Preview
FILED: NEW YORK COUNTY CLERK 12/21/2023 05:22 PM INDEX NO. 656413/2023
NYSCEF DOC. NO. 8 RECEIVED NYSCEF: 12/21/2023
Exhibit 7
FILED: NEW YORK COUNTY CLERK 12/21/2023 05:22 PM INDEX NO. 656413/2023
NYSCEF DOC. NO. 8 RECEIVED NYSCEF: 12/21/2023
BUILDING LOAN AGREEMENT
THIS BUILDING LOAN AGREEMENT (the “Agreement”) is made this 22nd day of April, 2021
between CPIF LENDING, LLC, a Washington limited liability company (“Lender”), and JTRE 14
VESEY LLC, a Delaware limited liability company (the “Borrower”).
RECITAL
Borrower has applied to Lender for a loan (the “Loan”) of up to the principal amount of SEVEN
MILLION NINE HUNDRED FIFTY THOUSAND AND NO/100 U.S. DOLLARS ($7,950,000.00)
(the “Loan Amount”) for the improvement to real property located at 14 Vesey Street, New York, New
York described on Schedule 1 attached hereto (the “Property”). The Loan will be evidenced by a
Promissory Note (Building Loan), and is secured by a Mortgage, Assignment of Leases and Rents, Security
Agreement and Fixture Filing (Building Loan) encumbering the Property, a Guaranty of Loan Documents
entered into by Jack Terzi, an individual (the “Guarantor”), and related loan documents described in
Sections 1.4, 1.5 and 1.6 below, all of even date herewith. This Agreement sets forth certain terms and
conditions in connection with the Loan, including those governing the disbursement of Loan proceeds.
AGREEMENT
NOW THEREFORE, in consideration of the financial benefits to Borrower from the Loan, the
receipt and sufficiency of which are hereby acknowledged by Borrower, and to induce Lender to make the
Loan, Borrower agrees to all terms and conditions provided below.
1. LOAN.
1.1 Disbursements.
1.1.1 Lender's obligation to make the Loan and disburse the Loan proceeds to Borrower
is subject to satisfaction by Borrower of all of the terms and conditions set forth in
this Loan Agreement and any other Loan Document. Borrower acknowledges that
it has no right to disbursement of the Loan proceeds if such terms and conditions
are not satisfied.
1.1.2 Notwithstanding anything contained herein to the contrary, commencing with July
1, 2021 and during each calendar month thereafter, until all of funds in the Capital
Expense Reserve have been advanced (the “Required Advance Period”), Lender
shall advance at least Eight Hundred Thirty Thousand Dollars ($830,000.00) to
Borrower from the Capital Expense Reserve (the “Minimum Advance
Requirement”).
1.1.3 If Borrower has not satisfied the advance requirements set forth in this Agreement
for the Minimum Advance Requirement in any month during the Required Advance
Period, the amount required to meet the Minimum Advance Requirement for such
month shall be advanced and deposited in an account under the sole control of the
Lender’s loan servicer, Trimont Real Estate Advisors, LLC (the “CapEx Collateral
Account”). Interest shall accrue on all funds advanced and deposited into the CapEx
Collateral Account as of the day of each such advance is deposited in accordance
with the terms of the Note.
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1.1.4 Funds in the CapEx Collateral Account shall be advanced to Borrower upon
satisfaction of the advance requirements set forth in this Agreement prior to
additional funds being advanced to Borrower from the Capital Expense Reserve.
The preceding sentence shall in no way waive the Minimum Advance Requirement
during each month of the Required Advance Period.
1.1.5 If, at the time of payment in full of the Loan, release of all collateral for the Loan
and termination of any future availability under the Loan, any funds remain in the
CapEx Collateral Account, such funds shall be disbursed to Borrower.
1.2 Promissory Note. The Loan shall be an interest-only loan evidenced by Borrower’s
Promissory Note (Building Loan) (the “Note”) in the Loan Amount, of even date herewith. Interest shall
accrue on the unpaid outstanding principal balance of the Note, at ten and one-half of one percent (10.5%)
per annum, unless extended in accordance with the terms of the Note. Borrower agrees that amounts repaid
may not be re-borrowed.
1.3 Holdbacks. Lender shall holdback funds for the Interest Reserve. Lender has allocated
certain funds for the Capital Expense Reserve (as defined in the Note) and such funds will be disbursed in
accordance with Section 1.1, the Note and the other provisions of this Agreement.
