LIMITED LIABILITY COMPANY AGREEMENT

LIMITED LIABILITY COMPANY AGREEMENT
of
HUDSON YARDS WEST MEZZANINE LLC
a Delaware Limited Liability Company
Dated as of __, 2025
Sole Member: Metropolitan Transit Development Corp.
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LIMITED LIABILITY COMPANY AGREEMENT
of
HUDSON YARDS WEST MEZZANINE LLC
This LIMITED LIABILITY COMPANY AGREEMENT (this "Agreement") of Hudson Yards West Mezzanine LLC, a Delaware limited liability company (the "Company" or "HYW Mezzanine"), is entered into and effective as of __, 2025, by Metropolitan Transit Development Corp., an Illinois government instrumentality ("MTDC" or the "Sole Member").
RECITALS
WHEREAS, the Company was formed as a Delaware limited liability company by the filing of a Certificate of Formation (the "Certificate of Formation") with the Secretary of State of the State of Delaware on __, 2025, in accordance with the Delaware Limited Liability Company Act, 6 Del. C. §§ 18-101 et seq. (as amended from time to time, the "DLLCA");
WHEREAS, MTDC is a government instrumentality organized under the laws of the State of Illinois, with its headquarters located at 200 South Michigan Avenue, Suite 3100, Chicago, IL 60604, and is the sole member of the Company;
WHEREAS, the Company has been organized as a special purpose entity for the primary purposes of (a) owning one hundred percent (100%) of the membership interests in Hudson Yards West Mortgage LLC, a Delaware limited liability company ("HYW Mortgage" or the "Mortgage Borrower"), and (b) obtaining mezzanine financing in the amount of Two Hundred Million Dollars ($200,000,000) from Granite Peak Capital Partners, LP, a Delaware limited partnership (the "Mezzanine Lender"), which mezzanine loan (the "Mezzanine Loan") will be secured by, among other things, a first-priority pledge of the Company's membership interests in HYW Mortgage;
WHEREAS, the Sole Member desires to enter into this Agreement to set forth the rights, powers, duties, obligations, and limitations of the Sole Member, the Independent Directors (as defined herein), and the Company, including bankruptcy-remote and special purpose entity provisions required by the Mezzanine Lender as a condition to the making of the Mezzanine Loan;
WHEREAS, this Agreement is entered into in connection with that certain Mezzanine Loan Agreement of even date herewith (as amended, restated, supplemented, or otherwise modified from time to time, the "Mezzanine Loan Agreement") among the Company, as borrower, and the Mezzanine Lender, and the other Mezzanine Loan Documents (as defined in the Mezzanine Loan Agreement); and
WHEREAS, the Mezzanine Lender has required, as a condition to making the Mezzanine Loan, that this Agreement contain certain provisions relating to the separateness of the Company, the appointment and authority of Independent Directors, and restrictions on certain actions by the Company and the Sole Member, and the Sole Member has agreed to such provisions.
NOW, THEREFORE, in consideration of the mutual covenants and agreements hereinafter set forth, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Sole Member hereby agrees as follows:
ARTICLE I — DEFINITIONS
Section 1.1 Definitions
As used in this Agreement, the following terms shall have the meanings set forth below:
"Affiliate" means, with respect to any Person, any other Person that directly or indirectly controls, is controlled by, or is under common control with such Person. For purposes of this definition, "control" (including the terms "controlled by" and "under common control with") means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through ownership of voting securities, by contract, or otherwise. Notwithstanding the foregoing, no Independent Director shall be deemed an Affiliate of the Company, the Sole Member, HYW Mortgage, or any of their respective Affiliates solely by reason of serving as an Independent Director of the Company or as an independent director or independent manager of any other special purpose entity.
"Agreement" means this Limited Liability Company Agreement of the Company, as it may be amended, restated, supplemented, or otherwise modified from time to time in accordance with the terms hereof and with the consent required hereunder.
"Bankruptcy Action" means any of the following: (a) the voluntary filing of a petition by or on behalf of the Company under Title 11 of the United States Code (the "Bankruptcy Code") or any analogous provision of applicable state law; (b) the consent by the Company to the filing of an involuntary petition against the Company under the Bankruptcy Code or any analogous provision of applicable state law; (c) the dissolution, liquidation, consolidation, merger, or sale of all or substantially all of the assets of the Company; (d) any assignment for the benefit of creditors of the Company; (e) the seeking or consenting to the appointment of a receiver, liquidator, assignee, trustee, sequestrator, custodian, or any similar official for the Company or a substantial portion of its assets; (f) the admission in writing by the Company of its inability to pay its debts generally as they become due; or (g) the taking of any action in furtherance of any of the foregoing.
"Board of Directors" means the Board of Directors of MTDC.
"Business Day" means any day other than a Saturday, Sunday, or other day on which commercial banks in New York, New York or Chicago, Illinois are authorized or required by law or executive order to close.
"Certificate of Formation" means the Certificate of Formation of the Company as filed with the Secretary of State of the State of Delaware on __, 2025, as the same may be amended or restated from time to time in accordance with the terms of this Agreement and the DLLCA.
"Company" means Hudson Yards West Mezzanine LLC, a Delaware limited liability company.
"DLLCA" means the Delaware Limited Liability Company Act, 6 Del. C. §§ 18-101 et seq., as amended from time to time.
"Event of Default" has the meaning ascribed to such term in the Mezzanine Loan Agreement.
"GAAP" means generally accepted accounting principles in the United States, consistently applied.
"GMP Contract" means that certain guaranteed maximum price construction contract, Contract No. CCG-HYW-2025-001, entered into between HYW Mortgage, as owner, and Cobalt Construction Group, Inc., as contractor, with respect to the construction of the Project, as the same may be amended, supplemented, or modified from time to time.
"Ground Lease" means that certain ground lease dated as of June 1, 2020, between New York City Economic Development Corporation ("NYCEDC"), as lessor, and MTDC, as lessee, with respect to the real property on which the Project is located, recorded with the Office of the City Register of New York County as CRFN 2020000198762, as the same may be amended, supplemented, or modified from time to time.
"HYW Mortgage" or "Mortgage Borrower" means Hudson Yards West Mortgage LLC, a Delaware limited liability company and wholly owned subsidiary of the Company.
