liability under subparagraph (b) or (d) of
the immediately preceding sentence, as the case may be, are also
matters as to which Lawyers Title Insurance Corporation, TICOR
Title Guarantee Company and TICOR Title Insurance Company, or
their successors or assigns (collectively, the "Title Companies")
are liable under the title insurance policies issued to Mortgagee
in connection with the Modification Agreement, Mortgagee will not
commence an action or proceeding to enforce personal liability
pursuant to subparagraph (b) or (d), as the case may be, with
respect to such matters until Mortgagee (i) has sought recourse
against the Title Companies for such matters and (ii) has
determined that such recourse against the Title Companies either
will not result in reasonably prompt payment of all claims of
Mortgagee or will not provide full protection of Mortgagee's
rights as to such matters (Mortgagee's determinations as described
in this clause (ii) shall be conclusive and binding), provided,
however, that nothing in this sentence shall prevent Mortgagee
from taking such actions as Mortgagee reasonably deems necessary
(including, without limitation, the filing of proofs of claim) to
preserve Mortgagee's rights against any or all of Mortgagor and
the Recourse Entities and provided, further, that nothing in this
subparagraph 2 of this Paragraph 43 shall limit any rights or
remedies of Mortgagee other than, to the extent restricted by this
subparagraph 2, the right to commence or prosecute an action or
proceeding to enforce personal liability. Any determination by
Mortgagee that the Title Companies are not liable shall, as
between Mortgagor and Mortgagee, be conclusive and binding for
purposes of this subparagraph 2, but such determination shall not
waive or limit in any manner the rights of any party against the
Title Companies.
3. The following are excluded and excepted from the
provisions of subparagraph 1 of this Paragraph 43 and
Mortgagee may recover personally against Mortgagor and the
Recourse Entities (subject in all events to the provisions
of subparagraphs 4 and 5 of this Paragraph 43) for the
following:
(i) all losses, damages or liabilities suffered by
Mortgagee arising out of any fraud or wilful or intentional
misrepresentation by Mortgagor or 900 3rd Avenue Associates,
an Illinois general partnership ("Associates") in connection
with (a) the execution and delivery of any of the Loan
Documents (excluding any fraud or misrepresentation relating
thereto by or on behalf of any partner of Mortgagor (other
than Associates)), or (b) Mortgagor's performance of any of
its obligations under the Loan Documents after December 1,
1994.
(ii) in the event of any material default by
Mortgagor under any of the Loan Documents that is not cured
prior to the expiration of the applicable notice or grace
period, if any, under such Loan Document (Mortgagee's
determinations as to whether a default is material shall be
conclusive and binding) (such material defaults being herein
called "Recourse Income Defaults"), all Income (as
hereinafter defined) which is either:
(A) received after the Default Date (as
hereinafter defined) by or on behalf of Mortgagor (including
receipt by Mortgagor or Mortgagor's agents, representatives,
property managers, successors or assigns but excluding
receipt by Mortgagee or any receiver (a "Receiver")
appointed for the Mortgaged Property and excluding receipt
by a successor or assign (a "Mortgagee Successor") which
takes title to the Mortgaged Property through or after a
foreclosure or other exercise of rights under the Mortgage
or by conveyance in lieu of such exercise of rights under
the Mortgage); or
(B) on deposit on the Default Date in one or
more accounts used by Mortgagor or Mortgagor's agents,
representatives, property managers, successors or assigns
(excluding Mortgagee or any Receiver or Mortgagee Successor)
in connection with the operation of the Mortgaged Property;
except to the extent any such Income is (x) so long as the
Escrow Agreement is in effect, either (I) deposited into the
General Reserve Fund (as such term is defined in the Escrow
Agreement) pursuant to the Escrow Agreement, or (II) applied
to Permitted Expenses or to Individually Approved Expenses
(as such terms are defined in the Escrow Agreement) to the
extent permitted under the Escrow Agreement, or (y) from and
after the date the Escrow Agreement ceases to be in effect,
properly applied to the normal and customary expenses and
operations of the Mortgaged Property (subject to all of the
aforesaid deposits and applications being documented by
evidence reasonably satisfactory to Mortgagee) (all such
Income described in clauses (ii)(A) or (ii)(B) above in
respect of which documentation of the aforesaid deposit or
application is either not furnished to Mortgagee or is not
reasonably satisfactory to Mortgagee being herein referred
to as "Recourse Income"), provided, however, that if any
such Recourse Income Default shall have been fully cured
prior to acceleration of the maturity of the indebtedness
evidenced by the Note, then, solely for purposes of
determining the liability of Mortgagor and the Recourse
Entities under this clause (ii) of this subparagraph 3, such
Recourse Income Default shall be treated as if it had not
occurred (but without limiting any rights or remedies of
Mortgagee in respect of such default other than rights or
remedies relating to personal liability, personal recourse,
or personal recovery);
(iii) an amount equal to all security deposits
collected by or on behalf of Mortgagor (including collection
by Mortgagor or Mortgagor's agents, representatives,
property managers, successors or assigns but excluding
collection by Mortgagee or any Receiver or Mortgagee
Successor) and not either (x) properly refunded to tenants
to the extent required under the terms of the applicable
leases, (y) paid to the Escrow Agent or the NY Escrow Holder
(as such terms are defined in the Escrow Agreement) in
accordance with the Escrow Agreement or the New NY Escrow
Agreement (as such term is defined in the Escrow Agreement)
or (z) paid to Mortgagee to the extent permitted by law and
in accordance with the Loan Documents, and all advance rents
collected by or on behalf of Mortgagor (including collection
by Mortgagor or Mortgagor's agents, representatives,
property managers, successors or assigns but excluding
collection by Mortgagee or any Receiver or Mortgagee
Successor) (i.e., rents paid more than one month in advance)
and not properly applied in due course (proper refunding or
application being documented by evidence reasonably
satisfactory to Mortgagee);
(iv) in the event of any Recourse Income Default, the
replacement cost of any items of personalty or any fixtures
which constitute security for the indebtedness secured by
the Mortgage and which are removed from the Mortgaged
Property by Mortgagor or by any person or any entity on
behalf of Mortgagor on or after the Default Date, provided,
however, that if any such Recourse Income Default shall have
been fully cured prior to acceleration of the maturity of
the indebtedness evidenced by the Note, then, solely for
purposes of determining the liability of Mortgagor and the
Recourse Entities under this clause (iv) of this
subparagraph 3, such Recourse Income Default shall be
treated as if it had not occurred (but without limiting any
rights or remedies of Mortgagee in respect of such default
other than rights or remedies relating to personal
liability, personal recourse, or personal recovery);
(v) all losses, damages or liabilities suffered by
Mortgagee arising from any acts of commission or omission by
Mortgagor that result in waste (as such term is defined
under the laws of the State of New York) upon the Mortgaged
Property; and
(vi) any insurance or condemnation proceeds
attributable to the Mortgaged Property that are received by
or on behalf of Mortgagor (with such receipt being
determined in the same manner as receipt of Income under
subparagraph 3(ii)(A) above of this Paragraph 43) and not
applied in accordance with the terms of the Mortgage or any
insurance and condemnation proceeds that were received by or
on behalf of Mortgagor (with such receipt being determined
as aforesaid) and not paid to Mortgagee when required under
the terms of the Mortgage.
4. Notwithstanding the foregoing provisions of this
Paragraph 43 or any other provisions of the Mortgage, the
Note or any of the other terms or provisions of the Loan
Documents, none of JMB Realty Corporation, a Delaware
corporation ("JMB Realty"), Progress Properties, Inc., a New
York corporation ("PPI"), J.R.A. Realty Corp., a New York
corporation ("JRA"), or P-C 900 Third Associates, a New York
limited partnership ("P-C") (JMB Realty, PPI, JRA and P-C
being herein collectively referred to as the "Initial Exempt
Entities"), nor any Additional Exempt Persons (as
hereinafter defined) shall have any direct or indirect
personal liability to Mortgagee under, for or in connection
with any of the obligations set forth in the Mortgage, the
Note or any other of the Loan Documents, including, but
without limitation, any of the provisions set forth in
subparagraphs 2 and 3 of this Paragraph 43, provided,
however, that in no event shall the Initial Exempt Entities
or the Additional Exempt Persons include the Recourse
Entities or an Owner Entity (as hereinafter defined).
Unless such successor or assign is an Owner Entity or a
Recourse Entity, Initial Exempt Entities shall include
successors or assigns of Initial Exempt Entities.
Notwithstanding the foregoing provisions of this Paragraph
43 or any other provisions of the Mortgage, the Note or any
of the other terms or provisions of the Loan Documents, if
title to the Mortgaged Property is conveyed to a
creditworthy entity which is either acceptable to Mortgagee,
in Mortgagee's sole discretion or which Mortgagee approves
in accordance with subparagraph (g) of Paragraph 17 of the
Initial Consolidated Mortgage (such creditworthy entity
which is either acceptable to Mortgagee in Mortgagee's sole
discretion or which Mortgagee so approves in accordance with
said subparagraph (g) being herein referred to as an
"Approved Transferee"), and such Approved Transferee duly
authorizes, executes, acknowledges and delivers to Mortgagee
an assumption agreement, in recordable form and otherwise
satisfactory to Mortgagee in all respects, pursuant to which
such Approved Transferee assumes and agrees to pay and
perform all liabilities and obligations (as such liabilities
and obligations are limited pursuant to this Paragraph 43)
of Mortgagor and the Recourse Entities (whether such
liabilities and obligations arise before, during or after
such conveyance) under the Mortgage, the Note, the Escrow
Agreement and all the other Loan Documents (other than the
Environmental Indemnity), then, upon approval in writing by
Mortgagee of such Approved Transferee and approval in
writing by Mortgagee of such assumption agreement executed
and acknowledged by such Approved Transferee, Mortgagee
shall, at Mortgagor's expense, execute and deliver to
Mortgagor a release pursuant to which Mortgagor and the
Recourse Entities shall be released by Mortgagee from all
liabilities and obligations under the Mortgage, the Note,
the Escrow Agreement and all the other Loan Documents (other
than the Environmental Indemnity), provided, however, that
unless and until all of the conditions of this sentence
shall have been satisfied in full and Mortgagee shall have
executed and delivered such release to Mortgagor, all of the
liabilities and obligations of the Mortgagor and the
Recourse Entities under the Mortgage, the Note, the
Environmental Indemnity, the Escrow Agreement and all the
other Loan Documents shall remain unchanged and in full
force and effect (subject to the first sentence of this
subparagraph 4 of this Paragraph 43) and provided, further
that in no event shall any transfer, approval or release
referred to the Mortgage or any other Loan Document (other
than the Environmental Indemnity) limit or affect the
liability of Mortgagor and the Recourse Entities under the
Environmental Indemnity, which Environmental Indemnity shall
remain in full force and effect (subject to the provisions
of Paragraph 7 of the Environmental Indemnity) unless and
until terminated in accordance with the terms of the
Environmental Indemnity.
5. Notwithstanding the foregoing provisions of this
Paragraph 43 or any other provisions of the Mortgage, the
Note or any other Loan Document, for purposes of the Note,
the Mortgage and each other Loan Document, neither the
deficit capital account of any direct or indirect partner in
Mortgagor, nor any obligation of any direct or indirect
partner in Mortgagor to restore a deficit capital account or
to contribute capital to Mortgagor or to any direct or
indirect partner in Mortgagor, shall be deemed to be the
property or asset of Mortgagor or the applicable direct or
indirect partner in Mortgagor, as the case may be, and
Mortgagee shall not have the right to collect, enforce or
proceed against or with respect to any such deficit capital
account or obligation to restore or contribute.
6. As used herein:
(i) the term "Associates" shall mean 900 3rd Avenue
Associates, an Illinois general partnership,
(ii) the term "Carlyle-XIV" shall mean Carlyle Real Estate
Limited Partnership - XIV, an Illinois limited partnership,
(iii) the term "Carlyle-XV" shall mean Carlyle Real Estate
Limited Partnership-XV, an Illinois limited partnership,
(iv) the term "Loan Documents" shall mean the Note,
the Mortgage and all other documents evidencing or securing
or otherwise executed or delivered in connection with the
loan evidenced by the Note and also including the
Environmental Indemnity, as any of the foregoing shall be
amended or modified from time to time in accordance with
their respective terms (it being understood, however, that
the Environmental Indemnity is entirely independent of said
loan and does not evidence or secure said loan),
(v) the term "Environmental Indemnity" shall mean
the Environmental Indemnity dated as of December 1, 1994
from Mortgagor, Associates, Carlyle-XIV and Carlyle-XV, as
amended or modified from time to time in accordance with its
terms,
(vi) the term "Escrow Agreement" shall mean the Taxes
and Reserve Escrow Agreement dated as of December 1, 1994
among Mortgagor, Mortgagee and the escrow agent referred to
therein, as amended or modified from time to time in
accordance with its terms,
(vii) the term "Recourse Entities" shall mean all the
following: (a) Associates (but excluding, solely as to this
clause (a), any partners (directly or indirectly) of a
partner of Associates), (b) Carlyle-XIV (but excluding,
solely as to this clause (b), any partners (directly or
indirectly) of Carlyle-XIV), (c) Carlyle-XV (but excluding,
solely as to this clause (c), any partners (directly or
indirectly) of Carlyle-XV) and (d) the respective successors
and assigns of the entities covered by clauses (a), (b) and
(c) above, but excepting, as to all of clauses (a), (b), (c)
and (d) above, their respective employees and authorized
agents, (it being understood that the exclusion of any
partner under any of clauses (a), (b) or (c) shall not
constitute per se an exclusion under any of the other
clauses),
(viii) the term "Owner Entity" shall mean Progress
Partners, a New York general partnership, but excluding (a) PPI,
JRA, P-C 900 and their respective successors and assigns, (b) any
direct or indirect partners (an "Excluded Partner") in a partner
of (I) Associates or (II) any successor or assign of Associates
and (c) the successors or assigns of any Excluded Partners,
(ix) the term "Additional Exempt Persons" shall mean all
of the following: (a) any individual or entity that was, is or
becomes a partner in Carlyle-XIV, Carlyle-XV, PPI, JRA or P-C,
directly or indirectly through one or more other partnerships, (b)
any officer, director, employee, shareholder, trustee, beneficiary
or agent of JMB Realty Corporation, PPI, JRA or P-C or of any such
direct or indirect partner in Carlyle-XIV, Carlyle XV, PPI, JRA or
P-C, and (c) the respective successors or assigns of such
individuals or entities covered under clause (a) above and the
respective successors or assigns of the officers, directors,
employees, shareholders, trustees, beneficiaries or agents covered
under clause (b) above, provided, however, that in no event shall
the Additional Exempt Persons include the Recourse Entities or an
Owner Entity,
(x) the term "Initial Consolidated Mortgage" shall
mean the Agreement of Consolidation and Modification of
Mortgages and Mortgage Notes dated November 7, 1984 between
Mortgagor and Mortgagee,
(xi) the term "Default Date" shall mean the date a
Recourse Income Default by Mortgagor occurs (whether or not
notice of the default constituting such Recourse Income
Default has been given and whether or not any applicable
grace period has expired and regardless of when Mortgagee
makes the determination that such default is a material
default),
(xii) the term "Income" shall mean all rents and
other revenues, payments or reimbursements of any kind
whatsoever (including all payments and contributions from
tenants for taxes, insurance, operating expenses, and common
area maintenance charges) derived from the Mortgaged
Property (it being understood that, at such time as any
security deposits or the proceeds thereof become property of
Mortgagor free and clear of any obligations in respect
thereof to any tenants, such security deposits or proceeds
shall be considered as included in Income), and
(xiii) the term "Modification Agreement" shall mean the
Agreement of Modification of Mortgages and Mortgage Notes in
Leases dated as of December 1, 1994 between Mortgagor and
Mortgagee."
A. Paragraph 57 of Section V of the Initial Consolidated
Mortgage is hereby deleted in its entirety.
B.
C. Paragraph 63 of Section V of the Initial Consolidated
Mortgage (as modified by the Second Consolidated Mortgage and the
Consolidation Agreement) is hereby deleted and the following new
paragraph is substituted therefor:
"Certificate of Occupancy. The Mortgagor represents
and warrants to the Mortgagee that Permanent Certificate of
Occupancy No. 104802 dated March 23, 1994 (hereinafter referred to
as the "Permanent Certificate") has been duly issued by the
Department of Buildings of the City of New York. The Mortgagor
hereby covenants and agrees that at the sole cost and expense of
the Mortgagor, it will take all steps necessary and will comply
with all applicable laws, rules and regulations so that the
Improvements are and will continue to comply with all laws, rules
and regulations (including, without limitation, zoning,
environmental and building laws, rules and regulations) applicable
thereto and that it will take all action necessary and appropriate
so that the Permanent Certificate will remain in full force and
effect. If any representation or warranty of the Mortgagor in
this paragraph contained shall prove to be false or misleading in
any respect, or if the Permanent Certificate expires or is revoked
for any reason whatsoever or if the Mortgagor shall otherwise fail
to duly observe and perform all or any of its covenants and
agreements contained in this paragraph, then a default shall be
deemed to have occurred hereunder and in addition to all other
remedies for such default contained in this Mortgage or as
provided by law, the Mortgagee may, at its option, declare the
entire Debt to be immediately due and payable. The Mortgagor
hereby indemnifies and holds harmless the Mortgagee for any loss
or damage sustained by the Mortgagee resulting from (a) failure of
the Improvements and the use and occupancy thereof to comply with
all applicable zoning, building and environmental laws, rules and
regulations, (b) the expiration or revocation of the Permanent
Certificate for any reason whatsoever, and (c) a breach by the
Mortgagor of any other covenant and agreement of the Mortgagor in
this paragraph contained."
D. Section V of the Initial Consolidated Mortgage is
hereby modified by the addition, at the end thereof on page 52 of the
Initial Consolidated Mortgage, of the following new Paragraphs 68 and
69:
"68. Environmental Compliance. Mortgagor hereby represents and
warrants that:
1. to the best of Mortgagor's knowledge, the Mortgaged Property
and the operations presently conducted thereon are not in
violation of any zoning ordinances, building codes or
Environmental Laws (hereinafter defined);
2. to the best of Mortgagor's knowledge, during the period that
Mortgagor has owned the Mortgaged Property, the Mortgaged
Property has not been used for the generation, treatment,
storage or disposal of any hazardous substance, except to
the extent permitted under Paragraph 69;
3. to the best of Mortgagor's knowledge, the Mortgaged Property
and the operations presently conducted thereon are not the
subject of any pending proceeding under any Environmental
Laws and are not the subject of threatened proceedings or
any pending or threatened investigation or inquiry under any
Environmental Laws;
4. to the best of Mortgagor's knowledge, the use of the
Mortgaged Property by any prior owner has not violated any
applicable Environmental Laws; and
5. to the best of Mortgagor's knowledge, Mortgagor has duly
obtained or secured all permits, licenses and other
governmental authorizations required or necessary to date
for the operation of the Mortgaged Property.
Mortgagor hereby covenants and agrees that:
1. Mortgagor will cause the Mortgaged Property to be at all
times in compliance with all Environmental Laws;
2. Mortgagor will not generate, handle, use, store, dispose of
or treat any hazardous substance or solid waste on the
Mortgaged Property except to the extent permitted under
paragraph 69;
3. Mortgagor's operations at the Mortgaged Property will not
result in the unlawful or other release of any hazardous
substance or solid waste in, on or under the Mortgaged
Property;
4. Mortgagor will immediately notify Mortgagee of the
occurrence of any violation of which Mortgagor has
knowledge, or receipt of any notice or complaint of any
violation or alleged violation of any Environmental Laws
(the covenant set forth in this clause 4 being herein
referred to as the "Environmental Notification Covenant");
5. Mortgagee, its agents and representatives, may, at
Mortgagee's expense (or at Mortgagor's expense in the event
that (a) Mortgagee has grounds to believe, in Mortgagee's
reasonable judgment, that the inspection described below
will disclose a violation of any Environmental Laws or a
misrepresentation or breach of any provisions of this
Paragraph 68 and (b) Mortgagor fails, upon notice from
Mortgagee, to conduct an inspection, of a scope reasonably
satisfactory to Mortgagee, within thirty (30) days after
Mortgagee's notice, through an independent environmental
engineering or consulting firm reasonably satisfactory to
Mortgagee or Mortgagor fails to furnish to Lender, promptly
after completion of such inspection, a report of such
inspection which shall be reasonably satisfactory to
Mortgagee as to the scope, thoroughness and amount of detail
therein (with customary qualifications reasonably
satisfactory to Mortgagee)), from time to time make periodic
inspections of the Mortgaged Property and in connection
therewith, Mortgagee may make such tests of the air, soil,
ground water and building materials, as Mortgagee, its
agents and representatives, shall deem reasonably necessary;
if the report of an inspection discloses a violation of any
Environmental Laws or a breach of any provisions of this
Paragraph 68, all of Mortgagor's obligations hereunder shall
apply to such violation or breach;
6. Mortgagor shall use reasonable best efforts to cause any and
all tenants or other operators of the Mortgaged Property to
conduct their respective businesses so as to comply in all
respects with Environmental Laws; and
7. Without limiting the requirements hereinabove stated,
Mortgagor shall perform (or cause to be performed) any clean
up of hazardous substances which are placed at the Mortgaged
Property either prior to or during Mortgagor's ownership or
control of the Mortgaged Property if and to the extent
required under any Environmental Laws.
