CASH MANAGEMENT AGREEMENT
by and among
HUDSON YARDS WEST MORTGAGE LLC, a Delaware limited liability company, as Borrower,
IRONCLAD NATIONAL BANK, N.A., a national banking association, as Lender and Cash Management Agent,
and
SENTINEL TITLE & ESCROW COMPANY, a New York corporation, as Deposit Bank
Dated as of June 15, 2025
Property: 450 West 34th Street, New York, New York 10001
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RECITALS
A. Hudson Yards West Mortgage LLC (the "Borrower"), a Delaware limited liability company and single-purpose entity, is the borrower under that certain Mortgage Loan Agreement, dated as of even date herewith (as amended, restated, supplemented, or otherwise modified from time to time, the "Loan Agreement"), by and between Borrower and Ironclad National Bank, N.A., a national banking association, as lender and administrative agent (in such capacity, together with its successors and assigns, "Lender"), pursuant to which Lender has agreed to make a senior mortgage loan in the original principal amount of Four Hundred Seventy-Five Million and No/100 Dollars ($475,000,000.00) (the "Loan") to Borrower, subject to the terms and conditions set forth therein.
B. The Loan is secured by, among other things, a first-priority mortgage lien on that certain real property located at 450 West 34th Street, New York, New York 10001, as more particularly described in the Mortgage (as defined in the Loan Agreement) (Borough: Manhattan; Block: 729; Lots: 1, 5, 12, 15), together with all improvements, fixtures, and appurtenances thereto (collectively, the "Property").
C. Borrower holds its interest in the Property pursuant to that certain Ground Lease, dated June 1, 2020, between NYC Economic Development Corporation, a not-for-profit local development corporation established pursuant to Section 1411 of the Not-for-Profit Corporation Law of the State of New York, as ground lessor, and Metropolitan Transit Development Corp. ("MTDC" or "Guarantor"), a government instrumentality of the State of Illinois, as ground lessee, as recorded in the Office of the City Register of the City of New York under CRFN 2020000198762, and as subsequently assigned to Borrower pursuant to that certain Assignment and Assumption of Ground Lease, dated as of even date herewith, with the consent of the ground lessor.
D. As a condition to the making of the Loan, the Loan Agreement requires Borrower to enter into this Cash Management Agreement (this "Agreement") to establish accounts and procedures for the collection, custody, and application of all revenue generated by or allocable to the Property, in order to ensure the orderly payment of debt service on the Loan, the funding of required reserves, and the protection of Lender's security interest in the Rents and other collateral securing the Loan.
E. Sentinel Title & Escrow Company, a New York corporation ("Deposit Bank"), has agreed to establish and maintain certain accounts on behalf of Borrower, subject to the exclusive dominion and control of Lender, in accordance with the terms and conditions set forth herein, and to act as depository and agent with respect to such accounts.
F. Reference is made to that certain Intercreditor Agreement, dated as of even date herewith (the "Intercreditor Agreement"), between Lender and Granite Peak Capital Partners, LP, a Delaware limited partnership ("Mezzanine Lender"), governing, among other things, the relative rights, priorities, and obligations of the senior and mezzanine lenders with respect to cash management, application of funds, exercise of remedies, and related matters arising in connection with the Property and the respective loans secured thereby.
NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
ARTICLE 1 — DEFINITIONS
Section 1.1 — Defined Terms
All capitalized terms used and not otherwise defined in this Agreement shall have the meanings ascribed thereto in the Loan Agreement. In addition to the terms defined elsewhere in this Agreement, the following terms shall have the following meanings when used herein:
"Account Control Agreement" means each Deposit Account Control Agreement entered into by Borrower, Lender, and Deposit Bank with respect to the Lockbox Account, the Cash Management Account, and each Reserve Account, in form and substance satisfactory to Lender, granting Lender "control" within the meaning of Section 9-104 of the Uniform Commercial Code as in effect in the State of New York.
"Approved Annual Budget" means the annual operating and capital budget for the Property approved by Lender in accordance with the Loan Agreement and Section 6.1 of this Agreement, as the same may be amended, modified, or supplemented from time to time with Lender's prior written approval.
"Building Loan Agreement" means that certain Building Loan Agreement, dated as of even date herewith, by and between Borrower and Lender, governing the disbursement of Loan proceeds for construction-related costs in connection with the development and construction of improvements on the Property.
"Business Day" means any day other than a Saturday, a Sunday, or a day on which banking institutions in the City of New York, State of New York, are authorized or required by law, regulation, or executive order to close.
"Cash Management Account" means the segregated deposit account established and maintained at Deposit Bank in the name of "Hudson Yards West Mortgage LLC — Cash Management Account," the details of which are set forth in Section 2.2 and Exhibit A hereto, into which all amounts on deposit in the Lockbox Account are swept on each Business Day in accordance with this Agreement.
"Cash Management Period" means any period commencing upon the occurrence of a Cash Management Trigger Event and continuing until the occurrence of the related Cash Management Trigger Cure in accordance with Section 4.2.
"Cash Management Trigger Cure" has the meaning set forth in Section 4.2.
"Cash Management Trigger Event" has the meaning set forth in Section 4.1.
"Cash Sweep Period" means any period commencing upon the occurrence of a Cash Sweep Trigger Event and continuing until the occurrence of the related Cash Sweep Trigger Cure in accordance with Section 4.4.
"Cash Sweep Trigger Cure" has the meaning set forth in Section 4.4.
"Cash Sweep Trigger Event" has the meaning set forth in Section 4.3.
"Closing Date" means June 15, 2025, the date of execution and delivery of this Agreement and the other Loan Documents.
"Construction Disbursement Account" means the account established and maintained at Deposit Bank or another Eligible Institution for the disbursement of Loan proceeds in connection with construction-period draws under the Building Loan Agreement.