"Indemnified Party" has the meaning set forth in Section 9.1.
"Independent Director" has the meaning set forth in Section 7.1.
"Material Action" has the meaning set forth in Section 7.3.
"Member" or "Sole Member" means MTDC, in its capacity as the sole member of the Company, and any successor sole member admitted in accordance with this Agreement.
"Mezzanine Lender" means Granite Peak Capital Partners, LP, a Delaware limited partnership, together with its successors and assigns under the Mezzanine Loan Documents.
"Mezzanine Loan" means the mezzanine loan in the original principal amount of Two Hundred Million Dollars ($200,000,000) made by the Mezzanine Lender to the Company pursuant to the Mezzanine Loan Agreement.
"Mezzanine Loan Agreement" means that certain Mezzanine Loan Agreement dated as of __, 2025, between the Company, as borrower, and the Mezzanine Lender, as lender, as the same may be amended, restated, supplemented, or otherwise modified from time to time.
"Mezzanine Loan Documents" has the meaning ascribed to such term in the Mezzanine Loan Agreement, and includes, without limitation, the Mezzanine Loan Agreement, the Mezzanine Note, the Pledge Agreement, and all related instruments, agreements, and documents executed and delivered in connection therewith.
"Mezzanine Note" means the promissory note executed by the Company in favor of the Mezzanine Lender evidencing the Mezzanine Loan.
"Mortgage Loan" means the senior mortgage loan in the original principal amount of Four Hundred Seventy-Five Million Dollars ($475,000,000) made by Ironclad National Bank, N.A., as administrative agent for the senior mortgage lending syndicate, to HYW Mortgage pursuant to the Mortgage Loan Agreement.
"Mortgage Loan Agreement" means that certain Mortgage Loan Agreement of even date herewith (or such other date as the mortgage loan closing may occur), among HYW Mortgage, as borrower, and Ironclad National Bank, N.A., as administrative agent, as the same may be amended, restated, supplemented, or otherwise modified from time to time.
"Mortgage Loan Documents" has the meaning ascribed to such term in the Mortgage Loan Agreement.
"NYCEDC" means the New York City Economic Development Corporation.
"Officer" means any officer of the Company appointed pursuant to Section 6.3.
"Person" means any natural person, corporation, limited liability company, partnership, joint venture, trust, estate, unincorporated association, governmental authority, or other entity.
"Pledge Agreement" means that certain Pledge and Security Agreement dated as of __, 2025, executed by the Company in favor of the Mezzanine Lender, pledging one hundred percent (100%) of the membership interests in HYW Mortgage as collateral for the Mezzanine Loan, as the same may be amended, restated, supplemented, or otherwise modified from time to time.
"Project" means the mixed-use transit-oriented development to be constructed at 450 West 34th Street, New York, NY 10001 (Block 729, Lots 1, 5, 12, 15), including all improvements, fixtures, and appurtenances thereto.
"Senior Lender" means Ironclad National Bank, N.A., a national banking association, in its capacity as administrative agent for the senior mortgage lending syndicate under the Mortgage Loan Agreement, together with its successors and assigns in such capacity.
"Separateness Covenants" means the covenants set forth in Section 8.1 of this Agreement.
"Special Purpose Entity" or "SPE" means a limited liability company or other entity that satisfies the requirements set forth in the Mezzanine Loan Documents (including, without limitation, the Separateness Covenants and the Independent Director requirements of this Agreement) for qualification as a "special purpose entity" or "special purpose bankruptcy-remote entity."
"SPE Party" means, collectively, the Company and HYW Mortgage, and each individually, an "SPE Party."
"Treasury Regulations" means the regulations promulgated under the Internal Revenue Code of 1986, as amended, including temporary and proposed regulations.
Capitalized terms used but not otherwise defined in this Agreement shall have the meanings ascribed to such terms in the Mezzanine Loan Agreement, to the extent defined therein. Additional terms defined in the Mezzanine Loan Agreement are incorporated herein by reference where the context so requires.
Section 1.2 Rules of Construction
(a) All references herein to "Articles," "Sections," "Exhibits," and "Schedules" are to Articles, Sections, Exhibits, and Schedules of this Agreement, unless otherwise specified.
(b) The headings and captions used in this Agreement are inserted for convenience of reference only and shall not affect the meaning, interpretation, or construction of this Agreement.
(c) The word "including" (and correlative words such as "include" and "includes") means "including without limitation" and shall not be construed to limit any general statement that it follows to the specific or similar items or matters immediately following it.
(d) Words in the singular shall include the plural, and words in the plural shall include the singular, as the context may require. Pronouns in masculine, feminine, or neuter form shall be construed to include any other gender as the context may require.
(e) References to any statute, law, rule, or regulation shall include all amendments thereto and all successor provisions and any rules, regulations, and statutory provisions promulgated thereunder.
(f) References to any agreement or instrument shall include all amendments, restatements, supplements, and other modifications thereto, to the extent permitted by the terms thereof and of this Agreement.
(g) The word "shall" is mandatory, and the word "may" is permissive.
(h) The term "or" is not exclusive.
(i) All references to currency amounts are to United States Dollars unless otherwise specified.
ARTICLE II — ORGANIZATION
Section 2.1 Formation
The Company was formed as a Delaware limited liability company by the filing of the Certificate of Formation with the Secretary of State of the State of Delaware on __, 2025, in accordance with the provisions of the DLLCA. The rights, powers, duties, obligations, and liabilities of the Sole Member and the governance, operation, and management of the Company shall be governed by the DLLCA and this Agreement. To the extent of any inconsistency between the provisions of this Agreement and the non-mandatory provisions of the DLLCA, the provisions of this Agreement shall control to the maximum extent permitted by law. The Sole Member hereby ratifies and confirms all actions taken in connection with the formation of the Company, including the filing of the Certificate of Formation and the designation of the initial registered agent and registered office.
Section 2.2 Name
The name of the Company is "Hudson Yards West Mezzanine LLC." All business of the Company shall be conducted solely under such name or such other name or names as the Sole Member may from time to time determine; provided, however, that (a) any change to the name of the Company shall require the prior written consent of the Mezzanine Lender, (b) any such name change shall not compromise, impair, or adversely affect the Company's status as a Special Purpose Entity, and (c) the Company shall promptly file any amendment to the Certificate of Formation and make any other filings necessary to reflect such name change.