For purposes of this Mortgage, the term 'Environmental Laws' means
and includes any and all laws, statutes, ordinances, rules,
regulations, orders, or determinations of any governmental
authority having jurisdiction over the Mortgaged Property
pertaining to health or to the environment, including without
limitation, the Clean Air Act, as amended, the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as
amended ('CERCLA'), the Federal Water Pollution Control Act, as
amended, the Occupational Safety Health Act of 1970, as amended,
the Resource Conservation and Recovery Act of 1976, as amended,
('RCRA'), the Hazardous Materials Transportation Act of 1975, as
amended, the Safe Drinking Water Act, as amended, and the Toxic
Substances Control Act, as amended. The terms 'hazardous
substance', and 'release' have the meanings specified in CERCLA
and the terms 'solid waste' and 'disposal' (or 'disposed') have
the meanings specified in RCRA. If either CERCLA or RCRA is
amended so as to broaden the meaning of any term defined therein,
the broader meaning will apply subsequent to the effective date of
the amendment. If the laws of New York establish a meaning for
'hazardous substance', 'release', 'solid waste' or 'disposal'
which is broader than that specified in either CERCLA or RCRA, the
broader meaning applies. As used in this Paragraph 68, the terms
"knowledge of Mortgagor", "to the best of Mortgagor's knowledge"
and phrases of similar import shall mean the current actual
knowledge, after appropriate investigation of the files pertaining
to the Mortgaged Property which are under the control of the
applicable individual, of (x) Douglas Welker (Asset Manager),
Gene Haran (Property Manager), and Scott Bowen (Chief Engineer)
and (y) solely as to the Environmental Notification Covenant, any
individuals who succeed, as to the Mortgaged Property, to the
positions or responsibilities of the individuals listed in clause
(x) above or to the position of assistant property manager.
Mortgagor represents that the persons referred to in clause (x)
above have, as of December 1, 1994, primary knowledge of matters
related to the ownership, management or operation of the Mortgaged
Property.
"69. Ordinary Use. Mortgagee acknowledges that Mortgagor
and/or tenants maintain on the Mortgaged Property certain supplies
of paint and varnish for ordinary maintenance, certain cleaning
fluids and other similar chemicals used in the operation of the
Mortgaged Property, and the supplies used for garage purposes by
the garage facilities appurtenant to the leased premises of
certain tenants. Notwithstanding anything in this Mortgage to the
contrary, maintenance of such supplies for such purposes will not
constitute a default hereunder provided that (i) the amounts and
types of each of such substances maintained on the Mortgaged
Property are limited to those reasonably required or necessary for
the normal and ordinary course of operation and maintenance of a
first class office building with the facilities presently located
on and contemplated for the Mortgaged Property; and (ii) the
storage, use and disposal of such substances will at all times be
in compliance with any applicable federal, state or local laws,
rules, regulations or ordinances and the highest standards
followed by the owners of first class office buildings in New York
City. The foregoing permitted use, storage, and disposal will not
apply to any substance whose use, storage, or disposal in any
amount or for any purpose is prohibited by the Environmental
Laws."
A. Wherever reference is made in the Initial Consolidated
Mortgage (as modified by the Second Consolidated Mortgage and the
Consolidation Agreement) to the sum "NINETY-ONE MILLION SEVEN HUNDRED
FIFTY THOUSAND AND NO/100THS ($91,750,000.00) DOLLARS" such reference
shall hereafter be deemed to be to the sum "EIGHTY NINE MILLION NINE
HUNDRED AND FIFTY THREE THOUSAND NINE HUNDRED FIFTY NINE AND 11/100THS
($89,953,959.11) DOLLARS" and wherever reference is made in the Initial
Consolidated Mortgage (as modified by the Second Consolidated Mortgage
and the Consolidation Agreement) to the "Debt", such reference shall
hereafter be deemed to refer to "Debt" as defined herein.
B. Wherever reference is made in the Initial Consolidated
Mortgage (as modified by the Second Consolidated Mortgage and the
Consolidation Agreement) to the "Master Lease," such reference shall be
deleted. Without limitation of the foregoing, Paragraph 61 of Section V
of the Initial Consolidated Mortgage is hereby deleted in its entirety.
I. Further Modification of Assignment of Leases. The
Assignment of Leases, whose terms, covenants and conditions are hereby
expressly incorporated herein by reference and made a part hereof with
the same force and effect as though the same were more particularly set
forth herein, is hereby modified in the following respects:
(a) The principal sum secured thereby as "NINETY-ONE
MILLION SEVEN HUNDRED FIFTY THOUSAND AND NO/100THS
($91,750,000.00) DOLLARS", as set forth in Section VI of the
Consolidation Agreement is hereby modified to be "EIGHTY NINE
MILLION NINE HUNDRED AND FIFTY THREE THOUSAND NINE HUNDRED FIFTY
NINE AND 11/100THS ($89,953,959.11) DOLLARS";
(b) The Consolidation Agreement as defined and referred to
in the third full paragraph on page 2 thereof is hereby modified
to be the Consolidation Agreement as modified by the Agreement of
Modification of Mortgages and Mortgage Notes dated as of December
1, 1994 between Assignor and Assignee (as modified from time to
time in accordance with its terms, the "Modification Agreement");
(c) The mortgage notes and the Note referred to in said
document shall hereafter be modified to mean and refer to the
Original Notes and the Note as described in the Modification
Agreement;
(d) The Mortgages or Mortgage referred to in said
document shall hereafter be modified to mean and refer to
the Original Mortgages and the Mortgage as described in the
Modification Agreement; and
(e) Exhibit B thereto (Schedule of Existing Leases) is
hereby modified to refer to Exhibit C hereto.
(f) Paragraph 15 thereof is hereby deleted and replaced
with the following:
"15. Exculpation. This Paragraph 15 consists of subparagraphs 1
through 6, inclusive, as set forth below:
1. Notwithstanding any provisions in the Note or in the
Mortgage or in any other Loan Document (as hereinafter
defined) to the contrary, (except as provided in
subparagraphs 2 and 3 of this Paragraph 15) it is expressly
understood and agreed that if Assignee at any time takes
action to enforce the collection of the indebtedness secured
by the Mortgage or by any other Loan Document, Assignee will
proceed to foreclose the Mortgage instead of instituting
suit upon the Note. If a lesser sum is realized from the
foreclosure of the Mortgage and sale of the Premises than
the amount then due and owing under or arising out of the
Note, the Mortgage, or any other Loan Document, Assignee
will never (except as provided in subparagraphs 2 and 3 of
this Paragraph 15) institute any action, suit, claim or
demand in law or in equity against Assignor, or against any
individual or entity that is a Recourse Entity (as
hereinafter defined) or that was, is or becomes a partner,
directly or indirectly through one or more other
partnerships, in (or any other affiliated or related persons
or entities of) Assignor, for or on account of the
deficiency. Notwithstanding any provisions in the Note or
in the Mortgage or in any other Loan Document to the
contrary, (except as provided in subparagraphs 2 and 3 of
this Paragraph 15) it is expressly understood and agreed
that if Assignee at any time takes action to enforce (or to
recover any loss or damage by reason of a breach or failure
of performance of) any agreement or obligation of Assignor
under the Mortgage or under any other Loan Document (other
than an action to enforce the collection of the indebtedness
secured by the Mortgage or by any other Loan Document or the
collection of any deficiency in respect of such
indebtedness, all such actions to enforce or recover as to
collection being subject to the two immediately preceding
sentences) (any action or suit to enforce or recover as to
any such agreement or obligation (excluding actions to
enforce collection, as aforesaid) being herein referred to
as "Non-Collection Actions"), (i) Assignee will not
institute any action, suit, claim or demand in law or in
equity against any individual or entity that is a Recourse
Entity (as hereinafter defined) or that was, is or becomes a
partner, directly or indirectly through one or more other
partnerships, in (or any other affiliated or related persons
or entities of) Assignor, except to the extent such action,
suit, claim or demand is necessary or appropriate in order
to either (x) institute an action, suit, claim or demand
against Assignor or (y) enforce (without collection of such
indebtedness or such deficiency) Assignee's rights with
respect to the Premises or any other collateral for the Note
or for such indebtedness, and (ii) notwithstanding the
foregoing exception in clause (i) above, Assignee shall not,
in any Non-Collection Action, recover against any individual
or entity that is a Recourse Entity or that was, is or
becomes a partner, directly or indirectly through one or
more other partnerships, in (or any other affiliated or
related persons or entities of) Assignor, provided, however,
that nothing in this sentence shall limit or affect
Assignee's right to institute any action, suit, claim or
demand against Assignor itself.
2. Subject in all events to the provisions of subparagraphs
4 and 5 of this Paragraph 15, nothing contained in
subparagraph 1 of this Paragraph 15 will in any way affect
or impair:
(a) the lien of the Mortgage which will remain in
full force and inure to the benefit of Assignee;
(b) subject to the last two sentences of this subparagraph
2, any representation or warranty of title made in the Mortgage,
all of which will remain in full force and inure to the benefit of
Assignee;
(c) Assignee's rights, as against Assignor or any
Recourse Entities (as hereinafter defined), to the extent
provided for under the Environmental Indemnity (as
hereinafter defined), subject to the provisions of Paragraph
7 of the Environmental Indemnity;
(d) subject to the last sentence of this subparagraph 2,
Assignee's rights, as against Assignor or any Recourse Entities,
under Paragraph 10 of Section V of the Initial Consolidated
Mortgage, to the extent costs and expenses covered by said
Paragraph 10 relate to upholding or defending the Mortgage as
having been duly authorized, executed and delivered (provided,
however, that, so long as (i) Assignor and the Recourse Entities
acknowledge their continuing liability under this Paragraph 15 and
(ii) Assignor and the Recourse Entities are defending and
upholding the validity of the Mortgage as an enforceable first
lien, this clause (d) shall not cover costs and expenses of
upholding or defending the due authorization, execution and
delivery of the Mortgage Amendment (as hereinafter defined);
(e) Assignee's rights to proceed against any
collateral under the Escrow Agreement (as hereinafter
defined) or the New NY Escrow Agreement (as such term is
defined in the Escrow Agreement) or to exercise any of
Assignee's rights under the Escrow Agreement or the New NY
Escrow Agreement or to apply any such collateral or other
amounts recovered pursuant to the Escrow Agreement or the
New NY Escrow Agreement in accordance with the Escrow
Agreement or in accordance with the New NY Escrow Agreement,
as the case may be (subject, as to this clause (e), to the
provisions of Paragraph 13(m) of the Escrow Agreement and
the corresponding provisions of the New NY Escrow
Agreement); or
(f) Assignee's rights to proceed against any
collateral under this Assignment or to exercise any of
Assignee's rights under this Assignment or to apply any such
collateral or other amounts recovered pursuant to this
Assignment in accordance with this Assignment so long as
Assignee does not commence or prosecute an action or
proceeding to enforce personal liability except to the
extent permitted under the provisions of this Paragraph 15
(other than this clause (f)).
If and to the extent that Assignee determines that the matters as
to which Assignor has liability under subparagraph (b) or (d) of
the immediately preceding sentence, as the case may be, are also
matters as to which Lawyers Title Insurance Corporation, TICOR
Title Guarantee Company and TICOR Title Insurance Company, or
their successors or assigns (collectively, the "Title Companies")
are liable under the title insurance policies issued to Assignee
in connection with the Modification Agreement, Assignee will not
commence an action or proceeding to enforce personal liability
pursuant to subparagraph (b) or (d), as the case may be, with
respect to such matters until Assignee (i) has sought recourse
against the Title Companies for such matters and (ii) has
determined that such recourse against the Title Companies either
will not result in reasonably prompt payment of all claims of
Assignee or will not provide full protection of Assignee's rights
as to such matters (Assignee's determinations as described in this
clause (ii) shall be conclusive and binding), provided, however,
that nothing in this sentence shall prevent Assignee from taking
such actions as Assignee reasonably deems necessary (including,
without limitation, the filing of proofs of claim) to preserve
Assignee's rights against any or all of Assignor and the Recourse
Entities and provided, further, that nothing in this subparagraph
2 of this Paragraph 15 shall limit any rights or remedies of
Assignee other than, to the extent restricted by this subparagraph
2, the right to commence or prosecute an action or proceeding to
enforce personal liability. Any determination by Assignee that
the Title Companies are not liable shall, as between Assignor and
Assignee, be conclusive and binding for purposes of this
subparagraph 2, but such determination shall not waive or limit in
any manner the rights of any party against the Title Companies.
3. The following are excluded and excepted from the
provisions of subparagraph 1 of this Paragraph 15 and
Assignee may recover personally against Assignor and the
Recourse Entities (subject in all events to the provisions
of subparagraphs 4 and 5 of this Paragraph 15) for the
following:
(i) all losses, damages or liabilities suffered by
Assignee arising out of any fraud or wilful or intentional
misrepresentation by Assignor or 900 3rd Avenue Associates,
an Illinois general partnership ("Associates") in connection
with (a) the execution and delivery of any of the Loan
Documents (excluding any fraud or misrepresentation relating
thereto by or on behalf of any partner of Assignor (other
than Associates)), or (b) Assignor's performance of any of
its obligations under the Loan Documents after December 1,
1994.
(ii) in the event of any material default by Assignor
under any of the Loan Documents that is not cured prior to
the expiration of the applicable notice or grace period, if
any, under such Loan Document (Assignee's determinations as
to whether a default is material shall be conclusive and
binding) (such material defaults being herein called
"Recourse Income Defaults"), all Income (as hereinafter
defined) which is either:
(A) received after the Default Date (as
hereinafter defined) by or on behalf of Assignor (including
receipt by Assignor or Assignor's agents, representatives,
property managers, successors or assigns but excluding
receipt by Assignee or any receiver (a "Receiver") appointed
for the Premises and excluding receipt by a successor or
assign (a "Assignee Successor") which takes title to the
Premises through or after a foreclosure or other exercise of
rights under the Mortgage or by conveyance in lieu of such
exercise of rights under the Mortgage); or
(B) on deposit on the Default Date in one or
more accounts used by Assignor or Assignor's agents,
representatives, property managers, successors or assigns
(excluding Assignee or any Receiver or Assignee Successor)
in connection with the operation of the Premises;
except to the extent any such Income is (x) so long as the
Escrow Agreement is in effect, either (I) deposited into the
General Reserve Fund (as such term is defined in the Escrow
Agreement) pursuant to the Escrow Agreement, or (II) applied
to Permitted Expenses or to Individually Approved Expenses
(as such terms are defined in the Escrow Agreement) to the
extent permitted under the Escrow Agreement, or (y) from and
after the date the Escrow Agreement ceases to be in effect,
properly applied to the normal and customary expenses and
operations of the Premises (subject to all of the aforesaid
deposits and applications being documented by evidence
reasonably satisfactory to Assignee) (all such Income
described in clauses (ii)(A) or (ii)(B) above in respect of
which documentation of the aforesaid deposit or application
is either not furnished to Assignee or is not reasonably
satisfactory to Assignee being herein referred to as
"Recourse Income"), provided, however, that if any such
Recourse Income Default shall have been fully cured prior to
acceleration of the maturity of the indebtedness evidenced
by the Note, then, solely for purposes of determining the
liability of Assignor and the Recourse Entities under this
clause (ii) of this subparagraph 3, such Recourse Income
Default shall be treated as if it had not occurred (but
without limiting any rights or remedies of Assignee in
respect of such default other than rights or remedies
relating to personal liability, personal recourse, or
personal recovery);
(iii) an amount equal to all security deposits
collected by or on behalf of Assignor (including collection
by Assignor or Assignor's agents, representatives, property
managers, successors or assigns but excluding collection by
Assignee or any Receiver or Assignee Successor) and not
either (x) properly refunded to tenants to the extent
required under the terms of the applicable leases, (y) paid
to the Escrow Agent or the NY Escrow Holder (as such terms
are defined in the Escrow Agreement) in accordance with the
Escrow Agreement or the New NY Escrow Agreement (as such
term is defined in the Escrow Agreement) or (z) paid to
Assignee to the extent permitted by law and in accordance
with the Loan Documents, and all advance rents collected by
or on behalf of Assignor (including collection by Assignor
or Assignor's agents, representatives, property managers,
successors or assigns but excluding collection by Assignee
or any Receiver or Assignee Successor) (i.e., rents paid
more than one month in advance) and not properly applied in
due course (proper refunding or application being documented
by evidence reasonably satisfactory to Assignee);
(iv) in the event of any Recourse Income Default, the
replacement cost of any items of personalty or any fixtures
which constitute security for the indebtedness secured by
the Mortgage and which are removed from the Premises by
Assignor or by any person or any entity on behalf of
Assignor on or after the Default Date, provided, however,
that if any such Recourse Income Default shall have been
fully cured prior to acceleration of the maturity of the
indebtedness evidenced by the Note, then, solely for
purposes of determining the liability of Assignor and the
Recourse Entities under this clause (iv) of this
subparagraph 3, such Recourse Income Default shall be
treated as if it had not occurred (but without limiting any
rights or remedies of Assignee in respect of such default
other than rights or remedies relating to personal
liability, personal recourse, or personal recovery);
(v) all losses, damages or liabilities suffered by
Assignee arising from any acts of commission or omission by
Assignor that result in waste (as such term is defined under
the laws of the State of New York) upon the Premises; and
(vi) any insurance or condemnation proceeds
attributable to the Premises that are received by or on
behalf of Assignor (with such receipt being determined in
the same manner as receipt of Income under subparagraph
3(ii)(A) above of this Paragraph 15) and not applied in
accordance with the terms of the Mortgage or any insurance
and condemnation proceeds that were received by or on behalf
of Assignor (with such receipt being determined as
aforesaid) and not paid to Assignee when required under the
terms of the Mortgage.
4. Notwithstanding the foregoing provisions of this
Paragraph 15 or any other provisions of the Mortgage, the
Note or any of the other terms or provisions of the Loan
Documents, none of JMB Realty Corporation, a Delaware
corporation ("JMB Realty"), Progress Properties, Inc., a New
York corporation ("PPI"), J.R.A. Realty Corp., a New York
corporation ("JRA"), or P-C 900 Third Associates, a New York
limited partnership ("P-C") (JMB Realty, PPI, JRA and P-C
being herein collectively referred to as the "Initial Exempt
Entities"), nor any Additional Exempt Persons (as
hereinafter defined) shall have any direct or indirect
personal liability to Assignee under, for or in connection
with any of the obligations set forth in the Mortgage, the
Note or any other of the Loan Documents, including, but
without limitation, any of the provisions set forth in
subparagraphs 2 and 3 of this Paragraph 15, provided,
however, that in no event shall the Initial Exempt Entities
or the Additional Exempt Persons include the Recourse
Entities or an Owner Entity (as hereinafter defined).
Unless such successor or assign is an Owner Entity or a
Recourse Entity, Initial Exempt Entities shall include
successors or assigns of Initial Exempt Entities.
