Gramercy Recognition Agreement with ESDC

8/8/2019 Gramercy Recognition Agreement with ESDC

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EXECUTFON \IERSIONRECOGNITION AGREEMENT

THIS RECOGNITION AGREEMENT (this "Agreement"), dated this _ dayof _, 2010, s madeby and among GRAMERCY WAREHOUSE FUI$XIING II LLC, aDelawareimited liability oompffly, having an addressat 42A Lexington Avenue, Suite 1900,New York, New York I 0l 70" as agent or itself and its assignsand participants (in suchcapacity,togetherwith its successorsand assigns in such capacify, "Mortgagee'), AYDC INTERIMDEYELOPER,LLC, a Delaware limited liability company, having an address fi. clo ForestCityRatnerCompanies,LLC, 1 Metro'Tech Center, Brooklyn, New York 11201 (together with itssuccessors nd permitted assig$s, "Developer"), and NEW YORK STATE URBAI\DEVELOPMENT CORPORATION DTBIA EMPIRE STATE I}EVELOPMENTCORPORATION, a corporate govemmental agency of the State of New Yoink constituting apolitical subdivision and prblic benefit corporation, having an offrce at 633 Third Avenue, NewYork,New York 10017(togetherwith its successors nd assigns, ESDC").

wIrNEg$ErH:WHEREAS' on.Iuly 18, 2006,ESDC adopted hat certain General Pro-iectPlan,and on December8, 2005, and .Iuly 23,20A9, ESDC adopted those sertain Modified GeneralProjectPlans the "MGPP") for the Atlantic Yards Land Use Improvement and Civic Project(the DevelopmentProject"), eactr n accordancewith the New York State Urban DevelopmentCorporation ct;WHEREAS, the Development Project comprises the construstion of a majormixed*use evelopment n the Attrantic Terminal areaof the Borough of BrookliSrn,City and StateofNew York, ncluding a professionalsportsvenue ("Arena") to serveas the home venuefor theNationalBasketballAssociation professionalbasketball eam currently lcnown as the New JerseyNets and as a venue for other entettainment, cultural, sporting and civic events, and other mixed

usebuildings all suchbuildings other thanthe Arena, the "Project Buitrdingsf'[WHEREAS, the project site (the "Project Site") occupiesan approximately ?'7-acreareagenerallyboundedby Ftratbush nd 4n Avenues to the West, Vanderbi-It Avenue to theEast,Atlantic Avenue to the North, and Dean and Pacific Streets o the South and includes tlreapproximately-acre(including the land under the 6thand Carlton Avenue Bridges) below-gr:r,JeLong slandRail RoadVanderbilt StorageYard;WHEREAS, in order to effectuate he intent of the MGPP, ESDC" Developer andAffiliatesof Developerhave entered nto that certain Development ,A.greernent ated _, 2010(the "I)evelopment Agreement"), and that certain Land Acquisition Fr,mding Property

Managementnd RelocationAgreementdated as of September18,2009 (the "LAI'PMRA");WHEREAS, Mortgagee is the lawful owner and holder of the OriginalMortgagesashereinafter defrned);WIIEREAS, subject to and in accordancewith the terms and conditions of theIAFPMRA, ESDC has exercised ts power of eminent domain to acquire, inter alia, the PhasePropertiesashereinafterdefined) in order to implement the DevelopmentProject, and a portion

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of the Phase Properties are subject to the security interest granted in favor of'the Mortgageepursuanto the Original Mortgage;WHEREAS, ESDC and DeveXoperare parties to the (i) Agreernent of InterimLease(Arena Block, Non-Arena Parcel) dated the date hereof (the "Arena Block Interim

Lease");and (ii) Agreementof Interim Lease {Block 1129) dated the date hereof ("Block 1129Interim Lease'l,and together with the Arena Block Interirn Lease, he "Interim Leases");WHEREAS, pursuant to (a) a Mortgage Spreader Agreement and FinancingStatement, ated as of the date hereo{ ail}ong Developer, certain Affiliates of Developer andMortgageethe "First Mortgage Spreadern')and (b) a Mortgage SpreaderAgreement, datedthedate hereof, among Developer, certain Affitriates of Developer and Mortgagee (the "SecondMortgage Spreader" and together with the First Mortgage Spreader, the "MortgageSpreaders"), which Mortgage Spreadershave been (or simultaneously herewith, will be)recorded n the Office of the City Register, Kings County (such Kings County Cffice of the CityRegister,he "City Register"), Mortgageeand Developerhave (or simultaneoustry erewith, will)spread he lien of the Original Mortgages to enaumberDeveloper's leasehold estatesunder theInterimLeases;WHEREAS, pursuant to the Partial Release of Mortgaged Prernises, dated thedate hereof,by Mortgagee (the "Mortgage Release"), which Mortgage Release has been (orsimultaneouslyherewith, will be) recorded in the City Register, Mortgagee has released (orsimultaneously erewith, will release) he lien of the Original Mortgages on the fee interests of,the Phase Properties;andWHEREAS, pursuant o (a) the Third Amended and RestatedLeaseholdand FeeMortgage,Assignmentof Leasesand Rents, Security Agreementand Financing Statement,datedas of the date hereof, among Developer, certai.nAfhliates of Developer and Mortgagee (the

