BUILDING LOAN AGREEMENT
Dated as of June 15, 2025
Between
HUDSON YARDS WEST MORTGAGE LLC, a Delaware limited liability company, as Borrower
and
IRONCLAD NATIONAL BANK, N.A., a national banking association, as Administrative Agent for the Lenders
Premises: 450 West 34th Street, New York, New York 10001 (Block 729, Lots 1, 5, 12, 15, Borough of Manhattan)
Building Loan Amount: Building Loan Portion — to be allocated from $475,000,000 Senior Mortgage Loan
To be filed in the Office of the Clerk of the County of New York pursuant to Section 22 of the Lien Law of the State of New York
Prepared by and upon recording return to:
Clearfield & Associates LLP 399 Park Avenue, 28th Floor New York, New York 10022
Attention: Harrison Whitmore, Esq.
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RECITALS
WHEREAS, Hudson Yards West Mortgage LLC, a Delaware limited liability company (the "Borrower"), is the owner of a fee and leasehold interest in those certain premises known as and located at 450 West 34th Street, New York, New York 10001, in the Borough of Manhattan, City and County of New York, State of New York, designated on the Tax Map of the City of New York as Block 729, Lots 1, 5, 12, and 15 (the "Mortgaged Property"), by virtue of (a) its organizational structure under Metropolitan Transit Development Corp., a Delaware corporation ("MTDC"), and (b) that certain ground lease dated as of June 1, 2020 (the "Ground Lease"), by and between New York City Economic Development Corporation ("NYCEDC"), as landlord, and MTDC, as tenant, recorded in the Office of the City Register of the City of New York, New York County, on June 12, 2020, under City Register File Number ("CRFN") 2020000198762, as reflected in the records of the Automated City Register Information System ("ACRIS"), which leasehold interest has been assigned or subleased to Borrower as more particularly described herein;
WHEREAS, Borrower intends to construct and develop a mixed-use transit-oriented development project on the Mortgaged Property, to be known as "Hudson Yards West" (the "Project"), which Project will include commercial office space, residential units, retail space, and transit infrastructure components, all as more particularly described in the approved plans and specifications referenced in Schedule E attached hereto (the "Improvement"), and which Project is being developed pursuant to and in accordance with approvals obtained under the Uniform Land Use Review Procedure ("ULURP"), Application No. C 230415 ZSM, as approved by the City Planning Commission of the City of New York on September 12, 2023, and by the City Council of the City of New York on October 25, 2023;
WHEREAS, the total estimated cost to develop, design, and construct the Project is approximately Nine Hundred Twenty Million Dollars ($920,000,000) (the "Total Project Cost"), which Total Project Cost is to be funded from multiple sources, including but not limited to the Senior Mortgage Loan (as defined below), the Mezzanine Loan (as defined below), equity contributions from MTDC, and a transit infrastructure grant from the City of New York in the amount of Forty-Five Million Dollars ($45,000,000) (the "NYC Transit Infrastructure Grant");
WHEREAS, certain lenders (collectively, the "Lenders"), with Ironclad National Bank, N.A., a national banking association ("Ironclad National Bank" or the "Administrative Agent" or "Agent"), acting as administrative agent for the Lenders, have agreed to make a senior mortgage loan to Borrower in the aggregate principal amount of Four Hundred Seventy-Five Million Dollars ($475,000,000) (the "Senior Mortgage Loan"), pursuant to the terms and conditions of that certain Senior Mortgage Loan Agreement dated as of June 15, 2025 (as the same may be amended, restated, supplemented, or otherwise modified from time to time, the "Loan Agreement"), among Borrower, Agent, and the Lenders;
WHEREAS, a portion of the Senior Mortgage Loan, in the amount set forth in Section 2.01 hereof (the "Building Loan Amount"), is to be advanced to or for the account of Borrower for the purpose of paying costs of improving the Mortgaged Property, and such advances constitute "building loan" advances within the meaning of the Lien Law of the State of New York, as amended (the "Lien Law"), including without limitation Sections 2 and 22 thereof;
WHEREAS, the remaining portion of the Senior Mortgage Loan, in the amount set forth in the Project Loan Agreement referenced below (the "Project Loan Amount"), is to be advanced to or for the account of Borrower pursuant to that certain separate Project Loan Agreement of even date herewith (as the same may be amended, restated, supplemented, or otherwise modified from time to time, the "Project Loan Agreement"), for purposes that do not constitute costs of improving the Mortgaged Property within the meaning of the Lien Law;
WHEREAS, this Agreement is being executed and delivered by the parties hereto for the purpose of filing with the Clerk of the County of New York in accordance with the requirements of Section 22 of the Lien Law, so that the Building Loan Mortgage (as defined below) will have priority over subsequent mechanic's liens to the extent of building loan advances actually made in accordance with the terms hereof and in compliance with the Lien Law;
WHEREAS, the Building Loan is to be secured by a building loan mortgage, assignment of leases and rents, and security agreement of even date herewith (as the same may be amended, restated, supplemented, or otherwise modified from time to time, the "Building Loan Mortgage"), granted by Borrower in favor of Agent for the benefit of the Lenders, to be recorded in the Office of the City Register of the City of New York, New York County;
WHEREAS, Borrower has entered into that certain Guaranteed Maximum Price Construction Contract No. CCG-HYW-2025-001 (as the same may be amended, restated, supplemented, or otherwise modified from time to time, the "GMP Contract"), dated as of May 1, 2025, with Cobalt Construction Group, Inc., a New York corporation (the "General Contractor"), having its principal office at 330 West 42nd Street, 9th Floor, New York, New York 10036 (Chief Executive Officer: Frank DelVecchio; Project Executive: Hiroshi Tanaka), pursuant to which the General Contractor has agreed to construct the Improvement for a guaranteed maximum price of Four Hundred Twelve Million Dollars ($412,000,000);
WHEREAS, Borrower has obtained builder's risk insurance coverage in the amount of Five Hundred Million Dollars ($500,000,000) (replacement cost) from Fortis Indemnity Insurance Co. (the "Builder's Risk Insurer"), brokered by Castleton Insurance Brokerage, Inc. (Brian Jessup, Account Executive), as more particularly described in Schedule F attached hereto; and
WHEREAS, this Agreement is being filed in the Office of the Clerk of the County of New York in compliance with Article 2 of the Lien Law, specifically Section 22 thereof, so that the Building Loan Mortgage will have priority over subsequent mechanic's liens to the extent of building loan advances actually made in accordance with the terms of this Agreement and in compliance with the Lien Law.
