FILED: NEW YORK COUNTY CLERK 07/10/ :51 PM INDEX NO /2015 NYSCEF DOC. NO. 2 RECEIVED NYSCEF: 07/10/2015

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1 FILED: NEW YORK COUNTY CLERK 07/10/ :51 PM INDEX NO /2015 NYSCEF DOC. NO. 2 RECEIVED NYSCEF: 07/10/2015 SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK TH AVENUE LLC, Plaintiff, - against - BIFROST LAND LLC, AJ LABELLE & PARTNERS, LLC, MUTUAL, LLC, 554 WEST 38TH STREET, LLC, JACOB I. SOPHER A/K/A HANK SOPHER, NEW YORK STATE WORKERS COMPENSATION BOARD, NEW YORK CITY DEPARTMENT OF TRANSPORTATION, NEW YORK STATE DEPARTMENT OF TAXATION AND FINANCE, NEW YORK CITY DEPARTMENT OF FINANCE, and JOHN DOES #1 through #20, said John Doe defendants being fictitious and unknown to plaintiff, it being intended to name all other parties who may have some interest in or lien upon the premises sought to be foreclosed, Defendants. Index No. COMPLAINT Plaintiff th Avenue LLC ( Lender or ), by its counsel, Fried, Frank, Harris, Shriver & Jacobson LLP, as and for its Complaint against the defendants, alleges upon knowledge as to itself and its own acts and upon information and belief as to all other matters as follows: INTRODUCTION 1. This is an action by Lender to foreclose the mortgage (the Mortgage ) on real property located in the Borough of Manhattan, County and State of New York, known as Eleventh Avenue and 554 West 38th Street (together, the Mortgaged Property ), all as more fully described in the Consolidation, Modification and Restatement Agreement, dated as of June 26, 2014 (the Security Instrument ), in the maximum principal amount of $60,900,000,

2 and which was recorded on July 8, 2014, in the Office of the New York City Register, New York County under CRFN# A complete and accurate copy of the Security Instrument is attached hereto as Exhibit The Mortgaged Property is also known as Block 709, Lots 3, 67, 68, 70 and 71. See Ex. 1: Security Instrument, Exhibit A. 4. Defendant Bifrost Land LLC holds title to the Mortgaged Property. PARTIES Plaintiff 5. Plaintiff Lender is, and at all relevant times hereinafter mentioned was, a limited liability company duly organized under the laws of the State of Delaware, having an address c/o Kuafu Properties LLC, 1500 Broadway, Suite 2202, New York, New York 10036, and, as described below, is the lawful primary perfected lien holder of the Mortgage being foreclosed herein. Borrower Defendant 6. Defendant Bifrost Land LLC ( Bifrost or Borrower ) is, and at all relevant times hereinafter mentioned was, a limited liability company duly organized under the laws of the State of Delaware, with a service of process address at 520 West 27th Street, New York, New York Other Defendants 7. Upon information and belief, and at all times hereinafter mentioned, defendant AJ LaBelle & Partners, LLC ( AJLP ) is a New York limited liability company with an address for the transaction of business at 40 Worth Street, Suite 814, New York, New York 2

3 AJLP is named as a defendant by virtue of a lien it recorded against the Mortgaged Property on March 18, 2015 (Index No. 153, Control No ), which lien accrued subsequent to and is subordinate to the liens of the Mortgage being foreclosed herein (the AJLP Mechanic s Lien ). 8. A complete and accurate copy of the AJLP Mechanic s Lien is attached hereto as Exhibit Upon information and belief, and at all times hereinafter mentioned, defendant Mutual, LLC is a New York limited liability company with an address for the transaction of business at c/o Swift Park, 370 Lexington Ave., Suite 1104, New York, New York Upon information and belief, and at all times hereinafter mentioned, defendant 554 West 38th Street, LLC is a New York limited liability company with an address for the transaction of business at c/o Swift Park, 370 Lexington Ave., Suite 1104, New York, New York Upon information and belief, and at all times hereinafter mentioned, defendant Jacob I. Sopher a/k/a Hank Sopher ( Sopher ) is an individual with a place of business at c/o Swift Park, 370 Lexington Ave., Suite 1104, New York, New York Mutual, LLC, 554 West 38th Street, LLC and Sopher are named as defendants to this action by virtue of a right of first refusal they possess or may claim to possess, pursuant to a certain Memorandum of Right of First Refusal, dated June 26, 2014, recorded on July 8, 2014, under CRFN # , to build a Garage (as such term is defined in the Purchase and Sale Agreement, hereinafter defined) on the Mortgaged Property, as described in further detail herein. 3