"Debt Service" means scheduled monthly payments of interest (and, if and when applicable, principal amortization) on the Loan, calculated at a per annum rate equal to Term SOFR (as defined in the Loan Agreement) plus four hundred twenty-five (425) basis points, subject to a SOFR Floor of one percent (1.00%).
"Debt Yield" means, as of any date of determination, the ratio, expressed as a percentage, of (a) the Net Operating Income for the applicable Test Period to (b) the then-outstanding principal balance of the Loan, as more particularly defined in the Loan Agreement.
"Deposit Bank" means Sentinel Title & Escrow Company, a New York corporation, or any successor deposit bank appointed pursuant to Section 10.3 of this Agreement.
"DSCR" means the debt service coverage ratio, as defined in the Loan Agreement, calculated as the ratio of (a) Net Operating Income for the applicable Test Period to (b) Debt Service for the same period, on a trailing twelve (12) month basis, tested quarterly on each Test Date.
"Eligible Account" means a segregated trust account or deposit account maintained at an Eligible Institution that meets the requirements of Section 2.6 of this Agreement.
"Eligible Institution" means a federally insured depository institution organized under the laws of the United States or any state thereof, with a minimum long-term unsecured debt rating of at least "A–" (or the equivalent thereof) from Pinnacle Ratings Group (or another nationally recognized statistical rating organization acceptable to Lender), or such other institution as may be approved by Lender in writing in its reasonable discretion.
"Event of Default" means (a) any "Event of Default" as defined in the Loan Agreement, (b) any "Event of Default" as defined in Section 11.1 of this Agreement, or (c) any event of default under any other Loan Document, in each case after the expiration of any applicable notice and cure period expressly set forth therein.
"Excess Cash" has the meaning set forth in Section 5.2(m), and means all amounts remaining in the Cash Management Account after the payment or funding of all items set forth in clauses (a) through (l) of the Waterfall.
"Excess Cash Reserve Account" means the segregated deposit account established and maintained at Deposit Bank in the name of "Hudson Yards West Mortgage LLC — Excess Cash Reserve Account" for the deposit and custody of Excess Cash during any Cash Sweep Period.
"Ground Lease" means that certain Ground Lease, dated June 1, 2020, between NYC Economic Development Corporation, as ground lessor, and Metropolitan Transit Development Corp., as ground lessee, as recorded in the Office of the City Register of the City of New York under CRFN 2020000198762, and as subsequently assigned to Borrower, as the same may be amended, modified, or supplemented from time to time.
"Ground Rent" means the annual ground rent of Four Million Two Hundred Thousand and No/100 Dollars ($4,200,000.00) (subject to Consumer Price Index escalation adjustments every five (5) years in accordance with the terms of the Ground Lease) payable by the tenant under the Ground Lease to the ground lessor.
"Ground Rent Reserve Account" means the segregated deposit account established and maintained at Deposit Bank in the name of "Hudson Yards West Mortgage LLC — Ground Rent Reserve Account" for the deposit and disbursement of monthly Ground Rent installments.
"Interest Reserve Account" means the segregated deposit account established and maintained at Deposit Bank in the name of "Hudson Yards West Mortgage LLC — Interest Reserve Account" for the pre-funding of Monthly Debt Service Payments during the construction period through the projected substantial completion date of December 15, 2027.
"Leases" means all leases, subleases, licenses, concession agreements, and other occupancy agreements (including all amendments, modifications, supplements, renewals, extensions, and guaranties thereof) affecting all or any portion of the Property, whether now existing or hereafter entered into by Borrower as landlord.
"Loan Documents" means, collectively, the Loan Agreement, the Note, the Mortgage, the Assignment of Leases and Rents, this Agreement, the Building Loan Agreement, the Guaranty, the Environmental Indemnity Agreement, the Account Control Agreements, and all other documents, instruments, and agreements executed and delivered by Borrower or any other party in connection with the Loan, as the same may be amended, restated, supplemented, or otherwise modified from time to time.
"Lockbox Account" means the segregated deposit account established and maintained at Deposit Bank in the name of "Hudson Yards West Mortgage LLC — Lockbox Account," the details of which are set forth in Section 2.1 and Exhibit A hereto, into which all Rents and other revenue of the Property are deposited.
"Lockbox Bank" means Sentinel Title & Escrow Company, as the institution at which the Lockbox Account is established and maintained.
"LTV" means the loan-to-value ratio, calculated as the ratio of (a) the outstanding principal balance of the Loan (or, where applicable, the combined outstanding principal balance of the Loan and the Mezzanine Loan) to (b) the appraised value of the Property as determined by the most recent appraisal obtained by Lender in accordance with the Loan Agreement.
"Monthly Debt Service Payment" means the amount of Debt Service due and payable on each Monthly Payment Date, as calculated in accordance with the Loan Agreement and the Note.
"Monthly Payment Date" means the sixth (6th) day of each calendar month during the term of the Loan, or if such day is not a Business Day, the next succeeding Business Day, as more particularly defined in the Loan Agreement.
"Net Operating Income" or "NOI" means the net operating income of the Property for the applicable Test Period, as defined and calculated in accordance with the Loan Agreement. Projected stabilized NOI is Fifty-Eight Million Two Hundred Thousand and No/100 Dollars ($58,200,000.00) per annum (Year 3 post-completion of construction).
"Operating Expenses" means all reasonable and customary expenses of operating, maintaining, and managing the Property, including, without limitation, property management fees payable to the Property Manager, insurance premiums, utility charges, ordinary repairs and maintenance, janitorial services, security, landscaping, common area maintenance, and such other expenses as are set forth in and approved under the Approved Annual Budget.
"Permitted Investments" means investments in (a) direct obligations of the United States of America or obligations fully and unconditionally guaranteed by the United States of America, (b) certificates of deposit or time deposits of an Eligible Institution, (c) commercial paper rated at least "A-1" or "P-1" by a nationally recognized statistical rating organization, or (d) money market funds invested exclusively in obligations described in the foregoing clauses (a) through (c), in each case having a maturity not exceeding thirty (30) days.
