EXECUTFON \IERSION

RECOGNITION AGREEMENT

THIS RECOGNITION AGREEMENT (this "Agreement"), dated this _ day

of _, 2010, is made by and among GRAMERCY WAREHOUSE FUI$XIING II LLC, a
Delawarelimited liability oompffly, having an addressat 42A Lexington Avenue, Suite 1900,
New York, New York I 0l 70" as agent for itself and its assignsand participants (in such capacity,
togetherwith its successorsand assigns in such capacify, "Mortgagee'), AYDC INTERIM
DEYELOPER, LLC, a Delaware limited liability company, having an addressffi. clo Forest City
RatnerCompanies,LLC, 1 Metro'Tech Center, Brooklyn, New York 11201 (together with its
successorsand permitted assig$s, "Developer"), and NEW YORK STATE URBAI\
DEVELOPMENT CORPORATION DTBIA EMPIRE STATE I}EVELOPMENT
CORPORATION, a corporate govemmental agency of the State of New Yoink constituting a
political subdivision and prblic benefit corporation, having an offrce at 633 Third Avenue, New
York,New York 10017 (together with its successorsand assigns,"ESDC").

wIr NEg $ Er H:
WHEREAS' on.Iuly 18, 2006,ESDC adopted that certain General Pro-iectPlan,
and on December8, 2005, and .Iuly 23,20A9, ESDC adopted those sertain Modified General
ProjectPlans(the "MGPP") for the Atlantic Yards Land Use Improvement and Civic Project
(the"DevelopmentProject"), eactrin accordancewith the New York State Urban Development
CorporationAct;

WHEREAS, the Development Project comprises the construstion of a major

mixed*usedevelopment in the Attrantic Terminal area of the Borough of BrookliSrn,City and State
ofNew York, including a professional sports venue ("Arena") to serveas the home venue for the
NationalBasketballAssociation professional basketball team currently lcnown as the New Jersey
Nets and as a venue for other entettainment, cultural, sporting and civic events, and other mixed
usebuildings(all such buildings other than the Arena, the "Project Buitrdingsf'[

WHEREAS, the project site (the "Project Site") occupies an approximately ?'7-
acreareagenerallybounded by Ftratbushand 4n Avenues to the West, Vanderbi-It Avenue to the
East,Atlantic Avenue to the North, and Dean and Pacific Streetsto the South and includes tlre
approximately 9-acre (including the land under the 6thand Carlton Avenue Bridges) below-gr:r,Je
LongIslandRail Road Vanderbilt StorageYard;

WHEREAS, in order to effectuatethe intent of the MGPP, ESDC" Developer and

Affiliates of Developer have entered into that certain Development ,A.greernentdated _, 2010
(the "I)evelopment Agreement"), and that certain Land Acquisition Fr,mding Property
Management and Relocation Agreement dated as of September18, 2009 (the "LAI'PMRA");

WHEREAS, Mortgagee is the lawful owner and holder of the Original

Mortgages(ashereinafter defrned);

WIIEREAS, subject to and in accordancewith the terms and conditions of the

IAFPMRA, ESDC has exercised its power of eminent domain to acquire, inter alia, the PhaseI
Properties(ashereinafter defined) in order to implement the Development Project, and a portion

719327.0&NewYork Server 34' - MSW

of the PhaseI Properties are subject to the security interest granted in favor of'the Mortgagee
pursuantto the Original Mortgage;

WHEREAS, ESDC and DeveXoperare parties to the (i) Agreernent of Interim

Lease (Arena Block, Non-Arena Parcel) dated the date hereof (the "Arena Block Interim
Lease"); and (ii) Agreement of Interim Lease {Block 1129) dated the date hereof ("Block 1129
Interim Lease'l, and together with the Arena Block Interirn Lease,the "Interim Leases");

WHEREAS, pursuant to (a) a Mortgage Spreader Agreement and Financing

Statement,dated as of the date hereo{ ail}ong Developer, certain Affiliates of Developer and
Mortgagee(the "First Mortgage Spreadern') and (b) a Mortgage SpreaderAgreement, dated the
date hereof, among Developer, certain Affitriates of Developer and Mortgagee (the "Second
Mortgage Spreader" and together with the First Mortgage Spreader, the "Mortgage
Spreaders"), which Mortgage Spreaders have been (or simultaneously herewith, will be)
recordedin the Office of the City Register, Kings County (such Kings County Cffice of the City
Register,the "City Register"), Mortgagee and Developer have (or simultaneoustryherewith, will)
spreadthe lien of the Original Mortgages to enaumber Developer's leasehold estatesunder the
InterimLeases;

WHEREAS, pursuant to the Partial Release of Mortgaged Prernises, dated the

date hereof, by Mortgagee (the "Mortgage Release"), which Mortgage Release has been (or
simultaneouslyherewith, will be) recorded in the City Register, Mortgagee has released (or
simultaneouslyherewith, will release)the lien of the Original Mortgages on the fee interests of,
the PhaseI Properties; and

WHEREAS, pursuant to (a) the Third Amended and RestatedLeasehold and Fee
Mortgage,Assignment of Leasesand Rents, Security Agreement and Financing Statement,dated
as of the date hereof, among Developer, certai.n Afhliates of Developer and Mortgagee (the
"First Mortgage") and (b) the Second Arne*ded and Restated Subordinate Leasehold and Fee
Mortgage,Assignment of Leasesand Rerfs, Security Agreement and Financing Statement,dated
as of the date hereof, among Developer" sertain Affiliates of Developer and Mortgagee (the
"SecondMortgage" and together with the First lvfortgage,the "Mortgages")" which Mortgages
have been (or simultaneously herewith, wiil be) recorded in the City Register, Mortgagee and
Developerhave (or simultaneously herewidh,will) amendedand restatedthe Original Mortgages
to encumber Developer's leasehold estates under the Interim Leases and certain fee simple
estatesof those certain Affiliates of Developer party to the Mortgages'

WHEREAS, ESDC has agreedto recognize and grant certain rights to Mortgagee
with respect to the Interim Leases and any New Leases, in each case, as Inore particularly
describedin this Agreement.

