CASH MANAGEMENT AGREEMENT (Mezzanine)
Dated as of June 15, 2025
Among
HUDSON YARDS WEST MEZZANINE LLC a Delaware limited liability company as Mezzanine Borrower
GRANITE PEAK CAPITAL PARTNERS, LP a Delaware limited partnership as Mezzanine Lender
IRONCLAD NATIONAL BANK, N.A. a national banking association as Depository Bank
Relating to: Mezzanine Loan in the original principal amount of $200,000,000
Secured by the pledge of 100% of the membership interests in Hudson Yards West Mortgage LLC
Property: 450 West 34th Street, New York, New York 10001
CASH MANAGEMENT AGREEMENT (Mezzanine)
This CASH MANAGEMENT AGREEMENT (MEZZANINE) (this "Agreement") is entered into as of June 15, 2025, by and among HUDSON YARDS WEST MEZZANINE LLC, a limited liability company organized and existing under the laws of the State of Delaware ("Mezzanine Borrower"), GRANITE PEAK CAPITAL PARTNERS, LP, a limited partnership organized and existing under the laws of the State of Delaware ("Mezzanine Lender"), and IRONCLAD NATIONAL BANK, N.A., a national banking association chartered under the laws of the United States with its principal office located at 277 Park Avenue, New York, New York 10172 ("Depository Bank").
RECITALS
A. Mezzanine Lender has made a mezzanine loan (the "Mezzanine Loan") to Mezzanine Borrower in the original principal amount of Two Hundred Million and 00/100 Dollars ($200,000,000), pursuant to that certain Mezzanine Loan Agreement dated as of June 15, 2025 (as amended, restated, supplemented, or otherwise modified from time to time, the "Mezzanine Loan Agreement"), between Mezzanine Borrower and Mezzanine Lender.
B. The Mezzanine Loan is secured by a pledge of one hundred percent (100%) of the membership interests in Hudson Yards West Mortgage LLC ("Mortgage Borrower"), a limited liability company organized and existing under the laws of the State of Delaware and the fee simple owner of that certain real property and improvements located at 450 West 34th Street, New York, New York 10001 (Block 729, Lots 1, 5, 12, 15), together with all appurtenances, easements, fixtures, and other property rights related thereto (the "Property").
C. Mortgage Borrower has obtained a senior mortgage loan (the "Senior Loan") in the original principal amount of Four Hundred Seventy-Five Million and 00/100 Dollars ($475,000,000) from a syndicate of lenders for which Ironclad National Bank, N.A. acts as administrative agent (in such capacity, "Senior Agent"), pursuant to that certain Senior Loan Agreement dated as of June 15, 2025 (as amended, restated, supplemented, or otherwise modified from time to time, the "Senior Loan Agreement"), among Mortgage Borrower, Senior Agent, and the lenders party thereto from time to time.
D. Cash management with respect to the Senior Loan is governed by that certain Cash Management Agreement (Senior) dated as of June 15, 2025 (as amended, restated, supplemented, or otherwise modified from time to time, the "Senior Cash Management Agreement"), among Mortgage Borrower, Senior Agent, and Depository Bank.
E. The respective rights and obligations of Mezzanine Lender and Senior Agent with respect to the Senior Loan and the Mezzanine Loan, including the relative priority of their respective liens, payment rights, and remedies, are governed by that certain Intercreditor Agreement dated as of June 15, 2025 (as amended, restated, supplemented, or otherwise modified from time to time, the "Intercreditor Agreement"), between Senior Agent and Mezzanine Lender.
F. The Mezzanine Loan Agreement requires Mezzanine Borrower to enter into this Agreement in order to establish cash management procedures governing the receipt, holding, and application of Mezzanine Excess Cash Flow (as defined herein) and certain other amounts, consistent with and subject to the terms and conditions of the Intercreditor Agreement and the Senior Cash Management Agreement.
G. Depository Bank has agreed to establish and maintain the Mezzanine Accounts (as defined herein) and to comply with the terms and conditions of this Agreement, in its capacity as depository bank hereunder.
Capitalized terms used but not otherwise defined herein shall have the respective meanings ascribed to such terms in the Mezzanine Loan Agreement, unless the context otherwise requires.
NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
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ARTICLE 1 — DEFINITIONS
Section 1.1 — Defined Terms
As used in this Agreement, the following terms shall have the meanings set forth below:
"Approved Annual Budget" means the operating and capital budget for the Property approved (or deemed approved) by Mezzanine Lender pursuant to Section 7.4 of the Mezzanine Loan Agreement for each calendar year during the term of the Mezzanine Loan, as such budget may be modified from time to time with the prior written consent of Mezzanine Lender.
"Business Day" means any day other than a Saturday, a Sunday, or a day on which Depository Bank is authorized or required by law, regulation, or executive order to close its offices in the City of New York, State of New York.
"Cash Management Period" means a period commencing upon the occurrence of a Mezzanine Cash Management Trigger Event and continuing until the occurrence of a Mezzanine Cash Management Trigger Cure in accordance with Section 5.3.
"Cash Sweep Period" means a period commencing upon the occurrence of a Mezzanine Cash Sweep Trigger Event and continuing until the occurrence of a Mezzanine Cash Sweep Trigger Cure in accordance with Section 5.5.
"Closing Date" means June 15, 2025, the date on which this Agreement becomes effective.
"Collateral" means all of Mezzanine Borrower's right, title, and interest in and to the Mezzanine Accounts and all funds, financial assets, investment property, instruments, and proceeds on deposit therein or credited thereto from time to time, together with all Permitted Investments made with funds from the Mezzanine Accounts and all proceeds of any of the foregoing.