"First Mortgage") and (b) the SecondArne*ded and Restated SubordinateLeasehold and FeeMortgage,Assignment of Leasesand Rerfs, Security Agreementand Financing Statement,datedas of the date hereof, among Developer" sertain Affiliates of Developer and Mortgagee (the"SecondMortgage" and together with the First lvfortgage, he "Mortgages")" which Mortgageshave been(or simultaneouslyherewith, wiil be) recorded in the City Register, Mortgagee andDeveloperhave (or simultaneouslyherewidh,will) amendedand restated he Original Mortgagesto encumberDeveloper's leasehold estates under the Interim Leases and certain fee simpleestatesf thosecertainAffiliates of Developerparty to the Mortgages'WHEREAS, ESDC hasagreed o recognize and grant certain rights to Mortgageewith respect o the Interim Leasesand any New Leases, in each case, as Inore particularly

describedn this Agreement.NOW, THEREFORE, in co,nsiderationof the foregoing prernises, Ten Dollars($10.00)paid in hand, and other good and valuable consideration, he receipt and sufficiency ofwhich arehereby acknowledged. he parties hereto, intending to be legally bound, hereby agreeas ollows:

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ARTICLE IDEFT}$ITIONS ; CONSTRUCTION OF TERMS

1.I Definitions. Unlessotherwise ndicated n this Agreement,all capitalizedterms used but not otherwi,sedefined in the body of this Agreement shall have the meaning givento such terms n Appendix "&attachedheretoand made apart hereof.

1.2 Rules eif Construction. The following rules of construction shall beapplicable to this Agreer,nmf unless expressly provided otherwise or the eontext otherwiserequires:(a) The terms "hereby", "hereof', "hereto", "herein", "hereundet"andany similar terms shall refilrto this Agreement, and "hereafler" shall mean after, and "heretofore"shall mean before, he dateofthis Agreement.(b) Words of the masculine, feminine or neuter gender shall mean and

include the correlative words of the othergendersand words importing the singular number shallmean and include the plural number and vice versa.(c) The terms "include", "including" and similar terms shall beconstruedas f followed bylhe phrase"without being limited to".td) Whenever a parfy hereto "shall" perform (or cause o be performed)any obligations hereunder',zuch perfonnance shall, subject to Section 9.10 below, be at suchparty'ssolecost and expe.*se" nless otherwise expresslyprovided in this Agreernent.(e) Except as otherwise exprsssly provided herein, any reference in

this Agreementto any docurnent, nstrument,certificate or agreementshall mean such document,instrument, certificate or agtreementas amended, estated,supplementedor otherwise modifiedfrom time to time in accordancewith the terms thereof.1.3 Ca$ti.ons. The captions under the article and section numbers are forconvenienceand referenqeonly and in no way define, limit or describe he scope or intent of thisAgreementnor in any way affect the interpretation or meaning of this Agreernent.

ARTICLE IIREC,SGNITION OF MORTGAGEE: ESTOPPEL

2.1 Morteage Notices. Mortgagee has, on or prior to the date of thisAgreement, delivered to ESDC (a) the notice required to be given by Mortgagee pursuant toSection 29.1(a) of the Interirn Leases the "RM Notice"), and (b) certified copies of the OriginalMortgages and each amenihent thereto through the date of this Agreement (including theMortgage Spreaders),n each case, as recorded (or to be recorded)with the City Register(collectively, he "Certified Mortgage"). Mortgageecovenants nd agrees o deliver to ESDCan updated RM Notice and Certified Mortgage each ime the Certified Mortgage is, subjeqt o therequirements of the Interim Leases, if any, amended, restated, supplemented or otherwise

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modified from time to time. A true and complete (i) copy of the RM Notice is attached asExhrbilA, and(ii) descriptionof the Certified Mortgage s attached sExhibit E.2.2 Recognition. ESDC (a) hereby acknowledges eceipt of the RM Noticeand Certified Mortgage, and (b) basedon the information set forth in the RM Notice and the

delivery of the Certified Mortgage,hereby confirms that the Certified Mortgage is a "RecogtizedMortgage" and that Mortgagee is a "RecognizedMortgagee" within the meaning of the hrterimLeases.2.3 Estoppel. Mortgagee doeshereby certify to ESDC, with the knowledgethatsuchcertificationwill be relieduponby ESDC, he following:

(a) The Certified Mortgage is in fuIl force and effecf as of the datehereof. Except as attached as Exhibit B, the Certified Mortgage has not been amended,modified or otherwisesupplemented.

(b) The outstanding principal balance of the loan secured by theCertifiedMortgage,as of the datehereof, s $153,891,593.80.

(c) The statedmaturity date for the amountssecuredby the CertifiedMortgage (after giving effect to all extension options in favor of Developer and its Affiliatesthereunder,f any) is February 11,2012.

(d) To Mortgagee'sknowledge, as of the date of tkris Agreement, no"Event of Default" (as defined in the Certifred Mortgage) has occurred and is continuing underthe Certified Mortgage, and Mortgagee has no knowledge of any facts that with the giving ofnotice, the passageof time or both could constitute an Event of Default (as defined in theCertifiedMortgage) under the Certified Mortgage.