Notwithstanding the foregoing provisions of this Paragraph
15 or any other provisions of the Mortgage, the Note or any
of the other terms or provisions of the Loan Documents, if
title to the Premises is conveyed to a creditworthy entity
which is either acceptable to Assignee, in Assignee's sole
discretion or which Assignee approves in accordance with
subparagraph (g) of Paragraph 17 of the Initial Consolidated
Mortgage (such creditworthy entity which is either
acceptable to Assignee in Assignee's sole discretion or
which Assignee so approves in accordance with said
subparagraph (g) being herein referred to as an "Approved
Transferee"), and such Approved Transferee duly authorizes,
executes, acknowledges and delivers to Assignee an
assumption agreement, in recordable form and otherwise
satisfactory to Assignee in all respects, pursuant to which
such Approved Transferee assumes and agrees to pay and
perform all liabilities and obligations (as such liabilities
and obligations are limited pursuant to this Paragraph 15)
of Assignor and the Recourse Entities (whether such
liabilities and obligations arise before, during or after
such conveyance) under the Mortgage, the Note, the Escrow
Agreement and all the other Loan Documents (other than the
Environmental Indemnity), then, upon approval in writing by
Assignee of such Approved Transferee and approval in writing
by Assignee of such assumption agreement executed and
acknowledged by such Approved Transferee, Assignee shall, at
Assignor's expense, execute and deliver to Assignor a
release pursuant to which Assignor and the Recourse Entities
shall be released by Assignee from all liabilities and
obligations under the Mortgage, the Note, the Escrow
Agreement and all the other Loan Documents (other than the
Environmental Indemnity), provided, however, that unless and
until all of the conditions of this sentence shall have been
satisfied in full and Assignee shall have executed and
delivered such release to Assignor, all of the liabilities
and obligations of the Assignor and the Recourse Entities
under the Mortgage, the Note, the Environmental Indemnity,
the Escrow Agreement and all the other Loan Documents shall
remain unchanged and in full force and effect (subject to
the first sentence of this subparagraph 4 of this Paragraph
15) and provided, further that in no event shall any
transfer, approval or release referred to the Mortgage or
any other Loan Document (other than the Environmental
Indemnity) limit or affect the liability of Assignor and the
Recourse Entities under the Environmental Indemnity, which
Environmental Indemnity shall remain in full force and
effect (subject to the provisions of Paragraph 7 of the
Environmental Indemnity) unless and until terminated in
accordance with the terms of the Environmental Indemnity.
5. Notwithstanding the foregoing provisions of this
Paragraph 15 or any other provisions of the Mortgage, the
Note or any other Loan Document, for purposes of the Note,
the Mortgage and each other Loan Document, neither the
deficit capital account of any direct or indirect partner in
Assignor, nor any obligation of any direct or indirect
partner in Assignor to restore a deficit capital account or
to contribute capital to Assignor or to any direct or
indirect partner in Assignor, shall be deemed to be the
property or asset of Assignor or the applicable direct or
indirect partner in Assignor, as the case may be, and
Assignee shall not have the right to collect, enforce or
proceed against or with respect to any such deficit capital
account or obligation to restore or contribute.
6. As used herein:
(i) the term "Associates" shall mean 900 3rd Avenue
Associates, an Illinois general partnership,
(ii) the term "Carlyle-XIV" shall mean Carlyle Real Estate
Limited Partnership - XIV, an Illinois limited partnership,
(iii) the term "Carlyle-XV" shall mean Carlyle Real Estate
Limited Partnership-XV, an Illinois limited partnership,
(iv) the term "Loan Documents" shall mean the Note,
the Mortgage and all other documents evidencing or securing
or otherwise executed or delivered in connection with the
loan evidenced by the Note and also including the
Environmental Indemnity, as any of the foregoing shall be
amended or modified from time to time in accordance with
their respective terms (it being understood, however, that
the Environmental Indemnity is entirely independent of said
loan and does not evidence or secure said loan),
(v) the term "Environmental Indemnity" shall mean
the Environmental Indemnity dated as of December 1, 1994
from Assignor, Associates, Carlyle-XIV and Carlyle-XV, as
amended or modified from time to time in accordance with its
terms,
(vi) the term "Escrow Agreement" shall mean the Taxes
and Reserve Escrow Agreement dated as of December 1, 1994
among Assignor, Assignee and the escrow agent referred to
therein, as amended or modified from time to time in
accordance with its terms,
(vii) the term "Recourse Entities" shall mean all the
following: (a) Associates (but excluding, solely as to this
clause (a), any partners (directly or indirectly) of a
partner of Associates), (b) Carlyle-XIV (but excluding,
solely as to this clause (b), any partners (directly or
indirectly) of Carlyle-XIV), (c) Carlyle-XV (but excluding,
solely as to this clause (c), any partners (directly or
indirectly) of Carlyle-XV) and (d) the respective successors
and assigns of the entities covered by clauses (a), (b) and
(c) above, but excepting, as to all of clauses (a), (b), (c)
and (d) above, their respective employees and authorized
agents, (it being understood that the exclusion of any
partner under any of clauses (a), (b) or (c) shall not
constitute per se an exclusion under any of the other
clauses),
(viii) the term "Owner Entity" shall mean Progress
Partners, a New York general partnership, but excluding (a) PPI,
JRA, P-C 900 and their respective successors and assigns, (b) any
direct or indirect partners (an "Excluded Partner") in a partner
of (I) Associates or (II) any successor or assign of Associates
and (c) the successors or assigns of any Excluded Partners,
(ix) the term "Additional Exempt Persons" shall mean all
of the following: (a) any individual or entity that was, is or
becomes a partner in Carlyle-XIV, Carlyle-XV, PPI, JRA or P-C,
directly or indirectly through one or more other partnerships, (b)
any officer, director, employee, shareholder, trustee, beneficiary
or agent of JMB Realty Corporation, PPI, JRA or P-C or of any such
direct or indirect partner in Carlyle-XIV, Carlyle XV, PPI, JRA or
P-C, and (c) the respective successors or assigns of such
individuals or entities covered under clause (a) above and the
respective successors or assigns of the officers, directors,
employees, shareholders, trustees, beneficiaries or agents covered
under clause (b) above, provided, however, that in no event shall
the Additional Exempt Persons include the Recourse Entities or an
Owner Entity,
(x) the term "Initial Consolidated Mortgage" shall
mean the Agreement of Consolidation and Modification of
Mortgages and Mortgage Notes dated November 7, 1984 between
Assignor and Assignee,
(xi) the term "Default Date" shall mean the date a
Recourse Income Default by Assignor occurs (whether or not
notice of the default constituting such Recourse Income
Default has been given and whether or not any applicable
grace period has expired and regardless of when Assignee
makes the determination that such default is a material
default),
(xii) the term "Income" shall mean all rents and
other revenues, payments or reimbursements of any kind
whatsoever (including all payments and contributions from
tenants for taxes, insurance, operating expenses, and common
area maintenance charges) derived from the Premises (it
being understood that, at such time as any security deposits
or the proceeds thereof become property of Assignor free and
clear of any obligations in respect thereof to any tenants,
such security deposits or proceeds shall be considered as
included in Income), and
(xiii) the term "Modification Agreement" shall mean the
Agreement of Modification of Mortgages and Mortgage Notes in
Leases dated as of December 1, 1994 between Assignor and
Assignee."
I. Certain Pledges. Mortgagor hereby represents and warrants to
Mortgagee that, to the best knowledge of Associates, no sales, transfers
or other assignments of partnership interests in Mortgagor or its
general partners have been made or agreed to except that the following
pledges and transfer have been made:
(a) PPI, JRA and P-C have each pledged their partnership
interests in Mortgagor, pursuant to Section 10.7 of the
Partnership Agreement, to Associates and Mortgagor to secure
certain obligations of PPI, JRA and P-C to Associates and
Mortgagor;
(b) Associates has pledged its partnership interest in
Mortgagor, pursuant to Section 10.7 of the Partnership
Agreement, to PPI, JRA, P-C and Mortgagor to secure certain
of Associate's obligations to PPI, JRA, P-C and Mortgagor
(such pledge by Associates being herein referred to as the
"Associates Pledge";
(c) PPI and JRA have each pledged their partnership
interests in Mortgagor, pursuant to the Promissory Note
dated October 27, 1990, from PPI and JRA to First Maryland
Savings & Loan, Inc. by the State of Maryland Deposit
Insurance Fund Corporation, as Receiver ("First Maryland")
and the Security Agreement from PPI and JRA to First
Maryland to First Maryland Savings & Loan to secure certain
of PPI's and JRA's obligations to First Maryland Savings &
Loan;
(d) PPI, Progress Corporation, N.V., a Netherlands
Antilles corporation ("NV"), Brissago, S.A., an Uruguay
corporation, Anstalt Majola, a Liechtenstein anstalt, and
Even International Corp., a Panama corporation, (all of the
foregoing, collectively, the "Progress Pledgors") have each
pledged their respective shares of stock of PPI, JRA and NV,
pursuant to the Schwartz Loan Agreement (as hereinafter
defined) to Albert Schwartz to secure certain of their
obligations to Albert Schwartz (as used herein, the term
"Schwartz Loan Agreement" shall mean the Loan Agreement
dated December 2, 1988 among Albert Schwartz and the
Progress Pledgors);
(e) PPI has pledged its partnership interests in Mortgagor
to Associates, pursuant to the Loan Agreement dated August
20, 1984, between PPI and Associates and the Security and
Pledge Agreement dated August 20, 1984 among PPI, JRA, and
Associates; and
(f) The Federal Deposit Insurance Corporation has succeeded, as
receiver, to the limited partnership interest of Central
National Bank in P-C.
As used herein, (i) the term "Prior Pledges" shall mean, collectively,
all of the pledges and transfers referred to in clauses (a) through (f),
inclusive, of the immediately preceding sentence, (ii) the term
"Partnership Agreement" shall mean the Amended and Restated Agreement of
General Partnership for Progress Partners, dated August 20, 1984, among
Associates, PPI and JRA, as amended by Amendment No. 1 to Amended and
Restated Agreement of General Partnership for Progress Partners, dated
February 26, 1986, among Associates, PPI, JRA and P-C and (iii) the term
"Prior Non-Associates Pledges" shall mean the Prior Pledges other than
the Associates Pledge. Notwithstanding anything in the Mortgage, Note
or any other Loan Document prohibiting or imposing any restrictions on
sales, transfers or other assignments of interests in Mortgagor or
Mortgagor's general partners, (i) Mortgagee hereby acknowledges the
Prior Pledges, (ii) Mortgagee hereby agrees that none of the Prior
Pledges shall be considered a breach of any provision of the Mortgage or
the Note and (iii) solely as to the Prior Non-Associates Pledges, the
exercise of the rights of the pledgee under any Prior Non-Associates
Pledges shall not be considered a breach of any provision of the
Mortgage or the Note and (iv) any transfer or assignment not permitted
by clauses (i), (ii) and (iii) above, including, without limitation,
subsequent transfers by the transferee under clause (iii) above, shall
be subject to strict compliance with all of the requirements of the Loan
Documents, including, without limitation, Paragraph 17 of Section V of
the Initial Consolidated Mortgage.
I. Recording of Agreement. The Mortgagor shall promptly cause
this Agreement to be filed, registered or recorded in such manner and in
such places as may be required by any present or future law in order to
publish notice of and fully to protect the lien of the Mortgage upon,
and the interest of the Mortgagee in, the Mortgaged Property. The
Mortgagor will pay all filing, registration and recording fees, and all
expenses incident to the preparation, execution and acknowledgement of
this Agreement, and all Federal, state, county and municipal taxes,
duties, imposts, assessments and charges arising out of or in connection
with the filing, registration, recording, execution and delivery of this
Agreement and the Mortgagor shall hold harmless and indemnify the
Mortgagee against any liability incurred by reason of the imposition of
any tax on the issuance, making, filing, registration or recording of
this Agreement. Nothing in this paragraph contained shall be deemed to
require the Mortgagor to pay any franchise, estate, inheritance,
succession, capital levy or transfer tax of the Mortgagee or any income,
excess profits or revenue tax upon the interest payable by the Mortgagor
hereunder or under the Note or the Mortgage.
II. Warranties, Representations and Covenants of Mortgagor. The
Mortgagor represents, warrants and covenants that (a) it continues to be
and is now the owner in fee simple of the Mortgaged Property upon which
the Mortgage is a valid first consolidated mortgage lien securing the
full aggregate amount of principal now owing thereon, namely, EIGHTY
NINE MILLION NINE HUNDRED AND FIFTY THREE THOUSAND NINE HUNDRED FIFTY
NINE AND 11/100THS ($89,953,959.11) DOLLARS, and interest thereon,
covering and encumbering the entire Mortgaged Property free and clear of
all liens and encumbrances other than those specific exceptions to title
set forth in Schedule B - Part I of the Mortgagee's title insurance
policy being contemporaneously herewith delivered to the Mortgagee,
which policy insures the first and prior lien of the Mortgage in the
full amount of principal (namely, EIGHTY NINE MILLION NINE HUNDRED AND
FIFTY THREE THOUSAND NINE HUNDRED FIFTY NINE AND 11/100THS
($89,953,959.11) DOLLARS) and interest now due owing thereon, (b) there
are no offsets, counterclaims or defenses against the Debt, this
Agreement, the Mortgage or the Note, (c) the Mortgagor (and the
undersigned representatives of the Mortgagor) has full power, authority
and legal right to execute this Agreement and to keep and observe all of
the terms of this Agreement on the Mortgagor's part to be observed or
performed, and (d) this Agreement is valid and binding upon the
Mortgagor and enforceable against the Mortgagor in accordance with its
terms. Whenever the terms, covenants, conditions, warranties or
representations contained in the Original Notes and/or the Original
Mortgages in any way conflict with the terms, covenants, conditions,
warranties and representations contained in this Agreement (including
without limitation the modifications to the Original Notes and Original
Mortgages), the latter shall prevail, and except as herein expressly
modified, all of the terms, covenants, conditions, warranties and
representations of the Original Notes and the Original Mortgages are
hereby ratified and confirmed, and the Mortgagor does hereby covenant
and agree to pay the consolidated principal sum of EIGHTY NINE MILLION
NINE HUNDRED AND FIFTY THREE THOUSAND NINE HUNDRED FIFTY NINE AND
11/100THS ($89,953,959.11) DOLLARS, with interest thereon, as evidenced
and secured by the Note and the Mortgage, as the Note and the Mortgage
are consolidated, modified, restated, ratified and confirmed hereby, and
otherwise to observe and perform all of the terms, covenants,
conditions, warranties and representations of the Note, the Mortgage and
this Agreement.
III. No Oral Change. This Agreement may not be modified,
amended, changed or terminated orally, but only by an agreement in
writing signed by the party against whom the enforcement of the
modification, amendment, change or termination is sought.
IV. Agreement Binding. This Agreement shall be binding upon and
inure to the benefit of the Mortgagor and the Mortgagee and their
respective successors and assigns.
V. Duplicate Originals. This Agreement may be executed in any
number of duplicate originals and each such duplicate original shall be
deemed to constitute but one and the same instrument.
VI. Invalid Provisions. If any term, covenant or condition of
this Agreement shall be held to be invalid, illegal or unenforceable in
any respect, this Agreement shall be construed without such provisions.
VII. Construction. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York.
VIII. Lien Law Covenant. In compliance with Section 13 of the
Lien Law of the State of New York, the Mortgagor hereby covenants and
agrees that the Mortgagor shall receive the advances secured by the
Mortgage as a trust fund to be applied first to pay for the cost of any
improvement on the Mortgaged Property before using any part of the total
of such advances for any other purpose.
IX. Authority. The parties executing this Agreement for and on
behalf of the Mortgagor do hereby represent and warrant that they have
the full power and authority to bind the partnership constituting the
Mortgagor and all partners and parties comprising same.
X. Exculpation. The provisions of Paragraph 43 of Section V of
the Initial Consolidated Mortgage, as modified by this Agreement, are
hereby incorporated herein by reference as if fully set forth in this
paragraph.<PAGE>
IN WITNESS WHEREOF, the Mortgagor and the Mortgagee have caused
this Agreement to be duly executed by their general partners or
officers, as the case may be, the day and year first above written.
PROGRESS PARTNERS, a New York
General Partnership, the Mortgagor
By: Progress Properties, Inc., a New York
Corporation, a General Partner
By:
Albert Schwartz
Authorized Signatory
By: 900 3rd Avenue Associates, an
Illinois General Partnership,
a General Partner
By: Carlyle Real Estate
Limited Partnership-XIV,
an Illinois Limited
Partnership, a General Partner
By: JMB Realty Corporation, a
Delaware Corporation, its
General Partner
By:
Name: Deborah A. Schenk
Title: Vice President
By: Carlyle Real Estate Limited
Partnership-XV, an Illinois Limited
Partnership, a General Partner
By: JMB Realty Corporation, a
Delaware corporation, its
General Partner
By:_______________________
Name: Deborah A. Schenk
Title: Vice President
TEACHERS INSURANCE AND ANNUITY
ASSOCIATION OF AMERICA, a New
York Corporation, the Mortgagee
By:
Marita Hornby
Assistant Secretary
BILL OF SALE, ASSIGNMENT AND ASSUMPTION
(9701 Wilshire Boulevard; Beverly Hills, California)
This Bill of Sale and Assignment is given pursuant to that certain
agreement ("Agreement") dated as of September 1, 1994, between the Seller and
Buyer, providing for, among other things, the assignment of the Personal
Property, Tenant Leases, Operating Agreements and Intangible Property (defined
below).
FOR VALUABLE CONSIDERATION, receipt of which is hereby acknowledged, the
undersigned, CARLYLE REAL ESTATE LIMITED PARTNERSHIP-XV, an Illinois limited
partnership ("Seller"), hereby sells, transfers, assigns and conveys to 9701
WILSHIRE BOULEVARD, INC., a California corporation ("Buyer"), the following:
1. Personal Property. All right, title and interest of Seller in and to
all tangible personal property ("Personal Property"), located upon or about
that certain office building complex known as the "9701 Wilshire Boulevard",
located in the City of Beverly Hills, County of Los Angeles and State of
California (the "Building") (provided, however, except to the extent of
Seller's interest in any of the foregoing computer items which are utilized
to operate the HVAC or other mechanical systems at the Building, the Personal
Property does not include any computer equipment, computer programs or
related software).
2. Leases. All right, title and interest of Seller in and to all
leases ("Leases") as defined in the Agreement relating to the Building, or
any part of the same and any guarantees, certificates of deposit, security
agreements or other collateral, if any, associated therewith, as more
particularly set forth in Exhibit "A" attached.
3. Operating Agreements. All right, title and interest of Seller in
and to all contracts, service agreements and other operating agreements
("Operating Agreements") relating to the Building, or any part of the same as
more particularly set forth in Exhibit "B" attached hereto.
4. Intangible Property. All right, title and interest of Seller in and
to the names "Mitsui Manufacturers Bank Building" and "9701 Wilshire Boulevard"
and all leases, contract rights, agreements, business licenses, permits, tenant
lists, advertising material, telephone exchange numbers or other intangible
property (collectively, the "Intangible Property") relating to the Building, or
any part of the same.
The covenants, agreements, and limitations (including, but not limited to,
the limitations of liability provided in paragraph 10B of the Agreement and the
indemnifications provided in paragraph 8 of the Agreement) provided in the
Agreement with respect to the property conveyed hereunder are hereby
incorporated herein by this reference as if herein set out in full and shall
inure to the
benefit of and shall be binding upon Seller and Buyer, and their respective
successors and assigns. Said property is conveyed "as is" without warranty or
representation, except as expressly provided in (and subject to the limitations
of) the Agreement.
DATED: As of October ___, 1994.
CARLYLE REAL ESTATE LIMITED PARTNERSHIP-XV,
an Illinois limited partnership
By: JMB REALTY CORPORATION,
a Delaware corporation,
General Partner
By:
Name: Gary M. Laughlin
Title: Authorized Signatory
As of this ____ day of October 1994, Buyer hereby accepts the foregoing
assignment of Leases and Operating Agreements and agrees to assume and
discharge, in accordance with the terms thereof, all of the burdens and
obligations of Seller thereunder, to the extent the same arise from and
after the date hereof.
9701 WILSHIRE BOULEVARD, INC.,
a California corporation
By: ____________________________________
Name: John P. Oswald
Title: President
CLOSING PROCEDURE LETTER
(9701 Wilshire Boulevard, Beverly Hills, California)
October 5, 1994
First American Title Insurance Company
100 North LaSalle Street
Suite 2115
Chicago, Illinois 60602
Attention: Mary Lou Kennedy
Re: 9701 Wilshire Boulevard
Beverly Hills, California
Ladies and Gentlemen:
Please refer to that certain Purchase Agreement and Joint Escrow
Instructions dated as of September 1, 1994, between Carlyle Real Estate
Limited Partnership-XV ("Seller"), and 9701 Wilshire Boulevard, Inc.
("Buyer"), as such agreement has heretofore been modified or amended (the
"Purchase Agreement"), a copy of which has previously been delivered to
you. Except as otherwise indicated, each capitalized term used herein
shall have the meaning set forth for the same in the Purchase Agreement.
This letter will constitute your instructions with respect to the
"Funds" and "Documents" described below.
A. Prior Deposit. In accordance with the terms of the Purchase
Agreement, Buyer delivered to you the aggregate amount of $500,000 as the
Initial Escrow Deposit and the Additional Escrow Deposit required
thereunder (the aggregate amount held by you in connection therewith,
including all interest earned thereon, is herein called the "Deposit").
