LOAN AGREEMENT Dated as of August 8, 2007 between BFP ONE LIBERTY PLAZA CO. LLC, as Borrower, and GOLDMAN SACHS COMMERCIAL MORTGAGE CAPITAL, L.P., as Lender

Exhibit 10.36

LOAN AGREEMENT

Dated as of August 8, 2007

between

BFP ONE LIBERTY PLAZA CO. LLC,

as Borrower,

and

GOLDMAN SACHS COMMERCIAL MORTGAGE CAPITAL, L.P.,

as Lender

TABLE OF CONTENTS

 

 

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LOAN AGREEMENT

THIS LOAN AGREEMENT, dated as of August 8, 2007, is between GOLDMAN SACHS COMMERCIAL MORTGAGE CAPITAL, L.P., a Delaware limited partnership, as lender, as lender (together with its successors and assigns, including any lawful holder of any portion of the Indebtedness, as hereinafter defined, “Lender”), and BFP ONE LIBERTY PLAZA CO. LLC, a Delaware limited liability company, as borrower (together with its permitted successors and assigns, “ Borrower ”).

RECITALS

WHEREAS, Borrower desires to obtain from Lender the Loan (as hereinafter defined) in connection with the financing of the property known as One Liberty Plaza; and

WHEREAS, Lender is willing to make the Loan on the terms and conditions hereof if Borrower joins in the execution and delivery of this Agreement, issues the Note and executes and delivers the other Loan Documents which shall establish the terms and conditions of the Loan;

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

DEFINITIONS

(a) When used herein, the following capitalized terms shall have the following meanings:

“ Account Collateral ” means, collectively, the Collateral Accounts and all sums at any time held, deposited or invested therein, together with any interest or other earnings thereon, and all proceeds thereof (including proceeds of sales and other dispositions), whether accounts, general intangibles, chattel paper, deposit accounts, instruments, documents or securities.

“ Affiliate ” of any specified Person means any other Person controlling, controlled by or under common control with such specified Person. For the purposes of this definition, “control” when used with respect to any specified Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities or other beneficial interests (determined in a manner analogous to the method for determining beneficial ownership under Rule 13d-3 under the Securities Exchange Act of 1934, as amended), by contract or otherwise; and the terms “controlling” and “controlled” have meanings correlative to the foregoing.

“ Agreement ” means this Loan Agreement, as the same may from time to time hereafter be modified or replaced.

“ Alteration ” means any demolition, alteration, installation, improvement or expansion of or to the Property or any portion thereof, other than Tenant Improvements required under Leases.

“ Annual Budget ” means a capital and operating expenditure budget for the Property prepared by Borrower, which shall include amounts sufficient to operate and maintain the Property at a standard at least equal to that maintained on the date hereof.

“ Appraisal ” means an as-is appraisal of the Property prepared by a member of the American Institute of Real Estate Appraisers selected by Lender, which appraisal shall meet the minimum appraisal standards for national banks promulgated by the Comptroller of the Currency pursuant to Title XI of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989, as amended (FIRREA) and shall comply with the Uniform Standards of Professional Appraisal Practice (USPAP).

“ Approved Annual Budget ” has the meaning set forth in Section 5.17 .

“ Approved Management Agreement ” means that certain Management and Leasing Agreement, dated as of January 31, 2001, between Borrower and Brookfield Financial Properties, L.P., as such agreement may be modified or replaced (subject to Lender’s prior written consent in the case of any modification or replacement that would have the effect of increasing the fees payable thereunder or otherwise have a material adverse effect on Lender or Borrower), and any other management agreement with respect to which Lender receives Rating Confirmation and which provides that it may be terminated by Borrower without fee or penalty on not less than 30 days’ prior written notice.

“ Approved Property Manager ” means (i) Brookfield Financial Properties, L.P., (ii) any other management company Controlled by BPC, or (iii) any other reputable management company having at least five years’ experience in the management of commercial office properties in New York City that is reasonably approved by Lender and with respect to which Lender receives Rating Confirmation, in each case unless and until Lender requests the termination of such management company during the continuance of an Event of Default pursuant to Section 5.11(d) .

“ Assignment ” has the meaning set forth in Section 9.7(b) .

“ Assignment of Contracts ” means the collateral assignment of contracts, licenses, permits, agreements, warranties and approvals executed by Borrower on the date hereof, as the same may from time to time be modified or replaced in accordance herewith.

“ Assignment of Rents and Leases ” means the assignment of rents and leases executed by Borrower on the date hereof, as the same may from time to time be modified or replaced in accordance herewith.

“ Assumption ” has the meaning set forth in Section 2.2 .

“ Bankruptcy Code ” has the meaning set forth in Section 7.1(d) .

 

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“ Borrower ” has the meaning provided in the first paragraph of this agreement.

“ BPC ” means Brookfield Properties Corporation, an Ontario corporation.

“ Business Day ” means any day other than (i) a Saturday and a Sunday and (ii) a day on which federally insured depository institutions in the State of New York or the state in which the offices of Lender, its trustee, its Servicer or its Servicer’s collection account are located are authorized or obligated by law, governmental decree or executive order to be closed.

“ Capital Expenditure ” means hard and soft costs incurred by Borrower with respect to replacements and capital repairs made to the Property (including repairs to, and replacements of, structural components, roofs, building systems, parking garages and parking lots), in each case to the extent capitalized in accordance with GAAP.

“ Cash Management Account ” has the meaning set forth in Section 3.1(a) .

“ Cash Management Agreement ” means a cash management agreement in substantially the form of Exhibit B , as the same may from time to time be modified or replaced in accordance herewith.

“ Cash Management Bank ” means any depository institution selected by Lender from time to time in which Eligible Accounts may be maintained. Any selection by Lender of a Cash Management Bank that is not a Pre-Approved Cash Management Bank shall be subject to Borrower’s prior approval, not to be unreasonably withheld, conditioned or delayed.

“ Casualty ” means a fire, explosion, flood, collapse or other casualty affecting all or any portion of the Property.

“ Certificates ” means, collectively, any senior and/or subordinate notes, debentures or pass-through certificates, or other evidence of indebtedness, or debt or equity securities, or any combination of the foregoing, representing a direct or beneficial interest, in whole or in part, in the Loan.

“ Change of Control ” means the failure of Borrower to be Controlled by one or more Qualified Equityholders (individually or collectively).

“ Cleary Reserve ” has the meaning set forth in Section 3.9(a) .

“ Closing Date ” means the date hereof.

“ Code ” means the Internal Revenue Code of 1986, as amended, and as it may be further amended from time to time, any successor statutes thereto, and applicable U.S. Department of Treasury regulations issued pursuant thereto in temporary or final form.

“ Collateral ” means all assets owned from time to time by Borrower including the Property, the Revenues and all other tangible and intangible property (including any Defeasance Collateral) in respect of which Lender is granted a Lien under the Loan Documents, and all proceeds thereof.

 

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“ Collateral Accounts ” means, collectively, the Cash Management Account, the Tax and Insurance Escrow Account, the TI/LC Reserve Account, the Loss Proceeds Account, the Replacement Reserve Account, the Unfunded Obligations Account, the Cleary Reserve, and any Defeasance Collateral Account (as defined in the Defeasance Pledge Agreement).

“ Commercially Reasonable ” means, with respect to the terms and conditions of any proposed Lease, commercially reasonable when compared with terms and conditions of Leases in similarly situated properties in similar contexts at the time in question, taking into account, inter alia , the size, creditworthiness and bargaining power of a prospective Tenant.

“ Condemnation ” means a taking or voluntary conveyance of all or part of the Property or any interest therein or right accruing thereto or use thereof, as the result of, or in settlement of, any condemnation or other eminent domain proceeding by any Governmental Authority.

“ Contingent Obligation ” means any obligation of Borrower directly or indirectly guaranteeing any Debt of any other Person in any manner and any contingent obligation to purchase, to provide funds for payment, to supply funds to invest in any other Person or otherwise to assure a creditor against loss.

“ Control ” of any entity means the ownership, directly or indirectly, of more than 51% of the equity interests in, and rights to distribution from, such entity and the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such entity, whether through the ability to exercise voting power, by contract or otherwise (“ Controlled ” has the meaning correlative thereto).