1.4 Security. Payment of the Note and performance of Borrower’s obligations under the Loan
Documents shall be secured as follows, all of which will be referred to collectively as the “Collateral”:
1.4.1 By the Mortgage, Assignment of Leases and Rents, Security Agreement and Fixture
Filing (Building Loan) securing the Property (the “Mortgage”).
1.4.2 By a Guaranty of Loan Documents executed by the Guarantor (the “Guaranty”).
1.4.3 By the Pledge and Security Agreement executed by the owners of Borrower,
pledging the membership interests of Borrower to Lender (the “Pledge”).
1.4.4 By UCC-1 Financing Statements regarding the Property and the Collateral.
1.4.5 By any other collateral specified or required under the Note or any other Loan
Document, or as reasonably required by Lender from time to time reasonably related to Project.
1.5 Environmental Indemnity. Borrower and Guarantor shall execute an Environmental
Indemnity Agreement regarding the Property (the “Indemnity Agreement”), under which Borrower and
Guarantor shall indemnify Lender against certain claims, losses and expenses relating to the Loan and the
Property.
1.6 Loan Documents; Conflict; Indebtedness. As used in this Agreement, “Loan
Documents” means the Note, this Agreement, the Guaranty, the Pledge, the Mortgage, the Indemnity
Agreement, and all other documents and instruments relating in any way to the Loan or this Loan
Agreement. If there is a conflict between or among any of the Loan Documents, the most favorable
construction for Lender shall be applied. The principal amount evidenced by the Note, including all future
advances and every other indebtedness of any and every kind now or hereafter owing from Borrower to
Lender, howsoever created or arising, whether primary, secondary or contingent, together with any interest
or charges provided in or arising out of such indebtedness, as well as all agreements, covenants and
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obligations under this Loan Agreement and all of the Loan Documents, shall collectively be referred to as
the “Indebtedness.”
1.7 Loan Term. The Loan Term shall be for twelve (12) months; unless extended in
accordance with the terms of the Note.
2. CONDITIONS TO CLOSING. Closing shall take place on or about the date hereof.
National Land Tenure will serve as Escrow Agent, and Borrower and Lender will execute Escrow
Instructions as necessary. Lender shall have no obligation to close the Loan unless each of the following
conditions is satisfied on or before the date of Closing. Each of the conditions is for the benefit of Lender
and may be waived by Lender, but only if the waiver is in writing and signed by Lender. Lender may close
the Loan without requiring satisfaction of each condition, but in the absence of a written waiver, Lender
may condition further disbursements upon satisfaction of such conditions.
2.1 Approved Closing Statement. Approval by Borrower and Lender of a Closing Settlement
Statement (the “Agreed Closing Statement”) that sets forth allocation of Loan funds to Borrower, and all
Commitment Fees, Costs and Expenses, and other charges and fees due to Lender or otherwise, pursuant
to Sections 2.9, 2.10 and 2.13 below.
2.2 Environmental; Property Condition. Lender shall have received from Borrower all
existing Phase I and, if applicable, Phase II and/or supplementary environmental reports regarding the
Property (collectively, the “Environmental Reports”), as well as Property Condition Reports for the
Property. At the sole discretion of Lender, Lender may require, at Borrower’s expense, new or updated
Phase I or Phase II Environmental Reports, good faith surveys, and/or an updated Property Condition
Reports. Lender may require that it be provided prior to Closing with a certificate from a geotechnical
engineer or other person acceptable to Lender certifying that, after due inspection and tests of the Property
and after investigation into the prior uses of the Property, that the Property are not contaminated by
hazardous substances (as described in the Indemnity, “Hazardous Substances”), and that Hazardous
Substances have not been generated, stored or disposed of on or under the Property in an unlawful or
potentially dangerous manner.
2.3 Credit Inquiries. Borrower hereby authorizes Lender, at Borrower’s reasonable expense,
to obtain credit and background reports regarding Borrower and Guarantors and, and to make all inquiries
and obtain such additional information which Lender considers necessary relative to the creditworthiness,
experience, condition and other obligations of Borrower and Guarantors, and the accuracy of statements
and information furnished to Lender in conjunction with this Agreement. Borrower and their principals
will execute the necessary authorization and other documents to complete or update this process, or as
requested by Lender. The foregoing authorizations shall be continuing throughout the term of the Loan
and until this Loan is paid in full.