4 13. A complete and accurate copy of said Memorandum of Right of First Refusal is attached hereto as Exhibit Upon information and belief, and at all times hereinafter mentioned, defendant New York State Workers Compensation Board is an agency and governmental subdivision of the State of New York whose headquarters is located at 328 State Street, Schenectady, New York That agency is named as a defendant to this action based upon an interest that it has or may claim to have in the Mortgaged Property pursuant to a judgment in New York County in the amount of $57,500, filed on August 8, 2014 (Index No /14). 15. Upon information and belief, and at all times hereinafter mentioned, defendant New York City Department of Transportation ( NYCDOT ) is an agency and governmental subdivision of the City of New York whose headquarters is located at 55 Water Street, 9th Floor, New York, New York NYCDOT is named as a defendant to this action based upon an interest that it has or may claim to have against the Mortgaged Property, pursuant to a Notice of Violation it filed on October 1, 2012, with respect to Block 709, Lot 3 (Index No ) (the NYCDOT Notice ). 16. A true and correct copy of the NYCDOT Notice is attached hereto as Exhibit Upon information and belief, and at all times hereinafter mentioned, defendant New York State Department of Taxation and Finance ( State Taxation and Finance ) is an agency and governmental subdivision of the State of New York, which has an address for service of legal process at Attn: Office of Counsel, Building 9, W A Harriman Campus, Albany, New York State Taxation and Finance is named as a defendant to this action based upon 4

5 a claim that it may have against Borrower for any unpaid license fees and taxes, including property taxes, with respect to the Mortgaged Property. 18. Upon information and belief, and at all times hereinafter mentioned, defendant New York City Department of Finance ( City Finance ) is an agency and governmental subdivision of the City of New York whose headquarters address for service of process is 66 John Street, Room 104, New York, New York City Finance is named as a defendant to this action based upon a claim that it may have against Borrower for any unpaid business taxes or other taxes with respect to the Mortgaged Property. John Doe Defendants The John Doe defendants constitute other individuals or entities who may be in possession of, or may have, a possessory lien or other interest in the Mortgaged Property and which possessory lien or other interest, if any, is subsequent and subordinate to the Mortgage being foreclosed herein. Said defendants are made party defendants herein for the purpose of terminating their interests in the Mortgaged Property. FACTUAL BACKGROUND The Loan 20. The mortgage loan was initially made on or about June 26, 2014, in the principal amount of $60,900,000, approximately $44,400,000 of which was immediately drawn at closing (the Loan ). The Loan was made pursuant to a Loan Agreement, dated as of June 26, 2014 (the Loan Agreement ), between UBS Real Estate Securities Inc. ( UBS ), as Lender, and Bifrost, as Borrower. 21. A complete and accurate copy of the Loan Agreement is attached hereto as Exhibit 5. 5

6 22. The Loan is evidenced by the Consolidation, Modification and Restatement of Notes Agreement, dated as of June 26, 2014, in the amount of $60,900,000 made by Bifrost and delivered to UBS (collectively, the Note ). 23. A complete and accurate copy of the Note is attached hereto as Exhibit The Note consolidates, amends and restates: a) a certain Mortgage Note dated 9/3/97 in the original principal amount of $1,800,000 by Mutual, LLC to Allied Irish Bank; b) a certain Mortgage Note dated 2/19/99 in the original principal amount of $1,000,000 made by Mutual, LLC to Allied Irish Bank plc, New York Branch; c) a certain Note Consolidation and Modification Agreement dated 2/19/99 in the original principal amount of $2,800,000 made by Mutual, LLC to Alpine Capital Bank; d) a certain Gap Mortgage Note dated 2/21/02 in the original principal amount of $418, made by Mutual, LLC to Alpine Capital Bank; e) a certain Consolidated Mortgage Note dated 2/21/02 in the original principal amount of $3,000,000 made by Mutual, LLC to Alpine Capital Bank; f) a certain Mortgage Note dated 10/27/03 in the original principal amount of $1,400,000 made by Mutual, LLC to Alpine Capital Bank; g) a certain Mortgage Note dated 6/29/05 in the original principal amount of $3,343, made by Mutual, LLC to Bank of Smithtown with Allonge between People s United Bank, successor by merger with Bank of Smithtown, to RR Fairpark LLC; h) a certain Amended, Restated and Consolidated Mortgage Note dated 6/29/05 in the original principal amount of $7,500,000 made by Mutual, LLC to Bank of Smithtown with (a) Extension of Note dated 6/29/11 between Mutual, LLC and People s United Bank, successor by merger with Bank of Smithtown, (b) Allonge between People s United Bank, successor by merger with Bank of Smithtown, to RR Fairpark LLC and (c) Allonge between RR Fairpark LLC and Israel Discount Bank of New York, together with Extension of Note Agreement dated 6/29/11 between 6

