Contract analysis

I. EXECUTIVE SUMMARY This memorandum presents my analysis of the existing property management agreement (the "PMA") between Meridian Gateway Holdings LLC ("Seller" or "Owner") and Atlas Urban Management Corp. ("Manager" or "Atlas Urban") with respect to the mixed-use property located at 450 West 34th Street, New York, NY 10001 (Block 754, Lot 42, Borough of Manhattan) (the "Property"). The purpose of this memorandum

II. OVERVIEW OF THE PROPERTY MANAGEMENT AGREEMENT A. Parties. The parties to the PMA are as follows: Owner/Principal: Meridian Gateway Holdings LLC, a New York limited liability company, with its principal office at 1440 Broadway, Suite 2200, New York, NY 10018. Based on organizational documents provided in the preliminary diligence package, the Managing Member of Meridian Gateway Holdings LLC is Victor S. Papadopoul

1. Day-to-Day Operations. General oversight and management of the day-to-day operations of the building, including staffing, scheduling, tenant services, and building systems operation across all three use types.

2. Tenant Relations, Rent Collection, and Lease Administration. Management of tenant relationships, including responding to tenant inquiries, complaints, and service requests. Collection of rents, additional rents, and other charges due under the leases. Administration of lease obligations, including tracking critical dates such as lease expirations, renewal option deadlines, rent escalation dates, and tenant improve

3. Maintenance, Repairs, and Contractor Supervision. Supervision of routine maintenance and repair activities for the building's physical plant, common areas, and building systems. Coordination and oversight of building staff (porters, maintenance technicians, security personnel) and third-party contractors engaged for specialized services.

4. Coordination of Capital Improvement Projects. Coordination and oversight of capital improvement projects, subject to Owner approval thresholds specified in the PMA. As discussed below, Meridian invested approximately $14,200,000 in capital improvements to the Property during the period from 2016 through 2020, and Atlas Urban's involvement in overseeing those projects — and any associated supervision fees — should

5. Financial Reporting. Preparation and delivery of monthly operating statements, including income and expense reports and variance analyses against the approved annual operating budget. Preparation and submission of annual operating budgets for Owner review and approval. Preparation of year-end financial reconciliations, including reconciliation of tenant pass-through charges (common area maintenance, real estate ta

6. Compliance with Applicable Housing Laws. For the 38 residential rental units on Floors 10 through 14, compliance with applicable New York City housing laws and regulations, including filings and correspondence with the New York City Department of Housing Preservation and Development ("HPD"). If any of the residential units are subject to the Rent Stabilization Law of 1969 or the Rent Stabilization Code, Atlas Urba

7. Building Systems, Life Safety, and Code Compliance. Oversight of building systems, including HVAC, electrical, plumbing, elevators, and fire suppression systems. Compliance with New York City Department of Buildings ("DOB") requirements, including periodic inspections, Local Law 11 facade inspections, Local Law 87 energy audits, and Local Law 97 emissions compliance. Coordination with the Fire Department of the Ci

8. Insurance Procurement Coordination. Coordination of the procurement and maintenance of property-level insurance coverage, including commercial property insurance, general liability insurance, umbrella/excess liability coverage, and any specialized coverages (e.g., terrorism risk insurance, flood insurance, equipment breakdown). This coordination is currently handled in conjunction with Lockhart & Pryor Insurance A

9. Engagement of Third-Party Contractors and Vendors. Authority to engage third-party contractors, vendors, and service providers on behalf of the Owner for the operation and maintenance of the Property, subject to Owner-approval thresholds specified in the PMA. The schedule of existing service contracts entered into by Atlas Urban on behalf of Meridian is a critical diligence item, as discussed in Section VIII below

III. MANAGEMENT FEE STRUCTURE A. Base Management Fee The base management fee under the PMA is set at 4.0% of effective gross income ("EGI"). This fee compensates Atlas Urban for the comprehensive scope of day-to-day property management services described in Section II.D above. A threshold diligence issue involves the precise definition of EGI under the PMA and its impact on the calculation of the management fee. Base

IV. TERMINATION PROVISIONS The termination provisions of the PMA are among the most critical elements for purposes of this transaction. The manner in which the PMA may be terminated — and the costs and conditions associated with termination — will directly affect BFO's strategic options and the negotiation of the PSA. The following analysis addresses the principal categories of termination rights that are typically f