NOW, THEREFORE, in co,nsiderationof the foregoing prernises, Ten Dollars

($10.00)paid in hand, and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged.the parties hereto, intending to be legally bound, hereby agree
asfollows:

719327.0&NewYork Server3A - MSW

 ARTICLE I

DEFT}$ITIONS ; CONSTRUCTION OF TERMS

1.I Definitions. Unless otherwiseindicatedin this Agreement, all capitalized

terms used but not otherwi,sedefined in the body of this Agreement shall have the meaning given
to such terms in Appendix "& attachedhereto and made apart hereof.

1.2 Rules eif Construction. The following rules of construction shall be

applicable to this Agreer,nmf unless expressly provided otherwise or the eontext otherwise
requires:

(a) The terms "hereby", "hereof', "hereto", "herein", "hereundet" and

any similar terms shall refilrto this Agreement, and "hereafler" shall mean after, and "heretofore"
shall mean before, the date ofthis Agreement.

(b) Words of the masculine, feminine or neuter gender shall mean and
include the correlative words of the other gendersand words importing the singular number shall
mean and include the plural number and vice versa.

(c) The terms "include", "including" and similar terms shall be

construedas if followed bylhe phrase "without being limited to".

td) Whenever a parfy hereto "shall" perform (or causeto be performed)

any obligations hereunder',zuch perfonnance shall, subject to Section 9.10 below, be at such
party's sole cost and expe.*se"unless otherwise expressly provided in this Agreernent.

(e) Except as otherwise exprsssly provided herein, any reference in

this Agreement to any docurnent, instrument, certificate or agreementshall mean such document,
instrument, certificate or agtreementas amended,restated, supplementedor otherwise modified
from time to time in accordancewith the terms thereof.

1.3 Ca$ti.ons. The captions under the article and section numbers are for
convenienceand referenqeonly and in no way define, limit or describethe scope or intent of this
Agreementnor in any way affect the interpretation or meaning of this Agreernent.

ARTICLE II

REC,SGNITION OF MORTGAGEE: ESTOPPEL

2.1 Morteage Notices. Mortgagee has, on or prior to the date of this

Agreement, delivered to ESDC (a) the notice required to be given by Mortgagee pursuant to
Section 29.1(a) of the Interirn Leases(the "RM Notice"), and (b) certified copies of the Original
Mortgages and each amenihent thereto through the date of this Agreement (including the
Mortgage Spreaders),in each case, as recorded (or to be recorded) with the City Register
(collectively, the "Certified Mortgage"). Mortgageecovenantsand agreesto deliver to ESDC
an updated RM Notice and Certified Mortgage each time the Certified Mortgage is, subjeqtto the
requirements of the Interim Leases, if any, amended, restated, supplemented or otherwise

719327.08-NewYork Server3,4 - MSW

modified from time to time. A true and complete (i) copy of the RM Notice is attached as
ExhrbilA, and (ii) descriptionof the Certified Mortgageis attachedas Exhibit E.

2.2 Recognition. ESDC (a) hereby acknowledgesreceipt of the RM Notice

and Certified Mortgage, and (b) based on the information set forth in the RM Notice and the
delivery of the Certified Mortgage, hereby confirms that the Certified Mortgage is a "Recogtized
Mortgage" and that Mortgagee is a "Recognized Mortgagee" within the meaning of the hrterim
Leases.

2.3 Estoppel. Mortgagee does hereby certify to ESDC, with the knowledge
that suchcertificationwill be relied upon by ESDC, the following:

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

(b) The outstanding principal balance of the loan secured by the

CertifiedMortgage,as of the datehereof,is $153,891,593.80.

(c) The stated maturity date for the amounts secured by the Certified
Mortgage (after giving effect to all extension options in favor of Developer and its Affiliates
thereunder,if any) is February 11,2012.

(d) To Mortgagee's knowledge, as of the date of tkris Agreement, no

"Event of Default" (as defined in the Certifred Mortgage) has occurred and is continuing under
the Certified Mortgage, and Mortgagee has no knowledge of any facts that with the giving of
notice, the passage of time or both could constitute an Event of Default (as defined in the
Certified Mortgage) under the Certified Mortgage.

ARTICLE III

EMINENT DOMAIN PROCEEDINGS

3.1 Second Taking Properties - Upgraded Yard Condition. Anything in the

LAFPMRA or any other Project Document to the contrary notwithstanding, Mortgagee and
Developer each acknowledge and agree that until (a) construction of the L,pgraded Yard
commencesin accordancewith and subject to the terms of the Yard Relocation and Construction
Agreement and (b) the conditions enumerated in Sections 3.1(b)(i) and 3,.i(bxii) of the
Development Agreement have been satisfied, ESDC shall have no obligation to Mortgagee, any
Person claiming by or through Mortgagee (including any SuccessorLeasehotrdOwner), or to
Developer, any Affiliate of Developer or any Person claming by or through Developer or any
AfFrliate of Developer to commenceany condemnationor other taking actions with respectto all
or any portion of the SecondTaking Properties.