7 Ex. 6: Note, Schedule A. Ex. 6: Note at Ex. A. People s United Bank, successor by merger with Bank of Smithtown and Mutual, LLC; i) a certain Mortgage Note dated 6/29/05 in the original principal amount of $7,500,000 made by 554 West 38th Street, LLC to Bank of Smithtown with (a) Extension of Note dated 6/29/11 between 554 West 38th Street, LLC and People s United Bank, successor by merger with Bank of Smithtown, (b) Allonge between People s United Bank, successor by merger with Bank of Smithtown, to RR Fairpark LLC and (c) Allonge between RR Fairpark LLC and Israel Discount Bank of New York, together with Extension of Note Agreement dated 6/29/11 between People s United Bank, successor by merger with Bank of Smithtown, and 554 West 38th Street, LLC; j) a certain Gap Note dated October 11, 2013 in the original principal amount of $325,344.94, made by Mutual, LLC and 554 West 38th Street, LLC to Israel Discount Bank of New York; k) a certain Consolidated Amended and Restated Mortgage Promissory Note dated October 11, 2013 in the original principal amount of $12,000,000, made by Mutual, LLC and 554 West 38th Street, LLC to Israel Discount Bank of New York; and l) a certain Gap Note dated June 26, 2014 in the original principal amount of $48,900,000.00, made by Bifrost Land LLC to UBS Real Estate Securities Inc. 25. The Promissory Note for the Loan is attached to the Note as Exhibit A. 26. As detailed below, on April 8, 2015, UBS sold and assigned its interest in the Loan to , in exchange for a payment of $46,712, The Mortgage 27. Borrower s obligations under the Loan are secured by the Security Instrument (together with the Note and the Additional Loan Documents (as hereinafter defined), 7

8 collectively, the Loan Documents ), which consolidates, amends and restates all existing mortgages and forms a single lien in the amount of $60,900, Specifically, the Mortgage consolidates, amends and restates: a) a certain mortgage made in the original principal amount of $1,800,000 by Mutual LLC to Allied Irish Bank dated 9/3/97 and recorded 2/10/98 in Reel 2543 page 1463; b) a certain mortgage in the original principal amount of $1,000,000 made by Mutual LLC to Allied Irish Bank plc, New York Branch dated 2/19/99 and recorded 5/11/99 in Reel 2872 page 862; c) a certain mortgage in the original principal amount of $418, made by Mutual LLC to Alpine Capital Bank dated 2/21/02 and recorded 4/23/02 in Reel 3496 page 1896; d) a certain mortgage in the original principal amount of $1,400,000 made by Mutual LLC to Alpine Capital Bank dated 10/27/03 and recorded 1/14/04 as CRFN ; e) a certain mortgage in the original principal amount of $3,343, made by Mutual LLC to Bank of Smithtown, dated 6/29/05 and recorded 8/8/05 as CRFN ; f) a certain mortgage in the original principal amount of $7,500,000 made by 554 West 386 Street LLC to Bank of Smithtown dated 6/29/05 and recorded 7/21/05 as CRFN ; and g) a certain GAP Mortgage in the amount of $48,900,000 dated 6/26/2014 made by Bifrost Land LLC to UBS Real Estate Securities Inc. and to be recorded. Ex. 1: Security Instrument, Exhibit B. Mortgage. 29. Any applicable recording tax was duly paid at the time of recording of the 30. Pursuant to the Security Instrument, the Mortgaged Property consists of the real property described in Exhibit A to the Security Instrument, as well as all additional lands, estates, and development rights in connection with the Mortgaged Property; structures or 8

9 buildings located on the Mortgaged Property, including equipment and fixtures; personal property located in the Mortgaged Property, including contract rights, licenses, certificates and permits; easements and other beneficial interests; and leases and rents with respect to the Mortgaged Property. See Ex. 1: Security Instrument Plaintiff is the owner and holder of the Mortgage and Note. Relevant Provisions of the Loan Documents 32. The Loan Documents provide, inter alia, that the Borrower will pay the principal and interest and all other sums to become due and owing pursuant to the Loan Documents, at the time and place and in the manner specified in the Loan Documents. Ex. 1: Security Instrument Pursuant to the Loan Documents, the Borrower agreed to pay Lender the outstanding principal due on the Note in full on July 9, 2015 (the Scheduled Maturity Date ), together with all other sums due and owing as more fully set forth in the Loan Documents. Ex. 5: Loan Agreement 2.3.2, defined at pp. 9, The Loan Documents grant the Borrower the option to obtain a six-month extension of the Scheduled Maturity Date, whereby the Scheduled Maturity Date would be extended to January 9, 2016, but to obtain that extension, the Borrower was required to satisfy certain conditions precedent set forth in the Loan Documents. Ex. 5: Loan Agreement 2.8. As set forth below, the Borrower has not satisfied those conditions. 35. The Promissory Note attached to the Note provides, in pertinent part: The Debt shall without notice become immediately due and payable at the option of Lender if any payment required in this Note is not paid on or prior to the date when due (after giving effect to any applicable notice and cure periods expressly set forth in the Loan Documents) or if not paid on the Maturity Date or on the 9

