Exhibit 10.18

 

SCHOOL DESIGN, CONSTRUCTION, FUNDING AND PURCHASE AGREEMENT

between

TPHGREENWICH OWNER LLC,

as developer

and

NEW YORK CITY SCHOOL CONSTRUCTION AUTHORITY

Dated as of December 22, 2017

 

 

 

 

TABLE OF CONTENTS

 

    Page       Article I CERTAIN DEFINITIONS 1       Section 1.01 Certain
Definitions 1       Article II TERM; LPC APPROVAL; CONSTRUCTION LOAN; MASTER
LEASE AND SUBLEASE 9       Section 2.01 Term 9       Section 2.02 LPC Approval.
9       Section 2.03 Construction Loan 9       Section 2.04 Master Lease and
Sublease 11       Article III SCHOOL BASE BUILDING WORK AND SCHOOL FIT-OUT WORK;
CONSTRUCTION DRAWINGS AND ESTIMATES 12       Section 3.01 School Base Building
Work and School Fit-Out Work 12       Section 3.02 School Base Building Design
Consultants 14       Section 3.03 School Base Building Construction Drawings 14
      Article IV AWARD OF CONTRACTS;  COMMENCEMENT AND PERFORMANCE OF SCHOOL
BASE BUILDING WORK AND SCHOOL FIT-OUT WORK 17       Section 4.01 Construction
Manager for School Base Building Work; Award of Contracts for School Base
Building Work 17       Section 4.02 General Contractor for School Fit-Out Work
18       Section 4.03 Commencement and Performance of School Base Building Work;
SCA Termination Option for Failure to Commence Construction; Developer
Termination Option for Failure to Obtain Construction Loan 18       Section 4.04
Intentionally omitted 19       Section 4.05 Construction Schedule 19      
Section 4.06 Methods and Materials 19       Section 4.07 SCA’s Project
Representative; Coordination Meetings 19

 

- i -

 

 

TABLE OF CONTENTS
(continued)

 

  Page     Article V PUBLIC SCHOOL PROJECT COSTS; REQUISITIONS AND PAYMENT OF
REQUISITIONS; SAVINGS; CHANGE ORDERS AND DELAYS 20       Section 5.01 Public
School Project Costs; Responsibility for Public School Project Costs; SCA
Obligation to Obtain and Deliver CP to Developer 20       Section 5.02
Requisitions and Payment of Public School Project Costs 21       Section 5.03
Intentionally omitted 29       Section 5.04 Change Orders 29       Section 5.05
Delays 32       Section 5.06 SCA Audit Rights 34       Section 5.07 SCA Pre- and
Post-Turnover Work 34       Section 5.08 MEP Equipment 34       Article VI
SUBSTANTIAL COMPLETION; COMPLETION OF PUNCH LIST ITEMS; ACCESS FOR SCHOOL BASE
BUILDING WORK AND SCHOOL F&E WORK: WARRANTIES 35       Section 6.01 Substantial
Completion of School Base Building Work and Completion of Punch List Items 35  
    Section 6.02 “Stand-By” Labor Costs 38       Section 6.03 Beneficial
Interest in Warranties 38       Article VII EXPEDITED JAMS ARBITRATION 38      
Section 7.01 Expedited Arbitration 38       Section 7.02 Selection of
Arbitrators; Arbitration Procedure 39       Article VIII INSURANCE AND
INDEMNITIES 39       Section 8.01 Developer’s Insurance Coverages 39      
Section 8.02 SCA’s Insurance Coverages 41       Section 8.03 Waiver of
Subrogation 42

 

- ii -

 

 

TABLE OF CONTENTS
(continued)

 

    Page       Section 8.04 Indemnification 42       Article IX DEFAULT AND
REMEDIES; CERTAIN TERMINATION PROVISIONS 43       Section 9.01 Default by
Developer; SCA’s Remedies 43       Section 9.02 Default by SCA; Developer’s
Remedies 45       Section 9.03 Certain Termination Provisions 46       Article X
CONDITIONS TO CLOSING; CLOSING; PCO 47       Section 10.01 Closing Conditions 47
      Section 10.02 Right to Waive Conditions 48       Section 10.03 Closing and
Closing Date 48       Section 10.04 Developer’s Closing Deliveries 48      
Section 10.05 SCA’s Closing Deliveries 49       Section 10.06 Title Insurance
Premiums; Apportionments; “True-Up” Adjustment to Purchase Price 49      
Section 10.07 Payment of Common Charges 50       Section 10.08 Developer’s Right
of Access 50       Section 10.09 Casualty; Condemnation 50       Section 10.10
PCO 51       Article XI REMOVAL OF TITLE DEFECTS 51       Section 11.01 Curing
Title Defects 51       Section 11.02 Title Affidavits 52       Article XII
REPRESENTATIONS, WARRANTIES; COVENANTS AND RESTRICTIONS; COMPLETION GUARANTY AND
BAD BOY GUARANTY 52       Section 12.01 Developer’s Representations 52      
Section 12.02 SCA’s Representations 52

 

- iii -

 

 

TABLE OF CONTENTS
(continued)

 

    Page       Section 12.03 Condominium Documents Covenants 53       Section
12.04 Completion Guaranty; Construction Lender’s Failure to Fund; and Bad Boy
Guaranty 53       Article XIII CONDOMINIUM DOCUMENTS 54       Section 13.01
Approval of Condominium Documents 54       Article XIV NOTICES 55       Section
14.01 Notices 55       Section 14.02 All notices shall be deemed effective upon
receipt 56       Article XV MISCELLANEOUS 56       Section 15.01 Further
Assurances 56       Section 15.02 Governing Law 56       Section 15.03
Amendments and Waivers in Writing 56       Section 15.04 Delays not a Waiver 56
      Section 15.05 Execution in Counterparts 57       Section 15.06 Exhibits;
Headings 57       Section 15.07 Assignments of this Agreement 57       Section
15.08 Binding on Permitted Successors and Assigns 57       Section 15.09
Remedies 57       Section 15.10 Submission to Jurisdiction 57       Section
15.11 Severability 58       Section 15.12 No Rights in Third Parties; Not Joint
Venture Partners 58       Section 15.13 No Construction Against Draftsperson 58
      Section 15.14 Broker 58       Section 15.15 Survival 58

 

- iv -

 

 

TABLE OF CONTENTS
(continued)

 

    Page       Section 15.16 Exculpation 58       Section 15.17 Acknowledgment
Regarding Play Areas 58

 

Exhibits

 

Exhibit A Legal Description Exhibit B Permitted Encumbrances Exhibit C Master
Lease Exhibit D Sublease Exhibit E Intentionally Omitted Exhibit F Intentionally
Omitted Exhibit G Description of Hard Cost Allocation and Land Value and Soft
Cost Allocation Exhibit H Guidelines for Payment of Installments of the Land
Value Payment and Construction Supervision Fee Exhibit I School Program Exhibit
J MEP Equipment Exhibit K Intentionally Omitted Exhibit L SCA Pre- and
Post-Turnover Work Exhibit M School Fit-Out Construction Drawings Exhibit N
Construction Schedule Exhibit O Breakdown of Public School Project Costs by
Category Exhibit P Form of Requisition Exhibit Q Intentionally Omitted Exhibit R
Form of Owner’s Title Affidavit Exhibit S Completion Guaranty to SCA Exhibit T
Condominium Declaration and Condominium Bylaws Exhibit U Memorandum of Master
Lease Exhibit V Memorandum of Sublease Exhibit W Termination of Memorandum of
Master Lease Exhibit X Termination of Memorandum of Sublease Exhibit Y 100%
School Base Building CD’s (inclusive of commissioning document and addendums
1-6)

 

- v -

 

 

SCHOOL DESIGN, CONSTRUCTION, FUNDING AND PURCHASE AGREEMENT

 

THIS SCHOOL DESIGN, CONSTRUCTION, FUNDING AND PURCHASE AGREEMENT (this
“Agreement”) made as of December 22, 2017 by and between TPHGREENWICH OWNER LLC,
a Delaware limited liability company having an address c/o Trinity Place
Holdings Inc., 340 Madison Avenue, Suite 3C, New York, NY 10173 (“Developer”)
and the NEW YORK CITY SCHOOL CONSTRUCTION AUTHORITY, a public benefit
corporation of the State of New York having its principal office at IDCNY Center
1, 30-30 Thompson Avenue, Long Island City, New York 11101 (the “SCA”).

 

RECITALS

 

A.       Developer and/or its affiliates are the owners of the Land (as
hereinafter defined) and intend to develop the Project (as hereinafter defined)
thereon.

 

B.       SCA desires to enter into an agreement with Developer pursuant to
which, subject to and upon the terms and conditions hereof, (i) Developer will
lease the Land to SCA pursuant to the Master Lease (as hereinafter defined);
(ii) SCA will sublease the Land (excluding the space that will comprise the
School Unit (as hereinafter defined) to Developer pursuant to the Sublease (as
hereinafter defined); (iii) Developer will cause the School Unit (as hereinafter
defined) to be designed and constructed by causing performance of the School
Base Building Work (as such term is hereinafter defined), and SCA will provide
funding for such design and for such construction of the School Base Building
Work; and (iv) upon Substantial Completion (as hereinafter defined) of the
School Base Building Work (as hereinafter defined) and recordation of the
Condominium Declaration (as hereinafter defined), SCA shall purchase the School
Unit from Developer and perform the School Fit-Out Work.

 

C.       The parties wish to set forth their understandings regarding, inter
alia, (i) the design and construction of the School Unit, (ii) the funding of
such design and construction, (iii) the rights and obligations of Developer and
SCA in connection with conveyance of the School Unit to SCA, and (iv) such other
matters as are set forth in this Agreement.

 

D.       The transaction contemplated by this Agreement has been approved or
deemed approved by the Mayor of the City of New York (the “Mayor”), following
approval of said site plan by the New York City Council (the “City Council”) by
resolution adopted in accordance with Section 1732 of the New York Public
Authorities Law.

 

NOW, THEREFORE, in consideration of the promises and obligations of Developer
and SCA set forth in this Agreement, subject to the terms of this Agreement, and
intending to be legally bound hereby, Developer and SCA hereby covenant and
agree as follows:

 

Article I

 

CERTAIN DEFINITIONS

 

Section 1.01   Defined Terms. The following words and phrases (to the extent not
defined in the first paragraph of this Agreement or the recitals to this
Agreement) shall have the following meanings for purposes of this Agreement:

 

 

 

 

“100% School Base Building CD’s” has the meaning set forth in Section 3.03(g)(i)
hereof.

 

“Affiliate” means, with respect to any Person, a Person that directly or
indirectly, through one or more intermediaries, controls, is controlled by or is
under common control with, such Person. For purposes hereof, the term “control”
(including the related terms “controlled by” and “under common control with”)
means the possession, directly or indirectly, of twenty percent (20%) or more of
the ownership interest in such entity or the power to direct or cause the
direction of management and policies of an entity (whether through the ownership
of voting securities or other ownership interest, by contract or otherwise).

 

“Agreement” means this Agreement and the exhibits attached hereto (or
subsequently incorporated herein through amendments hereto), as the same may be
amended from time to time.

 

“Arbitrator” has the meaning set forth in Section 7.02 hereof.

 

“Base Building Hard Cost Allocation” has the meaning set forth in Section
3.01(a)(ii) hereof.

 

“Board of Managers” means the board of managers or other governing board of the
Condominium, elected by the Unit Owners in accordance with the provisions of the
Condominium Documents.

 

“Building” means, as the same exists from time to time, the building and other
improvements to be constructed on the Land in accordance with this Agreement
(including the landmarked Dickey House).

 

“Business Days” means any day other than (1) a Saturday or a Sunday, or (2) a
New York City holiday (as determined by the New York City Office of Payroll
Administration).

 

“Business Hours” means 7:00 a.m. – 5:00 p.m. on Business Days.

 

“Capital Project Certificate” – see definition of “Evidence of Sufficient Funds”
below.

 

“Catch-Up Requisition” has the meaning set forth in Section 5.02(a)(i) hereof.

 

“Change Order” has the meaning set forth in Section 5.04 hereof.

 

“City” means The City of New York.

 

“City Council” has the meaning set forth on page 1.

 

“Closing” means the conveyance of the School Unit and the appurtenant undivided
interest in the Common Elements by Developer to SCA.

 

“Closing Date” has the meaning set forth in Section 10.03.

 

 -2- 

 

 

“Commence[ment of] Construction of the School Base Building Work” has the
meaning set forth in Section 4.03(b).

 

“Common Elements” has the meaning ascribed to it in the Condominium Documents.

 

“Completion Guaranty to SCA” has the meaning set forth in Section 12.04.

 

“Condominium” means the condominium to be created for the Land and Building.

 

“Condominium Bylaws” has the meaning set forth in the Condominium Declaration.

 

“Condominium Declaration” or “Declaration” means that certain Condominium
Declaration made by Developer, as Declarant, with respect to the Condominium.

 

“Condominium Documents” means collectively the Condominium Declaration, the
Condominium Bylaws, and house rules referred to in either of the foregoing that
relate to, restrict or govern or otherwise affect the ownership, use or
operation of all or any portion of the Condominium, and any other agreements or
documents related to the establishment of the Condominium (including, without
limitation, tax lot drawings).

 

“Construction Commencement Deadline” has the meaning set forth in Section
4.03(b).

 

“Construction Manager” means Gilbane Residential Construction LLC or its
replacement.

 

“Construction Schedule” has the meaning set forth in Section 4.05 hereof.

 

“CP” – see definition of “Evidence of Sufficient Funds” below.

 

“Deed” has the meaning set forth in Section 10.04(a) hereof.

 

“Developer” has the meaning set forth on page 1.

 

“Construction Supervision Fee” has the meaning set forth in Section 3.01(c)(i)
hereof.

 

“Developer Indemnitees” means Developer, Developer’s consultants and each of
their respective trustees, directors, officers, shareholders, partners, members,
direct or indirect investors, managers, agents and employees, and their
respective successors and assigns.

 

“Dispute Notice” has the meaning set forth in Section 7.02 hereof.

 

“Effective Date” means the date hereof.

 

 -3- 

 

 

“Eligible Costs” means capital costs of the Project consisting of: (a) costs for
planning, design, engineering, and architectural services; (b) environmental
work including surveys, maps, plans, estimates, and environmental reports; (c)
construction costs including materials and labor; (d) costs of a construction
manager to perform construction management services; (e) cost of supervising the
work of outside vendors; (f) builder’s risk and other applicable insurance; (g)
costs of payment and performance bonds required by this Agreement and/or
required by the Construction Manager; and (h) services to the extent they are
necessary for the operation of the site as a construction site including
utilities, snow and debris removal, fire sprinkler tests, security, building
protection, and extermination. Notwithstanding anything herein to the contrary,
the foregoing costs are considered Eligible Costs only to the extent such costs
and expenses are financeable by the City of New York, in the City of New York’s
sole discretion, with the proceeds of tax-exempt bonds pursuant to the New York
State Local Finance Law, the Internal Revenue Code of 1986, as amended, the City
Charter, the directives of the City Comptroller and any other applicable laws or
regulations.

 

“Evidence of Sufficient Funds” means evidence of funds then available to SCA for
payment of SCA’s obligations under this Agreement, such evidence to consist of
(A) one or more so-called “CP’s” or Capital Project Certificate(s), executed
pursuant to Section 219 of the New York City Charter by the Director of
Management and Budget (or any successor thereto) or his or her duly authorized
representative, stating that the required funds are available for use by SCA for
the designated purposes(s), or (B) such other evidence of funds then available
to SCA as shall be acceptable to Developer in Developer’s sole and absolute
discretion.

 

“F&E” has the meaning set forth in Section 3.01(b) hereof.

 

“Force Majeure” means any failure of or delay in the availability of any public
utility; any strikes or labor disputes; any not reasonably foreseeable delays or
shortages encountered in transportation, fuel, material or labor supplies;
casualties; condemnations; acts of God or the public enemy; governmental
restrictions; injunctions; unanticipated subsurface conditions; unanticipated
extent of a subsurface condition; third-party litigation; other acts or
occurrences beyond the reasonable control of a party; provided, however, that
any of the foregoing events or occurrences shall not be a Force Majeure event if
caused, either directly or indirectly, by the party claiming Force Majeure, and
in no event shall a failure or delay due to Developer’s lack of funds constitute
an event of Force Majeure.

 

“Government Entity” means the United States; the State of New York; the City;
any other political subdivision of any of the foregoing; and any agency,
authority, department, court, commission or other legal entity of any of the
foregoing.

 

“Incomplete School Base Building Work” has the meaning set forth in Section
6.01(b)(ii) hereof.

 

“Interparty Agreement” means that certain Interparty Agreement dated of even
date hereof by and among SCA, Developer and Massachusetts Mutual Life Insurance
Company, or any similar type agreement entered into among SCA, Developer, its
successor or assign, and any Subleasehold Lender with respect to any
Subleasehold Mortgage (as defined in the Sublease) permitted under the terms of
the Interparty Agreement dated of even date hereof.

 

“Land” means Block 19, Lots 11 and 13, New York, New York (known as 28-42
Trinity Place, New York, New York), and as more particularly described on
Exhibit A.

 

“Land Value and Soft Cost Allocation” has the meaning set forth in Section
3.01(a)(ii).

 

“Land Value Payment” has the meaning set forth in Section 5.01(a)(i) hereof.

 

 -4- 

 

 

“Legal Requirement(s)” means laws, statutes and ordinances, including, without
limitation, New York City building codes, approvals, permits and zoning
regulations (including without limitation the Zoning Resolution of the City of
New York), and ordinances; and the orders, rules, regulations, interpretations,
directives and requirements of all federal, state, county, city and borough
departments, bureaus, boards, agencies, offices, commissions and other sub
divisions thereof, or of any official thereof, or of any other governmental
public or quasi public authority, whether now or hereafter in force; and all
requirements, obligations and conditions of all instruments of record which may
be applicable to the Land and the School Unit or the streets, roads, avenues,
sidewalks, curbs or areas or vaults adjacent thereto, and any case law. With
respect to the School Fit-Out Work (but not the School Base Building Work),
“Legal Requirements” shall also include, if and to the extent applicable, the
pre-qualification of contractors pursuant to Sections 1734 and 1735 of the New
York Public Authorities Law and the pre-qualification of contractors, prevailing
wages, and provisions of that certain Memorandum of Understanding Between the
New York City School Construction Authority and Building & Construction Trade
Council of Greater New York dated as of the October 5, 2004.

 

“Legal Proceeding” means an action, litigation, arbitration, administrative
proceeding and other legal or equitable proceeding of any kind.

 

“Major Event” means either of the following occurring before the Closing:

 

(a)       a fire or other casualty causing damage or destruction to the Building
or

 

(b)       the giving of official notice by a Government Entity of a condemnation
or taking under the power of eminent domain of any part of the Land or the
Building,

 

which, in either case, is so substantial that construction or restoration of the
Project is not economically practicable (with or without insurance proceeds or
condemnation awards), as reasonably determined by Developer.

 

“Mayor” has the meaning set forth on page 1.

 

“NYC Indemnitees” has the meaning set forth in Section 2.03(c).

 

“Permitted Encumbrances” means the encumbrances and other title matters
described in Exhibit B attached hereto or as otherwise expressly identified
herein.

 

“Permitted Lender” shall mean an EB-5 lender with the experience, track record
and resources necessary to complete the contemplated loan transaction, as
determined in the reasonable discretion of Developer.  Notwithstanding anything
to the contrary in the foregoing, in no event shall an Unqualified Person be
considered a Permitted Lender.

 

“Person” means an individual person, a corporation, partnership, trust, joint
venture, limited liability company, proprietorship, estate, association, land
trust, other trust, Government Entity or other incorporated or unincorporated
enterprise, entity or organization of any kind.

 

“Pre-Development Costs” means School Base Building Soft Costs incurred prior to
the Catch-Up Requisition.

 

 -5- 

 

 

“Project” means the design, construction and development of the Building by
Developer.

 

“Property” means the Land and some or all (as the context requires) of the
improvements located thereon.

 

“Public School” – see definition of “School Unit” below.

 

“Public School Project Costs” has the meaning set forth in Section 5.01(a)
hereof.

 

“Public School Project Costs Not-to-Exceed Amount” means Ninety Seven Million
Six Hundred Twenty Two Thousand Four Hundred Sixty One and No Dollars
($97,622,461.00).

 

“Punch List Items” has the meaning set forth in Section 6.01(a) hereof.

 

“Purchase Price” means One Hundred Four Million Three Hundred Sixty One Thousand
Nine Hundred Fifty Nine and No Dollars ($104,361,959.00).

