CONFIDENTIAL
CALDERWOOD & HARKNESS LLP One Liberty Plaza, 55th Floor New York, New York 10006 Tel: (212) 558-4000
Fax: (212) 558-3588
www.calderwoodharkness.com
June 15, 2025
Dr. Rajesh Banerjee, PE Principal Engineer Trident Structural Engineers, P.C. 32 Old Slip, 15th Floor New York, New York 10005
Re: Engagement as Lender's Construction Consultant — Hudson Yards West Project, 450 West 34th Street, New York, New York 10001 (Block 729, Lots 1, 5, 12, 15)
C&H Matter No. 1031-00004
Dear Dr. Banerjee:
Calderwood & Harkness LLP represents Hudson Yards West Mortgage LLC, a Delaware limited liability company ("Mortgage Borrower"), and Hudson Yards West Mezzanine LLC, a Delaware limited liability company ("Mezzanine Borrower" and, together with Mortgage Borrower, the "Borrower Parties"), each an affiliate of Metropolitan Transit Development Corp., an Illinois corporation ("MTDC"). We are writing to confirm the engagement of Trident Structural Engineers, P.C. ("Consultant" or "Construction Consultant") to serve as the independent construction consultant for the benefit of the Lender Parties (as defined below) in connection with the construction of the Hudson Yards West mixed-use development project located at 450 West 34th Street, New York, New York 10001 (the "Project").
The engagement of the Consultant is being made for the benefit of the following lender parties (collectively, the "Lender Parties"):
(a) Ironclad National Bank, N.A. ("Agent"), in its capacity as administrative agent for a syndicate of senior mortgage lenders (collectively, the "Senior Lender"), advancing a Four Hundred Seventy-Five Million Dollar ($475,000,000) senior mortgage loan (the "Senior Loan"); and
(b) Granite Peak Capital Partners, LP ("Mezz Lender"), advancing a Two Hundred Million Dollar ($200,000,000) mezzanine loan (the "Mezzanine Loan" and, together with the Senior Loan, total project financing of Six Hundred Seventy-Five Million Dollars ($675,000,000)).
This engagement is required pursuant to, and is being made in accordance with, the terms and conditions of the Senior Loan Agreement and the Mezzanine Loan Agreement (as each is defined herein and, collectively with all related instruments, the "Loan Documents"). All costs and expenses of the Consultant arising under this engagement shall be borne by the Borrower Parties as further described in Section 5 below.
This letter, when countersigned by the Consultant and acknowledged by the Lender Parties, shall constitute a binding agreement among the parties hereto (this "Engagement Letter") with respect to the matters described herein. We ask that you review the terms carefully and, if acceptable, execute and return a counterpart in the manner described in the closing paragraph below.
1. Project Description
The Project consists of the development, construction, and completion of an approximately 1,800,000-gross-square-foot mixed-use tower to be located at 450 West 34th Street, New York, New York 10001 (the "Project Site"), situated on Manhattan Block 729, Lots 1, 5, 12, and 15 on the Tax Map of the City of New York. The Project Site is held pursuant to a ninety-nine (99)-year ground lease from the New York City Economic Development Corporation ("NYCEDC") to MTDC, dated as of June 1, 2020, and recorded in the Office of the City Register of the City of New York at City Register File Number ("CRFN") 2020000198762 (NYC ACRIS).
The total Project cost, inclusive of all hard costs, soft costs, land-related costs, financing costs, and reserves, is approximately Nine Hundred Twenty Million Dollars ($920,000,000).
Construction of the Project will be performed pursuant to a Guaranteed Maximum Price Contract (Contract No. CCG-HYW-2025-001) (the "GMP Contract") between Mortgage Borrower and Cobalt Construction Group, Inc. (the "General Contractor" or "GC"), establishing a Guaranteed Maximum Price ("GMP") of Four Hundred Twelve Million Dollars ($412,000,000) for the construction of the improvements. The principal contacts at the General Contractor are Frank DelVecchio, Chief Executive Officer, and Hiroshi Tanaka, Project Executive.
The key Project milestones are as follows:
Property management services for the Project will be provided by Evergreen Property Management LLC (Teresa Langford, Principal). The Project received land use approval under the Uniform Land Use Review Procedure ("ULURP") of the City of New York, with approval by the New York City Planning Commission on September 12, 2023, and by the New York City Council on October 25, 2023 (Application No. C 230415 ZSM).
2. Defined Terms
For purposes of this Engagement Letter, the following terms shall have the meanings set forth below:
"Approved Budget" means the construction budget for the Project, approved by Agent and Mezz Lender as a condition to the closing of the Senior Loan and the Mezzanine Loan, as the same may be updated, amended, or supplemented from time to time with the prior written consent of the Lender Parties in accordance with the Loan Documents.
