NINETEENTH AMENDMENT
TO
CONDOMINIUM OFFERING PLAN
FOR
THE 322 WEST 57TH STREET CONDOMINIUM
This Nineteenth Amendment (this "Amendment") modifies and supplements the
terms of the Condominium Offering Plan for The 322 West 57 th Street Condominium, located at
322 West 57`h Street, New York, New York 10019, first accepted for filing on June 22, 2006 (as
amended to date, the "Plan"), and is incorporated into and should be read in conjunction with the
Plan. The terms of this Amendment are as follows:
1.
Purpose of Amendment
The purpose of this Amendment is to (i) disclose that, pursuant to a foreclosure
sale held on August 6, 2009, in accordance with the provisions of the Uniform Commercial Code
(the "UCC Sale"), 434 M LLC ("Mezzanine Lender"), an entity described in more detail below,
has foreclosed upon the equity interests in Sponsor given to secure the mezzanine loan held by
Mezzanine Lender, (ii) disclose information regarding Sponsor; (iii) update and revise certain
other provisions of the Plan, (iii) disclose Sponsor's new counsel (which counsel will also
henceforth serve as the Escrow Agent), and (iv) extend the term of the offering.
2.
Ownership of Sponsor
Pursuant to the UCC Sale, Mezzanine Lender acquired all of the equity interest in
Sponsor previously held, as described in the Plan, by companies controlled, directly or indirectly,
by Yair Levy, Serge Hoyda and Kent Swig (collectively, the "Former Principals"). As a result of
the UCC Sale, the Former Principals are no longer the principals of Sponsor, which is now
owned by Mezzanine Lender. The executives now directing the development of the
Condominium and the consummation of the offering are Amy Rose and Constantine M.
Dakolias.
Accordingly, the. section of the plan entitled "Identity of Parties" pertaining to
Sponsor is hereby amended to read as follows:
"Sponsor is 322 West 57`h Owner LLC, a Delaware limited liability company,
with an office address of c/o Rose Associates, Inc., 200 Madison Avenue, New
York, New York 10016. The sole member is 434 M LLC, a Delaware limited
liability company. The executives now directing the development of the
Condominium and the consummation of the offering are Amy Rose and
Constantine M. Dakolias. Ms. Rose, a senior executive of Talltower57 LLC, a
member of the sole member of 434 M LLC (the sole member of Sponsor), has
been involved in the operation and ownership of commercial and residential real
estate in New York City for 20 years, and Mr. Dakolias, a senior executive of 434
M LLC (the sole member of Sponsor), has been involved in the business
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operations of financial funds for more than 15 years. Neither Sponsor, Ms. Rose
or Mr. Dakolias has converted to cooperative or condominium ownership any
other residential properties (other than the Condominium) in the last 5 years.
There have been no prior felony convictions of Sponsor or such executives, and
no prior convictions, injunctions and judgments against Sponsor, or such
executives, that may be material to the Plan or an offering of securities generally,
within 15 years prior to the date hereof. The business address of Sponsor is now:
322 West 57 th Owner LLC, c/o Rose Associates, Inc., 200 Madison Avenue, New
York, New York 10016."
3.
Revised Budget and Financial Statement
Annexed hereto as Exhibit A is a Budget for the Condominium for calendar year
2010, reflecting an increase in Residential Common Charges of approximately 11.9% over
calendar year 2009. Annexed hereto as Exhibit B is an Expert's Certificate Regarding Adequacy
of Budget, regarding such revised Budget. Annexed hereto as Exhibit C is an Expert's
Certificate Regarding Adequacy of Common Charges Payable by Commercial Unit Owner,
regarding such revised Budget.
Annexed hereto as Exhibit D are audited financial statements for the
Condominium for the period August 22, 2007 through December 31, 2007, and for the calendar
year ending December 31, 2008. To the extent that any shortfall existed'in Sponsor's prior year
Common Charge obligations with respect to Unsold Units, Sponsor has or will promptly cure
such arrearages as set forth in Paragraph 5 below.
To the extent that Condominium expenses for 2009 or arty other prior year of
Condominium operations exceed Common Charges collected from Unit Owners with respect to
any such period, Sponsor shall pay for such shortfall(s) from its own funds, and shall not cause
the Condominium Board or the Residential Board to levy assessments against Unit Owners for
such shortfall(s).