“ Cooperation Agreement ” means that certain Mortgage Loan Cooperation Agreement, dated as of the date hereof, among Borrower, Lender and Sponsor, as the same may from time to time be modified or replaced in accordance herewith.

“ Damages ” to a party means any and all liabilities, obligations, losses, damages, penalties, assessments, actions, judgments, suits, claims, costs, expenses (including reasonable attorneys’ fees whether or not suit is brought), settlement costs and disbursements imposed on, incurred by or asserted against such party.

“ Debt ” means, with respect to any Person, without duplication:

(i) all indebtedness of such Person to any other party, including indebtedness for borrowed money or for the deferred purchase price of property or services;

(ii) all letters of credit issued for the account of such Person and all unreimbursed amounts drawn thereunder;

(iii) all indebtedness secured by a Lien on any property owned by such Person (whether or not such indebtedness has been assumed) except obligations for impositions which are not yet due and payable;

(iv) all Contingent Obligations of such Person;

 

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(v) all payment obligations of such Person under any interest rate protection agreement (including any interest rate swaps, floors, collars or similar agreements) and similar agreements; and

(vi) all contractual indemnity obligations of such Person.

“ Default ” means the occurrence and uncured continuance of any event which, but for the giving of notice or the passage of time, or both, would be an Event of Default.

“ Default Rate ” means, with respect to any Note, the greater of (x) 3% per annum in excess of the interest rate otherwise applicable to such Note hereunder and (y) 1% per annum in excess of the Prime Rate from time to time.

“ Defeasance Borrower ” has the meaning set forth in Section 2.1(b) .

“ Defeasance Collateral ” means (x) non-callable AAA-rated United States securities backed by the full faith and credit of the U.S. government, or (y) non-callable AAA-rated “Government Securities” as defined in Section 2(a)(16) of the Investment Company Act of 1940, as amended.

“ Defeasance Pledge Agreement ” has the meaning set forth in Section 2.1(a)(iii) .

“ Defease ” means to deliver Defeasance Collateral as substitute Collateral for the Loan in accordance with Section 2.1 ; and the terms “ Defeased ” and “ Defeasance ” have meanings correlative to the foregoing.

“ Easement Areas ” has the meaning set forth in Section 4.27 .

“ Eligible Account ” means (i) a segregated account maintained with a federal or state-chartered depository institution or trust company which complies with the definition of Eligible Institution, or (ii) a segregated trust account or accounts maintained with the corporate trust department of a federal depository institution or state-chartered depository institution which has an investment grade rating and is subject to regulations regarding fiduciary funds on deposit under, or similar to, Title 12 of the Code of Federal Regulations Section 9.10(b) which, in either case, has corporate trust powers, acting in its fiduciary capacity.

“ Eligible Institution ” means an institution (i) whose commercial paper, short-term debt obligations or other short-term deposits are rated at least A–1, Prime-1 or F-1, as applicable, by each of the Rating Agencies and whose long-term senior unsecured debt obligations are rated at least A- or A2, as applicable, by each of the Rating Agencies, and whose deposits are insured by the FDIC or (ii) with respect to which Lender shall have received Rating Confirmation.

“ Embargoed Person ” has the meaning set forth in Section 4.39 .

“ Engineering Report ” means a structural and seismic engineering report or reports with respect to the Property prepared by such independent engineer as shall be approved by Lender and delivered to Lender in connection with the Loan, and any amendments or supplements thereto delivered to Lender.

 

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“ Environmental Auditor ” means EBI Consulting or any other independent environmental auditor approved by Lender.

“ Environmental Claim ” means any written notice, claim, proceeding, investigation or demand by any Person or Governmental Authority alleging or asserting liability with respect to Borrower or the Property arising out of, based on or resulting from (i) the alleged presence, Use or Release of any Hazardous Substance, (ii) any alleged violation of any Environmental Law, or (iii) any alleged injury or threat of injury to property, health or safety or to the environment caused by Hazardous Substances.

“ Environmental Indemnity ” the environmental indemnity agreement executed by Borrower on the date hereof, as the same may from time to time be modified or replaced in accordance herewith.

“ Environmental Laws ” means any and all present and future federal, state or local laws, statutes, ordinances or regulations, any judicial or administrative orders, decrees or judgments thereunder, and any permits, approvals, licenses, registrations, filings and authorizations, in each case as now or hereafter in effect, relating to the pollution, protection or cleanup of the environment, the impact of Hazardous Substances on property, health or safety, or the Use or Release of Hazardous Substances.

“ Environmental Reports ” means a “Phase I Environmental Site Assessment” as referred to in the ASTM Standards on Environmental Site Assessments for Commercial Real Estate, E 1527-05 (and, if necessary, a “Phase II Environmental Site Assessment”), prepared by an Environmental Auditor and delivered to Lender and any amendments or supplements thereto delivered to Lender, and shall also include any other environmental reports delivered to Lender pursuant to this Agreement and the Environmental Indemnity.

“ ERISA ” means the Employee Retirement Income Security Act of 1974, as amended from time to time, and the regulations promulgated thereunder.

“ ERISA Affiliate ,” at any time, means each trade or business (whether or not incorporated) that would, at the time, be treated together with Borrower as a single employer under Title IV or Section 302 of ERISA or Section 412 of the Code.

“ Event of Default ” has the meaning set forth in Section 7.1 .

“ Exception Report ” means the report prepared by Borrower and attached hereto as Schedule B , setting forth any exceptions to the representations and warranties set forth in Article IV .

“ Fiscal Quarter ” means the three-month period ending on March 31, June 30, September 30 and December 31 of each year, or such other fiscal quarter of Borrower as Borrower may select from time to time with the prior consent of Lender, such consent not to be unreasonably withheld.

 

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“ Fiscal Year ” means the 12-month period ending on December 31 of each year, or such other fiscal year of Borrower as Borrower may select from time to time with the prior consent of Lender, not to be unreasonably withheld.

“ Fitch ” means Fitch, Inc. and its successors.

“ Form W-8BEN ” means Form W-8BEN (Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding) of the Department of Treasury of the United States of America, and any successor form.

“ Form W-8ECI ” means Form 8ECI (Certificate of Foreign Person’s Claim for Exemption from Withholding of Tax on Income Effectively Connected with the Conduct of a Trade or Business in the United States) of the Department of the Treasury of the United States of America, and any successor form.

“ GAAP ” means generally accepted accounting principles in the United States of America, consistently applied.

“ Governmental Authority ” means any federal, state, county or municipal government, any bureau, department, agency or political subdivision thereof and any Person with jurisdiction exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government (including any court).

“ Guaranty Eligibility Requirement ” means a requirement that is satisfied for so long as Sponsor has total assets (in name or under management), based on fair market value, in excess of $3 billion and (except with respect to a pension advisory firm or similar fiduciary) capital/statutory surplus or shareholder’s equity in excess of $1 billion.

“ Hazardous Substance ” means petroleum and petroleum products and compounds containing them, including gasoline, diesel fuel and oil; explosives and flammable materials; radioactive materials; polychlorinated biphenyls and compounds containing them; lead and lead-based paint; asbestos or asbestos-containing materials in any form that is or could become friable; underground or above-ground storage tanks, whether empty or containing any substance; any substance the presence of which on the Property is prohibited by any federal, state or local authority; any substance that requires special handling; and any other material or substance now or in the future defined as a “hazardous substance,” “hazardous material,” “hazardous waste,” “extremely hazardous waste,” “toxic substance,” “toxic pollutant,” “contaminant,” “pollutant” or other words of similar import within the meaning of any Environmental Law, or that may have a negative impact on human health or the environment, other than substances legally and customarily used by office tenants in the ordinary course of business.

“ IDA Lease ” means the Lease, dated as of December 20, 2000, between the New York City Industrial Development Agency, as landlord, and WFP One Liberty Plaza Co. L.P., as tenant, and assigned by WFP One Liberty Plaza Co. L.P. to Borrower, as amended by the First Amendment to Overlease Agreement, dated as of December 1, 2002 between the New York City Industrial Development Agency and Borrower.

