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FILED: KINGS COUNTY CLERK 05/06/2024 04:54 PM INDEX NO. 512680/2024
NYSCEF DOC. NO. 3 RECEIVED NYSCEF: 05/06/2024
EXHIBIT A
FILED: KINGS COUNTY CLERK 05/06/2024 04:54 PM INDEX NO. 512680/2024
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NYSCEF DOC. NO. 3 RECEIVED NYSCEF: 05/06/2024
Loan Agreement — SBL (Revised 05-31-2018)
F. M ac
MULTIFAMILY Freddie Mac Loan Number: 8530
Borrower: 220-230 KOSC HMDC LLC, a New York limited liability company
Lender: ARBOR AGENCY LENDING, LLC, a New York limited liability company
Effective Date: June 8, 2018
Loan Amount: $5,830,000.00
This Loan Agreement ("Loan Agreement") is made by and between Borrower and Lender and is dated as of the
Effective Date. Lender has agreed to make and Borrower has agreed to accept a loan for the Loan Amount ("Loan")
upon the terms and subject to the conditions in this Loan Agreement. The Loan will be evidenced by the Note and
will bear interest and be paid in accordance with the payment terms set forth in the Note. Lender and Borrower
each acknowledge the receipt and sufficiency of adequate consideration for the making and receiving of this Loan.
Table of Contents
Article I Key Terms Article VII Transfers
Article II Security Agreement Article VIII Events of Default and Remedies
Article III Personal Liability Article IX Release; Indemnity
Article IV Reserve Funds and Requirements Article X Miscellaneous Provisions
Article V Representations and Warranties Article XI Defined Terms
Article VI Covenants
ARTICLE I — KEY TERMS.
Modifications and Riders
Loan Agreement modifications are included in Exhibit B
The following rider(s) are attached to this Loan Agreement:
[if checked, list]
Base Recourse
A portion of the Indebtedness equal to 0% of the Loan Amount (see Article Ill)
Tax and Insurance Reserves
Taxes - Collected or ❑ Deferred Insurance premiums - ❑ Collected or IZ Deferred
(See Article IV)
Capital Replacement and Repair Reserve
Capital Replacement and Repair Reserve Monthly Deposit of $312.50 is ❑ Collected or Deferred
0 One Time Capital Replacement Deposit of $ is required for Additional Capital Replacements.
One Time Repair Deposit of $ is required for Priority Repairs (including PR-90 Repairs)
(See Article IV)
Required Additional Capital Replacements and Repairs
Additional Capital Replacements are required and are listed in Exhibit B.
The Additional Capital Replacements Completion Date is days after the Effective Date.
Priority Repairs (may include PR-90 Repairs) are required and are listed in the Physical Risk Report.
Recourse and other requirements related to Repairs are detailed in Sections 3.03, 3.04, and Section 6.14.
Special Purpose Reserve Fund
❑ One Time Special Purpose Reserve Fund Deposit in the amount of $ is required
The Termination Date is days after the Effective Date. The Release Conditions are listed in Exhibit B.
(See Article IV)
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Property Management
The Mortgaged Property is:
Self-managed by Borrower
Eg Managed by a Property Manager that is an Affiliate of Borrower
❑ Managed by a Property Manager that is not an Affiliate of Borrower
The requirements for property management of the Mortgaged Property are detailed in Section 6.09.
Aluminum Wiring, Galvanized Steel/Polybutylene Piping, Stab-Lok Electric Circuit Breakers or Panels
The Mortgaged Property includes (check all that apply):
❑ Aluminum wiring
❑ Galvanized steel/polybutylene piping
❑ Stab-Lok electric circuit breakers or panels
Recourse and other requirements related to these features are detailed in Sections 3.03, 3.04, and 6.09.
Borrower Entity Requirements and Limitations
Borrower is a(n):
❑ Individual
❑ Revocable Trust
Single Asset Entity
❑ Restricted Multiple Asset Entity
Tenancy in common made up of multiple Co-Borrowers
❑ See the attached "Tenants in Common" rider for the Borrower Entity Requirements and Limitations
for each Co-Borrower.
Collection of Co-Borrowers that are not tenants in common, but have common ownership
❑ See the attached "Co-Borrowers" rider for the Borrower Entity Requirements and Limitations
for each Co-Borrower.
The limitations on Single Asset Entities and Restricted Multiple Asset Entities are detailed in Section 6.13.
O&M Program(s)
Borrower must implement and maintain each O&M Program and Moisture Management Plan checked below.
Asbestos ❑ Storage tanks
1.4 Lead-based paint ❑ Drinking water
■ Radon ❑ Prior use of Mortgaged Property
❑ Polychlorinated Biphenyls (PCBs) ❑ Neighborhood waste sites
❑ Hazardous Materials ❑ Other (describe: )
❑ Moisture Management Plan ❑ Other (describe: )
O&M Program requirements are detailed in Section 6.12, and Moisture Management Plan requirements are
detailed in Section 6.09.
Guarantor(s)
HAROLD 0. MARTIN, JR BARBARA J. MARTIN
Notices
Addresses for Notices to Borrower, Guarantor, and Lender as of the Effective Date are listed on the signature
pages (See Section 10.03).
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ARTICLE II SECURITY AGREEMENT.
2.01 Uniform Commercial Code Security Agreement. This Loan Agreement is also a security agreement for
any of the Mortgaged Property which, under applicable law, may be subjected to a security interest under
the UCC, for the purpose of securing Borrower's obligations under this Loan Agreement and to further
secure Borrower's obligations under the Note, Security Instrument and other Loan Documents, whether
such Mortgaged Property is owned now or acquired in the future, and all products and cash and non-cash
proceeds of the Mortgaged Property (collectively, "UCC Collateral"), and by this Loan Agreement, Borrower
grants to Lender a security interest under the UCC in the UCC Collateral.
ARTICLE III PERSONAL LIABILITY.
3.01 Limited Recourse Generally. Except as otherwise provided in this Article III, none of Borrower or any
member or limited partner of Borrower (if applicable) will have any personal liability under the Note, this
Loan Agreement or any other Loan Document for the repayment of the Indebtedness or for the performance
of or compliance with any other obligations of Borrower under the Loan Documents, and Lender's only
recourse for the satisfaction of the Indebtedness and the performance of such obligations will be Lender's
exercise of its rights and remedies with respect to the Mortgaged Property and to any other collateral held
by Lender as security for the Indebtedness. This limitation on Borrower's liability will not limit or impair
Lender's enforcement of its rights against any Guarantor.
3.02 Base Recourse. Borrower will be personally liable to Lender for the Base Recourse specified in Article I
("Base Recourse"), plus any other amounts for which Borrower has personal liability under this Article III.
3.03 Loss or Damage Recourse. Borrower will be personally liable to Lender for the repayment of a portion of
the Indebtedness equal to any loss or damage suffered by Lender as a result of the occurrence of any of
the following events:
(a) Borrower or any Affiliate or employee of Borrower makes an unintentional written material
misrepresentation in connection with the application for or creation of the Indebtedness or any
action or consent of the Lender; provided that the assumption will be that any written material
misrepresentation was intentional and the burden of proof will be on Borrower to prove there was
no intent.
(b) Borrower fails to complete any of the Priority Repairs (including PR-90 Repairs) identified in the
Physical Risk Report.
(c) Borrower undertakes and fails to complete any Capital Improvement, Property Improvement, or
other alteration of the Mortgaged Property (whether or not such alteration is permitted under
Sections 6.09(d) or (e)).
(d) Borrower engages in any willful act of material waste of the Mortgaged Property.
(e) Borrower fails to pay when due any of the following:
(i) Taxes, if Lender does not collect a Tax Reserve Fund.
(ii) Insurance premiums, if Lender does not collect an Insurance Reserve Fund.
(iii) Water and sewer charges that could become a lien on the Mortgaged Property.
(iv) Assessments or other charges that could become a lien on the Mortgaged
Property, including homeowner association dues.
(v) Transfer or recording Taxes required to be paid by Borrower.
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(g) Any of the following Transfers occurs:
(i) Any Person that is not an Affiliate of Borrower or a Borrower Principal creates a mechanic's
lien or other involuntary lien or encumbrance against the Mortgaged Property and Borrower
has not complied with the provisions of Article VII.
(ii) A Transfer by devise, descent or operation of law occurs upon the death of a natural person
and such Transfer does not meet Lender's requirements in Section 7.03(a) or (b), as
applicable.
