Contract analysis

I. INTRODUCTION AND SUMMARY OF KEY ISSUES A. Purpose of This Memorandum This document constitutes Calderwood & Harkness LLP's ("C&H") annotated markup of the non-binding mezzanine loan term sheet dated March 7, 2025 (the "Term Sheet"), executed between Metropolitan Transit Development Corp. ("MTDC") and Granite Peak Capital Partners, LP ("Granite Peak"), for a proposed mezzanine loan in the amount of Two Hundred Mill

1. Interest Rate (Section III.B). The proposed fixed rate of 11.50% per annum is at the higher end of the current market range for mezzanine construction loans to institutional sponsors. C&H recommends negotiating a reduction to 10.75%–11.00% fixed, or alternatively proposing a floating-rate structure pegged to Term SOFR plus 750 basis points, which may produce a lower all-in cost in the current interest rate environ

2. Origination Fee (Section III.C). The proposed origination fee of 1.50% ($3,000,000) exceeds the typical range for loans of this size and credit quality. C&H recommends negotiating to 1.00% ($2,000,000), with a fallback position of 1.25% ($2,500,000).

3. Exit Fee (Section III.D). The proposed exit fee of 0.50% of outstanding principal at prepayment or maturity is not universal in mezzanine construction loans and should be eliminated or, at minimum, capped at 0.25% and limited to voluntary prepayments.

4. Intercreditor Agreement Scope (Section VII). The intercreditor agreement between Granite Peak and Ironclad is the single most critical document for MTDC's protection. Key sub-issues include cure rights and cure periods, the mezzanine lender's purchase option (and a proposed secondary purchase option for MTDC), standstill periods, notice requirements, and subordination mechanics.

5. Pledge Structure and SPE Requirements (Section IV). The SPE requirements and organizational structure for HYW Mezzanine must be compatible with MTDC's governance structure as a government instrumentality chartered under Illinois law, including limitations on the scope of independent manager authority and confirmation that no pledge at the MTDC/HYW Mezzanine level will be required.

6. Extension Options and Coterminous Alignment (Section V.B). The two one-year extension options must be strictly coterminous with the Senior Loan extensions, and the interaction between mezzanine and senior extension conditions must be carefully coordinated to avoid maturity mismatches.

7. Cash Management and Sweep Triggers (Section VIII). The springing cash sweep at a combined DSCR below 1.10x must be coordinated with the Senior Loan's hard lockbox and sweep mechanism. A critical issue exists regarding whether projected stabilized NOI can support the 1.20x combined DSCR covenant when ground rent is included in the denominator.

8. Transfer and Assumption Restrictions (Section X). The blanket prohibition on transfers must be carved out to permit routine MTDC governance changes, internal reorganizations mandated by Illinois law, and transfers to successor government instrumentalities.

9. Guaranty and Recourse Carve-Out Scope (Section XI). Given MTDC's status as a government instrumentality with an A– Pinnacle credit rating, the non-recourse carve-outs should be narrowly tailored, and C&H recommends proposing a cap of 20% of outstanding loan balance on loss and damage carve-out liability.

10. Prepayment Provisions (Section VI). The 24-month lockout period is aggressive and should be reduced to 12–18 months to match the Senior Loan. The yield maintenance formula should be revised to eliminate the 50 basis point spread on the Treasury discount rate, and a 90-day open prepayment window prior to maturity should be added.

11. Ground Lease Considerations (Section XII). The NYCEDC ground lease (CRFN 2020000198762) must be reviewed for compatibility with the mezzanine financing structure, and recognition/consent documentation from NYCEDC must be obtained — a process that may take 60–90 days and represents a critical path item for the June 15, 2025 target closing. D. Recommendation to Client Based on our comprehensive review of the Term S

II. PARTIES AND RELATIONSHIP OF PARTIES A. Mezzanine Lender The Term Sheet identifies the Mezzanine Lender as follows: Mezzanine Lender: Granite Peak Capital Partners, LP, a Delaware limited partnership, with its principal offices at 9 West 57th Street, Suite 4200, New York, New York 10019. Granite Peak shall act as sole mezzanine lender. No syndication or participation of the Mezzanine Loan is contemplated at the ti

III. ECONOMIC TERMS A. Principal Amount The Term Sheet provides: Principal Amount: $200,000,000. The Mezzanine Loan, combined with the Senior Loan of $475,000,000, constitutes the total debt financing for the Project. Total project cost: $920,000,000. > [C&H Commentary] We have confirmed that the $200,000,000 Mezzanine Loan amount, together with the $475,000,000 Senior Loan, $200,000,000 MTDC equity contribution, and

IV. SPE STRUCTURE AND ORGANIZATIONAL REQUIREMENTS A. Single-Purpose Entity Covenants The Term Sheet requires HYW Mezzanine to comply with the following single-purpose entity ("SPE") covenants: (i) Maintain its existence as a limited liability company organized under the laws of the State of Delaware in good standing; (ii) Not commingle its assets with the assets of any other person or entity; (iii) Maintain separate

V. TERM, MATURITY, AND EXTENSION OPTIONS A. Initial Term and Maturity The Term Sheet provides: Initial Term: Four (4) years from the closing date. Initial Maturity Date: June 15, 2029 (assuming closing on June 15, 2025). > [C&H Commentary] The four-year initial term is coterminous with the Senior Loan initial maturity of June 15, 2029, as set forth in the senior mortgage term sheet. This alignment is essential — any

VI. PREPAYMENT A. Lockout Period The Term Sheet provides: Lockout Period: The Mezzanine Loan may not be prepaid, in whole or in part, during the first twenty-four (24) months following the closing date (the "Lockout Period"), i.e., through June 15, 2027. > [C&H Commentary] A 24-month hard lockout is aggressive for a construction mezzanine loan to an investment-grade sponsor. The Senior Loan term sheet provides for a

VII. INTERCREDITOR AGREEMENT A. General Framework The Term Sheet provides: Intercreditor Agreement: Granite Peak (as Mezzanine Lender) and Ironclad (as Senior Lender/Administrative Agent) shall enter into an Intercreditor Agreement substantially in the form to be negotiated and agreed by such parties prior to closing. The Intercreditor Agreement shall govern the respective rights and obligations of the Senior Lender