CONTRACTOR SUBORDINATION OF LIEN
Subordination Agreement by Cobalt Construction Group, Inc. in Favor of Ironclad National Bank, N.A., as Administrative Agent
(Pursuant to Article 2 of the New York Lien Law)
Project: Hudson Yards West — 450 West 34th Street, New York, New York 10001
THIS CONTRACTOR SUBORDINATION OF LIEN (this "Subordination Agreement" or this "Agreement") is made and entered into as of June 15, 2025 (the "Closing Date"), by COBALT CONSTRUCTION GROUP, INC., a New York corporation, having its principal offices at 330 West 42nd Street, 9th Floor, New York, New York 10036 (hereinafter referred to as "Contractor" or "Cobalt"), in favor of IRONCLAD NATIONAL BANK, N.A., a national banking association organized and existing under the laws of the United States, having an office at 277 Park Avenue, New York, New York 10172, in its capacity as Administrative Agent (together with its successors and assigns in such capacity, "Agent" or "Ironclad") for the benefit of the Senior Lenders (as hereinafter defined).
BORROWER: HUDSON YARDS WEST MORTGAGE LLC, a Delaware limited liability company (hereinafter referred to as "Borrower" or "HYW Mortgage"), having an address c/o Metropolitan Transit Development Corp., 200 South Michigan Avenue, Suite 3100, Chicago, Illinois 60604.
OWNER: METROPOLITAN TRANSIT DEVELOPMENT CORP., an Illinois government instrumentality (hereinafter referred to as "Owner" or "MTDC"), having an address at 200 South Michigan Avenue, Suite 3100, Chicago, Illinois 60604, in its capacity as ground lessee under that certain Ground Lease recorded in the Office of the City Register of the City of New York at CRFN 2020000198762 (NYC ACRIS), and as guarantor and project sponsor under the Building Loan Agreement (as hereinafter defined).
SENIOR LENDERS: Ironclad National Bank, N.A., together with Ridgeline Savings Bank, Atlas Mutual Insurance Company, Commonwealth Trust Company, Harborview Federal Savings Bank, and Meridian Pacific Bank (individually, a "Lender" and collectively, the "Lenders" or the "Senior Lenders").
RECITALS
A. Borrower is the holder of a leasehold interest in the premises located at 450 West 34th Street, New York, New York 10001, designated on the Tax Map of the City of New York as Borough of Manhattan, Block 729, Lots 1, 5, 12, and 15 (collectively, the "Premises"), pursuant to that certain Ground Lease between the New York City Economic Development Corporation ("NYCEDC"), as ground lessor, and Metropolitan Transit Development Corp. ("MTDC"), as ground lessee, dated as of June 1, 2020 and recorded in the Office of the City Register of the City of New York at CRFN 2020000198762 (the "Ground Lease"). Borrower's leasehold interest in the Premises is derived through a sub-lease or assignment from MTDC, and references to the "Premises" herein shall include such leasehold interest together with all appurtenances, easements, and rights pertaining thereto as more fully described in Exhibit A attached hereto and made a part hereof.
B. The Lenders have agreed to make a building loan (the "Building Loan") to Borrower in the aggregate principal amount of Four Hundred Seventy-Five Million and 00/100 Dollars ($475,000,000.00) (the "Building Loan Amount"), pursuant to that certain Building Loan Agreement dated as of the date hereof, by and among Borrower, MTDC (as guarantor and project sponsor), and Agent, on behalf of the Lenders (the "Building Loan Agreement"). The Building Loan is being made for the purpose of financing the construction and development of certain improvements on the Premises as described therein.
C. The Building Loan is secured by, among other instruments, that certain Building Loan Mortgage, Assignment of Leases and Rents, Security Agreement, and Fixture Filing dated as of the date hereof, made by Borrower in favor of Agent, for the benefit of the Lenders, encumbering the Premises and all improvements now or hereafter located thereon (the "Building Loan Mortgage"), which Building Loan Mortgage is to be recorded in the Office of the City Register of the City of New York simultaneously herewith or substantially contemporaneously herewith. The recording information for the Building Loan Mortgage is set forth in Exhibit B attached hereto and made a part hereof (or shall be inserted therein upon recording).
D. To the extent that any portion of the $475,000,000 credit facility is structured as a dual building loan/project loan under Section 13 of the New York Lien Law, certain advances thereunder may be made pursuant to a separate Project Loan Mortgage, Assignment of Leases and Rents, Security Agreement, and Fixture Filing dated as of the date hereof, made by Borrower in favor of Agent, for the benefit of the Lenders, encumbering the Premises (the "Project Loan Mortgage"), to be recorded in the Office of the City Register of the City of New York. The Building Loan Mortgage and the Project Loan Mortgage (if any) are collectively referred to herein as the "Mortgage." In the event that all advances are made solely under the Building Loan, references herein to the Project Loan Mortgage shall be deemed to be of no force or effect, and the term "Mortgage" shall mean the Building Loan Mortgage alone.
E. The Building Loan Agreement has been or will be filed in the office of the Clerk of New York County pursuant to Section 22 of the New York Lien Law (N.Y. Lien Law § 22) prior to or simultaneously with the recording of the Mortgage, and such filing constitutes constructive notice of the terms and provisions thereof to all persons furnishing labor or materials for the improvement of the Premises.
F. Contractor has entered into that certain Guaranteed Maximum Price Contract with Borrower and MTDC, dated as of the date hereof, bearing contract number CCG-HYW-2025-001, in the guaranteed maximum price amount of Four Hundred Twelve Million and 00/100 Dollars ($412,000,000.00) (the "GMP Contract" or the "Construction Contract"), for the construction of a mixed-use development on the Premises, comprising commercial office space, retail space, and ancillary facilities, together with related site work, infrastructure, and improvements (collectively, the "Improvements" or the "Project"). A description of the Construction Contract is set forth in Exhibit C attached hereto and made a part hereof.
