MEMORANDUM
PRIVILEGED & CONFIDENTIAL / ATTORNEY WORK PRODUCT
TO: Angela Fontaine, Partner, Real Estate
FROM: Cynthia Ho, Associate, Real Estate
DATE: March 10, 2026
RE: LOI Negotiation Issues List and Redline Tracker — Prospective Acquisition of 450 West 34th Street, New York, NY 10001 by Briarwood Family Office LLC from Meridian Gateway Holdings LLC
Matter No.: 1026-00003
CC: Douglas Fairchild, Grace Nakamura
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I. Purpose and Background
The purpose of this memorandum is to track all open and resolved negotiation points on the draft Letter of Intent (the "LOI") for the proposed acquisition of the mixed-use commercial property located at 450 West 34th Street, New York, New York 10001, designated as Block 754, Lot 42, Borough of Manhattan on the Tax Map of the City of New York (the "Property"), by Briarwood Family Office LLC ("Briarwood" or "BFO") (or its designee, BFO 450 West 34th LLC, a Delaware limited liability company to be formed) from Meridian Gateway Holdings LLC ("Meridian" or "MGH"). The proposed purchase price for the Property is $120,000,000.
Briarwood Family Office LLC is represented by this firm, Calderwood & Harkness LLP. The lead partner overseeing the transaction is Angela Fontaine. I serve as the associate responsible for day-to-day drafting, redline management, and issue tracking. Douglas Fairchild is providing support on tax and structural matters, and Grace Nakamura is coordinating the due diligence workstream.
Meridian Gateway Holdings LLC is represented by Hargrove, Pettigrew & Sloane LLP ("HPS"). The lead partner at HPS is Jonathan D. Hargrove, with associate Rebecca Tran handling document preparation and redline coordination on the Seller's side.
The principals involved in the transaction on the Buyer's side are Theodore R. Ashworth, Founder and Managing Principal of Briarwood Family Office LLC, and Margaux Ashworth-Levine, Principal and Head of Real Estate Investments. On the Seller's side, the principals are Victor S. Papadopoulos, Managing Member of Meridian Gateway Holdings LLC, and Elena K. Rosenberg, Co-Managing Member of Meridian Gateway Holdings LLC.
Procedural History. An initial draft of the LOI was prepared by this firm and transmitted to HPS on or about March 3, 2026, via email and hard copy letter addressed to Jonathan D. Hargrove. HPS circulated a redlined version of the LOI (containing forty-seven (47) tracked changes) back to our office on or about March 7, 2026. This memorandum summarizes each negotiation issue arising from a comparative analysis of the initial draft LOI (Version 1) and the HPS redline (Version 2), and sets forth Briarwood's recommended positions for the counter-redline (Version 3), which I am currently preparing for Angela's review.
The target LOI execution date remains March 14, 2026. Maintaining this timeline is important to permit prompt commencement of due diligence, coordination with prospective lender Pinnacle Federal Savings Bank, and engagement of the various third-party consultants that will need to be mobilized promptly upon LOI execution.
This memorandum is organized as follows: Section II provides a summary status table of all identified negotiation issues; Section III contains a detailed issue-by-issue analysis with positions, counter-positions, and recommendations; Section IV presents a version history and redline tracker; Section V sets forth priority action items and negotiation strategy; Section VI outlines the next steps; and Section VII provides an appendix containing key financial reference data for the Property.
II. Summary Status Table
The following table provides a high-level overview of all issues identified in the HPS redline, together with the positions of each party, current status, and priority level. A detailed analysis of each issue follows in Section III.
III. Detailed Issue-by-Issue Analysis
Issue 1: Purchase Price
BFO Position (V1): The purchase price for the Property shall be One Hundred Twenty Million Dollars ($120,000,000), payable all cash to Seller at closing, subject to customary prorations and adjustments as will be set forth in the PSA. The price is firm and not subject to adjustment for changes in rent rolls, occupancy levels, or operating income occurring between LOI execution and closing. BFO's offer is based on an in-place net operating income of approximately $6,960,000, representing an implied capitalization rate of 5.80%, and a price per gross building area square foot of approximately $643.78 based on the Property's 186,400 square feet of gross building area across fourteen (14) stories plus cellar.
Meridian/HPS Position (V2): HPS agreed to the $120,000,000 purchase price without adjustment. HPS did insert language in the redline providing that the purchase price shall be "free and clear of any purchase price adjustment mechanism, earn-out, holdback, or post-closing price modification of any kind." This language is redundant in light of BFO's position but is not objectionable and may be accepted without further comment. The language provides additional clarity and certainty, which benefits both parties.
Key Metrics:
Status: RESOLVED — Agreed at $120,000,000. No further negotiation required. HPS's "free and clear" language to be accepted in V3.
Issue 2: Buyer Entity / Designee Right
BFO Position (V1): The Buyer is listed in the LOI as "Briarwood Family Office LLC, or its designee." BFO retains the right to assign its rights under the PSA to a single-purpose acquisition entity, specifically BFO 450 West 34th LLC, a Delaware limited liability company to be formed prior to or at closing. This assignment right is intended to be exercised without the prior consent of Seller and is standard practice in commercial real estate acquisitions where the buyer is a family office or investment fund that forms project-level SPVs for liability isolation, tax planning, and asset management purposes.
Meridian/HPS Position (V2): HPS's redline imposes three conditions on the designee right:
(a) Any designee must be wholly owned and controlled, directly or indirectly, by Briarwood Family Office LLC at the time of assignment and at closing;
(b) Briarwood Family Office LLC shall remain jointly and severally liable with the designee for all of the Buyer's obligations under the PSA (including the obligation to close, fund the purchase price, and pay any damages for breach), even after any such assignment; and
(c) The designee entity must be identified in writing to Seller no later than ten (10) business days prior to the scheduled closing date.
Analysis and Recommendation:
Condition (a) is standard and acceptable. BFO 450 West 34th LLC will be wholly owned by BFO, and this requirement is consistent with the transaction structure.