"Combined DSCR" means the ratio, as defined in the Intercreditor Agreement, of the trailing twelve-month net operating income generated by the Property to the sum of the aggregate debt service on the Senior Loan and the aggregate Mezzanine Debt Service for such period, as calculated on a trailing twelve-month basis in accordance with the methodology set forth in the Intercreditor Agreement. The minimum maintenance covenant for Combined DSCR is 1.20x.
"Combined Debt Yield" means the ratio, as defined in the Intercreditor Agreement, of trailing twelve-month net operating income generated by the Property to the aggregate outstanding principal balance of the Senior Loan and the Mezzanine Loan. The minimum maintenance covenant for Combined Debt Yield is 8.0%.
"Combined LTV" means the ratio, as defined in the Intercreditor Agreement, of the aggregate outstanding principal balance of the Senior Loan and the Mezzanine Loan to the appraised value of the Property as determined by the most recent appraisal accepted by Senior Agent and Mezzanine Lender. The maximum covenant for Combined LTV is 70.0%.
"Construction Period" means the period from the Closing Date through the date of Substantial Completion (as defined in the Mezzanine Loan Agreement), which Substantial Completion is projected to occur on or about December 15, 2027.
"Depository Bank" means Ironclad National Bank, N.A., in its capacity as depository bank under this Agreement, and any successor depository bank appointed in accordance with Section 2.5.
"Distribution Conditions" means the conditions to distribution of funds from the Mezzanine Excess Cash Flow Account as set forth in Section 6.2.
"Eligible Account" means a segregated account maintained at Depository Bank that is either (a) an account that meets all requirements of the Mezzanine Loan Agreement and the Uniform Commercial Code as in effect in the State of New York, including the requirements for "control" within the meaning of Section 9-104 of the UCC, or (b) an account otherwise acceptable to Mezzanine Lender in its sole discretion.
"Event of Default" has the meaning ascribed to such term in Article 11 of the Mezzanine Loan Agreement.
"Intercreditor Agreement" means that certain Intercreditor Agreement dated as of the date hereof, between Senior Agent and Mezzanine Lender, as may be amended, restated, supplemented, or otherwise modified from time to time in accordance with its terms.
"Leasing Threshold" means the achievement and maintenance of an economic occupancy level of not less than eighty-five percent (85%) of the rentable square footage of the Property, as determined by Mezzanine Lender based on executed and delivered leases for which tenants have commenced paying full, unabated rent.
"Mezzanine Accounts" means, collectively, the Mezzanine Operating Account, the Mezzanine Debt Service Reserve Account, the Mezzanine Pledge Account, and the Mezzanine Excess Cash Flow Account, each as described in Section 3.1, and any additional reserve accounts established pursuant to Article 4.
"Mezzanine Borrower" means Hudson Yards West Mezzanine LLC, a Delaware limited liability company, and its successors and permitted assigns.
"Mezzanine Cash Management Trigger Cure" means the satisfaction of the conditions specified in Section 5.3 for the termination of a Cash Management Period.
"Mezzanine Cash Management Trigger Event" means the occurrence of any of the events specified in Section 5.2 giving rise to the commencement of a Cash Management Period.
"Mezzanine Cash Sweep Trigger Cure" means the satisfaction of the conditions specified in Section 5.5 for the termination of a Cash Sweep Period.
"Mezzanine Cash Sweep Trigger Event" means the occurrence of any of the events specified in Section 5.4 giving rise to the commencement of a Cash Sweep Period.
"Mezzanine Debt Service" means all amounts of interest (at the fixed rate of eleven and 50/100 percent (11.50%) per annum), principal (whether scheduled, accelerated, or otherwise), and fees payable by Mezzanine Borrower under the Mezzanine Loan Agreement and the other Mezzanine Loan Documents.
"Mezzanine Debt Service Reserve Account" means the reserve account described in Section 3.1(b).
"Mezzanine Excess Cash Flow" means amounts distributed (whether by dividend, distribution, loan repayment, or otherwise) by Mortgage Borrower to Mezzanine Borrower after satisfaction of all obligations under the senior cash management waterfall as set forth in the Senior Cash Management Agreement, net of any amounts trapped, escrowed, reserved, or otherwise retained by Senior Agent or in the accounts maintained under the Senior Cash Management Agreement.
"Mezzanine Excess Cash Flow Account" means the account described in Section 3.1(d).
"Mezzanine Lender" means Granite Peak Capital Partners, LP, a Delaware limited partnership, and its successors and assigns under the Mezzanine Loan Documents.
"Mezzanine Loan Agreement" means the Mezzanine Loan Agreement dated as of the date hereof, between Mezzanine Borrower and Mezzanine Lender, as may be amended, restated, supplemented, or otherwise modified from time to time.
"Mezzanine Loan Documents" means, collectively, the Mezzanine Loan Agreement, the Mezzanine Promissory Note, the Mezzanine Pledge Agreement, this Agreement, the Account Control Agreements, and all other documents, instruments, and agreements executed and delivered by Mezzanine Borrower in connection with the Mezzanine Loan, as such documents may be amended, restated, supplemented, or otherwise modified from time to time.
"Mezzanine Obligations" means all obligations, liabilities, and indebtedness of Mezzanine Borrower under the Mezzanine Loan Documents, including principal, interest, fees, late charges, default interest, indemnification obligations, and reimbursable expenses.
"Mezzanine Operating Account" means the operating account described in Section 3.1(a).
"Mezzanine Pledge Account" means the pledge and collateral account described in Section 3.1(c).
"Mezzanine Reserve Accounts" means, collectively, the Mezzanine Debt Service Reserve Account and any other reserve accounts established pursuant to Article 4.