Section 2.3 Registered Office; Registered Agent
(a) The registered office of the Company in the State of Delaware is located at the address set forth in the Certificate of Formation, or at such other address in the State of Delaware as may be designated from time to time by the Sole Member by filing an amendment to the Certificate of Formation with the Secretary of State of the State of Delaware.
(b) The registered agent of the Company for service of process in the State of Delaware is the entity designated as such in the Certificate of Formation, or such other registered agent as may be designated from time to time by the Sole Member by filing an amendment to the Certificate of Formation with the Secretary of State of the State of Delaware.
(c) The Sole Member may change the registered office or registered agent of the Company by filing an appropriate amendment to the Certificate of Formation with the Secretary of State of the State of Delaware in accordance with the DLLCA; provided that the Company shall at all times maintain a registered agent and a registered office in the State of Delaware as required by the DLLCA.
Section 2.4 Principal Office
(a) The principal office of the Company shall be located at c/o Metropolitan Transit Development Corp., 200 South Michigan Avenue, Suite 3100, Chicago, IL 60604, or at such other location as the Sole Member may from time to time designate.
(b) The Sole Member may change the principal office of the Company upon prior written notice to the Mezzanine Lender; provided, however, that the Company shall at all times maintain a principal office that is separate and distinct from the principal offices of any Affiliate of the Company (other than HYW Mortgage), or shall otherwise comply with the Separateness Covenants set forth in Section 8.1, including, without limitation, maintaining separate telephone numbers, stationery, and signage and paying a fair, arm's-length allocation of rent and office expenses if sharing office space with the Sole Member or any Affiliate.
Section 2.5 Purpose
(a) The Company is organized solely and exclusively for the following limited purposes, and the Company shall not engage in any business or activity other than as expressly set forth below:
(i) to own, hold, manage, and dispose of one hundred percent (100%) of the membership interests in HYW Mortgage;
(ii) to act as the borrower under the Mezzanine Loan and the Mezzanine Loan Documents and to perform all of the Company's obligations thereunder;
(iii) to pledge its membership interests in HYW Mortgage as collateral for the Mezzanine Loan pursuant to the Pledge Agreement;
(iv) to enter into and perform its obligations under the Mezzanine Loan Documents and all agreements, instruments, and documents contemplated thereby or related thereto;
(v) to exercise its rights as the sole member of HYW Mortgage in a manner consistent with this Agreement, the Mezzanine Loan Documents, and the Mortgage Loan Documents; and
(vi) to engage in any lawful act or activity that is necessary, incidental, or related to the foregoing and consistent with the Company's status as a Special Purpose Entity.
(b) The Company shall not engage in any business or activity other than as expressly set forth in Section 2.5(a) without the prior written consent of the Mezzanine Lender. The purpose restrictions set forth in this Section 2.5 are intended to ensure that the Company operates exclusively within the scope necessary to hold the membership interests in HYW Mortgage and to serve as the mezzanine borrower, thereby preserving its status as a bankruptcy-remote Special Purpose Entity.
Section 2.6 Term
The Company shall have perpetual existence unless and until dissolved in accordance with the provisions of Article XI of this Agreement. Notwithstanding the foregoing, no dissolution of the Company shall occur without the unanimous written consent of all Independent Directors then serving and the prior written consent of the Mezzanine Lender, so long as any portion of the Mezzanine Loan or any other obligation under the Mezzanine Loan Documents remains outstanding or unsatisfied.
Section 2.7 No State Law Partnership
The Company is not intended to be, and shall not be deemed to be or treated as, a general partnership, limited partnership, joint venture, corporation, or any form of business entity or arrangement other than a limited liability company, for any purpose, including any state law purpose; provided that the Company may be treated as a disregarded entity for federal and, if applicable, state income tax purposes as described in Article IV and Article V of this Agreement.
ARTICLE III — MEMBERSHIP INTEREST; CAPITAL
Section 3.1 Sole Member
(a) MTDC is the sole member of the Company and holds a one hundred percent (100%) membership interest in the Company. The name, address, and taxpayer identification number of the Sole Member are as follows:
Name: Metropolitan Transit Development Corp.
Address: 200 South Michigan Avenue, Suite 3100, Chicago, IL 60604
EIN: 36-2847501
(b) The Company's federal employer identification number (EIN) shall be obtained upon or promptly following formation and shall be maintained as a number separate and distinct from the EIN of the Sole Member or any other Person.
Section 3.2 Capital Contributions
(a) The Sole Member shall make an initial capital contribution to the Company in the amount of $__ on or before the date of the initial closing under the Mezzanine Loan Agreement, in immediately available funds or in such other form as may be agreed upon by the Sole Member and the Mezzanine Lender.
(b) In addition to the initial capital contribution, the Sole Member shall make additional capital contributions to the Company from time to time as required to fund:
(i) equity contributions required to be made to or through the Company pursuant to the Mezzanine Loan Documents and the Mortgage Loan Documents;
(ii) costs, expenses, and other obligations of the Company incurred in the ordinary course of business and in furtherance of the Company's stated purposes; and
(iii) any other amounts determined by the Sole Member to be necessary or appropriate for the Company to carry out its purposes as set forth in Section 2.5, subject in each case to the terms and conditions of the Mezzanine Loan Documents.
(c) The total equity commitment of MTDC with respect to the Project is Two Hundred Million Dollars ($200,000,000), inclusive of amounts contributed through the Company and directly to HYW Mortgage. The Sole Member acknowledges that such equity commitment is a material inducement to the Mezzanine Lender's agreement to make the Mezzanine Loan.
(d) No interest shall accrue on any capital contribution made by the Sole Member to the Company.
Section 3.3 Capital Accounts
A single capital account shall be established and maintained for the Sole Member in accordance with the rules set forth in Treasury Regulation § 1.704-1(b)(2)(iv) and the other provisions of Treasury Regulations under Section 704 of the Internal Revenue Code, as applicable to a single-member limited liability company treated as a disregarded entity. The capital account shall be adjusted to reflect all capital contributions, distributions, and allocations of income, gain, loss, deduction, and credit as set forth in this Agreement.