2.4 Lease Approval.
2.4.1 During the term of the Loan and until this Loan is paid in full, Lender will have the
right to approve, in Lender’s sole opinion, all existing and future leases and modifications not
related to the Borrower’s course of business and use of the Property as of the date of this
Agreement. Lender hereby approves that certain lease with New York County Lawyers
Association, a New York not-for-profit corporation, dated as of the date hereof (the “Seller Lease”).
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2.5 Title and Flood. Lender is authorized, at Borrower’s expense, to obtain and review the
following: ALTA title commitments on the Property, UCC, bankruptcy, lien, litigation, and judgment
searches, surveys, and a flood zone determination regarding the Property.
2.6 Utilities. Borrower will have established and Lender will be provided with evidence that
all utilities, including water, sewer, gas and electric power, are available to the Property and are of
sufficient size and capacity to serve the intended use of the Property and all improvements are paid in full,
and have been paid forward as well if required by Lender.
2.7 Taxes. Borrower will have provided Lender with evidence that all real estate taxes, excise
taxes, capital gains taxes, income taxes, and all other liens, taxes or fees relating in any way to the Property,
or Borrower or Guarantors, are paid in full, and have been paid forward as well if required by Lender.
2.8 Zoning; Use. Borrower will have established and Lender will be provided with evidence
that (a) the Property is zoned to permit the use of the Property and the improvements to be made by
Borrower, as approved by Lender, (b) the Property is a legal lot in compliance with all laws, ordinances
and regulations, (c) each of the Property and all improvements thereon are properly permitted, (d) all streets
adjoining the Property have been completed, dedicated, and accepted for maintenance and public use by
the appropriate governmental authorities, and that the Property has access in all directions, and (e) all
easements set forth in Lender’s Loan Policies benefit the Property and/or do not interfere with the operation
of the Property as intended.
2.9 Intentionally Omitted.
2.10 Fees.
2.10.1. Commitment Fee. Borrower will pay, at Closing, a commitment fee (i) to Lender equal to
2.5% of the Loan Amount, i.e., $198,750.00 and (ii) to Meridian Capital Group 0.50% of the Loan amount,
i.e., $39,750.00 (collectively, the “Commitment Fee”). Any other fees or Commissions will be Borrower’s
sole responsibility.
2.11 Opinion. Borrower shall provide Lender with an opinion from counsel to Borrower and
Guarantors, in such form and content as required by Lender, regarding the enforceability of the Loan
Documents with respect to Borrower and Guarantors.
2.12 Legal Counsel. Borrower acknowledges and agrees that Lender may use outside or in-
house legal counsel in considering any issues related to this Agreement, in documenting and closing the
proposed Loan, and for any matters arising in connection with the Loan or the Loan Documents after
Closing. Borrower agrees to pay all costs and fees of Lender’s outside counsel as part of the Costs and
Expenses. In-house legal fees shall be deemed to be within the range of fees charged by attorneys of
similar experience in Seattle, Washington or the applicable market.
2.13 Costs and Expenses. Borrower will be solely responsible for the payment (or
reimbursement of Lender) of all actual expenses, fees and costs incurred by Lender and associated with
Lender considering, documenting and/or making the Loan, including, without limitation, appraisal fees,
appraisal review, title commitment, survey review (if any), recording and escrow fees, title insurance
premiums, credit reports, background checks, UCC-1 searches and filings, any new or updated
environmental reports, environmental review, flood determination, legal fees and expenses, the Good Faith
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Deposit, delinquent real estate taxes, and all other costs and expenses (collectively, the “Costs and
Expenses”).
2.14 Additional Information. Borrower and/or Guarantors will provide Lender information
and items as requested by Lender. Lender may elect in its sole discretion not to proceed with considering
this Loan request until all information is provided to Lender.
2.15 Organizational Documents. Prior to Closing, Lender will be provided with true, accurate
and complete copies of Borrower’s Certificate of Good Standing/Existence, Articles or Certificates of
Formation, Operating Agreements, By-Laws, authorization to do business in the State of New York and
evidence of publication, and other related corporate governance documents of both Borrower and its entity
members.
2.16 Resolutions Approving Loan. Prior to Closing, Lender will be provided with duly
executed company resolutions of Borrower authorizing Borrower to execute the Loan Documents, and
naming the person(s) authorized to execute the Loan Documents on behalf of Borrower, and also a
Borrower’s Certificate in form acceptable to Lender.
