FILED: NEW YORK COUNTY CLERK 07/29/ :47 PM INDEX NO /2016 NYSCEF DOC. NO. 45 RECEIVED NYSCEF: 07/29/2016

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1 FILED: NEW YORK COUNTY CLERK 07/29/ :47 PM INDEX NO /2016 NYSCEF DOC. NO. 45 RECEIVED NYSCEF: 07/29/2016 MEZZANINE LOAN AGREEMENT Dated as of January 16, 2015 Between BH SUTTON MEZZ LLC, as Borrower And GAMMA LENDING S58 LP, as Lender KL

2 TABLE OF CONTENTS 1. DEFINITIONS; PRINCIPLES OF CONSTRUCTION Specific Definitions Index of Other Definitions Principles of Construction 6 2. GENERAL LOAN TERMS The Loan Interest; Monthly Payments Loan Repayment Release of Collateral Payments and Computations Exit Fee 9 3. REPRESENTATIONS AND WARRANTIES Organization; Special Purpose Proceedings; Enforceability No Conflicts Litigation Agreements Title No Bankruptcy Filing Full and Accurate Disclosure Tax Filings Compliance Pledged Collateral Leases Fraudulent Transfer Ownership of Borrower Hazardous Substances Name; Principal Place of Business Other Debt Embargoed Person Anti-Money Laundering Purchase Documents Tenant Buyout Agreements Material Contracts Obligations under Material Contracts Senior Loan Contractual Obligations COVENANTS Existence Taxes 15 Page KL

3 Page 4.3 Compliance with Law; Alterations Performance of Other Agreements Cooperate in Legal Proceedings Further Assurances Environmental Matters Title to the Property; Liens Leases Special Purpose Bankruptcy Remote Entity Change in Business or Operation of Property Zoning No Joint Assessment Principal Place of Business Change of Name, Identity or Structure Indebtedness Compliance with Restrictive Covenants, Etc Prohibited Transfers Liens Dissolution Expenses Indemnity Embargoed Person Anti-Money Laundering Access to Property Development Plan Material Contracts Contractual Obligations Senior Loan NOTICES AND REPORTING Notices Borrower Notices and Deliveries Financial Reporting Other Reports INSURANCE; CASUALTY; AND CONDEMNATION Insurance Casualty Condemnation Application of Proceeds or Award DEFAULTS Events of Default Remedies MISCELLANEOUS Recourse 33 KL

4 Page 8.2 Survival Lender's Discretion Governing Law Modification, Waiver in Writing Trial by Jury Head ings/exhib its Severability Preferences Certain Waivers Remedies of Borrower Prior Agreements Offsets, Counterclaims and Defenses Publ icity No Usury Conflict; Construction of Documents No Third Party Beneficiaries Assignment Set-Off Counterparts Proofs of Claim Waiver of Stay 38 LIST OF SCHEDULES Exhibit A - Exhibit B - Exhibit C - Contract Air Rights and Purchase Documents Tenants Development Plan Schedule 1 - Index of Other Definitions Schedule 2 - Organization of Borrower Schedule 3 - Definition of Special Purpose Bankruptcy Remote Entity Schedule 4 - Obligations under Purchase Documents KL

5 MEZZANINE LOAN AGREEMENT MEZZANINE LOAN AGREEMENT dated as of January 16, 2015 (as the same may be modified, supplemented, amended or otherwise changed, this "Agreement") between BH SUTTON MEZZ LLC, a Delaware limited liability company (together with its permitted successors and assigns, "Borrower"), and GAMMA LENDING S58 LP, a Delaware limited partnership (together with its successors and assigns, "Lender"). 1. DEFINITIONS; PRINCIPLES OF CONSTRUCTION 1.1 Specific Definitions. The following terms have the meanings set forth below: Key Terms and Definitions. Accrued Interest: with respect to each Interest Period, the portion of interest that accrued during such Interest Period and not paid as Current Pay Interest in accordance with the terms hereof. Collateral: all collateral securing or intended to secure the Debt, including, without limitation, the Pledged Collateral. Contract Air Rights: each of the parcels identified on the attached Exhibit A which Owner has contracted, pursuant to the Purchase Documents, to expand the zoning lot of the Property and/or purchase unused development rights. Contract Property: the parcel of real property known as 426 East 58 th Street, New York, New York (identified on the Tax Map of New York County as Block 1369, Lot 36) and all improvements now or hereafter erected thereon, together with all rights pertaining to such real property and improvements. Contract Property PSA: that certain Agreement of Sale dated as of the date hereof between Owner, as "purchaser," and ECC Realty LLC, as "seller," whereby Owner shall acquire fee title to the Contract Property. Current Pay Interest: with respect to each Interest Period, the portion of interest that accrued during such Interest Period at a rate equal to four and one-half percent (4.50%) per annum; provided, however, that from and after Owner's entering into of a Permitted Financing pursuant to Section 4.16 of the Senior Loan Agreement, Current Pay Interest shall mean all interest that accrued during the applicable Interest Period. Exit Fee: ($2,200,000.00). Two Million Two Hundred Thousand and No/100 Dollars Guarantor: collectively, Joseph Beninati, an individual having an address at 42 Mooreland Rd, Greenwich, CT 06830, Christopher Jones, an individual having an address at 162 Bay Street, Sag Harbor, New York and Daniel Lee, an individual having an address at 250 East 40th Street, Apt. 19B, New York, New York KL