 

“Qualified Developer” means an entity that, at the time of the initial
determination of its status as a Qualified Developer, (a) (i) is controlled by
one or more individuals who have at least ten (10) years of experience
("Developer Experience") in the development and/or renovation of real estate
projects reasonably comparable to the work to be performed by Developer under
this Agreement, (ii) with respect to Lender (as defined in the Interparty
Agreement), its affiliates or an insurance company of similar size and
experience as Lender, retains an owner’s representative with Developer
Experience, or (iii) solely with respect to Lender and its affiliates, has an
officer with Developer Experience with respect to major construction projects
who is responsible for the Project, (b) is (or has an affiliate which is) a
construction manager or general contractor or retains a construction manager or
general contractor with at least ten (10) years of experience in the
development, construction and/or renovation of real estate projects reasonably
comparable to the work to be performed by Developer or its construction manager
under this Agreement, and (c) is not an Unqualified Person.

 

“Qualified Lender” means (a) a savings and loan association; (b) a savings bank;
(c) a commercial bank or trust company (whether acting individually or in a
fiduciary capacity); (d) an insurance company; (e) an educational, state,
municipal or similar public employees’ welfare, pension or retirement fund or
system or any other corporation or organization subject to supervision and
regulation by the insurance or banking departments of any State of the United
States or the United States Treasury, or any successor department or departments
hereafter exercising the same functions as said departments; (f) an investment
banking firm or other financial institution, a private equity or investment fund
or other entity regularly engaged in the business of providing debt or mezzanine
financing or preferred equity, a real estate investment trust, an institution
that qualifies as a REMIC under the Internal Revenue Code of 1986, as amended, a
trustee or issuer of collateralized mortgage obligations, a loan conduit or
other similar investment entity (whether any of the foregoing shall be acting
individually or in any fiduciary capacity); (g) any governmental agency or
entity insured by a governmental agency; or (h) any entity substantially similar
to any of the foregoing and which is generally commercially treated as an
institutional investor or institutional trustee, servicer or fiduciary, any
combination of the forgoing entities or any other entity or entities all of the
equity owners of which are Qualified Lenders under another clause of this
definition; provided any of the foregoing Persons in clauses (a) through (h)
inclusive: (i) shall be subject to service of process within the United States
of America; (ii) (other than in the case of a governmental agency, entity
insured by a governmental agency, public benefit corporation or a pass-through
conduit for securities issued by a governmental or quasi-governmental agency or
public benefit corporation, or any subsidiary of the forgoing) shall have, at
the time of the initial determination of its status as a Qualified Lender,
either individual or combined net worth, capital, statutory surplus,
shareholder's equity, committed capital net of all liabilities, or assets under
management net of all liabilities of at least $500,000,000; and (iii) is willing
to enter into an Interparty Agreement (as defined in Section 2.03(b)).

 

 -6- 

 

 

“Real Estate Taxes” means all taxes, assessments and special assessments,
general or special, ordinary or extraordinary, foreseen or unforeseen, of any
kind or nature whatsoever, levied, assessed or imposed at any time upon or
against the Property and/or any part thereof

 

“Requisition” has the meaning set forth in Section 5.02(b)(i) hereof.

 

“Requisition Payment Due Date” means within fifteen (15) days after the Public
School Project Costs included in a Requisition have been approved or deemed
approved, or within fifteen (15) days after an Arbitrator’s determination
approving any disputed Public School Project Costs (unless, pursuant to Article
VII hereof, SCA is not permitted to withhold such payment pending such dispute,
in which event SCA shall make such payment within fifteen (15) days after the
determination by Developer’s construction lender as set forth in Article VII
hereof), but in no event prior to the date of the closing of the Construction
Loan.

 

“Retainage” has the meaning set forth in Section 5.02(d) hereof.

 

“SCA” has the meaning set forth on page 1.

 

“SCA Damages Amount” has the meaning set forth in Section 9.01(d) hereof.

 

“SCA Delay” has the meaning set forth in Section 5.05(a)(i) hereof.

 

“SCA Indemnitees” means SCA, SCA’s consultants and each of their respective
trustees, directors, officers, shareholders, partners, members, managers, agents
and employees, and their respective successors and assigns.

 

“SCA’s Inspection Consultants” has the meaning set forth in Section 6.01(b)(ii)
hereof.

 

“SCA Pre- and Post-Turnover Work” means the work described on Exhibit L annexed
hereto.

 

“SCA’s Project Representative” has the meaning set forth in Section 4.07(a)
hereof.

 

“School Base Building Architect” has the meaning set forth in Section 3.02
hereof.

 

“School Base Building First Confirmation Notice” has the meaning set forth in
Section 6.01(b)(ii) hereof.

 

 -7- 

 

 

“School Base Building Hard Costs” has the meaning set forth in Section
5.01(a)(iv) hereof.

 

“School Base Building Initial Notice” has the meaning set forth in Section
6.01(b)(ii) hereof.

 

“School Base Building Soft Costs” has the meaning set forth in Section
5.01(a)(iii) hereof.

 

“School Base Building Substantial Completion Notice” has the meaning set forth
in Section 6.01(b)(ii) hereof.

 

“School Base Building Work” has the meaning set forth in Section 3.01(a)(v)
hereof.

 

“School Base Building Work Revisions” has the meaning set forth in Section
3.03(i)(i).

 

“School F&E Work” has the meaning set forth in Section 3.01(b) hereof.

 

“School Fit-Out Architect” means Dattner Architect.

 

“School Fit-Out Work” has the meaning set forth in Section 3.01(b) hereof.

 

“School Program” has the meaning set forth in Section 3.01(b) hereof.

 

“School Unit” means that certain portion of the Building to consist of
approximately 87,539 gross square feet, together with the applicable percentage
of Common Interest (as defined in the Condominium Documents). The School Unit is
sometimes hereinafter referred to as the “Public School”.

 

“Subleasehold Lender” shall have the meaning given to such term in the Sublease.

 

“Substantial Completion” and grammatical variations thereof have the meanings
set forth in Section 6.01(a) hereof.

 

“Substantial Completion Date” means the date on which Substantial Completion
occurs.

 

“Title Defect” means any encumbrance that is not a Permitted Encumbrance and
that is recorded against or otherwise affects the School Unit or the Common
Elements serving such Unit.

 

“Title Insurer” means Fidelity National Title Insurance Company and, if
applicable, any co-insurer.

 

“Transfer Tax Forms” has the meaning set forth in Section 10.04(b) hereof.

 

“Unit” has the meaning ascribed to it in the Condominium Documents.

 

“Unqualified Person” means a Person that (i) is in default or in breach, beyond
any applicable grace period, of its material obligations under any material
written agreement with SCA (unless such default or breach has been waived in
writing by SCA); or (ii) has been convicted in a criminal proceeding for a
felony involving fraud or defalcation.

 

 -8- 

 

 

Article II

TERM; LPC APPROVAL; CONSTRUCTION LOAN; MASTER LEASE AND SUBLEASE

 

Section 2.01    Term. The term of this Agreement shall commence on the date
hereof and shall terminate on the date Developer and Purchaser have satisfied
all of their obligations hereunder unless sooner terminated pursuant to an
express provision of this Agreement, subject to the survival of any provisions
that expressly or by their general intent survive the termination of this
Agreement.

 

Section 2.02    LPC Approval.

 

(a)       SCA acknowledges and agrees that (1) construction of the School Unit
is subject to terms and conditions of the approval (the “LPC Approval”) of the
Landmarks Preservation Commission (“LPC”) as evidenced by the Status Update
Letter dated March 8, 2016, and (2) any work outside of the LPC Approval may
require further approval from LPC.

 

Section 2.03    Construction Loan

 

(a)       Developer intends to obtain a construction loan (a “Construction
Loan”) in order to construct the Building. On or prior to the closing of the
Construction Loan, the existing mortgage encumbering the Property will be
satisfied or assigned to the construction lender. Unless the construction lender
shall be a Qualified Lender, SCA shall have the right to approve the
construction lender, such approval not to be unreasonably withheld, conditioned
or delayed. SCA shall have a further right to approve the loan documents (to the
extent the provisions thereof are, in any material respect, inconsistent with
Developer’s obligations under this Agreement), such consent not to be
unreasonably withheld, conditioned or delayed. Without limitation, SCA may
require that the following matters be included in the loan documents for the
benefit of SCA:

 

(i)       Subject to Section 3.03(b) below, the construction lender must not
permit any changes in the Project specifications or application of Construction
Loan proceeds in a manner inconsistent with Section 3.01(a)(vi) hereof regarding
the size of the School Unit or that would otherwise adversely affect the School
Unit or its functionality or, except to a de minimis extent, operations of the
School Program, without the consent of SCA and the City of New York if such
change (A) would be inconsistent in any material respect with the 100% School
Base Building CD’s (as applicable), or (B)(1) would adversely affect the
functionality or, except to a de minimis extent, operations of the School
Program and/or (2) would cause the hard costs of the School Fit-Out Work to be
increased (unless Developer agrees to pay such excess).

 

(ii)       Performance under the loan documents by Developer must meet the time
requirements set forth in this Agreement.

 

(iii)      The construction lender must, if it succeeds to the interest of
Developer with respect to the Sublease (as defined below), cause the project to
be completed with a deed delivered for the School Unit, regardless of any remedy
obtainable by the construction lender, including foreclosure.

 

 -9- 

 

 

(iv)       If the construction lender completes the Building it must use either
a Qualified Developer or another developer approved by SCA and the City of New
York, such approval not to be unreasonably withheld, conditioned or delayed.

 

(v)       Any purchaser of Developer’s interest in the Sublease in connection
with a foreclosure of the mortgage securing the Construction Loan or any
successor-in-interest to such purchaser will complete the Building in accordance
with this Agreement, deliver a deed for the School Unit to the SCA as
contemplated herein, and use either a Qualified Developer or another developer
approved by SCA and the City of New York (such approval not to be unreasonably
withheld, conditioned or delayed) within a time period approved by SCA (such
approval not to be unreasonably withheld, conditioned or delayed).

 

(vi)       SCA will have remedies upon a failure to complete and deliver the
School Unit within an agreed upon amount of time, including the right to cancel
the Sublease if the construction lender defaults on its obligations and the
construction lender fails to take adequate steps to cure after it succeeds to
Developer’s interest in the Sublease.

 

(vii)       SCA shall be entitled to terminate the GMP Contract (as defined
below) in the event Developer’s construction lender defaults beyond notice and
cure in its obligations to SCA after succeeding to Developer’s interest in the
Sublease (a “Construction Lender Event of Default”). In the event of a
Construction Lender Event of Default, SCA may elect to perform the School Base
Building Work in accordance with its statutory procurement requirements but such
performance by SCA shall not, in any material respect, impair the development of
the remainder of the Project.

 

(viii)      Developer’s construction lender will either subordinate its mortgage
on the fee interest in the Property to the Master Lease or provide SCA with a
subordination non-disturbance and attornment agreement;

 

(b)       SCA will enter into the Interparty Agreement under which, if Developer
defaults (beyond notice and cure) in its construction obligations, if and when
the construction lender succeeds to Developer’s interest under the Sublease, the
construction lender will be required to perform Developer’s construction
obligations under this Agreement within a time period reasonably acceptable to
SCA. If a party other than a construction lender succeeds to Developer’s
interest under the Sublease, that party will have an obligation to fulfill such
construction obligations. The Interparty Agreement will include the rights and
obligations of the parties in the event the construction lender or a successor
does not or cannot complete the School Base Building Work. Also, the Interparty
Agreement will address (1) a default by Developer both before and after the
conveyance of the School Unit to SCA, and (2) who has priority with respect to
the respective guaranties to be provided to each of SCA and the construction
lender.

 

 -10- 

 

 

(c)       For the avoidance of doubt, Developer’s financing of the Project may
include EB-5 financing, even if the EB-5 lender is not a Qualified Lender. So
long as the EB-5 lender meets all of the criteria of a Permitted Lender, it
shall have the rights of a Qualified Lender hereunder. If a default under an
EB-5 loan has occurred and is continuing, the EB-5 lender shall not be entitled
to enforce any of the rights applicable to a Qualified Lender under Article XV
of the Sublease unless and until the EB-5 lender shall have provided SCA with
the applicable loan default notice.  Further, the EB-5 lender shall not be
entitled to recognition under the Sublease or a new sublease as contemplated by
Article XV of the Sublease, unless and until the EB-5 lender is or engages a
Qualified Developer to perform any outstanding work required to be performed by
Developer under this Agreement. In the event Developer uses EB-5 financing,
Developer agrees to indemnify, defend and hold harmless the SCA Indemnitees,
DOE, New York City, and any agency thereof (individually an “NYC Indemnitee” and
collectively, the “NYC Indemnitees”) in the event of any investigation,
prosecution or other litigation related to EB-5 financing for the Project (but
excluding any of the foregoing arising out of the negligence, willful misconduct
or breach of this Agreement by any NYC Indemnitee) and shall use counsel chosen
by Developer and reasonably acceptable to SCA, at the expense of the Developer.
The foregoing sentence shall survive Closing or termination of this Agreement.
At the option of SCA, Developer will cause the EB-5 Lender to enter into an
interparty agreement with SCA as is contemplated with respect to a Qualified
Lender.

 

Section 2.04    Master Lease and Sublease

 

(a)       At the closing of the Construction Loan, Developer and SCA shall enter
into the lease annexed hereto as Exhibit C (the “Master Lease”) and the sublease
annexed hereto as Exhibit D (the “Sublease”), and will execute, notarize and
cause to be recorded the Memorandum of Master Lease annexed hereto as Exhibit U
and the Memorandum of Sublease annexed hereto as Exhibit V (which memoranda of
lease will be recorded before Developer’s construction lender’s mortgage, with
the Memorandum of Master Lease being recorded before the Memoranda of Sublease).
Upon any termination of the Master Lease and Sublease (including at Closing),
Developer and SCA shall promptly execute, notarize and record the termination of
Memorandum of Master Lease annexed hereto as Exhibit W and the termination of
Memorandum of Sublease annexed hereto as Exhibit X (collectively, the “MOL
Terminations”), which obligation shall survive the termination of this
Agreement. The parties will complete, execute and record any transfer tax forms
required in connection with all of the foregoing. SCA is exempt from State of
New York and City of New York transfer taxes with respect to the Master Lease
and the Sublease and SCA shall provide such materials (if any) as the applicable
governmental authorities shall require to evidence such exemption.

 

 -11- 

 

 

Article III

 

SCHOOL BASE BUILDING WORK AND SCHOOL FIT-OUT WORK; CONSTRUCTION DRAWINGS AND
ESTIMATES

 

Section 3.01    School Base Building Work and School Fit-Out Work.

 

(a)          School Base Building Work.

 

(i)       Intentionally omitted.

 

(ii)       School Cost Allocation Methods and Preliminary Hard Cost Estimate.
Annexed hereto as Exhibit G is the Description of Hard Cost Allocation for
Public School (the “Base Building Hard Cost Allocation”), which Base Building
Hard Cost Allocation sets forth the parties’ agreed methods for allocating, from
time to time, applicable hard costs of constructing the core and shell of the
Building to the portions of the core and shell of the Building required for
construction of the School Unit. Also annexed hereto as Exhibit G is the Land
Value and Soft Cost Allocation for Public School (the “Land Value and Soft Cost
Allocation”), which Land Value and Soft Cost Allocation, among other things,
sets forth the parties’ agreed methods for allocating, from time to time, land
value and the parties’ agreed methods for allocating soft costs of constructing
the core and shell of the Building to the portions of the core and shell of the
Building required for construction of the School Unit.

 

(iii)       Intentionally omitted.

 

(iv)       School Base Building Design and Budget Development Process. As
further provided below in Section 3.03, Developer has caused the Base Building
Architect (as defined below) to prepare 100% complete school base building
construction drawings. Developer has caused an overall estimate to be prepared
(including by obtaining bids for major trades) based on 100% complete
construction plans and specifications for the Building.

 

(v)       “School Base Building Work” Defined. For purposes of the design
development, estimating, bidding and value engineering process set forth more
fully in Section 3.03, “School Base Building Work” means the portions of the
core and shell of the Building required for construction by or on behalf of
Developer of the School Unit in accordance with this Agreement and as may be
modified as expressly provided in this Agreement. Upon completion of the design
development, estimating, bidding and value engineering process set forth more
fully in Section 3.03, “School Base Building Work” means the work shown and
described on the final 100% School Base Building CD’s (as defined in Section
3.03) and as may be modified as expressly provided in this Agreement.

 

(vi)       Size of School Unit. Notwithstanding anything to the contrary in this
Section 3.01 or elsewhere in this Agreement, the parties acknowledge and agree
that no changes from the School Program (hereinafter defined) set forth on
Exhibit I to the size of the School Unit may (1) adversely affect the
functionality or, except to a de minimis extent, operations of the School
Program or (2) result in the School Unit not being of sufficient size to
accommodate the School Program, in each case without the prior written consent
of SCA.

 

(b)         School Fit-Out Work and School F&E Work. (i) SCA shall cause the
School Fit-Out Work to be completed in accordance with (A) the spaces designated
as “SCA Spaces” on Exhibit I annexed hereto (the “School Program”), (B) School
Fit-Out Construction Drawings (as defined below), and (C) all applicable Legal
Requirements. Notwithstanding anything to the contrary contained in this
Agreement, SCA (and not Developer) shall be solely responsible for obtaining a
temporary certificate of occupancy for the School Unit, it being understood in
furtherance of the foregoing and for purposes of clarification that the issuance
of a temporary certificate of occupancy for the School Unit shall not be
required for Substantial Completion to have occurred and shall not be a
condition to the obligation of SCA to pay Developer the Construction Supervision
Fee (including without limitation any Holdback Amount) or to close on the
acquisition of the School Unit. For purposes of this Agreement, “School Fit-Out
Work” means the work necessary to fit out the School Unit for operation of the
Public School in accordance with the provisions of this Agreement. School
Fit-Out Work and any other work SCA may require including, without limitation,
delivering its furniture, fixtures and equipment (“F&E”) to the School Unit and
installing its F&E (collectively, the “School F&E Work”) shall be the sole
responsibility of SCA. All School Fit-Out Work shall be performed, and all F&E
shall be purchased, delivered and installed, at the sole expense of SCA. This
paragraph shall survive the Closing.

 

 -12- 

 

 

(ii)       Subject to the remainder of this paragraph, Developer and SCA shall
reasonably cooperate so that the School Fit-Out Work and any work the Developer
may be performing at the Building do not interfere with each other, and in order
to minimize restrictions and delays with respect to such work. If SCA shall
elect to use union labor in respect of any such work at such time as Developer
shall have engaged non-union labor, the parties shall reasonably cooperate with
each other to establish a “second gate” for SCA’s union labor. In this regard,
prior to the commencement of the School Fit-Out Work, the parties shall confer
with each other with respect to relevant labor considerations affecting, and
necessary for the concurrent and orderly performance of, the Project and the
School Fit-Out Work. Nothing in this Agreement, however, shall require Developer
to change its desired labor practices and policies in respect of the Project.
Notwithstanding anything to the contrary contained in this Agreement, in no
event shall SCA perform or cause to be performed any work in or to the Property
until the completion of the SCA Pre- and Post-Turnover Work and Punch List Items
(as “completion” shall be determined by Developer in its reasonable discretion).
Subsequent to the completion of the SCA Pre- and Post-Turnover Work and the
Punch List Items, any work by or on behalf of SCA in or to, or requiring access
through, a portion of the Property outside of the School Unit (including,
without limitation, in connection with School Limited Common Elements (as
defined in the Declaration) and School Unit facilities located in the Cellar (as
used in the Declaration) or on the 9th Floor (as used in the Declaration), or
the School Unit’s dedicated chiller located on the main roof) in which
Developer’s construction work is ongoing shall be permitted, provided, in each
instance such work: (i) shall not interfere with Developer’s work; (ii) shall be
scheduled in advance and coordinated with Developer and Developer’s contractors;
(iii) may be subject to periodic and temporary delays or postponements as may be
necessary in connection with Developer’s work; and (iv) may be subject to such
additional restrictions with respect to access and manner of work permitted as
are necessary (in the case of (iii) and (iv) above, as shall be determined by
Developer in Developer’s sole discretion). In addition, during Developer’s
construction work, Developer shall have the right to shut off the shared
sprinkler system for temporary periods and from time to time; provided, however,
Developer shall not shut off the shared sprinkler system while school is in
session without the implementation of a fire watch or other protections in
compliance with applicable laws. This Section 3.01(b)(ii) shall survive Closing.

 

(c)          Construction Supervision Fee; Not-to Exceed Amounts; Value
Engineering.

 

(i)       In connection with Developer’s performance of the School Base Building
Work, SCA shall pay a fee to the Developer (the “Construction Supervision Fee”)
in the amount and in periodic installments in accordance with the guidelines set
forth on Exhibit H annexed hereto.

 

 -13- 

 

 

(ii)       Intentionally omitted.

 

(iii)       Developer, with the reasonable cooperation of SCA, shall perform or
cause to be performed such value engineering of the hard costs of School Base
Building Work as may be necessary to prevent the Public School Project Costs
from exceeding the Public School Project Costs Not-to-Exceed Amount.

