MEZZANINE LOAN AGREEMENT
$200,000,000
by and between
HUDSON YARDS WEST MEZZANINE LLC, a Delaware limited liability company, as Borrower,
and
GRANITE PEAK CAPITAL PARTNERS, LP, a Delaware limited partnership, as Lender
Dated as of June 15, 2025
Property: 450 West 34th Street, New York, New York 10001
MEZZANINE LOAN AGREEMENT
This MEZZANINE LOAN AGREEMENT (this "Agreement") is made and entered into as of June 15, 2025, by and between HUDSON YARDS WEST MEZZANINE LLC, a Delaware limited liability company ("Borrower"), and GRANITE PEAK CAPITAL PARTNERS, LP, a Delaware limited partnership ("Lender").
RECITALS
WHEREAS, Borrower is a Delaware limited liability company and the sole member of Hudson Yards West Mortgage LLC, a Delaware limited liability company ("Mortgage Borrower");
WHEREAS, Mortgage Borrower is the owner of a leasehold interest in certain real property located at 450 West 34th Street, New York, New York 10001, being Block 729, Lots 1, 5, 12, and 15 on the Tax Map of the Borough of Manhattan, City of New York (the "Property"), pursuant to that certain Ground Lease dated June 1, 2020, by and between NYC Economic Development Corporation, as ground lessor, and MTDC (as predecessor-in-interest to Mortgage Borrower), as ground lessee, recorded in the Office of the City Register, New York County, at CRFN 2020000198762 (as the same may be amended, restated, supplemented, or otherwise modified from time to time, the "Ground Lease");
WHEREAS, Mortgage Borrower has obtained a first mortgage loan in the original principal amount of Four Hundred Seventy-Five Million and No/100 Dollars ($475,000,000) (the "Senior Loan") from Ironclad National Bank, N.A., as administrative agent (in such capacity, the "Senior Lender" or "Agent"), pursuant to that certain Senior Mortgage Loan Agreement dated as of even date herewith (as the same may be amended, restated, supplemented, or otherwise modified from time to time, the "Senior Loan Agreement"), secured by, among other things, a first-priority mortgage lien on the Property, an assignment of leases and rents, and a security interest in the personal property of Mortgage Borrower relating to the Property;
WHEREAS, Borrower desires to obtain a mezzanine loan in the original principal amount of Two Hundred Million and No/100 Dollars ($200,000,000) (the "Loan") from Lender, and Lender is willing to make such Loan to Borrower, upon and subject to the terms and conditions set forth herein;
WHEREAS, the Loan is secured by a first-priority pledge of one hundred percent (100%) of the membership interests in Mortgage Borrower owned by Borrower, pursuant to that certain Pledge and Security Agreement dated as of even date herewith by Borrower in favor of Lender (the "Pledge Agreement"); and
WHEREAS, the relative rights, remedies, and priorities of Senior Lender and Lender with respect to the Senior Loan and the Loan, respectively, are governed by that certain Intercreditor Agreement dated as of even date herewith, by and between Ironclad National Bank, N.A., as Senior Lender, and Granite Peak Capital Partners, LP, as Lender (as the same may be amended, restated, supplemented, or otherwise modified from time to time, the "Intercreditor Agreement").
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, the parties hereto agree as follows:
ARTICLE 1 — DEFINITIONS; PRINCIPLES OF CONSTRUCTION
Section 1.1 — Definitions
As used in this Agreement, the following terms shall have the meanings set forth below. Unless otherwise indicated, all references to Sections, Articles, Exhibits, and Schedules are references to the Sections, Articles, Exhibits, and Schedules of this Agreement.
"Adjusted Net Operating Income" means, for any Test Period, Net Operating Income for such period after deduction of (a) a management fee equal to the greater of (i) the actual management fee payable to the Property Manager under the Property Management Agreement and (ii) four percent (4.0%) of Effective Gross Income for such Test Period, and (b) reserves in an amount equal to $0.25 per rentable square foot of the Improvements per annum (or such other amount as may be reasonably determined by Lender from time to time). Adjusted Net Operating Income shall be used for purposes of calculating the Combined DSCR, Combined Debt Yield, and Combined LTV.
"Affiliate" means, with respect to any Person, any other Person that directly or indirectly controls, is controlled by, or is under common control with such Person. For purposes of this definition, "control" (including the correlative meanings of the terms "controlled by" and "under common control with") means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities or other equity interests, by contract, or otherwise. A Person shall be deemed to "control" another Person if such first Person owns, directly or indirectly, fifty percent (50%) or more of the voting securities or other equity interests of such other Person, or possesses, directly or indirectly, the power to elect or appoint fifty percent (50%) or more of the directors, managers, or other governing body of such other Person.
"Agreement" means this Mezzanine Loan Agreement, as the same may be amended, restated, supplemented, or otherwise modified from time to time in accordance with the terms hereof.
"Anti-Money Laundering Laws" means the Bank Secrecy Act (31 U.S.C. §§ 5311 et seq.), the USA PATRIOT Act (Title III of Pub. L. 107-56), and any regulations promulgated thereunder, and any other applicable federal, state, or local laws, regulations, or executive orders relating to money laundering or terrorist financing.