"Approved Schedule" means the construction schedule for the Project, including all critical-path milestones, approved by Agent and Mezz Lender as a condition to the closing of the Senior Loan and the Mezzanine Loan, as the same may be updated, amended, or supplemented from time to time with the prior written consent of the Lender Parties in accordance with the Loan Documents.
"Construction Documents" means, collectively, the GMP Contract, the plans and specifications for the Project (including all architectural, structural, mechanical, electrical, plumbing, and fire protection drawings and specifications), all subcontracts entered into by the General Contractor, all change orders, the Approved Budget, and the Approved Schedule.
"Draw Request" means each monthly request submitted by the Borrower Parties for disbursement of Loan proceeds from the construction reserve account established under the Loan Documents, together with all supporting documentation required to be delivered in connection therewith pursuant to the Loan Documents, including, without limitation, applications for payment, lien waivers, inspection reports, and invoices.
"Lender Parties" means Agent (on behalf of the senior syndicate comprising the Senior Lender), Mezz Lender, and their respective successors, assignees, designees, and participants.
"Loan Documents" means the Senior Loan Agreement, dated as of the date hereof, among Mortgage Borrower and Agent (on behalf of the Senior Lender), the Mezzanine Loan Agreement, dated as of the date hereof, between Mezzanine Borrower and Mezz Lender, the Building Loan Agreement, and all mortgages, notes, assignments, pledges, guaranties, environmental indemnities, and other ancillary instruments and agreements executed in connection with the Senior Loan and the Mezzanine Loan.
"Retainage" means the amount equal to ten percent (10%) of each progress payment otherwise due to the General Contractor, which amount is to be withheld by Mortgage Borrower pursuant to the terms of the GMP Contract until such time as the conditions for release of retainage set forth in the GMP Contract and the Loan Documents have been satisfied.
Capitalized terms used but not otherwise defined in this Engagement Letter shall have the meanings ascribed to them in the Senior Loan Agreement.
3. Scope of Services
The Consultant shall provide the following services in connection with the Project:
3.1 Pre-Construction Review
Within fifteen (15) business days following the date of this Engagement Letter, the Consultant shall review and deliver a comprehensive written report (the "Pre-Construction Report") to the Lender Parties addressing the following matters:
(a) A detailed review and analysis of the GMP Contract, including the scope of work, the allocation of risk between the Mortgage Borrower and the General Contractor, the GMP amount, allowances, unit prices, the change order process, the schedule of values, the retainage provisions, and the dispute resolution mechanisms;
(b) A review and analysis of the Approved Budget, including an assessment of the adequacy of both hard-cost and soft-cost contingencies relative to the scope and complexity of the Project, prevailing market conditions in the New York metropolitan area, and customary contingency reserves for comparable mixed-use developments;
(c) A review and analysis of the Approved Schedule, including critical-path milestones, an assessment of the reasonableness of the projected construction commencement date, substantial completion date, and first TCO date, and identification of any scheduling risks;
(d) A confirmation that the plans and specifications for the Project are substantially complete and adequate for the commencement of construction, including a review of the status of all permits, approvals, and governmental authorizations necessary for the commencement of construction work;
(e) A review of the General Contractor's certificates of insurance and bonding arrangements, including the builder's risk insurance policy in the amount of Five Hundred Million Dollars ($500,000,000) placed with Fortis Indemnity Insurance Co., to confirm adequacy and conformity with the requirements of the Loan Documents; and
(f) A review of the schedule of values submitted by the General Contractor in connection with the GMP Contract, including an assessment of whether the schedule of values reasonably reflects the allocation of the GMP among the various divisions of work.
3.2 Monthly Site Inspections
During the term of this Engagement Letter, the Consultant shall conduct a minimum of one (1) physical site inspection per calendar month at the Project Site. During each such inspection, the Consultant shall observe and report on the following:
(a) the progress of construction relative to the Approved Schedule, including an assessment of whether critical-path milestones are being met;
(b) the quality of workmanship and the quality and suitability of materials being incorporated into the work;
(c) general site safety conditions and housekeeping practices, to the extent observable during a walk-through inspection (it being understood that Consultant shall have no responsibility for site safety, which remains the exclusive responsibility of the General Contractor as further provided in Section 10.3);
(d) the conformity of construction work with the approved plans and specifications; and
(e) the status of stored materials, both on-site and at approved off-site storage locations, including an assessment of whether such materials are properly secured, protected, and insured.
The Lender Parties (acting through Agent or Mezz Lender) may request additional site inspections at any time upon reasonable notice. The costs of such additional inspections shall be borne by the Borrower Parties in accordance with the fee schedule set forth in Section 5 and Exhibit A hereto. The Consultant shall coordinate all site visits with Connor McBride (MTDC Project Director) and Hiroshi Tanaka (GC Project Executive) to ensure safe and orderly access to the Project Site.
