CONSENT AND AGREEMENT OF GENERAL CONTRACTOR
COBALT CONSTRUCTION GROUP, INC.
in favor of
IRONCLAD NATIONAL BANK, N.A., as Administrative Agent
and
GRANITE PEAK CAPITAL PARTNERS, LP
Dated as of June 15, 2025
Project: Hudson Yards West 450 West 34th Street, New York, New York 10001 Block 729, Lots 1, 5, 12, 15
CONSENT AND AGREEMENT OF GENERAL CONTRACTOR
THIS CONSENT AND AGREEMENT OF GENERAL CONTRACTOR (this "Consent and Agreement") is made and entered into as of June 15, 2025, by COBALT CONSTRUCTION GROUP, INC., a New York corporation ("Contractor"), having its principal office at 330 West 42nd Street, 9th Floor, New York, New York 10036, in favor of IRONCLAD NATIONAL BANK, N.A., a national banking association, having an office at 277 Park Avenue, New York, New York 10172, in its capacity as administrative agent (in such capacity, together with its successors and assigns in such capacity, "Agent") for itself and the other lenders from time to time party to the Senior Loan Agreement (as hereinafter defined) (Agent and such other lenders, collectively, "Senior Lender"), and GRANITE PEAK CAPITAL PARTNERS, LP, a Delaware limited partnership, having an office at 9 West 57th Street, Suite 4200, New York, New York 10019 ("Mezzanine Lender"; Senior Lender and Mezzanine Lender are each referred to herein as a "Lender" and are collectively referred to herein as the "Lenders").
RECITALS
A. Reference is hereby made to that certain Guaranteed Maximum Price Construction Contract No. CCG-HYW-2025-001 dated as of June 15, 2025 (as the same may be amended, restated, supplemented, or otherwise modified from time to time in accordance with the terms hereof, the "Construction Contract"), by and between Hudson Yards West Mortgage LLC, a Delaware limited liability company ("Mortgage Borrower"), as owner, and Contractor, as general contractor, for the design and construction of a mixed-use transit-oriented development project (including approximately 1,200 residential units, approximately 175,000 square feet of Class A office space, approximately 85,000 square feet of retail and food hall space, structured parking, and associated public infrastructure improvements) located at 450 West 34th Street, New York, New York 10001, and more particularly described as Block 729, Lots 1, 5, 12, and 15 on the Tax Map of the City of New York, Borough of Manhattan (the "Project"), with a guaranteed maximum price of Four Hundred Twelve Million and 00/100 Dollars ($412,000,000.00) (the "GMP"), all as more particularly described in the Construction Contract.
B. Agent and Senior Lender have made or agreed to make a senior mortgage loan to Mortgage Borrower in the original principal amount of Four Hundred Seventy-Five Million and 00/100 Dollars ($475,000,000.00) (the "Senior Loan") pursuant to that certain Senior Loan Agreement dated as of June 15, 2025, by and among Mortgage Borrower, Agent, and the lenders party thereto (as the same may be amended, restated, supplemented, or otherwise modified from time to time, the "Senior Loan Agreement"). The Senior Loan is evidenced by certain promissory notes and is secured by, among other things, a mortgage, assignment of leases and rents, and security agreement encumbering the Project and the fee interest in the real property on which the Project is to be constructed.
C. Mezzanine Lender has made or agreed to make a mezzanine loan in the original principal amount of Two Hundred Million and 00/100 Dollars ($200,000,000.00) (the "Mezzanine Loan") to Hudson Yards West Mezzanine LLC, a Delaware limited liability company ("Mezzanine Borrower"), which is the sole member of Mortgage Borrower, pursuant to that certain Mezzanine Loan Agreement dated as of June 15, 2025, by and between Mezzanine Borrower and Mezzanine Lender (as the same may be amended, restated, supplemented, or otherwise modified from time to time, the "Mezzanine Loan Agreement"; the Mezzanine Loan Agreement, together with the Senior Loan Agreement, are collectively referred to herein as the "Loan Agreements"). The Mezzanine Loan is secured by a pledge of one hundred percent (100%) of the membership interests in Mortgage Borrower held by Mezzanine Borrower.
D. As security for the Senior Loan, Mortgage Borrower has collaterally assigned to Agent, for the benefit of Senior Lender, all of Mortgage Borrower's right, title, and interest in, to, and under the Construction Contract, including all rights to enforce the Construction Contract, to receive performance thereunder, to exercise remedies with respect thereto, and to receive and collect all amounts due or to become due to Mortgage Borrower thereunder, pursuant to that certain Assignment of Construction Contract and Plans dated as of June 15, 2025 (the "Assignment"), which Assignment has been recorded or is being recorded simultaneously herewith in the Office of the City Register of the City of New York, New York County. Additionally, as security for the Mezzanine Loan, Mezzanine Borrower has collaterally assigned its indirect interests in the Construction Contract and the Project to Mezzanine Lender pursuant to the pledge and security agreement delivered in connection with the Mezzanine Loan.
E. Agent and Mezzanine Lender have required the execution and delivery of this Consent and Agreement by Contractor as a condition precedent to the closing of the Senior Loan and the Mezzanine Loan and the initial advance of proceeds thereunder.
NOW, THEREFORE, in consideration of the foregoing recitals, the mutual covenants and agreements set forth herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Contractor hereby covenants, agrees, represents, and warrants to each Lender as follows:
Section 1 — Definitions
1.1 Capitalized terms used and not otherwise defined in this Consent and Agreement shall have the meanings ascribed to such terms in the Construction Contract. In addition, the following terms shall have the following meanings:
(a) "Assumption Notice" shall have the meaning set forth in Section 5.1 hereof.
(b) "Borrower Default" shall mean the occurrence and continuance of an "Event of Default" as such term is defined in either Loan Agreement (whether the Senior Loan Agreement or the Mezzanine Loan Agreement), beyond any applicable notice and cure periods set forth therein.
(c) "Construction Contract" shall have the meaning set forth in Recital A hereof.
(d) "Cure Period Notice" shall have the meaning set forth in Section 4.3 hereof.
(e) "GMP" shall have the meaning set forth in Recital A hereof.