NOW, THEREFORE, in consideration of the premises, the mutual covenants and agreements herein contained, the making of the Building Loan, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
ARTICLE 1 — DEFINITIONS
Section 1.01 — Defined Terms. Unless otherwise defined herein, all capitalized terms used in this Agreement shall have the meanings assigned to such terms in the Loan Agreement. The following terms, as used in this Agreement, shall have the following meanings:
"Administrative Agent" or "Agent" means Ironclad National Bank, N.A., a national banking association, in its capacity as administrative agent for the Lenders under the Loan Agreement, together with its successors and assigns in such capacity.
"Advance Request" means a written requisition for a Building Loan advance, substantially in the form of Schedule C attached hereto, submitted by Borrower to Agent in accordance with Section 3.03 of this Agreement.
"Borrower" means Hudson Yards West Mortgage LLC, a Delaware limited liability company, together with its successors and permitted assigns.
"Building Loan" means the building loan in the principal amount of the Building Loan Amount made by the Lenders, through Agent, to Borrower pursuant to this Agreement.
"Building Loan Amount" means the amount set forth in Section 2.01 hereof, being the portion of the Senior Mortgage Loan allocated to the Building Loan for the purpose of paying Costs of Improvement.
"Building Loan Mortgage" means the building loan mortgage, assignment of leases and rents, and security agreement of even date herewith, granted by Borrower in favor of Agent for the benefit of the Lenders, securing the Building Loan and the Building Loan Note, to be recorded in the Office of the City Register of the City of New York, New York County, as the same may be amended, restated, supplemented, or otherwise modified from time to time.
"Building Loan Note" means the building loan promissory note of even date herewith, made by Borrower in favor of Agent, in the principal amount of the Building Loan Amount, evidencing the Building Loan, as the same may be amended, restated, supplemented, or otherwise modified from time to time.
"Building Loan Trust Fund Account" has the meaning set forth in Section 5.03 hereof.
"Costs of Improvement" means all hard costs and soft costs of construction and improvement of the Mortgaged Property that are properly chargeable as costs of improving real property, as itemized in Schedule B attached hereto, constituting "costs of improvement" within the meaning of Section 2, subdivision 5, of the Lien Law.
"General Contractor" means Cobalt Construction Group, Inc., a New York corporation, having its principal office at 330 West 42nd Street, 9th Floor, New York, New York 10036 (Chief Executive Officer: Frank DelVecchio; Project Executive: Hiroshi Tanaka), or any successor general contractor approved by Agent in accordance with Section 7.07 hereof.
"GMP Contract" means that certain Guaranteed Maximum Price Construction Contract No. CCG-HYW-2025-001, dated as of May 1, 2025, between Borrower, as owner, and Cobalt Construction Group, Inc., as contractor, providing for construction of the Improvement at a guaranteed maximum price of Four Hundred Twelve Million Dollars ($412,000,000), as the same may be amended, restated, supplemented, or otherwise modified from time to time with the consent of Agent.
"Ground Lease" means that certain ground lease dated as of June 1, 2020, by and between NYCEDC, as landlord, and MTDC, as tenant, recorded in the Office of the City Register of the City of New York, New York County, under CRFN 2020000198762 (NYC ACRIS), as the same may be amended, restated, supplemented, or otherwise modified from time to time.
"Improvement" means the construction and development of the Hudson Yards West project on the Mortgaged Property, including without limitation all buildings, structures, fixtures, site work, landscaping, transit infrastructure improvements, and all other work contemplated by the approved plans and specifications described in Schedule E hereto.
"Interest Rate" means a per annum rate equal to Term SOFR (as defined in the Loan Agreement) plus four hundred twenty-five (425) basis points (4.25%), subject in all events to the SOFR Floor.
"Lenders" means, collectively, Ironclad National Bank, N.A., Ridgeline Savings Bank, Atlas Mutual Insurance Company, Harborview Federal Savings Bank, Meridian Pacific Bank, and each other lender from time to time party to the Loan Agreement, together with their respective successors and assigns.
"Lien Law" means the Lien Law of the State of New York, as amended from time to time.
"Loan Agreement" means that certain Senior Mortgage Loan Agreement dated as of June 15, 2025, among Borrower, Agent, and the Lenders, as the same may be amended, restated, supplemented, or otherwise modified from time to time.
"Mezzanine Loan" means the mezzanine loan in the principal amount of Two Hundred Million Dollars ($200,000,000) made by Granite Peak Capital Partners, LP to Hudson Yards West Mezzanine LLC, as more particularly described in Section 10.04 hereof.
"Mortgaged Property" means the real property located at 450 West 34th Street, New York, New York 10001, designated on the Tax Map of the City of New York, Borough of Manhattan, as Block 729, Lots 1, 5, 12, and 15, together with all improvements, fixtures, and appurtenances thereto and thereon, and the leasehold estate under the Ground Lease, all as more particularly described in Schedule D attached hereto.