 

(d)          Sales and Use Tax Exemption for School Base Building Work. SCA has
advised Developer that because SCA qualifies as an exempt organization under
Section 1116(a) of the New York Tax Law, SCA may be exempt from New York State
and New York City sales and use taxes on tangible personal property and services
used to improve real property (the “Sales and Use Taxes”). SCA and Developer
agree to afford all reasonable assistance and cooperation to each other in their
efforts to secure a confirmation, satisfactory to Developer and SCA, that SCA’s
exemption from Sales and Use Taxes will be available for the School Base
Building Work. SCA and Developer further agree, promptly, diligently and with
continuity following execution and delivery of this Agreement by the parties, to
use all reasonable efforts to secure such confirmation as soon as reasonably
practicable. SCA acknowledges and agrees that in the event SCA is not exempt
from Sales and Use Taxes, SCA will be responsible for paying the same to the
extent allocable to the School Base Building Work.

 

Section 3.02     School Base Building Design Consultants. The architect for the
School Base Building Work shall be FXFowle Architects LLP or such other
architect as shall have been selected by Developer in Developer’s sole
discretion (“School Base Building Architect”). The engineer, code consultant and
other design consultants for the School Base Building Work shall be the
engineer, code consultant and other design consultants for the School Base
Building Work as shall have been selected by Developer in Developer’s sole
discretion (together with the School Base Building Architect, collectively, the
“School Base Building Design Consultants”).

 

Section 3.03    School Base Building Construction Drawings.

 

(a)         School Fit-Out Construction Drawings. The current version of the
School Fit-Out construction drawings (the “School Fit-Out Construction
Drawings”) are attached hereto as Exhibit M, it being understood that SCA shall
be responsible, at SCA’s sole cost and expense, for promptly providing to
Developer and the School Base Building Architect any update to the School
Fit-Out Construction Drawings.

 

(b)         Code Compliance. Notwithstanding anything to the contrary contained
in this Agreement, (I) SCA shall be liable (including, without limitation, for
the cost of Change Orders) for (i) any non-compliance (“SCA Design
Non-Compliance”) of the 100% School Base Building CD’s with applicable codes or
other Legal Requirements for the operation of a school, to the extent that such
non-compliance arises from any drawings, design or specifications provided to
Developer or School Base Building Architect by SCA or its architect or other
consultants (“SCA Design”), and (ii) any changes to applicable codes or other
Legal Requirements solely to the extent such changes pertain to requirements for
the operation of a school, which changes are first imposed by the applicable
governmental authority after April 30, 2017 (“Post-April Non-Compliance”), and
(II) solely vis-à-vis SCA, Developer shall be liable (including, without
limitation, for the cost of Change Orders) for (a) errors on the 100% School
Base Building CD’s that result from School Base Building Architect incorrectly
incorporating the SCA Design into the 100% School Base Building CD’s, and (b)
any non-compliance of the 100% School Base Building CD’s with applicable codes
or other Legal Requirements for the operation of a school in effect as of April
30, 2017, except to the extent that such non-compliance arises from any SCA
Design. The foregoing shall in no event limit Developer’s rights and remedies
against the School Base Building Architect or any engineer or contractor in
connection with subclause (II) above.

 

 -14- 

 

 

(c)          Intentionally omitted.

 

(d)          Intentionally omitted.

 

(e)          Intentionally omitted.

 

(f)           Intentionally omitted.

 

(g)          100% School Base Building CD’s.

 

(i)       Subject to Section 3.03(b) above, the School Base Building Architect
has developed the School Base Building Work construction documents (inclusive of
an addendum) to be (A) complete and coordinated for architectural and
engineering purposes, (B) in conformance with all New York City codes and other
applicable Legal Requirements, and (C) a complete set of biddable construction
plans and specifications (inclusive of such addendum) (as they may be modified
as expressly provided in this Agreement, hereinafter, the “100% School Base
Building CD’s”). The 100% School Base Building CD’s are attached hereto as
Exhibit Y.

 

(ii)       Developer has furnished SCA with copies of the 100% School Base
Building CD’s, together with any bulletins, sketches, letters or narrative
summaries issued by the School Base Building Architect in connection therewith.

 

(h)          Codes and Other Legal Requirements. The 100% School Base Building
CD’s shall be filed by Developer with the Buildings Department and all other
governmental agencies having jurisdiction (or Developer may incorporate the 100%
School Base Building CD’s into a CD set for the entire Building for such filing
purposes if acceptable to the Buildings Department). Any changes to the 100%
School Base Building CD’s required by any governmental agency shall be disclosed
by Developer to SCA and shall promptly be incorporated into the 100% School Base
Building CD’s by the School Base Building Architect.

 

(i)           School Base Building Work Revisions.

 

(i)       Notwithstanding anything to the contrary in this Section 3.03,
Developer may, from time to time, make revisions to the 100% School Base
Building CD’s (any such revisions are hereinafter referred to as “School Base
Building Work Revisions”). Unless such School Base Building Work Revisions are
necessary in order to conform the 100% School Base Building CD’s to codes or
other Legal Requirements, they shall be subject to the approval of SCA,
provided, that SCA’s approval shall not be withheld unless such School Base
Building Work Revisions would be inconsistent with Section 3.01(a)(vi) hereof
regarding the size of the School Unit or would otherwise adversely affect the
functionality or, except to a de minimis extent, operations of the School
Program and/or cause the hard costs of the School Fit-Out Work to be increased
(unless Developer agrees to pay such excess).

 

 -15- 

 

 

(ii)       SCA shall approve or disapprove any School Base Building Work
Revisions within five (5) Business Days after receipt thereof. If SCA
disapproves such School Base Building Work Revisions, such disapproval shall
state specifically in writing (which may include mark-ups of the School Base
Building Work Revisions) the grounds for disapproval and the modifications
requested. If SCA shall not have approved or disapproved the School Base
Building Work Revisions within five (5) Business Days after receipt thereof, the
School Base Building Work Revisions shall be deemed approved.

 

(iii)       If SCA shall have timely disapproved the School Base Building Work
Revisions, then within three (3) Business Days after Developer’s written
request, Developer, SCA and the School Base Building Architect shall meet at
Developer’s office and use diligent efforts, with continuity, to resolve SCA’s
objections. If SCA’s objections shall not have been resolved within three (3)
Business Days after Developer’s request for such a meeting, then either party
may submit the validity of SCA’s objections to expedited arbitration pursuant to
Article VII. SCA may withhold payment of any amounts in respect of the costs of
implementing School Base Building Work Revisions that are disputed as expressly
permitted pursuant to subsection (i) above until SCA’s objections have been
resolved in accordance with this Agreement, but all amounts that are not so
disputed shall be timely paid by SCA.

 

(iv)       Copies of any modifications to the School Base Building Work
Revisions prepared in response to SCA’s objections or prepared in response to
the decision of an Arbitrator resolving such objections, shall be furnished to
SCA promptly after completion thereof.

 

(j)           Partial School Base Building CD’s. In order to expedite completion
of the School Base Building Work, if in the reasonable judgment of the School
Base Building Architect the same are complete and integrated enough for SCA to
review and comment on, Developer may request SCA to review mechanical,
electrical and plumbing plans and specifications, pre-purchase specifications
and long lead items. If Developer so requests, it shall submit to SCA specific
working drawings for the aspect of the School Base Building Work in question
together with, if applicable, a detailed description of the equipment or
materials to be purchased (model numbers, names of manufacturers, etc.). Any
such partial School Base Building CD’s shall be subject to the approval of SCA,
provided, that SCA’s approval shall not be withheld (i) unless such partial
School Base Building CD’s would be inconsistent with Section 3.01(a)(vi) hereof
regarding the size of the School Unit or would otherwise adversely affect the
functionality or, except to a de minimis extent, operations of the School
Program or (ii) unless such partial School Base building CD’s would cause the
hard costs of the School Fit-Out Work to be increased (unless Developer agrees
to pay such excess). SCA shall approve or disapprove Developer’s request within
a reasonable period of time, not to exceed five (5) Business Days after SCA’s
receipt thereof, such approval not to be unreasonably withheld. If SCA
disapproves any such request, SCA shall thereafter approve or disapprove any
revised request within three (3) Business Days after SCA’s receipt of such
revised request, such approval not to be unreasonably withheld. Any disapproval
shall be in writing (which may include mark-ups of the partial plans and
specifications submitted for approval) and shall specify the grounds for
disapproval and the modifications requested. If SCA fails so to approve or
disapprove such partial plans and specifications within such five (5) Business
Day or three (3) Business Day period, as the case may be, such partial plans and
specifications shall be deemed approved. If any SCA objections to a Developer’s
revised request are not resolved within five (5) Business Days after Developer’s
receipt thereof, either party may submit SCA’s then remaining objections to
expedited arbitration pursuant to Article VII.

 

 -16- 

 

 

(k)         School Exterior Signage. SCA acknowledges Developer’s desire that
exterior signage for the Public School be harmonious with Developer’s overall
signage criteria for the Building. Accordingly, SCA agrees to afford reasonable
cooperation to the School Base Building Architect so that the School Base
Building Architect may develop an exterior signage plan for the Public School
that meets SCA’s functional requirements and is also integrated with the overall
exterior signage plan for the Building. Promptly upon Developer’s request, SCA
shall (i) furnish Developer with any required SCA specifications for exterior
signage for the Public School, (ii) review and give all reasonable consideration
to proposed exterior signage plans for the Public School (and revisions thereto)
prepared by the School Base Building Architect, and (iii) meet with Developer
and the School Base Building Architect to discuss SCA comments on exterior
signage plans for the Public School (or revisions thereto) prepared by the
School Base Building Architect. All costs and expenses in connection with the
School Exterior Signage shall be borne by SCA (and shall not be considered
Public School Project Costs), and all work in connection with the same shall not
be considered School Base Building Work. The Condominium Documents set forth the
currently agreed upon signage requirements. This paragraph shall survive
Closing.

 

Article IV

 

AWARD OF CONTRACTS; COMMENCEMENT AND PERFORMANCE OF SCHOOL BASE BUILDING WORK
AND SCHOOL FIT-OUT WORK

 

Section 4.01    Construction Manager for School Base Building Work; Award of
Contracts for School Base Building Work.

 

(a)       The construction manager for the School Base Building Work shall be
(1) Construction Manager, (2) an Affiliate of Developer engaged on arms-length
terms, or (3) such other third party construction manager as Developer shall
select in its sole discretion.

 

(b)       Award of Contracts for School Base Building Work. Developer shall
promptly commence the award of trade contracts for performance of the School
Base Building Work, which trade contracts shall be based substantially on the
100% School Base Building CD’s. In the case of major trades, such contracts
shall be entered into with the lowest responsive and responsible bidders then
available (as identified by Developer). Developer’s contract with the
Construction Manager for the School Base Building Work shall be a guaranteed
maximum price contract (the “GMP Contract”). For the avoidance of doubt,
Developer shall have the right to enter into trade contracts directly, or have
the Construction Manager do so.

 

 -17- 

 

 

Section 4.02    General Contractor for School Fit-Out Work.

 

(a)          General Contractor for School Fit-Out Work.

 

(i)       The general contractor for the School Fit-Out Work shall be selected
by SCA.

 

Section 4.03     Commencement and Performance of School Base Building Work; SCA
Termination Option for Failure to Commence Construction; Developer Termination
Option for Failure to Obtain Construction Loan.

 

(a)         As soon as reasonably practicable after (i) execution and delivery
of this Agreement by the parties, (ii) funding of the first draw under
Developer’s construction loan, and (iii) Developer or its Construction Manager
having entered into trade contracts for the School Base Building Work, Developer
shall commence performance of the School Base Building Work and shall thereafter
prosecute the same diligently and with continuity to completion, subject to
Force Majeure and to SCA Delays (as hereinafter defined). Notwithstanding
anything to the contrary in the preceding sentence, SCA acknowledges and agrees
that Developer may elect, in Developer’s sole discretion, to commence the work
of early trades such as excavation and foundation prior to the closing of
Developer’s construction loan. SCA shall cooperate with Developer as reasonably
requested in connection with the performance of the School Base Building Work
including, without limitation, in order to obtain a building permit.

 

(b)         If Developer has not Commenced Construction of the School Base
Building Work within one hundred eighty (180) days after the Effective Date (the
“Construction Commencement Deadline”), which Construction Commencement Deadline
shall be subject to extension for Force Majeure and SCA Delays, then commencing
on the day after the expiration of the Construction Commencement Deadline and
continuing thereafter (but prior to any subsequent Commencement of Construction
of the School Base Building Work), SCA shall have the right, as SCA’s sole and
exclusive remedy, to terminate this Agreement on ninety (90) days prior notice.
If Developer shall not have Commenced Construction of the School Base Building
Work prior to the expiration of such ninety (90) day period, then (i) this
Agreement shall terminate at the close of business on the ninetieth (90th) day,
(ii) within thirty (30) days after the termination date, Developer shall pay to
SCA, without interest, the aggregate amount of all Requisitions (including the
Catch-Up Requisition) previously paid to Developer by SCA, and (iii) neither
party shall have any further obligation to the other. “Commence[ment of]
Construction of the School Base Building Work” means commencement of excavation
using heavy equipment.

 

(c)         Developer shall have the right to terminate this Agreement (i) if at
any time prior to the Construction Commencement Deadline, Developer notifies SCA
that Developer has been unable to obtain a construction loan commitment or
fully-executed construction loan term sheet for the Project on terms and
conditions acceptable to Developer in Developer’s sole discretion, and/or (ii)
in the event that Developer has obtained a construction loan commitment or
fully-executed construction loan term sheet for the Project, if at any time
prior to the date that is twenty-four (24) months after the Effective Date
(which date is subject to extension for Force Majeure and SCA Delays) Developer
notifies SCA that Developer has determined, in Developer’s sole discretion, that
it is not feasible for Developer to close on a construction loan for the
Project. Any such notice shall specify a termination date that is not less than
thirty (30) days nor more than ninety (90) days after the date of the notice.
Upon the termination date (as specified in the notice), (x) Developer shall pay
to SCA, without interest, the aggregate amount of all Requisitions and payments
(including the Catch-Up Requisition) previously paid to Developer by SCA, (y)
this Agreement shall terminate, and (z) neither party shall have any further
obligation to the other.

 

 -18- 

 

 

Section 4.04    Intentionally omitted.

 

Section 4.05    Construction Schedule. Annexed hereto as Exhibit N is a schedule
for performance of the School Base Building Work (as updated from time to time,
the “Construction Schedule”). Developer and SCA acknowledge and agree that
except as specifically set forth in Section 5.05, the Construction Schedule is
for informational purposes only, is not binding on either party and shall not be
deemed to modify the rights of either party under this Agreement. Developer
shall cause the Construction Schedule to be updated from time to time and shall
furnish SCA with all updates of the Construction Schedule promptly after the
same are received by Developer.

 

Section 4.06    Methods and Materials.

 

(a)         Methods and Materials. Developer shall cause the performance of the
School Base Building Work in such manner as Developer shall determine in its
sole discretion, consistent, however, with the 100% School Base Building CD’s
and the provisions of this Agreement.

 

Section 4.07    SCA’s Project Representative; Coordination Meetings.

 

(a)         SCA’s Project Representative.

 

(i)       SCA shall designate a representative of SCA designated by notice
pursuant to Article XIV of this Agreement, as “SCA’s Project Representative.”
SCA’s Project Representative shall administer this Agreement on behalf of SCA,
shall attend so-called “pencil requisitions” on behalf of SCA, and shall have
the authority (or shall diligently and promptly obtain the required
authorization, as needed) to bind SCA with respect to approval of Requisitions,
authorization of Change Orders, Substantial Completion, completion of Punch List
Items and all other matters requiring SCA consent, approval or authorization as
provided in this Agreement. SCA hereby designates Richard Mazur as its initial
SCA’s Project Representative.

 

(ii)       Without limiting any rights or obligations of SCA or Developer
contained in Section 4.07(b), Section 5.02(b), Section 6.02 or any other
provisions of this Agreement, SCA’s Project Representative shall have the right,
from time to time without notice, to observe Developer’s performance of the
School Base Building Work for the purpose of ensuring that the School Base
Building Work is undertaken in accordance with this Agreement, but the parties
will reasonably coordinate in order to avoid interference with Developer’s work
including, without limitation, the School Base Building Work.

 

 -19- 

 

 

(b)         Coordination Meetings. Commencing the date hereof and continuing
until commencement of performance of the School Base Building Work, SCA shall
cause SCA’s Project Representative to meet with Developer and Developer’s
Construction Manager(s) during business hours once per week in order to review
the progress of design, estimating, bidding and contracting of the School Base
Building Work. Commencing with commencement of performance of the School Base
Building Work and continuing until the School Base Building Work has been
Substantially Completed, SCA shall cause SCA’s Project Representative to meet
with Developer and Developer’s Construction Manager(s) during business hours
once each week in order to review the progress of performance of the School Base
Building Work. Any such meetings may be held at the Building if so requested by
Developer. Developer shall cause minutes to be prepared for all such meetings
and shall provide copies of the same to SCA promptly after receipt thereof by
Developer. If SCA’s Project Representative is unable to attend or fails to
attend a coordination meeting, Developer shall notify SCA in writing of such
absence (including by referencing the same in the minutes) and shall notify SCA
in writing (including by referencing the same in the minutes) of any issues that
Developer was unable to resolve as a consequence of such absence.

 

(c)         Project Meetings. SCA may attend Developer’s project meetings with
its Construction Manager and contractors if and to the extent such meetings
address School Base Building Work (or work on the core and shell of the Building
other than the School Base Building Work) that would affect the School Fit-Out
Work. Developer shall endeavor to give SCA reasonable prior notice of such
project meetings, which notice may be oral, by telephone and/or by e-mail.

 

Article V

 

PUBLIC SCHOOL PROJECT COSTS; REQUISITIONS AND PAYMENT OF REQUISITIONS; SAVINGS;
CHANGE ORDERS AND DELAYS

 

Section 5.01     Public School Project Costs; Responsibility for Public School
Project Costs; SCA Obligation to Obtain and Deliver CP to Developer.

 

(a)         Components of Public School Project Costs. “Public School Project
Costs” means all Eligible Costs and expenses incurred by Developer in connection
with development of the Public School, and, except as expressly provided in
Section 5.04, is inclusive of all costs and expenses incurred by Developer in
connection with any Change Orders. The Public School Project Costs consist of
the following:

 

(i)       SCA’s payment in respect of the Land value (determined in accordance
with Exhibit G), as referenced on the Breakdown of Public School Project Costs
by Category annexed hereto as Exhibit O (the “Land Value Payment”), which SCA
shall pay to the Developer in periodic installments in accordance with the
guidelines set forth on Exhibit H annexed hereto;

 

(ii)       Interest on SCA’s allocable share of Pre-Development Costs, as
referenced on Exhibit G;

 

(iii)      All soft costs incurred for the School Base Building Work, as the
categories of such costs are more particularly described in Exhibit O and as
such costs have been allocated to the School Base Building Work in accordance
with Exhibit G (the “School Base Building Soft Costs”); and

 

 -20- 

 

 

(iv)       All hard costs of the School Base Building Work, and all accessory
costs, as the categories of such costs are more particularly described in
Exhibit O and as such costs have been allocated to the School Base Building Work
in accordance with Exhibit G (the “School Base Building Hard Costs”).

 

(b)          Responsibility for Public School Project Costs.

 

(i)       SCA shall be responsible for all Public School Project Costs up to the
Public School Project Costs Not-to-Exceed Amount and Developer shall be
responsible for all Public School Project Costs in excess of the Public School
Project Costs Not-to-Exceed Amount.

 

(ii)       Notwithstanding anything to the contrary in Section 5.01(b)(i), SCA
shall be responsible for the costs of all Change Orders in respect of Public
School Project Costs (a) initiated by SCA, (b) consented to by SCA, and/or (c)
necessitated by the acts or omissions of SCA or its design professionals.

 

(iii)       Developer shall be responsible for the costs of certain Change
Orders as specifically provided in Section 5.04.

 

(c)          SCA Obligation to Obtain and Deliver CP to Developer.

 

(i)       Commencing on the Effective Date, and continuing until the date when
SCA has delivered to Developer copies of one or more CPs for at least, in the
aggregate, the Purchase Price (not including the Land Value Payment), and an
omnibus CP (the “Omnibus CP”) that covers (but may not specifically reference)
an allocation for the Land Value Payment together, in the case of the Omnibus
CP, with a letter from SCA in favor of Developer that funds in the amount of the
Land Value Payment are available to SCA, pursuant to the Omnibus CP, for payment
of the Land Value Payment in accordance with the terms of this Agreement (all of
the foregoing, collectively, the “Required CPs”) to Developer or until the date
when this Agreement shall have been terminated pursuant to Section 5.01(c)(ii),
SCA shall use diligent good faith efforts, with continuity, to obtain the
Required CPs. SCA shall deliver such CPs to Developer promptly upon SCA’s
receipt of same from the Director of Management and Budget.