Condition (b) — continued joint and several liability of BFO after assignment — is more problematic. The purpose of the SPV structure is to isolate the acquisition at the project level. However, from Seller's perspective, the concern is that the SPV, being a newly formed entity with no independent assets, would provide an insufficient source of recovery in the event of a Buyer default post-assignment. This concern is mitigated by the deposit structure: upon expiration of the due diligence period, $9,000,000 in aggregate deposits will be at risk (and going hard), providing Seller with substantial liquidated damages protection. I recommend pushing back on condition (b) as unnecessary in light of the deposit structure, while acknowledging that we may ultimately need to concede this point during PSA negotiations depending on the overall deal dynamics. For LOI purposes, the language should be bracketed or deferred.
Condition (c) — ten (10) business day identification deadline — is a reasonable administrative requirement. BFO should be prepared to form BFO 450 West 34th LLC well in advance of closing. This condition is acceptable.
Recommended V3 Position: Accept conditions (a) and (c). As to condition (b), insert language stating that continued liability of BFO shall be "subject to negotiation in the PSA" and note that the issue is deferred. This preserves BFO's bargaining position without creating an impasse at the LOI stage.
Status: OPEN — Minor point; expected to resolve through compromise language or deferral to PSA.
Issue 3: Earnest Money Deposit — Initial Amount
BFO Position (V1): The initial earnest money deposit shall be Six Million Dollars ($6,000,000), representing five percent (5%) of the purchase price ($120,000,000 × 0.05 = $6,000,000). The initial deposit shall be payable within three (3) business days following full execution and delivery of the PSA, by wire transfer of immediately available funds into escrow with the designated escrow agent. The initial deposit is refundable during the due diligence period and becomes non-refundable (subject to customary carve-outs) upon expiration of the due diligence period.
Meridian/HPS Position (V2): HPS initially countered with a single earnest money deposit of Nine Million Dollars ($9,000,000), representing seven and one-half percent (7.5%) of the purchase price. HPS's rationale, as conveyed in the redline and in a brief cover email from Rebecca Tran, was that a property of this significance and value in the Hudson Yards/Penn Station submarket warrants a higher initial deposit to compensate Seller for removing the Property from the market during the exclusivity and due diligence periods, and to demonstrate the seriousness of Buyer's intent.
Resolution: Following a telephone discussion between myself and Rebecca Tran on March 8, 2026, and a subsequent email exchange, HPS agreed to a two-tranche deposit structure: an initial deposit of $6,000,000 upon PSA execution, followed by an additional deposit of $3,000,000 upon expiration of the due diligence period (see Issue 4 below). The aggregate deposit amount of $9,000,000 satisfies Seller's desired total deposit figure while preserving Buyer's position during the free-look period by limiting the amount of capital at risk during the initial diligence phase. This structure is consistent with market practice for transactions of this magnitude in Manhattan.
Status: RESOLVED — HPS accepted two-tranche structure; initial deposit of $6,000,000 agreed.
Issue 4: Additional Deposit — Amount and Timing
BFO Position (V1): An additional earnest money deposit of Three Million Dollars ($3,000,000) shall be due and payable one (1) business day after expiration of the due diligence period, bringing the aggregate deposits to Nine Million Dollars ($6,000,000 + $3,000,000 = $9,000,000). The additional deposit shall go hard (become non-refundable) upon funding, except in the following circumstances:
(i) Material default by Seller under the PSA;
(ii) Failure of Seller to deliver title in the condition required under the PSA; and
(iii) Casualty or condemnation affecting the Property in excess of a threshold to be agreed upon in the PSA.
Similarly, the initial deposit of $6,000,000 would go hard upon expiration of the due diligence period, subject to the same carve-outs.
Meridian/HPS Position (V2): HPS agreed to the $3,000,000 additional deposit amount and the timing (one business day following expiration of the due diligence period). However, HPS's redline contains two significant modifications:
(a) HPS requests that the additional deposit go hard immediately and unconditionally upon funding, with no carve-outs whatsoever — including no carve-out for Seller default. Under HPS's formulation, even if Seller materially breaches the PSA, Buyer would forfeit the additional deposit (and by extension, based on parallel language, the initial deposit as well).
(b) HPS further requests that both the initial deposit and the additional deposit become fully non-refundable — without any carve-outs or exceptions — upon expiration of the due diligence period, irrespective of the basis for any subsequent termination.
Analysis: HPS's position is commercially unreasonable and inconsistent with market practice. A Buyer should never be required to forfeit its deposits in the event of a material breach by the Seller. The carve-outs BFO has proposed are standard in New York commercial real estate PSAs and are essential protections that any sophisticated buyer would insist upon. Specifically:
The Seller default carve-out ensures that if Seller refuses or is unable to close due to its own breach, Buyer recovers its deposits in addition to any other remedies available under the PSA. The title delivery carve-out protects Buyer in the event Seller cannot deliver marketable and insurable fee simple title as required. The casualty/condemnation carve-out is a standard risk allocation provision addressing circumstances beyond either party's control.
Recommended V3 Counter: The additional deposit shall go hard upon funding, and the initial deposit shall go hard upon expiration of the due diligence period, in each case subject to the following carve-outs: (i) material default by Seller under the PSA, (ii) failure of Seller to deliver title to the Property as required under the PSA, and (iii) casualty or condemnation affecting the Property in excess of a materiality threshold to be agreed upon in the PSA. The detailed mechanics of deposit hardening, the definition of "material default," and the casualty/condemnation threshold are to be negotiated in the PSA. The LOI should reflect the conceptual framework agreed by the parties (two-tranche deposit structure, aggregate $9,000,000, deposits going hard after due diligence period) with a notation that the specific hardening conditions are "subject to the terms and conditions of the PSA."