(f) "Lender Notice" shall mean a written notice from Agent or Mezzanine Lender to Contractor stating that a Borrower Default has occurred and is continuing under the applicable Loan Agreement and directing Contractor to attorn to and take direction from Agent (or its designee or successor) in lieu of Mortgage Borrower with respect to the work under the Construction Contract.
(g) "Loan Agreements" shall have the meaning set forth in Recital C hereof.
(h) "Mortgage Borrower" shall have the meaning set forth in Recital A hereof.
(i) "Mezzanine Borrower" shall have the meaning set forth in Recital C hereof.
(j) "Project" shall have the meaning set forth in Recital A hereof.
(k) "Senior Loan Agreement" shall have the meaning set forth in Recital B hereof.
(l) "Mezzanine Loan Agreement" shall have the meaning set forth in Recital C hereof.
1.2 As used herein, references to the "Senior Loan Agreement" and the "Mezzanine Loan Agreement" shall be deemed to include all schedules, exhibits, and annexes thereto, as the same may be amended, restated, supplemented, or otherwise modified from time to time in accordance with the terms thereof. Where any defined term herein cross-references a term defined in the Senior Loan Agreement or the Mezzanine Loan Agreement, such cross-reference shall be deemed to be to such term as in effect on the date of determination.
1.3 Unless the context otherwise requires, words importing the singular shall include the plural and vice versa, words importing a gender shall include all genders, references to "including" shall mean "including without limitation," and references to sections, exhibits, and schedules shall be to the sections, exhibits, and schedules of this Consent and Agreement.
Section 2 — Consent to Collateral Assignment
2.1 Contractor hereby acknowledges the Assignment and irrevocably and unconditionally consents to the collateral assignment by Mortgage Borrower to Agent, for the benefit of Senior Lender, of all of Mortgage Borrower's right, title, and interest in, to, and under the Construction Contract, including, without limitation, all rights to enforce the Construction Contract, to receive performance thereunder, to exercise any and all remedies available to Mortgage Borrower with respect thereto, and to receive and collect all amounts due or to become due to Mortgage Borrower under or in connection with the Construction Contract. Contractor acknowledges that it has received a true, correct, and complete copy of the Assignment and that it has reviewed the terms thereof. Contractor agrees that such collateral assignment shall not require any further consent, approval, or acknowledgment from Contractor.
2.2 Contractor further acknowledges and irrevocably consents to the collateral assignment by Mezzanine Borrower to Mezzanine Lender of Mezzanine Borrower's membership interests in Mortgage Borrower and the indirect interest in the Construction Contract arising by virtue of such pledge, all as more particularly described in the mezzanine loan documents. Contractor agrees that such collateral assignment shall not, in and of itself, constitute a default or event of default under the Construction Contract.
2.3 Contractor agrees and acknowledges that the Assignment and the collateral assignments referenced in Section 2.2 shall not be deemed to impose upon Agent or any Lender any duties, obligations, or liabilities under the Construction Contract, whether arising before, on, or after the date hereof, unless and until such Lender (or its designee) expressly elects to assume the Construction Contract following a Borrower Default pursuant to Section 5 hereof by delivery of an Assumption Notice. Prior to such election and delivery of an Assumption Notice, no Lender shall be deemed to be a party to the Construction Contract, and nothing herein shall be construed to create any contractual privity between Contractor and any Lender with respect to the Construction Contract except as expressly set forth in this Consent and Agreement.
2.4 Contractor further acknowledges and agrees that neither the Assignment nor this Consent and Agreement shall constitute a novation of the Construction Contract or release Mortgage Borrower from any of its obligations thereunder, and that Mortgage Borrower shall remain primarily liable for all obligations under the Construction Contract unless and until an Assumption Notice is delivered in accordance with Section 5 hereof.
Section 3 — Representations and Warranties of Contractor
Contractor hereby represents and warrants to each Lender, as of the date hereof, as follows:
3.1 Construction Contract in Full Force and Effect. The Construction Contract is in full force and effect, has not been amended, modified, supplemented, or otherwise changed except as disclosed in writing to Agent prior to the date hereof, and constitutes the entire agreement between Contractor and Mortgage Borrower with respect to the design, construction, and completion of the Project. A true, correct, and complete copy of the Construction Contract (including all exhibits, schedules, and annexes thereto) has been delivered to Agent and Mezzanine Lender. No right of offset, defense, counterclaim, or deduction against any amount due or to become due under the Construction Contract exists in favor of Contractor as of the date hereof.
3.2 Guaranteed Maximum Price. The GMP under the Construction Contract is Four Hundred Twelve Million and 00/100 Dollars ($412,000,000.00). No change orders, construction change directives, or other modifications have been executed or are pending as of the date hereof that would increase or decrease the GMP except as listed on Exhibit A attached hereto and made a part hereof. The GMP includes all costs and expenses necessary for the complete and timely performance of the work under the Construction Contract, including all general conditions, overhead, profit, contingency, and allowances as specified therein.
3.3 No Defaults. Contractor has not received any notice of default from Mortgage Borrower under the Construction Contract, and Contractor has not delivered any notice of default to Mortgage Borrower under the Construction Contract. No event has occurred, and no condition exists, that, with the giving of notice, the lapse of time, or both, would constitute a default by either Contractor or Mortgage Borrower under the Construction Contract. Contractor has no knowledge of any circumstance that would reasonably be expected to give rise to a claim of default by either party under the Construction Contract.
3.4 No Prior Assignments. Contractor has not assigned, transferred, pledged, hypothecated, or otherwise encumbered, and shall not assign, transfer, pledge, hypothecate, or otherwise encumber, its right, title, or interest in or under the Construction Contract or any monies due or to become due thereunder, except as disclosed to Agent in writing prior to the date hereof. There are no liens, security interests, or encumbrances on or affecting Contractor's interest in the Construction Contract other than statutory liens arising in the ordinary course of business that are not yet due and payable.
3.5 Organization and Standing. Contractor is a corporation duly organized, validly existing, and in good standing under the laws of the State of New York. Contractor is duly qualified and authorized to transact business in the State of New York and in each other jurisdiction where the nature of its business or the ownership of its properties requires such qualification. Contractor holds all licenses, permits, certifications, registrations, and authorizations required by applicable law or regulation to perform the work under the Construction Contract, including, without limitation, a valid New York City Department of Buildings general contractor license. All such licenses, permits, certifications, registrations, and authorizations are in full force and effect and are not subject to any pending or, to Contractor's knowledge, threatened revocation, suspension, or modification proceedings.