1. Automatic termination upon closing of a sale. Under this structure, the PMA terminates automatically and without further action by either party upon the closing of a sale of the Property. This is the most favorable structure for BFO, as it would enable BFO to close the acquisition free and clear of the PMA obligation and immediately install its own management team without the need to negotiate a separate terminati

2. Owner's right to terminate upon sale. Under this structure, the PMA does not terminate automatically upon a sale, but the Owner is granted a specific right to terminate the PMA in connection with a sale or transfer of the Property, typically upon a specified notice period (e.g., 30 or 60 days) and potentially subject to a termination fee. If this structure applies, Meridian would need to exercise the termination r

3. No termination right upon sale — PMA survives and binds the purchaser. Under this structure, the PMA does not provide either an automatic termination or a specific termination right in connection with a sale. Instead, the PMA "runs with" the Property and is binding on the purchaser as a successor owner. This is the least favorable structure for BFO, as it would require BFO to either (i) assume the PMA and honor it

V. ASSIGNMENT AND CHANGE-OF-CONTROL PROVISIONS A. Assignment by Owner Property management agreements typically address whether the PMA may be assigned by the Owner to a purchaser of the Property, and under what conditions. The key questions are:

1. Automatic Assignment. Does the PMA provide that it is automatically assigned to a purchaser of the Property upon a transfer of fee title? If so, BFO 450 West 34th LLC would succeed to Meridian's position as "Owner" under the PMA upon closing, and Atlas Urban would continue to perform its duties for the benefit of the new owner without the need for a separate assignment agreement.

2. Consent to Assignment. Does the PMA require the Manager's consent to an assignment by the Owner? If so, Atlas Urban would need to consent to the assignment of the PMA to BFO's acquisition SPV, and the failure to obtain such consent could constitute a breach of the PMA or render the assignment void. If Manager consent is required, this becomes a closing condition and introduces the risk that Atlas Urban could withh

3. Assumption of Obligations. If the PMA is assigned to BFO 450 West 34th LLC, the assignee would generally be expected to assume all of the Owner's obligations under the PMA from and after the closing date. This assumption should be documented in an Assignment and Assumption of Contracts, which would be delivered at closing as part of the standard closing document package. Meridian should remain liable for any oblig

4. Manager's Right to Renegotiate or Terminate. In some cases, the assignment of a PMA to a new owner triggers a right of the Manager to renegotiate the terms of the PMA or to terminate the agreement. This type of provision is uncommon but not unheard of, particularly where the PMA was negotiated in the context of a specific relationship between the Manager and the original Owner. If such a provision exists, it could

VI. KEY COVENANTS AND OBLIGATIONS OF MANAGER A. Standard of Care The PMA will set forth the standard of care to which Atlas Urban is held in performing its management duties. The specific formulation of this standard is important, as it defines the threshold for establishing a breach of the Manager's obligations and, accordingly, the Owner's remedies. Common formulations of the standard of care in property management

VII. INDEMNIFICATION AND LIABILITY A. Manager's Indemnification of Owner The PMA will contain indemnification provisions under which Atlas Urban agrees to indemnify, defend, and hold harmless the Owner against claims, losses, damages, liabilities, costs, and expenses (including reasonable attorneys' fees) arising from: • The Manager's negligence, gross negligence, or willful misconduct in the performance of its dutie

VIII. EXISTING VENDOR AND SERVICE CONTRACTS The PMA authorizes Atlas Urban to enter into service contracts with third-party vendors on behalf of the Owner for the operation and maintenance of the Property. These contracts cover essential building services, including but not limited to: • Elevator maintenance and inspection (the Property contains three passenger elevators and one freight elevator); • HVAC maintenance

IX. IMPACT ON THE TRANSACTION AND PSA CONSIDERATIONS A. Treatment in the PSA The PMA should be expressly addressed in the PSA. We recommend that the PSA include specific provisions governing the treatment of the PMA at closing, structured as one of the following alternatives: Alternative 1 — Assumed Contract. If BFO elects to retain Atlas Urban, the PMA should be designated as an "Assumed Contract" on the schedule of

X. BRIARWOOD'S OPTIONS — RETAIN, REPLACE, OR NEGOTIATE A. Option 1: Assume the PMA and Retain Atlas Urban Through Expiration (December 31, 2027) Under this option, BFO would assume the PMA at closing through the Assignment and Assumption of Contracts and retain Atlas Urban as the property manager for the remaining term of approximately 18 months, through December 31, 2027. At or before the expiration of the term, BFO