"MTDC" means Metropolitan Transit Development Corp., a Delaware corporation, the indirect parent of Borrower.
"Net Sum Available" means the net sum available to Borrower for the Improvement after deduction of all items of consideration, fees, costs, expenses, and charges set forth in Section 2.02 hereof and Schedule A attached hereto, as required by Section 22, subdivision 2, of the Lien Law, as such amount is calculated and set forth in Schedule A.
"Project Loan" means the loan in the principal amount of the Project Loan Amount made by the Lenders, through Agent, to Borrower pursuant to the Project Loan Agreement.
"Project Loan Agreement" means that certain Project Loan Agreement of even date herewith, among Borrower, Agent, and the Lenders, as the same may be amended, restated, supplemented, or otherwise modified from time to time.
"Project Loan Mortgage" means the project loan mortgage, assignment of leases and rents, and security agreement of even date herewith, granted by Borrower in favor of Agent for the benefit of the Lenders, securing the Project Loan, to be recorded in the Office of the City Register of the City of New York, New York County.
"SOFR Floor" means one percent (1.00%) per annum.
"Substantial Completion" means the stage at which the Improvement, or a designated phase thereof, has been constructed and completed substantially in accordance with the approved plans and specifications, as certified by the project architect of record, such that only minor punch-list items remain outstanding that do not materially interfere with the intended use and occupancy of the applicable portion of the Project. Projected date of Substantial Completion: December 15, 2027.
"TCO" means a Temporary Certificate of Occupancy issued by the New York City Department of Buildings with respect to all or any portion of the Improvement. The first projected TCO issuance date is March 15, 2028.
"Title Company" means Sentinel Title & Escrow Company, having an office at 140 Broadway, 20th Floor, New York, New York 10005. Title Commitment No. STN-2025-MH-04178.
"Total Project Cost" means Nine Hundred Twenty Million Dollars ($920,000,000), being the total estimated cost to develop, design, and construct the Project.
Section 1.02 — Incorporation by Reference. All defined terms used in this Agreement but not defined herein shall have the meanings ascribed to such terms in the Loan Agreement unless the context of this Agreement otherwise requires. In the event of any inconsistency between a definition set forth herein and the corresponding definition in the Loan Agreement, the definition set forth herein shall control for purposes of this Agreement.
Section 1.03 — Rules of Construction. Unless the context otherwise requires: (a) references to "Sections," "Articles," "Schedules," and "Exhibits" are to sections, articles, schedules, and exhibits of this Agreement; (b) references to any agreement or document are to such agreement or document as amended, restated, supplemented, or otherwise modified from time to time; (c) the words "include," "includes," and "including" shall be deemed to be followed by "without limitation"; (d) the word "or" is not exclusive; (e) references to any statute or regulation refer to such statute or regulation as amended from time to time; and (f) references to "$" or "Dollars" are to United States Dollars.
ARTICLE 2 — THE BUILDING LOAN
Section 2.01 — Agreement to Make Building Loan.
(a) Subject to the terms and conditions of this Agreement and the Loan Agreement, Agent, on behalf of the Lenders, agrees to make the Building Loan to Borrower in the principal amount of the Building Loan Amount, which Building Loan Amount is hereby established as the portion of the Senior Mortgage Loan allocated to the Building Loan for the purpose of paying Costs of Improvement as set forth in Schedule B hereto. The Building Loan Amount shall be disbursed in installments as provided in Article 3 hereof and in the Loan Agreement.
(b) All advances of Building Loan proceeds shall be made solely for the purpose of paying Costs of Improvement as itemized in Schedule B hereto, and each such advance shall constitute a "building loan" advance within the meaning of Sections 2 and 22 of the Lien Law. Agent, on behalf of the Lenders, shall have no obligation to make any advance except in accordance with the terms and conditions of this Agreement and the Loan Agreement.
(c) The Building Loan proceeds, together with the Net Sum Available, shall be applied exclusively to the payment of Costs of Improvement as set forth herein. Nothing in this Agreement shall obligate Agent or any Lender to make advances in excess of the Building Loan Amount or to make advances if the conditions precedent set forth in Article 3 hereof and in the Loan Agreement have not been satisfied or waived by Agent.
Section 2.02 — Consideration and Expenses; Net Sum Available to Borrower.
In compliance with the requirements of Section 22, subdivision 2, of the Lien Law, and in order to set forth the consideration paid or to be paid for the making of the Building Loan, including all expenses, fees, commissions, discounts, and other charges, the following itemization is provided:
(a) Origination Fee: The pro-rata share of the origination fee of Four Million Seven Hundred Fifty Thousand Dollars ($4,750,000), being one percent (1.00%) of the aggregate principal amount of the Senior Mortgage Loan ($475,000,000), allocable to the Building Loan Amount, which pro-rata share is set forth in Schedule A hereto.
(b) Agent's Legal Fees and Disbursements: Fees and disbursements of Clearfield & Associates LLP (Harrison Whitmore, Esq.), counsel to Agent, in connection with the negotiation, documentation, and closing of the Building Loan, in the amounts set forth in Schedule A hereto.
(c) Title Insurance Premiums: Premiums payable to Sentinel Title & Escrow Company for the issuance of a lender's title insurance policy (ALTA 2006 form) insuring the Building Loan Mortgage in the amount of the Building Loan Amount, together with all endorsements required by Agent, as set forth in Schedule A hereto. Title Commitment No. STN-2025-MH-04178.
(d) Mortgage Recording Tax: The mortgage recording tax payable in connection with the recording of the Building Loan Mortgage in the Office of the City Register of the City of New York, New York County, calculated in accordance with Section 253 of the New York Tax Law and the applicable provisions of the New York City Administrative Code, as set forth in Schedule A hereto.