3.6 Due Authorization. The execution, delivery, and performance by Contractor of this Consent and Agreement and the performance of Contractor's obligations hereunder have been duly authorized by all necessary corporate action of Contractor, including any required resolutions of the board of directors and any required shareholder approvals. This Consent and Agreement has been duly executed and delivered by Contractor and constitutes a legal, valid, and binding obligation of Contractor, enforceable against Contractor in accordance with its terms, subject only to applicable bankruptcy, insolvency, reorganization, moratorium, and similar laws affecting creditors' rights generally and to general principles of equity. The execution, delivery, and performance of this Consent and Agreement do not and will not (a) violate or conflict with the certificate of incorporation, bylaws, or other organizational documents of Contractor, (b) violate any law, rule, regulation, order, judgment, or decree applicable to Contractor, or (c) conflict with, result in a breach of, or constitute a default under any material agreement, instrument, indenture, or contract to which Contractor is a party or by which Contractor or its assets may be bound.
3.7 No Litigation. There are no pending or, to Contractor's knowledge, threatened claims, actions, suits, proceedings, investigations, or arbitrations before any court, governmental authority, arbitral body, or other tribunal that would materially and adversely affect Contractor's ability to perform its obligations under the Construction Contract or this Consent and Agreement, or that would materially and adversely affect the financial condition, business, or operations of Contractor. Contractor is not subject to any outstanding order, judgment, injunction, or decree that would materially impair its ability to perform the work under the Construction Contract.
3.8 Insurance. Contractor maintains, and at all times during the performance of the work under the Construction Contract shall maintain, all insurance coverages required under Article 11 of the Construction Contract, including, without limitation: (a) commercial general liability insurance with limits of not less than $25,000,000 per occurrence and $50,000,000 in the aggregate; (b) workers' compensation insurance in statutory amounts; (c) employer's liability insurance with limits of not less than $5,000,000 per occurrence; (d) commercial automobile liability insurance with a combined single limit of not less than $5,000,000; (e) professional liability insurance with limits of not less than $10,000,000 per claim; (f) umbrella/excess liability insurance with limits of not less than $50,000,000; and (g) builder's risk insurance on an "all risk" basis in an amount of not less than Five Hundred Million and 00/100 Dollars ($500,000,000.00) (replacement cost), which builder's risk insurance is currently carried through Fortis Indemnity Insurance Co., policy number FI-BRK-2025-04471, with an expiration date of June 15, 2028. All such insurance policies are in full force and effect, all premiums due thereon have been paid, and Contractor has not received any notice of cancellation, non-renewal, or material change with respect to any such policy.
3.9 Payments Received. As of the date hereof, Contractor has received aggregate payments under the Construction Contract in the amount of $0.00, and no payment applications are pending. Contractor has no outstanding claims for additional compensation or extensions of time under the Construction Contract that have not been disclosed to Agent in writing.
3.10 Surety Bonds. Contractor has delivered or caused to be delivered to Mortgage Borrower and Agent a performance bond and a payment bond, each in the penal sum of the GMP, issued by Sentinel Surety & Bond Company (A.M. Best Rating: A+ XV), bond numbers SSB-PF-2025-7823 and SSB-PY-2025-7824, respectively, each naming Agent as a co-obligee, and such bonds are in full force and effect.
Section 4 — Covenants of Contractor
Contractor hereby covenants and agrees with each Lender as follows:
4.1 Performance. Contractor shall diligently, faithfully, and continuously perform all of its obligations under the Construction Contract in accordance with the terms thereof, the approved plans and specifications (as the same may be amended from time to time in accordance with the Construction Contract and this Consent and Agreement), the construction schedule (as the same may be updated from time to time in accordance with the Construction Contract), and all applicable laws, codes, ordinances, rules, and regulations. Contractor shall prosecute the work with due diligence and in a good and workmanlike manner, using first-quality materials and employing skilled labor, all in accordance with the standards set forth in the Construction Contract. Contractor shall not cease, suspend, or materially slow the performance of the work at the Project solely by reason of non-payment by Mortgage Borrower if Agent has delivered a Lender Notice and Agent (or its designee) is making payments to Contractor in accordance with the payment terms of the Construction Contract. Contractor acknowledges and agrees that the Lenders are relying upon Contractor's continued performance of the work as a material inducement to the closing of the Senior Loan and the Mezzanine Loan.
4.2 No Modification Without Consent. Contractor shall not agree to, execute, or implement any amendment, modification, supplement, termination, cancellation, or waiver of any provision of the Construction Contract, or any change order, construction change directive, or other directive that (a) individually increases or decreases the GMP by more than Five Hundred Thousand and 00/100 Dollars ($500,000.00), (b) in the aggregate (when combined with all prior change orders and modifications) increases or decreases the GMP by more than Two Million Five Hundred Thousand and 00/100 Dollars ($2,500,000.00), (c) extends the date for substantial completion of the Project by more than fifteen (15) days, or (d) otherwise materially alters the scope, quality, or character of the work, without the prior written consent of Agent, which consent may be granted, conditioned, or withheld in Agent's reasonable discretion. For the avoidance of doubt, the foregoing consent requirement shall apply to any change order, regardless of whether such change order is initiated by Contractor, Mortgage Borrower, or the architect of record.
4.3 No Termination for Borrower Default Without Notice. Contractor shall not terminate, cancel, or suspend performance under the Construction Contract by reason of a default by Mortgage Borrower (including, without limitation, a failure to make any payment when due) without first giving Agent and Mezzanine Lender not less than thirty (30) days' prior written notice (such notice, the "Cure Period Notice"), which Cure Period Notice shall describe in reasonable detail the nature of the default, the amount of any payment default, and the section(s) of the Construction Contract alleged to have been breached. During the thirty (30) day period following receipt of the Cure Period Notice by Agent and Mezzanine Lender (or such longer period as may be reasonably necessary to effect such cure, provided that the curing party has commenced and is diligently pursuing such cure within such thirty (30) day period), Agent and Mezzanine Lender shall have the right, but not the obligation, to cure such default on behalf of Mortgage Borrower, and any such cure shall be accepted by Contractor as if made by Mortgage Borrower. Contractor shall not exercise any right of termination, cancellation, or suspension under the Construction Contract for so long as such cure is being diligently pursued. Contractor acknowledges that the cure periods set forth herein are in addition to, and not in lieu of, any cure periods afforded to Mortgage Borrower under the Construction Contract.
