CALDERWOOD & HARKNESS LLP Attorneys at Law
1251 Avenue of the Americas, 40th Floor New York, New York 10020
Telephone: (212) 554-7800 Facsimile: (212) 554-7801 www.calderwoodharkness.com
April 10, 2023
VIA HAND DELIVERY AND EMAIL
Ironside Capital Management LP 590 Madison Avenue, 28th Floor New York, New York 10022
Attention: Marcus Trent, Esq., General Counsel
Desmond R. Calloway, Founder & Chief Investment Officer
Re: Engagement of Calderwood & Harkness LLP — IRS Examination Defense of Ironside Capital Management LP (EIN: 83-2741956), Tax Year Ended December 31, 2021, Form 1065
Dear Mr. Trent and Mr. Calloway:
1. Purpose and Background
Calderwood & Harkness LLP ("C&H" or the "Firm") is pleased to confirm its engagement by Ironside Capital Management LP ("ICM" or the "Partnership"), a Delaware limited partnership, in connection with the defense of the examination by the Internal Revenue Service (the "IRS") of ICM's U.S. Return of Partnership Income (Form 1065) for the tax year ended December 31, 2021 (the "Examination").
We understand that, by IRS Letter 2205-D dated March 22, 2023 (the "Examination Notification"), received by ICM at its principal office on March 29, 2023, the Internal Revenue Service, Large Business & International Division ("LB&I"), Pass-Through Entities Practice Area, initiated an examination of ICM's 2021 Form 1065. The Examination Notification identified certain items on the return for review and requested that ICM contact the assigned Revenue Agent within thirty (30) days to schedule an initial conference and discuss the examination process.
Marcus Trent, General Counsel of ICM, contacted Calderwood & Harkness on April 5, 2023 to discuss the scope and substance of the Examination, the issues potentially at stake, and the possibility of C&H's representation of ICM in connection therewith. Following that discussion, and after review of the Examination Notification and relevant background materials provided by Mr. Trent, we are confident that the Firm is well positioned to provide effective and experienced counsel to ICM throughout the examination process.
This letter sets forth the terms and conditions under which C&H will provide legal services to ICM in connection with this matter. We ask that you review this letter carefully and, if the terms are acceptable, execute and return a copy as set forth in Section 15 below.
2. Scope of Engagement
C&H is retained to represent ICM in all aspects of the IRS partnership examination of the 2021 Form 1065, including but not limited to the following:
(a) Reviewing the Examination Notification (Letter 2205-D) and all subsequent IRS correspondence, notices, and communications relating to the Examination;
(b) Preparing and filing IRS Form 2848 (Power of Attorney and Declaration of Representative) to authorize designated C&H attorneys to act as ICM's authorized representatives before the IRS in connection with the Examination;
(c) Responding to Information Document Requests ("IDRs") issued by the assigned Revenue Agent or other IRS examination personnel, including the preparation, assembly, and submission of documents, data, and written explanations responsive to each such request;
(d) Coordinating with ICM's independent auditor and tax return preparer, Borwick Craine & Associates LLP (engagement partners Sandra Whitmore, CPA, audit, and Elliot Navarro, CPA, tax), and ICM's fund administrator, Greystone Fund Administration LLC, as needed to assemble responsive documents, workpapers, schedules, and supporting information required for the Examination defense;
(e) Analyzing and defending ICM's tax reporting positions on all issues raised during the Examination, including the preparation of technical analyses and written positions substantiating the Partnership's treatment of items of income, deduction, gain, loss, credit, and allocation as reported on the 2021 Form 1065 and the associated Schedules K-1;
(f) Attending conferences, meetings, and telephone calls with IRS examination personnel, including opening conferences, issue-specific discussions, progress meetings, and any closing conference;
(g) Preparing legal memoranda, position papers, protest letters, and other written submissions for delivery to the IRS examination team and, where warranted, to the IRS Office of Chief Counsel, in support of ICM's positions;
(h) Advising ICM on procedural rights and strategic considerations throughout the Examination, including rights under the Internal Revenue Code, the IRS Restructuring and Reform Act of 1998, the Taxpayer Bill of Rights, the Bipartisan Budget Act of 2015 (as applicable to centralized partnership audit procedures), applicable Treasury Regulations, and IRS administrative guidance; and
(i) Such other services as may be reasonably necessary or appropriate in connection with the defense of the Examination and as may be mutually agreed upon by C&H and ICM.