6 Inclusionary Purchase Documents: each of the following documents associated with the offsite affordable housing transaction relating to 222 East 40 th Street (a/k/a 225 East 39th Street), New York, New York, and identified as being in Block 920, Lot 13 on the Tax Map of the City and County of New York (the "Off-Site Development"): (i) that certain Inclusionary Housing Regulatory Agreement from The City of New York, acting by and through its Department of Housing Preservation and Development (the "HPD"), (ii) that certain Inclusionary Air Rights Purchase Agreement between Owner, as "purchaser," and Gemini Residential, LLC, a Delaware limited liability company, as "seller" and (iii) the building permit ready notice from the HPD for the Off-Site Development. Interest Rate: Nine percent (9.00%) per annum. Owner: SUTTON 58 OWNER, LLC, a New York limited liability company. Principal: the original principal amount of Twenty Million and No/100 Dollars ($20,000,000.00), plus all Accrued Interest added to the principal balance of the Loan pursuant to Section 2.2 hereof. Property: the parcels of real property owned by Owner and known as 428, 430 and 432 East 58 th Street, New York, New York (identified on the Tax Map of New York County as Block 1369, Lots 35, 34 and 133) and all improvements now or hereafter erected thereon (the "Improvements"). From and after Owner's acquisition of the Contract Property or any Contract Air Rights, the Property shall be deemed to include such Contract Property or Contract Air Rights. Purchase Documents: means, collectively, the Contract Property PSA, the Inclusionary Purchase Documents and each of the purchase and sale agreements identified on the attached Exhibit A relating to the Contract Air Rights, together with any documents and instruments executed or to be executed in relation thereto (including, without limitation, all zoning lot development and easement agreements, declarations of zoning lot restrictions, architect's certificates, waivers of declaration of zoning lot restrictions and consent and subordination to zoning lot development and easement agreements, and parties-in-interest certifications relating to the Contract Air Rights). Stated Maturity Date: August 1, Tenant Buyout Agreements: means each of the agreements executed with respect to the tenants listed on the attached Exhibit B Additional Terms and Definitions. Affiliate: as to any Person, any other Person that, directly or indirectly, is in Control of, is Controlled by or is under common Control with such Person or is a director or officer of such Person or of an Affiliate of such Person. Business Day: any day other than a Saturday, Sunday or any day on which commercial banks in New York, New York are authorized or required to close. KL

7 Code: 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. Contractual Obligation: as to any Person, any provision of any security issued by such Person or of any agreement, instrument or undertaking to which such Person is a party or by which it or any of its property is bound. Control: with respect to any Person, either (i) ownership directly or indirectly of fifty percent (50%) or more of all equity interests in such Person or (ii) the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, through the ownership of voting securities, by contract or otherwise. Debt: the unpaid Principal, all interest accrued and unpaid thereon, the Exit Fee and all other sums due to Lender in respect of the Loan or under any Loan Document. Default: the occurrence of any event under any Loan Document which, with the giving of notice or passage of time, or both, would be an Event of Default. Default Rate: a rate per annum equal to the lesser of (i) the maximum rate permitted by applicable law, or (ii) twenty-four percent (24%) per annum, compounded monthly. GAAP: generally accepted accounting principles in the United States of America as of the date of the applicable financial report. Governmental Authority: any court, board, agency, commission, office or authority of any nature whatsoever for any governmental unit (federal, state, county, district, municipal, city or otherwise) now or hereafter in existence. Interest Period: (i) the period from the date hereof through and including January 31, 2015, and (ii) each period thereafter from the first day of each calendar month through and including the last day of each calendar month. Leases: all leases and other agreements or arrangements heretofore or hereafter entered into affecting the use, enjoyment or occupancy of, or the conduct of any activity upon or in, the Property or the Improvements, including any guarantees, extensions, renewals, modifications or amendments thereof and all additional remainders, reversions and other rights and estates appurtenant thereunder. Legal Requirements: statutes, laws, rules, orders, regulations, ordinances, judgments, decrees and injunctions of Governmental Authorities (including those regarding fire, health, handicapped access, sanitation, ecological, historic, zoning, environmental protection, wetlands and building laws and the Americans with Disabilities Act of 1990, Pub. L. No , 104 Stat. 327 (1990), as amended, and all regulations promulgated pursuant thereto) affecting Owner, Borrower, any Loan Document or all or part of the Collateral or of the Property or the construction, ownership, use, alteration or operation thereof, whether now or hereafter enacted and in force, and all permits, licenses and authorizations and regulations relating thereto, and all KL