 

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“ Indebtedness ” means the Principal Indebtedness, together with interest and all other obligations and liabilities of Borrower under the Loan Documents, including all Transaction Costs and other amounts due or to become due to Lender pursuant hereto, under the Notes or in accordance with any of the other Loan Documents, Yield Maintenance Premiums and all other amounts, sums and expenses reimbursable by Borrower to Lender hereunder or pursuant to the Notes or any of the other Loan Documents.

“ Indemnified Liabilities ” has the meaning set forth in Section 9.19 .

“ Indemnified Parties ” has the meaning set forth in Section 5.18 .

“ Independent Director ” of any limited liability company means an individual who is duly appointed as a member of the board of directors of such limited liability company and who is not, and has never been, and will not while serving as Independent Director, be any of the following:

(i) a member, partner, equityholder, manager, director, officer or employee of Borrower or its members or Affiliates (other than as an independent director or manager of an Affiliate of Borrower that is required by a creditor to be a single purpose bankruptcy remote entity);

(ii) a creditor, supplier or service provider (including provider of professional services) to Borrower or any of its members or Affiliates (other than a company that provides professional independent directors and which also provides other services to Borrower or any of its members or Affiliates in the ordinary course of business);

(iii) a member of the immediate family of any such member, partner, equityholder, manager, director, officer, employee, creditor, supplier or service provider; or

(iv) a Person that controls (whether directly, indirectly or otherwise) any of (i), (ii) or (iii) above.

“ Initial Interest Rate ” means 6.139% per annum.

“ Initial Payment Date ” means the Payment Date in October 2007.

“ Initial Principal Payment Date ” means the Payment Date in August 2011.

“ Insurance Requirements ” means, collectively, (i) all material terms of any insurance policy required pursuant to this Agreement and (ii) all material regulations and then-current standards applicable to or affecting the Property or any portion thereof or any use or condition thereof, which may, at any time, be recommended by the board of fire underwriters, if any, having jurisdiction over the Property, or any other body exercising similar functions.

“ Interest Accrual Period ” means each period from and including the sixth day of a calendar month through and including the fifth day of the immediately succeeding calendar

 

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month; provided , however , that the first Interest Accrual Period shall commence on and include the Closing Date.

“ Interest Rate ” means (i) with respect to the initial Note, the Initial Interest Rate, and (ii) with respect to each Note resulting from the bifurcation of the initial Note into multiple Notes pursuant to Section 1.1(c) , the per annum interest rate of such Note as determined by Lender in accordance with such Section.

“ Lease ” means any lease, sublease or sub-sublease to which Borrower is a party, license, letting, concession, occupancy agreement or other agreement (whether written or oral and whether now or hereafter in effect), existing as of the date hereof or hereafter entered into by Borrower, pursuant to which any Person is granted a possessory interest in, or right to use or occupy all or any portion of any space in the Property, and every modification, amendment or other agreement relating to such lease, sublease, sub-sublease, or other agreement entered into, in accordance with the terms of the Loan Documents, in connection with such lease, sublease, sub-sublease, or other agreement and all agreements related thereto, and every guarantee of the performance and observance of the covenants, conditions and agreements to be performed and observed by the other party thereto.

“ Leasing Commissions ” means leasing commissions required to be paid by Borrower in connection with the leasing of space to Tenants at the Property pursuant to Leases entered into by Borrower in accordance herewith and payable in accordance with third-party/arm’s-length brokerage agreements.

“ Legal Requirements ” means:

(i) all governmental statutes, laws, rules, orders, regulations, ordinances, judgments, decrees and injunctions of Governmental Authorities (including Environmental Laws) affecting either Borrower or the Property or any portion thereof or the construction, ownership, use, alteration or operation thereof, or any portion thereof (whether now or hereafter enacted and in force);

(ii) all permits, licenses and authorizations and regulations relating thereto; and

(iii) all covenants, conditions and restrictions contained in any instruments at any time in force (whether or not involving Governmental Authorities) affecting the Property or any portion thereof which, in the case of this clause (iii), require repairs, modifications or alterations in or to the Property or any portion thereof, or in any material way limit or restrict the existing use and enjoyment thereof.

“ Lender ” has the meaning set forth in the first paragraph of this Agreement and in Section 9.7 .

“ Lien ” means any mortgage, lien (statutory or other), pledge, hypothecation, assignment, preference, priority, security interest, or any other encumbrance or charge on or affecting any Collateral or any portion thereof, or any interest therein (including any conditional sale or other title retention agreement, any sale-leaseback, any financing lease or similar

 

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transaction having substantially the same economic effect as any of the foregoing, the filing of any financing statement or similar instrument under the Uniform Commercial Code or comparable law of any other jurisdiction, domestic or foreign, and mechanics’, materialmen’s and other similar liens and encumbrances, as well as any option to purchase, right of first refusal to purchase, right of first offer to purchase which by its terms lasts for a period in excess of 30 days or other right to acquire the Property).

“ Loan ” has the meaning set forth in Section 1.1(a) .

“ Loan Amount ” means $850 million.

“ Loan Documents ” means this Agreement, the Notes, the Mortgage (and related financing statements), the Assignment of Rents and Leases, the Assignment of Contracts, the Environmental Indemnity, the Subordination of Property Management Agreement, the Cash Management Agreement, the Cooperation Agreement, any Qualified Letter of Credit, any Defeasance Pledge Agreement and all other agreements, instruments, certificates and documents necessary to effectuate the granting to Lender of first-priority Liens on the Collateral or otherwise in satisfaction of the requirements of this Agreement or the other documents listed above, as all of the aforesaid may be modified or replaced from time to time in accordance herewith.

“ Lockout Period ” means the period from the Closing Date to but excluding the first Payment Date following the earlier to occur of (i) the third anniversary of the Closing Date and (ii) the second anniversary of the date on which the entire Loan (excluding any “B” note secured by the Property and any mezzanine loan secured by direct or indirect equity interests in the Borrower, but including any pari passu “A” note) has been securitized pursuant to a Securitization or series of Securitizations.

“ Loss Proceeds ” means amounts, awards or payments payable to Borrower or Lender in respect of all or any portion of the Property in connection with a Casualty or Condemnation thereof (after the deduction therefrom and payment to Borrower and Lender, respectively, of any and all reasonable expenses incurred by Borrower and Lender in the recovery thereof, including all reasonable attorneys’ fees and disbursements, the reasonable fees of insurance experts and adjusters and the reasonable costs incurred in any litigation or arbitration with respect to such Casualty or Condemnation).

“ Loss Proceeds Account ” has the meaning set forth in Section 3.8 .

“ Major Lease ” means any Lease at the Property which, when aggregated with all Leases at the Property with the same Tenant or its Affiliates, covers more than one full floor of the Property (or the equivalent).

“ Material Adverse Effect ” means a material adverse effect upon (i) the ability of Borrower to perform, or of Lender to enforce, any material provision of any Loan Document, or (ii) the value, use or enjoyment of the Property or the operation thereof.

“ Material Agreements ” means each contract and agreement (other than Leases) relating to the ownership, management, development, use, operation, leasing, maintenance,

 

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repair or improvement of the Property, or otherwise imposing obligations on Borrower, under which Borrower would have the obligation to pay more than $5,000,000 per annum or which cannot be terminated by Borrower without cause upon 60 days’ notice or less or which is with an affiliate of Borrower.

“ Material Alteration ” means any Alteration to be performed by or on behalf of Borrower at the Property (other than an Alteration the cost of which a Tenant is obligated to repay or reimburse Borrower and which Borrower reasonably believes will be so reimbursed) which (a) is reasonably likely to have a Material Adverse Effect, (b) is reasonably expected to cost in excess of $15,000,000, as determined by an independent architect, or (c) is reasonably expected to permit (or is reasonably likely to induce) Tenants whose Leases in the aggregate cover more than 80,000 rentable square feet or contributed more than 5% of the base contract rental revenue of the Property during the trailing 12-month period (after adjustment to eliminate the effect of free rent periods) to terminate their Leases or abate rent.

“ Maturity Date ” means the Payment Date in August 2017, or such earlier date as may result from acceleration of the Loan in accordance with this Agreement.

“ Monthly Replacement Reserve Amount ” at any time means $38,801.

“ Monthly TI/LC Amount ” at any time means $349,206.

“ Moody’s ” means Moody’s Investors Service, Inc. and its successors.