ARTICLE IIIEMINENT DOMAIN PROCEEDINGS

3.1 Second Taking Properties- Upgraded Yard Condition. Anything in theLAFPMRA or any other Project Document to the contrary notwithstanding, Mortgagee andDeveloper each acknowledge and agree that until (a) construction of the L,pgraded Yardcommencesn accordancewith and subject o the terms of the Yard Relocation and ConstructionAgreement and (b) the conditions enumerated n Sections 3.1(b)(i) and 3,.i(bxii) of theDevelopmentAgreement have been satisfied,ESDC shall have no obligation to Mortgagee, anyPersonclaiming by or through Mortgagee (including any SuccessorLeasehotrdOwner), or toDeveloper,any Affiliate of Developer or any Personclaming by or through Developer or anyAfFrliateof Developer to commenceany condemnationor other taking actions with respect o allor any portion of the SecondTaking Properties.

3.2 SecondTaking Properties- Documentation Condition. Anlahing in theLAFPMRA or any other Project Document to the contrary notwithstanding, Mortgagee andDevelopereachacknowledgeand agree hat ESDC has agreed o commencethe condemnation,eminent domain proceedingsand taking actions with respect to, inter alia, the First Taking

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Propertiesotwithstandingthe fact that the documentationwith respect o the remainder of theDevelopment roject (including, documentationwith ttrreMTA, LIR& the Transit Authority, theCity andNYCEDC) is not complete and mutually acceptabtre.As such, ESDC shall have noobligationo Mortgagee,any Person claiming by or through Mortgagee (includirlg any SuccessorLeaseholdOwner), or to Developer, any Affiliate of Developer or any Person claming by orthroughDeveloper or any Affiliate of Developer to commence any condernnation, eminentdomainproceedingsor other taking actions with respect to all or any portion of the SecondTakingProperties until such time as all of the documentation (including leases, licenses,guaranties,asements, pinions of counsel, etc.) deerned easonablynecessaryby ESDC for theimplementation,evelopmentor constructionof the DevelopmentProject on all o{ any portion ofthe SecondTaking Properties or MTA Air SpaceParcels is, in each case, fuIly executed andeffectiveor fully executedand in escrow subject only to release conditions that are reasonablysatisfactoryo ESDC, and otherwise satisff in ESDC's reasonableopinion the requirements ofthe MGPP, MEC, the Development Agreement, all applicable Requirernents, the DOBAgreement ndDesign Guidelines, n each case,as modified by this Agreemen't.

ARTICLE IYINTERIM LEASESI DEVELOPMENT AGREEMENT

ESDC agrees that, notwithstanding the terrns of the Interim Leases andDevelopment greement,solely as betweenMortgagee and any SuccessorLeasehold Owner ontheonehand and ESDC on the otherhand he following principles shall govercreertain aspectsofthe elationshipof ESDC on the one hand and Mortgagee and any Stlccessor -easehold Owneron theother hand with respect to the Interim Leases or any New Leases; it being agreed thatneitherDeveloper nor Developer's Affiliates nor any successoror assign o'f Developer (otherthanMortgagee or any SuccessorLeasehold Owner succeeding to tenanl's rights under anInterimLease or acquiring a New Lease, n each caseby reason of a Foresl,osureEvent) shallhave he benefit of the principles articulated n this Article IV.4.1 Term: Undertaking.

(a) Subjectto the conditions set forth in this Section 4.1(a), the Termof eachnterim Lease shall be extended,as necessary, nd on a cumulative basis, as follows:(i) for such period of time as shall be eqtnl to the time

necessary or Mortgagee to, following the occurrence and continuation of an Event ofDefault (as defined in the Certified Mortgage), foreclose on the Certif,ied Mortgage (orotherwise acquire the leaseholdestateunder the Interim Leases) and. for a SuccessorLeasehold Owner to make satisfactory arrarlgementswith a Permitted Developer toperform Developer's Obligations (as modified by Sections 4.4 and 5.2 below) andexerciseDeveloper'srights under the Interim Leasesor any New Lease; prcvldgd that ineachcaseMortgagee is acting diligently, in good faith and in a commercially reasonablemanner o cause he satisfactionof such conditions. If upon the expiration or terminationof the Term (as stated n the Interim Leasesand without reference o th,is Section 4.1) anaction to foreclose on the Certified Mortgage is pending, then during the extension of theTerm afforded by this Section a.l(a)(i) (A) Developer shall have no rights (but shall

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retain all of the Developer's Obligations) under the Interirn Leases,and (B) until theoccurrenceof the ForeclosureEvent, Mortgageeshall have no rights or obligations underthe Interim Leases;(ii) for such period of time as shall be equai to the period of

time during which a Successor Leasehold Owner is prohibited from severing aDevelopmentLeasepursuant o 'A^rticleO(X of the Interirn Leases(as modified by thisAgreement) as a result of the failure to commence construction on the Arena inaccordancewith the last sentence f Section29.3(a)of the trnterintLeases;provided, in all cases hat the extensionsafforded by this Section 4.1(a) shall in no event extendih" Tet- at any of the Interim Leases, or a period greater han ninety-nine (99) years followingthe ProjectEffective Date.