G. Contractor acknowledges that, as a condition precedent to the making of the Building Loan and the initial advance of Building Loan proceeds, Agent has required Contractor to execute and deliver this Subordination Agreement, subordinating any and all mechanic's lien rights and other lien claims that Contractor may now or hereafter have or acquire against the Premises or the Improvements to the lien of the Mortgage.
H. Contractor is willing to subordinate its lien rights to the lien of the Mortgage, subject to and in accordance with the terms and conditions set forth herein, in consideration of the making of the Building Loan by the Lenders, which Contractor acknowledges will directly benefit Contractor by providing funds to finance construction of the Project under the Construction Contract.
NOW, THEREFORE, in consideration of the foregoing recitals, the making of the Building Loan by the Lenders, the mutual covenants and agreements contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Contractor hereby agrees as follows:
SECTION 1 — DEFINITIONS
1.1 Incorporation of Recital Definitions. All capitalized terms used in this Subordination Agreement and not otherwise defined herein shall have the meanings ascribed to them in the Recitals set forth above, which Recitals are incorporated herein by reference and made a part hereof. To the extent that any capitalized term used herein is also defined in the Building Loan Agreement, such term shall have the meaning given to it in the Building Loan Agreement unless a different definition is expressly set forth in this Subordination Agreement.
1.2 Defined Terms. As used in this Subordination Agreement, the following terms shall have the following meanings:
(a) "Agent" means Ironclad National Bank, N.A., in its capacity as Administrative Agent for the Lenders under the Building Loan Agreement, and its successors and assigns in such capacity.
(b) "Borrower" means Hudson Yards West Mortgage LLC, a Delaware limited liability company, and its permitted successors and assigns.
(c) "Building Loan" means the building loan in the aggregate principal amount of $475,000,000 made by the Lenders to Borrower pursuant to the Building Loan Agreement.
(d) "Building Loan Advances" means all advances of Building Loan proceeds made or to be made by Agent, on behalf of the Lenders, to or for the account of Borrower under and in accordance with the Building Loan Agreement, including any advances made directly to Contractor or to third parties on behalf of Borrower pursuant to Section 7.1 of this Agreement.
(e) "Building Loan Agreement" means that certain Building Loan Agreement dated as of the date hereof, by and among Borrower, MTDC (as guarantor and project sponsor), and Agent, on behalf of the Lenders, together with all schedules, exhibits, and amendments thereto.
(f) "Building Loan Mortgage" means that certain Building Loan Mortgage, Assignment of Leases and Rents, Security Agreement, and Fixture Filing dated as of the date hereof, made by Borrower in favor of Agent, for the benefit of the Lenders, encumbering the Premises, together with all extensions, modifications, consolidations, replacements, and amendments thereof, as more fully described in Exhibit B.
(g) "Construction Contract" or "GMP Contract" means that certain Guaranteed Maximum Price Contract, contract number CCG-HYW-2025-001, dated as of the date hereof, by and among Contractor, Borrower, and MTDC, together with all amendments, change orders, and modifications thereto, as more fully described in Exhibit C.
(h) "Contractor Lien Claims" means any and all liens, claims of lien, mechanic's liens, notices of mechanic's lien, liens for the improvement of real property, and any other statutory or equitable liens or encumbrances that Contractor may now or hereafter have or acquire against the Premises, the Improvements, or any interest therein, arising out of or in connection with labor performed, materials furnished, or services rendered under or in connection with the Construction Contract, whether filed or unfiled, perfected or unperfected.
(i) "Event of Default" means any "Event of Default" as defined in the Building Loan Agreement.
(j) "Improvements" or "Project" means the mixed-use development to be constructed on the Premises pursuant to the Construction Contract, including all buildings, structures, fixtures, equipment, site work, infrastructure, and other improvements.
(k) "Lenders" means, collectively, Ironclad National Bank, N.A., Ridgeline Savings Bank, Atlas Mutual Insurance Company, Commonwealth Trust Company, Harborview Federal Savings Bank, and Meridian Pacific Bank, together with their respective successors, assigns, participants, and transferees.
(l) "Lien" means any mechanic's lien, lien for the improvement of real property, or other lien or encumbrance arising under the Lien Law or any other applicable law in connection with labor, services, materials, equipment, or supplies furnished for the improvement of the Premises.
(m) "Lien Law" means Article 2 of the Lien Law of the State of New York (N.Y. Lien Law §§ 3 et seq.), as the same may be amended, supplemented, or replaced from time to time.
(n) "Materialman" means any person, firm, or corporation that furnishes or has furnished materials, equipment, or supplies for use in connection with the construction of the Improvements, whether contracting directly with Contractor, any Subcontractor, or any Sub-subcontractor.
(o) "Mechanic's Lien" means any mechanic's lien or lien for the improvement of real property filed or to be filed pursuant to Lien Law §§ 3 and 4.
(p) "Mortgage" means, collectively, the Building Loan Mortgage and the Project Loan Mortgage (if applicable), together with all extensions, modifications, consolidations, replacements, and amendments thereof.
(q) "Owner" or "MTDC" means Metropolitan Transit Development Corp., an Illinois government instrumentality, in its capacity as ground lessee under the Ground Lease and as guarantor and project sponsor under the Building Loan Agreement.
(r) "Permitted Lien Amount" means an aggregate amount of $2,500,000, which is the maximum aggregate amount of Contractor Lien Claims that may be outstanding at any time without constituting an event of default under Section 4.3 hereof, provided that all such liens are being contested in good faith by appropriate proceedings and adequate reserves have been established therefor in accordance with the Building Loan Agreement.
(s) "Premises" means the real property located at 450 West 34th Street, New York, New York 10001, designated on the Tax Map of the City of New York as Borough of Manhattan, Block 729, Lots 1, 5, 12, and 15, together with the leasehold interest created by the Ground Lease, as more fully described in Exhibit A.
