Document:

Exhibit

Exhibit 10.54
	
	
	

Section:   3
Block:   780   
Lots:   45 (f/k/a 45, 49 and 51)   
Premises:  210 West 31st Street, New York, New York   
                                                                                                                                                 

BUILDING LOAN MORTGAGE, ASSIGNMENT OF LEASES AND RENTS, 
SECURITY AGREEMENT AND FIXTURE FILING
(this “Mortgage”)

FROM

210 WEST 31ST STREET OWNER, LLC,
a limited liability company organized and existing under the laws of Delaware

(“Mortgagor”)

Address of Mortgagor:
c/o Onyx Equities, LLC
900 Route 9 North, Suite 400
Woodbridge, New Jersey 07095
Attention:  John A. Saraceno, Jr.

TO

PACIFICCAL PC CORE LENDER, LLC,
a Delaware limited liability company,
(“Mortgagee”)

Address of Mortgagee:
c/o PCCP, LLC
10100 Santa Monica Blvd., Suite 1000
Los Angeles, CA 90067
Attn: Legal Notices

THIS BUILDING LOAN MORTGAGE IS A ''BUILDING LOAN MORTGAGE'' AS DEFINED IN NEW YORK LIEN LAW (THE ''LIEN LAW'') § 2(14) AND SECURES REPAYMENT OF A LOAN MADE PURSUANT TO A ''BUILDING LOAN CONTRACT'' AS DEFINED IN LIEN LAW § 2(13).

Mortgage Amount: $7,410,000.00

This instrument prepared by, and after recording please return to:
MORRISON & FOERSTER LLP
250 West 55th Street
New York, New York 10019
Attention:  Jeffrey J. Temple, Esq.

ny-1260332 

BUILDING LOAN MORTGAGE, ASSIGNMENT OF LEASES AND RENTS, 
SECURITY AGREEMENT AND FIXTURE FILING
THIS BUILDING LOAN MORTGAGE, ASSIGNMENT OF LEASES AND RENTS, SECURITY AGREEMENT AND FIXTURE FILING (“Mortgage”) is made as of December 1, 2016, by 210 WEST 31ST STREET OWNER, LLC, a Delaware limited liability company (“Mortgagor”) , having an office at c/o Onyx Equities, LLC, 900 Route 9 North, Suite 400, Woodbridge, New Jersey 07095, Attention:  John A. Saraceno, Jr., for the benefit of PACIFICCAL PC CORE LENDER, LLC, a Delaware limited liability company, as Mortgagee (together with its successors and/or assigns, “Mortgagee”), having an office at c/o PCCP, LLC, 10100 Santa Monica Blvd., Suite 1000, Los Angeles, CA 90067, Attn: Legal Notices.
W I T N E S S E T H:
A.Mortgagor and Mortgagee have entered into that certain (i) Acquisition and Project Loan Agreement (such agreement, together with any and all amendments, supplements, renewals, modifications, consolidations and extensions thereof from time to time, is hereinafter referred to as the “Project Loan Agreement”) and (ii) Building Loan Agreement (such agreement, together with any and all amendments, supplements, renewals, modifications, consolidations and extensions thereof from time to time, is hereinafter referred to as the “Building Loan Agreement”; together with the Project Loan Agreement, collectively, the “Loan Agreements”), both of even date herewith, whereby Mortgagee has agreed to make a loan (the “Building Loan”) available to Mortgagor in the principal amount of up to $7,410,000.00 for the purposes set forth in the Loan Agreements.
B.To evidence the Building Loan, Mortgagor has executed and delivered to Mortgagee, that certain Building Loan Promissory Note Secured By Mortgage, of even date herewith, in the aggregate principal sum of $7,410,000.00 (as the same may be severed, amended, modified, restated, replaced, consolidated or supplemented from time to time, the “Building Loan Note” or the “Note”), in and by which Mortgagor promises to pay said principal sum, or so much thereof as has been advanced, together with interest at the rate or rates and in installments as provided in the Building Loan Note.
C.The execution and delivery of this Mortgage by Mortgagor is a condition precedent to the performance by Mortgagee of its obligations under the Loan Agreements. 
D.Capitalized terms not otherwise defined herein shall have the meaning ascribed to such term in the Loan Agreements or by reference therein.
ARTICLE 1.  GRANT
		
	1.1
	GRANT.  For the purposes of and upon the terms and conditions in this Mortgage, Mortgagor irrevocably grants, conveys and assigns to Mortgagee, with right of entry and possession, the leasehold interest in the real property located in the City of New York, County of New York, State of New York, described on Exhibit A attached hereto (the “Real Property”) 

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held by Mortgagor pursuant to that certain ground lease located at the Real Property and described in Schedule III attached hereto (the “Ground Lease”), together with all after acquired title in respect of the Real Property, and all right, title, interest and privileges of Mortgagor in and to all streets, ways, roads and alleys used in connection with or pertaining to the Real Property, and together with all development rights or credits, air rights, water, water rights and water stock related to such real property, and all minerals, oil and gas, and other hydrocarbon substances in, on or under the real property, and all appurtenances, easements, rights and rights of way appurtenant or related thereto; all buildings, other improvements and fixtures now or hereafter located on the Real Property, including, but not limited to, all apparatus, equipment, and appliances used in the operation or occupancy of the real property, it being intended by the parties that all such items shall be conclusively considered to be a part of the real property, whether or not attached or affixed to the real property (the “Improvements”); all interest or estate which Mortgagor may hereafter acquire in the property described above, and all additions and accretions thereto, and the proceeds of any of the foregoing (all of the foregoing being collectively referred to as the “Property”).  The listing of specific rights or property shall not be interpreted as a limit of general terms.
PROVIDED, ALWAYS, that if Mortgagor shall pay unto Mortgagee the principal of and interest on the Note, when and as the same shall become due and payable whether by acceleration or otherwise, and shall pay all Secured Obligations (as hereinafter defined), and perform all obligations on its behalf contained in this Mortgage, the Loan Agreements and all of the other documents evidencing any of the Secured Obligations, then and in that case, the Property and the Collateral (as hereinafter defined) hereby conveyed and all rights and interests therein and thereto shall revert to Mortgagor and the estate, right, title and interest of Mortgagee therein shall thereupon cease, determine and become void and in such case Mortgagee shall execute and deliver to Mortgagor, pursuant to Section 5.14 hereof, at Mortgagor’s cost, an appropriate release, assignment or discharge of this Mortgage in form to be recorded.
ARTICLE 2.  OBLIGATIONS SECURED
		
	2.1
	OBLIGATIONS SECURED.  Mortgagor makes this Mortgage for the purpose of securing the following obligations (“Secured Obligations”):

		
	(a)
	Payment to Mortgagee of all sums at any time owing under that certain Building Loan Note; 

		
	(b)
	Payment and performance of all covenants and obligations of Mortgagor under this Mortgage; 

		
	(c)
	Payment and performance of all covenants and obligations on the part of Mortgagor under (i) the Building Loan Agreement and (ii) each other Loan Document (as defined in the Project Loan Agreement) to which Mortgagor is a party relating to the Building Loan Mortgage, but expressly excluding the Environmental Indemnity Agreement, Carveout Guaranty, Payment Guaranty and the Completion Guaranty (as each such term is defined in the Project Loan Agreement);

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	(d)
	Payment and performance of all future advances and other obligations that the then record owner of all or part of the Property may agree to pay and/or perform (whether as principal, surety or guarantor) for the benefit of Mortgagee, as evidenced by this Mortgage and the other Loan Documents; and

		
	(e)
	All modifications, extensions and renewals of any of the obligations secured hereby, however evidenced, including, without limitation:  (i) modifications of the required principal payment dates or interest payment dates or both, as the case may be, deferring or accelerating payment dates wholly or partly; or (ii) modifications, extensions or renewals at a different rate of interest whether or not in the case of a note, the modification, extension or renewal is evidenced by a new or additional promissory note or notes. 

		
	2.2
	OBLIGATIONS.  The term “obligations” is used herein in its broadest and most comprehensive sense and shall be deemed to include, without limitation, all interest and charges, prepayment charges, late charges and loan fees at any time accruing or assessed on any of the Secured Obligations.

		
	2.3
	INCORPORATION.  All terms of the Secured Obligations and the documents evidencing such obligations are incorporated herein by this reference.  Capitalized terms not specifically defined herein have the meaning given such terms in the Loan Agreements.  All persons who may have or acquire an interest in the Property shall be deemed to have notice of the terms of the Secured Obligations and to have notice, if provided therein, that:  (a) the Note or the Loan Agreements may permit borrowing, repayment and reborrowing so that repayments shall not reduce the amounts of the Secured Obligations; and (b) the rate of interest on one or more Secured Obligations may vary from time to time.

ARTICLE 3.  ASSIGNMENT OF LEASES AND RENTS
		
	3.1
	ASSIGNMENT.  Mortgagor hereby irrevocably assigns to Mortgagee all of Mortgagor's right, title and interest in, to and under:  (a) all leases of the Property or any portion thereof, all licenses and agreements relating to the management, leasing or operation of the Property or any portion thereof, and all other agreements of any kind relating to the use or occupancy of the Property or any portion thereof, whether now existing or entered into after the date hereof (“Leases”); and (b) the rents, issues, deposits and profits of the Property, including, without limitation, all amounts payable and all rights and benefits accruing to Mortgagor under the Leases (“Payments”).  The term Leases shall also include all guarantees of and security for the lessees' performance thereunder, and all amendments, extensions, renewals or modifications thereto which are permitted hereunder.  This is a present and absolute assignment, not an assignment for security purposes only, and Mortgagee's right to the Leases and Payments is not contingent upon, and may be exercised without possession of, the Property.

		
	3.2
	GRANT OF LICENSE.  Subject to the terms and conditions of that certain Cash Management Agreement of even date herewith among Mortgagor, Mortgagee and Property Manager (“Cash Management Agreement”), Mortgagee confers upon Mortgagor a license (“License”) to collect and retain the Payments as they become due and payable, until the 

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occurrence of an Event Default (as hereinafter defined).  Upon the occurrence of an Event of Default, the License shall be automatically revoked and Mortgagee may collect and apply the Payments pursuant to Section 6.4 without notice and without taking possession of the Property.  Mortgagor hereby irrevocably authorizes and directs the lessees under the Leases to rely upon and comply with any notice or demand by Mortgagee for the payment to Mortgagee of any rental or other sums which may at any time become due under the Leases, or for the performance of any of the lessees' undertakings under the Leases, and the lessees shall have no right or duty to inquire as to whether any Event of Default has actually occurred or is then existing hereunder.  Mortgagor hereby relieves the lessees from any liability to Mortgagor by reason of relying upon and complying with any such notice or demand by Mortgagee.
		
	3.3
	EFFECT OF ASSIGNMENT.  The foregoing irrevocable assignment shall not cause Mortgagee to be:  (a) a mortgagee in possession; (b) responsible or liable for the control, care, management or repair of the Property or for performing any of the terms, agreements, undertakings, obligations, representations, warranties, covenants and conditions of the Leases; or (c) responsible or liable for any waste committed on the Property by the lessees under any of the Leases or any other parties; for any dangerous or defective condition of the Property; or for any negligence in the management, upkeep, repair or control of the Property resulting in loss or injury or death to any lessee, licensee, employee, invitee or other person.  Mortgagee shall not directly or indirectly be liable to Mortgagor or any other person as a consequence of:  (i) the exercise or failure to exercise any of the rights, remedies or powers granted to Mortgagee hereunder; or (ii) the failure or refusal of Mortgagee to perform or discharge any obligation, duty or liability of Mortgagor arising under the Leases.

		
	3.4
	REPRESENTATIONS AND WARRANTIES.  Mortgagor represents and warrants that:  (a) prior to the date of this Mortgage, Mortgagor delivered to Mortgagee a true, accurate and complete list of all Leases, if any; (b) all existing Leases, if any, are in full force and effect and are enforceable in accordance with their respective terms, and no breach or default, or event which would constitute a breach of default after notice or the passage of time, or both, exists under any existing Leases on the part of any party; (c) no rent under or other payment under any existing Lease has been paid by any lessee for more than one (1) month in advance; and (d) none of the lessor's interests under any of the Leases has been transferred or assigned.

		
	3.5
	COVENANTS.  Subject to the terms of the Loan Agreements, Mortgagor shall use commercially reasonable efforts to cause the Property to be leased at all times.  Mortgagor (a) shall not enter into any Leases at the Property except in accordance with the terms and conditions of the Loan Agreements or (b) execute any other assignment relating to any of the Leases.  Mortgagor shall timely perform all obligations that are required to be performed by the landlord under the Leases and give Mortgagee prompt written notice of any default which occurs with respect to any of the Leases following Mortgagor becoming aware of such default, whether the default be that of the lessee or of the lessor respectively thereunder.   Without in any way limiting the requirement of Mortgagee’s consent hereunder, if the provisions of the Cash Management Agreement shall be in effect, any sums received by Mortgagor in consideration of any termination (or the release or discharge of any lessee) 

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modification or amendment of any Lease shall be applied as provided in the Cash Management Agreement.  
		
	3.6
	ESTOPPEL CERTIFICATES.  Within fifteen (15) days after written request by Mortgagee, Mortgagor shall use commercially reasonable efforts to deliver to Mortgagee and to any party designated by Mortgagee estoppel certificates executed by Mortgagor and by each of the lessees certifying (if such be the case):  (a) that the foregoing assignment and the Leases are in full force and effect; (b) the date of each lessee's most recent payment of rent; (c) that there are no defenses or offsets outstanding, or stating those claimed by Mortgagor or lessees under the foregoing assignment or the Leases, as the case may be; and (d) any other information reasonably requested by Mortgagee.  The foregoing obligation shall be deemed satisfied if Mortgagor delivers an estoppel certificate executed by a tenant that complies with the requirements of such tenant’s Lease.

ARTICLE 4.  SECURITY AGREEMENT AND FIXTURE FILING
		
	4.1
	SECURITY INTEREST.  Mortgagor hereby grants and assigns to Mortgagee as of the Effective Date (as defined in the Project Loan Agreement) a security interest, to secure payment and performance of all of the Secured Obligations, in all of the following described personal property in which Mortgagor now or at any time hereafter owns or has any interest (collectively, the “Collateral”):

All goods, building and other materials, supplies, work in process, equipment, machinery, fixtures, furniture, furnishings, signs and other personal property, embedded software therein, wherever situated, which are or are to be incorporated into, used in connection with, or appropriated for use on (i) the real property described on Exhibit A attached hereto and incorporated by reference herein (to the extent the same are not effectively made a part of the real property pursuant to Section 1.1 above) or (ii) the Improvements (which real property and Improvements are collectively referred to herein as the Property); all after acquired title, and all right, title, interest and privileges of Mortgagor in and to all streets, ways, roads and alleys used in connection with or pertaining to such real property, and together with all development rights or credits, air rights, water, water rights and water stock related to such real property, and all minerals, oil and gas, and other hydrocarbon substances in, on or under the real property, and all appurtenances, easements, rights and rights of way appurtenant or related thereto; all buildings, other improvements and fixtures now or hereafter located on the real property, including, but not limited to, all apparatus, equipment, and appliances used in the operation or occupancy of the real property, it being intended by the parties that all such items shall be conclusively considered to be a part of the real property, whether or not attached or affixed to the real property; together with all rents, issues, deposits and profits of the Property (to the extent, if any, they are not subject to Article 3); all inventory, accounts, cash receipts, deposit accounts, accounts receivable, contract rights, general intangibles, chattel paper (whether electronic or tangible), instruments, documents, notes, drafts, letters of credit, letter of credit rights, supporting obligations insurance policies, insurance and condemnation awards and proceeds, any other rights to the payment of money, trade names, trademarks and service marks arising from or related to the ownership, management, leasing or operation of the Property or any business now or hereafter conducted thereon by 

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Mortgagor; all rights of Mortgagor under any interest rate hedge, cap, swap or similar agreement; all permits consents, approvals, licenses, authorizations and other rights granted by, given by or obtained from, any governmental entity with respect to the Property; all deposits or other security now or hereafter made with or given to utility companies by Mortgagor with respect to the Property; all advance payments of insurance premiums made by Mortgagor with respect to the Property; all plans, drawings and specifications relating to the Property; all loan funds held by Mortgagee, whether or not disbursed; all funds deposited with Mortgagee or another depository pursuant to the Loan Agreements or any other Loan Documents; all reserves, deferred payments, deposits, accounts, refunds and payments of any kind related to the Property or any portion thereof; together with all replacements and proceeds of, and additions and accessions to, any of the foregoing; together with all books, records and files relating to any of the foregoing.  
As to all of the above described personal property which is or which hereafter becomes a “fixture” under applicable law, this Mortgage constitutes a fixture filing under the New York Uniform Commercial Code, as amended or recodified from time to time (“UCC”); and is to be recorded in the real estate records of the county in which the Property is located.
		
