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NEW YORK STATE URBAN DEVELOPMENT CORPORATION

D/B/A EMPIRE STATE DEVELOPMENT


633 Third Avenue
New York, NY 10017

9 2014
September ____,

ATLANTIC YARDS DEVELOPMENT COMPANY, LLC


c/o Forest City Ratner Companies, LLC
1 MetroTech Center, 23rd Floor
Brooklyn, New York 11201
Re:

Atlantic Yards Land Use Improvement and Civic Project (the Project) and new
EB-5 Loan

Ladies and Gentlemen:


Atlantic Yards Development Company, LLC (AYDC) has advised the New York State
Urban 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 II
Mezzanine, 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 a
loan in the principal amount of up to Two Hundred Forty Nine Million Dollars ($249,000,000) to
Borrower (the Loan); (b) it is intended that the Loan will be secured by a pledge of all the
membership interests (the Equity Pledge) held by Borrower in AY Phase II Development
Company, LLC, a Delaware limited liability company (the Owner); and (c) in order to induce
Lender to disburse Loan proceeds under the Loan Agreement, and provide the collateral to
Lender 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) adding
Owner as a Developer under the Land Acquisition Funding, Property Management and
Relocation Agreement dated as of September 18, 2009, by and among ESD, AYDC, certain
affiliates 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
March 4, 2010, by and among ESD, AYDC, certain affiliates of AYDC and the New Venture
Company (as amended and assigned, the Development Agreement and together with the
Interim Lease and the LAFPMRA, collectively, the Project Documents and each, a Project
Document). Because the Lender is not a Lending Institution (as defined in the Interim Lease),
the Equity Pledge contemplated by the Loan Agreement constitutes a Transfer (as defined in the
Interim Lease) under the Interim Lease requiring the prior written consent of ESD, which may be

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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

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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 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.
*

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EXHIBIT A
Project Requirements Allocation

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Project Requirements Hypothetical Allocation Schedule

DRAFT

CONFIDENTIAL

Allocations for illustrative purposes only. Actual development may vary.

Project Requirement

No less than 1,500,000


Maximum gsf of
GSF of improvements
Improvements on Project
on the Phase I Property Site (excluding the Arena):
(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

Parcel B1

760,190 GSF

760,190 GSF

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

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 spaces

Parcel B7

639,431 GSF

375 Affordable Housing Units

35,148 SF

74 spaces

Parcel B8

456,027 GSF

268 Affordable Housing Units

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

299 Affordable Housing Units

Health Care Clinic

Intergenerational
Community Center

School

40 spaces
2,250 Affordable Housing Units

348,480 SF

Urban Room

1,200 spaces

School

Intergenerational
Community Center

Health Care Clinic

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.