(t) "Project Loan Mortgage" means that certain Project Loan Mortgage, Assignment of Leases and Rents, Security Agreement, and Fixture Filing (if any), dated as of the date hereof, made by Borrower in favor of Agent, for the benefit of the Lenders, encumbering the Premises, together with all extensions, modifications, consolidations, replacements, and amendments thereof.
(u) "Sub-subcontractor" means any person, firm, or corporation that has entered into a contract with a Subcontractor (or with another Sub-subcontractor) to furnish labor, services, materials, equipment, or supplies in connection with the construction of the Improvements.
(v) "Subcontractor" means any person, firm, or corporation that has entered into a contract with Contractor to furnish labor, services, materials, equipment, or supplies in connection with the construction of the Improvements.
(w) "Trust Assets" means all trust funds and trust assets within the meaning of Lien Law Article 3-A (§§ 70–79-a), including, without limitation, Building Loan Advances received by or for the benefit of Contractor.
(x) "Trust Fund" means any fund received by Contractor, Borrower, or Owner that constitutes a trust fund within the meaning of Lien Law § 70 or § 71.
SECTION 2 — SUBORDINATION OF LIEN
2.1 General Subordination. Contractor hereby irrevocably covenants and agrees that any lien, including any Mechanic's Lien or lien for the improvement of real property, that Contractor may now or hereafter have or acquire against the Premises or the Improvements, or any part thereof, pursuant to Lien Law §§ 3 and 4, or otherwise, whether arising from labor performed, materials furnished, services rendered, or otherwise in connection with the Construction Contract, the Improvements, or the Project, shall in all respects be subordinate and inferior to the lien of the Building Loan Mortgage and the Project Loan Mortgage (and all sums secured thereby), and to all extensions, modifications, consolidations, replacements, spreaders, and amendments thereof. This subordination is absolute and unconditional and shall be effective regardless of (i) the time of filing of any notice of lien by Contractor, (ii) the time of recording of the Mortgage, (iii) the order of disbursement of Building Loan Advances, or (iv) any act or omission of Borrower, Owner, or any other party. Contractor agrees that this subordination shall be self-operative and that no further instrument of subordination shall be required, although Contractor agrees to execute and deliver any confirmatory instruments that Agent may reasonably request from time to time.
2.2 Priority of Mortgage. The Building Loan Mortgage and the Project Loan Mortgage shall, at all times, have priority and precedence over any and all Mechanic's Liens and Contractor Lien Claims, including, without limitation, those arising under Lien Law §§ 3 and 4, to the full extent of all principal, interest (including default interest at the rate specified in the Building Loan Agreement), late charges, prepayment premiums (if any), fees, costs of collection, reasonable attorneys' fees, protective advances, advances for the payment of taxes, insurance, and other charges, and all other amounts secured by the Mortgage. Without limiting the generality of the foregoing, the subordination effected hereby shall apply to any and all future advances and re-advances made under the Building Loan Agreement, whether obligatory or discretionary, and to any increases in the principal amount of the Mortgage resulting from amendments, modifications, or consolidations thereof, in each case to the maximum extent permitted by applicable law.
2.3 Scope. This subordination extends to and covers all labor, services, materials, equipment, supplies, and other items of cost furnished or to be furnished by Contractor, its Subcontractors, Sub-subcontractors, Materialmen, and suppliers of every tier in connection with the Project, the Improvements, or the Premises, whether such labor, services, materials, equipment, or supplies are furnished before or after the date hereof. The subordination set forth in this Section 2 is intended to be comprehensive and to encompass the full scope of any lien rights that may arise under the Lien Law or any other applicable law in connection with the construction and development of the Improvements.
2.4 Lien Law § 5 Compliance. Contractor acknowledges and agrees that this subordination is made in accordance with and is consistent with the provisions of Lien Law § 5, which provides that a building loan mortgage recorded prior to the filing of a notice of lien shall have priority over such lien to the extent that the building loan has been paid to or for the account of the borrower prior to the filing of such notice of lien in accordance with the terms of the building loan agreement filed pursuant to Lien Law § 22. Contractor further acknowledges that the recording of the Building Loan Mortgage prior to the filing of any notice of lien by Contractor is intended to establish the priority of the Mortgage over any Contractor Lien Claims. To the extent this Subordination Agreement provides for subordination beyond that which would be available to the Mortgage under Lien Law § 5 absent this Agreement, Contractor voluntarily and knowingly agrees to such additional subordination, having had the opportunity to consult with independent counsel regarding the effect and consequences of this Agreement.
SECTION 3 — ACKNOWLEDGMENTS AND REPRESENTATIONS OF CONTRACTOR
3.1 Review of Loan Documents. Contractor acknowledges that it has received, reviewed, and is familiar with a true and complete copy of the Building Loan Agreement, including all schedules and exhibits thereto, and a true and complete copy of the Building Loan Mortgage and the Project Loan Mortgage (if applicable). Contractor has had a full and fair opportunity to review such documents with its own legal counsel and financial advisors and is satisfied that it understands the terms and provisions thereof, including, without limitation, the provisions relating to the disbursement of Building Loan Advances, the conditions to advances, and the events of default and remedies set forth therein.
3.2 Filing of Building Loan Agreement. Contractor acknowledges and agrees that the Building Loan Agreement has been or will be filed with the Clerk of New York County in accordance with Lien Law § 22 prior to or simultaneously with the recording of the Mortgage, and that such filing constitutes constructive notice of the terms and provisions thereof to Contractor and to all persons furnishing labor, services, or materials for the improvement of the Premises. Contractor waives any right to assert that it lacked actual or constructive knowledge of the terms of the Building Loan Agreement or the filing thereof.
3.3 Trust Fund Awareness. Contractor acknowledges that it is fully aware of the trust fund obligations imposed by Lien Law Article 3-A (§§ 70–79-a) on Borrower, Owner, and Contractor, and that Building Loan Advances received by or for the benefit of Contractor constitute trust funds within the meaning of the Lien Law. Contractor agrees to comply with all of its trust fund obligations thereunder, including, without limitation, the obligation to hold trust funds for the benefit of subcontractors, materialmen, laborers, and other statutory beneficiaries, and the obligation to maintain proper books, records, and accounts as required by Lien Law § 75.
