Contract analysis

I. Extension Conditions (Term Sheet § 5) The Term Sheet provides for a four (4)-year initial term commencing on the Closing Date and maturing on June 15, 2029 (the "Initial Maturity Date"), with two (2) successive one (1)-year extension options available at Borrower's election (the "First Extension Option" and the "Second Extension Option," respectively, and each, an "Extension Option"), subject to the satisfaction o

Section 5(a) of the Term Sheet provides that the exercise of each Extension Option is conditioned upon there being no Event of Default existing at the time of the delivery of the Extension Notice or at the commencement of the applicable extension period. MTDC does not object to the fundamental principle underlying this condition, which is standard in facilities of this nature. However, as currently drafted, the provi

Section 5(b) of the Term Sheet provides that, as a condition to the exercise of each Extension Option, the Borrower must demonstrate a trailing-twelve-month Debt Service Coverage Ratio ("DSCR") of not less than 1.20x on a combined basis (i.e., taking into account both the Senior Mortgage Loan and the mezzanine indebtedness held by Granite Peak Capital Partners, LP). MTDC understands and appreciates Ironclad's focus o

Section 5(c) of the Term Sheet requires that the combined Loan-to-Value Ratio ("LTV") not exceed 70.0% as of each extension date, calculated on a combined basis inclusive of the mezzanine financing. MTDC does not object to the 70.0% threshold, which it views as reasonable for a project of this scale and quality, but does take issue with the methodology for determining value at the time of extension. As currently draf

Section 5(d) of the Term Sheet requires, as a condition to each Extension Option, that Borrower deliver an interest rate cap agreement with a notional amount equal to the then-outstanding principal balance of the Senior Mortgage Loan for the duration of the applicable extension period. MTDC does not object to this condition, which is standard and commercially appropriate given the floating-rate structure of the Senio

Section 5(e) of the Term Sheet provides for an extension fee equal to twenty-five basis points (0.25%) of the then-outstanding principal balance of the Senior Mortgage Loan, payable upon the exercise of each Extension Option. MTDC proposes that the extension fee be reduced as follows: (i) First Extension Option: Fifteen basis points (0.15%) of the then-outstanding principal balance; and (ii) Second Extension Option:

Section 5(f) of the Term Sheet requires that the Extension Notice be delivered not less than ninety (90) days prior to the then-current maturity date. MTDC proposes that this notice period be shortened to not less than sixty (60) days prior to the then-current maturity date. A sixty (60)-day notice period is standard in construction loan facilities of this type and provides MTDC with the flexibility to evaluate marke

II. Recourse Carve-Out Exceptions (Term Sheet § 9) MTDC acknowledges and accepts the non-recourse structure of the Senior Mortgage Loan, with Borrower's liability limited to its interest in the Project and the other collateral pledged to secure the Senior Mortgage Loan, subject to certain standard exceptions (the "Recourse Carve-Outs" or "bad boy" carve-outs) set forth in Section 9 of the Term Sheet. MTDC further ack

Section 9(a)(i) of the Term Sheet provides that a voluntary bankruptcy filing by the Borrower under any chapter of Title 11 of the United States Code (or any state-law equivalent) shall constitute a full-recourse trigger, rendering the entire outstanding principal balance of the Senior Mortgage Loan, together with all accrued interest, fees, and other amounts, recourse to the Carve-Out Guarantor. MTDC does not object

Section 9(a)(ii) of the Term Sheet provides that any fraud or intentional misrepresentation by Borrower, Guarantor, or their respective agents in connection with the Senior Mortgage Loan shall constitute a full-recourse trigger. As drafted, this carve-out contains no materiality qualifier and no knowledge standard, meaning that any misstatement—regardless of magnitude, impact, or the knowledge or intent of the party

Section 9(a)(iii) of the Term Sheet provides that any misapplication or misappropriation by Borrower of (i) insurance proceeds, (ii) condemnation awards, or (iii) rents, revenues, and security deposits shall constitute a full-recourse trigger. MTDC acknowledges that the protection of insurance proceeds and condemnation awards is of critical importance to the Agent, as these funds represent a substitute for the collat

Section 9(a)(iv) of the Term Sheet provides that any transfer of the Project or any direct or indirect interest in the Borrower, or any encumbrance of the Project or any such interest, without the prior written consent of Agent, shall constitute a full-recourse trigger. MTDC acknowledges that due-on-sale and due-on-encumbrance protections are essential components of the Agent's credit underwriting and that unauthoriz