 

(ii)       If SCA has not delivered copies of the Required CPs to Developer on
or before the date that is ninety (90) days after the Effective Date, then
commencing on the day after the expiration of such ninety (90) day period and
continuing thereafter (but prior to any subsequent delivery by SCA to the
Developer of copies of the Required CPs), Developer shall have the right to
terminate this Agreement upon fifteen (15) days’ prior notice. If SCA shall not
have delivered copies of the Required CPs to Developer prior to the expiration
of such fifteen (15) day period, then this Agreement shall terminate upon the
close of business on such fifteenth (15th) day.

 

Section 5.02    Requisitions and Payment of Public School Project Costs.

 

(a)           Initial “Catch-Up” Requisition and Payment.

 

(i)       SCA acknowledges that prior to the execution and delivery of this
Agreement, Developer submitted a “catch-up” requisition to SCA for a portion of
the Land Value Payment, certain Pre-Development Costs, interest on such
Pre-Development Costs and certain other Public School Project Costs incurred
through October 31, 2017, in the aggregate amount of Thirteen Million Six
Hundred Twenty Six Thousand Five Hundred and No Dollars ($13,626,500) (the
“Catch-Up Requisition”). SCA further acknowledges that the Catch-Up Requisition
has been approved by SCA’s Project Representative.

 

 -21- 

 

 

(ii)       SCA shall pay Developer the amount of the Catch-Up Requisition within
fifteen (15) Business Days after the date hereof (the “Catch-Up Requisition
Payment Due Date”). SCA acknowledges that the Catch-Up Requisition will not be
subject to Retainage.

 

(b)          Costs Incurred Prior to First Draw Under Developer’s Construction
Loan.

 

(i)         Requisition and Back-Up. Commencing on the Effective Date and
continuing until the funding of the first draw under Developer’s construction
loan, on or about the seventh (7th) day of each calendar month (unless SCA’s
Project Representative agrees to accept the same more frequently), Developer may
submit to SCA’s Project Representative a requisition substantially in the form
annexed hereto as Exhibit P (hereinafter, a “Requisition”) for Public School
Project Costs consisting of Pre-Development Costs, interest on Pre-Development
Costs, and/or School Base Building Soft Costs. Each such Requisition may include
such Public School Project Costs (A) incurred during the previous calendar
month, or (B) incurred earlier, but not previously included in a Requisition, or
(C) previously included in a Requisition, but not previously approved by SCA’s
Project Representative, and shall be accompanied by the following:

 

(A)A certification by an officer of Developer setting forth (1) the amount of
the requested payment, (2) an itemization of the Public School Project Costs for
which payment is being sought, (3) if and to the extent that the prior
Requisition(s) covering such costs have been paid by SCA, a statement that all
Public School Project Costs for work completed prior to and during the period
covered by the immediately prior Requisition have been paid or otherwise
satisfied by Developer, and (4) a list of contractors or vendors whose work is
covered by the Requisition, indicating the amount requested on behalf of each
such contractor or vendor and accompanied by evidence reasonably satisfactory to
SCA’s Project Representative that the Public School Project Costs being
requisitioned have not previously been reimbursed under this Agreement; and

 

(B)True copies of (1) all contracts on account of which payment is being sought
(or for contracts that have previously been delivered, a statement to that
effect and copies of any amendments thereof), (2) supporting bills, invoices or
other customary documentation reflecting the requisitioned Public School Project
Costs; (3) a certificate of title continuation for the Property from the Title
Insurer indicating no change in the state of title or liens not contemplated by
the development of the Public School pursuant to this Agreement or previously
approved by SCA’s Project Representative, other than Permitted Encumbrances, and
(4) to the extent that the same would have been required under Developer’s
construction loan documents if Developer’s construction loan for the Project had
closed, lien waivers from contractors payment to which is covered by the
Requisition in question.

 

 -22- 

 

 

In addition, the representations of Developer set forth in Section 12.01 shall
be true, correct and complete in all material respects as of the date of
submission of the Requisition and as of the date of SCA disbursement pursuant
thereto.

 

(ii)       Approval of Requisition. Within five (5) Business Days after receipt
of each Requisition, SCA’s Project Representative shall either approve or
disapprove the Public School Project Costs included in such Requisition,
provided, that all Public School Project Costs included in such Requisition
shall be deemed approved unless, and except to the extent that, (A) the
allocation of any amounts in respect of the Pre-Development Costs included in
such Requisition is inconsistent with the allocation methodology set forth in
Exhibit G, (B) the allocation of any School Base Building Soft Costs included in
such Requisition is inconsistent with Exhibit G, or (C) the allocation of the
Land Value Payment included in such Requisition is inconsistent with Exhibit G.
If SCA’s Project Representative disapproves any Public School Project Costs
included in such Requisition, the grounds for disapproval shall be stated
specifically in writing. If SCA’s Project Representative fails to approve or
disapprove the Public School Project Costs included in such Requisition within
five (5) Business Days after receipt of such Requisition, all Public School
Project Costs included in such Requisition shall be deemed approved.

 

(iii)       Disapproved Public School Project Costs. If SCA’s Project
Representative has timely disapproved any Public School Project Costs included
in a Requisition in accordance with Section 5.02(b)(ii), Developer, at
Developer’s election, may either (A) resubmit the disapproved Public School
Project Costs in one or more future Requisitions for approval by SCA’s Project
Representative, or (B) submit the disapproved Public School Project Costs to
expedited arbitration pursuant to Article VII. In either case, and
notwithstanding any such disapproval, SCA shall timely pay all Public School
Project Costs covered by the applicable Requisition in accordance with and
subject to Section 5.02(b)(iv).

 

(iv)       Payment of Requisition. On or before the Requisition Payment Due
Date, SCA shall pay to Developer all amounts in respect of the Pre-Development
Costs, interest on Pre-Development costs and School Base Building Soft Costs
included in such Requisition or such amount as determined by the Arbitrator (or
Developer’s construction lender, as applicable).

 

(c)         Monthly Requisitions Commencing With First Draw Under Developer’s
Construction Loan; “True-Up” Adjustment.

 

(i)       Requisition of Hard Costs. Commencing with the first draw under
Developer’s construction loan and as the School Base Building Work progresses
(and subsequent to Closing, as set forth in Section 5.02(g) below), Developer
shall be entitled to requisition School Base Building Hard Costs (including
without limitation any trade costs for the work of early trades such as
excavation and foundation that have previously been incurred by Developer, at
Developer’s election, pursuant to Section 4.03), in accordance with the
following provisions of this Section 5.02(c). In addition, the initial such
Requisition following the first draw under Developer’s construction loan shall
include a “true-up” adjustment, pursuant to Section 5.02(e), for Public School
Project Costs previously allocated to SCA pursuant to the Description of Hard
Cost Allocation and the Land Value and Soft Cost Allocation attached as Exhibit
G.

 

 -23- 

 

 

(ii)       “Pencil” Requisition Meeting and Walk-Through. Commencing with the
calendar month prior to the calendar month in which Developer anticipates that
funding of the first draw under Developer’s construction loan will occur and
continuing until completion of all Punch List Items (as hereinafter defined)
(and subsequent to Closing, as applicable, as set forth in Section 5.02(g)
below), SCA’s Project Representative shall attend a monthly “pencil” requisition
meeting and walk-through of the School Unit, which “pencil” requisition meeting
and walk-through shall be conducted by Developer’s construction lender’s
inspecting engineer, Developer’s Construction Manager(s) and Developer.
Developer presently anticipates that such “pencil” requisition meeting and
walk-through will occur on or about the 25th day of each month. At the
conclusion of each “pencil” requisition meeting and walk-through: All School
Base Building Hard Costs and School Base Building Soft Costs covered by the
“pencil” requisition shall be deemed approved, unless and except to the extent
any such costs have been specifically disapproved by Developer’s construction
lender’s inspecting engineer.

 

(iii)       Requisition and Back-Up. Commencing with the calendar month in which
Developer anticipates that funding of the first draw under Developer’s
construction loan will occur and continuing until completion of all Punch List
Items (and subsequent to Closing, as set forth in Section 5.02(g) below), on or
about the seventh (7th) day of each calendar month (unless SCA’s Project
Representative agrees to accept the same more frequently), Developer may submit
to SCA’s Project Representative a Requisition for any and all Public School
Project Costs as defined in Section 5.01(a). Each such Requisition may include
Public School Project Costs (A) incurred during the previous calendar month, or
(B) incurred earlier, but not previously included in a Requisition, or (C)
previously included in a Requisition, but not previously approved by Developer’s
construction lender (or its inspecting engineer) or SCA’s Project
Representative, and shall be accompanied by the following:

 

(A)A certification by an officer of Developer setting forth (1) the amount of
the requested payment, (2) an itemization of the Public School Project Costs for
which payment is being sought, (3) if and to the extent that the prior
Requisition(s) covering such costs have been paid by SCA, a statement that all
Public School Project Costs for work completed prior to and during the period
covered by the immediately prior Requisition have been paid or otherwise
satisfied by Developer, and (4) a list of contractors or vendors whose work is
covered by the Requisition, indicating the amount requested on behalf of each
such contractor or vendor and accompanied by evidence reasonably satisfactory to
SCA’s Project Representative that the Public School Project Costs being
requisitioned have not previously been reimbursed under this Agreement; and

 

 -24- 

 

 

(B)True copies of (1) all contracts on account of which payment is being sought
(or for contracts that have previously been delivered, a statement to that
effect and copies of any amendments thereof), (2) as applicable, requisitions or
applications for payment from trade contractors to Developer’s Construction
Manager(s), and/or requisitions or applications for payment from Developer’s
Construction Manager(s) to Developer, and/or other supporting bills, invoices or
other documentation reflecting the requisitioned Public School Project Costs,
(3) as applicable, a true copy of an “Application and Certificate for Payment”
substantially in the form of AIA Forms G702 and G703, as such forms may be
amended from time to time, completed and executed by Developer’s Construction
Manager(s) and the School Base Building Architect with respect to all School
Base Building Hard Costs covered by the Requisition, (4) as applicable, copies
of any change orders, (5)  a certificate of title continuation for the Property
from the Title Insurer indicating no change in the state of title or liens not
contemplated by the development of the Public School pursuant to this Agreement
or previously approved by SCA’s Project Representative (except, with respect to
Requisitions made subsequent to Closing, for changes in the state of title not
caused by Developer or its contractors), and (6) to the extent required under
Developer’s construction loan documents for the Project, lien waivers from
contractors payment to which is being sought pursuant to the Requisition in
question.

 

In addition, the representations of Developer set forth in Section 12.01 shall
be true, correct and complete in all material respects as of the date of
submission of the Requisition and as of the date of SCA disbursement pursuant
thereto.

 

(iv)       Approval of Requisition. Within five (5) Business Days after receipt
of each Requisition, SCA’s Project Representative shall either approve or
disapprove the Public School Project Costs included in such Requisition,
provided, that all Public School Project Costs included in such Requisition
shall be deemed approved unless, and except to the extent that:

 

(A)The allocation of any amounts in respect of the Pre-Development Costs
included in such Requisition is inconsistent with the allocation methodology set
forth in Exhibit G; or

 

(B)Any School Base Building Soft Costs or School Base Building Hard Costs have
previously been disapproved by Developer’s construction lender’s inspecting
engineer at the “pencil” requisition meeting and walk-through for such
Requisition.

 

If SCA’s Project Representative disapproves any Public School Project Costs
included in such Requisition (other than Public School Project Costs previously
disapproved at the “pencil” requisition and walk-through), the grounds for
disapproval shall be stated specifically in writing. If SCA’s Project
Representative fails to approve or disapprove the Public School Project Costs
included in such Requisition (other than Public School Project Costs previously
disapproved at the “pencil” requisition and walk-through) within five (5)
Business Days after receipt of such Requisition, all such Public School Project
Costs included in such Requisition shall be deemed approved.

 

 -25- 

 

 

(v)       Disapproved Public School Project Costs. If Developer’s construction
lender’s inspecting engineer has disapproved any Public School Project Costs
included in a “pencil” requisition in accordance with Section 5.02(c)(ii), then
Developer may resubmit such disapproved Public School Project Costs in one or
more future “pencil” requisitions or one or more Requisitions for approval by
Developer’s construction lender’s inspecting engineer. If SCA’s Project
Representative has timely disapproved any Public School Project Costs included
in a “pencil” requisition or a Requisition in accordance with Section
5.02(c)(ii) or (iv), then Developer, at Developer’s election, may either (A)
resubmit such disapproved Public School Project Costs in one or more future
“pencil” requisitions and/or Requisitions for approval by SCA’s Project
Representative, or (B) submit the disputed Public School Project Costs to
expedited arbitration pursuant to Article VII. In any such case, and
notwithstanding any such disapproval(s), SCA shall timely pay all Public School
Project Costs covered by such Requisition (other than disputed amounts permitted
to be withheld pursuant to Article VII hereof) in accordance with and subject to
Section 5.02(b)(iv), Section 5.02(c)(vi) and Article VII hereof, as applicable.

 

(vi)       Payment of Requisition. On or before the Requisition Payment Due
Date, subject to Section 5.02(b)(iv), Section 5.02(c)(v) and Article VII hereof,
SCA shall pay Developer: (A) (1) all amounts in respect of Pre-Development
Costs, interest on Pre-Development Costs, School Base Building Soft Costs, Land
Value Payment and Construction Supervision Fee included in such Requisition,
plus (2) the total of all School Base Building Hard Costs attributable to the
School Base Building Work completed to the date of the Requisition, based on
percentage completion, minus (B) (1) all School Base Building Hard Costs
previously paid to Developer, plus (2) the applicable Retainage as defined in
Section 5.02(d).

 

(d)         Retainage. “Retainage” means an amount equal to the then applicable
percentage of School Base Building Hard Costs, exclusive of general conditions,
construction management fees, the Construction Supervision Fee, insurance and
bonds, Developer’s testing and survey costs and permits, in accordance with the
following:

 

(i)          School Base Building Hard Costs.

 

(A)Initial Retainage. Commencing with the Requisition following the first draw
under Developer’s construction loan, Retainage for the School Base Building Hard
Costs shall be the lesser of (1) ten percent (10%), or (2) the amount of
retainage required by Developer’s construction lender under Developer’s
construction loan.

 

(B)Reduction of Retainage. If Developer’s construction loan permits retainage
thereunder to be reduced upon Developer’s having achieved a specified percentage
of completion of the School Base Building Work (or upon Developer’s satisfaction
of other requirements for reduction of retainage), then upon Developer’s having
achieved such specified percentage of completion of the School Base Building
Work (or upon Developer’s satisfaction of such other requirements), Retainage
shall be deemed reduced to the same extent for purposes of this Section 5.02.

 

 -26- 

 

 

(C)Early Release of Certain Retainage. If Developer’s construction loan permits
release of retainage thereunder attributable to contractors for early trades
such as excavation and foundation, or permits retainage to be released for any
other contractors whose portion of the School Base Building Work has been
completed, or if Developer’s construction lender otherwise approves a request by
Developer for release of such retainage, then upon Developer’s satisfaction of
Developer’s construction lender’s conditions for release of such Retainage, SCA
shall pay Retainage for such early trades, or Retainage for such other
contractors whose portion of the School Base Building Work has been completed,
to the same extent.

 

(D)Release of the Balance of Retainage. Release of the balance of any Retainage
remaining upon Substantial Completion of the School Base Building Work, or upon
completion of Punch List Items for the School Base Building Work, shall be
governed by the terms and conditions of Developer’s construction loan. This
subparagraph (D) shall survive the Closing.

 

(ii)       Intentionally Omitted.

 

(e)         “True-Up” Adjustment for Allocations. As part of the initial
Requisition following the first draw under Developer’s construction loan
pursuant to Section 5.02(c), there shall be a “true-up” adjustment of Public
School Project Costs that have been previously paid by SCA, commencing with the
Catch-Up Requisition and ending with the Requisition preceding the first draw
under Developer’s construction loan, on the basis of allocations pursuant to the
Description of Hard Cost Allocation and the Land Value and Soft Cost Allocation
on Exhibit G. The “true-up” adjustment shall reflect any changes to the
underlying bases for such allocations (e.g., percentage of gross square footage,
land allocation percentage) occurring between the Catch-Up Requisition and the
Requisition preceding the first draw under Developer’s construction loan. If the
“true-up” adjustment results in an amount due Developer, such amount, with
interest at Developer’s cost of borrowing, shall be added to the initial
Requisition following the first draw under Developer’s construction loan. If the
“true-up” adjustment results in an amount due SCA, such amount shall be deducted
from the initial Requisition following the first draw under Developer’s
construction loan.

 

 -27- 

 

 

(f)           Holdback Amount.

 

(i)       Developer acknowledges and agrees that notwithstanding anything to the
contrary in this Agreement, SCA shall not be obligated to pay $1,500,000 of the
Construction Supervision Fee until (A) the School Base Building Work has been
Substantially Completed in accordance with the provisions of Section 6.01, and
(B) SCA has reasonably determined that no conditions then exist, arising solely
from construction (other than by SCA or its contractors) then continuing in any
Unit other than the School Unit or in portions of the core and shell of the
Building other than the School Base Building Work, that would prevent children
from safely and appropriately attending at the Public School. The $1,500,000 of
the Construction Supervision Fee to be held back pursuant to this Section
5.02(f) is hereinafter referred to as the “Holdback Amount”.

 

(ii)       Together with the initial monthly Requisition following the first
draw under Developer’s construction loan pursuant to Section 5.02(c), Developer
shall submit a projected draw schedule for the then balance of the Construction
Supervision Fee to be requisitioned by Developer, which projected draw schedule
for the remaining Construction Supervision Fee shall identify a portion of the
Construction Supervision Fee still to be requisitioned equal, in the aggregate,
to the Holdback Amount. Notwithstanding anything to the contrary in Section
5.02(c)(vi) concerning payment of Requisitions, SCA shall be deemed authorized
to hold back the portion of the Construction Supervision Fee so identified by
Developer until SCA has held back an amount, in the aggregate, equal to the
Holdback Amount, and interest shall not be payable on the amounts so held back,
until the Holdback Amount is due and payable pursuant to the provisions of this
Section 5.02(f).

 

(iii)       Commencing on the date when the School Base Building Work has been
Substantially Completed in accordance with the provisions of Section 6.01 and
continuing thereafter until SCA has paid the Holdback Amount, Developer may
submit a Requisition for (or including) the Holdback Amount. Payment of the
Holdback Amount shall be deemed approved unless SCA’s Project Representative
reasonably determines that conditions then exist, arising solely from
construction by Developer then continuing in any Unit other than the School Unit
or in portions of the core and shell of the Building other than the School Base
Building Work, that would prevent children from being safely and appropriately
enrolled at the Public School. If SCA’s Project Representative disapproves
payment of the Holdback Amount, the grounds for such disapproval (including
without limitation the construction conditions being relied on by SCA’s Project
Representative) shall be stated specifically in writing. If SCA’s Project
Representative fails to approve or disapprove payment of the Holdback Amount
within fifteen (15) Business Day’s after receipt of such Requisition, then
payment of the Holdback Amount shall be deemed approved.

 

(iv)       If SCA’s Project Representative has timely disapproved payment of the
Holdback Amount, then Developer, at Developer’s election, may either (A)
resubmit the Holdback Amount for payment in one or more future Requisitions for
approval by SCA’s Project Representative, or (B) submit nonpayment of the
Holdback Amount to expedited arbitration pursuant to Article VII, it being
understood that SCA shall be responsible for causing the NYC Department of
Education (sometimes referred to herein as “DOE”) to participate as necessary in
such arbitration and that the decision of the arbitrator shall be binding
irrespective of whether DOE participates in such arbitration. In any such case,
and notwithstanding any such disapproval, SCA shall timely pay all Public School
Project Costs (if any) covered by the same Requisition in accordance with and
subject to Section 5.02(b)(iv), Section 5.02(c)(vi) and Article VII, as
applicable.

 

 -28- 

 

 

(v)       On or before the Requisition Payment Due Date, SCA shall pay the
Holdback Amount, subject to Section 7.02 hereof. The obligation of SCA to pay
Developer the Holdback Amount shall survive Closing or termination of this
Agreement; provided, however, that the Holdback Amount shall not be payable in
the event SCA terminates this Agreement pursuant to Section 9.01 hereof as a
result of Developer’s default.

 

(g)          Requisitions After Closing of Purchase of School Unit.
Notwithstanding anything to the contrary in this Article 5, in Article 10 or
elsewhere in this Agreement, Developer may submit Requisitions pursuant to this
Section 5.02 after closing of the purchase of the School Unit, and SCA shall be
responsible therefor to the extent the applicable amounts are not paid by
Closing. This Section 5.02(g) shall survive Closing.

 

Section 5.03     Intentionally omitted.

 

Section 5.04    Change Orders.