"Appraisal" means a written appraisal of the Property prepared in accordance with the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 ("FIRREA") and the Uniform Standards of Professional Appraisal Practice ("USPAP"), by an appraiser holding the MAI designation from the Appraisal Institute and who is acceptable to Lender in its reasonable discretion. As of the Closing Date, the initial Appraisal is the appraisal prepared by Broadstreet Appraisal Group, Inc. (File No. BAG-25-1092), dated April 1, 2025, with an as-stabilized value of One Billion Twenty-Five Million and No/100 Dollars ($1,025,000,000). The term "Appraisal" also includes any updated or replacement appraisal required or permitted to be obtained pursuant to this Agreement.
"Appraised Value" means the fair market value of the Property as determined by the most recent Appraisal.
"Approved Annual Budget" means, with respect to any fiscal year, the annual operating budget for the Property approved by Lender (such approval not to be unreasonably withheld, conditioned, or delayed), setting forth anticipated revenues and expenditures for such fiscal year.
"Bankruptcy Action" means, with respect to any Person, (a) the filing by such Person of a voluntary petition under the federal Bankruptcy Code (11 U.S.C. §§ 101 et seq.) or any other federal or state insolvency law, (b) the consent by such Person to the filing of an involuntary petition against such Person under such laws, (c) the making by such Person of a general assignment for the benefit of creditors, (d) the admission by such Person in writing of its inability to pay its debts as they become due, (e) the appointment of a receiver, trustee, custodian, conservator, or liquidator for such Person or any substantial part of its property, or (f) the commencement of any proceeding or the taking of any other action by or against such Person under any federal or state insolvency, reorganization, moratorium, or similar law for the relief of debtors, including without limitation any reorganization, arrangement, composition, readjustment, dissolution, or other similar action.
"Borrower" means Hudson Yards West Mezzanine LLC, a Delaware limited liability company, and its successors and permitted assigns.
"Budget" means the approved construction budget for the Improvements, as set forth on Schedule 3 attached hereto and made a part hereof, as the same may be amended from time to time with Lender's prior written consent (such consent not to be unreasonably withheld, conditioned, or delayed), which Budget sets forth, on a line-item basis, all anticipated costs of construction, development, and completion of the Improvements, together with all associated soft costs, financing costs, and contingency reserves.
"Business Day" means any day other than a Saturday, Sunday, or any other day on which national banking institutions in the City of New York, State of New York, or the City of Chicago, State of Illinois, are authorized or required by law, regulation, or executive order to close.
"Cash Management Account" has the meaning set forth in Section 2.7(a).
"Cash Sweep Period" means any period during which (a) the Combined DSCR is less than 1.10x for any Test Period, as determined based on the most recent quarterly compliance certificate delivered pursuant to Section 6.9, or (b) an Event of Default has occurred and is continuing. A Cash Sweep Period shall cease with respect to clause (a) above upon the Combined DSCR being restored to at least 1.15x for two (2) consecutive Test Periods following the Test Period in which the Combined DSCR first fell below 1.10x, and with respect to clause (b) above, upon the cure (to Lender's satisfaction) of all Events of Default. The Cash Sweep Period shall operate through the hard lockbox and springing sweep mechanism described in Section 2.7.
"Casualty" means any damage to or destruction of the Property or any material portion thereof, by fire, flood, earthquake, act of God, or any other cause.
"Closing Date" means June 15, 2025.
"Cobalt GMP Contract" means that certain Guaranteed Maximum Price Construction Contract No. CCG-HYW-2025-001, dated as of or about the date hereof, by and between Mortgage Borrower and Cobalt Construction Group, Inc., as General Contractor, providing for the construction of the Improvements for a Guaranteed Maximum Price of Four Hundred Twelve Million and No/100 Dollars ($412,000,000), as the same may be amended, supplemented, or otherwise modified from time to time with Lender's prior written consent.
"Collateral" means all membership interests in Mortgage Borrower owned by Borrower, and all distributions, proceeds, rights, powers, privileges, and other incidents of ownership relating thereto, as more particularly described in the Pledge Agreement. The Collateral is further described on Schedule 1 attached hereto.
"Combined Debt" means, at any time of determination, the aggregate outstanding principal balance of the Senior Loan and the Loan at such time.
"Combined Debt Service" means, for any Test Period, the aggregate of all scheduled payments of interest (and, if applicable, scheduled principal amortization) due under the Senior Loan and the Loan during such Test Period.
"Combined Debt Yield" means, for any Test Period, the ratio, expressed as a percentage, of (a) Adjusted Net Operating Income for such Test Period, annualized if necessary (in the case of a Test Period of less than twelve (12) months), to (b) the Combined Debt as of the last day of such Test Period.
"Combined DSCR" means, for any Test Period, the ratio of (a) Adjusted Net Operating Income for such Test Period to (b) Combined Debt Service for such Test Period, each calculated on a trailing twelve-month basis (or, prior to twelve (12) full months of operations following the Conversion Date, annualized based on the period of actual operations since the Conversion Date).
"Combined LTV" means, at any time of determination, the ratio, expressed as a percentage, of (a) the Combined Debt at such time to (b) the Appraised Value as determined by the most recent Appraisal.
"Completion Date" means the date on which Substantial Completion of the Improvements occurs. The projected Completion Date is December 15, 2027.
"Completion Guaranty" means that certain Guaranty of Completion dated as of even date herewith, executed by MTDC in favor of Lender, guaranteeing, among other things, the timely completion of the Improvements in accordance with the approved plans and specifications and the Budget, as the same may be amended, restated, supplemented, or otherwise modified from time to time.
"Condemnation" means any taking of the Property or any portion thereof, or any interest therein, by any governmental authority or entity through the exercise of the power of eminent domain or condemnation, or any conveyance in lieu thereof.