(iii) Borrower grants an easement that does not meet Lender's requirements.
(iv) Borrower executes a Lease that does not meet Lender's requirements.
(h) Borrower fails to apply all Insurance proceeds and Condemnation proceeds as required by this
Loan Agreement. This Section 3.03(h) will not apply if Borrower's failure is a result of a valid order
issued in, or an automatic stay applicable because of, a bankruptcy, receivership, or a similar
judicial proceeding.
(i) Borrower fails to pay to Lender upon demand after an Event of Default all Rents to which Lender
is entitled under Section 3 of the Security Instrument and the amount of all security deposits
collected by Borrower from tenants then in residence. This Section 3.03(i) will not apply if
Borrower's failure is a result of a valid order issued in, or an automatic stay applicable because of,
a bankruptcy, receivership, or a similar judicial proceeding.
If an Event of Default has occurred and is continuing, Borrower fails to deliver all Books and
Records, contracts, Leases and other instruments relating to the Mortgaged Property or its
operation in accordance with the provisions of Section 6.07.
If the Mortgaged Property is subject to any oil or gas lease, pipeline agreement, or other instrument
related to the production or sale of oil or natural gas that under applicable state law has been given
priority over the Security Instrument.
If the Mortgaged Property is non-conforming under the applicable zoning laws, ordinances and/or
regulations in the Property Jurisdiction ("Zoning Code"), either of the following circumstances
occurs following a casualty affecting the Mortgaged Property:
(I) The Improvements impacted by the casualty cannot be rebuilt or restored to their pre-
casualty condition under the terms of the Zoning Code and the Property Insurance
proceeds available to Lender under the terms of this Loan Agreement are insufficient to
repay the Indebtedness in full.
(ii) Borrower fails to commence and diligently pursue completion of any Restoration within the
time frame required by both the Zoning Code and any permits issued pursuant to the
Zoning Code which are necessary to allow the Restoration of the Mortgaged Property to
its pre-casualty condition.
(m) If primary ingress to and egress from the Mortgaged Property is through an easement or private
road, any party takes, or threatens to take, any action to deny ingress to or egress from the
Mortgaged Property from or to a publicly dedicated and maintained right-of-way.
(n) If the Mortgaged Property is subject to a Regulatory Agreement restricting rents or occupancy, a
default or breach by Borrower (however such terms may be defined in the Regulatory Agreement)
extends beyond any applicable notice and/or cure periods under the Regulatory Agreement.
(o) If the operation of the Mortgaged Property requires that Borrower and its tenants have access to a
management office, recreational facility, and/or other amenity that is not located on the Mortgaged
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Property, and Borrower has entered into an agreement (whether recorded or unrecorded) to ensure
such access, any party takes, or threatens to take, any action to deny Borrower and its tenants
such access.
If the Mortgaged Property includes aluminum wiring, galvanized steel/polybutylene piping, or Stab-
Lok electric circuit breakers or panels, an Aluminum Wiring Event, a Galvanized Steel/PB Piping
Event, or a Stab-Lok Event occurs.
If a Process Agent is required by the Guaranty, either of the following circumstances occurs:
(i) The Process Agent is no longer able to act as Guarantor's agent for service of process for
any reason and Borrower fails to cause Guarantor to appoint a substitute Process Agent
in accordance with the terms of the Guaranty.
(ii) Borrower fails to cause Guarantor to maintain the Minimum U.S. Deposit amount set forth
in the Guaranty in a U.S. federally insured banking institution in accordance with the terms
of the Guaranty or fails to provide Lender with copies of the required documentation
evidencing the Minimum U.S. Deposits in accordance with the terms of the Guaranty.
3.04 Performance and Cost Recourse. Borrower will be personally liable to Lender for all the following:
(a) The performance of, and the cost to Lender of any nonperformance of, all of Borrower's obligations
under each of the following:
(i) Section 6.14(a) (relating to completion of Priority Repairs (including PR-90 Repairs)).
(ii) Sections 6.12 and 9.02(b) (relating to environmental matters).
(iii) Sections 6.09(h), 6.09(i) and 6.09(j) if the Mortgaged Property includes aluminum wiring,
galvanized steel/polybutylene piping, or Stab-Lok electric circuit breakers or panels.
(b) The cost to Lender of each of the following:
(I) Any audit required under Section 6.07.
(ii) Any expenses incurred in connection with the collection of any amount for which Borrower
is personally liable under this Article III, including Attorneys' Fees and Costs and the costs
of conducting any independent audit of Borrower's Books and Records to determine the
amount for which Borrower has personal liability.
Any expenses incurred in connection with Borrower's termination of any agreement for
services at the Mortgaged Property, including cable, internet, garbage collection and
recycling, landscaping, security, and cleaning.
3.05 Full Recourse. Borrower will become personally liable to Lender for the repayment of all the Indebtedness
upon the occurrence of any of the following:
(a) Borrower fails to comply with Section 6.13.
(b) A Transfer that is an Event of Default under Section 7.02 occurs, other than a Transfer set forth in
Section 3.03(g) (for which Borrower will have personal liability for Lender's loss or damage);
provided, however, that Borrower will not have any personal liability for a Transfer consisting solely
of the involuntary removal or involuntary withdrawal of a general partner in a limited partnership or
a manager in a limited liability company.
(c) There was fraud or intentional written material misrepresentation by Borrower, any Affiliate, or any
employee of Borrower in connection with the application for or creation of the Indebtedness or there
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is fraud in connection with any request by Borrower or Guarantor for any action or consent by
Lender.
(d) A Bankruptcy Event.
3.06 Exercise of Lender's Rights and Application of Payment. If Borrower has personal liability under this
Article III, then Lender may, to the fullest extent permitted by applicable law, exercise its rights against
Borrower personally without regard to whether Lender has exercised any rights against the Mortgaged
Property or any other security, or pursued any rights against any Guarantor, or pursued any other rights
available to Lender under the Note, this Loan Agreement, any other Loan Document or applicable law. To
the fullest extent permitted by applicable law, in any action to enforce Borrower's personal liability under
this Article III, Borrower waives any right to set off the value of the Mortgaged Property against such
personal liability. All payments made by Borrower with respect to the Indebtedness and all amounts
received by Lender from the enforcement of its rights under the Loan Documents will be applied first to the
portion of the Indebtedness for which Borrower has no personal liability.
3.07 Reserved. [Ground Lease]
ARTICLE IV RESERVE FUNDS AND REQUIREMENTS.
4.01 Reserves Generally.
(a) Establishment of Reserve Funds. Each Reserve Fund marked in Article I as required or collected
will be established on the Closing Date and funded in accordance with this Article IV. Upon Notice
to Borrower following (i) an Event of Default, (ii) a Transfer requiring Lender's approval under Article
VII, or (iii) the placement of a Subordinate Loan, Lender may require Borrower to establish and
make deposits into any Reserve Fund marked in Article I as deferred.
(b) Investment of Reserve Funds. All Reserve Funds will be deposited in an Eligible Account at an
Eligible Institution or invested in "permitted investments" as then defined and required by the Rating
Agencies. Lender will not be obligated to open additional accounts or deposit Reserve Funds in
additional institutions when the amount of any Reserve Fund exceeds the maximum amount of the
federal deposit insurance or guaranty. Borrower acknowledges and agrees that it will not have the
right to direct Lender as to any specific investment of monies in any Reserve Fund. Lender will not
be responsible for any losses resulting from investment of monies in any Reserve Fund or for
obtaining any specific level or percentage of earnings on such investment. Unless applicable law
requires, Lender will not be required to pay Borrower any interest, earnings or profits on any
Reserve Funds. Any amounts deposited with Lender under this Article IV will not be trust funds,
nor will they operate to reduce the Indebtedness, unless applied by Lender for that purpose
pursuant to the terms of this Loan Agreement.
(c) Use of Reserve Funds; No Disbursements during Event of Default. Each Reserve Fund will, except
as otherwise provided in this Loan Agreement, be used for the sole purpose of paying, or
reimbursing Borrower for payment of, the item(s) for which the applicable Reserve Fund is
established. Except as specified in this Loan Agreement, monies in one Reserve Fund will not be
used to pay, or reimburse Borrower for, matters for which another Reserve Fund has been
established. Lender will not be obligated to make disbursements from any Reserve Fund if any
Event of Default has occurred and is continuing. If an Event of Default has occurred and is
continuing, then Lender may use any Reserve Fund for the payment or performance of any
obligation of Borrower to Lender or otherwise with respect to the Mortgaged Property.