4.4 Notices of Default. Contractor shall promptly, and in any event within five (5) business days after the giving or receipt thereof, deliver to Agent and Mezzanine Lender (at the addresses set forth in Section 7 hereof) copies of any and all notices of default, notices of termination, notices of suspension, notices of delay, claims (including any claims for additional compensation or extensions of time), notices of force majeure events, and any other material notices or communications given or received by Contractor under or in connection with the Construction Contract. Without limiting the generality of the foregoing, Contractor shall promptly notify Agent and Mezzanine Lender in writing of: (a) any material casualty, loss, or damage to the Project or any portion thereof; (b) any stop-work order, violation notice, or similar directive issued by any governmental authority; (c) any labor dispute, strike, lockout, or work stoppage affecting the Project; (d) any claim or lien filed or threatened to be filed against the Project or any portion thereof; and (e) any material delay in the construction schedule or any event that could reasonably be expected to result in a delay of more than fifteen (15) days in the achievement of substantial completion.
4.5 Payment Applications. Contractor shall deliver to Agent (at the address set forth in Section 7 hereof, or to such other address or by such other means as Agent may direct from time to time) a complete copy of each payment application, draw request, or invoice submitted by Contractor to Mortgage Borrower under the Construction Contract, simultaneously with delivery of such payment application to Mortgage Borrower. Each such payment application shall be accompanied by such supporting documentation as Agent may reasonably require, including, without limitation: (a) an updated construction schedule; (b) a cost breakdown and budget comparison; (c) conditional and unconditional lien waivers as described in Section 4.7 hereof; (d) stored materials documentation, including evidence of insurance and segregation of stored materials; (e) sworn statements of Contractor and each subcontractor and material supplier whose work is included in the payment application; (f) evidence of compliance with prevailing wage requirements, if applicable; and (g) such other information as Agent's construction consultant may reasonably request.
4.6 Access and Inspection. Contractor shall permit Agent, Mezzanine Lender, and their respective authorized representatives, consultants, engineers, inspectors, and agents (including, without limitation, any construction consultant retained by the Lenders in connection with the Loan Agreements) to enter the Project site at reasonable times during normal business hours and upon not less than twenty-four (24) hours' prior notice (except in the case of an emergency, in which case no prior notice shall be required) to inspect the work, the materials incorporated or to be incorporated into the Project, and Contractor's books and records relating to the Project. Contractor shall cooperate fully with any such inspection, shall make its project manager and other key personnel available to discuss the status of the work, and shall provide access to the project office and all project records, including daily logs, meeting minutes, submittals, requests for information, and correspondence. Such inspections shall not unreasonably interfere with Contractor's performance of the work and shall be conducted in compliance with all applicable safety regulations and site rules.
4.7 Lien Waivers. In connection with each payment application submitted under the Construction Contract, Contractor shall deliver to Agent: (a) an unconditional lien waiver from Contractor for all work and materials included in the immediately preceding payment application for which payment has been received; (b) a conditional lien waiver from Contractor for all work and materials included in the current payment application; (c) unconditional lien waivers from each subcontractor and material supplier with a subcontract or supply contract value in excess of $250,000.00 for all work and materials included in the immediately preceding payment application for which payment has been received; and (d) conditional lien waivers from each such subcontractor and material supplier for all work and materials included in the current payment application. All lien waivers shall be in the form required by applicable law and in a form reasonably acceptable to Agent. Contractor shall use commercially reasonable efforts to obtain lien waivers from all other subcontractors and material suppliers.
4.8 Subcontracts. Contractor shall not enter into any subcontract, purchase order, or supply agreement with a value in excess of One Million and 00/100 Dollars ($1,000,000.00) without providing not less than ten (10) business days' prior written notice to Agent, which notice shall identify the proposed subcontractor, the scope of work, and the contract value. If requested by Agent, Contractor shall cause each subcontractor with a subcontract value in excess of Five Million and 00/100 Dollars ($5,000,000.00) to execute a consent and agreement substantially in the form hereof, appropriately modified to reflect such subcontractor's status. Contractor shall not permit any subcontractor to further subcontract any material portion of the work without Contractor's prior consent, and Contractor shall include in each subcontract provisions permitting assignment of such subcontract to Agent (or its designee) consistent with the terms of this Consent and Agreement. Contractor shall maintain a current list of all subcontractors and material suppliers and shall provide such list to Agent upon request.
4.9 No Assignment. Contractor shall not assign, transfer, convey, pledge, hypothecate, or otherwise encumber the Construction Contract or any interest therein, or any monies due or to become due thereunder, or delegate any of its obligations under the Construction Contract, without the prior written consent of Agent, which consent may be granted, conditioned, or withheld in Agent's sole discretion. Any purported assignment, transfer, or delegation in violation of this Section 4.9 shall be void and of no force or effect.
4.10 Insurance. Contractor shall maintain all insurance coverages required under the Construction Contract throughout the entire construction period and until final completion and acceptance of the work, and shall cause all insurance policies to name Agent and Mezzanine Lender as additional insureds (with respect to liability coverages) and as loss payees (with respect to property and builder's risk coverages) as their interests may appear, as specified in the Construction Contract. Contractor shall deliver to Agent certificates of insurance evidencing all required coverages, together with copies of endorsements naming Agent and Mezzanine Lender as additional insureds and loss payees, promptly upon execution of this Consent and Agreement and thereafter upon each renewal of such policies. Contractor shall provide Agent with not less than thirty (30) days' prior written notice of any cancellation, non-renewal, or material change in any such insurance policy. In the event of any casualty or loss, Contractor shall cooperate with Agent and the insurance carriers in the adjustment and settlement of any insurance claim.
4.11 Compliance with Laws. Contractor shall comply with all applicable federal, state, and local laws, codes, ordinances, rules, and regulations in the performance of the work, including, without limitation, all building codes, zoning regulations, environmental laws, occupational safety and health laws, prevailing wage requirements, and equal employment opportunity requirements.