	4.2
	REPRESENTATIONS AND WARRANTIES.  Mortgagor represents and warrants that: (a) Mortgagor has, or will have, marketable title to the Collateral; (b) Mortgagor has not previously assigned or encumbered the Collateral, and Mortgagor has not delivered or authorized any other person to deliver any financing statement covering any of the Collateral to any other person or entity; and (c) Mortgagor's principal place of business is located at the address shown in Section 7.11.

		
	4.3
	RIGHTS OF MORTGAGEE.  In addition to Mortgagee’s rights as a “Secured Party” under the UCC, Mortgagee may, but shall not be obligated to, at any time without notice and at the expense of Mortgagor: (a) give notice to any person of Mortgagee's rights hereunder and enforce such rights at law or in equity; (b) insure, protect, defend and preserve the Collateral or any rights or interests of Mortgagee therein; (c) inspect the Collateral; and (d) endorse, collect and receive any right to payment of money owing to Mortgagor under or from the Collateral.  Notwithstanding the above, in no event shall Mortgagee be deemed to have accepted any property other than cash in satisfaction of any obligation of Mortgagor to Mortgagee unless Mortgagee shall make an express written election of said remedy under UCC §9-621 as amended or recodified from time to time, or other applicable law.

		
	4.4
	RIGHTS OF MORTGAGEE UPON EVENT OF DEFAULT.  Upon the occurrence and during the continuance of an Event of Default under this Mortgage, then in addition to all of Mortgagee's rights as a Secured Party under any Loan Document, the UCC or otherwise at law:

		
	(a)
	Mortgagee may (i) upon written notice, require Mortgagor to assemble any or all of the Collateral and make it available to Mortgagee at a place designated by Mortgagee; (ii) upon prior written notice, enter upon the Property or other place where any of the Collateral may be located and take possession of, collect, sell, and dispose of any or all of the Collateral, and store the same at locations acceptable to Mortgagee at 

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Mortgagor's expense; (iii) sell, assign and deliver at any place and in any lawful manner all or any part of the Collateral and bid and become purchaser at any such sales; and
		
	(b)
	Mortgagee may, for the account of Mortgagor and at Mortgagor's expense: (i) operate, use, consume, sell or dispose of the Collateral as Mortgagee deems appropriate for the purpose of performing any or all of the Secured Obligations; (ii) enter into any agreement, compromise, or settlement, including insurance claims, which Mortgagee may deem desirable or proper with respect to any of the Collateral; and (iii) endorse and deliver evidences of title for, and receive, enforce and collect by legal action or otherwise, all indebtedness and obligations now or hereafter owing to Mortgagor in connection with or on account of any or all of the Collateral.

		
	(c)
	Notwithstanding any other provision hereof, Mortgagee shall not be deemed to have accepted any property other than cash in satisfaction of any obligation of Mortgagor to Mortgagee unless Mortgagor shall make an express written election of said remedy under UCC §9-621 as amended or recodified from time to time, or other applicable law.

		
	4.5
	POWER OF ATTORNEY.  During the continuance of any Event of Default, Mortgagor hereby irrevocably appoints Mortgagee as Mortgagor’s attorney‐in‐fact (such agency being coupled with an interest), and as such attorney-in-fact Mortgagee may, without the obligation to do so, in Mortgagee's name, or in the name of Mortgagor, prepare, execute and file or record financing statements, continuation statements, applications for registration and like papers necessary to create, perfect or preserve any of Mortgagee's security interests and rights in or to any of the Collateral, and take any other action required of Mortgagor herein; provided, however, that Mortgagee as such attorney-in-fact shall be accountable only for such funds as are actually received by Mortgagee.  

		
	4.6
	EFFECTIVE AS A FINANCING STATEMENT.  This Mortgage shall be effective as a financing statement filed as a fixture filing with respect to all fixtures included within the Property and is to be filed for record in the real estate records of each county where any part of the Property (including said fixtures) is situated.  This Mortgage shall also be effective as a financing statement covering as-extracted collateral (including oil and gas), accounts and general intangibles under the New York UCC, as in effect from time to time, and the UCC, as in effect from time to time, in any other state where the Property is situated which will be financed at the wellhead or minehead of the wells or mines located on the Property and is to be filed for record in the real estate records of each county where any part of the Property is situated.  This Mortgage shall also be effective as a financing statement covering any other Property and may be filed in any other appropriate filing or recording office.  The mailing address of Mortgagor and the Mortgagee are set forth in the preamble of this Mortgage and the address of Mortgagee from which information concerning the security interests hereunder may be obtained is the address of Mortgagee set forth at the end of this Mortgage.  A carbon, photographic or other reproduction of this Mortgage or of any financing statement relating to this Mortgage shall be sufficient as a financing statement for any of the purposes referred to in this Section.

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ARTICLE 5.  RIGHTS AND DUTIES OF THE PARTIES
		
	5.1
	TITLE.  Mortgagor represents and warrants that Mortgagor lawfully holds and possesses, or will hold and possess, leasehold title to the Property without limitation on the right to encumber, and this Mortgage is a first and prior Lien on the Property.

		
	5.2
	TAXES AND ASSESSMENTS.  Unless Mortgagee is reserving funds for such payments pursuant to the terms of the Loan Agreement, Mortgagor shall pay or caused to be paid prior to delinquency (i) all taxes, assessments, levies and charges imposed by any public or quasi‐public authority or utility company which are or which may become a Lien upon or cause a loss in value of the Property or any interest therein, and (ii) all taxes, assessments, levies and charges imposed by any public authority upon Mortgagee by reason of its interest in any Secured Obligation or in the Property, or by reason of any payment made to Mortgagee pursuant to any Secured Obligation; provided, however, Mortgagor shall have no obligation to pay taxes which may be imposed from time to time upon Mortgagee and which are measured by and imposed upon Mortgagee's net income.

		
	5.3
	TAX AND INSURANCE IMPOUNDS.  Mortgagor shall, until all Secured Obligations have been paid in full, pay to Mortgagee the Tax and Insurance Monthly Installment as and when required (and as defined in) Section 12.2 of the Project Loan Agreement.  

		
	5.4
	PERFORMANCE OF SECURED OBLIGATIONS.  Mortgagor shall promptly pay and perform each Secured Obligation when due. By its execution hereof, Mortgagor hereby acknowledges its receipt of the fully executed Loan Agreements and Mortgagor hereby agrees to be bound by all terms and conditions contained in the Loan Agreements respecting the Property.

		
	5.5
	LIENS, ENCUMBRANCES AND CHARGES.  Subject to Mortgagor’s rights under Section 8.3 of the Project Loan Agreement, Mortgagor shall (i) immediately discharge any Lien not approved by Mortgagee in writing that has or may attain priority over this Mortgage and (ii) pay when due all obligations secured by or reducible to Liens and encumbrances which shall now or hereafter encumber or appear to encumber all or any part of the Property or any interest therein, whether senior or subordinate hereto.

		
	5.6
	DAMAGES; INSURANCE AND CONDEMNATION PROCEEDS.

		
	(a)
	The following (whether now existing or hereafter arising) are all absolutely and irrevocably assigned by Mortgagor to Mortgagee and, at the request of Mortgagee, shall be paid directly to Mortgagee:  (i) all awards of damages and all other compensation payable directly or indirectly by reason of a condemnation or proposed condemnation for public or private use affecting all or any part of, or any interest in, the Property; (ii) all other claims and awards for damages to, or decrease in value of, all or any part of, or any interest in, the Property; (iii) all proceeds of any insurance policies payable by reason of loss sustained to all or any part of the Property; and (iv) all interest which may accrue on any of the foregoing.  Subject to applicable law, Mortgagee may at its discretion apply all or any of the proceeds it receives to its expenses in settling, prosecuting or defending any claim and shall release the balance 

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of any insurance proceeds Mortgagee receives to Mortgagor upon the conditions Mortgagee set forth in Sections 5.7 and 5.8 of the Project Loan Agreement, unless such casualty and/or release would materially impair Mortgagee’s security, in which case Mortgagee may apply the balance to the Secured Obligation.  Mortgagee may commence, appear in, defend or prosecute any assigned claim or action and may adjust, compromise, settle and collect all claims and awards assigned to Mortgagee; provided, however, in no event shall Mortgagee be responsible for any failure to collect any claim or award, regardless of the cause of the failure, including, without limitation, any malfeasance or nonfeasance by Mortgagee or its employees or agents.
		
	(b)
	Subject to the terms and conditions set forth in the Loan Agreements, Mortgagee may permit insurance proceeds held by Mortgagee to be used for repair or restoration. 

		
	5.7
	MAINTENANCE AND PRESERVATION OF THE PROPERTY. Mortgagor covenants: (a) to insure the Property against such risks as Mortgagee may require pursuant to the Loan Agreements and, at Mortgagee's request, to provide evidence of such insurance to Mortgagee, and to comply with the requirements of any insurance companies insuring the Property; (b) to keep the Property in good condition and repair; (c) not to remove or demolish the Property or any part thereof, not to alter, restore or add to the Property without Mortgagee’s prior written consent, (d) not to initiate or acquiesce in any change in any zoning or other land classification which affects the Property without Mortgagee's prior written consent; (e) to complete or restore promptly and in good and workmanlike manner the Property, or any part thereof which may be damaged or destroyed as provided for in the Loan Agreements; (f) to comply with all laws, ordinances, regulations and standards, and all covenants, conditions, restrictions and equitable servitudes, whether public or private, of every kind and character which affect the Property and pertain to acts committed or conditions existing thereon, including, without limitation, any work, alteration, improvement or demolition mandated by such laws, covenants or requirements; (g) not to commit or permit waste of the Property or Collateral; and (h) to do all other acts which from the character or use of the Property may be reasonably necessary to maintain and preserve its value.

		
	5.8
	DEFENSE AND NOTICE OF LOSSES, CLAIMS AND ACTIONS.  At Mortgagor's sole expense, Mortgagor shall protect, preserve and defend the Property and Collateral and title to and right of possession of the Property and Collateral, the security hereof and the rights and powers of Mortgagee hereunder against all adverse claims. Mortgagor shall give Mortgagee prompt notice in writing of the assertion of any claim, of the filing of any action or proceeding, of the occurrence of any damage to the Property or Collateral and of any condemnation offer or action.

		
	5.9
	[INTENTIONALLY OMITTED.]  

		
	5.10
	COMPENSATION; EXCULPATION; INDEMNIFICATION.  

		
	(a)
	Mortgagee shall not directly or indirectly be liable to Mortgagor or any other person as a consequence of (i) the proper exercise of the rights, remedies or powers granted 

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to Mortgagee in this Mortgage; (ii) the failure or refusal of Mortgagee to perform or discharge any obligation or liability of Mortgagor under any agreement related to the Property or under this Mortgage; or (iii) any loss sustained by Mortgagor or any third party resulting from Mortgagee's failure to lease the  Property after an Event of Default or from any other act or omission of Mortgagee in managing the Property after an Event of Default unless the loss is caused by the gross negligence or willful misconduct of Mortgagee and no such liability shall be asserted against or imposed upon Mortgagee, and all such liability is hereby expressly waived and released by Mortgagor.
		
	(b)
	Mortgagor indemnifies Mortgagee (and its successors, assigns and participants) against, and holds Mortgagee (and its successors, assigns and participants) harmless from, all losses, damages, liabilities, claims, causes of action, judgments, court costs, attorneys' fees and other legal expenses, cost of evidence of title, cost of evidence of value, and other expenses which either may suffer or incur: (i) by reason of this Mortgage; (ii) by reason of the performance of any act required or permitted hereunder or required by law; (iii) as a result of any failure of Mortgagor to perform Mortgagor's obligations; (iv) by reason of any alleged obligation or undertaking on Mortgagee's part to perform or discharge any of the representations, warranties, conditions, covenants or other obligations of Mortgagor contained in any other document related to the Property; or (v) as a result of any proceeding instituted by any claimant alleging a violation of the Lien Law.  The above obligation of Mortgagor to indemnify and hold harmless Mortgagee (and its successors, assigns and participants) shall survive the release and cancellation of the Secured Obligations and the release and reconveyance or partial release and reconveyance of this Mortgage.

		
	(c)
	Mortgagor shall pay all amounts and indebtedness arising under this Section 5.10 immediately after demand by Mortgagee (or its successors, assigns or participants) together with interest thereon from the date of such demand at the rate of interest then applicable to the principal balance of the Note as specified therein.

		
	5.11
	[INTENTIONALLY OMITTED.]  

		
	5.12
	DUE ON SALE OR ENCUMBRANCE.  If the Property or any interest therein, or if any portion of the corporate stock, general partnership interests or limited liability company interests in Mortgagor (except as otherwise expressly permitted in Section 8.14 of the Project Loan Agreement), shall be sold, transferred, mortgaged, assigned, encumbered or leased, whether directly or indirectly, whether voluntarily, involuntarily or by operation of law, without the prior written consent of Mortgagee, THEN Mortgagee, in its sole discretion, may declare all Secured Obligations immediately due and payable.

		
	5.13
	RELEASES, EXTENSIONS, MODIFICATIONS AND ADDITIONAL SECURITY.  Without notice to or the consent, approval or agreement of any persons or entities having any interest at any time in the Property or in any manner obligated under the Secured Obligations (“Interested Parties”), Mortgagee may, from time to time, release any person or entity from liability for the payment or performance of any Secured Obligation, take any action or make any agreement with Mortgagor or the applicable obligor extending the 

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maturity or otherwise altering the terms or increasing the amount of any Secured Obligation, or accept additional security or release all or a portion of the Property and other security for the Secured Obligations.  None of the foregoing actions shall release or reduce the personal liability of any of said Interested Parties, or release or impair the priority of the Lien of this Mortgage upon the Property and Collateral.
		
	5.14
	RELEASES.  If the Secured Obligations are paid, performed and discharged in full in accordance with the terms of this Mortgage, the Note, and the other Loan Documents, then this Mortgage shall be released or assigned (without any representations or warranties) by Mortgagee at Mortgagor’s request; provided, Mortgagor shall pay any filing fees in connection with the recordings of the assignment of mortgage and any expenses of Mortgagee incurred in connection with such release or assignment.  In connection therewith, at the request and sole expense of Mortgagor, Mortgagee shall execute and deliver to Mortgagor all releases, assignments or other documents, including, without limitation, reconveyances and termination statements, reasonably necessary or desirable for the release of such lien.

