RECOGNITION AGREEMENT
among
HUDSON YARDS WEST MORTGAGE LLC, a Delaware limited liability company, as Mortgage Borrower,
IRONCLAD NATIONAL BANK, N.A., a national banking association, as Administrative Agent,
and
GRANITE PEAK CAPITAL PARTNERS, LP, a Delaware limited partnership, as Mezzanine Lender
Dated as of _____________, 2025
Property: 450 West 34th Street, New York, New York 10001
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RECITALS
WHEREAS, Hudson Yards West Mortgage LLC ("Mortgage Borrower"), a Delaware limited liability company, is the borrower under that certain Senior Mortgage Loan in the original principal amount of Four Hundred Seventy-Five Million and 00/100 Dollars ($475,000,000.00), made by the lenders party thereto (collectively, the "Senior Lenders") and administered by Ironclad National Bank, N.A., a national banking association, in its capacity as administrative agent for the Senior Lenders (in such capacity, together with its successors and assigns, "Administrative Agent"), which Senior Mortgage Loan is secured by, among other things, a mortgage, assignment of leases and rents, security agreement, and fixture filing (the "Mortgage") encumbering the fee and leasehold interest in that certain real property located at 450 West 34th Street, New York, New York 10001, designated as Block 729, Lots 1, 5, 12, and 15, Borough of Manhattan, City and County of New York, State of New York (the "Property"), pursuant to that certain Senior Loan Agreement of even date herewith among Mortgage Borrower, the Senior Lenders, and Administrative Agent (as the same may be amended, restated, supplemented, or otherwise modified from time to time in accordance with the terms of this Agreement, the "Senior Loan Agreement");
WHEREAS, Hudson Yards West Mezzanine LLC ("Mezzanine Borrower"), a Delaware limited liability company and the sole member of Mortgage Borrower, is the borrower under that certain Mezzanine Loan in the original principal amount of Two Hundred Million and 00/100 Dollars ($200,000,000.00), made by Granite Peak Capital Partners, LP, a Delaware limited partnership ("Mezzanine Lender"), pursuant to that certain Mezzanine Loan Agreement of even date herewith between Mezzanine Borrower and Mezzanine Lender (as the same may be amended, restated, supplemented, or otherwise modified from time to time in accordance with the terms of this Agreement, the "Mezzanine Loan Agreement");
WHEREAS, the Mezzanine Loan is secured by a first-priority pledge of one hundred percent (100%) of the direct membership interests in Mortgage Borrower held by Mezzanine Borrower (collectively, the "Pledged Interests"), pursuant to that certain Pledge and Security Agreement of even date herewith from Mezzanine Borrower in favor of Mezzanine Lender (as the same may be amended, restated, supplemented, or otherwise modified from time to time in accordance with the terms of this Agreement, the "Pledge Agreement");
WHEREAS, the parties hereto desire to set forth certain agreements regarding the relationship between the Senior Loan and the Mezzanine Loan, including the acknowledgment by Administrative Agent of the Mezzanine Loan and the pledge of the Pledged Interests, the rights and obligations of Mezzanine Lender in connection therewith, certain cure rights and purchase options afforded to Mezzanine Lender, and the terms and conditions under which Mezzanine Lender may exercise its remedies with respect to the Pledged Interests; and
NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by each party hereto, the parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
Section 1.1 Defined Terms. As used in this Agreement, the following terms shall have the meanings set forth below:
"Administrative Agent" means Ironclad National Bank, N.A., a national banking association, in its capacity as administrative agent for the Senior Lenders under the Senior Loan Agreement, and its successors and assigns in such capacity. The principal address of Administrative Agent for purposes of this Agreement is 277 Park Avenue, New York, New York 10172, Attention: Kenneth Pryor, Managing Director, Real Estate Finance.
"Agreement" means this Recognition Agreement, dated as of the date first written above, among Mortgage Borrower, Administrative Agent, and Mezzanine Lender, as the same may be amended, restated, supplemented, or otherwise modified from time to time in accordance with the terms hereof.
"Approved Manager" means Evergreen Property Management LLC, a New York limited liability company, or any replacement property manager that has been approved in writing by each of Administrative Agent and Mezzanine Lender in accordance with the terms of the Senior Loan Agreement and this Agreement, such approval not to be unreasonably withheld, conditioned, or delayed.
"Bankruptcy Code" means Title 11 of the United States Code, 11 U.S.C. §§ 101 et seq., as amended from time to time, and any successor statute thereto.
"Business Day" means any day other than (a) a Saturday, (b) a Sunday, or (c) a day on which banks located in the City of New York, State of New York, are authorized or required by law, executive order, or governmental decree to be closed for the transaction of regular banking business. If any period of time measured in Business Days would otherwise expire on a day that is not a Business Day, such period shall be extended to the next succeeding Business Day.
"Clearfield & Associates" means Clearfield & Associates LLP, having its principal office at 399 Park Avenue, 28th Floor, New York, New York 10022, Attention: Harrison Whitmore, counsel to Administrative Agent.
"Closing Date" means the date of this Agreement.
"Completion Guaranty" means that certain Completion Guaranty of even date herewith, executed by Metropolitan Transit Development Corp. ("MTDC") in favor of Administrative Agent in connection with the Senior Loan, as the same may be amended, restated, supplemented, or otherwise modified from time to time.
"Cure Period" has the meaning set forth in Section 5.1 of this Agreement.
"DSCR" means the debt service coverage ratio as calculated in accordance with the Senior Loan Agreement.
"Debt Yield" means the debt yield as calculated in accordance with the Senior Loan Agreement.
"Foreclosure Event" means the consummation of (a) a foreclosure sale of the Pledged Interests conducted in accordance with Article 9 of the UCC (whether by public or private sale), or (b) an acceptance of the Pledged Interests by Mezzanine Lender in full or partial satisfaction of the Mezzanine Loan in accordance with Section 9-620 or Section 9-621 of the UCC, in each case in accordance with the terms and conditions of this Agreement.
