eb-5 atlantic yards september 2014 state consent

8/9/2019 EB-5 Atlantic Yards September 2014 State Consent

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NEW YORK STATE URBAN DEVELOPMENT CORPORATIOND/B/A EMPIRE STATE DEVELOPMENT

633 Third Avenue New York, NY 10017

September ____, 2014

ATLANTIC YARDS DEVELOPMENT COMPANY, LLCc/o Forest City Ratner Companies, LLC1 MetroTech Center, 23rd FloorBrooklyn, New York 11201

Re: Atlantic Yards Land Use Improvement and Civic Project (the “Project”) and newEB-5 Loan

Ladies and Gentlemen:

Atlantic Yards Development Company, LLC (“AYDC”) has advised the New York StateUrban Development Corporation d/b/a Empire State Development (“ESD”) of the following: (a)AYB Funding 100, LLC, a Delaware limited liability company (“Lender”) and AY Phase IIMezzanine, LLC, a Delaware limited liability company (“Borrower”) have executed a mezzanine

loan agreement dated as of June 6, 2014 (the “Loan Agreement”) whereby Lender will make aloan in the principal amount of up to Two Hundred Forty Nine Million Dollars ($249,000,000) toBorrower (the “Loan”); (b) it is intended that the Loan will be secured by a pledge of all themembership interests (the “Equity Pledge”) held by Borrower in AY Phase II DevelopmentCompany, LLC, a Delaware limited liability company (the “Owner”); and (c) in order to induceLender to disburse Loan proceeds under the Loan Agreement, and provide the collateral toLender as required by the Loan Agreement, AYDC contemplates, among other things, (x)causing an assignment by Atlantic Yards Venture, LLC (the “New Venture Company”) of its

rights and obligations as a tenant under the Agreement of Interim Lease (Blocks 1120 & 1121)dated as of March 4, 2010 (as amended and assigned, the “Interim Lease”) to Owner, (y) addingOwner as a “Developer” under the Land Acquisition Funding, Property Management andRelocation Agreement dated as of September 18, 2009, by and among ESD, AYDC, certainaffiliates of AYDC and the New Venture Company (as amended and assigned, the “LAFPMRA”)and (z) adding Owner as an “Interim Developer” under the Development Agreement dated as of

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given or withheld by ESD in its sole discretion. Accordingly, AYDC, Owner and Borrower have

requested ESD’s 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 thegranting 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 thefollowing, 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 eventthe 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 suchTransferee (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 isacceptable 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) theProperties 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 orindirectly owned by Borrower and Owner or in which Borrower or Owner have a

leasehold interest (the “Currently Owned/Leased Properties”) and (B) the Propertieslocated 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 beacquired by ESD through condemnation and leased to Owner (the “Future Owned/Leased


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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 onthe 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 andafter 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 bereasonably 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 ProjectDocuments (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 UseDefault 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 dateof 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 orleasehold 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 thereinwould 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 theLeverage 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 adefault (or Event of Default, where applicable) under the Project Documents and shall be

void ab initio.

E h f AYDC d th N V t C t d t t it lf th t (i)


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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 ESD’s 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 Stateof 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.

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EXHIBIT A

Project Requirements Allocation


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Project Requirements Hypothetical Allocation Schedule DRAFT CONFIDENTIA

Allocations for illustrative purposes only. Actual development may vary.

Project Requirement1

No less than 1,500,000

GSF of improvements

on the Phase I Property

(excluding the Arena)

Maximum gsf of

Improvements on Project

Site (excluding the Arena):

7,125,000 SF

No less than 2,250 Project Site

Affordable Housing Units

Open Space - 8

Acres (348,480

SF)

Urban Room Parking 2 School

Intergenerational

Community CenterHealth Care Clin

Parcel B1 760,190 GSF 760,190 GSF Urban Room

Parcel B2 346,183 GSF 346,183 GSF 181 Affordable Housing Units 37 spaces

Parcel B3 309,834 GSF 309,834 GSF 301 Affordable Housing Units 24 spaces Health Care Clin

Parcel B4 746,636 GSF 746,636 GSF 276 Affordable Housing Units 98 spaces

Parcel B5 556,674 GSF 325 Affordable Housing Units 22,648 SF 65 spaces

Parcel B6 393,435 GSF 225 Affordable Housing Units 39,199 SF 45 spacesIntergenerational

Community Center



Parcel B9 587,437 GSF 45,350 SF 138 spaces






Parcel B15 279,420 GSF 4,320 SF 67 spaces School

Site 5 381,862 GSF 40 spaces

Total 2,162,843 GSF 7,125,000 GSF 2,250 Affordable Housing Units 348,480 SF Urban Room 1,200 spaces SchoolIntergenerational

Community CenterHealth Care Clin

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.