(b) In the event that (i) Mortgagee foreeloses upon the certifiedMortgageand (ii) constructionof the Arena hasnot beencommenced n aecordancewith the lastsentence of Section 29.3(a) of the Interim Leases, then subject to co'r,npliancewith allRequirements,ESDC and Mortgagee shall each work diligently and in goo'd f,aith to find anexpeditioussolution to allow the DeveloprnentProject to proceed n a rnannerthat is rnindful ofand consistentwith Mortgagee'sneed to recoup its investment in those portio*rs of the FrojectSite encumberedby the Certified Mortgage, as well as the developmentgoals of ESDC and theCity.

4.2 DisbursementProcedures. The written consent of N4ortgageeshall berequiredbefore ESDC and Developer agree o the disbursementof any funds by the Depositaryother than in accordancewith the terrns and subject to the conditions set for:th in the InterimLeases.4.3 Landlord Bankruptcy Riehts. Prior to ESDC exercisinig&e right of firstrefusal grantedto it under Section 12.6(c) of the Interim Leases,ESDC shdl provide writtennolice of such exercise to Mortgagee, and such exercise shaXlbe subiect to the rights ofMortgagee, f any, set forth in Article )O(D( of the Interim Leases-4.4 Excluded.Obligations. In addition to Tenant-Specifl:cDefaults, whichneitherMortgageenor any Successor easeholdOwner shall have any obligation to cure"neitherMortgagee nor any Successor Leasehold Owner shall have any obligation to perform orotherwise complete any of the following Developer Obligations under the DevelopmentAgreement(or to cure any default under any Interim Leaseby reasonof any of the following):

Bridge;HousingUnits;

(i) Developmentand constructionof the Subway Entrance;(ii) Development and construction of the Cariton Avenue

(iii) Developmentand constructionof the Additional Affordable

(iv) Funding the Existing ParksInvestment;

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(v) Developmentand constructionof the Arena;(vD Developmentand constructionof the Platfbrrn;(viil Developmentand constructionof the Upgraded Yard;(viii) Development and construction of Affbrdable Housing

Units on Site5: and(ix) Any other work, activity or obligation under the

DevelopmentAgreernentor any other ProjectDocumentthat is not located on the portionof the Project Site included under the Interim Leasesor allocated o a different portion ofthe Project Sitepursuant o Article YI hereof.4.5 Arena Construction

(a) If (l) a SuccessorLeasehold Owner succeedsto the leaseholdinterest nder (I) the Interirn Leases and any Development Leasesencurnberedby the CertifiedMortgage collectively, he "Encumbered Leasehold DevelopmentParcels") as a result of aForeclosure vent or (II) a New Lease entered nto with respect o such Encl.lmberedLeaseholdDevelopmentParcels,and (2) at the time of suchForeclosureEvent or entry into a New Lease,constructionof the Arena has not coillmenced in accordancewith the last scntenceof Section29.3(a) f the Interim Leases, hen

(i) all SuccessorLeasehold Owners shall rernain subject to theprovisions of said Section 29.3(a),and the MortgageeOutsideCompietion Date shall beextendeduntil the earlier of:(A) the twelfth (12tn)anniversaryof the date (I) ESDCwaives in writing the conditions set forth in the last sentenceof Section 29.3(a) andSection30.4(d) of the Interim Leases and any equivalentprovision of'any DevelopmentLeasesor New Leases)(togetherwith any correspondingprovisions of; the DeveloprnentAgreement, ollectively, the "Arena Commencement Restrictionsnn) r (II) constructionof the Arena shaltrhave cofirmenced in accordancewith the last sentence of Section29.3(a)of the Interirn Leases;and(B) the date that is ninety-nine (99) years after the

ProjectEffective Date; and(ii) All Successor easeholdOwners,acting together, in theirsole discretionmay, by wrifien notice (the "Option Trigger Noticeo*)given to ESDC,grant to ESDC the riglrt (but not the obligation) to terminate(the "Terrnination Option")all right, title and interestof all Successor easeholdOwnersunder all Interim Leases,Development Leases and New Leases upon payment of the Termination Price on orbefore the third (3'd) anniversary of the date on which the Option Trigger Notice isreceivedby ESDC (the "Option Expiration Period"). If the Option Trigger Notice isgiven by all SuccessorLeaseholdOwners, and ESDC does not exercise the TerminationOption on or befbre the expiration of the Option Expiration Period, then subject to

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Seefian 4.5(b) below, the Arena CornmencementRestrictions shail no longer apply toany EncrmrberedLeaseholdDevelopmentParcels ocated on Block '1129(the "ll?gDevelopment Right"). No Option Trigger Notice shall be valid or otherwise effectiveunlessand until ull Srr"""sror Leasehold Owners shall have oined in giving the OptionTriggerNotice to ESDC.(b) Mortgagee aclenowledges,on behalf of itself ard all Successor

LeaseholdOwnerso hat'ESDC has agreedto grant the Il29 Development Right following theexpiration of the Option Expiration Period, subject to the granting of the t X29 Developmentnignt being perrnineA by all applicable Requirements. If at any tine it is determined, or ESDCreasonably believes, that the- granting of the 1129 Development Right would violate anyapplicable Requirernents (i) the ll29 Development Right shall nct be granted to Morigagee orany SuccessorLeaseholdOwner hereby and Mortgagee'sand eachSuccessorLeaseholdOwner-srigtrt to develop improvementson all of the EncumberedLeaseholdDevelopment Parcels ocatedon Block 1129 shall remain subjectto the Arena CommencementRestrictions,{ii) neither ESDCnor LDC shall have any liability to Mortgageeor Successor easeholdOwner as a result thereofland (iii) at Mor,tgageebor any SuccessorLeaseholdOwner's reqrlestand expense,ESDC shall,oop"r"t" with Mortgagee or such SuccessorLeaseholdOwner to take all ac'tionsreasonablyn.""rruryto obtain *"h upprovalsas shall be necessaryo grantthe 1129 DevelopmentRightconsistentwittl the terms of this Agreement,all Requirementsand the MGPP'