4.12 Monthly Reports. Contractor shall provide Agent and Mezzanine Lender with monthly written progress reports, in form and substance reasonably satisfactory to Agent, which reports shall include: (a) a narrative description of the work performed during the preceding month; (b) a comparison of actual progress to the approved construction schedule; (c) a description of any delays, claims, or disputes; (d) an updated cost report; and (e) photographs documenting the current status of the work.
Section 5 — Lender Remedies and Attornment Upon Borrower Default
5.1 Election to Assume. Upon the occurrence and continuance of a Borrower Default and the delivery of a Lender Notice to Contractor, Agent (or Mezzanine Lender, subject to the terms and conditions of any intercreditor agreement between Agent and Mezzanine Lender then in effect) shall have the right, but not the obligation, to assume all of Mortgage Borrower's rights, interests, and obligations under the Construction Contract by delivering to Contractor a written notice of such election in substantially the form attached hereto as Exhibit B (an "Assumption Notice"). Such Assumption Notice shall identify the assuming party, shall specify the effective date of such assumption, and shall be delivered in accordance with the notice provisions set forth in Section 7 hereof. Upon delivery of the Assumption Notice, Contractor shall immediately and without further action attorn to Agent (or its designee) as if Agent (or its designee) were the original party to the Construction Contract in place and instead of Mortgage Borrower, and Contractor shall thereafter perform all of its obligations under the Construction Contract for the benefit of Agent (or its designee) in the same manner and to the same extent as Contractor was obligated to perform for the benefit of Mortgage Borrower.
5.2 Continued Performance. Following delivery of a Lender Notice to Contractor and pending the delivery of an Assumption Notice or the expiration of the cure periods set forth in Section 4.3, Contractor shall continue to perform the work under the Construction Contract in accordance with its terms and shall accept direction from, and render performance to, Agent (or its designee); provided, however, that Agent (or its designee) shall: (a) cure all monetary defaults of Mortgage Borrower under the Construction Contract (including, without limitation, the payment of all amounts then due and payable to Contractor) within the cure period referenced in Section 4.3 hereof; and (b) pay Contractor for all work properly performed and materials properly furnished after the date of the Lender Notice in accordance with the payment terms set forth in the Construction Contract, subject to the disbursement procedures set forth in the Senior Loan Agreement. Contractor shall not be required to perform any work for which payment is not being made in accordance with the terms of the Construction Contract (after giving effect to the cure rights set forth herein). Nothing in this Section 5.2 shall require Contractor to perform work beyond the scope of the Construction Contract or to accept any reduction in the compensation or other benefits to which it is entitled thereunder.
5.3 Designees and Successors. Agent may designate any successor owner, purchaser at a foreclosure sale, transferee pursuant to a deed in lieu of foreclosure, receiver appointed with respect to the Project, or other designee (each, a "Successor Owner") to assume Mortgage Borrower's rights, interests, and obligations under the Construction Contract, and Contractor shall recognize and attorn to such Successor Owner and shall continue to perform under the Construction Contract as though such Successor Owner were the original owner named in the Construction Contract; provided, however, that such Successor Owner shall have assumed in writing, in a form reasonably acceptable to Contractor, all obligations of Mortgage Borrower under the Construction Contract accruing from and after the date of such assumption. Such written assumption shall be delivered to Contractor simultaneously with or prior to the effective date of such succession. Contractor shall not be required to look beyond the written assumption agreement to verify the authority or creditworthiness of the Successor Owner, and Contractor may rely on the representations of Agent with respect thereto.
5.4 No Liability of Lenders. Notwithstanding anything to the contrary contained herein or in the Construction Contract, no Lender shall have any personal liability or obligation under the Construction Contract unless and until such Lender (or its designee) delivers an Assumption Notice to Contractor in accordance with Section 5.1 hereof, and then only with respect to those obligations arising under the Construction Contract from and after the effective date of such Assumption Notice. Neither the Assignment, this Consent and Agreement, the delivery of a Lender Notice, nor any other act or omission of any Lender shall be construed to make any Lender liable for any obligations, liabilities, claims, costs, or expenses arising under or in connection with the Construction Contract for any period prior to the effective date of such Assumption Notice. Without limiting the foregoing, no Lender shall be liable for: (a) any act, omission, default, or negligence of Mortgage Borrower; (b) any breach or default under the Construction Contract occurring prior to the delivery of an Assumption Notice; (c) any obligation to pay or reimburse Contractor for work performed or materials furnished prior to the effective date of the Assumption Notice for which Mortgage Borrower has failed to make payment; or (d) any consequential, incidental, special, punitive, or exemplary damages of any kind.
5.5 Priority of Agent's Directions. In the event that Contractor receives conflicting or inconsistent directions, instructions, or communications from Mortgage Borrower, on the one hand, and Agent (or its designee), on the other hand, at any time after a Lender Notice has been delivered to Contractor in accordance with Section 7 hereof, Contractor shall follow the directions and instructions of Agent (or its designee) and shall disregard any conflicting or inconsistent directions or instructions from Mortgage Borrower. Contractor shall not be liable to Mortgage Borrower for any action taken in good faith in reliance on the directions of Agent (or its designee) following receipt of a Lender Notice.
5.6 No Setoff Against Lenders. Following the delivery of a Lender Notice, Contractor shall not assert against Agent (or its designee or Successor Owner) any claim, defense, setoff, counterclaim, or deduction that Contractor may have against Mortgage Borrower arising out of or relating to acts, omissions, or defaults of Mortgage Borrower occurring prior to the effective date of the applicable Assumption Notice, except to the extent that such claim, defense, setoff, counterclaim, or deduction relates to work performed by Contractor that has not been paid for and remains outstanding.
