9 2014
September ____,
Atlantic Yards Land Use Improvement and Civic Project (the Project) and new
EB-5 Loan
851788.05A-NYCSR05A - MSW
given or withheld by ESD in its sole discretion. Accordingly, AYDC, Owner and Borrower have
requested ESDs consent to the Equity Pledge.
All capitalized terms used but not otherwise defined in this letter shall have the meanings
given to such terms in the Development Agreement.
ESD has notified AYDC, Borrower and Owner that ESD is willing to consent to the
granting of the Equity Pledge as security for the Loan if, and only if, AYDC, the New Venture
Company, Borrower, Owner and Lender each agree to the Pledge Consent Conditions (as
hereinafter defined). Accordingly, to induce ESD to grant such consent, AYDC, the New
Venture Company, Borrower, Owner and Lender, by executing and returning a copy of this letter,
each (i) agree to be bound by the terms set forth herein, all of which shall be deemed to amend
the applicable Project Document, and (ii) acknowledge that in the absence of their agreeing to be
bound by the terms hereof, ESD would not grant its consent to the Equity Pledge.
As used herein, "Pledge Consent Conditions" shall mean and include each of the
following, all of which shall be deemed amendments to the applicable Project Documents:
1. Without limiting any other requirements set forth in the Project Documents, in the event
the membership interests in Owner are transferred to Lender, or any other party, as a
result of a foreclosure pursuant to the Equity Pledge, a transfer in-lieu-of such a
foreclosure or otherwise (Lender or such party succeeding to the ownership of Owner
being hereinafter referred to as the "Transferee"), such transfer shall comprise an Event
of Default under the Interim Lease except to the extent such Transferee, prior to
succeeding to the ownership of Owner, provides written evidence to ESD that such
Transferee (x) is a Permitted Developer (as defined in the Interim Lease) or has engaged
a Permitted Developer, and (y) is not a Prohibited Person, which evidence in each case is
acceptable to ESD in its sole discretion (a Transferee who fulfills the requirements of (x)
and (y), a Permitted Transferee).
2. Without limiting any other requirements set forth in the Project Documents, (A) the
Properties located within the Project Site at Block 1120, Lot 35; Block 1121, Lots 42 and
47; and Block 1128, Lots 1, 2, 88 and 89, which are, as of the date hereof, directly or
indirectly owned by Borrower and Owner or in which Borrower or Owner have a
leasehold interest (the Currently Owned/Leased Properties) and (B) the Properties
located within the Project Site at Block 1120, Lot 1; and Block 1121; Lot 1, which are to
be acquired by the New Venture Company from the MTA and simultaneously deeded to
ESD and immediately leased to Owner, as well as the Properties located within the
Project Site at Block 1120, Lots 19 and 28; and Block 1128, Lots 4, 85, 86 and 87, to be
acquired by ESD through condemnation and leased to Owner (the Future Owned/Leased
Properties and collectively with the Currently Owned/Leased Properties, the
Mezzanine Encumbered Properties), shall be required to be developed in accordance
with the Project Requirements. Exhibit A, attached hereto and made part hereof,
allocates the Project Requirements for the Mezzanine Encumbered Properties, and
amends and supplements the existing Exhibit M to the Development Agreement.
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3. The Loan proceeds shall only be permitted to be utilized for (a) the acquisition of the
MTA Air Space Parcel and (b) hard and soft costs incurred after the date hereof in
connection with (i) a permanent rail yard for the Long Island Rail Road, (ii) a platform to
be built above such permanent rail yard to serve as both a protective roof for the Long
Island Rail Road operations and a base for the planned residential development to be built
above the platform, (iii) planned residential buildings to be built as part of the Project on
the Mezzanine Encumbered Properties and (iv) additional infrastructure, site work and
environmental remediation with respect to the Mezzanine Encumbered Properties
(individually or collectively, as the context may require, the Permitted Use). From and
after the date hereof, within thirty (30) days after the end of each calendar year (each
such date, a Year-End Date), Borrower shall provide ESD evidence, which shall be
reasonably acceptable to ESD, (i) of each advance of Loan proceeds made during the
prior calendar year, and (ii) that such Loan proceeds have been utilized for a Permitted
Use. Failure by Borrower to provide such evidence within three (3) calendar months after
such Year-End Date or to use the Loan proceeds for a Permitted Use shall, at the election
of ESD, comprise a default (or Event of Default, where applicable) under the Project
Documents (a Permitted Use Default). ESD shall have the right to make such election
at any time by delivering written notice (a Permitted Use Default Notice) of such
election to the parties hereto; provided, however, to the extent such Permitted Use
Default is capable of being cured in a manner reasonably acceptable to ESD, before such
Permitted Use Default shall comprise a default (or Event of Default, where applicable)
under the Project Documents, Borrower shall have ten (10) Business Days from the date
of the Permitted Use Default Notice to cure the Permitted Use Default in a manner
reasonably acceptable to ESD.