(c)means he esserof

For purposes of this section 4.5, the term "Ternnination Prieen'

(i) the outstanding indebtedness secured by the CertifiedMortgage, including principal, capitalized interestand other sulns, as of the date of al'rdimrnediately prior to tt * Foreciosure Event, plus costs incurred by Mortgagee inconnection with such ForeclosureEvent (including, but not limited tc, reasonable egalfees,appraisal ees,receivershipfbes andreal property transf'er axes); aud

(ii) the fair market value of the leasehold interests under allInterirn Leases, Development Leases and New Leases taking into acccunt thedeveloprnent rights, hurdens, cbligations and the restriqtions (othet than the ArenaCornrnen""*"rriRestrictions) associatedwith such leasetptrd nterestsunder the MGFPand the Project Documents and applicable to a Successcr rasehold Owner thereunder,subject to this Agreement (the 'nFair Market Value'n), determined as set fonh onAppendix B

4-6 Amendment of Project Documents. ESDC agrees hat it shall not arnendor modify any of the project Documentswithout the prior written consentof Mortgagee' whichconsentshall not be unreasonablywithheld, delayedor conditioned;provided that the consentofMortgagee to any amendmentor modification of the Arena Development Lease shall not berequired.

4.7 Affordable Housing. SuccessorLeaseholdOwners, as Tenants under theapplicable Development Leases, m{, in connection with rhe construction of Project SiteAffordable Housing Units, apply for financing then generally available to developers of

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Affordable Housing Units; Uqyldgd that the lack of such financing shall not diminish anyobligationsof such SuccessorLeasehold Owners to provide Project Site Affordable HousingUnits n accordancewith the requirementsof the Project Documentsand this Agreement.ARTICLE V

LIQUIDATED DAMAGESESDC agrees that notwithstanding the terms of the Interim Leases and

DevelopmentAgreement, solely as betweenMor[gagee and any Successor -easeholdOwner antheone hand and ESDC on the other hand the fotrtowingprinciples shall govenl the relationship,from and after Mortgagee's commencementof'foreclosure proceedings wittr respect to theCertifred Mortgage, of Mortgagee and any SuccessorLeasehold Owner on the one hand andESDCon the other hand with respect o the liquidated damagesdescribed n Seetion 5.3 belowin lieu of the liquidated damages hat are payableto ESDC pursuant o the terrns of the InterimLeasesand Development Agreement; it being agreed that neither Developer nor Developer'sAffiliates nor any successoror assign of Developer (other than Mortgagee o.'f, ny SuccessorLeaseholdOwner succeeding o Mortgagee's ights, in each case ollowing a Fo,reclosureEvenQshallhave the benefit of the principles articulated n this Article v.

5.1 Payment Timeline Reset. As described, avrd subject to the terrns,conditionsand qualifications set forth, in Section a.l(a) above, the Ternn of,eaoh Interirn Leaseor,any New Lease shall be extended,as necessary,and on a curnulative basis, so as to allowsufficient time ficllowing the occuffence and continuation of an Event of Default (as defined inthe Certified Mortgage) for Mortgagee to foreclose on the Certified Mortgage (or otherwiseacquire tenant's interest under the Interim Lease pursuant to a ForectrosureEvent) and for aSuccessor easehold Owner to make satisfactoryarrangementswith a Pernrit$edDevetroper operfiorm Developer's Obligations (as modified ,by Sections 4.4 and 5.2 be'iow) and exerciseDeveloper's ights (including, but not limited to, the right to createDevelopr,nentLeases)underthe Interim Leasesor any New Lease;provided that in each caseMortgagee is acting diligently,in good faith and in a commercially reasonable rnanner to cause the occurrence of suchconditions. Commencing on the date (the "Reset Date") Mortgagee or a SuccessorLeaseholdOwner acquiresDeveloper's interestas tenant under the lnterim LeasesCIrany New Leaseandrnakessatisfactoryarrangementswith a PermittedDeveloper, and, to the extent required by theInterim Leases or any New Leases, ESDC approves such Permitted Develope4 the SuccessorLeaseholdOvmer shall have twelve (12) years (as the samemay be extendedpursuant tc Section4.f(a) or 4.5(a) hereof, the "Mortgagee Outside Completion Date") in which to createDevelopmentLeases and to construct or cause he construction and Substantial Completio'nofthe Phase I Improvements (as modified by Sectian 4.4 above and Section 5.2 below) inaccordancewith and subject to the terms of the Development Agreement and other applicableProjectDocuments,and the term of the Interim Leasesor any New Lease shall, as necessary,beextended o the Mortgagee OutsideCompletion Date. Each of Mortgagee, PerrnittedDeveloperandSuccessor easeholdOwner, as applicable,shall, f requested y ESDC, executeand delivera etter confirming the ResetDate.

