Exhibit 10.1

 

Loan No: 12366

 

________________________________________________________

 

 

LOAN AGREEMENT

 

________________________________________________________

 

 

Dated as of May 31, 2019

 

 

Between

 

 

250 LIVINGSTON OWNER LLC,
as Borrower

 

 

and

 

 

CITI REAL ESTATE FUNDING INC.,
as Lender

 

 

 

 

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Table of Contents

 

ARTICLE 1

DEFINITIONS; PRINCIPLES OF CONSTRUCTION

 

 

Section 1.1.

Definitions

 

Section 1.2.

Principles of Construction

 

ARTICLE 2

GENERAL TERMS

 

 

Section 2.1.

Loan Commitment; Disbursement to Borrower

 

Section 2.2.

The Loan

 

Section 2.3.

Disbursement to Borrower

 

Section 2.4.

The Note and the Other Loan Documents

 

Section 2.5.

Interest Rate

 

Section 2.6.

Loan Payments

 

Section 2.7.

Prepayments

 

Section 2.8.

Defeasance

 

ARTICLE 3

REPRESENTATIONS AND WARRANTIES

 

 

Section 3.1.

Legal Status and Authority

 

Section 3.2.

Validity of Documents

 

Section 3.3.

Litigation

 

Section 3.4.

Agreements

 

Section 3.5.

Financial Condition

 

Section 3.6.

Disclosure

 

Section 3.7.

No Plan Assets; FIRRMA

 

Section 3.8.

Not a Foreign Person

 

Section 3.9.

Intentionally Omitted

 

Section 3.10.

Business Purposes

 

Section 3.11.

Borrower’s Principal Place of Business

 

Section 3.12.

Status of Property

 

Section 3.13.

Financial Information

 

Section 3.14.

Condemnation

 

Section 3.15.

Separate Lots

 

Section 3.16.

Insurance

 

Section 3.17.

Use of Property

 

Section 3.18.

Leases and Rent Roll

 

Section 3.19.

Filing and Recording Taxes

 

Section 3.20.

Management Agreement

 

Section 3.21.

Illegal Activity/Forfeiture

 

Section 3.22.

Taxes

 

Section 3.23.

Permitted Encumbrances

 

Section 3.24.

Third Party Representations

 

Section 3.25.

Non-Consolidation Opinion Assumptions

 

Section 3.26.

Federal Reserve Regulations

 

Section 3.27.

Investment Company Act

 

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Table of Contents

(continued)

 

 

Section 3.28.

Fraudulent Conveyance

 

Section 3.29.

Intentionally Omitted

 

Section 3.30.

Anti-Money Laundering and Economic Sanctions

 

Section 3.31.

Organizational Chart

 

Section 3.32.

Bank Holding Company

 

Section 3.33.

Source of Certain Funds

 

Section 3.34.

Property Document Representations

 

Section 3.35.

No Change in Facts or Circumstances; Disclosure

 

ARTICLE 4

BORROWER COVENANTS

 

 

Section 4.1.

Existence

 

Section 4.2.

Legal Requirements

 

Section 4.3.

Maintenance and Use of Property

 

Section 4.4.

Waste

 

Section 4.5.

Taxes and Other Charges

 

Section 4.6.

Litigation

 

Section 4.7.

Access to Property

 

Section 4.8.

Notice of Default

 

Section 4.9.

Cooperate in Legal Proceedings

 

Section 4.10.

Performance by Borrower

 

Section 4.11.

Intentionally Omitted

 

Section 4.12.

Books and Records

 

Section 4.13.

Estoppel Certificates

 

Section 4.14.

Leases and Rents

 

Section 4.15.

Management Agreement

 

Section 4.16.

Payment for Labor and Materials

 

Section 4.17.

Performance of Other Agreements

 

Section 4.18.

Debt Cancellation

 

Section 4.19.

Intentionally Omitted

 

Section 4.20

ERISA ; FIRRMA

 

Section 4.21.

No Joint Assessment

 

Section 4.22.

Alterations

 

Section 4.23.

Property Document Covenants

 

Section 4.24.

Intentionally Omitted

 

Section 4.25

Permanent Certificate of Occupancy

 

 

ARTICLE 5

ENTITY COVENANTS

 

 

Section 5.1.

Single Purpose Entity/Separateness

 

Section 5.2.

Independent Director

 

Section 5.3.

Change of Name, Identity or Structure

 

Section 5.4.

Business and Operations

 

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Table of Contents

(continued)

 

 

Section 5.5.

Recycled Entity

 

ARTICLE 6

NO SALE OR ENCUMBRANCE

 

 

Section 6.1.

Transfer Definitions

 

Section 6.2.

No Sale/Encumbrance

 

Section 6.3.

Permitted Equity Transfers

 

Section 6.4.

Permitted Property Transfer (Assumption)

 

Section 6.5.

Lender’s Rights

 

Section 6.6.

Economic Sanctions, Anti-Money Laundering and Transfers

 

ARTICLE 7

INSURANCE; CASUALTY; CONDEMNATION; RESTORATION

 

 

Section 7.1.

Insurance

 

Section 7.2.

Casualty

 

Section 7.3.

Condemnation

 

Section 7.4.

Restoration

 

ARTICLE 8

RESERVE FUNDS

 

 

Section 8.1.

Intentionally Omitted

 

Section 8.2.

Replacement Reserve Funds

 

Section 8.3.

Intentionally Omitted

 

Section 8.4.

Operating Expense Funds

 

Section 8.5.

Excess Cash Flow Funds

 

Section 8.6.

Tax and Insurance Funds

 

Section 8.7.

The Accounts Generally

 

Section 8.8.

Other Reserve Funds

 

ARTICLE 9

CASH MANAGEMENT

 

 

Section 9.1.

Establishment of Certain Accounts

 

Section 9.2.

Deposits into the Restricted Account

 

Section 9.3.

Disbursements from the Cash Management Account

 

Section 9.4.

Withdrawals from the Debt Service Account

 

Section 9.5.

Payments Received Under this Agreement

 

ARTICLE 10

EVENTS OF DEFAULT; REMEDIES

 

 

Section 10.1.

Event of Default

 

Section 10.2.

Remedies

 

ARTICLE 11

SECONDARY MARKET

 

 

Section 11.1.

Securitization

 

Section 11.2.

Disclosure

 

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Table of Contents

(continued)

 

 

Section 11.3.

Reserves/Escrows

 

Section 11.4.

Servicer

 

Section 11.5.

Rating Agency Costs

 

Section 11.6.

Mezzanine Option

 

Section 11.7.

Conversion to Registered Form

 

Section 11.8

Intentionally Omitted

 

Section 11.9

Borrower’s Cost of Compliance

 

ARTICLE 12

INDEMNIFICATIONS

 

 

Section 12.1.

General Indemnification

 

Section 12.2.

Mortgage and Intangible Tax Indemnification

 

Section 12.3.

ERISA and FIRRMA Indemnification

 

Section 12.4.

Duty to Defend, Legal Fees and Other Fees and Expenses

 

Section 12.5.

Survival

 

Section 12.6.

Environmental Indemnity

 

ARTICLE 13

EXCULPATION

 

 

Section 13.1.

Exculpation

 

ARTICLE 14

NOTICES

 

 

Section 14.1.

Notices

 

ARTICLE 15

FURTHER ASSURANCES

 

 

Section 15.1.

Replacement Documents

 

Section 15.2.

Recording of Security Instrument, etc.

 

Section 15.3.

Further Acts, etc.

 

Section 15.4.

Changes in Tax, Debt, Credit and Documentary Stamp Laws

 

ARTICLE 16

WAIVERS

 

 

Section 16.1.

Remedies Cumulative; Waivers

 

Section 16.2.

Modification, Waiver in Writing

 

Section 16.3.

Delay Not a Waiver

 

Section 16.4.

Waiver of Trial by Jury

 

Section 16.5.

Waiver of Notice

 

Section 16.6.

Remedies of Borrower

 

Section 16.7.

Marshalling and Other Matters

 

Section 16.8.

Waiver of Statute of Limitations

 

Section 16.9.

Waiver of Counterclaim

 

Section 16.10.

Sole Discretion of Lender

 

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Table of Contents

(continued)

 

ARTICLE 17

MISCELLANEOUS

 

 

Section 17.1.

Survival

 

Section 17.2.

Governing Law

 

Section 17.3.

Headings

 

Section 17.4.

Severability

 

Section 17.5.

Preferences

 

Section 17.6.

Expenses

 

Section 17.7.

Cost of Enforcement

 

Section 17.8.

Schedules Incorporated

 

Section 17.9.

Offsets, Counterclaims and Defenses

 

Section 17.10.

No Joint Venture or Partnership; No Third Party Beneficiaries

 

Section 17.11.

Publicity

 

Section 17.12.

Limitation of Liability

 

Section 17.13.

Conflict; Construction of Documents; Reliance

 

Section 17.14.

Entire Agreement

 

Section 17.15.

Liability

 

Section 17.16.

Duplicate Originals; Counterparts

 

Section 17.17.

Brokers

 

Section 17.18.

Set-Off

 

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LOAN AGREEMENT

 

THIS LOAN AGREEMENT, dated as of May 31, 2019 (as amended, restated, replaced,
supplemented or otherwise modified from time to time, this “Agreement”), between
CITI REAL ESTATE FUNDING INC., having an address at 388 Greenwich Street, 6th
Floor, New York, New York 10013 (together with its successors and permitted
assigns, “Lender”) and 250 LIVINGSTON OWNER LLC, a Delaware limited liability
company having its principal place of business at 4611 12th Avenue, Suite 1L,
Brooklyn, New York 11219 (together with its successors and/or assigns,
“Borrower”).

 

RECITALS:

 

Borrower desires to obtain the Loan (defined below) from Lender.

 

Lender is willing to make the Loan to Borrower, subject to and in accordance
with the terms of this Agreement and the other Loan Documents (defined below).

 

In consideration of the making of the Loan by Lender and the covenants,
agreements, representations and warranties set forth in this Agreement, the
parties hereto hereby covenant, agree, represent and warrant as follows:

 

ARTICLE 1     

DEFINITIONS; PRINCIPLES OF CONSTRUCTION

 

Section 1.1.     Definitions.

 

For all purposes of this Agreement, except as otherwise expressly required or
unless the context clearly indicates a contrary intent:

 

“Acceptable LLC” shall mean a limited liability company formed under Delaware
law which (i) has at least one springing member, which, upon the dissolution of
all of the members or the withdrawal or the disassociation of all of the members
from such limited liability company, shall immediately become the sole member of
such limited liability company, and (ii) otherwise meets the Rating Agency
criteria then applicable to such entities.

 

“Account Collateral” shall mean (i) the Accounts, and all cash, checks, drafts,
certificates and instruments, if any, from time to time deposited or held in the
Accounts from time to time; (ii) any and all amounts invested in Permitted
Investments; (iii) all interest, dividends, cash, instruments and other property
from time to time received, receivable or otherwise payable in respect of, or in
exchange for, any or all of the foregoing; and (iv) to the extent not covered by
clauses (i) - (iii) above, all “proceeds” (as defined under the UCC as in effect
in the state in which the Accounts are located) of any or all of the foregoing.

 

“Accounts” shall mean the Cash Management Account, the Debt Service Account, the
Restricted Account, the Tax Account, the Insurance Account, the Replacement
Reserve Account, the Immediate Repair Account, the Excess Cash Flow Account, the
Gap Rent Reserve Account, the Unfunded Obligations Reserve Account, the
Operating Expense Account and any other account established by this Agreement or
the other Loan Documents.

 

 

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“AC Laws” shall have the meaning set forth in Section 3.30 hereof.

 

“Act” shall have the meaning set forth in Section 5.1 hereof.

 

“Affiliate” shall mean, as to any Person, any other Person that, directly or
indirectly, is in Control of, is Controlled by or is under common Control with
such Person or, with respect to any natural Person, is a member of the Family
Group of such Person.

 

“Affiliated Manager” shall mean any managing agent of the Property in which
Borrower, Guarantor, Sponsor, any SPE Component Entity (if any) or any Affiliate
of such entities has, directly or indirectly, any legal, beneficial or economic
interest.

 

“ALTA” shall mean American Land Title Association, or any successor thereto.

 

“Alteration Threshold” shall mean an amount equal to $8,000,000.

 

“AML Laws” shall have the meaning set forth in Section 3.30 hereof.

 

“Approved Accounting Method” shall mean GAAP, federal tax basis accounting
(consistently applied) or such other method of accounting, consistently applied,
as may be reasonably acceptable to Lender.

 

“Approved Annual Budget” shall have the meaning set forth in Section 4.12
hereof.

 

“Approved Extraordinary Expense” shall mean an operating expense of the Property
not set forth on the Approved Annual Budget but approved by Lender in writing
(which such approval shall not be unreasonably withheld or delayed).

 

“Approved ID Provider” shall mean each of CT Corporation, Corporation Service
Company, National Registered Agents, Inc., Wilmington Trust Company, Stewart
Management Company and Lord Securities Corporation; provided, that, (A) the
foregoing shall be deemed Approved ID Providers unless and until disapproved by
any Rating Agency and (B) additional national providers of Independent Directors
may be deemed added to the foregoing hereunder to the extent approved in writing
by Lender and the Rating Agencies.

 

“Approved Operating Expense” shall mean an operating expense of the Property set
forth on the Approved Annual Budget.

 

“Assignment of Management Agreement” shall mean, to the extent applicable, that
certain Conditional Assignment of Management Agreement which may be entered into
after the date hereof among Lender, Borrower and Manager, as the same may be
amended, restated, replaced, extended, renewed, supplemented or otherwise
modified from time to time.

 

“Award” shall mean any compensation paid by any Governmental Authority in
connection with a Condemnation in respect of all or any part of the Property.

 

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“Bail-In Action” means the exercise of any Write-Down and Conversion Powers by
the applicable EEA Resolution Authority in respect of any liability of an EEA
Financial Institution.

 

“Bail-In Legislation” means, with respect to any EEA Member Country implementing
Article 55 of Directive 2014/59/EU of the European Parliament and of the Council
of the European Union, the implementing law for such EEA Member Country from
time to time which is described in the EU Bail-In Legislation Schedule.

 

“Bank” shall be deemed to refer to the bank or other institution maintaining the
Restricted Account pursuant to the Restricted Account Agreement.

 

“Bankruptcy Code” shall mean Title 11 of the United States Code entitled
“Bankruptcy”, as amended from time to time, and any successor statute or
statutes and all rules and regulations from time to time promulgated thereunder,
and any comparable foreign laws relating to bankruptcy, insolvency or creditors’
rights.

 

“Bankruptcy Event” shall mean the occurrence of any one or more the of the
following: (i) Borrower or any SPE Component Entity shall commence any case,
proceeding or other action (A) under the Bankruptcy Code and/or any Creditors
Rights Laws seeking to have an order for relief entered with respect to it, or
seeking to adjudicate it a bankrupt or insolvent, or seeking reorganization,
liquidation or dissolution or (B) seeking appointment of a receiver, trustee,
custodian, conservator or other similar official for it or for all or any
substantial part of its assets; (ii) Borrower or any SPE Component Entity shall
make a general assignment for the benefit of its creditors; (iii) any Restricted
Party (or Affiliate thereof) files, or joins or colludes in the filing of, (A)
an involuntary petition against Borrower or any SPE Component Entity under the
Bankruptcy Code or any other Creditors Rights Laws, or solicits or causes to be
solicited or colludes with petitioning creditors for any involuntary petition
under the Bankruptcy Code or any other Creditors Rights Laws against Borrower or
any SPE Component Entity or (B) any case, proceeding or other action seeking
issuance of a warrant of attachment, execution, distraint or similar process
against all or any substantial part of Borrower’s or any SPE Component Entity’s
assets; (iv) Borrower or any SPE Component Entity files an answer consenting to
or otherwise acquiescing in or joining in any involuntary petition filed against
it, by any other Person under the Bankruptcy Code or any other Creditors Rights
Laws, or solicits or causes to be solicited or colludes with petitioning
creditors for any involuntary petition from any Person; (v) any Restricted Party
(or Affiliate thereof) consents to or acquiesces in or joins in an application
for the appointment of a custodian, receiver, trustee, or examiner for Borrower,
any SPE Component Entity or any portion of the Property; (vi) Borrower or any
SPE Component Entity makes an assignment for the benefit of creditors, or
admits, in writing or in any legal proceeding, its insolvency or inability to
pay its debts as they become due; (vii) any Restricted Party (or Affiliate
thereof) contesting or opposing any motion made by Lender to obtain relief from
the automatic stay or seeking to reinstate the automatic stay in the event of
any proceeding under the Bankruptcy Code or any other Creditors Rights Laws
involving Sponsor or its subsidiaries; (viii) any Restricted Party (or Affiliate
thereof) taking any action in furtherance of, in collusion with respect to or
indicating its consent to, approval of, or acquiescence in, any of the acts set
forth in items (i) through (vii) above; and (ix) in the event Lender receives
less than the full value of its claim in any proceeding under the Bankruptcy
Code or any other Creditors Rights Laws, Sponsor or any of its Affiliates
receiving an equity interest or other financial benefit of any kind as a result
of a “new value” plan or equity contribution.

 

-3-

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“Bistricer Family Entity” shall mean shall mean an entity which is (i) wholly
owned by one or more members of the Bistricer Family Group and (ii) which is
Controlled by David Bistricer.

 

“Bistricer Family Group” shall mean David Bistricer and/or his spouse, parents,
siblings or lineal descendants and/or a family trust for the benefit of the
foregoing Persons.

 

“Borrower Party” and “Borrower Parties” shall mean each of Borrower, any SPE
Component Entity, Sponsor, any Affiliated Manager and Guarantor.

 

“Business Day” shall mean a day on which commercial banks are not authorized or
required by applicable law to close in New York, New York.

 

“Cash Flow Adjustments” shall mean adjustments made by Lender in its calculation
of Underwritable Cash Flow and the components thereof, in each case, based upon
Lender and Rating Agency underwriting criteria, which such adjustments shall
include, without limitation, adjustments (A) for (i) items of a non-recurring
nature, (ii) a credit loss/vacancy allowance equal to: (x) with respect to the
residential portion of the Property, the greater of actual vacancy and two
percent (2%) and (y) with respect to the non-residential portion of the
Property, the greater of actual vacancy and five percent (5%) and (iii) imminent
liabilities and/or other expense increases (including, without limitation,
imminent increases to Taxes and Insurance Premiums); and (B) to exclude rental
income attributable to any Tenant (1) in bankruptcy that has not affirmed its
Lease in the applicable bankruptcy proceeding pursuant to a final,
non-appealable order of a court of competent jurisdiction, (2) not paying rent
under its Lease or otherwise in monetary default under its Lease beyond any
applicable notice and cure periods, (3) that has expressed its intention in
writing to not renew, terminate, cancel and/or reject its applicable Lease, (4)
whose tenancy or other occupancy at the Property is month-to-month and/or (5)
under a non-residential Lease which expires within 90 days or less of the
applicable date of calculation hereunder, unless and until each of the following
requirements is satisfied: (1) all of the space demised thereunder has been
re-let pursuant to a Lease entered into in accordance with the terms of this
Agreement, (2) such replacements Lease shall take effect and shall require the
commencement of the payment of full unabated rent for the remainder of the term
thereunder (other than any market free rent period for which Borrower has
deposited into a reserve with Lender (to be disbursed by Lender, in its
reasonable discretion) an amount equal to the unabated rent that would otherwise
be due and payable with respect to such Lease during each unexpired free rent
period if no rent concession were in place) concurrently with such expiration,
(3) to the extent such replacement Lease(s) requires the landlord to perform or
pay for any work and/or leasing commissions, Borrower shall deposit said amount
into a reserve with Lender (to be disbursed by Lender, in its reasonable
discretion) and (4) it being acknowledged that to the extent such replacement
Lease shall provide for rental income that is less than the rental income set
forth in the Lease that is being replaced, a commensurate downward adjustment to
the base rental payments due with respect to the Lease being replaced in
calculating Underwritable Cash Flow shall be required.

 

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“Cash Management Account” shall have the meaning set forth in Section 9.1
hereof.

 

“Cash Management Provisions” shall mean the representations, covenants and other
terms and conditions of this Agreement and the other Loan Documents (including,
without limitation, the Restricted Account Agreement) related to, in each case,
cash management and/or other related matters (including, without limitation,
Article 9 hereof).

 

“Cash Management Violation” shall mean any violation of or failure to comply
with, in each case, the Cash Management Provisions (including, without
limitation, the Cash Management Provisions related to the timing of required
deposits into the Restricted Account).

 

“Casualty” shall have the meaning set forth in Section 7.2 hereof.

 

“Casualty Consultant” shall have the meaning set forth in Section 7.4 hereof.

 

“Clipper REIT” shall have the meaning set forth in Section 6.3 hereof.

 

“Closing Date” shall mean the date of the funding of the Loan.

 

“Condemnation” shall mean a temporary or permanent taking by any Governmental
Authority as the result, in lieu or in anticipation, of the exercise of the
right of condemnation or eminent domain, of all or any part of the Property, or
any interest therein or right accruing thereto, including any right of access
thereto or any change of grade affecting the Property or any part thereof.

 

“Constituent Owner” shall mean, as to any Person, any Person that owns a direct
or indirect interest in such Person.

 

“Control” shall mean the power to direct the management and policies of an
entity, directly or indirectly, whether through the ownership of voting
securities or other beneficial interests, by contract or otherwise. The terms
“Controlled” and “Controlling” shall have correlative meanings.

 

“Covered Rating Agency Information” shall mean any Provided Information
furnished to the Rating Agencies in connection with issuing, monitoring and/or
maintaining the Securities.

 

“Creditors Rights Laws” shall mean any existing or future law of any
jurisdiction, domestic or foreign, relating to bankruptcy, insolvency,
reorganization, conservatorship, arrangement, adjustment, winding-up,
liquidation, dissolution, composition or other relief with respect to its debts
or debtors.

 

“Crowdfunded Person” means a Person capitalized primarily by monetary
contributions (A) of less than $35,000 each from more than 35 investors who are
individuals and (B) which are funded primarily (I) in reliance upon Regulation
Crowdfunding promulgated by the Securities and Exchange Commission pursuant to
the Securities Act of 1933, as amended and/or (II) through internet-mediated
registries, platforms or similar portals, mail-order subscriptions, benefit
events and/or other similar methods.

 

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“Debt” shall mean the outstanding principal amount set forth in, and evidenced
by, this Agreement and the Note together with all interest accrued and unpaid
thereon and all other sums due to Lender in respect of the Loan under the Note,
this Agreement or the other Loan Documents (including, without limitation, all
costs and expenses payable to Lender thereunder).

 

“Debt Service” shall mean, with respect to any particular period of time,
scheduled principal (if applicable) and interest payments hereunder (including,
as and to the extent applicable, interest accruing at the Default Rate).

 

“Debt Service Account” shall have the meaning set forth in Section 9.1 hereof.

 

“Debt Service Coverage Ratio” shall mean the ratio calculated by Lender in good
faith of (i) the Underwritable Cash Flow to (ii) the aggregate amount of Debt
Service which would be due for the twelve (12) month period immediately
preceding the date of calculation; provided, that, the foregoing shall be
calculated by Lender (A) based upon actual amount of Debt Service which would be
due for such period and (B) assuming that the Loan had been in place for the
entirety of said period.

 

“Debt Yield” shall mean, as of any date of calculation, a ratio conveyed as a
percentage in which: (i) the numerator is the Underwritable Cash Flow; and (ii)
the denominator is the then outstanding principal balance of the Loan.

 

"Deemed Approval Requirements" shall mean, with respect to any matter, that (i)
no Event of Default shall have occurred and be continuing (either at the date of
any notices specified below or as of the effective date of any deemed approval),
(ii) Borrower shall have sent Lender a written request for approval with respect
to such matter in accordance with the applicable terms and conditions hereof
(the "Initial Notice"), which such Initial Notice shall have been (A)
accompanied by any and all required information and documentation relating
thereto as may be reasonably required in order to approve or disapprove such
matter (the "Approval Information") and (B) marked in bold lettering with the
following language: “LENDER’S RESPONSE IS REQUIRED WITHIN SEVEN (7) BUSINESS
DAYS OF RECEIPT OF THIS NOTICE PURSUANT TO THE TERMS OF A LOAN AGREEMENT BETWEEN
THE UNDERSIGNED AND LENDER” and the envelope containing the Initial Notice shall
have been marked “PRIORITY-DEEMED APPROVAL MAY APPLY”; (iii) Lender shall have
failed to respond to the Initial Notice within the aforesaid time-frame; (iv)
Borrower shall have submitted a second request for approval with respect to such
matter in accordance with the applicable terms and conditions hereof (the
"Second Notice"), which such Second Notice shall have been (A) accompanied by
the Approval Information and (B) marked in bold lettering with the following
language: “LENDER’S RESPONSE IS REQUIRED WITHIN FIVE (5) BUSINESS DAYS OF
RECEIPT OF THIS NOTICE PURSUANT TO THE TERMS OF A LOAN AGREEMENT BETWEEN THE
UNDERSIGNED AND LENDER” and the envelope containing the Second Notice shall have
been marked “PRIORITY-DEEMED APPROVAL MAY APPLY”; and (v) Lender shall have
failed to respond to the Second Notice within the aforesaid time-frame. For
purposes of clarification, (A) Lender requesting (an “Information Request”)
additional and/or clarified information, in lieu of approving or denying any
request (in whole or in part), shall be deemed a response by Lender for purposes
of the foregoing and any such Information Request shall “toll” the periods set
forth above until Lender receives a satisfactory response to the applicable
inquiry (an “Acceptable Response”) and (B) upon receipt of any Acceptable
Response, Lender shall have the greater of: (x) five (5) Business Days and (y)
the period remaining pursuant to the mechanisms set forth above (the “Applicable
Remaining Period”), to respond to the applicable inquiry (for the avoidance of
doubt, any additional Information Request shall once again “toll” the deemed
approval mechanisms until an Acceptable Response is provided and Lender shall
have the Applicable Remaining Period following the receipt of any Acceptable
Response to respond to the applicable inquiry before the Deemed Approval
Requirements are satisfied).

 

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“Default” shall mean the occurrence of any event hereunder or under the Note or
the other Loan Documents which, but for the giving of notice or passage of time,
or both, would be an Event of Default.

 

“Default Rate” shall mean, with respect to the Loan, a rate per annum equal to
the lesser of (i) the Maximum Legal Rate, or (ii) five percent (5%) above the
Interest Rate.

 

“Default Yield Maintenance Premium” shall mean an amount equal to the greater of
(i) 5% of the amount of Debt prepaid or (ii) the Yield Maintenance Premium.

 

“Defeasance Approval Item” shall have the meaning set forth in Section 2.8
hereof.

 

“Defeasance Collateral Account” shall have the meaning set forth in Section 2.8
hereof.

 

“Disclosure Documents” shall mean, collectively and as applicable, any offering
circular, prospectus, prospectus supplement, private placement memorandum or
other offering document, in each case, in connection with a Securitization.

 

“Division” shall have the meaning set forth in Section 5.1 hereof.

 

“EEA Financial Institution” means (a) any credit institution or investment firm
established in any EEA Member Country which is subject to the supervision of an
EEA Resolution Authority, (b) any entity established in an EEA Member Country
which is a parent of an institution described in clause (a) of this definition,
or (c) any financial institution established in an EEA Member Country which is a
subsidiary of an institution described in clauses (a) or (b) of this definition
and is subject to consolidated supervision with its parent.

 

“EEA Member Country” means any of the member states of the European Union,
Iceland, Liechtenstein, and Norway.

 

“EEA Resolution Authority” means any public administrative authority or any
person entrusted with public administrative authority of any EEA Member Country
(including any delegee) having responsibility for the resolution of any EEA
Financial Institution.

 

“Eligible Account” shall mean a separate and identifiable account from all other
funds held by the holding institution that is an account or accounts maintained
with a federal or state-chartered depository institution or trust company which
(a) complies with the definition of Eligible Institution, (b) has a combined
capital and surplus of at least $50,000,000 and (c) has corporate trust powers
and is acting in its fiduciary capacity. An Eligible Account will not be
evidenced by a certificate of deposit, passbook or other instrument.

 

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“Eligible Institution” shall mean (a) a depository institution or trust company
insured by the Federal Deposit Insurance Corporation (i) in the case of accounts
in which funds are held for thirty (30) days or less, the short term unsecured
debt obligations or commercial paper of which are rated at least “A-1” (or its
equivalent) from each of the Rating Agencies and (ii) in the case of accounts in
which funds are held for more than thirty (30) days, the long term unsecured
debt obligations of which are rated at least “A” (or its equivalent) from each
of the Rating Agencies or (b) such other depository institution otherwise
approved by the Rating Agencies from time-to-time.

 

“Eligibility Requirements” means, with respect to any Person, that such Person
(i) has total assets (in name or under management) in excess of $600,000,000.00
and (except with respect to a pension advisory firm or similar fiduciary)
capital/statutory surplus or shareholder’s or partners’ equity of
$250,000,000.00, and (ii) is regularly engaged in the business of operating
commercial real estate properties.

 

“Environmental Indemnity” shall mean that certain Environmental Indemnity
Agreement, dated as of the date hereof, executed by Borrower and Guarantor in
connection with the Loan for the benefit of Lender, as the same may be amended,
restated, replaced, supplemented or otherwise modified from time to time.

 

“Environmental Laws” shall have the meaning set forth in the Environmental
Indemnity.

 

“Equity Collateral” shall have the meaning set forth in Section 11.6 hereof.

 

“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as the
same may heretofore have been or shall be amended, restated, replaced or
otherwise modified.

 

“EU Bail-In Legislation Schedule” means the EU Bail-In Legislation Schedule
published by the Loan Market Association (or any successor person), as in effect
from time to time.

 

“Event of Default” shall have the meaning set forth in Section 10.1 hereof.

 

“Excess Cash Flow” shall have the meaning set forth in Section 9.3 hereof.

 

“Excess Cash Flow Account” shall have the meaning set forth in Section 8.5
hereof.

 

“Excess Cash Flow Funds” shall have the meaning set forth in Section 8.5 hereof.

 

“Exchange Act” shall mean the Securities and Exchange Act of 1934, as amended.

 

“Exchange Act Filing” shall have the meaning set forth in Section 11.1 hereof.

 

“Exculpated Parties” shall have the meaning set forth in Section 13.1 hereof.

 

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“Existing ST Lease” shall mean (individually and/or collectively, as the context
shall require) each of (i) that certain Agreement of Lease, dated as of January
1, 1997 by and between Borrower as successor-in-interest to NPMM Realty, Inc.,
as landlord, and the City of New York, as tenant, as amended by that certain
Written Notice, dated as of December 28, 2010 as further amended by that certain
Lease Renewal and Amendment Agreement, dated December 15, 2016, as the same may
be amended, restated, supplemented, replaced or otherwise modified in accordance
with the terms hereof and (ii) that certain Agreement of Lease, dated as of July
1, 1999 by and between Livingston Acquisition, LLC, as landlord, and the City of
New York, as tenant, as amended by that certain Letter, dated as of September
27, 2000 as further amended by that certain Letter, dated October 31, 2000, as
the same may be amended, restated, supplemented, replaced or otherwise modified
in accordance with the terms hereof.

 

“Façade Work” shall have the meaning set forth on Schedule I attached hereto.

 

“Family Group” shall mean, as to any natural Person, the spouse, parents,
children and grandchildren (in each case, by birth or adoption) and other lineal
descendants, in each case, of such natural Person and, in each case, family
trusts and/or conservatorships for the benefit of any of the foregoing Persons.

 

“FIRRMA” shall mean, collectively, (i) the Defense Production Act of 1950, as
amended (50 U.S.C. § 4565), all laws and regulations related thereto and all
mandates, requirements, powers and similar requirements imposed or exercised
thereunder (including, without limitation, the Foreign Investment Risk Review
Modernization Act and any of the foregoing implemented by and/or otherwise
relating to the Committee on Foreign Investment in the United States) and (ii)
as the foregoing may be amended from time to time, any successor statute or
statutes and all rules and regulations from time to time promulgated in
connection with the foregoing.

 

“FIRRMA Documents” means any notice, correspondence, document, agreement,
declaration, or other communication relating to or arising in connection with
FIRRMA; provided, however, that if the communication is oral, “FIRRMA Document”
shall mean a written summary thereof prepared by Borrower.

 

“FIRRMA Prohibited Filing Event” shall mean an event which shall be deemed to
have occurred if (i) any mandatory filing or declaration relating to FIRRMA is
required and/or (ii) any Governmental Authority requires (or recommends to the
President of the United States) forfeiture, divestiture or abandonment of all or
any portion of the Property and/or imposes any material mitigation measures on
Borrower, the Constituent Owners of Borrower and/or the Property, in each case,
related to FIRRMA.

 

“FIRRMA Prohibited Transfer” shall mean any Sale or Pledge of the Property or
any part thereof or any legal or beneficial interest therein (including, without
limitation, the Loan and/or Loan Documents) or any Sale or Pledge of an interest
in any Restricted Party, in each case, which (i) triggers a mandatory filing or
declaration requirement with respect to FIRRMA, (ii) makes advisable a voluntary
filing or declaration with respect to FIRRMA or (iii) increases the likelihood
of (A) forfeiture, divestiture or abandonment of all or any portion of the
Property relating to FIRRMA or (B) any mitigation measures being imposed by any
Governmental Authority on Borrower, the Constituent Owners of Borrower and/or
the Property, in each case, related to FIRRMA.

 

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“First Monthly Payment Date” shall mean July 6, 2019.

 

“Fitch” shall mean Fitch, Inc.

 

“Flood Insurance Acts” shall have the meaning set forth in Section 7.1 hereof.

 

“GAAP” shall mean generally accepted accounting principles in the United States
of America as of the date of the applicable financial report.

 

“Gap Rent Reserve Account” shall have the meaning set forth in Section 8.8(a)
hereof.

 

“Gap Rent Reserve Funds” shall have the meaning set forth in Section 8.8(a)
hereof.

 

“Government Securities” shall mean “government securities” as defined in Section
2(a)(16) of the Investment Company Act of 1940 and within the meaning of
Treasury Regulation Section 1.860G-2(a)(8); provided, that, (i) such “government
securities” are not subject to prepayment, call or early redemption, (ii) to the
extent that any REMIC Requirements require a revised and/or alternate definition
of “government securities” in connection with any defeasance hereunder, the
foregoing shall be deemed amended in a manner commensurate therewith and (iii)
the aforesaid laws and regulations shall be deemed to refer to the same as may
be and/or may hereafter be amended, restated, replaced or otherwise modified.

 

“Governmental Authority” shall mean any court, board, agency, commission, office
or other authority of any nature whatsoever for any governmental unit (federal,
state, county, district, municipal, city or otherwise) whether now or hereafter
in existence.

 

“Gross Rents” shall mean an amount equal to: (x) with respect to the
non-residential portions of the Property, annual rental income reflected in a
current rent roll for all Tenants paying rent, open for business and in actual
physical occupancy of their respective space demised pursuant to Leases which
are in full force and effect and (y) with respect to the residential portions of
the Property, the trailing twelve (12) months of rental income actually paid by
Tenants pursuant to Leases.

 

“Guarantor” shall mean, individually and collectively, as the context may
require, (i) Clipper Realty Inc., a Maryland corporation, (ii) Clipper Realty
L.P., a Delaware limited partnership and (iii) and any successor to and/or
replacement of any of the foregoing Persons, in each case, pursuant to and in
accordance with the applicable terms and conditions of the Loan Documents.

 

“Guarantor Control Condition” shall mean a condition which shall be deemed
satisfied to the extent that each Person that Controls (directly or indirectly)
Borrower and, if applicable, each SPE Component Entity is, in each case, itself
a current Guarantor (as distinguished from any prior Guarantor that has been
replaced in accordance with the applicable terms and conditions of the Loan
Documents) or Controlled (directly or indirectly) by one or more current
Guarantors (as distinguished from any prior Guarantor that has been replaced in
accordance with the applicable terms and conditions of the Loan Documents).

 

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“Guaranty” shall mean that certain Limited Recourse Guaranty executed by
Guarantor and dated as of the date hereof.

 

“Immediate Repairs” shall have the meaning set forth in Section 4.24 hereof.

 

“Improvements” shall have the meaning set forth in the granting clause of the
Security Instrument.

 

“Indebtedness” shall mean, for any Person, any indebtedness or other similar
obligation for which such Person is obligated (directly or indirectly, by
contract, operation of law or otherwise), including, without limitation, (i) all
indebtedness of such Person for borrowed money, for amounts drawn under a letter
of credit, or for the deferred purchase price of property for which such Person
or its assets is liable, (ii) all unfunded amounts under a loan agreement,
letter of credit, or other credit facility for which such Person would be liable
if such amounts were advanced thereunder, (iii) all amounts required to be paid
by such Person by contract and/or as a guaranteed payment (including, without
limitation, any such amounts required to be paid to partners and/or as a
preferred or special dividend, including any mandatory redemption of shares or
interests), (iv) all indebtedness incurred and/or guaranteed by such Person,
directly or indirectly (including, without limitation, contractual obligations
of such Person), (v) all obligations under leases that constitute capital leases
for which such Person is liable, (vi) all obligations of such Person under
interest rate swaps, caps, floors, collars and other interest hedge agreements,
in each case whether such Person is liable contingently or otherwise, as
obligor, guarantor or otherwise, or in respect of which obligations such Person
otherwise assures a creditor against loss and (vii) any property-assessed clean
energy loans or similar indebtedness, including, without limitation, if such
loans or indebtedness are made or otherwise provided by any Governmental
Authority and/or secured or repaid (directly or indirectly) by any taxes or
similar assessments.

 

“Indemnified Parties” shall mean (a) Lender, (b) any successor owner or holder
of the Loan or participations in the Loan, (c) any Servicer or prior Servicer of
the Loan, (d) any Investor or any prior Investor in any Securities, (e) any
trustees, custodians or other fiduciaries who hold or who have held a full or
partial interest in the Loan for the benefit of any Investor or other third
party, (f) any receiver or other fiduciary appointed in a foreclosure or other
Creditors Rights Laws proceeding, (g) any officers, directors, shareholders,
partners, members, employees, agents, servants, representatives, contractors,
subcontractors, Affiliates or subsidiaries of any and all of the foregoing, and
(h) the heirs, legal representatives, successors and assigns of any and all of
the foregoing (including, without limitation, any successors by merger,
Division, consolidation or acquisition of all or a substantial portion of the
Indemnified Parties’ assets and business), in all cases whether during the term
of the Loan or as part of or following a foreclosure of the Loan.

 

“Independent Director” shall have the meaning set forth in Section 5.2 hereof.

 

“Insurance Account” shall have the meaning set forth in Section 8.6 hereof.

 

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“Insurance Payment Date” shall mean, with respect to any applicable Policies,
the date occurring 30 days prior to the date the applicable Insurance Premiums
associated therewith are due and payable.

 

“Insurance Premiums” shall have the meaning set forth in Section 7.1 hereof.

 

“Interest Accrual Period” shall mean the period beginning on (and including) the
sixth (6th) day of each calendar month during the term of the Loan and ending on
(and including) the fifth (5th) day of the next succeeding calendar month.

 

“Interest Bearing Accounts” shall mean the following Reserve Accounts: the
Replacement Reserve Account, the Gap Rent Reserve Account, the Excess Cash Flow
Account and the Operating Expense Account.

 

“Interest Rate” shall mean a rate per annum equal to 3.63%.

 

“Interest Shortfall” shall have the meaning set forth in Section 2.7 hereof.

 

“Investor” shall mean any investor or potential investor in the Loan (or any
portion thereof or interest therein) in connection with any Secondary Market
Transaction.

 

“IRS Code” shall mean the Internal Revenue Code of 1986, as amended from time to
time or any successor statute.

 

“Land” shall have the meaning set forth in the Security Instrument.

 

“Lease” shall have the meaning set forth in the Security Instrument.

 

“Legal Requirements” shall mean all federal, state, county, municipal and other
governmental statutes, laws, rules, orders, regulations, ordinances, judgments,
decrees and injunctions of Governmental Authorities affecting Borrower or the
Property or any part thereof, or the construction, use, alteration or operation
thereof, or any part thereof, whether now or hereafter enacted and in force,
including, without limitation, the Americans with Disabilities Act of 1990, and
all Permits, authorizations and regulations relating thereto, and all covenants,
agreements, restrictions and encumbrances contained in any instruments, either
of record or known to Borrower, at any time in force affecting Borrower or the
Property or any part thereof, including, without limitation, any which may (i)
require repairs, modifications or alterations in or to the Property or any part
thereof, or (ii) in any way limit the use and enjoyment thereof.

 

“Lender Affiliate” shall have the meaning set forth in Section 11.2 hereof.

 

“Lender Group” shall have the meaning set forth in Section 11.2 hereof.

 

“Levinson Family Entity” shall mean shall mean an entity which is (i) wholly
owned by one or more members of the Levinson Family Group and (ii) which is
Controlled by Sam Levinson.

 

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“Levinson Family Group” shall mean Sam Levinson and/or his spouse, siblings or
lineal descendants and/or a family trust for the benefit of the foregoing
Persons.

 

“Liabilities” shall have the meaning set forth in Section 11.2 hereof.

 

“Livingston REIT” shall mean an entity newly formed for the purpose of owning,
through its ownership of the REIT OP, the direct or indirect beneficial
interests in Borrower and other entities owning real estate related assets,
which is intended to qualify as a real estate investment trust under Section 856
through Section 860 of the Internal Revenue Code.

 

“Loan” shall mean the loan made by Lender to Borrower pursuant to this
Agreement.

 

“Loan Bifurcation” shall have the meaning set forth in Section 11.1 hereof.

 

“Loan Documents” shall mean, collectively, this Agreement, the Note, the
Security Instrument, the Environmental Indemnity, the Assignment of Leases and
Rents, the Assignment of Management Agreement, the Restricted Account Agreement,
the Guaranty and all other documents executed and/or delivered in connection
with the Loan, as each of the same may be amended, restated, replaced, extended,
renewed, supplemented or otherwise modified from time to time.

 

“Losses” shall mean any and all actual losses, damages (excluding consequential,
except, to the extent actually paid or payable to third parties by any party
seeking indemnification for Losses), costs, fees, expenses, claims, suits,
judgments, awards, liabilities (including but not limited to strict
liabilities), obligations, debts, fines, penalties, charges, amounts paid in
settlement, litigation costs and reasonable attorneys’ fees, in the case of each
of the foregoing, of whatever kind or nature and whether or not incurred in
connection with any judicial or administrative proceedings, actions, claims,
suits, judgments or awards.

 

“Major Lease” shall mean as to the Property (i) any Lease which, individually or
when aggregated with all other leases at the Property with the same Tenant or
its Affiliate, either (A) accounts for twenty percent (20%) or more of the total
rental income for the Property, or (B) demises twenty percent (20%) or more of
the Property’s gross leasable area, (ii) any Lease which contains any option,
offer, right of first refusal or other similar entitlement to acquire or
encumber all or any portion of the Property, (iii) any Specified Tenant Lease,
and (iv) any instrument guaranteeing or providing credit support for any Lease
meeting the requirements of (i) (ii) and/or (iii) above.

 

“Management Agreement” shall mean the management agreement entered into by and
between Borrower and Manager, pursuant to which Manager is to provide management
and other services with respect to the Property, as the same may be amended,
restated, replaced, extended, renewed, supplemented or otherwise modified from
time to time.

 

“Manager” shall mean any Person (if any) selected as the manager of the Property
(or any portion thereof) following the date hereof in accordance with the terms
of this Agreement and the other Loan Documents.

 

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“Manager Trigger” shall mean an event which shall be deemed to occur to the
extent that Borrower elects to or is otherwise required to engage a New Manager,
in each case, pursuant to the terms hereof and/or of the other Loan Documents.