4.
Condominium Board
Effective as of August 27, 2009, Sponsor removed all previously designated
members of the Residential Board, the Commercial Board and the Condominium Board, and
designated John Jegen, John Gacinski and Constantine Dakolias as the members of the interim
Residential Board. The Commercial Unit Owners designated Brian G. Schwagerl and Kevin J.
McCauley as the members of the interim Commercial Board. Collectively, such five (5) persons
constituted the interim Condominium Board. Sponsor, as the owner of the majority of Unsold
Units, has voting control of the Condominium Board and the Residential Board during the period
which continues until the earlier of: (i) Sponsor and its designees owning less than a majority of
the Residential Units or (ii) five (5) years after the First Closing (which First Closing occurred on
August 22, 2007, as set forth in the Seventeenth Amendment to the Plan).
Although, as noted above, Sponsor owns more than a majority of the Unsold
Units, Sponsor agreed to convene a Special Meeting of Residential Unit Owners (which
constituted the First Annual Meeting of Residential Unit Owners) in order for the Residential
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Board to be expanded to nine (9) members, and to allow Residential Unit Owners to vote
exclusively for three (3) independent members of such Board (one of whom will also serve on
the Condominium Board).
The Special Meeting occurred on September 16, 2009. At such meeting, Kashif
Riaz, Larry Wagner and Benjamin London were elected by the Residential Unit Owners other
than Sponsor or its affiliates as the independent members of the Residential Board, and Sponsor
named John Jegen, John Gacinski, Jack Levy, Michael Schindler, Christopher Linkas and
Constantine Dakolias to serve on the Residential Board as Sponsor's designees. From such 9member Residential Board Larry Wagner, John Jegen, John Gacinski, Jack Levy, Christopher
Linkas and Constantine Dakolias shall also represent the Residential Board on the expanded 9member Condominium Board. Brian G. Schwagerl, Kevin J. McCauley and Louis M. Nowikas
have been named as the Commercial Board's representatives on the Condominium Board.
Notwithstanding the foregoing, Sponsor does not waive any of its rights to control
of the Boards or otherwise as described in the Plan.
5.
Common Charges; Reserve Fund
As a result of numerous allegations that Sponsor, while under control of the
Former Principals, was delinquent in its Reserve Fund and Common Charge obligations, Sponsor
and the independent Unit Owner representatives jointly retained the accounting firm PKF on
behalf of the Condominium in order to conduct a detailed audit of the Condominium's financials
from the commencement of Condominium operations through the end of 2008. The results of
such audit are reflected in the financial statements annexed hereto as Exhibit E.
Sponsor has made significant payments toward known arrearages for Common
Charges on Unsold Units by payment of cash, or by the Condominium's credit for Sponsor's
account for payments made by Sponsor (or by Mezzanine Lender and/or its , affiliates) for
obligations of the Condominium (e.g., payment by Mezzanine Lender of vendors who were
owed payment by the Condominium). As set forth in Paragraph 3 above, to the extent that
Condominium expenses for 2009 or any other prior year of Condominium operations exceed
Common Charges collected from Unit Owners with respect to any such period, Sponsor shall
pay for such shortfall(s) from its own funds, and shall not cause the Condominium Board or the
Residential Board to levy assessments against Unit Owners for such shortfall(s).
Sponsor has also made significant payments toward known arrearages in Reserve
Fund contributions. Sponsor has determined that it was required to make an initial contribution
equal to 1% of the aggregate offering price of all Residential Units at the discounted rate offered
to tenants of Residential Units in the Tenth Amendment to the Plan, less a credit against such
Reserve Fund obligations for qualifying Building work, also disclosed in the Tenth Amendment.
Sponsor was also required to contribute 3% of the actual sale price of Residential Units for
which closings of title have occurred to date.
The Reserve Fund of the Condominium is being held at J.P. Morgan Chase Bank,
in Account No. 29311.82584.
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6.
Working Capital Fund
The Working Capital Fund of the Condominium is being held at J.P. Morgan
Chase Bank, in Account No. 817559743.