3.2 Second Taking Properties - Documentation Condition. Anlahing in the

LAFPMRA or any other Project Document to the contrary notwithstanding, Mortgagee and
Developer each acknowledge and agree that ESDC has agreed to commence the condemnation,
eminent domain proceedings and taking actions with respect to, inter alia, the First Taking

719327.08-NewYork Server3A - MSW

Propertiesnotwithstanding the fact that the documentation with respect to the remainder of the
DevelopmentProject (including, documentationwith ttrreMTA, LIR& the Transit Authority, the
City and NYCEDC) is not complete and mutually acceptabtre. As such, ESDC shall have no
obligationto Mortgagee, any Person claiming by or through Mortgagee (includirlg any Successor
Leasehold Owner), or to Developer, any Affiliate of Developer or any Person claming by or
throughDeveloper or any Affiliate of Developer to commence any condernnation, eminent
domainproceedings or other taking actions with respect to all or any portion of the Second
Taking Properties until such time as all of the documentation (including leases, licenses,
guaranties,easements,opinions of counsel, etc.) deernedreasonably necessaryby ESDC for the
implementation,development or constructionof the Development Project on all o{ any portion of
the SecondTaking Properties or MTA Air Space Parcels is, in each case, fuIly executed and
effectiveor fully executed and in escrow subject only to release conditions that are reasonably
satisfactoryto ESDC, and otherwise satisff in ESDC's reasonable opinion the requirements of
the MGPP, MEC, the Development Agreement, all applicable Requirernents, the DOB
Agreementand Design Guidelines, in each case,as modified by this Agreemen't.

ARTICLE IY

INTERIM LEASESI DEVELOPMENT AGREEMENT

ESDC agrees that, notwithstanding the terrns of the Interim Leases and
DevelopmentAgreement, solely as between Mortgagee and any SuccessorLeasehold Owner on
theonehand and ESDC on the other hand the following principles shall govercreertain aspectsof
therelationshipof ESDC on the one hand and Mortgagee and any Stlccessorl-easehold Owner
on the other hand with respect to the Interim Leases or any New Leases; it being agreed that
neitherDeveloper nor Developer's Affiliates nor any successoror assign o'f Developer (other
than Mortgagee or any Successor Leasehold Owner succeeding to tenanl's rights under an
InterimLease or acquiring a New Lease, in each case by reason of a Foresl,osureEvent) shall
havethe benefit of the principles articulated in this Article IV.

4.1 Term: Undertaking.

(a) Subject to the conditions set forth in this Section 4.1(a), the Term
of eachInterim Lease shall be extended,as necessary,and on a cumulative basis, as follows:

(i) for such period of time as shall be eqtnl to the time

necessaryfor Mortgagee to, following the occurrence and continuation of an Event of
Default (as defined in the Certified Mortgage), foreclose on the Certif,ied Mortgage (or
otherwise acquire the leasehold estate under the Interim Leases) and. for a Successor
Leasehold Owner to make satisfactory arrarlgements with a Permitted Developer to
perform Developer's Obligations (as modified by Sections 4.4 and 5.2 below) and
exercise Developer's rights under the Interim Leasesor any New Lease; prcvldgd that in
each caseMortgagee is acting diligently, in good faith and in a commercially reasonable
manner to causethe satisfactionof such conditions. If upon the expiration or termination
of the Term (as stated in the Interim Leasesand without referenceto th,is Section 4.1) an
action to foreclose on the Certified Mortgage is pending, then during the extension of the
Term afforded by this Section a.l(a)(i) (A) Developer shall have no rights (but shall

York Server34 - MSW

719327.08-New
 retain all of the Developer's Obligations) under the Interirn Leases, and (B) until the
occurrenceof the ForeclosureEvent, Mortgagee shall have no rights or obligations under
the 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 a
Development Lease pursuant to 'A^rticle)O(X of the Interirn Leases (as modified by this
Agreement) as a result of the failure to commence construction on the Arena in
accordancewith the last sentenceof Section29.3(a) of the trnterintLeases;

provided, in all casesthat the extensionsafforded by this Section 4.1(a) shall in no event extend
ih" Tet- at any of the Interim Leases,for a period greaterthan ninety-nine (99) years following
the Project Effective Date.

(b) In the event that (i) Mortgagee foreeloses upon the certified
Mortgage and (ii) construction of the Arena has not been commencedin aecordancewith the last
sentence of Section 29.3(a) of the Interim Leases, then subject to co'r,npliance with all
Requirements, ESDC and Mortgagee shall each work diligently and in goo'd f,aith to find an
expeditious solution to allow the Developrnent Project to proceed in a rnanner that is rnindful of
and consistent with Mortgagee's need to recoup its investment in those portio*rs of the Froject
Site encumberedby the Certified Mortgage, as well as the development goals of ESDC and the
City.

4.2 Disbursement Procedures. The written consent of N4ortgagee shall be

required before ESDC and Developer agree to the disbursementof any funds by the Depositary
other than in accordancewith the terrns and subject to the conditions set for:th in the Interim
Leases.

4.3 Landlord Bankruptcy Riehts. Prior to ESDC exercisinig&e right of first

refusal granted to it under Section 12.6(c) of the Interim Leases, ESDC shdl provide written
nolice of such exercise to Mortgagee, and such exercise shaXlbe subiect to the rights of
Mortgagee,if any, set forth in Article )O(D( of the Interim Leases-

4.4 Excluded.Obligations. In addition to Tenant-Specifl:cDefaults, which

neither Mortgagee nor any SuccessorLeasehold Owner shall have any obligation to cure" neither
Mortgagee nor any Successor Leasehold Owner shall have any obligation to perform or
otherwise complete any of the following Developer Obligations under the Development
Agreement (or to cure any default under any Interim Leaseby reasonof any of the following):

(i) Development and construction of the Subway Entrance;

(ii) Development and construction of the Cariton Avenue

Bridge;

(iii) Development and construction of the Additional Affordable

HousingUnits;

(iv) Funding the Existing Parks Investment;

York Server3.4 - MSW

719327.08-New
 (v) Development and construction of the Arena;

(vD Development and construction of the Platfbrrn;

(viil Development and construction of the Upgraded Yard;

(viii) Development and construction of Affbrdable Housing

Units on Site 5: and

(ix) Any other work, activity or obligation under the

Development Agreernent or any other Project Document that is not located on the portion
of the Project Site included under the Interim Leasesor allocated to a different portion of
the Project Site pursuant to Article YI hereof.