We note that the Examination is being conducted by Revenue Agent Timothy J. Albrecht (Lead Examiner, GS-13, Badge No. 74-28193) and Revenue Agent Dawn M. Petrovic (GS-12), under the supervision of Territory Manager Karen P. Driscoll. The IRS examination team is based at the IRS LB&I Manhattan Campus, 290 Broadway, New York, New York 10007. All communications with the IRS examination team will be coordinated through C&H upon filing of the Form 2848.
3. Limitation of Scope
This engagement is limited strictly to the defense of the IRS Examination described in Section 2 above. Unless separately agreed in a supplemental engagement letter or written amendment to this letter, the scope of this engagement expressly does not include any of the following:
(a) Tax return preparation or review. C&H will not prepare, review, amend, or sign any federal, state, or local tax return of ICM for any tax year, including the 2021 tax year under examination or any other tax year;
(b) Post-examination proceedings. Representation in any IRS Appeals Office proceedings (including any protest or Appeals conference), United States Tax Court litigation, refund litigation in the United States Court of Federal Claims or any United States District Court, or any other judicial or administrative proceedings that may arise from or relate to the Examination, unless the parties separately agree in writing to extend the scope of the engagement to encompass such proceedings;
(c) State and local tax matters. Advice on state or local tax matters, including but not limited to any state-level examination, audit, or inquiry triggered by, related to, or arising from the federal Examination, or any filing obligations with respect to state or local jurisdictions;
(d) Representation of partners. Representation of any individual partners of ICM, including the general partner, Ironside Capital GP LLC (EIN: 83-2741890), or any limited partners, in their individual capacities or with respect to their individual federal, state, or local tax returns, Schedules K-1, or any deficiency or assessment attributable to the flow-through of partnership items;
(e) Regulatory and compliance matters. Advice on regulatory, securities, investment adviser compliance, anti-money laundering, or other non-tax legal matters, whether or not arising from the same facts or circumstances as the Examination.
In the event that the scope of this engagement needs to be expanded to include any of the foregoing or any other matter, C&H and ICM will enter into a supplemental engagement letter or written amendment to this letter reflecting the agreed-upon expansion, the applicable terms and conditions, and any adjustments to staffing, fees, or billing arrangements.
4. Engagement Team
The following attorneys will staff this engagement on behalf of C&H:
Sylvia Hartwell — Responsible Partner, Tax Department
Ms. Hartwell is a partner in C&H's Tax Department with nineteen years of experience in partnership tax controversy, including the defense of complex IRS examinations involving investment partnerships, hedge funds, and private equity fund structures. Ms. Hartwell will serve as the Responsible Partner for this engagement and the primary point of contact with the IRS examination team. She will lead all substantive discussions, strategy sessions, and submissions in connection with the Examination and will be designated as an authorized representative of ICM on IRS Form 2848.
Leonard Cross — Billing Partner, Tax Department
Mr. Cross is a partner in C&H's Tax Department and serves as the relationship partner for Ironside Capital Management LP. Mr. Cross will provide strategic oversight and will be available for consultation on significant issues as they arise during the engagement. Mr. Cross will also serve as the Billing Partner for the engagement and will be available to address any billing inquiries or concerns raised by ICM.
Leila Nazari — Lead Associate, Tax Department
Ms. Nazari is a sixth-year associate in C&H's Tax Department with substantial experience in partnership tax matters and IRS controversy work. She will assist in legal research, drafting responses to IDRs, preparing legal memoranda and position papers, and coordinating document production. Ms. Nazari will be designated as an authorized representative of ICM on IRS Form 2848.
Robert Jansen — Working Associate, Tax Department
Mr. Jansen is a third-year associate in C&H's Tax Department. He will support the engagement team in document review, factual analysis, preparation of workpapers and schedules, and other tasks as assigned by the Responsible Partner.