(d) Termination of Reserve Funds. Upon payment in full of the Indebtedness, Lender will pay to
Borrower all funds remaining in any Reserve Funds.
4.02 Tax and Insurance Reserves.
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(a) Deposits. When required by Lender, Borrower will deposit with Lender on the Closing Date and on
each Payment Date under the Note an additional amount sufficient to accumulate with Lender the
entire sum required to pay, when due, Taxes ("Tax Reserve Fund") and Insurance premiums
("Insurance Reserve Fund").
The amount of each required deposit into the Tax Reserve Fund and Insurance Reserve Fund must
be sufficient to enable Lender to pay the Taxes or Insurance premiums, as applicable, before the
last date upon which the payment may be made without any penalty or interest charge being added.
(b) Disbursements.
(I) Lender will pay Taxes from the Tax Reserve Fund held by Lender upon Lender's receipt
of a bill or invoice for Taxes. Lender will have no obligation to pay Taxes to the extent the
amount payable exceeds the Tax Reserve Fund then held by Lender. Lender may pay
Taxes according to any bill, statement or estimate from the appropriate public office without
inquiring into the accuracy of the bill, statement or estimate.
(ii) Lender will pay Insurance premiums from the Insurance Reserve Fund held by Lender
upon Lender's receipt of a bill or invoice for Insurance premiums. Lender will have no
obligation to pay Insurance premiums to the extent the amount payable exceeds the
Insurance Reserve Fund then held by Lender. Lender may pay Insurance premiums
according to any bill, statement or estimate from an insurance company without inquiring
into the accuracy of the bill, statement or estimate.
(c) Adjustments to Reserve Fund Deposits. If at any time the amount of either the Tax Reserve Fund
or the Insurance Reserve Fund held by Lender for payment of Taxes or Insurance premiums
exceeds the amount reasonably deemed necessary by Lender, then the excess will be credited
against future payments into the applicable Reserve Fund. If at any time the amount of either the
Tax Reserve Fund or the Insurance Reserve Fund is less than the amount reasonably estimated
by Lender to be necessary, then Borrower will pay to Lender the amount of the deficiency within
20 days after Notice from Lender.
(d) Delivery of Invoices; Proof of Payment by Borrower. Borrower will promptly deliver to Lender a
copy of all notices of, and invoices for, Taxes and Insurance premiums. If Lender has not
established a Reserve Fund for either Taxes or Insurance premiums, then on or before the date
the Taxes or Insurance premiums are due, Borrower will provide Lender with proof of payment of
the Taxes or Insurance premiums.
4.03 Special Purpose Reserve Fund.
(a) Deposit. If a Special Purpose Reserve is required in Article I, then Borrower will pay to Lender on
the Closing Date the amount set forth in Article I ("Special Purpose Reserve Fund").
(b) Disbursements. Lender will disburse the funds in the Special Purpose Reserve Fund to Borrower
when the Release Conditions specified in Exhibit B have been satisfied in Lender's discretion.
(c) Application of Reserve Funds after the Termination Date. If Borrower has not satisfied the Release
Conditions on or before the Termination Date specified in Article I, then Lender may apply some or
all the Special Purpose Reserve Fund to the Indebtedness, and Borrower will pay a prepayment
premium computed using the formula set forth in the Note with respect to any such prepayment of
principal under the Note. Borrower may not pay the prepayment premium from funds drawn from
the Special Purpose Reserve Fund.
4.04 Capital Replacement and Repair Reserve Fund.
(a) Monthly Deposits. If the Capital Replacement and Repair Reserve Monthly Deposit is shown as
collected in Article I, then on each Payment Date under the Note, Borrower will pay to Lender the
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Capital Replacement and Repair Reserve Monthly Deposit amount shown in Article I ("Capital
Replacement and Repair Reserve Fund").
(b) Disbursements from Capital Replacement and Repair Reserve Fund. Lender will disburse funds
from the Capital Replacement and Repair Reserve Fund to Borrower for reimbursement of, or to
defray the cost of, each of the following, provided the conditions set forth in Sections 4.04(f) and
(g) are satisfied:
(i) Replacing any of the following:
Carpet/vinyl flooring, window treatments, roofs, furnaces/boilers, air conditioners,
ovens/ranges, refrigerators, dishwashers, water heaters, garbage disposals, and other
items that Lender may approve after the Effective Date, subject to any conditions that
Lender may require ("Basic Capital Replacements," and together with any Additional
Capital Replacements listed in Exhibit B, "Capital Replacements").
( i) Completing the Priority Repairs described in the Physical Risk Report, provided a Repair
Deposit is required in Article I.
(c) Additional Capital Replacements Deposit. If an Additional Capital Replacements Deposit is
required in Article I, then on the Closing Date, Borrower will pay the Additional Capital
Replacements Deposit to Lender for deposit into the Capital Replacement and Repair Reserve
Fund. The Additional Capital Replacements Deposit will be available to reimburse Borrower only
for reimbursement of, or to defray, the cost of the Additional Capital Replacements listed in Exhibit
B.
Borrower may not displace or relocate tenants to undertake or complete the Additional Capital
Replacements unless such displacement or relocation has been approved by Lender. Borrower
must complete the Additional Capital Replacements on or before the Additional Capital
Replacements Completion Date specified in Article I, as may be extended by Lender in its
discretion. Any funds from the Additional Capital Replacements Deposit remaining in the Capital
Replacement and Repair Reserve Fund after the Additional Capital Replacements are completed
in a manner satisfactory to Lender will be returned to Borrower.
(d) Repair Deposit. If a Repair Deposit is required in Article I, then on the Closing Date, Borrower will
pay the Repair Deposit to Lender for deposit into the Capital Replacement and Repair Reserve
Fund. The Repair Deposit will be available to reimburse Borrower only for reimbursement of, or to
defray, the cost of Priority Repairs (including PR-90 Repairs). Any funds from the Repair Deposit
remaining in the Capital Replacement and Repair Reserve Fund after all the Priority Repairs are
completed in a manner satisfactory to Lender will be returned to Borrower.
(e) Insufficient Amount in Capital Replacement and Repair Reserve Fund. If Borrower requests
disbursement from the Capital Replacement and Repair Reserve Fund for a Capital Replacement
or a Priority Repair (including PR-90 Repairs) in an amount that exceeds the amount on deposit in
the Capital Replacement and Repair Reserve Fund, then Lender will disburse to Borrower only the
amount on deposit in the Capital Replacement and Repair Reserve Fund. Borrower will pay all
additional amounts required in connection with any such Capital Replacement or Priority Repair
from Borrower's own funds.
Limits on Disbursements. Lender will disburse funds from the Capital Replacement and Repair
Reserve Fund no more frequently than once per calendar month, and no disbursement will be
made in an amount less than $1,000.
Performance of Capital Replacements and Priority Repairs (including PR-90 Repairs);
Requests for Disbursement.
(i) If Borrower determines that a Capital Replacement is necessary or desirable, then
Borrower will perform such Capital Replacement and request from Lender, in writing,
reimbursement for the cost of such Capital Replacement from the Capital Replacement
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and Repair Reserve Fund using the Disbursement Request attached to this Loan
Agreement as Exhibit A. The Disbursement Request must be accompanied by paid
invoices or bills that show Borrower has paid for the applicable Capital Replacement.
(ii) Borrower must complete all Priority Repairs (including PR-90 Repairs) pursuant to Section
6.14. After Borrower performs one or more Priority Repairs, Borrower may request from
Lender reimbursement for the cost of such Priority Repair(s) from the Capital Replacement
and Repair Reserve Fund using the Disbursement Request attached to this Loan
Agreement as Exhibit A. The Disbursement Request must be accompanied by paid
invoices or bills that show Borrower has paid for the applicable Priority Repair.
(iii) If requested by Lender, Borrower must provide any other information, documents, lien
waivers, certifications, or professional engineering reports regarding the work and the cost
of such Capital Replacements or Priority Repairs. Lender, at its option, may retain a
professional inspection engineer or other qualified third party to inspect any Capital
Replacement or Priority Repair. If Lender retains such a third party, then it will charge
Borrower an amount sufficient to pay all reasonable costs and expenses charged by such
third party inspector. Lender may, at its election, either deduct such cost from the Capital
Replacement and Repair Reserve Fund or send Borrower a Notice of the amount of such
charge, which Borrower must pay within 20 days following its receipt of such Notice.