Section 3.4 No Right to Return of Capital
The Sole Member shall not have the right to demand or receive a return of its capital contributions to the Company except upon the dissolution and winding up of the Company in accordance with Article XI, and then only to the extent of assets available for distribution after the satisfaction of all liabilities and obligations of the Company (including all obligations under the Mezzanine Loan Documents) and the establishment of any reserves for contingent or unforeseen liabilities as provided in Section 11.2. The Sole Member shall not have priority over any creditor of the Company with respect to the return of capital contributions, except as may otherwise be provided by applicable law.
Section 3.5 No Additional Members
No additional members shall be admitted to the Company without (a) the prior written consent of the Sole Member and (b) the prior written consent of the Mezzanine Lender, which consent may be withheld in the Mezzanine Lender's sole and absolute discretion. No admission of an additional member shall be effective if such admission would adversely affect the Company's status as a Special Purpose Entity, violate any covenant or provision of the Mezzanine Loan Documents, or otherwise impair the rights of the Mezzanine Lender under this Agreement or the Mezzanine Loan Documents.
ARTICLE IV — ALLOCATIONS AND DISTRIBUTIONS
Section 4.1 Allocations of Profit and Loss
All items of income, gain, loss, deduction, and credit of the Company for each fiscal year (or portion thereof) shall be allocated one hundred percent (100%) to the Sole Member. Because the Company has only one member and is treated as a disregarded entity for federal income tax purposes, all items of income, gain, loss, deduction, and credit shall be reported on the tax return of the Sole Member as if such items were directly earned or incurred by the Sole Member.
Section 4.2 Distributions
(a) Distributions of cash or other assets of the Company shall be made to the Sole Member at such times and in such amounts as the Sole Member shall determine in its sole discretion; provided, however, that no distribution shall be made if such distribution would:
(i) violate the DLLCA, including, without limitation, Section 18-607 thereof;
(ii) cause the Company to be unable to pay its debts as they become due in the ordinary course of business;
(iii) violate or cause a default or an Event of Default under the Mezzanine Loan Documents or the Mortgage Loan Documents; or
(iv) impair or adversely affect the Company's status as a Special Purpose Entity.
(b) All distributions by the Company shall be subject to the cash management, cash sweep, and waterfall provisions set forth in the Mezzanine Loan Documents, including, without limitation, the hard lockbox arrangement and the springing cash sweep mechanism that is triggered upon (i) the debt service coverage ratio ("DSCR") falling below 1.10x, or (ii) the occurrence and continuance of an Event of Default under the Mezzanine Loan Agreement. During any period in which a cash sweep is in effect, no distributions shall be made to the Sole Member except as expressly permitted by the Mezzanine Loan Documents.
Section 4.3 Tax Status
(a) The Company shall be treated as a disregarded entity for federal income tax purposes pursuant to Treasury Regulation § 301.7701-3. The Sole Member shall not cause or permit the Company to file an election with the Internal Revenue Service to be classified as an association taxable as a corporation for federal income tax purposes. No action shall be taken by the Company or the Sole Member that would cause the Company to be treated as other than a disregarded entity for federal income tax purposes without the prior written consent of the Mezzanine Lender.
(b) All tax returns of the Company shall be prepared under the supervision of the Sole Member. The Company's independent auditor is Whitfield Albrecht & Co. LLP, with Sandra Okonkwo serving as the Engagement Partner. The Sole Member shall cause all applicable tax filings to be made in a timely manner and shall provide copies of all such filings to the Mezzanine Lender upon request.
ARTICLE V — TAX MATTERS
Section 5.1 Tax Elections
As a disregarded entity for federal income tax purposes, the Company's income and deductions flow through to the Sole Member and are reported on the Sole Member's federal income tax returns. No entity-level federal income tax return is required to be filed by the Company, except as may be required by applicable state or local tax law for jurisdictions in which the Company conducts business or owns assets. The Sole Member shall make or cause to be made such tax elections as the Sole Member deems appropriate, consistent with the Company's status as a disregarded entity and the provisions of the Mezzanine Loan Documents.
Section 5.2 Tax Returns and Reports
The Sole Member, in consultation with its tax advisors, shall be responsible for the preparation and timely filing of all applicable federal, state, and local tax returns and reports relating to the Company. The Sole Member has engaged Sylvia Hartwell, Partner, Tax Practice, Calderwood & Harkness LLP, as its primary tax structuring advisor with respect to the transactions contemplated by this Agreement and the Mezzanine Loan Documents. The Sole Member shall maintain copies of all tax returns and reports filed on behalf of or with respect to the Company in the Company's books and records and shall make such copies available to the Mezzanine Lender upon reasonable request.
Section 5.3 Withholding
The Company is authorized to withhold from any distribution or payment to the Sole Member, and to pay over to the appropriate governmental authority, any amount required to be withheld pursuant to the Internal Revenue Code, the Treasury Regulations, or any applicable state, local, or foreign tax law. Any amount so withheld shall be treated as having been distributed to the Sole Member for all purposes of this Agreement.
ARTICLE VI — MANAGEMENT
Section 6.1 Management by Sole Member
(a) Except as otherwise expressly provided in this Agreement (including, without limitation, the provisions of Article VII relating to Material Actions requiring the unanimous consent of the Independent Directors, and Section 6.4 relating to actions requiring the consent of the Mezzanine Lender), the business and affairs of the Company shall be managed exclusively by the Sole Member.
(b) The Sole Member shall have full, exclusive, and complete authority, power, and discretion to manage and control the business and affairs of the Company, to make all decisions regarding the conduct of the Company's business, and to perform any and all acts or activities customary or incident to the management of the Company's business. Without limiting the generality of the foregoing, the Sole Member shall have the authority to:
(i) execute, deliver, and perform all agreements, contracts, instruments, and documents on behalf of the Company;
(ii) open and maintain bank accounts in the name of the Company;
(iii) employ or engage agents, employees, managers, accountants, attorneys, consultants, and other Persons as the Sole Member deems necessary or appropriate;
(iv) pay the debts and obligations of the Company;
(v) exercise all rights and powers of the Company as the sole member of HYW Mortgage; and
(vi) take all other actions that the Sole Member deems necessary, appropriate, or advisable in connection with the management of the Company's business and affairs.