"Construction Consultant" means any independent construction consultant retained by Lender from time to time to review and monitor the progress of construction of the Improvements, inspect the Property, and provide reports to Lender regarding the status of construction, compliance with the Budget and construction schedule, and such other matters as Lender may request.
"Construction Period" means the period commencing on the Closing Date and ending on the Conversion Date.
"Conversion Conditions" has the meaning set forth in Section 2.11(b).
"Conversion Date" means the date on which all Conversion Conditions set forth in Section 2.11(b) have been satisfied or waived by Lender in writing, marking the transition from the Construction Period to the Term Period.
"Default" means any event or condition which, with the giving of notice, the lapse of time, or both, would constitute an Event of Default under this Agreement or any other Loan Document.
"Default Rate" means a rate per annum equal to the Interest Rate plus five percent (5.00%), which as of the Closing Date equals sixteen and 50/100 percent (16.50%) per annum.
"Effective Gross Income" means, for any period, the sum of (a) gross potential rental income from the Improvements (based on contractual rents under executed leases and market rents for vacant space, as reasonably determined by Lender), plus (b) all other income from the Property, including parking, signage, storage, and other miscellaneous income, less (c) vacancy and collection loss (based on actual experience or underwriting assumptions approved by Lender).
"Environmental Indemnity" means that certain Environmental Indemnity Agreement dated as of even date herewith, executed by Borrower and MTDC in favor of Lender, as the same may be amended, restated, supplemented, or otherwise modified from time to time.
"Environmental Laws" means the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended ("CERCLA") (42 U.S.C. §§ 9601 et seq.), the Resource Conservation and Recovery Act, as amended ("RCRA") (42 U.S.C. §§ 6901 et seq.), the Clean Water Act, as amended (33 U.S.C. §§ 1251 et seq.), the Clean Air Act, as amended (42 U.S.C. §§ 7401 et seq.), the Toxic Substances Control Act, as amended (15 U.S.C. §§ 2601 et seq.), and all comparable state and local environmental laws, statutes, ordinances, rules, regulations, and orders, including without limitation those of the State of New York and the City of New York, in each case as amended from time to time, together with all rules and regulations promulgated thereunder.
"Equity Interests" means one hundred percent (100%) of the limited liability company membership interests in Mortgage Borrower owned by Borrower, constituting the Collateral.
"Event of Default" has the meaning set forth in Section 9.1.
"Excess Cash Flow" means, for any period, all amounts of Property revenue remaining after payment of (a) debt service on the Senior Loan, (b) required reserves under the Senior Loan Documents, (c) approved operating expenses in accordance with the Approved Annual Budget, (d) debt service on the Loan, and (e) required reserves under this Agreement.
"Exit Fee" means an amount equal to fifty basis points (0.50%) of the outstanding principal balance of the Loan at the time of prepayment or repayment at the Maturity Date.
"Extended Maturity Date" means each of the First Extended Maturity Date and the Final Extended Maturity Date, as applicable.
"Extension Conditions" has the meaning set forth in Section 2.4(c).
"Extension Option" has the meaning set forth in Section 2.4(b).
"Final Extended Maturity Date" means June 15, 2031.
"First Extended Maturity Date" means June 15, 2030.
"First TCO" means the first Temporary Certificate of Occupancy issued by the New York City Department of Buildings (or any successor agency) for the Improvements (or any material portion thereof). The projected date for issuance of the First TCO is March 15, 2028.
"Force Majeure" means any delay caused by strikes, lockouts, acts of God, adverse weather conditions, inability to procure labor or materials, governmental restrictions, enemy action, civil commotion, fire or other casualty, pandemic, or other causes beyond the reasonable control of Borrower or Mortgage Borrower; provided, however, that Force Majeure shall not include (a) financial inability to perform, (b) any event caused by Borrower's or Mortgage Borrower's negligence or willful misconduct, or (c) changes in economic or market conditions.
"GAAP" means generally accepted accounting principles in the United States of America, as in effect from time to time, consistently applied.
"GC" or "General Contractor" means Cobalt Construction Group, Inc., a New York corporation.
"Ground Lease" has the meaning set forth in the Recitals.
"Ground Rent" means the annual ground rent payable by Mortgage Borrower to NYCEDC under the Ground Lease, which as of the Closing Date is Four Million Two Hundred Thousand and No/100 Dollars ($4,200,000) per annum, subject to adjustment based on the Consumer Price Index ("CPI") escalation every five (5) years as provided in the Ground Lease.
"Guarantor" means Metropolitan Transit Development Corp. ("MTDC"), an Illinois government instrumentality, and its successors and permitted assigns.
"Guaranty" means, collectively, the Payment Guaranty and the Completion Guaranty.
"Hazardous Substances" means any substance, material, or waste that is regulated, classified, or otherwise characterized under any Environmental Law as hazardous, toxic, a contaminant, a pollutant, or words of similar import, including petroleum, petroleum products, asbestos, asbestos-containing materials, polychlorinated biphenyls, lead-based paint, radon, radioactive materials, and urea formaldehyde.
"Improvements" means the mixed-use development to be constructed on the Property, consisting of approximately 1,840,000 gross square feet of commercial office, retail, and transit-infrastructure space, together with all related fixtures, equipment, and appurtenances, all as more particularly described in the approved plans and specifications.
"Indemnified Parties" has the meaning set forth in Section 11.1.