"Property Manager" means Evergreen Property Management LLC, a Delaware limited liability company, or any successor property manager approved by Lender in accordance with the Loan Agreement and this Agreement.
"Qualified Replacement Manager" means a reputable and experienced property management company approved by Lender in writing, having demonstrated experience in managing properties comparable in size, type, and complexity to the Property in the New York metropolitan area, and otherwise meeting the qualifications set forth in the Loan Agreement.
"Rents" means all rents, income, receipts, revenues, issues, profits, and other amounts payable to Borrower under all Leases or otherwise arising from or relating to the Property, including, without limitation, fixed rents, additional rents, tenant reimbursements for operating expenses, taxes, and insurance, percentage rents, parking revenues, storage revenues, antenna or rooftop license fees, advertising revenues, and any other amounts receivable by Borrower in connection with the ownership, operation, or leasing of the Property.
"Replacement Reserve Account" means the segregated deposit account established and maintained at Deposit Bank in the name of "Hudson Yards West Mortgage LLC — Replacement Reserve Account" for the deposit and disbursement of capital expenditure reserves.
"Reserve Accounts" means, collectively, the Tax and Insurance Reserve Account, the Replacement Reserve Account, the Tenant Improvement and Leasing Commission Reserve Account, the Interest Reserve Account, the Ground Rent Reserve Account, the Excess Cash Reserve Account, and any other reserve account established pursuant to the Loan Agreement or this Agreement.
"Tax and Insurance Reserve Account" means the segregated deposit account established and maintained at Deposit Bank in the name of "Hudson Yards West Mortgage LLC — Tax and Insurance Reserve Account" for the deposit and disbursement of monthly installments for real property taxes and insurance premiums.
"Tenant Direction Letter" means a written notice in substantially the form of Exhibit B attached hereto, directing each tenant at the Property to remit all Rents and other amounts payable under its Lease directly to the Lockbox Account.
"Tenant Improvement and Leasing Commission Reserve Account" or "TI/LC Reserve Account" means the segregated deposit account established and maintained at Deposit Bank in the name of "Hudson Yards West Mortgage LLC — TI/LC Reserve Account" for the deposit and disbursement of costs of tenant improvements and leasing commissions.
"Test Date" means the last day of each calendar quarter (March 31, June 30, September 30, and December 31) during the term of the Loan.
"Test Period" means, with respect to any Test Date, the twelve (12) consecutive calendar month period ending on such Test Date (or, if fewer than twelve (12) calendar months have elapsed since the conversion from the construction period to the permanent operating period, such shorter period as is then available, annualized for purposes of calculating DSCR, Debt Yield, and other financial covenants).
"Waterfall" means the order of priority for disbursement of funds from the Cash Management Account during a Cash Management Period, as set forth in Section 5.2 of this Agreement.
Section 1.2 — Rules of Construction
(a) Unless the context clearly requires otherwise, all references in this Agreement to the Loan Agreement, the Mortgage, the Assignment of Leases and Rents, or any other Loan Document shall mean such document as amended, restated, supplemented, or otherwise modified from time to time in accordance with the terms thereof.
(b) Words importing the singular number shall include the plural and vice versa, and words importing one gender shall include all genders. The words "include," "includes," and "including" shall be deemed to be followed by the phrase "without limitation." The words "herein," "hereof," "hereunder," and words of similar import refer to this Agreement as a whole and not to any particular Article, Section, or provision hereof.
(c) References to Articles, Sections, Exhibits, and Schedules are to Articles, Sections, Exhibits, and Schedules of this Agreement unless otherwise specified. All Exhibits and Schedules attached hereto are incorporated herein by reference and made a part hereof.
(d) The parties hereto have participated jointly in the negotiation and drafting of this Agreement, and in the event of any ambiguity or question of intent or interpretation, this Agreement shall be construed as if drafted jointly by all parties, and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any of the provisions hereof.
(e) Headings and captions used in this Agreement are for convenience of reference only and shall not affect the construction or interpretation of any provision hereof.
(f) All accounting terms not specifically defined herein shall be construed in accordance with generally accepted accounting principles as in effect from time to time, consistently applied.
(g) All references to monetary amounts shall be to lawful currency of the United States of America.
ARTICLE 2 — ESTABLISHMENT OF ACCOUNTS
Section 2.1 — Lockbox Account
(a) Deposit Bank shall establish and maintain a segregated deposit account in the name of "Hudson Yards West Mortgage LLC — Lockbox Account" (the "Lockbox Account") at its offices located at 140 Broadway, 20th Floor, New York, New York 10005. The account details for the Lockbox Account are set forth on Exhibit A attached hereto and shall be completed upon the establishment of such account on or prior to the Closing Date.
(b) The Lockbox Account shall at all times be an Eligible Account and shall be maintained at an Eligible Institution. Deposit Bank represents and warrants that the Lockbox Account satisfies the requirements for an Eligible Account as of the date hereof and covenants that it shall maintain such account in compliance with such requirements throughout the term of this Agreement.
(c) At all times during the term of the Loan, whether or not a Cash Management Period or a Cash Sweep Period is then in effect, the Lockbox Account shall be subject to the exclusive dominion and control of Lender pursuant to this Agreement and the related Account Control Agreement. Borrower shall have no right to withdraw, transfer, or otherwise direct the disposition of any funds in the Lockbox Account, and Deposit Bank shall not honor or comply with any withdrawal, transfer, or disposition instruction with respect to the Lockbox Account from any person other than Lender.
(d) This Agreement establishes a hard lockbox structure with respect to the collection of Rents and other revenue of the Property. Accordingly, all Rents and other revenue derived from or allocable to the Property shall be deposited directly into the Lockbox Account at all times during the term of the Loan. The obligation to deposit Rents into the Lockbox Account is not contingent upon the occurrence of a Cash Management Trigger Event, a Cash Sweep Trigger Event, or any other trigger or condition, but rather is a continuous and unconditional obligation of Borrower from and after the Closing Date.