Status: OPEN — The concept of $3,000,000 as the additional deposit amount is agreed. The substantive question of hardening conditions and applicable carve-outs is deferred to PSA negotiation. The LOI language should reflect this deferral clearly to avoid any argument that Buyer has conceded on the carve-outs.
Issue 5: Escrow Agent
BFO Position (V1): All deposits under the PSA shall be held in escrow by Prestige Escrow Services LLC, located at 1 Penn Plaza, Suite 4500, New York, New York 10119. Prestige is an independent, third-party escrow company regularly engaged in commercial real estate transactions in the New York metropolitan area. Deposits shall be held in an interest-bearing FDIC-insured money market account, with interest accruing for the benefit of Buyer (applied against the purchase price at closing or returned to Buyer in the event of refund).
Meridian/HPS Position (V2): HPS initially proposed that all deposits be held by Hargrove, Pettigrew & Sloane LLP in the firm's Interest on Lawyer Account (IOLA) escrow account. This proposal was made in the redline without extensive explanation, but it is common for seller-side counsel to prefer to hold escrow funds in their own trust accounts.
Analysis and Resolution: Holding deposits in Seller's counsel's trust account creates an inherent appearance of conflict, particularly in a transaction of this magnitude. Where $9,000,000 in aggregate deposits are at stake, the use of an independent, third-party escrow agent is the preferred and more prudent approach. This firm communicated our objection to the HPS proposal during the March 8, 2026 call between myself and Rebecca Tran, and HPS accepted Prestige Escrow Services LLC without further discussion. We will include the standard form escrow agreement as an exhibit to the PSA, which will govern the terms of escrow and the conditions for release of funds.
Status: RESOLVED — HPS accepted Prestige Escrow Services LLC as escrow agent.
Issue 6: Due Diligence Period — Length
BFO Position (V1): The due diligence period shall be forty-five (45) calendar days commencing on the date of full execution and delivery of the PSA. If the PSA is executed on the target date of April 11, 2026 (assuming LOI execution on March 14, 2026, followed by approximately four weeks of PSA negotiation), the due diligence period would expire on approximately May 26, 2026. During the due diligence period, Buyer shall have the right to conduct all inspections, investigations, reviews, and analyses it deems necessary or desirable with respect to the Property, including but not limited to the items described in the access rights provision (see Issue 9).
Meridian/HPS Position (V2): HPS countered with a due diligence period of thirty (30) calendar days. In the cover email accompanying the redline, Rebecca Tran articulated the following rationale for the shortened period:
(a) The Property is well-maintained and has been the subject of a substantial capital improvement program, with approximately $14,200,000 in capital expenditures between 2016 and 2020;
(b) An existing Phase I Environmental Site Assessment is available, prepared by Whitmore Environmental Sciences LLC and dated June 15, 2020, which can be relied upon or updated by Buyer's environmental consultant;
(c) The Property has a limited number of commercial tenants, and the residential component consists of only thirty-eight (38) units;
(d) A shorter due diligence period reduces Seller's uncertainty and exposure to market risk during the diligence and closing period; and
(e) In HPS's view, thirty (30) calendar days is consistent with market practice for properties of this type in Manhattan.
BFO Counter Rationale: While we acknowledge that the Property has been well-maintained and that certain diligence materials are available, a forty-five (45) day due diligence period is necessary and appropriate for the following reasons:
(i) Mixed-Use Complexity. The Property is a mixed-use asset comprising retail, office, and residential components. Each use type requires distinct diligence workstreams, including separate market analyses, separate lease reviews, separate regulatory compliance assessments, and separate physical condition evaluations. The interplay between the different use types — particularly shared building systems, common area maintenance allocations, and overlapping insurance requirements — adds additional layers of complexity that would not be present in a single-use asset.
(ii) Updated Phase I ESA Required. The existing Phase I Environmental Site Assessment prepared by Whitmore Environmental Sciences LLC is dated June 15, 2020 — over five years old at the anticipated time of PSA execution. Under ASTM E1527-21 (Standard Practice for Environmental Site Assessments: Phase I Environmental Site Assessment Process), a Phase I ESA that is more than 180 days old must be updated or replaced to qualify for the innocent landowner defense under CERCLA and related environmental statutes. Furthermore, Pinnacle Federal Savings Bank, BFO's prospective senior lender, requires a Phase I ESA dated no more than 180 days prior to loan closing as a condition of its mortgage commitment. Whitmore Environmental Sciences LLC has estimated that a new Phase I ESA will require approximately three to four weeks to complete, factoring in records review, site reconnaissance, and report preparation.
(iii) Residential Rent Regulation Analysis. The Property contains thirty-eight (38) residential rental units. Given the enactment of the Housing Stability and Tenant Protection Act of 2019 (HSTPA), which eliminated high-rent and high-income deregulation pathways and imposed new restrictions on Major Capital Improvement (MCI) and Individual Apartment Improvement (IAI) rent increases, a comprehensive analysis of the rent roll is essential. This analysis must include a unit-by-unit review of legal regulated rents, preferential rents (if any), the status of each unit under DHCR records, any pending or prior MCI or IAI applications, and compliance with the HSTPA's amended provisions. This workstream typically requires engagement of a specialized rent regulation consultant and coordination with DHCR, which is a time-intensive process.
(iv) Multiple Commercial Lease Review. The Property is subject to multiple commercial leases, each of which must be reviewed in detail:
• Harmon & Voss Retail Partners LLC — Retail lease expiring November 30, 2032
• Solstice Wellness Studio Inc. — Retail/studio lease expiring March 31, 2029
• Ridgepoint Consulting Group LLC — Office lease expiring August 31, 2030
• Calderon Specialty Insurance Digital Media Corp. — Office lease expiring January 31, 2028
Each lease must be reviewed for assignment and transfer provisions, estoppel certificate and SNDA requirements, renewal options, purchase options or rights of first refusal (if any), co-tenancy clauses, operating expense escalation structures, percentage rent provisions, and compliance with the terms thereof. Lease abstracts must be prepared and cross-referenced against the rent roll and Seller's operating statements. This is a substantial undertaking that cannot be compressed into thirty days without sacrificing thoroughness.