4.5 Arena Construction

(a) If (l) a Successor Leasehold Owner succeeds to the leasehold

interestunder (I) the Interirn Leases and any Development Leasesencurnberedby the Certified
Mortgage(collectively, the "Encumbered Leasehold Development Parcels") as a result of a
ForeclosureEvent or (II) a New Lease entered into with respectto such Encl.lmberedLeasehold
DevelopmentParcels, and (2) at the time of such ForeclosureEvent or entry into a New Lease,
constructionof the Arena has not coillmenced in accordancewith the last scntence of Section
29.3(a)of the Interim Leases,then

(i) all SuccessorLeasehold Owners shall rernain subject to the

provisions of said Section 29.3(a), and the Mortgagee Outside Compietion Date shall be
extended until the earlier of:

(A) the twelfth (12tn) anniversary of the date (I) ESDC

waives in writing the conditions set forth in the last sentenceof Section 29.3(a) and
Section 30.4(d) of the Interim Leases(and any equivalent provision of'any Development
Leasesor New Leases) (together with any correspondingprovisions of; the Developrnent
Agreement,collectively, the "Arena Commencement Restrictionsnn)or (II) construction
of the Arena shaltrhave cofirmenced in accordance with the last sentence of Section
29.3(a) of the Interirn Leases;and

(B) the date that is ninety-nine (99) years after the

Project Effective Date; and

(ii) All SuccessorLeaseholdOwners, acting together, in their

sole discretion may, 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 interest of all SuccessorLeaseholdOwners under all Interim Leases,
Development Leases and New Leases upon payment of the Termination Price on or
before the third (3'd) anniversary of the date on which the Option Trigger Notice is
receivedby ESDC (the "Option Expiration Period"). If the Option Trigger Notice is
given by all SuccessorLeasehold Owners, and ESDC does not exercise the Termination
Option on or befbre the expiration of the Option Expiration Period, then subject to

York Server3,A- MSW

719327.08-New
 Seefian 4.5(b) below, the Arena CornmencementRestrictions shail no longer apply to
'1129 (the "ll?g
any EncrmrberedLeasehold Development Parcels located on Block
Development Right"). No Option Trigger Notice shall be valid or otherwise effective
unless and until ull Srr"""sror Leasehold Owners shall have joined in giving the Option
Trigger Notice to ESDC.

(b) Mortgagee aclenowledges,on behalf of itself ard all Successor

LeaseholdOwnersothat'ESDC has agreed to grant the Il29 Development Right following the
expiration of the Option Expiration Period, subject to the granting of the t X29 Development
nignt being perrnineA by all applicable Requirements. If at any tine it is determined, or ESDC
reasonably believes, that the- granting of the 1129 Development Right would violate any
applicable Requirernents (i) the ll29 Development Right shall nct be granted to Morigagee or
any SuccessorLeasehold Owner hereby and Mortgagee'sand each SuccessorLeasehold Owner-s
rigtrt to develop improvements on all of the EncumberedLeasehold Development Parcelslocated
on Block 1129 shall remain subject to the Arena CommencementRestrictions, {ii) neither ESDC
nor LDC shall have any liability to Mortgagee or SuccessorLeasehold Owner as a result thereofl
and (iii) at Mor,tgageeb or any SuccessorLeasehold Owner's reqrlest and expense, ESDC shall
,oop"r"t" with Mortgagee or such Successor Leasehold Owner to take all ac'tions reasonably
n.""rruryto obtain *"h upprovalsas shall be necessaryto grantthe 1129 DevelopmentRight
consistentwittl the terms of this Agreement, all Requirementsand the MGPP'

(c) For purposes of this section 4.5, the term "Ternnination Prieen'
meansthe lesserof

(i) the outstanding indebtedness secured by the Certified

Mortgage, including principal, capitalized interest and other sulns, as of the date of al'rd
imrnediately prior to tt * Foreciosure Event, plus costs incurred by Mortgagee in
connection with such Foreclosure Event (including, but not limited tc, reasonablelegal
fees, appraisal fees, receivership fbes and real property transf'ertaxes); aud

(ii) the fair market value of the leasehold interests under all
Interirn Leases, Development Leases and New Leases taking into acccunt the
developrnent rights, hurdens, cbligations and the restriqtions (othet than the Arena
Cornrnen""*"rriRestrictions) associatedwith such leasetptrdinterests under the MGFP
and the Project Documents and applicable to a Successcrlrasehold Owner thereunder,
subject to this Agreement (the 'nFair Market Value'n), determined as set fonh on
Appendix B

4-6 Amendment of Project Documents. ESDC agreesthat it shall not arnend

or modify any of the project Documents without the prior written consent of Mortgagee' which
consent shall not be unreasonablywithheld, delayed or conditioned; provided that the consent of
Mortgagee to any amendment or modification of the Arena Development Lease shall not be
required.

4.7 Affordable Housing. SuccessorLeasehold Owners, as Tenants under the

applicable Development Leases, m€{, in connection with rhe construction of Project Site
Affordable Housing Units, apply for financing then generally available to developers of

719327.08-NewYork Server3A - MSW

Affordable Housing Units; Uqyldgd that the lack of such financing shall not diminish any
obligations of such Successor Leasehold Owners to provide Project Site Affordable Housing
Units in accordancewith the requirementsof the Project Documents and this Agreement.

ARTICLE V

LIQUIDATED DAMAGES

ESDC agrees that notwithstanding the terms of the Interim Leases and
DevelopmentAgreement, solely as between Mor[gagee and any SuccessorI-easehold Owner an
the one hand and ESDC on the other hand the fotrtowing principles shall govenl the relationship,
from and after Mortgagee's commencement of'foreclosure proceedings wittr respect to the
Certifred Mortgage, of Mortgagee and any SuccessorLeasehold Owner on the one hand and
ESDC on the other hand with respectto the liquidated damagesdescribed in Seetion 5.3 below
in lieu of the liquidated damagesthat are payable to ESDC pursuant to the terrns of the Interim
Leasesand Development Agreement; it being agreed that neither Developer nor Developer's
Affiliates nor any successor or assign of Developer (other than Mortgagee o.'f,any Successor
LeaseholdOwner succeedingto Mortgagee'srights, in each case following a Fo,reclosureEvenQ
shallhave the benefit of the principles articulated in this Article v.