"Independent Manager" means a natural person who (a) is not, and has not been during the preceding five (5) years, a stockholder, member, partner, officer, director, employee, supplier, customer, or creditor of Borrower, Mortgage Borrower, Guarantor, or any Affiliate of any of the foregoing (other than in such person's capacity as an independent manager or director of an SPE entity that is not an Affiliate), (b) is not related by blood or marriage to any person described in clause (a), and (c) has prior experience serving as an independent manager or independent director for special purpose entities.
"Initial Maturity Date" means June 15, 2029.
"Insurance Requirements" means the insurance requirements set forth in Schedule 8 attached hereto.
"Intercreditor Agreement" has the meaning set forth in the Recitals.
"Interest Payment Date" means the first Business Day of each calendar month during the term of the Loan.
"Interest Rate" means a fixed rate of eleven and 50/100 percent (11.50%) per annum.
"Leasing Guidelines" means the pre-approved leasing parameters set forth in Schedule 9 attached hereto, as the same may be modified from time to time with Lender's prior written consent.
"Leasing Threshold" means eighty-five percent (85%) economic occupancy of the rentable area of the Improvements, to be achieved by no later than the Leasing Threshold Deadline.
"Leasing Threshold Deadline" means September 15, 2029 (being thirty (30) months following the projected First TCO date of March 15, 2028).
"Lender" means Granite Peak Capital Partners, LP, a Delaware limited partnership, and its successors and assigns.
"Loan" means the mezzanine loan made by Lender to Borrower pursuant to this Agreement in the original principal amount of Two Hundred Million and No/100 Dollars ($200,000,000).
"Loan Documents" means, collectively, this Agreement, the Note, the Pledge Agreement, the Payment Guaranty, the Completion Guaranty, the Environmental Indemnity, the Intercreditor Agreement, the Cash Management Agreement, the UCC Financing Statements, and all other documents, instruments, certificates, and agreements executed and delivered by or on behalf of Borrower, Mortgage Borrower, or Guarantor in connection with the Loan, as each may be amended, restated, supplemented, or otherwise modified from time to time.
"Loan-to-Value Ratio" or "LTV" means the Combined LTV, unless the context specifically refers to the Mezzanine LTV or the Senior LTV.
"Lockout Period" has the meaning set forth in Section 2.5(a).
"Major Lease" means any lease of space in the Improvements covering (a) more than 25,000 rentable square feet of space, or (b) a term (including all renewal options) in excess of fifteen (15) years.
"Material Adverse Effect" means any event, circumstance, condition, development, or occurrence that has or could reasonably be expected to have a material adverse effect on (a) the business, assets, financial condition, operations, or prospects of Borrower, Mortgage Borrower, or Guarantor, (b) the value of the Property or the Collateral, (c) the ability of Borrower or Guarantor to perform their respective obligations under the Loan Documents, or (d) the validity, enforceability, or priority of the rights and remedies of Lender under the Loan Documents.
"Maturity Date" means the Initial Maturity Date, as the same may be extended to the First Extended Maturity Date or the Final Extended Maturity Date, as applicable, pursuant to Section 2.4.
"Mezzanine Borrower" means Borrower (Hudson Yards West Mezzanine LLC).
"Mezzanine Cash Management Account" has the meaning set forth in Section 2.7(a).
"Mortgage Borrower" means Hudson Yards West Mortgage LLC, a Delaware limited liability company, and its successors and permitted assigns.
"MTDC" or "Metro Transit" means Metropolitan Transit Development Corp., an Illinois government instrumentality, headquartered at 200 South Michigan Avenue, Suite 3100, Chicago, Illinois 60604.
"Net Operating Income" or "NOI" means, for any period, gross revenues from the Property (including all rental income, parking income, signage income, and other operating income) less operating expenses of the Property (including real estate taxes, insurance premiums, Ground Rent, utilities, repairs and maintenance, property management fees, and other customary operating expenses), but excluding debt service, capital expenditures, depreciation, and amortization, in each case calculated in accordance with the Approved Annual Budget and Lender's underwriting standards. For the avoidance of doubt, projected stabilized Net Operating Income as of the Closing Date is Fifty-Eight Million Two Hundred Thousand and No/100 Dollars ($58,200,000) per annum.
"Note" means the Mezzanine Promissory Note of even date herewith, executed by Borrower and payable to the order of Lender, in the original principal amount of Two Hundred Million and No/100 Dollars ($200,000,000), substantially in the form attached hereto as Exhibit A.
"NYCEDC" means NYC Economic Development Corporation, the ground lessor under the Ground Lease, or its successors and assigns.
"OFAC" means the Office of Foreign Assets Control of the United States Department of the Treasury.
"Origination Fee" means Three Million and No/100 Dollars ($3,000,000), being one and 50/100 percent (1.50%) of the original principal amount of the Loan, payable by Borrower to Lender on the Closing Date.
"Payment Guaranty" means that certain Guaranty of Payment dated as of even date herewith, executed by MTDC in favor of Lender, guaranteeing certain payment obligations and Recourse Carveout liabilities, as the same may be amended, restated, supplemented, or otherwise modified from time to time.
"Permitted Encumbrances" means the title exceptions approved by Lender as of the Closing Date, as listed on Schedule 5 attached hereto.
"Permitted Transfer" has the meaning set forth in Section 6.3(b).
"Person" means any natural person, corporation, partnership, limited partnership, limited liability company, joint venture, trust, estate, unincorporated organization, governmental authority, or any other entity of whatever nature.