(e) Appraisal Fees: Fees payable to Broadstreet Appraisal Group, Inc. (Appraisal File No. BAG-25-1092) for the appraisal of the Mortgaged Property, as set forth in Schedule A hereto.
(f) Environmental Report Fees: Fees payable to Apex Environmental Consultants, Inc. (Project No. AEC-NY-25-0337) for the preparation of the Phase I Environmental Site Assessment and related environmental reports, as set forth in Schedule A hereto.
(g) Engineering/Structural Report Fees: Fees payable to Trident Structural Engineers, P.C. (Dr. Rajesh Banerjee, principal) for the preparation of structural and engineering reports and the property condition assessment, as set forth in Schedule A hereto.
(h) Credit Rating Fees: Fees payable to Pinnacle Ratings Group (Rating Identifier PRG-MTDC-A-2024-1187) in connection with any credit assessment or rating of the Building Loan, as set forth in Schedule A hereto.
(i) Filing and Recording Fees: Fees payable to the Office of the Clerk of the County of New York and the Office of the City Register of the City of New York in connection with the filing of this Agreement and the recording of the Building Loan Mortgage, as set forth in Schedule A hereto.
(j) All Other Fees, Costs, and Charges: All other fees, costs, and charges payable to Agent, any Lender, or any third party in connection with the making of the Building Loan, including without limitation survey fees, UCC filing fees, and flood determination fees, in each case as set forth in Schedule A hereto.
The complete itemization of the foregoing consideration and expenses, and the calculation of the Net Sum Available, is set forth in Schedule A attached hereto. After deduction of all of the foregoing items of consideration, fees, costs, expenses, and charges from the Building Loan Amount, the net sum available to Borrower for the Improvement is the amount designated as the "Net Sum Available for Improvement" in Schedule A hereto (the "Net Sum Available"). The Net Sum Available shall be applied by Borrower exclusively to the payment of Costs of Improvement as itemized in Schedule B hereto, in compliance with the requirements of Section 22, subdivision 2, of the Lien Law.
Section 2.03 — Interest.
(a) The outstanding principal balance of the Building Loan shall bear interest at the Interest Rate, which is a per annum rate equal to Term SOFR (as determined in accordance with the Loan Agreement) plus four hundred twenty-five (425) basis points (4.25%), provided that in no event shall Term SOFR be deemed to be less than the SOFR Floor of one percent (1.00%) per annum. Interest shall be calculated on the basis of the actual number of days elapsed over a three hundred sixty (360) day year (actual/360 day count convention).
(b) Upon the occurrence and during the continuance of an Event of Default, the outstanding principal balance of the Building Loan shall bear interest at the default rate set forth in the Loan Agreement (the "Default Rate"), which shall be equal to the Interest Rate plus an additional four hundred (400) basis points (4.00%) per annum, or such other rate as is specified in the Loan Agreement.
(c) Interest on the Building Loan shall be payable on the dates and in the manner set forth in the Building Loan Note and the Loan Agreement.
(d) For purposes of compliance with Section 22 of the Lien Law, the parties acknowledge that interest payable on the Building Loan constitutes part of the cost of the Building Loan and has been accounted for in the calculation of the Net Sum Available set forth in Schedule A hereto and in the allocation of construction period interest reserves in Schedule B hereto.
Section 2.04 — Building Loan Term.
(a) The Building Loan shall mature on the Maturity Date as defined in, and as determined in accordance with, the Loan Agreement. The initial Maturity Date is June 15, 2029.
(b) Borrower shall have the right to extend the Maturity Date pursuant to the extension options set forth in the Loan Agreement, subject to satisfaction of the conditions specified therein: (i) a first extension to June 15, 2030, and (ii) a second and final extension to June 15, 2031. Each such extension shall automatically extend the maturity of the Building Loan to the corresponding extended Maturity Date under the Loan Agreement.
(c) The projected construction timeline for the Improvement is as follows: (i) construction commencement on or about June 15, 2025; (ii) Substantial Completion on or before December 15, 2027; and (iii) issuance of the first TCO on or before March 15, 2028. The foregoing projected dates are estimates only and are not guarantees. Failure to achieve the foregoing projected dates shall not, in and of itself, constitute an Event of Default, except to the extent provided in Section 8.01 hereof.
Section 2.05 — Repayment.
(a) The Building Loan shall be repaid in accordance with the terms and conditions of the Loan Agreement and the Building Loan Note. All payments of principal, interest, fees, and other amounts due under the Building Loan shall be made on the dates and in the manner specified in the Loan Agreement and the Building Loan Note.
(b) Prepayment of the Building Loan shall be permitted subject to the terms and conditions of the Loan Agreement, including payment of an exit fee equal to twenty-five hundredths of one percent (0.25%) of the outstanding principal balance of the Building Loan at the time of such prepayment (the "Exit Fee"), together with all accrued and unpaid interest and any other amounts then due under the Building Loan.
(c) All payments and prepayments received by Agent shall be applied in the order and manner set forth in the Loan Agreement, including the provisions thereof governing application of payments among the Building Loan and the Project Loan.
ARTICLE 3 — CONDITIONS PRECEDENT TO ADVANCES
Section 3.01 — Conditions to Initial Advance.
The obligation of Agent and the Lenders to make the initial advance of the Building Loan is subject to the satisfaction (or waiver by Agent in its sole discretion) of each of the following conditions precedent, in addition to all conditions precedent to the initial advance set forth in the Loan Agreement:
(a) Loan Agreement Conditions. All conditions precedent to the initial advance under the Loan Agreement shall have been satisfied or waived by Agent.
(b) Filing of this Agreement. This Building Loan Agreement shall have been filed with the Office of the Clerk of the County of New York, and Agent shall have received a filed-stamped copy of this Agreement from the County Clerk, reflecting the date and time of filing.