“ Mortgage ” means the mortgage of the Property executed by Borrower on the date hereof, as the same may from time to time be modified or replaced in accordance herewith.

“ Net Operating Income ” means the excess of Operating Income over Operating Expenses.

“ Nonconsolidation Opinion ” means that certain opinion letter attached hereto as Schedule C.

“ Note ” means that certain promissory note made by Borrower to the order of Lender as of the Closing Date to evidence the Loan, as such note may be replaced by multiple Notes in accordance with Section 1.1(c) and as otherwise modified, assigned (in whole or in part) and/or replaced from time to time in accordance herewith.

“ OFAC List ” means the list of specially designated nationals and blocked persons subject to financial sanctions that is maintained by the U.S. Treasury Department, Office of Foreign Assets Control and any other similar list maintained by the U.S. Treasury Department, Office of Foreign Assets Control pursuant to any applicable governmental statutes, laws, rules, orders, regulations, ordinances, judgments, decrees and injunctions of Governmental Authorities, including, without limitation, trade embargo, economic sanctions, or other prohibitions imposed by Executive Order of the President of the United States. The OFAC List currently is accessible through the internet website at www.treas.gov/ofac/t11sdn.pdf .

 

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“ Officer’s Certificate ” means a certificate delivered to Lender which is signed by an authorized officer of Borrower or its managing member and certifies the information therein to the best of such officer’s knowledge.

“ Operating Expenses ” means, for any period, the sum of those operating, renting, administrative, management, legal and other ordinary expenses actually paid by Borrower or, without duplication, which come due and payable by Borrower during such period in connection with its ownership of the Property; provided , however , that such expenses shall not include (i) depreciation, amortization or other noncash items (other than expenses that are due and payable but not yet paid), (ii) interest, principal or any other sums due and owing with respect to the Loan, (iii) income taxes or other taxes in the nature of income taxes, (iv) Capital Expenditures, or (v) equity distributions.

“ Operating Income ” means, for any period, all operating income of Borrower from the Property during such period, determined in accordance with GAAP (but without straight-lining of rents), other than (i) Loss Proceeds (but Operating Income will include rental loss insurance proceeds to the extent allocable to such period), (ii) any revenue attributable to a Lease to the extent it is paid more than 30 days prior to the due date, (iii) any interest income from any source, (iv) any repayments received from any third party of principal loaned or advanced to such third party by Borrower, (v) any proceeds resulting from the Transfer of all or any portion of the Property or the FF&E, (vi) sales, use and occupancy or other taxes on receipts required to be accounted for by Borrower to any government or governmental agency, (vii) refunds and uncollectible accounts, and (viii) any other extraordinary or non-recurring items.

“ Participation ” has the meaning set forth in Section 9.7(b) .

“ Payment Date ” means, with respect to each Interest Accrual Period, the sixth day of the calendar month in which such Interest Accrual Period ends (or if such sixth day is not a Business Day, the first succeeding Business Day).

“ Peg Balance ” means the aggregate amount of payments required to be made under Sections 3.2(b)(i) through (iv)  on the next Payment Date, as specified in the most recent notice from the Servicer to the Cash Management Bank pursuant to the Cash Management Agreement.

“ Permits ” means all licenses, permits, variances and certificates used in connection with the ownership, operation, use or occupancy of the Property (including business licenses, state health department licenses, licenses to conduct business and all such other permits, licenses and rights, obtained from any Governmental Authority or private Person concerning ownership, operation, use or occupancy of the Property).

“ Permitted Debt ” means:

(i) the Indebtedness;

(ii) Trade Payables not represented by a note, customarily paid by Borrower within 60 days of incurrence and in fact not more than 60 days outstanding, which are

 

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incurred in the ordinary course of Borrower’s ownership and operation of the Property, in amounts reasonable and customary for similar properties and not exceeding 3.0% of the Loan Amount;

(iii) financing leases and purchase money debt, in each case incurred in the ordinary course of business in connection with the financing or purchase of equipment and other personal property used on the Property, provided that the aggregate capitalized amount of all such permitted financing leases plus the aggregate amount of all such permitted purchase money debt shall not exceed $1,000,000 at any time; and

(iv) any other Debt which is hereafter approved in writing by Lender in its sole discretion and with respect to which Lender shall have received Rating Confirmation.

“ Permitted Encumbrances ” means:

(i) the Liens created by the Loan Documents;

(ii) all Liens and other matters specifically disclosed on Schedule B of the Qualified Title Insurance Policies;

(iii) Liens, if any, for Taxes not yet delinquent;

(iv) mechanics’, materialmen’s or similar Liens, if any, and liens for delinquent taxes or impositions, in each case only if being contested in good faith and by appropriate proceedings, provided that each of such Liens is not in imminent danger of foreclosure and provided further that either (a) each such Lien is released or discharged of record or fully insured over by the title insurance company issuing the Qualified Title Insurance Policies within 60 days of its creation, or (b) Borrower deposits with Lender, by the expiration of such 60-day period, an amount equal to 150% of the dollar amount of such Lien or a bond in the aforementioned amount from such surety, and upon such terms and conditions, as shall be reasonably satisfactory to Lender, as security for the payment or release of such Lien;

(v) rights of existing and future Tenants as tenants only pursuant to written Leases entered into in conformity with the provisions of this Agreement;

(vi) zoning restrictions, easements, rights-of-way, restrictions on use of real property and other similar encumbrances incurred or entered into in the ordinary course of business which do not have a Material Adverse Effect; and

(vii) any other Liens which are hereafter approved in writing by Lender in its sole discretion and with respect to which Lender shall have received Rating Confirmation.

“ Permitted Investments ” means the following, subject to qualifications hereinafter set forth:

 

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(i) obligations of, or obligations guaranteed as to principal and interest by, the U.S. government or any agency or instrumentality thereof, when such obligations are backed by the full faith and credit of the United States of America;

(ii) federal funds, unsecured certificates of deposit, time deposits, banker’s acceptances, and repurchase agreements having maturities of not more than 365 days of any bank, the short-term debt obligations of which are rated A-1+ (or the equivalent) by each of the Rating Agencies and, if it has a term in excess of three months, the long-term debt obligations of which are rated AAA (or the equivalent) by each of the Rating Agencies;

(iii) deposits that are fully insured by the Federal Deposit Insurance Corp. (FDIC);

(iv) debt obligations that are rated AAA or higher (or the equivalent) by each of the Rating Agencies;

(v) commercial paper rated A–1+ (or the equivalent) by each of the Rating Agencies;

(vi) investment in money market funds rated AAAm or AAAm–G (or the equivalent) by each of the Rating Agencies; and

(vii) such other investments as to which Lender shall have received Rating Confirmation.

Notwithstanding the foregoing, “Permitted Investments” (i) shall exclude any security with the Standard & Poor’s “r” symbol (or any other Rating Agency’s corresponding symbol) attached to the rating (indicating high volatility or dramatic fluctuations in their expected returns because of market risk), as well as any mortgage-backed securities and any security of the type commonly known as “strips”; (ii) shall not have maturities in excess of one year; (iii) shall be limited to those instruments that have a predetermined fixed dollar of principal due at maturity that cannot vary or change; and (iv) shall exclude any investment where the right to receive principal and interest derived from the underlying investment provide a yield to maturity in excess of 120% of the yield to maturity at par of such underlying investment. Interest may either be fixed or variable, and any variable interest must be tied to a single interest rate index plus a single fixed spread (if any), and move proportionately with that index. No investment shall be made which requires a payment above par for an obligation if the obligation may be prepaid at the option of the issuer thereof prior to its maturity. All investments shall mature or be redeemable upon the option of the holder thereof on or prior to the earlier of (x) three months from the date of their purchase or (y) the Business Day preceding the day before the date such amounts are required to be applied hereunder.

“ Person ” means any individual, corporation, limited liability company, partnership, joint venture, estate, trust, unincorporated association or Governmental Authority and any fiduciary acting in such capacity on behalf of any of the foregoing.

 

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“ Plan ” means an employee benefit plan (i) which is maintained for employees of Borrower or any ERISA Affiliate and which is subject to Title IV of ERISA or (ii) with respect to which Borrower or any ERISA Affiliate could be subjected to any liability under Title IV of ERISA (including Section 4069 of ERISA).