2.17 Financial Information. Prior to Closing, Lender will be provided with copies of complete
and current financial statements of Borrower and Guarantors, certified as correct by them, together with
such other financial information as Lender may request, including those financial records required in
Sections 4.1 and 4.9 below.
2.18 Loan Documents. At Closing, all of the Loan Documents shall be duly executed, filed,
recorded, and delivered to Lender by the appropriate persons, including all Assignments, Guaranties, UCC-
1 Financing Statements, Agreed Closing Statements, and other documents required by Lender.
2.19 Security Interest; Priority. The security interests in the Collateral shall have been duly
authorized, created and perfected in favor of Lender as a first position lienholder, and shall be in full force
and effect.
2.20 No Default. There shall not exist at the time of closing, any condition which would
constitute an Event of Default under this Agreement or any of the other Loan Documents or the Other
Loan Documents (as such term is defined hereunder).
2.21 Property Contracts and Requirements. Borrower will have legally assumed and will be
in full compliance with all agreements or requirements that relate in any way to the Property.
2.22 Title. Borrower will have provided Lender and the Title Company with written
documentation demonstrating the chain of title regarding the Property being vested solely in Borrower,
sufficient for Lender to issue/obtain Extended ALTA policies for the Property and the Loan, subject to
Lender’s and the Title Company’s sole discretion. The Borrower shall have delivered to the Lender a title
insurance policy insuring title to the Land in accordance with the terms of the Mortgage and the Lender's
interest therein as a valid and enforceable first mortgage lien, subject only to exceptions approved by the
Lender and containing (A) full coverage against mechanics' liens (filed and inchoate), (B) no survey
exceptions except those theretofore approved by the Lender and (C) if applicable, a pending disbursements
clause and, if such title insurance policy is dated earlier than the date of the first advance of funds
hereunder, a continuation of or endorsement to such Title Insurance Policy, in a form approved by the
Lender; setting forth no additional exceptions except those approved by the Lender.
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2.23 Other Documentary Requirements. Borrower shall have furnished to Lender such other
instruments, documents and opinions as Lender shall reasonably require to evidence and secure the Loan
and to comply with the provisions of this Agreement including without limitation the items on the Checklist
attached as Exhibit B to the Acquisition Loan Agreement between Lender and Borrower dated of even
date herewith (the “Closing Checklist”), other than those items noted as “post-closing” thereon, if any (the
“Post-Closing Items”).
3. REPRESENTATIONS AND WARRANTIES. In order to induce Lender to enter into
this Agreement and to make the Loan, Borrower makes the following representations, covenants and
warranties to Lender as of the date of this Agreement, all of which shall survive the execution and delivery
of this Agreement and shall not be affected or waived by any inspection or examination made by or on
behalf of Lender:
3.1 Organization. Borrower is a limited liability company duly organized, validly existing,
and in good standing under the laws of Delaware and is qualified to do business in the State of New York.
3.2 Power and Authority. Borrower has the power and authority to own its Property and
assets, including the Property, and to transact the business in which it is engaged or presently proposes to
engage. Borrower is qualified to do business in the state of New York. Borrower has the power to execute,
deliver and carry out the terms and provisions of this Agreement and each of the Loan Documents and has
taken all necessary action to authorize the execution, delivery and performance of this Agreement and the
other Loan Documents, the borrowing hereunder and the making and delivery of all other Loan Documents
delivered hereunder. This Agreement constitutes, and the other Loan Documents and instruments issued
or to be issued hereunder, when executed and delivered pursuant hereto, constitute or will constitute the
authorized, valid and legally binding obligations of Borrower, enforceable in accordance with their
respective terms.