"Ground Lease" means that certain ground lease dated as of June 1, 2020, by and between the New York City Economic Development Corporation ("NYCEDC"), as landlord, and Metropolitan Transit Development Corp. ("MTDC"), as tenant (as assigned to and assumed by Mortgage Borrower or its predecessor in interest), which Ground Lease was recorded with the Office of the City Register of the City of New York at City Register File Number ("CRFN") 2020000198762, as the same may be amended, restated, supplemented, or otherwise modified from time to time.
"Lockbox Account" means the hard lockbox account established under the Senior Loan Agreement, maintained at Administrative Agent, into which all rents, revenues, and other income from the Property are required to be deposited, as more particularly described in the Cash Management Agreement executed in connection with the Senior Loan.
"LTV" means the loan-to-value ratio as calculated in accordance with the Senior Loan Agreement.
"Mezzanine Borrower" means Hudson Yards West Mezzanine LLC, a Delaware limited liability company, and the sole member of Mortgage Borrower.
"Mezzanine Default" means an "Event of Default" under and as defined in the Mezzanine Loan Agreement.
"Mezzanine Lender" means Granite Peak Capital Partners, LP, a Delaware limited partnership, and its successors and assigns in accordance with this Agreement. The principal address of Mezzanine Lender for purposes of this Agreement is 9 West 57th Street, Suite 4200, New York, New York 10019, Attention: Diane Castellano, Managing Partner.
"Mezzanine Loan" means the mezzanine loan in the original principal amount of Two Hundred Million and 00/100 Dollars ($200,000,000.00) made by Mezzanine Lender to Mezzanine Borrower pursuant to the Mezzanine Loan Agreement.
"Mezzanine Loan Agreement" has the meaning set forth in the recitals to this Agreement.
"Mezzanine Loan Documents" means, collectively, the Mezzanine Loan Agreement, the Pledge Agreement, the Mezzanine Note, the Guaranty of Recourse Obligations (Mezzanine), the Environmental Indemnity Agreement (Mezzanine), and all other documents, instruments, certificates, and agreements executed and delivered in connection with the Mezzanine Loan, as each may be amended, restated, supplemented, or otherwise modified from time to time in accordance with the terms of this Agreement.
"Mezzanine Note" means the Mezzanine Promissory Note in the original principal amount of $200,000,000.00, dated as of even date herewith, executed by Mezzanine Borrower in favor of Mezzanine Lender, as the same may be amended, restated, supplemented, or otherwise modified from time to time.
"Mortgage" means the mortgage, assignment of leases and rents, security agreement, and fixture filing, dated as of even date herewith, executed by Mortgage Borrower in favor of Administrative Agent, encumbering the Property, as the same may be amended, restated, supplemented, or otherwise modified from time to time.
"Mortgage Borrower" means Hudson Yards West Mortgage LLC, a Delaware limited liability company.
"MTDC" means Metropolitan Transit Development Corp., a Delaware corporation, having its principal office at 200 South Michigan Avenue, Suite 3100, Chicago, Illinois 60604.
"OFAC" means the Office of Foreign Assets Control of the United States Department of the Treasury.
"Person" means any individual, corporation, limited liability company, partnership, joint venture, association, trust, governmental authority, or other entity of any kind.
"Pledge Agreement" has the meaning set forth in the recitals to this Agreement.
"Pledged Interests" means one hundred percent (100%) of the direct membership interests in Mortgage Borrower held by Mezzanine Borrower.
"Property" means the real property located at 450 West 34th Street, New York, New York 10001, designated as Block 729, Lots 1, 5, 12, and 15, Borough of Manhattan, City and County of New York, State of New York, together with all buildings, structures, improvements, fixtures, and appurtenances now or hereafter situated thereon, and all easements, rights-of-way, and other rights appurtenant thereto.
"Purchase Option" has the meaning set forth in Section 6.1 of this Agreement.
"Purchase Price" has the meaning set forth in Section 6.2 of this Agreement.
"Qualified Transferee" has the meaning set forth in Section 7.1 of this Agreement.
"Sanctioned Person" means any Person that is (a) listed on any sanctions list maintained by OFAC, the United Nations Security Council, the European Union, His Majesty's Treasury of the United Kingdom, or any other applicable governmental authority, (b) located, organized, or resident in a country or territory that is the subject of comprehensive territorial sanctions (including, as of the date hereof, Cuba, Iran, North Korea, Syria, and the Crimea, Donetsk, and Luhansk regions of Ukraine), or (c) owned or controlled by any such Person described in clause (a) or (b).
"Senior Default" means an "Event of Default" under and as defined in the Senior Loan Agreement.
"Senior Lenders" means the lenders from time to time party to the Senior Loan Agreement.
"Senior Loan" means the senior mortgage loan in the original principal amount of Four Hundred Seventy-Five Million and 00/100 Dollars ($475,000,000.00) made by the Senior Lenders to Mortgage Borrower pursuant to the Senior Loan Agreement.
"Senior Loan Agreement" has the meaning set forth in the recitals to this Agreement.
"Senior Loan Documents" means, collectively, the Senior Loan Agreement, the Mortgage, the Senior Note, the Guaranty of Recourse Obligations (MTDC), the Completion Guaranty, the Environmental Indemnity Agreement, the Cash Management Agreement, the Deposit Account Control Agreement, the Building Loan Agreement, the Construction Disbursement Agreement, the Subordination, Non-Disturbance and Attornment Agreement (Ground Lease), and all other documents, instruments, certificates, and agreements executed and delivered in connection with the Senior Loan, as each may be amended, restated, supplemented, or otherwise modified from time to time in accordance with the terms of this Agreement. The Senior Loan Documents are listed on Exhibit A attached hereto.
"Senior Note" means the Promissory Note in the original principal amount of $475,000,000.00, dated as of even date herewith, executed by Mortgage Borrower in favor of Administrative Agent (for the benefit of the Senior Lenders), as the same may be amended, restated, supplemented, or otherwise modified from time to time.
"Standstill Period" has the meaning set forth in Section 5.2 of this Agreement.
"Term SOFR" has the meaning given to such term in the Senior Loan Agreement.