8 covenants, agreements, restrictions and encumbrances contained in any instrument, either of record or known to Borrower, at any time in force affecting all or part of the Property. Lien: any mortgage, deed of trust, lien (statutory or otherwise), pledge, hypothecation, easement, restrictive covenant, preference, assignment, security interest or any other encumbrance, charge or transfer of, or any agreement to enter into or create any of the foregoing, on or affecting (i) all or any part of the Property or any interest therein, (ii) any direct or indirect interest in Borrower or (iii) all or any part of the Collateral, including any conditional sale or other title retention agreement, any financing lease having substantially the same economic effect as any of the foregoing, the filing of any financing statement, and mechanic's, materialmen's and other similar liens and encumbrances. Liquidation Event: (i) any Casualty to the Property or any material portion thereof, (ii) any Condemnation of the Property or any material portion thereof, (iii) a Transfer of the Property in connection with realization thereon following an Event of Default under the Senior Loan, including without limitation a foreclosure sale, or (iv) any refinancing or payoff of the Senior Loan. Loan Documents: this Agreement and all other documents, agreements and instruments now or hereafter evidencing, securing or delivered to Lender in connection with the Loan, including, the following, each of which is dated as of the date hereof: (i) the Mezzanine Promissory Note made by Borrower to Lender in the original principal amount of the Loan (the "Note"), (ii) the Pledge and Security Agreement made by Borrower to Lender (the "Pledge") which creates a security interest in the 100% ownership interest of Borrower in Owner (the "Pledged Collateral"), and (iii) the Guaranty of Recourse Obligations made by Guarantor for the benefit of the Lender; as each of the foregoing may be (and each of the foregoing defined terms shall refer to such documents as they may be) amended, restated, replaced, supplemented or otherwise modified from time to time. Material Contract: the Tenant Buyout Agreements, the Purchase Documents and each other contract and agreement relating to the ownership, management, development, use, operation, leasing, maintenance, repair or improvement of the Property or any other contract and/or agreement that is in excess of $50,000 on any annual basis or that is otherwise material to the use and operation of the Property or to Borrower (including, without limitation, to Borrower's carrying out of the Development Plan). Maturity Date: the date on which the final payment of principal of the Note becomes due and payable as therein provided, whether at the Stated Maturity Date, by declaration of acceleration, or otherwise. Net Liquidation Proceeds After Debt Service: with respect to any Liquidation Event, all amounts paid to or received by or on behalf of Owner in connection with such Liquidation Event, including, without limitation, proceeds of any sale, refinancing or other disposition or liquidation, less (i) Lender's and/or Senior Lender's reasonable costs incurred in connection with the recovery thereof, (ii) in the case of Casualty or Condemnation, the costs incurred by Owner in connection with a restoration of the Property made in accordance with the Senior Loan Documents, (iii) amounts required or permitted to be deducted therefrom and KL

9 amounts paid pursuant to the Senior Loan Documents to Senior Lender, (iv) in the case of a foreclosure sale, disposition or Transfer of the Property in connection with realization thereon following an Event of Default under the Senior Loan, such reasonable and customary costs and expenses of sale or other disposition (including attorneys' fees and brokerage commissions), (v) in the case of a foreclosure sale, such costs and expenses incurred by Senior Lender under the Senior Loan Documents as Senior Lender shall be entitled to receive reimbursement for under the terms of the Senior Loan Documents and (vi) in the case of a refinancing of the Senior Loan, such costs and expenses (including reasonable attorneys' fees) of such refinancing as shall be reasonably approved by Lender. Senior Loan: that certain mortgage loan in the original principal amount of $32,250,000 made on the date hereof by Senior Loan Lender to Owner, and evidenced and secured by the Senior Loan Documents. Senior Loan Agreement: the Loan Agreement dated as of the date hereof between Senior Loan Lender and Owner, as the same made be amended, restated, replaced, supplemented or otherwise modified from time to time with the consent of Lender. Agreement. Senior Loan Documents: the "Loan Documents" as defined in the Senior Loan Senior Loan Lender: Gamma Funding S58 LP, and any subsequent holder of the Senior Loan to whom the Senior Loan has been assigned. Officer's Certificate: signed by Guarantor. a certificate delivered to Lender by Borrower which is Payment Date: the first day of each calendar month or, if such day is not a Business Day, the immediately preceding Business Day. Permitted Encumbrances: (i) the Liens created by the Loan Documents, (ii) all Liens and other matters disclosed in Lender's loan policy of title insurance (to the extent a copy of the same has been delivered to Lender on or prior to the date hereof), (iii) Liens, if any, for Taxes or other charges not yet due and payable and not delinquent, (iv) any workers', mechanics' or other similar Liens on the Property provided that any such Lien is bonded or discharged within thirty (30) days after Borrower first receives notice of such Lien, (v) such other title and survey exceptions as Lender approves in writing in Lender's discretion, (vi) the Liens created by the Senior Loan Documents and (vii) from and after Borrower's satisfaction of all requirements set forth in Section 4.16 hereof, the Permitted Financing. Person: any individual, corporation, partnership, limited liability company, joint venture, estate, trust, unincorporated association, any other person or entity, and any federal, state, county or municipal government or any bureau, department or agency thereof and any fiduciary acting in such capacity on behalf of any of the foregoing. Rents: all rents, rent equivalents, moneys payable as damages (including payments by reason of the rejection of a Lease in a Bankruptcy Proceeding) or in lieu of rent or rent equivalents, income, fees, receivables, receipts, revenues, deposits (including security, KL