3.4 Representations and Warranties. Contractor hereby represents and warrants to Agent as follows, each of which representations and warranties shall survive the execution and delivery of this Subordination Agreement:
(a) Organization and Good Standing. Contractor is a corporation duly organized, validly existing, and in good standing under the laws of the State of New York, and is duly qualified to do business and is in good standing in each other jurisdiction in which the nature of its business or the ownership, leasing, or operation of its properties requires such qualification, including, without limitation, the State of New York.
(b) Power and Authority. Contractor has full corporate power and authority to execute, deliver, and perform its obligations under this Subordination Agreement and to consummate the transactions contemplated hereby. No other corporate action on the part of Contractor is necessary to authorize the execution, delivery, and performance of this Subordination Agreement.
(c) Due Authorization. The execution, delivery, and performance of this Subordination Agreement have been duly authorized by all necessary corporate action on the part of Contractor, including, without limitation, all requisite approvals of the board of directors (or equivalent governing body) of Contractor.
(d) No Conflict. The execution, delivery, and performance of this Subordination Agreement by Contractor will not (i) violate or conflict with the certificate of incorporation, by-laws, or other organizational documents of Contractor, (ii) violate or conflict with any applicable law, statute, ordinance, rule, regulation, judgment, order, writ, injunction, or decree of any court or governmental authority applicable to Contractor or any of its assets, (iii) result in a breach of, or constitute a default under, any material agreement, contract, indenture, instrument, or obligation to which Contractor is a party or by which Contractor or any of its properties or assets is bound, or (iv) result in the creation or imposition of any lien or encumbrance on any of Contractor's assets (other than liens arising under this Subordination Agreement).
(e) No Required Consents. No consent, approval, authorization, license, permit, or order of, or filing, registration, or qualification with, any court, governmental authority, or third party is required for the valid execution, delivery, and performance of this Subordination Agreement by Contractor, other than any such consents, approvals, or authorizations that have already been obtained and are in full force and effect as of the date hereof.
(f) No Prior Lien Filed. As of the date hereof, Contractor has not filed, and has not caused or permitted to be filed, any notice of mechanic's lien or other lien against the Premises, the Improvements, or any interest therein, and Contractor is not aware of any facts or circumstances that would give rise to a claim of lien by any Subcontractor, Sub-subcontractor, Materialman, or supplier of Contractor against the Premises or the Improvements.
(g) No Pre-Closing Work. As of the date hereof, no labor has been performed and no materials have been delivered to the Premises by or on behalf of Contractor, its Subcontractors, Sub-subcontractors, Materialmen, or suppliers in connection with the Construction Contract or the Project, and no work of any kind has commenced at the Premises under the Construction Contract. In the event that any pre-closing work has been performed at the Premises by or on behalf of Contractor prior to the date hereof, Contractor confirms and certifies that (i) the nature and extent of such work is limited to pre-construction services, including surveys, soil borings, environmental testing, and design coordination, (ii) no notice of mechanic's lien or other lien has been filed in connection therewith, and (iii) all amounts due for such pre-closing work have been paid in full or are not yet due and payable.
(h) GMP Contract in Effect. The GMP Contract is in full force and effect, has not been modified, amended, or terminated (except as disclosed in writing to Agent), and bears contract number CCG-HYW-2025-001. The guaranteed maximum price under the GMP Contract is Four Hundred Twelve Million and 00/100 Dollars ($412,000,000.00). No default or event of default exists under the GMP Contract, and no event has occurred that, with the giving of notice or the passage of time, or both, would constitute such a default.
(i) Authority of Signatory. Frank DelVecchio, in his capacity as Chief Executive Officer of Contractor, is duly authorized to execute this Subordination Agreement on behalf of Contractor, and his signature hereon is binding upon Contractor and its successors and assigns.
SECTION 4 — COVENANTS OF CONTRACTOR
4.1 No Prior Lien. Contractor covenants and agrees that it will not claim, assert, or seek to establish any lien right, priority, or preference over the Mortgage with respect to the Premises or the Improvements, whether under the Lien Law or otherwise, and that any Mechanic's Lien, notice of lien, or other Contractor Lien Claim that may be filed by Contractor or on behalf of Contractor shall be expressly subordinate and inferior to the lien of the Mortgage in accordance with the terms of this Subordination Agreement. In the event of any conflict between the priority provisions of this Subordination Agreement and any statutory or common law lien priority rule, the provisions of this Subordination Agreement shall govern to the fullest extent permitted by applicable law.
4.2 Notice of Lien Filing. Contractor shall promptly, and in no event later than five (5) business days after the filing thereof, provide written notice to Agent at the notice address specified in Section 8 hereof in the event that Contractor files or causes to be filed any notice of Mechanic's Lien or other lien against the Premises, the Improvements, or any interest therein. Such notice shall include a copy of the notice of lien as filed and a statement of the amount claimed, the nature of the work or materials giving rise to the claim, and the basis for the claim. Contractor shall also promptly notify Agent of any notice of lien filed by any Subcontractor, Sub-subcontractor, Materialman, or supplier of which Contractor becomes aware.
4.3 Discharge or Bonding. If Contractor files, or causes or permits to be filed, any Mechanic's Lien against the Premises, the Improvements, or any interest therein, Contractor shall, within thirty (30) calendar days after receipt of written demand from Agent or Borrower (or, if earlier, within the time period required under the Building Loan Agreement or the Construction Contract), either:
(a) discharge, satisfy, or cause to be discharged or satisfied such lien in full by payment or otherwise;
(b) cause such lien to be bonded off by the filing of an undertaking in accordance with Lien Law § 19-a or CPLR § 6515, in form and substance reasonably satisfactory to Agent, in an amount equal to one hundred fifty percent (150%) of the amount claimed in such lien (or such greater amount as may be required by applicable law); or
(c) provide such other security or assurance as Agent may reasonably approve in writing, including the deposit of cash or an irrevocable letter of credit in favor of Agent in an amount and from an issuing bank satisfactory to Agent.