"UCC" means the Uniform Commercial Code as in effect from time to time in the State of New York; provided, that if perfection, the effect of perfection or non-perfection, or the priority of any security interest in any collateral is governed by the Uniform Commercial Code as in effect in a jurisdiction other than the State of New York (including the State of Delaware), "UCC" shall mean the Uniform Commercial Code as in effect from time to time in such other jurisdiction for purposes of the provisions hereof relating to such perfection, effect of perfection or non-perfection, or priority.
Section 1.2 Rules of Construction. Unless otherwise defined herein, all capitalized terms used in this Agreement shall have the meanings ascribed to such terms in the Senior Loan Agreement. The following rules of construction shall apply to this Agreement:
(a) The term "including" (and correlative terms such as "include" and "includes") shall mean "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.
(b) The headings and captions contained in this Agreement are for convenience of reference only, shall not be deemed to be a part of this Agreement, and shall not be referred to in connection with the construction or interpretation of this Agreement.
(c) References herein to "Articles," "Sections," "Exhibits," and "Schedules" shall be construed as references to articles, sections, exhibits, and schedules of and to this Agreement, unless the context otherwise requires.
(d) Words importing the singular number shall include the plural number and vice versa, and words importing any gender shall include the other genders, unless the context otherwise requires.
(e) References to any agreement, document, or instrument shall mean such agreement, document, or instrument as amended, restated, supplemented, or otherwise modified from time to time in accordance with the terms thereof and the terms of this Agreement.
(f) References to any Person shall include such Person's successors and permitted assigns.
(g) References to "herein," "hereof," "hereunder," and similar terms shall refer to this Agreement as a whole and not to any particular provision hereof.
(h) The words "shall" and "will" have equal force and effect.
(i) In the computation of periods of time from a specified date to a later specified date, the word "from" means "from and including" and the words "to" and "until" each mean "to but excluding."
ARTICLE 2
ACKNOWLEDGMENTS
Section 2.1 Acknowledgment of the Mezzanine Loan. Administrative Agent, on behalf of itself and the Senior Lenders, hereby acknowledges and consents to (a) the making of the Mezzanine Loan by Mezzanine Lender to Mezzanine Borrower in the original principal amount of Two Hundred Million and 00/100 Dollars ($200,000,000.00), (b) the execution and delivery by Mezzanine Borrower of the Mezzanine Loan Documents in favor of Mezzanine Lender, and (c) the Mezzanine Loan and the execution and delivery of the Mezzanine Loan Documents. The making of the Mezzanine Loan and the execution and delivery of the Mezzanine Loan Documents shall not, in and of themselves, constitute a default or an Event of Default under the Senior Loan Agreement or any other Senior Loan Document. Administrative Agent acknowledges receipt of copies of the Mezzanine Loan Documents listed on Exhibit B attached hereto, and such copies are true, correct, and complete in all material respects as of the date hereof.
Section 2.2 Acknowledgment of the Pledge. Administrative Agent, on behalf of itself and the Senior Lenders, hereby acknowledges and consents to the pledge by Mezzanine Borrower to Mezzanine Lender of the Pledged Interests pursuant to the Pledge Agreement. The pledge of the Pledged Interests shall not constitute a violation of any transfer restriction, change-of-control provision, or due-on-sale clause contained in the Senior Loan Agreement or any other Senior Loan Document. Administrative Agent further acknowledges that Mezzanine Lender has filed a UCC-1 Financing Statement with the Secretary of State of the State of Delaware with respect to the Pledged Interests, and such filing shall not constitute a default under the Senior Loan Documents.
Section 2.3 No Encumbrance on Property. Mezzanine Lender hereby acknowledges and agrees that the Mezzanine Loan is not secured by, and the Mezzanine Loan Documents do not create, any mortgage, lien, security interest, charge, or other encumbrance on (a) the Property, (b) any other real or personal property constituting collateral for the Senior Loan, or (c) any interest of Mortgage Borrower in any rents, revenues, income, accounts, deposit accounts, or other assets that constitute collateral under the Senior Loan Documents. Mezzanine Lender's sole collateral for the Mezzanine Loan is the Pledged Interests. Mezzanine Lender covenants and agrees that it shall not at any time acquire, hold, or accept any mortgage, lien, security interest, or other encumbrance on the Property or on any other asset or interest that constitutes collateral under the Senior Loan Documents. Nothing in this Section 2.3 shall be construed to limit Mezzanine Lender's right to acquire the Senior Loan pursuant to the Purchase Option set forth in Article 6.
Section 2.4 Subordination of Mezzanine Loan. Mezzanine Lender hereby acknowledges and agrees that (a) the Senior Loan, the Senior Loan Documents, and all liens, security interests, and other encumbrances securing the Senior Loan are and shall at all times remain senior and superior in right, priority, and interest to the Mezzanine Loan, the Mezzanine Loan Documents, and any and all rights of Mezzanine Lender with respect thereto, and (b) in no event shall any payment, distribution, or application of funds under the Mezzanine Loan Documents be deemed to have priority over any obligation owed under the Senior Loan Documents. Without limiting the generality of the foregoing, the subordination set forth in this Section 2.4 shall apply to all principal, interest (including default interest), fees, costs, expenses, advances, indemnification obligations, and any and all other amounts payable under the Senior Loan Documents.
Section 2.5 SPE Covenants. Each of Mortgage Borrower and Mezzanine Lender acknowledges and agrees that the single-purpose entity ("SPE") requirements and separateness covenants set forth in the Senior Loan Agreement and the organizational documents of Mortgage Borrower and Mezzanine Borrower must be maintained at all times. The Mezzanine Loan Documents shall not contain any provision that is materially inconsistent with the SPE covenants contained in the Senior Loan Documents, and Mezzanine Lender shall not take any action, or cause or permit Mezzanine Borrower to take any action, that would result in a breach of any SPE covenant applicable to Mortgage Borrower or Mezzanine Borrower under the Senior Loan Documents. In the event of any conflict between the SPE covenants in the Mezzanine Loan Documents and the SPE covenants in the Senior Loan Documents, the provisions of the Senior Loan Documents shall control.