10 happening of any other Event of Default. Ex. 6: Note at Exhibit A, Promissory Note, Article The Loan Agreement sets forth several Events of Default, including Borrower s failure to pay the amount of Debt due on the Scheduled Maturity Date, Borrower s allowing a lien to be filed on the Mortgaged Property, and a default by Borrower under any other terms or covenants of the Loan Agreement. part: 37. Specifically, Section 10.1 of the Loan Agreement provides, in pertinent Section Event of Default. (a) Each of the following events shall constitute an event of default hereunder (an Event of Default ): (i) (A) if any monthly Debt Service, any monthly deposit of Reserve Funds or the payment due on the Maturity Date is not paid when due or (B) if any other portion of the Debt is not paid when due; provided that, with respect to this clause (B), such nonpayment continues for ten (10) days following notice to Borrower that the same is due and payable; provided however, so long as (x) there are no legal impediments to withdrawal of funds in the Debt Service Reserve Account and Lender s access to such funds has not been impaired or impeded by Borrower, (y) there are sufficient funds in the Debt Service Reserve Account to make the applicable payment (after taking into account any pending disbursements) and (z) after giving effect to such disbursement, a Debt Service Reserve Shortfall shall not exist, any failure under clause (i)(a) shall not constitute an Event of Default if Lender is obligated to and fails to make available funds available in the Debt Service Reserve Account to payment of such amounts;... (x) if Borrower shall be in default beyond any applicable cure periods under any agreement (other than the Loan Documents) creating a Lien on the Property or any part thereof;... (xxi) if Borrower shall continue to be in Default under any of the other terms, covenants or conditions of this Agreement not specified in clauses (i) to (xx) above, for ten (10) days after notice to Borrower from Lender, in the case of any Default which can be cured by the payment of a sum of money, or for thirty (30) days after notice from Lender in the case of any other Default; provided, 10

11 however, that if such non-monetary Default is susceptible of cure but cannot reasonably be cured within such thirty (30) day period and provided further that Borrower shall have commenced to cure such Default within such thirty (30) day period and thereafter diligently and expeditiously proceeds to cure the same, such thirty (30) day period shall be extended for such time as is reasonably necessary for Borrower in the exercise of due diligence to cure such Default, such additional period not to exceed ninety (90) days;.... Ex. 5: Loan Agreement 10.1(a)(i), (x), (xxi). 38. Sections 10.1(b) and 10.2 of the Loan Agreement set forth Lender s remedies in the event of a default by Borrower. 39. Section 10.1(b) provides, in pertinent part: Upon the occurrence of an Event of Default (other than an Event of Default described in Section 10.1(a)(vi), (vii) or (viii) above) Lender may, in addition to any other rights or remedies available to it pursuant to this Agreement and the other Loan Documents or at law or in equity, take such action, without notice or demand, that Lender deems advisable to protect and enforce its rights against Borrower and in and to the Property, including, without limitation, declaring the Debt to be immediately due and payable, and Lender may enforce or avail itself of any or all rights or remedies provided in the Loan Documents against Borrower and the Property, including, without limitation, all rights or remedies available at law or in equity;.... Ex. 5: Loan Agreement 10.1(b). 40. Section 10.2(a) provides, in pertinent part: Upon the occurrence of an Event of Default, all or any one or more of the rights, powers, privileges and other remedies available to Lender against Borrower under this Agreement or any of the other Loan Documents executed and delivered by, or applicable to, Borrower or at law or in equity may be exercised by Lender at any time and from time to time, whether or not all or any portion of the Debt shall be declared due and payable, and whether or not Lender shall have commenced any foreclosure proceeding or initiated or taken other action for the enforcement of its rights and remedies under any of the Loan Documents with respect to all or any part of the Property. Any such actions taken by Lender shall be cumulative and concurrent and may be pursued independently, singly, successively, together or otherwise, at such time and in such order as Lender may determine in its sole and absolute discretion, to the fullest extent permitted by law, without impairing or 11