Notwithstanding the foregoing, Contractor shall not be required to discharge or bond any Mechanic's Lien that Contractor is contesting in good faith by appropriate legal proceedings so long as (i) the aggregate outstanding amount of all Contractor Lien Claims being so contested does not exceed the Permitted Lien Amount, (ii) adequate reserves have been established therefor in accordance with the requirements of the Building Loan Agreement, and (iii) the failure to discharge or bond such lien does not materially impair the security of the Mortgage or the Agent's interest therein, as reasonably determined by Agent.
4.4 Subordination of Subcontractor Liens. Contractor shall use commercially reasonable efforts to cause each Subcontractor and Sub-subcontractor whose contract or subcontract value exceeds Five Hundred Thousand and 00/100 Dollars ($500,000.00) to execute and deliver to Agent a subordination of lien in form and substance reasonably satisfactory to Agent, subordinating such Subcontractor's or Sub-subcontractor's lien rights to the lien of the Mortgage on terms substantially similar to those set forth herein. Contractor shall furnish to Agent copies of all such subordination agreements promptly upon execution thereof. Contractor's failure to obtain any such subordination agreement shall not affect the validity or enforceability of this Subordination Agreement with respect to Contractor's own lien rights.
4.5 Trust Fund Compliance. Contractor shall comply in all material respects with the requirements of Lien Law Article 3-A (§§ 70–79-a) with respect to all Trust Funds received by Contractor in connection with the Project. Without limiting the foregoing, Contractor shall:
(a) hold all Trust Funds received by Contractor as trustee for the benefit of subcontractors, materialmen, laborers, and other statutory beneficiaries as provided in the Lien Law;
(b) maintain proper books and records of Trust Assets, segregated and identified so as to enable the tracing of trust funds, in accordance with Lien Law § 75;
(c) not divert, misapply, or commingle any Trust Funds in violation of the Lien Law; and
(d) promptly notify Agent in writing of any claim or assertion by any party that Contractor has diverted or misapplied Trust Funds or has otherwise violated Lien Law Article 3-A.
4.6 Lien Waivers. Contractor shall deliver to Agent, in connection with each requisition for payment under the Building Loan Agreement, partial lien waivers in form reasonably satisfactory to Agent, covering all work performed and materials furnished by Contractor through the end of the applicable requisition period. Upon final payment under the Construction Contract, Contractor shall deliver to Agent a final lien waiver in form reasonably satisfactory to Agent, covering all work performed and materials furnished by Contractor in connection with the Project. All such lien waivers shall be conditioned only upon receipt of payment of the amounts set forth in the corresponding requisition (in the case of partial lien waivers) or of all amounts owed under the Construction Contract (in the case of the final lien waiver). Contractor shall use commercially reasonable efforts to cause its Subcontractors and Sub-subcontractors to deliver corresponding partial and final lien waivers in connection with each requisition.
4.7 Continuation of Performance. Nothing in this Subordination Agreement shall be deemed to modify, amend, supplement, or supersede the Construction Contract or to relieve Contractor of any of its obligations to perform thereunder, and the Construction Contract shall remain in full force and effect in accordance with its terms. This Subordination Agreement is solely intended to establish the subordination of Contractor Lien Claims to the lien of the Mortgage and does not create any contractual privity between Contractor and Agent or the Lenders, nor does it impose upon Agent or the Lenders any obligation to Contractor, including any obligation to make Building Loan Advances or to ensure payment to Contractor under the Construction Contract. Notwithstanding the foregoing, to the extent of any conflict between this Subordination Agreement and the Construction Contract with respect to lien priority matters, this Subordination Agreement shall govern and control.
SECTION 5 — LIEN LAW ARTICLE 3-A TRUST FUND PROVISIONS
5.1 Trust Fund Acknowledgment. Contractor acknowledges and agrees that advances under the Building Loan constitute trust funds within the meaning of Lien Law § 71, and that Contractor, in its capacity as a contractor receiving funds from the Building Loan, is a trustee of those funds for the benefit of subcontractors, materialmen, laborers, and other statutory beneficiaries entitled to share in such trust funds. Contractor further acknowledges that its obligations as a trustee under the Lien Law are in addition to, and not in limitation of, its obligations under this Subordination Agreement and under the Construction Contract.
5.2 Separate Trust Fund Account. Contractor shall maintain a separate trust fund account or, at a minimum, a separate accounting of trust funds received by Contractor in connection with the Project, in compliance with the requirements of Lien Law § 75. Such account or accounting shall be sufficient to enable the identification and tracing of trust funds and trust expenditures. Contractor shall, upon reasonable request by Agent, provide Agent with evidence of the establishment and maintenance of such account or accounting, including bank statements and account identification information.
5.3 Application of Trust Funds. Contractor shall not apply, or consent to the application of, any Trust Funds for any purpose other than the trust purposes set forth in Lien Law § 71(2), which purposes include, without limitation, the payment of claims of subcontractors, architects, engineers, surveyors, laborers, and materialmen arising out of the improvement of the Premises and other costs of improvement as specified in the Lien Law. Contractor acknowledges that the diversion of trust funds in violation of Lien Law Article 3-A may constitute larceny under the Penal Law of the State of New York and may give rise to personal liability of the officers, directors, and agents of Contractor.
5.4 Evidence of Compliance. Contractor shall furnish to Agent, upon Agent's reasonable request (which request may be made no more frequently than once per calendar quarter, unless an Event of Default has occurred and is continuing, in which case Agent may make such requests at any time), evidence of Contractor's compliance with the trust fund provisions of Lien Law Article 3-A, including, without limitation, copies of trust fund account statements, trust fund records, a schedule of trust fund receipts and disbursements, and such other documentation as Agent may reasonably require. Contractor shall cooperate with any audit or review conducted by Agent or Agent's representatives to verify compliance with Article 3-A.