(v) Zoning Analysis and Unused Development Rights. The Property has approximately 14,850 square feet of unused development rights (air rights). Halcyon Planning Associates LLC will need to conduct a zoning analysis to confirm the available FAR, assess the feasibility and constraints on any future development or enlargement, evaluate the impact of any applicable zoning lot restrictions or special district regulations, and analyze whether the air rights can be severed, sold, or utilized in connection with a future development plan. This analysis requires review of the NYC Zoning Resolution, any applicable restrictive declarations, and potentially a pre-application conference with the Department of Buildings.
(vi) Title and Survey Update. The existing survey of the Property was prepared by Clearview Land Surveyors Inc. and is dated March 2, 2011 — approximately fifteen years old. An updated ALTA/NSPS survey is required by Pinnacle Federal Savings Bank as a condition of mortgage financing and will be needed by the title company (to be designated) for the issuance of an owner's title insurance policy. Clearview has indicated that an updated survey will require approximately two to three weeks, depending on scheduling and site access.
(vii) Lender and Appraiser Coordination. BFO is seeking $78,000,000 in senior acquisition financing from Pinnacle Federal Savings Bank. The lender's due diligence requirements — including the updated Phase I ESA, updated survey, ALTA title commitment, appraisal (to be performed by Kensington Valuation Group Inc.), and property condition report — must be coordinated within the due diligence period. Kensington Valuation Group Inc. has estimated an appraisal turnaround time of approximately three weeks. Coordination of these overlapping consultant workstreams, receipt and review of draft reports, and negotiation of any open issues identified during diligence requires sufficient calendar time, which thirty days does not provide.
Compromise Position: If Seller insists that forty-five (45) days is unacceptable, BFO's fallback position is forty (40) calendar days. However, this concession should be deployed only as a last resort, and only in exchange for reciprocal concessions on other open issues (such as the exclusivity period or the break-up fee). Forty-five (45) days remains our strong preference and is fully justified by the scope and complexity of the required diligence.
Status: OPEN — This is a critical issue and one of the three priority items requiring resolution prior to LOI execution. I recommend holding firm at 45 days and preparing detailed talking points for Angela's use in a direct call with Jonathan D. Hargrove.
Issue 7: Due Diligence Termination Right (Free Look)
BFO Position (V1): During the due diligence period, Buyer shall have the absolute and unconditional right to terminate the PSA for any reason or no reason whatsoever, in Buyer's sole and unfettered discretion, by delivering written notice of termination to Seller prior to 5:00 p.m. (Eastern Time) on the last day of the due diligence period. Upon such termination, the initial deposit of $6,000,000 shall be returned to Buyer in full, together with all accrued interest thereon, within five (5) business days following delivery of the termination notice. Upon the return of the initial deposit, neither party shall have any further obligation or liability to the other under the PSA, except for those obligations that expressly survive termination (e.g., confidentiality, indemnification for property damage caused during inspections).
Meridian/HPS Position (V2): HPS accepted the free-look termination right in principle. The concept that Buyer may terminate during the due diligence period for any reason or no reason, with a full refund of the initial deposit, is agreed. However, HPS inserted a new provision requiring that, upon any such termination, Buyer shall promptly deliver to Seller, at no cost to Seller, copies of all third-party due diligence reports obtained by Buyer in connection with its investigation of the Property, including without limitation:
(a) Any Phase I (or Phase II, if applicable) Environmental Site Assessment;
(b) Any updated ALTA/NSPS survey;
(c) Any property condition report or engineering assessment;
(d) Any appraisal or valuation report; and
(e) Any other third-party reports relating to the physical, environmental, or structural condition of the Property.
HPS's rationale is that Seller should benefit from updated diligence reports for the Property in the event the transaction does not proceed, as Seller would need such reports to market the Property to subsequent potential purchasers.
Analysis and Recommendation: This request is not unusual in New York commercial real estate transactions and has become increasingly common in recent years. However, BFO should accept the report-sharing requirement only with the following carve-outs and conditions:
(i) Attorney-Client Privilege and Attorney Work Product. No materials protected by the attorney-client privilege, the attorney work product doctrine, or any other applicable privilege or protection shall be required to be delivered. This includes any legal memoranda, analyses, or opinion letters prepared by Calderwood & Harkness LLP or any other counsel retained by BFO, as well as any communications between BFO and its legal advisors regarding the Property.
(ii) Draft and Preliminary Reports Excluded. Only final versions of third-party reports shall be deliverable. Draft reports, preliminary findings, internal notes, and working papers of consultants shall not be subject to the delivery requirement.
(iii) "As-Is" Delivery; No Representation or Warranty. All reports delivered to Seller shall be provided on an "as-is, where-is" basis, without any representation, warranty, or guarantee by Buyer as to the accuracy, completeness, or reliability of such reports. Seller's use of and reliance upon any such reports shall be at Seller's sole risk. Buyer shall have no liability to Seller or any third party arising from Seller's use of any delivered reports.
(iv) No Reliance Letters. Buyer shall not be required to obtain or furnish reliance letters or consent-to-transfer letters from any third-party consultant in favor of Seller. If Seller wishes to rely upon any such reports, Seller shall engage directly with the applicable consultant to obtain its own reliance authorization.
These carve-outs are customary and should not be controversial. I recommend accepting HPS's report-sharing provision with the foregoing modifications. The detailed mechanics (timing, format, and scope of deliverables) should be set forth in the PSA rather than the LOI.
Status: RESOLVED in principle — free-look termination right agreed; report-sharing requirement accepted subject to customary carve-outs; details regarding scope and delivery mechanics to be addressed in the PSA.