 

“Material Action” shall mean with respect to any Person, any action to
consolidate or merge such Person with or into any Person, or sell all or
substantially all of the assets of such Person, or to institute proceedings to
have such Person be adjudicated bankrupt or insolvent, or consent to the
institution of bankruptcy or insolvency proceedings against such Person or file
a petition seeking, or consent to, reorganization or relief with respect to such
Person under any applicable federal or state law relating to bankruptcy, or
consent to the appointment of a receiver, liquidator, assignee, trustee,
sequestrator (or other similar official) of such Person or a substantial part of
its property, or make any assignment for the benefit of creditors of such
Person, or admit in writing such Person’s inability to pay its debts generally
as they become due, or take action in furtherance of any such action, or, to the
fullest extent permitted by law, dissolve or liquidate such Person.

 

“Material Adverse Effect” shall mean a material adverse effect on (i) the
Property, (ii) the business, profits, prospects, management, operations or
condition (financial or otherwise) of Borrower, Guarantor, Sponsor or the
Property, (iii) the enforceability, validity, perfection or priority of the lien
of the Security Instrument or the other Loan Documents, or (iv) the ability of
Borrower and/or Guarantor to perform its obligations under the Security
Instrument or the other Loan Documents.

 

“Material Alteration Adverse Effect” shall mean an alteration which (i) could
result in a default by Borrower pursuant to any Major Lease, (ii) could result
in criminal liability of Borrower and/or Guarantor, (iii) could result in a
material adverse impact on the value of the Property (i.e. a decrease in excess
of five percent (5%)), (iv) could result in a material adverse impact on the
cash flow at the Property (i.e. a decrease in excess of ten percent (10%)),
and/or (v) could cause a violation of any REMIC Requirements.

 

“Maturity Date” shall mean the Stated Maturity Date, or such other date on which
the final payment of the principal amount of the Loan becomes due and payable as
herein provided, whether at the Stated Maturity Date, by declaration of
acceleration, or otherwise.

 

“Maximum Legal Rate” shall mean the maximum non-usurious interest rate, if any,
that at any time or from time to time may be contracted for, taken, reserved,
charged or received on the indebtedness evidenced by the Note and as provided
for herein or the other Loan Documents, under the laws of such state or states
whose laws are held by any court of competent jurisdiction to govern the
interest rate provisions of the Loan.

 

“Member” is defined in Section 5.1 hereof.

 

“Mezzanine Borrower” shall have the meaning set forth in Section 11.6 hereof.

 

“Mezzanine Option” shall have the meaning set forth in Section 11.6 hereof.

 

“Minimum Disbursement Amount” shall mean Twenty-Five Thousand and No/100 Dollars
($25,000).

 

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“Monthly Debt Service Payment Amount” shall mean for the First Monthly Payment
Date and for each Monthly Payment Date occurring thereafter, a payment equal to
the amount of interest which has accrued during the preceding Interest Accrual
Period computed at the Interest Rate.

 

“Monthly Insurance Deposit” shall have the meaning set forth in Section 8.6
hereof.

 

“Monthly Payment Date” shall mean the First Monthly Payment Date and the sixth
(6th) day of every calendar month occurring thereafter during the term of the
Loan.

 

“Monthly Tax Deposit” shall have the meaning set forth in Section 8.6 hereof.

 

“Moody’s” shall mean Moody’s Investors Service, Inc.

 

“Net Proceeds” shall mean: (i) the net amount of all insurance proceeds payable
as a result of a Casualty to the Property, after deduction of reasonable costs
and expenses (including, but not limited to, reasonable attorneys’ fees), if
any, in collecting such insurance proceeds, or (ii) the net amount of the Award,
after deduction of reasonable costs and expenses (including, but not limited to,
reasonable attorneys’ fees), if any, in collecting such Award.

 

“Net Proceeds Deficiency” shall have the meaning set forth in Section 7.4
hereof.

 

“New Manager” shall mean any Person first engaged to manage the Property (or any
portion thereof) after the date hereof and, thereafter, any Person replacing or
becoming the assignee of the then current Manager, in each case, in accordance
with the applicable terms and conditions hereof.

 

“New Non-Consolidation Opinion” shall mean a substantive non-consolidation
opinion provided by outside counsel acceptable to Lender and the Rating Agencies
and otherwise in form and substance acceptable to Lender and the Rating
Agencies.

 

“New ST Lease” shall mean that certain Agreement of Lease, dated as of May 8,
2019 by and between Borrower, as landlord, and NYC DCAS, as tenant, as the same
may be amended, restated, supplemented, replaced or otherwise modified in
accordance with the terms hereof.

 

“New ST Lease Commencement Conditions” shall mean: (i) all Unfunded Obligations
with respect to the New ST Lease shall be completed in a manner acceptable to
Lender (in its reasonable discretion), (ii) the Commencement Date (as defined in
the New ST Lease) shall have occurred, (iii) the Tenant pursuant to the New ST
Lease shall have commenced the payment of full unabated rent pursuant to the New
ST Lease and (iv) no Specified Tenant Trigger Period shall be ongoing.

 

“Non-Conforming Policy” shall have the meaning set forth in Section 7.1 hereof.

 

“Non-Consolidation Opinion” shall mean that certain substantive
non-consolidation opinion delivered to Lender by Backenroth Frankel & Krinsky,
LLP in connection with the closing of the Loan.

 

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“Note” shall mean that certain Promissory Note of even date herewith in the
principal amount of $125,000,000, made by Borrower in favor of Lender, as the
same may be amended, restated, replaced, extended, renewed, supplemented,
severed, split, or otherwise modified from time to time.

 

“NYC DCAS” shall mean the City of New York Department of Citywide Administrative
Services.

 

“OFAC” shall have the meaning set forth in Section 3.30 hereof.

 

“Officer’s Certificate” shall mean a certificate delivered to Lender by Borrower
which is signed by Responsible Officer of Borrower.

 

“Op Ex Monthly Deposit” shall have the meaning set forth in Section 8.4 hereof.

 

“Operating Expense Account” shall have the meaning set forth in Section 8.4
hereof.

 

“Operating Expense Funds” shall have the meaning set forth in Section 8.4
hereof.

 

“Operating Expenses” shall mean the total of all expenditures, computed in
accordance with the Approved Accounting Method, of whatever kind relating to the
operation, maintenance and management of the Property that are incurred on a
regular monthly or other periodic basis, including without limitation, (and
without duplication) (a) utilities, ordinary repairs and maintenance, insurance,
license fees, property taxes and assessments, advertising expenses, payroll and
related taxes, computer processing charges, management fees (equal to the
greater of (x) three percent (3%) of the sum of (A) Operating Income for the
trailing twelve (12) month period plus (B) Gross Rents or (y) actual management
fees payable under the Management Agreement), operational equipment or other
lease payments as approved by Lender, but specifically excluding (i)
depreciation, (ii) Debt Service, (iii) non-recurring or extraordinary expenses,
and (iv) deposits into the Reserve Funds and (b) normalized capital expenditures
equal to $84,350 per annum.

 

“Operating Income” shall mean all income, computed in accordance with the
Approved Accounting Method, derived from the ownership and operation of the
Property from whatever source, including, but not limited to common area
maintenance, real estate tax recoveries, utility recoveries, other miscellaneous
expense recoveries and other miscellaneous income, but excluding rental income,
sales, use and occupancy or other taxes on receipts required to be accounted for
by Borrower to any Governmental Authority, refunds and uncollectible accounts,
sales of furniture, fixtures and equipment, interest income, insurance proceeds
(other than business interruption or other loss of income insurance), Awards,
unforfeited security deposits, utility and other similar deposits, non-recurring
or extraordinary income, including, without limitation lease termination
payments, and any disbursements to Borrower from the Reserve Funds. Operating
Income shall not be diminished as a result of the Security Instrument or the
creation of any intervening estate or interest in the Property or any part
thereof. Notwithstanding the foregoing or anything to the contrary contained
herein or in any other Loan Document, “Gross Rents” and “Operating Income” shall
be calculated hereunder without duplication of one another or of any individual
item contained within the definitions thereof.

 

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“Organizational Chart” shall have the meaning set forth in Section 3.31 hereof.

 

“Other Charges” shall mean all maintenance charges, impositions other than
Taxes, and any other charges, vault charges and license fees for the use of
vaults, chutes and similar areas adjoining the Property, now or hereafter levied
or assessed or imposed against the Property or any part thereof.

 

“Parking Agreement” shall mean that certain Parking Covenant and Agreement dated
as of May 31, 2019 by and between Borrower and 141 Livingston Owner LLC, a
Delaware limited liability company, as the same may be amended, restated,
supplemented, replaced or otherwise modified in accordance with the terms
hereof.

 

“Patriot Act” shall have the meaning set forth in Section 3.30 hereof.

 

“PCO” shall have the meaning set forth in Section 4.25 hereof.

 

“PCO Issuance Requirements” shall mean, collectively, the work that must be
completed and the other requirements that must be satisfied in order for a PCO
to be obtained for the Property.

 

“Permits” shall mean all necessary certificates, licenses, permits, franchises,
trade names, certificates of occupancy, consents, and other approvals
(governmental and otherwise) required under applicable Legal Requirements for
the operation of the Property and the conduct of Borrower’s business (including,
without limitation, all required zoning, building code, land use, environmental,
public assembly and other similar permits or approvals).

 

“Permitted Encumbrances” shall mean collectively, (a) the lien and security
interests created by this Agreement, the other Loan Documents, (b) all liens,
encumbrances and other matters disclosed in the Title Insurance Policy, (c)
liens, if any, for Taxes imposed by any Governmental Authority not yet due or
delinquent and (d) existing Leases and new Leases entered into in accordance
with this Agreement, (e) any Permitted Equipment Leases, and (f) such other
title and survey exceptions as Lender has approved or may approve in writing in
Lender’s sole discretion.

 

“Permitted Equipment Leases” shall mean equipment leases or other similar
instruments entered into with respect to the Personal Property; provided, that,
in each case, such equipment leases or similar instruments (i) are entered into
on commercially reasonable terms and conditions in the ordinary course of
Borrower’s business and (ii) relate to Personal Property which is (A) used in
connection with the operation and maintenance of the Property in the ordinary
course of Borrower’s business and (B) readily replaceable without material
interference or interruption to the operation of the Property.

 

“Permitted Investments” shall mean “permitted investments” as then defined and
required by the Rating Agencies.

 

“Person” shall mean any individual, corporation, partnership, joint venture,
limited liability company, estate, trust, unincorporated association, any
federal, state, county or municipal government or any bureau, department or
agency thereof and any other entity and, in each case, any fiduciary acting in
such capacity on behalf of any of the foregoing.

 

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“Personal Property” shall have the meaning set forth in the granting clause of
the Security Instrument.

 

“Policies” shall have the meaning specified in Section 7.1 hereof.

 

“Prohibited Entity” means any Person which (i) is a statutory trust or similar
Person, (ii) owns a direct or indirect interest in Borrower or the Property
through a tenancy-in-common or other similar form of ownership interest and/or
(iii) is a Crowdfunded Person.

 

“Prohibited Transfer” shall have the meaning set forth in Section 6.2 hereof.

 

“Property” shall have the meaning set forth in the Security Instrument.

 

“Property Document” shall mean, individually or collectively (as the context may
require), the Union Agreements and/or the Parking Agreement.

 

“Property Document Event” shall mean any event which would, directly or
indirectly, cause a termination right, right of first refusal, first offer or
any other similar right, cause any termination fees to be due or would cause a
Material Adverse Effect to occur under any Property Document (in each case,
beyond any applicable notice and cure periods under the applicable Property
Document); provided, however, any of the foregoing shall not be deemed a
Property Document Event to the extent Lender’s prior written consent is obtained
with respect to the same.

 

“Property Document Provisions” shall mean the representations, covenants and
other terms and conditions of this Agreement and the other Loan Documents
related to, in each case, any Property Document and/or other related matters
(including, without limitation, Sections 3.34 and 4.23 of this Agreement).

 

“Provided Information” shall mean any information provided by or on behalf of
any Borrower Party in connection with the Loan, the Property, such Borrower
Party and/or any related matter or Person.

 

“Prudent Lender Standard” shall, with respect to any matter, be deemed to have
been met if the matter in question (i) prior to a Securitization, is reasonably
acceptable to Lender and (ii) after a Securitization, (A) if permitted by REMIC
Requirements applicable to such matter, would be reasonably acceptable to Lender
or (B) if the Lender discretion in the foregoing subsection (A) is not permitted
under such applicable REMIC Requirements, would be acceptable to a prudent
lender of securitized commercial mortgage loans.

 

“Qualified Insurer” shall have the meaning set forth in Section 7.1 hereof.

 

“Qualified Management Agreement” shall mean a management agreement with a
Qualified Manager with respect to the Property which is approved by Lender in
writing (which such approval may be conditioned upon Lender's receipt of a
Rating Agency Confirmation with respect to such management agreement).

 

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“Qualified Manager” shall mean a Person approved by Lender in writing (which
such approval may be conditioned upon Lender's receipt of a Rating Agency
Confirmation with respect to such Person).

 

“Rating Agencies” shall mean each of S&P, Moody’s, Fitch and any other
nationally-recognized statistical rating agency designated by Lender (and any
successor to any of the foregoing) in connection with and/or in anticipation of
any Secondary Market Transaction.

 

“Rating Agency Condition” shall be deemed to exist if (i) any Rating Agency
fails to respond to any request for a Rating Agency Confirmation with respect to
any applicable matter or otherwise elects (orally or in writing) not to consider
any applicable matter or (ii) Lender (or its Servicer) is not required to and/or
elects not to obtain (or cause to be obtained) a Rating Agency Confirmation with
respect to any applicable matter, in each case, pursuant to and in compliance
with any pooling and servicing agreement(s) or similar agreement(s), in each
case, relating to the servicing and/or administration of the Loan.

 

“Rating Agency Confirmation” shall mean (i) prior to a Securitization or if the
Rating Agency Condition exists, that Lender has (in consultation with the Rating
Agencies (if required by Lender)) approved the matter in question in writing
based upon Lender’s good faith determination of applicable Rating Agency
standards and criteria and (ii) from and after a Securitization (to the extent
the Rating Agency Condition does not exist), a written affirmation from each of
the Rating Agencies (obtained at Borrower’s sole cost and expense) that the
credit rating of the Securities by such Rating Agency immediately prior to the
occurrence of the event with respect to which such Rating Agency Confirmation is
sought will not be qualified, downgraded or withdrawn as a result of the
occurrence of such event, which affirmation may be granted or withheld in such
Rating Agency’s sole and absolute discretion.

 

“Registrar” shall have the meaning set forth in Section 11.7 hereof.

 

“Registration Statement” shall have the meaning set forth in Section 11.2
hereof.

 

“Regulation AB” shall mean Regulation AB under the Securities Act and the
Exchange Act, as such Regulation may be amended from time to time.

 

“REIT Board” shall mean the governing body of the Clipper REIT.

 

“Related Loan” shall mean a loan to an Affiliate of Borrower or secured by a
Related Property, that is included in a Securitization with the Loan (or any
portion thereof or interest therein).

 

“Related Property” shall mean a parcel of real property, together with
improvements thereon and personal property related thereto, that is “related”
within the meaning of the definition of Significant Obligor, to the Property.

 

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“Release Date” shall mean the earlier to occur of (i) the fourth anniversary of
the Closing Date and (ii) the date that is two (2) years from the “startup day”
(within the meaning of Section 860G(a)(9) of the IRS Code) of the REMIC Trust
established in connection with the last Securitization involving any portion of
or interest in the Loan.

 

“REMIC Opinion” shall mean, as to any matter, an opinion as to the compliance of
such matter with applicable REMIC Requirements (which such opinion shall be, in
form and substance and from a provider, in each case, reasonably acceptable to
Lender and acceptable to the Rating Agencies).

 

“REMIC Payment” shall have the meaning set forth in Section 7.3 hereof.

 

“REMIC Requirements” shall mean any applicable legal requirements relating to
any REMIC Trust (including, without limitation, those relating to the continued
treatment of the Loan (or the applicable portion thereof and/or interest
therein) as a “qualified mortgage” held by such REMIC Trust, the continued
qualification of such REMIC Trust as such under the IRS Code, the non-imposition
of any tax on such REMIC Trust under the IRS Code (including, without
limitation, taxes on “prohibited transactions and “contributions”) and any other
constraints, rules and/or other regulations and/or requirements relating to the
servicing, modification and/or other similar matters with respect to the Loan
(or any portion thereof and/or interest therein) that may now or hereafter exist
under applicable legal requirements (including, without limitation under the IRS
Code)).

 

“REMIC Trust” shall mean any “real estate mortgage investment conduit” within
the meaning of Section 860D of the IRS Code that holds any interest in all or
any portion of the Loan.

 

“Rent Roll” shall have the meaning set forth in Section 3.18 hereof.

 

“Rent Loss Proceeds” shall have the meaning set forth in Section 7.1 hereof.

 

“Rents” shall have the meaning set forth in the Security Instrument.

 

“Replacement Reserve Account” shall have the meaning set forth in Section 8.2
hereof.

 

“Replacement Reserve Funds” shall have the meaning set forth in Section 8.2
hereof.

 

“Replacement Reserve Monthly Deposit” shall have the meaning set forth in
Section 8.2 hereof.

 

“Replacements” for any period shall mean replacements and/or alterations to the
Property; provided, that, the same are (i) required to be capitalized according
to the Approved Accounting Method and (ii) reasonably approved by Lender.

 

“Reporting Failure” shall have the meaning set forth in Section 4.12 hereof.

 

“Required Financial Item” shall have the meaning set forth in Section 4.12
hereof.

 

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“Reserve Accounts” shall mean the Tax Account, the Insurance Account, the
Replacement Reserve Account, the Immediate Repair Account, the Gap Rent Reserve
Account, the Unfunded Obligations Reserve Account, the Excess Cash Flow Account,
the Operating Expense Account and any other escrow account established by this
Agreement or the other Loan Documents (but specifically excluding the Cash
Management Account, the Restricted Account and the Debt Service Account).

 

“Reserve Funds” shall mean the Tax and Insurance Funds, the Replacement Reserve
Funds, the Immediate Repair Funds, the Gap Rent Reserve Funds, the Unfunded
Obligations Reserve Funds, the Excess Cash Flow Funds, the Operating Expense
Funds and any other escrow funds established by this Agreement or the other Loan
Documents.

 

“Responsible Officer” means with respect to a Person, the chairman of the board,
president, chief operating officer, chief financial officer, treasurer or vice
president of such Person or such other similar officer of such Person reasonably
acceptable to Lender.

 

“Restoration” shall mean, following the occurrence of a Casualty or a
Condemnation which is of a type necessitating the repair of the Property (or any
portion thereof), the completion of the repair and restoration of the Property
(or applicable portion thereof) as nearly as possible to the condition the
Property (or applicable portion thereof) was in immediately prior to such
Casualty or Condemnation, with such alterations as may be reasonably approved by
Lender.

 

“Restoration Retainage” shall have the meaning set forth in Section 7.4 hereof.

 

“Restoration Threshold” shall mean an amount equal to 5% of the outstanding
principal amount of the Loan.

 

“Restricted Account” shall have the meaning set forth in Section 9.1 hereof.

 

“Restricted Account Agreement” shall mean that certain Restricted Account
Agreement by and among Borrower, Lender and Wells Fargo Bank, N.A., dated as of
the date hereof, as the same may be amended, restated, replaced, supplemented or
otherwise modified from time to time in accordance with the terms hereof.

 

“Restricted Party” shall have the meaning set forth in Section 6.1 hereof.

 

“Sale or Pledge” shall have the meaning set forth in Section 6.1 hereof.

 

“Sanctions” shall have the meaning set forth in Section 3.30 hereof.

 

“Sanctions Authority” shall have the meaning set forth in Section 3.30 hereof.

 

“Sanctioned Jurisdiction” shall have the meaning set forth in Section 3.30
hereof.

 

“Sanctioned Person” shall have the meaning set forth in Section 3.30 hereof.

 

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“Satisfactory Search Results” shall mean the results of Lender’s customary “know
your customer”, credit history check, litigation, lien, bankruptcy, judgment and
other similar searches with respect to the applicable transferee and its
applicable affiliates, in each case, (i) revealing no matters which would have a
Material Adverse Effect and (ii) yielding results which are otherwise acceptable
to Lender in its reasonable discretion. Borrower shall pay all of Lender’s
costs, fees and expenses in connection with the foregoing and, notwithstanding
the forgoing, no such search results shall constitute “Satisfactory Search
Results” until such costs, fees and expenses are paid in full.

 

“Scheduled Defeasance Payments” shall mean scheduled payments of interest and
principal hereunder for all Monthly Payment Dates occurring after the Total
Defeasance Date and up to and including the Stated Maturity Date (including the
outstanding principal balance and accrued interest on the Loan as of the Stated
Maturity Date), and all payments required after the Total Defeasance Date, if
any, under the Loan Documents for servicing fees, rating surveillance charges
(to the extent applicable) and other similar charges.

 

“Secondary Market Transaction” shall have the meaning set forth in Section 11.1
hereof.

 

“Securities” shall have the meaning set forth in Section 11.1 hereof.

 

“Securities Act” shall mean the Securities Act of 1933, as amended.

 

“Securitization” shall have the meaning set forth in Section 11.1 hereof.

 

“Security Agreement” shall mean a pledge and security agreement in form and
substance satisfying the Prudent Lender Standard pursuant to which Borrower
grants Lender a perfected, first priority security interest in the Defeasance
Collateral Account and the Total Defeasance Collateral.

 

“Security Deposits” shall mean any advance deposits or any other deposits
collected by or on behalf of Borrower with respect to the Property, whether in
the form of cash, letter(s) of credit or other cash equivalents (including,
without limitation, such deposits made in connection with any Lease).

 

“Security Instrument” shall mean that certain Mortgage and Agreement of
Consolidation and Modification of Mortgage, Assignment of Leases and Rents,
Security Agreement and Fixture Filing dated as of the date hereof, executed and
delivered by Borrower as security for the Loan and encumbering the Property, as
the same may be amended, restated, replaced, supplemented or otherwise modified
from time to time.

 

“Self-Management Obligations” shall have the meaning set forth in Section
4.15(a) hereof.

 

“Servicer” shall have the meaning set forth in Section 11.4 hereof.

 

“Severed Loan Documents” shall have the meaning set forth in Article 10 hereof.

 

“Significant Obligor” shall have the meaning set forth in Item 1101(k) of
Regulation AB under the Securities Act.

 

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“Single Purpose Entity” shall mean an entity whose structure and organizational
and governing documents are otherwise in form and substance acceptable to the
Rating Agencies and satisfying the Prudent Lender Standard.

 

“Special Member” is defined in Section 5.1 hereof.

 

“Specified Tenant” shall mean, as applicable, (i) NYC DCAS and (ii) any other
lessee(s) of the Specified Tenant Space (or any portion thereof) and any
guarantor(s) of the applicable related Specified Tenant Lease(s).

 

“Specified Tenant Cure Conditions” shall mean each of the following, as
applicable (i) the applicable Specified Tenant has cured all defaults under the
applicable Specified Tenant Lease, (ii) the applicable Specified Tenant is in
actual, physical possession of the Specified Tenant Space (or applicable portion
thereof), open to the public for business during customary hours and not “dark”
in the Specified Tenant Space (or applicable portion thereof), (iii) the
applicable Specified Tenant has revoked or rescinded all termination or
cancellation notices with respect to the applicable Specified Tenant Lease and
has re-affirmed the applicable Specified Tenant Lease as being in full force and
effect, (iv) in the event the Specified Tenant Trigger Period is due to the
applicable Specified Tenant’s failure to extend or renew the applicable
Specified Tenant Lease in accordance with clause (vi) of the definition of
“Specified Tenant Trigger Period”, the applicable Specified Tenant has renewed
or extended the applicable Specified Tenant Lease in accordance with the terms
hereof and thereof for the applicable Specified Tenant Renewal Term, (v) with
respect to any applicable bankruptcy or insolvency proceedings involving the
applicable Specified Tenant and/or the applicable Specified Tenant Lease, the
applicable Specified Tenant is no longer insolvent or subject to any bankruptcy
or insolvency proceedings and has affirmed the applicable Specified Tenant Lease
pursuant to final, non-appealable order of a court of competent jurisdiction,
and (vi) the applicable Specified Tenant is paying full, unabated rent under the
applicable Specified Tenant Lease.

 

“Specified Tenant Extension Deadline” shall mean the earlier of: (x) the date
occurring eighteen (18) months prior to the expiration of the then applicable
term of the applicable Specified Tenant Lease and (y) the date on which the
applicable Specified Tenant is required to give notice of its intent to renew
the applicable Specified Tenant Lease.

 

“Specified Tenant Lease” shall mean, collectively and/or individually (as the
context requires), each Lease at the Property with Specified Tenant (including,
without limitation, any guaranty or similar instrument furnished thereunder), as
the same may have been or may hereafter be amended, restated, extended, renewed,
replaced and/or otherwise modified. For purposes of clarification: (i) as of the
Closing Date, each of the Existing ST Lease and the New ST Lease shall
(individually and/or collectively, as the context shall require) be considered
the Specified Tenant Lease for purposes hereunder and (ii) at such time as the
New ST Lease Commencement Conditions are satisfied, the New ST Lease shall be
the Specified Tenant Lease for purposes hereunder and the Existing ST Lease
shall be of no further force and effect.

 

“Specified Tenant Renewal Term” shall mean a renewal term of no less than five
(5) additional years.

 

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“Specified Tenant Space” shall mean that portion of the Property demised as of
the date hereof to the initial Specified Tenant pursuant to the initial
Specified Tenant Lease. References herein to “applicable portions” of the
Specified Tenant Space (or words of similar import) shall be deemed to refer to
the portion of the Specified Tenant Space demised pursuant to the applicable
Specified Tenant Lease(s) entered into after the date hereof in accordance with
the applicable terms and conditions hereof.

 

“Specified Tenant Termination Exercise Event” shall mean the Specified Tenant
pursuant to the New ST Lease shall have given written notice that it intends to
exercise the termination right set forth in Section 3 of the New ST Lease.

 

“Specified Tenant Trigger Period” shall mean a period (A) commencing upon the
first to occur of (i) Specified Tenant being in monetary or material
non-monetary default under the applicable Specified Tenant Lease beyond
applicable notice and cure periods thereunder, (ii) Specified Tenant failing to
be in actual, physical possession of the Specified Tenant Space (or applicable
portion thereof), failing to be open to the public for business during customary
hours and/or “going dark” in the Specified Tenant Space (or applicable portion
thereof), (iii) Specified Tenant giving notice that it is terminating its Lease
for all or any portion of the Specified Tenant Space (or applicable portion
thereof), (iv) any termination or cancellation of any Specified Tenant Lease
(including, without limitation, rejection in any bankruptcy or similar
insolvency proceeding) and/or any Specified Tenant Lease failing to otherwise be
in full force and effect, (v) any bankruptcy or similar insolvency of Specified
Tenant (vi) Specified Tenant failing to extend or renew the applicable Specified
Tenant Lease on or prior the applicable Specified Tenant Extension Deadline in
accordance with the applicable terms and conditions thereof and hereof for the
applicable Specified Tenant Renewal Term and (vii) to the extent a Specified
Tenant Termination Exercise Event shall have occurred, the date that is eighteen
(18) months prior to the date the New ST Lease will terminate in connection with
said Specified Tenant Termination Exercise Event; and (B) expiring upon the
first to occur of Lender’s receipt of evidence reasonably acceptable to Lender
(which such evidence shall include, without limitation, a duly executed estoppel
certificate from the applicable Specified Tenant in form and substance
acceptable to Lender (it being acknowledged that, to the extent the applicable
Specified Tenant is NYC DCAS, Lender shall not require an estoppel which goes
beyond the scope of information provided in the estoppel delivered by NYC DCAS
in connection with the origination of the Loan)) of (1) the satisfaction of the
Specified Tenant Cure Conditions or (2) Borrower leasing the entire Specified
Tenant Space (or applicable portion thereof) in accordance with the applicable
terms and conditions hereof, the applicable Tenant under such Lease being in
actual, physical occupancy of, and open to the public for business in, the space
demised under its Lease and paying the full, unabated amount of the rent due
under its Lease.

 

“SPE Component Entity” shall have the meaning set forth in Section 5.1 hereof.

 

“Sponsor” shall mean David Bistricer, Sam Levinson and/or any Sponsor Family
Entity.

 

“Sponsor Family Entity” shall mean any applicable Bistricer Family Entity and
any applicable Levinson Family Entity.

 

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“S&P” shall mean S&P Global Ratings, a Standard & Poor’s Financial Services LLC
business.

 

“State” shall mean the state in which the Property or any part thereof is
located.

 

“Stated Maturity Date” shall mean June 6, 2029.

 

“Successor Borrower” shall have the meaning set forth in Section 2.8 hereof.

 

“Survey” shall mean that certain survey of the Property certified and delivered
to Lender in connection with the closing of the Loan.

 

“Tax Account” shall have the meaning set forth in Section 8.6 hereof.

 

“Tax and Insurance Funds” shall have the meaning set forth in Section 8.6
hereof.

 

“Taxes” shall mean all taxes, assessments, water rates, sewer rents, and other
governmental impositions, including, without limitation, vault charges and
license fees for the use of vaults, chutes and similar areas adjoining the Land,
now or hereafter levied or assessed or imposed against the Property or any part
thereof.

 

“Tax Payment Date” shall mean, with respect to any applicable Taxes, the date
occurring 30 days prior to the date the same are due and payable.

 

“TCO” shall mean the current temporary certificate of occupancy for the Property
(together with any renewal temporary certificate of occupancy for the Property).

 

“Tenant” shall mean any Person leasing, subleasing or otherwise occupying any
portion of the Property under a Lease or other occupancy agreement.

 

“Tenant Direction Notice” shall have the meaning set forth in Section 9.2
hereof.

 

“Title Insurance Policy” shall mean that certain ALTA mortgagee title insurance
policy issued with respect to the Property and insuring the lien of the Security
Instrument.

 

“Total Defeasance Collateral” shall mean Government Securities, which provide
payments (i) on or prior to, but as close as possible to, the Business Day
immediately preceding all Monthly Payment Dates and other scheduled payment
dates, if any, hereunder after the Total Defeasance Date and up to and including
the Stated Maturity Date, and (ii) in amounts equal to or greater than the
Scheduled Defeasance Payments relating to such Monthly Payment Dates and other
scheduled payment dates.

 

“Total Defeasance Date” shall have the meaning set forth in Section 2.8 hereof.

 

“Total Defeasance Event” shall have the meaning set forth in Section 2.8 hereof.

 

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“Trigger Period” shall mean a period (A) commencing upon the earliest of (i) the
occurrence and continuance of an Event of Default, (ii) the Debt Yield falling
below 7.00%, and (iii) the occurrence of a Specified Tenant Trigger Period; and
(B) expiring upon (x) with regard to any Trigger Period commenced in connection
with clause (i) above, the cure (if applicable) of such Event of Default, (y)
with regard to any Trigger Period commenced in connection with clause (ii)
above, the date that the Debt Yield is equal to or greater than 7.25% for two
(2) consecutive calendar quarters and (z) with regard to any Trigger Period
commenced in connection with clause (iii) above, a Specified Tenant Trigger
Period ceasing to exist in accordance with the terms hereof. Notwithstanding the
foregoing, a Trigger Period shall not be deemed to expire in the event that a
Trigger Period then exists for any other reason.

 

“True Up Payment” shall mean a payment into the applicable Reserve Account of a
sum which, together with any applicable monthly deposits into the applicable
Reserve Account, will be sufficient to discharge the obligations and liabilities
for which such Reserve Account was established as and when reasonably
appropriate. The amount of the True Up Payment shall be determined by Lender in
its reasonable discretion and shall be final and binding absent manifest error.

 

“UCC” or “Uniform Commercial Code” shall mean the Uniform Commercial Code as in
effect in the State.

 

“Underwritable Cash Flow” shall mean an amount calculated by Lender on a monthly
basis equal to the sum of Gross Rents plus the trailing twelve (12) months
Operating Income, less the trailing twelve (12) months Operating Expenses, each
of which shall be subject to Lender’s application of the Cash Flow Adjustments.
Lender’s calculation of Underwritable Cash Flow (including determination of
items that do not qualify as Operating Income or Operating Expenses) shall be
calculated by Lender in good faith based upon Lender’s determination of Rating
Agency criteria and utilizing Lender’s customary standards of calculating
Underwritable Cash Flow and Lender’s calculation of Underwritable Cash Flow
shall be final absent manifest error.

 

“Underwriter Group” shall have the meaning set forth in Section 11.2 hereof.

 

“Unfunded Obligations” shall mean, collectively, those obligations of Borrower
to complete and/or pay for certain tenant improvements pursuant to the New ST
Lease as listed on Schedule IV attached hereto.

 

“Union Agreements” shall mean (i) each agreement with any union or similar
organization in effect with respect to the business and/or operations of the
Property, (ii) any successor to, replacement of, or any other similar contract
or agreement, in each case, entered into with respect to the Property and (iii)
any modification, restatement, replacement or other amendment to any of the
foregoing.

 

“Updated Information” shall have the meaning set forth in Section 11.1 hereof.

 

“U.S. Obligations” shall mean direct full faith and credit obligations of the
United States of America that are not subject to prepayment, call or early
redemption.

 

“Work Charge” shall have the meaning set forth in Section 4.16 hereof.

 

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“Write-Down and Conversion Powers” means, with respect to any EEA Resolution
Authority, the write-down and conversion powers of such EEA Resolution Authority
from time to time under the Bail-In Legislation for the applicable EEA Member
Country, which write-down and conversion powers are described in the EU Bail-In
Legislation Schedule.

 

“Yield Maintenance Premium” shall mean an amount equal to the greater of (a) an
amount equal to 1% of the amount prepaid; or (b) an amount equal to the present
value as of the date on which the prepayment is made of the Calculated Payments
(as defined below) from the date on which the prepayment is made through the
Stated Maturity Date determined by discounting such payments at the Discount
Rate (as defined below). As used in this definition, the term “Calculated
Payments” shall mean the monthly payments of interest only which would be due
based on the principal amount of the Loan being prepaid on the date on which
prepayment is made and assuming an interest rate per annum equal to the
difference (if such difference is greater than zero) between (y) the Interest
Rate and (z) the Yield Maintenance Treasury Rate (as defined below). As used in
this definition, the term “Discount Rate” shall mean the rate which, when
compounded monthly, is equivalent to the Yield Maintenance Treasury Rate (as
defined below), when compounded semi-annually. As used in this definition, the
term “Yield Maintenance Treasury Rate” shall mean the yield calculated by Lender
by the linear interpolation of the yields, as reported in the Federal Reserve
Statistical Release H.15-Selected Interest Rates under the heading “U.S.
Government Securities/Treasury Constant Maturities” for the week ending prior to
the date on which prepayment is made, of U.S. Treasury Constant Maturities with
maturity dates (one longer or one shorter) most nearly approximating the Stated
Maturity Date. In the event Release H.15 is no longer published, Lender shall
select a comparable publication to determine the Yield Maintenance Treasury
Rate. In no event, however, shall Lender be required to reinvest any prepayment
proceeds in U.S. Treasury obligations or otherwise. Lender shall notify Borrower
of the amount and the basis of determination of the required prepayment
consideration. Lender’s calculation of the Yield Maintenance Premium shall be
conclusive absent manifest error.

 

Section 1.2.     Principles of Construction.

 

All references to sections and schedules are to sections and schedules in or to
this Agreement unless otherwise specified. All uses of the word “including”
shall mean “including, without limitation” unless the context shall indicate
otherwise. Unless otherwise specified, the words “hereof,” “herein” and
“hereunder” and words of similar import when used in this Agreement shall refer
to this Agreement as a whole and not to any particular provision of this
Agreement. Unless otherwise specified, all meanings attributed to defined terms
herein shall be equally applicable to both the singular and plural forms of the
terms so defined.

 

ARTICLE 2     

GENERAL TERMS

 

Section 2.1.     Loan Commitment; Disbursement to Borrower. Except as expressly
and specifically set forth herein, Lender has no obligation or other commitment
to loan any funds to Borrower or otherwise make disbursements to Borrower.
Borrower hereby waives any right Borrower may have to make any claim to the
contrary.

 

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Section 2.2.     The Loan. Subject to and upon the terms and conditions set
forth herein, Lender hereby agrees to make and Borrower hereby agrees to accept
the Loan on the Closing Date.

 

Section 2.3.     Disbursement to Borrower. Borrower may request and receive only
one borrowing hereunder in respect of the Loan and any amount borrowed and
repaid hereunder in respect of the Loan may not be re-borrowed.

 

Section 2.4.     The Note and the Other Loan Documents. The Loan shall be
evidenced by the Note and this Agreement and secured by this Agreement and the
other Loan Documents.

 

Section 2.5.     Interest Rate.

 

(a)     Generally. Interest on the outstanding principal balance of the Loan
shall accrue from the Closing Date at the Interest Rate until repaid in
accordance with the applicable terms and conditions hereof.

 

(b)     Intentionally Omitted.

 

(c)     Default Rate. In the event that, and for so long as, any Event of
Default shall have occurred and be continuing, (i) the then outstanding
principal balance of the Loan shall accrue interest at the Default Rate,
calculated from the date the applicable Default occurred without regard to any
grace or cure periods contained herein, (ii) without limitation of any rights or
remedies contained herein and/or in any other Loan Document, any interest
accrued at the Default Rate in excess of the interest component of the Monthly
Debt Service Payment Amount shall, to the extent not already paid and/or due and
payable hereunder, be due and payable on each Monthly Payment Date and (iii) all
references herein and/or in any other Loan Document to the “Interest Rate” shall
be deemed to refer to the Default Rate.

 

(d)     Interest Calculation. Interest on the outstanding principal balance of
the Loan shall be calculated by multiplying (a) the actual number of days
elapsed in the period for which the calculation is being made by (b) a daily
rate based on a three hundred sixty (360) day year (that is, the Interest Rate
or the Default Rate, as then applicable, expressed as an annual rate divided by
360) by (c) the outstanding principal balance. The accrual period for
calculating interest due on each Monthly Payment Date shall be the Interest
Accrual Period immediately prior to such Monthly Payment Date. Borrower
understands and acknowledges that such interest accrual requirement results in
more interest accruing on the Loan than if either a thirty (30) day month and a
three hundred sixty (360) day year or the actual number of days and a three
hundred sixty-five (365) day year were used to compute the accrual of interest
on the Loan.

 

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(e)     Usury Savings. This Agreement and the other Loan Documents are subject
to the express condition that at no time shall Borrower be required to pay
interest on the principal balance of the Loan (including, to the extent
applicable, any prepayment premium and/or penalty) at a rate which could subject
Lender to either civil or criminal liability as a result of being in excess of
the Maximum Legal Rate. If by the terms of this Agreement or the other Loan
Documents, Borrower is at any time required or obligated to pay interest on the
principal balance due hereunder (including, to the extent applicable, any
prepayment premium and/or penalty) at a rate in excess of the Maximum Legal
Rate, the Interest Rate or the Default Rate, as the case may be, and/or, to the
extent applicable, any prepayment premium and/or penalty shall, in each case, be
deemed to be immediately reduced to the Maximum Legal Rate and all previous
payments in excess of the Maximum Legal Rate shall be deemed to have been
payments in reduction of principal and not on account of the interest due
hereunder. All sums paid or agreed to be paid to Lender for the use,
forbearance, or detention of the sums due under the Loan, shall, to the extent
permitted by applicable law, be amortized, prorated, allocated, and spread
throughout the full stated term of the Loan until payment in full so that the
rate or amount of interest on account of the Loan (including, to the extent
applicable, any prepayment premium and/or penalty) does not exceed the Maximum
Legal Rate from time to time in effect and applicable to the Loan for so long as
the Loan is outstanding.

 

(f)     Notwithstanding anything to the contrary in any Loan Document or in any
other agreement, arrangement or understanding among any of the following
Persons, Borrower, each Borrower Party and Lender acknowledge that any liability
of any EEA Financial Institution arising under any Loan Document, to the extent
such liability is unsecured, may be subject to the Write-Down and Conversion
Powers of an EEA Resolution Authority and agrees and consents to, and
acknowledges and agrees to be bound by (i) the application of any Write-Down and
Conversion Powers by an EEA Resolution Authority to any such liabilities arising
hereunder which may be payable to it by any party hereto that is an EEA
Financial Institution; and (ii) the effects of any Bail-in Action on any such
liability, including, if applicable (A) a reduction in full or in part or
cancellation of any such liability; (B) a conversion of all, or a portion of,
such liability into shares or other instruments of ownership in such EEA
Financial Institution, its parent undertaking, or a bridge institution that may
be issued to it or otherwise conferred on it, and that such shares or other
instruments of ownership will be accepted by it in lieu of any rights with
respect to any such liability under this Agreement or any other Loan Document;
and/or (C) the variation of the terms of such liability in connection with the
exercise of the Write-Down and Conversion Powers of any EEA Resolution
Authority.

 

Section 2.6.     Loan Payments.

 

(a)     Borrower shall make a payment to Lender of interest only on the Closing
Date for the period from (and including) the Closing Date through (but
excluding) the sixth (6th) day of either (i) the month in which the Closing Date
occurs (if such Closing Date is after the first day of such month, but prior to
the sixth (6th) day of such month) or (ii) if the Closing Date is after the
sixth (6th) day of the then current calendar month, the month following the
month in which the Closing Date occurs; provided, however, if the Closing Date
is the sixth (6th) day of a calendar month, no such separate payment of interest
shall be due. Borrower shall make a payment to Lender of interest and, to the
extent applicable, principal in the amount of the Monthly Debt Service Payment
Amount on the First Monthly Payment Date and on each Monthly Payment Date
occurring thereafter to and including the Maturity Date. Each payment shall be
applied first to accrued and unpaid interest and the balance to principal.

 

(b)     Intentionally Omitted.

 

(c)     Borrower shall pay to Lender on the Maturity Date the outstanding
principal balance of the Loan, all accrued and unpaid interest and all other
amounts due hereunder and under the Note, the Security Instrument and the other
Loan Documents.

 

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(d)     If any principal, interest or any other sum due under the Loan
Documents, other than the payment of principal due on the Maturity Date, is not
paid by Borrower on the date on which it is due, Borrower shall pay to Lender
upon demand an amount equal to the lesser of five percent (5%) of such unpaid
sum or the maximum amount permitted by applicable law in order to defray the
expense incurred by Lender in handling and processing such delinquent payment
and to compensate Lender for the loss of the use of such delinquent payment. Any
such amount shall be secured by the Security Instrument and the other Loan
Documents.

 

(e)      

 

(i)     Except as otherwise specifically provided herein, all payments and
prepayments under this Agreement and the Note shall be made to Lender not later
than 1:00 P.M., New York City time, on the date when due and shall be made in
lawful money of the United States of America in immediately available funds at
Lender’s office, and any funds received by Lender after such time shall, for all
purposes hereof, be deemed to have been paid on the next succeeding Business
Day.

 

(ii)     Whenever any payment to be made hereunder or under any other Loan
Document shall be stated to be due on a day which is not a Business Day, the due
date thereof shall be deemed to be the immediately preceding Business Day.

 

(iii)     All payments required to be made by Borrower hereunder or under the
Note or the other Loan Documents shall be made irrespective of, and without
deduction for, any setoff, claim or counterclaim and shall be made irrespective
of any defense thereto.

 

Section 2.7.     Prepayments.