5.1 Payment Timeline Reset. As described, avrd subject to the terrns,

conditions and qualifications set forth, in Section a.l(a) above, the Ternn of,eaoh Interirn Lease
or,any New Lease shall be extended, as necessary,and on a curnulative basis, so as to allow
sufficient time ficllowing the occuffence and continuation of an Event of Default (as defined in
the Certified Mortgage) for Mortgagee to foreclose on the Certified Mortgage (or otherwise
acquire tenant's interest under the Interim Lease pursuant to a Forectrosure Event) and for a
SuccessorLeasehold Owner to make satisfactory arrangementswith a Pernrit$ed Devetroperto
perfiorm Developer's Obligations (as modified ,by Sections 4.4 and 5.2 be'iow) and exercise
Developer'srights (including, but not limited to, the right to create Developr,nentLeases)under
the Interim Leasesor any New Lease; provided that in each case Mortgagee is acting diligently,
in good faith and in a commercially reasonable rnanner to cause the occurrence of such
conditions. Commencing on the date (the "Reset Date") Mortgagee or a SuccessorLeasehold
Owner acquires Developer's interest as tenant under the lnterim Leases CIrany New Lease and
rnakessatisfactory arrangementswith a Permitted Developer, and, to the extent required by the
Interim Leases or any New Leases, ESDC approves such Permitted Develope4 the Successor
LeaseholdOvmer shall have twelve (12) years (as the samemay be extended pursuant tc Section
4.f(a) or 4.5(a) hereof, the "Mortgagee Outside Completion Date") in which to create
Development Leases and to construct or cause the construction and Substantial Completio'n of
the Phase I Improvements (as modified by Sectian 4.4 above and Section 5.2 below) in
accordancewith and subject to the terms of the Development Agreement and other applicable
Project Documents, and the term of the Interim Leasesor any New Lease shall, as necessary,be
extendedto the Mortgagee Outside Completion Date. Each of Mortgagee, Perrnitted Developer
and SuccessorLeaseholdOwner, as applicable,shall, if requestedby ESDC, executeand deliver
a letter confirming the ResetDate.

719327.08-NewYork Server3A - MSW

 5.2 PhaseI ImProvements-

(a) If and to the extent Site 5 is subject to an agreement of lease

(whether interim, development or otherwise) or is otherwise included in an Interirn Lease
betweenESDC and Developer (or an Affitiate of Developer) that is, in each case, encurnberedby
a RecognizedMortgage for the benefit of,Mortgagee or its AfFrliate, then fror,n and after the date
of such lease, a Suicessor Leasehold Owner shall, following a Foreclosure Event but subject to
Section 5.2(dxi) hereof, be required to colrstruct (or to cause a Fermitted Developer or
SuccessorLeasehold Ovrner to construct) and cause the Substantial Completiem (as de ined in
the Arena Block Interim Lease) of, as part of the Fhase I Improvements (as modified by Section
4.4 above), Project Buildings having a minirnurn of One Million Five Hwdred Thousand
(1,500,000) gross square feet (exclusive of the squarefootage of the Arena) or* the Arena Block
and Site 5 (the "1.5M GSF Requirement")-

(b) If and to the extent Site 5 is not subject to an agleement of lease

(whether interim, deveiopment or otherwise) between ESDC and Developer (or an Affiliate of
ieveloper) or is not otherwise included in an Interim Leasethat is, in each case' encurnberedby
a RecognizedMortgage for the benefit of Mortgagee or its Affiliate, then a SuccessorLeasehold
Owner shall, following a ForeclosrueEvent but subject to Section s.z(dxii) hereof, he required
to construct (or to a Permitted Developer or SuccessorLeasehold Owner to constrtrct) and
"urri"
causethe SubstantialCompletion (as defined in the Arena Block Interim Lease) of, as part of the
PhaseI Improvements (as modified by Seetion 4.4 above), Project Btlildings l,raving e nninimum
of One Million Three Hundred Thousand (tr,3CI0,000)gross square feet (excLwsiveof the square
footage of the Arena) on the Arena Block (the "1"3M GSF Requirement").

(c) In determining the gross square footage constr,u,etedfor Xlurposes

of Sections 5.2(a) and (b) hereof, ESDC strrallinclude the gross square footage of al} Project
Buildings constructedin accordancewith the requirements of the Developr"nelrtAgreement and
applicable Project Lease on the Arena Block and, if applicable, Site 5, whether constrwcted by
Developer, an Affiliate of Deveioper, fufortgagee"a successorPermitted Developer, a Successor
Leasehold Owner or any permitted assign of Developer, Mortgagee or a Sucsesssr tr easehold
Owner.

(d) If a Developrnent Lease(s) has or have been severed pursuant to

Article XXX of the Arena Block Interim Lease and such severed lease or leases is eir are no
longer subject to a Recognized Mortgage in favor of Mortgagee, then {he 1-5R4 GSF
Requirementand the 1.3M GSF Requirernentshall be reducedas follows:

(i) as applicable, (A) the 1.5M GSF Requirernent shall be

reducedby the gross squarefcotage of eaehProject Building SubstantiatrlyCornpleted (as
defined in the applicable Developlrrent Lease) on the Arena Block and on Site 5, and (B)
the I .3M GSF Requirement shall be reduced by the gross squarefootage of each Project
Building Substantially Completed (as defined in the applicable Development Lease) on
the Arena Block;

(ii) the l"5M GSF Requireme.ntshall be frullher reduced by a

percentage,(A) the numerator of which shall be the lesser of the (I) tlrc maxirnum gross