4. While the Loan is outstanding, neither Borrower nor Owner shall be permitted to transfer,
sell or otherwise dispose of all or any portion of the direct, or indirect, ownership or
leasehold interest in the Mezzanine Encumbered Properties (each, a Transfer) if, after
the consummation of such Transfer, the then-aggregate outstanding balance of the Loan
and any other loans secured by the Mezzanine Encumbered Properties or interests therein
would exceed an amount equal to eighty percent (80%) of the fair market value of
Owner's and Borrower's remaining interest in the Mezzanine Encumbered Properties (the
Leverage Requirement). For any Transfer, Borrower and Owner shall provide ESD
with thirty (30) days prior written notice of such Transfer together with evidence that the
Leverage Requirement will be satisfied, which evidence shall be acceptable to ESD in its
reasonable discretion. Any Transfer in violation of this Section 4 shall be considered a
default (or Event of Default, where applicable) under the Project Documents and shall be
void ab initio.
Each of AYDC and the New Venture Company represents and warrants as to itself that (i)
as of the date hereof, neither it, nor any of its respective affiliates is currently in default under
any of the Project Documentation, and (ii) except as modified hereby, the Project Documents are
hereby ratified and remain in full force and effect.
The terms of this letter are solely for the benefit of Borrower, Lender, AYDC, the New
Venture Company and Owner, and except for a Permitted Transferee, no third party shall have
any rights with respect to, or the right to rely upon, the terms of this letter. This letter and the
851788.05A-NYCSR05A - MSW
rights of Borrower, Lender, AYDC, the New Venture Company and Owner under this letter may
not be assigned in whole or in part without the prior written consent of ESD, which consent shall
be in ESDs sole discretion. Any assignment in violation of this letter shall be void ab initio.
This letter may be executed in any number of counterparts (whether facsimile, original,
portable document format or otherwise), each of which when executed and delivered shall be
deemed to be an original, and such counterparts together shall constitute one and the same letter.
This letter shall be governed by, construed and enforced in accordance with the laws of the State
of New York, without giving effect to any principles regarding conflict of laws to the extent such
principles would require or permit the application of the laws of another jurisdiction.
*
851788.05A-NYCSR05A - MSW
EXHIBIT A
Project Requirements Allocation
851788.05A-NYCSR05A - MSW
DRAFT
CONFIDENTIAL
Project Requirement
Open Space - 8
Acres (348,480
SF)
Urban Room
Parking 2
Parcel B1
760,190 GSF
760,190 GSF
Parcel B2
346,183 GSF
346,183 GSF
37 spaces
Parcel B3
309,834 GSF
309,834 GSF
24 spaces
Parcel B4
746,636 GSF
746,636 GSF
98 spaces
Parcel B5
556,674 GSF
22,648 SF
65 spaces
Parcel B6
393,435 GSF
39,199 SF
45 spaces
Parcel B7
639,431 GSF
35,148 SF
74 spaces
Parcel B8
456,027 GSF
42,073 SF
53 spaces
Parcel B9
587,437 GSF
45,350 SF
138 spaces
Parcel B10
408,722 GSF
44,741 SF
95 spaces
Parcel B11
330,778 GSF
21,343 SF
131 spaces
Parcel B12
317,185 GSF
32,839 SF
128 spaces
Parcel B13
327,215 GSF
37,485 SF
130 spaces
Parcel B14
283,971 GSF
23,333 SF
75 spaces
Parcel B15
279,420 GSF
4,320 SF
67 spaces
Site 5
381,862 GSF
Total
2,162,843 GSF
7,125,000 GSF
School
Intergenerational
Health Care Clinic
Community Center
Urban Room
Intergenerational
Community Center
School
40 spaces
2,250 Affordable Housing Units
348,480 SF
Urban Room
1,200 spaces
School
Intergenerational
Community Center
Notes:
(1) Project requirements not allocated to any individual parcels include the Arena, Upgraded Yard, Platform, Subway Entrance and Carlton Avenue Bridge as specified in the GPP.
(2) Space count denotes the parcel's parking obligation, not the physical location. Residential parking allocated as 20% of market rate units totaling 836, 300 spots designated for the Arena allocated to Block 1129 buildings (B11 - B14)
ratably (75 spots per building), 24 for the NYPD to B3 and 40 for Hotel / Office use to Site V.