7
New EscrowAgentand Counsel; Escrow Agreement
Kramer Levin Naftalis & Frankel LLP ("Kramer Levin"), 1177 Avenue of the
Americas, New York, New York 10036, is hereby substituted to serve as Sponsor's Counsel and
Escrow Agent under the terms of the Plan and to represent Sponsor as closing counsel in
connection with Unit closings. The Escrow Agreement annexed as Exhibit 17 to the Plan has
been terminated. Sponsor has entered into a new Escrow Agreement with respect to Purchase
Agreement Deposits with Kramer Levin, a copy of which is annexed hereto as Exhibit E (the
"New Escrow Agreement"). Deposits under executed Purchase Agreements are now being held
by Kramer Levin pursuant to the New Escrow Agreement.
8.
New Property Manager; Management Agreement; Interim Selling Agent
The existing agreements with Swig Equities, LLC (and/or any affiliates thereof)
regarding the management of the Condominium, management of the Unsold Units and as Selling
Agent for Sponsor have been terminated. The Condominium Board has entered into a new
Management Agreement with Rose Associates, Inc. (in such capacity, "New Managing Agent")
to manage the Building and the Common Elements on behalf of the Condominium, and Sponsor
has separately retained Rose Associates, Inc. to manage the Unsold Residential Units, and to
serve as the interim Selling Agent on behalf of Sponsor On such capacity, "Interim Selling
Agent"). Rose Associates, Inc. is affiliated with Sponsor.
Accordingly, the section of the plan entitled "Identity of Parties" pertaining to
Managing Agent is hereby amended to read as follows:
"Rose Associates has been in business since 1928. The firm manages and
develops residential real estate in the New York metropolitan area. Rose
Associates, Inc. is located at 200 Madison Avenue, New York, New York 100163998. The firm manages approximately 85 buildings consisting of
condominiums, cooperatives and rental properties. These buildings include
approximately 20,000 apartments. Among the residential condominiums
presently managed by Rose Associates, Inc. are Beacon Court, Three Lincoln
Center and Metropolitan Tower.
There have been no prior felony convictions of the Managing Agent or any
principals of Rose Associates, Inc.; and no prior convictions, injunctions and
judgments against Rose Associates, Inc., or any principal of the Rose Associates,
Inc. that may be material to the Plan or an offering of securities generally, that
occurred within 15 years prior to the date hereof."
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9.
Resident Manager
The Plan provides that, at or after the First Closing, Sponsor will sell two Units to
the Condominium to serve as the respective residences of the Resident Manager and the
Assistant Resident Manager. The Plan further provides that the respective Purchase Prices of
such Units are to be financed by purchase money loans from Sponsor, which loans are to be
secured by mortgages on such Units, and are to be on such other terms and conditions as are set
forth in the Plan. While Sponsor retains the right to sell such Units to the Condominium for such
purpose, Sponsor is currently leasing one Residential Unit to the Condominium to serve as the
Resident Manager's residence (the "Resident Manager's Lease") at the monthly rent of $4,500.
Such monthly rent is less than the monthly debt service, common charges, and real estate taxes
on the Resident Manager's Unit (currently aggregating in excess of approximately $6,000 per
month), which will be payable by the Condominium after such Unit is conveyed by Sponsor to
the Condominium. The Condominium is not currently employing an Assistant Resident
Manager.
10.
Construction
A revised Property Description is annexed hereto as Exhibit F. Sponsor has recommenced construction work on Unit and common area renovations, as well as outstanding
punch-list work on Residential Units previously conveyed to Unit Owners. The Building-wide
window replacement work described in the Property Description has also re-commenced on
behalf of the Condominium. Following the completion of the window replacement project,
Sponsor plans to re-commence the renovation of the public plaza located adjacent to the Pare
Vendome garden, near the Building entrance, including the renovation of the 57 `h Street
driveway. Such work is expected to commence in the late spring of 2010.
Sponsor has determined that the design plan for the amenity space to be located
on floors 57 and 58 of the Building, previously filed with the New York City Department of
Buildings under Prior Ownership, did not conform to the requirements for such space set forth in
the Plan, and has abandoned such design plan. Sponsor has engaged a new design consultant to
present a design plan with possible options for the amenity space, which Sponsor still plans to
construct on floors 57 and 58, as re-designed, Although Sponsor is currently reviewing the
proposed re-design program with the newly expanded Residential Board, no comprehensive final
program has been adopted by Sponsor.