(e) Borrower acknowledges and agrees that its interest in the funds on deposit in the Lockbox Account is subject to the first-priority security interest of Lender, and that Lender's control over the Lockbox Account is a material inducement to Lender's agreement to make the Loan.
Section 2.2 — Cash Management Account
(a) Deposit Bank shall establish and maintain a segregated deposit account in the name of "Hudson Yards West Mortgage LLC — Cash Management Account" (the "Cash Management Account") at its offices located at 140 Broadway, 20th Floor, New York, New York 10005. The account details for the Cash Management Account are set forth on Exhibit A attached hereto.
(b) All funds on deposit in the Lockbox Account shall be swept by Deposit Bank into the Cash Management Account on each Business Day. Such sweeps shall be effected by automated clearing house transfer or such other means as Lender and Deposit Bank shall agree. Deposit Bank shall ensure that each daily sweep is completed no later than 2:00 p.m. (Eastern Time) on the applicable Business Day. Any funds received in the Lockbox Account after the daily sweep cut-off time shall be swept on the next succeeding Business Day.
(c) During a Cash Management Period, disbursements from the Cash Management Account shall be made solely in accordance with the Waterfall set forth in Section 5.2 of this Agreement, and neither Borrower nor any other person (other than Lender) shall have any right to direct or control disbursements from the Cash Management Account.
(d) Outside a Cash Management Period, funds in the Cash Management Account shall be disbursed on each Monthly Payment Date in accordance with Section 5.1 of this Agreement. After the funding of all required monthly reserve deposits and the payment of Debt Service and any other amounts then due and payable to Lender under the Loan Documents, the remaining funds shall be disbursed to Borrower's operating account designated by Borrower in writing and approved by Lender.
(e) The Cash Management Account shall at all times be an Eligible Account and shall be subject to the exclusive dominion and control of Lender pursuant to this Agreement and the related Account Control Agreement.
Section 2.3 — Reserve Accounts
(a) Deposit Bank shall establish and maintain the following Reserve Accounts, each as an Eligible Account, in the name of Borrower and subject to the exclusive dominion and control of Lender, at Deposit Bank's offices located at 140 Broadway, 20th Floor, New York, New York 10005:
(i) Tax and Insurance Reserve Account. A segregated deposit account in the name of "Hudson Yards West Mortgage LLC — Tax and Insurance Reserve Account" for the deposit of monthly installments of estimated annual real property taxes (including all special assessments) and insurance premiums applicable to the Property, and the disbursement thereof for the timely payment of such taxes and premiums in accordance with Section 7.1.
(ii) Replacement Reserve Account. A segregated deposit account in the name of "Hudson Yards West Mortgage LLC — Replacement Reserve Account" for the deposit of monthly capital expenditure reserve amounts and the disbursement thereof for capital repairs, replacements, and improvements to the Property in accordance with Section 7.2.
(iii) Tenant Improvement and Leasing Commission Reserve Account. A segregated deposit account in the name of "Hudson Yards West Mortgage LLC — TI/LC Reserve Account" for the deposit of monthly tenant improvement and leasing commission reserve amounts and the disbursement thereof for costs of tenant improvements and brokerage commissions incurred in connection with the leasing of the Property in accordance with Section 7.3.
(iv) Interest Reserve Account. A segregated deposit account in the name of "Hudson Yards West Mortgage LLC — Interest Reserve Account" for the pre-funding of Monthly Debt Service Payments during the construction period (from the Closing Date through the earlier of (A) the achievement of substantial completion of construction and (B) December 15, 2027), and the disbursement thereof in accordance with Section 7.4.
(v) Ground Rent Reserve Account. A segregated deposit account in the name of "Hudson Yards West Mortgage LLC — Ground Rent Reserve Account" for the deposit of monthly installments of one-twelfth (1/12th) of the annual Ground Rent (currently Four Million Two Hundred Thousand and No/100 Dollars ($4,200,000.00) per annum, subject to Consumer Price Index escalation adjustments every five (5) years in accordance with the Ground Lease) and the disbursement thereof for the timely payment of Ground Rent to the ground lessor in accordance with Section 7.5.
(vi) Excess Cash Reserve Account. A segregated deposit account in the name of "Hudson Yards West Mortgage LLC — Excess Cash Reserve Account" for the deposit of Excess Cash during any Cash Sweep Period, and the custody and disbursement thereof in accordance with Section 5.3.
(vii) Additional Reserve Accounts. Such other reserve accounts as may be required to be established under the Loan Agreement from time to time, each of which shall be maintained as an Eligible Account subject to the exclusive control of Lender.
(b) The account details for each Reserve Account are set forth on Exhibit A attached hereto and shall be completed upon the establishment of such accounts on or prior to the Closing Date.
(c) Each Reserve Account shall be subject to the exclusive dominion and control of Lender, and Borrower shall have no right to withdraw, transfer, or otherwise direct the disposition of any funds in any Reserve Account except as expressly provided in this Agreement or the Loan Agreement and with Lender's prior written approval or authorization.
Section 2.4 — Account Control Agreements
(a) Concurrently with the execution and delivery of this Agreement, Borrower, Lender, and Deposit Bank shall enter into one or more Account Control Agreements with respect to each of the Lockbox Account, the Cash Management Account, and each Reserve Account, in form and substance satisfactory to Lender, granting Lender "control" within the meaning of Section 9-104 of the Uniform Commercial Code as in effect in the State of New York. Each such Account Control Agreement shall be duly executed and delivered by Borrower, Lender, and Deposit Bank as of the Closing Date.