10
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719327.08=New
 squarefootage perrnitted by the applicable severedDeveloprnent Lease{s) (which has not
yet been accagnted for in Section 5.2(dxi) above as a Substantially CornptretedPraject
-Building)
and (II) the maximum gross square footage that may be constsucted on such
severed-parcel(s)(which has not yet been accounted for in Section 5"2{dxi} above as a
Substantially Completed Froject Building) pursuant to Exhibit C of the MG?P and (B)
the denorninator of which shall be the sum of (I) the numerator, (Ii) the rnaxirnwn gtoss
square footage that may be constructed on the remaining prernises dernised under ttre
Arena Block Interim Lease per the MGPP and (III) the maximum gross square footage
that may be cans'tructedon Site 5 per the MGPP; or

(iii) the 1.3M GSF Requirement shall be furtlrcr reduced by a

percentage, {A) the numerator of which shall be the lesser of the {I} the neaximun gross
rq,rut" footage permitted by the applicable severed Development Lease(s) {which has not
y.t b"*tt accognted for in Section 5.2(dxi) above as a Substantially Cornpleted Project
building) and (II) the rnaximum gross square footage that may be conskusted on such
severedparcel{s} (which has not yet been accounted for in Section 5.2(dxi) above as a
Substantially ConnpletedProject Building) pursuant to Exhibit C of the MGPP and [B)
the denominator of which shall be the sum of (I) the numerator, and (I$ the maxirnurn
gross square foctage that may be constructed on the remaining prernises demised under
the Arena Block Interirn Lease'

An example of this Section 5.2{d) is set forth on 1!ppg1!!4C attachedhereto.

53 Liquidated Damases.

{a} ln the event Mortgagee, a Permitted DeveXstrer or Snrecessor

Leasehold Owner fails to construct and Substantially Complete the Phase I nwrprovements(as
modified by Sections 4.4 and 5.2 above) in accordancewith and subject to the terrns of the
Development Agreement and other applicable Project Documents on or priex the Mortgagee
Outside Cornpleiion Date, then the following amounts shall (without affecting the obligations of
Developer *d itr Affrliates under the Interim Leasesand Developrnent ,Agrercment)b'e payable
by the person suceeedingto Developer's interest in the Interim Leases (wt*e{her such Ferson is
Mortgagee, its Perrnitted Developer or any SuccessorLeasehold Owner) to ESDC: as liquidated
da*ager for such failure notwithstanding any contrary requirements set fbrth in the Interirn
Leasesor DevetropmentAgreement:

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

Outside Cornpletion Date.

(ii) Until the Phase I Improvements (as rnodified by

Sections 4.4 and.5.2 above) have been constructed and Substantially Completed in
accordance with and subject to the terms of the Development Agreennent and other
applicableFroject Documents,an additional $7,500,000will be due and payable on each
oi ttr" first (lit) through fourth (+ft) anniversariesof the Mortgagee OLltside Completion
Date (for an aggregateof five (5) paymentstotaling $37,500,000)'

11
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 MOR.TGAGEE (ON BEHALF OF ITSELF AF{D ANY
PERSON CLAIMING BY OR TT,{ROUGII MORTGAGEE {INCLUDING ANiY FT]TURE
PERMITTED DEVELOPER AND SUCCESSOR LEASE}XOLD OWNER} AGREES
THAT (I) THE AMOUNT OF ACTUAL DAMAGES TO BE STISTAINEII tsY ESDC IN
THE EYENT THE PHASE r MPROVEMENTS (AS MOIIIFIED BY SECTIOI'{S 4.4
AI\D 5.2 ABOVA) HAVE NOT BEEN SUBSTANTIALLY COMPLETED ON OR PRIOR
TO THE MORTGAGEE OUTSII}E COMPLETION }ATE WCIULD BE MATERIAL,
BUT INCAPABLE OF PRECISE CALCULATION AIYD NOT REAX}ILY
ASCERTAINABLE, (II) THE AFdOUNTS SET FORTI{ IN SECTION 5.3(a}" ARE
REASONABLE IN PROPORTION TO THE PROBABLE DAMAGES LII(BLY TO tsE
SUSTAINED By ESDC, 0II) MORTGAGEE HAS HA.D THE, ADYICE CIF COT.TTNSEL
OF ITS OWN SELECTION WIIO REVIEWED TI.IE PROVISION FOR THE
PAYMENT OF THE AMOUI{TS SET FORTH IN T}TIS SECTICN 5.3(A} IN
CONNECTION 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 NOT
INTENDED TO, AND DO Ir{OT, CONSTITUTE A PENA.LTY Os[ PUNITTVE
DAMAGES FOR AFIY PURPOSES"

O) Upon ESDC's receipt of each of the }iquidated damages payments

required to be.made by Mortgagee pursuant to Section 53{a} }*ereof, the Terre of' the [nterim
Leasesshail be extended for a period of one (1) year ending on the next anniverwy of the then-
currentMortgagee Outside Completion Date.

(c) All arnotints payableto ESDC purmrantto this Secfion 5.3 shall be
payable in United Sates currency, ilr a single lump sum, by' wire transfer cf irnroediately
availablefunds to the account designatedat suchtime 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 strhatrl cor'wtitute a
monetary Event of Default under each of the lnterirn Lease and under the DeveloXrment
Agreement,and as a consequencethereof the landlord under each of the Interim Leases, and
gSOC under the Development Agreenaent, shall have atrl of the ri$ts and relrrcdi:es granted to
eachof them as a result of an monetary Event of Default, including, without lirnitation, th,eright
to terminatethe applicable agreement.