 

(a)          “Change Order” Defined. “Change Order” means any change, addition
or alteration in or to (i) the School Base Building Work as shown on the 100%
School Base Building CD’s, or (ii) any drawings, plans or specifications, to the
extent that any such change, addition or alteration (as opposed to mere
correction or clarification) is inconsistent with any of the plans and
specifications referenced in subsection (i) and would increase the Public School
Project Costs (including without limitation by increasing the fees or
reimbursables of the School Base Building Design Consultants) or increase
Developer’s costs of designing or constructing the portions of the core and
shell of the Building other than the School Base Building Work. Any SCA request
that Developer use premium labor to accelerate Substantial Completion of the
School Base Building Work shall also be deemed a Change Order.

 

(b)          Requests for Change Orders.

 

(i)       Any SCA request for a Change Order shall be submitted to Developer in
writing. SCA requests for Change Orders shall be subject to Developer’s
approval, not to be unreasonably withheld, provided, that it shall not be deemed
unreasonable for Developer to withhold its approval for any Change Order which:

 

(A)Intentionally Omitted.

 

(B)Intentionally Omitted.

 

(C)Following Commencement of Construction of the School Base Building Work,
would, in Developer’s judgment, cause the Public School Project Costs to exceed
the Public School Project Costs Not-to-Exceed Amount; or

 

(D)Intentionally Omitted.

 

 -29- 

 

 

(E)In Developer’s judgment, would adversely affect Developer’s then schedule for
(1) Substantial Completion of the School Base Building Work, or (2) substantial
completion of portions of the core and shell of the Building other than the
School Base Building Work, or (3) substantial completion of any Unit other than
the School Unit or work to be performed in any Unit other than the School Unit;
or

 

(F)In Developer’s judgment, would prevent or delay Developer from obtaining a
temporary certificate of occupancy for any Unit (other than the School Unit) or
for the Building.

 

Notwithstanding anything to the contrary in Sections 5.04(b)(i)(A) through (D),
if increases in scope contemplated by any Change Order request submitted to
Developer would cause the trade costs of the School Base Building Work, or the
Public School Project Costs to exceed the limitations set forth in Sections
5.04(b)(i)(A) or (C) respectively, then if so requested by SCA, Developer shall
cause the School Base Building Architect promptly, diligently and with
continuity to meet with SCA, Developer and Developer’s Construction Manager(s)
to effect compensating reductions in scope to the extent necessary to eliminate
such excess. Alternately, SCA may notify Developer that it will obtain
additional Evidence of Sufficient Funds to the extent necessary to eliminate any
such excess not eliminated through compensating reductions in scope.

 

(ii)       As soon as reasonably practicable after receipt of SCA’s request,
Developer shall notify SCA whether Developer approves or disapproves the
requested Change Order. If Developer approves the requested Change Order, such
approval shall be accompanied by a proposal, based upon reasonably detailed cost
estimates supported by appropriate back-up from Developer’s Construction
Manager, specifying the costs thereof, which costs shall include (A) any
increases in Public School Project Costs (as the components thereof are defined
in Section 5.01(a)) that would be occasioned by the requested Change Order
(including without limitation costs of delays in performance of the School Base
Building Work), (B) any costs resulting from adverse effects of the requested
Change Order on Developer’s then schedule for (1) Substantial Completion of
portions of the core and shell of the Building other than the School Base
Building Work, or (2) Substantial Completion of any Unit other than the School
Unit, or (3) Substantial Completion of work to be performed in any Unit other
than the School Unit, and (C) any costs resulting from delays that would be
caused by the requested Change Order in obtaining a temporary certificate of
occupancy for any Unit (other than the School Unit) or for the Building.
Notwithstanding anything to the contrary in the preceding sentence, but subject
to Section 3.03(b) above, in no event shall SCA be responsible for increases in
the hard costs of the School Fit-Out Work resulting from a requested Change
Order to the School Fit-Out Work, if the requested Change Order is (a)
occasioned by Change Orders to the School Base Building Work initiated by
Developer after finalization of the 100% School Base Building CD’s in accordance
with Section 3.03(h) (unless consented to by SCA or necessitated by the acts or
omissions of SCA or its design professionals, or (b) occasioned by construction
design defects that are the responsibility of the School Base Building
Architect, or (c) occasioned by defects or material deviations in construction
of the School Base Building Work.

 

 -30- 

 

 

(iii)       Upon receipt of Developer’s proposal, SCA shall have a reasonable
period of time (given the costs of the Change Order as forth in Developer’s
proposal), but not to exceed ten (10) Business Days, to accept such proposal or
withdraw its request for a Change Order. If requested by SCA, Developer shall
meet with SCA, the School Base Building Architect, the School Fit-Out Architect,
and Developer’s Construction Manager(s), in order to discuss alternatives to any
requested Change Order or to discuss methods that would reduce the costs of any
requested Change Order. If acceptance of such proposal would cause the trade
costs of the School Base Building Work or the Public School Project Costs to
exceed the limitations set forth in Sections 5.04(b)(i)(A) or (C) respectively,
then SCA’s acceptance shall be accompanied by Evidence of Sufficient Funds. Upon
Developer’s receipt of such Evidence of Sufficient Funds, the Public School
Project Costs Not-to-Exceed Amount shall be deemed automatically increased by
the amount thereof.

 

(iv)       Upon SCA’s acceptance of Developer’s proposal and upon Developer’s
receipt of any required Evidence of Sufficient Funds, (A) Developer shall
perform the Change Order diligently and with continuity to completion, and (B)
Developer may submit one or more Requisitions therefor, accompanied by
applicable back-up and otherwise in accordance with the provisions of Section
5.02, until SCA has fully paid the costs thereof.

 

(v)       If SCA does not accept Developer’s proposal and withdraws its request
for a Change Order, SCA shall pay Developer, within thirty (30) days after
receipt of Developer’s reasonably detailed invoices therefor, all costs of
preparing Developer’s proposal and the costs of Developer’s construction
management services in connection with the requested Change Order.

 

(vi)       SCA acknowledges and agrees that notwithstanding SCA’s request for a
Change Order, Developer’s performance of the School Base Building Work and of
construction of portions of the core and shell of the Building other than the
School Base Building Work shall continue without delay or interruption
notwithstanding SCA’s request for a Change Order, Developer’s preparation of a
proposal in response thereto, SCA’s consideration of Developer’s proposal, or
any meetings or consultations in connection therewith.

 

(c)          Responsibility for Costs of Certain Developer Change Orders.
Notwithstanding anything to the contrary in Section 5.01(b) or this Section
5.04, but subject to Section 3.03(b) above, Developer shall be responsible for
(and shall not submit Requisitions for) any increases in the hard costs of the
School Fit-Out Work resulting from Change Orders to the School Base Building
Work (1) initiated by Developer after finalization of the 100% School Base
Building CD’s in accordance with Section 3.03(h) (unless (I) consented to by SCA
or (II) necessitated by the acts or omissions of SCA or its design
professionals, any SCA Design Non-Compliance or any Post-April Non-Compliance),
or (2) occasioned by construction design defects that are the responsibility of
the School Base Building Architect, or (3) occasioned by defects or material
deviations in construction of the School Base Building Work; provided that,
subject to Section 3.03(b) above, in no event shall Change Orders to the School
Base Building Work initiated by Developer (unless (I) consented to by SCA or
(II) necessitated by the acts or omissions of SCA or its design professionals,
any SCA Design Non-Compliance or any Post-April Non-Compliance) be inconsistent
with Section 3.01(a)(vi) hereof regarding the size of the School Unit or
otherwise adversely affect the functionality or, except to a de minimis extent,
operations of the School Program, unless SCA shall consent thereto in writing.

 

 -31- 

 

 

(d)         Changes Requested by SCA or Otherwise Required. Notwithstanding
anything to the contrary contained in this Agreement and without limiting SCA’s
other obligations under this Agreement, if any changes to the School Base
Building Work (1) requested by SCA, or (2) required due to SCA Design
Non-Compliance or Post-April Non-Compliance, result in increased costs or
expenses, such increase shall increase the Purchase Price on a dollar-for-dollar
basis (with an increase in the Construction Supervision Fee calculated as if
such increased costs and expenses were originally part of the Purchase Price),
and the Public School Project Costs Not-to-Exceed Amount shall be deemed
automatically increased by the amount thereof. The ability, without restriction,
of SCA to pay all such increased costs and expenses shall be evidenced to
Developer’s reasonable satisfaction as a condition to Developer’s approval of
the applicable change.

 

Section 5.05     Delays.

 

(a)          SCA Delay.

 

(i)         There shall be an “SCA Delay” if Developer was actually delayed in
achieving Substantial Completion of the School Base Building Work or completion
of any Punch List Items, or in achieving substantial completion of any portion
of the core and shell of the Building other than the School Base Building Work,
or substantial completion of any Unit other than the School Unit, or substantial
completion of any work to be performed in any Unit other than the School Unit,
as a result of any delays, acts or omissions of SCA or its design professionals
or other consultants that occur or are continuing after the date of this
Agreement or as a result of any SCA Design Non-Compliance or Post-April
Non-Compliance, including without limitation the delays, acts or omissions set
forth in subparagraphs (A) through (J) below:

 

(A)delays in furnishing written approvals, objections or comments within the
time periods provided by Articles 3 or 4;

 

(B)delays caused by Change Orders, delays caused by the failure of SCA to comply
with SCA’s obligations pursuant to Section 5.04 regarding requested Change
Orders, and delays caused by time needed for design, estimating, approval and
permitting of requested Change Orders;

 

(C)the failure of SCA’s Project Representative to respond within five (5) days
after notice with respect to all issues which could not be addressed because of
the absence of SCA’s Project Representative from bi-weekly or weekly
coordination meetings;

 

(D)the performance of work, or failure to perform work, by a person or entity
employed by or on behalf of SCA;

 

(E)any failure by SCA timely to pay Public School Project Costs covered by
Requisitions submitted pursuant to Section 5.02 and required to be paid pursuant
to this Agreement, and any failure by SCA to act diligently and in a timely
manner, in accordance with SCA’s obligations under Section 5.02, with respect to
approval of Requisitions or otherwise;

 

 -32- 

 

 

(F)Intentionally omitted.

 

(G)any failure by SCA to comply with the obligations of SCA under Section 6.01
with respect to Substantial Completion of the School Base Building Work;

 

(H)Intentionally omitted;

 

(I)any work or failure to perform work, or any other act or omission of or by
SCA, or any violation caused by SCA, which delays Developer in obtaining a
temporary certificate of occupancy for any Unit (other than the School Unit) or
the Building; and

 

(J)the failure of SCA to comply with its obligations with respect to the
expedited arbitration procedures set forth in Article VII, or to duly comply
with the determination of an Arbitrator pursuant to Article VII.

 

(ii)         Unless SCA knew or reasonably should have known of the events
giving rise to an SCA Delay and the fact of such SCA Delay as evidenced by job
minutes, correspondence, memoranda or other writings furnished to or issued to
SCA (which job minutes, correspondence, etc. specifically refer to such events),
SCA shall not become responsible for such delay until Developer notifies SCA of
the events giving rise to such SCA Delay, the fact of such SCA Delay and (to the
extent then reasonably ascertainable) the estimated costs incurred (or that may
be incurred) as a result of such SCA Delay. As soon as reasonably practicable
after the date when SCA knew or reasonably should have known, or after Developer
shall have notified SCA, of the events giving rise to such SCA Delay and the
fact of such SCA Delay, Developer shall furnish SCA with a detailed schedule
impact analysis, with written narrative, showing the impacts of any such SCA
Delay on the so-called “critical path” of the Construction Schedule as then
updated, such analysis to include, without limitation, any concurrent delays or
other delays impacting the Construction Schedule as then updated and not caused
by SCA. In the case of a continuing SCA Delay, Developer agrees to consult with
SCA, and to cause Developer’s Construction Manager(s) to consult with SCA, in an
effort to mitigate such continuing SCA Delay.

 

(iii)        Without limiting anything contained in Section 5.04, SCA shall pay,
within thirty (30) days after receipt of Developer’s reasonably detailed
invoices therefor accompanied by customary back-up (including the detailed
schedule impact analysis referred to in Section 5.05(a)(ii)), all increases in
Public School Project Costs (including, without limitation, increases in
Developer’s Project financing costs) resulting from SCA Delay, as well as any
additional costs resulting from SCA Delay incurred by Developer for completion
of portions of the core and shell of the Building other than the School Base
Building Work, or completion of any Unit other than the School Unit or
completion of work in any Unit other than the School Unit.

 

 -33- 

 

 

(iv)      If Developer and SCA are unable to resolve any dispute about SCA
Delays or the costs occasioned thereby, or any dispute about whether SCA is
required to make a payment of Public School Project Costs under this Agreement,
within five (5) Business Days after either party has received written notice of
such a dispute from the other party, either party may submit such dispute to
expedited arbitration pursuant to Article VII.

 

(v)       Intentionally omitted.

 

(b)          Intentionally omitted.

 

Section 5.06    SCA Audit Rights. Commencing on the date of Substantial
Completion of the School Base Building Work and continuing for twenty-four (24)
months thereafter, SCA shall have the right to audit the Public School Project
Costs and to examine such books and records of Developer as may be reasonably
necessary in order to determine the Public School Project Costs. SCA agrees that
any such audit and examination shall be conducted only on reasonable prior
notice, during normal business hours, at Developer’s office in New York City and
at SCA’s sole cost and expense. This paragraph shall survive Closing.

 

Section 5.07    SCA Pre- and Post-Turnover Work. Notwithstanding anything to the
contrary contained in this Agreement, the SCA Pre- and Post-Turnover Work is
being included in the GMP Contract solely as an accommodation to SCA, it being
understood that the SCA Pre- and Post-Turnover Work may or may not be commenced
or completed by Closing and accordingly it shall not be a condition to SCA’s
obligation to close hereunder that the SCA Pre- and Post-Turnover Work has been
commenced or Substantially Completed. SCA shall pay Developer a Construction
Supervision Fee in respect of the SCA Pre- and Post-Turnover Work in accordance
with Exhibit H annexed hereto. Developer and its contractors shall have access
to the School Unit subsequent to Closing in order to perform the SCA Pre- and
Post-Turnover Work. Notwithstanding anything to the contrary contained herein,
in no event shall the cost of the SCA Pre- and Post-Turnover Work be considered
in calculating the Public School Project Costs Not-to-Exceed Amount. SCA is
responsible for all costs of the SCA Pre- and Post- Turnover Work, and
accordingly in the event the actual costs of the same exceed the estimates set
forth on Exhibit L annexed hereto, SCA shall be responsible for paying such
excess and the Purchase Price shall be increased accordingly; provided that SCA
shall have the right to consult with the Construction Manager, in coordination
with Developer, in order to minimize such excess costs. This Section 5.07 shall
survive Closing.

 

Section 5.08    MEP Equipment. Developer will, at SCA’s cost and expense, cause
factory testing to be performed and extended warranties to be issued (which will
be assigned to SCA (if assignable), or Developer will cooperate with SCA to
enforce the warranties), with respect to the equipment listed on Exhibit J
annexed hereto (collectively, the “MEP Equipment”), and will accept delivery of
such MEP Equipment and cause the work described on Exhibit J to be performed.
Developer’s Construction Manager’s builder’s risk insurance will, in general,
cover damage to such MEP Equipment to the extent such damage occurs on-site, but
SCA shall be solely responsible for any additional premiums required in order to
provide such coverage or any other coverage applicable to such MEP Equipment.
Apart from the foregoing provisions of this Section 5.08, SCA shall have all
responsibility (and Developer shall have no liability) in connection with such
MEP Equipment including, without limitation, with respect to the placement of
the same within the Building in the areas designated for the same on the School
Fit-Out Construction Drawings. SCA hereby agrees to indemnify, defend and hold
Developer and all other Developer Indemnitees harmless from and against any and
all losses, damages, claims, liabilities, judgments, Legal Proceedings and other
costs and expenses (including, without limitation, reasonable attorneys’ fees
and disbursements) of every kind and nature which may be incurred by Developer
or any other Developer Indemnitee in connection with the delivery, placement,
installation, hook-up, operation, maintenance and/or repair of the MEP
Equipment. SCA hereby releases and discharges Developer from any and all
obligations, claims and liability in connection with the MEP Equipment
including, without limitation, if any warranties in connection with any MEP
Equipment are voided for any reason. This Section 5.08 shall survive the Closing
or termination of this Agreement.

 

 -34- 

 

 

Article VI

 

SUBSTANTIAL COMPLETION; COMPLETION OF PUNCH LIST ITEMS; ACCESS FOR SCHOOL BASE
BUILDING WORK AND SCHOOL F&E WORK: WARRANTIES

 

Section 6.01     Substantial Completion of School Base Building Work and
Completion of Punch List Items.

 

(a)         “Substantial Completion” Defined. For purposes of this Agreement,
“Substantial Completion,” “Substantially Complete,” “Substantially Completed”
and similar terms means full completion in accordance with the 100% School Base
Building CD’s, except for minor details of construction, decoration, mechanical
adjustment or installation (“Punch List Items”), which Punch List Items shall
have been identified in writing by the School Base Building Architect after SCA
shall have been afforded access to inspect the School Unit on the School Base
Building Walk-Through Date.

 

(b)          Substantial Completion of School Base Building Work.

 

(i)       Substantial Completion of School Base Building Work. The School Base
Building Work shall be deemed Substantially Completed as determined in
accordance with this Section 6.01(b) or on a date otherwise determined by an
Arbitrator pursuant to Article VII hereof.

 

(ii)       Notices to be Delivered; Walk-Through. Developer shall give SCA
prompt notice of Developer’s achievement of the following construction
milestones shown on the Construction Schedule: Commencement of pouring of
foundations; so called “topping out” of the structural frame of the Building;
and completion of enclosure of the School Unit. Developer shall notify SCA at
least ninety (90) days in advance of the projected date of Substantial
Completion of the School Base Building Work (the “School Base Building Initial
Notice”). At least sixty (60) days prior to the earliest delivery date specified
in the School Base Building Initial Notice, Developer shall send to SCA a second
notice (the “School Base Building First Confirmation Notice”) confirming the
date set forth in the School Base Building Initial Notice, or if such delivery
date is no longer expected to be met by Developer, such second notice shall set
forth the revised anticipated delivery date. At least thirty (30) days prior to
the delivery date specified in the School Base Building First Confirmation
Notice, Developer shall deliver to SCA a third notice (the “School Base Building
Last Confirmation Notice”) confirming the date set forth in the School Base
Building First Confirmation Notice, or if such delivery date is no longer
expected to be met by Developer, such School Base Building Last Confirmation
Notice shall set forth the revised anticipated delivery date (which may be later
but not earlier than the anticipated delivery date set forth in the School Base
Building First Confirmation Notice).

 

 -35- 

 

 

At least ten (10) days prior to the date Developer believes the School Base
Building Work will be Substantially Completed, Developer shall send SCA a notice
(a “School Base Building Substantial Completion Notice”) setting forth the
anticipated School Base Building Substantial Completion Date. Within five (5)
Business Days after SCA’ s receipt of such School Base Building Substantial
Completion Notice, Developer and SCA shall establish a date reasonably
acceptable to Developer and SCA (the “School Base Building Walk-Through Date”)
on which Developer and SCA shall jointly inspect the School Unit, which School
Base Building Walk-Through Date shall be no earlier than the anticipated School
Base Building Substantial Completion Date set forth in the School Base Building
Substantial Completion Notice and no later than two (2) Business Days after such
anticipated School Base Building Substantial Completion Date. In the event the
School Base Building Work is Substantially Complete on the School Base Building
Walk-Through Date and SCA shall so certify or an Arbitrator shall so determine
in accordance with the procedures set forth in Article VII, the Substantial
Completion Date for the School Base Building Work shall be the date specified in
the School Base Building Substantial Completion Notice. If the School Base
Building Work is not Substantially Complete on the School Base Building
Walk-Through Date then the Substantial Completion Date for the School Base
Building Work shall not occur and Developer, at least five (5) days prior to the
date Developer believes the School Base Building Work will be Substantially
Complete, shall send to SCA a second School Base Building Substantial Completion
Notice setting forth the anticipated School Base Building Substantial Completion
Date. Within three (3) days after SCA’s receipt of a second School Base Building
Substantial Completion Notice, SCA shall establish a second School Base Building
Walk-Through Date, reasonably acceptable to Developer, on which Developer and
SCA shall jointly re-inspect the School Unit, which second School Base Building
Walk-Through Date shall be no earlier than the anticipated Substantial
Completion Date set forth in the second School Base Building Substantial
Completion Notice and no later than one (1) Business Day after such anticipated
Substantial Completion Date. In the event the School Base Building Work is still
not Substantially Complete on the second School Base Building Walk-Through Date,
then the procedure set forth in the preceding two sentences shall be repeated as
many times as necessary until the School Base Building Work is Substantially
Complete.