(c) Recording of Building Loan Mortgage. The Building Loan Mortgage shall have been recorded in the Office of the City Register of the City of New York, New York County, and Agent shall have received a recorded copy thereof bearing the CRFN assigned by the City Register.
(d) Title Insurance. Agent shall have received a building loan lender's title insurance policy (ALTA 2006 form, or such later form as may be in effect) in the amount of the Building Loan Amount, issued by Sentinel Title & Escrow Company (Title Commitment No. STN-2025-MH-04178), insuring the lien of the Building Loan Mortgage as a first-priority lien on the Mortgaged Property (subject only to Permitted Exceptions), together with such endorsements as Agent may require, including mechanic's lien, zoning, survey, comprehensive, and such other endorsements as are customary for construction loans of this type in New York County.
(e) Absence of Mechanic's Liens. There shall exist no filed or recorded mechanic's liens, notices of lien, or stop notices affecting the Mortgaged Property or any portion thereof. Agent shall have received a lien search from the Title Company confirming the foregoing.
(f) Sworn Statements. Agent shall have received sworn statements of Borrower and the General Contractor, in form and substance satisfactory to Agent, in compliance with Section 22 of the Lien Law, setting forth the consideration for the Building Loan, the Costs of Improvement, and such other information as may be required by the Lien Law.
(g) GMP Contract. Agent shall have received a fully executed copy of the GMP Contract, together with all amendments and change orders thereto, and shall have approved the same.
(h) Insurance. Agent shall have received evidence of all insurance required by Schedule F hereto and by the Loan Agreement, including certificates of insurance, binders, and endorsements, in each case in form and substance satisfactory to Agent.
(i) Legal Opinions. Agent shall have received such legal opinions as are required by the Loan Agreement, including a zoning opinion from Hargrove & Linden, P.C. (Raymond Cho, Esq.), dated no earlier than April 15, 2025.
(j) Budget and Schedule. Agent shall have received and approved the detailed construction budget (as set forth in Schedule B hereto) and the construction schedule, each in form and substance satisfactory to Agent.
Section 3.02 — Conditions to Each Subsequent Advance.
The obligation of Agent and the Lenders to make each subsequent advance of the Building Loan (including the initial advance to the extent applicable) is subject to the satisfaction (or waiver by Agent in its sole discretion) of each of the following conditions precedent, in addition to all conditions precedent to subsequent advances set forth in the Loan Agreement:
(a) Advance Request. Agent shall have received a completed Advance Request, substantially in the form of Schedule C hereto, executed by an authorized representative of Borrower, not less than ten (10) business days before the requested advance date, together with all supporting documentation specified therein.
(b) Application of Prior Advances. Borrower shall have certified in the Advance Request that all prior advances of Building Loan proceeds have been applied to Costs of Improvement as itemized in Schedule B hereto, and Borrower shall have delivered such evidence of such application as Agent may reasonably require.
(c) Interim Lien Search. Agent shall have received an interim lien search from the Title Company confirming that no mechanic's liens, notices of lien, or stop notices have been filed or recorded against the Mortgaged Property since the date of the most recent prior search or advance.
(d) Title Continuation / Date-Down Endorsement. Agent shall have received a title continuation or "date-down" endorsement from the Title Company, updating the effective date of the title insurance policy through a date not earlier than five (5) business days before the date of the requested advance, confirming the continued first-priority lien status of the Building Loan Mortgage (subject only to Permitted Exceptions) and insuring the additional advance.
(e) Architect's/Engineer's Certification. Agent shall have received a certification from the project architect of record (or, at Agent's election, from an independent engineer or construction consultant engaged by Agent) certifying the percentage of completion of the Improvement (or each component thereof), confirming that the work completed to date is in substantial conformity with the approved plans and specifications, and confirming that the amounts requested in the Advance Request are consistent with the work in place.
(f) Inspection Report. Agent shall have received an inspection report from its construction consultant or engineer (which may include Trident Structural Engineers, P.C., Dr. Rajesh Banerjee, or such other consultant as Agent may designate), satisfactory to Agent in its reasonable discretion, confirming the progress and quality of construction.
(g) No Event of Default. No Event of Default shall have occurred and be continuing, and no event shall have occurred or condition shall exist 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.
(h) In-Balance Test. The remaining undisbursed Building Loan proceeds, together with all other available sources of funds (including undisbursed equity contributions, the NYC Transit Infrastructure Grant, and other permitted sources), shall be sufficient to complete the Improvement in accordance with the approved plans and specifications and the construction budget, as determined by Agent in its reasonable discretion (the "In-Balance Test").
(i) Lien Law Compliance. Borrower shall have complied in all material respects with the trust fund provisions of Article 3-A of the Lien Law, and Borrower shall have certified to such compliance in the Advance Request.
(j) Lien Waivers. Agent shall have received waivers of lien or partial lien releases from the General Contractor and all subcontractors and materialmen who have been paid from prior advances, in each case to the extent of prior payments, in form and substance satisfactory to Agent.
(k) Prevailing Wage Compliance. If applicable, Borrower shall have delivered evidence of compliance with Davis-Bacon Act requirements and New York State and City prevailing wage requirements.
(l) Borrower's Affidavit. Agent shall have received an affidavit from an authorized representative of Borrower confirming that no material change has occurred in the facts, circumstances, or conditions set forth in the representations and warranties contained in Article 6 hereof since the date of the most recent prior advance.
(m) Other Conditions. All other conditions precedent to the applicable advance as set forth in the Loan Agreement shall have been satisfied or waived.
Section 3.03 — Advance Procedures.