12 otherwise affecting the other rights and remedies of Lender permitted by law, equity or contract or as set forth herein or in the other Loan Documents.... Ex. 5: Loan Agreement 10.2(a). 41. The Security Instrument also provides Lender with certain remedies upon an Event of Default by Borrower: Upon the occurrence and during the continuance of any Event of Default, Borrower agrees that Lender may take such action, without notice or demand, as it deems advisable to protect and enforce its rights against Borrower and in and to the Property, including, but not limited to, the following actions, each of which may be pursued concurrently or otherwise, at such time and in such order as Lender may determine, its sole discretion, without impairing or otherwise affecting the other rights and remedies of Lender: (a) declare the entire unpaid Debt to be immediately due and payable; (b) institute proceedings, judicial or otherwise, for the complete foreclosure of this Security Instrument under any applicable provision of law, in which case the Property or any interest therein may be sold for cash or upon credit in one or more parcels or in several interests or portions and in any order or manner;.... Ex. 1: Security Instrument 7.1 (a)-(b). 42. The Loan Agreement requires the Borrower to pay Lender all reasonable out-of-pocket costs and expenses (including reasonable attorneys fees and expenses) incurred by the Lender in connection with... enforcing any obligations of, or collecting any payments due from, Borrower or Guarantor under this Agreement or the other Loan Documents or with respect to the Property. Ex. 5: Loan Agreement 11.13(a)(vi). 43. Section of the Loan Agreement provides that interest accrues on the principal balance of the Loan (the Interest ): Except as herein provided with respect to interest accruing at the Default Rate, interest on the principal balance of the Loan outstanding from time to time shall accrue from (and including) the Closing Date up to and including the end of the last Interest Period at the Applicable Interest Rate. 12

13 Ex. 5: Loan Agreement follows: 44. Pursuant to Section of the Loan Agreement, Interest is calculated as Interest on the Outstanding Principal Balance of the Loan shall be calculated by multiplying (a) the actual number of days elapsed in the period for which the calculation is being made by (b) a daily rate based on a three hundred sixty (360) day year by (c) the Outstanding Principal Balance. Ex. 5: Loan Agreement Pursuant to Section of the Loan Agreement, Interest accrues at a higher Default Rate upon a default by Borrower: In the event that, and for so long as, any Event of Default shall have occurred and be continuing, the outstanding principal balance of the Loan shall accrue interest at the Default Rate, calculated from the date the Event of Default occurred. If all or any part of the principal amount of the Loan is prepaid upon acceleration of the Loan following the occurrence and during the continuance of an Event of Default prior to the Open Prepayment Commencement Date, Borrower shall be required to pay Lender, in addition to all other amounts then payable hereunder, the Yield Maintenance Premium calculated with respect to the amount of principal being repaid together with the applicable Breakage Costs and the applicable Exit Fee. Ex. 5: Loan Agreement Additional Loan Documents 46. Other obligations by the Borrower with respect to the Loan are set forth in the following documents, each of which is dated as of June 26, 2014, unless otherwise indicated (collectively, the Additional Loan Documents ): a) a certain Assignment and Assumption of Leases, wherein Borrower absolutely and unconditionally conveyed to Lender all leases, and all the rents, issues and profits arising from the leases relating to the Mortgaged Property, a complete and accurate copy of which is attached hereto as Exhibit 7; 13