Issue 8: Exclusivity Period
BFO Position (V1): Seller shall grant Buyer an exclusive negotiation and due diligence period of ninety (90) days from the date of LOI execution (the "Exclusivity Period"). If the LOI is executed on March 14, 2026, the Exclusivity Period would expire on or about June 12, 2026. During the Exclusivity Period, Seller shall not, and shall cause its members, managers, officers, agents, representatives, and affiliates not to, directly or indirectly:
(a) Solicit, initiate, encourage, or entertain inquiries, proposals, or offers from any third party with respect to the sale, transfer, exchange, contribution, or other disposition of the Property or any interest therein;
(b) Negotiate, discuss, or enter into any letter of intent, purchase agreement, option agreement, or other agreement or understanding with any third party with respect to the sale, transfer, exchange, contribution, or other disposition of the Property or any interest therein; or
(c) Provide any non-public information regarding the Property to any third party for the purpose of facilitating or evaluating any such transaction.
This provision is intended to be a binding obligation under the LOI, enforceable by Buyer in accordance with its terms, and shall survive the termination or expiration of all other provisions of the LOI.
Meridian/HPS Position (V2): HPS made three substantive modifications to the exclusivity provision:
(a) Duration Reduction. HPS reduced the Exclusivity Period from ninety (90) days to sixty (60) days, arguing that a ninety-day exclusivity period is excessive at the LOI stage and exposes Seller to an unreasonable period of market risk. HPS notes that the PSA negotiation period (between LOI execution and PSA execution) should not require more than three to four weeks, and that the due diligence period (as proposed by HPS at thirty days) would expire within sixty days of LOI execution.
(b) Automatic Termination. HPS inserted a provision stating that the Exclusivity Period shall terminate automatically upon the earlier of (i) expiration of the stated Exclusivity Period, (ii) Buyer's exercise of its due diligence termination right under the PSA, or (iii) termination of the PSA for any reason.
(c) Mutual Exclusivity. HPS inserted a reciprocal exclusivity obligation requiring that, during the Exclusivity Period, Buyer shall not directly or indirectly pursue, negotiate, or enter into any agreement for the acquisition of any competing commercial property located in the Hudson Yards, Penn Station, or Midtown West submarkets of Manhattan.
Analysis:
As to duration (a): HPS's sixty-day proposal is too short. The parties must negotiate and execute the PSA (estimated three to four weeks), and BFO requires forty-five calendar days of due diligence following PSA execution. A sixty-day exclusivity period would expire before the due diligence period even concludes, leaving Seller free to entertain competing offers during the final days of BFO's diligence — an unacceptable position for Buyer. However, BFO's initial proposal of ninety days does include a generous buffer. A compromise of seventy-five (75) days would cover the PSA negotiation period (approximately four weeks) plus the full forty-five-day due diligence period (approximately six and a half weeks), with a modest additional buffer. If the LOI is executed on March 14, 2026, a seventy-five-day exclusivity period would expire on or about May 28, 2026, which would extend through the estimated end of the due diligence period (May 26, 2026, assuming PSA execution on April 11, 2026) plus two additional days.
As to automatic termination (b): The provision that exclusivity terminates upon Buyer's exercise of the due diligence termination right is reasonable and should be accepted. If Buyer voluntarily walks away from the transaction during the free-look period, there is no basis for continuing to restrict Seller's ability to market the Property. The provision regarding termination upon expiration of the stated period is self-evident. The provision regarding termination upon termination of the PSA "for any reason" should be modified to exclude termination due to Seller default — Seller should not benefit from exclusivity termination caused by its own breach.
As to mutual exclusivity (c): This request should be firmly rejected. Mutual exclusivity provisions at the LOI stage are highly unusual in commercial real estate acquisitions. They are more commonly seen in corporate M&A contexts (no-shop provisions), and even in that setting, they are typically imposed on the seller, not the buyer. Requiring BFO to refrain from pursuing any acquisition opportunity in a broadly defined geographic submarket is commercially unreasonable and would impose an unjustifiable constraint on BFO's investment activities during the exclusivity period. BFO is a family office with an active real estate investment program, and its investment activities cannot be frozen based on a non-binding LOI. There is no legitimate seller interest served by restricting Buyer's ability to evaluate other properties; Seller's concern is adequately addressed by the deposit structure and the one-directional exclusivity provision.
Recommended V3 Position:
• Propose a seventy-five (75) day Exclusivity Period as a compromise between BFO's ninety-day proposal and HPS's sixty-day counter.
• Accept that exclusivity terminates automatically upon Buyer's voluntary exercise of its due diligence termination right, subject to a modification providing that exclusivity does not terminate if the PSA is terminated due to Seller default.
• Firmly reject the mutual exclusivity provision. This is a non-starter for BFO.
Status: OPEN — Substantive negotiation ongoing. The seventy-five-day compromise will be proposed in V3. Mutual exclusivity will be categorically rejected.
Issue 9: Access Rights During Due Diligence
BFO Position (V1): During the due diligence period, Buyer and its authorized consultants, agents, engineers, contractors, and representatives (including Whitmore Environmental Sciences LLC, Kensington Valuation Group Inc., Clearview Land Surveyors Inc., Halcyon Planning Associates LLC, and Lockhart & Pryor Insurance Advisors LLC) shall have reasonable access to the Property for the purpose of conducting inspections, investigations, tests, surveys, analyses, and evaluations, including without limitation environmental testing (Phase I and, if warranted, limited Phase II sampling), surveying, physical condition assessments, mechanical and structural inspections, tenant interviews, and market analyses. Access shall be upon forty-eight (48) hours' prior written or electronic notice to Seller, during normal business hours (8:00 a.m. to 6:00 p.m., Monday through Friday, excluding federal holidays), and Seller's property manager (Atlas Urban Management Corp., contact: Gerald Fitch) shall be notified of and may accompany Buyer's representatives during any site visit.