 

(a)     Except as otherwise provided herein, Borrower shall not have the right
to prepay the Loan in whole or in part. On or after the Monthly Payment Date
occurring three (3) months prior to the Stated Maturity Date, Borrower may,
provided no Event of Default has occurred and is continuing, at its option and
upon thirty (30) days prior notice to Lender (or such shorter period of time as
may be permitted by Lender in its reasonable discretion), prepay the Debt in
whole on any date without payment of any prepayment premium or penalty
(including, without limitation, any Default Yield Maintenance Premium). Any
prepayment received by Lender on a date other than a Monthly Payment Date shall
include interest which would have accrued thereon to the next Monthly Payment
Date (such amounts, the “Interest Shortfall”) and such amounts (i.e., principal
and interest prepaid by Borrower) shall be held by Lender as collateral security
for the Loan in an interest bearing Eligible Account at an Eligible Institution,
with interest accruing on such amounts to the benefit of Borrower; such amounts
prepaid shall be applied to the Loan on the next Monthly Payment Date, with any
interest on such funds paid to Borrower on such date provided no Event of
Default then exists.

 

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(b)     On each date on which Lender actually receives a distribution of Net
Proceeds, and if Lender does not make such Net Proceeds available for
Restoration or for disbursement as Rent Loss Proceeds (as applicable), in each
case, in accordance with the applicable terms and conditions hereof, Borrower
shall, at Lender’s option, prepay the Debt in an amount equal to one hundred
percent (100%) of such Net Proceeds together with any applicable Interest
Shortfall. Borrower shall make the REMIC Payment as and to the extent required
hereunder. No prepayment premium or penalty (including, without limitation, any
Default Yield Maintenance Premium) shall be due in connection with any
prepayment made pursuant to this Section 2.7(b) (including, without limitation,
in connection with any REMIC Payment). Any prepayment received by Lender
pursuant to this Section 2.7(b) on a date other than a Monthly Payment Date
shall be held by Lender as collateral security for the Loan in an interest
bearing, Eligible Account at an Eligible Institution, with such interest
accruing to the benefit of Borrower, and shall be applied by Lender on the next
Monthly Payment Date, with any interest on such funds paid to Borrower on such
date provided no Event of Default then exists.

 

(c)     After the occurrence and during the continuance of an Event of Default
and notwithstanding any acceleration of the Debt in accordance with the
applicable terms and conditions hereof, the Default Yield Maintenance Premium
shall, in all cases, be deemed a portion of the Debt due and owing hereunder and
under the other Loan Documents. Without limitation of the foregoing, if, after
the occurrence and during the continuance of an Event of Default, (i) payment of
all or any part of the Debt is tendered by Borrower (voluntarily or
involuntarily), a purchaser at foreclosure or any other Person, (ii) Lender
obtains a recovery of all or a portion of the Debt (through an exercise of
remedies hereunder or under the other Loan Documents or otherwise) or (iii) the
Debt is deemed satisfied (in whole or in part) through an exercise of remedies
hereunder or under the other Loan Documents or at law, the Default Yield
Maintenance Premium, in addition to the outstanding principal balance, all
accrued and unpaid interest and other amounts payable under the Loan Documents,
shall be deemed due and payable hereunder. Notwithstanding anything to the
contrary contained herein or in any other Loan Document, (i) any prepayment of
the Debt shall be applied to the Debt in such order and priority as may be
determined by Lender in its sole discretion and (ii) the word “prepayment” when
used herein and in the other Loan Documents shall also be deemed to mean
repayment and payment.

 

Section 2.8.     Defeasance.

 

(a)     Provided no Event of Default shall have occurred and be continuing,
Borrower shall have the right at any time after the Release Date and prior to
the Maturity Date to voluntarily defease the entire Loan and obtain a release of
the lien of the Security Instrument by providing Lender with the Total
Defeasance Collateral (hereinafter, a “Total Defeasance Event”), subject to the
satisfaction of the following conditions precedent:

 

(i)     Borrower shall provide Lender not less than thirty (30) days notice (or
such shorter period of time if permitted by Lender in its reasonable discretion)
but not more than ninety (90) days notice specifying a date (the “Total
Defeasance Date”) on which the Total Defeasance Event is to occur;

 

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(ii)     Unless otherwise agreed to in writing by Lender, Borrower shall pay to
Lender (A) all payments of principal and interest due and payable on the Loan to
and including the Total Defeasance Date (provided, that, if such Total
Defeasance Date is not a Monthly Payment Date, Borrower shall also pay to Lender
all payments of principal and interest due on the Loan to and including the next
occurring Monthly Payment Date); (B) all other sums, if any, due and payable
under the Note, this Agreement, the Security Instrument and the other Loan
Documents through and including the Total Defeasance Date (or, if the Total
Defeasance Date is not a Monthly Payment Date, the next occurring Monthly
Payment Date); (C) all escrow, closing, recording, legal, Rating Agency and
other fees, costs and expenses paid or incurred by Lender or its agents in
connection with the Total Defeasance Event, the release of the lien of Security
Instrument on the Property, the review of the proposed Defeasance Collateral and
the preparation of the Security Agreement, the Defeasance Collateral Account
Agreement and related documentation; and (D) any revenue, documentary stamp,
intangible or other taxes, charges or fees due in connection with the transfer
or assumption of the Note or the Total Defeasance Event;

 

(iii)     Borrower shall deposit the Total Defeasance Collateral into the
Defeasance Collateral Account and otherwise comply with the provisions of
Section 2.8(d) hereof;

 

(iv)     Borrower shall execute and deliver to Lender a Security Agreement in
respect of the Defeasance Collateral Account and the Total Defeasance
Collateral;

 

(v)     Borrower shall deliver to Lender (i) an opinion of counsel for Borrower
that is standard in commercial lending transactions and subject only to
customary qualifications, assumptions and exceptions opining, among other
things, that (A) Lender has a legal and valid perfected first priority security
interest in the Defeasance Collateral Account and the Total Defeasance
Collateral; (B) the Total Defeasance Event will not result in a deemed exchange
for purposes of the IRS Code and will not adversely affect the status of the
Note as indebtedness for federal income tax purposes; and (C) delivery of the
Total Defeasance Collateral and the grant of a security interest therein to
Lender shall not constitute an avoidable preference under Section 547 of the
Bankruptcy Code or applicable state law; and (ii) a REMIC Opinion with respect
to the Total Defeasance Event; and (iii) a New Non-Consolidation Opinion with
respect to Successor Borrower;

 

(vi)     Borrower shall deliver to Lender a Rating Agency Confirmation as to the
Total Defeasance Event;

 

(vii)     Borrower shall deliver an Officer’s Certificate certifying that the
requirements set forth in this Section 2.8 have been satisfied;

 

(viii)     Borrower shall deliver a certificate of a nationally recognized
public accounting firm acceptable to Lender certifying that the Total Defeasance
Collateral will generate monthly amounts equal to or greater than the Scheduled
Defeasance Payments; and

 

(ix)     Borrower shall deliver such other certificates, opinions, documents and
instruments as Lender may reasonably request.

 

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(b)     If Borrower has elected to defease the entire Loan and the requirements
of this Section 2.8 have been satisfied, the Property shall be released from the
lien of the Security Instrument and the Total Defeasance Collateral pledged
pursuant to the Security Agreement shall be the sole source of collateral
securing the Loan. In connection with the release of the lien, Borrower shall
submit to Lender, not less than thirty (30) days prior to the Total Defeasance
Date (or such shorter time as is acceptable to Lender in its reasonable
discretion), a release of lien (and related Loan Documents) for execution by
Lender. Such release shall be in a form appropriate in the jurisdiction in which
the Property is located and that contains standard provisions protecting the
rights of the releasing lender. In addition, Borrower shall provide all other
documentation Lender reasonably requires to be delivered by Borrower in
connection with such release, together with an Officer’s Certificate certifying
that such documentation (i) is in compliance with all Legal Requirements, and
(ii) will effect such release in accordance with the terms of this Agreement.
Except as set forth in this Article 2, no repayment, prepayment or defeasance of
all or any portion of the Loan shall cause, give rise to a right to require, or
otherwise result in, the release of the lien of the Security Instrument.

 

(c)     Intentionally Omitted.

 

(d)     On or before the date on which Borrower delivers the Total Defeasance
Collateral, Borrower shall open at any Eligible Institution an Eligible Account
(the “Defeasance Collateral Account”). The Defeasance Collateral Account shall
contain only (i) Total Defeasance Collateral, and (ii) cash from interest and
principal paid on the Total Defeasance Collateral. All cash from interest and
principal payments paid on the Total Defeasance Collateral shall be paid over to
Lender on each Monthly Payment Date and applied first to accrued and unpaid
interest and then to principal. Any cash from interest and principal paid on the
Total Defeasance Collateral not needed to pay the Scheduled Defeasance Payments
shall be (i) paid to Borrower or Successor Borrower (as applicable) and/or (ii)
to the extent permitted by applicable REMIC Requirements, retained in the
Defeasance Collateral Account. Borrower shall cause the Eligible Institution at
which the Total Defeasance Collateral is deposited to enter an agreement with
Borrower and Lender, satisfactory to Lender in its reasonable discretion,
pursuant to which such Eligible Institution shall agree to hold and distribute
the Total Defeasance Collateral in accordance with this Agreement (such
agreement, the “Defeasance Collateral Account Agreement”). Borrower or Successor
Borrower (as applicable) shall be the owner of the Defeasance Collateral Account
and shall report all income accrued on Total Defeasance Collateral for federal,
state and local income tax purposes in its income tax return. Borrower shall
prepay all cost and expenses associated with opening and maintaining the
Defeasance Collateral Account. Lender shall not in any way be liable by reason
of any insufficiency in the Defeasance Collateral Account.

 

(e)     In connection with a Total Defeasance Event under this Section 2.8, a
successor entity (the “Successor Borrower”) shall be established, which such
Successor Borrower shall be (i) a Single Purpose Entity and (ii) established
and/or designated by Borrower. Borrower shall transfer and assign all
obligations, rights and duties under and to the Note, Security Agreement and
Defeasance Collateral Account Agreement, together with the Total Defeasance
Collateral to such Successor Borrower. Such Successor Borrower shall assume the
obligations under the Note, the Defeasance Collateral Account Agreement and the
Security Agreement in a manner acceptable to Lender and the Rating Agencies and
Borrower shall be relieved of its obligations under the Loan Documents (other
than those obligations which by their terms survive a repayment, defeasance or
other satisfaction of the Loan and/or a transfer of the Property in connection
with Lender’s exercise of its remedies under the Loan Documents). Borrower shall
pay all costs and expenses incurred by Lender and Successor Borrower, including
attorney’s fees and expenses, incurred in connection with the foregoing
(including, without limitation, Lender’s costs of establishing and/or
designating Successor Borrower, if any).

 

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(f)     Notwithstanding anything to the contrary contained in this Section 2.8,
the parties hereto hereby acknowledge and agree that after the Securitization of
the Loan (or any portion thereof or interest therein), with respect to any
Lender approval or similar discretionary rights over any matters contained in
this Section 2.8 (any such matter, a “Defeasance Approval Item”), such rights
shall be construed such that Lender shall only be permitted to withhold its
consent or approval with respect to any Defeasance Approval Item if the same
fails to meet the Prudent Lender Standard.

 

ARTICLE 3     

REPRESENTATIONS AND WARRANTIES

 

Borrower represents and warrants as of the Closing Date that:

 

Section 3.1.     Legal Status and Authority. Borrower (a) is duly organized,
validly existing and in good standing under the laws of its state of formation;
(b) is duly qualified to transact business and is in good standing in the State;
and (c) has all necessary approvals, governmental and otherwise, and full power
and authority to own, operate and lease the Property. Borrower has full power,
authority and legal right to mortgage, grant, bargain, sell, pledge, assign,
warrant, transfer and convey the Property pursuant to the terms hereof and to
keep and observe all of the terms of this Agreement, the Note, the Security
Instrument and the other Loan Documents on Borrower’s part to be performed.

 

Section 3.2.     Validity of Documents. (a) The execution, delivery and
performance of this Agreement, the Note, the Security Instrument and the other
Loan Documents by Borrower and Guarantor and the borrowing evidenced by the Note
and this Agreement (i) are within the power and authority of such parties; (ii)
have been authorized by all requisite organizational action of such parties;
(iii) have received all necessary approvals and consents, corporate,
governmental or otherwise; (iv) will not violate, conflict with, result in a
breach of or constitute (with notice or lapse of time, or both) a material
default under any provision of law, any order or judgment of any court or
Governmental Authority, any license, certificate or other approval required to
operate the Property, any applicable organizational documents, or any applicable
indenture, agreement or other instrument, including, without limitation, the
Management Agreement; (v) will not result in the creation or imposition of any
lien, charge or encumbrance whatsoever upon any of its assets, except the lien
and security interest created hereby and by the other Loan Documents; and (vi)
will not require any authorization or license from, or any filing with, any
Governmental Authority (except for the recordation of the Security Instrument
and the Assignment of Leases and Rents in the appropriate land records in the
State and except for Uniform Commercial Code filings relating to the security
interest created hereby), (b) this Agreement, the Note, the Security Instrument
and the other Loan Documents have been duly executed and delivered by Borrower
and Guarantor and (c) this Agreement, the Note, the Security Instrument and the
other Loan Documents constitute the legal, valid and binding obligations of
Borrower and Guarantor. The Loan Documents are not subject to any right of
rescission, setoff, counterclaim or defense by Borrower or Guarantor, including
the defense of usury, nor would the operation of any of the terms of the Loan
Documents, or the exercise of any right thereunder, render the Loan Documents
unenforceable (except as such enforcement may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar Creditors Rights Laws,
and by general principles of equity (regardless of whether such enforceability
is considered in a proceeding in equity or at law)). Neither Borrower nor
Guarantor has asserted any right of rescission, setoff, counterclaim or defense
with respect to the Loan Documents.

 

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Section 3.3.     Litigation. There is no action, suit, proceeding or
governmental investigation, in each case, judicial, administrative or otherwise
(including any condemnation or similar proceeding), pending or, to the best of
Borrower’s knowledge, threatened or contemplated against Borrower, Sponsor or
Guarantor or against or affecting the Property other than those that are fully
covered by insurance and would not otherwise have a Material Adverse Effect.

 

Section 3.4.     Agreements. Borrower is not a party to any agreement or
instrument or subject to any restriction which would have a Material Adverse
Effect. Borrower is not in default in any material respect in the performance,
observance or fulfillment of any of the obligations, covenants or conditions
contained in any agreement or instrument to which it is a party or by which
Borrower or the Property is bound. Borrower has no material financial obligation
under any agreement or instrument to which Borrower is a party or by which
Borrower or the Property is otherwise bound, other than (a) obligations incurred
in the ordinary course of the operation of the Property and (b) obligations
under this Agreement, the Security Instrument, the Note and the other Loan
Documents. There is no agreement or instrument to which Borrower is a party or
by which Borrower is bound that would require the subordination in right of
payment of any of Borrower’s obligations hereunder or under the Note to an
obligation owed to another party.

 

Section 3.5.     Financial Condition.

 

(a)     Borrower is solvent and Borrower has received reasonably equivalent
value for the granting of the Security Instrument. No proceeding under Creditors
Rights Laws with respect to any Borrower Party has been initiated

 

(b)     In the last ten (10) years, no (i) petition in bankruptcy has been filed
by or against any Borrower Party and (ii) Borrower Party has ever made any
assignment for the benefit of creditors or taken advantage of any Creditors
Rights Laws.

 

(c)     No Borrower Party is contemplating either the filing of a petition by it
under any Creditors Rights Laws or the liquidation of its assets or property and
Borrower has no knowledge of any Person contemplating the filing of any such
petition against any Borrower Party.

 

(d)     With respect to any loan or financing in which any Borrower Party or any
Affiliate thereof has been directly or indirectly obligated for or has, in
connection therewith, otherwise provided any guaranty, indemnity or similar
surety , including, without limitation and to the extent applicable, any loan
which is being refinanced by the Loan, none of such loans or financings has ever
been (i) more than 30 days in default or (ii) transferred to special servicing.

 

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Section 3.6.     Disclosure. Borrower has disclosed to Lender all material facts
and has not failed to disclose any material fact that could cause any
representation or warranty made herein to be materially misleading.

 

Section 3.7.     No Plan Assets; FIRRMA.

 

(a)     As of the date hereof and until the Debt is repaid in accordance with
the applicable terms and conditions hereof, (a) Borrower is not and will not be
an “employee benefit plan,” as defined in Section 3(3) of ERISA, subject to
Title I of ERISA, (b) Borrower is not and will not be a “governmental plan”
within the meaning of Section 3(32) of ERISA, (c) transactions by or with
Borrower are not and will not be subject to any state statute regulating
investments of, or fiduciary obligations with respect to, governmental plans and
(d) none of the assets of Borrower constitutes or will constitute “plan assets”
of one or more such plans within the meaning of 29 C.F.R. Section 2510.3-101, as
modified by Section 3(42) of ERISA. As of the date hereof, neither Borrower, nor
any member of a “controlled group of corporations” (within the meaning of
Section 414 of the IRS Code), maintains, sponsors or contributes to a “defined
benefit plan” (within the meaning of Section 3(35) of ERISA) or a “multiemployer
pension plan” (within the meaning of Section 3(37)(A) of ERISA).

 

(b)     Each of Borrower, the Constituent Owners of Borrower, the Property and
acquisition thereof have complied with and are in compliance with FIRRMA.
Borrower has provided to Lender with copies of any and all FIRRMA Documents it
has received. No non-U.S. government (including any state owned enterprises or
sovereign wealth funds) owns any equity interests (direct or indirect) in
Borrower. Borrower has not made any voluntary filings relating to FIRRMA and
Borrower is not required to make any mandatory filings relating to FIRRMA.

 

Section 3.8.     Not a Foreign Person. Borrower is not a “foreign person” within
the meaning of § 1445(f)(3) of the IRS Code.

 

Section 3.9.     Intentionally Omitted.

 

Section 3.10.     Business Purposes. The Loan is solely for the business purpose
of Borrower, and is not for personal, family, household, or agricultural
purposes.

 

Section 3.11.     Borrower’s Principal Place of Business. Borrower’s principal
place of business and its chief executive office as of the date hereof is 4611
12th Avenue, Suite 1L, Brooklyn, New York 11219. Borrower’s mailing address, as
set forth in the opening paragraph hereof or as changed in accordance with the
provisions hereof, is true and correct. Borrower’s organizational identification
number, if any, assigned by the state of its incorporation or organization is
5222543. Borrower’s federal tax identification number is 46-1449451. Borrower is
not subject to back-up withholding taxes.

 

Section 3.12.     Status of Property.

 

(a)     Borrower has obtained all Permits, all of which are in full force and
effect as of the date hereof and not subject to revocation, suspension,
forfeiture or modification.

 

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(b)     The Property and the present and contemplated use and occupancy thereof
are in full compliance with all applicable zoning ordinances, building codes,
land use laws, Environmental Laws and other similar Legal Requirements.

 

(c)     The Property is served by all utilities required for the current or
contemplated use thereof. All utility service is provided by public utilities
and the Property has accepted or is equipped to accept such utility service.

 

(d)     All public roads and streets necessary for service of and access to the
Property for the current or contemplated use thereof have been completed, are
serviceable and all-weather and are physically and legally open for use by the
public. The Property has either direct access to such public roads or streets or
access to such public roads or streets by virtue of a perpetual easement or
similar agreement inuring in favor of Borrower and any subsequent owners of the
Property.

 

(e)     The Property is served by public water and sewer systems.

 

(f)     The Property is free from damage caused by fire or other casualty.
Except as otherwise specifically noted in the property condition report provided
to Lender in connection with the origination of the Loan, to the best of
Borrower’s knowledge (after due inquiry), the Property, including, without
limitation, all buildings, improvements, parking facilities, sidewalks, storm
drainage systems, roofs, plumbing systems, HVAC systems, fire protection
systems, electrical systems, equipment, elevators, exterior sidings and doors,
landscaping, irrigation systems and all structural components, are in good
condition, order and repair in all material respects; there exists no structural
or other material defects or damages in the Property, whether latent or
otherwise, and Borrower has not received notice from any insurance company or
bonding company of any defects or inadequacies in the Property, or any part
thereof, which would adversely affect the insurability of the same or cause the
imposition of extraordinary premiums or charges thereon or of any termination or
threatened termination of any policy of insurance or bond.

 

(g)     All costs and expenses of any and all labor, materials, supplies and
equipment used in the construction of the Improvements have been paid in full.
There are no mechanics’ or similar liens or claims which have been filed for
work, labor or material (and no rights are outstanding that under applicable
Legal Requirements could give rise to any such liens) affecting the Property
which are or may be prior to or equal to the lien of the Security Instrument.

 

(h)     Borrower has paid in full for, and is the owner of, all furnishings,
fixtures and equipment (other than Tenants’ property or the property subject to
a Permitted Equipment Lease) used in connection with the operation of the
Property, free and clear of any and all security interests, liens or
encumbrances, except the lien and security interest created by this Agreement,
the Note, the Security Instrument and the other Loan Documents.

 

(i)     All liquid and solid waste disposal, septic and sewer systems located on
the Property are in a good and safe condition and repair and, to the best of
Borrower’s knowledge with due inquiry, in compliance with all Legal
Requirements.

 

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(j)     Except as expressly disclosed on the Survey, no portion of the
Improvements is located in an area identified by the Federal Emergency
Management Agency or any successor thereto as an area having special flood
hazards pursuant to the Flood Insurance Acts. No part of the Property consists
of or is classified as wetlands, tidelands or swamp and overflow lands.

 

(k)     Except as expressly disclosed on the Survey, all the Improvements lie
within the boundaries of the Land and any building restriction lines applicable
to the Land.

 

(l)     To Borrower’s knowledge after due inquiry, there are no pending or
proposed special or other assessments for public improvements or otherwise
affecting the Property, nor are there any contemplated improvements to the
Property that may result in such special or other assessments.

 

(m)     Borrower has not (i) made, ordered or contracted for any construction,
repairs, alterations or improvements to be made on or to the Property which have
not been completed and paid for in full, (ii) ordered materials for any such
construction, repairs, alterations or improvements which have not been paid for
in full or (iii) attached any fixtures to the Property which have not been paid
for in full. There is no such construction, repairs, alterations or improvements
ongoing at the Property as of the Closing Date. There are no outstanding or
disputed claims for any Work Charges and there are no outstanding liens or
security interests in connection with any Work Charges.

 

(n)     Borrower has five (5) direct employees. No other personnel are employed
at or in connection with the Property. Except for the Union Agreements, there
are no: (i) collective bargaining agreements and/or other labor agreements to
which Borrower or the Property, or any portion thereof, is a party or by which
either is or may be bound; (ii) employment, profit sharing, deferred
compensation, bonus, stock option, stock purchase, pension, retainer,
consulting, retirement, health, welfare, or incentive plans and/or contracts to
which Borrower or the Property, or any portion thereof is a party, or by which
either is or may be bound; or (iii) plans and/or agreements under which “fringe
benefits” (including, but not limited to, vacation plans or programs, and
related or similar dental or medical plans or programs, and related or similar
benefits) are afforded to employees of Borrower or the Property, or any portion
thereof. Borrower has not violated any applicable laws, rules and regulations
relating to the employment of labor, including those relating to wages, hours,
collective bargaining and the payment and withholding of taxes and other sums as
required by appropriate Governmental Authorities. With respect to the Union
Agreements, there are no unfunded union, pension or similar liabilities whereby
said “unfunded” status could create or otherwise render any liability of
Borrower, Guarantor and/or any Affiliate thereof.

 

Section 3.13.     Financial Information. All financial data, including, without
limitation, the balance sheets, statements of cash flow, statements of income
and operating expense and rent rolls, that have been delivered to Lender in
respect of Borrower, Sponsor, Guarantor and/or the Property (a) are true,
complete and correct in all material respects, (b) accurately represent the
financial condition of Borrower, Sponsor, Guarantor or the Property, as
applicable, as of the date of such reports, and (c) to the extent prepared or
audited by an independent certified public accounting firm, have been prepared
in accordance with the Approved Accounting Method throughout the periods
covered, except as disclosed therein. Borrower does not have any contingent
liabilities, liabilities for taxes, unusual forward or long-term commitments or
unrealized or anticipated losses from any unfavorable commitments that are known
to Borrower and reasonably likely to have a Material Adverse Effect, except as
referred to or reflected in said financial statements. Since the date of such
financial statements, there has been no materially adverse change in the
financial condition, operations or business of Borrower, Sponsor or Guarantor
from that set forth in said financial statements.

 

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Section 3.14.     Condemnation. No Condemnation or other proceeding has been
commenced or, to Borrower’s best knowledge, is threatened or contemplated with
respect to all or any portion of the Property or for the relocation of the
access to the Property.

 

Section 3.15.     Separate Lots. The Property is assessed for real estate tax
purposes as one or more wholly independent tax lot or lots, separate from any
adjoining land or improvements not constituting a part of such lot or lots, and
no other land or improvements is assessed and taxed together with the Property
or any portion thereof.

 

Section 3.16.     Insurance. Borrower has obtained and has delivered to Lender
certified copies of all Policies (or such other evidence acceptable to Lender)
reflecting the insurance coverages, amounts and other requirements set forth in
this Agreement. There are no present claims of any material nature under any of
the Policies, and to Borrower’s knowledge, no Person, including Borrower, has
done, by act or omission, anything which would impair the coverage of any of the
Policies.

 

Section 3.17.     Use of Property. The Property is used exclusively as an office
building and other appurtenant and related uses.

 

Section 3.18.     Leases and Rent Roll. Except as disclosed in the rent roll for
the Property delivered to, certified to and approved by Lender in connection
with the closing of the Loan (the “Rent Roll”), (a) Borrower is the sole owner
of the entire lessor’s interest in the Leases; (b) the Leases are valid and
enforceable and in full force and effect; (c) all of the Leases are arms-length
agreements with bona fide, independent third parties; (d) no party under any
Lease is in default; (e) all Rents due have been paid in full and no Tenant is
in arrears in its payment of Rent; (f) the terms of all alterations,
modifications and amendments to the Leases are reflected in the certified
occupancy statement delivered to and approved by Lender; (g) none of the Rents
reserved in the Leases have been assigned or otherwise pledged or hypothecated;
(h) none of the Rents have been collected for more than one (1) month in advance
(except a security deposit shall not be deemed rent collected in advance); (i)
the premises demised under the Leases have been completed, all improvements,
repairs, alterations or other work required to be furnished on the part of
Borrower under the Leases have been completed and paid for in full , the Tenants
under the Leases have accepted the premises demised thereunder and have taken
possession of the same on a rent-paying basis and any payments, credits or
abatements required to be given by Borrower to the Tenants under the Leases have
been made in full; (j) to the knowledge of Borrower, there exist no offsets or
defenses to the payment of any portion of the Rents and Borrower has no monetary
obligation to any Tenant under any Lease; (k) Borrower has received no notice
from any Tenant challenging the validity or enforceability of any Lease; (l)
there are no agreements with the Tenants under the Leases other than expressly
set forth in each Lease; (m) Intentionally Omitted; (n) no Lease contains an
option to purchase, right of first refusal to purchase, right of first refusal
to lease additional space at the Property, or any other similar provision; (o)
no Person has any possessory interest in, or right to occupy, the Property
except under and pursuant to a Lease; (p) all security deposits relating to the
Leases are reflected on the Rent Roll and have been collected by Borrower; (q)
no brokerage commissions or finders fees are due and payable regarding any
Lease; (r) each Tenant is in actual, physical occupancy of the premises demised
under its Lease; (s) there are no actions or proceedings (voluntary or
otherwise) pending against any Tenants or guarantors under Leases, in each case,
under bankruptcy or similar insolvency laws or regulations; and (t) no event has
occurred giving any Tenant the right to cease operations at its leased premises
(i.e., “go dark”), terminate its Lease or pay reduced or alternative Rent to
Borrower under any of the terms of such Lease, such as a co-tenancy provision.

 

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Section 3.19.     Filing and Recording Taxes. All mortgage, mortgage recording,
stamp, intangible or other similar tax required to be paid by any Person under
applicable Legal Requirements currently in effect in connection with the
execution, delivery, recordation, filing, registration, perfection or
enforcement of any of this Agreement, the Security Instrument, the Note and the
other Loan Documents, including, without limitation, the Security Instrument,
have been paid or will be paid, and, under current Legal Requirements, the
Security Instrument and the other Loan Documents are enforceable in accordance
with their terms by Lender (or any subsequent holder thereof), except as such
enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium
or other similar Creditors Rights Laws, and by general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).

 

Section 3.20.     Management Agreement. There currently exists no management or
other similar agreement for the management and/or operation of the Property. All
management and other duties that would customarily be undertaken by a property
manager are currently performed directly by Borrower.

 

Section 3.21.     Illegal Activity/Forfeiture.

 

(a)     No portion of the Property has been or will be purchased, improved,
equipped or furnished with proceeds of any illegal activity and to the best of
Borrower’s knowledge, there are no illegal activities or activities relating to
controlled substances at the Property.

 

(b)     There has not been and shall never be committed by Borrower or, to the
knowledge of Borrower, any other Person in occupancy of or involved with the
operation or use of the Property any act or omission affording the federal
government or any state or local government the right of forfeiture as against
the Property or any part thereof or any monies paid in performance of Borrower’s
obligations under this Agreement, the Note, the Security Instrument or the other
Loan Documents. Borrower hereby covenants and agrees not to commit, permit or
suffer to exist any act or omission affording such right of forfeiture.

 

Section 3.22.     Taxes. Borrower has filed all federal, state, county,
municipal, and city income, personal property and other tax returns required to
have been filed by it and has paid all taxes and related liabilities which have
become due pursuant to such returns or pursuant to any assessments received by
it. Borrower knows of no basis for any additional assessment in respect of any
such taxes and related liabilities for prior years.

 

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Section 3.23.     Permitted Encumbrances. None of the Permitted Encumbrances,
individually or in the aggregate, materially interferes with the benefits of the
security intended to be provided by this Agreement, the Security Instrument, the
Note and the other Loan Documents materially and adversely affects the value or
marketability of the Property, impairs the use or the operation of the Property
or impairs Borrower’s ability to pay its obligations in a timely manner.

 

Section 3.24.     Third Party Representations. Each of the representations and
the warranties made by Sponsor and Guarantor in the other Loan Documents (if
any) are true, complete and correct in all material respects.

 

Section 3.25.     Non-Consolidation Opinion Assumptions. All of the assumptions
made in the Non-Consolidation Opinion, including, but not limited to, any
exhibits attached thereto and/or certificates delivered in connection therewith,
are true, complete and correct.

 

Section 3.26.     Federal Reserve Regulations. No part of the proceeds of the
Loan will be used for the purpose of purchasing or acquiring any “margin stock”
within the meaning of Regulation U of the Board of Governors of the Federal
Reserve System or for any other purpose which would be inconsistent with such
Regulation U or any other Regulations of such Board of Governors, or for any
purposes prohibited by Legal Requirements or by the terms and conditions of this
Agreement, the Security Instrument, the Note or the other Loan Documents.

 

Section 3.27.     Investment Company Act. Borrower is not (a) an “investment
company” or a company “controlled” by an “investment company,” within the
meaning of the Investment Company Act of 1940, as amended; (b) a “holding
company” or a “subsidiary company” of a “holding company” or an “affiliate” of
either a “holding company” or a “subsidiary company” within the meaning of the
Public Utility Holding Company Act of 1935, as amended; or (c) subject to any
other federal or state law or regulation which purports to restrict or regulate
its ability to borrow money.

 

Section 3.28.     Fraudulent Conveyance. Borrower (a) has not entered into the
Loan or any Loan Document with the actual intent to hinder, delay, or defraud
any creditor and (b) received reasonably equivalent value in exchange for its
obligations under the Loan Documents. Giving effect to the Loan, the fair
saleable value of Borrower’s assets exceeds and will, immediately following the
execution and delivery of the Loan Documents, exceed Borrower’s total
liabilities, including, without limitation, subordinated, unliquidated, disputed
or contingent liabilities. The fair saleable value of Borrower’s assets is and
will, immediately following the execution and delivery of the Loan Documents, be
greater than Borrower’s probable liabilities, including the maximum amount of
its contingent liabilities or its debts as such debts become absolute and
matured. Borrower’s assets do not and, immediately following the execution and
delivery of the Loan Documents will not, constitute unreasonably small capital
to carry out its business as conducted or as proposed to be conducted. Borrower
does not intend to, and does not believe that it will, incur debts and
liabilities (including, without limitation, contingent liabilities and other
commitments) beyond its ability to pay such debts as they mature (taking into
account the timing and amounts to be payable on or in respect of obligations of
Borrower).

 

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Section 3.29.     Intentionally Omitted.

 

Section 3.30.     Anti-Money Laundering and Economic Sanctions. Borrower hereby
represents, warrants and covenants that each Borrower Party, each and every
Person Affiliated with any Borrower Party and their directors, officers,
employees or agents and any Person that has an economic interest in any Borrower
Party, in each case, has not, and at all times throughout the term of the Loan,
including after giving effect to any transfers of interests permitted pursuant
to the Loan Documents, shall not: (i) be (or have been) a Sanctioned Person or
organized, located or resident in a Sanctioned Jurisdiction; (ii) fail to
operate (or have operated) under policies, procedures and practices (including,
without limitation, recordkeeping and reporting), if any, that are in compliance
with (and ensure compliance with) the Patriot Act, AC Laws, AML Laws and
Sanctions; (iii) directly or indirectly use (or have used) any part if the
proceeds of the Loan (including, without limitation, any sums disbursed from
time to time hereunder) or otherwise lend, contribute or make the same available
(or have lent, contributed or made the same available), in each case, (A) to
fund or facilitate any activities or business (I) of or with any Sanctioned
Person or (II) of or in any Sanctioned Jurisdiction, (B) in any manner that
would result in a violation of any Sanctions by any Person or (C) in violation
of any applicable laws (including, without limitation, the Patriot Act, AC Laws,
AML Laws and/or Sanctions), (iv) be (or have been) a Person who has been
determined by competent authority to be subject to any of the prohibitions
contained in the Patriot Act; or (v) be (or have been) owned or controlled by or
be (or have been) acting for or on behalf of, in each case, any Person who has
been determined to be subject to the prohibitions contained in the Patriot Act.
Without limitation of any other term or provision contained herein, it shall be
an Event of Default hereunder if any Borrower Party or any other party to any
Loan Document becomes the subject of Sanctions or is indicted, arraigned or
custodially detained on charges involving Sanctions, the Patriot Act, AC Laws
and/or AML Laws and/or predicate crimes to AC Laws, the Patriot Act, AML Laws
and Sanctions. Borrower hereby represents and covenants that none of the
execution, delivery or performance of the Loan Documents or any activities,
transactions, services, collateral and/or security contemplated thereunder has
or shall result in a breach of the Patriot Act, AC Laws, AML Laws and/or
Sanctions by any party to the Loan Documents or their respective Affiliates. All
capitalized words and phrases and all defined terms used in the Patriot Act are
incorporated into this Section. As used herein, (A) “AC Laws” shall mean
collectively (i) all laws, rules and regulations concerning or relating to
bribery or corruption, including, without limitation, the U.S. Foreign Corrupt
Practices Act of 1977 and all other applicable anti-bribery and corruption laws
and (ii) any amendment, extension, replacement or other modification of any of
the foregoing from time to time and any corresponding provisions of future laws;
(B) “AML Laws” shall mean collectively (i) all laws, rules, regulations and
guidelines concerning or relating to money laundering issued, administered
and/or enforced by any governmental and/or regulatory agency and (ii) any
amendment, extension, replacement or other modification of any of the foregoing
from time to time and any corresponding provisions of future laws; (C) “OFAC”
shall mean the Office of Foreign Assets Control of the U.S. Department of the
Treasury and the U.S. Department of State; (D) “Patriot Act” shall mean
collectively (i) the Uniting and Strengthening America by Providing Appropriate
Tools Required to Intercept and Obstruct Terrorism Act (USA PATRIOT ACT) of
2001, as the same was restored and amended by Uniting and Strengthening America
by Fulfilling Rights and Ensuring Effective Discipline Over Monitoring Act (USA
FREEDOM Act) of 2015, (ii) all statutes, orders, rules and regulations of the
United States government and its various executive departments, agencies and
offices related to applicable anti-money laundering laws, rules and regulations
and (iii) any amendment, extension, replacement or other modification of any of
the foregoing from time to time and any corresponding provisions of future laws;
(E) “Sanctions” shall mean economic, trade and/or financial sanction,
requirements and/or embargoes, in each case, imposed, administered and/or
enforced from time to time by any Sanctions Authority; (F)“Sanctions Authority”
shall mean the United States (including, without limitation, OFAC) and any other
relevant sanctions authority; (G) “Sanctioned Jurisdiction” shall mean, at any
time, a country or territory that is, or whose government is, the subject of
Sanction; and (H) “Sanctioned Person” shall mean, at any time, (i) any Person
listed in any Sanctions related list maintained by any Sanctions Authority, (ii)
any Person located, organized or resident in a Sanctioned Jurisdiction and/or
(iii) any other subject of Sanctions (including, without limitation, any Person
Controlled or 50% or more owned (in each case, directly and/or indirectly and in
the aggregate) by (or acting for, on behalf of or at the direction of) any
Person or Persons described in subsections (i) and/or (ii) of this definition).

 

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Section 3.31.     Organizational Chart. The organizational chart attached as
Schedule III hereto (the “Organizational Chart”), relating to Borrower and
certain Affiliates and other parties, is true, complete and correct on and as of
the date hereof.

 

Section 3.32.     Bank Holding Company. Borrower is not a “bank holding company”
or a direct or indirect subsidiary of a “bank holding company” as defined in the
Bank Holding Company Act of 1956, as amended, and Regulation Y thereunder of the
Board of Governors of the Federal Reserve System.

 

Section 3.33.     Source of Certain Funds. The funds used to make the initial
deposits required hereunder to the Gap Rent Reserve Account have, as their
source, sums held in escrow with the applicable title insurance company in
connection with the closing of the Loan which, absent direction from Borrower to
the contrary, would have been distributed to Borrower on account of Borrower’s
equity in the Property.

 

Section 3.34.     Property Document Representations. With respect to each
Property Document, Borrower hereby represents that (a) each Property Document is
in full force and effect and has not been amended, restated, replaced or
otherwise modified (except, in each case, as expressly set forth herein), (b)
there are no defaults under any Property Document by any party thereto and, to
Borrower’s knowledge, no event has occurred which, but for the passage of time,
the giving of notice, or both, would constitute a default under any Property
Document, (c) all rents, additional rents and other sums due and payable under
the Property Documents have been paid in full, (d) no party to any Property
Document has commenced any action or given or received any notice for the
purpose of terminating any Property Document and (e) to the best of Borrower’s
knowledge, the representations made in any estoppel or similar document
delivered with respect to any Property Document in connection with the Loan are
true, complete and correct and are hereby incorporated by reference as if fully
set forth herein.

 

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Section 3.35.     No Change in Facts or Circumstances; Disclosure.

 

All information submitted by (or on behalf of) Borrower, Guarantor or Sponsor to
Lender and in all financial statements, rent rolls, reports, certificates and
other documents submitted in connection with the Loan or in satisfaction of the
terms thereof and all statements of fact made by Borrower, Sponsor and/or
Guarantor in this Agreement or in the other Loan Documents, are accurate,
complete and correct in all material respects. There has been no material
adverse change in any condition, fact, circumstance or event that would make any
such information inaccurate, incomplete or otherwise misleading in any material
respect or that otherwise have a Material Adverse Effect. Borrower has disclosed
to Lender all material facts and has not failed to disclose any material fact
that could cause any representation or warranty made herein to be materially
misleading.

 

Borrower agrees that, unless expressly provided otherwise, all of the
representations and warranties of Borrower set forth in this Article 3 and
elsewhere in this Agreement and the other Loan Documents shall survive for so
long as any portion of the Debt remains owing to Lender. All representations,
warranties, covenants and agreements made in this Agreement and in the other
Loan Documents shall be deemed to have been relied upon by Lender
notwithstanding any investigation heretofore or hereafter made by Lender or on
its behalf.

 

ARTICLE 4     

BORROWER COVENANTS

 

From the date hereof and until payment and performance in full of all
obligations of Borrower under this Agreement, the Security Instrument, the Note
and the other Loan Documents or the earlier release of the lien of the Security
Instrument (and all related obligations) in accordance with the terms of this
Agreement, the Security Instrument, the Note and the other Loan Documents,
Borrower hereby covenants and agrees with Lender that:

 

Section 4.1.     Existence. Borrower will continuously maintain (a) its
existence and shall not dissolve or permit its dissolution, (b) its rights to do
business in the State and (c) its franchises and trade names, if any.

 

Section 4.2.     Legal Requirements.

 

(a)     Borrower shall promptly comply and shall cause the Property to comply
with all Legal Requirements affecting the Property or the use thereof (which
such covenant shall be deemed to (i) include Environmental Laws and (ii) require
Borrower to keep all Permits in full force and effect).

 

(b)     Borrower shall from time to time, upon Lender’s request, provide Lender
with evidence reasonably satisfactory to Lender that the Property complies with
all Legal Requirements or is exempt from compliance with Legal Requirements.

 

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(c)     Borrower shall give prompt notice to Lender of the receipt by Borrower
of any notice related to any material violation of any Legal Requirements which
could cause a Material Adverse Effect and of the commencement of any material
proceedings or investigations which relate to compliance with Legal
Requirements. Reference is hereby made to the violations set forth on Schedule
II attached hereto and made a part hereof (the “Municipal Violations”). Borrower
represents that none of the Municipal Violations shall cause a Material Adverse
Effect. Borrower shall use commercially reasonable efforts to satisfy and clear:
(x) each of the Municipal Violations (other than those which cannot be cleared
until the Façade Work is complete) from the public record within one hundred
eighty (180) days of the date hereof and (y) each of the Municipal Violations
which cannot be cleared until the Façade Work is complete from the public record
within one hundred eighty (180) days after completion of said Façade Work (which
period shall, in any case, be extended for such additional period as may be
necessary to clear the same, provided that Borrower is exercising diligent good
faith and commercially reasonable efforts to clear the same).

 

(d)     After prior written notice to Lender, Borrower, at its own expense, may
contest by appropriate legal proceeding, promptly initiated and conducted in
good faith and with due diligence, the validity of any Legal Requirement, the
applicability of any Legal Requirement to Borrower or the Property or any
alleged violation of any Legal Requirement, provided that (i) no Event of
Default has occurred and remains uncured; (ii) such proceeding shall be
permitted under and be conducted in accordance with the provisions of any
instrument to which Borrower is subject and shall not constitute a default
thereunder and such proceeding shall be permitted by and conducted in accordance
with all applicable Legal Requirements; (iii) neither the Property nor any part
thereof or interest therein will be in danger of being sold, forfeited,
terminated, cancelled or lost; (iv) Borrower shall promptly upon final
determination thereof comply with any such Legal Requirement determined to be
valid or applicable or cure any violation of any Legal Requirement; (v) such
proceeding shall suspend the enforcement of the contested Legal Requirement
against Borrower or the Property; and (vi) Borrower shall furnish such security
as may be required in the proceeding, or as may be requested by Lender, to
insure compliance with such Legal Requirement, together with all interest and
penalties payable in connection therewith. Lender may apply any such security or
part thereof, as necessary to cause compliance with such Legal Requirement at
any time when, in the judgment of Lender, the validity, applicability or
violation of such Legal Requirement is finally established or the Property (or
any part thereof or interest therein) shall be in danger of being sold,
forfeited, terminated, cancelled or lost.