“ Plan Assets ” means assets of any employee benefit plan subject to Part 4, Subtitle A, Title I of ERISA.

“ Policies ” has the meaning set forth in Section 5.15(b) .

“ Pre-Approved Cash Management Bank ” means each of the financial institutions listed in Schedule G and its respective affiliates.

“ Prepayment Period ” means the final four Interest Accrual Periods prior to the Maturity Date.

“ Prime Rate ” means the “prime rate” published in the “Money Rates” section of The Wall Street Journal . If The Wall Street Journal ceases to publish the “prime rate,” then Lender shall select an equivalent publication that publishes such “prime rate,” and if such “prime rate” is no longer generally published or is limited, regulated or administered by a governmental or quasi-governmental body, then Lender shall reasonably select a comparable interest rate index.

“ Principal Indebtedness ” means the principal balance of the Loan outstanding from time to time.

“ Property ” means the fee, leasehold and reversionary interests in the land, improvements and condominium units collectively known as One Liberty Plaza in New York City, New York, as such property is more particularly described on Schedule A .

“ Qualified Equityholder ” means (i) Sponsor (ii) Brookfield Properties Corp., (iii) any bank, savings and loan association, investment bank, insurance company, trust company, commercial credit corporation, pension plan, pension fund, pension advisory firm, mutual fund, government entity or plan, real estate company, investment fund or institution substantially similar to any of the foregoing, provided in each case that such institution has total assets (in name or under management) in excess of $2,000,000,000 and (except with respect to a pension advisory firm or similar fiduciary) capital/statutory surplus or shareholder’s equity in excess of $1,000,000,000, in each case excluding the Property, and is regularly engaged in the business of owning properties similar to the Property in major metropolitan areas, and (iv) any entity approved by Lender with respect to which Rating Confirmation is received.

“ Qualified Guarantee ” means a guarantee from Sponsor in favor of Lender, in form and substance reasonably satisfactory to Lender; provided that (1) a guarantee shall cease to be a Qualified Guarantee if at any time Sponsor fails to satisfy the Guaranty Eligibility Requirement, and (2) at the time of the delivery of each Qualified Guarantee, Borrower shall deliver to Lender an opinion of counsel, in form and substance reasonably satisfactory to Lender, to the effect that delivery of such Qualified Guarantee does not alter the conclusion reached in the Nonconsolidation Opinion.

 

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“ Qualified Letter of Credit ” means a clean, irrevocable, unconditional, transferable letter of credit reasonably satisfactory to Lender with respect to which Borrower has no reimbursement obligation, in favor of Lender and entitling Lender to draw thereon in New York, New York, issued by a domestic bank or the U.S. agency or branch of a foreign bank the long-term unsecured debt rating of which is not less than AA (or the equivalent) from each of the Rating Agencies. The following terms and conditions shall apply to each Qualified Letter of Credit:

(i) Each such Qualified Letter of Credit shall expressly provide that partial draws are permitted thereunder.

(ii) Each such Qualified Letter of Credit shall expressly provide that it is freely transferable to any successor or assign of Lender.

(iii) Lender shall be entitled to draw on any Qualified Letter of Credit immediately and without further notice (a) upon the occurrence and during the continuance of any Event of Default, (b) if Borrower shall not have delivered to Lender, no less than 30 days prior to the expiration date of such Qualified Letter of Credit, if any (including any renewal or extension thereof), a renewal or extension of such Qualified Letter of Credit or a replacement Qualified Letter of Credit for a term of not less than one year (or through the date that is 30 days beyond the Maturity Date, whichever is earlier), or (c) if the credit rating or financial condition of the issuing bank falls below the ratings set forth above in this definition and Borrower fails to provide a replacement Qualified Letter of Credit, Qualified Guaranty or cash reserve as required hereunder.

“ Qualified Successor Borrower ” means a Single-Purpose Entity Controlled by one or more Qualified Equityholders.

“ Qualified Survey ” means a current title survey of the Property, certified to the title company issuing the Qualified Title Insurance Policies and Lender and their respective successors and assigns, in form and substance reasonably satisfactory to Lender.

“ Qualified Title Insurance Policy ” means a mortgagee’s title insurance policy in form and substance reasonably satisfactory to Lender.

“ Rating Agency ” means (i) until a Securitization, S&P, Moody’s and Fitch, and (ii) from and after a Securitization, those of S&P, Moody’s and Fitch that rate the Certificates issued in any Securitization.

“ Rating Confirmation ” means, with respect to any proposed action, confirmation in writing from each of the Rating Agencies that such action shall not result, in and of itself, in a downgrade, withdrawal or qualification of any rating then assigned to any outstanding Certificates; provided that if a Securitization taking the form of a transaction rated by the Rating Agencies has not occurred, then “Rating Confirmation” shall instead mean that the matter in question shall be subject to the prior written approval of Lender in its reasonable discretion (it being agreed that it shall be reasonable for Lender to withhold consent if the proposed action is not in compliance with reasonably prudent lending practices or the guidelines of the Rating

 

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Agencies). No Rating Confirmation shall be regarded as having been received unless and until any conditions imposed on its effectiveness by any Rating Agency shall have been satisfied.

“ Release ” means any release, spill, emission, leaking, pumping, injection, deposit, disposal, discharge, dispersal, leaching or migration into the indoor or outdoor environment (including the movement of Hazardous Substances through ambient air, soil, surface water, ground water, wetlands, land or subsurface strata).

“ Rent Roll ” has the meaning set forth in Section 4.14(a) .

“ Replacement Reserve Account ” has the meaning set forth in Section 3.6 .

“ Revenues ” means all rents, rent equivalents, moneys payable as damages pursuant to a Lease or in lieu of rent or rent equivalents, royalties (including all oil and gas or other mineral royalties and bonuses), income, receivables, receipts, revenues, deposits (including security, utility and other deposits), accounts, cash, issues, profits, charges for services rendered, and other consideration of whatever form or nature received by or paid to or for the account of or benefit of Borrower from any and all sources including any obligations now existing or hereafter arising or created out of the sale, lease, sublease, license, concession or other grant of the right of the use and occupancy of property or rendering of services by Borrower and proceeds, if any, from business interruption or other loss of income insurance.

“ S&P ” means Standard & Poor’s Ratings Services, a division of the McGraw-Hill Companies, Inc., and its successors.

“ Securitization ” means a transaction in which all or any portion of the Loan and the Loan Documents is deposited into one or more trusts which issue Certificates to investors, or a similar transaction.

“ Securitization Issuer ” means the issuer of Certificates in a Securitization.

“ Service ” means the Internal Revenue Service or any successor agency thereto.

“ Servicer ” means the entity or entities appointed by Lender from time to time to serve as servicer and/or special servicer of the Loan. If at any time no entity shall be so appointed, the term “Servicer” shall be deemed to refer to Lender.

“ Single-Purpose Entity ” means a Person which (a) was formed solely for the purpose of acquiring the Property, (b) does not engage in any business unrelated to the Property, (c) does not have any assets other than those related to its interest in the Property or any Debt other than Permitted Debt, (d) maintains books, records, accounts, financial statements, stationery, invoices and checks which are separate and apart from those of any other Person (except that Borrower’s financial position, assets, results of operations and cash flows may be included in the consolidated financial statements of an Affiliate of Borrower in accordance with GAAP, provided that any such consolidated financial statements shall contain a note indicating that Borrower and its Affiliates are separate legal entities and maintain records, books of account and bank accounts separate and apart from any other Person), (e) is subject to and complies with all of the limitations on powers and separateness requirements set forth in the organizational

 