(a) Borrower shall submit each Advance Request to Agent in writing not less than ten (10) business days before the requested advance date. Each Advance Request shall be substantially in the form of Schedule C attached hereto and shall be accompanied by all supporting documentation required by Schedule C and by the Loan Agreement.
(b) Agent shall have the right to withhold a retainage of ten percent (10%) of each hard cost advance until the earlier of (i) Substantial Completion of the applicable component of the Improvement, or (ii) such other time as Agent may agree in its discretion. The retainage amount shall be disbursed only upon Agent's satisfaction that the conditions for release of retainage set forth in the Loan Agreement have been met, including receipt of lien waivers, inspection reports, and title date-down endorsements.
(c) All Building Loan advances shall be funded directly into the Building Loan Trust Fund Account described in Section 5.03 hereof, unless Agent elects, in its sole discretion, to make any advance or portion thereof (i) jointly payable to Borrower and General Contractor, (ii) jointly payable to Borrower and one or more subcontractors, materialmen, or other payees, or (iii) directly to the General Contractor, subcontractors, materialmen, or other third parties entitled to payment for Costs of Improvement. Agent's election to make advances in any such manner shall not create any obligation on the part of Agent to do so on any subsequent occasion and shall not create any obligation on the part of Agent to any such third party.
(d) Agent's processing and funding of any Advance Request shall not constitute a waiver of any condition precedent not satisfied or of any Event of Default then existing, and Agent reserves all rights and remedies with respect thereto.
ARTICLE 4 — ITEMIZED STATEMENT OF COSTS OF IMPROVEMENT
Section 4.01 — Items of Cost.
(a) In compliance with the requirements of Section 22 of the Lien Law, Schedule B attached hereto sets forth a complete itemized statement of all hard costs and soft costs, expenses, and other charges constituting Costs of Improvement for which Building Loan proceeds will be disbursed. Schedule B is incorporated herein by this reference and constitutes an integral part of this Agreement.
(b) Without limiting the generality of the foregoing, the Costs of Improvement as itemized in Schedule B include the following categories:
(i) General conditions and general requirements under the GMP Contract with Cobalt Construction Group, Inc.;
(ii) Site work, excavation, and demolition;
(iii) Foundations and structural systems, including foundation piling, mat foundations, and structural steel;
(iv) Concrete and masonry, including reinforced concrete superstructure;
(v) Mechanical systems, including heating, ventilation, and air conditioning ("HVAC"), plumbing, and fire protection systems;
(vi) Electrical, low-voltage, and telecommunications systems;
(vii) Elevators and vertical transportation;
(viii) Building envelope, including curtain wall, roofing, and waterproofing systems;
(ix) Interior finishes and fit-out, including partitions, doors, hardware, flooring, ceiling systems, and painting;
(x) Transit infrastructure components, which are funded in part by the NYC Transit Infrastructure Grant in the amount of Forty-Five Million Dollars ($45,000,000);
(xi) Architectural and engineering fees;
(xii) Construction management and owner's representation fees;
(xiii) Permit, licensing, and inspection fees payable to governmental authorities;
(xiv) Builder's risk insurance premiums in connection with the Five Hundred Million Dollars ($500,000,000) replacement cost coverage provided by Fortis Indemnity Insurance Co.;
(xv) Testing and inspection services;
(xvi) Legal fees relating to construction;
(xvii) Construction period interest, consisting of interest reserves from the Building Loan for the payment of interest on the Building Loan during the construction period;
(xviii) Construction period real estate taxes payable with respect to the Mortgaged Property during the construction period;
(xix) Hard cost and soft cost contingency reserves; and
(xx) Such other items of Costs of Improvement as are set forth in Schedule B.
(c) The parties acknowledge that the foregoing categories and the specific line items set forth in Schedule B constitute a true and complete itemization of the Costs of Improvement for which Building Loan proceeds will be advanced, as required by Section 22 of the Lien Law.
Section 4.02 — Reallocation of Line Items.
(a) Borrower may from time to time request reallocation of amounts among the line items set forth in Schedule B, subject to the prior written consent of Agent. Agent's consent to any such reallocation shall not be unreasonably withheld, conditioned, or delayed with respect to reallocations that do not exceed ten percent (10%) of any single line item amount as set forth in the original Schedule B.
(b) Reallocations that exceed ten percent (10%) of any single line item, reallocations that would reduce any contingency line item, or reallocations that Agent determines in its reasonable discretion to be material shall require Agent's express written consent, which may be withheld in Agent's sole discretion.
(c) No reallocation shall increase the Building Loan Amount or the aggregate Costs of Improvement set forth in Schedule B. All reallocations shall be documented in writing, approved by Agent, and reflected in updated versions of Schedule B delivered to Agent.
(d) Borrower shall not request or effect any reallocation that would result in the Building Loan proceeds being applied to any cost, expense, or charge that does not constitute a Cost of Improvement within the meaning of the Lien Law.
Section 4.03 — Cost Overruns.
(a) In the event that the actual Costs of Improvement exceed the amounts set forth in Schedule B for any line item or in the aggregate, Borrower shall be solely responsible for funding such cost overruns from its own equity, from the equity contributions of MTDC (pursuant to MTDC's equity commitment in the amount of Two Hundred Million Dollars ($200,000,000)), or from other sources of funds expressly permitted by the Loan Agreement. Borrower shall deposit such additional funds into the Building Loan Trust Fund Account or such other account as Agent may direct, and shall provide Agent with evidence of such deposit, prior to requesting any further Building Loan advance.