3.3 No Violation of Agreements. Borrower is not in default under any material provision of
any agreement to which it is a party or regarding its businesses or the Property, and, to its knowledge, is
not in violation of any applicable law. To the best of Borrower’s knowledge, neither the execution and
delivery of this Agreement, the other Loan Documents and the instruments incidental hereto or thereto by
Borrower, nor the consummation of the transactions herein or therein contemplated, nor Borrower’s
compliance with the terms and provisions hereof or thereof will: (a) violate any applicable law, (b) conflict
or be inconsistent with, result in any breach of any of the material terms, covenants, conditions or
provisions of, constitute a default under any agreement, or result in the creation or imposition of (or the
obligation to impose) any lien, charge or encumbrance upon any of the property or assets of Borrower
pursuant to the terms of any governmental approval, mortgage, deed of trust, lease, agreement or other
instrument to which either Borrower is a party, by which Borrower may be bound or to which Borrower
may be subject, or (c) violate any of the provisions of the Borrower’s Articles of Organization, Borrower’s
Operating Agreement (and any amendments thereto) or other governance documents of Borrower. No
governmental approval is necessary (i) for the execution of this Agreement and the other Loan Documents,
the making of the Note or the assumption and performance of this Agreement or the Note by Borrower or
(ii) for the consummation by Borrower of the transactions contemplated by this Agreement, including, but
not limited to, the grant of any security interests to Lender.
3.4 Financial Statements. The financial statements delivered to Lender by Borrower and
Guarantors accurately represent the financial condition of Borrower and Guarantors as of the date of
Closing. No adverse change has occurred in the financial condition of Borrower or Guarantors which
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could adversely affect the ability of Borrower or Guarantors to pay and perform its obligations under the
Loan Documents.
3.5 No Litigation; No Default. To the best of Borrower’s knowledge, there are no litigation,
actions, suits, or administrative or other proceedings pending or threatened against or affecting any
Guarantor, Borrower or the Property that could have an adverse effect on Borrower, any Guarantor or the
Collateral, and, to the best of Borrower’s knowledge, Borrower is not in default with respect to any
provision of any contract, agreement, or other instrument, or any order, writ, injunction, decree, or demand
of any court or administrative agency or any applicable law or governmental approval of any governmental
body which could have an adverse effect on Borrower, on Guarantor, or on the Collateral.
3.6 Taxes. Borrower and Guarantors have paid and will pay all license, franchise, excise, real
estate, capital gains, income and other taxes, fees, imposts, duties, liens or charges, levied, assessed or
imposed upon them or any predecessor, affiliate, guarantor or principal, or upon the Property, of
whatsoever kind or description, which are due and payable.
3.7 Enforceability of Loan Documents. The Loan and the execution, delivery, and
performance of the Loan Documents have been duly authorized by all necessary action, and the obligations
of Borrower under the Loan Documents constitute the legal, valid, and binding obligations of Borrower,
enforceable in accordance with their terms. Neither Borrower’s Operating Agreement or other applicable
documents of Borrower, nor other agreements, require recording, filing, registration, notice or other similar
action in order to insure the legality, validity, binding effect or enforceability against all parties to this
Agreement, or the other Loan Documents executed or to be executed hereunder, other than filings or
recordings that may be required under the Uniform Commercial Code.
3.8 No Conflict. The execution, delivery, and performance of the Loan Documents by
Borrower does not conflict with or violate any federal, state or local law or regulation, or any contract,
agreement, or other instrument to which Borrower is a party.
3.9 No Consents. Subject to obtaining required building permits, no consent, approval,
authorization, or order of any court or governmental agency is required for the performance of Borrower’s
obligations under the Loan Documents.
3.10 Good Title to Property. Borrower has good and marketable title to all of its Property and
assets, as set forth in the Recitals above, subject to no liens, mortgages, pledges, encumbrances or charges
of any kind, except the Mortgage or the Other Loan Documents and as set forth in the Lender’s title
insurance policy, in form approved and accepted by Lender. The Property is owned free and clear of any
claims, liens, rights or actions in any bankruptcy proceeding or otherwise, and the Property will not be
affected in any way by any ongoing or continuing bankruptcy proceedings.
3.11 Licenses and Permits. Except for the issuance of building permits for the Renovations (as
defined herein), all governmental approvals, registrations, permits and requirements with respect to the
Property and the business of Borrower were duly and validly issued by the applicable governmental bodies,
are in full force and effect and are valid and enforceable in accordance with their terms, and Borrower is
in compliance with all of their terms and requirements. With regard to such governmental approvals, no
fact or circumstance exists that constitutes or, with the passage of time or the giving of notice or both,
would constitute a material default under any thereof, or permit the grantor thereof to cancel or terminate
the rights thereunder, except upon the expiration of the full term thereof. Except for the issuance of
building permits for the Renovations, Borrower presently holds all material governmental approvals as are
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necessary or advisable in connection with the Property and the conduct of their businesses as now
conducted and as presently proposed to be conducted, and is also in compliance with all governmental or
regulatory requirements regarding the Property.