10 utility and other deposits), accounts, cash, issues, profits, charges for services rendered, and other payment and consideration of whatever form or nature received by or paid to or for the account of or benefit of Borrower or any of its agents or employees from any and all sources arising from or attributable to the Property and the Improvements, including proceeds, if any, from business interruption or other loss of income insurance. Security Documents: collectively, (i) the Pledge, (ii) a notice of pledge to Owner, (iii) all Uniform Commercial Code financing statements required by this Agreement to be filed with respect to the security interests in personal property created pursuant to the Security Documents, (iv) the Subject Securities (as such term is defined in the Pledge) and (v) all other documents and agreements executed or delivered to Lender by Borrower in connection with any of the foregoing documents. State: the state of New York. Taxes: all real estate and personal property taxes, assessments, water rates or sewer rents, maintenance charges, impositions, vault charges and license fees, now or hereafter levied or assessed or imposed against all or part of the Property. Term: the entire term of this Agreement, which shall expire upon repayment in full of the Debt and full performance of each and every obligation to be performed by Borrower pursuant to the Loan Documents. Title Insurance Policy: a loan policy of title insurance issued by Chicago Title Insurance Company or another title insurer acceptable to Lender in its sole and absolute discretion, insuring the legal title to the Pledged Collateral as well as the Lien of the Security Documents subject only to Permitted Encumbrances and otherwise in form and content reasonably acceptable to Lender. Transfer: (i) any sale, conveyance, transfer, assignment, or the entry into any agreement to sell, convey, transfer, lease or assign, whether by law or otherwise, of, on, in or affecting (x) all or part of the Property (including any legal or beneficial direct or indirect interest therein), (y) any direct or indirect interest in Borrower or (z) all or any part of the Collateral or (ii) any change of Control of Borrower. TRIPRA: Terrorism Risk Insurance Program Reauthorization Act of 2007, as amended or extended, or as the same may be replaced by a comparable statute. UCC: the Uniform Commercial Code as in effect in the State or any other State applicable to any collateral for the Loan, as the case may be. 1.2 Index of Other Definitions. An index of other terms which are defined in this Agreement or in other Loan Documents is set forth on Schedule Principles of Construction. Unless otherwise specified, (i) all references to sections and schedules are to those in this Agreement, (ii) the words "hereof," "herein" and "hereunder" and words of similar import refer to this Agreement as a whole and not to any particular provision, (iii) all definitions are equally applicable to the singular and plural forms of KL

11 the terms defined, (iv) the word "including" means "including but not limited to," (v) accounting terms not specifically defined herein shall be construed in accordance with GAAP and (vi) all references to the Senior Loan Agreement or any other Senior Loan Document shall mean the Senior Loan Agreement or such other Senior Loan Document as in effect on the date hereof, as each of the same may hereafter be amended, restated, replaced, supplemented or otherwise modified, but only to the extent that Lender has consented to the foregoing. With respect to terms defined or provisions referenced by cross-reference to the Senior Loan Documents, such defined terms shall have the definitions (or such referenced provisions shall mean such provisions) set forth in the Senior Loan Documents as of the date hereof, and no modifications to the Senior Loan Documents shall have the effect of changing such definitions or provisions for the purposes of this Agreement unless Lender expressly agrees that such definitions or provisions as used in this Agreement have been revised. 2. GENERAL LOAN TERMS 2.1 The Loan. Lender is making a loan (the "Loan") to Borrower on the date hereof, in the original principal amount of Twenty Million and No/100 Dollars ($20,000,000.00), which shall mature on the Stated Maturity Date. Borrower acknowledges receipt of the Loan, the proceeds of which are being and shall be used solely to make a capital contribution to Owner. No amount repaid in respect of the Loan may be reborrowed. 2.2 Interest; Monthly Payments Generally. From and after the date hereof, interest on the unpaid Principal shall accrue at the Interest Rate and be payable as hereinafter provided. On the date hereof, Borrower shall pay interest on the unpaid Principal from the date hereof through and including January 31, 2015 by making a payment of Current Pay Interest for such Interest Period, with Accrued Interest for such Interest Period being added to the Principal as of January 31, On February 27, 2015 (which shall be the first Payment Date hereunder) and each Payment Date thereafter through and including the Maturity Date, Borrower shall pay interest on the unpaid Principal accrued and accruing through the last day of the Interest Period by making a payment of Current Pay Interest for such Interest Period, with Accrued Interest for such Interest Period being added to the Principal as of such Payment Date. All accrued and unpaid interest shall be due and payable on the Maturity Date. If the Loan is repaid on any date other than on a Payment Date (whether prior to or after the Stated Maturity Date), Borrower shall also pay interest that would have accrued on such repaid Principal to but not including the next Payment Date Default Rate. After the occurrence and during the continuance of an Event of Default, the entire unpaid Debt shall bear interest at the Default Rate, and shall be payable upon demand from time to time, to the extent permitted by applicable law Taxes. Any and all payments by Borrower hereunder and under the other Loan Documents shall be made free and clear of and without deduction for any and all present or future taxes, levies, imposts, deductions, charges or withholdings, and all liabilities with respect thereto, excluding taxes imposed on Lender's income, and franchise taxes imposed on Lender by the law or regulation of any Governmental Authority (all such non-excluded taxes, levies, KL