Section 6 — GMP; Retainage; Construction Funds
6.1 Confirmation of GMP. Contractor hereby confirms that the GMP under the Construction Contract is Four Hundred Twelve Million and 00/100 Dollars ($412,000,000.00), subject only to approved change orders executed in accordance with the Construction Contract and this Consent and Agreement. Contractor acknowledges and agrees that all construction funds to be disbursed in payment of the Construction Contract shall be disbursed through Agent's controlled disbursement procedures as set forth in the Senior Loan Agreement, and Contractor shall cooperate with Agent in complying with such disbursement procedures. Without limiting the foregoing, Contractor acknowledges that disbursements under the Senior Loan are subject to satisfaction of the conditions precedent to advances set forth in the Senior Loan Agreement, including, without limitation, approval by Agent's construction consultant, receipt of a satisfactory title continuation report, and certification by the inspecting architect.
6.2 Retainage. Contractor acknowledges and agrees that Agent may withhold and hold retainage from each payment to Contractor at the rate specified in the Construction Contract, which rate is as follows: (a) ten percent (10%) of each progress payment until the work is fifty percent (50%) complete (as determined by Agent's construction consultant); and (b) five percent (5%) of each progress payment from and after the date that the work is fifty percent (50%) complete. All retainage so withheld shall be held by Agent (or in a retainage escrow account established by Agent) and shall be disbursed in accordance with the terms and conditions of the Senior Loan Agreement and the Construction Contract, including the satisfaction of all conditions to final payment set forth therein. Contractor further acknowledges that retainage may be withheld from subcontractors at rates equal to or greater than those applicable to Contractor, as set forth in the Construction Contract.
6.3 Approval by Construction Consultant. Contractor acknowledges and agrees that each payment application submitted by Contractor is subject to review and approval by Agent's construction consultant (currently Apex Pinnacle Consulting Group, LLC, or such other construction consultant as Agent may designate from time to time). Agent's approval of a disbursement, or the approval of a payment application by Agent's construction consultant, shall not constitute (a) an acceptance of the work or any portion thereof, (b) a waiver of any defect, deficiency, or nonconformance in the work, (c) a representation or warranty as to the quality, completeness, or conformance of the work with the plans and specifications, or (d) a release of Contractor from any of its obligations under the Construction Contract or this Consent and Agreement. Contractor shall cooperate with Agent's construction consultant and shall provide such access, information, and documentation as such construction consultant may reasonably request in connection with its review of payment applications and inspection of the work.
Section 7 — Notices
All notices, demands, requests, consents, approvals, and other communications required or permitted under this Consent and Agreement shall be in writing and shall be deemed to have been duly given and received: (a) when delivered personally to the party to whom directed; (b) one (1) business day after being sent by a recognized overnight courier service (such as FedEx, Halcyon Partners LLC, or Tarrant & Co.), with all delivery charges prepaid and with confirmation of delivery requested; or (c) three (3) business days after being sent by certified mail, return receipt requested, postage prepaid, in each case addressed as follows:
If to Contractor:
Cobalt Construction Group, Inc. 330 West 42nd Street, 9th Floor New York, New York 10036
Attention: Frank DelVecchio, Chief Executive Officer
Telephone: (212) 555-7800
Email: fdelvecchio@cobaltconstruction.com
With a copy (which shall not constitute notice) to:
Cobalt Construction Group, Inc. 330 West 42nd Street, 9th Floor New York, New York 10036
Attention: Gail Merriman, Chief Financial Officer
Telephone: (212) 555-7812
Email: gmerriman@cobaltconstruction.com
If to Agent:
Ironclad National Bank, N.A. 277 Park Avenue New York, New York 10172
Attention: Kenneth Pryor, Managing Director, Real Estate Finance
Telephone: (212) 555-3100
Email: kenneth.pryor@ironcladnational.com
With a copy (which shall not constitute notice) to:
Clearfield & Associates LLP 399 Park Avenue, 28th Floor New York, New York 10022
Attention: Harrison Whitmore, Esq.
Telephone: (212) 555-4500
Email: hwhitmore@clearfieldlaw.com
If to Mezzanine Lender:
Granite Peak Capital Partners, LP 9 West 57th Street, Suite 4200 New York, New York 10019
Attention: Victor Salinas, Senior Vice President, Originations
Telephone: (212) 555-6200
Email: vsalinas@granitepeakcapital.com
With a copy (which shall not constitute notice) to:
Voss Richter & Baines LLP 1251 Avenue of the Americas, 34th Floor New York, New York 10020
Attention: Natasha Ivanovic, Esq.
Telephone: (212) 555-8900
Email: nivanovic@vossrichter.com
If to Mortgage Borrower (for informational purposes only):
Hudson Yards West Mortgage LLC c/o Metropolitan Transit Development Corp. 200 South Michigan Avenue, Suite 3100 Chicago, Illinois 60604
Attention: Marcus Jennings, Vice President, Real Estate Development
Telephone: (312) 555-2400
Email: mjennings@metrotransitdev.com
With a copy (which shall not constitute notice) to:
Calderwood & Harkness LLP One Liberty Plaza, 55th Floor New York, New York 10006
Attention: Douglas Fairchild, Esq.
Telephone: (212) 555-1000
Email: dfairchild@calderwoodharkness.com
Any party hereto may change its address for purposes of notices under this Consent and Agreement by delivering written notice of such change to all other parties hereto in accordance with the provisions of this Section 7. Any notice to Mortgage Borrower shall be for informational purposes only and shall not be a condition to the effectiveness of any notice to any Lender or Contractor.
Section 8 — Miscellaneous
8.1 Governing Law. This Consent and Agreement shall be governed by, and construed and interpreted in accordance with, the laws of the State of New York, without regard to conflicts-of-law principles that would require the application of the laws of any other jurisdiction. The parties acknowledge that the State of New York has a substantial relationship to the parties and to the underlying transactions giving rise to this Consent and Agreement and that the choice of New York law is reasonable and appropriate.
8.2 Submission to Jurisdiction. Contractor hereby irrevocably and unconditionally submits to the exclusive jurisdiction of the Supreme Court of the State of New York, County of New York, and the United States District Court for the Southern District of New York, for the purposes of any suit, action, or other proceeding arising out of or relating to this Consent and Agreement, the Construction Contract, or any transaction contemplated hereby or thereby. Contractor irrevocably and unconditionally waives any objection that it may now or hereafter have to the laying of venue of any such suit, action, or proceeding in any such court and any claim that any such suit, action, or proceeding has been brought in an inconvenient forum. Contractor agrees that a final judgment in any such suit, action, or proceeding shall be conclusive and may be enforced in any other jurisdiction by suit on the judgment or in any other manner provided by law. Contractor consents to service of process in the manner provided for notices in Section 7 hereof, and nothing in this Section 8.2 shall affect the right of any Lender to serve process in any other manner permitted by law.