3.12 No Burdensome Agreements. Borrower is not a party to any agreement or instrument or
subject to any restrictions that now have or, as far as can be reasonably foreseen, could have an adverse
effect on any Guarantor, Borrower or any of the Property.
3.13 Assets in Good Condition. The assets of Borrower, including without limitation the
Property, are and will remain in good repair and good working order and condition in a manner consistent
with past practices of Borrower, and comparable to industry standards, and are and will be in compliance
with all applicable laws.
3.14 License Fees. Borrower has paid all fees and charges that have become due for any
governmental approval for their businesses or has made adequate provisions for any such fees and charges
that have accrued. There has been issued to Borrower all governmental approvals necessary for the
operation of Borrower’s businesses or the Property.
3.15 Trademarks, Patents, Etc. Borrower possess all necessary trademarks, trade names,
service marks, copyrights, patents, patent rights and licenses to conduct its business as now and as proposed
to be conducted, without conflict with the rights or claimed rights of others.
3.16 Disclosure. The exhibits hereto, the financial information and statements referred to herein,
any certificate, statement, report or other document furnished to Lender by Borrower, or any other person
in connection herewith or in connection with any transaction contemplated hereby, and this Agreement,
do not contain any untrue statements of material fact or omit to state any material fact necessary in order
to make the statements contained therein or herein not misleading.
3.17 Regulations U and X. Borrower does not own and no part of the proceeds hereof will be
used to purchase or carry any margin stock (within the meaning of Regulation U of the Board of Governors
of the Federal Reserve System) or to extend credit to others for the purpose of purchasing or carrying any
margin stock. Borrower is not engaged principally or as one of their important activities in the business
of extending credit for the purpose of purchasing or carrying any margin stock. If requested by Lender,
Borrower will furnish to Lender a statement in conformity with the requirements of Federal Reserve
Form U-1 referred to in said Regulation. No part of the proceeds of the Loan will be used for any purpose
that violates or is inconsistent with the provisions of Regulation X of said Board of Governors.
3.18 Condition of Property. Except as otherwise disclosed to Lender in writing prior to the
date of this Agreement, Borrower hereby represents and warrants to Lender that, as of the date hereof and
continuing hereafter, Borrower’s property and each portion thereof, including the Property, (a) are not and
have not been a site for the use, generation, manufacture, storage, disposal or transportation of any
Hazardous Substances; and (b) have been and are presently in compliance with all Hazardous Substances
laws, including those described in the Indemnity, and are otherwise in compliance with all laws, regulations
and requirements.
3.19 Leases. All leases for tenants at the Property are in full force and effect, there are no
defaults thereunder, and Borrower has not modified any leases on the Property within 30 days prior to
Closing.
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3.20 Solvency. Borrower is, and after giving effect to the incurrence of all Indebtedness and
obligations being incurred in connection herewith, will be and will continue to be solvent.
3.21 No Default. There exists no Event of Default under this Agreement, nor under any of the
other Loan Documents, and Borrower are not aware of any event which would constitute an Event of
Default under this Agreement or any of the other Loan Documents if not cured within any applicable cure
period.
3.22 Other Warranties. All representations and warranties of Borrower and Guarantors in this
Agreement and the other Loan Documents are true and correct.
4. COVENANTS OF BORROWER.
4.1 Book and Records. Borrower shall keep and maintain at the Property addresses, or at the
Borrower’s office at the address set forth on the Borrower’s signature page hereto, or such other place as
Lender may approve in writing, books of account and records adequate to reflect correctly the results of
operation of Property and copies of all written contracts, leases and other documents affecting Property.
Such books, records, contracts, leases and other documents shall be subject to examination, inspection and
copying at any reasonable time by Lender.
4.2 Other Agreements; No Modifications. Borrower shall timely pay and perform all
obligations under all contracts or agreements relating to the ownership, operation and management of the
Property and Borrower’s businesses. Without Lender's prior written consent, Borrower shall not enter into
material amendments or modifications of any such contract or agreement.
4.3 Notice of Claims/Adverse Events. Borrower will promptly notify Lender in writing of all
threatened and actual litigation, governmental proceedings, notices, defaults and every other occurrence
that may have an adverse effect on the business or financial condition of Borrower, Guarantors or the
Property, or that addresses any non-compliance by Borrower or their affiliates regarding any of the Loan
Documents or any governmental or regulatory laws, regulations, agreements or requirements regarding the
Property.