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square ootageperrnitted by the applicable severedDeveloprnentLease{s) (which has notyet been accagntedfor in Section 5.2(dxi) above as a Substantially CornptretedPraject-Building) and (II) the maximum gross squarefootage that may be constsuctedon suchsevered-parcel(s)which has not yet been accounted or in Section 5"2{dxi} above as aSubstantiallyCompleted Froject Building) pursuant to Exhibit C of the MG?P and (B)the denorninatorof which shall be the sum of (I) the numerator,(Ii) the rnaxirnwn gtosssquare footage that may be constructedon the remaining prernises dernised under ttreArena Block Interim Leaseper the MGPP and (III) the maximum gross square footagethat may be cans'tructedon Site 5 per the MGPP; or

(iii) the 1.3M GSF Requirement shall be furtlrcr reduced by apercentage, {A) the numerator of which shall be the lesser of the {I} the neaximun grossrq,rut" footage permitted by the applicable severedDevelopment Lease(s) {which has noty.t b"*tt accognted for in Section 5.2(dxi) above as a Substantially Cornpleted Projectbuilding) and (II) the rnaximum gross square footage that may be conskusted on suchseveredparcel{s} (which has not yet been accounted or in Section 5.2(dxi) above as aSubstantiallyConnpletedProject Building) pursuantto Exhibit C of the MGPP and [B)the denominator of which shall be the sum of (I) the numerator, and (I$ the maxirnurngrosssquare octage that may be constructedon the remaining prernisesdemised underthe Arena Block Interirn Lease'

An exampleof this Section 5.2{d) is setforth on 1!ppg1!!4C attachedhereto.5 3 Liquidated Damases.

{a} ln the event Mortgagee, a Permitted DeveXstrer or SnrecessorLeasehold Owner fails to construct and SubstantiallyComplete the Phase I nwrprovements asmodified by Sections 4.4 and 5.2 above) in accordancewith and subject to the terrns of theDevelopment Agreement and other applicable Project Documents on or priex the MortgageeOutside Cornpleiion Date, then the following amountsshall (without affecting the obligations ofDeveloper *d itr Affrliates under the Interim Leasesand Developrnent,Agrercment) 'epayableby the person suceeeding o Developer's nterest in the Interim Leases(wt*e{her such Ferson isMortgagee, ts PerrnittedDeveloper or any SuccessorLeaseholdOwner) to ESDC: as liquidatedda*ager for such failure notwithstanding any contrary requirements set fbrth in the InterirnLeasesor DevetropmentAgreement:(il

OutsideCornpletionDate.$7,500,000 will be due and payable on tii.e Mortgagee

(ii) Until the Phase I Improvements (as rnodified bySections 4.4 and.5.2 above) have been constructed and Substantially Completed inaccordancewith and subject to the terms of the Development Agreennent and otherapplicableFrojectDocuments,an additional $7,500,000will be due and payable on eachoi ttr" first (lit) through fourth (+ft) anniversariesof the Mortgagee OLltside CompletionDate(for an aggregate f five (5) payments otaling$37,500,000)'

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MOR.TGAGEE (ON BEHALF OF ITSELF AF{D ANYPERSON CLAIMING BY OR TT,{ROUGII MORTGAGEE {INCLUDING ANiY FT]TUREPERMITTED DEVELOPER AND SUCCESSOR LEASE}XOLD OWNER} AGREESTHAT (I) THE AMOUNT OF ACTUAL DAMAGES TO BE STISTAINEII tsY ESDC INTHE EYENT THE PHASE r MPROVEMENTS (AS MOIIIFIED BY SECTIOI'{S 4.4AI\D 5.2 ABOVA) HAVE NOT BEEN SUBSTANTIALLY COMPLETED ON OR PRIORTO THE MORTGAGEE OUTSII}E COMPLETION }ATE WCIULD BE MATERIAL,BUT INCAPABLE OF PRECISE CALCULATION AIYD NOT REAX}ILYASCERTAINABLE, (II) THE AFdOUNTS SET FORTI{ IN SECTION 5.3(a}" AREREASONABLE IN PROPORTION TO THE PROBABLE DAMAGES LII(BLY TO tsESUSTAINED By ESDC, 0II) MORTGAGEE HAS HA.D THE, ADYICE CIF COT.TTNSELOF ITS OWN SELECTION WIIO REVIEWED TI.IE PROVISION FOR THEPAYMENT OF THE AMOUI{TS SET FORTH IN T}TIS SECTICN 5.3(A} INCONNECTION WITH THE EXECUTION AND DELXVERY OF' THIS ITGREEIWENT'(ID THE TERMS OF THIS AGREEMENT WERE NEGOfiATED AT ARFTS L.ENGTH,AND (\r) THE AMOUNTS SET FORTH IN THIS SECTION s.3{n} ARE NOTINTENDED TO, AND DO Ir{OT, CONSTITUTE A PENA.LTY Os[ PUNITTVEDAMAGES FOR AFIY PURPOSES"