 

Section 4.3.     Maintenance and Use of Property. Borrower shall cause the
Property to be maintained in a good and safe condition and repair. The
Improvements and the Personal Property shall not be removed, demolished or
materially altered (except for normal replacement of the Personal Property)
without the consent of Lender or as otherwise permitted pursuant to Section 4.21
hereof. Borrower shall perform (or shall cause to be performed) the prompt
repair, replacement and/or rebuilding of any part of the Property which may be
destroyed by any casualty, or become damaged, worn or dilapidated or which may
be affected by any proceeding of the character referred to in Section 3.14
hereof and shall complete and pay for (or cause the completion and payment for)
any structure at any time in the process of construction or repair on the Land.
Borrower shall operate the Property for the same uses as the Property is
currently operated and Borrower shall not, without the prior written consent of
Lender, (i) change the use of the Property or (ii) initiate, join in, acquiesce
in, or consent to any change in any private restrictive covenant, zoning law or
other public or private restriction, limiting or defining the uses which may be
made of the Property or any part thereof. If under applicable zoning provisions
the use of all or any portion of the Property is or shall become a nonconforming
use, Borrower will not cause or permit the nonconforming use to be discontinued
or the nonconforming Improvement to be abandoned without the express written
consent of Lender.

 

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Section 4.4.     Waste. Borrower shall not commit or suffer any intentional
physical waste of the Property or make any change in the use of the Property
which will in any way materially increase the risk of fire or other hazard
arising out of the operation of the Property, or take any action that might
invalidate or give cause for cancellation of any Policy, or do or permit to be
done thereon anything that may in any way impair the value of the Property or
the security for the Loan. Borrower will not, without the prior written consent
of Lender, permit any drilling or exploration for or extraction, removal, or
production of any minerals from the surface or the subsurface of the Property,
regardless of the depth thereof or the method of mining or extraction thereof.

 

Section 4.5.     Taxes and Other Charges.

 

(a)     Borrower shall pay (or cause to be paid) all Taxes and Other Charges now
or hereafter levied or assessed or imposed against the Property or any part
thereof as the same become due and payable; provided, however, prior to the
occurrence and continuance of an Event of Default, Borrower’s obligation to
directly pay Taxes shall be suspended for so long as Borrower complies with the
terms and provisions of Section 8.6 hereof. Borrower shall furnish to Lender
receipts for the payment of the Taxes and the Other Charges prior to the date
the same shall become delinquent (provided, however, that Borrower is not
required to furnish such receipts for payment of Taxes in the event that such
Taxes have been paid by Lender pursuant to Section 8.6 hereof). Borrower shall
not suffer and shall promptly cause to be paid and discharged any lien or charge
whatsoever which may be or become a lien or charge against the Property, and
shall promptly pay for all utility services provided to the Property.

 

(b)     After prior written notice to Lender, Borrower, at its own expense, may
contest (or permit to be contested) by appropriate legal proceeding, promptly
initiated and conducted in good faith and with due diligence, the amount or
validity or application in whole or in part of any Taxes or Other Charges,
provided that (i) no Event of Default has occurred and remains uncured; (ii)
such proceeding shall be permitted under and be conducted in accordance with the
provisions of any other instrument to which Borrower is subject and shall not
constitute a default thereunder and such proceeding shall be permitted by and
conducted in accordance with all applicable Legal Requirements; (iii) neither
the Property nor any part thereof or interest therein will be in danger of being
sold, forfeited, terminated, canceled or lost; (iv) Borrower shall promptly upon
final determination thereof pay the amount of any such Taxes or Other Charges,
together with all costs, interest and penalties which may be payable in
connection therewith; (v) such proceeding shall suspend the collection of such
contested Taxes or Other Charges from the Property; and (vi) Borrower shall
furnish such security as may be required in the proceeding, or deliver to Lender
such reserve deposits as may be requested by Lender, to insure the payment of
any such Taxes or Other Charges, together with all interest and penalties
thereon. Lender may pay over any such cash deposit or part thereof held by
Lender to the claimant entitled thereto at any time when, in the judgment of
Lender, the entitlement of such claimant is established or the Property (or part
thereof or interest therein) shall be in danger of being sold, forfeited,
terminated, canceled or lost or there shall be any danger of the lien of the
Security Instrument being primed by any related lien.

 

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Section 4.6.     Litigation. Borrower shall give prompt written notice to Lender
of any litigation or governmental proceedings pending or threatened in writing
against Borrower which might have a Material Adverse Effect.

 

Section 4.7.     Access to Property. Borrower shall, subject to the rights of
Tenants, permit agents, representatives and employees of Lender to inspect the
Property or any part thereof at reasonable hours upon reasonable advance notice.

 

Section 4.8.     Notice of Default. Borrower shall promptly advise Lender of any
material adverse change in Borrower’s, Sponsor’s and/or Guarantor’s condition
(financial or otherwise) or of the occurrence of any Default or Event of Default
of which Borrower has knowledge.

 

Section 4.9.     Cooperate in Legal Proceedings. Borrower shall cooperate fully
with Lender with respect to any proceedings before any court, board or other
Governmental Authority which may in any way affect the rights of Lender
hereunder or any rights obtained by Lender under any of the Note, the Security
Instrument or the other Loan Documents and, in connection therewith, permit
Lender, at its election, to participate in any such proceedings.

 

Section 4.10.     Performance by Borrower. Borrower hereby acknowledges and
agrees that Borrower’s observance, performance and fulfillment of each and every
covenant, term and provision to be observed and performed by Borrower under this
Agreement, the Security Instrument, the Note and the other Loan Documents is a
material inducement to Lender in making the Loan.

 

Section 4.11.     Intentionally Omitted.

 

Section 4.12.     Books and Records.

 

(a)     Borrower shall furnish to Lender:

 

(i)     quarterly (and prior to a Securitization (if requested by Lender),
monthly) certified rent rolls within ten (10) Business Days after the end of
each calendar month or thirty (30) days after the end of each calendar quarter,
as applicable;

 

(ii)     quarterly (and prior to a Securitization (if requested by Lender),
monthly) operating statements of the Property detailing the revenues received,
the expenses incurred and the components of Underwritable Cash Flow before and
after Debt Service and major capital improvements for the period of calculation
and containing appropriate year-to-date information, within ten (10) Business
Days after the end of each calendar month or thirty (30) days after the end of
each calendar quarter, as applicable;

 

(iii)     within eighty five (85) days after the close of each fiscal year of
Borrower, (A) with respect to Borrower, an annual balance sheet, and statement
of cash flow (each of which shall not include any Person other than Borrower)
and (B) an annual operating statement of the Property (detailing the revenues
received, the expenses incurred and the components of Underwritable Cash Flow
before and after Debt Service and major capital improvements for the period of
calculation and containing appropriate year-to-date information);

 

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(iv)     by no later than (as applicable): (x) December 1 of each calendar year
(to the extent a Trigger Period is then ongoing) an annual budget for the next
succeeding calendar year and/or (y) within ten (10) Business Days following the
occurrence of a Trigger Period (to the extent no Approved Annual Budget is then
in effect with respect to the applicable calendar year) an annual operating
budget for the then current calendar year, which annual operating budget shall,
in each case, be presented on a monthly basis consistent with the annual
operating statement described above for the Property, including cash flow
projections for the upcoming year and all proposed capital replacements and
improvements, which such budget shall not take effect until approved by Lender
(after such approval has been given in writing, such approved budget shall be
referred to herein, as the “Approved Annual Budget”). Until such time that
Lender approves a proposed Annual Budget, (1) to the extent that an Approved
Annual Budget does not exist for the immediately preceding calendar year, all
operating expenses of the Property for the then current calendar year shall be
deemed extraordinary expenses of the Property and shall be subject to Lender’s
prior written approval (not to be unreasonably withheld or delayed) and (2) to
the extent that an Approved Annual Budget exists for the immediately preceding
calendar year, such Approved Annual Budget shall apply to the then current
calendar year; provided, that such Approved Annual Budget shall be adjusted to
reflect actual increases in Taxes, Insurance Premiums and utilities expenses;

 

(b)     Upon request from Lender, Borrower shall furnish in a timely manner to
Lender:

 

(i)     an accounting of all security deposits held in connection with any Lease
of any part of the Property, including the name and identification number of the
accounts in which such security deposits are held, the name and address of the
financial institutions in which such security deposits are held and the name of
the Person to contact at such financial institution, along with any authority or
release necessary for Lender to obtain information regarding such accounts
directly from such financial institutions; and

 

(ii)     evidence reasonably acceptable to Lender of compliance with the terms
and conditions of Articles 5 and 9 hereof.

 

(c)     Borrower shall, within ten (10) days of request, furnish Lender (and
shall cause Sponsor and/or Guarantor to furnish to Lender) with such other
additional financial or management information (including State and Federal tax
returns) as may, from time to time, be reasonably required by Lender in form and
substance satisfactory to Lender. Borrower shall furnish to Lender and its
agents convenient facilities for the examination and audit of any such books and
records.

 

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(d)     Borrower agrees that (i) Borrower shall keep adequate books and records
of account and (ii) all Required Financial Items (defined below) to be delivered
to Lender pursuant to Section 4.12 shall: (A) be complete and correct; (B)
present fairly the financial condition of the applicable Person; (C) disclose
all liabilities that are required to be reflected or reserved against; (D) be
prepared (1) in the form required by Lender and certified by a Responsible
Officer of Borrower (2) in hardcopy and electronic formats and (3) in accordance
with the Approved Accounting Method; and (E) upon request of Lender, be audited
by an independent certified public accountant acceptable to Lender. Borrower
shall be deemed to warrant and represent that, as of the date of delivery of any
such financial statement, there has been no material adverse change in financial
condition, nor have any assets or properties been sold, transferred, assigned,
mortgaged, pledged or encumbered since the date of such financial statement
except as disclosed by Borrower in a writing delivered to Lender. Borrower
agrees that all Required Financial Items shall not contain any misrepresentation
or omission of a material fact.

 

(e)     Borrower acknowledges the importance to Lender of the timely delivery of
each of the items required by this Section 4.12 and the other financial
reporting items required by this Agreement (each, a “Required Financial Item”
and, collectively, the “Required Financial Items”). In the event Borrower fails
to deliver to Lender any of the Required Financial Items fifteen (15) calendar
days of the giving of notice by Lender to Borrower of Borrower’s failure to
deliver the same within the time frame specified herein (each such event, a
“Reporting Failure”), such event shall, at Lender’s option, constitute an
immediate Event of Default hereunder and, without limiting Lender’s other rights
and remedies with respect to the occurrence of such an Event of Default,
Borrower shall pay to Lender the sum of $1,000.00 per occurrence for each
Reporting Failure. It shall constitute a further Event of Default hereunder if
any such payment is not received by Lender within thirty (30) days after the
date on which such demand for payment was made, and Lender shall be entitled to
the exercise of all of its rights and remedies provided hereunder.

 

Section 4.13.     Estoppel Certificates.

 

(a)     After request by Lender , (which such request shall be made no more
often than once in any twelve (12) month period (unless during the continuance
of a Trigger Period and/or in connection with any Secondary Market
Transaction)), Borrower, within ten (10) days of such request, shall furnish
Lender or any proposed assignee with a statement, duly acknowledged and
certified, setting forth (i) the original principal amount of the Loan, (ii) the
unpaid principal amount of the Loan, (iii) the rate of interest of the Loan,
(iv) the terms of payment and maturity date of the Loan, (v) the date
installments of interest and/or principal were last paid, (vi) that, except as
provided in such statement, no Event of Default exists, (vii) that this
Agreement, the Note, the Security Instrument and the other Loan Documents are
valid, legal and binding obligations and have not been modified or if modified,
giving particulars of such modification, (viii) whether any offsets or defenses
exist against the obligations secured hereby and, if any are alleged to exist, a
detailed description thereof, (ix) that all Leases are in full force and effect
and have not been modified (or if modified, setting forth all modifications),
(x) the date to which the Rents thereunder have been paid pursuant to the
Leases, (xi) whether or not, to the best knowledge of Borrower, any of the
lessees under the Leases are in default under the Leases, and, if any of the
lessees are in default, setting forth the specific nature of all such defaults,
(xii) the amount of security deposits held by Borrower under each Lease and that
such amounts are consistent with the amounts required under each Lease, and
(xiii) as to any other matters reasonably requested by Lender and reasonably
related to the Leases, the obligations created and evidenced hereby and by the
Security Instrument or the Property.

 

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(b)     Borrower shall use commercially reasonable efforts to deliver to Lender,
promptly upon request (which such request shall be made no more often than once
in any twelve (12) month period (unless during the continuance of a Trigger
Period and/or in connection with any Secondary Market Transaction)), duly
executed estoppel certificates from any one or more Tenants as required by
Lender attesting to such facts regarding the Lease as Lender may require,
including, but not limited to, attestations that each Lease covered thereby is
in full force and effect with no defaults thereunder on the part of any party,
that none of the Rents have been paid more than one month in advance, except as
security, no free rent or other concessions are due lessee and that the lessee
claims no defense or offset against the full and timely performance of its
obligations under the Lease.

 

(c)     In connection with any Secondary Market Transaction, at Lender’s
reasonable request and only at the time of the consummation of any Secondary
Market Transaction, Borrower shall provide an estoppel certificate, in such
form, substance and detail as required pursuant to clause (a) above, to any
Investor or any prospective Investor that (i) is purchasing (or potentially
purchasing) a direct interest in the Loan or (ii) is (or potentially will be)
the “B-Buyer” in any Securitization.

 

(d)     Borrower shall use commercially reasonable efforts to deliver to Lender,
within ten (10) days of request, estoppel certificates from each party under any
Property Document in form and substance reasonably acceptable to Lender.

 

Section 4.14.     Leases and Rents.

 

(a)     All Leases and all renewals of Leases executed after the date hereof
shall (i) provide for rental rates comparable to existing local market rates for
similar properties, (ii) be on commercially reasonable terms with unaffiliated,
third parties (unless otherwise consented to by Lender), (iii) provide that such
Lease is subordinate to the Security Instrument and that the lessee will attorn
to Lender and any purchaser at a foreclosure sale and (iv) not contain any terms
which would have a Material Adverse Effect. Notwithstanding anything to the
contrary contained herein, Borrower shall not, without the prior written
approval of Lender (which approval shall not be unreasonably withheld or
delayed), enter into, renew, extend, amend, modify, permit any assignment of or
subletting under, waive any provisions of, release any party to, terminate,
reduce rents under, accept a surrender of space under, or shorten the term of,
in each case, any Major Lease.

 

(b)     Without limitation of subsection (a) above, Borrower (i) shall observe
and perform the obligations imposed upon the lessor under the Leases (including,
without limitation, any obligation in the Leases relating to obtaining and/or
maintaining a certificate of occupancy at the Property) in a commercially
reasonable manner; (ii) shall pay all tenant improvement costs, leasing
commissions and similar allowances and incentives and shall perform all landlord
improvement and other work, in each case, associated with the Leases as and to
the extent due and payable and shall, upon Lender’s request, provide evidence
reasonably acceptable to Lender of the same; (iii) shall enforce the terms,
covenants and conditions contained in the Leases upon the part of the lessee
thereunder to be observed or performed in a commercially reasonable manner; (iv)
shall not collect any of the Rents more than one (1) month in advance (other
than security deposits); (v) shall not execute any assignment of lessor’s
interest in the Leases or the Rents (except as contemplated by the Loan
Documents); (vi) shall not, without Lender’s prior written consent, alter,
modify or change any Lease to the extent the same would, individually or in the
aggregate, (A) cause any such Lease to violate 4.14(a)(i) through (iii) above or
(B) have a Material Adverse Effect; and (vii) shall hold all security deposits
under all Leases in accordance with Legal Requirements. Upon request, Borrower
shall furnish Lender with executed copies of all Leases.

 

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(c)     Notwithstanding anything contained herein to the contrary, Borrower
shall not willfully withhold from Lender any information regarding renewal,
extension, amendment, modification, waiver of provisions of, termination, rental
reduction of, surrender of space of, or shortening of the term of, any Lease
during the term of the Loan. Borrower further agrees to provide Lender with
written notice of a Tenant “going dark” under such Tenant’s Lease within five
(5) Business Days after such Tenant “goes dark” and Borrower’s failure to
provide such notice shall constitute an Event of Default.

 

(d)     Borrower shall notify Lender in writing, within two (2) Business Days
following receipt thereof, of Borrower’s receipt of any early termination fee or
payment or other termination fee or payment paid by any Tenant under any Lease,
and Borrower further covenants and agrees that, within five (5) Business Days
following Borrower’s receipt thereof, Borrower shall deposit such termination
fee or payment with Lender and (i) if no Event of Default is then continuing,
Lender shall deposit same in the account with Lender or Servicer (which such
account shall be deemed a Reserve Account and Reserve Fund hereunder) for
disbursement under such terms and conditions as may be reasonably determined by
Lender and (ii) if an Event of Default is then continuing, same shall (at
Lender’s option in Lender’s sole discretion) be held by Lender as additional
collateral for the Debt, disbursed by Lender for tenant improvement and leasing
commission costs with respect to the Property and/or applied towards the payment
of the Debt in such order, priority and proportions as Lender in its sole
discretion shall determine. The foregoing consent right of Lender (including,
without limitation, any reserve requirement) shall not be subject to any “cap”
or similar limit on the amount of Reserve Funds held by Lender.

 

(e)     Upon the occurrence of an Event of Default, Borrower shall, within
forty-five (45) days of demand by Lender, deliver to Lender all Security
Deposits. Without limitation of any other term or provision contained herein,
for purposes of clarification, for a Security Deposit to be deemed “delivered to
Lender” in connection with the foregoing, the same must be in the form of cash
or in a letter of credit solely in Lender’s name.

 

Section 4.15.     Management Agreement.

 

(a)     Notwithstanding anything to the contrary contained herein or in any
other Loan Document, (i) until the occurrence of a Manager Trigger, any
covenants and other provisions contained herein specifically relating to
Manager, New Manager, Affiliated Manager and/or the Management Agreement and, in
each case, contemplating the existence of a New Manager, Manager, Affiliated
Manager and Management Agreement for the Property (in each case, as applicable)
shall, in each case, be deemed to apply only as and to the extent applicable
(provided, that, Borrower complies with the terms and conditions of this
subsection (a)), (ii) Borrower shall, until a New Manager is engaged to manage
the Property in accordance with the applicable terms and conditions hereof, at
all times directly undertake and perform the duties of a property manager at the
Property and otherwise comply with the applicable covenants contained herein and
in the other Loan Documents related thereto (the foregoing, the “Self-Management
Obligations”), (iii) upon the occurrence of a Trigger Period, Lender, at its
option, may require Borrower to engage, in accordance with the terms and
conditions set forth herein, a New Manager to manage the Property, which such
New Manager shall be (A) selected by Borrower and subject to Lender’s approval
and (B) a Qualified Manager and shall be engaged pursuant to a Qualified
Management Agreement

 

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(b)     Borrower shall (i) diligently and promptly perform, observe and enforce
all of the terms, covenants and conditions of the Management Agreement on the
part of Borrower to be performed, observed and enforced to the end that all
things shall be done which are necessary to keep unimpaired the rights of
Borrower under the Management Agreement, (ii) promptly notify Lender of any
default under the Management Agreement; (iii) promptly deliver to Lender a copy
of any notice of default or other material notice received by Borrower under the
Management Agreement; (iv) promptly give notice to Lender of any notice or
information that Borrower receives which indicates that Manager is terminating
the Management Agreement or that Manager is otherwise discontinuing its
management of the Property; and (v) promptly enforce the performance and
observance of all of the covenants required to be performed and observed by
Manager under the Management Agreement.

 

(c)     Borrower shall not, without the prior written consent of Lender, (i)
surrender, terminate or cancel the Management Agreement, consent to any
assignment of the Manager’s interest under the Management Agreement or otherwise
replace Manager or renew or extend any Management Agreement (exclusive of, in
each case, any automatic renewal or extension in accordance with its terms) or
enter into any other new or replacement management agreement with respect to the
Property; provided, however, that Borrower may replace Manager and/or consent to
the assignment of Manager’s interest under the Management Agreement, in each
case, in accordance with the applicable terms and conditions hereof and of the
other Loan Documents; (ii) reduce or consent to the reduction of the term of the
Management Agreement; (iii) increase or consent to the increase of the amount of
any charges under the Management Agreement; or (iv) otherwise modify, change,
alter or amend, in any material respect, or waive or release any of its material
rights and remedies under, the Management Agreement in any material respect.

 

(d)     If Borrower shall default in the performance or observance of any
material term, covenant or condition of the Management Agreement on the part of
Borrower to be performed or observed, then, without limiting the generality of
the other provisions of this Agreement, and without waiving or releasing
Borrower from any of its obligations hereunder, Lender shall have the right, but
shall be under no obligation, to pay any sums and to perform any act or take any
action as may be appropriate to cause all the terms, covenants and conditions of
the Management Agreement on the part of Borrower to be performed or observed to
be promptly performed or observed on behalf of Borrower, to the end that the
rights of Borrower in, to and under the Management Agreement shall be kept
unimpaired and free from default. Lender and any Person designated by Lender
shall have, and are hereby granted, the right to enter upon the Property at any
time and from time to time for the purpose of taking any such action. If Manager
shall deliver to Lender a copy of any notice sent to Borrower of default under
the Management Agreement, such notice shall constitute full protection to Lender
for any action taken or omitted to be taken by Lender in good faith, in reliance
thereon. Borrower shall notify Lender if Manager sub-contracts to a third party
or an Affiliate any or all of its management responsibilities under the
Management Agreement.

 

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(e)     Borrower shall, from time to time, use its best efforts to obtain from
Manager under the Management Agreement such certificates of estoppel with
respect to compliance by Borrower with the terms of the Management Agreement as
may be requested by Lender. Borrower shall exercise each individual option, if
any, to extend or renew the term of the Management Agreement upon demand by
Lender made at any time within one (1) year of the last day upon which any such
option may be exercised, and Borrower hereby expressly authorizes and appoints
Lender its attorney-in-fact to exercise any such option in the name of and upon
behalf of Borrower, which power of attorney shall be irrevocable and shall be
deemed to be coupled with an interest.

 

(f)     In the event that the Management Agreement is scheduled to expire at any
time during the term of the Loan, Borrower shall submit to Lender by no later
than 60 days prior to such expiration a draft replacement management agreement
for approval in accordance with the terms and conditions hereof. Borrower’s
failure to submit the same within such time-frame shall, at Lender’s option,
constitute an immediate Event of Default.

 

(g)     Borrower shall have the right to replace Manager or consent to the
assignment of Manager’s rights under the Management Agreement, in each case, to
the extent that (i) no Event of Default has occurred and is continuing, (ii)
Lender receives at least sixty (60) days prior written notice of the same, (iii)
such replacement or assignment (as applicable) will not result in a Property
Document Event and (iv) the applicable New Manager is a Qualified Manager
engaged pursuant to a Qualified Management Agreement. Manager shall not (and
Borrower shall not permit Manager to) resign as Manager or otherwise cease
managing the Property until a New Manager is engaged to manage the Property in
accordance with the applicable terms and conditions hereof and of the other Loan
Documents.

 

(h)     Without limitation of the foregoing, if Borrower fails to perform the
Self-Management Obligations or if, after the first occurrence of the Manager
Trigger, if the Management Agreement is terminated or expires (including,
without limitation, pursuant to the Assignment of Management Agreement), comes
up for renewal or extension (exclusive of, in each case, any automatic renewal
or extension in accordance with its terms), ceases to be in full force or effect
or is for any other reason no longer in effect (including, without limitation,
in connection with any Sale or Pledge), then Lender, at its option, may require
Borrower to engage, in accordance with the terms and conditions set forth herein
and in the Assignment of Management Agreement, a New Manager to manage the
Property, which such New Manager shall (i) to the extent a Trigger Period is
continuing and if opted by Lender, selected by Lender and (ii) be a Qualified
Manager and shall be engaged pursuant to a Qualified Management Agreement.

 

(i)     As conditions precedent to any engagement of a New Manager hereunder,
(i) New Manager and Borrower shall execute an Assignment of Management Agreement
in the form required by Lender (with such changes thereto as may be required by
the Rating Agencies), (ii) to the extent that such New Manager is an Affiliated
Manager, Borrower shall deliver to Lender a New Non-Consolidation Opinion with
respect to such New Manager and new management agreement and (iii) if requested
by Lender, Borrower shall deliver to Lender evidence that the engagement of such
New Manager will not result in a Property Document Event.

 

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(j)     Borrower shall notify Lender in writing, within two (2) Business Days
following receipt thereof, of Borrower’s receipt of any early termination fee or
similar payment or other termination fee or similar payment paid by any Manager,
and Borrower further covenants and agrees that Borrower shall hold any such
termination fee or payment in trust for the benefit of Lender and that any use
of such termination fee or payment shall be subject in all respects to Lender’s
prior written consent in Lender’s sole discretion (which consent may include,
without limitation, a requirement by Lender that such termination fee or payment
be placed in reserve with Lender to be disbursed by Lender for replacing such
Manager and/or for payment of the Debt or otherwise in connection with the Loan
evidenced by the Note and/or the Property, as so determined by Lender). The
foregoing consent right of Lender (including, without limitation, any reserve
requirement) shall not be subject to any “cap” or similar limit on the amount of
Reserve Funds held by Lender.

 

(k)     Any sums expended by Lender pursuant to this Section shall bear interest
at the Default Rate from the date such cost is incurred to the date of payment
to Lender, shall be deemed to constitute a portion of the Debt, shall be secured
by the lien of the Security Instrument and the other Loan Documents and shall be
immediately due and payable upon demand by Lender therefor.

 

Section 4.16.     Payment for Labor and Materials.

 

(a)     Subject to Section 4.16(b) below, Borrower will promptly pay (or cause
to be paid) when due all bills and costs for labor, materials, and specifically
fabricated materials incurred in connection with the Property (any such bills
and costs, a “Work Charge”) and never permit to exist in respect of the Property
or any part thereof any lien or security interest, even though inferior to the
liens and the security interests hereof, and in any event never permit to be
created or exist in respect of the Property or any part thereof any other or
additional lien or security interest other than the liens or security interests
created hereby and by the Security Instrument, except for the Permitted
Encumbrances.

 

(b)     After prior written notice to Lender, Borrower, at its own expense, may
contest by appropriate legal proceeding, promptly initiated and conducted in
good faith and with due diligence, the validity of any Work Charge, the
applicability of any Work Charge to Borrower or to the Property or any alleged
non-payment of any Work Charge and defer paying the same, provided that (i) no
Event of Default has occurred and is continuing; (ii) such proceeding shall be
permitted under and be conducted in accordance with the provisions of any
instrument to which Borrower is subject and shall not constitute a default
thereunder and such proceeding shall be conducted in accordance with all
applicable Legal Requirements; (iii) neither the Property nor any part thereof
or interest therein will be in imminent danger of being sold, forfeited,
terminated, cancelled or lost; (iv) Borrower shall promptly upon final
determination thereof pay (or cause to be paid) any such contested Work Charge
determined to be valid, applicable or unpaid; (v) such proceeding shall suspend
the collection of such contested Work Charge from the Property or Borrower shall
have paid the same (or shall have caused the same to be paid) under protest; and
(vi) Borrower shall furnish (or cause to be furnished) such security as may be
required in the proceeding, or as may be reasonably requested by Lender, to
insure payment of such Work Charge, together with all interest and penalties
payable in connection therewith. Lender may apply any such security or part
thereof, as necessary to pay for such Work Charge at any time when, in the
judgment of Lender, the validity, applicability or non-payment of such Work
Charge is finally established or the Property (or any part thereof or interest
therein) shall be in present danger of being sold, forfeited, terminated,
cancelled or lost.

 

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Section 4.17.     Performance of Other Agreements. Borrower shall observe and
perform each and every term to be observed or performed by Borrower pursuant to
the terms of any agreement or recorded instrument affecting or pertaining to the
Property, or given by Borrower to Lender for the purpose of further securing the
Debt and any amendments, modifications or changes thereto.

 

Section 4.18.     Debt Cancellation. Borrower shall not cancel or otherwise
forgive or release any claim or debt (other than termination of Leases in
accordance herewith) owed to Borrower by any Person, except for adequate
consideration and in the ordinary course of Borrower’s business.

 

Section 4.19.     Intentionally Omitted.

 

Section 4.20.     ERISA; FIRRMA.

 

(a)     Borrower shall not engage in any transaction which would cause any
obligation, or action taken or to be taken, hereunder (or the exercise by Lender
of any of its rights hereunder or under the other Loan Documents) to be a
non-exempt prohibited transaction under ERISA.

 

(b)     Borrower further covenants and agrees to deliver to Lender such
certifications or other evidence from time to time throughout the term of the
Security Instrument, as requested by Lender in its reasonable discretion, that
(i) Borrower is not an “employee benefit plan” as defined in Section 3(3) of
ERISA, or other retirement arrangement, which is subject to Title I of ERISA or
Section 4975 of the IRS Code, or a “governmental plan” within the meaning of
Section 3(32) of ERISA; (ii) Borrower is not subject to state statutes
regulating investments and fiduciary obligations with respect to governmental
plans; and (iii) one or more of the following circumstances is true:

 

 

(A)

Equity interests in Borrower are publicly offered securities, within the meaning
of 29 C.F.R. § 2510.3 101(b)(2);

 

 

(B)

Less than twenty-five percent (25%) of each outstanding class of equity
interests in Borrower are held by “benefit plan investors” within the meaning of
29 C.F.R.§ 2510.3 101(f)(2); or

 

 

(C)

Borrower qualifies as an “operating company” or a “real estate operating
company” within the meaning of 29 C.F.R § 2510.3 101(c) or (e) or an investment
company registered under The Investment Company Act of 1940, as amended.

 

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(c)     Borrower shall not maintain, sponsor, contribute to or become obligated
to contribute to, or suffer or permit any member of Borrower’s “controlled group
of corporations” to maintain, sponsor, contribute to or become obligated to
contribute to a “defined benefit plan” or a “multiemployer pension plan”. The
terms in quotes above are defined in Section 3.7 of this Agreement.

 

(d)     Within three (3) Business Days of Borrower’s receipt of any FIRRMA
Document, Borrower shall provide Lender a copy of the same. Concurrently with
Borrower’s delivery of any FIRRMA Document, Borrower shall provide Lender a copy
thereof. In the event that Borrower or any of its Affiliates meets with any
Governmental Authority for any purpose relating to FIRRMA, Borrower shall
provide Lender with a written summary of such meeting within three (3) Business
Days thereafter. In the event that any review, investigation or other proceeding
is commenced relating to FIRRMA and involving Borrower, the Constituent Owners
of Borrower and/or the Property, Borrower shall provide Lender with a written
summary of the status of such matters on a monthly, or if requested by Lender,
more frequent, basis, including such information as Lender shall reasonably
request. Borrower shall (and shall cause its Constituent Owners to) (i) comply
with FIRRMA and (ii) respond to, and comply with, all requests, orders, and
directives from any Governmental Authority related to FIRRMA; provided, however,
the foregoing subsections (i) and (ii) shall not limit any obligation of
Borrower to otherwise comply with any other applicable terms and conditions
hereof and of the other Loan Documents. Notwithstanding anything contained
herein to the contrary, each of any FIRRMA Prohibited Transfer and FIRRMA
Prohibited Filing Event shall be deemed prohibited hereunder as a breach hereof
and Borrower shall not permit the same to occur without Lender’s prior written
consent.

 

Section 4.21.     No Joint Assessment. Borrower shall not suffer, permit or
initiate the joint assessment of the Property with (a) any other real property
constituting a tax lot separate from the Property, or (b) any portion of the
Property which may be deemed to constitute personal property, or any other
procedure whereby the lien of any taxes which may be levied against such
personal property shall be assessed or levied or charged to the Property.

 

Section 4.22.     Alterations. Notwithstanding anything contained herein
(including, without limitation, Article 8 hereof) to the contrary, Lender’s
prior approval shall be required in connection with any alterations to any
Improvements (a) that are structural in nature and could be reasonably expected
to have a Material Alteration Adverse Effect or (b) the cost of which (including
any related alteration, improvement or replacement) is reasonably anticipated to
exceed the Alteration Threshold, which approval shall (subject to applicable
REMIC Requirements) not be unreasonably withheld conditioned or delayed.
Notwithstanding the foregoing, Lender’s prior approval shall not be required for
alterations that Borrower determines (in its commercially reasonable discretion)
are required in order for the Property to continue to comply with any applicable
Legal Requirements. If the total unpaid amounts incurred and to be incurred with
respect to any alterations to the Improvements shall at any time exceed the
Alteration Threshold, Borrower shall promptly deliver to Lender as security for
the payment of such amounts and as additional security for Borrower’s
obligations under the Loan Documents any of the following: (i) cash, (ii) U.S.
Obligations, (iii) other security acceptable to Lender, (provided that Lender
shall have received a Rating Agency Confirmation as to the form and issuer of
same), or (iv) a completion bond (provided that Lender shall have received a
Rating Agency Confirmation as to the form and issuer of same). Such security
shall be in an amount equal to the excess of the total unpaid amounts incurred
and to be incurred with respect to such alterations to the Improvements over the
Alteration Threshold. To the extent that the Deemed Approval Requirements are
fully satisfied in connection with any Borrower request for Lender consent under
this Section and Lender thereafter fails to respond, Lender’s approval shall be
deemed given with respect to the matter for which approval was requested

 

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Section 4.23.     Property Document Covenants.

 

(a)     Without limiting the other provisions of this Agreement and the other
Loan Documents, Borrower shall (i) promptly perform and/or observe, in all
material respects, all of the covenants and agreements required to be performed
and observed by it under the Property Documents and do all things necessary to
preserve and to keep unimpaired its material rights thereunder; (ii) promptly
notify Lender of any material default under the Property Documents of which it
is aware; (iii) promptly deliver to Lender a copy of each financial statement,
business plan, capital expenditures plan, notice, report and estimate received
by it under the Property Documents; (iv) enforce the performance and observance
of all of the covenants and agreements required to be performed and/or observed
under the Property Documents in a commercially reasonable manner; (v) cause the
Property to be operated, in all material respects, in accordance with the
Property Documents; and (vi) not, without the prior written consent of Lender,
(A) enter into any new Property Document or replace or execute modifications to
any existing Property Documents or renew or extend the same (exclusive of, in
each case, any automatic renewal or extension in accordance with its terms), (B)
surrender, terminate or cancel the Property Documents, (C) reduce or consent to
the reduction of the term of the Property Documents, (D) increase or consent to
the increase of the amount of any charges under the Property Documents, (E)
otherwise modify, change, supplement, alter or amend, or waive or release any of
its rights and remedies under, the Property Documents in any material respect or
(F) following the occurrence and during the continuance of an Event of Default,
exercise any rights, make any decisions, grant any approvals or otherwise take
any action under the Property Documents.

 

(b)     Borrower shall be obligated to maintain parking in such quantities and
at such locations as is necessary for Borrower to satisfy all requirements
relating to parking contained in the Existing ST Lease, the New ST Lease and any
future Lease which is entered into with the initial Specified Tenant or any
Affiliate thereof (the “Parking Obligations”). Borrower shall cause the Parking
Agreement to remain in full force and effect and shall cause all parties thereto
to comply with all obligations thereunder. The obligations set forth in this
Section 4.23 as they related to the Parking Agreement and the Parking
Obligations shall, for the avoidance of doubt, survive any foreclosure,
deed-in-lieu of foreclosure or other transfer of the Property in connection with
an exercise of remedies hereunder (any of the foregoing, a “Remedies Exercise”)
and shall inure to the benefit of any successor owner of the Property following
the occurrence of any such Remedies Exercise.

 

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Section 4.24.     Unfunded Landlord Obligations and Immediate Repairs. Borrower
represents, warrants and covenants as follows with respect to the Unfunded
Obligations and the Immediate Repairs:

 

(a)     Borrower shall perform the repairs at the Property as set forth on
Schedule I hereto (all such repairs are hereinafter referred to as “Immediate
Repairs”) and shall complete each of the Immediate Repairs on or before the
respective deadline for each repair as set forth on Schedule I hereto;

 

(b)     Borrower shall perform and pay for the Unfunded Obligations as and when
the same are required in accordance with the Specified Tenant Lease.

 

(c)     If an Event of Default shall occur and be continuing and/or if Borrower
shall breach any of the requirements of this Section 4.24, Borrower shall,
within five (5) days after Lender requests the same, deliver cash (to be held as
security for completion of the Unfunded Obligations, the Immediate Repairs and
security for payment of the Debt) in the amount that Lender determines (in its
reasonable discretion) is necessary to complete the Unfunded Obligations and the
outstanding Immediate Repairs (said obligation, the “Guaranteed Reserve
Deposit”).

 

Section 4.25.     Permanent Certificate of Occupancy.  Borrower shall (a)
maintain the TCO at all times until a new, valid, permanent certificate of
occupancy is obtained for the Property (the “PCO”), (b) exercise good faith and
commercially reasonable efforts to complete (or cause to be completed) all PCO
Issuance Requirements and to cause a PCO to be obtained for the Property and (c)
cause a copy of the PCO to be delivered to Lender upon issuance of the PCO. 
Borrower further covenants throughout the Loan term to continue to renew any
then applicable TCO prior to its expiration date and to deliver a renewal TCO to
Lender on or before the then applicable expiration date.  The terms and
provisions of this Section shall not be deemed to limit the other terms and
conditions hereof or of the other Loan Documents.

 

ARTICLE 5     

ENTITY COVENANTS

 

Section 5.1.     Single Purpose Entity/Separateness.

 

(a)     Borrower hereby represents, warrants and covenants that Borrower has
not, since its formation, and shall not:

 

(i)     engage in any business or activity other than the ownership, operation
and maintenance of the Property, and activities incidental thereto;

 

(ii)     acquire or own any assets other than (A) the Property, and (B) such
incidental Personal Property as may be necessary for the ownership, leasing,
maintenance and operation of Property;

 

(iii)     merge into or consolidate with any Person, divide or otherwise engage
in or permit any Division or have the power to engage in or permit any Division
or dissolve, terminate, liquidate in whole or in part, transfer or otherwise
dispose of all or substantially all of its assets or change its legal structure.
As used herein, the term “Division” shall mean, as to any Person, such Person
dividing and/or otherwise engaging in and/or becoming subject to, in each case,
any division (whether pursuant to plan of division or otherwise), including,
without limitation and to the extent applicable, pursuant to §18-217 of the
Limited Liability Company Act of the State of Delaware;

 

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(iv)     fail to observe all organizational formalities, or fail to preserve its
existence as an entity duly organized, validly existing and in good standing (if
applicable) under the applicable Legal Requirements of the jurisdiction of its
organization or formation, or amend, modify, terminate or fail to comply with
the provisions of its organizational documents (provided, that, such
organizational documents may be amended or modified to the extent that, in
addition to the satisfaction of the requirements related thereto set forth
therein, Lender’s prior written consent and, if required by Lender, a Rating
Agency Confirmation are first obtained);

 

(v)     own any subsidiary, or make any investment in, any Person (other than,
with respect to any SPE Component Entity, in Borrower);

 

(vi)     commingle its funds or assets with the funds or assets of any other
Person;

 

(vii)     incur any Indebtedness, secured or unsecured, direct or contingent
(including guaranteeing any obligation), other than (A) the Debt, (B) trade and
operational indebtedness incurred in the ordinary course of business with trade
creditors, provided such indebtedness is (1) unsecured, (2) not evidenced by a
note, (3) on commercially reasonable terms and conditions, and (4) due not more
than sixty (60) days past the date incurred and paid on or prior to such date,
and/or (C) Permitted Equipment Leases; provided however, the aggregate amount of
the indebtedness described in (B) and (C) shall not exceed at any time two
percent (2%) of the outstanding principal amount of the Debt. No Indebtedness
other than the Debt may be secured (senior, subordinate or pari passu) by the
Property;

 

(viii)     fail to maintain all of its books, records, financial statements and
bank accounts separate from those of any other Person (including, without
limitation, any Affiliates). Borrower’s assets have not and will not be listed
as assets on the financial statement of any other Person; provided, however,
that Borrower’s assets may be included in a consolidated financial statement of
its Affiliates provided that (i) appropriate notation shall be made on such
consolidated financial statements to indicate the separateness of Borrower and
such Affiliates and to indicate that Borrower’s assets and credit are not
available to satisfy the debts and other obligations of such Affiliates or any
other Person and (ii) such assets shall be listed on Borrower’s own separate
balance sheet. Borrower has maintained and will maintain its books, records,
resolutions and agreements as official records;

 

(ix)     enter into any contract or agreement with any partner, member,
shareholder, principal or Affiliate, except, in each case, upon terms and
conditions that are intrinsically fair and substantially similar to those that
would be available on an arm’s-length basis with unaffiliated third parties;

 

(x)     maintain its assets in such a manner that it will be costly or difficult
to segregate, ascertain or identify its individual assets from those of any
other Person;

 

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(xi)     assume or guaranty the debts of any other Person, hold itself out to be
responsible for the debts of any other Person, or otherwise pledge its assets
for the benefit of any other Person or hold out its credit as being available to
satisfy the obligations of any other Person;

 

(xii)     make any loans or advances to any Person;

 

(xiii)     fail to file its own tax returns (unless it is a “disregarded entity”
for tax purposes or is otherwise not required to file tax returns under
applicable Legal Requirements or is prohibited by applicable Legal Requirements
from doing so);

 

(xiv)     fail to (A) hold itself out to the public and identify itself, in each
case, as a legal entity separate and distinct from any other Person and not as a
division or part of any other Person, (B) conduct its business solely in its own
name, (C) hold its assets in its own name or (D) correct any known
misunderstanding regarding its separate identity;

 

(xv)     fail to maintain adequate capital for the normal obligations reasonably
foreseeable in a business of its size and character and in light of its
contemplated business operations (to the extent there exists sufficient cash
flow from the Property to do so);

 

(xvi)     without the prior unanimous written consent of all of its partners,
shareholders or members, as applicable, the prior unanimous written consent of
its board of directors or managers, as applicable, and the prior written consent
of each Independent Director (regardless of whether such Independent Director is
engaged at the Borrower or SPE Component Entity level), (a) file or consent to
the filing of any petition, either voluntary or involuntary, to take advantage
of any Creditors Rights Laws, (b) seek or consent to the appointment of a
receiver, liquidator or any similar official, (c) take any action that might
cause such entity to become insolvent, (d) make an assignment for the benefit of
creditors or (e) take any Material Action with respect to Borrower or any SPE
Component Entity (provided, that, none of any member, shareholder or partner (as
applicable) of Borrower or any SPE Component Entity or any board of directors or
managers (as applicable) of Borrower or any SPE Component Entity may vote on or
otherwise authorize the taking of any of the foregoing actions unless, in each
case, there are at least one (1) Independent Director then serving in such
capacity in accordance with the terms of the applicable organizational documents
and such Independent Director shall have consented to such foregoing action);

 

(xvii)     fail to allocate shared expenses (including, without limitation,
shared office space) or fail to use separate stationery, invoices and checks;

 

(xviii)     fail to pay its own liabilities (including, without limitation,
salaries of its own employees) from its own funds or fail to maintain a
sufficient number of employees in light of its contemplated business operations
(in each case to the extent there exists sufficient cash flow from the Property
to do so);

 

(xix)     acquire obligations or securities of its partners, members,
shareholders or other Affiliates, as applicable;

 

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(xx)     identify its partners, members, shareholders or other Affiliates, as
applicable, as a division or part of it; or

 

(xxi)     violate or cause to be violated the assumptions made with respect to
Borrower and its principals in the Non-Consolidation Opinion or in any New
Non-Consolidation Opinion.