C&H reserves the right to assign additional attorneys, tax professionals, or paraprofessionals (including paralegals and legal assistants) to the engagement as the needs of the matter require. Any such additional personnel will be staffed at rates consistent with C&H's standard billing rates for the relevant level of experience. C&H will provide ICM with prior notice before assigning any additional timekeepers to the engagement.
5. Fees and Billing Rates
C&H will bill for services rendered in connection with this engagement on an hourly basis. The current standard hourly rates for the attorneys assigned to this engagement are as follows:
Hourly rates for any additional timekeepers assigned to the engagement will be at C&H's standard rates for attorneys or paraprofessionals of the applicable seniority level, which will be communicated to ICM at the time of assignment.
C&H's standard hourly rates are subject to annual adjustment, typically effective on January 1 of each calendar year. C&H will provide ICM with at least thirty (30) days' advance written notice of any changes to the hourly rates applicable to this engagement. Any adjusted rates will apply only to time recorded on or after the effective date of the rate change.
Time is recorded in increments of one-tenth of an hour (six minutes). Each timekeeper maintains contemporaneous time records reflecting the date, a description of the services performed, and the time expended on each task.
6. Billing Procedures
C&H will render invoices to ICM on a monthly basis, with invoices generally issued within fifteen (15) business days following the end of each calendar month, or at such other intervals as may be mutually agreed upon by the parties.
Each invoice will set forth the following information in reasonable detail: (i) a narrative description of the services rendered during the billing period; (ii) the name and title of each timekeeper who performed services; (iii) the hours expended by each timekeeper; (iv) the applicable hourly rate for each timekeeper; (v) total professional fees for the billing period; and (vi) an itemization of disbursements and out-of-pocket expenses incurred during the billing period.
Payment of each invoice is due within thirty (30) days of the date of the invoice. Amounts not paid within thirty (30) days of the invoice date will bear interest at the rate of one percent (1.0%) per month (twelve percent (12%) per annum), or the maximum rate permitted by applicable law, whichever is less, calculated from the date payment was due until the date payment is received.
ICM may direct billing inquiries to Leonard Cross, Billing Partner, at (212) 554-7842 or lcross@calderwoodharkness.com.
7. Expenses and Disbursements
In addition to professional fees for legal services, ICM will reimburse C&H for all reasonable and necessary out-of-pocket expenses and disbursements incurred in connection with the engagement, including but not limited to the following:
(a) Travel expenses, including transportation (airfare, train fare, car service, or mileage at the then-current IRS standard mileage rate), lodging, and meals, incurred in connection with IRS meetings, conferences, or other examination-related activities;
(b) Photocopying and document reproduction charges, at C&H's standard internal rates;
(c) Courier, express delivery, and overnight delivery service charges;
(d) Online legal research charges, including charges for access to Westmark Data Systems, Tidewater Technologies, and similar legal research databases;
(e) Filing fees, if applicable, in connection with any submissions made to the IRS or other governmental authorities;
(f) Telecommunications charges directly related to the engagement, including conference call and videoconference charges; and
(g) Such other out-of-pocket expenses as may be reasonably incurred in connection with the engagement.
All expenses and disbursements will be separately itemized on each monthly invoice. C&H will use commercially reasonable efforts to minimize disbursements and will obtain ICM's prior written approval before incurring any single expense item exceeding Two Thousand Five Hundred Dollars ($2,500).
8. Client Responsibilities
The effectiveness of C&H's representation depends in significant part on ICM's full cooperation with the engagement team. ICM agrees to cooperate fully with C&H in the defense of the Examination, including by:
(a) Providing timely access to all books, records, documents, workpapers, financial statements, partnership agreements, offering memoranda, subscription agreements, trade records, allocation schedules, and other information reasonably requested by C&H in connection with the Examination;
(b) Facilitating C&H's communication and coordination with Borwick Craine & Associates LLP (independent auditor and tax return preparer), Greystone Fund Administration LLC (fund administrator), Ridgeline Securities LLC (prime broker), and any other service providers, counterparties, or advisors whose records or input may be needed in connection with the Examination defense;
(c) Designating Marcus Trent, General Counsel, as the primary client contact for day-to-day communications with C&H regarding the Examination, and making Desmond R. Calloway, Founder & Chief Investment Officer, and Priya Venkatesh, Chief Operating Officer & Chief Financial Officer, available for substantive factual discussions, interviews, and consultations as needed;
(d) Promptly forwarding to C&H, and in any event within two (2) business days of receipt, any and all correspondence, notices, or communications received directly from the IRS or any other governmental authority relating to the Examination, the 2021 tax year, or any related matter;
(e) Executing all necessary authorizations, consents, and forms, including IRS Form 2848 (Power of Attorney and Declaration of Representative), to permit C&H to act on ICM's behalf before the IRS in connection with the Examination; and
(f) Making reasonable efforts to preserve and maintain all documents, records, and electronically stored information that may be relevant to the Examination, and refraining from destroying, discarding, or altering any such materials without prior consultation with C&H.