 

In the event that following any joint inspection by Developer and SCA, SCA
believes the School Base Building Work is not Substantially Complete, then
within two (2) Business Days after the completion of such inspection SCA shall
furnish Developer with a written list of incomplete work (the “Incomplete School
Base Building Work”) which SCA believes must be completed. In the event
Developer and SCA are unable to agree whether the School Base Building Work is
Substantially Completed, either party may refer such dispute to expedited
arbitration in accordance with the procedures set forth in Article VII. After
the delivery to SCA of any School Base Building Substantial Completion Notice
and upon request by Developer, SCA shall use reasonable efforts to meet with
Developer and Developer’s Construction Manager at the Building (accompanied by
SCA’s Project Representative and such of SCA’s architectural, engineering and/or
construction consultants (“SCA’s Inspection Consultants”) as Developer shall
have reasonably requested), prior to the date specified in such final School
Base Building Substantial Completion Notice, to identify any items of Incomplete
School Base Building Work.

 

 -36- 

 

 

(iii)       Punch List Items. Developer shall cause the School Base Building
Architect to prepare the list of Punch List Items and shall cause the same to be
delivered to SCA no later than ten (10) Business Days after the earlier of (i)
the date SCA certifies that the School Base Building Work is Substantially
Completed, or (ii) the date an Arbitrator, pursuant to Article VII, issues a
decision that the School Base Building Work is Substantially Complete. Developer
shall cause the Punch List Items to be completed as soon as reasonably
practicable after completion of the list of Punch List Items, which obligation
shall survive Closing.

 

(iv)       Notwithstanding the forgoing, and without limiting the provisions of
Section 5.02(f) regarding the Holdback Amount, Substantial Completion shall be
deemed to have occurred even though (A) there remain openings for construction
hoists and/or cranes affixed to the Building, which openings shall not prevent
the performance of School F&E Work in accordance with the provisions of this
Agreement in the School Unit, (B) there remain temporary supports, bracing,
vertical transportation, safety or other devices, or other work necessary for
completion of construction of the Building or the plazas adjacent thereto in
accordance with Legal Requirements and good construction practices, provided
that the same shall not materially interfere with the performance of School F&E
Work in accordance with the provisions of this Agreement in the School Unit, and
that any such work shall be subject to the provisions of Section 6.01(b)(v), or
(C) the SCA Pre- and Post-Turnover Work may not have been commenced or
completed. Developer agrees that the design for any such construction hoists
and/or cranes referred to in subsection (A) of this paragraph will reflect that
SCA may be performing the F&E work in the School Unit during a period of time
while such construction hoists and/or cranes remain in operation. Accordingly,
such construction hoists and/or cranes shall be designed in a manner, consistent
with good construction practices, that will minimize interference with SCA’s
performance of the School F&E Work in the School Unit after Substantial
Completion shall have occurred. In addition, any openings for such construction
hoists and/or cranes shall be temporarily sealed and made weather tight for so
long as such construction hoists and/or cranes remain in operation, and shall be
permanently enclosed, sealed and made weather tight promptly following removal
of such hoists and/or cranes, which shall be removed as soon as reasonably
practicable. Any such temporary supports, bracing, vertical transportation,
safety or other devices, or other work referred to in subsection (B) of this
paragraph shall be removed or completed as soon as reasonably practicable in
accordance with good construction practices, any damage to the School Unit
caused by such removal or caused by completion of any such work shall be
promptly repaired by Developer, and any School Base Building Work remaining to
be completed following such removal, or following completion of any such work,
shall be completed by Developer as soon as reasonably practicable in accordance
with good construction practices, which obligation shall survive Closing.

 

 -37- 

 

 

(v)       Developer’s Performance of Work in the Building after Substantial
Completion of the School Base Building Work. In completing the Punch List items
and in otherwise completing the initial construction of the Building and the
plazas adjacent thereto after the date of Substantial Completion of the School
Base Building Work, to the extent that DOE is operating in the School Unit,
Developer shall (A) except in the case of an emergency, give DOE at least
seventy-two (72) hours prior notice of such work if such work will entail an
interruption in elevator service, HVAC service, electricity, water or any other
utility within the School Unit, provided that in no event shall Developer shut
down any such service to the School during a regular school day (except in the
case of an emergency), (B) perform such work other than during Business Hours,
provided, that such work may be performed during Business Hours (but not while
the School is in session) with the consent of DOE, not to be unreasonably
withheld, (C) comply with DOE’s security requirements, and (D) use reasonable
efforts to minimize any disruption to DOE’s operations in the School Unit for
the purposes contemplated by the School Program. If DOE requires that any
employee or agent of Developer be accompanied by a representative of DOE when
entering any occupied portion of the School Unit to perform work, DOE shall make
such representative available for such purposes (1) as soon as reasonably
practicable after a request therefor during Business Hours, and (2) within
twelve (12) hours after a request therefor at all other times. This paragraph
shall survive the Closing.

 

Section 6.02      “Stand-By” Labor Costs. During any period when SCA shall be
performing the School Fit-Out Work, School F&E Work or any other work in the
School Unit, SCA shall be solely responsible for all indirect and so-called
“stand by” union labor costs occasioned by (i) performance of such School
Fit-Out Work, School F&E Work or such other work, (ii) SCA use of any elevators
in the School Unit, and (iii) SCA use of Building HVAC systems and any other
mechanical, electrical or plumbing systems in the School Unit. SCA shall
reimburse Developer for such labor costs within thirty (30) days after SCA’s
receipt of Developer’s reasonably detailed invoices therefor. This Section 6.02
shall survive Closing.

 

Section 6.03     Beneficial Interest in Warranties. To the extent such
designation as beneficiary (or co-beneficiary) is commercially available, SCA
(or, at SCA’s election, the New York City Department of Education a/k/a the
Board of Education of the City School District of the City of New York) shall be
named as beneficiary (or as co-beneficiary, to the extent such warranties cover
elements of the core and shell of the Building outside the School Unit) in all
warranties received by Developer from contractors and suppliers engaged in
performance of the School Base Building Work, including but not limited to the
warranties specifically required by the 100% School Base Building CD’s. To the
extent commercially available, said warranties shall commence not later than the
date of Substantial Completion of the School Base Building Work, and shall
continue for at least one (1) year after the date of Substantial Completion of
the School Base Building Work. Developer agrees to cooperate fully with SCA (or
the New York City Department of Education a/k/a the Board of Education of the
City School District of the City of New York) and the Board of Managers in the
event that SCA (or the New York City Department of Education a/k/a the Board of
Education of the City School District of the City of New York) seeks to enforce
its rights with respect to such warranties.

 

Article VII

EXPEDITED JAMS ARBITRATION

 

Section 7.01     Expedited Arbitration. The parties hereby agree that,
notwithstanding anything to the contrary contained herein, all disputes under
this Agreement, the Master Lease and the Sublease, and any other document
executed by the parties in connection with any of the foregoing, shall be
resolved by binding arbitration conducted in The City of New York (and not by
litigation), in accordance with the provisions of this Article VII, and judgment
upon the award rendered may be entered in any court having jurisdiction thereof.

 

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Section 7.02     Selection of Arbitrators; Arbitration Procedure. The party
hereto desiring to arbitrate a dispute pursuant to this Article VII shall give
notice (a “Dispute Notice”) to that effect to the other party, and a single
arbitrator shall be appointed in accordance with the JAMS Rules (as defined
below) to resolve the dispute in question. For purposes of this Agreement, the
arbitrator actually serving to resolve any dispute is referred to as the
“Arbitrator.”

 

Within two (2) Business Days after the Dispute Notice has been delivered, or as
soon as the Arbitrator is available to meet, both parties shall meet with the
Arbitrator, who shall attempt to mediate a resolution to the dispute acceptable
to the parties. Within two (2) Business Days after either party or the
Arbitrator certifies in writing that such mediation is at an impasse, the
dispute shall be determined by the Arbitrator in accordance with the then
effective JAMS Streamlined Arbitration Rules and Procedures (the “JAMS Rules”).
Copies of the Arbitrator’s decision shall be sent to Developer and to SCA and
shall be binding on both. The Arbitrator shall have no power to vary or modify
any of the provisions of this Agreement, and his or her powers and jurisdiction
are hereby limited accordingly. The Construction Manager may participate in any
dispute relating to the agreement between Developer and Construction Manager.
During any mediation provided for by this Article VII or the consideration of
any issue by the Arbitrator pursuant to this Article VII, SCA and Developer
shall observe and perform each and every one of its obligations hereunder,
including, without limitation, SCA’s obligation to pay timely all Public School
Project Costs or other costs contemplated hereunder (other than amounts being
disputed pursuant to this Article VII, unless Developer’s construction lender
determines that any amount in dispute is required, under the applicable
contract, to be paid, in which case SCA shall be obligated to make such payment
within fifteen (15) days after such determination by Developer’s construction
lender notwithstanding such dispute, but if the Arbitrator determines that SCA
was not required to make such payment, then SCA shall have the right to deduct
such amount (to the extent not theretofore refunded to SCA by Developer) from
amounts payable by SCA pursuant to future Requisitions, and to the extent that
future Requisitions are insufficient, the Holdback Amount, without limiting
SCA’s right to seek to collect any deficiency directly from Developer). Any
construction lender of Developer, or such lender’s representative, shall have
the right to attend any and all mediation and arbitration proceedings conducted
pursuant to this Article VII for the purpose of observing such proceedings,
provided, however, that such lender shall have no right to participate in any
way in any such proceeding.

 

Article VIII

INSURANCE AND INDEMNITIES

 

Section 8.01     Developer’s Insurance Coverages.

 

(a)          Developer shall cause its Construction Manager to obtain and
maintain through the date of completion of the Punch List Items:

 

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(i)       workers’ compensation and disability benefits insurance as required by
the State of New York and employer’s liability insurance in the amount of Five
Hundred Thousand Dollars ($500,000) per occurrence;

 

(ii)       commercial general liability insurance against claims for property
damage and/or personal injury and/or death arising out of the work performed
under this Agreement by or on behalf of Developer, written on an occurrence
basis, to afford protection in the amount of Two Million Dollars ($2,000,000)
per occurrence, Four Million Dollars ($4,000,000) general aggregate and Four
Million Dollars ($4,000,000) products completed operations aggregate;

 

(iii)       automobile liability insurance covering all automobiles and other
vehicles licensed for road use used in connection with the work performed under
this Agreement by or on behalf of Developer, whether owned, non-owned and/or
hired vehicles and automobiles, with endorsement for “Changes in Business Auto
and Truckers Coverage Forms - Insured Contract” in the amount of One Million
Dollars ($1,000,000) combined single limit per accident for bodily injury and
property damage;

 

(iv)       Excess Umbrella Liability policy with limit of not less than Fifty
Million Dollars ($50,000,000) each occurrence, and Fifty Million Dollars
($50,000,000) Aggregate. This policy should be excess of Employers Liability,
General Liability and Automobile Liability policies.

 

(v)       builder’s risk property insurance on all materials, equipment,
machinery and supplies related to the work performed by or on behalf of
Developer under this Agreement, insuring against direct physical loss or damage
to covered property (e.g., excluding the Land appurtenant thereto) by all risk
of physical loss, on a completed value non-reporting form basis, in the amount
of the total cost of the work required to be performed by Developer under this
Agreement, but the policy may have a deductible feature consistent with the
Construction Manager’s customary practices.

 

(b)         Developer shall cause the School Base Building Architect to maintain
in full force and effect an errors and omissions policy until the School Base
Building Work is completed, including all Punch List Items, and a temporary
certificate of occupancy has been obtained for all portions of the Building
(excluding the School Unit), in the amount of Two Million Dollars ($2,000,000)
per claim and aggregate per policy year. Developer shall not consent to the
amendment or termination of such policy to limit or adversely affect SCA’s
coverage without SCA’s prior written approval, not to be unreasonably withheld
or delayed.

 

(c)         With respect to all insurance policies maintained by Developer’s
Construction Manager as required hereunder, Developer shall, within no more than
ten (10) Business Days following receipt of a written request therefor, provide
SCA with insurance certificates evidencing such insurance policies.

 

(d)         Developer shall deliver to SCA a certificate evidencing the
replacement or renewal of any such insurance policy prior to the expiration
thereof. Developer and Developer’s Construction Manager shall cause SCA, The
City of New York and DOE to be named as additional insureds on all liability
insurance policies required hereunder on a primary and non-contributory basis
with respect to its work in its defined space;

 

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(e)         If Developer fails to satisfy its obligations set forth in Sections
8.01(a) and (b) above, then upon at least ten (10) Business Days prior notice
SCA may, but shall not be obligated to, procure such insurance for such risks
and pay the commercially reasonable premiums for any such insurance. All
commercially reasonable sums advanced by SCA to pay premiums on insurance
policies which Developer is required to cause Developer’s Construction Manager
to maintain hereunder shall be due and payable by Developer to SCA within thirty
(30) days after demand accompanied by reasonable documentation supporting the
amount of any such costs or expenses. If any dispute regarding the
interpretation or application of this Section 8.01(e) is not resolved within
five (5) Business Days after Developer’s receipt of SCA’s notice, either party
may submit such dispute to expedited arbitration in accordance with the
procedures set forth in Article VII.

 

Section 8.02    SCA’s Insurance Coverages.

 

(a)         During the performance of the School Fit-Out Work and School F&E
Work, SCA shall maintain or will cause its contractors and sub-contractors to
maintain:

 

(i)       workers’ compensation and disability benefits insurance as required by
the State of New York and employer’s liability insurance in the amount of Five
Hundred Thousand Dollars ($500,000) per occurrence;

 

(ii)       commercial general liability insurance against any and all claims for
property damage and/or personal injury and/or death arising out of the work
performed under this Agreement by or on behalf of SCA, written on an occurrence
basis, to afford protection written on an occurrence basis, to afford protection
in the amount of Two Million Dollars ($2,000,000) per occurrence, Four Million
Dollars ($4,000,000) general aggregate and Four Million Dollars ($4,000,000)
products completed operations aggregate; Coverage shall be primary and shall not
contribute to any coverage held by the Developer/Contractor;

 

(iii)       Excess Umbrella Liability policy with limit of not less than Twenty
Five Million Dollars ($25,000,000) each occurrence, and Twenty Five Million
Dollars ($25,000,000) Aggregate. This policy should be excess of Employers
Liability, General Liability and Automobile Liability policies.

 

(iv)       automobile liability insurance covering all automobiles and vehicles
used in connection with the work performed under this Agreement by or on behalf
of SCA, whether owned, non-owned and/or hired vehicles and automobiles, with
endorsement for “Changes in Business Auto and Truckers Coverage Forms - Insured
Contract” in the amount of One Million Dollars ($1,000,000) combined single
limit per accident for bodily injury and property damage;

 

(v)       builder’s risk property insurance on all materials, equipment,
machinery, including coverage for any hot testing, and supplies related to the
work performed by or on behalf of SCA under this Agreement, insuring against
direct physical loss or damage to the covered property related to the School
Unit (e.g., excluding the Land appurtenant thereto) by all risk of physical
loss, on a completed value non-reporting form basis, in the amount of the total
cost of the work required to be performed by SCA under this Agreement, but the
policy may have a deductible feature consistent with SCA’s customary practices.
Coverage shall be primary and shall not contribute to any insurance held by the
Developer; and

 

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(b)       SCA shall cause SCA’s consultants to maintain in full force and effect
an errors and omissions policy until the School Fit-Out Work and School F&E Work
is completed, in the amount of One Million Dollars ($1,000,000) per claim and
aggregate per policy year. SCA shall not consent to the amendment or termination
of such policy to limit or adversely affect Developer’s coverage without
Developer’s prior written approval, not to be unreasonably withheld or delayed.

 

(c)       With respect to all insurance policies maintained by SCA as required
hereunder: (1) SCA shall, within no more than ten (10) Business Days following
receipt of a written request therefor, provide Developer with copies of such
polices or insurance certificates evidencing the same, and (2) SCA shall cause
Developer, Trinity Place Holdings Inc. and TPHGreenwich Holdings LLC to be named
as additional insureds on all liability insurance policies on a primary and
non-contributory basis with respect to its work in its defined space and with
respect to any equipment of SCA (e.g., MEP Equipment, etc.) located outside of
SCA’s space.

 

(d)       SCA shall endeavor to cause each insurance policy contemplated by
Section 8.02(a) to provide that it will not expire or terminate or be cancelled
without, in each case, the insurer’s providing to SCA at least thirty (30) days’
prior written notice of such expiration, termination or cancellation. SCA shall
deliver to Developer a certificate evidencing the replacement or renewal of any
such insurance policy prior to the expiration thereof.

 

(e)       If SCA fails to satisfy its obligations set forth in Sections 8.02(a)
and (b) above, then upon at least ten (10) Business Days prior notice Developer
may, but shall not be obligated to, procure such insurance for such risks and
pay the commercially reasonable premiums for any such insurance. All
commercially reasonable sums advanced by Developer to pay premiums on insurance
policies which SCA is required to maintain hereunder shall be due and payable to
Developer by SCA within thirty (30) days after demand accompanied by reasonable
documentation supporting the amount of any such costs or expenses. If any
dispute regarding the interpretation or application of this Section 8.02(e) is
not resolved within five (5) Business Days after SCA’s receipt of Developer’s
notice, either party may submit such dispute to expedited arbitration in
accordance with the procedures set forth in Article VII.

 

Section 8.03     Waiver of Subrogation. All policies of insurance required under
this Agreement shall include a waiver of the right of subrogation with respect
to all the named insureds and additional insureds.

 

Section 8.04     Indemnification.

 

(a)       Developer hereby agrees to indemnify, hold harmless from, and defend
(or cause its insurance carrier to defend) all SCA Indemnitees against any and
all losses, damages, claims, liabilities, judgments, Legal Proceedings and other
costs and expenses (including, without limitation, reasonable attorneys’ fees
and disbursements incurred by such SCA Indemnitees), of every kind and nature
which may be incurred by or imposed against any SCA Indemnitees to the extent
arising out of or in connection with Developer’s intentional misconduct or
negligence in the performance of its obligations hereunder, except to the extent
such losses are caused directly or indirectly by (i) such SCA Indemnitees’
intentional misconduct or negligence or (ii) SCA’s consultants in carrying out
any of the School Fit-Out Work or School F&E Work.

 

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(b)       SCA hereby agrees to indemnify, hold harmless from, and defend to the
fullest extent of the law (or cause its insurance carrier to defend) all
Developer Indemnitees against any and all losses, damages, claims, liabilities,
judgments, Legal Proceedings and other costs and expenses (including, without
limitation, reasonable attorneys’ fees and disbursements incurred by such
Developer Indemnitees), of every kind and nature which may be incurred by or
imposed against any Developer Indemnitees to the extent arising out of or in
connection with the intentional misconduct or negligence of SCA in SCA’s
performance of the School Fit-Out Work or School F&E Work or the intentional
misconduct or negligence of SCA or its agents, except to the extent such losses
are caused by (i) Developer Indemnitees’ intentional misconduct or negligence,
or (ii) Developer’s consultants in carrying out any of the Developer’s
obligations under this Agreement.

 

(c)       The provisions of this Section 8.04 shall survive the termination or
expiration of this Agreement as to matters arising prior to the termination or
expiration of this Agreement.

 

Article IX

DEFAULT AND REMEDIES; CERTAIN TERMINATION PROVISIONS

 

Section 9.01     Default by Developer; SCA’s Remedies.

 

(a)       If, after the Commencement of Construction of the School Base Building
Work, (I) Developer fails to perform the work it is required to perform
hereunder as a result of substantially all of the work on the School Unit at the
time in question ceasing to be performed for more than forty-five (45)
consecutive days, or (II) Developer fails to cause the School Base Building Work
to be Substantially Completed no later than September 6, 2023 (provided,
however, that any period during which Arbitration over whether Substantial
Completion has occurred shall not be considered for purposes of the foregoing
deadline to the extent the Arbitrator determines that Substantial Completion
occurred on or prior to September 6, 2023), then provided (i) SCA is not then in
default under this Agreement beyond any applicable notice and cure period and
(ii) no Force Majeure or SCA Delay is then continuing, SCA shall have the right
after ten (10) Business Days’ prior written notice to Developer, to (x)
terminate this Agreement, the Master Lease and the Sublease and recover all
Public School Project Costs paid to Developer and any other actual (but not
consequential or punitive) damages incurred or suffered by SCA (it being
understood that the termination of the Master Lease shall not be effective until
immediately after SCA has been refunded and has recovered all of the foregoing
amounts), (y) enforce specific performance, or (z) pursue any right or remedy
available to SCA (but in no event shall SCA have the right to consequential or
punitive damages), unless, in the case of clause (I) above, (A) work on the
School Unit at the time in question has resumed during said ten (10) Business
Day period and/or (B) (1) Developer has notified SCA during such ten (10)
Business Day period that Developer intends to assign this Agreement pursuant to
Section 15.07(a) within thirty (30) days of the date of such notice and such
assignment becomes effective within such thirty (30) day period and (2) within
five (5) Business Days after the effective date of such assignment, work on the
School Unit at the time in question has resumed, it being understood that in
either case of (A) or (B) above, SCA shall not be entitled to exercise any of
the remedies set forth above. This paragraph shall survive the termination of
this Agreement.