(iv) If Lender reasonably determines at any time that a Capital Replacement or a Repair is
necessary for the proper maintenance of the Mortgaged Property, then Lender will give
Notice to Borrower requesting that Borrower obtain and submit to Lender bids for all labor
and materials required in connection with such Capital Replacement or Repair. In
response, Borrower will submit such bids and a time schedule for completing each Capital
Replacement or Repair to Lender within 30 days after Borrower's receipt of Lender's
Notice. Borrower will perform such Capital Replacement or Repair in conformity with the
requirements of this Section 4.04 and then may request reimbursement for such Capital
Replacement or Repair in accordance with this Section 4.04.
(h) Adjustments to Reserve Fund Deposits. If the initial term of the Loan is greater than 120 months,
then following each of the 120th and 180th Payment Dates under the Note, Lender may adjust the
amount of the Capital Replacement and Repair Reserve Monthly Deposit based on Lender's most
recent assessment of the physical condition of the Mortgaged Property and will provide Borrower
Notice of this revised Capital Replacement and Repair Reserve Monthly Deposit amount. Borrower
will begin paying this revised Capital Replacement and Repair Reserve Monthly Deposit on the
next Payment Date following its receipt of the Notice from Lender.
4.05 Reserved
4.06 Reserved [Ground Lease]
ARTICLE V REPRESENTATIONS AND WARRANTIES.
Borrower represents and warrants to Lender as follows as of the Effective Date:
5.01 Review of Documents. Borrower has reviewed: (a) the Physical Risk Report, (b) the Commitment Letter
(c) the Note, (d) this Loan Agreement, (e) the Security Instrument, and (f) all other Loan Documents.
5.02 Condition of Mortgaged Property. Except as Borrower may have disclosed to Lender in writing in
connection with the issuance of the Commitment Letter (which written disclosure may be in certain written
reports accepted by Lender in connection with the funding of the Indebtedness and dated prior to the
Effective Date), the Mortgaged Property has not been damaged by fire, water, wind or other cause of loss,
or, if so damaged, any previous damage to the Mortgaged Property has been fully restored.
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5.03 No Condemnation. No part of the Mortgaged Property has been taken in Condemnation or other similar
proceeding, and, to the best of Borrower's knowledge after due inquiry and investigation, no such
proceeding is pending or threatened for the partial or total Condemnation or other taking of the Mortgaged
Property.
5.04 Actions; Suits; Proceedings. There are no judicial, administrative, mediation or arbitration actions, suits
or proceedings pending or, to the best of Borrower's knowledge, threatened in writing against or affecting
Borrower, any Borrower Principal, or the Mortgaged Property which, if adversely determined, would have a
Material Adverse Effect.
5.05 Environmental. Except as previously disclosed by Borrower to Lender in writing (which written disclosure
may be in certain environmental assessments and other written reports accepted by Lender in connection
with the funding of the Indebtedness and dated prior to the Effective Date), each of the following is true:
(a) Borrower has not at any time engaged in, caused, or permitted any Prohibited Activities or
Conditions on the Mortgaged Property.
(b) To the best of Borrower's knowledge after due inquiry and investigation, no Prohibited Activities or
Conditions exist or have existed on the Mortgaged Property.
(c) The Mortgaged Property does not now contain any underground storage tanks, and, to the best of
Borrower's knowledge after due inquiry and investigation, the Mortgaged Property has not
contained any underground storage tanks in the past. If there is an underground storage tank
located on the Mortgaged Property that has been previously disclosed by Borrower to Lender in
writing, that tank complies with all requirements of Hazardous Materials Laws.
(d) To the best of Borrower's knowledge after due inquiry and investigation, Borrower has complied
with all Hazardous Materials Laws, including all requirements for notification regarding releases of
Hazardous Materials. All Environmental Permits required for the operation of the Mortgaged
Property in accordance with Hazardous Materials Laws now in effect have been obtained and all
such Environmental Permits are in full force and effect.
(e) To the best of Borrower's knowledge after due inquiry and investigation, no event has occurred
with respect to the Mortgaged Property that constitutes, or with the passage of time or the giving of
notice, or both, would constitute, noncompliance with the terms of any Environmental Permit.
(f) There are no actions, suits, claims, or proceedings pending or, to the best of Borrower's knowledge
after due inquiry and investigation, threatened in writing, that involve the Mortgaged Property and
allege, arise out of, or relate to any Prohibited Activity or Condition.
(g) Borrower has received no actual or constructive notice of any written complaint, order, notice of
violation or other communication from any Governmental Authority with regard to air emissions,
water discharges, noise emissions or Hazardous Materials, or any other environmental, health or
safety matters affecting the Mortgaged Property or any property that is adjacent to the Mortgaged
Property.
5.06 No Labor or Materialmen's Claims. Borrower represents and warrants that all parties furnishing labor and
materials for which a Lien or claim of Lien may be filed against the Mortgaged Property have been paid in
full and there are no mechanics', laborers' or materialmen's Liens or claims outstanding for work, labor or
materials affecting the Mortgaged Property, whether prior to, equal with or subordinate to the Lien of the
Security Instrument, except such Liens or claims that Borrower has disclosed to both Lender and the title
company and which are insured against by the policy of title insurance to be issued in connection with the
Loan.
5.07 Compliance with Applicable Laws and Regulations. To the best of Borrower's knowledge after due
inquiry and investigation, each of the following is true:
Loan Agreement — SBL Page 10
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NYSCEF DOC. NO. 3 RECEIVED NYSCEF: 05/06/2024
(a) All Improvements and the use of the Mortgaged Property comply with all applicable statutes, rules,
and regulations, including all applicable statutes, rules, and regulations pertaining to requirements
for equal opportunity, anti-discrimination, fair housing, environmental protection, zoning, and land
use ("legal non-conforming" status with respect to uses or structures will be considered to comply
with zoning and land use requirements for the purposes of this representation).
(b) The Improvements comply with applicable health, fire, and building codes.
(c) There is no evidence of any illegal activities relating to controlled substances on the Mortgaged
Property.
5.08 Access; Utilities; Tax Parcels. The Mortgaged Property: (a) has ingress and egress via a publicly
dedicated right of way or via an irrevocable easement permitting ingress and egress, (b) is served by public
utilities and services generally available in the surrounding community or otherwise appropriate for the
current use of the Mortgaged Property, and (c) constitutes one or more separate tax parcels.
5.09 Licenses and Permits. Borrower and any operator of the Mortgaged Property, if applicable, and to the
best of Borrower's knowledge, any commercial tenant of the Mortgaged Property, are in possession of all
material licenses, permits, and authorizations required for use of the Mortgaged Property, which are valid
and in full force and effect as of the Effective Date.
5.10 No Other Interests. To the best of Borrower's knowledge after due inquiry and investigation, no Person
has (a) any possessory interest in the Mortgaged Property or right to occupy the Mortgaged Property except
under the provisions of existing Leases by and between tenants and Borrower, or (b) an option to purchase
the Mortgaged Property or an interest in the Mortgaged Property, except as has been disclosed to and
approved in writing by Lender.
5.11 Term of Leases. All Leases for residential units at the Mortgaged Property satisfy all the following
conditions:
(a) They are on forms acceptable to Lender.
(b) They do not include options to purchase or have purchase options associated with them.
(c) They are for initial terms of at least one month and not more than 2 years.