(c) All actions taken by the Sole Member in its capacity as such shall be subject to the Separateness Covenants set forth in Section 8.1, the limitations set forth in this Agreement, and the terms and conditions of the Mezzanine Loan Documents.
Section 6.2 Authorized Representatives
(a) The following individuals are hereby designated as authorized representatives of the Sole Member with respect to the management and conduct of Company matters:
(i) David Harrington, Executive Director, MTDC;
(ii) Priya Subramanian, Chief Financial Officer, MTDC;
(iii) Marcus Jennings, Vice President, Real Estate Development, MTDC; and
(iv) Connor McBride, Project Director, Hudson Yards West, MTDC.
(b) Each authorized representative designated in Section 6.2(a) shall have the power and authority to act on behalf of the Sole Member with respect to all matters relating to the Company, including the execution and delivery of documents, the giving of notices, and the making of requests and consents, in each case within the scope of such representative's authority as established by the Sole Member's internal governance procedures.
(c) The Sole Member may change, add, or remove its authorized representatives at any time by delivering written notice thereof to the Mezzanine Lender, which notice shall include the name, title, and specimen signature of each new or replacement authorized representative.
Section 6.3 Officers
(a) The Sole Member may, from time to time, appoint one or more officers of the Company, including a President, one or more Vice Presidents, a Secretary, a Treasurer, and such other officers with such titles and duties as the Sole Member may determine. The officers of the Company need not be members of the Company.
(b) Each officer shall serve at the pleasure of the Sole Member and may be removed by the Sole Member at any time, with or without cause, and with or without prior notice; provided that the removal or appointment of any officer shall not require the consent of the Independent Directors unless such removal or appointment constitutes or is taken in connection with a Material Action as defined in Section 7.3.
(c) The initial officers of the Company shall be designated by the Sole Member prior to or contemporaneously with the closing of the Mezzanine Loan. The Sole Member shall provide the Mezzanine Lender with written notice of the identity, title, and specimen signature of each initial officer and any successor or additional officer.
(d) Any officer may resign at any time by giving written notice to the Sole Member. Any such resignation shall take effect at the time specified therein or, if no time is specified, upon receipt of such notice by the Sole Member.
Section 6.4 Actions Requiring Mezzanine Lender Consent
In addition to any Material Action requiring the unanimous consent of the Independent Directors under Article VII, the following actions shall require the prior written consent of the Mezzanine Lender so long as any portion of the Mezzanine Loan or any other obligation under the Mezzanine Loan Documents remains outstanding:
(a) amending, restating, supplementing, or otherwise modifying this Agreement or the Certificate of Formation in any respect;
(b) admitting any additional member to the Company or transferring, assigning, pledging, or otherwise encumbering any membership interest in the Company;
(c) dissolving, winding up, or liquidating the Company, or taking any action in furtherance thereof;
(d) merging, consolidating, or converting the Company into any other form of entity;
(e) changing the Company's stated purpose or engaging in any business or activity other than the purposes expressly set forth in Section 2.5;
(f) incurring any indebtedness other than (i) the Mezzanine Loan and (ii) trade payables incurred in the ordinary course of business not to exceed Fifty Thousand Dollars ($50,000) in the aggregate at any time outstanding;
(g) creating, incurring, assuming, or permitting to exist any lien, encumbrance, charge, or security interest on any of the Company's assets other than as expressly permitted under the Mezzanine Loan Documents;
(h) making any loan or advance to any Person;
(i) entering into any transaction with an Affiliate other than on arm's-length terms and as expressly permitted under the Mezzanine Loan Documents;
(j) changing the Company's name or state of formation; and
(k) removing or replacing any Independent Director except as provided in Section 7.2.
For the avoidance of doubt, the consent requirements set forth in this Section 6.4 are in addition to, and not in lieu of, any consent requirements set forth elsewhere in this Agreement or in the Mezzanine Loan Documents.
ARTICLE VII — SPECIAL PURPOSE ENTITY PROVISIONS; INDEPENDENT DIRECTORS
Section 7.1 Independent Directors
(a) The Company shall at all times have at least two (2) Independent Directors (each, an "Independent Director" and, collectively, the "Independent Directors").
(b) An "Independent Director" shall be a natural person who, at the time of appointment and at all times during the term of service as an Independent Director:
(i) is not, and has not been at any time during the five (5) years preceding the date of such person's appointment as an Independent Director, (A) a member, manager, officer, employee, or Affiliate of the Company, MTDC, HYW Mortgage, or any of their respective Affiliates (other than in the capacity as an independent director or independent manager of an SPE Party or another special purpose entity), (B) a creditor, supplier, contractor, or customer of any such entity, or (C) a family member (by blood, marriage, or adoption) of any individual described in clause (A) or (B);
(ii) is not, and has not been at any time during the five (5) years preceding the date of such person's appointment as an Independent Director, a shareholder, partner, member, director (other than as an independent director or independent manager of a special purpose entity), officer, or employee of the Mezzanine Lender, the Senior Lender, or any of their respective Affiliates;
(iii) is provided by a nationally recognized company that provides independent directors or independent managers for special purpose entities in structured finance transactions, such as Hollowell Technologies, Pemberton Industries, Lord Securities Corporation, or a similar provider of comparable experience and reputation; and
(iv) has prior experience serving as an independent director or independent manager of special purpose bankruptcy-remote entities in structured finance, securitization, or similar transactions.
(c) The initial Independent Directors of the Company shall be designated by the Sole Member, with the prior written consent of the Mezzanine Lender, prior to or contemporaneously with the closing of the Mezzanine Loan. Each initial Independent Director shall execute and deliver an Independent Director Acceptance and Agreement substantially in the form attached hereto as Exhibit C.
Section 7.2 Appointment, Removal, and Replacement of Independent Directors
(a) Independent Directors shall be appointed by the Sole Member with the prior written consent of the Mezzanine Lender. No Person shall serve as an Independent Director unless such Person meets all of the qualifications set forth in Section 7.1(b) and has been approved in writing by the Mezzanine Lender.