B. Delivery of Balance of Funds. On or before October 6, 1994
(the "Closing Date"), Buyer will be wire-transferring to you the aggregate
amount of $8,020,000 (the "Closing Funds") pursuant to the following
instructions which you have provided us:
American National Bank & Trust Company of Chicago
33 North LaSalle Street
Chicago, Illinois 60602
ABA No. 071000770
For the Account of First American Title Insurance Company
(National Accounts Branch)
Escrow Account No.: 4127757
Reference Escrow Re: NA15138 (9701 Wilshire Boulevard)
(Please advise Accounting Department upon receipt at
312-750-6780)
The Deposit and the Closing Funds are herein collectively called the
"Funds".
C. Delivery of Documents.
(1) Delivery of Grant Deed. On or before the Closing Date,
Seller shall deliver to you one fully executed and acknowledged original of
the Grant Deed, together with a separate documentary transfer tax
statement.
(2) Delivery of Closing Statements. On or before the Closing
Date, Buyer and Seller shall also deliver to you executed originals of the
Closing Statements (the "Closing Statements") described in
Section 1.6045-4(e)(3)(ii) of the U.S. Treasury Regulations (the "Regulations")
with respect to the transactions contemplated by the Purchase Agreement,
signed or initialed by each of Seller and Buyer.
(3) Delivery of Additional Documents. On or before the
Closing Date, Seller may also be delivering to you certain partnership
documents, affidavits and other agreements or documents to assist you in
issuing the "Title Policies", as hereinafter defined (all such documents,
affidavits and agreements being herein called the "Additional Documents").
(4) Definition. As used herein, the "Documents" means the
Grant Deed, the Closing Statements and the Additional Documents,
collectively.
(5) Additional Instructions. It is Seller's understanding
that both Buyer and Prudential Insurance Company of America ("Lender") have
or will be sending you separate instructions respecting the transactions
hereunder. Nothing contained in those separate instructions, however,
shall modify or amend the instructions contained herein and you are not
authorized by Seller to take any actions which conflict with, or would
otherwise prevent you from complying with, the instructions set forth
herein.
D. Conditions to Close of Escrow. The Funds shall not be
disbursed and the Documents shall not be recorded (or filed) or delivered
to any person or entity until each of the following conditions is
satisfied:
(1) You have received all of the Funds and you are
unconditionally and irrevocably prepared to wire or otherwise disburse the
same in accordance with paragraph E below.
(2) You have received the Documents and you are
unconditionally and irrevocably prepared to record the Grant Deed in
accordance with paragraph E below.
(3) In connection with the payoff of Seller's existing loan
("Existing Loan") with Lender, an amount equal to $10,750,000 (the new loan
amount obtained by Buyer from Lender) is to be deemed paid by Lender
crediting such amount in partial payment of the Existing Loan. In that
connection, it shall be a condition to your disbursing or recording
hereunder that you are unconditionally and irrevocably prepared to take
such actions as required by Lender pursuant to its separate instructions to
cause such $10,750,000 to be credited as aforesaid (provided, however, such
condition shall not be deemed satisfied if such actions are in conflict
with, or would otherwise prevent you from complying with, the instructions
of Seller set forth herein).
(4) You are unconditionally and irrevocably prepared to issue
title insurance policies covering the Property in the form required by
Buyer and/or Lender pursuant to their separate instructions (the "Title
Policies").
(5) You have received all information necessary for filing
the forms (the "Information Returns") then required to be filed pursuant to
Section 6045 of the Internal Revenue Code with respect to the transactions
contemplated by the Purchase Agreement (including Seller's written approval
of the amount of gross proceeds to be shown on the Information Returns) and
you are unconditionally and irrevocably prepared to serve as the designated
"reporting person" (with such term having the meaning prescribed in
Section 1.6045-4(a) of the Regulations) in accordance with Section
1.6045-4(e)(5) of the Regulations and, accordingly, (a) file all
information returns required under the Regulations in respect of
such transactions, and (b) furnish to the Seller any statements
required under the Regulations in respect of such transactions.
E. Close of Escrow. If the conditions specified in paragraph D
above are satisfied on the Closing Date, then you shall immediately confirm
the foregoing to Seller, and thereafter you shall immediately:
(1) Record the Grant Deed with the appropriate recorder's
office (and, if available from Lender, the reconveyance documents
respecting the Existing Loan).
(2) Deliver any amounts due to third parties under the
Closing Statement in accordance with the respective instructions (the
"Third Party Instructions") from such third parties.
(3) Wire the amount due Seller (the "Seller Amount") under
the Closing Statement in accordance with the following wiring instructions
("Seller Wiring Instructions"): to Bank of America Illinois, 231 South La
Salle Street, Chicago, Illinois 60697, ABA No. 071000039, for credit to
the account of Carlyle Real Estate Limited Partnership-XV, Account
No. 4909542. Notwithstanding anything to the contrary contained herein,
the Seller Wiring Instructions may not be changed except by written notice
from a "Seller Funding Representative" (i.e., Julie Parks [312] 915-2875,
Robert Chapman [312] 915-2873, or Howard Kogen [312] 915-1500 of JMB Realty
Corporation).
(4) If after paying or delivering the amounts specified in
clauses (2) and (3) above (and after paying all closing costs as specified
herein), any portion of the Funds remain, then you are to deliver such
remaining balance of the Funds ("Remaining Funds"), pursuant to separate
instructions to be delivered by Buyer to you.
(5) File all Information Returns and take all other actions
described in paragraph D(5) of this letter.
F. Delivery of Documents. As soon as available, please deliver a
conformed "as-recorded" copy of the Grant Deed (and any reconveyance
documents respecting the Existing Loan) to Pircher, Nichols & Meeks at 1999
Avenue of the Stars, Suite 2600, Los Angeles, California 90067.
G. Closing Costs. All closing costs incurred in carrying out your
duties under this letter are to be paid in accordance with the Purchase
Agreement (as reflected in the Closing Statements).
H. Investment of Funds. As soon as you receive any portion of the
Funds you should immediately notify Seller of such fact. No investment of
the Funds shall be made that will cause you to fail to comply with the
provisions of Paragraph D above. If the transactions contemplated herein
shall close but you are unable to deliver the Seller Amount (or any other
portion of the Funds other than the Remaining Funds) on the same day, you
shall promptly notify Seller of such fact. If Seller gives you oral or
written instructions to do so, you shall invest such Seller Amount (and
such other Funds, other than the Remaining Funds, as directed by Seller) in
treasury bills or treasury backed repurchase agreements with the Bank (or
such other short-term investment as may be authorized by Seller). Any
investment of the Remaining Funds, if any, shall be as directed by Buyer.
All interest accrued on the Funds prior to the closing of the transactions
hereunder, as well as all interest accrued on the Remaining Funds after the
closing, shall belong to Buyer and shall be delivered to Buyer in
accordance with its separate instructions. All interest accrued on the
Funds (other than the Remaining Funds) after the closing of the
transactions hereunder shall belong to Seller and shall be wire-transferred
to Seller in accordance with the Seller Wiring Instructions.
I. Cancellation of Instructions. Notwithstanding anything to the
contrary herein, if the conditions specified in paragraph D hereof are not
satisfied on or before the Closing Date, then, if you receive written
instructions to cancel this escrow from Seller, the instructions set forth
in paragraphs A through F above shall be deemed canceled, you shall
immediately return the Funds (and any interest thereon) to Buyer, in
accordance with separate written instructions of Buyer (provided, however,
the Deposit is to be disposed of in accordance with the terms and
conditions of the Purchase Agreement) and you shall destroy the Documents
on the next business day thereafter.
J. Limitation of Liability. You are acting solely as escrow agent
hereunder, and you shall be liable solely for your failure to comply with
the terms of this letter. The foregoing will not limit your liability as
title insurer under the terms of the Title Policies (such liability being
in accordance with the terms of such policies).
K. Execution by Counterparts. This letter of instructions may be
executed in two or more counterparts, each of which shall be an original,
but all of which shall constitute one and the same letter of instructions.
Very truly yours,
PIRCHER, NICHOLS & MEEKS
as attorneys for Seller
By
Gary M. Laughlin
ACCEPTED AND AGREED TO
as of the date first
above written:
FIRST AMERICAN LAND TITLE
INSURANCE COMPANY,
a ______________________
By
Name:
Title:
A F F I D A V I T
STATE OF CALIFORNIA )
) ss.
COUNTY OF LOS ANGELES)
The undersigned owner of certain property situated in Beverly Hills,
California, more particularly described in First American Title Insurance
Company (the "Title Company") Preliminary Title Report No. 9413861-21,
being duly sworn, depose and say that to the best knowledge of the
undersigned:
1. Payment for any labor, services or materials
in connection with the construction or repair
of any buildings or improvements on the above
described premises performed within the last
120 days has been made or will be made in the
ordinary course of business.
2. That attached hereto as Exhibit "A" is a list
of the tenant leases covering the premises
(and, except for rights disclosed of record,
no tenants or parties have any right of
occupancy or possession of such premises
except under such leases).
3. No advisor, agent or attorney of, nor any
partner, trustee, director, officer,
employee, beneficiary, shareholder or
participant of or in, the undersigned shall
have any personal liability directly or
indirectly, under this affidavit.
The affidavit is made for the purpose of inducing the Title Company to
insure the purchase of said property, well knowing that it will do so only
in complete reliance upon the truth and accuracy of the statements
contained herein.
CARLYLE REAL ESTATE LIMITED PARTNERSHIP-XV,
an Illinois limited partnership
By: JMB REALTY CORPORATION,
a Delaware corporation,
General Partner
By:
Name: Gary M. Laughlin
Title: Authorized Signatory
Subscribed and sworn to before me, this ___ day of October, 1994,
___________________________________
ENVIRONMENTAL INDEMNITY
This ENVIRONMENTAL INDEMNITY is made as of this 1st day of
December, 1994, by PROGRESS PARTNERS, a New York general partnership
having an office at 900 Third Avenue, New York, New York ("Borrower"),
900 3RD AVENUE ASSOCIATES, an Illinois general partnership having an
office at 875 North Michigan Avenue, Suite 3900, Chicago, Illinois 60611
("Associates"), CARLYLE REAL ESTATE LIMITED PARTNERSHIP-XIV, an Illinois
limited partnership having an office at 900 N. Michigan Avenue, Suite
1200, Chicago, Illinois 60611 ("Carlyle XIV") and CARLYLE REAL ESTATE
LIMITED PARTNERSHIP-XV, an Illinois limited partnership having an office
at 900 N. Michigan Avenue, Suite 1200, Chicago, Illinois 60611 ("Carlyle
XV" and, collectively with Borrower, Associates and Carlyle XIV,
"Indemnitor") to TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF AMERICA,
a New York corporation having an office at 730 Third Avenue, New York,
New York 10017 ("Lender").
Preliminary Statement
A. Borrower is the owner of the real property located in
New York County, New York as more particularly described in SCHEDULE A
attached hereto (that real property, together with any additional real
property hereafter encumbered by the lien of the Mortgage, as
hereinafter defined, and all improvements now or hereafter located
thereon and all rights and interests of Borrower therein, being
hereinafter collectively called the "Premises");
B. Lender is about to modify the terms of a loan made to
Borrower, in the original principal amount of $91,750,000 (the
principal, interest, and all other sums due and owing under the loan
being hereinafter collectively called the "Loan"). Borrower and Lender
are simultaneously herewith executing and delivering to each other that
certain Agreement of Modification of Mortgages, Mortgage Notes and
Assignment of Lessor's Interest in Leases (the "Modification
Agreement"). The "Note" (as defined in the Modification Agreement)
represents a valid indebtedness owed by Borrower to Lender and the
"Mortgage" (as defined in the Modification Agreement) constitutes a
first mortgage on the Premises;
C. As a condition to modifying the terms of the Loan,
Lender requires Indemnitor to provide certain indemnities;
D. To induce Lender to modify the terms of the Loan and in
consideration thereof, Indemnitor has agreed to provide those
indemnities; and
E. Pursuant to Section I of the Modification Agreement and
other provisions of the Mortgage, Borrower has, among other things,
covenanted and agreed that Borrower will cause the Premises to be at all
times in compliance with all environmental laws, and Associates, Carlyle
XIV and Carlyle XV (collectively, the "Other Indemnitors") and Borrower
have agreed to jointly and severally enter into this Environmental
Indemnity with the intention that, without limiting in any manner the
joint and several liability of Borrower and the Other Indemnitors to
Lender, as between Borrower and the Other Indemnitors, Borrower will
continue to be responsible for compliance by the Premises with all
environmental laws.
NOW THEREFORE, in consideration of the matters described
hereinabove and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Indemnitor jointly and
severally agrees as follows:
1. For purposes of this Environmental Indemnity:
(a) "Borrower" is defined in the introductory paragraph
hereof.
(b) "Corrective Action" is defined in clause (c) of
paragraph 2 hereof
(c) "Environmental Laws" shall mean any and all present and
future laws, statutes, ordinances, rules, regulations, orders, and
determinations of any governmental authority having jurisdiction over
the Premises, pertaining to health, hazardous substances, or the
environment, including, without limitation, the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as
amended by the Superfund Amendments and Reauthorization Act of 1986, and
as the same be further amended (hereinafter collectively called
"CERCLA").
(d) "Environmental Problem" shall mean any of the
following:
(A) the presence, suspected presence, or alleged
presence of any Hazardous Substance on, in, under, or above
all or any portion of the Premises (unless such presence is
in compliance with all Environmental Laws and such suspected
or alleged presence would, if it were an actual presence, be
in compliance with all Environmental Laws); or
(B) the release, suspected release, threatened
release, or alleged release of any Hazardous Substance from
or onto the Premises (unless such release is in compliance
with all Environmental Laws and such suspected, threatened
or alleged release would, if it were an actual release, be
in compliance with all Environmental Laws);
(C) the violation, suspected violation, threatened
violation, or alleged violation of any Environmental Law
with respect to the Premises;
(D) the failure, suspected failure, threatened
failure, or alleged failure to obtain or to abide by the
terms or conditions of any permit or approval required under
any Environmental Law with respect to the Premises.
A condition described above shall be deemed to be an Environmental
Problem regardless of whether or not any federal, state, or local
governmental authority or agency has taken any action in connection with
the condition.
(e) "Environmental Report" shall mean a report prepared by
a person or entity with expertise in identifying and analyzing
Environmental Problems that reports or describes, based on an assessment
performed by or on behalf of that person or entity, Environmental
Problems that are or may be in existence with respect to the Premises.
(f) "Foreclosure Date" shall mean the date the Premises
are conveyed by foreclosure or other exercise of rights under the
Mortgage, or by conveyance in lieu of such exercise of rights.
(g) "Hazardous Substance" shall mean any substance that is
defined or listed as a hazardous, toxic, or dangerous substance under
any present or future Environmental Law or that is otherwise regulated
or prohibited or subject to investigation or remediation under any
present or future Environmental Law because of its hazardous, toxic, or
dangerous properties, including, without limitation, (i) any substance
that is a "hazardous substance" under CERCLA, and (ii) petroleum,
natural gas, natural gas liquids, liquefied natural gas, and synthetic
gas usable for fuel (or mixtures of natural gas and such synthetic gas).
(h) "Indemnified Expenses" is defined in clauses (a) and
(b) of paragraph 2 hereof.
(i) "Lender Determination Date" is defined in clause (s)
of paragraph 1 hereof.
(j) "Loan" is defined in the Preliminary Statement hereof.
(k) "Loan Documents" shall mean the Note, the Mortgage, and
all other instruments and documents evidencing or securing or otherwise
executed or delivered in connection with the Loan and also including
this Environmental Indemnity (it being understood, however, that this
Environmental Indemnity is entirely independent of the Loan and does not
evidence or secure the Loan).
(l) "Modification Agreement" is defined in the Preliminary
Statement hereof.
(m) "Monitor Firm" is defined in clause (c) of paragraph 2
hereof.
(n) "Mortgage" is defined in the Preliminary Statement
hereof.
(o) "Note" is defined in the Preliminary Statement hereof.
(p) "Other Indemnitors" is defined in the Preliminary
Statement hereof.
(q) "Premises" is defined in the Preliminary Statement
hereof.
(r) "Qualifying Report" is defined in clause (s) of
paragraph 1 hereof.
(s) "Release Date" shall mean either (A) if the Loan has
been repaid in full, the later of (i) the fifth anniversary of the date
of repayment in full of the Loan, (ii) if Lender has made any claim or
demand under this Environmental Indemnity which, as of the aforesaid
fifth anniversary, has not been paid in full or in respect of which
Lender reasonably determines that Lender may incur further Indemnified
Expenses, the date (after the payment in full of all claims for
Indemnified Expenses made in accordance with this Environmental
Indemnity) (such date, the "Lender Determination Date") on which Lender
reasonably determines that no further Indemnified Expenses will be
incurred by Lender or (iii) the date of Lender's approval of an
environmental report with respect to the Premises which report (1) is
dated not earlier than ninety days prior to a date ("Required Report
Date") which is either (x) if clause (ii) does not apply, the aforesaid
fifth anniversary or (y), if clause (ii) applies, the Lender
Determination Date, (2) is prepared and certified by an environmental
consulting firm acceptable to Lender, (3) is furnished to Lender at no
expense to Lender, and (4) shows, in a manner satisfactory to Lender
(with customary qualifications reasonably satisfactory to Lender), that
the Premises are, at the date of the report, free from Hazardous
Substances which are not in compliance with all Environmental Laws (a
report which satisfies all of the foregoing requirements being herein
referred to as a "Qualifying Report"), provided, however, that if, on or
after the date of repayment of the Loan but prior to the Required Report
Date, Borrower conveys its title to the Premises in a bona fide sale to
an unaffiliated third party, the Required Report Date shall be deemed to
be the date Borrower so conveys title to said third party, and (B) if
the Loan has not been repaid in full, the later of (i) the eighth
anniversary of the Foreclosure Date, (ii) if Lender has made any claim
or demand under this Environmental Indemnity which, as of the aforesaid
eighth anniversary, has not been paid in full or in respect of which
Lender reasonably determines that Lender may incur further Indemnified
Expenses, the Lender Determination Date or (iii) the date of Lender's
approval of a Qualifying Report (except that, for purposes of this
clause (B)(iii), such Qualifying Report shall be dated not earlier than
ninety days prior to the Foreclosure Date. Notwithstanding anything in
this Environmental Indemnity to the contrary, a discharge or other
release of the Loan in connection with the exercise of remedies under
the Mortgage or other Loan Documents shall not be considered a payment
or repayment of the Loan for any purposes of this Environmental
Indemnity.
(t) "Required Report Date" is defined in clause
(s) of paragraph 1 hereof.
2. (a) Indemnitor shall, at its sole cost and expense,
indemnify, defend (in accordance with the provisions of paragraph 14
hereof), protect, and hold harmless Lender and Lender's officers,
trustees, directors, shareholders, employees, and agents against and
from any and all damages, losses, liabilities, obligations, penalties,
claims, sums paid in settlement of claims, litigation, demands,
defenses, judgments, suits, proceedings, costs, disbursements, fines,
encumbrances, liens, and expenses of any kind or of any nature
whatsoever (collectively, the "Indemnified Expenses") that may at any
time (including, without limitation, after the repayment of the Loan or
after foreclosure or other exercise of rights under the Mortgage, or
conveyance of the Premises in lieu of such exercise of rights but
excluding any time after the Release Date) be imposed upon, incurred by
(subject to the limitations of paragraph 2(c) hereof, if applicable), or
asserted or awarded against, Lender or any such officers, trustees,
directors, shareholders, employees, or agents to the extent that such
Indemnified Expenses arise directly or indirectly from or out of any
Environmental Problem, regardless of whether that Environmental Problem
arises before or after the date hereof or before or after any repayment
of the Loan or any conveyance of the Premises by foreclosure or other
exercise of rights under the Mortgage, or conveyance in lieu of such
exercise of rights, regardless of whether or not that Environmental
Problem is the fault of Borrower, Indemnitor, or any other person or
entity, and regardless of whether or not the Environmental Problem was
disclosed in any Environmental Report performed for, or on behalf of,
Lender in connection with the Loan or whether or not Lender has actual
constructive knowledge of the Environmental Problem from any other
source, provided, however, that Indemnitor shall have no liability under
this paragraph as to an Environmental Problem which arises after the
Release Date or as to which Indemnitor is relieved of liability pursuant
to paragraph 2(d) and provided, further, that Indemnified Expenses shall
be subject to the limitations set forth in paragraph 2(b) hereof.
Notwithstanding anything in this Environmental Indemnity to the
contrary, the aggregate liability of all of the entities comprising
Indemnitor for any and all Indemnified Expenses and any other
obligations of Indemnitor hereunder shall not, in the aggregate, exceed
Ten Million Dollars ($10,000,000).