11.
Asbestos
In 2006, 322 West 57th Owner LLC engaged a certified asbestos inspector to
perform an asbestos survey of "popcorn" ceiling material in the building in accordance with U.S
Environmental Protection Agency (EPA) guidelines. Over 130 samples were taken of ceiling
materials using Polarized Light Microscopy testing. None of the samples tested positive for the
presence of asbestos containing material (ACM), which is defined under the EPA and New York
City Department of Environmental Protection (NYCDEP) guidelines as any material containing
more than one percent asbestos. Between September 2006 and April 2007, over 200 air samples
were also collected and analyzed by Phase Contract Microscopy and Transmission Electron
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Microscopy and it was determined that no ACM was present in the air samples collected at levels
that might present any health risk. From July 2007 through April 2008, an additional 1880
samples were taken of the popcorn ceiling material and none of the samples tested positive for
the presence of ACM using Polarized Light Microscopy. Also from June 2007 through March
2008, 4340 air samples were taken in the hallways during renovation work. The samples were
analyzed using Transmission Electron Microscopy and no ACM was present at levels that might
present any health risk. Sampling performed by U.S. Occupational Safety and Health
Administration also did not detect ACM in the ceiling samples. However, other testing
conducted on behalf of the Sheffield Tenant's Association and the NYCDEP allegedly detected
the presence of ACM in a limited number of ceiling samples taken from several floors of the
building.
It is Sponsor's position that the ceiling material does not contain ACM. However,
in light of the conflicting test results and out of an abundance of caution, popcorn ceilings are .
being removed as apartments are being renovated and a contractor has been engaged to clean and
test all corridors and apartment areas where ceiling popcorn materials have or may have been
removed. Approximately 171 out of 597 Residential Units still have the original popcom
ceilings. This includes all Units on floors 17 through 20, as well select Units on floors 21
through 57. It should be noted that asbestos fibers are only a health hazard if they are friable and
become airbome. ACM that is in good condition and not friable does not pose a health hazard to
building occupants.
At the same time that sampling was being done on the popcorn ceiling material,
sampling was also done on the mastic adhesive that is under the parquet floor tiles in the Units.
The testing did determine that ACM was present in the mastic. Again, asbestos fibers are only a
health hazard if they are friable and become airborne. In the case of the floor tiles, there is not a
problem as long as the tiles remain in place and in good condition. Sponsor has been removing
the mastic adhesive in a number of Units and has been using proper asbestos abatement
procedures to do the removal work. One of the requirements is to have an independent air
monitor take air samples during and after the abatement work. From July 2007 through March
2008, 5946 air samples were taken during and after the mastic removal work and were analyzed
using Phase Contract Microscopy. No ACM was present in any of the air samples at levels that
might present any health risk.
12.
Purchase Agreement
The Purchase Agreement annexed as Exhibit 1 to the Plan has been updated. The
updated form of Purchase Agreement is annexed hereto as Exhibit G.
13.
Litigation
The following are brief summaries of certain material litigation matters affecting
Sponsor:
Pare Vendome HClub Investors, LLC v. 322 West 57 th Owner LLC, the
(a)
Board of Managers of the Pare Vendome Condominium, et al. (New York State Supreme
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Court).
The plaintiffs in this action allege, among other things, that Sponsor failed to
prevent water leaks into premises owned by the plaintiff in the Pare Vendome condominium,
which adjoins the Condominium on its westerly boundary. The State Supreme Court action has
been stayed, however, as the plaintiff and Sponsor agreed to submit the matter to arbitration.
Arbitration is ongoing among the plaintiffs, the Board of Managers of the Pare Vendome
condominium, Sponsor and the Condominium. The arbitration concerns, among other things,
work which Sponsor must perform in remediation of the water leaks, and the timetable under
which such work must be completed.
(b)
Cotton, James v. 322 West 57th Owner LLC (New York State Supreme
Court).