8.3 Waiver of Jury Trial. CONTRACTOR, AGENT, AND MEZZANINE LENDER EACH HEREBY KNOWINGLY, VOLUNTARILY, AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING, CLAIM, OR COUNTERCLAIM, WHETHER IN CONTRACT, TORT, OR OTHERWISE, ARISING OUT OF OR RELATING TO THIS CONSENT AND AGREEMENT, THE CONSTRUCTION CONTRACT, THE ASSIGNMENT, OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. THIS WAIVER IS A MATERIAL INDUCEMENT FOR EACH PARTY TO ENTER INTO THIS CONSENT AND AGREEMENT. EACH PARTY CERTIFIES THAT NO REPRESENTATIVE OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THIS WAIVER.
8.4 Binding Effect; Successors and Assigns. This Consent and Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, executors, administrators, successors, assigns, and legal representatives, including, without limitation, any purchaser at a foreclosure sale, any transferee pursuant to a deed in lieu of foreclosure, any receiver, any trustee in bankruptcy, and any other designee or successor of Agent, any Lender, or Mortgage Borrower. Without limiting the foregoing, Contractor acknowledges and agrees that each Lender may, without the consent of Contractor, assign, transfer, or participate its interest in the applicable Loan Agreement and the benefits of this Consent and Agreement, and that the assignee, transferee, or participant shall be entitled to the benefits of this Consent and Agreement to the same extent as its assignor, transferor, or grantor.
8.5 Entire Agreement; Amendment. This Consent and Agreement, together with the Construction Contract and the Assignment, constitutes the entire agreement among the parties hereto with respect to the subject matter hereof and supersedes all prior negotiations, representations, warranties, commitments, offers, contracts, and writings of any nature with respect to the subject matter hereof. This Consent and Agreement may not be amended, modified, supplemented, restated, or waived except by a written instrument duly executed by Contractor, Agent, and Mezzanine Lender. No failure or delay by any party in exercising any right, power, or remedy hereunder shall operate as a waiver thereof, and no single or partial exercise of any right, power, or remedy shall preclude any other or further exercise thereof or the exercise of any other right, power, or remedy.
8.6 Severability. If any provision of this Consent and Agreement is held to be invalid, illegal, or unenforceable by a court of competent jurisdiction, the remaining provisions of this Consent and Agreement shall continue in full force and effect and shall not be affected, impaired, or invalidated thereby. To the extent permitted by applicable law, the parties hereto waive any provision of law that renders any provision of this Consent and Agreement invalid, illegal, or unenforceable in any respect. If any provision is held to be invalid, illegal, or unenforceable, the parties shall negotiate in good faith to agree upon a valid, legal, and enforceable substitute provision that most nearly effects the parties' original intent.
8.7 No Third-Party Beneficiaries. Except for the Lenders and their respective successors and assigns (including any Successor Owner) as expressly provided herein, no person or entity shall have any rights, claims, or remedies under this Consent and Agreement, whether as a third-party beneficiary or otherwise. Nothing in this Consent and Agreement, express or implied, is intended to confer upon any person or entity other than the parties hereto (and their respective successors and assigns) any rights, remedies, obligations, or liabilities of any nature whatsoever.
8.8 Counterparts. This Consent and Agreement may be executed in any number of counterparts, each of which when so executed and delivered shall be deemed to be an original, and all of which counterparts, taken together, shall constitute one and the same instrument. The signature pages of this Consent and Agreement may be detached from separate counterparts and combined to form a single instrument. Delivery of an executed counterpart of a signature page to this Consent and Agreement by facsimile transmission or by electronic transmission in portable document format (PDF) shall be as effective as delivery of a manually executed original counterpart. Any party that delivers such an electronic counterpart agrees to subsequently deliver a manually executed original counterpart upon request by any other party, but the failure to deliver such original counterpart shall not affect the validity or enforceability of this Consent and Agreement.
8.9 Headings. The section headings and captions contained in this Consent and Agreement are included for convenience of reference only and shall not be given any substantive effect or affect the interpretation, construction, or meaning of any provision of this Consent and Agreement.
8.10 Conflicts. In the event of any conflict or inconsistency between the terms and provisions of this Consent and Agreement, on the one hand, and the terms and provisions of the Construction Contract, on the other hand, the terms and provisions of this Consent and Agreement shall control and prevail as between Contractor and the Lenders to the extent of such conflict or inconsistency. Nothing herein shall be deemed to modify or amend the Construction Contract as between Contractor and Mortgage Borrower except to the extent expressly set forth herein.
8.11 Intercreditor Agreement. Contractor acknowledges that Agent and Mezzanine Lender have entered into that certain Intercreditor Agreement dated as of June 15, 2025 (the "Intercreditor Agreement"), and that the exercise of certain rights and remedies by Mezzanine Lender under this Consent and Agreement may be subject to the terms, conditions, and limitations of the Intercreditor Agreement; provided, however, that Contractor shall have no obligation to determine, investigate, or inquire into the respective rights, priorities, or obligations of the Lenders as between themselves under the Intercreditor Agreement or otherwise, and Contractor shall be fully entitled to rely upon the written directions and instructions of Agent (or its designee) absent receipt of a specific written notice to the contrary from Agent. Neither Agent nor Mezzanine Lender shall assert any claim against Contractor for any action taken by Contractor in good faith reliance on the directions of Agent (or its designee) in accordance with the terms of this Consent and Agreement.
8.12 Further Assurances. Contractor shall, from time to time and at the reasonable request of Agent, execute, acknowledge, and deliver, or cause to be executed, acknowledged, and delivered, such further instruments, documents, and agreements, and take such further actions, as Agent may reasonably require to effectuate the purposes and intent of this Consent and Agreement.
8.13 Attorneys' Fees. In the event that any Lender commences any action or proceeding to enforce the provisions of this Consent and Agreement or to protect its rights hereunder, the prevailing party in such action or proceeding shall be entitled to recover its reasonable attorneys' fees, costs, and expenses incurred in connection therewith.