 

(b)     If Borrower is a partnership or limited liability company (other than an
Acceptable LLC), each general partner (in the case of a partnership) and at
least one member (in the case of a limited liability company) of Borrower, as
applicable, shall be a corporation or an Acceptable LLC (each an “SPE Component
Entity”) whose sole asset is its interest in Borrower. Each SPE Component Entity
(i) will at all times comply with each of the covenants, terms and provisions
contained in Section 5.1(a)(iii) - (vi) (inclusive) and (viii) – (xxi)
(inclusive) and, if such SPE Component Entity is an Acceptable LLC, Section
5.1(c) and (d) hereof, as if such representation, warranty or covenant was made
directly by such SPE Component Entity; (ii) will not engage in any business or
activity other than owning an interest in Borrower; (iii) will not acquire or
own any assets other than its partnership, membership, or other equity interest
in Borrower; (iv) will at all times continue to own no less than a 0.5% direct
equity ownership interest in Borrower; (v) will not incur any debt, secured or
unsecured, direct or contingent (including guaranteeing any obligation); and
(vi) will cause Borrower to comply with the provisions of this Section 5.1.

 

(c)     In the event Borrower or the SPE Component Entity is an Acceptable LLC,
the limited liability company agreement of Borrower or the SPE Component Entity
(as applicable) (the “LLC Agreement”) shall provide that (i) upon the occurrence
of any event that causes the last remaining member of Borrower or the SPE
Component Entity (as applicable) (“Member”) to cease to be the member of
Borrower or the SPE Component Entity (as applicable) (other than (A) upon an
assignment by Member of all of its limited liability company interest in
Borrower or the SPE Component Entity (as applicable) and the admission of the
transferee in accordance with the Loan Documents and the LLC Agreement, or (B)
the resignation of Member and the admission of an additional member of Borrower
or the SPE Component Entity (as applicable) in accordance with the terms of the
Loan Documents and the LLC Agreement), any person acting as Independent Director
of Borrower or the SPE Component Entity (as applicable) shall, without any
action of any other Person and simultaneously with the Member ceasing to be the
member of Borrower or the SPE Component Entity (as applicable) automatically be
admitted to Borrower or the SPE Component Entity (as applicable) as a member
with a 0% economic interest (“Special Member”) and shall continue Borrower or
the SPE Component Entity (as applicable) without dissolution and (ii) Special
Member may not resign from Borrower or the SPE Component Entity (as applicable)
or transfer its rights as Special Member unless (A) a successor Special Member
has been admitted to Borrower or the SPE Component Entity (as applicable) as a
Special Member in accordance with requirements of Delaware law and (B) after
giving effect to such resignation or transfer, there remains at least one (1)
Independent Director of the SPE Component Entity or Borrower (as applicable) in
accordance with Section 5.2 below. The LLC Agreement shall further provide that
(i) Special Member shall automatically cease to be a member of Borrower or the
SPE Component Entity (as applicable) upon the admission to Borrower or the SPE
Component Entity (as applicable) of the first substitute member, (ii) Special
Member shall be a member of Borrower or the SPE Component Entity (as applicable)
that has no interest in the profits, losses and capital of Borrower or the SPE
Component Entity (as applicable) and has no right to receive any distributions
of the assets of Borrower or the SPE Component Entity (as applicable), (iii)
pursuant to the applicable provisions of the limited liability company act of
the State of Delaware (the “Act”), Special Member shall not be required to make
any capital contributions to Borrower or the SPE Component Entity (as
applicable) and shall not receive a limited liability company interest in
Borrower or the SPE Component Entity (as applicable), (iv) Special Member, in
its capacity as Special Member, may not bind Borrower or the SPE Component
Entity (as applicable) and (v) except as required by any mandatory provision of
the Act, Special Member, in its capacity as Special Member, shall have no right
to vote on, approve or otherwise consent to any action by, or matter relating
to, Borrower or the SPE Component Entity (as applicable) including, without
limitation, the merger, consolidation or conversion of Borrower or the SPE
Component Entity (as applicable); provided, however, such prohibition shall not
limit the obligations of Special Member, in its capacity as Independent
Director, to vote on such matters required by the Loan Documents or the LLC
Agreement. In order to implement the admission to Borrower or the SPE Component
Entity (as applicable) of Special Member, Special Member shall execute a
counterpart to the LLC Agreement. Prior to its admission to Borrower or the SPE
Component Entity (as applicable) as Special Member, Special Member shall not be
a member of Borrower or the SPE Component Entity (as applicable), but Special
Member may serve as an Independent Director of Borrower or the SPE Component
Entity (as applicable).

 

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(d)     The LLC Agreement shall further provide that (i) upon the occurrence of
any event that causes the Member to cease to be a member of Borrower or the SPE
Component Entity (as applicable) to the fullest extent permitted by law, the
personal representative of Member shall, within ninety (90) days after the
occurrence of the event that terminated the continued membership of Member in
Borrower or the SPE Component Entity (as applicable) agree in writing (A) to
continue Borrower or the SPE Component Entity (as applicable) and (B) to the
admission of the personal representative or its nominee or designee, as the case
may be, as a substitute member of Borrower or the SPE Component Entity (as
applicable) effective as of the occurrence of the event that terminated the
continued membership of Member in Borrower or the SPE Component Entity (as
applicable), (ii) any action initiated by or brought against Member or Special
Member under any Creditors Rights Laws shall not cause Member or Special Member
to cease to be a member of Borrower or the SPE Component Entity (as applicable)
and upon the occurrence of such an event, the business of Borrower or the SPE
Component Entity (as applicable) shall continue without dissolution and (iii)
each of Member and Special Member waives any right it might have to agree in
writing to dissolve Borrower or the SPE Component Entity (as applicable) upon
the occurrence of any action initiated by or brought against Member or Special
Member under any Creditors Rights Laws, or the occurrence of an event that
causes Member or Special Member to cease to be a member of Borrower or the SPE
Component Entity (as applicable).

 

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Section 5.2.     Independent Director.

 

(a)     The organizational documents of Borrower (to the extent Borrower is a
corporation or an Acceptable LLC) or the SPE Component Entity, as applicable,
shall provide that at all times there shall be at least one duly appointed
independent director or manager of such entity (each, an “Independent Director”)
who shall (I) not have been at the time of each such individual’s initial
appointment, and shall not have been at any time during the preceding five
years, and shall not be at any time while serving as Independent Director,
either (i) a shareholder (or other equity owner) of, or an officer, director
(other than in its capacity as Independent Director), partner, member or
employee of, Borrower or any of its respective shareholders, partners, members,
subsidiaries or Affiliates, (ii) a customer of, or supplier to, or other Person
who derives any of its purchases or revenues from its activities with, Borrower
or any of its respective shareholders, partners, members, subsidiaries or
Affiliates, (iii) a Person who Controls or is under common Control with any such
shareholder, officer, director, partner, member, employee supplier, customer or
other Person, (iv) a member of the immediate family of any such shareholder,
officer, director, partner, member, employee, supplier, customer or other Person
or (v) a trustee or similar Person in any proceeding under Creditors Rights Laws
involving Borrower, the applicable SPE Component Entity or any of their
respective shareholders, partners, members, subsidiaries or Affiliates (II)
shall have, at the time of their appointment, had at least three (3) years’
experience in serving as an independent director and (III) be employed by, in
good standing with and engaged by Borrower in connection with, in each case, an
Approved ID Provider. Notwithstanding the foregoing, a Person who would
otherwise not qualify to serve as Independent Director solely by reason of
serving as an independent director for Affiliates of Borrower shall not be so
disqualified and may serve as an Independent Director so long as such Person
derives less than 5% of his or her total annual income from his or her service
as independent director for Borrower or SPE Component Entity, as applicable, and
each applicable affiliate of Borrower.

 

(b)     The organizational documents of Borrower and any SPE Component Entity
shall further provide that (I) the board of directors or managers of Borrower
and any SPE Component Entity and the constituent equity owners of such entities
(constituent equity owners, the “Constituent Members”) shall not take any action
set forth in Section 5.1(a)(II)(xvi) or any other action which, under the terms
of any organizational documents of Borrower or any SPE Component Entity,
requires the vote of the Independent Director unless, in each case, at the time
of such action there shall be at least one (1) Independent Director engaged as
provided by the terms hereof and such Independent Director votes in favor of or
otherwise consent to such action; (II) any resignation, removal or replacement
of any Independent Director shall not be effective without (1) prior written
notice to Lender and the Rating Agencies (which such prior written notice must
be given on the earlier of five (5) days or three (3) Business Days prior to the
applicable resignation, removal or replacement) and (2) evidence that the
replacement Independent Director satisfies the applicable terms and conditions
hereof and of the applicable organizational documents (which such evidence must
accompany the aforementioned notice); (III) to the fullest extent permitted by
applicable law, including Section 18-1101(c) of the Act and notwithstanding any
duty otherwise existing at law or in equity, the Independent Director shall
consider only the interests of the Constituent Members and Borrower and any SPE
Component Entity (including Borrower’s and any SPE Component Entity’s respective
creditors) in acting or otherwise voting on the matters provided for herein and
in Borrower’s and SPE Component Entity’s organizational documents (which such
fiduciary duties to the Constituent Members and Borrower and any SPE Component
Entity (including Borrower’s and any SPE Component Entity’s respective
creditors), in each case, shall be deemed to apply solely to the extent of their
respective economic interests in Borrower or any SPE Component Entity (as
applicable) exclusive of (x) all other interests (including, without limitation,
all other interests of the Constituent Members), (y) the interests of other
Affiliates of the Constituent Members, Borrower and SPE Component Entity and (z)
the interests of any group of Affiliates of which the Constituent Members,
Borrower or SPE Component Entity is a part)); (IV) other than as provided in
subsection (III) above, the Independent Director shall not have any fiduciary
duties to any Constituent Members, any directors of Borrower or SPE Component
Entity or any other Person; (V) the foregoing shall not eliminate the implied
contractual covenant of good faith and fair dealing under applicable law; (VI)
to the fullest extent permitted by applicable law, including Section 18-1101(e)
of the Act, an Independent Director shall not be liable to Borrower, SPE
Component Entity, any Constituent Member or any other Person for breach of
contract or breach of duties (including fiduciary duties), unless the
Independent Director acted in bad faith or engaged in willful misconduct and
(VII) except as provided in the foregoing subsections (III) through (VI), the
Independent Director shall, in exercising their rights and performing their
duties under the applicable organizational documents, have a fiduciary duty of
loyalty and care similar to that of a director of a business corporation
organized under the General Corporation Law of the State of Delaware.

 

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Section 5.3.     Change of Name, Identity or Structure. Borrower shall not
change (or permit to be changed) Borrower’s or the SPE Component Entity’s (a)
name, (b) identity (including its trade name or names), (c) principal place of
business set forth on the first page of this Agreement or (d) if not an
individual, Borrower’s or the SPE Component Entity’s corporate, partnership or
other structure or state of formation, without, in each case, notifying Lender
of such change in writing at least thirty (30) days prior to the effective date
of such change and, in the case of a change in Borrower’s or the SPE Component
Entity’s structure or state of formation, without first obtaining the prior
written consent of Lender and, if required by Lender, a Rating Agency
Confirmation with respect thereto. Borrower shall execute and deliver to Lender,
prior to or contemporaneously with the effective date of any such change, any
financing statement or financing statement change required by Lender to
establish or maintain the validity, perfection and priority of the security
interest granted herein. At the request of Lender, Borrower shall execute a
certificate in form satisfactory to Lender listing the trade names under which
Borrower or the SPE Component Entity intends to operate the Property, and
representing and warranting that Borrower or the SPE Component Entity does
business under no other trade name with respect to the Property.

 

Section 5.4.     Business and Operations. Borrower will continue to engage in
the businesses now conducted by it as and to the extent the same are necessary
for the ownership, maintenance, management and operation of the Property.
Borrower will qualify to do business and will remain in good standing under the
laws of the State and each other applicable jurisdiction in which the Property
is located, in each case, as and to the extent the same are required for the
ownership, maintenance, management and operation of the Property.

 

Section 5.5.     Recycled Entity. Borrower hereby represents and warrants to
Lender that Borrower has not, since its formation: (a) failed to be duly formed,
validly existing, and in good standing in the applicable jurisdiction(s) of its
formation and the State; (b) had any judgments or liens of any nature against it
except for (i) tax liens not yet delinquent, (ii) judgments which have been
satisfied in full and (iii) liens in connection with the Prior Loan; (c) failed
to comply in all material respects with all laws, regulations, and orders
applicable to it or failed to receive all Permits necessary for it to operate;
(d) been involved in any dispute with any taxing authority which is unresolved
as of the Closing Date or failed to pay all taxes owed prior to the delinquency
thereof (or, if later, then with all applicable penalties, interest and other
sums due in connection therewith); (e) ever been party to any lawsuit,
arbitration, summons, or legal proceeding that is still pending or that resulted
in a judgment against it that has not been paid in full; (f) failed to comply
with all separateness covenants contained in its organizational documents since
its formation; (g) had any material contingent or actual obligations not related
to the Property; (h) except as expressly disclosed to Lender in connection with
the closing of the Loan, amended, modified, supplemented, restated, replaced or
terminated its organizational documents (or consented to any of the foregoing);
or (i) has been the product of, the subject of or otherwise involved in, in each
case, any Division.

 

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ARTICLE 6     

NO SALE OR ENCUMBRANCE

 

Section 6.1.     Transfer Definitions. As used herein and in the other Loan
Documents, “Restricted Party” shall mean Borrower, Sponsor, Guarantor, any SPE
Component Entity, any Affiliated Manager, or any shareholder, partner, member or
non-member manager, or any direct or indirect legal or beneficial owner of
Borrower, Sponsor, Guarantor, any SPE Component Entity, any Affiliated Manager
or any non-member manager; and a “Sale or Pledge” shall mean a voluntary or
involuntary sale, conveyance, mortgage, grant, bargain, encumbrance, pledge,
assignment, grant of any options with respect to, or any other transfer or
disposition of (directly or indirectly, voluntarily or involuntarily, by
operation of law or otherwise, and whether or not for consideration or of
record) of a legal or beneficial interest.

 

Section 6.2.     No Sale/Encumbrance.

 

(a)     It shall be an Event of Default hereof if, without the prior written
consent of Lender, a Sale or Pledge of the Property or any part thereof or any
legal or beneficial interest therein (including, without limitation, the Loan
and/or Loan Documents) occurs, a Sale or Pledge of an interest in any Restricted
Party occurs and/or Borrower shall acquire any real property in addition to the
real property owned by Borrower as of the Closing Date (each of the foregoing,
collectively, a “Prohibited Transfer”), other than (i) pursuant to Leases of
space in the Improvements to Tenants in accordance with the provisions of
Section 4.14 and (ii) as permitted pursuant to the express terms of this Article
6.

 

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(b)     A Prohibited Transfer shall include, but not be limited to, (i) an
installment sales agreement wherein Borrower agrees to sell the Property or any
part thereof for a price to be paid in installments; (ii) an agreement by
Borrower leasing all or a substantial part of the Property for other than actual
occupancy by a Tenant thereunder or a sale, assignment or other transfer of, or
the grant of a security interest in, Borrower’s right, title and interest in and
to any (A) Leases or any Rents or (B) Property Documents; (iii) if a Restricted
Party is a corporation, any merger, consolidation or Sale or Pledge of such
corporation’s stock or the creation or issuance of new stock in one or a series
of transactions; (iv) if a Restricted Party is a limited or general partnership
or joint venture, any merger or consolidation or the change, removal,
resignation or addition of a general partner or the Sale or Pledge of the
partnership interest of any general or limited partner or any profits or
proceeds relating to such partnership interests or the creation or issuance of
new limited partnership interests; (v) if a Restricted Party is a limited
liability company, any merger, Division or consolidation or the change, removal,
resignation or addition of a managing member or non-member manager (or if no
managing member, any member) or the Sale or Pledge of the membership interest of
any member or any profits or proceeds relating to such membership interest; (vi)
if a Restricted Party is a trust or nominee trust, any merger, consolidation or
the Sale or Pledge of the legal or beneficial interest in a Restricted Party or
the creation or issuance of new legal or beneficial interests; (vii) the removal
or the resignation of Manager (including, without limitation, an Affiliated
Manager) or the engagement of a New Manager, in each case, other than in
accordance with Section 4.15; or (viii) any action for partition of the Property
(or any portion thereof or interest therein) or any similar action instituted or
prosecuted by Borrower or by any other Person, pursuant to any contractual
agreement or other instrument or under applicable law (including, without
limitation, common law) and/or any other action instituted by (or at the behest
of) Borrower or its Affiliates or consented to or acquiesced in by Borrower or
its Affiliates which results in a Property Document Event and/or (ix) the
incurrence of any property-assessed clean energy loans or similar indebtedness
with respect to Borrower and/or the Property, including, without limitation, if
such loans or indebtedness are made or otherwise provided by any Governmental
Authority and/or secured or repaid (directly or indirectly) by any taxes or
similar assessments.

 

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Section 6.3.     Permitted Equity Transfers. Notwithstanding the restrictions
contained in this Article 6, the following equity transfers shall be permitted
without Lender’s consent: (a) a transfer (but not a pledge) by devise or descent
or by operation of law upon the death of a Restricted Party or any member,
partner or shareholder of a Restricted Party, (b) the transfer (but not the
pledge), in one or a series of transactions, of the stock, partnership interests
or membership interests (as the case may be) in a Restricted Party or (c) the
sale, transfer or issuance of shares of common stock in Clipper Realty Inc., a
Maryland corporation (the “Clipper REIT”) (provided, that, the foregoing
provisions of clauses (a), (b) and (c) above shall not be deemed to waive,
qualify or otherwise limit Borrower’s obligation to comply (or to cause the
compliance with) the other covenants set forth herein and in the other Loan
Documents (including, without limitation, the covenants contained herein
relating to ERISA and FIRRMA matters)); provided, further, that, with respect to
the transfers listed in clauses (a), (b) and/or (c) above, (A) Lender shall
receive not less than thirty (30) days prior written notice of such transfers
(it being acknowledged that with respect to any transfer contemplated by clause
(c) above, no such notice shall be required if (i) the transfer shall otherwise
comply with the requirements of this Section 6.3 (ii) the transfer does not
cause any Person (or affiliated Persons) to own more than a ten (10%) interest
in Borrower that did not previously own said interest); (B) no such transfers
shall result in a change in Control of Guarantor or, to the extent applicable,
any Affiliated Manager; (C) after giving effect to such transfers, (I) David
Bistricer, Sam Levinson and Sponsor Family Entities shall, in the aggregate, own
at least a 45% (of which 15% may be owned by Moric Bistricer) direct or indirect
equity ownership interest in Berkshire Equity LLC and Berkshire Equity LLC shall
own a 100% direct ownership interest in each of Borrower and any SPE Component
Entity; (II) the Clipper REIT shall (x) serve as the general partner of Clipper
Realty L.P., a Delaware limited partnership (the “Clipper REIT OP”), (y) Control
Borrower and any SPE Component Entity and (z) control the day-to-day operation
of the Property and (III) the Clipper REIT OP and the Clipper REIT shall own at
least a twenty five percent (25%) direct and/or indirect interest in the
Borrower; (D) after giving effect to such transfers, the Property shall continue
to be managed by (I) to the extent a Manager Trigger has occurred, Manager or a
New Manager approved in accordance with the applicable terms and conditions
hereof or (II) to the extent that a Manager Trigger has not occurred, Borrower;
(E) in the case of the transfer of any direct equity ownership interests in
Borrower or in any SPE Component Entity, such transfers shall be conditioned
upon continued compliance with the relevant provisions of Article 5 hereof; (F)
in the case of (1) the transfer of the management of the Property to a new
Affiliated Manager in accordance with the applicable terms and conditions
hereof, or (2) the transfer of any equity ownership interests (I) directly in
Borrower or in any SPE Component Entity, or (II) in any Restricted Party whose
sole asset is a direct or indirect equity ownership interest in Borrower or in
any SPE Component Entity, such transfers shall be conditioned upon delivery to
Lender of a New Non-Consolidation Opinion addressing such transfer; (G) such
transfers shall be conditioned upon Borrower’s ability to, after giving effect
to the equity transfer in question (I) remake the representations contained
herein relating to ERISA and FIRRMA matters (and, upon Lender’s request,
Borrower shall deliver to Lender an Officer’s Certificate containing such
updated representations effective as of the date of the consummation of the
applicable equity transfer) and (II) continue to comply with the covenants
contained herein relating to ERISA and FIRRMA matters; (H) to the extent that
any transfer results in the transferee (either itself or collectively with its
affiliates) owning a 20% or greater equity interest (directly or indirectly) in
Borrower or in any SPE Component Entity, Lender’s receipt of the Satisfactory
Search Results shall be a condition precedent to such transfer; (I) such
transfers shall be permitted pursuant to the terms of the Property Documents;
(J) after giving effect to such transfers, the Guarantor Control Condition shall
continue to be satisfied; (K) Clipper REIT shall continue to satisfy the
Eligibility Requirements until the Loan is indefeasible paid in full; and (L) at
no time shall any Person serve on the REIT Board to the extent such Person is
either (i) a Sanctioned Person and/or (ii) not reputable or experienced in
commercial real estate transactions similar involving properties similar to the
Property. Upon request from Lender, Borrower shall promptly provide Lender with
(y) a revised version of the Organizational Chart delivered to Lender in
connection with the Loan reflecting any equity transfer consummated in
accordance with this Section 6.3 and (z) “know your client” searches (in form,
scope and substance and from a provider, in each case, reasonably acceptable to
Lender) with respect to any transfer to which this Article applies (provided,
that, notwithstanding the foregoing provisions of this Section, satisfaction of
this subsection (z) shall, at Lender’s option, be a condition precedent to any
such transfer).

 

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Section 6.4.     Permitted Property Transfer (Assumption). Notwithstanding the
foregoing provisions of this Article 6, at any time other than the sixty (60)
days prior to and following any Secondary Market Transaction, Lender shall not
unreasonably withhold consent to a transfer of the Property in its entirety to,
and the related assumptions of the Loan by, any Person (a “Transferee”) provided
that each of the following terms and conditions are satisfied:

 

(a)     no Default or Event of Default has occurred (other than a Default that
is personal to Borrower which will be rendered inapplicable to the Loan by
virtue of the applicable transfer);

 

(b)     Borrower shall have (i) delivered written notice to Lender of the terms
of such prospective transfer not less than sixty (60) days before the date on
which such transfer is scheduled to close and, concurrently therewith, all such
information concerning the proposed Transferee as Lender shall reasonably
require and (ii) paid to Lender a non-refundable processing fee in the amount of
$25,000. Lender shall have the right to approve or disapprove the proposed
transfer based on its then current underwriting and credit requirements for
similar loans secured by similar properties which loans are sold in the
secondary market, such approval not to be unreasonably withheld, conditioned or
delayed. In determining whether to give or withhold its approval of the proposed
transfer, Lender shall consider the experience and track record of Transferee
and its principals in owning and operating facilities similar to the Property,
the financial strength of Transferee and its principals, the general business
standing of Transferee and its principals and Transferee’s and its principals’
relationships and experience with contractors, vendors, tenants, lenders and
other business entities;

 

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(c)     Borrower shall have paid to Lender, concurrently with the closing of
such prospective transfer, (i) a non-refundable assumption fee in an amount
equal to (A) for the first such transfer, one quarter of one percent (.25%) of
the then outstanding principal balance of the Loan and (B) for each subsequent
transfer, one half of one percent (.5%) of the then outstanding principal
balance of the Loan, (ii) all third party out-of-pocket costs and expenses,
including reasonable attorneys’ fees, incurred by Lender in connection therewith
and (iii) all fees, costs and expenses of all third parties and the Rating
Agencies incurred in connection therewith;

 

(d)     Transferee assumes and agrees to pay the Debt as and when due subject to
the provisions of Article 13 hereof and, prior to or concurrently with the
closing of such transfer, Transferee and its constituent partners, members,
shareholders, Affiliates or sponsors as Lender may require, shall execute,
without any cost or expense to Lender, such documents and agreements as Lender
shall reasonably require to evidence and effectuate said assumption and an
Affiliate of Transferee reasonably acceptable to Lender (but in all events able
to satisfy the net worth, liquidity and other similar covenants in the Guaranty
(unless otherwise agreed to by Lender)) shall execute a recourse guaranty and an
environmental indemnity in form and substance identical to the Guaranty and
Environmental Indemnity, respectively, with such changes to each of the
foregoing as may be reasonably required by Lender;

 

(e)     Borrower and Transferee, without any cost to Lender, shall furnish any
information requested by Lender for the preparation of, and shall authorize
Lender to file, new financing statements and financing statement amendments and
other documents to the fullest extent permitted by applicable Legal
Requirements, and shall execute any additional documents reasonably requested by
Lender;

 

(f)     Borrower shall have delivered to Lender, without any cost or expense to
Lender, such endorsements to Lender’s Title Insurance Policy insuring that fee
simple or leasehold title to the Property, as applicable, is vested in
Transferee (subject to Permitted Encumbrances), hazard insurance endorsements or
certificates and other similar materials as Lender may deem necessary at the
time of the transfer, all in form and substance satisfactory to Lender;

 

(g)     Transferee shall have furnished to Lender all appropriate papers
evidencing Transferee’s organization and good standing, and the qualification of
the signers to execute the assumption of the Debt, which papers shall include
certified copies of all documents relating to the organization and formation of
Transferee and of the entities, if any, which are partners or members of
Transferee. Transferee and such constituent partners, members or shareholders of
Transferee (as the case may be), as Lender shall reasonably require, shall
comply with the covenants set forth in Article 5 hereof;

 

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(h)     Transferee shall assume the obligations of Borrower under any Management
Agreement or provide a new management agreement with a new manager which meets
with the requirements of the Assignment of Management Agreement and Section 4.15
hereof and assign to Lender as additional security such new management
agreement;

 

(i)     Transferee shall furnish to Lender a New Non-Consolidation Opinion and,
a REMIC Opinion with respect to the transfer and the transactions related
thereto and an additional opinion of counsel satisfactory to Lender and its
counsel (A) that Transferee’s formation documents provide for the matters
described in subparagraph (g) above, (B) that the assumption of the Debt has
been duly authorized, executed and delivered, and that the assumption agreement
and the other Loan Documents are valid, binding and enforceable against
Transferee in accordance with their terms, (C) that Transferee and any entity
which is a controlling stockholder, member or general partner of Transferee,
have been duly organized, and are in existence and good standing and (D) with
respect to such other matters as Lender may reasonably request;

 

(j)     to the extent that the Unfunded Obligations and/or the Immediate Repairs
have yet to be completed after the date of the proposed transfer, if Lender
shall so request, Borrower or Transferee shall deliver cash (to be held as
security for completion of the Unfunded Obligations, the Immediate Repairs and
security for payment of the Debt) in the amount that Lender determines (in its
reasonable discretion) is necessary to complete the Unfunded Obligations and the
outstanding Immediate Repairs;

 

(k)     if required by Lender, Lender shall have received (A) a Rating Agency
Confirmation with respect to such transfer and (B) evidence that the proposed
transfer will not result in a Property Document Event; and

 

(l)     Borrower’s obligations under the contract of sale pursuant to which the
transfer is proposed to occur shall expressly be subject to the satisfaction of
the terms and conditions of this Section 6.4.

 

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Upon the consummation of the transfer of the Property pursuant to and in
accordance with this Section 6.4 (including, without limitation, subsection (d)
hereof), the existing Guarantor and Borrower (as distinguished from the
applicable Transferee that is assuming the Loan and Affiliate of Transferee
delivering a new recourse guaranty and new environmental indemnity in connection
with such transfer of the Property) shall be conditionally released from
liability under the Loan Documents for events first occurring (as distinguished
from events first discovered) subsequent to the effective date of such
consummation, except to the extent that such events are the proximate result of
acts, events, conditions, or circumstances that existed on or prior to the
effective date of such consummation, which such conditional release shall be
documented pursuant to Lender’s standard form release documentation; provided
however, such conditional release shall be automatically null and void and of no
further force or effect whatsoever and shall be deemed automatically revoked, in
each case, upon the occurrence of any successful reversal of (or other challenge
to) such transfer or the related assumption of the Loan, in each case, including
without limitation, any fraudulent conveyance challenge, preferential transfer
challenge or other similar challenge. The Affiliate of Transferee delivering a
new recourse guaranty and new environmental indemnity in connection with such
transfer of the Property shall only have recourse liability pursuant to the
Guaranty and Environmental Indemnity for events first occurring (as
distinguished from events first discovered) subsequent to the effective date of
the consummation of the transfer of the Property pursuant to and in accordance
with this Section 6.4, provided, however, in no event shall any such limitation
on liability affect Lender’s ability to exercise any remedies it has with
respect to an Event of Default as set forth in this Agreement and the other Loan
Documents), and provided, further, that to the extent there is a dispute
regarding the date when any events giving rise to liability first arose, the
existing Guarantor and Borrower and the Transferee and the Affiliate of
Transferee delivering a new recourse guaranty and new environmental indemnity
shall be jointly and severally liable until such dispute is adjudicated in a
court of law or similar proceeding. Lender agrees that, at Borrower’s cost, it
shall execute standard and customary documentation necessary to effectuate the
agreements set forth in this paragraph.

 

Section 6.5.     Lender’s Rights. Lender reserves the right to condition the
consent to a Prohibited Transfer requested hereunder upon (a) a modification of
the terms hereof and on assumption of this Agreement and the other Loan
Documents as so modified by the proposed Prohibited Transfer, (b) payment of a
transfer fee of 1% of outstanding principal balance of the Loan and all of
Lender’s third party expenses incurred in connection with such Prohibited
Transfer, (c) receipt of a Rating Agency Confirmation with respect to the
Prohibited Transfer, (d) the proposed transferee’s continued compliance with the
covenants set forth in this Agreement, including, without limitation, the
covenants in Article 5, (e) receipt of a New Non-Consolidation Opinion with
respect to the Prohibited Transfer and/or (f) such other conditions and/or legal
opinions as Lender shall determine in its sole discretion to be in the interest
of Lender. All expenses incurred by Lender shall be payable by Borrower whether
or not Lender consents to the Prohibited Transfer. Lender shall not be required
to demonstrate any actual impairment of its security or any increased risk of
default hereunder in order to declare the Debt immediately due and payable upon
a Prohibited Transfer without Lender’s consent. This provision shall apply to
every Prohibited Transfer, whether or not Lender has consented to any previous
Prohibited Transfer.

 

Section 6.6.     Economic Sanctions, Anti-Money Laundering and Transfers.
Borrower shall (and shall cause its direct and indirect constituent owners and
Affiliates to) (a) at all times comply with the representations and covenants
contained in Section 3.30 such that the same remain true, correct and not
violated or breached and (b) not permit a Prohibited Transfer to occur and shall
cause the ownership and Control requirements specified in this Article 6
(including, without limitation, those stipulated in Section 6.3 hereof) to be
complied with at all times. Borrower hereby represents that, other than in
connection with the Loan, the Loan Documents and any Permitted Encumbrances, as
of the date hereof, there exists no Sale or Pledge of (i) the Property or any
part thereof or any legal or beneficial interest therein or (ii) any interest in
any Restricted Party. For purposes of clarification, references hereunder and/or
under the other Loan Documents to “equity ownership interest” (or words of
similar import) shall be deemed to refer to the legal and/or beneficial
interests in a Person (as applicable); provided, that, when hereunder or under
the other Loan Documents a specified percentage of the aforesaid “equity
ownership interest” (or words of similar import) in a Person is required to be
held, the same shall be deemed to refer to both the legal and beneficial
interest in such Person. Notwithstanding anything to the contrary contained
herein or in any other Loan Document (including, without limitation Sections 6.3
and 6.4 hereof), in no event shall Borrower or any SPE Component Entity be (I) a
Prohibited Entity, (II) Controlled (directly or indirectly) by any Prohibited
Entity or (II) more than 49% owned (directly or indirectly) by any Prohibited
Entities (whether individually or in the aggregate), unless, in the case of each
of the foregoing, Lender’s prior written consent is first obtained (which such
consent shall be given or withheld in Lender’s sole discretion and may be
conditioned on, among other things, Lender’s receipt of a Rating Agency
Confirmation).

 

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ARTICLE 7     

INSURANCE; CASUALTY; CONDEMNATION; RESTORATION

 

Section 7.1.     Insurance.

 

(a)     Borrower shall obtain and maintain, or cause to be obtained and
maintained, insurance for Borrower and the Property providing at least the
following coverages:

 

(i)     insurance with respect to the Improvements and the Personal Property
insuring against any peril now or hereafter included within the classification
“All Risk” or “Special Perils” (including, without limitation, fire, lightning,
windstorm / named storms, hail, terrorism and similar acts of sabotage,
explosion, riot, riot attending a strike, civil commotion, vandalism, aircraft,
vehicles and smoke), in each case (A) in an amount equal to 100% of the “Full
Replacement Cost,” which for purposes of this Agreement shall mean actual
replacement value exclusive of costs of excavations, foundations, underground
utilities and footings, with a waiver of depreciation; (B) containing an agreed
amount endorsement waiving all coinsurance provisions or shall be written on a
no coinsurance form; (C) providing for no deductible in excess of $25,000 except
with respect to earthquake and windstorm/named storm which may provide for no
deductible in excess of 5% of the total insurable value of the Property; (D) at
all times insuring against at least those hazards that are commonly insured
against under a “special causes of loss” form of policy, as the same shall exist
on the date hereof, and together with any increase in the scope of coverage
provided under such form after the date hereof; and (E) containing “law and
ordinance” coverage if any of the Improvements or the use of the Property (or
any portion thereof) shall at any time constitute a legal non-conforming
structure or use with limits acceptable to lender. The Full Replacement Cost
shall be re-determined from time to time (but not more frequently than once in
any twelve (12) calendar months) at the request of Lender by an appraiser or
contractor designated and paid by Borrower and approved by Lender, or by an
engineer or appraiser in the regular employ of the insurer. After the first
appraisal, additional appraisals may be based on construction cost indices
customarily employed in the trade. No omission on the part of Lender to request
any such ascertainment shall relieve Borrower of any of its obligations under
this Subsection;

 

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(ii)     commercial general liability insurance against all claims for personal
injury, bodily injury, death or property damage occurring upon, in or about the
Property, including “Dram Shop” or other liquor liability coverage if alcoholic
beverages are sold, manufactured or distributed from the Property, such
insurance (A) to be on the so-called “occurrence” form with a general aggregate
limit of not less than $2,000,000 and a per occurrence limit of not less than
$1,000,000, with no deductible or self insured retention; (B) to continue at not
less than the aforesaid limit until required to be changed by Lender in writing
by reason of changed economic conditions making such protection inadequate; and
(C) to cover at least the following hazards: (1) premises and operations; (2)
products and completed operations on an “if any” basis; (3) independent
contractors; (4) contractual liability for all insured contracts; (5)
contractual liability covering the indemnities contained in Article 13 hereof to
the extent the same is available; and (6) acts of terrorism and similar acts of
sabotage;

 

(iii)     loss of rents and/or business interruption insurance (A) with loss
payable to Lender; (B) covering all risks required to be covered by the
insurance provided for in Subsection 7.1(a)(i), (iv) and (vi) through (viii);
(C) in an amount equal to 100% of the projected gross income from the Property
(on an actual loss sustained basis) for a period continuing until the
Restoration of the Property is completed; the amount of such business
interruption/loss of rents insurance shall be determined prior to the Closing
Date and at least once each year thereafter based on Lender’s determination of
the projected gross income from the Property for a eighteen (18) month period;
and (D) containing an extended period of indemnity endorsement which provides
that after the physical loss to the Improvements and the Personal Property has
been repaired, the continued loss of income will be insured until such income
either returns to the same level it was at prior to the loss, or the expiration
of six (6) months from the date that the Property is repaired or replaced and
operations are resumed, whichever first occurs, and notwithstanding that the
policy may expire prior to the end of such period. Notwithstanding anything to
the contrary contained herein or in any other Loan Documents, to the extent that
insurance proceeds are payable to Lender pursuant to this Subsection (the “Rent
Loss Proceeds”) and Borrower is entitled to disbursement of Net Proceeds for
Restoration in accordance with the terms hereof, (1) a Trigger Period shall be
deemed to exist and (2) such Rent Loss Proceeds shall be deposited by Lender in
the Cash Management Account and disbursed as provided in Article 9 hereof;
provided, however, that (I) nothing herein contained shall be deemed to relieve
Borrower of its obligations to pay the obligations secured hereunder on the
respective dates of payment provided for in the Note except to the extent such
amounts are actually paid out of the Rent Loss Proceeds and (II) in the event
the Rent Loss Proceeds are paid in a lump sum in advance and Borrower is
entitled to disbursement of such Rent Loss Proceeds in accordance with the terms
hereof, Lender or Servicer shall hold such Rent Loss Proceeds in a segregated
interest-bearing Eligible Account (which shall deemed to be included within the
definition of the “Accounts” hereunder) and Lender or Servicer shall estimate
the number of months required for Borrower to restore the damage caused by the
applicable Casualty, shall divide the applicable aggregate Rent Loss Proceeds by
such number of months and shall disburse such monthly installment of Rent Loss
Proceeds from such Eligible Account into the Cash Management Account each month
during the performance of such Restoration;

 

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(iv)     at all times during which structural construction, repairs or
alterations are being made with respect to the Improvements (and only if the
existing property and/or liability coverage forms do not otherwise apply) (A)
commercial general liability and umbrella liability insurance covering claims
related to the construction, repairs or alterations being made which are not
covered by or under the terms or provisions of the commercial general liability
and umbrella insurance policies required hereunder; and (B) the insurance
provided for in Subsection 7.1(a)(i) written in a so-called builder’s risk
completed value form (1) on a non-reporting basis, (2) against all risks insured
against and on terms consistent with the coverages required pursuant to
Subsections 7.1(a)(i), (iii) and (vi) through (viii), (3) including permission
to occupy the Property, and (4) with an agreed amount endorsement waiving
co-insurance provisions;

 

(v)     workers’ compensation, subject to the statutory limits of the state in
which the Property is located, and employer’s liability insurance with a limit
of at least $1,000,000 per accident and per disease per employee, and $1,000,000
for disease aggregate in respect of any work or operations on or about the
Property, or in connection with the Property or its operation (if applicable);

 

(vi)     comprehensive boiler and machinery insurance and equipment breakdown
coverage, in each case, covering all mechanical and electrical equipment and
pressure vessels and boilers in an amount not less than their replacement cost
or in such other amount as shall be reasonably required by Lender;

 

(vii)     if any portion of the Improvements is at any time located in an area
identified by (A) the Federal Emergency Management Agency in the Federal
Register as an area having special flood hazards and/or (B) the Secretary of
Housing and Urban Development or any successor thereto as an area having special
flood hazards pursuant to the National Flood Insurance Act of 1968, the Flood
Disaster Protection Act of 1973 or the National Flood Insurance Reform Act of
1994, as each may be amended, or any successor law (the “Flood Insurance Acts”),
flood hazard insurance (1) in an amount equal to the maximum limit of coverage
available for the Property under the Flood Insurance Acts plus such additional
amounts or other related and/or excess coverage as Lender may require in its
sole discretion and (2) with deductibles no greater than the maximum limit of
coverage available under the Flood Insurance Acts ;

 

(viii)     earthquake, sinkhole and mine subsidence insurance, if required, in
amounts equal to one and one half times (1.5x) the scenario expected loss (SEL)
of the Property plus business income, in each case, as determined by Lender in
its sole discretion and in form and substance satisfactory to Lender, subject to
a deductible not to exceed 5% of the total insurable value of the Property,
provided that the insurance pursuant to this Subsection (viii) shall otherwise
be on terms consistent with the all risk insurance policy required under Section
7.1(a)(i);

 

(ix)     umbrella liability insurance in an amount not less than $50,000,000 per
occurrence and in the aggregate on terms consistent with the commercial general
liability insurance policy required under subsection (ii) above;

 

(x)     Intentionally Omitted;

 

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(xi)     if applicable, motor vehicle liability coverage for all owned and
non-owned vehicles, including rented and leased vehicles containing minimum
limits per occurrence, including umbrella coverage, of One Million and No/100
Dollars ($1,000,000); and

 

(xii)     such other insurance and in such amounts as (A) may be required
pursuant to the terms of the Property Documents and (B) Lender from time to time
may reasonably request against such other insurable hazards which at the time
are commonly insured against for property similar to the Property located in or
around the region in which the Property is located.

 

(b)     All insurance provided for in Subsection 7.1(a) hereof shall be obtained
under valid and enforceable policies (the “Policies” or in the singular, the
“Policy”), in such forms, amounts, coverages, deductibles, loss payees and
insureds, in each case, as may be satisfactory to Lender, issued by financially
sound and responsible insurance companies authorized to do business in the state
in which the Property is located and approved by Lender. Such insurance
companies must have a general policy rating of A or better and a financial class
of X or better by A.M. Best Company, Inc., and a claims paying ability/financial
strength rating of “A” (or its equivalent) or better by S&P (each such insurer
shall be referred to below as a “Qualified Insurer”). Not less than fifteen (15)
days prior to the expiration dates of the Policies theretofore furnished to
Lender pursuant to Subsection 7.1(a), Borrower shall deliver certified copies of
the Policies marked “premium paid” or accompanied by evidence satisfactory to
Lender of payment of the premiums due thereunder (the “Insurance Premiums”),
provided, however, that in the case of renewal Policies, Borrower may furnish
Lender with binders and Acord Form 28 Certificates therefor to be followed by
the original Policies when issued. At least once per calendar year, Borrower
shall provide Lender with updated flood zone certifications for the Property (in
form and substance acceptable to Lender), which such flood zone certifications
shall be delivered to Lender upon the earlier to occur of (i) December 1 of each
calendar year or (ii) the renewal of the applicable Policy providing flood
insurance coverage during the applicable calendar year.

 

(c)     Borrower shall not obtain (or permit to be obtained) (i) any umbrella or
blanket liability or casualty Policy unless, in each case, such Policy is
approved in advance in writing by Lender, Lender’s interest is included therein
as provided in this Agreement, such Policy is issued by a Qualified Insurer and
such Policy includes such changes to the coverages and requirements set forth
herein as may be required by Lender (including, without limitation, increases to
the amount of coverages required herein) or (ii) separate insurance concurrent
in form or contributing in the event of loss with that required in Subsection
7.1(a) to be furnished by, or which may be reasonably required to be furnished
by, Borrower. In the event Borrower obtains (or causes to be obtained) separate
insurance or an umbrella or a blanket Policy, Borrower shall notify Lender of
the same and shall cause complete copies of each Policy to be delivered as
required in Subsection 7.1(a) , except binders shall be submitted in the event
such policies have not yet been issued, to be followed by complete copies of
Policies upon issuance. Notwithstanding Lender’s approval of any umbrella or
blanket liability or casualty Policy hereunder, Lender reserves the right, in
its sole discretion, to require Borrower to obtain a separate Policy in
compliance with this Section 7.1.

 

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(d)     All Policies of insurance provided for or contemplated by Subsection
7.1(a) shall name Borrower as a insured and, in the case of liability Policies
(except for the Policies referenced in Subsections 7.1(a)(v) and (xi)), shall
name Lender as an additional insured, as their respective interests may appear,
and, in the case of property damage Policies (including, but not limited to,
terrorism, rent loss, business interruption, boiler and machinery, earthquake
and flood insurance), such Policies shall contain a standard noncontributing
mortgagee clause in favor of Lender providing that the loss thereunder shall be
payable to Lender.