Section 9(a)(v) of the Term Sheet provides that Borrower and Guarantor shall be liable on a recourse basis for any losses, costs, damages, or liabilities arising out of or relating to the presence, release, or threatened release of Hazardous Materials at, on, under, or from the Project, or any violation of Environmental Laws applicable to the Project. MTDC acknowledges that an environmental indemnity is a standard an

III. Cash Management and Cash Sweep Triggers (Term Sheet § 11) MTDC acknowledges the importance of a robust cash management structure for a construction loan of this magnitude and appreciates Ironclad's focus on protecting the cash flows generated by the Project. MTDC's comments on the cash management provisions set forth in Section 11 of the Term Sheet are designed to achieve an appropriate balance between the Agent

Section 11(a) of the Term Sheet requires the establishment of a hard lockbox with a springing cash sweep, effective from the Closing Date. Under this structure, all rents and revenues from the Project would be deposited directly into a lender-controlled lockbox account from and after closing, with funds swept into a cash management account controlled by Agent upon the occurrence of a Cash Sweep Trigger Event. MTDC pr

Section 11(b) of the Term Sheet provides that a cash sweep will be triggered when the trailing-twelve-month combined DSCR falls below 1.10x. MTDC proposes the following modifications to this trigger: (i) Reduced DSCR Sweep Trigger During Lease-Up. For the first eighteen (18) months following the issuance of the first TCO (projected March 15, 2028, through September 15, 2029), the DSCR sweep trigger should be reduced

Section 11(c) of the Term Sheet provides that a cash sweep will be triggered upon the occurrence and during the continuance of an Event of Default. MTDC does not object to this trigger, which is standard and appropriate. However, MTDC requests that the Term Sheet expressly provide that a cash sweep triggered by an Event of Default shall automatically terminate upon the satisfaction of each of the following conditions

Section 11(d) of the Term Sheet references a cash management waterfall but does not specify the order of priority in which funds in the cash management account will be applied. MTDC requests that the definitive loan documents include a detailed waterfall provision substantially as follows: (i) First: Payment of current monthly debt service on the Senior Mortgage Loan (interest and, if applicable, principal amortizati

IV. Reserve Requirements (Term Sheet § 12) MTDC recognizes that the reserve structure is a critical component of the credit facility and that Ironclad's reserve requirements reflect a conservative and prudent approach to construction lending. MTDC's comments on the reserve provisions set forth in Section 12 of the Term Sheet are intended to tailor the reserves to the specific characteristics and timeline of the Proje

Section 12(a) of the Term Sheet requires a pre-funded interest reserve equal to twelve (12) months of projected debt service, to be fully funded at closing. Based on the pricing terms of the Senior Mortgage Loan (Term SOFR plus 425 basis points, with a SOFR Floor of 1.00%, resulting in an all-in interest rate of 5.25% at the Floor), twelve (12) months of projected interest on the full $475,000,000 commitment amount w

Section 12(c) of the Term Sheet requires a TI/LC reserve of $35.00 per rentable square foot ("RSF"), to be fully funded at closing. Based on the Project's approximately 1,200,000 RSF of leasable space across the office, retail, and residential components, a fully funded TI/LC reserve at $35.00/RSF would total approximately $42,000,000 at closing. MTDC proposes a phased funding approach: (i) Initial Funded Amount at C

Section 12(d) of the Term Sheet requires a capital expenditure ("CapEx") reserve of $0.50 per RSF per annum, funded through monthly deposits commencing at closing. MTDC proposes the following modification: The CapEx reserve obligation should not commence until the earlier of (i) twenty-four (24) months after the issuance of the first TCO (projected September 15, 2030, based on a first TCO date of March 15, 2028) or (

Section 12(e) of the Term Sheet requires a completion guaranty reserve equal to ten percent (10%) of the remaining construction budget at each quarterly test date. This reserve is designed to ensure that sufficient funds are available to complete construction of the Project in the event of a cost overrun or contractor default. MTDC proposes the following alternative approaches: Primary Proposal: Reduce the completion

V. Additional Observations In addition to the foregoing comments on Sections 5, 9, 11, and 12 of the Term Sheet, MTDC wishes to flag the following items, which it intends to address in the negotiation of the definitive loan documents but does not propose to resolve at the term sheet stage: • Intercreditor Agreement. The terms of the Intercreditor Agreement between Ironclad (as Agent for the senior lending syndicate)