Meridian/HPS Position (V2): HPS's redline imposes the following restrictions on Buyer's access rights:
(i) No Invasive Testing Without Consent. Buyer shall not conduct any Phase II environmental testing or any other invasive or destructive testing (including sampling of soil, groundwater, building materials, or indoor air) without obtaining Seller's prior written consent, which consent shall not be unreasonably withheld.
(ii) No Direct Tenant Contact Without Consent. Buyer and its representatives shall not directly contact, interview, or communicate with any tenant, subtenant, licensee, or occupant of the Property without obtaining Seller's prior written consent. Seller or its property manager shall have the right to be present during any approved tenant communication.
(iii) Insurance Requirement. Prior to any entry upon the Property, Buyer shall deliver to Seller a certificate of insurance evidencing commercial general liability insurance in the amount of not less than Two Million Dollars ($2,000,000) per occurrence and Five Million Dollars ($5,000,000) in the aggregate, naming Seller, Meridian Gateway Holdings LLC, and Atlas Urban Management Corp. as additional insureds.
(iv) Restoration Obligation. Buyer shall promptly restore the Property to substantially the same condition as existed immediately prior to any inspection, investigation, or testing, at Buyer's sole cost and expense.
Analysis and Recommendation:
As to (i) — Invasive testing: The consent requirement for Phase II environmental testing is standard and should be accepted. However, BFO should insist that the consent standard include the qualification that consent shall not be "unreasonably withheld, conditioned, or delayed" (HPS's redline uses "unreasonably withheld" but omits "conditioned or delayed"). BFO should also insert a response deadline requiring Seller to respond to any request for Phase II consent within five (5) business days of Buyer's written request, with Seller's failure to respond within such period deemed to be consent. This is important because Phase II testing may be time-critical within the due diligence period, and delays by Seller in responding to consent requests could effectively shorten Buyer's available diligence time.
As to (ii) — Tenant contact: The restriction on direct tenant contact is common in acquisition transactions, particularly where the seller wishes to manage tenant relationships and avoid premature disclosure of a potential change in ownership. BFO should accept the general concept with one modification: Buyer should be permitted to send written communications (including estoppel certificate requests and tenant questionnaires) to tenants, provided that the form and content of such communications are approved by Seller in advance. This will facilitate the estoppel process and allow BFO to begin gathering necessary tenant information during the due diligence period.
As to (iii) — Insurance: The insurance requirement is customary and should be accepted. I will coordinate with Lockhart & Pryor Insurance Advisors LLC to ensure that an appropriate certificate of insurance is obtained and delivered prior to any site access. The coverage amounts of $2,000,000 per occurrence and $5,000,000 aggregate are within normal ranges for this type of transaction.
As to (iv) — Restoration: The restoration obligation is standard and should be accepted. Buyer should ensure that its consultant engagement letters include provisions requiring each consultant to carry its own insurance and to restore any areas disturbed during inspections.
Recommended V3 Position: Accept the framework of HPS's access restrictions with the modifications described above: (a) invasive testing consent not to be unreasonably withheld, conditioned, or delayed, with a five-business-day deemed consent provision; (b) tenant contact restricted but written communications permitted with Seller's approval of form; (c) insurance requirement accepted; (d) restoration obligation accepted.
Status: OPEN — Expected to resolve with compromise language in V3. Moderate-priority issue.
Issue 10: Confidentiality Provisions and Carve-Outs
BFO Position (V1): The LOI shall include a standard mutual confidentiality provision, binding on both parties, providing that neither party shall disclose the existence or terms of the LOI, the proposed transaction, or any information obtained from the other party in connection therewith (collectively, "Confidential Information") to any person or entity without the prior written consent of the other party, except that each party may disclose Confidential Information to the following categories of permitted recipients without the other party's consent:
(i) Such party's legal counsel, tax advisors, accountants, and financial advisors (including, for BFO: Calderwood & Harkness LLP, Edgemont Nash & Co. LLP, and other retained consultants);
(ii) Prospective lenders in connection with financing for the acquisition of the Property (for BFO: Pinnacle Federal Savings Bank);
(iii) Prospective equity sources for the acquisition (for BFO: Caliber Point Capital Partners LP);
(iv) BFO's existing investors and family members, given that BFO operates as a single-family office and its investors include members of the Ashworth family; and
(v) As required by applicable law, regulation, or court order, provided that the disclosing party provides prompt written notice to the other party (to the extent permitted by law) and cooperates in any effort by the other party to obtain a protective order.
The confidentiality obligations shall remain in effect for a period of two (2) years from the date of LOI execution. The confidentiality provision shall be a binding obligation under the LOI.
Meridian/HPS Position (V2): HPS accepted the mutual confidentiality framework and the binding nature of the provision. HPS also accepted the carve-outs for legal, tax, and financial advisors (category (i)), prospective lenders (category (ii)), family members (category (iv)), and disclosures required by law (category (v)). However, HPS raised two objections:
(a) Equity Source Carve-Out. HPS objects to the carve-out for "prospective equity sources" (category (iii)), arguing that this carve-out is too broad. HPS is concerned that BFO could share detailed financial information about the Property — including Seller's operating statements, rent rolls, and lease terms — with multiple potential equity investors, leading to wide dissemination of Seller's proprietary information in the market. HPS notes that if BFO approaches multiple equity sources, Seller's financial information could become known to competitors and other market participants, potentially undermining Seller's negotiating position if the transaction does not close.
(b) Confidentiality Acknowledgments. HPS requests that any permitted recipients (across all categories) either execute a written confidentiality acknowledgment or be bound by existing confidentiality obligations at least as restrictive as those contained in the LOI. HPS's concern is that information shared with advisors, lenders, or equity sources could be further disseminated without adequate protection.
Analysis and Recommendation:
HPS's concern regarding the equity source carve-out is not without merit. While BFO needs the ability to share information with Caliber Point Capital Partners LP (which has been identified as the anticipated preferred equity partner), an open-ended carve-out that permits disclosure to unspecified "prospective equity sources" could be perceived as overly broad. However, the practical reality is that BFO has already identified Caliber Point Capital Partners LP as the targeted equity partner for this transaction, and it is unlikely that BFO will solicit multiple equity sources during the LOI/PSA negotiation period.