"Monthly Payment Date" means the first (1st) Business Day of each calendar month, or such other date as may be specified in the Mezzanine Loan Agreement for the payment of Mezzanine Debt Service.
"Mortgage Borrower" means Hudson Yards West Mortgage LLC, a Delaware limited liability company and the fee simple owner of the Property.
"MTDC" means Metropolitan Transit Development Corp., the sole member of Mezzanine Borrower and the ultimate equity holder of the Property ownership structure.
"Permitted Investments" means the investments described in Section 7.1 in which funds held in the Mezzanine Accounts may be invested.
"Property" means the real property, improvements, and appurtenances located at 450 West 34th Street, New York, New York 10001 (Block 729, Lots 1, 5, 12, 15), together with all fixtures, equipment, and other property rights related thereto.
"Required Mezzanine Debt Service Reserve Amount" means an amount equal to three (3) months' interest on the outstanding principal balance of the Mezzanine Loan, calculated at the rate of 11.50% per annum.
"Senior Agent" means Ironclad National Bank, N.A., in its capacity as administrative agent under the Senior Loan Agreement, and any successor administrative agent thereunder.
"Senior Cash Management Agreement" means that certain Cash Management Agreement (Senior) dated as of the date hereof, among Mortgage Borrower, Senior Agent, and Depository Bank, as may be amended, restated, supplemented, or otherwise modified from time to time.
"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) made to Mortgage Borrower by the lenders under the Senior Loan Agreement.
"Senior Loan Agreement" means the Senior Loan Agreement dated as of the date hereof, among Mortgage Borrower, Senior Agent, and the lenders party thereto, as may be amended, restated, supplemented, or otherwise modified from time to time.
"Senior Loan Documents" means the Senior Loan Agreement and all other documents, instruments, and agreements executed and delivered in connection with the Senior Loan, as such documents may be amended, restated, supplemented, or otherwise modified from time to time.
"Subordination" means the subordination of Mezzanine Lender's cash management rights hereunder to the cash management rights of Senior Agent as provided in and to the extent set forth in the Intercreditor Agreement.
"Substantial Completion" has the meaning ascribed to such term in the Mezzanine Loan Agreement; Substantial Completion is projected to occur on or about December 15, 2027.
"UCC" means the Uniform Commercial Code as in effect from time to time in the State of New York.
"Waterfall" means the priority of payments described in Section 6.1.
Section 1.2 — Rules of Construction
For purposes of this Agreement, unless the context otherwise requires:
(a) Words importing the singular number shall include the plural, and vice versa, and words importing any gender shall include all genders.
(b) The words "hereof," "herein," "hereto," and "hereunder" and words of similar import shall refer to this Agreement as a whole and not to any particular provision of this Agreement.
(c) Article, Section, Exhibit, and Schedule references are to the Articles, Sections, Exhibits, and Schedules of this Agreement unless otherwise specified.
(d) References to any agreement or instrument (including this Agreement) shall be deemed to include references to such agreement or instrument as amended, restated, supplemented, replaced, or otherwise modified from time to time in accordance with its terms.
(e) The words "include," "includes," and "including" shall be deemed to be followed by the phrase "without limitation" whether or not so stated.
(f) The headings and captions contained in this Agreement are for convenience of reference only and shall not affect the interpretation or construction of this Agreement.
(g) References to "days" shall mean calendar days unless "Business Days" is expressly specified.
(h) Whenever any payment or performance hereunder shall be stated to be due or required on a day that is not a Business Day, such payment or performance shall be made on the next succeeding Business Day, and such extension of time shall be included in the computation of interest or fees, as the case may be.
(i) Unless otherwise specified, all dollar amounts are expressed in the lawful currency of the United States of America.
(j) The terms "approval," "consent," and "satisfaction" of Mezzanine Lender shall mean the prior written approval, consent, or satisfaction of Mezzanine Lender, and whenever Mezzanine Lender is permitted to exercise discretion, such discretion shall be exercised in its sole and absolute discretion unless expressly stated to be "reasonable."
ARTICLE 2 — APPOINTMENT AND AUTHORITY OF DEPOSITORY BANK
Section 2.1 — Appointment
Mezzanine Borrower and Mezzanine Lender hereby jointly appoint Depository Bank to establish and maintain the Mezzanine Accounts in accordance with the terms and conditions of this Agreement and to hold, invest, and disburse funds deposited in the Mezzanine Accounts in the manner set forth herein. Depository Bank hereby accepts such appointment and agrees to perform its obligations hereunder, subject to the terms, conditions, and limitations set forth in this Agreement. The appointment of Depository Bank hereunder shall be effective as of the Closing Date and shall continue until the termination of this Agreement in accordance with Article 13 or the resignation or removal of Depository Bank in accordance with Section 2.5, whichever first occurs.
Section 2.2 — Depository Bank's Duties
The duties and obligations of Depository Bank under this Agreement shall be limited to the ministerial functions expressly set forth herein, and Depository Bank shall have no implied duties, obligations, or responsibilities hereunder. Without limiting the generality of the foregoing:
(a) Depository Bank shall act solely upon and in accordance with written instructions received from Mezzanine Lender (or, during periods when Mezzanine Borrower is authorized to direct the disposition of funds, from Mezzanine Borrower) in connection with the operation of the Mezzanine Accounts.
(b) Depository Bank shall have no duty or obligation to investigate or verify the sufficiency of any funds deposited into any Mezzanine Account or the authority of any person directing the disposition of such funds, provided that such instructions are delivered in the form and manner contemplated by this Agreement.
(c) Depository Bank shall have no duty or obligation to interpret, construe, or enforce the terms and conditions of the Mezzanine Loan Agreement, the Intercreditor Agreement, the Senior Loan Documents, or any other document or agreement other than this Agreement and the Account Control Agreements.