(b) Indemnified Expenses shall include, without
limitation, all of the following to the extent the same are incurred
after the date hereof: (i) costs incurred in the removal of Hazardous
Substances, costs incurred in investigation, monitoring, clean-up, and
containment of Hazardous Substances, costs incurred to mitigate damages,
closure costs, costs incurred for remediation and restoration, and other
response costs to the extent the foregoing are required by Environmental
Laws; (ii) costs incurred to cure any violations of Environmental Laws
and costs of any Monitor Firms; (iii) damages for personal injury or
death, or property loss; (iv) civil and criminal fines and penalties;
(v) costs incurred to remove any liens imposed by law in favor of the
federal or any state or local government or governmental agency or
authority in connection with an Environmental Problem; (vi) attorneys',
accountants', consultants', and experts' fees and disbursements,
administrative costs, and other out-of-pocket expenses (including any
such fees, disbursements, costs, and expenses incurred as a result of
groundless, false, or fraudulent claims or proceedings); (vii)
diminution in the market value of the Premises; (viii) sums paid to
tenants and other third parties (or offset against rents or other sums
payable by such tenants and other third parties) for indemnification
pursuant to leases or other agreements entered into by Borrower wherein
such tenants or other third parties are entitled to indemnification or
payment on account of Environmental Problems or pursuant to statutory or
common law (if and to the extent the claims of such tenants or third
parties are valid claims arising out of violations of any Environmental
Laws); (ix) consequential damages; (x) sums paid and any other liability
to the federal government, any state or local government, any federal,
state, or local governmental authority, or any other person or entity
for any costs described above; (xi) sums paid in satisfaction of
judgments; (xii) settlement costs (except to the extent excluded under
the immediately following sentence); and (xiii) all other costs and
expenses of any kind or nature (but subject to the specific limitations,
if any, set forth in the foregoing clauses of this sentence).
Notwithstanding the foregoing, as to any action or proceeding covered
hereby in which Lender is a party or which may give rise to a lien
against the Premises, (1) so long as all Indemnified Expenses incurred
by Lender have been paid in full within ten (10) days after demand
therefor from Lender to Indemnitor, (I) during the period prior to the
Foreclosure Date, if Borrower is not a party to such action or
proceeding and (II) during the period after the Foreclosure Date, as to
any such action or proceeding, Lender may settle any such action or
proceeding only with Borrower's prior written consent, which consent
shall not be unreasonably withheld or delayed so long as, prior to the
Foreclosure Date, such settlement does not create any lien, encumbrance
or defect in title with respect to the Premises and does not include
any admission of a release of Hazardous Substances or any admission of a
violation of any Environmental Laws and (2) if Indemnitor shall fail to
pay in full any Indemnified Expenses within ten (10) days after demand
therefor from Lender to Indemnitor, Lender may settle any action or
proceeding covered hereby in which Lender is a party without Borrower's
consent. With regard to any action or proceeding covered hereby, the
settlement of which is not addressed by the preceding sentence, any such
settlement shall be in compliance with Paragraph 13 hereof.
(c) Without limiting Indemnitor's obligations
hereunder, in the event of any Environmental Problem, Lender may, in
Lender's sole discretion: (i) by notice to Indemnitor (if Lender is
giving such notice prior to the Foreclosure Date), obligate Indemnitor
to take appropriate action to correct or ameliorate the Environmental
Problem to the extent required by Environmental Laws, in which event
Indemnitor shall take such action at Indemnitor's sole expense; (ii) at
all times after the Foreclosure Date and, with respect to the period
prior to the Foreclosure Date, upon the failure of Indemnitor to take
satisfactory action after a notice to Indemnitor in accordance with
clause (i) above (with all determinations as to such failure being made
by Lender in Lender's sole discretion), itself take appropriate action
to correct or ameliorate the Environmental Problem to the extent
required by Environmental Laws, in which event Indemnitor shall
cooperate with Lender and shall indemnify Lender for the costs incurred
in taking such action in accordance with this Environmental Indemnity;
and/or (iii) exercise any other rights or remedies that Lender may have
(except that, prior to the Foreclosure Date, such exercise of rights or
remedies shall not include Lender, itself, taking action to correct or
ameliorate the Environmental Problem to the extent required by
Environmental Laws unless and until Lender complies with the conditions
set forth in clause (ii) above); but Lender shall have no obligation to
do any of the foregoing. Notwithstanding the foregoing, (1) if Borrower
has conveyed title to the Premises in a bona fide sale to an
unaffiliated third party, then Indemnitor shall not be obligated to take
the actions described in clause (i) of the immediately preceding
sentence and Lender's rights under clause (ii) of the immediately
preceding sentence shall be limited to Lender's rights under the Loan
Documents (other than this Environmental Indemnity) or under applicable
law but such rights shall not be conditioned upon the giving of a notice
pursuant to clause (i) of the immediately preceding sentence, and (2) if
the Loan has been repaid in full, (x) Indemnitor covenants and agrees
that, so long as Borrower, any of the Other Indemnitors or any affiliate
of Borrower or of any of the Other Indemnitors owns the Premises,
Indemnitor shall cause the owner of the Premises to take such actions as
a reasonably prudent owner of real property similar to the Premises
would take to first investigate and, as necessary, correct or ameliorate
any Environmental Problem to the extent required by Environmental Laws,
(y) except for enforcement of the covenant and agreement set forth in
clause (x) above, Lender shall not have the right to perform any work on
the Premises to correct or ameliorate any Environmental Problem or to
obligate Indemnitor to perform such work on the Premises and (z) except
for the limitation set forth in clause (y) above, all of Lender's other
rights and remedies under this Environmental Indemnity (including,
without limitation, the indemnification and defense of Lender in
accordance with subparagraph 2(a) above) shall remain in full force and
effect. So long as all Indemnified Expenses incurred by Lender have
been paid in full, if Lender elects to take action after the Foreclosure
Date to correct or ameliorate an Environmental Problem as described in
clause (ii) of the first sentence of this subparagraph 2(c) (any such
actions being herein referred to as "Corrective Actions") Lender shall
notify Borrower of such election, and if Borrower notifies Lender,
within 10 days after Lender's aforesaid notice to Borrower, that
Borrower has engaged an independent environmental engineering or
consulting firm (a "Monitor Firm") (which Monitor Firm, with appropriate
name and telephone numbers of persons to be contacted, shall be
specified in Borrower's notice) to monitor Lender's Corrective Actions
then Lender shall permit such Monitor Firm to monitor such Corrective
Actions, subject to such rules and regulations as Lender and the
contractors performing such Corrective Actions shall require, provided,
however, that (x) neither Borrower nor such Monitor Firm shall have any
right to perform, impede, control, direct or in any manner interfere
with such Corrective Actions, (y) neither Lender nor its contractors
shall have any liability to the Monitor Firm and (z) if, after such
Monitor Firm has been notified of any rules or regulations in connection
with the monitoring of Corrective Actions, such Monitor Firm materially
breaches any of such rules or regulations (with all determinations as to
such material breach being made by Lender in Lender's sole discretion),
then Lender may, by notice to Borrower, terminate all further rights of
Borrower to monitor such Corrective Actions. Notwithstanding the
foregoing, if (I) a Monitor Firm reasonably determines that any
Corrective Action being taken will worsen (rather than ameliorate or
correct) an Environmental Problem, (II) Indemnitor or such Monitor Firm
notifies Lender, in accordance with the notice provisions of this
Environmental Indemnity, of such deficiencies of such Corrective Action
and of the one or more alternatives to such Corrective Action which
would avoid such deficiencies while correcting such Environmental
Problem, (III) Lender and the contractor(s) performing such Corrective
Work do not adopt one or more of the proposed alternatives (or any other
changed approach approved by the Monitor Firm, which approval shall not
be unreasonably withheld) and (IV) failure to adopt the proposed
alternatives does, in fact, worsen the Environmental Problem, then
Indemnified Expenses shall not include any loss or damage caused by such
worsening of the Environmental Problem.
(d) Notwithstanding anything herein to the contrary, if
the Premises are conveyed by foreclosure or other exercise of rights
under the Mortgage, or conveyance in lieu of such exercise of rights,
then the indemnity provided for under this Environmental Indemnity shall
not apply to any Environmental Problem that arises after and not on or
before the Foreclosure Date unless the Environmental Problem results in
whole or in part from acts or omissions by Indemnitor or Borrower or
from acts or omissions prior to the Foreclosure Date by any other person
or entity (other than Lender). The indemnity provided for under this
Environmental Indemnity shall, however, apply to Indemnified Expenses
incurred after the Foreclosure Date that arise from any Environmental
Problem in existence on or before the Foreclosure Date or any
Environmental Problem otherwise not excluded from coverage under the
immediately preceding sentence, even if that Environmental Problem is
not discovered until after the Foreclosure Date unless the condition
becomes an Environmental Problem as a result of a change in
Environmental Laws that becomes effective after the Foreclosure Date.
Indemnitor shall have the burden of proving that any Environmental
Problem arises after the Foreclosure Date and the burden of proving that
a condition became an Environmental Problem as a result of a change in
Environmental Laws that became effective after the Foreclosure Date and
if Indemnitor is unable to satisfy that burden of proof, then
Indemnitor's obligations hereunder for Indemnified Expenses arising out
of that Environmental Problem shall be effective and shall not be
reduced or diminished.
3. The obligations of Indemnitor hereunder are independent
of the obligations of Borrower under the other documents and instruments
which constitute the Loan Documents. A separate action or actions may
be brought and prosecuted against Indemnitor hereunder, whether or not
an action is brought against Borrower under the other documents and
instruments which constitute the Loan Documents and whether or not
Borrower is joined in any action against the Other Indemnitors. Nothing
in this Environmental Indemnity is intended to reduce or limit in any
manner the obligations and liabilities of Borrower under the other
documents and instruments which constitute the Loan Documents.
4. This Environmental Indemnity is given solely to protect
Lender and not as additional security for, or as a means of repayment
of, the Loan and is entirely independent of the Loan, and shall not be
measured or affected by any amounts at any time owing under the Loan
Documents, the sufficiency or insufficiency of any collateral
(including, without limitation, the Premises) given to Lender to secure
repayment of the Loan, or the consideration given by Lender or any other
party in order to acquire the Premises or any portion thereof. None of
the obligations of Indemnitor hereunder shall be in any way secured by
the other documents and instruments which constitute the Loan Documents
or by the lien of the Mortgage.
5. Indemnitor's obligations hereunder shall survive
repayment of the Loan and shall survive any conveyance of the Premises
(including, without limitation, any conveyance by foreclosure or by
other exercise of rights under the Mortgage, or conveyance of the
Premises in lieu of such exercise of rights), provided, however, that
Indemnitor's obligations shall terminate on the Release Date and
provided, further, that this Environmental Indemnity shall terminate on
the date that a creditworthy entity acceptable to Lender, in Lender's
sole discretion, duly authorizes, executes and delivers to Lender an
environmental indemnity substantially in the form of this Environmental
Indemnity in connection with a transfer of the Premises.
6. This Environmental Indemnity shall bind the successors
of Indemnitor and inure to the benefit of the successors and assigns of
Lender (including, without limitation, any participants of Lender with
respect to the Loan), provided, however, that prior to the Foreclosure
Date, Lender may only assign this Environmental Indemnity to a person or
entity to whom the Loan Documents are being or have been assigned and
provided, further, that on and after the Foreclosure Date this
Environmental Indemnity may only be assigned to (i) a subsidiary of
Lender controlled by Lender or (ii) another entity controlled by Lender.
7. The obligations of Indemnitor under this Environmental
Indemnity are not limited or impaired by any provisions in the Loan
Documents exculpating Borrower or Borrower's partners from personal
liability thereunder or limiting Lender's recourse against Borrower or
Borrower's partners. Notwithstanding the foregoing provisions of this
Environmental Indemnity, none of JMB Realty Corporation, a Delaware
corporation ("JMB Realty"), Progress Properties, Inc., a New York
corporation ("PPI"), J.R.A. Realty Corp., a New York corporation
("JRA"), or P-C 900 Third Associates, a New York limited partnership
("P-C") (JMB Realty, PPI, JRA and P-C being herein collectively referred
to as the "Initial Exempt Entities"), nor any Additional Exempt Persons
(as hereinafter defined) shall have any direct or indirect personal
liability to Lender under, for or in connection with any of the
obligations set forth in this Environmental Indemnity, provided,
however, that in no event shall the Initial Exempt Entities or the
Additional Exempt Persons include the Recourse Entities (as hereinafter
defined) or an Owner Entity (as hereinafter defined). Unless such
successor or assign is an Owner Entity or a Recourse Entity, Initial
Exempt Entities shall include successors or assigns of Initial Exempt
Entities. Notwithstanding the foregoing provisions of this
Environmental Indemnity, for purposes of this Environmental Indemnity,
neither the deficit capital account of any direct or indirect partner in
Borrower, nor any obligation of any direct or indirect partner in
Borrower to restore a deficit capital account or to contribute capital
to Borrower or to any direct or indirect partner in Borrower, shall be
deemed to be the property or asset of Borrower or the applicable direct
or indirect partner in Borrower, as the case may be, and Lender shall
not have the right to collect, enforce or proceed against or with
respect to any such deficit capital account or obligation to restore or
contribute. As used herein:
(i) the term "Recourse Entities" shall mean all the
following: (a) Associates (but excluding, solely as to this
clause (a), any partners (directly or indirectly) of a
partner of Associates), (b) Carlyle-XIV (but excluding,
solely as to this clause (b), any partners (directly or
indirectly) of Carlyle-XIV), (c) Carlyle-XV (but excluding,
solely as to this clause (c), any partners (directly or
indirectly) of Carlyle-XV) and (d) the respective successors
and assigns of the entities covered by clauses (a), (b) and
(c) above, but excepting, as to all of clauses (a), (b), (c)
and (d) above, their respective employees and authorized
agents, (it being understood that the exclusion of any
partner under any of clauses (a), (b) or (c) shall not
constitute per se an exclusion under any of the other
clauses),
(ii) the term "Owner Entity" shall mean Progress Partners,
a New York general partnership, but excluding (a) PPI, JRA, P-C
900 and their respective successors and assigns, (b) any direct or
indirect partners (an "Excluded Partner") in a partner of (I)
Associates or (II) any successor or assign of Associates and (c)
the successors or assigns of any Excluded Partners, and
(iii) the term "Additional Exempt Persons" shall mean all of
the following: (a) any individual or entity that was, is or
becomes a partner in Carlyle-XIV, Carlyle-XV, PPI, JRA or P-C,
directly or indirectly through one or more other partnerships, (b)
any officer, director, employee, shareholder, trustee, beneficiary
or agent of JMB Realty Corporation, PPI, JRA or P-C or of any such
direct or indirect partner in Carlyle-XIV, Carlyle XV, PPI, JRA or
P-C, and (c) the respective successors or assigns of such
individuals or entities covered under clause (a) above and the
respective successors or assigns of the officers, directors,
employees, shareholders, trustees, beneficiaries or agents covered
under clause (b) above, provided, however, that in no event shall
the Additional Exempt Persons include the Recourse Entities or an
Owner Entity.
8. The obligations of Indemnitor under this Environmental
Indemnity are not limited or impaired by the accuracy or inaccuracy of
the representations and warranties made by Borrower under the Loan
Documents.
9. Lender shall at all times (until the Loan is repaid in
full) be free to inspect the Premises and to perform such other
investigations and tests as Lender deems necessary in connection with
this Environmental Indemnity, but Lender shall not be obligated to do
so. The cost and expense of any inspection pursuant to the immediately
preceding sentence shall be Lender's responsibility except that such
cost and expense shall be Indemnitor's responsibility if (i) prior to
the Foreclosure Date, (x) Lender has grounds to believe, in Lender's
reasonable judgment, that the inspection described above will disclose a
violation of any Environmental Laws or the existence of an Environmental
Problem and (y) Indemnitor fails, upon notice from Lender, to conduct an
inspection of the Premises, of a scope reasonably satisfactory to
Lender, within thirty (30) days after Lender's notice, through an
independent environmental engineering or consulting firm reasonably
satisfactory to Lender or Indemnitor fails to furnish to Lender,
promptly after completion of such inspection, a satisfactory report of
such inspection which shall be reasonably satisfactory to Lender as to
the scope, thoroughness and amount of detail therein (with customary
qualifications reasonably satisfactory to Lender) or (ii) after the
Foreclosure Date, such inspection actually discloses a violation of any
Environmental Laws which is Indemnitor's responsibility under this
Environmental Indemnity or an actual Environmental Problem which is
Indemnitor's responsibility under this Environmental Indemnity. If the
report of an inspection prior to the Foreclosure Date discloses an
Environmental Problem, all of Indemnitor's obligations hereunder shall
apply to such Environmental Problem.
10. Indemnitor's obligations hereunder shall apply to and
include claims or actions brought by or on behalf of employees of
Borrower and Indemnitor, and Indemnitor waives, solely to the extent
necessary in order to indemnify Lender as required hereunder, any
immunity to which Indemnitor may otherwise be entitled under any
industrial or worker's compensation laws.
11. If Indemnitor fails to indemnify Lender as provided
herein, Lender shall be subrogated to any rights Indemnitor may have
against third parties relating to the matters covered by this
Environmental Indemnity.
12. The rights of Lender under this Environmental Indemnity
shall be in addition to any other rights and remedies of Lender against
Indemnitor under any other document or instrument now or hereafter
executed by Indemnitor, or at law or in equity (including, without
limitation, any right of reimbursement or contribution pursuant to
CERCLA, if any), and shall not in any way be deemed a waiver of any of
such rights.
13. Before or after the Foreclosure Date, except if and to
the extent that Lender has exercised its right to settle an action or
proceeding covered hereby pursuant to paragraph 2(b), Indemnitor may
settle any action or proceeding covered hereby, provided that Indemnitor
shall have obtained Lender's prior written consent, which consent shall
not be unreasonably withheld or delayed so long as (i) such settlement
does not create any lien, encumbrance or defect in title with respect to
the Premises or any obligation or liability which affects Lender, (ii)
such settlement does not include any admission of a release of Hazardous
Substances or any admission of a violation of any Environmental Laws and
(iii) all Indemnified Expenses incurred by Lender have been paid in
full.
14. Any defense of Lender by Indemnitor hereunder shall be
conducted by attorneys reasonably satisfactory to Lender. If Lender
reasonably determines that the interests of Lender and Indemnitor in any
action or proceeding conflict in such a manner and to such an extent as
to require, consistent with applicable standards of professional
responsibility, the retention of separate counsel for Lender and
Indemnitor, then Lender may retain Lender's own counsel at Indemnitor's
expense.
15. Unless Indemnitor pays in full, within 30 days after
Lender's demand therefor, any payment due from Indemnitor to Lender
hereunder, then Indemnitor shall pay to Lender interest (at the rate of
fourteen and thirty-seven and one-half one hundredths percent (14.375%)
per annum) on any such payment due from Indemnitor from the thirtieth
day after the date such payment is demanded by Lender to and including
the date of payment.
16. Indemnitor shall pay Lender's attorneys' fees and all
other costs and expenses incurred by Lender in the enforcement of this
Environmental Indemnity or the collection of any sums due under this
Environmental Indemnity, unless, as to any action or proceeding in
connection with this Environmental Indemnity, Indemnitor is the
prevailing party in such action or proceeding.
17. THIS ENVIRONMENTAL INDEMNITY AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER SHALL IN ALL RESPECTS BE GOVERNED
BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE
OF NEW YORK. INDEMNITOR HEREBY IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE
JURISDICTION OF ANY STATE OR FEDERAL COURT SITTING IN THE STATE OF NEW
YORK OVER ANY SUIT, ACTION, OR PROCEEDING ARISING OUT OF OR RELATING TO
THIS ENVIRONMENTAL INDEMNITY, AND INDEMNITOR AGREES AND CONSENTS THAT,
IN ADDITION TO ANY METHODS OF SERVICE OR PROCESS PROVIDED FOR UNDER
APPLICABLE LAW, ALL SERVICE OF PROCESS IN ANY SUIT, ACTION OR PROCEEDING
IN ANY STATE COURT OR FEDERAL COURT SITTING IN THAT STATE MAY BE MADE BY
CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT REQUESTED, DIRECTED TO
INDEMNITOR AT THE ADDRESSES INDICATED IN PARAGRAPH 18 HEREOF FOR THE
GIVING OF ANY NOTICE, THE UNDERSIGNED HEREBY WAIVING PERSONAL SERVICE
THEREOF. SERVICE SO MADE SHALL BE COMPLETE TEN (10) DAYS AFTER THE SAME
SHALL HAVE BEEN SO MAILED.