ARTICLE 3
PERMITTED ACTIVITIES OF MEZZANINE LENDER
Section 3.1 Enforcement of Pledge. Subject to the terms and conditions of this Agreement, Mezzanine Lender shall have the right to exercise its remedies under the Pledge Agreement upon the occurrence and during the continuance of a Mezzanine Default, including the right to conduct a UCC foreclosure sale of the Pledged Interests (whether by public auction or private sale) or to accept the Pledged Interests in full or partial satisfaction of the Mezzanine Loan, in each case in accordance with Article 9 of the UCC. Notwithstanding the foregoing, the exercise of any such remedies by Mezzanine Lender shall be subject to (a) the Standstill Period provisions of Section 5.2 (to the extent a Senior Default is then continuing), (b) the notice obligations set forth in Section 4.2 and Section 7.4, (c) the Qualified Transferee requirements set forth in Section 7.1, (d) the replacement guarantor requirements set forth in Section 7.2, and (e) the assumption and acknowledgment requirements set forth in Section 7.3. Nothing in this Agreement shall be construed to grant Mezzanine Lender any rights or remedies with respect to the Property or any other collateral securing the Senior Loan.
Section 3.2 No Interference with Senior Loan. Mezzanine Lender hereby covenants and agrees that it shall not, at any time:
(a) take any action, directly or indirectly, to contest, challenge, or interfere with the exercise by Administrative Agent of any right or remedy under the Senior Loan Documents, whether arising at law, in equity, or under the Senior Loan Documents, including the right to accelerate the Senior Loan, foreclose the Mortgage, exercise any power of sale, appoint a receiver, or enforce any other right or remedy available to Administrative Agent;
(b) commence or join in any action, suit, or proceeding seeking to enjoin, restrain, delay, or otherwise impede the enforcement of any right or remedy of Administrative Agent under the Senior Loan Documents, or seeking a declaration that any Senior Loan Document or any provision thereof is invalid, unenforceable, or otherwise ineffective;
(c) object to, or otherwise contest or interfere with, any foreclosure or enforcement action commenced by Administrative Agent with respect to the Property, including any sale pursuant to the Mortgage, any action for the appointment of a receiver, any action to collect rents, or any action to enforce the assignment of leases and rents; or
(d) assert any claim, defense, or counterclaim against Administrative Agent or any Senior Lender in connection with the Senior Loan or the exercise of any rights or remedies under the Senior Loan Documents, except to the extent that such claim, defense, or counterclaim arises directly from a breach by Administrative Agent of its express obligations under this Agreement.
Section 3.3 Consent to Lockbox. Mezzanine Lender hereby acknowledges and consents to the establishment and operation of the Lockbox Account and the cash management provisions contained in the Senior Loan Agreement and the Cash Management Agreement, including the application of all rents, revenues, and income from the Property in accordance with the cash management waterfall set forth therein. Mezzanine Lender shall not contest, challenge, or interfere with the priority of the cash management waterfall under the Senior Loan Documents. Without limiting the generality of the foregoing, Mezzanine Lender acknowledges and agrees that the application of funds through the lockbox and cash sweep triggers set forth in the Senior Loan Agreement (including any cash sweep triggered by a DSCR below 1.10x or the occurrence of a Senior Default) shall take priority over any distributions to Mezzanine Borrower that would otherwise be available for application to the Mezzanine Loan. Mezzanine Lender shall have no right to redirect, intercept, or otherwise interfere with the flow of funds through the Lockbox Account or any other account established under the Senior Loan Documents.
ARTICLE 4
NOTICE REQUIREMENTS
Section 4.1 Notices from Administrative Agent to Mezzanine Lender. Administrative Agent shall provide written notice to Mezzanine Lender (concurrently with or promptly following delivery of any corresponding notice to Mortgage Borrower) of each of the following events or occurrences:
(a) any Senior Default or any event or condition which, with the giving of notice, the lapse of time, or both, would constitute a Senior Default, together with a reasonably detailed description of the nature of such default or event;
(b) any acceleration of the maturity of the Senior Loan or any demand for payment in full of the outstanding principal balance of the Senior Loan and all accrued and unpaid interest and other amounts due thereunder;
(c) commencement of any foreclosure action, enforcement proceeding, receivership proceeding, or other legal action by Administrative Agent against the Property, Mortgage Borrower, or any guarantor under the Senior Loan Documents, together with copies of all pleadings or notices filed in connection therewith;
(d) any proposed material modification, amendment, waiver, or consent under or with respect to the Senior Loan Documents, as further described in Section 8.1 of this Agreement;
(e) any termination, replacement, or proposed replacement of the property manager for the Property, including any termination of Evergreen Property Management LLC as Approved Manager;
(f) any insurance casualty or condemnation event affecting the Property that results in damage or loss in excess of Five Hundred Thousand and 00/100 Dollars ($500,000.00), or any condemnation notice or proceeding that would materially and adversely affect the value, use, or operation of the Property;
(g) any draw request, advance, or disbursement rejection under the construction loan or building loan provisions of the Senior Loan Agreement, including any rejection of a draw request in excess of One Million and 00/100 Dollars ($1,000,000.00);
(h) any breach by Mortgage Borrower of any financial covenant set forth in the Senior Loan Agreement, including any DSCR covenant breach (DSCR below 1.20x), any LTV covenant breach (LTV in excess of 70.0%), or any Debt Yield covenant breach (Debt Yield below 8.0%), together with the applicable calculations; and
(i) any triggering of the cash sweep provisions under the Senior Loan Agreement, including any cash sweep triggered by a DSCR below 1.10x, together with the applicable DSCR calculation and the anticipated duration of such cash sweep.
Administrative Agent shall deliver such notices promptly and in any event within five (5) Business Days following Administrative Agent's actual knowledge of the applicable event or occurrence (or, in the case of notices under clause (d), not less than thirty (30) days prior to the effectiveness of any such modification, amendment, waiver, or consent, as further provided in Section 8.1).