ICM understands and acknowledges that C&H's ability to provide effective representation may be materially impaired by any failure to comply with the foregoing obligations, and that C&H shall not be responsible for any adverse outcome attributable to ICM's failure to cooperate or to provide complete and accurate information in a timely manner.
9. Confidentiality and Privilege
All communications between C&H and ICM in connection with this engagement, including oral and written communications, memoranda, analyses, and work product, are intended to be confidential and protected by the attorney-client privilege, the work product doctrine, and any other applicable privilege or protection, to the fullest extent permitted by law. C&H will treat all information provided by ICM in connection with this engagement as confidential and will not disclose such information to third parties except as authorized by ICM or as required by law or applicable professional responsibility rules.
ICM should take care not to disclose privileged communications to third parties, as such disclosure may result in a waiver of the attorney-client privilege or work product protection. In particular, ICM should avoid forwarding, copying, or discussing the substance of privileged communications with individuals or entities who are not within the scope of the privilege. To the extent that communications must be shared with Borwick Craine & Associates LLP, Greystone Fund Administration LLC, or other advisors in connection with the Examination, C&H will advise ICM on appropriate procedures to preserve applicable privileges, including the execution of common interest agreements or joint defense agreements where warranted by the circumstances.
ICM further acknowledges and understands that C&H's engagement by ICM does not create an attorney-client relationship between C&H and any partner of ICM (whether general or limited), any officer, director, member, manager, employee, or affiliate of ICM or of Ironside Capital GP LLC, or any third party, unless separately agreed in writing between C&H and such individual or entity. C&H's duties of loyalty, confidentiality, and competent representation run solely to ICM as an entity.
10. Conflicts of Interest
C&H has conducted a conflicts check in accordance with the Firm's standard procedures and the requirements of the New York Rules of Professional Conduct. Based on the results of that check, C&H is not presently aware of any conflict of interest that would prevent it from representing ICM in the Examination.
C&H represents ICM solely in its capacity as an entity—a Delaware limited partnership. C&H does not represent, and this engagement does not establish an attorney-client relationship with, any individual partner (whether general or limited), officer, member, manager, employee, or affiliate of ICM or Ironside Capital GP LLC in their personal capacity. The interests of the Partnership and the interests of its individual partners, officers, or employees may diverge during the course of the Examination. In the event that an actual or potential conflict of interest arises during the engagement, C&H will promptly notify ICM and take appropriate steps in accordance with the applicable Rules of Professional Conduct, which may include seeking informed written consent from affected parties or, if the conflict is not waivable, withdrawing from the representation.
11. Document Retention
C&H will maintain files related to this engagement, including correspondence, memoranda, research materials, and copies of documents provided by or on behalf of ICM, in accordance with the Firm's document retention policies. The Firm's current policy provides for retention of closed engagement files for a period of ten (10) years following the conclusion of the engagement, after which time the Firm reserves the right to destroy such files without further notice to ICM, unless ICM requests that files be returned or transferred.
Upon the conclusion of the engagement, or at any time upon ICM's written request, original documents provided by ICM to C&H will be returned to ICM. C&H may retain copies of all documents, including documents provided by ICM, for its own files, records, and archives, subject to the Firm's confidentiality obligations.
12. Termination
Either party may terminate this engagement at any time and for any reason upon written notice to the other party. No reason need be stated for termination, and neither party shall have any liability to the other solely by reason of such termination, except as set forth below.