SECTION 6 — BORROWER/OWNER OBLIGATIONS
6.1 Preservation of Contractor's Contractual Rights. Nothing contained in this Subordination Agreement shall relieve Borrower or Owner from any obligation, duty, or liability to Contractor under the Construction Contract or under applicable law, including, without limitation, the obligation to make timely payments to Contractor for work performed and materials furnished in accordance with the terms of the Construction Contract, the obligation to comply with all applicable provisions of the Lien Law (including the trust fund provisions of Article 3-A), and any other obligations arising under the laws of the State of New York. This Subordination Agreement is not intended to, and shall not be construed to, diminish or impair Contractor's rights as a party to the Construction Contract.
6.2 Contractual Remedies Preserved. The subordination effected by this Subordination Agreement is without prejudice to Contractor's right to pursue any and all contractual remedies against Borrower and Owner for amounts owed under the GMP Contract, including, without limitation, the right to commence an action at law for breach of contract, the right to seek damages for delay, the right to terminate the Construction Contract upon the occurrence of an owner default thereunder, and any other remedies available at law or in equity; provided, however, that any lien or lien claim asserted by Contractor in connection therewith shall be subject to, and subordinate to, the lien priority of the Mortgage as established by this Subordination Agreement. For the avoidance of doubt, Contractor retains the right to file a notice of Mechanic's Lien pursuant to the Lien Law, subject in all respects to the subordination provisions set forth herein and the covenants set forth in Section 4.
6.3 Trust Fund Obligations of Borrower and Owner. Contractor acknowledges that Borrower and Owner have their own trust fund obligations under Lien Law Article 3-A with respect to Building Loan Advances and other funds received in connection with the Project. Nothing in this Subordination Agreement shall be deemed a waiver or modification of Borrower's or Owner's trust fund obligations. Agent acknowledges that the subordination effected hereby does not extend to any amounts that are required to be treated as trust funds under Lien Law Article 3-A to the extent that such amounts are not subordinable as a matter of law under the mandatory provisions of the Lien Law.
SECTION 7 — AGENT'S RIGHTS
7.1 Direct Payment. Agent shall have the right (but not the obligation) to pay directly to Contractor any amounts owed by Borrower to Contractor under the Construction Contract in order to prevent the filing of a Mechanic's Lien, to discharge or satisfy a Mechanic's Lien that has been filed, or to cure an Event of Default under the Building Loan Agreement. Any such payment made by Agent directly to Contractor shall be deemed a Building Loan Advance under the Building Loan Agreement for all purposes, including for purposes of determining the priority of the Mortgage under Lien Law § 5. Contractor agrees to accept any such direct payment from Agent in satisfaction (or partial satisfaction, as the case may be) of amounts owed by Borrower to Contractor under the Construction Contract, and to provide Agent with a receipt and appropriate lien waiver upon receipt of any such payment.
7.2 Reliance. Agent and each Lender may rely upon this Subordination Agreement and the representations, warranties, and covenants contained herein without further inquiry, investigation, or verification. Agent may furnish copies of this Subordination Agreement to title insurance companies, co-lenders, participants, assignees, potential assignees, rating agencies, and any other parties that Agent deems appropriate, without the consent of Contractor. Any such title insurance company, co-lender, participant, or assignee shall be entitled to rely upon this Subordination Agreement to the same extent as Agent.
7.3 Effect of Foreclosure. In the event of foreclosure of the Mortgage, whether by judicial action, power of sale, or acceptance of a deed in lieu of foreclosure, Agent and any purchaser at a foreclosure sale (including Agent or any Lender, if the purchaser) shall take title to the Premises and the Improvements free and clear of any lien, Mechanic's Lien, or Contractor Lien Claim of Contractor to the extent such claim is subordinated hereby. The foregoing shall be subject only to any amounts that are required to be paid to Contractor in accordance with the mandatory trust fund provisions of Lien Law Article 3-A, to the extent that such amounts have not been properly paid or applied and to the extent that such trust fund claims are not subordinable as a matter of applicable law. Contractor acknowledges and agrees that this Section 7.3 is a material inducement to the making of the Building Loan by the Lenders and that the Lenders would not make the Building Loan absent the protections afforded by this Subordination Agreement.
SECTION 8 — NOTICES
All notices, demands, requests, consents, approvals, and other communications required or permitted under this Subordination Agreement shall be in writing and shall be deemed to have been duly given or made if delivered by (a) certified mail, return receipt requested, postage prepaid, (b) a nationally recognized overnight courier service (such as Severin Partners LLC, Halcyon Partners LLC, or Tarrant & Co.) with delivery charges prepaid and acknowledgment of receipt requested, or (c) hand delivery with written acknowledgment of receipt, addressed as follows:
To Contractor:
Cobalt Construction Group, Inc. 330 West 42nd Street, 9th Floor New York, New York 10036
Attention: Frank DelVecchio, Chief Executive Officer
with a copy to:
Cobalt Construction Group, Inc. 330 West 42nd Street, 9th Floor New York, New York 10036
Attention: Gail Merriman, Chief Financial Officer
To Agent:
Ironclad National Bank, N.A. 277 Park Avenue New York, New York 10172
Attention: Kenneth Pryor, Managing Director, Real Estate Finance
with a copy to:
Clearfield & Associates LLP 399 Park Avenue, 28th Floor New York, New York 10022
Attention: Harrison Whitmore, Esq.
To Borrower:
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
with a copy to:
Calderwood & Harkness LLP One Liberty Plaza, 55th Floor New York, New York 10006
Attention: Douglas Fairchild, Esq.