14 Assignment of the Loan b) a certain Assignment of Licenses and Permits, wherein Borrower assigned licenses and permits relating to the Mortgaged Property to Lender, a complete and accurate copy of which is attached hereto as Exhibit 8; c) a certain Collateral Assignment of Interest Rate Protection Agreement, wherein Borrower agreed, as additional security for the obligations of Borrower pursuant to the Loan Agreement, to assign and transfer to Lender its rights and interest, including all payments, distributions, disbursements or proceeds, in the Interest Rate Protection Agreement, as well as a security interest in and to the Interest Rate Protection Agreement, 1 a complete and accurate copy of which is attached hereto as Exhibit 9; and d) a certain Memorandum of Right of First Refusal, dated June 26, 2014, wherein Borrower agreed to grant to defendants Mutual, LLC, 554 West 38th Street, LLC, and Jacob I. Sopher a/k/a Hank Sopher, an option to purchase or lease a Garage. See Ex. 3: Memorandum of Right of First Refusal. Garage is defined in Article 17 of the Purchase and Sale Agreement by and between Mutual LLC and 554 West 38th Street LLC, dated August 22, 2012, 2 a complete and accurate copy of which is attached hereto as Exhibit 10, as follows: The Principal [i.e., the Buyer, its principals or their successors and/or assigns] acknowledges and agrees that it may build within the Principal s Development [i.e., the Mortgaged Property and certain other nearby parcels] a garage or parking facility or multiple garages and parking facilities (collectively the Garage ).... Ex. 10: Purchase and Sale Agreement, Article The Loan Agreement expressly permits UBS, as the lender, to assign the Loan to another lender. Ex. 5: Loan Agreement 9.1(a), Interest Rate Protection Agreement is defined in the Loan Agreement as one or more interest rate caps (together with the schedules relating thereto) in form and substance satisfactory to Lender, together with the confirmation thereto, between Borrower and, subject to Section 2.5, a Counterparty reasonably acceptable to Lender with a Minimum Counterparty Rating, and all amendments, restatements, replacements, supplements and modifications thereto. Ex. 5: Loan Agreement, defined at p The Purchase and Sale Agreement has been subsequently amended. A complete and accurate copy of the First Amendment of Agreement, dated February 21, 2013, is attached hereto as Exhibit 11. A complete and accurate copy of the Second Amendment of Agreement, dated June 4, 2013, is attached hereto as Exhibit 12. A complete and accurate copy of the Third Amendment of Agreement, dated November 18, 2013, is attached hereto as Exhibit

15 48. UBS sold and assigned the Loan in its entirety to , in exchange for a payment of $46,712,256.21, pursuant to an Assignment of Loan Documents executed by UBS, dated April 8, attached hereto as Exhibit A complete and accurate copy of the Assignment of Loan Documents is 50. The Assignment of Loan Documents provides in pertinent part, as follows: UBS REAL ESTATE SECURITIES INC., a Delaware corporation, having an address at 1285 Avenue of the Americas, New York, New York ( Assignor ) for good and valuable consideration, the receipt and sufficiency of which are acknowledged, hereby sells, transfers, assigns, delivers, set-over and conveys, unto TH AVENUE LLC, a Delaware limited liability company, having an address c/o Kuafu Properties LLC, 1500 Broadway, Suite 2202, New York, NY ( Assignee ), its successors and assigns, all of the right, title and interest of Assignor in and to: That certain Consolidation, Modification and Restatement Agreement (the Security Instrument ), and that certain Consolidation, Modification and Restatement of Notes Agreement (the Note ), each dated as of June 26, 2014 and made by BIFROST LAND LLC in the principal sum of $60,900, including, without limitation, all of Assignor s right, title and interest in any claims, collateral, insurance policies, certificates of deposit, letters of credit, assignment of management and subordination of management fees agreements, environmental indemnity agreements, guaranty agreements, escrow accounts, performance bonds, demands, cause of action and any other collateral arising out of and/or executed and/or delivered in or to or with respect to the Security Instrument and the Note, together with any other documents or instruments executed and/or delivered in connection with or otherwise related to the Security Instrument and the Note. 51. The Loan Sale Agreement dated as of April 8, 2015 between Lender and UBS (the Loan Sale Agreement ) states in pertinent part: Seller [i.e., UBS] desires to sell to Buyer [i.e., Lender], and Buyer desires to purchase from Seller, all of Seller s right, title, and interest in and to the Loan and the Loan Documents on the terms and conditions set forth herein. 15

16 52. A complete and accurate copy of the Loan Sale Agreement is attached hereto as Exhibit The Assignment of Consolidation, Modification and Restatement Agreement, dated April 8, 2015, was recorded on July 8, 2015, in the Office of the New York City Register, New York County under CRFN# A complete and accurate copy of the Assignment of Consolidation, Modification and Restatement Agreement is attached hereto as Exhibit 16. The Borrower s Defaults 55. The Borrower has defaulted under the Loan Documents by, inter alia, failing to pay the remaining principal on the Loan by the Scheduled Maturity Date of July 9, Although the Loan Documents permit an extension of the Scheduled Maturity Date if Borrower satisfies certain conditions precedent, the Borrower failed to satisfy the conditions precedent necessary for such an extension. See Ex. 5: Loan Agreement By its actions and inactions, Borrower committed an Event of Default under Section 10.1(a)(i)(A) of the Loan Agreement. 58. In addition, at least one lien, the AJLP Mechanic s Lien, has been filed against the Mortgaged Property and Borrower has not discharged that lien, thus causing an Event of Default under Sections 10.1(a)(x) and (a)(xxi) of the Loan Agreement. See Ex. 5: Loan Agreement ( Borrower shall not create, incur, assume or suffer to exist any Lien on any direct interest in Borrower or any portion of the Property ); id. 10.1(a)(xxi) (an Event of Default exists if Borrower shall continue to be in Default under any of the other terms, covenants or conditions of this Agreement ); see also id. 10.1(a)(x) (an Event of Default exists 16