(d) Depository Bank shall not be required to expend or risk its own funds or otherwise incur any financial liability in the performance of its duties hereunder.
(e) Depository Bank may consult with legal counsel of its own selection, and any action taken or omitted by Depository Bank in good faith in accordance with the advice of such counsel shall not constitute gross negligence or willful misconduct on the part of Depository Bank.
Section 2.3 — Standard of Care
Depository Bank shall exercise the standard of ordinary care customarily observed by commercial depository institutions in the City of New York, State of New York, in the performance of its duties and obligations hereunder. Depository Bank shall not be liable for any loss, liability, claim, damage, cost, or expense arising from or in connection with the performance of its duties hereunder, except to the extent that such loss, liability, claim, damage, cost, or expense results directly from the gross negligence or willful misconduct of Depository Bank. Depository Bank shall be entitled to rely, and shall be fully protected in relying, upon any written notice, instruction, direction, certificate, document, or other communication believed by it in good faith to be genuine and to have been signed, sent, or presented by the proper person or persons authorized to give such notice, instruction, direction, certificate, document, or communication. In no event shall Depository Bank be liable for consequential, indirect, special, or punitive damages of any kind, regardless of the form of action.
Section 2.4 — Compensation and Indemnification
(a) Fees. Mezzanine Borrower shall pay to Depository Bank the customary account maintenance fees, transaction fees, and other charges assessed by Depository Bank in connection with the establishment, maintenance, and operation of the Mezzanine Accounts, as set forth in Depository Bank's standard fee schedule provided to Mezzanine Borrower and Mezzanine Lender from time to time. Depository Bank shall provide Mezzanine Borrower and Mezzanine Lender with at least thirty (30) days' prior written notice of any material change to its fee schedule.
(b) Indemnification. Mezzanine Borrower shall indemnify, defend, and hold harmless Depository Bank, and its directors, officers, employees, agents, and affiliates (each, a "Depository Indemnified Party"), from and against any and all losses, claims, liabilities, damages, judgments, costs, and expenses (including reasonable attorneys' fees and disbursements) incurred by any Depository Indemnified Party arising out of, in connection with, or as a result of the performance by Depository Bank of its duties and obligations under this Agreement or the Account Control Agreements, except to the extent that such losses, claims, liabilities, damages, judgments, costs, or expenses result directly from the gross negligence or willful misconduct of such Depository Indemnified Party. This indemnification shall be in addition to, and not in limitation of, any other indemnification or right of contribution available to any Depository Indemnified Party under any other agreement or at law or in equity.
(c) Survival. The obligations of Mezzanine Borrower under this Section 2.4 shall survive the resignation or removal of Depository Bank, the termination of this Agreement, and the repayment of the Mezzanine Loan.
Section 2.5 — Resignation and Removal
(a) Resignation. Depository Bank may resign from its duties and obligations under this Agreement by providing not less than thirty (30) days' prior written notice of such resignation to Mezzanine Borrower and Mezzanine Lender. Such resignation shall become effective upon the appointment of a successor depository bank and the transfer of all funds held in the Mezzanine Accounts to accounts maintained by such successor, or upon the expiration of sixty (60) days following the delivery of such notice, whichever first occurs.
(b) Removal. Mezzanine Lender may remove Depository Bank at any time by providing not less than thirty (30) days' prior written notice to Depository Bank and Mezzanine Borrower. Such removal shall become effective upon the appointment of a successor depository bank and the transfer of all funds held in the Mezzanine Accounts to accounts maintained by such successor, or upon the expiration of sixty (60) days following the delivery of such notice, whichever first occurs.
(c) Successor Appointment. Any successor depository bank shall be a nationally recognized financial institution with combined capital and surplus of not less than One Billion Dollars ($1,000,000,000) and shall be acceptable to Mezzanine Lender in its sole discretion. Mezzanine Borrower shall cooperate with Mezzanine Lender and the successor depository bank in executing all documents and instruments necessary to establish and maintain the Mezzanine Accounts at such successor, including new account control agreements in form and substance satisfactory to Mezzanine Lender.
(d) Interim Arrangements. If no successor depository bank has been appointed within sixty (60) days following the effective date of Depository Bank's resignation or removal, Depository Bank shall transfer all funds held in the Mezzanine Accounts to the Clerk of the United States District Court for the Southern District of New York (or such other court of competent jurisdiction) or to an escrow account at a financial institution designated by Mezzanine Lender, to be held pending the appointment of a successor depository bank. Upon such transfer, Depository Bank shall be discharged from all further duties and obligations under this Agreement.
Section 2.6 — Relationship to Depository Bank's Other Capacities
The parties hereto acknowledge and agree that Ironclad National Bank, N.A. serves simultaneously in the following capacities: (i) as Senior Agent under the Senior Loan Agreement, (ii) as depository bank under the Senior Cash Management Agreement, and (iii) as Depository Bank under this Agreement. No conflict of interest or breach of any duty shall be deemed to arise from such multiple roles, and Ironclad National Bank, N.A. shall be entitled to act in each such capacity independently and without regard to its obligations in any other capacity, except to the extent expressly provided herein or in the Intercreditor Agreement. In the event that Depository Bank receives inconsistent or conflicting instructions in its capacity as Depository Bank hereunder and in its capacity as depository bank under the Senior Cash Management Agreement or as Senior Agent, the Intercreditor Agreement shall control the priority and manner in which such instructions are to be followed, and Depository Bank shall be fully protected in complying with such instructions in accordance with the Intercreditor Agreement.