		
	5.15
	SUBROGATION.  Mortgagee shall be subrogated to the Lien of all encumbrances, whether released of record or not, paid in whole or in part by Mortgagee pursuant to this Mortgage or by the proceeds of any loan secured by this Mortgage.

		
	5.16
	RIGHT OF INSPECTION.  Mortgagee, its agents and employees, may enter the Property at any reasonable time, after reasonable notice to Mortgagor, for the purpose of inspecting the Property and ascertaining Mortgagor's compliance with the terms hereof.

ARTICLE 6.  DEFAULT PROVISIONS

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	6.1
	EVENT OF DEFAULT.  For all purposes hereof, the term “Event of Default” shall mean the existence of any Event of Default, as defined in the Project Loan Agreement.

		
	6.2
	RIGHTS AND REMEDIES.  At any time after the occurrence and during the continuance of an Event of Default, Mortgagee shall have all the following rights and remedies:

		
	(a)
	Upon written notice to Mortgagor, to declare all Secured Obligations immediately due and payable;

		
	(b)
	Upon written notice to Mortgagor, and without releasing Mortgagor from any Secured Obligation, and without becoming a mortgagee in possession, to cure any Event of Default of Mortgagor and, in connection therewith, to enter upon the Property and do such acts and things as Mortgagee deems necessary or desirable to protect the security hereof, including, without limitation:  (i) to appear in and defend any action or proceeding purporting to affect the security of this Mortgage or the rights or powers of Mortgagee under this Mortgage; (ii) to pay, purchase, contest or compromise any encumbrance, charge, Lien or claim of Lien which, in the sole judgment of Mortgagee, is or may be senior in priority to this Mortgage, the judgment of Mortgagee being conclusive as between the parties hereto; (iii) to obtain insurance; (iv) to pay any premiums or charges with respect to insurance required to be carried under this Mortgage; or (v) to employ counsel, accountants, contractors and other appropriate persons.

		
	(c)
	To commence and maintain an action or actions in any court of competent jurisdiction to foreclose this instrument as a mortgage or to obtain specific enforcement of the covenants of Mortgagor hereunder, and Mortgagor agrees that such covenants shall be specifically enforceable by injunction or any other appropriate equitable remedy and that for the purposes of any suit brought under this subparagraph, Mortgagor waives the defense of laches and any applicable statute of limitations;

		
	(d)
	To apply to a court of competent jurisdiction for and obtain appointment of a receiver of the Property as a matter of strict right and without regard to the adequacy of the security for the repayment of the Secured Obligations, the existence of a declaration that the Secured Obligations are immediately due and payable, or the filing of a notice of default, and Mortgagor hereby consents to such appointment;

		
	(e)
	To enter upon, possess, manage and operate the Property or any part thereof, to take and possess all documents, books, records, papers and accounts of Mortgagor or the then owner of the Property, to make, terminate, enforce or modify Leases of the Property upon such terms and conditions as Mortgagee deems proper, to make repairs, alterations and improvements to the Property as necessary, in Mortgagee’s sole judgment, to protect or enhance the security hereof;

		
	(f)
	[reserved];

		
	(g)
	To resort to and realize upon the security hereunder and any other security now or later held by Mortgagee concurrently or successively and in one or several 

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consolidated or independent judicial actions or lawfully taken non‐judicial proceedings, or both, and to apply the proceeds received upon the Secured Obligations all in such order and manner as Mortgagee determines in its sole discretion.
		
	(h)
	Upon sale of the Property at any judicial foreclosure, Mortgagee may credit bid (as determined by Mortgagee in its sole and absolute discretion) all or any portion of the Secured Obligations.  In determining such credit bid, Mortgagee may, but is not obligated to, take into account all or any of the following: (i) appraisals of the Property as such appraisals may be discounted or adjusted by Mortgagee in its sole and absolute underwriting discretion; (ii) expenses and costs incurred by Mortgagee with respect to the Property prior to foreclosure; (iii) expenses and costs which Mortgagee anticipates will be incurred with respect to the Property after foreclosure, but prior to resale, including, without limitation, costs of structural reports and other due diligence, costs to carry the Property prior to resale, costs of resale (e.g. commissions, attorneys' fees, and taxes), costs of any hazardous materials clean-up and monitoring, costs of deferred maintenance, repair, refurbishment and retrofit, costs of defending or settling litigation affecting the Property, and lost opportunity costs (if any), including the time value of money during any anticipated holding period by Mortgagee; (iv) declining trends in real property values generally and with respect to properties similar to the Property; (v) anticipated discounts upon resale of the Property as a distressed or foreclosed property; (vi) the fact of additional collateral (if any), for the Secured Obligations; and (vii) such other factors or matters that Mortgagee (in its sole and absolute discretion) deems appropriate.  In regard to the above, Mortgagor acknowledges and agrees that: (w) Mortgagee is not required to use any or all of the foregoing factors to determine the amount of its credit bid; (x) this Section does not impose upon Mortgagee any additional obligations that are not imposed by law at the time the credit bid is made; (y) the amount of Mortgagee's credit bid need not have any relation to any loan-to-value ratios previously discussed between Mortgagor and Mortgagee; and (z) Mortgagee's credit bid may be (at Mortgagee's sole and absolute discretion) higher or lower than any appraised value of the Property.

		
	6.3
	APPLICATION OF FORECLOSURE SALE PROCEEDS.  After deducting all costs, fees and expenses of Mortgagee, including, without limitation, cost of evidence of title and attorneys' fees in connection with sale and costs and expenses of sale and of any judicial proceeding wherein such sale may be made, Mortgagee shall apply all proceeds of any foreclosure sale:  (a) to payment of all sums expended by Mortgagee under the terms hereof and not then repaid, with accrued interest at the rate of interest specified in the Note to be applicable on or after maturity or acceleration of the Note; (b) to payment of all other Secured Obligations; and (c) the remainder, if any, to the person or persons legally entitled thereto. 

		
	6.4
	APPLICATION OF OTHER SUMS.  All sums received by Mortgagee under Section 6.2 or Section 3.2, less all costs and expenses incurred by Mortgagee or any receiver under Section 6.2, including, without limitation, attorneys' fees, shall be applied in payment of the Secured Obligations in such order as Mortgagee shall determine in its sole discretion; provided, however, Mortgagee shall have no liability for funds not actually received by Mortgagee.

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	6.5
	NO CURE OR WAIVER.  Neither Mortgagee's nor any receiver's entry upon and taking possession of all or any part of the Property and Collateral, nor any collection of rents, issues, profits, insurance proceeds, condemnation proceeds or damages, other security or proceeds of other security, or other sums, nor the application of any collected sum to any Secured Obligation, nor the exercise or failure to exercise of any other right or remedy by Mortgagee or any receiver shall cure or waive any breach, Event of Default or notice of default under this Mortgage, or nullify the effect of any notice of default or sale (unless all Secured Obligations then due have been paid and performed and Mortgagor has cured all other defaults), or impair the status of the security, or prejudice Mortgagee in the exercise of any right or remedy, or be construed as an affirmation by Mortgagee of any tenancy, lease or option or a subordination of the Lien of this Mortgage.

		
	6.6
	PAYMENT OF COSTS, EXPENSES AND ATTORNEYS' FEES.  Mortgagor agrees to pay to Mortgagee, within ten (10) days after demand, all costs and expenses incurred by Mortgagee pursuant to Section 6.2 (including, without limitation, court costs and attorneys' and paralegals' fees, whether internal or external, whether incurred in litigation or not) with interest from the date of notice of expenditure until said sums have been paid at the rate of interest then applicable to the principal balance of the Note as specified therein.

ARTICLE 7.  MISCELLANEOUS PROVISIONS
		
	7.1
	ADDITIONAL PROVISIONS.  The Loan Documents contain or incorporate by reference the entire agreement of the parties with respect to matters contemplated herein and supersede all prior negotiations.  The Loan Documents grant further rights to Mortgagee and contain further agreements and affirmative and negative covenants by Mortgagor which apply to this Mortgage and to the Property and such further rights and agreements are incorporated herein by this reference.

		
	7.2
	MERGER.  No merger shall occur as a result of Mortgagee's acquiring any other estate in, or any other Lien on, the Property unless Mortgagee consents to a merger in writing.  

		
	7.3
	OBLIGATIONS OF MORTGAGOR, JOINT AND SEVERAL.  If more than one person has executed this Mortgage as “Mortgagor”, the obligations of all such persons hereunder shall be joint and several.

		
	7.4
	[INTENTIONALLY OMITTED.]  

		
	7.5
	WAIVER OF MARSHALING RIGHTS.  Mortgagor, for itself and for all parties claiming through or under Mortgagor, and for all parties who may acquire a Lien on or interest in the Property, hereby waives all rights to have the Property and/or any other property, including, without limitation, the Collateral, which is now or later may be security for any Secured Obligation (“Other Property”) marshaled upon any foreclosure of this Mortgage or on a foreclosure of any other security for any of the Secured Obligations.  Mortgagee shall have the right to sell, and any court in which foreclosure proceedings may be brought shall have the right to order a sale of, the Property and any or all of the Collateral or Other Property as a whole or in separate parcels, in any order that Mortgagee may designate.

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	7.6
	RULES OF CONSTRUCTION.  When the identity of the parties or other circumstances make it appropriate the masculine gender includes the feminine and/or neuter, and the singular number includes the plural.  The term “Property” means all and any part of the Property and any interest in the Property.

		
	7.7
	SUCCESSORS IN INTEREST.  The terms, covenants, and conditions herein contained shall be binding upon and inure to the benefit of the heirs, successors and assigns of the parties hereto; provided, however, that this Section 7.7 does not waive or modify the provisions of Section 5.12.

		
	7.8
	EXECUTION IN COUNTERPARTS.  This Mortgage may be executed in any number of counterparts, each of which, when executed and delivered to Mortgagee, will be deemed to be an original and all of which, taken together, will be deemed to be one and the same instrument.

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	7.9
	CHOICE OF LAW.  THIS MORTGAGE, AND ITS VALIDITY, ENFORCEMENT AND INTERPRETATION, SHALL BE GOVERNED BY NEW YORK LAW AND CONSTRUED, INTERPRETED AND ENFORCED IN ACCORDANCE WITH AND PURSUANT TO THE LAWS OF THE STATE OF NEW YORK (WITHOUT REGARD TO ANY CONFLICT OF LAWS PRINCIPLES) AND APPLICABLE UNITED STATES FEDERAL LAW, EXCEPT AS OTHERWISE REQUIRED BY MANDATORY PROVISIONS OF LAW AND EXCEPT TO THE EXTENT THAT REMEDIES PROVIDED BY THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF NEW YORK ARE GOVERNED BY THE LAWS OF SUCH OTHER JURISDICTION.

		
	7.10
	INCORPORATION.  Exhibit A as attached, is hereby incorporated into this Mortgage by this reference.

		
	7.11
	NOTICES.  All notices or other communications required or permitted to be given pursuant to the provisions of this Mortgage shall be in writing and shall be considered as properly given if delivered personally or sent by first class U.S. mail, postage prepaid, except that notice of an Event of Default may be sent by certified mail, return receipt requested, or by Overnight Express Mail or by overnight commercial courier service, charges prepaid.  Notices so sent shall be effective three (3) days after mailing, if mailed by first class mail, and otherwise upon receipt at the addresses set forth below; provided, however, that non-receipt of any communication as a result of any change of address of which the sending party was not notified or as a result of a refusal to accept delivery shall be deemed receipt of such communication.  For purposes of notice, the addresses of the parties shall be:

		
	Mortgagor:
	210 West 31st Street Owner, LLC

c/o Onyx Equities, LLC
900 Route 9 North, Suite 400
Woodbridge, New Jersey 07095
Attention:  John A. Saraceno, Jr. 

		
	With a copy to:
	c/o KBS Capital Advisors

800 Newport Center Drive, Suite 700
Newport Beach, CA 92660
Attention: Brian Ragsdale
Attention: Shep Wainwright

and to:

Cole Schotz P.C.
1325 Avenue of the Americas, 19th Floor
New York, NY 10019 
Attention: Jordan J. Metzger, Esq.

and to:

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Sheppard Mullin Richter & Hampton LLP
650 Town Center Drive, 4th Floor
Costa Mesa, CA 92626
Attention: Scott A. Morehouse, Esq.

		
	Mortgagee:
	PacificCal PC Core Lender, LLC

c/o PCCP, LLC 
10100 Santa Monica Blvd., Suite 1000
Los Angeles, CA 90067
Attn: Legal Notices 

		
	With a copy to:
	Morrison & Foerster LLP 
250 West 55th Street  
New York, New York 10019 
Attn:  Jeffrey Temple, Esq.

Any party shall have the right to change its address for notice hereunder to any other location within the continental United States by the giving of thirty (30) days’ notice to the other party in the manner set forth hereinabove.  Mortgagor shall forward to Mortgagee, without delay, any notices, letters or other communications delivered to the Property or to Mortgagor naming Mortgagee, “Lender” or any similar designation as addressee, or which is reasonably likely to affect the ability of Mortgagor to perform its obligations to Mortgagee under the Note or the Loan Agreements.
		
	7.12
	SECONDARY MARKET TRANSACTIONS.  The terms and provisions of Article XIII of the Project Loan Agreement are hereby incorporated herein by this reference.

		
	7.13
	RESERVED.  

		
	7.14
	LIMITED RECOURSE PROVISION.  Except as to the Guarantors as set forth in the Guaranties and the Environmental Indemnity Agreement, Lender shall have no recourse against, nor shall there by any personal liability to, the members of Borrower, or to any shareholders, members, partners, beneficial interest holders or any other entity or person in the ownership (directly or indirectly) of Borrower (except for Guarantors as provided in the Guaranties and the Environmental Indemnity Agreement, but including the members of Borrower, LMB Phalanx LLC, KBS SOR II Acquisition VI, LLC, KBS SOR US Properties II LLC, KBS Strategic Opportunity Limited Partnership II, or KBS Strategic Opportunity REIT II, Inc.) with respect to the obligations of Borrower and Guarantors under the Loans.  For purposes of clarification, in no event shall the above language limit, reduce or otherwise affect Borrower’s liability or obligations under the Loan Documents, the Guarantors’ liability under the Guaranties and the Environmental Indemnity Agreement to which they are a party, or Lender’s right to exercise any rights or remedies against any collateral securing the Loans.

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ARTICLE 8.  GROUND LEASE
		
	8.1
	Mortgagor shall perform all of the covenants contained in Section 8.27 of the Project Loan Agreement with respect to the Ground Lease.  Mortgagor shall enforce the obligations of the lessor under the Ground Lease (the “Ground Lessor”) to the end that Mortgagor may enjoy all of the rights granted to it under the Ground Lease, and shall promptly notify Mortgagee of any default beyond any applicable grace, notice or cure period by the Ground Lessor that Mortgagor becomes aware of, in the performance or observance of any of the terms, covenants and conditions on the part of the Ground Lessor to be performed or observed under the Ground Lease, and Mortgagor shall promptly advise Mortgagee of the occurrence of any event of default beyond any applicable grace, notice or cure period under the Ground Lease.  Mortgagor hereby assigns to Mortgagee, as further security for the payment and performance of the Secured Obligations and observance of the terms, covenants and conditions of this Mortgage, all of the rights, privileges and prerogatives of Mortgagor, as tenant under the Ground Lease, to surrender the leasehold estate created by the Ground Lease or to terminate, cancel, modify, change, supplement, alter or amend the Ground Lease, and any such surrender of the leasehold estate created by the Ground Lease or termination, cancellation, modification, change, supplement, alteration or amendment of the Ground Lease not permitted pursuant to the foregoing terms of this Section 8.1, Section 8.27 of the Loan Agreement or not otherwise approved by Mortgagee shall be void and of no force and effect. 