In the event of termination by ICM, ICM will remain responsible for payment of all professional fees and out-of-pocket expenses incurred through the effective date of termination, including any fees or expenses reflected on invoices previously rendered but not yet paid, as well as any unbilled fees and expenses for work performed prior to the date of termination.
In the event of termination by C&H, the Firm will take all reasonable steps to protect ICM's interests during the transition period, including providing ICM with reasonable notice to retain successor counsel, facilitating the orderly transfer of the engagement file to successor counsel, and filing any required notifications with the IRS (including revocation or substitution of IRS Form 2848), all in accordance with the applicable Rules of Professional Conduct and any applicable IRS procedural requirements. ICM will remain responsible for payment of all fees and expenses incurred through the effective date of termination.
13. Limitation of Liability
To the fullest extent permitted by applicable law and the Rules of Professional Conduct, C&H's aggregate liability to ICM in connection with this engagement, whether arising in contract, tort (including negligence), or otherwise, shall not exceed the total amount of professional fees actually paid by ICM to C&H for services rendered under this engagement letter. This limitation does not apply to the extent it is prohibited by applicable law, regulation, or the Rules of Professional Conduct governing the Firm's practice.
Nothing in this Section shall be construed to limit ICM's obligation to pay all fees and expenses due to C&H under the terms of this engagement letter.
14. Governing Law
This engagement letter, and the terms and conditions set forth herein, shall be governed by and construed in accordance with the laws of the State of New York, without regard to its conflict of laws principles. Any dispute arising out of or relating to this engagement letter or the services provided hereunder shall be subject to the exclusive jurisdiction of the courts of the State of New York located in the County of New York, or the United States District Court for the Southern District of New York.
15. Acceptance and Execution
We respectfully request that ICM confirm its agreement to the terms and conditions set forth in this engagement letter by having an authorized representative of the Partnership sign and date the Acknowledgment and Acceptance set forth below and return an executed copy to the undersigned at the address listed above, or by email to shartwell@calderwoodharkness.com. A duplicate original of this letter is enclosed for ICM's records.
C&H looks forward to the opportunity to represent Ironside Capital Management LP in connection with the Examination and is prepared to begin work immediately upon execution of this letter. Given the pending IRS examination timeline and the thirty-day response window specified in the Examination Notification, prompt execution will allow us to make timely contact with the assigned Revenue Agent and file the Form 2848 without delay.
We are confident in the strength of ICM's tax reporting positions and in our ability to mount a thorough and effective defense on the Partnership's behalf. Please do not hesitate to contact Sylvia Hartwell at (212) 554-7815 or Marcus Trent's usual contact, Leonard Cross, at (212) 554-7842 should you have any questions regarding this letter or the engagement.
Very truly yours,
CALDERWOOD & HARKNESS LLP
By: ________
Sylvia Hartwell Partner, Tax Department
By: ________
Leonard Cross Partner, Tax Department
ACKNOWLEDGMENT AND ACCEPTANCE
The undersigned, on behalf of Ironside Capital Management LP, hereby acknowledge receipt of the foregoing engagement letter dated April 10, 2023, confirm that they have read and understood the terms and conditions set forth therein, and agree to be bound by such terms and conditions.
AGREED AND ACCEPTED:
IRONSIDE CAPITAL MANAGEMENT LP
By: Ironside Capital GP LLC, its General Partner
By: ________
Name: Desmond R. Calloway
Title: Managing Member, Ironside Capital GP LLC
Date: ________
________________________________________
Marcus Trent, Esq. General Counsel, Ironside Capital Management LP
Date: ________
Enclosures:
1. Duplicate original of this engagement letter
2. IRS Form 2848 (Power of Attorney and Declaration of Representative) — for execution by authorized signatory
cc:
Priya Venkatesh, COO & CFO, Ironside Capital Management LP Leila Nazari, Calderwood & Harkness LLP Robert Jansen, Calderwood & Harkness LLP
| Timekeeper | Title | Hourly Rate |
| Sylvia Hartwell | Partner | $1,350/hr |
| Leonard Cross | Partner | $1,275/hr |
| Leila Nazari | Associate | $895/hr |
| Robert Jansen | Associate | $725/hr |