5.4 No Offsets or Credits. The amounts payable pursuarrt to Section 5.3

aboveare separate,distinct and stand apart from any amotrnts tl*at rnay be due and payable to
ESDC by Develcper or any Affiliate of Developer under any other Plo;ect Doslr-raent or
otherwise, whether for the failtne to satisff the same or any difftrent criteria or requirernents- As
such,Mortgagee and Developer each acknowledge and aglee that notwithstanding any provision
of the Interim Leases or other Project Documents that may limit or otherwise restriot ESDC's
right to recover twice for the same event or circumstances, neither Mortgagee (including its
PermittedDeveloper and SuccessorLeasehold Owner) nor Developer (including any Affiliate of
Developeror any Person claiming by or through Developer or zrnyAffiliate of Developer) shall
be entitled to any credit or offset for amounts paid by the other party against the ar,nour$spayable

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by such party under this Agreement, the Developrnent .A"greement,any of the Interim Leases or
anyother Project Docurnent.

AII.TICLE VI

ALLOCATXON OF DEVELOPMENT PROJECT OBLIGATXQNS

6.1 Allocation. Attached as Exhlhit__.le is a schedule, initialed by an

authorizedrepresentativeof each of Developer and Mortgagee, allocating afflorlg the Project Site
includedin the Interim Leases(the "Mortgaged Leasehsld Estate") and the remaining balance
of the Project Site (the "Remainder Projeet Site") the developrnent and constrLlction obligations
with respect to the Development Project set forth in the Developrnent Agreement and other
ProjectDocuments, including the development and construction requirernents,setforth in Section
2.3 of the Development Agreement (collectively, the "Fx'oject Requirementsn'). ESDC agrees
that it shall not permit Developer, any Affiliate of Developer or arl). successor or assign of
Developer or any Affiliate of Developer to reallocate the Project Requirer:nents among the
MortgagedLeasehold Estate and the Remainder Project Site without the prior written consent of
Mortgagee; provided that any reallocation of Project Requirements to or aruong the parcels
includedin the Mortgaged Leasehold Estateshall require Mortgagee Consent, and reallocation of
ProjectRequirementsailocated to the Remainder Project Site solely among the parcels included
in the Remainder Project Site shall not require ESDC to provide notise to or obtain the.approval
of Mortgagee.

6.2 Development Lease Allocation- Developer agreesthat in connection with

anyrequest to ESDC for a Development Lease pursnrantto Article Xlil( of the Interim Leases,
Developer shall deliver to Mortgagee and ESDC a sahedule (the "Ilwelopment Schedule")
detailing the Project Requirementsto be constructedas part of the proposed Development Lease.
To the extent Developer elects to reallocate the Project Reqrirements as a res,ult of the Project
Requirements allocated to the proposed Development. I-ease as set f,orth on the Developrnent
Schedule"then such reallocation shall require the approval of Mcrtgagee if and to the extent set
forth in Section 6.1 above. Prior to the creation of amyDevelopment X-ease,Developer shall in
any event deliver to ESDC and Mortgagee a revised Exhibit C reflecting the Project
Requilements set forth on the Development Schedule that have been allocated to the proposed
Development Lease and setting forth the Froject Requirernents that remain allocated to the
remainder of the Mortgaged Leasehold Estate and Remainder Project Site. {-trnlessMortgagee
shall detiver a written objection to such replacementExhibit within thirty (30) days of receipt by
Mortgagee and ESDC, then such replacernent Exhibit shall be conclusive and binding upon
Mortgageeand Developer.

6.3 Reliance. ESDC shall be entittred to conctrr.asivelyrely, without any

requirement of inquiry or investigation, upon the trast Exhibit C delivered to ESDC in
accordancewith and subiect to the terms and conditions of this Article YI.

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 ARTICLE VII

REPRESE}{TATISNS AND WARRANTIES

7.1 Developer ReFtesentations. Developer representsand warrants as of the

datehereofthat:

(a) Org*ntza$ion- Developer is a limited liability cornpany, and has

beenduly organized and is validly existing and in good standing pursuantto the trawsof the State
of Delawarewith requisite power ard authority to own properties and transact the businessesin
which it is now engaged. Developer is duly qualified to do businessand is in good standing in
the Stateof New York.

(b) Proeeedfircgs. Developer has the fulI limited liability company

aegionto authorize the execution, delivery and performance
-of to and has taken all necessary
power
*tir Agreement. This Agreement Ims been duly executed and delivered by, or on behalf of,
Developerand constitutesa legal, valid and binding obligation of Developer, enforceable against
Developerin accordancewith its terrsrs-

(c) No triitegwlPsryents. Developer has been asked to pay, and

neitherhas offered to pay or paid arayillegal consideration, whether monetary or otherwise, in
connectionwith the execution and delivery by ESDC of this Agreement.

(d) No Pro*hibitedPerson Neither Developer nor any of its Principals

is a Prohibited Personor Federal Pruhibited Ferson.

7.2 Mortgaeee ReFr,ffientations. Mortgagee representsand warrants as of the

datehereofthat:

(a) ()rgcniza{ion Mortgagee is a lirnited liability eompany, and has

beenduly organized and is validly exiis*icg and in good standing pwsuant to the laws of the State
of Delawarewith requisite power M au&:ority to own properties and transact the businessesin
which it is now engaged. To tlle extent the conduct of Mortgagee's busir,rcssso requires,
Mortgageeis duly qualified to do busir,rcssand is in good standing in the State of'New York.

(b) Praceedings. Mortgagee has the full limited triability company

powerto and has taken all necessaryastion to authorize the execution, delivery and performance
of ttris Agreement. This Agreement has been duly executed and delivered by, or on behalf of,
Mortgagei and constitutes a legal, valid and binding obligation of Mortgagee, enforceable
againitMortgagee in accordancewith its terrns subject to bankruptcy and equitable principles o1'
generalapplication.