Section 4.2 Notices from Mezzanine Lender to Administrative Agent. Mezzanine Lender shall provide written notice to Administrative Agent of each of the following events or occurrences:
(a) any Mezzanine Default, together with a reasonably detailed description of the nature of such Mezzanine Default;
(b) any acceleration of the maturity of the Mezzanine Loan or any demand for payment in full of the outstanding principal balance of the Mezzanine Loan;
(c) commencement of any UCC foreclosure proceeding (whether public or private sale), acceptance of collateral, or other enforcement action with respect to the Pledged Interests, together with copies of all notices given in connection therewith;
(d) any proposed material modification, amendment, waiver, or consent under or with respect to the Mezzanine Loan Documents, as further described in Section 8.2 of this Agreement;
(e) any transfer, sale, assignment, or participation of all or any portion of the Mezzanine Loan or any interest therein, including the identity of the proposed transferee; and
(f) the consummation of any Foreclosure Event, together with the identity of the transferee of the Pledged Interests and evidence of compliance with the Qualified Transferee and replacement guarantor requirements of Article 7.
Mezzanine Lender shall deliver such notices promptly and in any event within five (5) Business Days following the applicable event or occurrence (or, in the case of a Foreclosure Event, within two (2) Business Days following consummation thereof, and in the case of notice under clause (c), not less than thirty (30) days prior to the scheduled date of any UCC foreclosure sale, as further provided in Section 7.4).
Section 4.3 Notice Addresses. All notices, requests, demands, consents, approvals, and other communications required or permitted to be given under this Agreement shall be in writing and shall be delivered as follows:
(a) If to Administrative Agent:
Ironclad National Bank, N.A. 277 Park Avenue New York, New York 10172
Attention: Kenneth Pryor, Managing Director, Real Estate Finance
Telephone: (212) 555-8400
with a copy (which shall not constitute notice) to:
Clearfield & Associates LLP 399 Park Avenue, 28th Floor New York, New York 10022
Attention: Harrison Whitmore
Telephone: (212) 555-3750
(b) If to Mezzanine Lender:
Granite Peak Capital Partners, LP 9 West 57th Street, Suite 4200 New York, New York 10019
Attention: Diane Castellano, Managing Partner
and Rebecca Thornton, In-house Counsel Telephone: (212) 555-6100
with a copy (which shall not constitute notice) to:
Voss Richter & Baines LLP 1251 Avenue of the Americas, 34th Floor New York, New York 10020
Attention: Natasha Ivanovic
Telephone: (212) 555-9200
(c) If to Mortgage Borrower:
Hudson Yards West Mortgage LLC c/o Metropolitan Transit Development Corp. 200 South Michigan Avenue, Suite 3100 Chicago, Illinois 60604
Attention: Lydia Okafor, General Counsel
Telephone: (312) 555-2200
with a copy (which shall not constitute notice) to:
Calderwood & Harkness LLP One Liberty Plaza, 55th Floor New York, New York 10006
Attention: Douglas Fairchild
Telephone: (212) 555-1800
All notices shall be delivered by (i) hand delivery, (ii) a nationally recognized overnight courier service (such as Sundial Data Systems, Harborline Partners LLC, or Tarrant & Co.), or (iii) certified mail, return receipt requested, postage prepaid. Any notice shall be deemed received (A) upon actual receipt by the applicable addressee (or any person at the applicable address who accepts delivery on behalf of the addressee) or (B) upon refusal of delivery at the applicable address if delivery is attempted by any of the methods described above. Any party may change its address for notices by delivering written notice of such change to the other parties in accordance with this Section 4.3.
Section 4.4 Failure to Give Notice. The failure by Administrative Agent to deliver any notice required under this Article 4 to Mezzanine Lender, or the failure by Mezzanine Lender to deliver any notice required under this Article 4 to Administrative Agent, shall not affect the validity, enforceability, or effectiveness of any action taken by the non-receiving party or of any right, remedy, or obligation of any party under this Agreement or any Senior Loan Document or Mezzanine Loan Document; provided, however, that (a) any Cure Period available to Mezzanine Lender under Section 5.1 shall not commence running until the actual receipt by Mezzanine Lender of the applicable notice of Senior Default, (b) the Standstill Period under Section 5.2 shall not commence until the actual receipt by Mezzanine Lender of the applicable notice, (c) the period for exercise of the Purchase Option under Section 6.3 shall not commence until the actual receipt by Mezzanine Lender of the applicable notice of Senior Default, and (d) no party shall be deemed to have waived any right or remedy under this Agreement by reason of the other party's failure to deliver a required notice.
ARTICLE 5
MEZZANINE LENDER CURE RIGHTS
Section 5.1 Right to Cure Senior Defaults. Upon receipt by Mezzanine Lender of written notice from Administrative Agent (or from any other source) of a Senior Default, Mezzanine Lender shall have the right, but not the obligation, to cure such Senior Default within the following cure periods (each, a "Cure Period"):
(a) Monetary Defaults. With respect to any Senior Default that is monetary in nature (including the failure to make any payment of principal, interest, reserves, escrows, or other amounts due under the Senior Loan Documents), Mezzanine Lender shall have a period of ten (10) Business Days after the expiration of any cure period available to Mortgage Borrower under the Senior Loan Documents for such monetary default in which to cure such monetary default by payment to Administrative Agent of all amounts then due and payable.
(b) Non-Monetary Defaults Capable of Cure. With respect to any Senior Default that is non-monetary in nature and is capable of cure, Mezzanine Lender shall have a period of thirty (30) days after the expiration of any cure period available to Mortgage Borrower under the Senior Loan Documents for such non-monetary default in which to cure such non-monetary default; provided, however, that if such non-monetary default is of a nature that cannot reasonably be cured within such thirty (30) day period despite the exercise of diligent efforts, and Mezzanine Lender commences the cure of such default within such thirty (30) day period and thereafter diligently and continuously pursues such cure to completion, the Cure Period for such non-monetary default shall be extended for an additional sixty (60) days (for a total Cure Period of ninety (90) days after the expiration of Mortgage Borrower's cure period). In no event shall the aggregate Cure Period for any non-monetary default exceed ninety (90) days after the expiration of Mortgage Borrower's cure period under the Senior Loan Documents.