"Phase I ESA" means the Phase I Environmental Site Assessment prepared by Apex Environmental Consultants, Inc. (Project No. AEC-NY-25-0337), dated March 20, 2025.
"Pledge Agreement" has the meaning set forth in the Recitals.
"Property" has the meaning set forth in the Recitals.
"Property Management Agreement" means that certain property management agreement by and between Mortgage Borrower and Property Manager, in form and substance satisfactory to Lender, as the same may be amended, restated, supplemented, or otherwise modified from time to time with Lender's prior written consent.
"Property Manager" means Evergreen Property Management LLC, or any replacement property manager approved by Lender in writing.
"Recourse Carveouts" means those obligations and liabilities that are fully recourse to Guarantor as described in Section 9.2(b) and the Payment Guaranty.
"Replacement Cost" means the cost of replacing the Improvements with improvements of like kind and quality, as determined by the applicable insurance policy or Appraisal.
"Senior Lender" means Ironclad National Bank, N.A., as administrative agent under the Senior Loan Agreement, and its successors and assigns.
"Senior Loan" has the meaning set forth in the Recitals.
"Senior Loan Agreement" has the meaning set forth in the Recitals.
"Senior Loan Documents" means the Senior Loan Agreement 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.
"Senior LTV" means the ratio, expressed as a percentage, of (a) the outstanding principal balance of the Senior Loan to (b) the Appraised Value.
"SPE Requirements" means the single-purpose entity covenants set forth in Section 5.1(r), Exhibit E, and such additional requirements as may be imposed by Lender or applicable rating agencies from time to time.
"Substantial Completion" means "Substantial Completion" as defined in the Cobalt GMP Contract, generally meaning the stage of construction at which the Improvements (or a designated portion thereof) are sufficiently complete in accordance with the approved plans and specifications so that Mortgage Borrower can occupy or use the Improvements for their intended purpose, subject only to the completion of minor punchlist items that do not materially interfere with such use.
"Term Period" means the period commencing on the Conversion Date and ending on the Maturity Date (as the same may be extended).
"Test Period" means each consecutive twelve-month (12-month) period ending on the last day of each fiscal quarter, commencing with the first full fiscal quarter following the Conversion Date. For any period prior to twelve (12) full months of operations following the Conversion Date, the Test Period shall mean such shorter period, with Adjusted Net Operating Income and Combined Debt Service annualized for purposes of calculating the applicable financial covenants.
"Title Insurance Policy" means the ALTA lender's title insurance policy (or UCC insurance policy, as applicable) issued by Sentinel Title & Escrow Company (Commitment No. STN-2025-MH-04178), insuring the Collateral and Lender's first-priority security interest therein in the amount of Two Hundred Million and No/100 Dollars ($200,000,000), subject only to Permitted Encumbrances and with such endorsements as Lender may require.
"Total Project Cost" means Nine Hundred Twenty Million and No/100 Dollars ($920,000,000), representing the aggregate cost of the acquisition, development, construction, and completion of the Improvements, including all hard costs, soft costs, financing costs, and reserves.
"Transfer" has the meaning set forth in Section 6.3(a).
"UCC" means the Uniform Commercial Code as in effect from time to time in the State of New York or the State of Delaware, as applicable.
"ULURP Approval" means the land use approvals granted by the New York City City Planning Commission on September 12, 2023, and by the New York City City Council on October 25, 2023, under ULURP Application No. C 230415 ZSM, together with all conditions, restrictions, and requirements imposed in connection therewith.
"USA PATRIOT Act" means the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (Title III of Pub. L. 107-56), as amended from time to time.
Additional capitalized terms used but not defined in this Section 1.1 shall have the meanings assigned to such terms elsewhere in this Agreement or, if not defined herein, in the Senior Loan Agreement (to the extent such cross-reference is consistent with the terms of the Intercreditor Agreement).
Section 1.2 — Principles of Construction
Unless the context otherwise requires, the following rules of construction shall apply to this Agreement:
(a) The singular includes the plural and vice versa, and each gender includes each other gender.
(b) The word "including" (and correlative words such as "include" and "includes") means "including without limitation" and shall not be construed to limit any general statement that it follows to the specific or similar items or matters immediately following it.
(c) The words "herein," "hereof," "hereunder," "hereto," and similar words refer to this Agreement as a whole and not to any particular provision of this Agreement.
(d) References to Articles, Sections, Exhibits, and Schedules are to Articles, Sections, Exhibits, and Schedules of this Agreement unless otherwise specified. All Exhibits and Schedules attached hereto are incorporated herein by reference and made a part of this Agreement.
(e) The headings and captions used in this Agreement are for convenience of reference only and shall not be considered in construing this Agreement or any provision hereof.
(f) References to any Person include the successors and permitted assigns of such Person.
(g) References to any law, statute, rule, regulation, or governmental order include all amendments, supplements, replacements, successor statutes, rules, regulations, and orders, and all rules and regulations promulgated thereunder.
(h) All dollar amounts referenced herein are in lawful currency of the United States of America.
(i) Accounting terms not otherwise defined herein shall have the meanings assigned to them under GAAP as in effect from time to time.
(j) In the event of any conflict or inconsistency between the terms of this Agreement and the terms of the Intercreditor Agreement, the terms of the Intercreditor Agreement shall govern and control as between Senior Lender and Lender, and as between Borrower and Lender, this Agreement shall control to the extent not inconsistent with the Intercreditor Agreement.