17 if Borrower shall be in default beyond any applicable cure periods under any agreement (other than the Loan Documents) creating a Lien on the Property or any part thereof ). 59. Although not required, Lender provided notice to Borrower of Borrower s default in connection with the AJLP Mechanic s Lien, pursuant to a letter dated April 20, 2015, a complete and accurate copy of which is attached hereto as Exhibit 17. Waiver of Counterclaims 60. Pursuant to the Loan Documents, Borrower waived its right to assert counterclaims, other than compulsory counterclaims, in any action or proceeding against it by Lender arising out of or in any way connected to the Loan Documents. 61. The Loan Agreement provides, in pertinent part: Borrower hereby waives the right to assert a counterclaim, other than a compulsory counterclaim, in any action or proceeding brought against it by Lender or its agents or otherwise, to offset any obligations to make the payments required by the Loan Documents. No failure by Lender to perform any of its obligations hereunder shall be a valid defense to, or result in any offset against, any payments which Borrower is obligated to make under any of the Loan Documents. Ex. 5: Loan Agreement The Security Instrument also provides, in pertinent part: To the extent permitted by applicable law, Borrower hereby waives the right to assert a counterclaim, other than a mandatory or compulsory counterclaim, in any action or proceeding brought against it by Lender arising out of or in any way connected with this Security Instrument, the Loan Agreement, the Note, any of the other Loan Documents, or the Obligations. Ex. 1: Security Instrument Pursuant to these provisions of the Loan Documents, Borrower is prohibited from asserting any counterclaims in this or any other action concerning the Loan Documents. 17

18 fully set forth herein. AS AND FOR A FIRST CAUSE OF ACTION (Foreclosure of the Mortgage) 64. Lender repeats and realleges all of the preceding paragraphs as if more 65. There is now due and owing to the Lender under the Loan Documents, the principal sum of $44,400,000, together with accrued and unpaid Interest, including Interest at the Default Rate. Also now due are all other sums due and owing under the Loan Documents, plus the costs of collection including, without limitation, reasonable attorneys fees and expenses and other sums, all as more fully provided for in the Loan Documents, which sums are due and owing in addition to any usual costs and allowances which Lender may be entitled to and may be awarded under any law or statute applicable to this action. 66. In order to protect its security, Lender may be compelled to pay during the pendency of this action taxes, water and sewage charges, assessments, insurance premiums and other charges necessary or advisable to maintain or increase the value of, or otherwise affecting, the Mortgaged Property, and Lender requests that any sums so advanced and any other sums of like nature so paid during the pendency of this action be added to the amount otherwise due to Lender and be deemed secured by the Mortgage and adjudged a valid lien on the Mortgaged Property. 67. Upon information and belief, the interest, liens, or claims of the defendants herein are all subordinate and subject to the lien of the Mortgage held by the Lender and being foreclosed herein and no persons or entities other than those described herein have, may have, or claim to have any interest in and/or lien upon the Mortgaged Property superior to the lien of the Mortgage being foreclosed. 18

19 68. In the event that Lender possesses any other lien(s) against the Mortgaged Property or otherwise, Lender requests that such other lien(s) shall not be merged in Lender s causes of action set forth in this complaint, but that Lender shall be permitted to enforce said other lien(s) and/or seek or proceeding(s), including, without limitation, any surplus money proceedings. 69. Lender requests that in the event that this action will proceed to judgment of foreclosure and sale, the Mortgaged Property should be sold subject to the following: a) Any state of facts that an inspection of the Mortgaged Property would disclose. b) Any state of facts that an accurate survey of the Mortgaged Property would show. c) Covenants, restrictions, easements and public utility agreements of record, if any. d) Building and zoning ordinances of the municipality in which the Mortgaged Property is located and possible violations of same. e) Any rights of tenants or persons in possession of the Mortgaged Property. f) Any equity of redemption of the United States of America to redeem the Mortgaged Property within 120 days from date of sale. g) Prior mortgage liens of record, if any, and any advances and arrears thereunder. h) Prior lien(s) of record, if any. 70. Upon information and belief, each and all of the defendants herein have or claim to have some interest in, or lien upon, the Mortgaged Property, or some part thereof, which interest or lien, if any, has accrued after the lien of the Mortgage and is subordinate thereto. 71. Bifrost is a named necessary party defendant to bar and foreclose it from all right, title and interest it has or claims to have in the Mortgaged Property. 19