(c) Non-Curable Defaults. With respect to any Senior Default that is not capable of cure by its nature, including (i) a violation of the SPE covenants applicable to Mortgage Borrower (other than a violation that can be cured by reinstatement of compliance), (ii) an unauthorized transfer of any direct or indirect interest in Mortgage Borrower in violation of the Senior Loan Documents (other than the pledge of the Pledged Interests), (iii) the filing by Mortgage Borrower of a voluntary petition under the Bankruptcy Code or any applicable state insolvency law, or (iv) any other Senior Default designated as non-curable in the Senior Loan Documents, Mezzanine Lender shall have no Cure Period, and Mezzanine Lender's sole remedy with respect thereto shall be to exercise the Purchase Option set forth in Article 6 within the applicable time period set forth in Section 6.3.
Section 5.2 Standstill Period. Administrative Agent agrees that, upon providing written notice to Mezzanine Lender of a Senior Default in accordance with Section 4.1, Administrative Agent shall not exercise any enforcement remedies under the Senior Loan Documents (including, without limitation, acceleration of the Senior Loan, commencement of foreclosure proceedings, exercise of any power of sale, appointment of a receiver, commencement of any action for the collection of the Senior Loan, or exercise of any rights under the assignment of leases and rents) for a period (the "Standstill Period") measured as follows:
(a) Monetary Defaults. For any monetary Senior Default, the Standstill Period shall be a period of ten (10) Business Days after the actual receipt by Mezzanine Lender of written notice of such Senior Default (which period shall run concurrently with any cure period available to Mortgage Borrower under the Senior Loan Documents for such monetary default).
(b) Non-Monetary Defaults. For any non-monetary Senior Default, the Standstill Period shall be a period of sixty (60) days after the actual receipt by Mezzanine Lender of written notice of such Senior Default (which period shall run concurrently with any cure period available to Mortgage Borrower under the Senior Loan Documents for such non-monetary default).
Notwithstanding the foregoing, the Standstill Period shall not apply, and Administrative Agent shall be free to exercise any and all enforcement remedies available under the Senior Loan Documents immediately upon the occurrence of any of the following:
(i) the Property is subject to imminent foreclosure, tax sale, or other enforcement action by any lienholder, taxing authority, or other Person whose lien or claim is prior to, or pari passu with, the lien of the Mortgage;
(ii) Mortgage Borrower or any direct or indirect owner of Mortgage Borrower files a voluntary petition under the Bankruptcy Code or any applicable state insolvency law, or an involuntary petition under the Bankruptcy Code is filed against Mortgage Borrower and is not dismissed within sixty (60) days of filing;
(iii) waste, destruction, or material deterioration of the Property is occurring and is not being remedied by Mortgage Borrower or Mezzanine Lender; or
(iv) the Ground Lease is subject to termination or expiration within thirty (30) days by reason of a default by the tenant thereunder, and such default has not been cured and is not being diligently pursued to cure.
As a condition to the effectiveness of the Standstill Period, Mezzanine Lender must, during the pendency of such Standstill Period, continue to cause payment to Administrative Agent of (A) all current interest payable on the Senior Loan as and when due, and (B) all required reserve deposits and escrow payments under the Senior Loan Documents as and when due. If Mezzanine Lender fails to make any such payment when due during the Standstill Period, the Standstill Period shall immediately terminate, and Administrative Agent shall be free to exercise any and all enforcement remedies under the Senior Loan Documents.
Section 5.3 Acceptance of Cure. Administrative Agent shall accept any performance or payment by Mezzanine Lender in cure of a Senior Default as if such performance or payment had been tendered by Mortgage Borrower, and any such cure shall be effective for all purposes under the Senior Loan Documents. Administrative Agent shall not reject any proper and timely cure tendered by Mezzanine Lender. Notwithstanding the foregoing, any cure of a Senior Default by Mezzanine Lender shall not be construed as:
(a) an assumption by Mezzanine Lender of the Senior Loan or any obligation under the Senior Loan Documents (except as may be expressly agreed to in writing by Mezzanine Lender);
(b) a waiver by Mezzanine Lender of any Mezzanine Default or any right or remedy of Mezzanine Lender under the Mezzanine Loan Documents; or
(c) a subordination of any right, claim, or interest of Mezzanine Lender under the Mezzanine Loan Documents or this Agreement.
All amounts paid by Mezzanine Lender to Administrative Agent in cure of a Senior Default shall be deemed advances by Mezzanine Lender to Mezzanine Borrower under the Mezzanine Loan Documents.
Section 5.4 No Duty to Cure. Nothing in this Agreement shall be construed to require Mezzanine Lender to cure any Senior Default or to make any payment or perform any obligation under the Senior Loan Documents. The exercise or non-exercise by Mezzanine Lender of the cure rights set forth in this Article 5 shall be in the sole and absolute discretion of Mezzanine Lender. Mezzanine Lender's decision not to cure any particular Senior Default shall not affect or impair any of its other rights under this Agreement, including the Purchase Option set forth in Article 6, the Foreclosure Event rights set forth in Article 7, or any other right or remedy available to Mezzanine Lender under the Mezzanine Loan Documents or applicable law.
ARTICLE 6
PURCHASE OPTION
Section 6.1 Grant of Option. Administrative Agent, on behalf of itself and the Senior Lenders, hereby grants to Mezzanine Lender an irrevocable option (the "Purchase Option") to acquire the Senior Loan and all of Administrative Agent's and each Senior Lender's right, title, and interest in and to the Senior Loan Documents (including the Mortgage, the Senior Note, and all liens, security interests, and other encumbrances securing the Senior Loan), exercisable upon the occurrence and during the continuance of a Senior Default and subject to the terms, conditions, and limitations set forth in this Article 6. The Purchase Option is personal to Mezzanine Lender and may not be assigned except to a Qualified Transferee designated by Mezzanine Lender in accordance with Section 6.3(d).