(b) Deposit Bank hereby acknowledges and agrees that, pursuant to the Account Control Agreements and this Agreement, Deposit Bank shall comply with all instructions originated by Lender (or its authorized designee) directing the disposition of funds in the Lockbox Account, the Cash Management Account, and each Reserve Account, without further consent, approval, or authorization of Borrower. Deposit Bank shall not require Borrower's countersignature or separate authorization for any instruction properly delivered by Lender.
(c) In the event of any conflict between the terms of an Account Control Agreement and the terms of this Agreement with respect to the rights and obligations of the parties regarding the accounts established hereunder, the terms of this Agreement shall control, except to the extent that the Account Control Agreement provides Lender with greater rights or protections.
Section 2.5 — Interest on Accounts
(a) All interest, earnings, and investment returns accruing on funds on deposit in the Lockbox Account, the Cash Management Account, and each Reserve Account shall be for the account of Borrower and shall constitute additional security for the Loan and Borrower's obligations under the Loan Documents.
(b) Interest and earnings on funds in the Lockbox Account and the Cash Management Account shall remain in the respective account (or, at Lender's election, shall be deposited into the Cash Management Account) and shall be disbursed in accordance with the Waterfall (during a Cash Management Period) or to Borrower's operating account (outside a Cash Management Period), as applicable.
(c) Interest and earnings on funds in each Reserve Account shall remain in the respective Reserve Account and shall be available for disbursement in the same manner and for the same purposes as the principal amounts in such Reserve Account.
(d) Upon the repayment of the Loan in full and satisfaction of all obligations under the Loan Documents, any accrued and unpaid interest and earnings shall be paid to Borrower.
Section 2.6 — Eligible Account Requirements
(a) Each account established and maintained under this Agreement shall at all times satisfy the following requirements:
(i) The account shall be maintained at an Eligible Institution that is a federally insured depository institution within the meaning of applicable federal banking law and regulations.
(ii) The account shall be held in the name of Borrower, with the security interest and control rights of Lender noted on the records of Deposit Bank.
(iii) The account shall be segregated from the funds of Deposit Bank, the funds of any other person, and the funds of any other account maintained hereunder or otherwise, and Deposit Bank shall not commingle the funds in any account with any other funds of Deposit Bank or any third party.
(iv) The account shall be subject to a duly executed Account Control Agreement in favor of Lender.
(b) If at any time Deposit Bank ceases to qualify as an Eligible Institution (whether by reason of a downgrade in its long-term unsecured debt rating below "A–" (or the equivalent thereof) from Pinnacle Ratings Group or any other nationally recognized statistical rating organization, or by reason of any other event or circumstance causing Deposit Bank to fail to satisfy the requirements of an Eligible Institution), the accounts shall be transferred to a successor Eligible Institution within thirty (30) calendar days after Deposit Bank receives notice of such disqualification (or, if earlier, within thirty (30) calendar days after Deposit Bank becomes aware or should reasonably have become aware of such disqualification). Borrower shall cooperate fully with Lender and the successor Eligible Institution in effecting such transfer, including by executing and delivering any documents and instruments reasonably requested by Lender in connection therewith.
ARTICLE 3 — LOCKBOX PROCEDURES; TENANT DIRECTION LETTERS
Section 3.1 — Deposit of Rents
(a) Borrower shall cause all Rents and all other revenue derived from or allocable to the Property to be deposited directly into the Lockbox Account. No Rents or other revenue of the Property shall be deposited into any account of Borrower or any other person other than the Lockbox Account. This obligation is absolute and unconditional and shall remain in effect at all times during the term of the Loan, regardless of whether a Cash Management Period, a Cash Sweep Period, or an Event of Default is then in effect.
(b) All Leases executed or entered into after the date hereof shall contain a provision requiring the tenant thereunder to remit all Rents and other amounts payable under such Lease directly to the Lockbox Account by wire transfer, automated clearing house transfer, or such other means as shall be acceptable to Lender. Borrower shall provide Lender with a copy of the applicable lease provision prior to execution of any such Lease.
(c) Borrower shall use commercially reasonable efforts to cause all existing tenants to remit Rents and other amounts payable under their respective Leases directly to the Lockbox Account by wire transfer or automated clearing house transfer rather than by check, to the extent practicable and consistent with the terms of the applicable Lease.
Section 3.2 — Tenant Direction Letters
(a) Within five (5) Business Days after the Closing Date, Borrower shall deliver a Tenant Direction Letter, in substantially the form attached hereto as Exhibit B (with such modifications as may be necessary to conform to the terms of the applicable Lease), to each tenant under an existing Lease at the Property, directing such tenant to remit all Rents and other amounts payable under its Lease directly to the Lockbox Account.
(b) Borrower shall deliver a Tenant Direction Letter to each new tenant promptly upon execution of each new Lease, and in no event later than five (5) Business Days after the date of execution thereof.
(c) Borrower shall use commercially reasonable efforts to cause each tenant to acknowledge receipt of and compliance with the Tenant Direction Letter, including by obtaining a signed acknowledgment copy from each tenant, and shall deliver copies of all signed acknowledgments to Lender promptly upon receipt.
(d) Borrower shall not, without the prior written consent of Lender, revoke, rescind, amend, modify, or supplement any Tenant Direction Letter, or direct any tenant to remit Rents or other amounts to any account other than the Lockbox Account.
Section 3.3 — Misdirected Payments
(a) If Borrower, the Property Manager, or any affiliate, agent, or representative of Borrower receives any Rents or other amounts that should have been deposited directly into the Lockbox Account (including amounts received by check, wire transfer, or any other means), Borrower shall deposit (or cause the deposit of) such amounts into the Lockbox Account within one (1) Business Day of receipt, in the same form received or in immediately available funds.
(b) All such misdirected amounts shall be held by Borrower (or the Property Manager or such other person, as applicable) in trust for Lender pending deposit into the Lockbox Account. Borrower shall not commingle any such amounts with any other funds of Borrower or any other person.