12 imposts, deductions, charges, withholdings and liabilities being hereinafter referred to in this Section as "Applicable Taxes"). If Borrower shall be required by law to deduct any Applicable Taxes from or in respect of any sum payable hereunder to Lender, the following shall apply: (i) the sum payable shall be increased as may be necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section 2.2.3), Lender receives an amount equal to the sum it would have received had no such deductions been made, (ii) Borrower shall make such deductions and (iii) Borrower shall pay the full amount deducted to the relevant taxation authority or other authority in accordance with applicable law. Payments pursuant to this Section shall be made within ten days after the date Lender makes written demand therefor. 2.3 Loan Repayment Repayment. Borrower shall repay the entire outstanding principal balance of the Note in full on the Maturity Date, together with interest thereon to (but excluding) the date of repayment and any other amounts due and owing under the Loan Documents. Except during the continuance of an Event of Default, all proceeds of any repayment, including any prepayments of the Loan, shall be applied by Lender in the following order of priority: First, accrued and unpaid interest at the Interest Rate; Second, to Principal; and Third, to any other amounts then due and owing under the Loan Documents, including the Exit Fee. If prior to the Stated Maturity Date the Debt is accelerated by reason of an Event of Default, then Lender shall be entitled to receive, in addition to the unpaid Principal and accrued interest and other sums due under the Loan Documents, an amount equal to the Exit Fee. During the continuance of an Event of Default, all proceeds of repayment, including any payment or recovery on the Property (whether through foreclosure, deed-in-lieu of foreclosure, or otherwise) shall, unless otherwise provided in the Loan Documents, be applied in such order and in such manner as Lender shall elect in Lender's sole and absolute discretion Optional Prepayments. Borrower shall have the right to prepay the entirety of Principal on any Payment Date prior to the Stated Maturity Date provided that Borrower gives Lender at least five (5) days prior written notice thereof, such prepayment is accompanied by the Exit Fee and the Senior Loan is also repaid in full. Borrower shall have no right to prepay the Principal whether in whole or in part except as provided in the preceding sentence and except as set forth in Sections and 4.16 of the Senior Loan Agreement in connection with a Permitted Financing Mandatory Prepayments. If the Senior Loan is paid on or before the Maturity Date, Borrower shall prepay this Loan in full (including accrued and unpaid interest), together with the Exit Fee, and interest on the outstanding principal balance of the Loan from the date of such prepayment through, but not including, the next occurring Payment Date (or, if such prepayment occurs on a Payment Date, through, but not including, such Payment Date). In the event of any Liquidation Event, Borrower shall cause the related Net Liquidation Proceeds After Debt Service to be deposited directly into an account designated by Lender, which shall then be applied by Lender on the next succeeding Payment Date towards the amount necessary to fully repay the Loan including all interest accrued to the date of prepayment and any other sums then due and payable by Borrower to Lender. Any amounts of Net Liquidation Proceeds After Debt Service in excess of the Debt shall be paid to Borrower. Borrower shall notify Lender of any KL

13 Liquidation Event not later than one (1) Business Day following the first date on which Borrower has knowledge of such event. Borrower shall be deemed to have knowledge of (i) a sale (other than a foreclosure sale) of the Property on the date on which a contract of sale for such sale is entered into, and a foreclosure sale, on the date notice of such foreclosure sale is given, and (ii) a refinancing of the Property, on the date on which a commitment for such refinancing has been entered into. The provisions of this Section shall not be construed to contravene in any manner the restrictions and other provisions regarding refinancing of the Senior Loan or Transfer of the Property set forth in this Agreement and the other Loan Documents. 2.4 Release of Collateral. Lender shall, upon the written request and at the expense of Borrower, upon payment in full of the Debt in accordance herewith, release the Liens of the Pledge and other Security Documents if not theretofore released. 2.5 Payments and Computations Making of Payments. Each payment by Borrower shall be made in funds immediately available to Lender by 3:00 p.m., New York City time, on the date such payment is due, to Lender by deposit to such account as Lender may designate by written notice to Borrower. All such payments shall be made irrespective of, and without any deduction, set-off or counterclaim whatsoever and are payable without relief from valuation and appraisement laws and with all costs and charges incurred in the collection or enforcement thereof, including attorneys' fees and court costs. Absent written instruction to the contrary from Lender, Borrower shall make all payments to Lender by write transfer pursuant to the following instructions: Bank: JP Morgan Chase Bank, N.A. ABA#: Account Name: Gamma Funding Management LLC Account #: Reference: Sutton Computations. Interest payable under the Loan Documents shall be computed on the basis of the actual number of days elapsed over a 360-day year Late Payment Charge. If any Principal (other than the balloon payment of Principal due on the Maturity Date), interest or other sum due under any Loan Document is not paid by Borrower on the date on which it is due, Borrower shall pay to Lender upon demand an amount equal to the lesser of five percent (5%) of such unpaid sum or the maximum amount permitted by applicable law (the "Late Payment Charge"), in order to defray the expense incurred by Lender in handling and processing such delinquent payment and to compensate Lender for the loss of the use of such delinquent payment. Such amount shall be secured by the Loan Documents. 2.6 Exit Fee. Upon any repayment or prepayment of the Loan in full, Borrower shall pay to Lender on the date of such repayment or prepayment the Exit Fee. Upon any acceleration of the Loan, Borrower shall immediately pay to Lender the Exit Fee. The Exit Fee hereunder shall be deemed to be earned by Lender upon the funding of the Loan. KL