Section 6.2 Purchase Price. The purchase price for the Senior Loan (the "Purchase Price") shall equal the sum, without duplication, of:
(a) the entire outstanding principal balance of the Senior Loan as of the date of closing of the Purchase Option;
(b) all accrued and unpaid interest on the Senior Loan through and including the date of closing (including default interest, if applicable, at the default rate set forth in the Senior Loan Agreement);
(c) all fees, costs, expenses, and other amounts then due and payable under the Senior Loan Documents, including (i) the exit fee of twenty-five hundredths of one percent (0.25%) of the outstanding principal balance of the Senior Loan, (ii) any prepayment premium or yield maintenance payment, if applicable, (iii) late charges, and (iv) all unreimbursed fees and expenses of Administrative Agent's counsel;
(d) any and all advances, protective disbursements, or other amounts paid by Administrative Agent or any Senior Lender on behalf of Mortgage Borrower under the Senior Loan Documents (including real estate tax advances, insurance premium advances, and amounts advanced for the protection of the Property); and
(e) any breakage costs or SOFR breakage amounts due under the Senior Loan Agreement.
The Purchase Price shall be paid without any discount, reduction, set-off, deduction, or counterclaim. For reference purposes, the estimated Purchase Price as of the Closing Date (assuming no default interest or extraordinary costs have accrued) is approximately equal to the par outstanding principal balance of the Senior Loan ($475,000,000.00), plus accrued and unpaid interest and other amounts. Administrative Agent shall deliver a written payoff statement to Mezzanine Lender within five (5) Business Days of receipt of Mezzanine Lender's written request therefor, setting forth in reasonable detail the components of the Purchase Price as of a specified closing date.
Section 6.3 Exercise Procedure. The Purchase Option shall be exercised as follows:
(a) Exercise Notice. Mezzanine Lender must deliver an irrevocable written notice of exercise (substantially in the form attached hereto as Exhibit D) to Administrative Agent (with a copy to Mortgage Borrower) within thirty (30) days after Mezzanine Lender's actual receipt of written notice from Administrative Agent (or from any other source) of the applicable Senior Default; provided, that if the Senior Default is first discovered by Mezzanine Lender independently, Mezzanine Lender must deliver the exercise notice within thirty (30) days after Mezzanine Lender's delivery of notice of such Senior Default to Administrative Agent. Time is of the essence with respect to the delivery of the exercise notice.
(b) Closing. The closing of the purchase of the Senior Loan (the "Purchase Closing") shall occur within thirty (30) days following the date of delivery of the exercise notice by Mezzanine Lender (or such later date as may be mutually agreed by Administrative Agent and Mezzanine Lender in writing, or as may be required to obtain any necessary regulatory, governmental, or third-party approvals, but in no event later than sixty (60) days following the date of delivery of the exercise notice).
(c) Extension of Standstill. During the pendency of the Purchase Option exercise (i.e., from the date of delivery of the exercise notice through and including the Purchase Closing date), the Standstill Period applicable to the relevant Senior Default shall be deemed automatically extended through the Purchase Closing date, provided that Mezzanine Lender continues to comply with the payment conditions set forth in Section 5.2 during such extended period.
(d) Designation of Qualified Transferee. Mezzanine Lender may, by written notice to Administrative Agent delivered not later than ten (10) Business Days prior to the scheduled Purchase Closing date, designate a Qualified Transferee to acquire the Senior Loan in lieu of Mezzanine Lender. Any such designation shall not relieve Mezzanine Lender of its obligation to consummate the purchase of the Senior Loan in the event the designated Qualified Transferee fails to close.
Section 6.4 Closing Mechanics. At the Purchase Closing:
(a) Administrative Agent shall execute and deliver to Mezzanine Lender (or its designated Qualified Transferee) an assignment of the Senior Loan and the Senior Loan Documents (including an assignment of mortgage in recordable form, an allonge to the Senior Note, and a UCC-3 assignment statement with respect to any UCC-1 financing statements filed in connection with the Senior Loan), in each case without recourse, representation, or warranty of any kind, except that Administrative Agent shall represent and warrant that (i) Administrative Agent (on behalf of the Senior Lenders) is the legal and beneficial holder of the Senior Loan and the Senior Loan Documents, (ii) Administrative Agent has not previously assigned, transferred, pledged, or encumbered its interest in the Senior Loan or any Senior Loan Document (other than participations or syndications disclosed to Mezzanine Lender), and (iii) Administrative Agent has the authority to execute and deliver such assignment;
(b) Mezzanine Lender (or its designated Qualified Transferee) shall pay the Purchase Price to Administrative Agent (for the account of the Senior Lenders) in immediately available funds by wire transfer to an account designated by Administrative Agent;
(c) each party shall execute and deliver such customary closing deliverables as are reasonably required to effectuate the assignment, including (i) an allonge to the Senior Note, (ii) an assignment of mortgage in form suitable for recording with the Office of the City Register of the City of New York, (iii) UCC-3 amendment and assignment statements, (iv) estoppel certificates from Mortgage Borrower and any tenant under a material lease at the Property (to the extent reasonably obtainable), (v) an updated title endorsement or date-down endorsement to the lender's title insurance policy, and (vi) such other instruments, certificates, and documents as Administrative Agent or Mezzanine Lender may reasonably request; and
(d) Mortgage Borrower shall reasonably cooperate with the Purchase Closing and shall deliver any required consents, confirmations, acknowledgments, or estoppels as reasonably requested by Administrative Agent or Mezzanine Lender.
All costs and expenses of the Purchase Closing (including recording fees, title endorsement premiums, transfer taxes, and the reasonable fees and disbursements of Administrative Agent's counsel) shall be borne by Mezzanine Lender (or the designated Qualified Transferee).