4.4 Insurance. Borrower will maintain the insurance required of it in any Loan Agreement or
Deed or other document regarding or relating to the Property, including but not limited to adequate fire
and extended risk insurance coverage, business interruption, worker’s compensation, commercial general
liability, and other insurance required by law. All policies must be in amounts, upon terms, and in a form
acceptable to Lender, with insurers reasonably acceptable to Lender. The failure to maintain said insurance
is an Event of Default under this Agreement and under all of the other Loan Documents. Lender may buy
the required insurance but will not be obligated to do so. These amounts, if so purchased, will be added to
the Indebtedness or payable on demand, at Lender’s sole option.
4.5 Pay Limitations. Borrower will not draw, permit or pay anyone more than is reasonable
for services provided to Borrower.
4.6 No Borrowing, Guarantees or Loans. Without Lender’s prior written consent, and a
detailed explanation from Borrower of other intended activities, Borrower will not (a) incur debt, borrow
money, or guaranty any loan or other obligation, except the Loan and in the ordinary course of Borrower’s
business, so long as such indebtedness is unsecured and the aggregate amount outstanding at any time does
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not exceed $100,000.00, (b) lend any money or sell any of Borrower’s assets or accounts receivable, or (c)
make any loans or advances to, or investments in, other persons or entities.
4.7 No Encumbrances or Transfer of Assets. Without Lender’s prior written consent, and a
detailed explanation from Borrower of other intended activities, Borrower will not (a) mortgage, assign,
hypothecate, or encumber any assets of Borrower, or the Property, except to Lender, or (b) merge,
consolidate, sell, transfer, license, lease, encumber or otherwise dispose of the Property, or the assets or
the businesses of Borrower.
4.8 No Dividends, Distributions or Redemptions. Borrower will not pay or declare any
dividend or make any other distribution on account of any shares of any class, units or other ownership
interest, or redeem, purchase, or otherwise acquire directly or indirectly, any shares of any class
membership interests or units, or other ownership interest.
4.9 Financial Reporting. See Exhibit A.
4.10 Inspections. Borrower will permit Lender to inspect the Property and Borrower’s assets at
all reasonable times upon reasonable notice , subject to rights of tenants under written leases approved by
Lender, from Lender at Borrower’s expense and will cooperate with all inspection and related activities of
Lender.
4.11 Management; Maintenance; Environmental Issues. Borrower will ensure competent
management of the Property and its affairs at all times by a third-party property manager, will maintain
and comply with the current property management contract in place for the Property, or any subsequent
management contracts that are approved in advance in writing by Lender, and will not undertake any
actions to damage or cause harm to the Property or any improvements thereon, or to cause insurance
coverage for the Property to become inadequate. Additionally, Borrower will eliminate any other
environmental, hazardous waste, contaminants or related conditions identified as requiring remediation in
the Environmental Reports, and comply with any remediation recommendations set forth therein.
4.12 Leases. Lender shall have the right to approve, in Lender’s sole opinion, all existing and
future leases and modifications for leases. Lender has approved the Seller Lease. Borrower will ensure
that all leases at the Property remain in full force and effect in accordance with the terms thereof unless
any such lease expires by the terms thereof.
4.13 Insurance and Real Estate Taxes. Pursuant to Sections 1.5 and 1.6 of the Note, Borrower
will promptly remit to Lender sufficient funds on a monthly basis as deemed necessary by Lender and
Lender’s loan servicer (“Trimont Real Estate Advisors, LLC”) to pay the annual real estate taxes and
liability insurance premiums due on the Property, when such taxes or premiums are due so that Lender
may pay them directly. Lender may choose to hold back sufficient funds from Closing to accomplish this
in accordance with Sections 1.5 and 1.6 of the Note, in its sole discretion. Borrower will also promptly
provide to Lender all notices and written materials relating in any way to such taxes or insurance due.
4.14 Indemnity. Borrower and Guarantors will indemnify, defend and hold harmless Lender
from any and all obligations, costs or expenses connected in any way with or arising at any time from or
under (a) any of Borrower’s and/or Guarantor’s obligations set forth herein or in any Loan Document, (b)
any failure of Borrower and/or Guarantor to satisfy or comply with any obligations set forth herein, or any
regulations or requirements applicable to the Property. Any such costs, expenses or other amounts due
from Borrower shall be automatically be added to the principal amount due under the Note.