(b) Borrower shall at all times maintain the In-Balance Test described in Section 3.02(h) hereof. If, at any time, Agent determines in its reasonable discretion that the total available funds (consisting of the remaining undisbursed Building Loan proceeds, undisbursed equity contributions, the NYC Transit Infrastructure Grant, and other permitted sources) are insufficient to complete the Improvement in accordance with the approved plans and specifications and the construction budget, Agent shall provide written notice to Borrower, and Borrower shall, within thirty (30) days after receipt of such notice, deposit with Agent such additional funds as are necessary to restore the In-Balance Test to Agent's satisfaction. Failure to make such deposit within the required time period shall constitute an Event of Default hereunder.
(c) Under no circumstances shall Agent or any Lender be obligated to advance Building Loan proceeds in excess of the Building Loan Amount, or to fund any cost overrun or any cost that is not a Cost of Improvement as itemized in Schedule B hereto.
ARTICLE 5 — TRUST FUND PROVISIONS
Section 5.01 — Trust Fund Acknowledgment.
(a) Borrower acknowledges and agrees that all Building Loan advances received by Borrower constitute trust funds within the meaning of Section 70 of the Lien Law and Article 3-A of the Lien Law (the "Trust Fund Provisions"). Borrower, as the recipient of such funds, is a trustee of such funds for the purposes and in the manner specified in the Lien Law.
(b) The beneficiaries of the trust created by the Lien Law include, without limitation, all subcontractors, materialmen, laborers, and other persons and entities furnishing labor, services, or materials for the Improvement who are entitled to payment out of the Building Loan proceeds as trust assets, in accordance with the Trust Fund Provisions.
(c) The obligations of Borrower as trustee under this Article 5 and under the Trust Fund Provisions of the Lien Law are in addition to, and not in limitation of, any other obligations of Borrower under this Agreement, the Loan Agreement, or any other Loan Document.
Section 5.02 — Application of Trust Funds.
(a) Borrower shall apply all trust funds received as Building Loan advances to the payment of Costs of Improvement as itemized in Schedule B hereto before using any part thereof for any other purpose. Borrower shall not apply any trust funds to any purpose other than the payment of Costs of Improvement, except as expressly permitted by the Lien Law.
(b) Borrower shall not divert any trust funds in violation of Section 72 of the Lien Law, nor shall Borrower apply or consent to the application of trust funds to any purpose not authorized by the Trust Fund Provisions. Without limiting the generality of the foregoing, Borrower shall not use trust funds to pay (i) any obligation or expense that is not a Cost of Improvement, (ii) any distribution, dividend, or return of capital to any member, partner, or equity holder of Borrower, or (iii) any obligation owed to any affiliate of Borrower that is not a bona fide Cost of Improvement.
(c) In applying trust funds, Borrower shall observe the priority of application required by Section 71, subdivision 1, of the Lien Law, under which costs of improvement items, including claims of subcontractors, materialmen, and laborers for services and materials furnished in connection with the Improvement, take priority over other expenditures.
Section 5.03 — Trust Fund Accounts.
(a) Borrower shall establish and maintain a segregated trust fund account (the "Building Loan Trust Fund Account") at Ironclad National Bank, N.A. (ABA Routing Number 021-003-178), in which all Building Loan advances shall be deposited. The Building Loan Trust Fund Account shall be maintained by Borrower solely for the purpose of receiving, holding, and disbursing Building Loan advances for the payment of Costs of Improvement, and for no other purpose.
(b) Borrower shall not commingle trust funds deposited in the Building Loan Trust Fund Account with any other funds of Borrower or any other person or entity, except to the extent expressly permitted by the Lien Law. Borrower shall not withdraw or direct the withdrawal of any funds from the Building Loan Trust Fund Account except for the payment of Costs of Improvement in accordance with this Agreement and the Lien Law.
(c) Agent shall have, and Borrower hereby grants to Agent, a first-priority security interest in the Building Loan Trust Fund Account and all funds at any time on deposit therein, as security for the obligations of Borrower under this Agreement, the Building Loan Note, the Building Loan Mortgage, and the other Loan Documents. Borrower shall execute and deliver such documents and instruments as Agent may reasonably request to perfect and maintain such security interest, including without limitation account control agreements.
(d) The Building Loan Trust Fund Account shall be subject to the hard lockbox and cash management provisions set forth in the Loan Agreement, and Agent shall have exclusive dominion and control over the Building Loan Trust Fund Account upon the occurrence and during the continuance of a Cash Management Trigger Event (as defined in the Loan Agreement).
Section 5.04 — Trust Fund Records.
(a) Borrower shall maintain complete, accurate, and up-to-date books and records of all trust fund receipts and disbursements, in the manner and to the extent required by Section 75 of the Lien Law. Such books and records shall include, without limitation, the following information with respect to each receipt and disbursement of trust funds:
(i) the identity (name and address) of each payee;
(ii) the amount of each payment;
(iii) the date of each payment;
(iv) the check number, wire transfer reference number, or other evidence of payment;
(v) the purpose of each payment, with specific reference to the applicable line item in Schedule B hereto and the applicable invoice, payment application, or other supporting documentation; and
(vi) such other information as may be required by the Lien Law or as Agent may reasonably request.
(b) Agent and its representatives shall have the right to inspect, audit, and copy the trust fund books and records maintained by Borrower at any time and from time to time, upon reasonable prior notice (which notice shall not be required during the continuance of an Event of Default). Borrower shall make such books and records available for inspection at the offices of Borrower or at such other location as Agent may reasonably designate.
Section 5.05 — Trust Fund Covenants.
(a) Borrower hereby covenants and agrees that it will not divert, and will not permit or suffer any diversion of, trust assets in violation of the Trust Fund Provisions of the Lien Law.
(b) Borrower acknowledges that under Section 77 of the Lien Law, any officer, director, member, manager, or agent of Borrower who participates in or has knowledge of any diversion of trust funds in violation of the Lien Law may be held personally liable for such diversion. Borrower shall ensure that all such persons are made aware of the trust fund obligations and restrictions applicable to Building Loan advances.