ARTICLE 3 — ESTABLISHMENT OF ACCOUNTS
Section 3.1 — Mezzanine Accounts
On or prior to the Closing Date, Mezzanine Borrower shall establish and maintain the following Eligible Accounts at Depository Bank (collectively, the "Mezzanine Accounts"), each of which shall be held in the name of Mezzanine Borrower or as otherwise specified below:
(a) Mezzanine Operating Account. An account entitled "Hudson Yards West Mezzanine LLC — Mezzanine Operating Account" (the "Mezzanine Operating Account"), which shall serve as the primary account for the receipt of all Mezzanine Excess Cash Flow distributed from the Mortgage Borrower level. Deposits into the Mezzanine Operating Account shall be made by wire transfer from the Senior Excess Cash Flow Account (or equivalent account) maintained under the Senior Cash Management Agreement or by direct transfer from Mortgage Borrower's designated distribution account, in each case in accordance with the Senior Cash Management Agreement and the Intercreditor Agreement. The Mezzanine Operating Account shall serve as the source from which all waterfall disbursements are made pursuant to Section 6.1.
(b) Mezzanine Debt Service Reserve Account. An account entitled "Hudson Yards West Mezzanine LLC — Mezzanine Debt Service Reserve" (the "Mezzanine Debt Service Reserve Account"), which shall serve as a reserve account for accrued and upcoming Mezzanine Debt Service. The monthly funding requirement for the Mezzanine Debt Service Reserve Account shall be equal to one (1) month's interest on the outstanding principal balance of the Mezzanine Loan at the rate of 11.50% per annum. Based on the initial outstanding principal balance of $200,000,000, the monthly funding requirement is initially approximately $1,916,667 per month ($200,000,000 x 11.50% / 12). The Mezzanine Debt Service Reserve Account shall be funded and maintained in accordance with Section 4.1.
(c) Mezzanine Pledge Account. An account entitled "Hudson Yards West Mezzanine LLC — Mezzanine Pledge Account, Granite Peak Capital Partners, LP, as Secured Party" (the "Mezzanine Pledge Account"), which shall serve as a collateral account in which Mezzanine Lender holds a first-priority perfected security interest, subject to the Intercreditor Agreement. During any Cash Sweep Period, the Mezzanine Pledge Account shall receive and hold all excess cash remaining after satisfaction of all prior waterfall obligations. Funds deposited in the Mezzanine Pledge Account shall constitute additional collateral for the Mezzanine Loan and shall not be released except in accordance with the terms of this Agreement.
(d) Mezzanine Excess Cash Flow Account. An account entitled "Hudson Yards West Mezzanine LLC — Mezzanine Excess Cash Flow" (the "Mezzanine Excess Cash Flow Account"), to which residual funds shall be transferred after satisfaction of all waterfall obligations during periods when no Cash Sweep Period is in effect. Subject to the satisfaction of the Distribution Conditions set forth in Section 6.2, funds in the Mezzanine Excess Cash Flow Account shall be available for distribution to MTDC, as the equity holder of Mezzanine Borrower.
Section 3.2 — Account Control
Each Mezzanine Account shall be subject to a separate Account Control Agreement among Mezzanine Borrower, Mezzanine Lender, and Depository Bank, substantially in the form attached hereto as Exhibit A (each, an "Account Control Agreement"), which shall be executed and delivered simultaneously with this Agreement. Each Account Control Agreement shall be in form and substance satisfactory to Mezzanine Lender and shall provide, among other things, that:
(a) Mezzanine Lender shall have "control" of each Mezzanine Account within the meaning of Section 9-104 of the UCC;
(b) During a Cash Management Period, Depository Bank shall comply solely with instructions originated by Mezzanine Lender directing the disposition of funds in each Mezzanine Account, without the further consent of Mezzanine Borrower;
(c) At all times, whether or not a Cash Management Period is in effect, Depository Bank shall comply with any instruction from Mezzanine Lender directing the disposition of funds in the Mezzanine Accounts, notwithstanding any contrary instruction from Mezzanine Borrower;
(d) Depository Bank shall not permit any withdrawal, transfer, or other disposition of funds from any Mezzanine Account other than in accordance with this Agreement and the applicable Account Control Agreement; and
(e) Depository Bank shall subordinate any security interest, lien, or right of set-off it may have in any Mezzanine Account to the security interest of Mezzanine Lender, except with respect to returned items and customary account fees.
Section 3.3 — Subordination to Senior Lien
The parties hereto expressly acknowledge and agree that all Mezzanine Accounts and all amounts on deposit therein or credited thereto from time to time are subordinate to the rights, interests, and claims of Senior Agent under the Senior Cash Management Agreement, the Senior Loan Documents, and the Intercreditor Agreement. Without limiting the generality of the foregoing:
(a) No funds shall be deposited into the Mezzanine Operating Account or any other Mezzanine Account until all senior waterfall obligations under the Senior Cash Management Agreement have been fully satisfied and Senior Agent has authorized the release of Mezzanine Excess Cash Flow for deposit into the Mezzanine Operating Account;
(b) Depository Bank is authorized and directed to comply with any instruction from Senior Agent, to the extent required by the Intercreditor Agreement, directing the remittance, transfer, or application of funds in any Mezzanine Account, notwithstanding any inconsistent instruction from Mezzanine Lender or Mezzanine Borrower; and
(c) In the event of any conflict or inconsistency between the terms of this Agreement and the terms of the Intercreditor Agreement with respect to the disposition of funds in any Mezzanine Account, the terms of the Intercreditor Agreement shall control.