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documentation of Borrower as of the Closing Date, (f) holds itself out as being a Person separate and apart from each other Person, conducts its business in its own name (except for services rendered under a management agreement with an Affiliate, so long as the manager, or equivalent thereof, under such management agreement holds itself out as an agent of Borrower), and exercises reasonable efforts to correct any known misunderstanding actually known to it regarding its separate identity, and maintains an arm’s-length relationship with its Affiliates, (g) pays its own liabilities out of its own funds and reasonably allocates any overhead that is shared with an Affiliate, including, but not limited to, paying for shared office space and services performed by any officer or employee of an Affiliate, (h) maintains (or contracts with an Affiliate or other party to provide) a sufficient number of employees in light of its contemplated business operations, (i) conducts its business so that the assumptions made with respect to it in the Nonconsolidation Opinion (which is attached hereto as Schedule C ) shall at all times be true and correct in all material respects, (j) observes all applicable limited liability company formalities in all material respects, (k) does not commingle its assets with those of any other Person, (l) does not guarantee or become obligated for the debts of any other Person or hold out its credit as being available to satisfy the obligations or securities of others, (m) does not acquire obligations or securities of its members, (n) does not pledge its assets for the benefit of any other Person or make any loans or advances to any Person, (o) maintains adequate capital in light of its contemplated business operations, and (p) has at all times two Independent Directors on its Board of Directors and has an operating agreement which provides that for so long as the Loan is outstanding, the Borrower shall not take or consent to any of the following actions except to the extent expressly permitted in this Agreement and the other Loan Documents:

(i) the dissolution, liquidation, consolidation, merger or sale of all or substantially all of its assets;

(ii) the engagement by it in any business other than the acquisition, development, management, leasing, ownership, maintenance and operation of the Property and activities incidental thereto;

(iii) the filing, or consent to the filing, of a bankruptcy or insolvency petition, any general assignment for the benefit of creditors or the institution of any other insolvency proceeding, or the seeking or consenting to the appointment of a receiver, liquidator, assignee, trustee, sequestrator, custodian or any similar official without the affirmative vote of both of its Independent Directors; and

(iv) any amendment or modification of any provision of its organizational documents relating to qualification as a “Single-Purpose Entity”.

“ Sponsor ” means Brookfield Financial Properties, L.P. and any successor by merger or by acquisition of substantially all of its business and assets.

“ Subordination of Property Management Agreement ” means the subordination of property management agreement executed by Borrower and the Approved Property Manager on the date hereof, as the same may from time to time be modified or replaced in accordance herewith.

 

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“ Tax and Insurance Escrow Account ” has the meaning set forth in Section 3.4(a) .

“ Taxes ” means all real estate and personal property taxes, assessments, fees, taxes on rents or rentals, water rates or sewer rents, facilities and other governmental, municipal and utility district charges or other similar taxes or assessments now or hereafter levied or assessed or imposed against the Property or Borrower with respect to the Property or rents therefrom or which may become Liens upon the Property, without deduction for any amounts reimbursable to Borrower by third parties.

“ Tenant ” means any Person liable by contract or otherwise to pay monies (including a percentage of gross income, revenue or profits) pursuant to a Lease.

“ Tenant Improvements ” means, collectively, (i) tenant improvements to be undertaken for any Tenant which are required to be completed by or on behalf of Borrower pursuant to the terms of such Tenant’s Lease, and (ii) allowances to be paid to a Tenant pursuant to such Tenant’s Lease in connection with such Tenant’s construction of its tenant improvements at the Property.

“ Tenant Notice ” has the meaning set forth in Section 3.1(b) .

“ Termination Fee ” has the meaning set forth in Section 3.5(d) .

“ Test Period ” means each 12-month period ending on the last day of a Fiscal Quarter.

“ TI/LC Reserve Account ” has the meaning set forth in Section 3.5 .

“ Trade Payables ” means unsecured amounts payable by or on behalf of Borrower for or in respect of the operation of the Property in the ordinary course and which would under GAAP be regarded as ordinary expenses, including amounts payable to suppliers, vendors, contractors, mechanics, materialmen or other Persons providing property or services to the Property or Borrower.

“ Transaction ” means the transaction contemplated by the Loan Documents.

“ Transaction Costs ” means the costs and expenses described in Section 9.17 .

“ Transfer ” means the pledge, sale or other whole or partial conveyance of all or any portion of the Property or any direct or indirect interest therein to a third party (other than pledges, sales and conveyances of indirect equity interests in Borrower that are not otherwise prohibited hereunder and the imposition of zoning restrictions, easements, rights-of-way, restrictions on use of real property and other similar encumbrances incurred or entered into in the ordinary course of business which do not have a Material Adverse Effect), including granting of any purchase options, rights of first refusal, rights of first offer or similar rights to purchase all or any portion of the Property (other than such rights as have heretofore been granted and are listed in the Exception Report and/or the Rent Rolls) or the subjecting of any portion of the Property to restrictions on transfer; provided that the conveyance of a space lease, license or other occupancy right at the Property in accordance herewith shall not constitute a Transfer.

 

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“ Treasury Constant Yield ” means the arithmetic mean of the rates published as “Treasury Constant Maturities” as of 5:00 p.m., New York time, for the five Business Days preceding the date on which acceleration has been declared, as shown on the USD screen of the Moneyline Telerate service (or such other page as may replace that page on that service, or such other page or replacement therefor on any successor service), or if such service is not available, the Bloomberg service (or any successor service), or if neither the Moneyline Telerate nor the Bloomberg service is available, under Section 504 in the weekly statistical release designated H.15(519) (or any successor publication) published by the Board of Governors of the Federal Reserve System, for “On the Run” U.S. Treasury obligations corresponding to the scheduled Maturity Date. If no such maturity shall so exactly correspond, yields for the two most closely corresponding published maturities shall be calculated pursuant to the foregoing sentence and the Treasury Constant Yield shall be interpolated or extrapolated (as applicable) from such yields on a straight-line basis (rounding, in the case of relevant periods, to the nearest month).

“ Unfunded Obligations ” means the items described in Schedule D .

“ Unfunded Obligations Account ” has the meaning set forth in Section 3.9(a) .

“ Unfunded Obligations Amount ” means $22,991,245.27.

“ Use ” means, with respect to any Hazardous Substance, the generation, manufacture, processing, distribution, handling, use, treatment, recycling or storage of such Hazardous Substance or transportation of such Hazardous Substance.

“ U.S. Person ” means a United States person within the meaning of Section 7701(a)(30) of the Code.

“ U.S. Tax ” means any present or future tax, assessment or other charge or levy imposed by or on behalf of the United States of America or any taxing authority thereof.

“ Yield Maintenance Premium ” shall mean, with respect to any payment of principal (or any portion thereof) during the continuance of an Event of Default, the greater of (x) 2% of the amount prepaid and (y) the product of:

(A) a fraction whose numerator is the amount so paid and whose denominator is the outstanding principal balance of the Loan before giving effect to such payment, times

(B) the excess of (1) the sum of the respective present values, computed as of the date of such prepayment, of the remaining scheduled payments of principal and interest with respect to the Loan (assuming no prepayments or acceleration of the Loan), determined by discounting such payments to the date on which such payments are made at the Treasury Constant Yield, over (2) the outstanding principal balance of the Loan on such date immediately prior to such payment.

The calculation of the Yield Maintenance Premium shall be made by the Lender and shall, absent manifest error, be final, conclusive and binding upon all parties.

 

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(b) Rules of Construction . All references to sections, schedules and exhibits are to sections, schedules and exhibits in or to this Agreement unless otherwise specified. Unless otherwise specified: (i) the words “hereof”, “herein” and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement, (ii) all meanings attributed to defined terms herein shall be equally applicable to both the singular and plural forms of the terms so defined, (iii) “including” means “including, but not limited to”, and (iv) “mortgage” means a mortgage, deed of trust, deed to secure debt or similar instrument, as applicable, and “mortgagee” means the secured party under a mortgage, deed of trust, deed to secure debt or similar instrument. All accounting terms not specifically defined herein shall be construed in accordance with GAAP, as same may be modified herein.

 

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ARTICLE I

GENERAL TERMS

1.1. The Loan .

(a) On the Closing Date, subject to the terms and conditions of this Agreement, Lender shall make a loan to Borrower (the “ Loan ”) in an amount equal to the Loan Amount. The Loan shall initially be represented by a single Note which shall bear interest as described herein at a per annum rate equal to the Initial Interest Rate.

(b) The Loan shall be secured by (i) the Property, pursuant to the Mortgage and the Assignment of Rents and Leases, (ii) Borrower’s contract rights, pursuant to the Assignment of Contracts, (iii) the Account Collateral, and (iv) the other security interests and Liens granted in the Loan Documents.