(c) Borrower shall maintain a written log of all misdirected payments received by Borrower, the Property Manager, or any affiliate, agent, or representative of Borrower, including the date of receipt, the amount, the payor, and the date of deposit into the Lockbox Account, and shall make such log available to Lender upon request.
Section 3.4 — Endorsement
Borrower hereby irrevocably authorizes and directs Deposit Bank to endorse any checks, drafts, money orders, or other instruments received for deposit to the Lockbox Account in the name of Borrower, with the endorsement "For Deposit Only" or words of similar import, and to deposit the proceeds thereof into the Lockbox Account. Borrower further authorizes Deposit Bank to accept items for deposit to the Lockbox Account without endorsement, to the extent permitted by applicable law and banking regulations.
ARTICLE 4 — CASH MANAGEMENT TRIGGERS; CASH SWEEP TRIGGERS
Section 4.1 — Cash Management Trigger Events
A "Cash Management Trigger Event" shall mean the occurrence of any of the following events or circumstances:
(a) The occurrence and continuance of an Event of Default under the Loan Agreement (after the expiration of any applicable notice and cure period expressly set forth therein);
(b) Borrower's DSCR falling below 1.20x (the "DSCR Covenant" under the Loan Agreement) for any Test Period, as determined by Lender on the basis of the financial statements, rent rolls, and other information delivered by Borrower pursuant to the Loan Agreement;
(c) Borrower's Debt Yield falling below 8.0% for any Test Period, as determined by Lender on the basis of the financial statements and other information delivered by Borrower pursuant to the Loan Agreement;
(d) The combined LTV (calculated using the aggregate outstanding principal balance of the Loan and the Mezzanine Loan) exceeding 70.0% upon annual testing in accordance with the Loan Agreement, based on the most recent appraisal of the Property obtained by Lender;
(e) The occurrence of any bankruptcy, insolvency, receivership, conservatorship, reorganization, dissolution, or similar event or proceeding with respect to Borrower, Guarantor (MTDC), or the Property Manager, whether voluntary or involuntary, including the filing of a petition or application by or against any such person under any applicable federal or state bankruptcy, insolvency, or debtor-relief law;
(f) The termination (or delivery of notice of termination) of the management agreement between Borrower and the Property Manager, or the resignation or removal of the Property Manager for any reason, unless a Qualified Replacement Manager approved by Lender in writing is appointed and assumes management responsibilities within thirty (30) calendar days after the date of such termination, notice of termination, resignation, or removal; and
(g) The occurrence of a material casualty or condemnation event affecting more than twenty percent (20%) of the net rentable area of the Property or more than twenty percent (20%) of the aggregate Rents (determined on the basis of the most recent annual rent roll), unless restoration or repair of the affected portion of the Property is commenced within the time periods required under the Loan Agreement and is thereafter diligently prosecuted to completion.
The occurrence of a Cash Management Trigger Event shall be determined by Lender in its reasonable discretion, and Lender shall provide Borrower with written notice of the occurrence of any Cash Management Trigger Event promptly after Lender's determination thereof. The Cash Management Period shall commence upon the date of Lender's delivery of such notice (or, in the case of a Cash Management Trigger Event described in clause (a) or (e) above, upon the occurrence of such event, without the necessity of notice).
Section 4.2 — Cash Management Trigger Cure
A Cash Management Trigger Event shall be deemed to have been cured (a "Cash Management Trigger Cure"), and the related Cash Management Period shall terminate, upon the satisfaction of the following conditions with respect to the applicable Cash Management Trigger Event:
(a) With respect to a Cash Management Trigger Event described in Section 4.1(a), the cure of all Events of Default under the Loan Agreement (and all other Loan Documents) to the satisfaction of Lender, and no other Cash Management Trigger Event shall then be continuing;
(b) With respect to a Cash Management Trigger Event described in Section 4.1(b), 4.1(c), or 4.1(d), the applicable financial covenant (DSCR, Debt Yield, or LTV, as the case may be) being satisfied by Borrower for two (2) consecutive Test Periods following the Test Period in which the Cash Management Trigger Event first occurred, as determined by Lender on the basis of the financial statements and other information delivered by Borrower;
(c) With respect to a Cash Management Trigger Event described in Section 4.1(e), (i) in the case of an involuntary bankruptcy or insolvency proceeding, the dismissal, discharge, or vacatur of such proceeding within sixty (60) calendar days after the commencement thereof (it being understood and agreed that the filing of a voluntary bankruptcy or insolvency proceeding by Borrower, Guarantor, or the Property Manager shall not be subject to cure), and (ii) no other Cash Management Trigger Event shall then be continuing;
(d) With respect to a Cash Management Trigger Event described in Section 4.1(f), the appointment by Borrower, and the prior written approval by Lender, of a Qualified Replacement Manager, and the execution and delivery of a new management agreement and a subordination of management agreement, each in form and substance satisfactory to Lender; and
(e) With respect to a Cash Management Trigger Event described in Section 4.1(g), the completion of restoration or repair of the Property to a condition satisfactory to Lender (as certified by an independent architect or engineer approved by Lender), or the receipt and application of insurance proceeds or condemnation awards in accordance with the Loan Agreement, and no other Cash Management Trigger Event shall then be continuing.
Notwithstanding the foregoing, no Cash Management Trigger Cure shall be effective more than five (5) times in the aggregate during the term of the Loan, and no more than two (2) Cash Management Trigger Cures may be effected with respect to the same category of Cash Management Trigger Event (i.e., the same clause of Section 4.1). For the avoidance of doubt, a Cash Management Trigger Cure shall not be effective unless all conditions to such cure have been satisfied, and the applicable Cash Management Period shall remain in effect until such time as all such conditions are fully satisfied.