		
	8.2
	If Mortgagor shall default beyond any applicable notice and/or grace period in the performance or observance of any term, covenant or condition of the Ground Lease on the part of Mortgagor, as tenant thereunder, to be performed or observed, then, without limiting the generality of the other provisions of this Mortgage, and without waiving or releasing Mortgagor from any of its obligations hereunder, Mortgagee shall have the right, but shall be under no obligation, to pay any sums and to perform any act or take any action as may be appropriate to cause all of the terms, covenants and conditions of the Ground Lease on the part of Mortgagor, as tenant thereunder, to be performed or observed or to be promptly performed or observed on behalf of Mortgagor, to the end that the rights of Mortgagor in, to and under the Ground Lease shall be kept unimpaired and free from default.  If Mortgagee shall make any payment or perform any act or take action in accordance with the preceding sentence, Mortgagee will give Mortgagor prompt written notice thereof; provided that Mortgagee's failure to give such notice prior to making such payment or performing or taking such action shall not affect its rights hereunder.  In any such event, Mortgagee and any Person designated by Mortgagee shall have, and are hereby granted, the right to enter upon the Mortgaged Property at any time and from time to time for the purpose of taking any such action.  If the Ground Lessor shall deliver to Mortgagee a copy of any notice of default sent by Ground Lessor to Mortgagor, as lessee under the Ground Lease, Mortgagee may take or omit to take any action in good faith, in reliance thereon.

		
	8.3
	So long as any portion of the Secured Obligations shall remain unpaid, the leasehold estate created in the Real Property pursuant to the Ground Lease shall not merge but shall always be kept separate and distinct, notwithstanding the union of such estates in any Person by 

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purchase, operation of law or otherwise.  Mortgagee reserves the right, at any time, to release portions of the Property from the lien of this Mortgage with or without consideration, at Mortgagee's election, without waiving or affecting any of its rights hereunder or under the Note, the Loan Agreements or the other Loan Documents and any such release shall not affect Mortgagee's rights in connection with the portion of the Property not so released.

		
	8.4
	In the event of the bankruptcy, reorganization or insolvency of Mortgagor, any attempt by Mortgagor to surrender its leasehold estate, or any portion thereof, under the Ground Lease, or any attempt by Mortgagor to terminate, cancel or acquiesce in the rejection of the Ground Lease without the consent of Mortgagee shall be null and void.  Mortgagor hereby expressly releases, assigns, relinquishes and surrenders unto Mortgagee all of its right, power and authority to terminate, cancel, acquiesce in the rejection of, modify, change, supplement, alter or amend the Ground Lease in any respect, either orally or in writing, in the event of the bankruptcy, reorganization or insolvency of Mortgagor, and any attempt on the part of Mortgagor to exercise any such right without the consent of Mortgagee shall be null and void.

		
	8.5
	Notwithstanding anything to the contrary contained in this Mortgage with respect to the Ground Lease, as security for the Loan, but subject to the Loan Documents, the Mortgagor unconditionally assigns, transfers and sets over unto Mortgagee all of its claims and rights to the payment of damages that may hereafter arise as a result of any rejection or disaffirmance of the Ground Lease by the Ground Lessor or its successors and assigns, or by ant trustee of any such party, pursuant to the Bankruptcy Code.  Mortgagee shall have and is hereby granted the right to approve prior to the filing or commencement thereof by Borrower of any claim, suit, action or proceeding relating to the Ground Lessor’s attempt to reject or disaffirm, or the rejection or disaffirmance of, the Ground Lease (including, without limitation, the right to file and prosecute, any proofs of claim, complaints, motions, objections, applications, notices and other documents) in any case in respect of Ground Lessor or any of its successors and assigns, under the Bankruptcy Code.  This assignment constitutes a present, irrevocable and unconditional assignment of the foregoing claims, rights and remedies, and shall continue in effect until the Secured Obligations shall have been satisfied and discharged in full.

		
	8.6
	Mortgagee hereby agrees to deliver to Ground Lessor (simultaneously with the delivery thereof to Mortgagor) copies of any notice of default or nonperformance given to Mortgagor hereunder. The terms of this Section 8.6 are adopted in order to comply with certain provisions required in order to qualify this Mortgage as a “Recognized Mortgage” under the Ground Lease.

ARTICLE 9.  STATE SPECIFIC PROVISIONS
		
	9.1
	CONFLICTS WITH PRECEDING ARTICLES.  In the event of any conflict between the provisions of this Article 9 and any provision in the preceding Articles, then the provisions of this Article 9 shall control. 

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	9.2
	NEW YORK PROVISIONS.  Notwithstanding anything to the contrary elsewhere in this Mortgage:

		
	(a)
	MAXIMUM PRINCIPAL SUM.  THE PARTIES HERETO INTEND THAT THIS MORTGAGE SHALL SECURE UNPAID BALANCES OF THE DEBT SECURED HEREBY WHETHER ADVANCED TO MORTGAGOR ON THE DATE HEREOF OR AFTER THIS MORTGAGE IS DELIVERED FOR RECORDATION IN THE OFFICIAL RECORDS OF THE COUNTY IN WHICH THE PROPERTY IS LOCATED.  THE MAXIMUM PRINCIPAL AMOUNT OF INDEBTEDNESS WHICH IS OR UNDER ANY CONTINGENCY MAY BE SECURED AT THE DATE OF EXECUTION HEREOF OR AT ANY TIME THEREAFTER BY THIS MORTGAGE IS $7,410,000.00.           

		
	(b)
	Trust Fund for Advances.  In compliance with Section 13 of the Lien Law of the State of New York, the Mortgagor will receive the advances secured hereby and will hold the right to receive such advances as a trust fund to be applied first for the purpose of paying the “cost of improvement” (as such quoted term is defined in the New York Lien Law), and will apply the same first to the payment of such costs before using any part of the total of the same for any other purpose and, will comply with Section 13 of the New York Lien Law.  Mortgagor will indemnify and hold Mortgagee harmless against any loss or liability, cost or expense, including, without limitation, any judgments, attorney’s fees, costs of appeal bonds and printing costs, arising out of or relating to any proceeding instituted by any claimant alleging a violation by Mortgagor of any applicable lien law including, without limitation, any section of Article 3-A of the New York Lien Law.

		
	(c)
	New York Real Property Law Article 4-A.  If this Mortgage shall be deemed to constitute a “mortgage investment” as defined by New York Real Property Law Section 125, then this Mortgage shall and hereby does (i) confer upon the Mortgagee the powers and (ii) impose upon the Mortgagee the duties of trustees set forth in New York Real Property Law Section 126.

		
	(d)
	Statement in Accordance with Section 253.1-a.(a) of the New York Tax Law.  This Mortgage does not cover real property principally improved or to be improved by one or more structures containing in the aggregate not more than six (6) residential dwelling units, each having separate cooking facilities.

		
	(e)
	Statement in Accordance with Section 274-a of the New York Real Property Law.  The Mortgagee shall, within fifteen (15) days after written request, provide the Mortgagor with the statement required by Section 274-a of the New York Real Property Law.

		
	(f)
	Section 291-f of New York Real Property Law.  Mortgagee shall have all of the rights set forth in Section 291-f of the Real Property Law of New York.  For purposes of Section 291-f of the New York Real Property Law, all existing tenants and every tenant or subtenant who after the recording of this Mortgage, enters into a Lease upon 

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the premises of any of the Property or who acquires by instrument of assignment or by operation of law a leasehold estate upon the Property is hereby notified that Mortgagor shall not, without obtaining Mortgagee’s prior consent in each instance, cancel, abridge or otherwise modify  any Leases or accept prepayments for more than thirty (30) days of installments of rent to become due with respect to any Lease thereof having an unexpired term on the date of this Mortgage of five (5) years or more, except as expressly permitted under the Loan Agreements, and that any such cancellation, abridgement, modification or prepayment made by any such tenant or subtenant without either being expressly permitted under this Mortgage or receiving Mortgagee’s prior consent shall be voidable by Mortgagee at its option.
		
	(g)
	Sections 254, 271, 272 and 291-f of New York Real Property Law.  All covenants of the Mortgagor herein contained shall be construed as affording to Mortgagee rights additional to and not exclusive of the rights conferred under the provisions of Sections 254, 271, 272 and 291-f of the Real Property Law of New York.

		
	(h)
	Real Property Law.  In the event of any conflict, inconsistency or ambiguity between (i) the provisions of the Note, this Mortgage or the other Loan Documents and (ii) the provisions of subsection 4 of Section 254 of the Real Property Law of New York covering the insurance of buildings against loss by fire, the provisions of the Note, this Mortgage and the other Loan Documents shall control.

		
	(i)
	RPAPL.  If an Event of Default shall occur and be continuing, Mortgagee may elect to sell (and, in the case of any default of any purchaser, resell) the Property or any part thereof by exercise of the power of foreclosure or of sale granted to Mortgagee by Articles 13 of the New York Real Property Actions and Proceedings Law (the “RPAPL”). In such case, Mortgagee may commence a civil action to foreclose this Mortgage pursuant to Article 13 of the RPAPL to satisfy the Note and all other amounts secured hereby. 

		
	(j)
	Certain Waivers.  Mortgagor hereby waives and releases all benefit that might accrue to Mortgagor by virtue of any present or future law exempting the Property, or any part of the proceeds arising from any sale thereof, from attachment, levy or sale on execution, or providing for any stay of execution, exemption from civil process or extension of time for payment, or any right of marshalling in the event of any sale hereunder of the Property, and, unless specifically required herein, all notices of Mortgagor’s default or of Mortgagee’s election to exercise, or Mortgagee’s actual exercise of any option under this Mortgage or any other Loan Documents.  Mortgagor waives all rights or defenses arising by reason of any “one action” or “anti-deficiency” law, or any other law which may prevent Mortgagee from bringing any action against Mortgagor, including a claim for deficiency to the extent Mortgagee is otherwise entitled to a claim for deficiency, before or after Mortgagee’s commencement or completion of any foreclosure action or any other action to exercise its remedies hereunder or otherwise available at a law or in equity.  

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	(k)
	Application of Insurance Proceeds.  In no event shall the provisions of Section 254 of the Real Property Law of the State of New York with respect to the application of insurance proceeds apply to this Mortgage.  

		
	(l)
	Assignment.  Upon the repayment of this Mortgage, Mortgagee shall cooperate with Mortgagor in effecting an assignment, without representation or warranty (except that Mortgagee shall represent that it has not assigned or encumbered this Mortgage or the other Loan Documents), and without recourse to Mortgagee, of this Mortgage, provided all Lenders’ costs and attorneys’ fees in connection therewith are paid by Mortgagor, and Mortgagee shall have no liability to Mortgagor for the loss of the Note or any original document evidencing and securing the Loan, but shall provide Mortgagor with a lost document affidavit describing the circumstances thereof and such other instruments as may be reasonably requested to effectuate such assignment (which shall not include any indemnification agreements).  

		
	(m)
	Relation to Acquisition Mortgage.  This Mortgage is intended to be junior and subordinate in lien to the Acquisition Loan Mortgage executed by Mortgagor in favor of Mortgagee and dated as of the date hereof, securing repayment of Acquisition Loans 

		
	(n)
	Relation to Project Mortgage.  This Mortgage is intended to be senior and prior in lien to the Project Loan Mortgage executed by Mortgagor in favor of Mortgagee and dated as of the date hereof, securing repayment of Project Loans, or so much thereof as shall have been advanced thereunder, the proceeds of which are to be disbursed and advanced from time to time after the date hereof.  

		
	(o)
	Loan Proceeds.  Borrower intends and has agreed in the Building Loan Agreement to apply the Building Loan to pay for costs of improvement (and other items disclosed in the Section 22 Lien Law Affidavit attached to the Building Loan Agreement) incurred after the date hereof in the construction, renovation, and development of a commercial building, as described in the Building Loan Agreement.

		
	(p)
	Filing.  The Building Loan Agreement has been filed with the Clerk of the County of New York, New York before the recording of this Mortgage.

[SIGNATURE APPEARS ON FOLLOWING PAGE]

ny-1260332 

IN WITNESS WHEREOF, Mortgagor has executed this Mortgage as of the day and year set forth above.
MORTGAGOR:
210 WEST 31ST STREET OWNER, LLC,
a Delaware limited liability company

By:    KBS SOR II 210 WEST 31ST STREET, LLC, 
a Delaware limited liability company, 
its sole member

By:    ONYX 31st STREET, LLC, 
a Delaware limited liability company, 
its Managing Member

By:      /s/ John A. Saraceno Jr.        
John A. Saraceno, Jr., 
Authorized Signatory 

 (ALL SIGNATURES MUST BE ACKNOWLEDGED)

ny-1260332 

NOTARY ACKNOWLEDGMENT
STATE OF NEW YORK    )
)  ss.:
COUNTY OF NEW YORK    )
On the   29th   day of    November    , 2016, before me, the undersigned, personally appeared     John Saraceno        , personally known to me or proved to me on the basis of satisfactory evidence to be the individual whose name is subscribed to the within instrument, and acknowledged to me that he executed the same in his capacity and that by his signature on the instrument the individual or the person upon behalf of which the individual acted executed the instrument.