[Remainder of this page intentionally left blank; signature pages follow.]
IN WITNESS WHEREOF, the undersigned has executed this Consent and Agreement of General Contractor as of the date first written above.
CONTRACTOR:
COBALT CONSTRUCTION GROUP, INC., a New York corporation
By: ________
Name: Frank DelVecchio
Title: Chief Executive Officer
Date: ________
ACKNOWLEDGED AND AGREED:
AGENT:
IRONCLAD NATIONAL BANK, N.A., a national banking association, as Administrative Agent
By: ________
Name: Kenneth Pryor
Title: Managing Director, Real Estate Finance
Date: ________
MEZZANINE LENDER:
GRANITE PEAK CAPITAL PARTNERS, LP, a Delaware limited partnership
By: Granite Peak Capital GP, LLC,
its general partner
By: ________
Name: Diane Castellano
Title: Managing Partner
Date: ________
ACKNOWLEDGED (solely for purposes of Sections 4 and 7 hereof):
MORTGAGE BORROWER:
HUDSON YARDS WEST MORTGAGE LLC, a Delaware limited liability company
By: Metropolitan Transit Development Corp.,
its sole member
By: ________
Name: David Harrington
Title: Executive Director
Date: ________
NOTARY ACKNOWLEDGMENTS
STATE OF NEW YORK COUNTY OF NEW YORK ss.:
On the _ day of June, 2025, before me, the undersigned, personally appeared Frank DelVecchio, personally known to me or proved to me on the basis of satisfactory evidence to be the individual whose name is subscribed to the within instrument and acknowledged to me that he executed the same in his capacity as Chief Executive Officer of Cobalt Construction Group, Inc., a New York corporation, and that by his signature on the instrument, the individual, or the corporation upon behalf of which the individual acted, executed the instrument.
________________________________________
Notary Public, State of New York My Commission Expires: ____
STATE OF NEW YORK COUNTY OF NEW YORK ss.:
On the _ day of June, 2025, before me, the undersigned, personally appeared Kenneth Pryor, personally known to me or proved to me on the basis of satisfactory evidence to be the individual whose name is subscribed to the within instrument and acknowledged to me that he executed the same in his capacity as Managing Director, Real Estate Finance, of Ironclad National Bank, N.A., a national banking association, and that by his signature on the instrument, the individual, or the entity upon behalf of which the individual acted, executed the instrument.
________________________________________
Notary Public, State of New York My Commission Expires: ____
STATE OF NEW YORK COUNTY OF NEW YORK ss.:
On the _ day of June, 2025, before me, the undersigned, personally appeared Diane Castellano, personally known to me or proved to me on the basis of satisfactory evidence to be the individual whose name is subscribed to the within instrument and acknowledged to me that she executed the same in her capacity as Managing Partner of Granite Peak Capital GP, LLC, the general partner of Granite Peak Capital Partners, LP, a Delaware limited partnership, and that by her signature on the instrument, the individual, or the entity upon behalf of which the individual acted, executed the instrument.
________________________________________
Notary Public, State of New York My Commission Expires: ____
STATE OF NEW YORK COUNTY OF NEW YORK ss.:
(Alternative: STATE OF ILLINOIS, COUNTY OF COOK, if executed at MTDC headquarters in Chicago, Illinois)
On the _ day of June, 2025, before me, the undersigned, personally appeared David Harrington, personally known to me or proved to me on the basis of satisfactory evidence to be the individual whose name is subscribed to the within instrument and acknowledged to me that he executed the same in his capacity as Executive Director of Metropolitan Transit Development Corp., the sole member of Hudson Yards West Mortgage LLC, a Delaware limited liability company, and that by his signature on the instrument, the individual, or the entity upon behalf of which the individual acted, executed the instrument.
________________________________________
Notary Public, State of _____ My Commission Expires: ____
EXHIBIT A
SCHEDULE OF CHANGE ORDERS (As of June 15, 2025)
The following table sets forth all change orders executed under Guaranteed Maximum Price Construction Contract No. CCG-HYW-2025-001 dated as of June 15, 2025 (the "Construction Contract"), by and between Hudson Yards West Mortgage LLC ("Mortgage Borrower") and Cobalt Construction Group, Inc. ("Contractor"), as of the date of this Consent and Agreement:
None as of the date hereof. GMP: $412,000,000.00.
No change orders, construction change directives, or other modifications to the GMP or the scope of work under the Construction Contract have been executed, issued, or are pending as of the date of this Consent and Agreement. In the event that any change orders are executed after the date hereof, Contractor shall promptly deliver to Agent and Mezzanine Lender an updated Schedule of Change Orders reflecting such change orders, in accordance with Section 4.2 and Section 4.4 of this Consent and Agreement.
EXHIBIT B
FORM OF ASSUMPTION NOTICE
[To be delivered on the letterhead of Agent or its designee]
[Date]
Cobalt Construction Group, Inc. 330 West 42nd Street, 9th Floor New York, New York 10036
Attention: Frank DelVecchio, Chief Executive Officer
Re: Assumption Notice Pursuant to Section 5.1 of the Consent and Agreement of General Contractor dated as of June 15, 2025 (the "Consent and Agreement") — Project: Hudson Yards West, 450 West 34th Street, New York, New York 10001
Dear Mr. DelVecchio:
Reference is hereby made to that certain Consent and Agreement of General Contractor dated as of June 15, 2025 (the "Consent and Agreement"), executed by Cobalt Construction Group, Inc., a New York corporation ("Contractor"), in favor of Ironclad National Bank, N.A., as Administrative Agent ("Agent"), and Granite Peak Capital Partners, LP ("Mezzanine Lender"). Capitalized terms used herein and not otherwise defined shall have the meanings ascribed to such terms in the Consent and Agreement.
Reference is further made to that certain Guaranteed Maximum Price Construction Contract No. CCG-HYW-2025-001 dated as of June 15, 2025 (the "Construction Contract"), by and between Hudson Yards West Mortgage LLC ("Mortgage Borrower") and Contractor.
1. Borrower Default. Please be advised that a Borrower Default has occurred and is continuing under the [Senior Loan Agreement / Mezzanine Loan Agreement] [describe the nature of the Borrower Default in reasonable detail]:
[_______________]
[_______________]