Section 3.4 — No Commingling
Funds in each Mezzanine Account shall at all times be held separately and shall not be commingled with any other funds of Mezzanine Borrower, Mezzanine Lender, Depository Bank, or any affiliate of any of the foregoing. Each Mezzanine Account shall be separately identified on the books and records of Depository Bank and shall constitute a separate and distinct deposit account. No Mezzanine Account shall be subject to deduction, set-off, counterclaim, banker's lien, or any other encumbrance by Depository Bank, except for (i) returned items and chargebacks processed in the ordinary course of banking operations and (ii) Depository Bank's customary account maintenance and transaction fees as contemplated by Section 2.4(a).
ARTICLE 4 — RESERVE ACCOUNTS
Section 4.1 — Mezzanine Debt Service Reserve
(a) Initial Funding. On the Closing Date, Mezzanine Borrower shall deposit into the Mezzanine Debt Service Reserve Account the initial Mezzanine Debt Service reserve deposit in an amount equal to three (3) months' interest on the Mezzanine Loan, calculated at the rate of 11.50% per annum on the initial outstanding principal balance of $200,000,000 (such amount, the "Initial Mezzanine Debt Service Reserve Deposit"). The Initial Mezzanine Debt Service Reserve Deposit is approximately Five Million Seven Hundred Fifty Thousand and 00/100 Dollars ($5,750,000), calculated as follows: 3 x ($200,000,000 x 11.50% / 12) = 3 x $1,916,666.67 = $5,750,000. Such deposit shall be made in immediately available funds by wire transfer to the Mezzanine Debt Service Reserve Account on or before the Closing Date as a condition precedent to the closing of the Mezzanine Loan.
(b) Monthly Replenishment. On each Monthly Payment Date, the waterfall disbursement mechanism described in Section 6.1(e) shall fund the Mezzanine Debt Service Reserve Account in an amount sufficient to maintain a balance in such account equal to the Required Mezzanine Debt Service Reserve Amount (i.e., three (3) months' interest on the then-outstanding principal balance of the Mezzanine Loan at 11.50% per annum). In the event that the balance in the Mezzanine Debt Service Reserve Account is less than the Required Mezzanine Debt Service Reserve Amount on any Monthly Payment Date after giving effect to the waterfall disbursements for such date, such shortfall shall be carried forward and funded from available Mezzanine Excess Cash Flow on the next succeeding Monthly Payment Date(s) as a priority item within the waterfall.
(c) Draws. Mezzanine Lender shall have the right, but not the obligation, to draw upon the Mezzanine Debt Service Reserve Account to pay Mezzanine Debt Service that is due and unpaid under the Mezzanine Loan Documents. Mezzanine Lender shall provide written notice to Mezzanine Borrower within two (2) Business Days after any such draw, specifying the amount drawn and the Mezzanine Debt Service obligation to which such amount was applied. Draws from the Mezzanine Debt Service Reserve Account may be made by Mezzanine Lender instructing Depository Bank to transfer funds to Mezzanine Lender's designated account, and Depository Bank shall comply with such instruction without the consent of Mezzanine Borrower.
(d) Excess Funds. If the balance of the Mezzanine Debt Service Reserve Account at any time exceeds the Required Mezzanine Debt Service Reserve Amount (after giving effect to all pending and scheduled disbursements), the excess may be released to the Mezzanine Operating Account for application through the waterfall on the next Monthly Payment Date, upon written confirmation from Mezzanine Lender.
Section 4.2 — Mezzanine Extension Reserve
In the event that Mezzanine Borrower elects to extend the Mezzanine Loan beyond its initial maturity date in accordance with the extension provisions set forth in the Mezzanine Loan Agreement, Mezzanine Borrower shall fund a Mezzanine Extension Reserve Account in the amount and on the terms and conditions set forth in the Mezzanine Loan Agreement (the "Mezzanine Extension Reserve"). The Mezzanine Extension Reserve shall be established as an Eligible Account at Depository Bank and shall be subject to the same account control and security interest provisions applicable to the other Mezzanine Accounts under this Agreement. Amounts held in the Mezzanine Extension Reserve shall be applied toward Mezzanine Debt Service during the extension term of the Mezzanine Loan in the manner specified in the Mezzanine Loan Agreement, and any remaining balance upon termination of the extension term shall be released to the Mezzanine Operating Account for application through the waterfall.
Section 4.3 — Additional Reserves
Mezzanine Lender shall have the right to require the establishment of additional reserve accounts upon the occurrence of specified events under the Mezzanine Loan Agreement, including, without limitation:
(a) a mezzanine leasing reserve account, to be funded upon the occurrence of a Cash Management Trigger Event or as otherwise required by the Mezzanine Loan Agreement, to provide for tenant improvement allowances, leasing commissions, and other costs associated with the leasing of vacant space at the Property;
(b) a mezzanine carry/shortfall reserve account, to be funded upon the occurrence of a Cash Sweep Trigger Event or as otherwise required by the Mezzanine Loan Agreement, to provide for anticipated shortfalls in Mezzanine Debt Service; and
(c) such other reserve accounts as Mezzanine Lender may require from time to time in accordance with the Mezzanine Loan Agreement.
Each additional reserve account established pursuant to this Section 4.3 shall be maintained as an Eligible Account at Depository Bank, shall be subject to a separate Account Control Agreement in favor of Mezzanine Lender, and shall be included within the definition of "Mezzanine Accounts" and "Mezzanine Reserve Accounts" for all purposes of this Agreement. Mezzanine Lender shall provide written notice to Mezzanine Borrower and Depository Bank of the establishment of any additional reserve account, including the required funding amount and the conditions for disbursement.
Section 4.4 — Investment of Reserves
(a) All funds held in the Mezzanine Reserve Accounts shall be invested solely in Permitted Investments in accordance with Article 7. Mezzanine Borrower shall provide written investment direction to Depository Bank with respect to funds held in the Mezzanine Reserve Accounts, and in the absence of timely direction, Depository Bank shall invest such funds in investments described in Section 7.1(d).