   /s/ Tierra James                 
Signature and Office of individual 
taking acknowledgment

ny-1260332 

EXHIBIT A 
DESCRIPTION OF PROPERTY

ny-1260332Exhibit

Exhibit 10.55
Section:    3
Block:    780
Lots:    45 (f/k/a 45, 49 and 51)
County:    New York
		
	Premises:
	210 West 31st Street, New York, New York

BUILDING LOAN AGREEMENT
between
PACIFICCAL PC CORE LENDER, LLC,
AS LENDER

AND

210 WEST 31st STREET OWNER, LLC,
AS BORROWER

Date:  As of December 1, 2016

This Agreement was prepared by:
MORRISON & FOERSTER LLP
250 West 55th Street
New York, New York 10019
Attention: Jeffrey J. Temple, Esq.

ny-1258903 

TABLE OF CONTENTS
Page
	
					
	ARTICLE 1   CERTAIN DEFINITIONS
	1
	

	 
	Section 1.1
	Certain Definitions
	1
	

	 
	 
	 
	 

	ARTICLE 2   LOAN TERMS
	4
	

	 
	Section 2.1
	The Commitments, Loans and Notes
	4
	

	 
	Section 2.2
	Interest Rate
	4
	

	 
	 
	 
	 

	ARTICLE 3   CONDITIONS TO INITIAL DISBURSEMENT
	4
	

	 
	Section 3.1
	Conditions to Initial Disbursement
	5
	

	 
	 
	 
	 

	ARTICLE 4   FUTURE DISBURSEMENTS OF THE BUILDING LOANS
	5
	

	 
	Section 4.1
	General Conditions
	5
	

	 
	Section 4.2
	Procedure for Making Disbursements of Building Loan Proceeds
	7
	

	 
	Section 4.3
	Retainage
	7
	

	 
	Section 4.4
	Stored Materials; Deposits
	8
	

	 
	Section 4.5
	Tenant Improvement Costs
	9
	

	 
	Section 4.6
	Unsatisfactory Work
	10
	

	 
	Section 4.7
	Direct Loan Advances by Lender
	10
	

	 
	Section 4.8
	No Waiver or Approval by Reason of Loan Advances
	10
	

	 
	Section 4.9
	Construction Consultant
	11
	

	 
	Section 4.10
	Authorization to Make Loan Advances to Cure Borrower's Defaults
	11
	

	 
	Section 4.11
	Reserved
	11
	

	 
	Section 4.12
	Lender's Right to Make Loan Advances in Compliance with the Completion Guaranty
	11
	

	 
	Section 4.13
	No Third-Party Benefit
	12
	

	 
	 
	 
	 

	ARTICLE 5   INSURANCE, CONDEMNATION AND IMPOUNDS
	12
	

	 
	Section 5.1
	Insurance, Condemnation, Impounds
	12
	

	 
	 
	 
	 

	ARTICLE 6   ENVIRONMENTAL MATTERS
	12
	

	 
	 
	 
	 

	ARTICLE 7   REPRESENTATIONS AND WARRANTIES
	12
	

	 
	Section 7.1
	Cost of Improvement
	12
	

	 
	Section 7.2
	Design Professionals' Certificates
	12
	

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	ARTICLE 8   FINANCIAL REPORTING
	13
	

	 
	 

	ARTICLE 9   COVENANTS
	13
	

	 
	Section 9.1
	Payment for Labor and MAterials
	13
	

	 
	Section 9.2
	Inspection
	13
	

	 
	Section 9.3
	Project Construction and Completion
	14
	

	 
	Section 9.4
	Proceedings to Enjoin or Prevent Construction
	16
	

	 
	Section 9.5
	Lender's and Construction Consultant's Actions for their Own Protection Only
	16
	

	 
	Section 9.6
	Sign and Publicity
	16
	

	 
	Section 9.7
	Amendment of Project Documents and Government Approvals; Change Orders
	17
	

	 
	Section 9.8
	Lien Law
	18
	

	 
	 
	 
	 

	ARTICLE 10   EVENTS OF DEFAULT
	18
	

	 
	Section 10.1
	Project Loan Agreement
	18
	

	 
	Section 10.2
	Access to Project
	18
	

	 
	Section 10.3
	Termination of Contracts
	18
	

	 
	Section 10.4
	Unsatisfactory Work
	19
	

	 
	Section 10.5
	Construction Work
	19
	

	 
	 
	 
	 

	ARTICLE 11   REMEDIES
	19
	

	 
	 
	 
	 

	ARTICLE 12   RECOURSE LIABILITY
	20
	

	 
	Section 12.1
	Recourse Liability
	20
	

	 
	 
	 
	 

	ARTICLE 13  MISCELLANEOUS
	20
	

	 
	Section 13.1
	Incorporation by Reference
	20
	

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LIST OF EXHIBITS AND SCHEDULES
	
		
	Schedule 1
	Licenses and Permits

	Schedule 2
	Trade List

	Schedule 3
	Plans and Specifications

	Schedule 4
	Advance Conditions

	Exhibit A
	Legal Description of Project

	Exhibit B
	Form of Section 22 Affidavit

	 
	 

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BUILDING LOAN AGREEMENT
THIS  BUILDING LOAN AGREEMENT is made and entered into as of December 1, 2016, by and between 210 WEST 31st STREET OWNER, LLC, a Delaware limited liability company (“Borrower”), and PACIFICCAL PC CORE LENDER, LLC, a Delaware limited liability company (together with its successors and/or assigns, “Lender”).
R E C I T A L S:
A.    Borrower is the owner of a ground leasehold interest in that certain tract of land located in the City, County and State of New York and being more fully described in Exhibit A attached hereto (the “Land”).
B.    Borrower proposes to construct the Improvements (as hereinafter defined) on the Land and, in connection therewith has requested and applied to Lender for a loan in the amount of $7,410,000.00 (the “Building Loan Commitment”) for the purposes of paying certain costs pertaining to the Project (as hereinafter defined) including certain costs with respect to the construction and equipping of the Improvements, all of which said costs constitute a Cost of Improvement (as hereinafter defined).  The Lender has agreed to make such loans on and subject to the terms and conditions hereinafter set forth.
A.Borrower has also requested and applied to Lender for (i) a loan in the amount of $32,650,000.00 for the purpose of acquiring its interest in the Land and (ii) a loan in the amount of $7,050,000.00 for the purpose of paying certain costs pertaining to the Premises, which costs do not constitute a Cost of Improvement.  Lender has agreed to make such loans pursuant to the Acquisition and Project Loan Agreement, dated as of the date hereof, entered into by Borrower and Lender (the “Project Loan Agreement”).
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows:
ARTICLE 1
 
CERTAIN DEFINITIONS
Section 1.1    Certain Definitions.  Unless separately defined in this Agreement, all capitalized terms used herein shall have the meaning assigned to such terms in the Project Loan Agreement.  In addition, as used herein, the following terms have the meanings indicated:
“Agreement” means this Building Loan Agreement, as amended from time to time.
“Bond” means a Performance Bond and Labor and Material Payment Bond in the form approved by the American Institute of Architects and identified as Form AIA No. A‐311, and providing first dollar coverage, with the contractor or subcontractor (as the case may be) as principal, with a surety company licensed to do business in the state where the Project is located and reasonably acceptable to Lender and with Borrower and Lender listed as joint and several 

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obligees.  Bonds will be required from any contractor or subcontractor (a) with a contract or subcontract for a trade listed on Schedule 2 attached hereto (unless Lender in its reasonable discretion, upon advice from the Construction Consultant, agrees to waive such bonding requirement with respect to any contractor or subcontractor), which Schedule 2 shall be updated in connection with satisfaction of the terms of Section 8.6(d)(iii) of the Project Loan Agreement, or (b) required to be bonded pursuant to the Construction Management Agreement, prior to the funding of any Loans for the portion of the Construction Work to be performed by such contractors or subcontractors.
“Borrower” has the meaning assigned in the Preamble.
“Building Loan” and “Building Loans” have the meanings assigned in Section 2.1(1).
“Building Loan Commitment” has the meaning assigned in the Recitals.
“Building Loan Mortgage” means the Building Loan Mortgage, Assignment of Leases and Rents, Security Agreement and Fixture Filing in the amount of the Total Building Loan Commitments and executed, dated and delivered by Borrower to Lender on the Closing Date, securing the Building Loan Note, as such mortgage may be modified, supplemented, amended and/or in effect from time to time.
“Building Loan Notes” has the meaning assigned to such term in Section 1.1 of the Project Loan Agreement.
“Change Order” means any modification, amendment and/or supplement to (a) the Plans and Specifications, (b) the Approved Budget, (c) the Construction Schedule, (d) the Construction Management Agreement or (e) any Contract. 
“Consent and Agreement” means the consent and agreement executed by the parties thereto in accordance with the Assignment of Construction Documents and substantially in the same form as attached thereto. 
“Construction Completion” means the date that the following conditions shall be satisfied:
(a)    Lender shall have reasonably determined that the Construction Work has been substantially completed in accordance with the Plans and Specifications, the Loan Documents and all Applicable Laws, subject only to the completion of Punch List Items, and Lender shall have received written certification from the Construction Consultant with respect to same; and
(b)    the deliveries required by Schedule 4 – Part B shall have been received and approved by Lender.
“Design Professional” means, collectively, the Architect, the Engineer or any other structural engineer or mechanical engineer and, to the extent reasonably requested by Lender, other design professionals relating to the Construction Work, as reasonably approved by Lender, and any reference in this Agreement to a certification or other document to be executed 

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by the applicable Design Professional shall mean one or more of such Design Professionals designated in writing by Lender as the Design Professionals to execute such certification or document, depending on the areas of expertise covered by such certification or document.
“Event of Default” has the meaning assigned to such term in Article 10.
“Hard Costs” means the aggregate costs of all labor, materials, equipment and fixtures necessary for completion of construction of the Improvements, as more particularly set forth in the Approved Budget, including Tenant Improvement Costs (other than Tenant Allowance Payments).
“Land” has the meaning assigned to such term in the Recitals.
“Lender” has the meanings assigned in the Preamble.
“Lien Law” shall mean the Lien Law of the State of New York, as amended from time to time.
“Plans and Specifications” means the final plans and specifications for the construction of the Construction Work prepared by Borrower’s Design Professionals and reasonably approved by Lender, the Construction Consultant and, to the extent then required, by any applicable Governmental Authority and such other parties whose approval or consent may be required under any law, regulation, prior agreement, this Agreement and all modifications, amendments and/or supplements thereof made by Change Orders permitted pursuant to the terms of this Agreement.  A list of the preliminary Plans and Specifications is attached hereto as Schedule 3, which Schedule 3 shall be updated in connection with satisfaction of the terms of Section 8.6(d)(i) of the Project Loan Agreement,. 
“Project Loan Agreement” has the meaning assigned to such term in the Recitals.
“Punch List Items” means minor construction items to be completed or constructed with respect to the Construction Work which do not materially interfere either with the use and operation of the Project.
“Retainage” has the meaning assigned to such term in Section 4.3(1).
“Unavoidable Delay” means any delay in the Construction Work, if and so long as such delay is caused by (directly or indirectly) natural disaster, fire, earthquake, floods, explosion, actions of the elements, declared or undeclared war, acts of terrorism, riots, mob violence, inability to procure or a general shortage of labor, equipment, facilities, energy, materials or supplies in the open market, failure of transportation, strikes, lockouts not instituted by Borrower, actions of labor unions, condemnation, court orders, laws, rules, regulations or orders of governmental or military authorities or any other similar causes outside of Borrower’s reasonable control; provided, however, (i) “Unavoidable Delay” shall not include lack of or inability to procure monies (other than a Lender’s failure to fund, provided all conditions thereto under the Loan Documents have been satisfied) necessary to fulfill Borrower’s commitments and 

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obligations under the Loan Documents, and (ii) under no circumstances shall Unavoidable Delay be in excess of ninety (90) days.
“Unsatisfactory Work” means any Construction Work which the Construction Consultant has reasonably determined has not been substantially completed in a good and workmanlike manner, and, to the extent any Construction Work is not specifically addressed in the construction drawings and specifications, in a manner consistent with sound design principles and/or sound construction practices, or in substantial conformity with the Plans and Specifications, or in accordance with all Applicable Law.
ARTICLE 2
 
LOAN TERMS
Section 2.1    The Commitments, Loans and Notes.  
(1)    Building Loans.  Lender agrees, on the terms and conditions of this Agreement, to make loans (each advance of such a loan being a “Building Loan” and collectively, the “Building Loans”) on a non-revolving basis to Borrower in Dollars from time to time in an amount equal to the aggregate amount of Building Loans to be made of such time.    The Building Loans shall be advanced from time to time as provided in this Agreement for the payment of all or part of the Cost of Improvement in connection with the construction of the Project and shall be funded and repaid in accordance with this Agreement.
(2)    Requests for Building Loan Advances.  With respect to each Building Loan, Borrower shall give Lender (and the Construction Consultant) a Request as provided in Section 4.1(2).  Upon fulfillment of the applicable conditions referred to in Article 3 and Schedule 4, Lender shall make such funds available to Borrower by depositing the same, in immediately available funds, in an account designated by Borrower by the end of business on the applicable advance date, to be applied in accordance with the terms of this Agreement.
(3)    Changes of Commitments.
(a)    The Building Loan Commitment shall reduce pro rata automatically by reason of any prepayment of the Building Loans applicable thereto in the amount of any such prepayment.
(b)    The Building Loan Commitment, once terminated or reduced, may not be reinstated.  
(4)    Note.  The Building Loans to be made by Lender shall be evidenced by the Building Loan Note, payable to Lender in a principal amount equal to the applicable Building Loans covered by such note.
Section 2.2    Interest Rate.  Interest shall accrue on the Building Loans at the rate or rates provided for in the Building Loan Note, and shall be paid by Borrower in the amounts and at the times provided for in the Building Loan Note.

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ARTICLE 3
CONDITIONS TO INITIAL DISBURSEMENT
Section 3.1    Conditions to Initial Disbursement.  Lender’s obligation to disburse a portion of the Building Loan Commitment on the Closing Date is subject to the satisfaction of each of the following conditions precedent on or before the Closing Date:
(1)    Project Loan Agreement.  All of the conditions set forth in Section 3.1 of the Project Loan Agreement shall have been satisfied.
(2)    Schedule of Contractors.  A schedule of the identity of all of the Contractors for the Improvements which are engaged as of the Closing Date, and copies of the executed Contracts entered into with such Contractors and all material modifications, amendments and/or supplements with respect thereto, together with a certificate of an Authorized Officer of Borrower certifying that (A) the copies of the Contracts attached to such certificate are true, correct and complete in all material respects; (B) such Contracts attached to such certificate are in full force and effect; and (C) neither Borrower, nor, to Borrower’s knowledge, the Construction Manager nor the applicable Contractor is in default thereunder beyond notice and the expiration of applicable cure periods.
(3)    Plans.  Receipt, review, and reasonable approval by Lender, and at Lender’s option, the Construction Consultant of the preliminary Plans and Specifications for the Improvements, sealed by the applicable Design Professionals. 
(4)    Cost Review.  The delivery by the Construction Consultant to Lender of the Construction Consultant’s Construction, Cost and Plan Review in form and substance satisfactory to Lender. 
(5)    Budget.  The preliminary Budget as reasonably approved by Lender, which shall include all Project Costs for the Improvements and shall, in Borrower’s reasonable estimation, be sufficient to complete the Improvements and carry the Project through the Maturity Date based on the final Plans and Specifications and the Construction Schedule.  To the extent that the Commitments would exceed any of the limits described in this section, they shall be automatically reduced to an amount not in excess of the limits described in this section.
(6)    Construction Schedule.  The preliminary Construction Schedule, together with (if any Construction Work has been commenced prior to the Effective Date) evidence reasonably satisfactory to Lender that the development of the Construction Work is proceeding in accordance with the Construction Schedule and the Budget.
(7)    Other Documents.  Lender shall have received and reasonably approved such other documents, materials or information as Lender or its counsel shall reasonably require.
ARTICLE 4
 
FUTURE DISBURSEMENTS OF THE BUILDING LOANS

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Section 4.1    General Conditions.  
(1)    Subject to (a) Borrower’s satisfaction of the applicable conditions precedent set forth in Schedule 4 and (b) Borrower’s compliance with the applicable provisions of this Article 4, Lender shall disburse the proceeds of each Building Loan within twelve (12) Business Days after Lender’s receipt of all of the documents and items to be delivered or received pursuant to Schedule 4 and this Article 4; provided, however, that at no time shall Lender be obligated to:
(a)    advance to Borrower more than the amount that Borrower have funded from their own monies or are then required to fund to the party seeking payment or, in the case of reimbursement, to the party seeking reimbursement (subject to Retainage, if applicable
(b)    make an advance if the Building Loans are not In-Balance in accordance with Section 4.3 of the Project Loan Agreement,
(c)    subject to possible reallocation in accordance with this Agreement and the Project Loan Agreement, advance proceeds of a Building Loan in an amount in excess of the Budget Line Items set forth in the Budget, as the same may be adjusted in accordance with the terms of this Agreement,
(d)    except as provided in Section 4.3 hereof, advance any portion of the Retainage,
(e)    except as provided in Section 4.4 hereof, make any Building Loans with respect to materials not yet incorporated into the Improvements,
(f)    make an advance in connection with any Change Order for which Lender’s approval is required under Section 9.7(2) which has not been approved by Lender in accordance with Section 9.7(2),
(g)    make any Building Loans for any contractor until, (A) in the case of a Major Contractor, such Major Contractor has been reasonably approved by Lender in accordance with the provisions of the Project Loan Agreement and has duly executed and delivered to Lender the applicable consent and attornment agreement in substantially the form attached to the General Assignment,  and (B) in the case of any Contractor required to be bonded pursuant to the terms hereof or the terms of the Construction Management Agreement, the work to be performed by such Contractor is covered by a Bond; or
(h)    make any Building Loans with respect to any sums due a Design Professional, until such Design Professional has duly entered into a contract with Borrower, a copy (certified by an Authorized Officer of Borrower) of such contract has been delivered to Lender, and such Design Professional has duly executed and delivered to Lender the applicable Consent and Agreement in substantially the form attached to the General Assignment.
(2)    Notwithstanding anything to the contrary contained in this Agreement, the Lender shall have no obligation to advance any Building Loan unless Lender is, at all times, reasonably satisfied that the Improvements can be constructed Lien free (subject to Permitted 