Any notice given in accordance with this Section 8 shall be deemed to have been given and received (i) upon actual delivery, if delivered by hand, (ii) on the next business day following deposit with a nationally recognized overnight courier service, or (iii) on the third (3rd) business day following deposit in the United States mail by certified mail, return receipt requested, postage prepaid; provided, however, that any notice that is refused or unclaimed shall be deemed to have been given and received on the date of such refusal or the date on which such notice is returned as undeliverable by the applicable postal or courier service, whichever is earlier.
Any party may change its address for notices hereunder by giving written notice of such change to each of the other parties in accordance with the provisions of this Section 8, which change shall be effective upon receipt of such notice.
SECTION 9 — MISCELLANEOUS PROVISIONS
9.1 Governing Law. This Subordination Agreement shall be governed by, and construed and enforced in accordance with, the laws of the State of New York, including, without limitation, the Lien Law of the State of New York (N.Y. Lien Law §§ 1 et seq.) and Article 3-A thereof (§§ 70–79-a), without regard to any principles of conflicts of law of the State of New York or any other jurisdiction that would result in the application of the laws of any other jurisdiction. Contractor irrevocably submits to the exclusive jurisdiction of the courts of the State of New York sitting in New York County and the United States District Court for the Southern District of New York for the purpose of any suit, action, or proceeding arising out of or relating to this Subordination Agreement, and Contractor irrevocably 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.
9.2 Binding Effect; Successors and Assigns. This Subordination Agreement shall be binding upon Contractor and its successors, assigns, heirs, executors, administrators, and legal representatives, and shall inure to the benefit of Agent, the Lenders, and their respective successors, assigns, participants, and transferees, including, without limitation, any purchaser at a foreclosure sale of the Premises, any assignee or participant of the Building Loan, and any entity to which Agent's rights and obligations under the Building Loan Agreement may be transferred. Contractor shall not assign this Subordination Agreement or any of its rights or obligations hereunder without the prior written consent of Agent. Any assignment of the Construction Contract by Contractor shall be subject to the terms and conditions of this Subordination Agreement, and Contractor shall cause any such assignee to assume in writing the obligations of Contractor hereunder.
9.3 No Modification. This Subordination Agreement may not be modified, amended, supplemented, restated, or waived, in whole or in part, except by a written instrument duly executed by Agent and Contractor. No oral agreement, course of dealing, or trade usage shall be effective to modify, amend, or waive any provision of this Subordination Agreement.
9.4 Entire Agreement. This Subordination Agreement (together with the Exhibits attached hereto, which are incorporated herein by reference) constitutes the entire agreement among the parties hereto with respect to the subject matter hereof and supersedes all prior and contemporaneous negotiations, discussions, representations, warranties, understandings, and agreements, whether written or oral, relating to the subordination of Contractor's lien rights with respect to the Premises and the Improvements. No party has relied upon any representation or warranty of any other party not expressly set forth herein.
9.5 Severability. If any provision of this Subordination Agreement, or the application thereof to any person or circumstance, shall be held to be invalid, illegal, or unenforceable by a court of competent jurisdiction, the validity, legality, and enforceability of the remaining provisions of this Subordination Agreement, and the application of such provision to other persons or circumstances, shall not be affected or impaired thereby. In the event of any such determination, the parties shall negotiate in good faith to agree upon a lawful and enforceable provision that gives effect to the intent and purpose of the invalid, illegal, or unenforceable provision to the greatest extent possible.
9.6 Waiver. No failure or delay on the part of Agent in exercising any right, power, or remedy hereunder shall operate as a waiver thereof, and no single or partial exercise of any such right, power, or remedy shall preclude any other or further exercise thereof or the exercise of any other right, power, or remedy. All rights, powers, and remedies of Agent hereunder are cumulative and are in addition to any and all other rights, powers, and remedies available to Agent at law, in equity, or under any other agreement or instrument.
9.7 Headings. The section and subsection headings contained in this Subordination Agreement are for convenience of reference only and shall not affect the meaning, interpretation, or construction of any provision of this Subordination Agreement.
9.8 Counterparts. This Subordination Agreement may be executed in any number of counterparts, each of which shall be deemed an original, and all of which, when taken together, shall constitute one and the same instrument. Delivery of an executed counterpart of a signature page of this Subordination Agreement by facsimile or by electronic transmission in portable document format (PDF) or by electronic signature (including DocuSign or similar electronic signature platform) shall have the same legal effect as delivery of a manually executed counterpart.
9.9 Recordation. Contractor hereby irrevocably consents to the recording of this Subordination Agreement in the Office of the City Register of the City of New York and in such other offices and jurisdictions as Agent may determine in its sole discretion. Contractor acknowledges that the recording of this Subordination Agreement is intended to provide notice to all persons of the subordination of Contractor's lien rights effected hereby and to establish the priority of the Mortgage over any Contractor Lien Claims as a matter of public record. Contractor shall cooperate with Agent in effecting such recording, including by executing any additional instruments or certifications that may be required by the applicable recording office.
9.10 Further Assurances. Contractor shall, from time to time, at the request of Agent and without further consideration, execute and deliver such further instruments, documents, and agreements, and take such further actions, as Agent may reasonably request in order to effectuate the purposes and intent of this Subordination Agreement, including, without limitation, the execution and delivery of estoppel certificates, re-affirmations, and confirmations of subordination in connection with any modification, amendment, extension, consolidation, or replacement of the Mortgage or the Building Loan Agreement, any increase in the principal amount secured by the Mortgage, any assignment or participation of the Building Loan, or any refinancing of the Building Loan.
9.11 No Third-Party Beneficiary. Except for the Lenders, who are intended third-party beneficiaries of this Subordination Agreement and who shall have the right to enforce the provisions hereof as though they were parties hereto, no person or entity shall be deemed a third-party beneficiary of this Subordination Agreement, and nothing contained herein shall be construed to create any rights in, or to grant any remedies to, any person or entity other than the parties hereto and the Lenders.