(c) Lender shall have the right at any time, at Lender’s sole discretion, to replace the initial Note with two or more replacement Notes, and the holder of each replacement Note shall similarly have the right at any time, at such holder’s sole discretion, to replace its Note with two or more replacement Notes. Each replacement Note shall be in the form of the Note so replaced but for its principal amount and Interest Rate. The principal amount of each Note shall be determined by applicable holder in its sole discretion, provided that the sum of the principal amounts of the replacement Notes shall equal the then outstanding principal balance of the Notes that are so replaced. Any prepayments not resulting from an Event of Default, Casualty or Condemnation shall be applied to the payment of the principal on the Notes on a pro rata basis. The Interest Rate of each replacement Note shall be determined by the applicable holder in its sole discretion, provided that the weighted average of such Interest Rates, weighted on the basis of the respective principal balances of the Notes, shall equal the Interest Rate of the Note so replaced. Provided Borrower has received five days’ prior notice, Borrower shall execute and return to Lender each such Note within two Business Days after Borrower’s receipt of an execution copy thereof (whereupon Lender shall return the replaced Note to Borrower), and Borrower’s failure to do so within such time period shall, at Lender’s election, constitute an immediate Event of Default hereunder. Borrower hereby authorizes and appoints Lender as its attorney-in-fact to execute such replacement Notes on Borrower’s behalf should Borrower fail to do so. The foregoing grant of authority is a power of attorney coupled with an interest and such appointment shall be irrevocable for the term of this Agreement. Borrower hereby ratifies all actions that such attorney shall lawfully take or cause to be taken in accordance with this Section 1.1(c) . If requested by Lender, Borrower shall deliver to Lender, together with such replacement Notes, an opinion of counsel in substantially the form delivered to Lender on the Closing Date with respect to the due authorization and enforceability of such replacement Notes.

1.2. Interest and Principal .

(a) On each Payment Date prior to the Initial Principal Payment Date, Borrower shall pay to Lender interest on each Note for the applicable Interest Accrual Period at the applicable Interest Rate (except that in each case, interest shall be payable at the Default Rate with respect to any portion of such Interest Accrual Period falling during the continuance of an

 

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Event of Default). On the Closing Date, Borrower shall pay interest from and including the Closing Date through the end of the first Interest Accrual Period.

Commencing with the Initial Principal Payment Date, and on each and every Payment Date thereafter, Borrower shall pay to Lender a constant monthly payment of $5,172,387.70, which amount shall be applied first toward the payment of interest on each Note for the applicable Interest Accrual Period at the applicable Interest Rate (except that in each case, interest shall be payable at the Default Rate with respect to any portion of such Interest Accrual Period falling during the continuance of an Event of Default), and the balance shall be applied toward the reduction of the outstanding principal balances of the Notes pro rata in accordance with their then outstanding principal balances. Interest payable hereunder shall be computed on the basis of a 360-day year and the actual number of days elapsed in the related Interest Accrual Period.

(b) No prepayments of the Loan shall be permitted except for (i) scheduled amortization as described in Section 1.2(a) , (ii) prepayments resulting from Casualty or Condemnation as described in Section 5.16(c) , and (iii) a prepayment of the Loan in whole (but not in part) during the Prepayment Period on not less than 30 days prior written notice; provided that any prepayment under this clause (iii) shall be accompanied by all interest accrued on the amount prepaid plus, if such prepayment does not occur on a Payment Date, the amount of interest that would have accrued thereon if the Loan had remained outstanding through the end of the Interest Accrual Period in which such prepayment occurs, plus all other amounts then due under the Loan Documents. If a prepayment notice is delivered to Lender and such prepayment is not made within 30 days of the date specified therein, (x) Borrower’s notice of prepayment shall be deemed rescinded, and (y) Borrower shall, at the end of such 30 day period, pay to Lender all reasonable losses, costs and expenses suffered by Lender as a consequence of such rescission. In addition, Defeasance shall be permitted after the expiration of the Lockout Period as described in Section 2.1 . The entire outstanding principal balance of the Loan, together with interest accrued thereon and all other amounts then due under the Loan Documents, shall be due and payable by Borrower to Lender on the Maturity Date.

(c) If all or any portion of the Principal Indebtedness (other than scheduled amortization as described in Section 1.2(a) and prepayments resulting from Casualty or Condemnation as described in Section 5.16(d) ) is paid to Lender following acceleration of the Loan, Borrower shall pay to Lender an amount equal to the applicable Yield Maintenance Premium. Amounts received in respect of the Indebtedness during the continuance of an Event of Default shall be applied toward interest, principal and other components of the Indebtedness (in such order as Lender shall determine) before any such amounts are applied toward payment of Yield Maintenance Premiums, with the result that Yield Maintenance Premiums shall accrue as the Principal Indebtedness is prepaid but no amount received from Borrower shall constitute payment of a Yield Maintenance Premium until the remainder of the Indebtedness shall have been paid in full.

(d) Any regularly scheduled payments of interest and/or principal (excluding payments of principal at maturity) not paid when due hereunder shall bear interest at the applicable Default Rate and, when paid, shall be accompanied by a late fee in an amount equal to 4% times the amount of such late payment in order to defray the expense incurred by Lender in

 

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handling and processing such delinquent payment and to compensate Lender for the loss of the use of such delinquent payment.

1.3. Method and Place of Payment . Except as otherwise specifically provided herein, all payments and prepayments under this Agreement and the Notes (including any deposit into the Cash Management Account pursuant to Section 3.2(b) ) shall be made to Lender not later than 11:00 a.m., New York City time, on the date when due and shall be made in lawful money of the United States of America by wire transfer in federal or other immediately available funds to the account specified from time to time by Lender. Any funds received by Lender after such time shall, for all purposes hereof, be deemed to have been paid on the next succeeding Business Day. Lender shall notify Borrower in writing of any changes in the account to which payments are to be made. If the amount received from Borrower is less than the sum of all amounts then due and payable hereunder, such amount shall be applied toward the components of the Indebtedness ( e.g. , interest, principal and other amounts payable hereunder), the Loan and the Notes in such sequence as Lender shall elect in its sole discretion.

1.4. Taxes .

(a) Borrower agrees to indemnify Lender against any present or future stamp, documentary or other similar or related taxes or other similar or related charges now or hereafter imposed, levied, collected, withheld or assessed by any United States Governmental Authority by reason of the execution and delivery of the Loan Documents and any consents, waivers, amendments and enforcement of rights under the Loan Documents.

(b) If Borrower is required by law to withhold or deduct any amount from any payment hereunder in respect of any U.S. Tax, Borrower shall withhold or deduct the appropriate amount, remit such amount to the appropriate Governmental Authority and pay to each Person to whom there has been an Assignment or Participation of a Loan and who is not a U.S. Person such additional amounts as are necessary in order that the net payment of any amount due to such non-U.S. Person hereunder after deduction for or withholding in respect of any U.S. Tax imposed with respect to such payment (or in lieu thereof, payment of such U.S. Tax by such non-U.S. Person), will not be less than the amount stated herein to be then due and payable; provided that the foregoing obligation to pay such additional amounts shall not apply while the Loan is contained within a Securitization and shall not apply (i) to any assignee that has not complied with the obligations contained in Section 9.7(c) , (ii) to any U.S. Taxes imposed solely by reason of the failure by such Person (or, if such Person is not the beneficial owner of the relevant Loan, such beneficial owner) to comply with applicable certification, information, documentation or other reporting requirements concerning the nationality, residence, identity or connections with the United States of America of such Person (or beneficial owner, as the case may be) if such compliance is required by statute or regulation of the United States of America as a precondition to relief or exemption from such U.S. Taxes; or (iii) with respect to any Person who is a fiduciary or partnership or other than the sole beneficial owner of such payment, to any U.S. Tax imposed with respect to payments made under any Note to a fiduciary or partnership to the extent that the beneficial owner or member of the partnership would not have been entitled to the additional amounts if such beneficial owner or member of the partnership had been the holder of the Note.

 

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(c) Within 30 days after paying any amount from which it is required by law to make any deduction or withholding, and within 30 days after it is required by law to remit such deduction or withholding to any relevant taxing or other authority, Borrower shall deliver to such non-U.S. Person satisfactory evidence of such deduction, withholding or payment (as the case may be).