(k) The words "shall" and "will" are used interchangeably and have the same meaning.
(l) The word "or" is not exclusive.
(m) The rule of construction known as ejusdem generis shall not be applied to limit the generality of any provision of this Agreement.
ARTICLE 2 — THE LOAN
Section 2.1 — Agreement to Lend; Loan Amount
(a) Subject to the terms and conditions set forth in this Agreement and the other Loan Documents, and in reliance upon the representations and warranties of Borrower contained herein and therein, Lender hereby agrees to make the Loan to Borrower in the original principal amount of Two Hundred Million and No/100 Dollars ($200,000,000.00).
(b) The Loan shall be funded in full on the Closing Date, subject to the satisfaction (or waiver by Lender in its sole discretion) of all Conditions Precedent set forth in Article 4 of this Agreement. The proceeds of the Loan shall be disbursed to Borrower (or at Borrower's direction) by wire transfer of immediately available funds to such account or accounts as Borrower shall designate in writing to Lender prior to the Closing Date.
(c) The parties acknowledge that the Loan proceeds, together with the proceeds of the Senior Loan in the amount of Four Hundred Seventy-Five Million and No/100 Dollars ($475,000,000), the equity contribution from MTDC in the amount of Two Hundred Million and No/100 Dollars ($200,000,000), and the NYC Transit Infrastructure Grant in the amount of Forty-Five Million and No/100 Dollars ($45,000,000), constitute the sources of funds for the Total Project Cost of Nine Hundred Twenty Million and No/100 Dollars ($920,000,000), as further set forth in the sources and uses schedule attached as part of Schedule 3.
(d) The obligation of Borrower to repay the Loan, together with all interest thereon and all other amounts due under the Loan Documents, is absolute and unconditional, and shall not be subject to any setoff, counterclaim, defense, abatement, suspension, deferment, diminution, or reduction of any kind.
Section 2.2 — The Note
(a) The Loan shall be evidenced by the Note, executed by Borrower and payable to the order of Lender in the original principal amount of Two Hundred Million and No/100 Dollars ($200,000,000), substantially in the form attached hereto as Exhibit A.
(b) The Note is subject to and shall be construed in accordance with the terms and conditions of this Agreement. In the event of any conflict or inconsistency between the terms of the Note and the terms of this Agreement, the terms of this Agreement shall govern and control.
(c) The Note shall be dated as of the Closing Date and shall mature on the Maturity Date (as the same may be extended in accordance with Section 2.4). The Note may not be re-advanced once repaid.
Section 2.3 — Interest
Section 2.3(a) — Interest Rate. The outstanding principal balance of the Loan shall bear interest at a fixed rate of eleven and 50/100 percent (11.50%) per annum (the "Interest Rate"), calculated on the basis of a three hundred sixty (360)-day year and the actual number of days elapsed. For purposes of determining the amount of each monthly interest payment, interest shall be computed using a 30/360 day count convention.
Section 2.3(b) — Interest-Only Payments. Interest only on the outstanding principal balance of the Loan shall be due and payable monthly in arrears on each Interest Payment Date, commencing on the first Business Day of the first calendar month following the Closing Date (which shall be July 1, 2025). For the avoidance of doubt, the initial interest payment shall include interest accrued from and including the Closing Date through and including the last day of June 2025. No scheduled amortization of principal shall be required at any time during the term of the Loan; the entire outstanding principal balance of the Loan, together with all accrued and unpaid interest and all other amounts due under the Loan Documents, shall be due and payable on the Maturity Date in accordance with Section 2.4.
Section 2.3(c) — Default Interest. Upon the occurrence and during the continuance of any Event of Default, all outstanding principal of the Loan shall, without notice or demand, bear interest at the Default Rate of sixteen and 50/100 percent (16.50%) per annum (being the Interest Rate of 11.50% plus five percent (5.00%)), effective from the date of the occurrence of such Event of Default until such Event of Default is cured (if susceptible to cure) or the Loan is repaid in full. Interest at the Default Rate shall accrue and be compounded monthly and shall be payable on demand. The imposition of the Default Rate shall be in addition to and not in lieu of any other remedies available to Lender under this Agreement, the other Loan Documents, or applicable law. Borrower acknowledges and agrees that the Default Rate is not a penalty but rather represents a reasonable estimate of the increased credit risk, administrative burden, and opportunity cost incurred by Lender as a result of the occurrence and continuance of an Event of Default.
Section 2.3(d) — Interest Accrual; Computation. Interest on the Loan shall accrue from and including the Closing Date to but excluding the date on which the Loan is repaid in full. For purposes of daily interest accrual, interest shall be computed on the basis of a 360-day year and the actual number of days elapsed. For purposes of determining the amount of each scheduled monthly interest payment, interest shall be computed using a 30/360 day count convention (i.e., each month is assumed to have thirty (30) days and each year is assumed to have three hundred sixty (360) days).
Notwithstanding any provision of this Agreement, the Note, or any other Loan Document to the contrary, in no event shall the amount of interest payable hereunder exceed the maximum rate of interest permitted by applicable law (the "Maximum Legal Rate"). If the amount of interest payable for any period would exceed the Maximum Legal Rate, such interest shall automatically be reduced to the Maximum Legal Rate, and any excess interest previously collected by Lender shall be credited against the outstanding principal balance of the Loan (or, if the Loan has been repaid in full, refunded to Borrower). This provision shall control every other provision of this Agreement and the Loan Documents.