 

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(b)       If Developer defaults in its obligation to convey the School Unit to
SCA pursuant to Article X for any reason other than due to a default by SCA
hereunder or the failure of a condition precedent to Closing which is for the
benefit of Developer, then SCA may (i) terminate this Agreement, the Master
Lease and the Sublease, and be refunded all Public School Project Costs already
paid to Developer and recover any other actual (but not consequential or
punitive) damages incurred or suffered by SCA (it being understood that the
termination of the Master Lease shall not be effective until immediately after
SCA has been refunded and has recovered all of the foregoing amounts), (ii)
enforce specific performance, or (iii) pursue any other remedy but in no event
shall SCA have the right to consequential or punitive damages. This paragraph
shall survive the termination of this Agreement.

 

(c)       If Developer defaults with respect to any of its obligations under
this Agreement, the Master Lease or the Sublease other than as set forth in
subsections (a) and (b) above, SCA shall not be entitled to terminate this
Agreement, the Master Lease or the Sublease, but shall be entitled to seek
actual (but not consequential or punitive) damages incurred or suffered by SCA,
and (1) in the event such default is not cured within thirty (30) business days
after written notice from SCA, then SCA shall have the right to exercise
self-help at Developer’s sole cost and expense, except that SCA shall not be
entitled to perform any work at the Property in connection with such default by
Developer; provided, however, that SCA shall be entitled, as part of its
self-help remedy, to perform work solely within the School Unit so long as
Developer is not performing or causing to be performed any work in or to any
portion of the Property, and such right of SCA shall be subject to the cure
right of any Subleasehold Lender (as defined in the Sublease) pursuant to the
terms of the Sublease and/or (2) SCA shall have the right to seek specific
performance.

 

(d)       Without limiting SCA’s rights and remedies under Section 9.01(a) and
(b) above, if this Agreement is terminated by SCA pursuant to Section 9.01
hereof as a result of a default by Developer under this Agreement, and a
Qualified Lender does not receive or is not entitled to receive a New Sublease
(as defined in the Sublease) (it being understood that the Master Lease shall
remain in full force and effect subject to the remainder of this paragraph),
then, upon notice from SCA, Developer shall either (1) pay the SCA Damages
Amount (as defined below) to SCA within thirty (30) days thereafter (in which
event the Master Lease shall automatically terminate and the MOL Terminations
shall be filed), or (2) hire a third-party real estate broker reasonably
acceptable to SCA to market and sell the Property and thereafter diligently
pursue such sale, with the proceeds of such sale to be paid in the following
order: (i) first, to SCA to reimburse SCA for any Public School Project Costs
paid by SCA to Developer pursuant to Article V of this Agreement and actual (but
not consequential or punitive) damages incurred or suffered by SCA (the “SCA
Damages Amount”) irrespective of any rights of any Qualified Lenders, other
lenders or any other Persons (it being understood that SCA shall be entitled to
be repaid the SCA Damages Amount before any other person or entity); and (ii)
thereafter, to Developer (subject to any rights of Developer’s lenders under the
applicable loan documents). Any such sale must be made free and clear of the
Master Lease and the Sublease, it being understood that SCA and Developer shall
cause the MOL Terminations and any related transfer tax forms to be executed,
recorded and/or filed at the closing of the sale of the Property; provided,
however, that the Master Lease shall not be terminated and MOL Terminations
shall not be filed until either (x) the date of, and concurrently with the
closing of, the sale of the Property and payment to SCA of the SCA Damages
Amount, if an amount sufficient to pay the SCA Damages Amount is not escrowed
prior to such closing under the terms of an escrow agreement reasonably
acceptable to SCA or (y) the date the SCA Damages Amount is deposited into an
escrow account under the terms of an escrow agreement reasonably acceptable to
SCA pending the closing of such sale, at which point the Master Lease shall be
terminated and MOL Terminations shall be filed. For the avoidance of doubt, SCA
shall have the right to enforce this Section 9.01(d) by specific performance by
causing a court to order a sale in accordance with this Section.

 

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(e)          Any exercise of remedies under this Section 9.01 is subject to
Article VII hereof.

 

Section 9.02      Default by SCA; Developer’s Remedies.

 

(a)          If SCA fails to timely satisfy any of its funding obligations under
Article V (a “Funding Failure”) and such failure remains uncured after fifteen
(15) Business Days’ written notice from Developer, then, provided Developer is
not then in default under this Agreement beyond any applicable notice and cure
period, Developer may (i) terminate this Agreement, the Master Lease and the
Sublease, cease all work on the School Base Building Work and be relieved of any
obligation to sell the School Unit to SCA, and SCA shall be liable for payment
of (w) all then unpaid Requisitions, (x) all then unpaid Retainage, (y) all
Public School Project Costs previously incurred by Developer but not yet
requisitioned pursuant to Article V (and Developer shall be entitled to retain
all sums previously disbursed to Developer), and (z) any other actual (but not
consequential or punitive) damages incurred or suffered by Developer, (ii)
enforce specific performance or (iii) pursue any other remedy, but in no event
shall Developer have the right to consequential or punitive damages (the
foregoing clauses (i)-(iii), collectively, the “Developer Remedies”).
Notwithstanding the foregoing, on two (2) occasions only in a given 12-month
period, SCA shall be entitled to receive a second written notice of a Funding
Failure and in such case Developer shall not be entitled to enforce the
foregoing remedies unless SCA has not cured such Funding Failure within five (5)
Business Days after such second notice is given. Notwithstanding anything to the
contrary contained herein, (I) any payment properly disputed by SCA as expressly
permitted in this Agreement shall not constitute a Funding Failure or a default
by SCA under this Agreement unless and until such sum becomes due and payable
pursuant to the express terms of this Agreement and is not paid by SCA, and (II)
Developer acknowledges that The City of New York has an annual payment
moratorium (which typically lasts two weeks) and that, subject to the remainder
of this subclause (II), there shall be no Funding Failure or default by SCA
under this Agreement in the event that SCA fails to timely pay amounts due under
this Agreement because the applicable payment due date falls during such annual
moratorium, in which case payment by SCA shall be due and payable within fifteen
(15) days after the date of the expiration of such moratorium (and it shall be a
Funding Failure and a default by SCA under this Agreement in the event SCA does
not so pay by such date); provided, however, that the foregoing shall not be
deemed to give SCA any right to delay approval of any Requisition. SCA shall,
however, (1) reasonably cooperate with Developer to pay Developer as soon as
possible (including prior to the effectiveness of such moratorium to the extent
reasonably practical, even if such payment is not due and payable until the
moratorium is in effect), and (2) endeavor to promptly notify Developer in
writing upon becoming aware of the dates of any such moratorium period but in no
event shall the failure to do so be deemed a default by SCA under this
Agreement. This paragraph shall survive the termination of this Agreement.

 

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(b)          If SCA defaults in its obligation to acquire the School Unit
pursuant to Article X for any reason other than a default by Developer hereunder
or the failure of a condition precedent to Closing which is for the benefit of
SCA, then Developer may pursue the Developer Remedies. This paragraph shall
survive the termination of this Agreement.

 

(c)          Notwithstanding anything to the contrary contained in this
Agreement, if Developer exercises any right under this Section 9.02 to terminate
this Agreement, then SCA shall pay to Developer, within thirty (30) days after
receipt of Developer’s reasonably itemized demand therefor, an amount equal to
the sum of (A) Developer’s commercially reasonably projected costs to redesign
and reconfigure and, if applicable, retrofit the School Unit, (B) Developer’s
reasonably projected carrying costs for a reasonable period (e.g., real estate
taxes, operating expenses, common charges under the Condominium Documents, debt
service and marketing expenses), and (C) any other actual (but not consequential
or punitive) damages incurred or suffered by Developer (including, without
limitation, any payments due under Developer’s construction loan resulting from
SCA’s default). Nothing contained in this Section 9.02(c) shall be deemed to
limit any other right or remedy of Developer hereunder. This paragraph shall
survive the termination of this Agreement.

 

(d)          If SCA defaults with respect to any of its obligations under this
Agreement, the Master Lease or the Sublease other than as set forth in
subclauses (a) and (b) above, Developer shall not be entitled to terminate this
Agreement, the Master Lease or the Sublease but shall be entitled to seek actual
(but not consequential or punitive) damages incurred or suffered by Developer,
and (1) in the event such default is not cured within thirty (30) business days
after written notice from Developer, then Developer shall have the right to
exercise self-help at SCA’s sole cost and expense, and/or (2) Developer shall
have the right to seek specific performance.

 

(e)          Any exercise of remedies under this Section 9.02 is subject to
Article VII hereof.

 

Section 9.03      Certain Termination Provisions. Notwithstanding anything to
the contrary contained herein:

 

(a)          If this Agreement is terminated by Developer pursuant to Section
9.02 hereof, then the Master Lease and Sublease shall also terminate (and the
parties shall promptly execute, notarize and record any and all documents in
order to effectuate the same). If this Agreement terminates for any other
reason, then, subject to the provisions of subsection 9.01(d) above, at any time
after SCA has been paid all amounts owed to SCA under this Agreement, at either
party’s election, by written notice to the other party hereto, the Master Lease
and Sublease shall terminate (and the parties shall promptly execute, notarize
and record any and all documents in order to effectuate the same). Neither
Developer nor SCA shall have any right to terminate the Sublease other than in
connection with a termination of this Agreement. The foregoing provisions of
this Section 9.03(a) are subject, solely as between SCA and the Subleasehold
Lenders, to Article XV of the Sublease and any Interparty Agreement that is then
in effect.

 

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(b)          For the avoidance of doubt, in the event a Subleasehold Lender or
Permitted Designee (as defined in the Sublease) enters into a New Sublease (as
defined in the Sublease) the Master Lease shall remain in effect.

 

(c)          This Article IX shall survive termination of this Agreement or
Closing, as applicable.

 

Article X

 

CONDITIONS TO CLOSING; CLOSING; PCO

 

Section 10.01     Closing Conditions. Developer shall convey, and SCA shall
accept conveyance of, the School Unit at a Closing, subject to satisfaction of
each of the following Conveyance Conditions at or before the Closing (it being
understood that if there is any dispute between the parties regarding whether
any such condition has been satisfied, either party may submit the dispute to
expedited arbitration pursuant to Article VII):

 

(a)          Substantial Completion of the School Base Building Work has been
achieved (which condition is for the benefit of SCA), subject to Section 5.07
hereof;

 

(b)          title to the School Unit is free of Encumbrances other than the
Permitted Encumbrances (it being understood that Permitted Encumbrances shall
include any exceptions generically or specifically relating to mechanics’ liens
that the title company may raise as a result of the SCA Pre- and Post-Turnover
Work not being complete); and, if SCA elects, at its cost, title insurer will
issue a binding and enforceable ALTA form title policy (showing no Encumbrances
other than the Permitted Encumbrances) to SCA, naming SCA as the fee owner
(which condition is for the benefit of SCA). SCA acknowledges and agrees that
the following agreement shall be a Permitted Encumbrance: that certain Agreement
between Triborough Bridge and Tunnel Authority and Developer dated as of March
22, 2017, as the same may be amended and/or replaced.

 

(c)          Developer delivering to SCA the Deed and the other closing
deliveries described in this Article X (which condition is for the benefit of
SCA);

 

(d)          there not having occurred any Major Event (which condition is for
the benefit of both SCA and Developer);

 

(e)          the Condominium Documents shall have been approved by SCA in
accordance with and to the extent required by Article XIII hereof and executed
by each of the parties thereto (which condition is for the benefit of SCA and
Developer);

 

(f)          the Condominium Declaration being recorded and the Condominium
being in full force and effect, and there being in force a valid and effective
policy of all-risk casualty insurance with standard coverages and endorsements
(as specified in the Condominium Declaration) covering the Common Elements to
the extent constructed and in existence as of such date, to the extent of the
full replacement value thereof (which condition is for the benefit of SCA and
Developer);

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(g)          payment by SCA to Developer (or Developer’s designee(s)) of any
remaining outstanding amount in respect of the Purchase Price, other than with
respect to SCA Pre- and Post-Turnover Work which has not been performed as of
Closing, it being understood that such amount shall be paid by SCA subsequent to
Closing pursuant to Section 5.02(g) hereof (which condition is for the benefit
of Developer); and

 

(h)          receipt of a “No Action” letter from the New York State Attorney
General’s office (which condition is for the benefit of both SCA and Developer),
it being understood, however, that at Developer’s option the sale of the School
Unit will be made pursuant to the offering plan, except that this Agreement
shall contain all of the terms and conditions pertaining to the sale of the
School Unit to SCA and in the event of an inconsistency between the terms and
conditions of the offering plan, on the one hand, and the terms and conditions
of this Agreement, on the other hand, the terms and conditions of this Agreement
shall control. Notwithstanding anything set forth in the offering plan to the
contrary, SCA represents that it will not rely on any of the statements, terms,
provisions or representations made in the offering plan, and waives and
disclaims any of the protections therein and all conditions of the Martin Act
(to the fullest extent permitted by law).

 

Section 10.02    Right to Waive Conditions. Either party hereto shall have the
right to waive compliance by the other party hereto with any of the conveyance
conditions or with any particular matter included within any of the conveyance
conditions. Any such waiver must be in writing and must refer specifically to
the condition (or matter) being waived.

 

Section 10.03    Closing and Closing Date. The Closing shall take place at 10:00
a.m. at the offices of Developer’s counsel, or at another location in the City
as may be selected by Developer, on a date (the “Closing Date”) following the
later of (A) the date that Substantial Completion of the School Base Building
Work has been certified by SCA or determined by an Arbitrator, and (B) the
filing of the Condominium Declaration with the City Register’s office, after at
least five (5) Business Days’ prior written notice given by either party. If the
Closing has not occurred by June 1, 2030 and this Agreement has not therefore
been terminated, then (a) this Agreement shall automatically terminate on June
1, 2030, and (b) thereafter neither party shall have any further obligations
hereunder except for those which expressly survive termination of this
Agreement.

 

Section 10.04    Developer’s Closing Deliveries. Subject to the terms of this
Agreement, Developer shall execute and deliver to SCA the following at Closing:

 

(a)          a bargain and sale deed without covenants to the School Unit in
recordable form, duly executed and acknowledged (the “Deed”), conveying fee
simple title to the School Unit to SCA;

 

(b)          such transfer tax forms as shall be required in connection with the
Deed (collectively, the “Transfer Tax Forms”); SCA having advised Developer that
SCA is exempt from State of New York and City of New York transfer taxes with
respect to conveyance of the School Unit and that in no event shall any transfer
taxes be payable by Developer in connection with such conveyance;

 

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(c)          the title affidavit(s) described in Section 11.02;

 

(d)          a certificate of non-foreign status pursuant to Section 1445 of the
IRC Code;

 

(e)          a certificate of good standing of Developer and all approvals,
authorizations, consents or other actions by or filings with any Person (if any)
which are required to be obtained or completed by Developer in connection with
the execution and delivery of any Closing documents;

 

(f)          the MOL Terminations and any related transfer tax forms; and

 

(g)          any other instruments or documents to be executed and/or delivered
by Developer pursuant to this Agreement at or prior to Closing that have not
been executed or delivered as of the Closing Date.

 

Section 10.05     SCA’s Closing Deliveries. At Closing, SCA shall accept
delivery of the Deed and shall execute and deliver to Developer the following:

 

(a)          any unpaid sums due by SCA under this Agreement;

 

(b)          the Transfer Tax Forms;

 

(c)          the MOL Terminations and any related transfer tax forms; and

 

(d)          any other statements or documents to be executed or delivered by
SCA at Closing, in accordance with the provisions of this Agreement.

 

Section 10.06    Title Insurance Premiums; Apportionments; “True-Up” Adjustment
to Purchase Price.

 

(a)          At Closing, SCA shall pay the costs for the issuance of the title
insurance commitment and the policy issued pursuant thereto (if SCA elects to
obtain such insurance).

 

(b)          At Closing, Developer and SCA shall apportion water and real
property taxes, sewer charges, utility deposits, and payments under any service
contracts, all as shall be customary for transactions of this nature as well as
common charges for the School Unit, if any based upon the allocation schedule
attached as Exhibit B to the Bylaws of the Condominium. SCA agrees to reasonably
cooperate with Developer if Developer endeavors to pursue any real property tax
waiver, abatement or exemption. In the event of a credit due Developer,
Developer may make application to the NYC Department of Finance for a refund.
For purposes of clarification, SCA will be responsible for paying to Developer
at Closing SCA’s proportionate share of real estate taxes as of Closing even
though SCA may be tax exempt, and SCA will have the right to seek a refund from
the taxing authority subsequent to Closing in respect of such payment so made to
Developer by SCA, but Developer will have no obligation or liability in the
event such refund is not received by SCA.

 

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(c)          The Purchase Price shall be adjusted to reflect a “true-up” of
Public School Project Costs that have been previously paid by SCA, during the
period commencing after the initial Requisition following the first draw under
Developer’s construction loan through the day immediately preceding the Closing,
on the basis of allocations pursuant to the Description of Hard Cost Allocation
and the Land Value and Soft Cost Allocation on Exhibit G. The “true-up”
adjustment shall reflect any changes to the underlying bases for such
allocations (e.g., percentage of gross square footage, land allocation
percentage) occurring between the initial Requisition following the first draw
under Developer’s construction loan through the day immediately preceding the
Closing. If the “true-up” adjustment results in an amount due Developer, such
amount, with interest at Developer’s cost of borrowing, shall be added to the
Purchase Price. If the “true-up” adjustment results in an amount due SCA, such
amount, with interest at SCA’s cost of borrowing, shall be deducted from the
Purchase Price.

 

Section 10.07     Payment of Common Charges. SCA’s obligation to pay common
charges under the Condominium Declaration with respect to the School Unit will
commence from and after the Closing Date for the School Unit. This Section 10.07
shall survive the Closing.

 

Section 10.08     Developer’s Right of Access. Without limiting any right of
access provided to Sponsor (as defined in the Condominium Documents), the Board
of Managers or any other Unit Owner under the Condominium Documents, Developer
hereby reserves unto itself, and SCA acknowledges and agrees to such
reservation, a right of reasonable access by Developer and its contractors to
the School Unit from time to time and at reasonable times in order to (1)
complete the Punch List Items and/or, (2) at SCA’s sole cost and expense, to
perform necessary work including, without limitation, installing a hoist or
elevators, fire sprinkler loop, infrastructure devices, data gathering panels
and/or communicating stairs, in the case of this subclause (2) if the acts or
omissions of SCA or its design professionals or other consultants (or any SCA
Design Non-Compliance or Post-April Non-Compliance) are delaying Developer’s
ability to obtain (a) any temporary certificate of occupancy for any unit or
floor other than the School Unit or (b) a PCO (as defined below), it being
understood and agreed that, the forgoing notwithstanding, SCA shall be fully
responsible for promptly and diligently performing all work necessary within the
School Unit in order to enable Developer to obtain (a) all temporary
certificates of occupancy for units and floors other than the School Unit and
(b) the PCO, but SCA shall not be responsible for performing any work
necessitated as a result of the acts or omissions (where there is a duty to act)
of another unit owner in the Building. Any such work to complete the Punch List
Items or to obtain temporary certificates of occupancy and the PCO shall be
undertaken in a manner consistent with SCA’s reasonable security requirements
and so as not to interfere with the conduct of SCA’s business in the School Unit
for the purposes described in the School Program, provided, however, that in no
event shall Developer be obligated to employ any so-called “overtime” labor in
connection with the completion of such Punch List Items. This Section 10.08
shall survive the Closing.