14 3. REPRESENTATIONS AND WARRANTIES Borrower represents and warrants to Lender as of the date hereof that: 3.1 Organization; Special Purpose. Borrower has been duly organized and is validly existing and in good standing under the laws of the state of its formation, with requisite power and authority, and all rights, licenses, permits and authorizations, governmental or otherwise, necessary to own its properties and to transact the business in which it is now engaged. Borrower is duly qualified to do business and is in good standing in each jurisdiction where it is required to be so qualified in connection with its properties, business and operations. Borrower is a Special Purpose Bankruptcy Remote Entity. 3.2 Proceedings; Enforceability. Borrower has the power to execute, deliver and perform, and has taken all necessary action to authorize the execution, delivery and performance of, the Loan Documents. The Loan Documents have been duly executed and delivered by Borrower and constitute legal, valid and binding obligations of Borrower enforceable against Borrower in accordance with their respective terms, subject to applicable bankruptcy, insolvency and similar laws affecting rights of creditors generally, and general principles of equity. The Loan Documents are not subject to, and Borrower has not asserted, any right of rescission, setoff, counterclaim or defense, including the defense of usury. No exercise of any of the terms of the Loan Documents, or any right thereunder, will render any Loan Document unenforceable. 3.3 No Conflicts. The execution, delivery and performance of the Loan Documents by Borrower and the transactions contemplated hereby will not conflict with or result in a breach of any of the terms or provisions of, or constitute a default under, or result in the creation or imposition of any Lien (other than pursuant to the Loan Documents) upon any of the property of Borrower pursuant to the terms of any agreement or instrument or organizational document to which Borrower is a party or by which it or its property is subject, nor will such action result in any violation of the provisions of any statute or any order, rule or regulation of any Governmental Authority having jurisdiction over Borrower or any of its property. Any consent, approval, authorization, order, registration or qualification of or with any Governmental Authority or any other Person required for the execution, delivery and performance by Borrower of the Loan Documents has been obtained and is in full force and effect. 3.4 Litigation. There are no actions, suits or other proceedings at law or in equity by or before any Governmental Authority now pending or threatened in writing against or affecting Borrower, the Property or the Collateral, which, if adversely determined, might materially adversely affect the condition (financial or otherwise) or business of Borrower (including the ability of Borrower to carry out its obligations under the Loan Documents) or the condition or ownership of the the Property or the Collateral. 3.5 Agreements. Borrower is not a party to any agreement or instrument or subject to any restriction which might adversely affect Borrower, the Property or the Collateral, or Borrower's business, properties, operations or condition, financial or otherwise. Borrower is not in default in any material respect in the performance, observance or fulfillment of any of the obligations, covenants or conditions contained in any agreement or instrument to which it is a party or by which it or the Property or the Collateral is bound. KL

15 3.6 Title. Owner has good, marketable and indefeasible title in fee to the real property comprising the Property and good title to the balance of the Property, free and clear of all Liens except the Permitted Encumbrances. The Pledge, together with any UCC Financing Statements required to be filed in connection therewith, will create (i) a valid, perfected first priority lien on the Borrower's interest in the Pledged Collateral, all in accordance with the terms thereof. The Permitted Encumbrances do not materially adversely affect Borrower's ability to effectuate the project contemplated by the Development Plan. No Condemnation or other proceeding has been commenced or, to Borrower's best knowledge, is contemplated with respect to all or part of the Property or for the relocation of roadways providing access to the Property. There are no claims for payment for work, labor or materials affecting the Property which are or may become a Lien prior to, or of equal priority with, the Liens created by the Loan Documents. There are no outstanding options to purchase or rights of first refusal affecting all or any portion of the Property. Each parcel comprising the Property is a separate tax lot and is not a portion of any other tax lot that is not a part of the Property. To the actual knowledge of Borrower, there are no pending or proposed special or other assessments for public improvements or otherwise affecting the Property, or any contemplated improvements to the Property that may result in such special or other assessments (except in accordance with the Development Plan). 3.7 No Bankruptcy Filing. Neither Borrower nor Guarantor is contemplating either the filing of a petition by it under any state or federal bankruptcy or insolvency law or the liquidation of the Property or all or a major portion of its property (a "Bankruptcy Proceeding"), and Borrower has no knowledge of any Person contemplating the filing of any such petition against Borrower or Guarantor. 3.8 Full and Accurate Disclosure. No statement of fact made by Borrower in any Loan Documents contains any untrue statement of a material fact or omits to state any material fact necessary to make statements contained therein not misleading. There is no material fact presently known to Borrower that has not been disclosed to Lender which adversely affects, or, as far as Borrower can foresee, might adversely affect, the Property or the Collateral. 3.9 Tax Filings. To the extent required, Borrower has filed (or has obtained effective extensions for filing) all federal, state and local tax returns required to be filed and have paid or made adequate provision for the payment of all federal, state and local taxes, charges and assessments payable by Borrower Compliance. Borrower and the Property and the use thereof (including the development of and use of the Property contemplated by the Development Plan) comply in all material respects with all applicable Legal Requirements, including parking, building and zoning and landmarks and other land use laws, ordinances, regulations and codes. The development and planned use of the Property in accordance with the Development Plan are consistent with applicable zoning laws and other Legal Requirements in effect as of the date hereof, including, without limitation, any applicable landmark restrictions in effect as of the date hereof Pledged Collateral. Borrower is the sole beneficial owner of the Pledged Collateral and no Lien exists or will exist (except the Permitted Encumbrances) upon the Pledged Collateral at any time (and no right or option to acquire the same exists in favor of any other Person). The Pledged Collateral is not and will not be subject to any contractual restriction upon KL