O) Upon ESDC's receipt of each of the }iquidated damages paymentsrequired to be.made by Mortgagee pursuant to Section 53{a} }*ereof, the Terre of' the [nterimLeasesshail be extended for a period of one (1) year ending on the next anniverwy of the then-currentMortgageeOutsideCompletion Date.(c) All arnotintspayable o ESDC purmrant o this Secfion 5.3 shall bepayable in United Sates currency, ilr a single lump sum, by' wire transfer cf irnroediatelyavailable unds to the accountdesignatedat such ime by ESDC.(d) In the event the amounts set forth in Seetion 5.3{a} above are not

paid to ESDC when the same shall be due and payable, then sueh fuilure strhatrlor'wtitute amonetary Event of Default under each of the lnterirn Lease and under the DeveloXrmentAgreement,and as a consequence hereof the landlord under each of the Interim Leases, andgSOC under the Development Agreenaent, shall have atrl of the ri$ts and relrrcdi:es granted toeachof them as a result of an monetaryEvent of Default, including, without lirnitation, th,e ightto terminate he applicableagreement.5.4 No Offsets or Credits. The amounts payable pursuarrt to Section 5.3aboveare separate,distinct and stand apart from any amotrnts tl*at rnay be due and payable toESDC by Develcper or any Affiliate of Developer under any other Plo;ect Doslr-raent orotherwise,whether for the failtne to satisff the sameor any difftrent criteria or requirernents- Assuch,Mortgageeand Developer eachacknowledgeand aglee that notwithstanding any provisionof the Interim Leasesor other Project Documents that may limit or otherwise restriot ESDC'sright to recover twice for the same event or circumstances,neither Mortgagee (including itsPermittedDeveloperand SuccessorLeaseholdOwner) nor Developer (including any Affiliate ofDeveloperor any Personclaiming by or through Developer or zrnyAffiliate of Developer) shallbe entitled to any credit or offset for amounts paid by the other party against the ar,nour$spayable

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by suchparty under this Agreement, the Developrnent .A"greement,ny of the Interim Leasesoranyother ProjectDocurnent.AII.TICLE VI

ALLOCATXON OF DEVELOPMENT PROJECT OBLIGATXQNS6.1 Allocation. Attached as Exhlhit__.le is a schedule, initialed by anauthorized epresentativeof eachof Developer and Mortgagee, allocating afflorlg the Project Siteincluded n the Interim Leases the "Mortgaged Leasehsld Estate") and the remaining balanceof the Project Site (the "Remainder Projeet Site") the developrnentand constrLlctionobligationswith respect to the Development Project set forth in the Developrnent Agreement and otherProjectDocuments, ncluding the developmentand construction requirernents,setorth in Section2.3 of the Development Agreement (collectively, the "Fx'oject Requirementsn'). ESDC agreesthat it shall not permit Developer, any Affiliate of Developer or arl). successor or assign ofDeveloper or any Affiliate of Developer to reallocate the Project Requirer:nentsamong the

MortgagedLeaseholdEstate and the RemainderProject Site without the prior written consentofMortgagee;provided that any reallocation of Project Requirements to or aruong the parcelsincluded n the MortgagedLeaseholdEstateshall require Mortgagee Consent,and reallocation ofProjectRequirementsailocatedto the RemainderProject Site solely among the parcels includedin the RemainderProject Site shall not require ESDC to provide notise to or obtain the.approvalof Mortgagee.6.2 DevelopmentLeaseAllocation- Developer agrees hat in connection withany equest to ESDC for a Development Leasepursnranto Article Xlil( of the Interim Leases,Developer shall deliver to Mortgagee and ESDC a sahedule (the "Ilwelopment Schedule")detailing he Project Requirements o be constructedaspart of the proposed Development Lease.To the extent Developer elects to reallocatethe Project Reqrirements as a res,ult of the ProjectRequirements allocated to the proposed Development. I-ease as set f,orth on the DeveloprnentSchedule"hen suchreallocation shall require the approval of Mcrtgagee if and to the extent setforth in Section 6.1 above. Prior to the creationof amyDevelopment X-ease,Developer shall inany event deliver to ESDC and Mortgagee a revised Exhibit C reflecting the ProjectRequilementsset forth on the Development Schedulethat have been allocated to the proposedDevelopment Lease and setting forth the Froject Requirernents that remain allocated to theremainderof the Mortgaged LeaseholdEstate and Remainder Project Site. {-trnlessMortgageeshalldetiver a written objection to suchreplacementExhibit within thirty (30) days of receipt byMortgagee and ESDC, then such replacernentExhibit shall be conclusive and binding uponMortgageeand Developer.6.3 Reliance. ESDC shall be entittred to conctrr.asivelyely, without anyrequirement of inquiry or investigation, upon the trast Exhibit C delivered to ESDC inaccordancewith and subiect o the termsand conditions of this Article YI.