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Encumbrances), substantially in accordance with the Plans and Specifications for the sums set forth in the Budget subject to possible reallocation in accordance with this Agreement and the Project Loan Agreement (or, if more, Borrower has furnished the difference in cash or cash equivalents, subject to the provisions of Sections 4.3, 4.4 and 4.5 of the Project Loan Agreement) by the Completion Date.
Section 4.2    Procedure for Making Disbursements of Building Loan Proceeds.  
(1)    Disbursements shall be made from time to time as construction progresses pursuant to a Request, but no more frequently than once in each calendar month.
(2)    Each Request shall (a) be duly executed by an Authorized Officer on behalf of Borrower, (b) be submitted to Lender and the Construction Consultant not less than twelve (12) Business Days prior to the proposed disbursement date for such Building Loans, (c) specify the items to be paid or reimbursed with the proceeds of the requested Building Loans, and (d) include the documentation required to be included therewith under Schedule 4.
(3)    All advances of the Building Loans shall be made for the payment of Project Costs in accordance with the Budget upon Borrower’s satisfaction of the applicable conditions set forth in this Article 4 and Schedule 4 – Parts A and B, as applicable.
Section 4.3    Retainage.  
(1)    Disbursement of the available proceeds of each Building Loan with respect only to Hard Costs shall be limited to ninety percent (90%) of the value of the Hard Costs Work set forth in the applicable Request; provided, however, where the retainage percentage amount set forth in any contract or subcontract for such portion of the Improvements is a percentage amount less than ninety percent (90%) of the value of such Hard Costs Work, then such the disbursement of such available proceeds shall be limited to such lower percentage value of such Hard Costs Work.  The amounts authorized to be withheld pursuant to this paragraph (1) being collectively referred to herein as the “Retainage.”  No Retainage will apply to Soft Costs. 
(2)    Lender shall advance Building Loans pursuant to a Request to pay portions of the Retainage with respect to each contract (including a Major Contract) prior to Construction Completion, within twelve (12) Business Days after Borrower’s compliance with the following conditions to the satisfaction of Lender with respect to such contracts and leases:
(a)    all of the work under such contract is finally completed substantially in accordance with the terms of such contract and the applicable Plans and Specifications, as the case may be, and Lender receives a certification to that effect from an Authorized Officer of Borrower and Borrower’s Architect and at Lender’s option such work has been approved by the Construction Consultant;
(b)    the work performed by such Contractor has been approved, to the extent such approval is required, by the Governmental Authorities having jurisdiction over the same and the applicable permits with respect to such work, if any, have been issued;

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(c)    the contract provides for such early release of the applicable Retainage;
(d)    the applicable Contractor (including the Construction Manager) with respect to which the Retainage is being released delivers to Lender a final and complete release of Lien in form and substance reasonably acceptable to Lender, conditional only upon receipt of payment of such Retainage, with respect to such work;
(e)    the applicable surety has delivered a consent and release in connection with any Bonds;
(f)    if and as required, Lender shall have received copies of any warranties, guaranties or “as built” drawings relating to the work performed by each such Contractor in connection with the Construction Work; and
(g)    all other applicable requirements and conditions with respect to such advance of Building Loan proceeds are satisfied.
Section 4.4    Stored Materials; Deposits.  
(1)    Lender shall advance the proceeds of Building Loans with respect to materials and equipment that are included in the Budget and are not yet incorporated into the Improvements as of the date of the applicable Building Loans, but are temporarily stored at the Project so long as Lender shall have received the following items, each in form and substance reasonably satisfactory to Lender:
(a)    evidence that Borrower has an obligation under the applicable contract, subcontract or purchase order to pay for such materials and equipment prior to their installation;
(b)    evidence that the ownership of such materials and equipment is vested in Borrower free of any liens and claims of third parties, including, without limitation, bills of sale and conditional lien waivers from the respective Contractor and that such material and equipment are clearly marked to indicate the ownership thereof by Borrower;
(c)    evidence that such stored materials are included within the coverages of insurance policies carried by Borrower or proof of other insurance (which shall include a standard mortgagee endorsement or its equivalent to the extent available) which has been reasonably approved by Lender;
(d)    evidence acceptable to Lender, and at the Lender’s option, the Construction Consultant, that the stored materials are reasonably protected against vandalism (casualty), theft or damage;
(e)    evidence that Building Loans for said materials do not, at any one time, exceed, in the aggregate, $250,000, inclusive of the amount requested;
(f)    evidence that Lender has a perfected first security interest in such material prior to or simultaneous with the making of such Building Loans;

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(g)    evidence reasonably acceptable to Lender, and at Lender’s option the Construction Consultant, as to the identity, quality and quantity of same; and
(h)    evidence that all other applicable requirements and conditions with respect to such advance of Building Loan proceeds have been satisfied.
(2)    Unless otherwise approved by Lender, Lender shall not be required to make any Building Loans with respect to any materials or equipment unless and until such materials and equipment are delivered to the Project.  Any determination by Lender of whether to make any Building Loans for materials, equipment or parts that are included in the Budget but are temporarily stored at sites other than the Project, shall be conditioned upon, among other things:
(a)    satisfaction of the requirements set forth in Section 4.4(1)(a), (b), (d), (g) and (h) with respect to any such materials, equipment and parts;
(b)    evidence that upon payment the ownership of such fabricated materials, equipment and parts is vested in Borrower free of any liens and claims of third parties, including, without limitation, bills of sale and conditional lien waivers from the respective supplier and UCC searches with respect to the respective supplier;
(c)    evidence that the materials, equipment and parts are under the control of the applicable supplier and are being kept at bonded warehouse sites or otherwise stored in a designated and secured area reasonably satisfactory to Lender, and at Lender’s option the Construction Consultant, in each case in the U.S.A. and reasonably approved by Lender, and at Lender’s option the Construction Consultant; and that such equipment and parts shall have been clearly designated, marked or tagged to indicate ownership by such Borrower and the security interest of Lender therein;
(d)    evidence that Lender has a perfected security interest (i.e., Uniform Commercial Code filings or other applicable filings) in such materials, equipment and parts prior to or simultaneous with the making of such Building Loans, which requirement shall, if requested by Lender in connection with the first advance for property stored in the applicable state (and in connection with any other advance in such state when Lender reasonably believes that the collateral is substantially different from the type of collateral covered by the first opinion), be supported by the opinion of a local counsel in the state where the applicable equipment and parts are stored; and
(e)    the Construction Consultant and/or Lender shall have the right during normal business hours to inspect such materials, equipment and parts and the locations where such equipment and parts are stored.
(3)    Lender shall advance the proceeds of Building Loans with respect to deposits or other advance funding arrangements solely to the extent that such deposit or advance funding arrangement has been approved by Lender in its reasonable discretion.

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Section 4.5    Tenant Improvement Costs.  Unless otherwise permitted by Lender, advances of the Loan for Tenant Improvement Costs shall be limited to costs actually payable to a contractor or service provider as evidenced by the invoice and payment request from such contractor or service provider.  Lender may require, as a condition for the disbursement of any advance of the Loan for Tenant Improvement Costs that the plans and specifications for such tenant improvements be delivered to and reasonably accepted by Lender, and that the construction contract for such tenant improvements be delivered to Lender for its review (if available to Borrower under the terms of the applicable Lease).  Lender agrees that its review and approval of the plans and specifications for such tenant improvements and such construction contract will be completed within the time period applicable to Borrower’s review and approval of such items under the terms of the applicable Lease, provided that Lender receives such plans and specifications concurrently with the delivery of such plans and specifications to Borrower.
Section 4.6    Unsatisfactory Work.  If the Construction Consultant shall in its reasonable discretion determine that a portion of the Construction Work for which Loans are sought is Unsatisfactory Work, Lender shall be entitled to withhold from such Loans amounts sufficient to pay for correction of the Unsatisfactory Work and Lender shall disburse such amounts to Borrower promptly after such Unsatisfactory Work has been rectified.  No such action by Lender shall be deemed to affect Borrower’s obligation to complete the Improvements on or before the Completion Date.  
Section 4.7    Direct Loan Advances by Lender.  Lender shall advance all or any part of any particular Building Loan to Borrower for disbursement in accordance with a Request, or during the continuance of an Event of Default, Lender may make such Loan Advances directly to the Construction Manager, a Major Contractor, other Contractor or other party any costs payable to such party, or at Borrower’s expense, to the Title Insurer which shall pay said monies to the parties as so instructed by Lender. In addition, Lender may make Advances as contemplated by Section 4 of the Completion Guaranty (whether the applicable work is being performed by the Guarantor or Lender).  The execution of this Agreement by Borrower shall, and hereby does, constitute an irrevocable authorization to Lender to make such direct advances provided for above and no further authorization from Borrower shall be necessary to warrant such direct advances, and all such direct advances shall be secured by the Security Documents as fully as if made directly to Borrower, regardless of the disposition thereof by any party so paid.  At Lender’s request, any advance of Building Loan proceeds made by and through the Title Insurer may be made pursuant to the provisions of a construction escrow agreement in the form then in use by such company with such modifications or amendments thereto as are reasonably required by Lender and Borrower.  Borrower agrees to join as a party to such escrow agreement and to comply with the requirements set forth therein (which shall be in addition to and not in substitution for the requirements contained in this Agreement) and to pay the reasonable fees and expenses of the Title Insurer charged in connection with the performance of its duties under such construction escrow agreement.
Section 4.8    No Waiver or Approval by Reason of Loan Advances.  The making of any Building Loans by Lender shall not be deemed an acceptance or approval by Lender (for the benefit of any Borrower or any third party) of the Construction Work or other work theretofore done or constructed or to the Lender’s obligations to make further Building Loans, nor, in the 

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event any Borrower is unable to satisfy any condition, shall any such failure to insist upon strict compliance have the effect of precluding Lender from thereafter declaring such inability to be an Event of Default as herein provided.  Lender’s waiver of, or failure to enforce, any conditions to or requirements associated with any Building Loans in any one or more circumstances shall not constitute or imply a waiver of such conditions or requirements in any other circumstances.
Section 4.9    Construction Consultant.  Lender reserves the right to employ the Construction Consultant and any other consultants necessary, in Lender’s reasonable judgment, to review Requests for Loan Advance and inspect all construction and the periodic progress of the same, the reasonable cost therefor to be borne by Borrower as a loan expense.  Borrower shall, to the extent in Borrower’s possession or control, make available to Lender and the Construction Consultant on reasonable notice during business hours and to the extent required by the Loan Documents, all documents and other information (including, without limitation, receipts, invoices, lien waivers and other supporting documentation to substantiate the costs to be paid with the proceeds of any Request) which any Contractor or other Person entitled to payment for Construction Work is required to deliver to Borrower and shall use its commercially reasonable efforts to obtain any further documents or information reasonably requested by Lender or the Construction Consultant in connection with any Loan or the administration of this Agreement.  Borrower acknowledges and agrees that the Construction Consultant shall have no responsibilities or duties to Borrower, and shall be employed solely for the benefit of Lender.  No default of Borrower will be waived merely by an inspection by Lender or the Construction Consultant.  In no event will any inspection by Lender or the Construction Consultant be a representation that there has been or will be compliance with the Plans and Specifications or that the Construction Work is free from defective materials or workmanship.  Any and all provisions of this Agreement in respect of the Construction Consultant shall be enforceable solely by, and at the option of, Lender, and no Borrower shall be a third-party beneficiary thereof.  Any and all reports, advice or other information provided by the Construction Consultant to Lender or otherwise produced by or in the possession of the Construction Consultant shall be confidential, except that Borrower shall have the right to reasonably request and review same from time to time.
Section 4.10    Authorization to Make Loan Advances to Cure Borrower’s Defaults.  If an Event of Default shall be continuing, Lender (subject to the provisions of Section 14.3 of the Project Loan Agreement) may (but shall not be required to) perform any of such covenants and agreements with respect to which the Event of Default relates.  Any amounts expended by Lender in so doing shall constitute a Building Loan and be added to the outstanding principal balance of the Building Loans, and Lender shall make the applicable Building Loans to fund any such disbursements.  The authorization hereby granted is irrevocable, and no prior notice to or further direction or authorization from any Borrower is necessary for Lender to make such disbursements.
Section 4.11    Reserved.  
Section 4.12    Lender’s Right to Make Loan Advances in Compliance with the Completion Guaranty.  Any Building Loan proceeds disbursed by Lender as contemplated by Section 1.01(c) of the Completion Guaranty (whether the applicable work is being performed by any Guarantor or Lender) shall constitute a Building Loan and be added to the outstanding 

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principal balance of the Building Loans, and Lender shall make the applicable Building Loans to fund any such disbursements.  The authorization hereby granted is irrevocable and no prior notice to or further direction or authorization from any Borrower is necessary for Lender to make such disbursements.
Section 4.13    No Third-Party Benefit.  This Agreement is solely for the benefit of the Lender and Borrower and, to the extent set forth in Completion Guaranty, Guarantors.  All conditions of the obligations of Lender to make advances hereunder are imposed solely and exclusively for the benefit of Lender and may be freely waived or modified in whole or in part by Lender at any time if in their sole discretion they deem it advisable to do so, and no Person other than Borrower (provided, however, that all conditions have been satisfied) shall have standing to require Lender to make any Building Loan advances or shall be a beneficiary of this Agreement or any advances to be made hereunder.
ARTICLE 5 
INSURANCE, CONDEMNATION, AND IMPOUNDS
Section 5.1    Insurance, Condemnation, Impounds.  Provisions relating to insurance, condemnation and impounds, including, without limitation, the use of casualty and condemnation proceeds shall be subject to the terms of Article V of the Project Loan Agreement, which is hereby incorporated by reference.  
ARTICLE 6
 
ENVIRONMENTAL MATTERS
Borrower hereby repeats and agrees to observe all representations, warranties and  covenants contained in Article IX of the Project Loan Agreement with the same force and effect as if set forth herein in their entirety.
ARTICLE 7
 
REPRESENTATIONS AND WARRANTIES
Borrower hereby reaffirms and ratifies the representations and warranties set forth in Article VI of the Project Loan Agreement and elsewhere in the Project Loan Agreement with the same force and effect as if set forth herein in their entirety and each such representation and warranty remains true and correct in all material respects as of the Effective Date (subject to any changes resulting from changed circumstances or facts which do not constitute an Event of Default).  Borrower hereby represents and warrants to Lender that, as of the Effective Date:
Section 7.1    Cost of Improvement.  Each item included in the Budget as part of the “Building Loan” is included within the definition of Cost of Improvement.  A true statement under oath, verified by Borrower, in full compliance with Section 22 of the Lien Law is attached hereto as Exhibit B.
Section 7.2    Design Professionals’ Certificates.  To Borrower’s best knowledge, the certifications set forth in the certificates of the Design Professionals which Borrower have 