(c) Authority. Mortgagee, in its capacity as agent for itself and its
assignsand participants, (i) is the legal owner and holder of all interest in the Certified Mortgage,
analil; has full power, right and authority to enter into this Agreement on behalf of all itself and
its assigns and participants, (iii) bV virtue of Mortgagee's execution and delivery of this
Agreement,Mortgagee and its assigns and participants are bound by the terms hereof, and (iv)
thit the Person whose signature appeuusbelow on behalf of Mortgagee has the right, power and

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 APPENDD( C

Example.qfthe calculation of the 1,.3MGSF Calculatio.n

Thefollowingchart provides relevantinformation regardingthe parcel sizes from the MGpp:

F:-..-..-- _.=J...-....'__.*..-__-._._-.r___

iTie.aggfegqtegros-s..squaire,'foq!"ag.eF'gf-thSliindividudt:buildi'riqs
arb.
maxi'rnqm'g.qiiarb:foiara'S+:thet.wonJd,b:b
l(ji'p'aidi:1h:aii.the rjeieitope.d.jh
gqg!piesgJg-s[eg&l:hdrvr-Q-u-e!-ssnere&eles-e-sbgqses.
- --
Scenarios:

AIl ScenariosAssume that Site 5 is not part of the Collateral and the 1.3M GSF
Requirementapplies

1. If no Developrnent Parcelshave been severedfrom the Interim Lease then the Successor
LeaseholdOqrnerwill be requiredto build 1,300,000GSF.

2. If a DevelopnmentLeaseon Building 2 has been severedand substantial completion of a

property with 380,687GSF has been achievedthen the 1.3M GSF Requirement
applicable to a SuccessorLeasehold Owner shall be reducedto:

919,313
GSF

Calculation:

1,300,000GSF- 380,687GSF(Substantially
Completed):919,313GSF

3, if a DeveloprnentLeaseon Building 2 hasbeenseveredand substantialcompletionof a

property \nrith380,687GSF hasbeenachievedand then a DevelopmentLeaseon
Building 3 with 343,632GSF hasbeen sev€,redand transferredto a Developer
unaffiliated with Mortgageeor SuccessorLeaseholdOwner and not completedthen the
1.3M GSF Requirementapplicableto a SuccessorLeaseholdOwner shall be reducedto;

780,313GSF

Calcalation:

a) 1,300,000GSF - 380,687GSF (SubstantiallyCompleted):919,313 GSF less

AppendixC-l
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 b) 343,632GSF (numerator)/ (343,632GSF+ i,106,009GSF+ 824,629GSF)
(denominator)
: 15.1lYo @ercentage)
multiplied by 919,313GSF : 138,904GSFreduction

ReducedRequirement: 1,300,000GSFless380,687GSFless 138,904GSF: 780.409GSF

AppendixC-2
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719327.08-New
 Exhibit B

CertifiedMorteaee
"Certified Mortgage" shall mean,collectively, the following:

l. The Original Mortgage;

2. \\at certainMortgage SpreaderAgreementamorg Ay 35-37 Sixth, LLC, a New york limited iiabilitv
company ("35'37 Sixth"), AY 487 Dean,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 limited liability company (,,InteU!0_Dgl'elSEI" and togetier with 3S-37 Sixth, +gZ
Dean and 489 Dean, collectively, the 'Msrtgap$") und Mortgagee, dated as of the date hereof, aad
relating to a loan in the original principal amountof $152,821,234.

3, That certainPartial Releaseof MortgagedPremisesamoogMortgagorsand Mortgagee,datedasof the

datehereof,and relating to a loan in the original principal amountof $152,821,234.

4. That certain Third Amended and RestatedLeaseholdand Fee Mortgage, Assignment of Leasesand
Rents, Security Agreementand Financing Staternentamong Mortgagors and Mortgagee, datedas of the
datehereof.

5' That certai:rMortgage SpreaderAgreementamong Mortgagors and Mortgagee, dated as of the date
hereof, and relating to a loan in the original principal ?mountof $37,362,050.

3, That certaiaPartial Releaseof MortgagedPrernisesamongMortgagorsand Mortgagee,datedasof the

datehereof,and relating to a loan in the original principal amountof $37,362,050.

4. That certain SecondAmended aad RestatedSubordinateLeaseholdand Fee Mortgage, Assignmentof

Leasesand Rents, Security Agreement and Financing Statementamong Mortgagors and Mortgagee,dated
as ofthe datehereof.

uS\DANIENOV525135.1
 E)(HIBIT C

ProjeetRequirementsAllocationSchedule

ProjectRequirement Mortgaged LeaseholdEstate Remainder Project Site

No lessthan 1,500,000gsf of No lessthan 1,300,000gsf (lessany No lessthan 200,000gsf (lessaay

Improvementsoo the PhaseI amouutsover 200,000sf constnrcted amountsover 1,300,000gsf
Property (excludine the Arena) on Site 5) constuoted on tle Arena Block)
Maximum gsf of Improvements on Maximum3,406,342gsf Maximum3,718,658
gsf
Proiect Siie (excludine the Arena)
No less thaa2,25AProject Site No lessthan 945 Project Site 1,305Project Site Affordable
Affordable Housing Units A-ffordable Housing Units (includes Housing Units lessany ProjectSite
minimum of 300 units oa tle Arena Affordablo Housing Units
Block aud 30% ofthe residential constructedon the Mortgaged
units ou the Arena Block) LeaseholdEstate.
Arena Arena
Open Space Obligationsfor eachDevelopment Obligationsfor eachDevelopment
Parcelshall be pursuantto the Parcel shallbe pwsuant to tie
Design Guidelines Design Guidelines
UrbanRoom Urban Room (aspart of Building B-
1)
UperadedYard Uperaded Yard
Platform Platform
SubwavEntrance Subway Entrance
CarltonAveaue Bridse Carlton AvenueBridee
ArenaParking( l, I 00 non-exclusive ArenaParklngr
spaces)
School School
Intergenerational Community Center lntergenerational Community Ceuter
Health Care Clinic Health Care Clinic

Acknowledged:

Mortgagee Developer

' Subjectto (a) thetermsof the Are.naParkingEasement, and(b) thatneitherMortgageenor any Successor
LeaseholdOwner
shallhaveanyobligationto fund the costof creatingandoperatingthe temporaryArenaParking,

Exhibit C-1
719327.08-New
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