(b) All earnings on investments of funds held in the Mezzanine Reserve Accounts shall be credited to and remain in the respective Mezzanine Reserve Account from which such investment was made. All losses on investments of funds held in the Mezzanine Reserve Accounts shall be charged to the respective Mezzanine Reserve Account, and Mezzanine Borrower shall bear all investment risk with respect to such funds.
(c) In no event shall Depository Bank be responsible for any loss resulting from the investment or reinvestment of funds in any Mezzanine Reserve Account in Permitted Investments, so long as such investments are made in accordance with the written direction of Mezzanine Borrower or, in the absence thereof, in accordance with the default investment provisions of Section 7.2.
ARTICLE 5 — CASH MANAGEMENT AND CASH SWEEP TRIGGERS
Section 5.1 — Pre-Trigger Cash Management
Prior to the occurrence of a Mezzanine Cash Management Trigger Event and at all times when no Cash Management Period or Cash Sweep Period is in effect:
(a) All Mezzanine Excess Cash Flow shall be deposited into the Mezzanine Operating Account promptly upon receipt by Mezzanine Borrower (or by Depository Bank on behalf of Mezzanine Borrower pursuant to the standing instructions under the Senior Cash Management Agreement);
(b) Mezzanine Borrower shall direct Depository Bank, on each Monthly Payment Date, to apply funds in the Mezzanine Operating Account in accordance with the waterfall set forth in Section 6.1;
(c) Residual funds remaining in the Mezzanine Operating Account after satisfaction of all waterfall obligations through Section 6.1(g) shall be transferred to the Mezzanine Excess Cash Flow Account and shall be available for distribution to MTDC, subject to the satisfaction of the Distribution Conditions set forth in Section 6.2; and
(d) Mezzanine Borrower shall have the right to provide investment direction to Depository Bank with respect to funds held in the Mezzanine Accounts in accordance with Article 7.
Section 5.2 — Mezzanine Cash Management Trigger Events
A "Mezzanine Cash Management Trigger Event" shall be deemed to have occurred upon the earliest to occur of any of the following events:
(a) the occurrence of an Event of Default under the Mezzanine Loan Agreement;
(b) the Combined DSCR falling below 1.20x for any calendar quarter, as calculated in accordance with the methodology set forth in the Intercreditor Agreement based on trailing twelve-month net operating income;
(c) the Combined Debt Yield falling below 8.0% for any calendar quarter, as calculated in accordance with the methodology set forth in the Intercreditor Agreement;
(d) the Combined LTV exceeding 70.0% on any annual testing date, as determined by the most recent appraisal accepted by Senior Agent and Mezzanine Lender;
(e) the failure to achieve the Leasing Threshold (i.e., economic occupancy of not less than 85% of the rentable square footage of the Property) by September 15, 2029 (which date is approximately thirty (30) months after the projected date of first temporary certificate of occupancy of March 15, 2028);
(f) the commencement of a "Cash Management Period" (howsoever defined) under the Senior Cash Management Agreement;
(g) the failure of Mezzanine Borrower to deliver any financial report, operating statement, rent roll, or other report required to be delivered to Mezzanine Lender under the Mezzanine Loan Agreement or this Agreement within ten (10) Business Days after the applicable due date; or
(h) the occurrence of a material adverse change in the financial condition of MTDC (including, without limitation, a downgrade in MTDC's credit rating below investment grade, the filing of any regulatory action against MTDC, or a material decline in MTDC's net worth or liquidity), as determined by Mezzanine Lender in its reasonable discretion.
Mezzanine Lender shall provide written notice to Mezzanine Borrower and Depository Bank of the occurrence of a Mezzanine Cash Management Trigger Event promptly following Mezzanine Lender's determination that such event has occurred, and such notice shall specify the clause of this Section 5.2 under which the Mezzanine Cash Management Trigger Event has occurred.
Section 5.3 — Mezzanine Cash Management Trigger Cure
A Cash Management Period shall terminate upon the first to occur of any of the following, as applicable to the Mezzanine Cash Management Trigger Event giving rise to such Cash Management Period:
(a) if the Cash Management Period was triggered by an Event of Default under clause (a) of Section 5.2, the cure or waiver of the applicable Event of Default in accordance with the terms of the Mezzanine Loan Agreement;
(b) if the Cash Management Period was triggered by a financial covenant breach under clause (b), (c), or (d) of Section 5.2, the satisfaction of the applicable financial covenant (Combined DSCR of at least 1.20x, Combined Debt Yield of at least 8.0%, or Combined LTV of not more than 70.0%, as applicable) for two (2) consecutive calendar quarters following the quarter in which the breach occurred, as demonstrated by financial statements and calculations delivered to and accepted by Mezzanine Lender;
(c) if the Cash Management Period was triggered by a failure to achieve the Leasing Threshold under clause (e) of Section 5.2, the achievement and maintenance of the Leasing Threshold for two (2) consecutive calendar quarters following the quarter in which the Leasing Threshold was first achieved, as demonstrated by rent rolls and occupancy reports delivered to and accepted by Mezzanine Lender;
(d) if the Cash Management Period was triggered by the commencement of a Cash Management Period under the Senior Cash Management Agreement under clause (f) of Section 5.2, the termination of the Cash Management Period under the Senior Cash Management Agreement;
(e) if the Cash Management Period was triggered by a failure to deliver financial reports under clause (g) of Section 5.2, the delivery of all required financial reports then outstanding to Mezzanine Lender in form and substance satisfactory to Mezzanine Lender; and
(f) if the Cash Management Period was triggered by a material adverse change under clause (h) of Section 5.2, the determination by Mezzanine Lender, in its reasonable discretion, that the material adverse change in the financial condition of MTDC no longer exists;
provided, however, that no Mezzanine Cash Management Trigger Cure shall be effective if, at the time of such proposed cure, any other Mezzanine Cash Management Trigger Event has occurred and is then continuing.
