EFTA00999340.pdf

From: Heather Gray To: jeffrey E. <[email protected]> Subject: RE: New Art Entity - review of existing art loan documents Date: Wed, 22 Oct 2014 19:45:53 +0000 Got it. Thanks From: jeffrey E. [[email protected]] Sent: Wednesday, October 22, 2014 3:45 PM To: Heather Gray Subject: Re: New Art Entity - review of existing art loan documents once we decide exactly what we are doing , we will tell them . we did it , On Wed, Oct 22, 2014 at 3:00 PM, Heather Gray < wrote: Dear Eileen, Ada and Jeffrey, I reviewed all of the documents that we have that relate to the Bank of America art loan to determine which provisions in the documents should be taken into account in connection with our proposed restructuring of Narrows Holdings LLC, and which provisions address Narrows' use of the art that is pledged as collateral. Restructuring of Narrows As Ada noted in her email below, the Amended and Restated Loan Agreement dated June 10, 2003 provides that, without the prior written consent of the bank, Leon may not: (i) sell, transfer or otherwise dispose of his interest in Narrows, or (ii) amend or otherwise modify or waive any provisions of Narrows' Articles of Organization or Operating Agreement. Arguably not applicable to our proposed restructuring of Narrows, although in a similar vein as the above, without the prior written consent of the bank, Narrows may not enter into any merger or consolidation, or form or acquire any subsidiary, and Narrows is required to promptly advise the bank in writing of any condition, event or act which comes to its attention that might materially affect its "financial condition, prospects or operations." Narrows' use of Art Collateral Here is a list of the provisions in the documents that address Narrows' use of the art that is pledged as collateral: • Narrows is prohibited from placing any of the art in storage. • Narrows is prohibited from moving any of the art from its current location unless (i) Narrows has given the bank ten days' prior notice of the move, (ii) all necessary UCC filings have been made prior to the movement of the art, (iii) the bank continues to have a valid first priority security interest in the art in the new location, and (iv) the new location is within the United States. The location of each item of art collateral is set out in the amendments to the pledge agreement. • Narrows is required to keep the art in good condition, to not allow any liens or encumbrances to be placed upon it (other than the bank's lien) and to defend the art against any claims. EFTA00999340 • Narrows is required to insure the art with companies acceptable to the bank and for an amount that is not less than 130% of the loans currently outstanding. The insurance policy is supposed to be written for the benefit of Narrows and the bank as their interests may appear and the bank is meant to be named on the policy as loss payee. • As you know, we are notifying the bank of loans of art collateral to US museums. With these loans, the bank requires Narrows and the borrowing museum to sign a bailment agreement with the bank, and also requires a certificate of insurance from the museum's insurer naming the bank as loss payee in the event of a claim. • Narrows is required to give the bank three business days' prior notice before selling, leasing, pledging, assigning or otherwise disposing or transferring any of the art, and such sale, lease, etc. must confirm to the requirements of the loan documents with regard to substitution and release of collateral. Please let me know if you have any questions. Best, Heather Heather Gray Elysium Management LLC 445 Park Avenue Suite 1401 New York, New York loon Emai From: Jeffrey E. imailto:[email protected]] Sent: Tuesday, October 21, 2014 12:37 PM To: Ada Clapp Subject: Re: Art Entity-Negative Covenants we need the full review of doc first On Tue, Oct 21, 2014 at 12:34 PM, Ada Clapp wrote: Hi Jeffrey, Since I don't really know what we are doing vis a vis the BAC loans and the art entity, I will take your response to mean that signing the documents to move forward with the proposed art entity is on hold until I hear back from you. Please let me know if I have misunderstood your response. Thanks. Ada Clapp Chief Legal Officer Elysium Management LLC 445 Park Avenue Suite 1401 New York, New York 10022 Email: This communication and any attachment is for the intended recipient(s) only and may contain information that is privileged, confidential and/or proprietary. If you are not the intended recipient, you are hereby notified that EFTA00999341 further dissemination of this communication and its attachments is prohibited. Please delete all copies of this communication and its attachments and notify me immediately that you have received them in error. Thank you. From: Jeffrey E. [mailto:[email protected] Sent: Tuesday, October 21, 2014 12:12 PM To: Ada Clapp Subject: Re: Art Entity-Negative Covenants notify them of what we are doing. when we do it. no more no less On Ilue, Oct 21, 2014 at 11:35 AM, Ada Clapp < > wrote: Hi Jeffrey, With respect to the timing of the proposed art partnership, I just wanted to remind you that there are Negative Covenants in the BAC loan documents that require Leon to obtain the bank's prior written consent before he can (i) amend or modify any provision of the Operating Agreement of Narrows, or (ii) sell, transfer or dispose of his interests in Narrows. Accordingly, we technically need the bank's prior written consent for Leon to (i) sign the proposed Amendment to the Narrows LLC Agreement that Paul Weiss has prepared (creating Class A and Class B Managing Members) and thereafter for Leon to sell his Class B Managing Member interests to the APOI or APO2 Trust. How do you wish to proceed in this regard? Are we negotiating new loan agreements (so that perhaps we deal with this issue in the new documents)? Or are we planning to continue under the current agreements? Heather and I discussed with Eileen the need to review the current documents to see what other provisions might affect the new art entity. However, if we are starting from scratch with new loan documents, this would be a waste of time. Please advise whether you would like one of us to do that anyway. Thanks. Ada Clapp Chief Legal Officer Elysium Management LLC 445 Park Avenue Suite 1401 New York, New York 10022 Email: This communication and any attachment is for the intended recipient(s) only and may contain information that is privileged, confidential and/or proprietary. If you are not the intended recipient, you are hereby notified that further dissemination of this communication and its attachments is prohibited. Please delete all copies of this communication and its attachments and notify me immediately that you have received them in error. Thank you. please note The information contained in this communication is confidential, may be attorney-client privileged, may constitute inside information, and is intended only for the use of the addressee. It is the property of JEE Unauthorized use, disclosure or copying of this communication or any part thereof is strictly prohibited and may be unlawful. If you have received this communication in error, please notify us immediately by EFTA00999342  return e-mail or by e-mail to [email protected], and destroy this communication and all copies thereof, including all attachments. copyright -all rights reserved please note The information contained in this communication is confidential, may be attorney-client privileged, may constitute inside information, and is intended only for the use of the addressee. It is the property of JEE Unauthorized use, disclosure or copying of this communication or any part thereof is strictly prohibited and may be unlawful. If you have received this communication in error, please notify us immediately by return e-mail or by e-mail to [email protected], and destroy this communication and all copies thereof, including all attachments. copyright -all rights reserved please note The information contained in this communication is confidential, may be attorney-client privileged, may constitute inside information, and is intended only for the use of the addressee. It is the property of JEE Unauthorized use, disclosure or copying of this communication or any part thereof is strictly prohibited and may be unlawful. If you have received this communication in error, please notify us immediately by return e-mail or by e-mail to jeevacation®gmail.com, and destroy this communication and all copies thereof, including all attachments. copyright -all rights reserved EFTA00999343