3.3 Draw Request Review
The Consultant shall review each monthly Draw Request submitted by the Borrower Parties in connection with the Senior Loan and the Mezzanine Loan, including all supporting documentation delivered therewith, which documentation shall include, without limitation, conditional and unconditional lien waivers, AIA Document G702 (Application and Certificate for Payment) and AIA Document G703 (Continuation Sheet) applications for payment, invoices, subcontractor certifications, and such other documentation as may be required under the Loan Documents.
In connection with each Draw Request review, the Consultant shall:
(a) verify that the work described in the Draw Request has been performed in substantial accordance with the Construction Documents;
(b) verify the accuracy of the percentage-of-completion figures set forth in the Draw Request with respect to each line item of the Approved Budget and the schedule of values;
(c) confirm that Retainage in the amount required by the GMP Contract and the Loan Documents has been properly withheld;
(d) confirm that the remaining balance of the Approved Budget and the remaining contingency reserves are adequate to complete the Project in accordance with the Approved Schedule;
(e) prepare and review a "cost-to-complete" analysis in connection with each Draw Request, comparing actual expenditures to date against projected remaining costs to achieve substantial completion and first TCO; and
(f) provide a written recommendation to Agent and Mezz Lender to approve, approve with conditions, or disapprove each Draw Request, together with a summary of the basis for such recommendation.
The Consultant shall deliver its written Draw Request recommendation within ten (10) business days following the Consultant's receipt of the complete Draw Request package (including all required supporting documentation). In the event the Draw Request package received by the Consultant is incomplete, the Consultant shall promptly notify Agent and the Borrower Parties, and the ten (10) business day period shall not commence until the Consultant has received all required documentation.
3.4 Budget Monitoring
The Consultant shall track actual Project expenditures against the Approved Budget on a line-item basis throughout the term of this Engagement Letter. The Consultant shall:
(a) identify and report to the Lender Parties any variance exceeding five percent (5%) of any individual line item of the Approved Budget, or any variance exceeding two percent (2%) of total hard costs reflected in the Approved Budget;
(b) review and provide a written opinion to the Lender Parties regarding all proposed change orders in excess of Two Hundred Fifty Thousand Dollars ($250,000) individually or One Million Dollars ($1,000,000) in the aggregate (measured on a cumulative basis from the commencement of construction);
(c) report on the status of contingency utilization, including the remaining balance of hard-cost and soft-cost contingency reserves and the projected adequacy of such reserves through Project completion; and
(d) promptly notify Agent and Mezz Lender, in writing, of any anticipated cost overrun that may cause total Project costs to exceed the Approved Budget, including an estimate of the magnitude of such overrun and the Consultant's recommendation regarding remedial measures.
3.5 Schedule Monitoring
The Consultant shall monitor construction progress against the critical-path schedule throughout the construction period. The Consultant shall:
(a) identify and report to the Lender Parties any delay of more than thirty (30) calendar days to any critical-path milestone identified in the Approved Schedule;
(b) report on the occurrence and impact of force majeure events, permitting delays, material procurement delays, and labor availability issues that may affect the Project schedule;
(c) confirm, in each Monthly Construction Report, whether the projected substantial completion date of December 15, 2027 and the projected first TCO date of March 15, 2028 remain achievable; and
(d) provide early warning to Agent and Mezz Lender of any circumstances that, in the Consultant's professional judgment, are reasonably likely to result in a delay to the December 15, 2027 substantial completion target or the March 15, 2028 first TCO target, together with an assessment of the likely duration and cause of such delay and the Consultant's recommendation regarding potential mitigation measures.
3.6 Change Order Review
The Consultant shall review all change orders issued or proposed in connection with the GMP Contract, including an analysis of the scope, cost, and schedule impact of each change order. The Consultant shall:
(a) provide a written recommendation to the Lender Parties regarding the approval or disapproval of each change order that requires Lender consent under the Loan Documents, including an assessment of whether the proposed change order is reasonable in scope, cost, and necessity;
(b) maintain a running log of all approved, pending, and rejected change orders, including cumulative totals, which log shall be included as a component of each Monthly Construction Report delivered pursuant to Section 4.1; and
(c) advise the Lender Parties as to whether any individual or cumulative change orders may trigger thresholds or consent requirements under the GMP Contract or the Loan Documents.