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furnished are true and correct in all material respects.
ARTICLE 8
 
FINANCIAL REPORTING
Borrower hereby reaffirms and ratifies the representations and warranties set forth in Article VII of the Project Loan Agreement and elsewhere in the Project Loan Agreement with the same force and effect as if set forth herein in their entirety.
ARTICLE 9
 
COVENANTS
Borrower hereby repeats and agrees to observe all covenants contained in Article VIII of the Project Loan Agreement with the same force and effect as if set forth herein in their entirety.  In addition, Borrower covenants and agrees with Lender that, so long as any Commitment or Loan is outstanding and until payment in full of all amounts payable by Borrower hereunder:
Section 9.1    Payment for Labor and Materials.  Borrower shall promptly pay when due all invoices and costs for labor, materials, and specifically fabricated materials incurred in connection with the Project and shall, subject to Borrower’s right to contest the same pursuant to the Project Loan Agreement and this Agreement, discharge, by bond or otherwise, any Liens filed against the Project, in no event later than sixty (60) days of the filing thereof (and, to the extent provided for in the Loan Documents, promptly advance funds for such bond or discharge in accordance with the Loan Documents).  In addition,  Borrower may contest the validity or amount of such invoices and Liens so long as (1) Borrower notify Lender that it intends to contest such claim or demand, (2) Borrower provides Lender with an indemnity, bond or other security reasonably satisfactory to Lender assuring the discharge of Borrower’s obligations for such claims and demands, including interest and penalties, and (3) Borrower shall promptly upon final determination thereof pay the amount of such items, together with all costs, interest and penalties.
Section 9.2    Inspection.  Borrower shall permit representatives of Lender and the Construction Consultant, at reasonable times and on reasonable advance notice, to examine its books of record and account, to make copies and abstracts therefrom, and to discuss its affairs, finances and accounts with its principal officers, engineers and independent accountants (and by this provision Borrower authorizes said accountants to discuss with such Persons such affairs, finances and accounts, but after prior notice to Borrower of such discussions).  Without limiting the foregoing, representatives of the Construction Consultant and Lender shall have the right at reasonable times and on reasonable advance notice to (a) inspect the Project and all materials to be used in connection with the construction of the Improvements from time to time and to witness the construction thereof, (b) to conduct such non-invasive environmental and engineering inspections and studies as Lender may require, (c) to examine all detailed plans and shop drawings in connection with the construction of the Improvements and (d) provided Borrower is presented with the opportunity to be present, meet with the representatives of the Design Professionals, the Construction Manager and the Major Contractors to discuss the status 

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and issues relating to the construction of the Improvements (and by this provision Borrower authorizes Borrower’s Architect, the Construction Manager and the Major Contractors to reasonably cooperate and discuss with such Persons such construction matters, but after reasonable prior notice to Borrower of such discussions).  Borrower shall at all times cause a complete set of the original plans (and all supplements thereto) relating to the construction of the Project to be maintained at the Project or construction office and available for inspection by such representatives.
Section 9.3    Project Construction and Completion.  
Subject in all instances to any Unavoidable Delays:
(1)    Borrower shall construct the Construction Work in a good and workmanlike manner in accordance with generally accepted engineering and construction practice, the Plans and Specifications, the Construction Schedule and Applicable Law.
(2)    Borrower shall cause the Construction Completion to occur prior to the Completion Date (other than Punch List Items which shall be completed by Borrower with diligence following the Completion Date).  Borrower shall be required to obtain temporary certificates of occupancy for all aspects of the Project not later than ninety (90) days following Construction Completion.
(3)    Borrower shall not commence construction of any Construction Work, or any particular component thereof, until Borrower or any such tenant has obtained all Government Approvals required under Applicable Law for the commencement of construction of such Construction Work or such component thereof, as the case may be.  Borrower shall be obligated to obtain the licenses and permits set forth on Schedule 1 attached hereto no later than the date set forth opposite such license or permit on Schedule 1.
(4)    Once begun, Borrower shall cause the construction of the Construction Work to be prosecuted with diligence in accordance with the Construction Schedule, subject to Borrower’s right to contest the same, free and clear of Liens or claims for Liens for materials supplied and for labor or services performed in connection with the construction of the applicable Improvements.  Subject to Borrower’s right to contest the same, in no event shall Borrower permit or suffer any party, including subcontractors, to commence proceedings to enforce any Lien unless and to the extent that said Lien is fully bonded; provided that such bonding effects the removal of any such Liens or claims.
(5)    Borrower shall deliver to Lender, on demand, copies of all contracts, bills of sale, statements, receipted vouchers and agreements under which any Borrower claims title to any materials, fixtures or articles incorporated in the Improvements.
(6)    Borrower shall, upon demand of Lender based upon the advice of the Construction Consultant, correct any Unsatisfactory Work; and the advance of any proceeds of any Loan shall not constitute a waiver of Lender’s right to require compliance with this covenant with respect to any such Unsatisfactory Work.  None of Lender or the Construction Consultant shall have any affirmative duty to any Borrower or any third party to inspect for Unsatisfactory Work or other defects or to call them to the attention of Borrower or anyone else.

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(7)    Borrower shall (and shall cause each Affiliate of Borrower party thereto to):
(a)    perform and observe in all material respects all of its material covenants and material agreements contained in the Construction Management Agreement, each Contract, each other Project Document and each Government Approval to which it is a party or by which the Project or any portion thereof is bound;
(b)    take all reasonable and necessary action to prevent the termination, in accordance with the terms thereof or otherwise, of the Construction Management Agreement, any Contract, any other material Project Document and any Government Approval;
(c)    enforce in accordance with its terms each material covenant or obligation set forth in the Construction Management Agreement, each Contract, each other Project Document and each Government Approval;
(d)    promptly give Lender copies of any written notices of material default or material violation or other material notices given by or on behalf of Borrower, or  received by or on behalf of Borrower from any other Person under the Construction Management Agreement, any Contract, any other material Project Document or any Government Approval;
(e)    to the extent reasonably requested by Lender, promptly replace any materially defaulting Contractor, and Borrower shall promptly deliver all required information and documents to Lender regarding each replacement Contractor;
(f)    if the Construction Consultant in its reasonable judgment determines that one or more elements of the Construction Work will not be completed according to the Construction Schedule, or that the Construction Work will not be completed by the Completion Date, reschedule the work of construction to permit timely completion to the extent reasonably possible.  Within fifteen (15) days after receiving such a request from Lender, Borrower shall deliver to Lender a revised Construction Schedule showing timely completion of such work; and
(g)    take all such commercially reasonable action to achieve the purposes described in clauses (a), (b), (c), (d), (e) and (f) of this Section 9.3(7) as may from time to time be reasonably requested by Lender in writing; provided however that, Borrower shall be permitted, upon Lender’s reasonable approval, to contest the validity or applicability of any requirement under the Construction Management Agreement, the Architect’s Agreement, any Contract or any Project Document.
(8)    Borrower shall deliver to Lender and the Construction Consultant copies of all Major Contracts for Lender’s approval in accordance with the provisions of the Project Loan Agreement and all other Contracts for informational purposes entered into for the construction of the Improvements.  Within twenty (20) days after receiving a written request from Lender, except to the extent previously delivered, Borrower shall deliver to Lender any and all of the following information and documents that Lender may specify, all in forms reasonably acceptable to Lender:  (a) a current, complete and correct list showing the name, address and telephone number of each Contractor engaged in connection with the construction of the 

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Improvements, and the total dollar amount of each contract and subcontract (including any changes) together with the amounts paid through the date of the list; (b) true and correct copies of the most current versions of all executed Contracts and subcontracts identified in the list described in clause (a) above, including any changes; (c) a construction progress schedule showing the progress of construction and the projected sequencing and completion times for uncompleted work all as of the date of the schedule; and (d) any update to any item described above, which Borrower may have previously delivered to Lender.  Borrower expressly authorize Lender to contact Borrower’s Architect, each Construction Manager, any consulting engineer(s) or any Contractor or Governmental Authority to verify any information disclosed in accordance with this Section.
Section 9.4    Proceedings to Enjoin or Prevent Construction.  If any proceedings are filed seeking to enjoin or otherwise prevent or declare invalid or unlawful all or any part of the Construction Work, Borrower, at its sole cost and expense, will cause such proceedings to be vigorously contested in good faith, and in the event of an adverse ruling or decision, prosecute all allowable appeals therefrom, and will, without limiting the generality of the foregoing, resist the entry or seek the stay of any temporary or permanent injunction that may be entered, and use its commercially reasonable efforts to bring about a favorable and speedy disposition of all such proceedings.
Section 9.5    Lender’s and Construction Consultant’s Actions for their Own Protection Only.  The authority herein conferred upon Lender, and/or the Construction Consultant and any action taken by Lender and/or the Construction Consultant in accordance with the provisions of this Agreement in making inspections, procuring sworn statements and waivers of lien, approving Contracts and subcontracts and approving Plans and Specifications will be taken by Lender and the Construction Consultant for their own protection only, and none of Lender or the Construction Consultant shall be deemed to have assumed any responsibility to Borrower or any other party with respect to any such action herein authorized or taken by Lender or the Construction Consultant or with respect to the Construction Work, performance of Contracts by any Contractors, or prevention of claims for mechanics’ liens.  Any review, investigation or inspection conducted by Lender, the Construction Consultant or any other architectural or engineering consultants retained by Lender in order to verify independently Borrower’s satisfaction of any conditions precedent to advances under this Agreement, Borrower’s performance of any of the covenants, agreements and obligations of Borrower under this Agreement, or the validity of any representations and warranties made by Borrower hereunder (regardless of whether or not the party conducting such review, investigation or inspection should have discovered that any of such conditions precedent were not satisfied or that any such covenants, agreements or obligations were not performed or that any such representations or warranties were not true), shall not affect (or constitute a waiver by Lender of) (a) any of Borrower’s representations, warranties or obligations under this Agreement or Lender’s reliance thereon or right to require the performance thereof or (b) Lender’s reliance upon any certifications of Borrower or the Design Professionals required under this Agreement or any other facts, information or reports furnished to Lender by Borrower hereunder.
Section 9.6    Sign and Publicity.  If Lender requests, Borrower shall, to the extent permitted by Applicable Law, erect a sign reasonably approved by Lender on the Project 

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in a conspicuous location indicating that the financing for the Project has been provided by the Lender.  Borrower shall include in the initial public announcement or media release concerning the acquisition of the Project, a statement that Lender has provided the financing for the Project.
Section 9.7    Amendment of Project Documents and Government Approvals; Change Orders.
(1)    Borrower shall not, without Lender’s prior consent:
(a)    take any action to cancel or terminate any material right under the Construction Management Agreement, any Major Contract, any other Project Document or any Government Approval to which it is a party;
(b)    sell, assign, pledge, transfer, mortgage, hypothecate or otherwise dispose of (by operation of law or otherwise) or encumber any part of its interest in the Construction Management Agreement, any Contract, any other Project Document or any Government Approval except in accordance with the provisions of the Project Loan Agreement;
(c)    waive any material default under or breach of any material provisions of the Construction Management Agreement, any Major Contract, any other Project Document or any Government Approval, or waive, forgive, release or fail to enforce any material right, interest or entitlement, howsoever arising, under or in respect of any of the foregoing, or vary or agree to the variation in any material way of any of the foregoing or of the performance of any other Person or Governmental Authority thereunder;
(d)    materially amend or modify any material provision of, or give any consent under, the Construction Management Agreement, any Major Contract, any other Project Document or any Government Approval (including, without limitation, the Plans and Specifications, the Construction Schedule or the Bonds) except as permitted under this Agreement and the Project Loan Agreement, including, without limitation, any material amendment or modification which, subject to Borrower’s right to make Change Orders pursuant to the provisions of subsection (2) below, would materially increase or change the Budget or any Budget Line Item; or which might materially and adversely affect the value of the security for the Loans; or which, regardless of cost, is a material change in structure, design or function; or which might delay completion of any element of the Construction Work beyond the time allotted for it in the Completion Schedule, unless such delay can be made up in the performance of another element of the Project Work, or completion of the satisfaction of the Project Work Substantial Completion Conditions for the Construction Work beyond the applicable Completion Date therefor;
(e)    petition, request or take any other legal or administrative action that seeks, or may reasonably be expected, to rescind, terminate or suspend the Construction Management Agreement, any Major Contract, any other Project Document or any Government Approval or amend or modify all or any material part thereof; or
(f)    enter into, or permit the Construction Manager to enter into, any new Major Contract (which consent shall be conditioned upon the delivery by the Major Contractor thereunder of a Consent and Agreement).

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(2)    Borrower shall obtain Lender’s and the Construction Consultant’s approval for any Change Order that exceeds $100,000 with respect to any single change or related group or series of changes.  At such time as all Change Orders in the aggregate have exceeded $250,000, Borrower shall obtain Lender’s and the Construction Consultant’s reasonable approval in writing for all subsequent Change Orders.  With respect to any Change Order approval requested in connection with this paragraph (2) above, Borrower’s initial request for approval shall (A) refer to this Section 9.7(2), (B) clearly set forth that Lender has five (5) Business Days to respond and (C) contain all information as Lender shall reasonably request in connection with such Change Order.  
(3)    Subject to the provisions of this Section 9.7, Borrower shall from time to time promptly deliver to Lender and the Construction Consultant all Change Orders, pending or executed, along with evidence that all Government Approvals relating thereto have been obtained, together with any documents related thereto, and a written description of the proposed change and related working drawings, a written estimate of the cost of the proposed change and the time necessary to complete it and a written explanation of the reasons therefor.  
Section 9.8    Lien Law.  Borrower, in compliance with Section 13 of the Lien Law covenants that it shall receive  and hold the advances of the Building Loans hereunder and the right to receive the same as a trust fund for the purpose of first paying the “cost of the improvement”, as such quoted term is defined in the Lien Law, before using any part thereof for any other purpose.
ARTICLE 10
 
EVENTS OF DEFAULT
Each of the following shall constitute an Event of Default under the Loans:
Section 10.1    Project Loan Agreement.  An Event of Default shall occur under the Project Loan Agreement or any other Loan Document and is continuing beyond any applicable notice and cure periods.
Section 10.2    Access to Project.  If Lender or the Construction Consultant or their representatives are denied access to the Project during customary working hours upon reasonable prior notice to Borrower to inspect the Improvements and the construction thereof and all materials, fixtures and articles used or to be used in connection therewith, and, to the extent required pursuant to the Loan Documents, to examine all detailed plans, shop drawings and specifications which relate to the Improvements and such default remains uncured for a period of twenty (20) days after notice thereof from Lender to Borrower; provided, however, that if such default is caused as a result of the Construction Manager or a Major Contractor, such twenty (20) day period shall be extended so long as Borrower are diligently pursuing its rights and remedies to cause compliance by the Construction Manager or such Major Contractor.
Section 10.3    Termination of Contracts.  If for any reason the Construction Manager or any Major Contract is terminated and not promptly (but in no event later than sixty (60) days 