Section 2.4 — Term; Extension Options
Section 2.4(a) — Initial Term and Maturity. The initial term of the Loan shall commence on the Closing Date (June 15, 2025) and shall expire on the Initial Maturity Date (June 15, 2029), being a period of forty-eight (48) months. On the Maturity Date (as the same may be extended pursuant to this Section 2.4), the entire outstanding principal balance of the Loan, together with all accrued and unpaid interest, the Exit Fee, and all other amounts due and payable under the Loan Documents, shall be immediately due and payable in full without notice or demand.
Section 2.4(b) — Extension Options. Borrower shall have two (2) options to extend the Maturity Date (each, an "Extension Option"), each for a period of one (1) year, upon satisfaction of all Extension Conditions set forth in Section 2.4(c) below. If the first Extension Option is validly exercised, the Maturity Date shall be extended to the First Extended Maturity Date (June 15, 2030). If the second Extension Option is validly exercised, the Maturity Date shall be further extended to the Final Extended Maturity Date (June 15, 2031). Each Extension Option must be exercised in sequential order; the second Extension Option may not be exercised unless the first Extension Option has been validly exercised. The Extension Options under this Agreement are intended to be coterminous with the extension options available to Mortgage Borrower under the Senior Loan Agreement.
Section 2.4(c) — Extension Conditions. Each Extension Option is subject to the timely satisfaction of all of the following conditions precedent (collectively, the "Extension Conditions"), each of which must be satisfied as of the date of the extension notice and on the date the applicable Extension Option becomes effective:
(i) No Event of Default or Default shall have occurred and be continuing, either at the time of the extension request or on the then-applicable Maturity Date.
(ii) Borrower shall have delivered to Lender an irrevocable written notice of its election to exercise the Extension Option not less than sixty (60) days and not more than one hundred twenty (120) days prior to the then-applicable Maturity Date, substantially in the form attached hereto as Exhibit C.
(iii) The Combined DSCR shall be not less than 1.20x for the Test Period ending on the last day of the fiscal quarter immediately preceding the date on which the applicable Extension Option is to become effective.
(iv) The Combined LTV shall not exceed seventy percent (70.0%) as of the date on which the applicable Extension Option is to become effective, as determined by the most recent Appraisal.
(v) The Combined Debt Yield shall be not less than eight percent (8.0%) for the Test Period ending on the last day of the fiscal quarter immediately preceding the date on which the applicable Extension Option is to become effective.
(vi) All representations and warranties of Borrower contained in this Agreement and the other Loan Documents shall be true and correct in all material respects as of the extension effective date (or, in the case of representations and warranties that relate to a specific date, as of such specific date).
(vii) Borrower shall have paid to Lender a nonrefundable extension fee equal to twenty-five basis points (0.25%) of the then-outstanding principal balance of the Loan.
(viii) Borrower shall have delivered to Lender, at Borrower's sole cost and expense, an updated Appraisal prepared in accordance with the requirements of this Agreement, confirming compliance with the LTV covenant set forth in clause (iv) above and otherwise satisfactory to Lender in form and substance.
(ix) The corresponding extension of the Senior Loan maturity date under the Senior Loan Agreement shall have been exercised or shall be exercised simultaneously with the exercise of the Extension Option hereunder.
(x) Borrower shall have delivered to Lender evidence of all insurance coverages required under the Loan Documents, satisfactory to Lender, for the extended term.
(xi) Borrower shall have delivered to Lender a title search update or date-down endorsement to the Title Insurance Policy, confirming the continued priority of Lender's security interest in the Collateral, free and clear of any intervening liens, encumbrances, or title defects (other than Permitted Encumbrances).
(xii) Borrower shall have delivered to Lender a certificate of an authorized officer of Borrower certifying compliance with all Extension Conditions, in form and substance satisfactory to Lender.
(xiii) Borrower shall have paid or reimbursed all of Lender's out-of-pocket costs and expenses incurred in connection with the review and processing of the extension request, including the reasonable fees and disbursements of Lender's counsel.
Section 2.5 — Prepayment
Section 2.5(a) — Lockout Period. No voluntary prepayment of the Loan, in whole or in part, shall be permitted during the first twenty-four (24) months following the Closing Date (the period from and including the Closing Date through and including June 15, 2027, the "Lockout Period"). Any tender of prepayment during the Lockout Period shall be void and of no force or effect, and Lender shall have no obligation to accept any such prepayment.
Section 2.5(b) — Voluntary Prepayment after Lockout. After the expiration of the Lockout Period, the Loan may be prepaid in whole (but not in part, unless Lender shall otherwise agree in writing in its sole discretion) upon not less than thirty (30) days' prior irrevocable written notice to Lender specifying the proposed prepayment date (which must be a Business Day). Such notice, once given, shall be irrevocable and shall obligate Borrower to prepay the Loan on the date specified therein. All voluntary prepayments shall be accompanied by:
(i) Payment of the Exit Fee in the amount of fifty basis points (0.50%) of the outstanding principal balance of the Loan being prepaid;
(ii) Payment of all accrued and unpaid interest on the principal balance being prepaid through and including the date of prepayment;
(iii) Payment of all other amounts then due and payable under the Loan Documents, including without limitation any late charges, default interest, indemnification obligations, and costs and expenses; and
(iv) Compliance with all applicable provisions of the Intercreditor Agreement. No prepayment of the Loan shall be made unless the Senior Loan is being simultaneously prepaid in whole or in part (as applicable) or remains outstanding in compliance with the terms of the Intercreditor Agreement.