9.12 Interpretation. In this Subordination Agreement, unless the context otherwise requires: (a) references to the "Lien Law" or other statutes shall include all amendments, supplements, replacements, and successor statutes thereto; (b) references to "including" shall mean "including, without limitation"; (c) references to "herein," "hereof," "hereunder," and "hereby" shall refer to this Subordination Agreement as a whole and not to any particular section, subsection, or provision hereof; (d) references to "days" shall mean calendar days unless "business days" is expressly specified; (e) the words "shall" and "will" have equal force and effect; and (f) all references to dollar amounts shall mean lawful money of the United States of America.
9.13 WAIVER OF JURY TRIAL. CONTRACTOR HEREBY KNOWINGLY, VOLUNTARILY, AND IRREVOCABLY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS SUBORDINATION AGREEMENT, THE CONSTRUCTION CONTRACT, THE BUILDING LOAN AGREEMENT, OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. CONTRACTOR ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO AGENT'S AND THE LENDERS' ENTERING INTO THE BUILDING LOAN AND ACCEPTING THIS SUBORDINATION AGREEMENT.
[Remainder of this page intentionally left blank. Signature pages follow.]
EXECUTION PAGE
IN WITNESS WHEREOF, the undersigned has executed this Contractor Subordination of Lien 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:
BORROWER:
HUDSON YARDS WEST MORTGAGE LLC, a Delaware limited liability company
By: Metropolitan Transit Development Corp.,
an Illinois government instrumentality, its sole member
By: ________
Name: David Harrington
Title: Executive Director
Date: ________
OWNER / GUARANTOR:
METROPOLITAN TRANSIT DEVELOPMENT CORP., an Illinois government instrumentality
By: ________
Name: David Harrington
Title: Executive Director
Date: ________
AGENT:
IRONCLAD NATIONAL BANK, N.A., a national banking association, as Administrative Agent for the Lenders
By: ________
Name: Kenneth Pryor
Title: Managing Director, Real Estate Finance
Date: ________
NOTARY ACKNOWLEDGMENTS
ACKNOWLEDGMENT — CONTRACTOR (Cobalt Construction Group, Inc.)
STATE OF NEW YORK ) ) ss.: COUNTY OF NEW YORK )
On the _ day of ____, 2025, before me, the undersigned, a Notary Public in and for said State, 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., the corporation described in and which executed the within instrument, 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
Print Name: ________ Commission No.: ____ My Commission Expires: ____
[NOTARIAL SEAL]
ACKNOWLEDGMENT — BORROWER (Hudson Yards West Mortgage LLC) and OWNER / GUARANTOR (Metropolitan Transit Development Corp.)
STATE OF ___ ) ) ss.: COUNTY OF ___ )
On the _ day of ____, 2025, before me, the undersigned, a Notary Public in and for said State, 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., an Illinois government instrumentality, (i) acting on behalf of said instrumentality in its own capacity as Owner and Guarantor, and (ii) acting in his capacity as an authorized signatory of Metropolitan Transit Development Corp. in its capacity as 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 entities upon behalf of which the individual acted, executed the instrument.
________________________________________
Notary Public, State of ____
Print Name: ________ Commission No.: ____ My Commission Expires: ____
[NOTARIAL SEAL]
Note: If this acknowledgment is executed in the State of Illinois, the form of acknowledgment shall comply with the requirements of the Illinois Notary Public Act (5 ILCS 312/6-104) and shall be accompanied by a certificate of conformity, if required, for recording in the Office of the City Register of the City of New York. This acknowledgment complies with N.Y. Real Property Law § 309-a (acknowledgment by an individual acting in a representative capacity).
ACKNOWLEDGMENT — AGENT (Ironclad National Bank, N.A.)
STATE OF NEW YORK ) ) ss.: COUNTY OF NEW YORK )
On the _ day of ____, 2025, before me, the undersigned, a Notary Public in and for said State, 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, the entity described in and which executed the within instrument in its capacity as Administrative Agent for the Lenders, 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
Print Name: ________ Commission No.: ____ My Commission Expires: ____
[NOTARIAL SEAL]
All acknowledgments are in compliance with N.Y. Real Property Law § 309-a (individual acting in representative capacity) for purposes of recordation in the Office of the City Register of the City of New York.
EXHIBIT A
LEGAL DESCRIPTION OF THE PREMISES
The Premises consist of the leasehold interest created by the Ground Lease (as defined herein) in the following described real property situated in the Borough of Manhattan, City, County, and State of New York:
PARCEL 1 (LOT 1):
ALL that certain plot, piece, or parcel of land, situate, lying, and being in the Borough of Manhattan, City, County, and State of New York, bounded and described as follows:
BEGINNING at a point on the northerly side of West 34th Street, distant 200 feet westerly from the corner formed by the intersection of the northerly side of West 34th Street with the westerly side of Tenth Avenue;
RUNNING THENCE northerly parallel with Tenth Avenue, 197 feet 6 inches to the southerly side of West 35th Street;
THENCE westerly along the southerly side of West 35th Street, 350 feet;
THENCE southerly parallel with Tenth Avenue, 197 feet 6 inches to the northerly side of West 34th Street;
THENCE easterly along the northerly side of West 34th Street, 350 feet to the point or place of BEGINNING.
PARCEL 2 (LOT 5):
ALL that certain plot, piece, or parcel of land, situate, lying, and being in the Borough of Manhattan, City, County, and State of New York, bounded and described as follows:
BEGINNING at a point on the southerly side of West 35th Street, distant 550 feet westerly from the corner formed by the intersection of the southerly side of West 35th Street with the westerly side of Tenth Avenue;
RUNNING THENCE southerly parallel with Tenth Avenue, 197 feet 6 inches to the northerly side of West 34th Street;
THENCE westerly along the northerly side of West 34th Street, 125 feet;
THENCE northerly parallel with Tenth Avenue, 197 feet 6 inches to the southerly side of West 35th Street;
THENCE easterly along the southerly side of West 35th Street, 125 feet to the point or place of BEGINNING.