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after any such termination) replaced with a substitute construction management agreement or Major Contract, as the case may be, in each case reasonably acceptable to Lender and from a new construction manager or contractor, as the case may be, approved by Lender.
Section 10.4    Unsatisfactory Work.  Borrower shall fail to cause any Unsatisfactory Work to be corrected to the satisfaction of Lender and the Construction Consultant within thirty (30) days after notice of such disapproval; provided, however, that if such Unsatisfactory Work cannot reasonably be corrected within such thirty (30) day period, then so long as Borrower shall have commenced to cause the correction of such Unsatisfactory Work within such thirty (30) day period and thereafter diligently and expeditiously proceeds to cause the correction of the same, such thirty (30) day period shall be extended for such time as is reasonably necessary for Borrower in the exercise of due diligence to cause the correction of such Unsatisfactory Work, but in no event beyond the date which is ninety (90) days after the applicable notice of disapproval (subject, in all instances, to Unavoidable Delays).
Section 10.5    Construction Work.  The Construction Work (a) is not completed on or before the Completion Date, or (b) at any time, is discontinued (subject to Unavoidable Delay) or abandoned for more than thirty (30) consecutive days; provided that no Event of Default shall occur as a result of such failure if Borrower shall have delivered or caused to be delivered to Lender an updated “as is” Appraisal (at Borrower’s expense) evidencing that the Loan-to-Value Ratio does not exceed 70.0%, it being understood that Borrower may prepay the Loan in accordance with the Loan Documents in order to cause compliance with the condition set forth in this proviso.
ARTICLE 11
 
REMEDIES
Upon the occurrence of any Event of Default, Lender may (subject to, and in accordance with, the provisions of Section 14.3 of the Project Loan Agreement) and, upon request of Lender shall, by written notice to Borrower, pursue any one or more of the remedies set forth in the Project Loan Agreement or the other Loan Documents, concurrently or successively, it being the intent hereof that none of such remedies shall be to the exclusion of any other.
WHETHER OR NOT LENDER ELECT TO EMPLOY ANY OR ALL OF THE REMEDIES AVAILABLE TO IT UPON THE OCCURRENCE OF AN EVENT OF DEFAULT, LENDER SHALL BE LIABLE FOR THE CONSTRUCTION OF OR FAILURE TO CONSTRUCT, COMPLETE OR PROTECT THE IMPROVEMENTS OR FOR PAYMENT OF ANY EXPENSES INCURRED IN CONNECTION WITH THE EXERCISE OF ANY REMEDY AVAILABLE TO LENDER OR FOR THE CONSTRUCTION OR COMPLETION OF THE IMPROVEMENTS OR FOR THE PERFORMANCE OR NON-PERFORMANCE OF ANY OTHER OBLIGATION OF BORROWER.
ARTICLE 12
 
RECOURSE LIABILITY

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Section 12.1    Recourse Liability.  This Agreement shall be subject to the provisions of Section 2.13 of the Project Loan Agreement, which section is hereby incorporated herein by reference.  
ARTICLE 13
 
MISCELLANEOUS
Section 13.1    Incorporation by Reference.  The provisions of Article XIV of the Project Loan Agreement are hereby incorporated by reference and shall have the same force and effect as if included herein.

[Signature Pages Follow]

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the date first above written.
BORROWER:
210 WEST 31ST STREET OWNER, LLC, 
                    a Delaware limited liability company

By:    KBS SOR II 210 WEST 31ST STREET, LLC, 
a Delaware limited liability company, 
its sole member

By:    ONYX 31st STREET, LLC, 
a Delaware limited liability company, 
its Managing Member

By:      /s/ John A. Saraceno Jr.        
John A. Saraceno, Jr., 
Authorized Signatory

LENDER:
PACIFICCAL PC CORE LENDER, LLC, 
                    a Delaware limited liability company

By:   /s/ Steve Towle                 
                    Name:   Steve Towle                 
                    Title:   Authorized Signatory            

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SCHEDULE 1
LICENSES AND PERMITS

(see attached)

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SCHEDULE 2
TRADE LIST

(see attached)

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SCHEDULE 3
PLANS AND SPECIFICATIONS

(see attached)

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SCHEDULE 4
ADVANCE CONDITIONS
Part A – General Conditions
Part B – Conditions to Final Loans

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	Part A.
	GENERAL CONDITIONS TO ALL BUILDING LOANS

The obligation of Lender to make any Loans shall be subject to Lender’s receipt, review, approval and/or confirmation of the following, each in form and content satisfactory to Lender in its reasonable discretion (such conditions not to be duplicative to the extent they are the same matters required as conditions precedent to the effectiveness of the Acquisition Loans and/or Project Loans that are being advanced concurrently therewith under the Project Loan Agreement):
1.    There shall exist no Event of Default in each case both before and after giving effect to the requested advance.
2.    The representations and warranties contained in this Agreement and in all other Loan Documents shall be true and correct in all material respects on and as of the date of the making of such Loan with the same force and effect as if made on and as of such date, subject to changes resulting from changed circumstances or facts which do not constitute an Event of Default.
3.    Such advance shall be secured by the Building Loan Mortgage and the other Security Documents, subject only to the Permitted Encumbrances, as evidenced by a pending disbursements clause satisfactory to Lender.
4.    Borrower shall have paid Lender’s reasonable costs and expenses in connection with such advance (including title and attorneys’ fees and expenses).
5.    No proceeding with respect to condemnation, adverse possession, zoning change or usage change proceeding shall have formally commenced against the Project the Project shall not have suffered any damage by fire or other casualty which has not been repaired or is not being restored in accordance with this Agreement; no Applicable Law or  injunctive proceeding, restriction, litigation, action, citation or similar proceeding or matter shall have been enacted or adopted by any Governmental Authority, which would have, in Lender’s judgment, a Material Adverse Effect on the Project or Borrower’s ability to perform its obligations under the Loan Documents.
6.    The Construction Work (or such part thereof as may have been constructed at the time of any borrowing) shall have been constructed substantially in accordance with the Plans and Specifications (as may have been modified in accordance with this Agreement) and all applicable Government Approvals.
7.    If requested by Lender, the Construction Consultant shall have reviewed and approved the disbursement requested in the Request delivered by Borrower with respect to such Loan.  Such Request shall include copies of all documents, contracts, invoices, bills, construction records, lien waivers, Change Orders, and drawings, plans and specifications as the Construction Consultant shall reasonably require, to enable the Construction Consultant to timely review each Request.

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8.    Borrower shall have provided the Construction Consultant and Lender, or their representatives, prompt and reasonable access to the Project, in order to inspect the Construction Work then completed.
9.    Lender shall have received the following items in connection with each Loan:
(a)    A Request as provided in Section 4.2 of the Project Loan Agreement duly executed by an Authorized Officer of Borrower, together with the required attachments thereto;
(b)    Such invoices, contracts and other supporting data as Lender may reasonably require to evidence that all Project Costs for which disbursement of Building Loans is sought have been incurred and are then due and payable;
(c)    Except for Liens insured against pursuant to the Title Policies or liens being contested by Borrower pursuant to the terms of the Loan Documents, (i) sworn unconditional waivers of lien from contractors, subcontractors, materialmen, suppliers and vendors, covering all work for which funds have been advanced pursuant to a prior disbursement and (ii) at Lender’s election, sworn conditional waivers of lien from contractors, subcontractors, materialmen, suppliers and vendors, covering all work of such Persons for which funds are being advanced pursuant to the then current Request, all in compliance with the Lien Law;
(d)    Copies of any Change Orders which have not been previously furnished to Lender and the Construction Consultant, all of which shall be subject to Lender’s review and approval in accordance with this Agreement;
(e)    Copies of all Contracts, subcontracts and purchase orders which have been executed or Modified since the last Advance, together with (i) any Bonds (to the extent required under this Agreement), (ii) a certificate by an Authorized Officer of Borrower certifying that the delivered items are true, accurate and complete copies of the originals thereof, and (iii) Consents and Agreements in the applicable form attached to the General Assignment from each Major Contractors who has entered into a Major Contract but has not previously delivered a Consent and Agreement;
(f)    To the extent not previously delivered to Lender and in the case where an Advance is requested in connection with stored materials, inventory of materials and equipment stored on the Project and evidence that Borrower has complied with all of the requirements of Section 4.8 relating to such stored materials;
(g)    Copies of all Government Approvals (to the extent required as of such date) not previously delivered to Lender;
(h)    If any material dispute arises between or among Borrower, the Construction Manager or any Major Contractor, a written summary in reasonable detail of the nature of such dispute;
(i)    If the Budget shall have been modified, copies of all such modifications, all of which shall be subject to Lender’s review and approval in accordance with this Agreement;

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(j)    Copies of any amendments to the Construction Schedule not previously delivered to Lender, all of which shall be subject to Lender’s review and approval in accordance with this Agreement; and
(k)    To the extent not previously delivered to Lender, evidence showing compliance with the insurance provisions of Section 3.1.
10.    All of the conditions set forth in Article III shall have been satisfied.
11.    The Loans shall be In-Balance.
12.    Such other documents and items as Lender may reasonably request.

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	PART B.
	CONDITIONS TO THE FINAL BUILDING LOANS FOR CONSTRUCTION WORK

The obligation of Lender to advance Building Loans to Borrower for payment of final construction costs and release of Retainage with respect to the Improvements is subject to the further condition precedent that all of the following requirements (collectively, the “Project Work Substantial Completion Conditions”) shall have been completed to the reasonable satisfaction of Lender:
1.    Lender and the Construction Consultant (except in the case of clauses (b) and (h) below) shall have received the following items in connection with the final Loans for such Construction Work:
(a)    Evidence of the approval by the applicable Governmental Authorities of such Construction Work for operation to the extent any such approval is a condition of the lawful use of such Construction Work, including, without limitation, valid temporary certificates of occupancy;
(b)    A final as-built survey covering such Construction Work and any paving, driveways and exterior improvements, together with endorsements to the Title Policies which are reasonably satisfactory to Lender and which describe the Improvements located on the Project (ALTA 116 series), insure the lien-free completion of the Improvements (ALTA 101 series, as required by Lender), insure that there are no new encroachments or violations of any recorded covenants, conditions or restrictions affecting the Project (ALTA 100 series), that did not exist as of the Loan closing date and amend any survey exception to reflect the final as-built survey;
(c)    Intentionally omitted;
(d)    Unconditional waivers of lien and sworn statements from all contractors, subcontractors, materialmen, suppliers and vendors with respect to such Construction Work, in each case in compliance with the Lien Law other than Retainage or Punch List Items;
(e)    Certificates from the applicable Design Professionals (such certificates, except in the case of Borrower’s Architect, to be limited to the portion of such Construction Work for which the respective Design Professional was responsible) stating that, to the best of such Design Professional’s knowledge, (i) such Construction Work (A) has been substantially completed in accordance with the Plans and Specifications and (B) is available for occupancy and (ii) such Construction Work as so completed complies with all applicable building codes;
(f)    Intentionally omitted;
(g)    Violation searches, if available and requested by Lender, with Governmental Authorities indicating no notices of violation have been issued with respect to such Construction Work that have not been cured;
(h)    Current searches of all Uniform Commercial Code financing statements filed with the Secretary of State of the state of formation/organization of Borrower and the office of Recorder of the City and County of New York, showing that no Uniform Commercial Code 

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financing statements are filed or recorded against Borrower in which the collateral is personal property or fixtures located on the Project or used in connection with the Project other than financing statements with respect to the Loans;
(i)    A certificate of an Authorized Officer of Borrower certifying that:
(i)    Borrower has not received written notice of a condemnation of any portion of the Project or any action which could result in a relocation of any roadways abutting the Project or the denial of access, which, in Lender’s sole judgment, adversely affects the Lender’s security or the operation of the Project, has commenced or, to the best of Borrower’s knowledge, is contemplated by any Governmental Authority;
(ii)    all fixtures, attachments and equipment necessary for the operation of the Project have been installed or incorporated into the Project and are operational and in good working order, free from defects; all guaranties and warranties have been transferred/assigned to Borrower; and Borrower as the absolute owner of all of said property free and clear of all Liens; and
(iii)    all Project Costs relating to such Construction Work have been paid in full except (A) to the extent covered by the final Loans then being requested, and (B) amounts for Hard Costs which Borrower is disputing in good faith and with due diligence; provided that Lender may, in its sole discretion, hold back an amount equal to (x) 100% of the disputed amount minus (y) any Retainage that Lender is still holding with respect to the applicable Hard Costs, and (C) amounts held by Lender with respect to Punch List Items with respect to the applicable Hard Costs.
(j)    Evidence that all of the Government Authorizations required to be obtained have been obtained, and that all actions required to be taken by such time in accordance with the Marketing Plan and Schedule have been completed.
2.    Lender shall have received written certification from the Construction Consultant, or to the extent that Construction Consultant will not provide such a certification, Borrower, that (a) such Construction Work has been substantially completed in accordance with the Plans and Specifications, subject to completion of Punch List Items (as to which, if incomplete on the date of the final disbursement of a Loan for Work, Lender may, in its sole discretion, hold back an amount equal to (a) 100% of the estimated cost of completing such Punch List Items from the final disbursement minus (b) any Retainage that Lender is still holding with respect to the applicable Punch List Items, such amount to be advanced to Borrower on completion of such Punch List Items and the satisfaction of the requirements of Section 4.2 with respect to Retainage, which Borrower shall diligently complete) and (b) the deliveries required in paragraphs 1 and 2 above shall have been received and approved by Lender.  
3.    The Future Equity shall have been fully contributed to the Project in accordance with the terms of the Project Loan Agreement.

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EXHIBIT A
LEGAL DESCRIPTION OF PROJECT
ALL THAT CERTAIN PLOT, PIECE OR PARCEL OF LAND, SITUATE, LYING AND BEING IN THE BOROUGH OF MANHATTAN, CITY, COUNTY AND STATE OF NEW YORK, BOUNDED AND DESCRIBED AS FOLLOWS:
BEGINNING AT A POINT ON THE SOUTHERLY SIDE OF 31ST STREET, DISTANT 104 FEET 3 INCHES WESTERLY FROM THE CORNER FORMED BY THE INTERSECTION OF SAID SOUTHERLY SIDE OF 31ST STREET WITH THE WESTERLY SIDE OF SEVENTH AVENUE;
RUNNING THENCE SOUTHERLY PARALLEL WITH THE WESTERLY SIDE OF SEVENTH AVENUE, 37 FEET 9 INCHES;
THENCE WESTERLY PARALLEL WITH THE SOUTHERLY SIDE OF 31ST STREET, 61 FEET 4-1/2 INCHES;
THENCE SOUTHERLY PARALLEL WITH THE WESTERLY SIDE OF SEVENTH AVENUE, 1 FOOT 11-1/2 INCHES;
THENCE WESTERLY PARALLEL WITH THE SOUTHERLY SIDE OF 31ST STREET, 2 FEET 7 INCHES;
THENCE SOUTHERLY PARALLEL WITH THE WESTERLY SIDE OF SEVENTH AVENUE, 59 FEET 1/2 INCH;
THENCE WESTERLY PARALLEL WITH THE SOUTHERLY SIDE OF 31ST STREET, 64 FEET 3-1/2 INCHES;
THENCE NORTHERLY PARALLEL WITH THE WESTERLY SIDE OF SEVENTH AVENUE, 98 FEET 9 INCHES TO THE SOUTHERLY SIDE OF 31ST STREET;
THENCE EASTERLY ALONG THE SOUTHERLY SIDE OF 31ST STREET, 128 FEET 3 INCHES TO THE POINT OR PLACE OF BEGINNING.

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EXHIBIT B
SECTION 22 AFFIDAVIT
(see attached)

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