Section 2.5(c) — Mandatory Prepayment. Mandatory prepayment of the Loan shall be required in the following circumstances:
(i) Casualty or Condemnation. In the event of any Casualty or Condemnation, to the extent net insurance proceeds or condemnation awards (as applicable) are required to be applied to the Loan pursuant to the Intercreditor Agreement, after satisfaction of the Senior Loan and subject to the restoration provisions of Article 8.
(ii) Prohibited Transfers. In the event of any Transfer not constituting a Permitted Transfer, to the extent Lender elects to exercise its right to accelerate the Loan pursuant to Section 9.2(a).
(iii) Cash Sweep. During any Cash Sweep Period, all Excess Cash Flow swept to the Mezzanine Cash Management Account pursuant to Section 2.7 shall be applied as provided therein, which may include application to reduction of the outstanding principal balance of the Loan, in Lender's discretion.
The Exit Fee shall be payable on all mandatory prepayments, except that the Exit Fee shall not be payable on mandatory prepayments arising from Casualty or Condemnation proceeds applied to the Loan pursuant to Section 2.5(c)(i).
Section 2.5(d) — Repayment at Maturity. On the Maturity Date (as the same may be extended pursuant to Section 2.4), all outstanding principal, all accrued and unpaid interest, the Exit Fee, and all other amounts due and payable under the Loan Documents shall be immediately due and payable in full, without notice or demand.
Section 2.6 — Origination Fee
On the Closing Date, Borrower shall pay to Lender a nonrefundable origination fee in the amount of Three Million and No/100 Dollars ($3,000,000.00), representing one and 50/100 percent (1.50%) of the original principal amount of the Loan (the "Origination Fee"). The Origination Fee shall be deemed fully earned as of the Closing Date and is not subject to refund, rebate, proration, or offset under any circumstances, including but not limited to early repayment of the Loan. Lender may, at its option, deduct the Origination Fee from the Loan proceeds disbursed on the Closing Date.
Section 2.7 — Cash Management; Lockbox
Section 2.7(a) — Cash Management Account. Borrower shall cause Mortgage Borrower to establish and maintain, at all times during the term of the Loan, a lockbox account and a cash management account as required under the Senior Loan Agreement and the Senior Loan Documents (collectively, with any related operating accounts and reserve accounts, the "Cash Management Account"). Lender shall have a subordinate interest in such accounts as provided in the Intercreditor Agreement. Upon the occurrence and during the continuance of a Cash Sweep Period, all Excess Cash Flow remaining after (a) payment of Senior Loan debt service in accordance with the Senior Loan Documents, (b) funding of all required reserves under the Senior Loan Documents, (c) payment of approved operating expenses in accordance with the Approved Annual Budget, and (d) payment of debt service on the Loan, shall be swept on each Interest Payment Date (or more frequently, as Lender may direct during an Event of Default) to an account designated and controlled by Lender (or Lender's agent) (the "Mezzanine Cash Management Account"). The Mezzanine Cash Management Account shall be maintained at a depository institution acceptable to Lender and shall be subject to a deposit account control agreement in favor of Lender.
Section 2.7(b) — Application of Swept Funds. Funds swept to the Mezzanine Cash Management Account during a Cash Sweep Period shall be applied as follows:
(i) During a Cash Sweep Period triggered by the Combined DSCR falling below 1.10x (and no Event of Default exists): swept funds shall be held by Lender as additional collateral for the Loan and shall be applied, in Lender's reasonable discretion, to (A) cure or mitigate the DSCR deficiency (including by funding additional reserves for debt service), (B) reduce the outstanding principal balance of the Loan, or (C) fund reserves for operating expenses, capital expenditures, or other Property-related obligations as Lender may determine.
(ii) During a Cash Sweep Period triggered by an Event of Default: swept funds shall be applied to the outstanding obligations under the Loan in such order and manner as Lender shall determine in its sole discretion, including without limitation to accrued interest, outstanding principal, late charges, default interest, costs of enforcement, and other amounts due under the Loan Documents.
Section 2.7(c) — Release of Swept Funds. Upon the cessation of a Cash Sweep Period (which shall occur only when (A) the Combined DSCR has been restored to at least 1.15x for two (2) consecutive Test Periods following the Test Period in which the Combined DSCR first fell below 1.10x, and (B) all Events of Default have been cured to Lender's satisfaction), any amounts remaining in the Mezzanine Cash Management Account that have not been applied to the Loan or otherwise committed shall be released to Borrower (or at Borrower's direction). Notwithstanding the foregoing, no more than two (2) cessation and reinstatement events shall be permitted during the term of the Loan; upon the third occurrence of a Cash Sweep Period, such Cash Sweep Period shall continue for the remainder of the term of the Loan.
Section 2.8 — Late Charge
If any payment of interest or any other amount payable under this Agreement or the Note is not received by Lender within five (5) calendar days after its due date, Borrower shall pay to Lender, in addition to any default interest payable under Section 2.3(c), a late charge equal to five percent (5.0%) of the delinquent payment amount. The parties agree that the late charge represents a reasonable estimate of the administrative costs and expenses that Lender will incur as a result of late payment, that the actual amount of such costs and expenses would be extremely difficult or impracticable to determine, and that the late charge constitutes liquidated damages and not a penalty. The late charge shall be payable upon demand and, if not paid when due, shall bear interest at the Default Rate.
Section 2.9 — Payments; Application