5.12 No Prior Assignment; Prepayment of Rents. Borrower has (a) not executed any prior assignment of
Rents (other than an assignment of Rents securing any prior indebtedness that is being assigned to Lender
or that is being paid off and discharged with the proceeds of the Loan), and (b) not performe
Preview
FILED: KINGS COUNTY CLERK 05/06/2024 04:54 PM INDEX NO. 512680/2024 NYSCEF DOC. NO. 3 RECEIVED NYSCEF: 05/06/2024 EXHIBIT A FILED: KINGS COUNTY CLERK 05/06/2024 04:54 PM INDEX NO. 512680/2024 00 NYSCEF DOC. NO. 3 RECEIVED NYSCEF: 05/06/2024 Loan Agreement — SBL (Revised 05-31-2018) F. M ac MULTIFAMILY Freddie Mac Loan Number: 8530 Borrower: 220-230 KOSC HMDC LLC, a New York limited liability company Lender: ARBOR AGENCY LENDING, LLC, a New York limited liability company Effective Date: June 8, 2018 Loan Amount: $5,830,000.00 This Loan Agreement ("Loan Agreement") is made by and between Borrower and Lender and is dated as of the Effective Date. Lender has agreed to make and Borrower has agreed to accept a loan for the Loan Amount ("Loan") upon the terms and subject to the conditions in this Loan Agreement. The Loan will be evidenced by the Note and will bear interest and be paid in accordance with the payment terms set forth in the Note. Lender and Borrower each acknowledge the receipt and sufficiency of adequate consideration for the making and receiving of this Loan. Table of Contents Article I Key Terms Article VII Transfers Article II Security Agreement Article VIII Events of Default and Remedies Article III Personal Liability Article IX Release; Indemnity Article IV Reserve Funds and Requirements Article X Miscellaneous Provisions Article V Representations and Warranties Article XI Defined Terms Article VI Covenants ARTICLE I — KEY TERMS. Modifications and Riders Loan Agreement modifications are included in Exhibit B The following rider(s) are attached to this Loan Agreement: [if checked, list] Base Recourse A portion of the Indebtedness equal to 0% of the Loan Amount (see Article Ill) Tax and Insurance Reserves Taxes - Collected or ❑ Deferred Insurance premiums - ❑ Collected or IZ Deferred (See Article IV) Capital Replacement and Repair Reserve Capital Replacement and Repair Reserve Monthly Deposit of $312.50 is ❑ Collected or Deferred 0 One Time Capital Replacement Deposit of $ is required for Additional Capital Replacements. One Time Repair Deposit of $ is required for Priority Repairs (including PR-90 Repairs) (See Article IV) Required Additional Capital Replacements and Repairs Additional Capital Replacements are required and are listed in Exhibit B. The Additional Capital Replacements Completion Date is days after the Effective Date. Priority Repairs (may include PR-90 Repairs) are required and are listed in the Physical Risk Report. Recourse and other requirements related to Repairs are detailed in Sections 3.03, 3.04, and Section 6.14. Special Purpose Reserve Fund ❑ One Time Special Purpose Reserve Fund Deposit in the amount of $ is required The Termination Date is days after the Effective Date. The Release Conditions are listed in Exhibit B. (See Article IV) Loan Agreement — SBL FILED: KINGS COUNTY CLERK 05/06/2024 04:54 PM INDEX NO. 512680/2024 NYSCEF DOC. NO. 3 RECEIVED NYSCEF: 05/06/2024 Property Management The Mortgaged Property is: Self-managed by Borrower Eg Managed by a Property Manager that is an Affiliate of Borrower ❑ Managed by a Property Manager that is not an Affiliate of Borrower The requirements for property management of the Mortgaged Property are detailed in Section 6.09. Aluminum Wiring, Galvanized Steel/Polybutylene Piping, Stab-Lok Electric Circuit Breakers or Panels The Mortgaged Property includes (check all that apply): ❑ Aluminum wiring ❑ Galvanized steel/polybutylene piping ❑ Stab-Lok electric circuit breakers or panels Recourse and other requirements related to these features are detailed in Sections 3.03, 3.04, and 6.09. Borrower Entity Requirements and Limitations Borrower is a(n): ❑ Individual ❑ Revocable Trust Single Asset Entity ❑ Restricted Multiple Asset Entity Tenancy in common made up of multiple Co-Borrowers ❑ See the attached "Tenants in Common" rider for the Borrower Entity Requirements and Limitations for each Co-Borrower. Collection of Co-Borrowers that are not tenants in common, but have common ownership ❑ See the attached "Co-Borrowers" rider for the Borrower Entity Requirements and Limitations for each Co-Borrower. The limitations on Single Asset Entities and Restricted Multiple Asset Entities are detailed in Section 6.13. O&M Program(s) Borrower must implement and maintain each O&M Program and Moisture Management Plan checked below. Asbestos ❑ Storage tanks 1.4 Lead-based paint ❑ Drinking water ■ Radon ❑ Prior use of Mortgaged Property ❑ Polychlorinated Biphenyls (PCBs) ❑ Neighborhood waste sites ❑ Hazardous Materials ❑ Other (describe: ) ❑ Moisture Management Plan ❑ Other (describe: ) O&M Program requirements are detailed in Section 6.12, and Moisture Management Plan requirements are detailed in Section 6.09. Guarantor(s) HAROLD 0. MARTIN, JR BARBARA J. MARTIN Notices Addresses for Notices to Borrower, Guarantor, and Lender as of the Effective Date are listed on the signature pages (See Section 10.03). Loan Agreement — SBL Page 2 FILED: KINGS COUNTY CLERK 05/06/2024 04:54 PM INDEX NO. 512680/2024 NYSCEF DOC. NO. 3 RECEIVED NYSCEF: 05/06/2024 ARTICLE II SECURITY AGREEMENT. 2.01 Uniform Commercial Code Security Agreement. This Loan Agreement is also a security agreement for any of the Mortgaged Property which, under applicable law, may be subjected to a security interest under the UCC, for the purpose of securing Borrower's obligations under this Loan Agreement and to further secure Borrower's obligations under the Note, Security Instrument and other Loan Documents, whether such Mortgaged Property is owned now or acquired in the future, and all products and cash and non-cash proceeds of the Mortgaged Property (collectively, "UCC Collateral"), and by this Loan Agreement, Borrower grants to Lender a security interest under the UCC in the UCC Collateral. ARTICLE III PERSONAL LIABILITY. 3.01 Limited Recourse Generally. Except as otherwise provided in this Article III, none of Borrower or any member or limited partner of Borrower (if applicable) will have any personal liability under the Note, this Loan Agreement or any other Loan Document for the repayment of the Indebtedness or for the performance of or compliance with any other obligations of Borrower under the Loan Documents, and Lender's only recourse for the satisfaction of the Indebtedness and the performance of such obligations will be Lender's exercise of its rights and remedies with respect to the Mortgaged Property and to any other collateral held by Lender as security for the Indebtedness. This limitation on Borrower's liability will not limit or impair Lender's enforcement of its rights against any Guarantor. 3.02 Base Recourse. Borrower will be personally liable to Lender for the Base Recourse specified in Article I ("Base Recourse"), plus any other amounts for which Borrower has personal liability under this Article III. 3.03 Loss or Damage Recourse. Borrower will be personally liable to Lender for the repayment of a portion of the Indebtedness equal to any loss or damage suffered by Lender as a result of the occurrence of any of the following events: (a) Borrower or any Affiliate or employee of Borrower makes an unintentional written material misrepresentation in connection with the application for or creation of the Indebtedness or any action or consent of the Lender; provided that the assumption will be that any written material misrepresentation was intentional and the burden of proof will be on Borrower to prove there was no intent. (b) Borrower fails to complete any of the Priority Repairs (including PR-90 Repairs) identified in the Physical Risk Report. (c) Borrower undertakes and fails to complete any Capital Improvement, Property Improvement, or other alteration of the Mortgaged Property (whether or not such alteration is permitted under Sections 6.09(d) or (e)). (d) Borrower engages in any willful act of material waste of the Mortgaged Property. (e) Borrower fails to pay when due any of the following: (i) Taxes, if Lender does not collect a Tax Reserve Fund. (ii) Insurance premiums, if Lender does not collect an Insurance Reserve Fund. (iii) Water and sewer charges that could become a lien on the Mortgaged Property. (iv) Assessments or other charges that could become a lien on the Mortgaged Property, including homeowner association dues. (v) Transfer or recording Taxes required to be paid by Borrower. Loan Agreement - SBL Page 3 FILED: KINGS COUNTY CLERK 05/06/2024 04:54 PM INDEX NO. 512680/2024 NYSCEF DOC. NO. 3 RECEIVED NYSCEF: 05/06/2024 (g) Any of the following Transfers occurs: (i) Any Person that is not an Affiliate of Borrower or a Borrower Principal creates a mechanic's lien or other involuntary lien or encumbrance against the Mortgaged Property and Borrower has not complied with the provisions of Article VII. (ii) A Transfer by devise, descent or operation of law occurs upon the death of a natural person and such Transfer does not meet Lender's requirements in Section 7.03(a) or (b), as applicable. (iii) Borrower grants an easement that does not meet Lender's requirements. (iv) Borrower executes a Lease that does not meet Lender's requirements. (h) Borrower fails to apply all Insurance proceeds and Condemnation proceeds as