16 the transfer thereof (except for any such restriction contained in the Pledge). The Subject Securities (as such term is defined in the Pledge) have been duly authorized and validly issued and are fully paid and non-assessable and are not subject to any options to purchase or similar rights of any Person. The Security Documents create a valid security interest in the Pledged Collateral, securing the payment of the Debt, and upon the filing in the appropriate filing offices of the financing statements to be delivered pursuant to this Agreement, such security interests will be perfected, first priority security interests, and all filings and other actions necessary to perfect such security interests will have been duly taken. Upon the exercise of its rights and remedies under the Pledge, Lender will succeed to all of the rights, titles and interest of Borrower in Owner without the consent of any other Person and will, without the consent of any other Person, be admitted as the sole member in Owner Leases. The Property is not subject to any Leases (other than such Leases that are the subject of Tenant Buyout Agreements) Fraudulent Transfer. Borrower has not entered into the Loan or any Loan Document with the actual intent to hinder, delay, or defraud any creditor, and Borrower has received reasonably equivalent value in exchange for its obligations under the Loan Documents. Giving effect to the transactions contemplated by the Loan Documents, the fair saleable value of Borrower's assets will, immediately following the execution and delivery of the Loan Documents, exceed Borrower's total liabilities, including subordinated, unliquidated, disputed or contingent liabilities, including the maximum amount of its contingent liabilities or its debts as such debts become absolute and matured Ownership of Borrower. Borrower is the owner of all of the issued and outstanding ownership interests in Owner, free and clear of all Liens and encumbrances. No other ownership interests in Owner have been issued or are issuable. All of the ownership interests in Owner have been duly and validly issued, have been fully paid for and are nonassessable. There are no options or rights to acquire any ownership interests in Owner. The membership interests in Borrower are owned free and clear of all Liens, warrants, options and rights to purchase. Borrower has no obligation to any Person to purchase, repurchase or issue any ownership interest in it. The organizational chart attached hereto as Schedule 2 is complete and accurate and illustrates all Persons who have a direct or indirect ownership interest in Borrower Hazardous Substances. Except as may otherwise be set forth in that certain Phase I Environmental Site Assessment for East 58 th Street prepared by Langan Engineering, Environmental, Surveying and Landscape Architecture, D.P.C., Project No , (i) to the best of Borrower's knowledge, after due inquiry, the Property is not in violation of any Legal Requirement pertaining to or imposing liability or standards of conduct concerning environmental regulation, contamination or clean-up, including the Comprehensive Environmental Response, Compensation and Liability Act, the Resource Conservation and Recovery Act, the Emergency Planning and Community Right-to-Know Act of 1986, the Hazardous Substances Transportation Act, the Solid Waste Disposal Act, the Clean Water Act, the Clean Air Act, the Toxic Substance Control Act, the Safe Drinking Water Act, the Occupational Safety and Health Act, any state super-lien and environmental clean-up statutes (including with respect to Toxic Mold), any local law requiring related permits and licenses, and KL

17 all amendments to and regulations in respect of the foregoing laws (collectively, "Environmental Laws"); (ii) the Property is not subject to any private or governmental Lien or judicial or administrative notice or action or inquiry, investigation or claim relating to hazardous, toxic and/or dangerous substances, including mold or fungus of a type that may pose a risk to human health or the environment or would negative impact the value of the Property ("Toxic Mold"), or any other substances or materials which are included under or regulated by Environmental Laws (collectively, "Hazardous Substances"); (iii) to the best of Borrower's knowledge, after due inquiry, no Hazardous Substances are or have been (including the period prior to Borrower's acquisition of the Property), discharged, generated, treated, disposed of or stored on, incorporated in, or removed or transported from the Property other than in compliance with all Environmental Laws; (iv) to the best of Borrower's knowledge, after due inquiry, no Hazardous Substances are present in, on or under any nearby real property which could migrate to or otherwise affect the Property; (v) no underground storage tanks exist on the Property and the Property has never been used as a landfill; and (vi) there have been no environmental investigations, studies, audits, reviews or other analyses conducted by or on behalf of Borrower which have not been provided to Lender Name; Principal Place of Business. Borrower does not use and will not use any trade name other than "Bauhouse" or derivatives thereof, and has not done and will not do business under any name other than its actual name set forth herein. The principal place of business of Borrower is its primary address for notices as set forth in Section 5.1, and Borrower has no other place of business. Borrower's Taxpayer Identification Number is Other Debt. There is no indebtedness with respect to Borrower or the Property, whether secured or unsecured, other than Permitted Encumbrances and Permitted Indebtedness Embargoed Person. None of the funds or assets of Guarantor or of Borrower constitute property of, or are beneficially owned directly or indirectly by, any Embargoed Person (as hereinafter defined) and (b) no Embargoed Person has any direct interest or indirect interest, of any nature whatsoever in Borrower or Guarantor, as applicable, with the result that the investment in Borrower or Guarantor, as applicable (whether directly or indirectly), is prohibited by law or the Loan is in violation of law Anti-Money Laundering. None of the funds of Borrower or Guarantor, as applicable, that are used to consummate this transaction are derived from or are the proceeds of any unlawful activity, with the result that the investment in Borrower or Guarantor (whether directly or indirectly), is prohibited by law or the Loan is in violation of law or may cause any of the Collateral to be subject to forfeiture or seizure. Borrower has ascertained the identity of all persons and entities who have provided funds to capitalize Borrower and has conducted verification procedures which are sufficient to establish the identity and source of such funds Purchase Documents. Owner is the sole beneficial owner of the purchaser's interest in the Purchase Documents and no Lien exists or will exist (except the Permitted Encumbrances) upon Owner's interest in and to the Purchase Documents at any time (and no right or option to acquire the same exists in favor of any other Person). KL