 

(e)     All Policies of insurance provided for in Subsection 7.1(a) shall
contain clauses or endorsements to the effect that:

 

(i)     With respect to the property policies, (1) the following shall in no way
affect the validity or enforceability of the Policy insofar as Lender is
concerned: (A) any act or negligence of Borrower, of anyone acting for Borrower
or of any other Person named as an insured, (B) any foreclosure or other similar
exercise of remedies and (C) the failure to comply with the provisions of the
Policy which might otherwise result in a forfeiture of the insurance or any part
thereof(2) the property policies shall not be cancelled without at least 30
days’ written notice to Lender, except ten (10) days’ notice for non-payment of
premium and (3) the issuer(s) of the policies shall give written notice to
Lender if the issuers elect not to renew the policies prior to its expiration;

 

(ii)     if obtainable by Borrower using commercially reasonable efforts, the
Policy shall not be materially changed (other than to increase the coverage
provided thereby), terminated or cancelled without at least 30 days’ written
notice to Lender, except ten (10) days’ notice for non-payment of premium;

 

(iii)     if obtainable by Borrower using commercially reasonable efforts the
issuer(s) of the Policy shall give written notice to Lender (via certified mail,
postage prepaid, return receipt requested) if the Policy has not been renewed
thirty (30) days prior to its expiration;

 

(iv)     Lender shall not be liable for any Insurance Premiums thereon or
subject to any assessments or commissions thereunder and that the related
issuer(s) waive any related claims to the contrary;

 

(v)     Lender shall, at its option and with no obligation to do so, have the
right to directly pay Insurance Premiums in order to avoid cancellation,
expiration and/or termination of the Policy due to non-payment of Insurance
Premiums; and

 

(vi)     the Policies shall not exclude coverage for acts of terror or similar
acts of sabotage.

 

Borrower shall promptly forward to Lender a copy of each written notice received
by Borrower of any modification, reduction or cancellation of any of the
Policies or of any of the coverages afforded under any of the Policies.

 

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(f)     By no later than five (5) days following the expiration date of any
Policies, Borrower shall furnish to Lender a statement certified by Borrower or
a Responsible Officer of Borrower of the amounts of insurance maintained in
compliance herewith, of the risks covered by such insurance and of the insurance
company or companies which carry such insurance and, if requested by Lender,
verification of the adequacy of such insurance by an independent insurance
broker or appraiser acceptable to Lender. Without limitation of the foregoing,
Borrower shall also comply with the foregoing within ten (10) days of written
request of Lender. Borrower shall promptly forward to Lender a copy of each
written notice received by any Borrower Party of any modification, reduction or
cancellation of any of the Policies or of any of the coverages afforded under
any of the Policies.

 

(g)     If at any time Lender is not in receipt of written evidence that all
insurance required hereunder is in full force and effect, Lender shall have the
right, without notice to Borrower to take such action as Lender deems necessary
to protect its interest in the Property, including, without limitation, the
obtaining of such insurance coverage as Lender in its sole discretion deems
appropriate, and all expenses incurred by Lender in connection with such action
or in obtaining such insurance and keeping it in effect shall be paid by
Borrower to Lender upon demand and until paid shall be secured by the Security
Instrument and shall bear interest at the Default Rate.

 

(h)     In the event of a foreclosure of the Security Instrument or other
transfer of title to the Property in extinguishment in whole or in part of the
Debt, all right, title and interest of Borrower in and to the Policies then in
force concerning the Property and all proceeds payable thereunder shall
thereupon vest exclusively in Lender or the purchaser at such foreclosure or
other transferee in the event of such other transfer of title.

 

(i)     As an alternative to the Policies required to be maintained pursuant to
the preceding provisions of this Section 7.1, Borrower will not be in default
under this Section 7.1 if Borrower maintains (or causes to be maintained)
Policies which (i) have coverages, deductibles and/or other related provisions
other than those specified above and/or (ii) are provided by insurance companies
not meeting the credit ratings requirements set forth above (any such Policy, a
“Non-Conforming Policy”), provided, that, prior to obtaining such Non-Conforming
Policies (or permitting such Non-Conforming Policies to be obtained), Borrower
shall have (1) received Lender’s prior written consent thereto and (2) confirmed
that Lender has received a Rating Agency Confirmation with respect to any such
Non-Conforming Policy. Notwithstanding the foregoing, Lender hereby reserves the
right to deny its consent to any Non-Conforming Policy regardless of whether or
not Lender has consented to the same on any prior occasion.

 

(j)     Borrower shall cooperate with Lender in obtaining for Lender the
benefits of any Awards or insurance proceeds lawfully or equitably payable in
connection with the Property, and Lender shall be reimbursed for any expenses
incurred in connection therewith (including reasonable, actual attorneys’ fees
and disbursements, and the payment by Borrower of the expense of an appraisal on
behalf of Lender in case of a Casualty or Condemnation affecting the Property or
any part thereto) out of such Awards or insurance proceeds. Any Net Proceeds
related to such Awards or insurance proceeds shall be deposited with Lender and
held and applied in accordance with the applicable terms and conditions hereof.

 

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(k)     Borrower hereby represents that the physical address(es) for each
portion of the Improvements for all purposes (including, without limitation,
insurance purposes) are as follows: 250 Livingston Street, Brooklyn, New York.

 

Section 7.2.     Casualty. If the Property shall be damaged or destroyed, in
whole or in part, by fire or other casualty (a “Casualty”), Borrower shall give
prompt notice of such damage to Lender and shall promptly commence and
diligently prosecute the completion of the Restoration of the Property and
otherwise comply with the provisions of Section 7.4. Borrower shall pay all
costs of Restoration (including, without limitation, any applicable deductibles
under the Policies) whether or not such costs are covered by the Net Proceeds.
Lender may, but shall not be obligated to, make proof of loss if not made
promptly by Borrower.

 

Section 7.3.     Condemnation. Borrower shall promptly give Lender notice of the
actual or threatened commencement of any proceeding for the Condemnation of the
Property of which Borrower has knowledge and shall deliver to Lender copies of
any and all papers served in connection with such proceedings. Lender may
participate in any such proceedings, and Borrower shall from time to time
deliver to Lender all instruments requested by it to permit such participation.
Borrower shall, at its expense, diligently prosecute any such proceedings, and
shall consult with Lender, its attorneys and experts, and cooperate with them in
the carrying on or defense of any such proceedings. Notwithstanding any taking
by any public or quasi-public authority through Condemnation or otherwise
(including but not limited to any transfer made in lieu of or in anticipation of
the exercise of such taking), Borrower shall continue to pay the Debt at the
time and in the manner provided for its payment in the Note and in this
Agreement and the Debt shall not be reduced until any Award shall have been
actually received and applied by Lender, after the deduction of expenses of
collection, to the reduction or discharge of the Debt. Lender shall not be
limited to the interest paid on the Award by the condemning authority but shall
be entitled to receive out of the Award interest at the rate or rates provided
herein or in the Note. If the Property or any portion thereof is taken by a
condemning authority, Borrower shall promptly commence and diligently prosecute
the Restoration of the Property and otherwise comply with the provisions of
Section 7.4. Borrower shall pay all costs of Restoration whether or not such
costs are covered by the Net Proceeds. If the Property is sold, through
foreclosure or otherwise, prior to the receipt by Lender of the Award, Lender
shall have the right, whether or not a deficiency judgment on the Note shall
have been sought, recovered or denied, to receive the Award, or a portion
thereof sufficient to pay the Debt. Notwithstanding the foregoing or anything to
the contrary contained herein, if, in connection with any Casualty or
Condemnation, a prepayment of the Debt (in whole or in part) is required under
REMIC Requirements, (a) the applicable Net Proceeds shall be applied to the Debt
in accordance with Section 7.4(c) hereof and (b) to the extent that the amount
of the applicable Net Proceeds actually applied to the Debt in connection
therewith is insufficient under REMIC Requirements, Borrower shall, within five
(5) days of demand by Lender, prepay the principal amount of the Debt in
accordance with the applicable terms and conditions hereof in an amount equal to
such insufficiency plus the amount of any then applicable Interest Shortfall
(such prepayment, together with any related Interest Shortfall payment,
collectively, the “REMIC Payment”). Lender may require Borrower to deliver a
REMIC Opinion in connection with each of the foregoing.

 

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Section 7.4.     Restoration. The following provisions shall apply in connection
with the Restoration of the Property:

 

(a)     If the Net Proceeds shall be less than the Restoration Threshold and the
costs of completing the Restoration shall be less than the Restoration
Threshold, the Net Proceeds will be disbursed by Lender to Borrower upon
receipt, provided that all of the conditions set forth in Section 7.4(b)(i) are
met and Borrower delivers to Lender a written undertaking to expeditiously
commence and to satisfactorily complete with due diligence the Restoration in
accordance with the terms of this Agreement.

 

(b)     If the Net Proceeds are equal to or greater than the Restoration
Threshold or the costs of completing the Restoration are equal to or greater
than the Restoration Threshold, Lender shall make the Net Proceeds available for
the Restoration in accordance with the provisions of this Section 7.4.

 

(i)     The Net Proceeds shall be made available for Restoration provided that
each of the following conditions are met:

 

(A)     no Event of Default shall have occurred and be continuing;

 

(B)     (1) in the event the Net Proceeds are insurance proceeds, less than
thirty percent (30%) of each of (i) fair market value of the Property as
reasonably determined by Lender, and (ii) rentable area of the Property has been
damaged, destroyed or rendered unusable as a result of a Casualty or (2) in the
event the Net Proceeds are condemnation proceeds, less than ten percent (10%) of
each of (i) the fair market value of the Property as reasonably determined by
Lender and (ii) rentable area of the Property is taken, such land is located
along the perimeter or periphery of the Property, no portion of the Improvements
is located on such land and such taking does not materially impair the existing
access to the Property;

 

(C)     Leases demising in the aggregate a percentage amount equal to or greater
than 65% of the total rentable space in the Property which has been demised
under executed and delivered Leases in effect as of the date of the occurrence
of such fire or other casualty or taking, whichever the case may be, shall
remain in full force and effect during and after the completion of the
Restoration, notwithstanding the occurrence of any such Casualty or
Condemnation, whichever the case may be, and Borrower furnishes to Lender
evidence satisfactory to Lender that all Tenants under Major Leases shall
continue to operate their respective space at the Property after the completion
of the Restoration;

 

(D)     Borrower shall commence (or shall cause the commencement of) the
Restoration as soon as reasonably practicable (but in no event later than thirty
(30) days after the issuance of a building permit with respect thereto) and
shall diligently pursue the same to satisfactory completion in compliance with
all applicable Legal Requirements, including, without limitation, all applicable
Environmental Laws, and the applicable requirements of the Property Documents;

 

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(E)     Lender shall be satisfied that any operating deficits which will be
incurred with respect to the Property as a result of the occurrence of any such
fire or other casualty or taking will be covered out of (1) the Net Proceeds,
(2) the insurance coverage referred to in Section 7.1(a)(iii) above, or (3) by
other funds of Borrower;

 

(F)     Lender shall be satisfied that the Net Proceeds together with any cash
or cash equivalent deposited by Borrower with Lender are sufficient to cover the
cost of the Restoration;

 

(G)     Lender shall be satisfied that, (I) upon the completion of the
Restoration, the fair market value and cash flow of the Property will not be
less than the fair market value and cash flow of the Property as the same
existed immediately prior to the applicable Casualty or Condemnation and (II)
Restoration of the Improvements on the Land (as each existed immediately prior
to the applicable casualty or condemnation (with such changes to the
Improvements as may be reasonably acceptable to Lender (taking into account
subsection (I) above)) is permitted under applicable Legal Requirements and the
Property Documents;

 

(H)     Lender shall be satisfied that the Restoration will be completed on or
before the earliest to occur of (1) six (6) months prior to the Maturity Date,
(2) six (6) months after the occurrence of such fire or other casualty or
taking, (3) the earliest date required for such completion under the terms of
any Leases and the Property Documents, (4) such time as may be required under
applicable Legal Requirements or (5) the expiration of the insurance coverage
referred to in Section 7.1(a)(iii) above;

 

(I)     Borrower shall execute and deliver to Lender a completion guaranty in
form and substance satisfactory to Lender and its counsel pursuant to the
provisions of which Borrower guaranties to Lender the lien-free completion by
Borrower of the Restoration in accordance with the provisions of this Subsection
7.4(b);

 

(J)     the Property and the use thereof after the Restoration will be in
compliance with and permitted under all applicable Legal Requirements and the
Property Documents;

 

(K)     the Restoration shall be done and completed in an expeditious and
diligent fashion and in compliance with all applicable Legal Requirements and
the Property Documents;

 

(L)     the Property Documents will remain in full force and effect during and
after the Restoration and a Property Document Event shall not occur as a result
of the applicable Casualty, Condemnation and/or Restoration; and

 

(M)     Lender shall be satisfied that making the Net Proceeds available for
Restoration shall be permitted pursuant to REMIC Requirements and, in that
regard, Lender may require Borrower to deliver a REMIC Opinion in connection
therewith.

 

(ii)     The Net Proceeds shall be held by Lender and, until disbursed in
accordance with the provisions of this Section 7.4(b), shall constitute
additional security for the Debt and other obligations under this Agreement, the
Security Instrument, the Note and the other Loan Documents. The Net Proceeds
(other than the Rent Loss Proceeds) shall be disbursed by Lender to, or as
directed by, Borrower from time to time during the course of the Restoration,
upon receipt of evidence satisfactory to Lender that (A) all materials installed
and work and labor performed (except to the extent that they are to be paid for
out of the requested disbursement) in connection with the related Restoration
item have been paid for in full, and (B) there exist no notices of pendency,
stop orders, mechanic’s or materialman’s liens or notices of intention to file
same, or any other liens or encumbrances of any nature whatsoever on the
Property which have not either been fully bonded to the satisfaction of Lender
and discharged of record or in the alternative fully insured to the satisfaction
of Lender by the title company issuing the Title Insurance Policy.

 

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(iii)     All plans and specifications required in connection with the
Restoration shall be subject to prior review and acceptance in all respects by
Lender and by an independent consulting engineer selected by Lender (the
“Casualty Consultant”). Lender shall have the use of the plans and
specifications and all permits, licenses and approvals required or obtained in
connection with the Restoration. The identity of the contractors, subcontractors
and materialmen engaged in the Restoration shall be subject to prior review and
acceptance by Lender and the Casualty Consultant, such acceptance not to be
unreasonably withheld or delayed. All costs and expenses incurred by Lender in
connection with making the Net Proceeds available for the Restoration including,
without limitation, reasonable counsel fees and disbursements and the Casualty
Consultant’s fees, shall be paid by Borrower. Borrower shall have the right to
settle all claims under the Policies jointly with Lender, provided that (a) no
Event of Default exists, (b) Borrower promptly and with commercially reasonable
diligence negotiates a settlement of any such claims and (c) the insurer with
respect to the Policy under which such claim is brought has not raised any act
of the insured as a defense to the payment of such claim. If an Event of Default
exists, Lender shall, at its election, have the exclusive right to settle or
adjust any claims made under the Policies in the event of a Casualty.

 

(iv)     In no event shall Lender be obligated to make disbursements of the Net
Proceeds in excess of an amount equal to the costs actually incurred from time
to time for work in place as part of the Restoration, as certified by the
Casualty Consultant, minus the Restoration Retainage. The term “Restoration
Retainage” as used in this Subsection 7.4(b) shall mean an amount equal to 10%
of the costs actually incurred for work in place as part of the Restoration, as
certified by the Casualty Consultant, until such time as the Casualty Consultant
certifies to Lender that Net Proceeds representing 50% of the required
Restoration have been disbursed. There shall be no Restoration Retainage with
respect to costs actually incurred by Borrower for work in place in completing
the last 50% of the required Restoration. The Restoration Retainage shall in no
event, and notwithstanding anything to the contrary set forth above in this
Subsection 7.4(b), be less than the amount actually held back by Borrower from
contractors, subcontractors and materialmen engaged in the Restoration. The
Restoration Retainage shall not be released until the Casualty Consultant
certifies to Lender that the Restoration has been completed in accordance with
the provisions of this Subsection 7.4(b) and that all approvals necessary for
the re-occupancy and use of the Property have been obtained from all appropriate
governmental and quasi-governmental authorities, and Lender receives evidence
satisfactory to Lender that the costs of the Restoration have been paid in full
or will be paid in full out of the Restoration Retainage, provided, however,
that Lender will release the portion of the Restoration Retainage being held
with respect to any contractor, subcontractor or materialman engaged in the
Restoration as of the date upon which the Casualty Consultant certifies to
Lender that the contractor, subcontractor or materialman has satisfactorily
completed all work and has supplied all materials in accordance with the
provisions of the contractor’s, subcontractor’s or materialman’s contract, and
the contractor, subcontractor or materialman delivers the lien waivers and
evidence of payment in full of all sums due to the contractor, subcontractor or
materialman as may be reasonably requested by Lender or by the title company
insuring the lien of the Security Instrument. If required by Lender, the release
of any such portion of the Restoration Retainage shall be approved by the surety
company, if any, which has issued a payment or performance bond with respect to
the contractor, subcontractor or materialman.

 

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(v)     Lender shall not be obligated to make disbursements of the Net Proceeds
more frequently than once every calendar month.

 

(vi)     If at any time the Net Proceeds or the undisbursed balance thereof
shall not, in the reasonable opinion of Lender in consultation with the Casualty
Consultant, be sufficient to pay in full the balance of the costs which are
estimated by the Casualty Consultant to be incurred in connection with the
completion of the Restoration, Borrower shall deposit the deficiency (the “Net
Proceeds Deficiency”) with Lender before any further disbursement of the Net
Proceeds shall be made. The Net Proceeds Deficiency deposited with Lender shall
be held by Lender and shall be disbursed for costs actually incurred in
connection with the Restoration on the same conditions applicable to the
disbursement of the Net Proceeds, and until so disbursed pursuant to this
Section 7.4(b) shall constitute additional security for the Debt and other
obligations under this Agreement, the Security Instrument, the Note and the
other Loan Documents.

 

(vii)     The excess, if any, of the Net Proceeds and the remaining balance, if
any, of the Net Proceeds Deficiency deposited with Lender after the Casualty
Consultant certifies to Lender that the Restoration has been completed in
accordance with the provisions of this Section 7.4(b), and the receipt by Lender
of evidence satisfactory to Lender that all costs incurred in connection with
the Restoration have been paid in full, shall be remitted by Lender to Borrower,
provided no Event of Default shall have occurred and shall be continuing under
this Agreement, the Security Instrument, the Note or any of the other Loan
Documents.

 

(c)     All Net Proceeds not required (i) to be made available for the
Restoration or (ii) to be returned to Borrower as excess Net Proceeds pursuant
to Subsection 7.4(b)(vii) shall be retained and applied by Lender toward the
payment of the Debt whether or not then due and payable in such order, priority
and proportions as Lender in its discretion shall deem proper. If Lender shall
receive and retain Net Proceeds, the lien of the Security Instrument shall be
reduced only by the amount thereof received and retained by Lender and actually
applied by Lender in reduction of the Debt. Borrower shall not be required to
pay any prepayment premium or penalty (including, without limitation, any
Default Yield Maintenance Premium) in connection with the application of Net
Proceeds in accordance with the terms of this Section 7.4(c).

 

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ARTICLE 8     

RESERVE FUNDS

 

Section 8.1.     Intentionally Omitted

 

Section 8.2.     Replacement Reserve Funds.

 

(a)     Borrower shall deposit into an Eligible Account held by Lender or
Servicer (the “Replacement Reserve Account”) on each Monthly Payment Date during
the continuance of a Trigger Period an amount equal to $7,029.17 (the
“Replacement Reserve Monthly Deposit”) for the Replacements. Amounts deposited
pursuant to this Section 8.2 are referred to herein as the “Replacement Reserve
Funds”. Lender may reassess its estimate of the amount necessary for
Replacements from time to time (but not more than one (1) time in any twelve
(12) month period) and may require Borrower to increase the monthly deposits
required pursuant to this Section 8.2 upon thirty (30) days notice to Borrower
if Lender determines in its reasonable discretion that an increase is necessary
to maintain proper operation of the Property.

 

(b)     Lender shall disburse Replacement Reserve Funds only for Replacements.
Lender shall disburse to Borrower the Replacement Reserve Funds upon
satisfaction by Borrower of each of the following conditions: (i) Borrower shall
submit a request for payment to Lender at least ten (10) days prior to the date
on which Borrower requests such payment be made and specifies the Replacements
to be paid; (ii) on the date such request is received by Lender and on the date
such payment is to be made, no Event of Default shall exist and remain uncured,
(iii) Lender shall have received a certificate from Borrower (A) stating that
the items to be funded by the requested disbursement are Replacements, (B)
stating that all Replacements at the Property to be funded by the requested
disbursement have been completed in a good and workmanlike manner and in
accordance with all applicable Legal Requirements, such certificate to be
accompanied by a copy of any license, permit or other approval required by any
Governmental Authority in connection with the Replacements, (C) identifying each
Person that supplied materials or labor in connection with the Replacements to
be funded by the requested disbursement and (D) stating that each such Person
has been paid in full or will be paid in full upon such disbursement, such
certificate to be accompanied by lien waivers, invoices and/or other evidence of
payment satisfactory to Lender; (iv) at Lender’s option, if the cost of any
individual Replacement exceeds $25,000, a title search for the Property
indicating that the Property is free from all liens, claims and other
encumbrances other than Permitted Encumbrances; (v) at Lender’s option, if the
cost of any individual Replacement exceeds $25,000, Lender shall have received a
report satisfactory to Lender in its reasonable discretion from an architect or
engineer approved by Lender in respect of such architect or engineer’s
inspection of the required repairs; and (vi) Lender shall have received such
other evidence as Lender shall reasonably request that the Replacements at the
Property to be funded by the requested disbursement have been completed and are
paid for or will be paid upon such disbursement to Borrower. Lender shall not be
required to disburse Replacement Reserve Funds more frequently than once each
calendar month nor in an amount less than the Minimum Disbursement Amount (or a
lesser amount if the total amount of Replacement Reserve Funds is less than the
Minimum Disbursement Amount, in which case only one disbursement of the amount
remaining in the account shall be made).

 

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(c)     Nothing in this Section 8.2 shall (i) make Lender responsible for making
or completing the Replacements; (ii) require Lender to expend funds in addition
to the Replacement Reserve Funds to complete any Replacements; (iii) obligate
Lender to proceed with the Replacements; or (iv) obligate Lender to demand from
Borrower additional sums to complete any Replacements.

 

(d)     Borrower shall permit Lender and Lender’s agents and representatives
(including, without limitation, Lender’s engineer, architect, or inspector) or
third parties to enter onto the Property during normal business hours (subject
to the rights of Tenants under their Leases) to inspect the progress of any
Replacements and all materials being used in connection therewith and to examine
all plans and shop drawings relating to such Replacements. Borrower shall cause
all contractors and subcontractors to cooperate with Lender or Lender’s
representatives or such other Persons described above in connection with
inspections described in this Section.

 

Section 8.3.     Intentionally Omitted.

 

Section 8.4.     Operating Expense Funds. On the first Monthly Payment Date
occurring on and after each occurrence of a Trigger Period, Borrower shall make
a True Up Payment into the Operating Expense Account. On each Monthly Payment
Date occurring on and after the occurrence and continuance of a Trigger Period,
Borrower shall deposit (or shall cause there to be deposited) into an Eligible
Account held by Lender or Servicer (the “Operating Expense Account”) an amount
equal to the aggregate amount of Approved Operating Expenses and Approved
Extraordinary Expenses to be incurred by Borrower for the then current Interest
Accrual Period (such amount, the “Op Ex Monthly Deposit”). Amounts deposited
pursuant to this Section 8.4 are referred to herein as the “Operating Expense
Funds”. Provided no Event of Default has occurred and is continuing, Lender
shall disburse the Operating Expense Funds to Borrower to pay Approved Operating
Expenses and/or Approved Extraordinary Expenses upon Borrower’s request (which
such request shall be accompanied by an Officer’s Certificate detailing the
applicable expenses to which the requested disbursement relates and attesting
that such expense shall be paid with the requested disbursement).

 

Section 8.5.     Excess Cash Flow Funds. On the first Monthly Payment Date
occurring after each occurrence of a Trigger Period and on each Monthly Payment
Date occurring thereafter during the continuance of such Trigger Period,
Borrower shall make a True Up Payment into the Excess Cash Flow Account
(provided, that, (i) such True Up Payments shall only be required after the
occurrence of any Cash Management Violation and (ii) the amount of such True Up
Payments shall be determined by Lender based upon Lender’s estimate of the
amounts that would have been deposited into the Excess Cash Flow Account on each
applicable Monthly Payment Date had the Cash Management Violation not occurred).
On each Monthly Payment Date occurring on and after the occurrence and
continuance of a Trigger Period, Borrower shall deposit (or cause to be
deposited) into an Eligible Account with Lender or Servicer (the “Excess Cash
Flow Account”) an amount equal to the Excess Cash Flow generated by the Property
for the immediately preceding Interest Accrual Period (each such monthly deposit
being herein referred to as the “Monthly Excess Cash Flow Deposits” and the
amounts on deposit in the Excess Cash Flow Reserve Account being herein referred
to as the “Excess Cash Flow Funds”). Provided no Event of Default has occurred
and is continuing, any Excess Cash Flow Funds remaining in the Excess Cash Flow
Account shall be disbursed to Borrower upon the expiration of any Trigger Period
in accordance with the applicable terms and conditions hereof.

 

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Section 8.6.     Tax and Insurance Funds. In addition to the initial deposits
with respect to Taxes and, if applicable, Insurance Premiums made by Borrower to
Lender on the Closing Date to be held in Eligible Accounts by Lender or Servicer
and hereinafter respectively referred to as the “Tax Account” and the “Insurance
Account”, Borrower shall pay (or cause to be paid) to Lender on each Monthly
Payment Date (a) one-twelfth of an amount which would be sufficient to pay the
Taxes payable, or estimated by Lender to be payable, during the next ensuing
twelve (12) months assuming that said Taxes are to be paid in full on the Tax
Payment Date (the “Monthly Tax Deposit”), each of which such deposits shall be
held in the Tax Account, and (b) at the option of Lender, if the liability or
casualty Policy maintained by Borrower covering the Property shall not
constitute an approved blanket or umbrella Policy pursuant to Subsection 7.1(c)
hereof, or Lender shall require Borrower to obtain a separate Policy pursuant to
Subsection 7.1(c) hereof, one-twelfth of an amount which would be sufficient to
pay the Insurance Premiums due for the renewal of the coverage afforded by the
Policies upon the expiration thereof (the “Monthly Insurance Deposit”), each of
which such deposits shall be held in the Insurance Account (amounts held in the
Tax Account and the Insurance Account are collectively herein referred to as the
“Tax and Insurance Funds”). In the event Lender shall elect, after the Closing
Date, to collect payments in escrow for Insurance Premiums, Borrower shall make
a True Up Payment with respect to the same into the applicable Reserve Account.
Additionally, if, at any time, Lender determines that amounts on deposit in or
scheduled to be deposited in (i) the Tax Account will be insufficient to pay all
applicable Taxes in full on the Tax Payment Date and/or (ii) the Insurance
Account will be insufficient to pay all applicable Insurance Premiums in full on
the Insurance Payment Date, Borrower shall make a True Up Payment with respect
to such insufficiency into the applicable Reserve Account. Borrower agrees to
notify Lender immediately of any changes to the amounts, schedules and
instructions for payment of any Taxes and Insurance Premiums of which it has or
obtains knowledge and authorizes Lender or its agent to obtain the bills for
Taxes directly from the appropriate taxing authority. Provided there are
sufficient amounts in the Tax Account and Insurance Account, respectively, and
no Event of Default exists, Lender shall be obligated to pay the Taxes and
Insurance Premiums as they become due on their respective due dates on behalf of
Borrower by applying the Tax and Insurance Funds to the payment of such Taxes
and Insurance Premiums. If the amount of the Tax and Insurance Funds shall
exceed the amounts due for Taxes and Insurance Premiums pursuant to Sections 4.5
and 7.1 hereof, Lender shall, in its discretion, return any excess to Borrower
or credit such excess against future payments to be made to the Tax and
Insurance Funds.

 

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Section 8.7.     The Accounts Generally.

 

(a)     Borrower grants to Lender a first-priority perfected security interest
in each of the Accounts and any and all sums now or hereafter deposited in the
Accounts as additional security for payment of the Debt. Until expended or
applied in accordance herewith, the Accounts and the funds deposited therein
shall constitute additional security for the Debt. The provisions of this
Section 8.7 (together with the other related provisions of the other Loan
Documents) are intended to give Lender and/or Servicer “control” of the Accounts
and the Account Collateral and serve as a “security agreement” and a “control
agreement” with respect to the same, in each case, within the meaning of the
UCC. Borrower acknowledges and agrees that the Accounts are subject to the sole
dominion, control and discretion of Lender, its authorized agents or designees,
subject to the terms hereof, and Borrower shall have no right of withdrawal with
respect to any Account except with the prior written consent of Lender or as
otherwise provided herein. The funds on deposit in the Accounts shall not
constitute trust funds and may be commingled with other monies held by Lender.
Notwithstanding anything to the contrary contained herein, unless otherwise
consented to in writing by Lender, Borrower shall only be permitted to request
(and Lender shall only be required to disburse) Reserve Funds on account of the
liabilities, costs, work and other matters (as applicable) for which said sums
were originally reserved hereunder, in each case, as reasonably determined by
Lender.

 

(b)     Borrower shall not, without obtaining the prior written consent of
Lender, further pledge, assign or grant any security interest in the Accounts or
the sums deposited therein or permit any lien to attach thereto, or any levy to
be made thereon, or any UCC-1 Financing Statements, except those naming Lender
as the secured party, to be filed with respect thereto. Borrower hereby
authorizes Lender to file a financing statement or statements under the UCC in
connection with any of the Accounts and the Account Collateral in the form
required to properly perfect Lender’s security interest therein. Borrower agrees
that at any time and from time to time, at the expense of Borrower, Borrower
will promptly execute and deliver all further instruments and documents, and
take all further action, that may be reasonably necessary or desirable, or that
Lender may reasonably request, in order to perfect and protect any security
interest granted or purported to be granted hereby (including, without
limitation, any security interest in and to any Permitted Investments) or to
enable Lender to exercise and enforce its rights and remedies hereunder with
respect to any Account or Account Collateral.

 

(c)     Notwithstanding anything to the contrary contained herein or in any
other Loan Document, upon the occurrence and during the continuance of an Event
of Default, without notice from Lender or Servicer (i) Borrower shall have no
rights in respect of the Accounts, (ii) Lender may liquidate and transfer any
amounts then invested in Permitted Investments pursuant to the applicable terms
hereof to the Accounts or reinvest such amounts in other Permitted Investments
as Lender may reasonably determine is necessary to perfect or protect any
security interest granted or purported to be granted hereby or pursuant to the
other Loan Documents or to enable Lender to exercise and enforce Lender’s rights
and remedies hereunder or under any other Loan Document with respect to any
Account or any Account Collateral, and (iii) Lender shall have all rights and
remedies with respect to the Accounts and the amounts on deposit therein and the
Account Collateral as described in this Agreement and in the Security
Instrument, in addition to all of the rights and remedies available to a secured
party under the UCC, and, notwithstanding anything to the contrary contained in
this Agreement or in the Security Instrument, may apply the amounts of such
Accounts as Lender determines in its sole discretion including, but not limited
to, payment of the Debt.

 

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(d)     The insufficiency of funds on deposit in the Accounts shall not absolve
Borrower of the obligation to make any payments, as and when due pursuant to
this Agreement and the other Loan Documents, and such obligations shall be
separate and independent, and not conditioned on any event or circumstance
whatsoever.

 

(e)     Borrower shall indemnify Lender and hold Lender harmless from and
against any and all actions, suits, claims, demands, liabilities, losses,
damages, obligations and costs and expenses (including litigation costs and
reasonable attorneys fees and expenses) arising from or in any way connected
with any actions or omission of Borrower and/or its Affiliates with respect to
the Accounts. Borrower shall assign to Lender all rights and claims Borrower may
have against all Persons supplying labor, materials or other services which are
to be paid from or secured by the Accounts; provided, however, that Lender may
not pursue any such right or claim unless an Event of Default has occurred and
remains uncured.

 

(f)     Borrower and Lender (or Servicer on behalf of Lender) shall maintain
each applicable Account as an Eligible Account, except as otherwise expressly
agreed to in writing by Lender. In the event that Lender or Servicer no longer
satisfies the criteria for an Eligible Institution, Borrower shall cooperate
with Lender in transferring the applicable Accounts to an institution that
satisfies such criteria. Borrower hereby grants Lender power of attorney
(irrevocable for so long as the Loan is outstanding) with respect to any such
transfers and the establishment of accounts with a successor institution.

 

(g)     Interest accrued on any Account (other than an Interest Bearing Account)
shall not be required to be remitted either to Borrower or to any Account and
may instead be retained by Lender. Funds deposited in the Interest Bearing
Accounts shall be invested in Permitted Investments as provided for in Section
8.7(h) hereof. Interest accrued, if any, on sums on deposit in the Interest
Bearing Accounts shall be remitted to and become part of the applicable Account.
All such interest that so becomes part of the applicable Account shall be
disbursed in accordance with the disbursement procedures contained herein
applicable to such Account; provided, however, that Lender may, at its election,
retain any such interest for its own account during the occurrence and
continuance of an Event of Default.

 

(h)     Sums on deposit in the Interest Bearing Accounts shall, upon Borrower’s
written request, be invested in Permitted Investments selected by Lender or
Servicer provided (i) such investments are then regularly offered by Lender (or
Servicer on behalf of Lender) for accounts of this size, category and type
(Borrower acknowledges that the Servicer or Lender may only offer as an
investment opportunity the right to place funds on deposit in the applicable
Accounts in an interest bearing account (bearing interest at the money market
rate)), (ii) such investments are permitted by applicable federal, State and
local rules, regulations and laws, (iii) the maturity date of the Permitted
Investment is not later than the date on which sums in the Interest Bearing
Accounts are required to be disbursed pursuant to the terms hereof, and (iv) no
Event of Default shall have occurred and be continuing. All income earned from
the aforementioned Permitted Investments shall be property of Borrower and
Borrower hereby irrevocably authorizes and directs Lender (or Servicer on behalf
of Lender) to hold any income earned from the aforementioned Permitted
Investments as part of the applicable Interest Bearing Account. Borrower shall
be responsible for payment of any federal, State or local income or other tax
applicable to income earned from Permitted Investments. No other investments of
the sums on deposit in the Interest Bearing Accounts shall be permitted. Lender
shall not be liable for any loss sustained on the investment of any funds in the
Interest Bearing Accounts.

 

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(i)     Borrower acknowledges and agrees that it solely shall be, and shall at
all times remain, liable to Lender or Servicer for all fees, charges, costs and
expenses actually incurred in connection with the Accounts, this Agreement and
the enforcement hereof, including, without limitation, any monthly or annual
fees or charges as may be assessed by Lender or Servicer in connection with the
administration of the Accounts and the reasonable fees and expenses of legal
counsel to Lender and Servicer as needed to enforce, protect or preserve the
rights and remedies of Lender and/or Servicer under this Agreement.

 

(j)     All conditions and requirements of this Agreement relating to the
Reserve Funds are for the sole benefit of Lender and no other person or party
(including, without limitation, any architect, any contractor, any subcontractor
and any materialmen now or hereafter engaged in any work at the Property) shall
have the right to rely on the satisfaction of such conditions and requirements
by Borrower. Lender shall have the right, in its sole and absolute discretion,
to waive any such condition or requirement. The making of a disbursement from
the Reserve Funds by Lender shall not constitute Lender’s approval or acceptance
of the construction related thereto (if any) theretofore completed. Lender’s
inspection and approval of the any work at the Property, or the workmanship and
materials used therein, shall impose no liability of any kind on Lender, the
sole obligation of Lender as the result of such inspection and approval being to
make the disbursements if and to the extent, required by this Agreement. This
Agreement is not intended to (and shall not) constitute a “building loan
contract” within the meaning of the New York Lien Law. Without in any manner
implying that this Agreement shall constitute such a “building loan contract”
within the meaning of the New York Lien Law, should Borrower make this Agreement
available for examination by any potential lienor, all potential lienors are
hereby cautioned to exercise sound business judgment in the extension of credit
to Borrower. No potential lienor should expect Lender to make disbursements of
the Reserve Funds in amounts and at times such that it will not be necessary for
each such potential lienor to exercise sound business judgment in the extension
of credit to Borrower. Moreover, all potential lienors are reminded that
subdivision (3) of section 13 of the New York Lien Law provides that “nothing in
this subdivision shall be considered as imposing upon the lender any obligation
to see to the proper application of such disbursements by the borrower,” and
Lender does not impose such an obligation on itself. Notwithstanding anything to
the contrary contained herein, (i) none of the provisions herein relating to the
Reserve Funds are intended to (and do not) contain an express promise to build
(within the meaning of applicable Legal Requirements), (ii) Lender may withhold
or deny disbursement requests hereunder to the extent that any such disbursement
would violate or otherwise materially adversely impact Lender or the Loan under
Applicable Law, (iii) without limitation of the foregoing, the Interest Reserve
Funds are not intended to fund “costs of the improvement” within the meaning of
the New York Lien Law and Lender shall have no obligation hereunder to disburse
Interest Reserve Funds on account of the same and (iv) Borrower shall, prior to
the commencement of any work or similar obligations for which lien rights exist
(by law or by contract), notify any potential lienors in writing of the
foregoing provisions of this subsection (j).

 

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Section 8.8.     Other Reserve Funds.

 

(a)     Gap Rent Reserve Funds. On the Closing Date, Borrower shall deposit into
an Eligible Account held by Lender or Servicer (the “Gap Rent Reserve Account”)
an amount equal to $5,376,645.18. Amounts deposited pursuant to this Section
8.8(a) are referred to herein as the “Gap Rent Reserve Funds”. On each Monthly
Payment Date commencing with the Monthly Payment Date occurring in July, 2019
through and including the Monthly Payment Date occurring in August, 2020, Lender
shall deposit a portion of the Gap Rent Reserve Funds equal to $413,588.09 into
an account designated by Borrower (unless a Trigger Period is then ongoing, in
which case said amount shall be deposited into the Restricted Account),
provided, that, (i) each of the Existing ST Lease and the New ST Lease remains
in full force and effect, (ii) no Event of Default has occurred and is
continuing, (iii) sufficient Gap Rent Reserve Funds are on deposit in the Gap
Rent Reserve Account to make such disbursement and (iv) no Specified Tenant
Trigger Period shall have occurred and be continuing and (v) the initial
Specified Tenant is in actual, physical occupancy of the premises demised under
its Lease. If Borrower fails to deliver evidence to Lender (in a form acceptable
to Lender in Lender’s reasonable discretion) on or before August 30, 2020 that
the New ST Lease Commencement Conditions have been satisfied, then on the
Monthly Payment Date which shall occur in September, 2020 and Monthly Payment
Date thereafter until Lender shall receive evidence (in a form reasonably
acceptable to Lender) that the New ST Lease Commencement Conditions have been
satisfied, Borrower shall deposit an amount equal to the positive difference (as
determined by Lender in its sole, but good faith, discretion) between: (x) the
full amount of rent which would have been paid pursuant to the New ST Lease
during the applicable month assuming the New ST Lease Commencement Conditions
had been satisfied prior to the date of said deposit and (y) the amount that
Lender anticipates (in its sole but good faith discretion) shall actually be
received pursuant to the Existing ST Lease for the applicable month (each such
deposit, a “Gap Rent True-Up Deposit”). Provided no Event of Default shall have
occurred and be continuing, all funds remaining in the Gap Rent Reserve Account
shall be disbursed into an account designated by Borrower (unless a Trigger
Period is then ongoing, in which case said amount shall be deposited into the
Restricted Account) at such time as Lender receives evidence (in a form
reasonably acceptable to Lender) that the New ST Lease Commencement Conditions
have been satisfied.

 

 

 

ARTICLE 9     

CASH MANAGEMENT

 

Section 9.1.     Establishment of Certain Accounts.

 

(a)     Borrower shall, upon the first occurrence of a Trigger Period, establish
an Eligible Account (the “Restricted Account”) pursuant to the Restricted
Account Agreement in the name of Borrower for the sole and exclusive benefit of
Lender into which Borrower shall deposit, or cause to be deposited, all revenue
generated by the Property. Pursuant to the Restricted Account Agreement, funds
on deposit in the Restricted Account shall be transferred on each Business Day
to or at the direction of Borrower unless a Trigger Period exists, in which case
such funds shall be transferred on each Business Day to the Cash Management
Account.

 

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(b)     Upon the first occurrence of a Trigger Period, Lender, on Borrower’s
behalf, shall establish an Eligible Account (the “Cash Management Account”) with
Lender or Servicer, as applicable, in the name of Borrower for the sole and
exclusive benefit of Lender. Upon the first occurrence of a Trigger Period,
Lender, on Borrower’s behalf, shall also establish with Lender or Servicer an
Eligible Account into which Borrower shall deposit, or cause to be deposited the
amounts required for the payment of Debt Service under the Loan (the “Debt
Service Account”).

 

Section 9.2.     Deposits into the Restricted Account; Maintenance of Restricted
Account.

 

(a)     Borrower represents, warrants and covenants that, so long as the Debt
remains outstanding, (i) upon and after the first occurrence of a Trigger
Period, Borrower shall, or shall cause Manager to, immediately deposit all
revenue derived from the Property and received by Borrower or Manager, as the
case may be, into the Restricted Account; (ii) upon and after the first
occurrence of a Trigger Period, Borrower shall instruct Manager to immediately
deposit (A) all revenue derived from the Property collected by Manager, if any,
pursuant to the Management Agreement (or otherwise) into the Restricted Account
and (B) all funds otherwise payable to Borrower by Manager pursuant to the
Management Agreement (or otherwise in connection with the Property) into the
Restricted Account; (iii) (A) upon the first occurrence of a Trigger Period,
Borrower shall send a notice, substantially in the form of Exhibit A attached
hereto, to all Tenants then occupying space at the Property directing them to
pay all rent and other sums due under the Lease to which they are a party into
the Restricted Account (such notice, the “Tenant Direction Notice”), (B) after
the first occurrence of a Trigger Period, simultaneously with the execution of
any Lease entered into on or after the date hereof in accordance with the
applicable terms and conditions hereof, Borrower shall furnish each Tenant under
each such Lease the Tenant Direction Notice and (C) after the first occurrence
of a Trigger Period, Borrower shall continue to send the aforesaid Tenant
Direction Notices until each addressee thereof complies with the terms thereof;
(iv) after the first occurrence of a Trigger Period, there shall be no other
accounts maintained by Borrower or any other Person into which revenues from the
ownership and operation of the Property are directly deposited; and (v) after
the first occurrence of a Trigger Period, neither Borrower nor any other Person
shall open any other such account with respect to the direct deposit of income
in connection with the Property. Until deposited into the Restricted Account,
any Rents and other revenues from the Property held by Borrower shall be deemed
to be collateral and shall be held in trust by it for the benefit, and as the
property, of Lender pursuant to the Security Instrument and shall not be
commingled with any other funds or property of Borrower. Borrower warrants and
covenants that it shall not rescind, withdraw or change any notices or
instructions required to be sent by it pursuant to this Section 9.2 without
Lender’s prior written consent.