Section 6.5 Termination of Purchase Option. The Purchase Option shall terminate and be of no further force or effect upon the earliest to occur of:
(a) the failure of Mezzanine Lender to timely deliver an exercise notice within the period required by Section 6.3(a) with respect to a particular Senior Default;
(b) the failure of Mezzanine Lender (or its designated Qualified Transferee) to consummate the Purchase Closing within the period required by Section 6.3(b);
(c) the indefeasible payment in full and satisfaction of all obligations under the Senior Loan Documents; or
(d) the indefeasible payment in full and satisfaction of all obligations under the Mezzanine Loan Documents and the release of the Pledged Interests from the lien of the Pledge Agreement;
provided, however, that if the Purchase Option terminates under clause (a) or clause (b) above with respect to a particular Senior Default, the Purchase Option shall automatically revive and be available for exercise by Mezzanine Lender upon the occurrence of any subsequent Senior Default (which may include a continuation of the same default if it is subsequently cured and reoccurs, or a new and distinct Senior Default).
ARTICLE 7
FORECLOSURE EVENT REQUIREMENTS
Section 7.1 Qualified Transferee. Upon any Foreclosure Event, the transferee of the Pledged Interests (whether Mezzanine Lender itself, an affiliate of Mezzanine Lender, or any third-party purchaser at a UCC foreclosure sale) must be a "Qualified Transferee," which is defined as a Person that satisfies each of the following criteria at the time of the Foreclosure Event:
(a) such Person is not a Sanctioned Person, is not listed on any sanctions list or blocked-persons list maintained by OFAC or any other applicable governmental authority, and is not located in, organized under the laws of, or a resident of any jurisdiction that is the subject of comprehensive territorial sanctions;
(b) neither such Person nor any principal, officer, director, or controlling person of such Person has been convicted of a felony or is currently under indictment for a felony or any crime involving fraud, dishonesty, or moral turpitude;
(c) such Person possesses a net worth (determined in accordance with GAAP, based on the most recently available audited financial statements) of not less than Five Hundred Million and 00/100 Dollars ($500,000,000.00), exclusive of the value of the Pledged Interests;
(d) such Person has, directly or through its affiliates, controlled subsidiaries, or retained advisors, demonstrated experience in the ownership, management, development, or operation of commercial real estate projects of comparable size and complexity to the Property, as evidenced by the successful completion, ownership, or management of not fewer than three (3) commercial real estate projects each valued at not less than Two Hundred Fifty Million and 00/100 Dollars ($250,000,000.00) within the ten (10) year period immediately preceding the proposed Foreclosure Event;
(e) such Person is not a direct competitor of Administrative Agent in the commercial lending business (as reasonably determined by Administrative Agent); and
(f) such Person is approved by Administrative Agent, which approval shall not be unreasonably withheld, conditioned, or delayed; provided, however, that Administrative Agent's approval shall be deemed given if Administrative Agent fails to respond in writing to Mezzanine Lender's request for approval within fifteen (15) Business Days of Administrative Agent's receipt of a complete information package from Mezzanine Lender containing the information required under Section 7.4 and Exhibit C.
For the avoidance of doubt, Mezzanine Lender itself shall be deemed a Qualified Transferee so long as it satisfies each of the criteria set forth in clauses (a) through (e) above, without the need for further approval by Administrative Agent under clause (f).
Section 7.2 Replacement Guarantor. As a condition precedent to the consummation of any Foreclosure Event, Mezzanine Lender shall cause the Qualified Transferee (or an affiliate of the Qualified Transferee that meets the guarantor criteria set forth in the Senior Loan Agreement) to deliver to Administrative Agent a replacement guaranty of recourse obligations and a replacement environmental indemnity agreement, each in form and substance substantially identical to the Guaranty of Recourse Obligations and Environmental Indemnity Agreement delivered by MTDC at the closing of the Senior Loan; provided, however, that the delivery of a replacement guaranty and replacement environmental indemnity shall not be required if the Qualified Transferee's creditworthiness is substantially equivalent to or greater than the creditworthiness of MTDC as of the Closing Date, as determined by Administrative Agent in its reasonable discretion. In making such determination, Administrative Agent may consider, among other factors, MTDC's A– credit rating from Pinnacle Ratings Group, MTDC's audited net assets of approximately Three Billion Seven Hundred Million and 00/100 Dollars ($3,700,000,000.00) as reflected in MTDC's most recent annual financial statements, and the nature and extent of the Qualified Transferee's recourse obligations under the Senior Loan Documents. If a replacement guaranty is required, the replacement guarantor shall be subject to all of the obligations and requirements applicable to a guarantor under the Senior Loan Documents, including any non-recourse carve-out guaranty obligations, completion guaranty obligations (to the extent the Completion Guaranty is still in effect), and environmental indemnity obligations.
Section 7.3 Assumption and Acknowledgment. Upon consummation of a Foreclosure Event, the Qualified Transferee shall:
(a) assume all obligations of Mezzanine Borrower under the limited liability company agreement and other organizational documents of Mortgage Borrower, and shall be bound by all terms, conditions, covenants, and restrictions contained therein, including all SPE covenants and separateness provisions;
(b) execute and deliver to Administrative Agent a written consent and acknowledgment (in form and substance reasonably satisfactory to Administrative Agent) confirming (i) the Qualified Transferee's continued compliance with the SPE covenants and separateness requirements set forth in the Senior Loan Documents and the organizational documents of Mortgage Borrower, (ii) that no modification to the Senior Loan Documents has been made or is required as a result of the Foreclosure Event, and (iii) the appointment or continuation of an Approved Manager for the management and operation of the Property; and
(c) pay all costs and expenses of Administrative Agent incurred in connection with the review, approval, and consummation of the Foreclosure Event, including the reasonable attorneys' fees and disbursements of Clearfield & Associates LLP, title endorsement premiums, and UCC search and filing fees. Such costs shall be paid at or prior to the consummation of the Foreclosure Event.
Section 7.4 Pre-Foreclosure Notice. Mezzanine Lender shall deliver to Administrative Agent not less than thirty (30) days' prior written notice of any anticipated Foreclosure Event. Such notice shall be accompanied by the following:
(a) the identity and background of the proposed Qualified Transferee (including a completed Qualified Transferee Certificate in the form attached hereto as Exhibit C);