(b) No Independent Director may be removed or replaced without the prior written consent of the Mezzanine Lender, which consent may be withheld in the Mezzanine Lender's sole and absolute discretion.
(c) In the event of the death, incapacity, resignation, or removal of any Independent Director, a successor Independent Director meeting all of the qualifications set forth in Section 7.1(b) shall be appointed by the Sole Member, with the prior written consent of the Mezzanine Lender, within ten (10) Business Days following such vacancy. The Company shall provide prompt written notice to the Mezzanine Lender of any vacancy in the position of Independent Director and of the identity and qualifications of any proposed successor Independent Director.
(d) The Company shall at all times maintain at least two (2) Independent Directors who meet the qualifications set forth in Section 7.1(b). During any period in which fewer than two (2) qualified Independent Directors are serving, the Company shall not take any action, conduct any business, or enter into any transaction, except to the extent necessary to preserve the Company's existence and to appoint a replacement Independent Director in accordance with this Section 7.2.
Section 7.3 Material Actions Requiring Unanimous Independent Director Consent
(a) The Company shall not, and the Sole Member shall not cause or permit the Company to, take any "Material Action" without the prior unanimous written consent of all Independent Directors then serving. For purposes of this Agreement, a "Material Action" means any of the following actions or decisions:
(i) filing or consenting to the filing of any petition, either voluntary or involuntary, to take advantage of any applicable insolvency, bankruptcy, reorganization, arrangement, readjustment of debt, dissolution, or liquidation law or statute of the United States, any state thereof, or any other jurisdiction, or filing an answer admitting the material allegations of a petition filed against the Company in any such proceeding;
(ii) seeking or consenting to the appointment of a receiver, liquidator, assignee, trustee, sequestrator, custodian, or any similar official for the Company or for a substantial portion of the Company's assets;
(iii) making a general assignment for the benefit of creditors of the Company;
(iv) admitting in writing the Company's inability to pay its debts generally as they become due;
(v) taking any action in furtherance of any of the foregoing actions described in clauses (i) through (iv);
(vi) dissolving, liquidating, consolidating, merging, or selling all or substantially all of the Company's assets; and
(vii) amending, modifying, or restating this Article VII or any other provision of this Agreement that relates to the Company's status as a Special Purpose Entity, the Separateness Covenants set forth in Section 8.1, the purpose restrictions set forth in Section 2.5, or the Independent Director requirements set forth in this Article VII.
(b) In considering whether to consent to any Material Action, each Independent Director shall owe a fiduciary duty to the Company, including the Company's creditors, and shall take into account the interests of the Company's creditors (including, without limitation, the Mezzanine Lender) in determining whether to grant or withhold consent. The Independent Directors shall consider the effect of any proposed Material Action on the Company's ability to satisfy its obligations under the Mezzanine Loan Documents and on the Company's status as a Special Purpose Entity.
(c) The fact that the unanimous consent of the Independent Directors is required for any Material Action shall not impose any obligation on any Independent Director to consent to any Material Action, and each Independent Director may withhold consent for any reason or no reason.
(d) Any Material Action taken without the prior unanimous written consent of all Independent Directors then serving shall be void and of no force or effect.
Section 7.4 Compensation of Independent Directors
(a) Each Independent Director shall be entitled to receive reasonable compensation for services rendered in such capacity, as agreed between the Company and the applicable independent director provider organization or, if no such agreement exists, as determined by the Sole Member with the consent of the Mezzanine Lender. Such compensation shall constitute an operating expense of the Company and shall be payable by the Company regardless of the financial condition of the Company.
(b) No Independent Director shall be entitled to receive, and no Independent Director shall receive, any membership interest, distribution, economic interest, or equity participation in the Company. The compensation of each Independent Director shall be limited to the reasonable fees payable for services as an Independent Director as described in Section 7.4(a).
Section 7.5 No Duty to Sole Member
(a) In exercising their duties and obligations under Section 7.3, the Independent Directors shall not owe any fiduciary duty, duty of loyalty, duty of care, or other duty to the Sole Member, and shall not be required to consider or give weight to the interests, preferences, or instructions of the Sole Member. The Independent Directors shall consider only the interests of the Company as a whole, including the interests of the Company's creditors (and, in particular, the Mezzanine Lender).
(b) The Sole Member hereby acknowledges and agrees that the Independent Directors are required to act in a manner that is in the best interests of the Company as a whole (including its creditors) and not in the sole interest of the Sole Member. The Sole Member further acknowledges that the Independent Directors' refusal to consent to any Material Action shall not constitute a breach of any duty owed by the Independent Directors to the Sole Member, and the Sole Member shall not have any claim or cause of action against any Independent Director arising from any such refusal.
Section 7.6 Limitations on Liability of Independent Directors
(a) No Independent Director shall be personally liable to the Company, the Sole Member, or any creditor of the Company for any act or omission performed or omitted in good faith in such Independent Director's capacity as an Independent Director of the Company and in a manner reasonably believed by such Independent Director to be in the best interests of the Company, except to the extent that such act or omission constitutes fraud, willful misconduct, or gross negligence on the part of such Independent Director.
(b) The Company shall indemnify, defend, and hold harmless each Independent Director to the fullest extent permitted by the DLLCA, subject to the provisions of Section 9.1 and the limitations set forth in the Mezzanine Loan Documents. Such indemnification shall cover all losses, claims, damages, liabilities, costs, and expenses (including reasonable attorneys' fees and disbursements) incurred by or imposed upon an Independent Director in connection with any action, suit, proceeding, or claim arising out of or relating to such Independent Director's service in such capacity, except to the extent arising from such Independent Director's fraud, willful misconduct, or gross negligence.
(c) The elimination of liability and the provision of indemnification set forth in this Section 7.6 shall not be deemed to limit or eliminate the obligation of each Independent Director to act in good faith and in a manner reasonably believed to be in the best interests of the Company (including its creditors) as required by Section 7.3(b).