1.5. Release . Upon payment of the Indebtedness in full (other than continuing indemnity obligations which survive repayment of the Loan and with respect to which no claim shall have been made and not yet paid), Lender shall execute instruments prepared by Borrower and reasonably satisfactory to Lender releasing and discharging all Liens on all Collateral securing payment of the Indebtedness (subject to Borrower’s obligation to pay any associated fees and expenses), including all balances in the Collateral Accounts.

ARTICLE II

DEFEASANCE AND ASSUMPTION

2.1. Defeasance .

(a) On any date after the expiration of the Lockout Period, provided no Event of Default is then continuing and subject to the notice requirement described in Section 2.1(c) , Borrower may obtain the release of the Collateral (other than the Defeasance Collateral) from the liens created by the Loan Documents upon the payment to Lender of all sums then due under the Loan Documents and the delivery of the following to Lender:

(i) Defeasance Collateral sufficient to provide payments on or prior to, and in any event as close as possible to, all successive Payment Dates in an amount sufficient to make all payments of interest and principal due hereunder (including the then outstanding Principal Indebtedness on the first Payment Date in the Prepayment Period or such other date during the Prepayment Period as Borrower shall specify), taking into account any income tax payable on any net annual income of Borrower or the Defeasance Borrower, as applicable;

(ii) written confirmation from an independent certified public accounting firm reasonably satisfactory to Lender that such Defeasance Collateral is sufficient to provide the payments described in clause (i) above;

(iii) a security agreement, in form and substance reasonably satisfactory to Lender, creating in favor of Lender a first priority perfected security interest in such Defeasance Collateral (a “ Defeasance Pledge Agreement ”);

(iv) an opinion of counsel for Borrower, in form and substance reasonably satisfactory to Lender and delivered by counsel reasonably satisfactory to Lender, opining (1) that the Defeasance Pledge Agreement has been duly authorized and is enforceable against Borrower in accordance with its terms and that Lender has a perfected first priority security interest in such Defeasance Collateral; and (2) that the Defeasance does not constitute a “significant modification” of the Loan under Section 1001 of the Code or cause a tax to be imposed on the Securitization Vehicle;

 

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(v) Rating Confirmation with respect to such Defeasance;

(vi) instruments reasonably satisfactory to Lender releasing and discharging or assigning to a third party Lender’s Liens on the Collateral (other than the Defeasance Collateral);

(vii) such other certificates, opinions, documents or instruments as Lender and the Rating Agencies may reasonably request; and

(viii) reimbursement for any costs and expenses incurred by Lender in connection with this Section 2.1 (including Rating Agency and Servicer fees and expenses, reasonable fees and expenses of legal counsel and any revenue, documentary stamp or intangible taxes or any other tax or charge due in connection herewith).

Lender shall reasonably cooperate with Borrower to avoid the incurrence of mortgage recording taxes in connection with a Defeasance, which cooperation may include assigning the Note to a refinancing lender in consideration of receipt of a new defeasance note and rights under the Defeasance Pledge Agreement.

(b) At the time of Defeasance, Borrower shall transfer and assign all of its interest in the Property to a third party, unless the Loan is assumed by a bankruptcy-remote entity satisfactory to Lender and the Rating Agencies to which Borrower shall transfer all of the Defeasance Collateral (a “ Defeasance Borrower ”) and such Defeasance Borrower shall have executed and delivered to Lender an assumption agreement in form and substance reasonably satisfactory to Lender, such Uniform Commercial Code financing statements as may be reasonably requested by Lender and legal opinions of counsel reasonably acceptable to Lender which are substantially equivalent to the opinions delivered to Lender on the Closing Date, including new nonconsolidation opinions reasonably satisfactory to Lender and satisfactory to the Rating Agencies; and Borrower and the Defeasance Borrower shall have delivered such other documents, certificates and legal opinions as Lender shall reasonably request, in which event Borrower shall be completely released and relieved of all of its obligations under the Loan Documents except those obligations which by their terms survive the repayment of the Loan.

(c) Borrower must give Lender at least 30 days’ prior written notice of any Defeasance under this Section 2.1 , specifying the date on which the Defeasance is expected to occur.

(d) Upon satisfaction of the requirements contained in this Section 2.1 , Lender will execute and deliver to Borrower such instruments, prepared by Borrower and approved by Lender, as shall be necessary to release the Property from the Liens of the Loan Documents.

 

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2.2. Assumption . The initial Borrower shall have the right to contemporaneously Transfer all of the Collateral to a Qualified Successor Borrower that will assume all of the obligations of Borrower hereunder (an “ Assumption ”), provided no Event of Default or material monetary Default is then continuing or would result therefrom and the following conditions are met to the reasonable satisfaction of Lender:

(i) such Qualified Successor Borrower shall have executed and delivered to Lender an assumption agreement, in form and substance reasonably acceptable to Lender, evidencing its agreement to abide and be bound by the terms of the Loan Documents;

(ii) such Qualified Successor Borrower shall execute and deliver such Uniform Commercial Code financing statements as may be reasonably requested by Lender;

(iii) a Qualified Equityholder reasonably satisfactory to Lender in its sole discretion shall provide a guaranty of the Indemnified Liabilities in form satisfactory to Lender;

(iv) such Qualified Successor Borrower shall have delivered to Lender legal opinions of counsel reasonably acceptable to Lender which are equivalent to the opinions delivered to Lender on the Closing Date, including new nonconsolidation opinions which are reasonably satisfactory to Lender and satisfactory to each of the Rating Agencies; and Borrower and the Qualified Successor Borrower shall have delivered such other documents, certificates and legal opinions as Lender shall reasonably request;

(v) such Qualified Successor Borrower shall have delivered to Lender all documents reasonably requested by it relating to the existence of such Qualified Successor Borrower and the due authorization of the Qualified Successor Borrower to assume the Loan and to execute and deliver the documents described in this Section 2.2 , each in form and substance reasonably satisfactory to Lender, including, but not limited to, a certified copy of the applicable resolutions from all appropriate persons, certified copies of the certificate of formation and Operating Agreement (or the equivalent) of the Qualified Successor Borrower, together with all amendments thereto, and certificates of good standing or existence for the Qualified Successor Borrower issued as of a recent date by its state of organization and each other state where such entity, by the nature of its business, is required to qualify or register;

(vi) the Qualified Title Insurance Policy shall have been properly endorsed to reflect the Transfer of the Property to the Qualified Successor Borrower;

(vii) Rating Confirmation shall have been received with respect to the legal structure of the successor borrower, the documentation of the Assumption and the related legal opinions; and

(viii) the Servicer shall have received upon request a nonrefundable assumption fee in an amount equal to 0.50% of the then outstanding Loan Amount (provided, however, that in connection with an Assumption by a Qualified Successor Borrower that is controlled by, and at least 25% of the direct or indirect equity interest in which is

 

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owned by, either BPC or Sponsor, the assumption fee shall be $150,000) and shall have received payment of all reasonable out-of-pocket costs and expenses incurred by Lender and Servicer, as applicable, in connection with such assumption (including reasonable attorneys’ fees and costs, the cost of an endorsement to the Qualified Title Insurance Policy reflecting the conveyance of the Property to the Qualified Successor Borrower, lien search and credit investigation expenses and rating agency fees and expenses).

ARTICLE III

ACCOUNTS

3.1. Cash Management Account .

(a) On or prior to the Closing Date, Borrower shall establish and thereafter maintain with a depository institution satisfactory to Lender (the “ Cash Management Bank ”) an account for the collection of income from the Property (the “ Cash Management Account ”). As a condition precedent to the Closing Date, Borrower shall cause the Cash Management Bank to execute and deliver a Cash Management Agreement which provides, inter alia , that no party other than Lender and Servicer shall have the right to withdraw and disburse funds from the Cash Management Account. The fees and expenses of the Cash Management Bank shall be paid by Borrower.

(b) Within five Business Days following the Closing Date, Borrower shall deliver to each Tenant in the Property a written notice (a “ Tenant Notice ”) in the form of Exhibit A instructing that (i) all payments under the Leases shall thereafter be transmitted by them directly to, and deposited directly into, the Cash Management Account and (ii) such instruction may not be rescinded unless and u