required by this Loan Agreement. This Section 3.03(h) will not apply if Borrower's failure is a result of a valid order issued in, or an automatic stay applicable because of, a bankruptcy, receivership, or a similar judicial proceeding. (i) Borrower fails to pay to Lender upon demand after an Event of Default all Rents to which Lender is entitled under Section 3 of the Security Instrument and the amount of all security deposits collected by Borrower from tenants then in residence. This Section 3.03(i) will not apply if Borrower's failure is a result of a valid order issued in, or an automatic stay applicable because of, a bankruptcy, receivership, or a similar judicial proceeding. If an Event of Default has occurred and is continuing, Borrower fails to deliver all Books and Records, contracts, Leases and other instruments relating to the Mortgaged Property or its operation in accordance with the provisions of Section 6.07. If the Mortgaged Property is subject to any oil or gas lease, pipeline agreement, or other instrument related to the production or sale of oil or natural gas that under applicable state law has been given priority over the Security Instrument. If the Mortgaged Property is non-conforming under the applicable zoning laws, ordinances and/or regulations in the Property Jurisdiction ("Zoning Code"), either of the following circumstances occurs following a casualty affecting the Mortgaged Property: (I) The Improvements impacted by the casualty cannot be rebuilt or restored to their pre- casualty condition under the terms of the Zoning Code and the Property Insurance proceeds available to Lender under the terms of this Loan Agreement are insufficient to repay the Indebtedness in full. (ii) Borrower fails to commence and diligently pursue completion of any Restoration within the time frame required by both the Zoning Code and any permits issued pursuant to the Zoning Code which are necessary to allow the Restoration of the Mortgaged Property to its pre-casualty condition. (m) If primary ingress to and egress from the Mortgaged Property is through an easement or private road, any party takes, or threatens to take, any action to deny ingress to or egress from the Mortgaged Property from or to a publicly dedicated and maintained right-of-way. (n) If the Mortgaged Property is subject to a Regulatory Agreement restricting rents or occupancy, a default or breach by Borrower (however such terms may be defined in the Regulatory Agreement) extends beyond any applicable notice and/or cure periods under the Regulatory Agreement. (o) If the operation of the Mortgaged Property requires that Borrower and its tenants have access to a management office, recreational facility, and/or other amenity that is not located on the Mortgaged Loan Agreement — SBL Page 4 FILED: KINGS COUNTY CLERK 05/06/2024 04:54 PM INDEX NO. 512680/2024 NYSCEF DOC. NO. 3 RECEIVED NYSCEF: 05/06/2024 Property, and Borrower has entered into an agreement (whether recorded or unrecorded) to ensure such access, any party takes, or threatens to take, any action to deny Borrower and its tenants such access. If the Mortgaged Property includes aluminum wiring, galvanized steel/polybutylene piping, or Stab- Lok electric circuit breakers or panels, an Aluminum Wiring Event, a Galvanized Steel/PB Piping Event, or a Stab-Lok Event occurs. If a Process Agent is required by the Guaranty, either of the following circumstances occurs: (i) The Process Agent is no longer able to act as Guarantor's agent for service of process for any reason and Borrower fails to cause Guarantor to appoint a substitute Process Agent in accordance with the terms of the Guaranty. (ii) Borrower fails to cause Guarantor to maintain the Minimum U.S. Deposit amount set forth in the Guaranty in a U.S. federally insured banking institution in accordance with the terms of the Guaranty or fails to provide Lender with copies of the required documentation evidencing the Minimum U.S. Deposits in accordance with the terms of the Guaranty. 3.04 Performance and Cost Recourse. Borrower will be personally liable to Lender for all the following: (a) The performance of, and the cost to Lender of any nonperformance of, all of Borrower's obligations under each of the following: (i) Section 6.14(a) (relating to completion of Priority Repairs (including PR-90 Repairs)). (ii) Sections 6.12 and 9.02(b) (relating to environmental matters). (iii) Sections 6.09(h), 6.09(i) and 6.09(j) if the Mortgaged Property includes aluminum wiring, galvanized steel/polybutylene piping, or Stab-Lok electric circuit breakers or panels. (b) The cost to Lender of each of the following: (I) Any audit required under Section 6.07. (ii) Any expenses incurred in connection with the collection of any amount for which Borrower is personally liable under this Article III, including Attorneys' Fees and Costs and the costs of conducting any independent audit of Borrower's Books and Records to determine the amount for which Borrower has personal liability. Any expenses incurred in connection with Borrower's termination of any agreement for services at the Mortgaged Property, including cable, internet, garbage collection and recycling, landscaping, security, and cleaning. 3.05 Full Recourse. Borrower will become personally liable to Lender for the repayment of all the Indebtedness upon the occurrence of any of the following: (a) Borrower fails to comply with Section 6.13. (b) A Transfer that is an Event of Default under Section 7.02 occurs, other than a Transfer set forth in Section 3.03(g) (for which Borrower will have personal liability for Lender's loss or damage); provided, however, that Borrower will not have any personal liability for a Transfer consisting solely of the involuntary removal or involuntary withdrawal of a general partner in a limited partnership or a manager in a limited liability company. (c) There was fraud or intentional written material misrepresentation by Borrower, any Affiliate, or any employee of Borrower in connection with the application for or creation of the Indebtedness or there Loan Agreement — SBL Page 5 FILED: KINGS COUNTY CLERK 05/06/2024 04:54 PM INDEX NO. 512680/2024 NYSCEF DOC. NO. 3 RECEIVED NYSCEF: 05/06/2024 is fraud in connection with any request by Borrower or Guarantor for any action or consent by Lender. (d) A Bankruptcy Event. 3.06 Exercise of Lender's Rights and Application of Payment. If Borrower has personal liability under this Article III, then Lender may, to the fullest extent permitted by applicable law, exercise its rights against Borrower personally without regard to whether Lender has exercised any rights against the Mortgaged Property or any other security, or pursued any rights against any Guarantor, or pursued any other rights available to Lender under the Note, this Loan Agreement, any other Loan Document or applicable law. To the fullest extent permitted by applicable law, in any action to enforce Borrower's personal liability under this Article III, Borrower waives any right to set off the value of the Mortgaged Property against such personal liability. All payments made by Borrower with respect to the Indebtedness and all amounts received by Lender from the enforcement of its rights under the Loan Documents will be applied first to the portion of the Indebtedness for which Borrower has no personal liability. 3.07 Reserved. [Ground Lease] ARTICLE IV RESERVE FUNDS AND REQUIREMENTS. 4.01 Reserves Generally. (a) Establishment of Reserve Funds. Each Reserve Fund marked in Article I as required or collected will be established on the Closing Date and funded in accordance with this Article IV. Upon Notice to Borrower following (i) an Event of Default, (ii) a Transfer requiring Lender's approval under Article VII, or (iii) the placement of a Subordinate Loan, Lender may require Borrower to establish and make deposits into any Reserve Fund marked in Article I as deferred. (b) Investment of Reserve Funds. All Reserve Funds will be deposited in an Eligible Account at an Eligible Institution or invested in "permitted investments" as then defined and required by the Rating Agencies. Lender will not be obligated to open additional accounts or deposit Reserve Funds in additional institutions when the amount of any Reserve Fund exceeds the maximum amount of the federal deposit insurance or guaranty. Borrower acknowledges and agrees that it will not have the right to direct Lender as to any specific investment of monies in any Reserve Fund. Lender will not be responsible for any losses resulting from investment of monies in any Reserve Fund or for obtaining any specific level or percentage of earnings on such investment. Unless applicable law requires, Lender will not be required to pay Borrower any interest, earnings or profits on any Reserve Funds. Any amounts deposited with Lender under this Article IV will not be trust funds, nor will they operate to reduce the Indebtedness, unless applied by Lender for that purpose pursuant to the terms of this Loan Agreement. (c) Use of Reserve Funds; No Disbursements during Event of Default. Each Reserve Fund will, except as otherwise provided in this Loan Agreement, be used for the sole purpose of paying, or reimbursing Borrower for payment of, the item(s) for which the applicable Reserve Fund is established. Except as specified in this Loan Agreement, monies in one Reserve Fund will not be used to pay, or reimburse Borrower for, matters for which another Reserve Fund has been established. Lender will not be obligated to make disbursements from any Reserve Fund if any Event of Default has occurred and is continuing. If an Event of Default has occurred and is continuing, then Lender may use any Reserve Fund for the payment or performance of any obligation of Borrower to Lender or otherwise with respect to the Mortgaged Property. (d) Termination of Reserve Funds. Upon payment in full of the Indebtedness, Lender will pay to Borrower all funds remaining in any Reserve Funds. 