The plaintiffs in this action, also filed in New York State Supreme Court, are a
group of tenants who live in rent-stabilized Unsold Units in the Building. The plaintiffs, whose
residency pre-dates the conversion of the Building to Condominium ownership, have alleged that
Sponsor has tried to cause them to vacate their apartments so that Sponsor can sell their
apartments. The plaintiffs are seeking a number of injunctions against Sponsor's alleged actions,
as well as legal fees. The case is proceeding, although to date 8 of the 40 original plaintiffs have
withdrawn from the lawsuit.
New York).
(c)
z
Jansson, Susanne v. 322 West 57 `h Owner LLC (Civil Court of the City of
This proceeding seeks appointment of an Administrator of Rents to collect rents
from rental tenants and to apply those rents to remedying allegedly defective and dangerous
conditions at the building. Pursuant to applicable statute, such remedy is available where there
has been a showing of ongoing conditions that are a presently existing threat to the welfare,
health or safety of the tenants. The petitioners are essentially the same persons as the plaintiffs
in the Cotton action noted above. The Sponsor has recently moved for summary judgment
dismissing the request for appointment of an Administrator of Rents on the ground that there is
no allegation or proof of any presently existing dangerous conditions. The motion has been
argued and is currently sub judice.
(d)
Supreme Court).
322 West 57th Owner LLC v. Penhurst Productions, et al. (New York State
This is an action for use and occupancy charges brought by Sponsor against
certain residents of Unsold Units in the Building whose non-rent stabilized unregulated tenancies
and leases expired before the conversion of the Building to Condominium ownership. The
matter is in the discovery stage. The monies sought are for the approximate time period of April
2007 through January 2008.
(e)
Court).
Matthow, Dana v. 322 West 57d' Owner LLC (New York State Supreme
The plaintiff is a tenant of a rent-stabilized apartment in the Building, and alleges
that Sponsor has damaged him by utilizing approximately 2 square feet of space in a hallway
storage closet (of approximately 24 total square feet) for upgrading building electrical risers.
The case is proceeding.
14.
Mortgage Loan Balances
The mortgage loans encumbering the Unsold Units and the outstanding balances
thereunder are as follows:
(a)
Amended and Restated Project Loan Mortgage, Assignment of Leases and
Rents and Security Agreement between Sponsor and Column Financial, Inc. ("Column'), dated
July 7, 2006 and recorded September 6, 2006 as CRFN 2006-000-502129, as assigned by mesne
assignments to 434 Holdings II LLC ("Current Mortgagee"), an affiliate of Sponsor.
(b)
Amended and Restated Building Loan Mortgage, Assignment of Leases
and Rents and Security Agreement between Sponsor and Column, dated July 7, 2006 and
recorded on September 6, 2006 as CRFN 2006-000-502126, as assigned by mesne assignments
to Current Mortgagee.
(c)
Consolidated, Amended and Restated Senior Loan Mortgage, Assignment
of Leases and Rents and Security Agreement between Sponsor and Column, dated July 7, 2006
and recorded on September 6, 2006 as CRFN 2006-000-502123, as assigned by mesne
assignments to Current Mortgagee.
Each of the loans secured by the above-referenced mortgages was modified by an
Omnibus Amendment to Building Loan Agreement, Senior Loan Agreement and Project Loan
Agreement dated as of August 12, 2009 (the "Omnibus Agreement"). The Omnibus Agreement,
among other things, extended the maturity date of each of such loans to April 9, 2010. The
aggregate outstanding balance of all such loans as of November 30, 2009 is $34,718,022.01.
The current holder of each of the above-referenced mortgages is an affiliate of
Sponsor.
15.
Extension of Term of Offering
The effective period for the term of the Plan is extended for a period of twelve
(12) months from the filing of this Amendment.
16.
Definitions
Except as herein defined, all capitalized terms used in this Amendment which are
defined in the Plan shall have the respective meaning ascribed to such terms in the Plan.
17.
Incorporation of the Plan
The Plan, as modified and supplemented by this Amendment, is incorporated
herein by reference with the same force and effect as if set forth at length.
No Material Changes
in the Plan
18.
There have been no material changes in the Plan except as set forth in this
Amendment. The Plan, as hereby amended, does not knowingly omit any material fact.
Dated: December 18, 2009
322 West 57th Owner.LLC
Exhibits
Intentionally Omitted