ARTICLE VIII — SEPARATENESS COVENANTS
Section 8.1 Separateness Covenants
So long as any portion of the Mezzanine Loan or any other obligation under the Mezzanine Loan Documents remains outstanding, the Company shall, and the Sole Member shall cause the Company to, comply with each of the following covenants (collectively, the "Separateness Covenants"):
(a) Separate Existence. The Company shall maintain its existence as a limited liability company duly organized, validly existing, and in good standing under the laws of the State of Delaware and shall qualify to do business in each other jurisdiction in which the conduct of its business or the ownership of its assets requires such qualification.
(b) Separate Books and Records. The Company shall maintain its own separate books, records, accounts, bank statements, and financial statements, separate and apart from those of MTDC, HYW Mortgage, and any other Affiliate. Such books and records shall accurately reflect the Company's own assets, liabilities, revenues, expenses, and transactions and shall be maintained at the Company's principal office or at such other location as the Sole Member may designate with the consent of the Mezzanine Lender.
(c) Separate Bank Accounts. The Company shall maintain bank accounts and funds that are separate and distinct from those of the Sole Member and any Affiliate, other than as expressly required by the Mezzanine Loan Documents (including, without limitation, cash management accounts established pursuant to the cash management provisions of the Mezzanine Loan Agreement). The Company shall not permit the funds of any other Person to be deposited into the Company's accounts, and the Company shall not deposit its funds into the accounts of any other Person, except as expressly required or permitted by the Mezzanine Loan Documents.
(d) Separate Financial Statements. The Company shall not commingle its assets with those of any other Person. The Company shall maintain its own annual financial statements, which may be unaudited, prepared in accordance with GAAP or such other accounting basis as the Mezzanine Lender may approve in writing. The Company's assets may be included in the consolidated financial statements of MTDC; provided, however, that appropriate notation shall be made in any such consolidated financial statements that the Company is a separate legal entity from MTDC, that the Company's assets are not available to satisfy the debts or obligations of MTDC or any other Affiliate, and that the Company's separate existence should not be disregarded.
(e) Arm's-Length Transactions. The Company shall conduct all transactions with Affiliates on terms and conditions that are commercially reasonable and substantially equivalent to those that would be obtained in a comparable arm's-length transaction with an unrelated third party. All such transactions shall be documented in writing through enforceable agreements that are duly executed and maintained in the Company's books and records.
(f) No Commingling. The Company shall not commingle its funds, assets, or accounts with the funds, assets, or accounts of any other Person. The Company shall maintain strict segregation of its financial resources and shall ensure that all payments, receipts, and transfers are properly recorded in the Company's own books and records.
(g) Own Name. The Company shall hold itself out to the public and all other Persons as a legal entity separate and distinct from the Sole Member, HYW Mortgage, and any other Person. The Company shall conduct all business in its own name and shall not use the name, stationery, invoices, checks, or other business instruments of any other Person. The Company shall maintain its own stationery, invoices, checks, and business forms, and shall not hold itself out as having agreed to pay, or as being liable for, the debts, liabilities, or obligations of any other Person.
(h) Separate Offices. The Company shall maintain a principal office and, if applicable, a registered office in Delaware. If the Company shares office space with the Sole Member or any Affiliate, the Company shall pay a fair, arm's-length allocation of rent, utilities, and other office expenses and shall maintain a separate telephone number (or extension), separate stationery and signage, and such other indicia of separate identity as are appropriate to reinforce its separate existence.
(i) Observe Formalities. The Company shall observe all limited liability company formalities required by the DLLCA and this Agreement, including the maintenance of minutes or written consents for all actions taken by the Sole Member and the Independent Directors. The Company shall hold itself out as a separate entity at all times and shall take all reasonable steps to correct any known misunderstanding regarding its separate identity.
(j) Own Liabilities. The Company shall pay its own liabilities, debts, and expenses from its own funds and assets. The Company shall not pay or agree to pay the debts, liabilities, or obligations of any other Person. The Company shall not guarantee or become obligated for the debts of any other Person. The Company shall not pledge its assets for the benefit of any other Person other than as expressly permitted under the Mezzanine Loan Documents.
(k) No Indebtedness. The Company shall not incur, create, assume, or permit to exist any indebtedness other than (i) the Mezzanine Loan, (ii) trade payables incurred in the ordinary course of business not to exceed Fifty Thousand Dollars ($50,000) in the aggregate at any time outstanding, and (iii) obligations arising under this Agreement and the Mezzanine Loan Documents.
(l) No Guarantees. The Company shall not guarantee or become obligated for the debts of any other Person, nor hold out its credit or assets as being available to satisfy the obligations of any other Person, except pursuant to carve-out guaranties, environmental indemnities, or similar instruments expressly required under the Mezzanine Loan Documents.
(m) No Liens. The Company shall not create, incur, assume, or permit to exist any lien, encumbrance, charge, or security interest on any of its assets, other than (i) liens expressly created or permitted under the Mezzanine Loan Documents, (ii) statutory liens arising in the ordinary course of business that are being contested in good faith by appropriate proceedings and for which adequate reserves have been established, and (iii) such other liens as the Mezzanine Lender may approve in writing.
(n) No Acquisition of Interests. The Company shall not acquire any securities of, or any ownership, equity, or membership interest in, any other Person or entity, other than its ownership of one hundred percent (100%) of the membership interests in HYW Mortgage as contemplated by this Agreement and the Mezzanine Loan Documents.
(o) No Dissolution/Merger. The Company shall not dissolve, wind up, liquidate, consolidate, merge with or into any other entity, or sell all or substantially all of its assets, or acquire all or substantially all of the assets of any other entity, without the prior written consent of the Mezzanine Lender and the prior unanimous written consent of all Independent Directors then serving.
(p) Adequate Capitalization. The Company shall maintain capital that is reasonably sufficient to conduct its business and operations and to remain solvent. The Company shall not, and the Sole Member shall not cause or permit the Company to, take any action or fail to take any action that would cause the Company to become insolvent, to have unreasonably small capital for the business in which it is engaged, or to be unable to pay its debts as they become due.
(q) No Employees. The Company shall not hire, employ, or maintain any employees. The Company may engage independent contractors, consultants, agents, and other third-party service providers as needed to carry out its purposes, provided that all such engagements are documented in writing and on arm's-length terms.
(r) Proper Documentation. The Company shall ensure that all material contracts, agreements, and instruments to which the Company is a party are in writing, duly executed by authorized representatives, and maintained in the Company's books and records.