 

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(b)     Upon the first occurrence of a Trigger Period Borrower shall establish
and thereafter maintain the Restricted Account for the term of the Loan, which
Restricted Account shall be under the sole dominion and control of Lender
(subject to the terms hereof and of the Restricted Account Agreement). The
Restricted Account shall have a title evidencing the foregoing in a manner
reasonably acceptable to Lender. Borrower hereby grants to Lender a
first-priority security interest in the Restricted Account and all deposits at
any time contained therein and the proceeds thereof and will take all actions
necessary to maintain in favor of Lender a perfected first priority security
interest in the Restricted Account. Borrower hereby authorizes Lender to file
UCC Financing Statements and continuations thereof to perfect Lender’s security
interest in the Restricted Account and all deposits at any time contained
therein and the proceeds thereof. All costs and expenses for establishing and
maintaining the Restricted Account (or any successor thereto) shall be paid by
Borrower. All monies now or hereafter deposited into the Restricted Account
shall be deemed additional security for the Debt. Borrower shall pay all sums
due under and otherwise comply with the Restricted Account Agreement. Borrower
shall not alter or modify either the Restricted Account or the Restricted
Account Agreement, in each case without the prior written consent of Lender. The
Restricted Account Agreement shall provide (and Borrower shall provide) Lender
online access to bank and other financial statements relating to the Restricted
Account (including, without limitation, a listing of the receipts being
collected therein). In connection with any Secondary Market Transaction, Lender
shall have the right to cause the Restricted Account to be entitled with such
other designation as Lender may select to reflect an assignment or transfer of
Lender’s rights and/or interests with respect to the Restricted Account. Lender
shall provide Borrower with prompt written notice of any such renaming of the
Restricted Account. Borrower shall not further pledge, assign or grant any
security interest in the Restricted Account or the monies deposited therein or
permit any lien or encumbrance to attach thereto, or any levy to be made
thereon, or any UCC Financing Statements, except those naming Lender as the
secured party, to be filed with respect thereto. The Restricted Account (i)
shall be an Eligible Account and (ii) shall not be commingled with other monies
held by Borrower or Bank. Upon (A) Bank ceasing to be an Eligible Institution,
(B) the Restricted Account ceasing to be an Eligible Account, (C) any
resignation by Bank or termination of the Restricted Account Agreement by Bank
or Lender and/or (D) the occurrence and continuance of an Event of Default,
Borrower shall, within fifteen (15) days of Lender’s request, (1) terminate the
existing Restricted Account Agreement, (2) appoint a new Bank (which such Bank
shall (I) be an Eligible Institution, (II) other than during the continuance of
an Event of Default, be selected by Borrower and approved by Lender and (III)
during the continuance of an Event of Default, be selected by Lender), (3) cause
such Bank to open a new Restricted Account (which such account shall be an
Eligible Account) and enter into a new Restricted Account Agreement with Lender
on substantially the same terms and conditions as the previous Restricted
Account Agreement and (4) send new Tenant Direction Notices and the other
notices required pursuant to the terms hereof relating to such new Restricted
Account Agreement and Restricted Account. Borrower constitutes and appoints
Lender its true and lawful attorney-in-fact with full power of substitution to
complete or undertake any action required of Borrower under this Section 9.2 in
the name of Borrower in the event Borrower fails to do the same. Such power of
attorney shall be deemed to be a power coupled with an interest and cannot be
revoked.

 

Section 9.3.     Disbursements from the Cash Management Account. On each Monthly
Payment Date, Lender or Servicer, as applicable, shall allocate all funds, if
any, on deposit in the Cash Management Account and disburse such funds in the
following amounts and order of priority:

 

(a)     First, funds sufficient to pay the Monthly Tax Deposit due for the then
applicable Monthly Payment Date, if any, shall be deposited in the Tax Account;

 

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(b)     Second, funds sufficient to pay the Monthly Insurance Deposit due for
the then applicable Monthly Payment Date, if any, shall be deposited in the
Insurance Account;

 

(c)     Third, funds sufficient to pay any interest accruing at the Default Rate
and late payment charges, if any, shall be deposited into the Debt Service
Account;

 

(d)     Fourth, funds sufficient to pay the Debt Service due on the then
applicable Monthly Payment Date shall be deposited in the Debt Service Account;

 

(e)     Fifth, funds sufficient to pay the Replacement Reserve Monthly Deposit
for the then applicable Monthly Payment Date, if any, shall be deposited in the
Replacement Reserve Account;

 

(f)     Sixth, funds sufficient to pay any other amounts due and owing to Lender
and/or Servicer pursuant to the terms hereof and/or of the other Loan Documents,
if any, shall be deposited with or as directed by Lender;

 

(g)     Seventh, to the extent that a Trigger Period has occurred and is
continuing, funds sufficient to pay the Op Ex Monthly Deposit for the then
applicable Monthly Payment Date, if any, shall be deposited in the Operating
Expense Account; and

 

(h)     Eighth, all amounts remaining in the Cash Management Account after
deposits for items (a) through (g) above (“Excess Cash Flow”) shall (i) to the
extent that a Trigger Period has occurred and is continuing, be deposited into
the Excess Cash Flow Account and (ii) to the extent that no Trigger Period
exists, be disbursed to Borrower.

 

Section 9.4.     Withdrawals from the Debt Service Account. Prior to the
occurrence and continuance of an Event of Default, funds on deposit in the Debt
Service Account, if any, shall be used to pay Debt Service when due, together
with any late payment charges or interest accruing at the Default Rate.

 

Section 9.5.     Payments Received Under this Agreement. Notwithstanding
anything to the contrary contained in this Agreement or the other Loan
Documents, provided no Event of Default has occurred and is continuing,
Borrower’s obligations with respect to the monthly payment of Debt Service and
amounts due for the Reserve Accounts shall (provided Lender is not prohibited
from withdrawing or applying any funds in the applicable Accounts by operation
of law or otherwise) be deemed satisfied to the extent sufficient amounts are
deposited in applicable Accounts to satisfy such obligations on the dates each
such payment is required, regardless of whether any of such amounts are so
applied by Lender.

 

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ARTICLE 10     

EVENTS OF DEFAULT; REMEDIES

 

Section 10.1.     Event of Default.

 

The occurrence of any one or more of the following events shall constitute an
“Event of Default”:

 

(a)     if (A) any monthly Debt Service payment or the payment due on the
Maturity Date is not paid when due, (B) any deposit to any of the Accounts
required hereunder or under the other Loan Documents is not paid when due or (C)
any other portion of the Debt is not paid when due and such non-payment
continues for five (5) days following notice to Borrower that the same is due
and payable;

 

(b)     if any of the Taxes or Other Charges are not paid when the same are due
and payable except to the extent (A) sums sufficient to pay the Taxes or Other
Charges are available in the Tax Account prior to the applicable due date for
such Taxes or Other Charges and Lender failed to pay the Taxes or Other Charges
when required hereunder, (B) Lender’s access to such sums was not restricted or
constrained in any manner and (C) no Event of Default was continuing;

 

(c)     if the Policies are not kept in full force and effect or if evidence of
the same is not delivered to Lender as provided in Section 7.1 hereof;

 

(d)     if any of the representations or covenants contained in Article 5,
Article 6 or Section 4.23 hereof or in the Property Document Provisions are
breached or violated;

 

(e)     if any representation or warranty made herein, in the Guaranty or in the
Environmental Indemnity or in any other guaranty, or in any certificate, report,
financial statement or other instrument or document furnished to Lender in
connection with the Loan shall have been false or misleading in any material
adverse respect when made;

 

(f)     if (i) Borrower, any SPE Component Entity, any Affiliated Manager,
Sponsor or Guarantor shall commence any case, proceeding or other action (A)
under any Creditors Rights Laws seeking to have an order for relief entered with
respect to it, or seeking to adjudicate it a bankrupt or insolvent, or seeking
reorganization, liquidation or dissolution, or (B) seeking appointment of a
receiver, trustee, custodian, conservator or other similar official for it or
for all or any substantial part of its assets, or Borrower or any managing
member or general partner of Borrower, any SPE Component Entity, any Affiliated
Manager, Sponsor or Guarantor shall make a general assignment for the benefit of
its creditors; (ii) there shall be commenced against Borrower or any managing
member or general partner of Borrower, any SPE Component Entity, any Affiliated
Manager, Sponsor or Guarantor any case, proceeding or other action of a nature
referred to in clause (i) above (other than any case, action or proceeding
already constituting an Event of Default by operation of the other provisions of
this subsection) which (A) results in the entry of an order for relief or any
such adjudication or appointment or (B) remains undismissed, undischarged or
unbonded for a period of sixty (60) days; (iii) there shall be commenced against
Borrower, any SPE Component Entity, any Affiliated Manager, Sponsor or Guarantor
any case, proceeding or other action seeking issuance of a warrant of
attachment, execution, distraint or similar process against all or any
substantial part of its assets (other than any case, action or proceeding
already constituting an Event of Default by operation of the other provisions of
this subsection) which results in the entry of any order for any such relief
which shall not have been vacated, discharged, or stayed or bonded pending
appeal within sixty (60) days from the entry thereof; (iv) Borrower, any SPE
Component Entity, any Affiliated Manager, Sponsor or Guarantor shall take any
action in furtherance of, in collusion with respect to, or indicating its
consent to, approval of, or acquiescence in, any of the acts set forth in clause
(i), (ii), or (iii) above; (v) Borrower, any SPE Component Entity, any
Affiliated Manager, Sponsor or Guarantor shall generally not, or shall be unable
to, or shall admit in writing its inability to, pay its debts as they become
due; (vi) any Restricted Party is substantively consolidated with any other
entity in connection with any proceeding under the Bankruptcy Code or any other
Creditors Rights Laws involving Sponsor or its subsidiaries; or (vii) a
Bankruptcy Event occurs;

 

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(g)     if Borrower shall be in default beyond applicable notice and grace
periods under any other mortgage, deed of trust, deed to secure debt or other
security agreement covering any part of the Property whether it be superior or
junior in lien to the Security Instrument;

 

(h)     if the Property becomes subject to any mechanic’s, materialman’s or
other lien other than a lien for any Taxes not then due and payable and the lien
shall remain undischarged of record (by payment, bonding or otherwise) for a
period of thirty (30) days;

 

(i)     if any federal tax lien is filed against Borrower, any SPE Component
Entity, Sponsor, Guarantor or the Property and same is not discharged of record
(by payment, bonding or otherwise) within thirty (30) days after same is filed;

 

(j)     if Borrower shall fail to deliver to Lender, upon request by Lender, the
estoppel certificates required by Section 4.13(a) or (c) hereof (within ten (10)
days after the date required pursuant to the applicable section herein);

 

(k)     if any default occurs under any guaranty or indemnity executed in
connection herewith (including, without limitation, the Environmental Indemnity
and/or the Guaranty) and such default continues after the expiration of
applicable grace periods, if any;

 

(l)     if any of the assumptions contained in the Non-Consolidation Opinion, or
in any New Non-Consolidation Opinion (including, without limitation, in any
schedules thereto and/or certificates delivered in connection therewith) are
untrue or shall become untrue in any material respect;

 

(m)     if Borrower defaults under the Management Agreement beyond the
expiration of applicable notice and grace periods, if any, thereunder or if the
Management Agreement is canceled, terminated or surrendered, expires pursuant to
its terms or otherwise ceased to be in full force and effect, unless, in each
such case, Borrower, contemporaneously with such cancellation, termination,
surrender, expiration or cessation, enters into a Qualified Management Agreement
with a Qualified Manager in accordance with the applicable terms and provisions
hereof;

 

(n)     if Borrower fails to appoint a New Manager upon the request of Lender
and/or fails to comply with any limitations on instructing the Manager, each as
required by and in accordance with, as applicable, the terms and provisions of,
this Agreement, the Assignment of Management Agreement and the Security
Instrument;

 

(o)     if any representation and/or covenant herein relating to ERISA and/or
FIRRMA matters is breached;

 

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(p)     if (A) Borrower shall fail (beyond any applicable notice or grace
period) to pay any rent, additional rent or other charges payable under any
Property Document as and when payable thereunder, (B) Borrower defaults under
the Property Documents beyond the expiration of applicable notice and grace
periods, if any, thereunder, (C) any of the Property Documents are amended,
supplemented, replaced, restated or otherwise modified without Lender’s prior
written consent or if Borrower consents to a transfer of any party’s interest
thereunder without Lender’s prior written consent, (D) any Property Document
and/or the estate created thereunder is canceled, rejected, terminated,
surrendered or expires pursuant to its terms, unless in such case Borrower
enters into a replacement thereof in accordance with the applicable terms and
provisions hereof or (E) a Property Document Event occurs;

 

(q)     [intentionally omitted];

 

(r)     With respect to any default or breach of any term, covenant or condition
of this Agreement not specified in subsections (a) through (q) above or not
otherwise specifically specified as an Event of Default in this Agreement, if
the same is not cured (i) within ten (10) days after notice from Lender (in the
case of any default which can be cured by the payment of a sum of money) or (ii)
for thirty (30) days after notice from Lender (in the case of any other default
or breach); provided, that, with respect to any default or breach specified in
subsection (ii), if the same cannot reasonably be cured within such thirty (30)
day period and Borrower shall have commenced to cure the same within such thirty
(30) day period and thereafter diligently and expeditiously proceeds to cure the
same, such thirty (30) day period shall be extended for so long as it shall
require Borrower in the exercise of due diligence to cure the same, it being
agreed that no such extension shall be for a period in excess of sixty (60) days
(unless otherwise agreed to in writing by Lender in Lender’s sole and absolute
discretion); or

 

(s)     if any default shall exist under any of the other Loan Documents beyond
any applicable cure periods contained in such Loan Documents or if any other
such event shall occur or condition shall exist, if the effect of such event or
condition is to accelerate the maturity of any portion of the Debt or to permit
Lender to accelerate the maturity of all or any portion of the Debt.

 

Section 10.2.     Remedies.

 

(a)     Upon the occurrence and during the continuance of an Event of Default
(other than an Event of Default described in Section 10.1(f) above with respect
to Borrower or any SPE Component Entity) and at any time thereafter Lender may,
in addition to any other rights or remedies available to it pursuant to this
Agreement, the Security Instrument, the Note and the other Loan Documents or at
law or in equity, take such action, without notice or demand, that Lender deems
advisable to protect and enforce its rights against Borrower and in the
Property, including, without limitation, declaring the Debt to be immediately
due and payable, and Lender may enforce or avail itself of any or all rights or
remedies provided in this Agreement, the Security Instrument, the Note and the
other Loan Documents against Borrower and the Property, including, without
limitation, all rights or remedies available at law or in equity. Upon any Event
of Default described in Section 10.1(f) above with respect to Borrower or any
SPE Component Entity, the Debt and all other obligations of Borrower under this
Agreement, the Security Instrument, the Note and the other Loan Documents shall
immediately and automatically become due and payable, without notice or demand,
and Borrower hereby expressly waives any such notice or demand, anything
contained herein or in the Security Instrument, the Note and the other Loan
Documents to the contrary notwithstanding.

 

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(b)     Upon the occurrence and during the continuance of an Event of Default,
all or any one or more of the rights, powers, privileges and other remedies
available to Lender against Borrower under this Agreement, the Security
Instrument, the Note or the other Loan Documents executed and delivered by, or
applicable to, Borrower or at law or in equity may be exercised by Lender at any
time and from time to time, whether or not all or any of the Debt shall be
declared due and payable, and whether or not Lender shall have commenced any
foreclosure proceeding or other action for the enforcement of its rights and
remedies under this Agreement, the Security Instrument, the Note or the other
Loan Documents with respect to the Property. Any such actions taken by Lender
shall be cumulative and concurrent and may be pursued independently, singularly,
successively, together or otherwise, at such time and in such order as Lender
may determine in its sole discretion, to the fullest extent permitted by
applicable law, without impairing or otherwise affecting the other rights and
remedies of Lender permitted by applicable law, equity or contract or as set
forth herein or in the Security Instrument, the Note or the other Loan
Documents. No delay or omission to exercise any remedy, right or power accruing
upon an Event of Default shall impair any such remedy, right or power or shall
be construed as a waiver thereof, but any such remedy, right or power may be
exercised from time to time and as often as may be deemed expedient. A waiver of
one Default or Event of Default with respect to Borrower shall not be construed
to be a waiver of any subsequent Default or Event of Default by Borrower or to
impair any remedy, right or power consequent thereon.

 

(c)     Lender shall have the right from time to time to partially foreclose the
Security Instrument in any manner and for any amounts secured by the Security
Instrument then due and payable as determined by Lender in its sole discretion
including, without limitation, the following circumstances: (i) in the event
Borrower defaults beyond any applicable grace period in the payment of one or
more scheduled payments of principal and interest, Lender may foreclose the
Security Instrument to recover such delinquent payments, or (ii) in the event
Lender elects to accelerate less than the entire outstanding principal balance
of the Loan, Lender may foreclose the Security Instrument to recover so much of
the principal balance of the Loan as Lender may accelerate and such other sums
secured by the Security Instrument as Lender may elect. Notwithstanding one or
more partial foreclosures, the Property shall remain subject to the Security
Instrument to secure payment of sums secured by the Security Instrument and not
previously recovered.

 

(d)     Lender shall have the right from time to time to sever the Note and the
other Loan Documents into one or more separate notes, security instruments and
other security documents (the “Severed Loan Documents”) in such denominations as
Lender shall determine in its sole discretion for purposes of evidencing and
enforcing its rights and remedies provided hereunder. Borrower shall execute and
deliver to Lender from time to time, promptly after the request of Lender, a
severance agreement and such other documents as Lender shall request in order to
effect the severance described in the preceding sentence, all in form and
substance reasonably satisfactory to Lender. Borrower hereby absolutely and
irrevocably appoints Lender as its true and lawful attorney, coupled with an
interest, in its name and stead to make and execute all documents necessary or
desirable to effect the aforesaid severance, Borrower ratifying all that its
said attorney shall do by virtue thereof; provided, however, Lender shall not
make or execute any such documents under such power until three (3) days after
notice has been given to Borrower by Lender of Lender’s intent to exercise its
rights under such power. Borrower shall not be obligated to pay any costs or
expenses incurred in connection with the preparation, execution, recording or
filing of the Severed Loan Documents and the Severed Loan Documents shall not
contain any representations, warranties or covenants not contained in the Loan
Documents and any such representations and warranties contained in the Severed
Loan Documents will be given by Borrower only as of the Closing Date.

 

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(e)     Notwithstanding anything to the contrary contained herein or in any
other Loan Document, any amounts recovered from the Property or any other
collateral for the Loan and/or paid to or received by Lender may, after an Event
of Default, be applied by Lender toward the Debt in such order, priority and
proportions as Lender in its sole discretion shall determine.

 

(f)     Lender may, but without any obligation to do so and without notice to or
demand on Borrower and without releasing Borrower from any obligation hereunder
or being deemed to have cured any Event of Default hereunder, make, do or
perform any obligation of Borrower hereunder in such manner and to such extent
as Lender may deem necessary. Lender is authorized to enter upon the Property
for such purposes, or appear in, defend, or bring any action or proceeding to
protect its interest in the Property for such purposes, and the cost and expense
thereof (including reasonable attorneys’ fees to the extent permitted by
applicable law), with interest as provided in this Section, shall constitute a
portion of the Debt and shall be due and payable to Lender upon demand. All such
costs and expenses incurred by Lender in remedying such Event of Default or such
failed payment or act or in appearing in, defending, or bringing any action or
proceeding shall bear interest at the Default Rate, for the period after such
cost or expense was incurred into the date of payment to Lender. All such costs
and expenses incurred by Lender together with interest thereon calculated at the
Default Rate shall be deemed to constitute a portion of the Debt and be secured
by the liens, claims and security interests provided to Lender under the Loan
Documents and shall be immediately due and payable upon demand by Lender
therefore.

 

ARTICLE 11     

SECONDARY MARKET

 

Section 11.1.     Securitization.

 

(a)     Lender shall have the right (i) to sell or otherwise transfer the Loan
(or any portion thereof and/or interest therein), (ii) to sell participation
interests in the Loan (or any portion thereof and/or interest therein) or (iii)
to securitize the Loan (or any portion thereof and/or interest therein) in a
single asset securitization or a pooled asset securitization. The transactions
referred to in clauses (i), (ii) and (iii) above shall hereinafter be referred
to collectively as “Secondary Market Transactions” and the transactions referred
to in clause (iii) shall hereinafter be referred to as a “Securitization”. Any
certificates, notes or other securities issued in connection with a
Securitization are hereinafter referred to as “Securities”.

 

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(b)     If requested by Lender, Borrower shall assist Lender in satisfying the
market standards to which Lender customarily adheres or which may be reasonably
required in the marketplace or by the Rating Agencies in connection with any
Secondary Market Transactions, including, without limitation, to:

 

(i)     provide (A) updated financial and other information with respect to the
Property, the business operated at the Property, Borrower, Guarantor, Sponsor,
SPE Component Entity and Manager (provided, that, such financial information
with respect to Sponsor and Guarantor shall, unless otherwise agreed to by
Borrower, be in the same format as delivered to Lender in connection with the
closing of the Loan), (B) updated budgets relating to the Property, and (C)
updated appraisals, market studies, environmental reviews (Phase I’s and, if
appropriate, Phase II’s), property condition reports and other due diligence
investigations of the Property (the “Updated Information”), together, if
customary, with appropriate verification of the Updated Information through
letters of auditors or opinions of counsel acceptable to Lender and the Rating
Agencies;

 

(ii)     provide new and/or updated opinions of counsel, which may be relied
upon by Lender, the Rating Agencies and their respective counsel, agents and
representatives, as to substantive non-consolidation, fraudulent conveyance,
matters of Delaware and federal bankruptcy law relating to limited liability
companies, true sale, true lease and any other opinion customary in Secondary
Market Transactions or required by the Rating Agencies with respect to the
Property, Property Documents, Borrower and Borrower’s Affiliates, which counsel
and opinions shall be satisfactory in form and substance to Lender and the
Rating Agencies;

 

(iii)     provide updated, as of the closing date of the Secondary Market
Transaction, representations and warranties made in the Loan Documents and such
additional representations and warranties as the Rating Agencies may reasonably
require; and

 

(iv)     execute such amendments to the Loan Documents, the Property Documents
and Borrower’s or any SPE Component Entity’s organizational documents as may be
reasonably requested by Lender or requested by the Rating Agencies or otherwise
to effect any Secondary Market Transaction, including, without limitation, (A)
amend and/or supplement the Independent Director provisions provided herein and
therein, in each case, in accordance with the applicable requirements of the
Rating Agencies, (B) bifurcating the Loan into two or more components and/or
additional separate notes and/or creating additional senior/subordinate note
structure(s) (any of the foregoing, a “Loan Bifurcation”) and (C) to modify all
operative dates (including but not limited to payment dates, interest period
start dates and end dates, etc.) under the Loan Documents, by up to ten (10)
days; provided, however, that Borrower shall not be required to so modify or
amend any Loan Document if such modification or amendment would (1) change the
interest rate, the stated maturity or the amortization of principal set forth
herein, (2) change the aggregate outstanding principal balance of the Loan, (3)
alter the restrictions on transfers of equity interests in Borrower or transfers
of the Property, in each case, as set forth herein, (4) alter any limitations of
Borrower’s recourse obligations under the Loan as contained herein or (5) alter
any other material obligation, right or privilege of Borrower under the Loan
Documents (other than to a de minimis extent or except, in the case of each of
(1) through (5) above, (y) as provided in subsection (C) above and (z) in
connection with a Loan Bifurcation which may result in varying fixed interest
rates and amortization schedules, but which shall have the same initial weighted
average coupon of the original Note).

 

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(c)     If, at the time a Disclosure Document is being prepared for a
Securitization, Lender expects that Borrower alone or Borrower and one or more
Affiliates of Borrower collectively, or the Property alone or the Property and
Related Properties collectively, will be a Significant Obligor, Borrower shall
furnish to Lender upon request (i) the selected financial data or, if
applicable, net operating income, required under Item 1112(b)(1) of Regulation
AB, if Lender expects that the principal amount of the Loan together with any
Related Loans as of the cut-off date for such Securitization may, or if the
principal amount of the Loan together with any Related Loans as of the cut-off
date for such Securitization and at any time during which the Loan and any
Related Loans are included in a Securitization does, equal or exceed ten percent
(10%) (but less than twenty percent (20%)) of the aggregate principal amount of
all mortgage loans included or expected to be included, as applicable, in the
Securitization, or (ii) the financial statements required under Item 1112(b)(2)
of Regulation AB, if Lender expects that the principal amount of the Loan
together with any Related Loans as of the cut-off date for such Securitization
may, or if the principal amount of the Loan together with any Related Loans as
of the cut-off date for such Securitization and at any time during which the
Loan and any Related Loans are included in a Securitization does, equal or
exceed twenty percent (20%) of the aggregate principal amount of all mortgage
loans included or expected to be included, as applicable, in the Securitization.
Such financial data or financial statements shall be furnished to Lender (A)
within fifteen (15) Business Days after notice from Lender in connection with
the preparation of Disclosure Documents for the Securitization, (B) not later
than thirty (30) days after the end of each fiscal quarter of Borrower and (C)
not later than seventy-five (75) days after the end of each fiscal year of
Borrower; provided, however, that Borrower shall not be obligated to furnish
financial data or financial statements pursuant to clauses (B) or (C) of this
sentence with respect to any period for which a filing pursuant to the Exchange
Act in connection with or relating to the Securitization (an “Exchange Act
Filing”) is not required. If requested by Lender, Borrower shall furnish to
Lender financial data and/or financial statements for any tenant of the Property
if, in connection with a Securitization, Lender expects there to be, with
respect to such tenant or group of Affiliated tenants, a concentration within
all of the mortgage loans included or expected to be included, as applicable, in
the Securitization such that such tenant or group of Affiliated tenants would
constitute a Significant Obligor.

 

(d)     All financial data and statements provided by Borrower hereunder shall
be prepared in accordance with GAAP or the income tax basis of accounting
(unless GAAP or another accounting method is required by Regulation AB (to the
extent applicable) or otherwise required by Legal Requirements (to the extent
applicable), and shall meet the requirements of Regulation AB and other
applicable legal requirements. All financial statements referred to in this
Section shall be audited by independent accountants of Borrower acceptable to
Lender in accordance with Regulation AB and all other applicable legal
requirements, shall be accompanied by the manually executed report of the
independent accountants thereon, which report shall meet the requirements of
Regulation AB and all other applicable legal requirements, and shall be further
accompanied by a manually executed written consent of the independent
accountants, in form and substance acceptable to Lender, to the inclusion of
such financial statements in any Disclosure Document and any Exchange Act Filing
and to the use of the name of such independent accountants and the reference to
such independent accountants as “experts” in any Disclosure Document and
Exchange Act Filing, all of which shall be provided at the same time as the
related financial statements are required to be provided. All financial data and
statements (audited or unaudited) provided by Borrower under this Section shall
be accompanied by an Officer’s Certificate, which certification shall state that
such financial statements meet the requirements set forth in the first sentence
of this subsection (d).

 

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(e)     If requested by Lender, Borrower shall provide Lender, promptly upon
request, with any other or additional financial statements, or financial,
statistical or operating information, as Lender shall determine to be required
pursuant to Regulation AB or any amendment, modification or replacement thereto
or other legal requirements in connection with any Disclosure Document or any
Exchange Act Filing or as shall otherwise be reasonably requested by Lender.

 

(f)     In the event Lender determines, in connection with a Securitization,
that the financial data and financial statements required in order to comply
with Regulation AB or any amendment, modification or replacement thereto or
other legal requirements are other than as provided herein, then notwithstanding
the provisions of this Section, Lender may request, and Borrower shall promptly
provide, such other financial data and financial statements as Lender determines
to be necessary or appropriate for such compliance.

 

Section 11.2.     Disclosure.

 

(a)     Borrower (on its own behalf and on behalf of each other Borrower Party)
understands that information provided to Lender by Borrower, any other Borrower
Party and/or their respective agents, counsel and representatives may be (i)
included in (A) the Disclosure Documents and (B) filings under the Securities
Act and/or the Exchange Act and (ii) made available to Investors, the Rating
Agencies and service providers, in each case, in connection with any Secondary
Market Transaction.

 

(b)     Borrower shall indemnify Lender and its officers, directors, partners,
employees, representatives, agents and affiliates against any losses, claims,
damages or liabilities (collectively, the “Liabilities”) to which Lender and/or
its officers, directors, partners, employees, representatives, agents and/or
affiliates may become subject in connection with (x) any Disclosure Document
and/or any Covered Rating Agency Information, in each case, insofar as such
Liabilities arise out of or are based upon any untrue statement of any material
fact in the Provided Information and/or arise out of or are based upon the
omission to state a material fact in the Provided Information required to be
stated therein or necessary in order to make the statements in the applicable
Disclosure Document and/or Covered Rating Agency Information, in light of the
circumstances under which they were made, not misleading and (y) after a
Securitization, any indemnity obligations incurred by Lender or Servicer in
connection with any Rating Agency Confirmation.

 

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(c)     Borrower shall provide in connection with each of (i) a preliminary and
a final private placement memorandum or (ii) a preliminary and final prospectus
or prospectus supplement, as applicable, an agreement (A) certifying that
Borrower has examined such Disclosure Documents specified by Lender and that
each such Disclosure Document, as it relates to Borrower, Borrower Affiliates,
the Property, Manager, Sponsor, Guarantor and all other aspects of the Loan,
does not contain any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements made, in the light of
the circumstances under which they were made, not misleading, (B) indemnifying
Lender (and for purposes of this Section 11.2, Lender hereunder shall include
its officers and directors), the Affiliate of Lender (“Lender Affiliate”) that
has filed the registration statement relating to the Securitization (the
“Registration Statement”), each of its directors, each of its officers who have
signed the Registration Statement and each Person that controls the Affiliate
within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act (collectively, the “Lender Group”), and Lender Affiliate, and any
other placement agent or underwriter with respect to the Securitization, each of
their respective directors and each Person who controls Lender Affiliate or any
other placement agent or underwriter within the meaning of Section 15 of the
Securities Act and Section 20 of the Exchange Act (collectively, the
“Underwriter Group”) for any Liabilities to which Lender, the Lender Group or
the Underwriter Group may become subject insofar as the Liabilities arise out of
or are based upon any untrue statement or alleged untrue statement of any
material fact contained in such sections or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated in such sections or necessary in order to make the statements in such
sections, in light of the circumstances under which they were made, not
misleading and (C) agreeing to reimburse Lender, the Lender Group and/or the
Underwriter Group for any legal or other expenses reasonably incurred by Lender,
the Lender Group and the Underwriter Group in connection with investigating or
defending the Liabilities; provided, however, that Borrower will be liable in
any such case under clauses (B) or (C) above only to the extent that any such
loss claim, damage or liability arises out of or is based upon any such untrue
statement or omission made therein in reliance upon and in conformity with
information furnished to Lender by or on behalf of Borrower in connection with
the preparation of the Disclosure Document or in connection with the
underwriting or closing of the Loan, including, without limitation, financial
statements of Borrower, operating statements and rent rolls with respect to the
Property. The indemnification provided for in clauses (B) and (C) above shall be
effective whether or not the indemnification agreement described above is
provided. The aforesaid indemnity will be in addition to any liability which
Borrower may otherwise have.

 

(d)     In connection with filings under Exchange Act and/or the Securities Act,
Borrower shall (i) indemnify Lender, the Lender Group and the Underwriter Group
for Liabilities to which Lender, the Lender Group or the Underwriter Group may
become subject insofar as the Liabilities arise out of or are based upon the
omission or alleged omission to state in the Disclosure Document a material fact
required to be stated in the Disclosure Document in order to make the statements
in the Disclosure Document, in light of the circumstances under which they were
made, not misleading and (ii) reimburse Lender, the Lender Group or the
Underwriter Group for any legal or other expenses reasonably incurred by Lender,
the Lender Group or the Underwriter Group in connection with defending or
investigating the Liabilities.

 

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(e)     The liabilities and obligations of both Borrower and Lender under this
Section 11.2 shall survive the termination of this Agreement and the
satisfaction and discharge of the Debt. Failure by Borrower and/or any Borrower
Party to comply with the provisions of Section 11.1 and/or Section 11.2 within
the timeframes specified therein and/or as otherwise required by Lender shall,
at Lender’s option, constitute a breach of the terms thereof and/or an Event of
Default. Borrower (on its own behalf and on behalf of each Borrower Party)
hereby expressly authorizes and appoints Lender its attorney-in-fact to take any
actions required of any Borrower Party under Sections 11.1, 11.2 and/or 11.6 in
the event any Borrower Party fails to do the same, which power of attorney shall
be irrevocable and shall be deemed to be coupled with an interest.
Notwithstanding anything to the contrary contained herein, (i) except as may
otherwise expressly provided to the contrary in this Article 11, each Borrower
Party shall bear its own cost of compliance with this Article (including,
without limitation, the costs of any ongoing financial reporting or similar
provisions contained herein) and (ii) to the extent that the timeframes for
compliance with such ongoing financial reporting and similar provisions are
shorter than the timeframes allowed for comparable reporting obligations under
Section 4.12 hereof (if any), the timeframes under this Article 11 shall
control.

 

Section 11.3.     Reserves/Escrows. In the event that Securities are issued in
connection with the Loan, all funds held by Lender in escrow or pursuant to
reserves in accordance with this Agreement and the other Loan Documents shall be
deposited in “eligible accounts” at “eligible institutions” and, to the extent
applicable, invested in “permitted investments” as then defined and required by
the Rating Agencies.

 

Section 11.4.     Servicer. At the option of Lender, the Loan may be serviced by
a servicer/special servicer/trustee selected by Lender (collectively, the
“Servicer”) and Lender may delegate all or any portion of its responsibilities
under this Agreement and the other Loan Documents to such Servicer pursuant to a
servicing agreement between Lender and such Servicer.

 

Section 11.5.     Rating Agency Costs. In connection with any Rating Agency
Confirmation or other Rating Agency consent, approval or review required
hereunder (other than the initial review of the Loan by the Rating Agencies in
connection with a Securitization), Borrower shall pay all of the costs and
expenses of Lender, Servicer and each Rating Agency in connection therewith,
and, if applicable, shall pay any fees imposed by any Rating Agency in
connection therewith.

 

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Section 11.6.     Mezzanine Option. Lender shall have the option (the “Mezzanine
Option”) at any time to divide the Loan into two parts, a mortgage loan and a
mezzanine loan, provided, that (i) the total loan amounts for such mortgage loan
and such mezzanine loan shall equal the then outstanding amount of the Loan
immediately prior to Lender’s exercise of the Mezzanine Option, and (ii) the
weighted average interest rate of such mortgage loan and mezzanine loan shall
not exceed the Interest Rate (except for changes to the weighted average
interest rate as may be caused by the imposition of default interest under the
mezzanine loan or the mortgage loan or any voluntary or involuntary prepayment
of the mortgage loan (including, without limitation, any such prepayment that
may occur in connection with a Casualty or Condemnation)). Borrower shall, at
Borrower’s sole cost and expense, cooperate with Lender in Lender’s exercise of
the Mezzanine Option in good faith and in a timely manner, which such
cooperation shall include, but not be limited to, (i) executing such amendments
to the Loan Documents and Borrower or any SPE Component Entity’s organizational
documents as may be reasonably requested by Lender or requested by the Rating
Agencies, (ii) creating one or more Single Purpose Entities (the “Mezzanine
Borrower”), which such Mezzanine Borrower shall (A) own, directly or indirectly,
100% of the equity ownership interests in Borrower (the “Equity Collateral”),
and (B) together with such constituent equity owners of such Mezzanine Borrower
as may be designated by Lender, execute such agreements, instruments and other
documents as may be required by Lender in connection with the mezzanine loan
(including, without limitation, a promissory note evidencing the mezzanine loan
and a pledge and security agreement pledging the Equity Collateral to Lender as
security for the mezzanine loan); and (iii) delivering such opinions, title
endorsements, UCC title insurance policies, documents and/or instruments
relating to the Property Documents and other materials as may be required by
Lender or the Rating Agencies.

 

Section 11.7.     Conversion to Registered Form. At the request of Lender,
Borrower shall appoint, as its agent, a registrar and transfer agent (the
“Registrar”) reasonably acceptable to Lender which shall maintain, subject to
such reasonable regulations as it shall provide, such books and records as are
necessary for the registration and transfer of the Note in a manner that shall
cause the Note to be considered to be in registered form for purposes of Section
163(f) of the IRS Code. The option to convert the Note into registered form once
exercised may not be revoked. Any agreement setting out the rights and
obligation of the Registrar shall be subject to the reasonable approval of
Lender. Borrower may revoke the appointment of any particular person as
Registrar, effective upon the effectiveness of the appointment of a replacement
Registrar. The Registrar shall not be entitled to any fee from Borrower or
Lender or any other lender in respect of transfers of the Note and other Loan
Documents.

 

Section 11.8.     Intentionally Omitted.

 

Section 11.9.     Borrower’s Cost of Compliance. Notwithstanding anything to the
contrary contained in Section 11.1(b), and/or Section 11.6 hereof, all actual
reasonable out of pocket expenses incurred by Borrower in connection with
Borrower’s compliance with the terms and conditions of Section 11.1(b), and/or
Section 11.6 hereof shall be paid by Lender other than (A)(i) legal fees
incurred by Borrower in an aggregate amount exceeding $25,000 and (ii) the fees
and expenses of Borrower’s attorneys (whether in-house or retained) and (B) in
such situations as reasonably determined by Lender that actions taken by Lender
were a reasonable and proximate result of any act or omission of Borrower or any
material adverse condition of the Property in which event(s) all actual out of
pocket expenses incurred by Borrower in connection with Borrower’s compliance of
the terms and conditions of Section 11.1(b), Section 11.6 and/or Section 11.8
hereof shall be paid by Borrower.

 

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ARTICLE 12     

INDEMNIFICATIONS

 

Section 12.1.     General Indemnification. Borrower shall, at its sole cost and
expense, protect, defend, indemnify, release and hold harmless the Indemnified
Parties from and against any and all Losses imposed upon or incurred by or
asserted against any Indemnified Parties and directly or indirectly arising out
of or in any way relating to any one or more of the following: (a) any accident,
injury to or death of persons or loss of or damage to property occurring in, on
or about the Property or any part thereof or on the adjoining sidewalks, curbs,
adjacent property or adjacent parking areas, streets or ways; (b) any use,
nonuse or condition in, on or about the Property or any part thereof or on the
adjoining sidewalks, curbs, adjacent property or adjacent parking areas, streets
or ways; (c) performance of any labor or services or the furnishing of any
materials or other property in respect of the Property or any part thereof; (d)
any failure of the Property (or any portion thereof) to be in compliance with
any applicable Legal Requirements; (e) any and all claims and demands whatsoever
which may be asserted against Lender by reason of any alleged obligations or
undertakings on its part to perform or discharge any of the terms, covenants, or
agreements contained in any Lease, management agreement or any Property
Document; (f) the payment of any commission, charge or brokerage fee to anyone
(other than a broker or other agent retained by Lender) which may be payable in
connection with the funding of the Loan evidenced by the Note and secured by the
Security Instrument; and/or (g) the holding or investing of the funds on deposit
in the Accounts or the performance of any work or the disbursement of funds in
each case in connection with the Accounts. Any amounts payable to Lender by
reason of the application of this Section 12.1 shall become immediately due and
payable and shall bear interest at the Default Rate from the date loss or damage
is sustained by Lender until paid.

 

Section 12.2.     Mortgage and Intangible Tax Indemnification. Borrower shall,
at its sole cost and expense, protect, defend, indemnify, release and hold
harmless the Indemnified Parties from and against any and all Losses imposed
upon or incurred by or asserted against any Indemnified Parties and directly or
indirectly arising out of or in any way relating to any tax on the making and/or
recording of the Security Instrument, the Note or any of the other Loan
Documents.

 

Section 12.3.     ERISA and FIRRMA Indemnification. Borrower shall, at its sole
cost and expense, protect, defend, indemnify, release and hold harmless the
Indemnified Parties from and against any and all Losses (including, without
limitation, reasonable attorneys’ fees and costs incurred in the investigation,
defense, and settlement of Losses incurred in correcting any prohibited
transaction or in the sale of a prohibited loan, and in obtaining any individual
prohibited transaction exemption under ERISA that may be required, in Lender’s
sole discretion) that Lender may incur, directly or indirectly, as a result of a
default under Sections 3.7 or 4.19 of this Agreement.

 

Section 12.4.     Duty to Defend, Legal Fees and Other Fees and Expenses. Upon
written request by any Indemnified Party, Borrower shall defend such Indemnified
Party (if requested by any Indemnified Party, in the name of the Indemnified
Party) by attorneys and other professionals approved by the Indemnified Parties.
Notwithstanding the foregoing, any Indemnified Parties may, in their sole
discretion, engage their own attorneys and other professionals to defend or
assist them, and, at the option of Indemnified Parties, their attorneys shall
control the resolution of any claim or proceeding. Upon demand, Borrower shall
pay or, in the sole discretion of the Indemnified Parties, reimburse, the
Indemnified Parties for the payment of reasonable fees and disbursements of
attorneys, engineers, environmental consultants, laboratories and other
professionals in connection therewith.

 

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Section 12.5.     Survival. The obligations and liabilities of Borrower under
this Article 12 shall fully survive indefinitely notwithstanding any
termination, satisfaction, assignment, entry of a judgment of foreclosure,
exercise of any power of sale, or delivery of a deed in lieu of foreclosure of
the Security Instrument.

 

Section 12.6.     Environmental Indemnity. Simultaneously herewith, Borrower and
Guarantor have executed and delivered the Environmental Indemnity to Lender,
which Environmental Indemnity is not secured by the Security Instrument.

 

 

 

 

ARTICLE 13     

EXCULPATION

 

Section 13.1.     Exculpation.