18. Any notice, request, demand, consent, approval, or
other communication under this Environmental Indemnity (collectively,
"Notice") shall be in writing, signed by the party giving such Notice
and shall be sent by registered or certified mail, postage prepaid,
return receipt requested, or via Federal Express, addressed to the party
for whom it is intended at its address as follows (as that address may
be changed as hereinafter provided):
If to
Indemnitor: Progress Partners
c/o 900 Third Avenue Associates
900 N. Michigan Avenue
Chicago, Illinois 60611
Attention: Law Department
With copies
to: 900 3rd Avenue Associates
Carlyle Real Estate Limited
Partnership-XIV
Carlyle Real Estate Limited
Partnership-XV
900 North Michigan Avenue
Suite 1200
Chicago, Illinois 60611
Attn: Douglas Welker
If to Lender: Teachers Insurance and Annuity
Association of America
730 Third Avenue
New York, NY 10017
Attn: Vice President - Administration
Mortgage and Real Estate
Division
With a copy to: Teachers Insurance and Annuity
Association of America
730 Third Avenue
New York, NY 10017
Attn: Vice President, Investment Law -
Mortgage and Real Estate
Notice shall be deemed given (a) if by registered or
certified mail, on the third day after the same is deposited in an
official United States post office or (b) if by Federal Express, on the
date received by the recipient of such notice. Any party may from time
to time, by Notice to the other party given as above set forth, change
its address for purposes of receipt of any such Notice.
19. Indemnitor represents to Lender that Indemnitor has no
actual knowledge of any Environmental Problem. Indemnitor shall
promptly notify Lender in writing of any Environmental Problem of which
Indemnitor becomes aware. As used in this Environmental Indemnity, the
term "actual knowledge" shall mean the current actual knowledge, after
appropriate investigation of the files pertaining to the Premises which
are under the control of the applicable individual, of Douglas Welker
(Asset Manager), Gene Haran (Property Manager), and Scott Bowen (Chief
Engineer). Indemnitor represents that the persons referred to in the
immediately preceding sentence have, as of December 1, 1994, primary
knowledge of matters related to the ownership, management or operation
of the Premises.
20. If there is more than one Indemnitor: (i) the
obligations of each Indemnitor are joint and several; (ii) a release of
any one or more Indemnitor or any limitation of this Environmental
Indemnity in favor of or for the benefit of one or more Indemnitors
shall not in any way be deemed a release of or limitation in favor of or
for the benefit of any other Indemnitor; (iii) the unenforceability for
any reason of this Environmental Indemnity against one or more
Indemnitors shall not affect or impair the obligations hereunder of any
remaining Indemnitor; and (iv) a separate action hereunder may be
brought and prosecuted against one or more Indemnitors. As to any
particular claim under this Environmental Indemnity made by Lender, each
Indemnitor shall have no right of contribution (including, without
limitation, any right of contribution under CERCLA) or subrogation
against any other Indemnitor hereunder, with respect to such claim,
unless and until all obligations of such Indemnitor, with respect to
such claim, have been satisfied, provided, however, that, with respect
to such claim, if and so long as Indemnitor promptly pays and performs
in full in accordance with Indemnitor's obligations under this
Environmental Indemnity, then nothing in this sentence shall prevent any
payment under this Environmental Indemnity by any Other Indemnitor from
being considered as a Qualified Partner Contribution (as such term is
defined in the Taxes and Reserve Escrow Agreement dated as of
December 1, 1994 between Borrower, Lender and the escrow agent named
therein (the "Escrow Agreement")) to the extent permitted under the
Escrow Agreement. To the extent that any limitation of an Indemnitor's
rights of subrogation and contribution as set forth herein is found by a
court of competent jurisdiction to be void or voidable for any reason,
then those rights of subrogation or contribution shall in any event be
junior and subordinate to the rights of Lender against any Indemnitor
hereunder.
21. Indemnitor authorizes Lender without notice or demand
and without affecting Indemnitor's liability hereunder from time to time
to: (a) change, subject to obtaining Borrower's agreement or consent
thereto, any of the terms of the Loan Documents; (b) take and hold
additional security for the payment of the indebtedness evidenced by the
Note and the other amounts payable under the Loan Documents, and
enforce, waive and release any such security or, subject to obtaining
Borrower's agreement or consent thereto, exchange any such security; (c)
release from the lien of the Mortgage all or part of the Premises; (d)
apply the Premises and direct the order of manner of sale thereof as
Lender in its discretion may determine; or (e) release Borrower from
performance or observance of any of the agreements contained in the Loan
Documents. Indemnitor's liability hereunder shall also not be affected
by any such change, release, or application that arises by operation of
law.
22. Indemnitor waives, to the extent permitted by
applicable law:
(a) Presentment, demand, protest, notice of protest, notice
of dishonor and notice of non-payment, non-performance or non-
observance, and notice of acceptance of this Environmental Indemnity;
(b) The right, if any, to the benefit of, or to direct the
application of, any security held by Lender, including the Premises;
and, until all of the indebtedness evidenced by the Note has been paid
in full, all rights of subrogation, any right to enforce any remedy
which Lender now has or hereafter may have against Borrower, and any
right to participate in any security now or hereafter held by Lender;
(c) Subject to paragraph 25 hereof, the right to require
Lender to proceed against Borrower or to proceed against any security
now or hereafter held by Lender or to pursue any other remedy in
Lender's power;
(d) The benefits, if Indemnitor is entitled to any
benefits, of any or all anti-deficiency statutes or single-action
legislation;
(e) Any defense against Lender arising out of the absence,
impairment, or loss of any right of reimbursement or subrogation or
other right or remedy of Indemnitor against (i) Borrower or (ii) any
security resulting from the exercise of election of any remedies by
Lender, including a judicial foreclosure or the exercise of rights under
the Mortgage, and any defense arising by reason of any disability or
other defense of Borrower or by reason of the cessation, from any cause,
of the liability of Borrower;
(f) The benefit of or right to assert any statute of
limitations affecting Indemnitor's liability hereunder or the
enforcement thereof to the extent permitted by law;
(g) Any homestead exemption rights;
(h) Any right to deferral or modification of Indemnitor's
obligations hereunder by reason of any bankruptcy, reorganization,
arrangement, moratorium, or other debtor relief proceeding regarding
Indemnitor;
(i) Any defense arising out of any bankruptcy,
reorganization, arrangement, moratorium, or other debtor relief
proceeding regarding Borrower, or the death of Borrower;
(j) Any right to assert any offsets or counterclaims
against Lender (other than compulsory counterclaims which must be
brought as counterclaims in an action or proceeding in order to avoid
Indemnitor's waiving, as a matter of law, any right to assert the cause
of action which is the basis of the counterclaim) (it being understood
that nothing in this clause (j) shall be construed as a waiver of the
right to assert defenses (as distinguished from offsets or
counterclaims) or as a waiver of the right of Indemnitor to bring a
separate action or proceeding against Lender so long as such action or
proceeding is not consolidated (except to the extent specifically
consented to by Lender) with any action or proceeding brought by
Lender); and
(k) Any other defenses afforded by applicable law to
sureties, guarantors or indemnitors (other than defenses of Indemnitor
which are expressly provided for in this Environmental Indemnity).
23. The terms of this Environmental Indemnity are for the
sole and exclusive protection and use of Lender. Except as provided in
paragraph 6 as to successors and assigns of Lender, no party shall be a
third-party beneficiary hereunder, and no provision hereof shall operate
or inure to the use and benefit of any third party.
24. Indemnitor expressly hereby waives all rights to a
trial by jury in any action, counterclaim or proceeding based upon, or
related to, the subject matter of this Environmental Indemnity. This
waiver applies to all claims against all parties to such actions and
proceedings, including parties who are not parties to this Environmental
Indemnity. This waiver is knowingly, intentionally, and voluntarily
made by Indemnitor and Indemnitor expressly acknowledges that neither
Lender nor any person acting on behalf of Lender has made any
representations of fact to induce this waiver of trial by jury or in any
way to modify or nullify its effect. Indemnitor further acknowledges
that Indemnitor has been represented (or has had the opportunity to be
represented) by counsel in the execution and delivery of this
Environmental Indemnity and in the making of this waiver by independent
legal counsel, selected of Indemnitor's own free will, and that
Indemnitor has had the opportunity to discuss this waiver with counsel.
Indemnitor further acknowledges that Indemnitor has read and understands
the meaning and ramifications of this Environmental Indemnity and,
specifically, this waiver provision.
25. Notwithstanding any other provision of this
Environmental Indemnity to the contrary, Lender shall not commence any
action or proceeding before any judicial or administrative authority
against Associates, Carlyle XIV or Carlyle XV in respect of any default
by Indemnitor under this Environmental Indemnity unless Lender has
notified Borrower and the Other Indemnitors of such default and Borrower
has not fully cured such default within thirty (30) days after such
notice from Lender (or, if Borrower has promptly commenced such cure
within such thirty (30) day period and is diligently prosecuting such
cure, such additional period as Lender may, in Lender's sole and
absolute discretion, permit Borrower to continue curing), provided,
however, that the provisions of this paragraph shall be of no further
force or effect if Borrower ceases to exist and provided, further, that
Lender's right to commence an action or proceeding as aforesaid shall
not be conditioned upon any action of Lender other than the sending of
notice in accordance with the provisions of paragraph 18 of the
Environmental Indemnity. Notwithstanding any other provision of this
Environmental Indemnity to the contrary, after the Foreclosure Date (i)
neither Borrower nor the Other Indemnitors shall have any right to enter
the Premises or to cure, or to attempt to cure, any default by
Indemnitor to the extent such cure would involve entering upon or
performing work at the Premises (but this clause (i) shall not limit
Borrower's rights as to a Monitor Firm under paragraph 2(c) above) and
(ii) Lender's rights under this Environmental Indemnity (including,
without limitation, Lender's rights to commence an action or proceeding
as described in the immediately preceding sentence) shall not be
conditioned upon affording Borrower or the Other Indemnitors the right
to enter, or perform work at, the Premises after the Foreclosure Date.
26. Any indebtedness of Borrower now or hereafter owed to
or held by any Other Indemnitor is hereby subordinated to the
indebtedness of Borrower to Lender; and such indebtedness of Borrower to
any Indemnitor shall, if Lender so requests, be collected, enforced and
received by such Indemnitor as trustee for Lender and be paid over to
Lender on account of the indebtedness of Borrower to Lender, but without
reducing or affecting in any manner the liability of such Indemnitor
under the other provisions of this Environmental Indemnity. The
immediately preceding sentence shall not be construed as preventing
loans or contributions by the Other Indemnitors to Borrower from being
treated as Qualified Partner Contributions to the extent such treatment
is provided for under the Escrow Agreement, in which case upon repayment
to such Other Indemnitors of such Qualified Partner Contributions in
accordance with the Escrow Agreement the immediately preceding sentence
shall cease to apply to the moneys so repaid.
27. If Borrower pays any sum otherwise payable by
Indemnitor hereunder and if such sum must be repaid to Borrower pursuant
to any bankruptcy or insolvency law, then Indemnitor's obligation to pay
such sum hereunder shall not be diminished and shall continue in full
force and effect.
28. Lender shall have no duty to disclose or report to
Indemnitor any information now or hereafter known to Lender regarding
the Premises or the Borrower including, without limitation, information
regarding any Environmental Problem or circumstances that could result
in an Environmental Problem.
29. So long as Indemnitor has complied and continues to
comply with the terms of this Environmental Indemnity and all
Indemnified Expenses incurred by Lender have been paid in full, Lender
will endeavor to cooperate with Indemnitor, at Indemnitor's sole cost
and expense, in Indemnitor's efforts to obtain reimbursement from third
parties, including without limitation governmental agencies and
insurance companies, for all or a portion of the amounts (including
without limitation Indemnified Expenses) paid with respect to any
Environmental Problem, and Indemnitor shall be subrogated to the rights
of Lender respecting such reimbursement, whether or not such amounts are
expended prior to or after the Foreclosure Date.
30. If any term of this Environmental Indemnity or any
application of any such term shall be invalid, illegal, or
unenforceable, the remainder of this Environmental Indemnity and any
other application of such term shall remain effective.
31. No delay in exercising any right or power hereunder
shall operate as a waiver, and no waiver of any right or power or
consent by Lender shall be valid unless in writing. The failure of
Lender to insist upon strict compliance with any of the terms of this
Environmental Indemnity shall not be considered to be a waiver of any
such terms, nor shall it prevent Lender from insisting upon strict
compliance with this Environmental Indemnity at any time thereafter.
32. No provision of this Environmental Indemnity may be
changed, waived, discharged or terminated except by an instrument in
writing signed by the party against whom enforcement of the change,
waiver, discharge, or termination is sought.
IN WITNESS WHEREOF, Indemnitor has caused this Environmental
Indemnity to be executed as of the date first written above.
Indemnitor:
PROGRESS PARTNERS, a New York General
Partnership
By: Progress Properties, Inc., a New
York corporation, a General
Partner
By:
________________________________
Albert Schwartz,
Authorized signatory
By: 900 3rd Avenue Associates, an
Illinois General Partnership, a
General Partner
By: Carlyle Real Estate Limited
Partnership-XIV, an Illinois
Limited Partnership, a
General Partner
By: JMB Realty Corporation, a
Delaware corporation, its
General Partner
By:
______________________
Deborah A. Schenk
Vice President
By: Carlyle Real Estate Limited
Partnership-XV, an Illinois
Limited Partnership, a
General Partner
By: JMB Realty
Corporation, a
Delaware corporation, its
General Partner
By:
______________________
Deborah A. Schenk
Vice President
900 3RD AVENUE ASSOCIATES, an
Illinois General Partnership, a
General Partner
By: Carlyle Real Estate Limited
Partnership-XIV, an Illinois
Limited Partnership, a General
Partner
By: JMB Realty Corporation, a
Delaware corporation, its
General Partner
By:
________________________
Deborah A. Schenk
Vice President
By: Carlyle Real Estate Limited
Partnership-XV, an Illinois
Limited Partnership, a General
Partner
By: JMB Realty Corporation, a
Delaware corporation, its
General Partner
By:
________________________
Deborah A. Schenk
Vice President
CARLYLE REAL ESTATE LIMITED PARTNERSHIP-
XIV, an Illinois Limited Partnership
By: JMB Realty Corporation, a Delaware
corporation, its general partner
By:
_____________________________
Deborah A. Schenk
Vice President
CARLYLE REAL ESTATE LIMITED PARTNERSHIP-
XV, an Illinois Limited Partnership
By: JMB Realty Corporation, a Delaware
corporation, its General Partner
By:
_____________________________
Deborah A. Schenk
Vice President
Schedule A
Description of Premises
(310) 201-8907
September 30, 1994
Michael A. Brand, Esq.
Brand Farrar Dziubla Freilich &
Kolstad
515 South Flower Street
Suite 3500
Los Angeles, California 90071-2201
Re: 9701 Wilshire Boulevard
Beverly Hills, California
Dear Mike:
Reference is made to that certain Purchase Agreement and Joint Escrow
Instructions dated as of September 1, 1994, between Carlyle Real Estate
Limited Partnership-XV ("Seller") and 9701 Wilshire Boulevard, Inc.
("Buyer") respecting the purchase and sale of the above premises (which
agreement, together with all amendments and modifications thereto, is
herein called the "Purchase Agreement"). Except as otherwise specifically
set forth herein, all capitalized terms used herein shall have the meanings
set forth for such terms in the Purchase Agreement.
This letter shall confirm the agreement of our respective clients, as
Seller and Buyer, to extend the Closing Date until October 7, 1994 (or such
earlier date as may hereafter be agreed upon). Except as specified herein,
the Purchase Agreement is unmodified and remains in full force and effect.
Please confirm your agreement, on behalf of Buyer, to the foregoing
by signing where noted below.
Very truly yours,
PIRCHER, NICHOLS & MEEKS,
as attorneys for Seller
By: _________________________
AGREED TO AS OF
SEPTEMBER 30, 1994
BRAND FARRAR DZIUBLA
FREILICH & KOLSTAD,
as attorneys for Buyer
By: ______________________
EXHIBIT 21
LIST OF SUBSIDIARIES
The Partnership is a partner of the following joint ventures:
JMB/Piper Jaffray Tower Associates, a general partnership, which is a
partner in (i) OB Joint Venture II, a general partnership, which is a
partner of 222 South Ninth Street Limited Partnership, a limited
partnership, which holds title to the Piper Jaffray Tower office building in
Minneapolis, Minnesota, and (ii) OB Joint Venture, a general partnership,
which holds title to the land underlying the Piper Jaffray Tower office
building; JMB/Piper Jaffray Tower Associates II, a general partnership
which also is a partner in OB Joint Venture, a general partnership, which
holds title to the land underlying the Piper Jaffray Tower office building;
900 3rd Avenue Associates, a general partnership, which is a partner of
Progress Partners, a general partnership, which holds title to 900 Third
Avenue Building located in New York, New York; Maguire Thomas Partners -
South Tower, a limited partnership, which holds title to Wells Fargo Center
- IBM Tower located in Los Angeles, California; East Ridge Development
Company, a limited partnership, which holds title to Eastridge Mall located
in Casper, Wyoming; JMB/160 Spear Street Associates, a general partnership,
which holds title to 160 Spear Street building located in San Francisco,
California; 260 Franklin Street Associates, a general partnership, which
holds title to the 260 Franklin Street Building located in Boston,
Massachusetts; C-C California Plaza Partnership, a general partnership,
which holds title to the California Plaza office building in Walnut Creek,
California; Villages Northeast Associates, a general partnership, which is
a partner in VNE Partners, Ltd., a limited partnership, which holds title
to three apartment complexes located in DeKalb County (Atlanta) Georgia;
and JMB/NewPark Associates, a general partnership, which is a partner in
NewPark Associates, a general partnership, which holds title to the NewPark
Mall in Newark, California. Reference is made to Note 3 for a description
of the terms of such venture partnerships.
EXHIBIT 24
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned officers and
directors of JMB Realty Corporation, the corporate general partner of
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XV, do hereby nominate,
constitute and appoint GARY NICKELE, GAILEN J. HULL, DENNIS M. QUINN or any
of them, attorneys and agents of the undersigned with full power of
authority to sign in the name and on behalf of the undersigned officer or
directors a Report on Form 10-K of said partnership for the fiscal year
ended December 31, 1994, and any and all amendments thereto, hereby
ratifying and confirming all that said attorneys and agents and any of them
may do by virtue hereof.
IN WITNESS WHEREOF, the undersigned have executed this Power of
Attorney the 31st day of January, 1995.
JUDD D. MALKIN
-----------------------
Judd D. Malkin Chairman and Director
NEIL G. BLUHM
-----------------------
Neil G. Bluhm President and Director
H. RIGEL BARBER
-----------------------
H. Rigel Barber Chief Executive Officer
JEFFREY R. ROSENTHAL
-----------------------
Jeffrey R. Rosenthal Chief Financial Officer
The undersigned hereby acknowledge and accept such power of authority
to sign, in the name and on behalf of the above named officer and
directors, a Report on Form 10-K of said partnership for the fiscal year
ended December 31, 1994, and any and all amendments thereto, the 31st day
of January, 1995.
GARY NICKELE
-----------------------
Gary Nickele
GAILEN J. HULL
-----------------------
Gailen J. Hull
DENNIS M. QUINN
-----------------------
Dennis M. Quinn
EXHIBIT 24
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned officers and
directors of JMB Realty Corporation, the corporate general partner of
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XV, do hereby nominate,
constitute and appoint GARY NICKELE, GAILEN J. HULL, DENNIS M. QUINN or any
of them, attorneys and agents of the undersigned with full power of
authority to sign in the name and on behalf of the undersigned officer or
directors a Report on Form 10-K of said partnership for the fiscal year
ended December 31, 1994, and any and all amendments thereto, hereby
ratifying and confirming all that said attorneys and agents and any of them
may do by virtue hereof.
IN WITNESS WHEREOF, the undersigned have executed this Power of
Attorney the 31st day of January, 1995.
STUART C. NATHAN
-----------------------
Stuart C. Nathan Executive Vice President,
Director of General Partner
A. LEE SACKS
-----------------------
A. Lee Sacks Director of General Partner
The undersigned hereby acknowledge and accept such power of authority
to sign, in the name and on behalf of the above named officer and
directors, a Report on Form 10-K of said partnership for the fiscal year
ended December 31, 1994, and any and all amendments thereto, the 31st day
of January, 1995.
GARY NICKELE
-----------------------
Gary Nickele
GAILEN J. HULL
-----------------------
Gailen J. Hull
DENNIS M. QUINN
-----------------------
Dennis M. Quinn
EXHIBIT 24
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned officer of JMB
Realty Corporation, the corporate general partner of CARLYLE REAL ESTATE
LIMITED PARTNERSHIP - XV, does hereby nominate, constitute and appoint GARY
NICKELE, GAILEN J. HULL, DENNIS M. QUINN or any of them, attorneys and
agents of the undersigned with full power of authority to sign in the name
and on behalf of the undersigned officer, a Report on Form 10-K of said
partnership for the fiscal year ended December 31, 1994, and any and all
amendments thereto, hereby ratifying and confirming all that said attorneys
and agents and any of them may do by virtue hereof.