 

Section 10.09     Casualty; Condemnation. (a) If a Major Event occurs and either
party exercises its right not to close on the conveyance of the School Unit
contemplated by this Agreement, then this Agreement shall terminate and the
insurance proceeds or the condemnation award, as the case may be, relating to
the School Unit shall be equitably apportioned between SCA and Developer as
applicable;

 

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(b)          If (i) a Major Event occurs and Developer exercises its right not
to close on the conveyance of the School Unit contemplated by this Agreement,
(ii) SCA was not in default beyond applicable notice and cure periods under this
Agreement at the time the Major Event occurred and (iii) Developer, on or prior
to the second (2nd) anniversary of the date upon which such Major Event
occurred, constructs a building on the Land, then, Developer shall not, on or
prior to such second (2nd) anniversary, sell or lease such building (or any
portion thereof in excess of 50,000 gross square feet) to any party for the
primary purpose of operating a pre-K, kindergarten, elementary or middle school
through eighth grade (the “School”), unless Developer shall have first given SCA
written notice thereof (which notice, in Developer’s sole discretion, may be
given to SCA at any time after Developer has elected to construct a building on
the Land and before consummating a sale or lease of a School to a party other
than SCA) containing the material economic and other terms upon which Developer
is willing to sell or lease, as applicable, the School (the “ROFO Notice”). SCA
shall notify Developer not later than thirty (30) days after receipt of the ROFO
Notice (the “ROFO Period”), TIME BEING OF THE ESSENCE, that it elects to
purchase or lease, as applicable, the School, upon the terms and conditions
contained in the ROFO notice. If SCA shall timely elect to purchase or lease, as
applicable, the School as aforesaid, then Developer shall prepare, and the
parties shall execute and deliver a contract of sale or lease, as applicable,
containing the terms set forth in the ROFO Notice and other provisions
reasonably acceptable to the parties (unless Developer’s ROFO Notice contained a
contract of sale or lease document, as applicable, attached thereto, in which
case the parties hereto shall execute such contract of sale or lease form after
completing any blanks therein in a manner consistent with the ROFO Notice and,
to the extent not addressed by the ROFO Notice, otherwise reasonably acceptable
to the parties), within sixty (60) days after the giving of notice by SCA of its
election to purchase or lease, as applicable, the School in accordance with the
provisions of this paragraph. In the event SCA shall fail to elect to purchase
or lease, as applicable, the School prior to the end of the ROFO Period, TIME
BEING OF THE ESSENCE, or SCA otherwise waives such election in writing prior to
the end of the ROFO Period, TIME BEING OF THE ESSENCE, Developer shall be free
to sell or lease the Property to any other party or otherwise deal with the
Property as Developer sees fit and without regard for any rights of SCA by
virtue of this Agreement or otherwise. This Section 10.09(b) shall survive the
termination of this Agreement.

 

Section 10.10     PCO. Subsequent to Closing, and subject to the provisions of
Section 10.08 hereof, Developer shall obtain a permanent certificate of
occupancy for the Building (“PCO”). SCA shall provide reasonable protections so
as not to delay Developer’s ability to obtain the PCO and shall use its best
efforts to cause the New York State Attorney General’s office to waive any
requirement that any funds be deposited in escrow in respect of work to be
performed in the School Unit in order for Developer to obtain the PCO. The
provisions of this Section 10.10 shall survive the Closing.

 

Article XI

 

REMOVAL OF TITLE DEFECTS

 

Section 11.01     Curing Title Defects. Developer shall remove or cause to be
removed of record or bonded or affirmatively insured or omitted as an exception
to title by the Title Insurer, at or prior to Closing, any liens or encumbrances
that can be removed by payment of a liquidated amount created or suffered by
Developer against the School Unit, other than any lien or encumbrance consented
to or occasioned (directly or indirectly) by SCA or that constitutes a Permitted
Encumbrance. Developer shall have no other obligation to remove any liens,
encumbrances or other title exceptions.

 

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Section 11.02     Title Affidavits. (a) At or before the Closing, Developer
shall give the Title Insurer an owner’s affidavit of title substantially in the
form attached hereto as Exhibit R (with such edits as may be necessary to
reflect the then current state of facts).

 

(b)          If a search of the title discloses judgments, bankruptcies or other
returns against other Persons having names similar to those of Developer, on or
before the Closing Date, Developer will establish to the satisfaction of the
Title Insurer that such judgments, bankruptcies or other returns are not against
Developer.

 

Article XII

 

REPRESENTATIONS, WARRANTIES; COVENANTS AND RESTRICTIONS; COMPLETION GUARANTY AND
BAD BOY GUARANTY

 

Section 12.01    Developer’s Representations. Developer represents that:

 

(a)          Developer is a limited liability company duly formed, validly
existing and in good standing under the laws of the State of Delaware and has
all requisite limited liability company power and authority to carry on its
business as now being conducted. Developer has the requisite limited liability
company power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. The execution, delivery and
performance by Developer of this Agreement and the transactions contemplated
hereby have been duly and validly authorized by all requisite action (including
such requisite action by the direct and indirect members of Developer). This
Agreement has been duly executed and delivered by Developer.

 

(b)          There are no approvals, authorizations, consents or other actions
by or filings with any Person that are required to be obtained or completed by
Developer in connection with the execution and delivery of this Agreement,
except those that have been obtained by Developer.

 

(c)          To Developer’s actual knowledge, there are no outstanding
judgments, orders, writs, injunctions, or decrees of any Government Entity, no
pending Legal Proceedings or material threats of Legal Proceedings, in each
instance against Developer which are reasonably likely to have a material
adverse effect on Developer’s performance of its obligations under this
Agreement.

 

(d)          The representations of Developer in this Section 12.01 are true,
correct, and complete in all material respects as of the date of this Agreement.

 

Section 12.02     SCA’s Representations. SCA makes the representations and
warranties set forth below:

 

(a)          SCA is a public benefit corporation created and validly existing
under the laws of the State of New York and has all requisite corporate power
and authority to carry on its business as now being conducted. SCA has the
requisite corporate power and authority to execute and deliver this Agreement
and to consummate the transactions contemplated hereby. The execution, delivery
and performance by SCA of this Agreement and the transactions contemplated
hereby have been duly and validly authorized by all requisite action. This
Agreement has been duly executed and delivered by SCA.

 

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(b)          Except as contemplated by Section 5.01(c) of this Agreement, there
are no approvals, authorizations, consents or other actions by or filings with
any Person that are required to be obtained or completed by SCA in connection
with the execution and delivery of this Agreement or in connection with any
action required to be taken by SCA hereunder, except those that have been
obtained.

 

(c)          To SCA’s actual knowledge, there are no outstanding judgments,
orders, writs, injunctions, or decrees of any Government Entity, no pending
Legal Proceedings or material threats of Legal Proceedings, in each instance
against SCA that are reasonably likely to have a material adverse effect on
SCA’s performance of its obligations under this Agreement.

 

(d)          The representations and warranties of SCA in this Section 12.02 are
true, correct, and complete in all material respects as of the date of this
Agreement.

 

Section 12.03     Condominium Documents Covenants. SCA shall reasonably
cooperate with Developer and execute and deliver to Developer such documents and
affidavits as Developer may reasonably request in connection with the
Condominium Documents including, without limitation, in order to obtain a “No
Action” letter from the New York State Attorney General’s office. The “No
Action” letter will provide that the conveyance of the School Unit will occur
without a temporary certificate of occupancy for the School Unit. SCA shall
reasonably cooperate with Developer to obtain the Attorney General’s approval of
the “No Action” letter. Developer will apply for a “No Action” letter reasonably
in advance of the Closing.

 

Section 12.04     Completion Guaranty; Construction Lender’s Failure to Fund;
and Bad Boy Guaranty.

 

(a)          At the closing of the Construction Loan, Developer shall provide a
completion guaranty (the “Completion Guaranty to SCA”) in favor of SCA with
respect to the School Base Building Work (but, for purposes of clarification,
excluding the SCA Pre- and Post-Turnover Work) from the same guarantor or
guarantors (the “Guarantor”) as required by Developer’s construction lender and
in the form of Exhibit S hereto, subject to the remainder of this paragraph.
Guarantor will not be liable for changes in the scope of any work made after
Developer’s construction lender has exercised remedies under the applicable loan
documents. The Completion Guaranty to SCA will include a guaranty to obtain a
PCO for the Building, to the extent of Developer’s obligation therefor set forth
in this Agreement and the guaranteed obligations will be subject to Developer’s
construction lender funding the Construction Loan and subject to SCA’s
obligations under this Agreement. If, prior to Closing, Developer’s construction
lender fails to fund an advance of the Construction Loan in excess of
$10,000,000 when the construction lender is required to do so under the
construction loan documents, and such failure has not been cured within one (1)
year after notice from SCA to Developer and the construction lender (it being
understood that such failure may be cured by Developer obtaining replacement
funds for such failure), SCA, subject to the terms of the Interparty Agreement,
will, unless Developer is diligently attempting to cause the construction lender
to remedy such failure or is otherwise diligently seeking to obtain funds from
another source as a substitute for such unfunded amount, have the right to
terminate the Master Lease, Sublease and this Agreement upon thirty (30) days’
prior written notice to Developer and the construction lender, in which case,
unless such failure has been cured within such thirty (30) day period, the
Guarantor shall reimburse SCA for all Public School Project Costs paid by SCA to
Developer, and thereafter no party shall have any further obligation under the
Master Lease, Sublease or this Agreement except for those obligations which
expressly survive the termination of the Master Lease, Sublease and/or this
Agreement, as applicable.

 

 -53- 

 

 

(b)          At the closing of the Construction Loan, Developer shall provide a
“bad boy” guaranty in favor of SCA (the “Bad Boy Guaranty to SCA”) from the
Guarantor in substantially the same form as provided to the construction lender
(to the extent applicable to the School Base Building Work and the transactions
contemplated hereby), with respect to actual losses incurred by SCA due to the
acts of Developer.

 

Article XIII

 

CONDOMINIUM DOCUMENTS

 

Section 13.01     Approval of Condominium Documents. The parties hereby approve
the draft Condominium Declaration, Condominium Bylaws and House Rules (the
“Condominium Documents”) attached hereto as Exhibit T and agree that Developer
may prepare and/or enter into the Condominium Documents attached as Exhibit T,
subject to the remainder of this Section 13.01. Prior to Closing, Developer may
make any changes to the Condominium Documents that do not directly or adversely
affect the School Unit, School Limited Common Elements or General Common
Elements (all as described in the Declaration) without the consent of SCA,
provided that, subject to Section 3.03(b) above, such changes shall not be
inconsistent with Section 3.01(a)(vi) hereof regarding the size of the School
Unit or otherwise adversely affect the functionality or, except to a de minimis
extent, operations of the School Program. All other changes to the Condominium
Declaration and Condominium Bylaws prior to Closing shall require the consent of
SCA in its sole discretion. In the event that SCA believes that such changes
would directly or adversely affect the School Unit, School Limited Common
Elements or General Common Elements or be inconsistent with Section 3.01(a)(vi)
hereof regarding the size of the School Unit or otherwise adversely affect the
functionality or, except to a de minimis extent, operations of the School
Program, subject to Section 3.03(b) above, the issue shall be submitted to
Arbitration. Following the Closing, any amendment to the Condominium Documents
shall be subject only to the provisions thereof. Developer shall have discretion
to determine when on or prior to Closing the Condominium Documents will be
submitted for filing and/or recorded. Developer shall have the right to merge
existing tax lots comprising the Property in connection with the formation of
the condominium, and SCA shall reasonably cooperate in connection therewith.
Developer shall have the right, prior to or subsequent to Closing, to file or
cause to be filed in the City Register’s Office an amended and restated
Condominium Declaration, and file or cause to be filed with the Tax Map Unit of
the Department of Finance and the City Register’s Office an amendment to the
Floor Plans, that subdivides a portion of the condominium into individual
residential units and/or individual retail units and which reflects such
additional changes to the Condominium Documents relating solely to the
subdivision of the residential and/or retail portions of the Condominium as
Developer shall determine in its sole discretion, provided that Developer will
comply with the standards set forth in the second sentence of this Section
13.01. Prior to Closing, Developer will provide SCA with written notice at least
five (5) business days prior to amending the Condominium Documents in any
respect that would affect the School Unit, School Limited Common Elements or
General Common Elements. All other changes to the Condominium Documents made
prior to Closing shall be provided by Borrower to SCA. This Section 13.01 does
not limit the respective rights and obligations of the parties under Article III
and Section 5.04 hereof. This Section 13.01 shall survive Closing.

 

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Article XIV

 

NOTICES

 

Section 14.01     Notices. Whenever it is provided in this Agreement that a
notice, demand, request, consent, approval or other communication shall or may
be given to or served upon either of the parties (or their respective successors
or assigns) by the other, and whenever either of the parties shall desire to
give or serve upon the other any notice, demand, request, consent, approval or
other communication with respect hereto or to the subject matter hereof, each
such notice, demand, request, consent, approval or other communication shall be
in writing and shall be sent by national overnight delivery service or personal
delivery, addressed as follows (or to such other address and person as shall be
designated from time to time by SCA or Developer, as the case may be, in a
written notice under this Article XIV):

 

If to SCA:        

New York City School Construction Authority

30-30 Thompson Avenue

Long Island City, New York 11101

Attn: Ross J. Holden, Executive Vice President & General Counsel

      with a copy simultaneously to:      

Herrick, Feinstein LLP

2 Park Avenue

New York, New York 10016

Attn: Doug Heller, Esq.

 

If to Developer:

c/o Trinity Place Holdings Inc.

340 Madison Avenue, Suite 3C

New York, NY 10173

Attn: Matthew Messinger

 

 -55- 

 

 

 

with a copy simultaneously to:

 

c/o Trinity Place Holdings Inc.

340 Madison Avenue, Suite 3C

New York, NY 10173

Attn: Miriam Harris

 

 

and a copy simultaneously to:

 

Kramer Levin Naftalis & Frankel LLP

1177 Avenue of the Americas

New York, New York 10036

Attn: James P. Godman, Esq.

 

Section 14.02     All notices shall be deemed effective upon receipt. Any notice
sent by national overnight delivery service or personal delivery shall be deemed
given on the date of receipt or refusal as indicated on the receipt of the
national overnight delivery service or personal delivery service. Any notice may
be given either by a party or by such party’s attorney. Developer or SCA may
designate, upon not less than five (5) business days’ notice given to the others
in accordance with the terms of this Article 14 additional or substituted
parties to whom notices should be sent hereunder.

 

Article XV

 

MISCELLANEOUS

 

Section 15.01     Further Assurances. Each of the parties shall take such
actions and execute and deliver such other instruments and documents as may be
reasonable, necessary or appropriate to effectuate the transactions contemplated
under, this Agreement, provided, however, that the taking of such acts or the
execution of such documents will not result in any cost or liability (other than
a de minimis cost or expense) to the respective party that is not otherwise
required under this Agreement.

 

Section 15.02     Governing Law. This Agreement shall be governed and construed
in accordance with the laws of the State of New York, without regard to
principles of conflicts of law.

 

Section 15.03     Amendments and Waivers in Writing. This Agreement may not be
modified, waived, or amended except by written agreement executed by all the
parties.

 

Section 15.04     Delays not a Waiver. Except as expressly provided in this
Agreement, no delay on the part of any party hereto in exercising any right,
power or privilege hereunder shall operate as a waiver thereof or as a waiver or
any other right, power or privilege hereunder, nor shall any single or partial
exercise of any right, power or privilege hereunder preclude any other or
further exercise hereunder. Except as otherwise provided in this Agreement, the
rights and remedies of each party under this Agreement are cumulative and are
not exclusive of any rights or remedies that the party may otherwise have at law
or in equity.

 

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Section 15.05     Execution in Counterparts. This Agreement may be executed in
counterparts.

 

Section 15.06     Exhibits; Headings. The exhibits attached hereto or
subsequently incorporated herein are (and shall be deemed) parts of this
Agreement. The headings of this Agreement are for purposes of reference only and
shall not limit or otherwise affect the meaning hereof.

 

Section 15.07     Assignments of this Agreement. (a) Developer shall not assign
this Agreement, or any of its rights or obligations herein or hereunder, except,
upon not less than ten (10) Business Days’ prior notice to SCA, to a Qualified
Developer. Developer shall also have the right to assign and/or mortgage this
Agreement to its lender. Any attempted assignment in violation of this Section
15.07(a) shall be null and void.

 

(b)          SCA shall not assign this Agreement, or any of its rights or
obligations herein or hereunder, except that (i) after Substantial Completion of
the School Fit-Out Work and performance by SCA of all of its financial
obligations under this Agreement, SCA may assign this Agreement or such rights
or obligations (including without limitation its rights under Section 6.03) to
the New York City Department of Education a/k/a the Board of Education of the
City School District of the City of New York, and (ii) SCA may assign this
Agreement or such rights or obligations with the prior written consent of
Developer. Any such assignee shall assume all of SCA’ s then remaining
obligations hereunder and shall confirm such assumption, by a writing
satisfactory to Developer, prior to the effective date of such assignment. No
such assignment shall relieve SCA of any remaining financial or other
obligations hereunder. Any attempted assignment in violation of this Section
15.07(b) shall be null and void.

 

Section 15.08    Binding on Permitted Successors and Assigns. This Agreement
(and all terms thereof, whether so expressed or not), shall be binding upon the
respective successors, permitted assigns and legal representatives of the
parties and shall inure to the benefit of and be enforceable by the parties and
their respective successors, permitted assigns and legal representatives.

 

Section 15.09     Remedies. Except as specifically provided herein, each party
has and may pursue all rights available at law or in equity by reason of the
failure, by any other party hereto, to keep or perform such other party’s
agreements or obligations under this Agreement.

 

Section 15.10     Submission to Jurisdiction. Developer and SCA hereby
irrevocably and unconditionally (i) agree that the exclusive forum for
confirming or challenging an arbitration award pursuant to Article VII hereof
shall be the Supreme Court of the State in New York County, (ii) consent to, and
waive any and all personal rights under, the laws of any state to object to the
jurisdiction of each such court in any such action, and (iii) waive any and all
rights to a trial by jury. In furtherance of such agreement, Developer and SCA
agree, upon request of the other party, to discontinue (or cause to be
discontinued) any such suit, action or proceeding pending in any other
jurisdiction or court, and Developer and SCA irrevocably consent to the service
of any and all process in any such suit, action or proceeding by service of
copies of such process to Developer or SCA, as the case may be, at its address
provided herein.

 

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Section 15.11     Severability. If any term, covenant, condition or provision of
this Agreement is determined by a final judgment to be invalid or unenforceable,
the remaining terms, covenants, conditions and provisions of this Agreement
shall not be affected thereby, and each other term, covenant, condition and
provision of this Agreement shall be valid and enforceable to the fullest extent
permitted by law.

 

Section 15.12     No Rights in Third Parties; Not Joint Venture Partners.
Nothing in this Agreement, express or implied, is intended: (i) to confer on any
Person, other than the parties hereto, any rights, obligations, liabilities, or
remedies; (ii) to constitute SCA as a partner or co-venturer of Developer or
each other; or (iii) to waive any claim or right of any party hereto against any
Person who is not a party hereto.

 

Section 15.13     No Construction Against Draftsperson. This Agreement shall be
construed without regard to any presumption requiring construction against the
party drafting this Agreement.

 

Section 15.14     Broker. Developer and SCA each represents and warrants to the
other that it has not dealt with any broker in connection with this contract
other than Newmark Grubb Knight Frank (“Broker”) and that neither knows of any
other broker who has claimed or may have the right to claim a commission in
connection with this transaction. Developer and SCA shall indemnify and defend
each other against any costs, claims or expenses, including attorneys’ fees,
arising out of the breach on their respective parts of the aforesaid
representations and warranties. In the event the closing of the sale of the
School Unit occurs, each of Developer (pursuant to a brokerage agreement) and
SCA (pursuant to a consulting contract) shall make a payment to Broker subject
to and upon the terms of the applicable agreement.

 

Section 15.15     Survival. Those provisions of this Agreement that by their
terms or general intent survive any termination or cancellation of this
Agreement shall so survive as will any claim that any party may have against the
other for a default occurring prior to such termination, all of which shall
survive such termination.

 

Section 15.16    Exculpation. SCA shall look solely to the estate of and
property of Developer in the School Unit for the satisfaction of SCA’s remedies
for the collection of a judgment (or other judicial process) requiring the
payment of money by Developer in the event of a default by Developer under this
Agreement, and no other property or assets of any party who could or does
constitute Developer shall be subject to levy, execution or other enforcement
procedure for the satisfaction of SCA’s remedies under or with respect to this
Agreement or the relationship of Developer and SCA hereunder. Accordingly, and
not by way of limitation, none of the trustees, directors, officers,
shareholders, partners, members, direct or indirect investors, consultants or
representatives of Developer or any Affiliate of Developer shall be personally
liable for the obligations of Developer hereunder. Nothing contained herein
shall be deemed to release the guarantors thereunder from liability under the
Completion Guaranty to SCA or Bad Boy Guaranty to SCA.

 

Section 15.17    Acknowledgment Regarding Play Areas. The parties acknowledge
and agree that in no event may the school play areas described in Exhibit I and
depicted on Exhibit M be designed or constructed in a manner so as to constitute
or qualify as “Floor Area,” as such term is defined in Section 12-10 of the
Zoning Resolution of The City of New York.

 

This Article XV shall survive the Closing or termination of this Agreement.

 

 -58- 

 

 

IN WITNESS WHEREOF, Developer and SCA have executed this Agreement as of the
date first above written.

 

  TPHGREENWICH OWNER LLC           By: /s/ Steven Kahn     Name:  Steven Kahn  
  Title:  Chief Financial Officer           NEW YORK CITY SCHOOL CONSTRUCTION
AUTHORITY           By: /s/ Ross Holden     Name: Ross Holden     Title:
Executive Vice President & General Counsel