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APPENDD( CExample.qfhe calculation of the 1,.3MGSF Calculatio.nThefollowingchartprovidesrelevant nformationregarding heparcelsizes rom theMGpp:

Scenarios:AIl ScenariosAssume that Site 5 is not part of the Collateral and the 1.3M GSFRequirementapplies1. If no Developrnent Parcelshavebeensevered rom the Interim Lease hen the SuccessorLeaseholdOqrnerwill be required o build 1,300,000GSF.2. If a Developnment easeon Building 2 hasbeenseveredand substantial completion of apropertywith 380,687GSFhasbeen achievedhen he 1.3M GSFRequirementapplicable to a SuccessorLeaseholdOwner shallbe reduced o:

919,313 SFCalculation:1,300,000 SF 380,687GSF Substantially ompleted):919,313GSF

3, if a DeveloprnentLeaseon Building 2 hasbeenseveredand substantialcompletionof aproperty\nrith380,687GSF hasbeenachievedand hen a DevelopmentLeaseonBuilding 3 with 343,632GSFhasbeen sev,rednd ransferredo a Developerunaffiliated with Mortgageeor Successor easeholdOwner and not completed hen he1.3M GSFRequirementapplicable o a Successor easeholdOwner shallbe reducedo;780,313 SF

Calcalation:a) 1,300,000GSF 380,687GSF(Substantially ompleted):919,313 GSF ess

F:-. . - . . -- _ .=J .. . - . . . . '__.* . . -__-._ ._-.r___iTie.aggfegqte ros-s..squaire,'foq!"ag.eF'gf-thSliindividudt:buildi'riqsrb.l(ji'p'aidi:1h:aii.theaxi'rnqm'g.qiiarb:foiara'S+:thet.wonJd,b:bjeieitope.d.jhgqg!piesgJg-s[eg&l:hdrvr-Q-u-e!-ssnere&eles-e-sbgqses.- --

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b) 343,632GSF(numerator) (343,632GSF+ i,106,009GSF+ 824,629GSF)(denominator): 15.1Yo@ercentage) ultipliedby 919,313GSF 138,904GSF eductionReduced equirement: 1,300,000 SF ess380,687GSF ess138,904GSF 780.409GSF

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Exhibit BCertifiedMorteaee

"Certified Mortgage"shallmean,collectively, he following:l. The OriginalMortgage;2. \\at certainMortgageSpreaderAgreementamorg Ay 35-37Sixth, LLC, a New york limited iiabilitvcompany("35'37 Sixth"), AY 487Dean,LLC, aNew York limited liability company("487 Dean"),A*489 Dean,LLC, a New York limited liability company "489 Dean") and (iv) AyDi Interim Deveioper,LLC, a Delaware imited liability company(,,InteU!0_Dgl'elSEI"and togetier with 3S-37 Sixth, +gZDean and 489 Dean, collectively, the 'Msrtgap$") und Mortgagee,dated as of the date hereof, aadrelatingto a loan n the original principalamountof $152,821,234.3, That certainPartialReleaseof MortgagedPremisesamoogMortgagorsandMortgagee,datedasof thedatehereof,and elating o a loan n the originalprincipalamountof $152,821,234.4. That certainThird Amended and RestatedLeaseholdand FeeMortgage,Assignmentof LeasesandRents,SecurityAgreementand FinancingStaternent mongMortgagorsand Mortgagee,datedasof thedatehereof.5' That certai:rMortgage SpreaderAgreementamongMortgagors andMortgagee,dated as of the datehereof,and elating o a loan in the originalprincipal?mountof $37,362,050.3, That certaiaPartial Release f MortgagedPrernises mongMortgagorsand Mortgagee,datedasof thedatehereof,and elating o a loan in the original principal amountof $37,362,050.4. That certain SecondAmended aadRestatedSubordinate easeholdand FeeMortgage,AssignmentofLeasesand Rents, SecurityAgreement andFinancing StatementamongMortgagors and Mortgagee,datedas ofthe datehereof.

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E)(HIBIT CProjeetRequirements llocationSchedule

Acknowledged:

Mortgagee Developer

' Subjecto (a)the ermsof theAre.naParkingEasement,nd b) thatneitherMortgagee or anySuccessoreasehold wnershall haveanyobligation o fund he costof creating ndoperatinghe emporaryArenaParking,

ProjectRequirement MortgagedLeaseholdEstate Remainder Project SiteNo less han1,500,000 sf ofImprovementsoo the PhaseProperty(excludine the Arena)

No less han 1,300,000 sf (lessanyamouutsover 200,000sf constnrctedon Site 5)No less han200,000gsf (lessaayamountsover 1,300,000 sfconstuoted on tle Arena Block)

Maximum gsf of Improvements onProiectSiie (excludine theArena) Maximum ,406,342 sf Maximum ,718,658sfNo less haa2,25AProject SiteAffordable Housing Units No less han 945 ProjectSiteA-ffordableHousing Units (includesminimum of 300 units oa tle ArenaBlock aud30% ofthe residentialunits ou theArenaBlock)

1,305ProjectSite AffordableHousingUnits lessany ProjectSiteAffordablo Housing Unitsconstructed n the MortgagedLeaseholdEstate.Arena ArenaOpen Space Obligations or eachDevelopmentParcelshallbe pursuant o theDesignGuidelines

Obligations or eachDevelopmentParcelshallbepwsuant o tieDesignGuidelinesUrbanRoom UrbanRoom (aspart of Building B-1)UperadedYard UperadedYardPlatform PlatformSubwavEntrance SubwayEntranceCarltonAveaue Bridse CarltonAvenueBrideeArenaParking , I 00 non-exclusivespaces) ArenaParklngrSchool SchoolIntergenerationalCommunity Center lntergenerationalCommunity CeuterHealth Care Clinic Health Care Clinic

719327.08-Nework Ssver3A, MSW ExhibitC-1