IN WITNESS WHEREOF, the undersigned have executed this Power of
Attorney the 20th day of February, 1995.
GLENN E. EMIG
-----------------------
Glenn E. Emig Chief Operating Officer
The undersigned hereby acknowledge and accept such power of authority
to sign, in the name and on behalf of the above named officer, a Report on
Form 10-K of said partnership for the fiscal year ended December 31, 1994,
and any and all amendments thereto, the 20th day of February, 1995.
GARY NICKELE
-----------------------
Gary Nickele
GAILEN J. HULL
-----------------------
Gailen J. Hull
DENNIS M. QUINN
-----------------------
Dennis M. Quinn
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
REGISTRANT'S FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 1994 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS
INCLUDED IN SUCH REPORT.
</LEGEND>
<CIK> 0000761023
<NAME> CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XV
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
<CASH> 3,680,080
<SECURITIES> 10,564,988
<RECEIVABLES> 8,994,073
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 23,239,141
<PP&E> 367,553,814
<DEPRECIATION> 106,168,986
<TOTAL-ASSETS> 327,662,913
<CURRENT-LIABILITIES> 77,111,613
<BONDS> 246,148,319
<COMMON> 0
0
0
<OTHER-SE> (21,446,718)
<TOTAL-LIABILITY-AND-EQUITY> 327,662,913
<SALES> 52,221,396
<TOTAL-REVENUES> 53,107,469
<CGS> 0
<TOTAL-COSTS> 35,462,378
<OTHER-EXPENSES> 1,254,951
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 33,160,181
<INCOME-PRETAX> (16,770,041)
<INCOME-TAX> 0
<INCOME-CONTINUING> (29,725,306)
<DISCONTINUED> 35,340,353
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,615,047
<EPS-PRIMARY> 14.55
<EPS-DILUTED> 0
</TABLE>
September 9, 1994
Securities and Exchange Commission
450 Fifth Street, N.W.
Judiciary Plaza
Washington, D.C. 20549
Re: Carlyle Real Estate Limited Partnership - XV
Commission File No. 0-16111
Form 8-K
Gentlemen:
Transmitted, for the above-captioned registrant, is the electronically filed
executed copy of registrant's current report on Form 8-K dated May 5, 1994.
Thank you.
Very truly yours,
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XV
By: JMB Realty Corporation
Corporate General Partner
By: C. SCOTT NELSON
-------------------------------
C. Scott Nelson, Vice President
Director of Partnership
Financial Reporting
CSN:sf
Enclosures
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 5, 1994
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XV
______________________________________________________
(Exact name of registrant as specified in its charter)
Illinois 0-16111 36-3314827
________________ _____________ ___________________
(State or other) (Commission (IRS Employer
Jurisdiction of File Number) Identification No.)
Organization
900 N. Michigan Avenue, Chicago, Illinois 60611-1575
_____________________________________________________
(Address of principal executive office)
Registrant's telephone number, including area code: (312) 915-1987
___________________________________________________________________
PARK AT COUNTRYSIDE APARTMENTS
DAYTONA BEACH, FLORIDA
______________________________________
ITEM 5. OTHER EVENTS. Carlyle Real Estate Limited Partnership - XV (the
"Partnership") through Daytona Park Associates, Ltd. (the "Venture"), a Florida
limited partnership, was the owner of the Park at Countryside Apartments (the
"Property") located in Daytona Beach, Florida. Effective May 5, 1994, due to
the Venture's default in the payment of debt service, the mortgage lender (The
Travelers Insurance Company) concluded proceedings to realize upon its mortgage
security represented by the land, building and related improvements of the
Property. The property consists of a 120-unit apartment complex and was
approximately 98% occupied at the time of the transfer of title.
The Venture has recognized a gain of approximately $2,000,000 for financial
reporting purposes in 1994 and expects to recognize a gain of approximately
$1,200,000 for Federal income tax purposes (of which the Partnership's share is
approximately $1,300,000 and $800,000, respectively). The terms of the Venture
agreement provide that the gain on disposition of the Property be allocated to
the partners with negative capital balances immediately prior to disposition,
with such gain being allocated in the ratio of such negative balances.
Furthermore, pursuant to the terms of the Carlyle Real Estate Limited
Partnership - XV Partnership Agreement, the gain on disposition in 1994 will be
allocated 1% to the General Partners and 99% to the Limited Partners.
There will be no distributable proceeds as a result of this transaction.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements. Not applicable.
(b) Proforma financial information. Not applicable.
(c) Exhibits.
1. Agreed Final Judgement of Foreclosure.
2. Release - The Travelers Insurance Company.
3. Release - Daytona Park Associates, Ltd.<PAGE>
SIGNATURES
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.
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XV
By: JMB Realty Corporation
Corporate General Partner
By: C. SCOTT NELSON
_______________________________
C. Scott Nelson, Vice President
Director of Partnership
Financial Reporting
Dated: September 9, 1994
IN THE CIRCUIT COURT OF THE
SEVENTH JUDICIAL CIRCUIT IN AND
FOR VOLUSIA COUNTY, FLORIDA
CIVIL DIVISION
CASE NO. 93-32654 CICI
THE TRAVELERS INSURANCE )
COMPANY, a Connecticut )
corporation, )
)
Plaintiff, )
)
v. )
)
DAYTONA PARK ASSOCIATES, LTD., )
a Florida limited partnership, )
by and through its general )
partner, CARLYLE REAL ESTATE )
LIMITED PARTNERSHIP-XV, an )
Illinois limited partnership, )
by and through its general )
partner, JMB REALTY )
CORPORATION, a Delaware )
corporation, )
)
Defendant. )
_________________________________________ )
THIS CAUSE came before the Court upon the Stipulation of Settlement
between Plaintiff, THE TRAVELERS INSURANCE COMPANY ("TRAVELERS"), and
Defendant, DAYTONA PARK ASSOCIATES, LTD., a Florida limited partnership, by
and through its general partner, CARLYLE REAL ESTATE LIMITED PARTNERSHIP-XV,
an Illinois limited partnership, by and through its general partner, JMB
REALTY CORPORATION, a Delaware corporation (collectively referred to as
"DAYTONA"). Upon consideration of said Stipulation, and the entire record
it is
ORDERED AND ADJUDGED, that:
1. This Court has jurisdiction over the subject matter and the
parties hereto.
2. The Consolidated and Restated Note (the "Note"), sued upon
by TRAVELERS was properly executed and delivered, and DAYTONA is in default of
its obligations under the Note for failure to make payments as required
therein.
3. The Third Modification of Mortgage, Collateral Assignment of
Rents and Leases and Security Agreement sued upon by TRAVELERS in this action
constitutes a valid lien upon the property therein described ("Subject
Property").
4. There are no genuine issues of material fact, and therefore
DAYTONA is liable to TRAVELERS for the entire indebtedness, including all
accrued and unpaid interest and principal, due under the Note.
5. DAYTONA, owes TRAVELERS the following amounts, which shall
bear interest at 12% per annum, for which let execution issue:
Principal: $3,100,000.00
Interest due 10/1/93 20,666.67
Interest due 11/1/93 20,666.67
Accrued interest at Contract Rate
11/1/93 to 11/23/93 21,020.55
(per diem 955.4795) (22 days)
Late Fees 1,653.34
Previous Late Fees Due 2,325.00
Accumulated Deferred Interest
Balance as of 11/1/93 810,928.69
Interest on Deferred Interest at
Contract Rate: 11/1/93 to 11/23/93 5,498.76
Accelerated Balance 3,982,759.68
------------
Default Interest
11/23/93 to 3/7/94
(per diem $1,554.9130) (104 days) 161,710.95
Less Payment Received 12/17/93 (29,451.13)
Less Payment Received 1/25/94 (26,758.00)
Less Payment Received 2/11/94 (25,256.21)
Attorneys' Fees $8,040.50
Costs $1,254.41
TOTAL $4,072,300.20
6. TRAVELERS holds a lien for the total sum superior to any
claim or estate of DAYTONA upon the subject real property located in Volusia
County, Florida, as described in Exhibit "A" attached hereto.
7. If the total sum with interest at the rate described in
paragraph 5, and all costs accrued subsequent to this judgement are not paid,
the Clerk of the Court shall sell the property at public sale on May 5, 1994,
between 11:00 a.m. and 2:00 p.m. to the highest and best bidder for cash,
except as prescribed in paragraph 8, at the Northwest Door of the Volusia
County Courthouse located at 120 West Indiana Avenue, DeLand, Florida 32721,
in accordance with Fla. Stat. subsection 45.031.
8. TRAVELERS shall advance all subsequent costs of this action
and shall be reimbursed for them by the Clerk if TRAVELERS is not the
purchaser of the property for sale. If TRAVELERS is the purchaser of the
property, the Clerk shall credit TRAVELERS bid with the total sum with
interest and costs accruing subsequent to this judgement, or such part of it,
as is necessary to pay the bid in full.
9. Upon filing the Certificate of Title, the Clerk shall
distribute the proceeds of the sale, so far as they are sufficient, by paying:
first, all of TRAVELER's costs; second, documentary stamps affixed to the
certificate; third, TRAVELERS attorneys' fees; fourth, the total sum due to
TRAVELERS, less the items paid, plus interest at the rate prescribed in
paragraph 5 from this date to the date of the sale; and by retaining any
remaining amount pending further Order of this Court.
10. Upon filing the Certificate of Title, Defendants and all
persons claiming under or against Defendants since the filing of the Notice of
Lis Pendens shall be foreclosed of all estate or claim in the property and the
purchaser at the sale shall be let into possession of the property.
11. This Court retains jurisdiction of this cause for the purpose
of making any and all further orders as it shall deem necessary and proper.
DONE AND ORDERED in Chambers, at Daytona, Volusia County,
Florida, this 6 day of April, 1994.
JOHN V. DOYLE
CIRCUIT JUDGE
_______________________
CIRCUIT COURT JUDGE
Copies furnished to all counsel of record
ADDRESS OF LIEN HOLDER:
The Travelers Insurance Company
2215 York Road, Suite 504,
Oak Brook, Illinois 60521
_________________________________
RELEASE
________
THE TRAVELERS INSURANCE, a Connecticut corporation ("first party"), for
and in consideration of the sum of ten ($10.00) Dollars, and other valuable
consideration, received from or on behalf of DAYTONA PARK ASSOCIATES,LTD., a
Florida limited partnership, by and through its general partner, CARLYLE REAL
ESTATE LIMITED PARTNERSHIP-XV, an Illinois limited partnership, by and
through its general partner, JMB REALTY CORPORATION, a Delaware corporation,
("second party"), the receipt whereof which is hereby acknowledged by first
party,
(Wherever used herein the terms "first party" and "second party"
shall include singular and plural past and present heirs, legal
representatives, and assigns of individuals, the successors,
assigns, officers, employees, and directors of said corporation,
in their individual, personal and corporate capacities, and the
limited and general partners of partnerships, wherever the context
so admits or requires).
HEREBY remises, releases, acquits, satisfies, and forever discharges the
said second party, and each of its past and present predecessors and
successors in interest, affiliates assigns, officers, employees, attorneys,
directors and shareholders, in their individual, personal and corporate
capacities, of and from all, and all manner of action and actions, cause and
causes of action, suits, debts, dues, sums of money, accounts, reckonings,
bonds, bills, specialties, covenants, contracts, controversies, agreements,
promises, variances, trespasses, liabilities, damages, judgments, executions,
claims and demands whatsoever, whether in law or in equity, whether matured or
unmatured and whether known or unknown or otherwise, which said first party,
ever had, now has, or hereafter can, shall or may have, against said second
party, and/or its past and present predecessors and successors in interest,
affiliates assigns, officers, employees, attorneys, directors and
shareholders, in their individual, personal and corporate capacities for, upon
or by reason of any matter, cause or thing whatsoever, from the beginning of
the world to the day of these presents including, but not limited to, any
claim that was asserted or that could have been asserted, causes of action,
and other liabilities sued upon in that certain lawsuit captioned THE
TRAVELERS INSURANCE COMPANY, A CONNECTICUT CORPORATION, V. DAYTONA PARK
ASSOCIATES, LTD., A FLORIDA LIMITED PARTNERSHIP, ETC., ET AL., Case No. 93-
32654, CICI in the Circuit Court of the Seventh Judicial Circuit in and for
Volusia County, Florida.
This release is not intended to and shall not release the second party
from its obligations and responsibilities created under the terms and
conditions of that certain Stipulation of Settlement entered into between
first party and second party in the aforementioned lawsuit including those
exceptions to the non-consideration and consultation with its attorneys; and
(ii) said first party was not fraudulently induced, coerced or intimidated to
sign this release. In signing this Release, the first party has not relied
upon any oral or written statements or acts made by the second party, or its
attorneys or agents, other than as expressly stated in writing herein in this
Release.
DAYTONA PARK ASSOCIATES, LTD., a
Florida Limited Partnership,
BY: CARLYLE REAL ESTATE LIMITED
PARTNERSHIP-XV, an Illinois limited
partnership, a general partner
BY: JMB REALTY CORPORATION, a
Delaware corporation, a general
partner,
BY: BRIAN K. ELLISON
Name: BRIAN K. ELLISON
Title: Vice President
STATE OF ILLINOIS )
____________________ ) SS:
)
COUNTY OF COOK )
____________________ )
The foregoing instrument was acknowledged before me this 15th day of
MARCH, 1994 by BRIAN K. ELLISON as , of JMB REALTY
CORPORATION, a Delaware corporation, a general partner, of DAYTONA PARK
ASSOCIATES, LTD., a Florida limited partnership, on behalf of the partnership.
He/she/they personally appeared before me, is/are personally known to me or
produced ____________________ as identification, and did take an oath.
Notary: MONA SARNOFF
__________________
Print Name: MONA SARNOFF
__________________
Notary Public, State of ILLINOIS
________
My Commission expires: 2/1/98
____________
[NOTARIAL SEAL]
RELEASE
________
DAYTONA PARK ASSOCIATES, LTD., a Florida limited partnership, by and
through its general partner, CARLYLE REAL ESTATE LIMITED PARTNERSHIP-XV, an
Illinois limited partnership, by and through its general partner, JMB REALTY
CORPORATION, a Delaware corporation, ("first party"), for and in consideration
of the sum of ten ($10.00) Dollars, and other valuable consideration, received
from or on behalf of THE TRAVELERS INSURANCE COMPANY, a Connecticut
Corporation, ("second party"), the receipt whereof which is hereby
acknowledged by first party,
(Wherever used herein the terms "first party" and "second party"
shall include singular and plural past and present heirs, legal
representatives, and assigns of individuals, the successors,
assigns, officers, employees, directors and shareholders of said
corporation, in their individual, personal and corporate
capacities, and the limited and general partners of partnerships,
wherever the context so admits or requires).
HEREBY remises, releases, acquits, satisfies, and forever discharges the
said second party, and each of its past and present predecessors and
successors in interest, assigns, officers, employees, attorneys, directors and
shareholders, in their individual, personal and corporate capacities, of and
from all, and all manner of action and actions, cause and causes of action,
suits, debts, dues, sums of money, accounts, reckonings, bonds, bills,
specialties, covenants, contracts, controversies, agreements, promises,
variances, trespasses, liabilities, damages, judgments, executions, claims and
demands whatsoever, whether in law or in equity, whether matured or unmatured
and whether known or unknown or otherwise, which said first party, ever had,
now has, or hereafter can, shall or may have, against said second party,
and/or its past and present predecessors and successors in interest, assigns,
officers, employees, attorneys, directors and shareholders, in their
individual, personal and corporate capacities for, upon or by reason of any
matter, cause or thing whatsoever, from the beginning of the world to the day
of these presents including, but not limited to, any claim that was asserted
or that could have been asserted, causes of action, and other liabilities sued
upon in that certain lawsuit captioned THE TRAVELERS INSURANCE COMPANY, A
CONNECTICUT CORPORATION, V. DAYTONA PARK ASSOCIATES, LTD., A FLORIDA LIMITED
PARTNERSHIP, ETC., ET AL., Case No. 93-32654, in the Circuit Court of the
Seventh Judicial Circuit in and for Volusia County, Florida.
This release is not intended to and shall not release the second party
from its obligations and responsibilities created under the terms and
conditions of that certain Stipulation of Settlement entered into between
first party and second party in the aforementioned lawsuit.
The first party hereby expressly acknowledges, warrants and represents
that (i) this Release was signed only after due recourse nature of the loan
transaction at issue which are specifically provided under the loan documents
sued upon herein, including, but not limited to, the Renewal and Substitution
Note dated December 18, 1985, the Demand Promissory Note dated March 13, 1991
and the Consolidated and Restated Note dated March 13, 1991, as set forth in
paragraph 9 of the Stipulation of Settlement.
The first party hereby expressly acknowledges, warrants and represents
that (i) this Release was signed only after due consideration and consultation
with its attorneys; and (ii) said first party was not fraudulently induced,
coerced or intimidated to sign this release. In signing this Release, the
first party has not relied upon any oral or written statements or acts made by
the second party, or their attorneys or agents, other than as expressly stated
in writing herein in this Release.
THE TRAVELERS INSURANCE COMPANY, a
Connecticut corporation
BY: NATALIE L. BOCK
Name: NATALIE L. BOCK
Title: ASSISTANT SECRETARY
[CORPORATE SEAL]
Address: 2215 YORK ROAD, STE. 504
OAK BROOK, IL 60521
STATE OF ILLINOIS )
________ ) SS:
)
COUNTY OF DU PAGE )
________ )
The foregoing instrument was acknowledged before me this 17th day of
MARCH, 1994 by NATALIE L. BOCK as ASSISTANT SECRETARY of THE TRAVELERS
INSURANCE COMPANY, a CONNECTICUT corporation, on behalf of the corporation.
He/SHE/they personally appeared before me, IS/are personally known to me or
produced _____________________ as identification, and [did] [did not] take an
oath.
Notary: MELISSA K. O'NEILL
_____________________
[NOTARIAL SEAL] Print Name: MELISSA K. O'NEILL
_____________________
Notary Public, State of ILLINOIS
_________
My commission expires: 9/5/95
_________
December 15, 1994
Securities and Exchange Commission
450 Fifth Street, N.W.
Judiciary Plaza
Washington, D.C. 20549
Re: CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XV
Commission File No. 0-16111
Form 8-K
Gentlemen:
Transmitted, for the above-captioned registrant, is the electronically filed
executed copy of registrant's current report on Form 8K dated December 15,
1994.
Thank you.
Very truly yours,
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XV
BY: JMB Realty Corporation
(Corporate General Partner)
By: C. SCOTT NELSON
________________________________
C. Scott Nelson, Vice President
Director of Partnership
Financial Reporting
CSN:sf
Enclosures
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): November 15, 1994
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XV
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Illinois 0-16111 36-3314827
------------------- -------------- --------------------
(State or other) (Commission (IRS Employer
Jurisdiction of File Number) Identification No.)
Organization
900 N. Michigan Avenue, Chicago, Illinois 60611-1575
-----------------------------------------------------
(Address of principal executive office)
Registrant's telephone number, including area code: (312) 915-1987
-------------------------------------------------------------------
125 BROAD STREET BUILDING
New York, New York
-------------------------------
ITEM 5. OTHER EVENTS. On November 15, 1994, effective as of October 15, 1994
JMB/125 Broad Building Associates, L.P. ("JMB/125"), an Illinois limited
partnership, made an agreement with its joint venture partners (the "O&Y
partners") in the 125 Broad Street Company ("125 Broad") to settle their
dispute regarding 125 Broad and its property. Pursuant to the agreement,
JMB/125 assigned its approximate 48.25% interest in 125 Broad, which owns the
125 Broad Street Building and a leasehold interest in the underlying land
located in New York, New York, to O&Y Plaza Corp. and released the O&Y
partners from any claims of JMB/125 related to 125 Broad. Carlyle Real Estate
Limited Partnership-XV (the "Partnership") owns, indirectly through Carlyle-XV
Associates, L.P., an approximate 60% limited partnership interest in JMB/125.
Carlyle Real Estate Limited Partnership-XVI, an affiliate of the Partnership,
owns, indirectly through another limited partnership, substantially all of the
remaining interest in JMB/125. O&Y Plaza Corp. is an affiliate of Olympia &
York Developments, Ltd. ("O&Y") and the O&Y partners. The 125 Broad Street
Building consists of approximately 1,336,000 square feet. The occupancy at
the date of assignment was 66%.