Section 4.3 — Cash Sweep Trigger Events
A "Cash Sweep Trigger Event" shall mean the occurrence of either of the following events or circumstances:
(a) Borrower's DSCR falling below 1.10x on a trailing twelve (12) month basis, tested quarterly on each Test Date, as determined by Lender on the basis of the financial statements, rent rolls, and other information delivered by Borrower pursuant to the Loan Agreement; or
(b) The occurrence and continuance of an Event of Default under the Loan Agreement (after the expiration of any applicable notice and cure period expressly set forth therein).
Upon the occurrence of a Cash Sweep Trigger Event, the hard lockbox / springing cash sweep mechanism contemplated by this Agreement shall spring into full effect. During any Cash Sweep Period, all Excess Cash (as determined in accordance with Section 5.2(m)) shall be swept into the Excess Cash Reserve Account and held as additional collateral for the Loan. Neither Borrower nor any other person (other than Lender) shall have any right to direct or control the disposition of amounts on deposit in the Excess Cash Reserve Account during a Cash Sweep Period.
Lender shall provide Borrower with written notice of the occurrence of a Cash Sweep Trigger Event promptly after Lender's determination thereof. The Cash Sweep Period shall commence upon the date of Lender's delivery of such notice (or, in the case of a Cash Sweep Trigger Event described in clause (b) above, upon the occurrence of such Event of Default, without the necessity of additional notice beyond any notice already delivered in connection with such Event of Default).
Section 4.4 — Cash Sweep Trigger Cure
A Cash Sweep Trigger Event shall be deemed to have been cured (a "Cash Sweep Trigger Cure"), and the related Cash Sweep Period shall terminate, upon the satisfaction of the following conditions with respect to the applicable Cash Sweep Trigger Event:
(a) With respect to a Cash Sweep Trigger Event described in Section 4.3(a), Borrower's DSCR being restored to at least 1.10x for two (2) consecutive Test Periods following the Test Period in which the Cash Sweep Trigger Event first occurred, as determined by Lender on the basis of the financial statements and other information delivered by Borrower; or
(b) With respect to a Cash Sweep Trigger Event described in Section 4.3(b), the cure of all Events of Default under the Loan Agreement (and all other Loan Documents) to the satisfaction of Lender, and no other Cash Sweep Trigger Event shall then be continuing.
Notwithstanding the foregoing, no Cash Sweep Trigger Cure shall be effective more than five (5) times in the aggregate during the term of the Loan, and no more than two (2) Cash Sweep Trigger Cures may be effected with respect to the same category of Cash Sweep Trigger Event. Upon a Cash Sweep Trigger Cure, amounts on deposit in the Excess Cash Reserve Account shall be released to Borrower in accordance with Section 5.3, subject to no Cash Management Period then being in effect.
Section 4.5 — Interaction with Mezzanine Loan Cash Management
(a) The parties acknowledge and agree that the cash management rights and remedies of Lender under this Agreement are senior and prior in right and priority to any cash management rights or remedies of Granite Peak Capital Partners, LP, as Mezzanine Lender, under the Mezzanine Loan Agreement or any related mezzanine loan documents.
(b) To the extent that the Mezzanine Lender has any cash management rights under the Mezzanine Loan Agreement or otherwise, such rights are in all respects subordinate and subject to the rights of Lender under this Agreement and the Intercreditor Agreement. In the event of any conflict between this Agreement and any cash management provisions contained in the Mezzanine Loan Agreement or any related mezzanine loan document, the terms of this Agreement and the Intercreditor Agreement shall govern and control.
(c) No disbursement of Excess Cash to the Mezzanine Lender or to any mezzanine debt service reserve or other mezzanine reserve account shall be made unless and until all payments and deposits required under the Waterfall (including all items described in clauses (a) through (l) of Section 5.2) have been made in full, and no Cash Management Period or Cash Sweep Period is then in effect (unless the Intercreditor Agreement expressly provides otherwise).
(d) This Section 4.5 is subject in all respects to the terms and conditions of the Intercreditor Agreement, and in the event of any conflict between this Section 4.5 and the Intercreditor Agreement, the Intercreditor Agreement shall control.
ARTICLE 5 — WATERFALL; APPLICATION OF FUNDS
Section 5.1 — Application Outside a Cash Management Period
When no Cash Management Period is in effect, funds in the Cash Management Account shall be applied on each Monthly Payment Date (or on such other date as may be specified in the Loan Agreement for the applicable payment or deposit) in the following order of priority:
(a) First, to Lender, the Monthly Debt Service Payment then due and payable under the Loan Agreement and the Note;
(b) Second, to the Tax and Insurance Reserve Account, the required monthly deposit for real property taxes and insurance premiums, in an amount equal to one-twelfth (1/12th) of the estimated annual real property taxes and one-twelfth (1/12th) of the estimated annual insurance premiums, as determined by Lender;
(c) Third, to the Ground Rent Reserve Account, an amount equal to one-twelfth (1/12th) of the annual Ground Rent (currently Three Hundred Fifty Thousand and No/100 Dollars ($350,000.00) per month, subject to Consumer Price Index escalation adjustments every five (5) years in accordance with the Ground Lease);
(d) Fourth, to the Replacement Reserve Account, the required monthly capital expenditure reserve deposit in the amount specified in the Loan Agreement;
(e) Fifth, to the TI/LC Reserve Account, the required monthly tenant improvement and leasing commission reserve deposit in the amount specified in the Loan Agreement;
(f) Sixth, to Lender, any other amounts then due and payable to Lender under the Loan Documents, including, without limitation, late charges, default interest, prepayment premiums, yield maintenance amounts, protective advances, and reimbursable expenses; and
(g) Seventh, the remainder shall be disbursed to Borrower's operating account (as designated by Borrower and approved by Lender) for Operating Expenses and other lawful purposes in connection with the ownership, operation, and management of the Property.