 

(a)     Subject to the qualifications below, Lender shall not enforce the
liability and obligation of Borrower to perform and observe the obligations
contained in the Note, this Agreement, the Security Instrument or the other Loan
Documents by any action or proceeding wherein a money judgment or any deficiency
judgment or other judgment establishing personal liability shall be sought
against Borrower or any principal, director, officer, employee, beneficiary,
shareholder, partner, member, trustee, agent, or Affiliate of Borrower or any
legal representatives, successors or assigns of any of the foregoing
(collectively, the “Exculpated Parties”), except that Lender may bring a
foreclosure action, an action for specific performance or any other appropriate
action or proceeding to enable Lender to enforce and realize upon its interest
under the Note, this Agreement, the Security Instrument and the other Loan
Documents, or in the Property, the Rents, or any other collateral given to
Lender pursuant to the Loan Documents; provided, however, that, except as
specifically provided herein, any judgment in any such action or proceeding
shall be enforceable against Borrower only to the extent of Borrower’s interest
in the Property, in the Rents and in any other collateral given to Lender, and
Lender, by accepting the Note, this Agreement, the Security Instrument and the
other Loan Documents, shall not sue for, seek or demand any deficiency judgment
against Borrower or any of the Exculpated Parties in any such action or
proceeding under or by reason of or under or in connection with the Note, this
Agreement, the Security Instrument or the other Loan Documents. The provisions
of this Section shall not, however, (1) constitute a waiver, release or
impairment of any obligation evidenced or secured by any of the Loan Documents;
(2) impair the right of Lender to name Borrower as a party defendant in any
action or suit for foreclosure and sale under the Security Instrument; (3)
affect the validity or enforceability of any indemnity, guaranty or similar
instrument (including, without limitation, indemnities set forth in Article 12
hereof, Section 11.2 hereof, in the Guaranty and the Environmental Indemnity)
made in connection with the Loan or any of the rights and remedies of Lender
thereunder (including, without limitation, Lender’s right to enforce said rights
and remedies against Borrower and/or Guarantor (as applicable) personally and
without the effect of the exculpatory provisions of this Article 13); (4) impair
the rights of Lender to (A) obtain the appointment of a receiver and/or (B)
enforce its rights and remedies provided in Articles 8 and 9 hereof; (5) impair
the enforcement of the assignment of leases and rents contained in the Security
Instrument and in any other Loan Documents; (6) impair the right of Lender to
enforce Section 4.12(e) of this Agreement; (7) constitute a prohibition against
Lender to seek a deficiency judgment against Borrower in order to fully realize
the security granted by the Security Instrument or to commence any other
appropriate action or proceeding in order for Lender to exercise its remedies
against the Property (or any portion thereof); or (8) constitute a waiver of the
right of Lender to enforce the liability and obligation of Borrower, by money
judgment or otherwise, to the extent of any Loss incurred by Lender (including
reasonable attorneys’ fees and costs reasonably incurred) arising out of or in
connection with the following:

 

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(i)     fraud or intentional misrepresentation by any Borrower Party in
connection with the Loan;

 

(ii)     the willful misconduct of any Borrower Party;

 

(iii)     any litigation or other legal proceeding related to the Debt filed by
any Borrower Party or any other action of any Borrower Party exercised in bad
faith that delays, opposes, impedes, obstructs, hinders, enjoins or otherwise
interferes with or frustrates the efforts of Lender to exercise any rights and
remedies available to Lender as provided herein and in the other Loan Documents;

 

(iv)     waste to the Property caused by the intentional acts or intentional
omissions of any Borrower Party and/or the removal or disposal of any portion of
the Property by (or on behalf of) any Borrower Party after an Event of Default;

 

(v)     the misapplication, misappropriation or conversion by any Borrower Party
of (A) any insurance proceeds paid by reason of any loss, damage or destruction
to the Property (or any portion thereof), (B) any Awards or other amounts
received in connection with the Condemnation of all or a portion of the
Property, (C) any Rents following an Event of Default, (D) any Tenant security
deposits or Rents collected in advance or (E) any other monetary collateral for
the Loan (including, without limitation, any Reserve Funds and/or any portion
thereof disbursed to (or at the direction of) Borrower);

 

(vi)     failure to pay Taxes, charges for labor or materials or other charges
that can create liens on any portion of the Property in accordance with the
terms and provisions hereof , in each case, to the extent there existed
sufficient cash flow from the Property to do so (provided, however, that there
shall be no personal liability under this subsection (vi) solely for the failure
to pay Taxes if (A) sufficient sums had been reserved hereunder for the express
purpose of paying the Taxes in question and Lender failed to pay same, (B)
Lender’s access to such sums was not restricted or constrained in any manner and
(C) no Event of Default was continuing);

 

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(vii)     failure to pay Insurance Premiums, to maintain the Policies in full
force and effect and/or to provide Lender evidence of the same, in each case, as
expressly provided herein (provided, however, that there shall be no personal
liability under this subsection (vii) for the aforementioned failures to the
extent that, in each case, (A) each applicable failure is itself a failure to
pay Insurance Premiums or is solely as a result of a failure to pay Insurance
Premiums and (B)(1) there existed insufficient cash flow from the Property to
pay Insurance Premiums or (2)(I) sufficient sums had been reserved hereunder for
the express purpose of paying the Insurance Premiums in question and Lender
failed to pay same, (II) Lender’s access to such sums was not restricted or
constrained in any manner and (III) no Event of Default was continuing);

 

(viii)     any security deposits, advance deposits or any other deposits
collected with respect to the Property which are not delivered to Lender upon a
foreclosure of the Property or action in lieu thereof, except to the extent any
such security deposits were applied in accordance with the terms and conditions
of any of the Leases prior to the occurrence of the Event of Default that gave
rise to such foreclosure or action in lieu thereof;

 

(ix)     any tax on the making and/or recording of the Security Instrument, the
Note or any of the other Loan Documents or any transfer or similar taxes
(whether due upon the making of the same or upon Lender’s exercise of its
remedies under the Loan Documents), but excluding any income, franchise or other
similar taxes;

 

(x)     the seizure or forfeiture of the Property, or any portion thereof, or
Borrower’s interest therein, resulting from criminal wrongdoing by any Borrower
Party;

 

(xi)     the failure to make any REMIC Payment and/or any True Up Payment, to
permit on-site inspections of the Property (or any portion thereof) and/or to
provide the Required Financial Items, in each case, as and when required herein;

 

(xii)     any violation or breach of the Property Document Provisions and/or any
Property Document Event;

 

(xiii)     [intentionally omitted];

 

(xiv)     any indemnity obligations of Lender to Bank under the Restricted
Account Agreement;

 

(xv)     the failure of Borrower to appoint a New Manager upon the request of
Lender and/or the failure of Borrower to comply with any limitations on
instructing the Manager, each as required by and in accordance with, as
applicable, the terms and provisions of, this Agreement, the Assignment of
Management Agreement and the Security Instrument;

 

(xvi)     any violation or breach of any representation, warranty or covenant
contained in Article 5 hereof;

 

(xvii)     [intentionally omitted];

 

(xviii)     any failure to (a) obtain, maintain, and/or have in place a current
certificate of occupancy at the Property that complies with all Legal
Requirements, (b) update any certificate of occupancy or obtain any new
certificate of occupancy at any time as required by Legal Requirements, and/or
(c) to operate the Property in a manner consistent with the certificate of
occupancy that is in place at the Property (including, without limitation, any
failure to operate the Property in accordance with the specified uses listed on
the then current certificate of occupancy).

 

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(xix)     any violation or breach of the Cash Management Provisions; and/or

 

(xx)     any claims to divest, subordinate or extinguish the lien of the
Security Instrument (including, without limitation, any such claims resulting
from any breach or other failure to comply with Section 22 of the New York Lien
Law).

 

(b)     Notwithstanding anything to the contrary in this Agreement, the Note or
any of the Loan Documents, (A) Lender shall not be deemed to have waived any
right which Lender may have under Section 506(a), 506(b), 1111(b) or any other
provisions of the Bankruptcy Code to file a claim for the full amount of the
Debt or to require that all collateral shall continue to secure all of the Debt
owing to Lender in accordance with the Loan Documents, and (B) the Debt shall be
fully recourse to Borrower in the event that: (i) any representation, warranty
or covenant contained in Article 5 or Article 6 hereof is violated or breached
(provided, that, with respect to any such violation or breach of Article 5
hereof, such violation or breach is evidenced by a court, in a proceeding with
respect to Creditors Rights Laws involving any one or more Constituent Owner(s)
of Borrower and/or SPE Component Entity (any such Person, a “Bankrupt Person”),
ordering the substantive consolidation of the assets and liabilities of Borrower
and/or SPE Component Entity with the assets and liabilities of any Bankrupt
Person on the basis of, among other things, such violation or breach) or (ii) a
Bankruptcy Event occurs.

 

(c)     Borrower hereby personally guarantees (without the benefit of the
exculpation provisions provided in Section 13.1 hereof) payment of each of the
following obligations of Borrower: (x) the obligation to make a Gap Rent True-Up
Deposit as set forth in Section 8.8(a) hereof and (y) the obligation to make a
Guaranteed Reserve Deposit as set forth in Section 4.24(c) hereof.

 

For purposes of clarification and for the avoidance of doubt, the recourse
carveouts in Section 13.1(a) above and this Section 13.1(b) shall not be deemed
to be mutually exclusive or otherwise limit one another; without limiting the
foregoing, if a particular event, condition, circumstance or occurrence would
trigger recourse liability both under Section 13.1(a) above and this Section
13.1(b), recourse liability shall apply under all of such Sections (as and to
the extent provided in such Sections).

 

ARTICLE 14     

NOTICES

 

Section 14.1.     Notices. All notices or other written communications hereunder
shall be deemed to have been properly given (a) upon delivery, if delivered in
person or by facsimile transmission with receipt acknowledged by the recipient
thereof and confirmed by telephone by sender, (b) one (1) Business Day after
having been deposited for overnight delivery with any reputable overnight
courier service, or (c) three (3) Business Days after having been deposited in
any post office or mail depository regularly maintained by the U.S. Postal
Service and sent by registered or certified mail, postage prepaid, return
receipt requested, addressed as follows:

 

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If to Borrower:

250 Livingston Owner LLC
4611 12th Avenue
Brooklyn, New York 11219
Attention : David Bistricer
Facsimile No.: (718) 438-1290

   

With a copy to:

Sukenik Segal Graff
450 Seventh Avenue, 42nd Floor
New York, New York 10123 
Attention: Josh Graff, Esq.
Facsimile No.: (212) 779-8095

   

If to Lender:

Citi Real Estate Funding Inc.

388 Greenwich Street

6th Floor

New York, New York 10013

Attention : Ana Rosu Marmann

Facsimile No.: (646) 328-2938

 

Midland Loan Services, a Division of PNC Bank, National

Association

P.O. Box 25965

Shawnee Mission, KS 66225-5965

Attention: Executive Vice President - Division Head

Facsimile No.: (913) 253-9001

 

or if by hand delivery:

 

Midland Loan Services, a Division of PNC Bank, National

Association

10851 Mastin, Suite 300

Overland Park, KS 66210

Attention: Executive Vice President - Division Head

   

With a copy to:

Alston & Bird LLP

90 Park Avenue

New York, New York 10016

Attention: Gerard Keegan, Esq.

Facsimile No.: (212) 210-9444

 

or addressed as such party may from time to time designate by written notice to
the other parties.

 

Either party by notice to the other may designate additional or different
addresses for subsequent notices or communications.

 

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ARTICLE 15     

FURTHER ASSURANCES

 

Section 15.1.     Replacement Documents. Upon receipt of an affidavit of an
officer of Lender as to the loss, theft, destruction or mutilation of the Note,
this Agreement or any of the other Loan Documents which is not of public record,
and, in the case of any such mutilation, upon surrender and cancellation of the
Note, this Agreement or such other Loan Document, Borrower will issue, in lieu
thereof, a replacement thereof, dated the date of the Note, this Agreement or
such other Loan Document, as applicable, in the same principal amount thereof
and otherwise of like tenor.

 

Section 15.2.     Recording of Security Instrument, etc. Borrower forthwith upon
the execution and delivery of the Security Instrument and thereafter, from time
to time, will cause the Security Instrument and any of the other Loan Documents
creating a lien or security interest or evidencing the lien hereof upon the
Property and each instrument of further assurance 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 and perfect the
lien or security interest hereof upon, and the interest of Lender in, the
Property. Borrower will pay all taxes, filing, registration or recording fees,
and all expenses incident to the preparation, execution, acknowledgment and/or
recording of the Note, the Security Instrument, this Agreement, the other Loan
Documents, any note, deed of trust or mortgage supplemental hereto, any security
instrument with respect to the Property and any instrument of further assurance,
and any modification or amendment of the foregoing documents, and all federal,
state, county and municipal taxes, duties, imposts, assessments and charges
arising out of or in connection with the execution and delivery of the Security
Instrument, any deed of trust or mortgage supplemental hereto, any security
instrument with respect to the Property or any instrument of further assurance,
and any modification or amendment of the foregoing documents, except where
prohibited by applicable law so to do.

 

Section 15.3.     Further Acts, etc. Borrower will, at the cost of Borrower, and
without expense to Lender, do, execute, acknowledge and deliver all and every
further acts, deeds, conveyances, deeds of trust, mortgages, assignments,
notices of assignments, transfers and assurances as Lender shall, from time to
time, reasonably require, for the better assuring, conveying, assigning,
transferring, and confirming unto Lender the property and rights hereby
mortgaged, deeded, granted, bargained, sold, conveyed, confirmed, pledged,
assigned, warranted and transferred or intended now or hereafter so to be, or
which Borrower may be or may hereafter become bound to convey or assign to
Lender, or for carrying out the intention or facilitating the performance of the
terms of this Agreement or for filing, registering or recording the Security
Instrument, or for complying with all Legal Requirements. Borrower, on demand,
will execute and deliver, and in the event it shall fail to so execute and
deliver, hereby authorizes Lender to execute in the name of Borrower or without
the signature of Borrower to the extent Lender may lawfully do so, one or more
financing statements to evidence more effectively the security interest of
Lender in the Property. Borrower grants to Lender an irrevocable power of
attorney coupled with an interest for the purpose of exercising and perfecting
any and all rights and remedies available to Lender at law and in equity,
including without limitation, such rights and remedies available to Lender
pursuant to this Section 15.3.

 

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Section 15.4.     Changes in Tax, Debt, Credit and Documentary Stamp Laws.

 

(a)     If any law is enacted or adopted or amended after the date of this
Agreement which deducts the Debt from the value of the Property for the purpose
of taxation and which imposes a tax, either directly or indirectly, on the Debt
or Lender’s interest in the Property, Borrower will pay the tax, with interest
and penalties thereon, if any. If Lender is advised by counsel chosen by it that
the payment of tax by Borrower would be unlawful or taxable to Lender or
unenforceable or provide the basis for a defense of usury then Lender shall have
the option by written notice of not less than ninety (90) days to declare the
Debt immediately due and payable.

 

(b)     Borrower will not claim or demand or be entitled to any credit or
credits on account of the Debt for any part of the Taxes or Other Charges
assessed against the Property, or any part thereof, and no deduction shall
otherwise be made or claimed from the assessed value of the Property, or any
part thereof, for real estate tax purposes by reason of the Security Instrument
or the Debt. If such claim, credit or deduction shall be required by applicable
law, Lender shall have the option, by written notice of not less than ninety
(90) days, to declare the Debt immediately due and payable.

 

(c)     If at any time the United States of America, any State thereof or any
subdivision of any such State shall require revenue or other stamps to be
affixed to the Note, the Security Instrument, or any of the other Loan Documents
or impose any other tax or charge on the same, Borrower will pay for the same,
with interest and penalties thereon, if any.

 

ARTICLE 16

WAIVERS

 

Section 16.1.     Remedies Cumulative; Waivers.

 

The rights, powers and remedies of Lender under this Agreement shall be
cumulative and not exclusive of any other right, power or remedy which Lender
may have against Borrower pursuant to this Agreement, the Security Instrument,
the Note or the other Loan Documents, or existing at law or in equity or
otherwise. Lender’s rights, powers and remedies may be pursued singularly,
concurrently or otherwise, at such time and in such order as Lender may
determine in Lender’s sole discretion. No delay or omission to exercise any
remedy, right or power accruing upon an Event of Default shall impair any such
remedy, right or power or shall be construed as a waiver thereof, but any such
remedy, right or power may be exercised from time to time and as often as may be
deemed expedient. A waiver of one Default or Event of Default with respect to
Borrower shall not be construed to be a waiver of any subsequent Default or
Event of Default by Borrower or to impair any remedy, right or power consequent
thereon.

 

Section 16.2.     Modification, Waiver in Writing.

 

No modification, amendment, extension, discharge, termination or waiver of any
provision of this Agreement, the Security Instrument, the Note and the other
Loan Documents, nor consent to any departure by Borrower therefrom, shall in any
event be effective unless the same shall be in a writing signed by the party
against whom enforcement is sought, and then such waiver or consent shall be
effective only in the specific instance, and for the purpose, for which given.
Except as otherwise expressly provided herein, no notice to, or demand on
Borrower, shall entitle Borrower to any other or future notice or demand in the
same, similar or other circumstances.

 

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Section 16.3.     Delay Not a Waiver.

 

Neither any failure nor any delay on the part of Lender in insisting upon strict
performance of any term, condition, covenant or agreement, or exercising any
right, power, remedy or privilege under this Agreement, the Security Instrument,
the Note or the other Loan Documents, or any other instrument given as security
therefor, shall operate as or constitute a waiver thereof, nor shall a single or
partial exercise thereof preclude any other future exercise, or the exercise of
any other right, power, remedy or privilege. In particular, and not by way of
limitation, by accepting payment after the due date of any amount payable under
this Agreement, the Security Instrument, the Note or the other Loan Documents,
Lender shall not be deemed to have waived any right either to require prompt
payment when due of all other amounts due under this Agreement, the Security
Instrument, the Note and the other Loan Documents, or to declare a default for
failure to effect prompt payment of any such other amount.

 

Section 16.4.     Waiver of Trial by Jury.

 

BORROWER AND LENDER, BY ACCEPTANCE OF THIS AGREEMENT, HEREBY WAIVE, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE RIGHT TO TRIAL BY JURY IN ANY
ACTION, PROCEEDING OR COUNTERCLAIM, WHETHER IN CONTRACT, TORT OR OTHERWISE,
RELATING DIRECTLY OR INDIRECTLY TO THE LOAN, THE APPLICATION FOR THE LOAN, THIS
AGREEMENT, THE NOTE, THE SECURITY INSTRUMENT OR THE OTHER LOAN DOCUMENTS OR ANY
ACTS OR OMISSIONS OF LENDER OR BORROWER.

 

Section 16.5.     Waiver of Notice.

 

Borrower shall not be entitled to any notices of any nature whatsoever from
Lender except (a) with respect to matters for which this Agreement specifically
and expressly provides for the giving of notice by Lender to Borrower and (b)
with respect to matters for which Lender is required by applicable law to give
notice, and Borrower hereby expressly waives the right to receive any notice
from Lender with respect to any matter for which this Agreement does not
specifically and expressly provide for the giving of notice by Lender to
Borrower.

 

Section 16.6.     Remedies of Borrower.

 

In the event that a claim or adjudication is made that Lender or its agents have
acted unreasonably or unreasonably delayed acting in any case where by
applicable law or under this Agreement, the Security Instrument, the Note and
the other Loan Documents, Lender or such agent, as the case may be, has an
obligation to act reasonably or promptly, Borrower agrees that neither Lender
nor its agents shall be liable for any monetary damages, and Borrower’s sole
remedies shall be limited to commencing an action seeking injunctive relief or
declaratory judgment. The parties hereto agree that any action or proceeding to
determine whether Lender has acted reasonably shall be determined by an action
seeking declaratory judgment. Lender agrees that, in such event, it shall
cooperate in expediting any action seeking injunctive relief or declaratory
judgment.

 

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Section 16.7.     Marshalling and Other Matters.

 

Borrower hereby waives, to the extent permitted by applicable Legal
Requirements, the benefit of all appraisement, valuation, stay, extension,
reinstatement and redemption laws now or hereafter in force and all rights of
marshalling in the event of any sale under the Security Instrument of the
Property or any part thereof or any interest therein. Further, Borrower hereby
expressly waives any and all rights of redemption from sale under any order or
decree of foreclosure of the Security Instrument on behalf of Borrower, and on
behalf of each and every person acquiring any interest in or title to the
Property subsequent to the date of the Security Instrument and on behalf of all
persons to the extent permitted by applicable Legal Requirements.

 

Section 16.8.     Waiver of Statute of Limitations.

 

To the extent permitted by applicable Legal Requirements, Borrower hereby
expressly waives and releases to the fullest extent permitted by applicable
Legal Requirements, the pleading of any statute of limitations as a defense to
payment of the Debt or performance of its obligations hereunder, under the Note,
Security Instrument or other Loan Documents.

 

Section 16.9.     Waiver of Counterclaim. Borrower hereby waives the right to
assert a counterclaim, other than a compulsory counterclaim, in any action or
proceeding brought against it by Lender or its agents.

 

Section 16.10.     Sole Discretion of Lender. Wherever pursuant to this
Agreement (a) Lender exercises any right given to it to approve or disapprove,
(b) any arrangement or term is to be satisfactory to Lender, or (c) any other
decision or determination is to be made by Lender, the decision to approve or
disapprove all decisions that arrangements or terms are satisfactory or not
satisfactory, and all other decisions and determinations made by Lender, shall
be in the sole discretion of Lender, except as may be otherwise expressly and
specifically provided herein.

 

ARTICLE 17     

MISCELLANEOUS

 

Section 17.1.     Survival. This Agreement and all covenants, agreements,
representations and warranties made herein and in the certificates delivered
pursuant hereto shall survive the making by Lender of the Loan and the execution
and delivery to Lender of the Note, and shall continue in full force and effect
so long as all or any of the Debt is outstanding and unpaid unless a longer
period is expressly set forth in this Agreement, the Security Instrument, the
Note or the other Loan Documents. Whenever in this Agreement any of the parties
hereto is referred to, such reference shall be deemed to include the legal
representatives, successors and assigns of such party. All covenants, promises
and agreements in this Agreement, by or on behalf of Borrower, shall inure to
the benefit of the legal representatives, successors and assigns of Lender.

 

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Section 17.2.     Governing Law.

 

THIS AGREEMENT WAS NEGOTIATED IN THE STATE OF NEW YORK, THE LOAN WAS MADE BY
LENDER AND ACCEPTED BY BORROWER IN THE STATE OF NEW YORK, AND THE PROCEEDS OF
THE LOAN DELIVERED PURSUANT HERETO WERE DISBURSED FROM THE STATE OF NEW YORK,
WHICH STATE THE PARTIES AGREE HAS A SUBSTANTIAL RELATIONSHIP TO THE PARTIES AND
TO THE UNDERLYING TRANSACTION EMBODIED HEREBY, AND IN ALL RESPECTS, INCLUDING,
WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, MATTERS OF CONSTRUCTION,
VALIDITY AND PERFORMANCE, THIS AGREEMENT, THE NOTE AND THE OTHER LOAN DOCUMENTS
AND THE OBLIGATIONS ARISING HEREUNDER AND THEREUNDER SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
CONTRACTS MADE AND PERFORMED IN SUCH STATE (WITHOUT REGARD TO PRINCIPLES OF
CONFLICTS OF LAWS) AND ANY APPLICABLE LAW OF THE UNITED STATES OF AMERICA. TO
THE FULLEST EXTENT PERMITTED BY LAW, BORROWER HEREBY UNCONDITIONALLY AND
IRREVOCABLY WAIVES ANY CLAIM TO ASSERT THAT THE LAW OF ANY OTHER JURISDICTION
GOVERNS THIS AGREEMENT, THE NOTE AND THE OTHER LOAN DOCUMENTS, AND THIS
AGREEMENT, THE NOTE AND THE OTHER LOAN DOCUMENTS SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK PURSUANT TO
SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW.

 

ANY LEGAL SUIT, ACTION OR PROCEEDING AGAINST LENDER OR BORROWER ARISING OUT OF
OR RELATING TO THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS WILL, AT LENDER’S
OPTION, BE INSTITUTED IN (OR, IF PREVIOUSLY INSTITUTED, MOVED TO) ANY FEDERAL OR
STATE COURT DESIGNATED BY LENDER IN THE CITY OF NEW YORK, COUNTY OF NEW YORK.
BORROWER HEREBY (I) WAIVES ANY OBJECTIONS WHICH IT MAY NOW OR HEREAFTER HAVE
BASED ON VENUE AND/OR FORUM NON CONVENIENS OF ANY SUCH SUIT, ACTION OR
PROCEEDING AND (II) IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF ANY
SUCH COURT IN ANY SUIT, ACTION OR PROCEEDING. BORROWER AND LENDER HEREBY
ACKNOWLEDGE AND AGREE THAT THE FOREGOING AGREEMENT, WAIVER AND SUBMISSION ARE
MADE PURSUANT TO SECTION 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW.

 

BORROWER DOES HEREBY DESIGNATE AND APPOINT:

 

Sukenik Segal Graff

450 Seventh Avenue, 42nd Floor

New York, New York 10123

Attention: Josh Graff, Esq.

Facsimile No.: (212) 779-8095

 

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AS ITS AUTHORIZED AGENT TO ACCEPT AND ACKNOWLEDGE ON ITS BEHALF SERVICE OF ANY
AND ALL PROCESS WHICH MAY BE SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING IN
ANY FEDERAL OR STATE COURT IN NEW YORK, NEW YORK, AND AGREES THAT SERVICE OF
PROCESS UPON SAID AGENT AT SAID ADDRESS AND NOTICE OF SAID SERVICE MAILED OR
DELIVERED TO BORROWER IN THE MANNER PROVIDED HEREIN SHALL BE DEEMED IN EVERY
RESPECT EFFECTIVE SERVICE OF PROCESS UPON BORROWER IN ANY SUCH SUIT, ACTION OR
PROCEEDING IN THE STATE OF NEW YORK. BORROWER (I) SHALL GIVE PROMPT NOTICE TO
LENDER OF ANY CHANGED ADDRESS OF ITS AUTHORIZED AGENT HEREUNDER, (II) MAY AT ANY
TIME AND FROM TIME TO TIME DESIGNATE A SUBSTITUTE AUTHORIZED AGENT WITH AN
OFFICE IN NEW YORK, NEW YORK (WHICH SUBSTITUTE AGENT AND OFFICE SHALL BE
DESIGNATED AS THE PERSON AND ADDRESS FOR SERVICE OF PROCESS), AND (III) SHALL
PROMPTLY DESIGNATE SUCH A SUBSTITUTE IF ITS AUTHORIZED AGENT CEASES TO HAVE AN
OFFICE IN NEW YORK, NEW YORK OR IS DISSOLVED WITHOUT LEAVING A SUCCESSOR.

 

Section 17.3.     Headings. The Article and/or Section headings in this
Agreement are included herein for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose.

 

Section 17.4.     Severability. Wherever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable Legal Requirements, but if any provision of this Agreement shall be
prohibited by or invalid under applicable Legal Requirements, such provision
shall be ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Agreement.

 

Section 17.5.     Preferences. Lender shall have the continuing and exclusive
right to apply or reverse and reapply any and all payments by Borrower to any
portion of the obligations of Borrower hereunder. To the extent Borrower makes a
payment or payments to Lender, which payment or proceeds or any part thereof are
subsequently invalidated, declared to be fraudulent or preferential, set aside
or required to be repaid to a trustee, receiver or any other party under any
Creditors Rights Laws, state or federal law, common law or equitable cause,
then, to the extent of such payment or proceeds received, the obligations
hereunder or part thereof intended to be satisfied shall be revived and continue
in full force and effect, as if such payment or proceeds had not been received
by Lender.

 

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Section 17.6.     Expenses. Borrower covenants and agrees to pay its own costs
and expenses and pay, or, if Borrower fails to pay, to reimburse, Lender, upon
receipt of written notice from Lender, for Lender’s reasonable costs and
expenses (including reasonable, actual attorneys’ fees and disbursements) in
each case, incurred by Lender in accordance with this Agreement in connection
with (i) the preparation, negotiation, execution and delivery of this Agreement,
the Security Instrument, the Note and the other Loan Documents and the
consummation of the transactions contemplated hereby and thereby and all the
costs of furnishing all opinions by counsel for Borrower (including without
limitation any opinions requested by Lender as to any legal matters arising
under this Agreement, the Security Instrument, the Note and the other Loan
Documents with respect to the Property); (ii) Borrower’s ongoing performance of
and compliance with Borrower’s respective agreements and covenants contained in
this Agreement, the Security Instrument, the Note and the other Loan Documents
on its part to be performed or complied with after the Closing Date, including,
without limitation, confirming compliance with environmental and insurance
requirements; (iii) Lender’s ongoing performance and compliance with all
agreements and conditions contained in this Agreement, the Security Instrument,
the Note and the other Loan Documents on its part to be performed or complied
with after the Closing Date (including, without limitation, those contained in
Articles 8 and 9 hereof); (iv) the negotiation, preparation, execution, delivery
and administration of any consents, amendments, waivers or other modifications
to this Agreement, the Security Instrument, the Note and the other Loan
Documents and any other documents or matters requested by Lender; (v) securing
Borrower’s compliance with any requests made pursuant to the provisions of this
Agreement; (vi) the filing and recording fees and expenses, title insurance and
reasonable fees and expenses of counsel for providing to Lender all required
legal opinions, and other similar expenses incurred in creating and perfecting
the lien in favor of Lender pursuant to this Agreement, the Security Instrument,
the Note and the other Loan Documents; (vii) enforcing or preserving any rights,
in response to third party claims or the prosecuting or defending of any action
or proceeding or other litigation, in each case against, under or affecting
Borrower, this Agreement, the Security Instrument, the Note, the other Loan
Documents, the Property, or any other security given for the Loan; (viii)
servicing the Loan (including, without limitation, enforcing any obligations of
or collecting any payments due from Borrower under this Agreement, the Security
Instrument, the Note and the other Loan Documents or with respect to the
Property) or in connection with any refinancing or restructuring of the credit
arrangements provided under this Agreement in the nature of a “work-out” or of
any insolvency or bankruptcy proceedings; and (ix) the preparation, negotiation,
execution, delivery, review, filing, recording or administration of any
documentation associated with the exercise of any of Borrower’s rights hereunder
and/or under the other Loan Documents regardless of whether or not any such
right is consummated (including, without limitation, Borrower’s rights hereunder
to defease the Loan and to permit or undertake transfers (including under
Sections 6.3 and 6.4 hereof), in each case, in accordance with the applicable
terms and conditions hereof); provided, however, that, with respect to each of
subsections (i) through (ix) above, (A) none of the foregoing subsections shall
be deemed to be mutually exclusive or limit any other subsection, (B) the same
shall be deemed to (I) include, without limitation and in each case, any related
special servicing fees, liquidation fees, modification fees, work-out fees and
other similar costs or expenses payable to any Servicer, trustee and/or special
servicer of the Loan (or any portion thereof and/or interest therein) and (II)
exclude any requirement that Borrower directly pay the base monthly servicing
fees due to any master servicer on account of the day to day, routine servicing
of the Loan (provided, further, that the foregoing subsection (II) shall not be
deemed to otherwise limit any fees, costs, expenses or other sums required to be
paid to Lender under this Section, the other terms and conditions hereof and/or
of the other Loan Documents) and (C) Borrower shall not be liable for the
payment of any such costs and expenses to the extent the same arise by reason of
the gross negligence, illegal acts, fraud or willful misconduct of Lender.

 

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Section 17.7.     Cost of Enforcement. In the event (a) that the Security
Instrument is foreclosed in whole or in part, (b) of the bankruptcy, insolvency,
rehabilitation or other similar proceeding in respect of Borrower or any of its
constituent Persons or an assignment by Borrower or any of its constituent
Persons for the benefit of its creditors, or (c) Lender exercises any of its
other remedies under this Agreement, the Security Instrument, the Note and the
other Loan Documents, Borrower shall be chargeable with and agrees to pay all
costs of collection and defense, including attorneys’ fees and costs, incurred
by Lender or Borrower in connection therewith and in connection with any
appellate proceeding or post judgment action involved therein, together with all
required service or use taxes.

 

Section 17.8.     Schedules Incorporated. The Schedules annexed hereto are
hereby incorporated herein as a part of this Agreement with the same effect as
if set forth in the body hereof.

 

Section 17.9.     Offsets, Counterclaims and Defenses. Any assignee of Lender’s
interest in and to this Agreement, the Security Instrument, the Note and the
other Loan Documents shall take the same free and clear of all offsets,
counterclaims or defenses which are unrelated to such documents which Borrower
may otherwise have against any assignor of such documents, and no such unrelated
counterclaim or defense shall be interposed or asserted by Borrower in any
action or proceeding brought by any such assignee upon such documents and any
such right to interpose or assert any such unrelated offset, counterclaim or
defense in any such action or proceeding is hereby expressly waived by Borrower.

 

Section 17.10.     No Joint Venture or Partnership; No Third Party
Beneficiaries.

 

(a)     Borrower and Lender intend that the relationships created under this
Agreement, the Security Instrument, the Note and the other Loan Documents be
solely that of borrower and lender. Nothing herein or therein is intended to
create a joint venture, partnership, tenancy-in-common, or joint tenancy
relationship between Borrower and Lender nor to grant Lender any interest in the
Property other than that of mortgagee, beneficiary or lender.

 

(b)     This Agreement, the Security Instrument, the Note and the other Loan
Documents are solely for the benefit of Lender and Borrower and nothing
contained in this Agreement, the Security Instrument, the Note or the other Loan
Documents shall be deemed to confer upon anyone other than Lender and Borrower
any right to insist upon or to enforce the performance or observance of any of
the obligations contained herein or therein. All conditions to the obligations
of Lender to make the Loan hereunder are imposed solely and exclusively for the
benefit of Lender and no other Person shall have standing to require
satisfaction of such conditions in accordance with their terms or be entitled to
assume that Lender will refuse to make the Loan in the absence of strict
compliance with any or all thereof and no other Person shall under any
circumstances be deemed to be a beneficiary of such conditions, any or all of
which may be freely waived in whole or in part by Lender if, in Lender’s sole
discretion, Lender deems it advisable or desirable to do so.

 

(c)     The general partners, members, principals and (if Borrower is a trust)
beneficial owners of Borrower are experienced in the ownership and operation of
properties similar to the Property, and Borrower and Lender are relying solely
upon such expertise and business plan in connection with the ownership and
operation of the Property. Borrower is not relying on Lender’s expertise,
business acumen or advice in connection with the Property.

 

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(d)     Notwithstanding anything to the contrary contained herein, Lender is not
undertaking the performance of (i) any obligations related to the Property
(including, without limitation, under the Leases); or (ii) any obligations with
respect to any agreements, contracts, certificates, instruments, franchises,
permits, trademarks, licenses and other documents to which any Borrower Party
and/or the Property is subject.

 

(e)     By accepting or approving anything required to be observed, performed or
fulfilled or to be given to Lender pursuant to this Agreement, the Security
Instrument, the Note or the other Loan Documents, including, without limitation,
any officer’s certificate, balance sheet, statement of profit and loss or other
financial statement, survey, appraisal, or insurance policy, Lender shall not be
deemed to have warranted, consented to, or affirmed the sufficiency, the
legality or effectiveness of same, and such acceptance or approval thereof shall
not constitute any warranty or affirmation with respect thereto by Lender.

 

(f)     Borrower recognizes and acknowledges that in accepting this Agreement,
the Note, the Security Instrument and the other Loan Documents, Lender is
expressly and primarily relying on the truth and accuracy of the representations
and warranties set forth in Article 3 of this Agreement without any obligation
to investigate the Property and notwithstanding any investigation of the
Property by Lender; that such reliance existed on the part of Lender prior to
the date hereof, that the warranties and representations are a material
inducement to Lender in making the Loan; and that Lender would not be willing to
make the Loan and accept this Agreement, the Note, the Security Instrument and
the other Loan Documents in the absence of the warranties and representations as
set forth in Article 3 of this Agreement.

 

Section 17.11.     Publicity. All news releases, publicity or advertising by
Borrower or its Affiliates through any media intended to reach the general
public which refers to this Agreement, the Note, the Security Instrument or the
other Loan Documents or the financing evidenced by this Agreement, the Note, the
Security Instrument or the other Loan Documents, to Lender or any of its
Affiliates shall be subject to the prior written approval of Lender, not to be
unreasonably withheld. Without limitation of any other term or provision hereof,
nothing contained herein or in the other Loan Documents shall be deemed to
restrict Lender and/or Servicer from (and Lender and/or Servicer shall be
authorized to) disseminate to any Person any and all information it obtains in
connection with the Loan as Lender and/or Servicer deems necessary or
appropriate.

 

Section 17.12.     Limitation of Liability. No claim may be made by Borrower, or
any other Person against Lender or its Affiliates, directors, officers,
employees, attorneys or agents of any of such Persons for any special, indirect,
consequential or punitive damages in respect of any claim for breach of contract
or any other theory of liability arising out of or related to the transactions
contemplated by this Agreement or any act, omission or event occurring in
connection therewith; and Borrower hereby waives, releases and agrees not to sue
upon any claim for any such damages, whether or not accrued and whether or not
known or suspected to exist in its favor.

 

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Section 17.13.     Conflict; Construction of Documents; Reliance. In the event
of any conflict between the provisions of this Agreement and the Security
Instrument, the Note or any of the other Loan Documents, the provisions of this
Agreement shall control. The parties hereto acknowledge that they were
represented by competent counsel in connection with the negotiation, drafting
and execution of this Agreement, the Note, the Security Instrument and the other
Loan Documents and this Agreement, the Note, the Security Instrument and the
other Loan Documents shall not be subject to the principle of construing their
meaning against the party which drafted same. Borrower acknowledges that, with
respect to the Loan, Borrower shall rely solely on its own judgment and advisors
in entering into the Loan without relying in any manner on any statements,
representations or recommendations of Lender or any parent, subsidiary or
Affiliate of Lender. Lender shall not be subject to any limitation whatsoever in
the exercise of any rights or remedies available to it under this Agreement, the
Note, the Security Instrument and the other Loan Documents or any other
agreements or instruments which govern the Loan by virtue of the ownership by it
or any parent, subsidiary or Affiliate of Lender of any equity interest any of
them may acquire in Borrower, and Borrower hereby irrevocably waives the right
to raise any defense or take any action on the basis of the foregoing with
respect to Lender’s exercise of any such rights or remedies. Borrower
acknowledges that Lender engages in the business of real estate financings and
other real estate transactions and investments which may be viewed as adverse-to
or competitive with the business of Borrower or its Affiliates.

 

Section 17.14.     Entire Agreement. This Agreement, the Note, the Security
Instrument and the other Loan Documents contain the entire agreement of the
parties hereto and thereto in respect of the transactions contemplated hereby
and thereby, and all prior agreements among or between such parties, whether
oral or written between Borrower and Lender are superseded by the terms of this
Agreement, the Note, the Security Instrument and the other Loan Documents.

 

Section 17.15.     Liability. If Borrower consists of more than one Person, the
obligations and liabilities of each such Person hereunder shall be joint and
several. This Agreement shall be binding upon and inure to the benefit of
Borrower and Lender and their respective successors and assigns forever.

 

Section 17.16.     Duplicate Originals; Counterparts. This Agreement may be
executed in any number of duplicate originals and each duplicate original shall
be deemed to be an original. The failure of any party hereto to execute this
Agreement, or any counterpart hereof, shall not relieve the other signatories
from their obligations hereunder.

 

Section 17.17.     Brokers. Borrower agrees (i) to pay any and all fees imposed
or charged by all brokers, mortgage bankers and advisors (each a “Broker”) hired
or contracted by any Borrower Party or their Affiliates in connection with the
transactions contemplated by this Agreement and (ii) to indemnify and hold
Lender harmless from and against any and all claims, demands and liabilities for
brokerage commissions, assignment fees, finder’s fees or other compensation
whatsoever arising from this Agreement or the making of the Loan which may be
asserted against Lender by any Person. The foregoing indemnity shall survive the
termination of this Agreement and the payment of the Debt. Borrower hereby
represents and warrants that the only broker engaged by any Borrower Party in
connection with the transactions contemplated by this Agreement respect hereto
is Iron Hound Management Company LLC. Lender hereby agrees to pay any and all
fees imposed or charged by any Broker hired solely by Lender. Borrower
acknowledges and agrees that (a) any Broker is not an agent of Lender and has no
power or authority to bind Lender, (b) Lender is not responsible for any
recommendations or advice given to any Borrower Party by any Broker, (c) Lender
and the Borrower Parties have dealt at arms-length with each other in connection
with the Loan, (d) no fiduciary or other special relationship exists or shall be
deemed or construed to exist among Lender and the Borrower Parties and (e) none
of the Borrower Parties shall be entitled to rely on any assurances or waivers
given, or statements made or actions taken, by any Broker which purport to bind
Lender or modify or otherwise affect this Agreement or the Loan, unless Lender
has, in its sole discretion, agreed in writing with any such Borrower Party to
such assurances, waivers, statements, actions or modifications. Borrower
acknowledges and agrees that Lender may, in its sole discretion, pay fees or
compensation to any Broker in connection with or arising out of the closing and
funding of the Loan. Such fees and compensation, if any, (i) shall be in
addition to any fees which may be paid by any Borrower Party to such Broker and
(ii) create a potential conflict of interest for Broker in its relationship with
the Borrower Parties. Such fees and compensation, if applicable, may include a
direct, one-time payment, servicing fees and/or incentive payments based on
volume and size of financings involving Lender and such Broker.

 

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Section 17.18.     Set-Off. In addition to any rights and remedies of Lender
provided by this Agreement and by law, Lender shall have the right in its sole
discretion, without prior notice to Borrower, any such notice being expressly
waived by Borrower to the extent permitted by applicable law, upon any amount
becoming due and payable by Borrower hereunder (whether at the stated maturity,
by acceleration or otherwise), to set-off and appropriate and apply against such
amount any and all deposits (general or special, time or demand, provisional or
final), in any currency, and any other credits, indebtedness or claims, in any
currency, in each case whether direct or indirect, absolute or contingent,
matured or unmatured, at any time held or owing by Lender or any Affiliate
thereof to or for the credit or the account of Borrower; provided however,
Lender may only exercise such right during the continuance of an Event of
Default. Lender agrees promptly to notify Borrower after any such set-off and
application made by Lender; provided that the failure to give such notice shall
not affect the validity of such set-off and application.

 

[NO FURTHER TEXT ON THIS PAGE]

 

 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their duly authorized representatives, all as of the day and year
first above written.

 

 

BORROWER:

 

250 Livingston Owner LLC,

a Delaware limited liability company

 

 

  By:    

Name: David Bistricer

Title: Authorized Signatory

 

 

 

[SIGNATURES CONTINUE ON THE FOLLOWING PAGE]

 

 

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LENDER:

 

CITI REAL ESTATE FUNDING INC.

 

 

  By:    

Name:

Title:

 

 

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SCHEDULE I

IMMEDIATE REPAIRS
 

 

 Item

Deadline for Completion

(from closing date of loan)

 

1.Completion of the façade repair and roof replacement* (the “Façade Work”)*

Twelve (12) Months from the Closing Date

 

*In each case, as more particularly described in that certain Property Condition
Assessment Report for Mixed Use Development, prepared by Nova Consulting Group,
Inc. designated Nova Project No. RH18-5790.

 

 

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SCHEDULE II

Municipal Violations

 

 

VIOLATION

Notice of Sidewalk Violation #HWS98K; Filed 11/6/1998

Department of Building Violation; ECB Violation Number: 051818LL302CR535;
Violation Date: 05/18/2018 (Violation Type: local law) (Violation Description:
Failure to submit a required report of critical examination documenting
condition of exterior wall and appurtenances)

Department of Building Violation; Violation # V053118FISPNRF01361; (Violation
Description: failure to submit a façade inspection report.)

Department of Building Violation; Violation # 38226718H; (Violation Type:
Elevator. ECB Penalty Due: $1000)

Department of Building Violation; Energy Efficiency Report; Violation #
V031719EARCX10001; (Violation Type: Failure to submit an Energy Efficient
Report)

Department of Building Violation; Energy Efficiency Report; Violation #
V031819EARCX00265; (Violation Type: Failure to submit an Energy Efficient
Report)

Rent & Housing Maintenance Violation; Violation ID 12792507 6333410 (Violation
Description - §27-2005 adm code repair the broken or defective plastered
surfaces and paint in a uniform color ceiling in the 1st room from north located
at apt 12i, 12th story, 1st apartment from west at north)

Rent & Housing Maintenance Violation; Violation ID 12797426 6333410 (Violation
Description - §27-2005 adm code repair the roof so that it will not leak at
ceiling in the 1st room from north locatd at apt 12i, 12th story, 1st apartment
from west at north)

Fire Department Violation 11250428J, issue dated 04/18/2012 (Failed to provide
sign/posting/instruct; Failed to provide labels/marks/stamps; Failed to provide
adequate egress/space; Fail to maintain Spk/Std/Alarm/Supp Sys.

Fire Department Violation E297516P1, issue dated 10/15/10

Fire Department Violation E343529S4, issue dated 09/04/13

Fire Department Violation E524337B, issue dated 10/23/2017

Fire Department Violation E75358, issue dated 07/14/2005

Fire Department Violation 861212TES, issue dated 09/01/1984 (Str of empty comb
boxes w/o permit)

Department of Environmental Protection Violation; Summons Number 00417247 N,
issue date 1/15/2019

 

 

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SCHEDULE III

ORGANIZATIONAL CHART

(attached hereto)

 

 

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SCHEDULE IV

UNFUNDED OBLIGATIONS

 

Tenant

Amount of Unfunded Obligations

The City of New York

Requirements set forth in Sections 6 of New ST Lease

 

 

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EXHIBIT A

[Form of Notice Letter - Tenants]

 

___________, 20[__]

 

[TENANT]

 

Re:     [Describe Lease] (the “Lease”)

 

To Whom it May Concern:

 

A new cash management system has been adopted in connection with our loan from
[_________________], its successors and/or assigns (“Lender”). Consequently,
from and after the date of this letter, all payments due under the Lease should
be delivered as follows:

 

(i)     If by check, money order, or its equivalent, please mail such items to:

 

 

[INSERT RESTRICTED ACCT. INFO]

       

Attention:

 

Facsimile No.:

     

 

(ii)

If by wire transfer to:

 

[INSERT RESTRICTED ACCT. INFO]

 

Payee:

 

ABA Routing #:

 

For Account:

 

Account #:

 

Bank Contact:

     

 

 

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This payment direction may not be rescinded or altered, except by a written
direction signed by the Lender or its agent.

 

We appreciate your cooperation.

 

 

Very truly yours,

 

[BORROWER]