I recommend the following approach:
(i) Narrow the equity source carve-out to require Buyer to identify, in writing to Seller, each specific prospective equity source to whom Buyer intends to disclose Confidential Information. As of the date of this memorandum, BFO has identified Caliber Point Capital Partners LP as the sole prospective equity source. Any additional equity sources, if applicable, would need to be disclosed to Seller in writing prior to any information sharing.
(ii) Require each identified equity source to be bound by confidentiality obligations at least as restrictive as those contained in the LOI. BFO should ensure that Caliber Point Capital Partners LP has executed (or will execute) an NDA with BFO that contains provisions sufficient to satisfy this requirement.
(iii) Accept HPS's request that all permitted recipients be subject to confidentiality obligations. For advisors and consultants, this is typically addressed through existing engagement letter confidentiality provisions. For lenders, this is addressed through the lender's standard confidentiality agreements in connection with loan applications. For family members, BFO can provide a certification that it has informed its family investors of the confidential nature of the information.
This approach balances HPS's legitimate confidentiality concerns with BFO's practical need to share information with its capital sources and advisory team.
Status: OPEN — Expected to resolve with narrowed carve-out language. This is a moderate-priority issue.
Issue 11: Break-Up Fee / Expense Reimbursement
BFO Position (V1): No break-up fee. No expense reimbursement. The LOI is non-binding (except for the expressly binding provisions of exclusivity, confidentiality, governing law, and expense allocation). Each party shall bear its own costs and expenses incurred in connection with the negotiation and execution of the LOI and the proposed transaction, regardless of whether the transaction is consummated.
Meridian/HPS Position (V2): HPS introduced two alternative proposals in the redline:
Alternative A — Break-Up Fee. If Buyer fails to execute a mutually acceptable PSA within thirty (30) days following the expiration of the Exclusivity Period (or any extension thereof), Buyer shall pay to Seller a break-up fee of Five Hundred Thousand Dollars ($500,000) as liquidated damages and not as a penalty, in consideration of Seller's agreement to grant exclusivity and Seller's removal of the Property from the market during the Exclusivity Period. HPS's rationale is that Seller incurs significant opportunity costs and legal expenses (at Hargrove, Pettigrew & Sloane LLP) during the exclusivity period, and should be compensated if the transaction fails to progress to a signed PSA.
Alternative B — Expense Reimbursement. If the LOI terminates without the execution of a PSA (for any reason other than Seller default), Buyer shall reimburse Seller for Seller's documented, reasonable, out-of-pocket third-party expenses incurred in connection with the proposed transaction, including legal fees, consulting fees, and administrative costs, up to a cap of Two Hundred Fifty Thousand Dollars ($250,000).
Analysis and Recommendation:
Both Alternative A and Alternative B should be firmly rejected for the following reasons:
(i) Non-Standard at LOI Stage. Break-up fees and expense reimbursement provisions at the LOI stage are non-standard in New York commercial real estate acquisition transactions. LOIs are, by their nature, preliminary documents intended to memorialize the parties' mutual understanding of the key business terms prior to the negotiation of a definitive PSA. Imposing financial penalties on Buyer at the LOI stage for failing to reach agreement on a PSA — where the terms of the PSA are themselves subject to negotiation — is fundamentally inconsistent with the non-binding character of the LOI and creates a coercive dynamic that undermines the good-faith negotiation process.
(ii) Adequate Seller Protection Through Other Mechanisms. Seller is not without protection. The exclusivity provision (once agreed) will prevent Buyer from tying up the Property while simultaneously pursuing competing transactions. More importantly, upon PSA execution, Buyer will be required to deposit $6,000,000 in earnest money, providing Seller with substantial security. Upon expiration of the due diligence period, the aggregate deposits will increase to $9,000,000, all of which go hard (subject to limited carve-outs). Seller's economic exposure during the LOI/exclusivity period — where no deposits are at risk and no binding obligations to close exist — is modest relative to the overall transaction economics.
(iii) Chilling Effect on Negotiations. A break-up fee creates a perverse incentive for Buyer to agree to unfavorable PSA terms rather than risk forfeiting $500,000 by failing to reach agreement. This is antithetical to good-faith arm's-length negotiation and could compromise BFO's ability to negotiate the PSA effectively.
(iv) Expense Reimbursement Equally Objectionable. The expense reimbursement alternative, while less onerous in dollar terms, is equally objectionable in principle. Each party has made a voluntary decision to engage counsel and incur expenses in connection with the proposed transaction. Those expenses are an ordinary cost of doing business and should not be shifted to the other party if the transaction does not close. BFO is incurring its own substantial legal, consulting, and transactional expenses, and has not sought to impose any reciprocal expense reimbursement obligation on Seller.
Recommended Action: Reject both Alternative A and Alternative B categorically. The V3 counter-redline should delete the break-up fee and expense reimbursement provisions in their entirety and reinstate BFO's original position that each party bears its own costs. If HPS insists on a break-up fee or expense reimbursement provision as a condition to LOI execution, this issue should be escalated immediately to Angela Fontaine for a direct call with Jonathan D. Hargrove.
Priority: HIGH — If HPS does not relent, this could delay or derail LOI execution. Based on the March 8, 2026 call with Rebecca Tran, my sense is that HPS may be testing the waters on this point and may withdraw the request if met with a firm rejection. However, if HPS's principals (particularly Victor S. Papadopoulos) are driving this request, a partner-level conversation may be necessary.
Status: OPEN — Firm rejection recommended. Escalate to Angela Fontaine if necessary.