(s) Tax Identification. The Company shall obtain and maintain its own separate federal employer identification number (EIN), distinct from the EIN of the Sole Member and any other Person. The Company shall file (or cause to be filed) all required federal, state, and local tax returns and reports in a timely manner.
(t) No Amendments. The Company shall not amend, modify, or restate the Certificate of Formation or this Agreement in any manner that would adversely affect the Company's status as a Special Purpose Entity, without the prior written consent of the Mezzanine Lender and the prior unanimous written consent of all Independent Directors then serving.
Section 8.2 Reliance by Mezzanine Lender
(a) The Sole Member acknowledges and agrees that the Mezzanine Lender is entering into the Mezzanine Loan Agreement and the other Mezzanine Loan Documents, and is making the Mezzanine Loan, in material reliance upon the Company's organization and continued existence as a Special Purpose Entity and upon the Company's and the Sole Member's compliance with the Separateness Covenants set forth in Section 8.1.
(b) The Sole Member further acknowledges and agrees that the failure of the Company or the Sole Member to comply with any Separateness Covenant shall constitute an Event of Default under the Mezzanine Loan Agreement, entitling the Mezzanine Lender to exercise all rights and remedies available to it under the Mezzanine Loan Documents, at law, and in equity.
(c) The Separateness Covenants are intended for the benefit of the Mezzanine Lender and shall be enforceable by the Mezzanine Lender as a third-party beneficiary of this Agreement. The Sole Member shall not, and the Company shall not, amend, modify, waive, or otherwise alter any Separateness Covenant without the prior written consent of the Mezzanine Lender.
Section 8.3 Duration of Separateness Covenants
The Separateness Covenants set forth in Section 8.1 shall remain in full force and effect, and the Company and the Sole Member shall continue to comply therewith, until such time as the Mezzanine Loan and all other obligations of the Company under the Mezzanine Loan Documents have been indefeasibly paid, satisfied, and discharged in full and all commitments of the Mezzanine Lender under the Mezzanine Loan Documents have been terminated in accordance with their terms. For the avoidance of doubt, the Separateness Covenants shall survive any transfer of the Mezzanine Loan or any assignment of the Mezzanine Lender's rights under the Mezzanine Loan Documents.
ARTICLE IX — INDEMNIFICATION; EXCULPATION
Section 9.1 Indemnification
(a) The Company shall, to the fullest extent permitted by the DLLCA, indemnify, defend, and hold harmless each of the following Persons (each, an "Indemnified Party"):
(i) the Sole Member;
(ii) the authorized representatives designated pursuant to Section 6.2;
(iii) each Officer appointed pursuant to Section 6.3; and
(iv) each Independent Director appointed pursuant to Article VII;
from and against any and all losses, claims, damages, judgments, liabilities, costs, and expenses (including reasonable attorneys' fees and disbursements, court costs, and costs of investigation and settlement) (collectively, "Losses") arising out of or relating to the business, affairs, operations, or activities of the Company or any action taken or omitted to be taken by such Indemnified Party on behalf of or in connection with the Company; provided, however, that no Indemnified Party shall be entitled to indemnification hereunder to the extent that such Losses result from or are attributable to such Indemnified Party's own fraud, willful misconduct, or gross negligence.
(b) The indemnification obligations set forth in this Section 9.1 shall extend to all Losses incurred by an Indemnified Party in connection with any threatened, pending, or completed action, suit, proceeding, or investigation, whether civil, criminal, administrative, arbitrative, or investigative, and whether formal or informal, in which such Indemnified Party is involved or threatened to be involved as a party, witness, or otherwise, by reason of such Indemnified Party's status or service in any of the capacities described in Section 9.1(a).
(c) The indemnification of Independent Directors pursuant to this Section 9.1 shall survive the resignation, removal, or replacement of such Independent Directors and shall survive the termination, amendment, or restatement of this Agreement.
(d) Notwithstanding anything in this Section 9.1 to the contrary, no indemnification payment or advancement of expenses shall be made to the extent that such payment would (i) violate any provision of the Mezzanine Loan Documents, (ii) impair the Company's status as a Special Purpose Entity, or (iii) cause the Company to be unable to pay its debts as they become due in the ordinary course of business.
(e) Any Indemnified Party seeking indemnification hereunder shall give prompt written notice to the Company of any claim, demand, action, or proceeding for which indemnification is sought. The failure to give such notice shall not relieve the Company of its indemnification obligations except to the extent that the Company is materially prejudiced by such failure.
Section 9.2 Exculpation
No Indemnified Party shall be personally liable to the Company, the Sole Member, or any other Person for any act or omission performed or omitted in good faith on behalf of the Company and in a manner reasonably believed by such Indemnified Party to be within the scope of authority conferred by this Agreement, the DLLCA, or any resolution of the Sole Member, except to the extent that such act or omission constitutes fraud, willful misconduct, or gross negligence on the part of such Indemnified Party. This Section 9.2 shall not be construed to eliminate or limit any liability of any Indemnified Party arising under the Mezzanine Loan Documents or any other agreement to which such Indemnified Party is a party.
Section 9.3 Insurance
The Company may obtain and maintain, at the Company's expense, such directors and officers liability insurance, errors and omissions insurance, general liability insurance, or other insurance coverage as the Sole Member deems appropriate and consistent with the Company's obligations under the Mezzanine Loan Documents. Any such insurance shall name the Independent Directors as additional insureds to the extent such coverage is available on commercially reasonable terms.
ARTICLE X — TRANSFERS OF MEMBERSHIP INTERESTS
Section 10.1 Restrictions on Transfer
(a) The Sole Member shall not sell, assign, transfer, pledge, hypothecate, encumber, grant a security interest in, or otherwise dispose of (each, a "Transfer") all or any portion of its membership interest in the Company without the prior written consent of the Mezzanine Lender, which consent may be withheld in the Mezzanine Lender's sole and absolute discretion; provided, however, that the pledge of the Sole Member's membership interest in the Company, if and to the extent required under the Mezzanine Loan Documents, is expressly permitted and shall not require any additional consent under this Section 10.1.
(b) Any purported Transfer of all or any portion of the Sole Member's membership interest in the Com