In return, JMB/125 received an unsecured promissory note in the principal
amount of $5 million bearing simple interest at 4.5% per annum with all
principal and accrued interest due at maturity in October 1999, subject to
mandatory prepayments of principal and interest or acceleration of the
maturity date under certain circumstances. In addition, JMB/125 received a
release from any claims of certain O&Y affiliates and will generally be
indemnified against any liability as a general partner of 125 Broad. JMB/125
was also relieved of any obligation to contribute cash to 125 Broad in the
amount of its deficit capital account balance. Affiliates of O&Y subsequently
filed a pre-arranged bankruptcy plan for reorganization of 125 Broad under
Chapter 11 of the Bankruptcy Code in order to facilitate 125 Broad's transfer
of the office building to the mortgage lender in satisfaction of the mortgage
debt and other claims. As a result, the transactions between JMB/125 and O&Y
Plaza Corp. and the O&Y partners could be subject to challenge by certain
creditors resulting in changes in or recission of the transactions.
As a result of the assignment of its interest, and assuming that there is
no subsequent modification or rescission thereof, JMB/125 no longer has an
ownership interest in the office building, which will result in net gain for
financial reporting and Federal income tax purposes to JMB/125 (and through
JMB/125 and the Partnership, to the Limited Partners of the Partnership) with
no distributable proceeds. Collection of principal and interest, if any,
would result in additional gain for financial reporting and Federal income tax
purposes. Such collections would constitute distributable proceeds upon
receipt.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements. Not applicable.
(b) Proforma financial information - Not applicable.
(c) Exhibits
1. Letter Agreement consummating assignment from JMB/125 to O&Y
Plaza Corp. dated November 15, 1994.
2. Promissory Note dated October 31, 1994 made by O&Y Equity
Company, L.P. ("Equity") and O&Y (U.S.) Development Company, L.P. ("Devco") to
JMB/125 Broad Building Associates, L.P. ("JMB") in the principal amount of
$5,000,000.
3. Release and Indemnity dated October 31, 1994 from Equity and
Devco.
4. Assignment of Partnership Interest from JMB to O&Y Plaza
Corp. dated October 31, 1994.
5. Release of Equity, Devco, 125 Broad Street Company and O&Y
Management Corp. by JMB, JMB/125 Broad Building Associates and JMB Realty
Corporation dated October 31, 1994.
SIGNATURES
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.
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XV
BY: JMB Realty Corporation
(Corporate General Partner)
By: C. SCOTT NELSON
________________________________
C. Scott Nelson, Vice President
Director of Partnership
Financial Reporting
Dated: December 15, 1994
KAYE, SCHOLER, FIERMAN, HAYS & HANDLER
425 PARK AVENUE
NEW YORK, N.Y. 10022-3598
---
(212) 836-8000
November 15, 1994
Writer's direct dial number
(212) 836-8596
VIA FEDERAL EXPRESS AND FAX
---------------------------
Mr. Stuart Nathan
JMB Realty Corporation
900 North Michigan Avenue, Suite 1900
Chicago, IL 60611
Re: 125 Broad Street Company
------------------------
Dear Stuart:
Enclosed are executed originals of the following documents:
(a) Promissory Note (one original) dated October 31, 1994
made by O&Y Equity Company, L.P. ("Equity") and O&Y (U.S.)
Development Company, L.P. ("Devco") to JMB/125 Broad Building
Associates, L.P. ("JMB") in the principal amount of $5,000,000; and
(b) Release and Indemnity (two originals) dated October 31,
1994 from Equity and Devco.
I am concurrently delivering to O&Y the executed originals of
the following documents, which are also dated October 31, 1994, and
copies of which are enclosed for your files:
(i) Assignment of Partnership Interest from JMB to O&Y Plaza
Corp. ("O&Y"); and
(ii) Release from JMB, JMB/125 Broad Building Associates and
JMB Realty Corporation.
KAYE, SCHOLER, FIERMAN, HAYS & HANDLER
Mr. Stuart Nathan 2 November 15, 1994
Accordingly, the transfer of JMB's interest in 125 Broad
Street Company to O&Y has been consummated.
Sincerely,
BARRY P. MARCUS
--------------------
Barry P. Marcus
Enclosure:
cc: Corinne Ball, Esq.
Richard Beltram
Lee Ann Duffy, Esq.
David King
Paul Leake, Esq.
Leo J. Pircher, Esq.
Jeffrey Rosenthal
Andrew P. Siedman, Esq.
Joel Simon
Lary S. Wolf, Esq.
Scott Zucker, Esq.
PROMISSORY NOTE
---------------
$5,000,000 New York, New York
October 31, 1994
FOR VALUE RECEIVED 0&Y Equity Company, L.P. and O&Y (U.S.)
Development Company, L.P., each a Delaware limited partnership
(individually and together hereinafter called "Maker"), hereby
promise to pay to the order of JMB/125 Broad Building Associates,
L.P., an Illinois limited partnership (hereinafter called "Payee"),
at 900 North Michigan Avenue, Chicago, Illinois 60611, or at such
other place as Payee or any holder of this Note may from time to
time designate, the principal sum of Five Million Dollars
($5,000,000), together with interest at the Interest Rate (as
hereinafter defined), in lawful money of the United States, on the
Maturity Date (as hereinafter defined). Interest shall be computed
on the basis of a 365-day or 366-day year, as the case may be.
The following capitalized terms are defined as follows for
purposes of this Note:
"Interest Rate" shall mean 4.5% per annum simple interest;
provided however, that if O&Y Equity Company, L.P. ("Equityco")
executes and delivers to Canadian Imperial Bank of Commerce
("CIBC") a promissory note (which note, as it may be amended from
time to time, and/or any separate standstill, forbearance or
similar agreement (a "Standstill Agreement") relating thereto, is
herein referred to as the "CIBC Note") in settlement of Equityco's
obligations to CIBC under two Guarantee Agreements dated as of June
25, 1987 given by Equityco to CIBC in connection with the mortgage
loan made by CIBC to 125 Broad Street Company, then the "Interest
Rate" shall thereafter be equal to the greater of 4.5% per annum
simple interest or the interest rate under the CIBC Note.
"Maturity Date" shall mean October 31, 1999; provided,
however, that if the CIBC Note is executed and delivered, then the
"Maturity Date" shall be the earlier of (i) maturity date under the
CIBC Note or (ii) December 31, 1999.
Maker may, at its option, at any time and from time to time,
prepay all or any part of (i) the interest accrued and unpaid under
this Note ("Unpaid Interest"), or (ii) the unpaid principal balance
of this Note ("Unpaid Interest"), together with all Unpaid Interest
accrued thereon. Each such partial prepayment shall be applied
first to Unpaid Interest and then to Unpaid Principal. If the CIBC
Note is executed and delivered, then Maker shall make a mandatory
prepayment (a "Required Prepayment") on account of Unpaid Interest
and/or Unpaid Principal on each date on which a payment of interest
and/or principal is paid under the CIBC Note (a "CIBC Payment"),
which Required Prepayment shall consist of and be in an amount
equal to the sum of (i) the Unpaid Interest multiplied by a
percentage that is equal to the percentage that such CIBC Payment
of accrued and unpaid interest constitutes of the total accrued and
unpaid interest on the CIBC Note on each such date plus (ii) the
Unpaid Principal multiplied by a percentage that is equal to the
percentage that such CIBC Payment of principal constitutes of the
total outstanding principal of the CIBC Note on each such date.
For purposes of the foregoing, a CIBC Payment shall be deemed to
have been made at the time it was to have been due and payable if
the holder of the CIBC Note agrees (other that in a Standstill
Agreement Delivered at the time the CIBC Note is first delivered)
to a deferral of such CIBC Payment (a "CIBC Deferral"), unless
Maker gives to Payee, on or before such date, consideration
equivalent and proportionate to the consideration (if any) given to
the holder of the CIBC Note (the "CIBC Consideration") to obtain
such deferral (it being understood that such consideration to be
given to Payee shall be in an amount that bears the same proportion
to the deferred Required Prepayment as the CIBC Consideration bears
to the deferred CIBC Payment).
Maker shall deliver to Payee (i) copies of all financial
statements and other informational materials that Maker delivers to
the holder of the CIBC Note pursuant thereto, at the same times as
such deliveries are made to such holder, and (ii) copies of the
CIBC Note (and any amendments thereto and any separate Standstill
Agreement relating thereto) and notice of any CIBC Deferral
promptly after delivery of any thereof.
If the CIBC Note is not executed and delivered, then for
purposes hereof, all references herein to the CIBC Note shall refer
instead to the note first executed and delivered after the date
hereof by Maker, or either of the parties comprising Maker, to a
commercial bank (or, at Payee's option, another entity that is not
an "Affiliate" of Maker (as such quoted term is defined in the
Draft Plan hereinafter referred to)), to evidence an unsecured
recourse claim (including deficiency claim that is subsequently
liquidated as unsecured) against such party that arose from an
extension of credit or other loan accommodation (as such note may
be amended from time to time, together with any separate Standstill
Agreement relating thereto).
By its acceptance of this Note, Payee agrees that it will not
oppose, directly or indirectly, a plan of reorganization of Maker
(or either party comprising Maker) under Chapter 11 of the
Bankruptcy Code (as defined in the Draft Plan) which provides that
the reorganized debtor to its successor will emerge from Chapter 11
with (i) the obligation to pay the Debt in full over a term and in
a manner that is at least as favorable to Payee as the terms
hereof, and (ii) Maker's obligations under the release and
Indemnity dated this date from Maker to Payee.
2
Payee may, at its option, declare the entire Unpaid Principal
and all Unpaid Interest (the "Debt") to be immediately due and
payable upon (i) the commencement by Maker of a case under the
Bankruptcy Code, or under any other applicable federal or state
bankruptcy law or other similar law (which, is in the case of an
involuntary proceeding, is not contested or is not set aside within
120 days); (ii) the appointment of a trustee or receiver of all or
a substantial part of the property then owned by Maker; (iii) an
assignment for the benefit of creditors by Maker; or (iv) the
failure by Maker to make any Required Prepayment within ten
business days after the due date therefor.
After maturity (by acceleration or otherwise), and both before
and after judgment, the unpaid principal balance of this Note, and
interest accrued thereon, shall bear interest at an annual rate
equal to (i) the greater of 7.5% or the "Default Rate" under the
CIBC Note (if entered into), or (ii) the maximum rate permitted by
law, whichever is less. Such interest shall be computed on the
basis of a 365-day or 366-day year, as the case may be.
No remedy of Payee if exclusive of any other remedy provided
herein or at law, and all remedies available to Payee shall be
cumulative.
Maker hereby waives diligence, demand, presentment, protest
and notice of any kind, and assents to extensions of the time of
payment, releases, or forbearance or other indulgence, without
notice.
This Note may note be changed, modified or terminated orally,
but only by an agreement in writing signed by the party to be
charged.
The obligations of the parties constituting Maker hereunder
shall be joint and several.
Maker represents and warrants to Payee that the CIBC Note
referred to herein is the same as the "Equityco Note" referred to
in the draft Plan of Reorganization for 125 Broad Street Company,
a copy of which has been delivered to Payee (the "Draft Plan").
3
IN WITNESS WHEREOF, Maker has executed this Note as of
the date first above written.
O&Y EQUITY COMPANY, L.P.
By: O&Y Equity General Partner Corp.,
General Partner
By: JOEL M. SIMON
--------------------
Name:Joel M. Simon
Title:Executive Vice President
O&Y (U.S.) DEVELOPMENT COMPANY, L.P.
By: O&Y (U.S.) Development General
Partner Corp., General Partner
By: JOEL M. SIMON
--------------------
Name:Joel M. Simon
Title:Executive Vice President
4
RELEASE AND INDEMNITY
---------------------
O&Y Equity Company and O&Y (U.S.) Development Company, L.P.,
each a Delaware limited partnership (individually and together
"O&Y"), for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, jointly and severally
agree as follows:
1. O&Y does hereby release and discharge JMB/125 Broad
Building Associates, L.P. ("JMB"), an Illinois partnership, JMB/125
Broad Building Associates, and Illinois general partnership
("JMB/125") and their respective successors, those persons,
corporations, partnerships or other entities that are former or
present partners in JMB, JMB/125 or such successors, all direct and
indirect owners or partners of such partners, JMB Realty
Corporation, an Illinois corporation ("JMB Corp."), and its
successors and direct and indirect owners, and all officers,
directors, attorneys and other agents of any of the foregoing
(collectively, "Releasees"), from all actions, causes of action,
suits, debts, dues, sums of money, accounts, reckonings, bonds,
bills, specialties, controversies, variances, trespasses, damages
judgments, executions, claims and demands whatsoever in law or
equity against Releasees, or any of them, which O&Y ever had, now
has or hereafter can, shall or may have for, upon or by reason of
any matter, cause or thing whatsoever arising out of or relating to
any matter, fact or thing, existing from the beginning of the world
to the date hereof, arising out of or in any way relating to 125
Broad Street Company, a New York limited partnership ("125 Broad
Co.") or the assets or liabilities thereof or JMB's or JMB/125's
former interest therein, including without limitation, matters
arising out of or in any way relating to (i) the Second Amended and
Restated Agreement of Limited Partnership of 125 Broad Co. dated
December 31, 1985, as amended (the "Partnership Agreement"), or
(ii) the Basic Agreement (as such term is defined in the
Partnership Agreement); except that nothing herein shall release
JMB from its obligations under that certain Assignment of
Partnership Interest dated this date (the "Assignment") from JMB to
O&Y Plaza Corp.
2. O&Y hereby agrees to indemnify, defend and hold harmless
Releasees from and against all liabilities and obligations of 125
Broad Street Company, a New York limited partnership (the
"Partnership"), whether arising before or after the delivery of the
Assignment, except liabilities and obligations existing as a result
of any inaccuracies in JMB's representations and warranties in the
Assignment.
3. O&Y Equity Company, L.P. ("Equity") hereby represents and
warrants to JMB that the Plan of Reorganization and Disclosure
Statement that will first be proposed by Equity and the Partnership
in the contemplated commencement by the Partnership of a case under
Chapter 11 of the United States Bankruptcy Code will be the same in
all respects materially affecting JMB as the drafts of such Plan of
Reorganization and Disclosure Statement most recently delivered to
JMB or its counsel prior to the delivery of the Assignment;
provided, however, that if such proposed Plan of Reorganization or
Disclosure Statement is not approved, confirmed and consummated,
neither O&Y nor the Partnership shall have any liability or
obligation to JMB as a result thereof or in connection with the
proposal by O&Y, the Partnership or any other person or entity,
and/or the approval, confirmation and consummation, of a different
Plan of Reorganization and/or Disclosure Statement.
4. If any provision of this Release and Indemnity or the
application thereof to any circumstance shall be invalid or
unenforceable to any extent, the remaining provisions hereof shall
not be affected thereby and shall remain valid and enforceable to
the fullest extent permitted by law.
IN WITNESS WHEREOF, O&Y has caused this Release and Indemnity
to be duly executed October 31, 1994.
O&Y EQUITY COMPANY, L.P.
By: O&Y Equity General Partner Corp.,
General Partner
By: JOEL M. SIMON
----------------------
Name: Joel M. Simon
Title: Executive Vice President
O&Y (U.S.) DEVELOPMENT COMPANY, L.P.
By: O&Y (U.S.) Development General
Partner Corp., General Partner
By: JOEL M SIMON
---------------------
Name: Joel M. Simon
Title: Executive Vice President
ASSIGNMENT OF PARTNERSHIP INTEREST
----------------------------------
THIS ASSIGNMENT OF PARTNERSHIP INTEREST is made as of October
31, 1994, by JMB/125 BROAD BUILDING ASSOCIATES, L.P. an Illinois
limited partnership, having an office at 900 North Michigan Avenue,
Chicago, Illinois 60611 ("Assignor"), to O&Y PLAZA CORP., a
Delaware corporation, having an office at 237 Park Avenue, New
York, NY 10017 ("Assignee").
WITNESSETH, THAT:
For good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by Assignor, Assignor
hereby unconditionally assigns, transfers and sets over to claims
against that certain New York limited partnership (the
"Partnership") known as 125 Broad Street Company, including,
without limitation, Assignor's 48.2467039% interest as a general
partner in the Partnership and Assignor's 48.2467039% interest in
the profits, losses, gains, deduction, credits and distributions of
the Partnership (all of the foregoing being collectively referred
to herein as the "Partnership Interest").
Assignor hereby withdraws as a partner in the Partnership.
Assignor hereby represents and warrants to Assignee that: (i)
Assignor has the requisite power and authority to execute and
deliver this Assignment and has obtained all consents and
permissions required for such execution and delivery; (ii) this
Assignment has been duly and validly authorized, executed and
delivered by Assignor and is binding upon and enforceable against
Assignor; and (iii) Assignor is conveying to Assignee hereunder
good title to, and the entire right, title and interest in, the
Partnership Interest, free and clear of any liens, encumbrances,
claims, liabilities, rights, demands, exceptions, agreements,
covenants and restrictions of any kind or character, including but
not limited to, any security interests or any restriction on sale
or assignment, or any option, right or agreement for the purchase
or acquisition of the same or of any interest in the same, except
as expressly set forth in the partnership agreement of the
Partnership (including, but not limited to, the security interest
therein set forth) and except for any liability that all general
partners in the Partnership have by virtue of their status as
general partners.
At Assignee's request, Assignor shall execute, acknowledge and
deliver such documents and instruments, and take such other
actions, as may be necessary or reasonably required to fully
effectuate and confirm the transfer and assignment of the
Partnership Interest and Assignor's withdrawal as a partner in the
Partnership as contemplated hereby; provided Assignor does not
thereby incur any new obligation or liability.
This Amendment shall be binding upon Assignor and its
successors and assigns and shall inure to the benefit of Assignee
and its successors and assigns.
IN WITNESS WHEREOF, Assignor has executed this Assignment as
of the date first above written.
JMB/125 BROAD BUILDING ASSOCIATES, L.P.
By: Carlyle Advisors, Inc.
General Partner
By: STUART NATHAN
---------------------------
President
RELEASE
JMB/125 Broad Building Associates, L.P., an Illinois limited
partnership ("JMB LP"), JMB/125 Broad Building Associates, an
Illinois General partnership ("JMB/125"), and JMB Realty
Corporation, an Illinois corporation, on behalf of itself and its
wholly-owned subsidiaries ("JMB") (JMB LP, JMB/125 and JMB,
collectively and individually, "Releasor"), for good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged,
Now DO HEREBY RELEASE AND DISCHARGE:
O&Y Equity Company, L.P., a Delaware limited partnership
("Equityco"), O&Y (U.S.) Development Company, L.P., a Delaware
limited partnership ("Devco"), 125 Broad Street Company, a New York
limited partnership ("125 Broad Co."), those persons, corporations,
partnerships or other entities that are former or present partners
in Equityco, Devco or 125 Broad Co., all direct and indirect owners
or partners of such partners, and O&Y Management Corp., a New York
corporation (collectively, "Releasees"), in addition to the
officers, directors, and successors in interest of Releasees, or
any of them, from all actions, causes of action, suits, debts,
dues, sums of money, accounts, reckonings, bonds, bills,
specialties, controversies, variances, trespasses, damages,
judgments, executions, claims and demands whatsoever in law or
equity against Releasees, or any of them, which Releasor ever had,
now has or hereafter can, shall or may have for, upon or by reason
of any matter, cause or thing whatsoever, existing from the
beginning of the world to the date hereof, arising out of or in any
way relating to 125 Broad Co. or the assets or liabilities thereof
or Releasor's interest or former interest therein, including
without limitation, matters arising out of or in any way relating
to (i) the Second Amended and Restated Agreement of Limited
Partnership of 125 Broad Co. dated December 31, 1985, as amended
(the "Partnership Agreement"), or (ii) the Basic Agreement, the
Management Agreement, the Development Guaranty or the Takeover
Agreement Assignment (as such terms are defined in the Partnership
Agreement); except that nothing herein shall release Equityco or
Devco from their obligations under (i) that certain Promissory Note
dated this date made by Equityco and Devco to JMB LP in the
principal amount of $5,000,000 or (ii) that certain Release and
Indemnity dated this date given by Equityco and Devco to JMB LP.
IN WITNESS WHEREOF, Releasor has caused this Release to
be duly executed October 31, 1994.
JMB/125 Broad Building Associates, L.P.
By: Carlyle Advisors, Inc.,
General Partner
By: STUART NATHAN
-------------------------------
Name: Stuart Nathan
Title: President
JMB/125 Broad Building Associates
By: Carlyle Real Estate
Limited Partnership - XV,
General Partner
By: JMB REALTY CORPORATION
General Partner
By: STUART NATHAN
--------------------------
Name: Stuart Nathan
Title: Executive Vice President
JMB Realty Corporation
By: STUART NATHAN
-----------------------------
Name: Stuart Nathan
Title:Executive Vice President