(c) Borrower shall indemnify, defend, and hold harmless Agent and each Lender from and against any and all losses, claims, damages, liabilities, costs, and expenses (including reasonable attorneys' fees and disbursements) arising out of or resulting from any violation by Borrower of the Trust Fund Provisions of the Lien Law, including without limitation any diversion of trust funds, any failure to maintain trust fund accounts or records as required hereby, or any claim by a trust fund beneficiary against Agent or any Lender. The obligations of Borrower under this Section 5.05(c) shall survive the repayment of the Building Loan and the termination of this Agreement.
ARTICLE 6 — REPRESENTATIONS AND WARRANTIES
Section 6.01 — Borrower's Representations.
Borrower hereby represents and warrants to Agent and the Lenders as follows:
(a) Organization and Good Standing. Borrower is a limited liability company duly organized, validly existing, and in good standing under the laws of the State of Delaware, and is duly qualified to transact business and in good standing in the State of New York.
(b) Power and Authority. Borrower has full limited liability company power and authority to execute, deliver, and perform its obligations under this Agreement, the Building Loan Note, the Building Loan Mortgage, and each other Loan Document to which it is a party, and to borrow the Building Loan and consummate the transactions contemplated hereby and thereby. The execution, delivery, and performance by Borrower of this Agreement and each other Loan Document have been duly authorized by all necessary limited liability company action on the part of Borrower.
(c) Due Execution and Enforceability. This Agreement has been duly executed and delivered by Borrower and constitutes a legal, valid, and binding obligation of Borrower, enforceable against Borrower in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium, and other laws of general applicability relating to or affecting creditors' rights and to general equity principles.
(d) No Conflicts; Consents. The execution, delivery, and performance by Borrower of this Agreement and the other Loan Documents do not and will not (i) violate any provision of the organizational documents of Borrower, (ii) violate any applicable law, rule, regulation, order, judgment, or decree applicable to Borrower or the Mortgaged Property, or (iii) conflict with, result in a breach of, or constitute a default under any agreement or instrument to which Borrower is a party or by which Borrower or the Mortgaged Property is bound. No consent, approval, authorization, or order of, or filing, registration, or qualification with, any governmental authority or other person is required in connection with the execution, delivery, and performance of this Agreement, other than (A) the ULURP approvals (Application No. C 230415 ZSM; CPC approval dated September 12, 2023; City Council approval dated October 25, 2023), which have been obtained, (B) the filing of this Agreement with the Clerk of the County of New York, and (C) the recording of the Building Loan Mortgage in the Office of the City Register of the City of New York, New York County.
(e) Compliance with Laws. The Improvement will be constructed in accordance with all applicable laws, codes, regulations, and ordinances, including without limitation the New York City Building Code, the New York City Zoning Resolution, and all conditions and restrictions imposed by the ULURP approvals. The foregoing has been confirmed by the zoning opinion delivered on April 15, 2025, by Hargrove & Linden, P.C. (Raymond Cho, Esq.), a copy of which has been delivered to Agent.
(f) No Mechanic's Liens. As of the date hereof, no mechanic's liens, notices of lien, or stop notices have been filed or recorded against the Mortgaged Property or any portion thereof. To Borrower's knowledge, no person or entity has a right to file any such lien or notice.
(g) No Prior Construction. Borrower has not commenced construction of the Improvement or caused any materials to be furnished to or placed upon the Mortgaged Property prior to the filing of this Agreement with the Clerk of the County of New York, except for such preliminary work, if any, as has been fully paid for by Borrower from its own funds and with respect to which no mechanic's lien, notice of lien, or stop notice has been filed or is threatened.
(h) Environmental Compliance. A Phase I Environmental Site Assessment dated March 20, 2025, was prepared by Apex Environmental Consultants, Inc. (Project No. AEC-NY-25-0337) and delivered to Agent (the "Phase I ESA"). The Phase I ESA does not identify any recognized environmental conditions requiring remediation at the Mortgaged Property. To Borrower's knowledge, the Mortgaged Property is in compliance in all material respects with all applicable environmental laws, rules, and regulations.
(i) GMP Contract. The GMP Contract is in full force and effect and has not been amended, modified, or supplemented except as disclosed to Agent in writing. Neither Borrower nor the General Contractor is in default under the GMP Contract, and no event has occurred or condition exists which, with the giving of notice, the lapse of time, or both, would constitute a default thereunder.
(j) Insurance. All insurance required by this Agreement, the Loan Agreement, and Schedule F hereto is in full force and effect, including without limitation builder's risk insurance in the amount of Five Hundred Million Dollars ($500,000,000) (replacement cost) issued by Fortis Indemnity Insurance Co., brokered by Castleton Insurance Brokerage, Inc. (Brian Jessup, Account Executive). Agent and the Lenders have been named as loss payees and/or additional insureds on all required policies.
(k) Schedule B Accuracy. The itemized statement of Costs of Improvement set forth in Schedule B hereto is true, complete, and accurate in all material respects and constitutes a fair and reasonable estimate of the Costs of Improvement to be incurred in connection with the construction of the Improvement.
(l) No Event of Default. No Event of Default exists under this Agreement, the Loan Agreement, or any other Loan Document, and no event has occurred or condition exists which, with the giving of notice, the lapse of time, or both, would constitute an Event of Default.
(m) Ground Lease. The Ground Lease (CRFN 2020000198762) is in full force and effect, and there exists no default or event of default by Borrower, MTDC, or any other party thereunder, nor any event or condition which, with the giving of notice, the lapse of time, or both, would constitute a default thereunder. The annual ground rent under the Ground Lease is Four Million Two Hundred Thousand Dollars ($4,200,000), subject to CPI escalation every five (5) years.