4.02 Tax and Insurance Reserves. Loan Agreement — SBL Page 6 FILED: KINGS COUNTY CLERK 05/06/2024 04:54 PM INDEX NO. 512680/2024 NYSCEF DOC. NO. 3 RECEIVED NYSCEF: 05/06/2024 (a) Deposits. When required by Lender, Borrower will deposit with Lender on the Closing Date and on each Payment Date under the Note an additional amount sufficient to accumulate with Lender the entire sum required to pay, when due, Taxes ("Tax Reserve Fund") and Insurance premiums ("Insurance Reserve Fund"). The amount of each required deposit into the Tax Reserve Fund and Insurance Reserve Fund must be sufficient to enable Lender to pay the Taxes or Insurance premiums, as applicable, before the last date upon which the payment may be made without any penalty or interest charge being added. (b) Disbursements. (I) Lender will pay Taxes from the Tax Reserve Fund held by Lender upon Lender's receipt of a bill or invoice for Taxes. Lender will have no obligation to pay Taxes to the extent the amount payable exceeds the Tax Reserve Fund then held by Lender. Lender may pay Taxes according to any bill, statement or estimate from the appropriate public office without inquiring into the accuracy of the bill, statement or estimate. (ii) Lender will pay Insurance premiums from the Insurance Reserve Fund held by Lender upon Lender's receipt of a bill or invoice for Insurance premiums. Lender will have no obligation to pay Insurance premiums to the extent the amount payable exceeds the Insurance Reserve Fund then held by Lender. Lender may pay Insurance premiums according to any bill, statement or estimate from an insurance company without inquiring into the accuracy of the bill, statement or estimate. (c) Adjustments to Reserve Fund Deposits. If at any time the amount of either the Tax Reserve Fund or the Insurance Reserve Fund held by Lender for payment of Taxes or Insurance premiums exceeds the amount reasonably deemed necessary by Lender, then the excess will be credited against future payments into the applicable Reserve Fund. If at any time the amount of either the Tax Reserve Fund or the Insurance Reserve Fund is less than the amount reasonably estimated by Lender to be necessary, then Borrower will pay to Lender the amount of the deficiency within 20 days after Notice from Lender. (d) Delivery of Invoices; Proof of Payment by Borrower. Borrower will promptly deliver to Lender a copy of all notices of, and invoices for, Taxes and Insurance premiums. If Lender has not established a Reserve Fund for either Taxes or Insurance premiums, then on or before the date the Taxes or Insurance premiums are due, Borrower will provide Lender with proof of payment of the Taxes or Insurance premiums. 4.03 Special Purpose Reserve Fund. (a) Deposit. If a Special Purpose Reserve is required in Article I, then Borrower will pay to Lender on the Closing Date the amount set forth in Article I ("Special Purpose Reserve Fund"). (b) Disbursements. Lender will disburse the funds in the Special Purpose Reserve Fund to Borrower when the Release Conditions specified in Exhibit B have been satisfied in Lender's discretion. (c) Application of Reserve Funds after the Termination Date. If Borrower has not satisfied the Release Conditions on or before the Termination Date specified in Article I, then Lender may apply some or all the Special Purpose Reserve Fund to the Indebtedness, and Borrower will pay a prepayment premium computed using the formula set forth in the Note with respect to any such prepayment of principal under the Note. Borrower may not pay the prepayment premium from funds drawn from the Special Purpose Reserve Fund. 4.04 Capital Replacement and Repair Reserve Fund. (a) Monthly Deposits. If the Capital Replacement and Repair Reserve Monthly Deposit is shown as collected in Article I, then on each Payment Date under the Note, Borrower will pay to Lender the Loan Agreement — SBL Page 7 FILED: KINGS COUNTY CLERK 05/06/2024 04:54 PM INDEX NO. 512680/2024 NYSCEF DOC. NO. 3 RECEIVED NYSCEF: 05/06/2024 Capital Replacement and Repair Reserve Monthly Deposit amount shown in Article I ("Capital Replacement and Repair Reserve Fund"). (b) Disbursements from Capital Replacement and Repair Reserve Fund. Lender will disburse funds from the Capital Replacement and Repair Reserve Fund to Borrower for reimbursement of, or to defray the cost of, each of the following, provided the conditions set forth in Sections 4.04(f) and (g) are satisfied: (i) Replacing any of the following: Carpet/vinyl flooring, window treatments, roofs, furnaces/boilers, air conditioners, ovens/ranges, refrigerators, dishwashers, water heaters, garbage disposals, and other items that Lender may approve after the Effective Date, subject to any conditions that Lender may require ("Basic Capital Replacements," and together with any Additional Capital Replacements listed in Exhibit B, "Capital Replacements"). ( i) Completing the Priority Repairs described in the Physical Risk Report, provided a Repair Deposit is required in Article I. (c) Additional Capital Replacements Deposit. If an Additional Capital Replacements Deposit is required in Article I, then on the Closing Date, Borrower will pay the Additional Capital Replacements Deposit to Lender for deposit into the Capital Replacement and Repair Reserve Fund. The Additional Capital Replacements Deposit will be available to reimburse Borrower only for reimbursement of, or to defray, the cost of the Additional Capital Replacements listed in Exhibit B. Borrower may not displace or relocate tenants to undertake or complete the Additional Capital Replacements unless such displacement or relocation has been approved by Lender. Borrower must complete the Additional Capital Replacements on or before the Additional Capital Replacements Completion Date specified in Article I, as may be extended by Lender in its discretion. Any funds from the Additional Capital Replacements Deposit remaining in the Capital Replacement and Repair Reserve Fund after the Additional Capital Replacements are completed in a manner satisfactory to Lender will be returned to Borrower. (d) Repair Deposit. If a Repair Deposit is required in Article I, then on the Closing Date, Borrower will pay the Repair Deposit to Lender for deposit into the Capital Replacement and Repair Reserve Fund. The Repair Deposit will be available to reimburse Borrower only for reimbursement of, or to defray, the cost of Priority Repairs (including PR-90 Repairs). Any funds from the Repair Deposit remaining in the Capital Replacement and Repair Reserve Fund after all the Priority Repairs are completed in a manner satisfactory to Lender will be returned to Borrower. (e) Insufficient Amount in Capital Replacement and Repair Reserve Fund. If Borrower requests disbursement from the Capital Replacement and Repair Reserve Fund for a Capital Replacement or a Priority Repair (including PR-90 Repairs) in an amount that exceeds the amount on deposit in the Capital Replacement and Repair Reserve Fund, then Lender will disburse to Borrower only the amount on deposit in the Capital Replacement and Repair Reserve Fund. Borrower will pay all additional amounts required in connection with any such Capital Replacement or Priority Repair from Borrower's own funds. Limits on Disbursements. Lender will disburse funds from the Capital Replacement and Repair Reserve Fund no more frequently than once per calendar month, and no disbursement will be made in an amount less than $1,000. Performance of Capital Replacements and Priority Repairs (including PR-90 Repairs); Requests for Disbursement. (i) If Borrower determines that a Capital Replacement is necessary or desirable, then Borrower will perform such Capital Replacement and request from Lender, in writing, reimbursement for the cost of such Capital Replacement from the Capital Replacement Loan Agreement — SBL Page 8 FILED: KINGS COUNTY CLERK 05/06/2024 04:54 PM INDEX NO. 512680/2024 NYSCEF DOC. NO. 3 RECEIVED NYSCEF: 05/06/2024 and Repair Reserve Fund using the Disbursement Request attached to this Loan Agreement as Exhibit A. The Disbursement Request must be accompanied by paid invoices or bills that show Borrower has paid for the applicable Capital Replacement. (ii) Borrower must complete all Priority Repairs (including PR-90 Repairs) pursuant to Section 6.14. After Borrower performs one or more Priority Repairs, Borrower may request from Lender reimbursement for the cost of such Priority Repair(s) from the Capital Replacement and Repair Reserve Fund using the Disbursement Request attached to this Loan Agreement as Exhibit A. The Disbursement Request must be accompanied by paid invoices or bills that show Borrower has paid for the applicable Priority Repair. (iii) If requested by Lender, Borrower must provide any other information, documents, lien waivers, certifications, or professional engineering reports regarding the work and the cost of such Capital Replacements or Priority Repairs. Lender, at its option, may retain a professional inspection engineer or other