18 3.21 Tenant Buyout Agreements. The Tenant Buyout Agreements set forth on the attached Exhibit B constitute all of the agreements necessary to evidence the termination of each of the Leases applicable to the Property and the reconveyance to Owner of all rights under such Leases in accordance with applicable Legal Requirements. All amounts required to be paid by Owner pursuant to the terms of the Tenant Buyout Agreements have previously been paid or are being paid by Owner on the date hereof into escrow pursuant to the terms of such Tenant Buyout Agreements Material Contracts. There are no Material Contracts other than the Tenant Buyout Agreements and the Purchase Documents. The Material Contracts are in full force and effect and Owner has not sent or received any notice of default thereunder, and has no knowledge of any default by Owner or the applicable counterparty thereunder Obligations under Material Contracts. Schedule 4 attached hereto accurately sets forth (i) all amounts paid by Owner pursuant to the Purchase Documents or Tenant Buyout Agreements on or prior to the date hereof, (ii) the amount and required payment date of all remaining payments to be made by Owner pursuant to such Purchase Documents or Tenant Buyout Agreements, (iii) all additional outstanding obligations (if any) of Owner pursuant to such Purchase Documents or Tenant Buyout Agreements and (iv) the scheduled closing date under each Purchase Document or Tenant Buyout Agreement (together with any extension or adjournment rights related thereto and any applicable date by which such rights must be exercised to remain effective thereunder) Senior Loan. The Senior Loan has been fully funded in the amount of $32,250,000. The outstanding principal balance of the Senior Loan, as of the Closing Date, is $32,250,000. No default, breach, violation or event of default has occurred under any Senior Loan Document which remains uncured or unwaived and no circumstance, event or condition has occurred or exists which, with the giving of notice and/or the expiration of the applicable period would constitute an Event of Default under the Senior Loan Documents. Each and every representation and warranty of Owner, made to Senior Lender contained in any one or more of the Senior Loan Documents is true, correct, complete and accurate in all material respects as of the date hereof and are hereby incorporated into this Agreement and deemed made hereunder as and when made thereunder and shall remain incorporated without regard to any waiver, amendment or other modification thereof by the Senior Lender or to whether the related Senior Loan Document has been repaid, defeased or otherwise terminated, unless otherwise consented to in writing by Lender Contractual Obligations. Other than the Loan Documents and the organizational documents of Owner and Borrower, as of the date of this Agreement, Borrowe' is not subject to any Contractual Obligations and has not entered into any agreement, instrument or undertaking by which it or its assets are bound. All of the representations and warranties in this Article 3 and elsewhere in the Loan Documents (i) shall survive for so long as any portion of the Debt remains owing to Lender and (ii) shall be deemed to have been relied upon by Lender notwithstanding any investigation heretofore or hereafter made by Lender or on its behalf, provided, however, that the representations, warranties and covenants set forth in Section 3.15 shall survive in perpetuity. KL

19 4. COVENANTS Until the end of the Term, Borrower hereby covenants and agrees with Lender that: 4.1 Existence. Borrower shall do or cause to be done all things necessary to preserve, renew and keep in full force and effect its existence, rights, and franchises and qualify to do business and remain in good standing under the laws of each jurisdiction, in each case as and to the extent required for the ownership, maintenance, management and operation of its property. 4.2 Taxes. Borrower shall pay all Taxes as the same become due and payable, and deliver to Lender receipts for payment or other evidence satisfactory to Lender that the Taxes have been so paid before they would be delinquent if not paid. Borrower shall not suffer and shall promptly cause to be paid and discharged any Lien against the Property, and shall promptly pay for all utility services provided to the Property. 4.3 Compliance with Law; Alterations Maintenance and Compliance. Borrower shall cause Owner to at all times maintain the Property in a good and safe condition and repair and in compliance with all Legal Requirements. Borrower shall promptly comply with all Legal Requirements and promptly cure properly any violation of a Legal Requirement. Borrower shall notify Lender in writing within one Business Day after Borrower first receives notice of any such noncompliance Alterations. Borrower may not permit Owner to, without Lender's prior written consent, not to be unreasonably withheld, perform or permit alterations to the Improvements unless the same both (i) complies with all Legal Requirements and (ii) is not expected to cost more than $50, Demolition Work. Notwithstanding anything to the contrary set forth herein, Owner shall have the right to undertake the demolition of the Improvements in accordance with the Development Plan and all Legal Requirements so long as all of the requirements of Section of the Senior Loan Agreement are satisfied. 4.4 Performance of Other Agreements. Borrower shall observe and perform and cause Owner to observe and perform each and every term to be observed or performed by it pursuant to the terms of any agreement or instrument affecting or pertaining to the Collateral or the Property. 4.5 Cooperate in Legal Proceedings. Borrower shall cooperate fully with Lender with respect to, and permit Lender, at its option, to participate in, any proceedings before any Governmental Authority which may in any way affect the value of the Collateral or the rights of Lender under any Loan Document. 4.6 Further Assurances. Borrower shall, at Borrower's sole cost and expense, (i) execute and deliver to Lender such documents, instruments, certificates, assignments and other writings, and do such other acts necessary or desirable, to evidence, preserve and/or protect the Collateral and/or for the better and more effective carrying out of the intents and purposes of KL