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4.15 Intentionally Omitted.
4.16 Capital Expense Reserve. Borrower acknowledges that it will have a Capital Expense
Reserve available in the total amount of $7,458,347.00, as set forth in Section 1.7 of the Note, which funds
will be withheld by Lender at Closing. This Capital Expense Reserve shall be used by Borrower, and
advanced to Borrower, in accordance with Section 1.1 and Section 7 of this Agreement. Failure by
Borrower to substantially complete the work in accordance with the terms of this Agreement, subject to
any applicable notice and cure periods, will be an Event of Default, and may result in the loss of any right
to receive any remaining amounts in the Capital Expense Reserve.
4.17 Interest Reserve. Proceeds of the Loan in the amount of $253,153.00 have been allocated
and reserved for the payment of interest installments (the “Interest Reserve”), will be automatically
credited and charged by Lender to the account of Borrower as such interest installments on the Loan
become due. The Interest Reserve funds will be advanced at closing and held by Lender’s loan servicer,
Trimont Real Estate Advisors, LLC, in a collateral account for the benefit of Lender, and shall be part of
the outstanding principal amount of the Loan and shall bear interest as provided for in herein and in the
Note. If an Event of Default occurs or exists, Lender shall have the right, but shall not be obligated, to
continue to disburse said monthly interest installments from the Interest Reserve. In the event the Interest
Reserve is depleted and/or Lender, in its sole determination, deems any of the remaining Interest Reserve
to be insufficient, then Borrower shall, upon demand from Lender, either (i) deposit with Lender, in a cash
collateral account, an amount, determined by Lender, sufficient to pay in full the remaining monthly
interest installments of the Loan, or (ii) commence the payment of the monthly interest installments.
Establishment of an Interest Reserve shall in no way relieve Borrower of the obligation to pay interest as
set forth in the Loan Documents, once such an Interest Reserve has been depleted.
4.18 Tenant Improvement/Leasing Commission Reserve. Borrower acknowledges that it
will: (i) within five (5) months from the date hereof, fund at least One Million and 00/100 Dollars
($1,000,000.00) into a tenant improvement/leasing commission reserve (the “TI/Leasing Commission
Reserve”); and (ii) within ten (10) months after the date hereof, fully fund the TI/Leasing Commission
Reserve in the aggregate amount of $2,500,000.00, provided, however, that Lender shall consider a
reduction of such amount based upon Lender’s review and approval of any potential leases and tenant
improvement/leasing commission requirements prior to such time. Such funds shall be deposited in a
collateral account for the benefit of Lender and shall not bear interest. The TI/Leasing Commission
Reserve will be held by Lender’s loan servicer, Trimont Real Estate Advisors, LLC, in a collateral account
for the benefit of Lender. Funds will be disbursed from such collateral account in accordance with the
terms of the Note. Funds in the TI/Leasing Commission Reserve shall be advanced in accordance with
Section 7 of this Agreement.
4.19 Cash Management Procedures
4.19.1 Borrower has established a deposit account and a tenant deposit account at First
Republic Bank (“Deposit Bank”) for the Property, into which (i) all rents and revenues of the
Property and (ii) all tenant deposits related to the Property shall be deposited (collectively, the
“Property Accounts”). Borrower shall execute and deliver a springing deposit account control
agreement with Deposit Bank (the “DACA”) in favor of Lender to grant Lender a perfected security
interest in the Property Accounts, in form and substance acceptable to Lender.
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4.19.2 Upon the occurrence of an Event of Default, Lender will send the Notice of
Exclusive Control described in the DACA (and will send a copy of such notice to Lender’s loan
servicer, Trimont Real Estate Advisors, LLC and, effective immediately, all funds in the Property
Accounts will be under and subject to the full, complete, and sole control, direction, and access of
Lender. Pursuant to, and effective as of the date of, the Notice of Exclusive Control, Deposit Bank
will be instructed to transfer the funds in the Property Accounts each Monday, in same day funds,
for credit to Lender, to the account designated by Trimont Real Estate Advisors, LLC.
4.19.3 From and after the delivery by Lender of a Notice of Exclusive Control to Deposit
Bank and commencement of the transfer procedure described in Section 4.19.1.2 above, Tr