Upon the effective termination of a Cash Management Period, Mezzanine Lender shall provide prompt written notice thereof to Mezzanine Borrower and Depository Bank.
Section 5.4 — Mezzanine Cash Sweep Trigger Events
A "Mezzanine Cash Sweep Trigger Event" shall be deemed to have occurred upon the earliest to occur of any of the following events:
(a) the occurrence of an Event of Default under the Mezzanine Loan Agreement that remains uncured beyond any applicable notice and grace period provided therein;
(b) the Combined DSCR falling below 1.10x for any calendar quarter, as calculated in accordance with the methodology set forth in the Intercreditor Agreement based on trailing twelve-month net operating income (representing a hard lockbox springing sweep consistent with the $675,000,000 combined senior and mezzanine debt structure);
(c) the Combined Debt Yield falling below 7.5% for any calendar quarter, as calculated in accordance with the methodology set forth in the Intercreditor Agreement;
(d) the commencement of a "Cash Sweep Period" (howsoever defined) under the Senior Cash Management Agreement;
(e) the date that is twelve (12) months prior to the then-applicable maturity date of the Mezzanine Loan (including any extended maturity date) if, as of such date, all conditions to the exercise of the next available extension option have not been satisfied or waived by Mezzanine Lender; and
(f) the filing of any voluntary or involuntary petition for bankruptcy, reorganization, insolvency, dissolution, liquidation, or similar proceeding under any applicable federal or state bankruptcy, insolvency, or debtor relief law by or against Mezzanine Borrower, Mortgage Borrower, or any guarantor of the Mezzanine Obligations.
Mezzanine Lender shall provide written notice to Mezzanine Borrower and Depository Bank of the occurrence of a Mezzanine Cash Sweep Trigger Event promptly following Mezzanine Lender's determination that such event has occurred, and such notice shall specify the clause of this Section 5.4 under which the Mezzanine Cash Sweep Trigger Event has occurred.
Section 5.5 — Mezzanine Cash Sweep Trigger Cure
A Cash Sweep Period shall terminate upon the first to occur of any of the following, as applicable to the Mezzanine Cash Sweep Trigger Event giving rise to such Cash Sweep Period:
(a) if the Cash Sweep Period was triggered by an Event of Default under clause (a) of Section 5.4, the cure or waiver of the applicable Event of Default in accordance with the terms of the Mezzanine Loan Agreement;
(b) if the Cash Sweep Period was triggered by a financial metric breach under clause (b) or (c) of Section 5.4, the satisfaction of the applicable financial metric (Combined DSCR of at least 1.10x or Combined Debt Yield of at least 7.5%, as applicable) for two (2) consecutive calendar quarters following the quarter in which the breach occurred, as demonstrated by financial statements and calculations delivered to and accepted by Mezzanine Lender;
(c) if the Cash Sweep Period was triggered by the commencement of a Cash Sweep Period under the Senior Cash Management Agreement under clause (d) of Section 5.4, the termination of the Cash Sweep Period under the Senior Cash Management Agreement; and
(d) if the Cash Sweep Period was triggered by the failure to satisfy extension conditions under clause (e) of Section 5.4, the satisfaction of all conditions to the exercise of the applicable extension option in accordance with the Mezzanine Loan Agreement;
provided, however, that:
(x) no Cash Sweep Trigger Event triggered by the filing of a bankruptcy, insolvency, or similar proceeding under clause (f) of Section 5.4 shall be subject to cure, and any Cash Sweep Period commenced as a result of such event shall continue in effect until the repayment in full of all Mezzanine Obligations or the termination of this Agreement, whichever first occurs; and
(y) no Mezzanine Cash Sweep Trigger Cure shall be effective if, at the time of such proposed cure, any other Mezzanine Cash Sweep Trigger Event has occurred and is then continuing.
Upon the effective termination of a Cash Sweep Period, (i) Mezzanine Lender shall provide prompt written notice thereof to Mezzanine Borrower and Depository Bank, and (ii) all funds then held in the Mezzanine Pledge Account (other than amounts that Mezzanine Lender has applied or directed to be applied to the Mezzanine Obligations) shall be released to the Mezzanine Excess Cash Flow Account within five (5) Business Days following such termination, subject to the satisfaction of the Distribution Conditions.
ARTICLE 6 — WATERFALL AND DISTRIBUTIONS
Section 6.1 — Mezzanine Waterfall
On each Monthly Payment Date (or more frequently as directed by Mezzanine Lender during a Cash Management Period or Cash Sweep Period), Depository Bank shall apply funds in the Mezzanine Operating Account in the following order of priority (the "Waterfall"):
(a) First — to Depository Bank, payment of all accrued and unpaid fees, charges, and expenses owed to Depository Bank under this Agreement and the Account Control Agreements, as evidenced by an invoice or fee statement delivered to Mezzanine Borrower and Mezzanine Lender;
(b) Second — to Mezzanine Lender (or to such account as Mezzanine Lender may designate in writing), payment of all accrued and unpaid interest on the outstanding principal balance of the Mezzanine Loan at the rate of 11.50% per annum, calculated on the basis of the actual number of days elapsed in a 360-day year, for the applicable interest period;
(c) Third — to Mezzanine Lender (or to such account as Mezzanine Lender may designate in writing), payment of any scheduled or required amortization payment of principal on the Mezzanine Loan then due and payable, if applicable, in the amount and on the terms set forth in the Mezzanine Loan Agreement;