qualified third party to inspect any Capital Replacement or Priority Repair. If Lender retains such a third party, then it will charge Borrower an amount sufficient to pay all reasonable costs and expenses charged by such third party inspector. Lender may, at its election, either deduct such cost from the Capital Replacement and Repair Reserve Fund or send Borrower a Notice of the amount of such charge, which Borrower must pay within 20 days following its receipt of such Notice. (iv) If Lender reasonably determines at any time that a Capital Replacement or a Repair is necessary for the proper maintenance of the Mortgaged Property, then Lender will give Notice to Borrower requesting that Borrower obtain and submit to Lender bids for all labor and materials required in connection with such Capital Replacement or Repair. In response, Borrower will submit such bids and a time schedule for completing each Capital Replacement or Repair to Lender within 30 days after Borrower's receipt of Lender's Notice. Borrower will perform such Capital Replacement or Repair in conformity with the requirements of this Section 4.04 and then may request reimbursement for such Capital Replacement or Repair in accordance with this Section 4.04. (h) Adjustments to Reserve Fund Deposits. If the initial term of the Loan is greater than 120 months, then following each of the 120th and 180th Payment Dates under the Note, Lender may adjust the amount of the Capital Replacement and Repair Reserve Monthly Deposit based on Lender's most recent assessment of the physical condition of the Mortgaged Property and will provide Borrower Notice of this revised Capital Replacement and Repair Reserve Monthly Deposit amount. Borrower will begin paying this revised Capital Replacement and Repair Reserve Monthly Deposit on the next Payment Date following its receipt of the Notice from Lender. 4.05 Reserved 4.06 Reserved [Ground Lease] ARTICLE V REPRESENTATIONS AND WARRANTIES. Borrower represents and warrants to Lender as follows as of the Effective Date: 5.01 Review of Documents. Borrower has reviewed: (a) the Physical Risk Report, (b) the Commitment Letter (c) the Note, (d) this Loan Agreement, (e) the Security Instrument, and (f) all other Loan Documents. 5.02 Condition of Mortgaged Property. Except as Borrower may have disclosed to Lender in writing in connection with the issuance of the Commitment Letter (which written disclosure may be in certain written reports accepted by Lender in connection with the funding of the Indebtedness and dated prior to the Effective Date), the Mortgaged Property has not been damaged by fire, water, wind or other cause of loss, or, if so damaged, any previous damage to the Mortgaged Property has been fully restored. Loan Agreement — SBL Page 9 FILED: KINGS COUNTY CLERK 05/06/2024 04:54 PM INDEX NO. 512680/2024 NYSCEF DOC. NO. 3 RECEIVED NYSCEF: 05/06/2024 5.03 No Condemnation. No part of the Mortgaged Property has been taken in Condemnation or other similar proceeding, and, to the best of Borrower's knowledge after due inquiry and investigation, no such proceeding is pending or threatened for the partial or total Condemnation or other taking of the Mortgaged Property. 5.04 Actions; Suits; Proceedings. There are no judicial, administrative, mediation or arbitration actions, suits or proceedings pending or, to the best of Borrower's knowledge, threatened in writing against or affecting Borrower, any Borrower Principal, or the Mortgaged Property which, if adversely determined, would have a Material Adverse Effect. 5.05 Environmental. Except as previously disclosed by Borrower to Lender in writing (which written disclosure may be in certain environmental assessments and other written reports accepted by Lender in connection with the funding of the Indebtedness and dated prior to the Effective Date), each of the following is true: (a) Borrower has not at any time engaged in, caused, or permitted any Prohibited Activities or Conditions on the Mortgaged Property. (b) To the best of Borrower's knowledge after due inquiry and investigation, no Prohibited Activities or Conditions exist or have existed on the Mortgaged Property. (c) The Mortgaged Property does not now contain any underground storage tanks, and, to the best of Borrower's knowledge after due inquiry and investigation, the Mortgaged Property has not contained any underground storage tanks in the past. If there is an underground storage tank located on the Mortgaged Property that has been previously disclosed by Borrower to Lender in writing, that tank complies with all requirements of Hazardous Materials Laws. (d) To the best of Borrower's knowledge after due inquiry and investigation, Borrower has complied with all Hazardous Materials Laws, including all requirements for notification regarding releases of Hazardous Materials. All Environmental Permits required for the operation of the Mortgaged Property in accordance with Hazardous Materials Laws now in effect have been obtained and all such Environmental Permits are in full force and effect. (e) To the best of Borrower's knowledge after due inquiry and investigation, no event has occurred with respect to the Mortgaged Property that constitutes, or with the passage of time or the giving of notice, or both, would constitute, noncompliance with the terms of any Environmental Permit. (f) There are no actions, suits, claims, or proceedings pending or, to the best of Borrower's knowledge after due inquiry and investigation, threatened in writing, that involve the Mortgaged Property and allege, arise out of, or relate to any Prohibited Activity or Condition. (g) Borrower has received no actual or constructive notice of any written complaint, order, notice of violation or other communication from any Governmental Authority with regard to air emissions, water discharges, noise emissions or Hazardous Materials, or any other environmental, health or safety matters affecting the Mortgaged Property or any property that is adjacent to the Mortgaged Property. 5.06 No Labor or Materialmen's Claims. Borrower represents and warrants that all parties furnishing labor and materials for which a Lien or claim of Lien may be filed against the Mortgaged Property have been paid in full and there are no mechanics', laborers' or materialmen's Liens or claims outstanding for work, labor or materials affecting the Mortgaged Property, whether prior to, equal with or subordinate to the Lien of the Security Instrument, except such Liens or claims that Borrower has disclosed to both Lender and the title company and which are insured against by the policy of title insurance to be issued in connection with the Loan. 5.07 Compliance with Applicable Laws and Regulations. To the best of Borrower's knowledge after due inquiry and investigation, each of the following is true: Loan Agreement — SBL Page 10 FILED: KINGS COUNTY CLERK 05/06/2024 04:54 PM INDEX NO. 512680/2024 NYSCEF DOC. NO. 3 RECEIVED NYSCEF: 05/06/2024 (a) All Improvements and the use of the Mortgaged Property comply with all applicable statutes, rules, and regulations, including all applicable statutes, rules, and regulations pertaining to requirements for equal opportunity, anti-discrimination, fair housing, environmental protection, zoning, and land use ("legal non-conforming" status with respect to uses or structures will be considered to comply with zoning and land use requirements for the purposes of this representation). (b) The Improvements comply with applicable health, fire, and building codes. (c) There is no evidence of any illegal activities relating to controlled substances on the Mortgaged Property. 5.08 Access; Utilities; Tax Parcels. The Mortgaged Property: (a) has ingress and egress via a publicly dedicated right of way or via an irrevocable easement permitting ingress and egress, (b) is served by public utilities and services generally available in the surrounding community or otherwise appropriate for the current use of the Mortgaged Property, and (c) constitutes one or more separate tax parcels. 5.09 Licenses and Permits. Borrower and any operator of the Mortgaged Property, if applicable, and to the best of Borrower's knowledge, any commercial tenant of the Mortgaged Property, are in possession of all material licenses, permits, and authorizations required for use of the Mortgaged Property, which are valid and in full force and effect as of the Effective Date. 5.10 No Other Interests. To the best of Borrower's knowledge after due inquiry and investigation, no Person has (a) any possessory interest in the Mortgaged Property or right to occupy the Mortgaged Property except under the provisions of existing Leases by and between tenants and Borrower, or (b) an option to purchase the Mortgaged Property or an interest in the Mortgaged Property, except as has been disclosed to and approved in writing by Lender. 5.11 Term of Leases. All Leases for residential units at the Mortgaged Property satisfy all the following conditions: (a) They are on forms acceptable to Lender. (b) They do not include options to purchase or have purchase options associated with them. (c) They are for initial terms of at least one month and not more than 2 years. 5.12 No Prior Assignment; Prepayment of Rents. Borrower has (a) not executed any prior assignment of Rents (other than an assignment of Rents securing any prior indebtedness that is being assigned to Lender or that is being paid off and discharged with the proceeds of the Loan), and (b) not performe