Issue 12: Target Closing Date and Outside Closing Deadline
BFO Position (V1): The target closing date for the transaction shall be June 30, 2026. The outside closing deadline — after which either party may terminate the PSA if closing has not occurred — shall be July 31, 2026. BFO requested the right to extend the outside closing deadline by one period of thirty (30) days (to August 30, 2026) by delivering written notice to Seller at least ten (10) business days prior to the original outside closing deadline and simultaneously posting an additional non-refundable deposit of One Million Dollars ($1,000,000) with the escrow agent. This extension right was intended to provide a cushion in the event of financing-related delays, title cure periods, or other administrative matters that may require additional time to resolve.
Meridian/HPS Position (V2): HPS agreed to the June 30, 2026 target closing date and the July 31, 2026 outside closing deadline. However, HPS rejected BFO's automatic thirty-day extension right. HPS argued that Buyer should be obligated to close on or before the outside closing deadline and that failure to do so should result in a Seller termination right and forfeiture of all deposits. HPS alternatively proposed that any extension of the outside closing deadline be subject to Seller's consent, which consent may be granted or withheld in Seller's sole and absolute discretion.
Analysis: The automatic extension right is a useful tool in the PSA to address situations where the closing is delayed through no fault of either party (e.g., lender processing delays, title cure periods, municipal approval timelines). However, at the LOI stage, the specific mechanics of extension rights are premature and would be more appropriately addressed in the PSA, where the conditions for extension can be tied to specific circumstances and obligations.
Recommendation: Accept the deletion of the automatic extension right from the LOI. The target closing date of June 30, 2026 and the outside closing deadline of July 31, 2026 are agreed. Extension rights and mechanics will be negotiated in the PSA, where BFO will seek a more structured extension provision that may include:
• Automatic extension for a period necessary to permit Seller to cure title objections (up to 30 days);
• Automatic extension for a period necessary to address financing delays attributable to lender processing (up to 15 business days, conditioned upon Buyer's demonstration of good-faith efforts to close);
• Extension by mutual written agreement of the parties; and
• Extension right in favor of Buyer for up to 30 days upon payment of an extension deposit.
This approach preserves BFO's flexibility in the PSA negotiation without creating an impasse at the LOI stage.
Status: RESOLVED — Automatic extension right removed from the LOI; closing timeline (June 30, 2026 target / July 31, 2026 outside) agreed; extension mechanics to be negotiated in the PSA.
Issue 13: Financing Contingency
BFO Position (V1): The LOI is intentionally silent on financing contingency. BFO intends to obtain senior acquisition financing from Pinnacle Federal Savings Bank in the amount of $78,000,000, representing approximately 65% loan-to-value, and preferred equity from Caliber Point Capital Partners LP in the amount of $18,000,000, representing approximately 15% of the capital stack. BFO equity of $24,000,000, representing approximately 20% of the capital stack, will fund the balance. However, none of these financing arrangements constitute a condition to BFO's obligation to close under the PSA, and the LOI does not contain an express financing contingency.
Capital Stack Summary:
Meridian/HPS Position (V2): HPS requested two things:
(a) An affirmative representation in the LOI that Buyer "has adequate financial resources to consummate the purchase of the Property without a financing contingency and without recourse to any third-party financing source as a condition to closing."
(b) A statement that the PSA shall contain "an express, unconditional waiver of any financing contingency, and Buyer's obligation to close shall not be subject to or conditioned upon the availability, adequacy, or terms of any debt or equity financing."
Analysis: HPS's request is reasonable in substance, though the specific language in (a) is overstated insofar as it suggests BFO has already secured all necessary capital. BFO intends to close without a financing contingency, but the language should be carefully crafted to avoid creating an inadvertent representation regarding the current status of BFO's financing arrangements.
Agreed Language: After discussion with Rebecca Tran, the parties agreed to the following formulation, which will be included in the LOI:
"Buyer intends to proceed on an all-cash basis or with financing at Buyer's sole discretion and risk. Buyer's obligation to close under the PSA shall not be conditioned upon obtaining financing from any source, and the PSA shall not contain a financing contingency."
This language accurately reflects BFO's position — that financing risk is borne entirely by Buyer — without making specific representations about the status of any particular financing arrangement. The detailed financing waiver provision will be included in the PSA.
Status: RESOLVED — Agreed language per above.
Issue 14: Governing Law and Binding/Non-Binding Provisions
BFO Position (V1): The LOI shall be governed by and construed in accordance with the laws of the State of New York, without regard to conflicts of law principles. The LOI shall be non-binding in its entirety, except for the following provisions, which shall be binding obligations of the parties, enforceable in accordance with their terms:
(i) Exclusivity (as set forth in the exclusivity provision);
(ii) Confidentiality (as set forth in the confidentiality provision);
(iii) Governing law and jurisdiction (disputes to be resolved exclusively in the state and federal courts located in New York County, New York); and
(iv) Expense allocation (each party bears its own costs and expenses).
Meridian/HPS Position (V2): HPS agreed to New York governing law and the general framework of binding and non-binding provisions. However, HPS requested that the list of binding provisions be expanded to include:
(v) The break-up fee / expense reimbursement provision (see Issue 11).
HPS's reasoning is that if a break-up fee or expense reimbursement obligation is included in the LOI, it must be binding in order to be enforceable. This is logically correct — a non-binding break-up fee would be meaningless.
Analysis: This issue is entirely dependent on the resolution of Issue 11 (Break-Up Fee / Expense Reimbursement). If the break-up fee and expense reimbursement provisions are rejected — as recommended — then there is no need to expand the list of binding provisions, and HPS's request falls away. The list of binding provisions would remain as originally proposed by BFO: exclusivity, confidentiality, governing law and jurisdiction, and expense allocation.
If, contrary to our recommendation, a break-up fee or expense reimbursement provision is ultimately accepted (a scenario I consider unlikely given the strength of our position), then it would indeed need to be added to the list of binding provisions. However, we do not anticipate reaching that point.
Status: OPEN — Dependent on resolution of Issue 11. If break-up fee is rejected (as recommended), this issue resolves automatically.
Issue 15: Seller Representations at LOI Stage