20 72. AJLP is a named necessary party defendant to bar and foreclose it from all right, title and interest it has or claims to have in the Mortgaged Property. 73. Mutual, LLC is a named necessary party defendant to bar and foreclose it from all right, title and interest it has or claims to have in the Mortgaged Property West 38th Street, LLC is a named necessary party defendant to bar and foreclose it from all right, title and interest it has or claims to have in the Mortgaged Property. 75. Sopher is a named necessary party defendant to bar and foreclose him from all right, title and interest he has or claims to have in the Mortgaged Property. 76. New York State Workers Compensation Board is a named necessary party defendant to bar and foreclose it from all right, title and interest it has or claims to have in the Mortgaged Property. 77. NYCDOT is a named necessary party defendant to bar and foreclose it from all right, title and interest it has or claims to have in the Mortgaged Property. 78. State Taxation and Finance is named as a necessary party defendant solely by virtue of any possible license fees and taxes as may be due from Borrower, which license fees and taxes are subject and subordinate to the lien of the Mortgage herein foreclosed, and for no other reason. 79. City Finance is named as a necessary party defendant solely by virtue of any possible unpaid business taxes as may be due from Borrower, which unpaid taxes are subject and subordinate to the lien of the Mortgage herein foreclosed, and for no other reason. 80. None of the defendants are infants, absentees or incompetents, nor have they been proceeded against as such. 20

21 81. No other action or proceeding has been commenced or maintained or is now pending at law or otherwise for the foreclosure of the Mortgage or for recovery of the sums secured by the Note and Mortgage or any part thereof. 82. Lender shall not be deemed to have waived, altered, released or changed the election hereinafter made by reason of the payment after the date of the commencement of this action of any or all of the defaults mentioned herein, and such election shall continue and remain effective until the costs and disbursements of this action, and any and all future defaults under the Loan Documents, and occurring prior to the discontinuance of this action, are fully paid. 83. By virtue of the foregoing, Lender is entitled to a judgment of foreclosure under the Mortgage. WHEREFORE, the Plaintiff Lender demands judgment: (a) that the defendants and all persons claiming by, through or under them and every person whose right, title, conveyance or encumbrance is recorded subsequent to the filing of the Notice of Pendency of this action in the Office of the Clerk of New York County be barred and foreclosed of and from all estate, right, title, interest, claim, lien, and equity of redemption in and to the Mortgaged Property and each and every part thereof; (b) directing that said Mortgaged Property be sold according to law and that the monies arising from the sale be brought into Court; that all of the Mortgaged Property shall be offered as one parcel; and that defendants shall surrender possession to the purchaser or purchasers, of all items of property sold at the foreclosure sale; 21

22 (c) appointing a receiver to collect the rents, issues, benefits and profits of the Mortgaged Property during the pendency of this action or to perform such other acts as the Court orders and deems appropriate; (d) that Lender be paid the amounts due under the Loan Documents from the proceeds of the foreclosure sale with any and all applicable interest thereon to the time of such payment, together with the expenses of the sale and the costs, allowances, disbursements of this action, any sums advanced or paid by the Lender to protect the lien of Lender s Mortgage including, but not limited to, taxes, water and sewer charges, assessments, insurance premiums and repair and maintenance costs in connection with the Mortgaged Property, late charges due under the Loan Documents, and all other charges which may have been advanced by Lender to protect the security afforded by the Mortgage and all other charges and liens on the Mortgaged Property to be paid, with appropriate interest thereon from the dates of the respective payments and advances thereof, so far as the amounts of such monies properly applicable thereto will pay the same; (e) that Lender may specifically enforce each and every contract, including any and all Additional Loan Documents, rights and agreement assigned to it by the defendants, as Lender may choose in its own discretion not inconsistent with foreclosure of the Mortgage; (f) that the referee (or other officer) making such sale be directed to pay from the proceeds thereof all taxes, assessments, valuations and other charges which are liens on the property sold; (g) that the entry of judgment in this action be filed in the New York County Clerk s Office by certified copy; (h) that advertisement of the notice of sale be made in New York County; 22

23 (i) that the purchaser or purchasers at said sale be let into possession on production or delivery of referee s deed or deeds; and (j) awarding to Lender such other and further relief as may be just and proper, including costs, disbursements and reasonable attorneys fees in this action. 23

24 Dated: New York, New York July 10, 2015 FRIED, FRANK, HARRIS, SHRIVER & JACOBSON LLP By: /s/ Janice Mac Avoy Janice Mac Avoy Mark Siegmund Chelsea P. Azrak One New York Plaza New York, New York (212) Attorneys for Plaintiff th Avenue LLC