Section 5.2 — Application During a Cash Management Period (Waterfall)
During any Cash Management Period, funds in the Cash Management Account shall be applied on each Monthly Payment Date (or on such other date as may be specified in the Loan Agreement for the applicable payment or deposit) in the following order of priority (the "Waterfall"):
(a) First, to Lender and/or Deposit Bank, as applicable, any unpaid fees, costs, expenses, and indemnification obligations owing by Borrower under the Loan Documents or this Agreement, including, without limitation, the fees and expenses of Deposit Bank set forth on Schedule 2 and any reimbursable legal fees, inspection fees, appraisal fees, environmental review fees, and similar costs incurred by Lender;
(b) Second, to the Interest Reserve Account, any required interest reserve replenishment (to the extent applicable during the construction period), in an amount determined by Lender to be necessary to maintain the Interest Reserve Account at the level required under the Loan Agreement;
(c) Third, to Lender, the Monthly Debt Service Payment then due and payable under the Loan Agreement and the Note;
(d) Fourth, to the Ground Rent Reserve Account, an amount equal to one-twelfth (1/12th) of the annual Ground Rent then in effect (currently Three Hundred Fifty Thousand and No/100 Dollars ($350,000.00) per month, subject to Consumer Price Index escalation adjustments);
(e) Fifth, to the Tax and Insurance Reserve Account, an amount equal to one-twelfth (1/12th) of the estimated annual real property taxes and one-twelfth (1/12th) of the estimated annual insurance premiums applicable to the Property, as determined by Lender on the basis of the most recent tax bills and insurance premium invoices received;
(f) Sixth, to the Replacement Reserve Account, the required monthly capital expenditure reserve deposit in the amount specified in the Loan Agreement;
(g) Seventh, to the TI/LC Reserve Account, the required monthly tenant improvement and leasing commission reserve deposit in the amount specified in the Loan Agreement;
(h) Eighth, to the Property Manager, the approved monthly management fee payable to Evergreen Property Management LLC (or any successor Property Manager approved by Lender) under the management agreement approved by Lender, in an amount not to exceed the management fee set forth in the Approved Annual Budget for the applicable month;
(i) Ninth, to Borrower's operating account, the budgeted monthly Operating Expenses set forth in the Approved Annual Budget for the applicable month (excluding management fees already funded pursuant to clause (h) above and items funded from Reserve Accounts), subject to Lender's right to disapprove any individual expenditure exceeding Fifty Thousand and No/100 Dollars ($50,000.00) (or such other threshold as may be set forth in the Loan Agreement) unless such expenditure is a line item expressly included in the Approved Annual Budget;
(j) Tenth, to Lender, any unpaid late charges, default interest, prepayment premiums, yield maintenance amounts, or other amounts then due and payable under the Loan Documents that were not funded under clause (a) above;
(k) Eleventh, to Lender or the applicable Reserve Account, any amount necessary to cure a deficiency in any Reserve Account below the required minimum balance for such Reserve Account as set forth in the Loan Agreement or this Agreement, in such order of priority among Reserve Accounts as Lender shall determine;
(l) Twelfth, to any other obligations then due and payable by Borrower under the Loan Documents not otherwise covered by the foregoing clauses; and
(m) Thirteenth (the "Excess Cash"), the remainder, after payment or funding of all items set forth in clauses (a) through (l) above:
(i) If a Cash Sweep Period is then in effect: all such remaining amounts shall be deposited into the Excess Cash Reserve Account and held as additional collateral for the Loan, subject to the terms and conditions of Section 5.3; or
(ii) If a Cash Management Period (but not a Cash Sweep Period) is then in effect: all such remaining amounts shall be disbursed to Borrower's operating account (as designated by Borrower and approved by Lender).
Section 5.3 — Excess Cash Reserve Account
(a) All amounts on deposit in the Excess Cash Reserve Account during a Cash Sweep Period shall be held as additional collateral for the Loan and the obligations of Borrower under the Loan Documents. Neither Borrower nor any other person (other than Lender) shall have any right to withdraw, transfer, or otherwise direct the disposition of any funds in the Excess Cash Reserve Account during a Cash Sweep Period, and such funds shall not be disbursed to Borrower or to any other person.
(b) Upon the termination of a Cash Sweep Period (pursuant to a Cash Sweep Trigger Cure in accordance with Section 4.4), all funds then on deposit in the Excess Cash Reserve Account (including all interest and earnings thereon) shall be released and disbursed to Borrower's operating account; provided, however, that no such release shall be made if a Cash Management Period is then in effect with respect to any Cash Management Trigger Event that has not been cured in accordance with Section 4.2, in which case such funds shall be held in the Excess Cash Reserve Account (or the Cash Management Account, at Lender's election) pending the termination of such Cash Management Period.
(c) Upon the occurrence and continuance of an Event of Default, Lender may, in its sole and absolute discretion, apply any and all amounts on deposit in the Excess Cash Reserve Account to the outstanding balance of the Loan (including principal, interest, late charges, default interest, fees, costs, expenses, and any other amounts owing under the Loan Documents) in such order and manner as Lender shall determine. Lender shall provide Borrower with written notice of any such application promptly after the making thereof, but the failure to provide such notice shall not affect the validity or effectiveness of such application.
Section 5.4 — Insufficiency of Funds
If the amounts available in the Cash Management Account on any Monthly Payment Date (or other applicable date) are insufficient to fund all items in the Waterfall set forth in Section 5.2 (or, outside a Cash Management Period, all items set forth in Section 5.1), funds shall be applied in the order of priority set forth in the applicable Section until such funds are exhausted. Any resulting deficiency in any payment or deposit required under the Waterfall shall not relieve Borrower of its obligation to pay such amounts when due under the Loan Agreement or this Agreement. Borrower shall fund any such deficiency from its own resources within five (5) Business Days of Lender's written notice of such deficiency, and the failure to do so shall constitute an Event of Default hereunder and under the Loan Agreement.
Section 5.5 — Adjustments to Reserve Deposits