3.7 Completion and Close-Out
Upon the approach of substantial completion of the Project, the Consultant shall:
(a) monitor the preparation and completion of the punch list, including verification that punch-list items are being addressed in a timely and workmanlike manner;
(b) confirm that all conditions for the release of Retainage, as set forth in the GMP Contract and the Loan Documents, have been satisfied or are reasonably expected to be satisfied;
(c) review final lien waivers from the General Contractor and all subcontractors and material suppliers, together with AIA Document G706A (Contractor's Affidavit of Release of Liens), to confirm that all liens and claims have been or will be released;
(d) confirm the issuance of the first Temporary Certificate of Occupancy and, if applicable, the permanent Certificate of Occupancy by the New York City Department of Buildings; and
(e) deliver a comprehensive final completion report (the "Final Completion Report") to Agent and Mezz Lender, summarizing the status of the Project, confirming completion of all material construction work, and addressing any open or outstanding items.
4. Reporting Requirements
4.1 Monthly Construction Report
The Consultant shall deliver a written Monthly Construction Report to Agent and Mezz Lender within five (5) business days following each monthly site inspection conducted pursuant to Section 3.2. Each Monthly Construction Report shall be in a format reasonably satisfactory to Agent and shall include the following components:
(a) Executive Summary. A narrative summary of the overall status of the Project, including material developments, key issues, and the Consultant's professional assessment of Project progress.
(b) Photographic Documentation. Current photographs of the Project Site, documenting the progress of construction work, organized by building area and trade.
(c) Schedule Status. A comparison of actual construction progress to the Approved Schedule, including an updated Gantt chart or critical-path schedule illustrating the current status of each milestone, together with identification and analysis of any schedule variances.
(d) Budget Status. A comparison of actual expenditures to the Approved Budget, including a cost-to-complete analysis, contingency utilization summary, and identification of any budget variances exceeding the thresholds set forth in Section 3.4.
(e) Change Order Log. A cumulative log of all approved, pending, and rejected change orders, including the aggregate cost and schedule impact of all approved change orders.
(f) Pending Issues and Risks. Identification and discussion of any pending issues, open items, or risks that, in the Consultant's professional judgment, may have a material impact on the cost, schedule, or quality of the Project.
(g) Draw Recommendation. A summary of the Consultant's recommendation with respect to the most recent Draw Request, if applicable, or a notation that no Draw Request was submitted during the reporting period.
(h) Contractor/Subcontractor Workforce Summary. A summary of the General Contractor's and subcontractors' workforce at the Project Site, including approximate headcount by trade and any notable changes in staffing levels.
Copies of each Monthly Construction Report shall be delivered simultaneously to the Borrower Parties, to the attention of Connor McBride, MTDC Project Director.
4.2 Interim and Special Reports
In addition to the Monthly Construction Report, the Consultant shall deliver interim and special reports as follows:
(a) Urgent Notifications. Upon the Consultant's discovery or observation of any material deficiency in construction work, any life-safety concern at the Project Site, or any circumstance that in the Consultant's professional judgment may constitute or give rise to a potential event of default under the Loan Documents, the Consultant shall deliver prompt telephonic notice to Agent and Mezz Lender, followed by a detailed written report within two (2) business days of such discovery or observation.
(b) Special Reports. Upon the request of Agent or Mezz Lender, the Consultant shall prepare and deliver special reports addressing specific construction issues, including, without limitation, assessments of disputed work, value-engineering proposals, remediation plans, and claims by or against the General Contractor or subcontractors. The cost of such special reports shall be borne by the Borrower Parties at the hourly rates set forth in Exhibit A hereto.
4.3 Distribution. All reports and other written communications required or permitted to be delivered by the Consultant under this Engagement Letter shall be delivered electronically in portable document format (PDF) to each of the following persons and addresses (or to such other persons and addresses as any party may designate in writing from time to time):
Agent: Kenneth Pryor, Managing Director, RE Finance Ironclad National Bank, N.A. 277 Park Avenue New York, New York 10172 with a copy to: Samantha Bledsoe
Mezz Lender: Victor Salinas, Senior Vice President, Originations Granite Peak Capital Partners, LP 9 West 57th Street, Suite 4200 New York, New York 10019 with a copy to: Rebecca Thornton
Lender's Counsel: Harrison Whitmore Clearfield & Associates LLP 399 Park Avenue, 28th Floor New York, New York 10022
Mezz Lender's Counsel: Natasha Ivanovic Voss Richter & Baines LLP 1251 Avenue of the Americas, 34th Floor New York, New York 10020
Borrower Parties: Connor McBride, MTDC Project Director Metropolitan Transit Development Corp. 200 South Michigan Avenue, Suite 3100 Chicago, Illinois 60604 with a copy to: Lydia Okafor, General Counsel
5. Fees and Expenses
5.1 Pre-Construction Review Fee
As compensation for the pre-construction review services described in Section 3.1, the Consultant shall receive a flat fee of Forty-Five Thousand Dollars ($45,000), payable upon the Consultant's delivery of the Pre-Construction Report to the Lender Parties and the Borrower Parties.
5.2 Monthly Monitoring Fee
As compensation for the ongoing construction monitoring services described in Sections 3.2 through 3.6, the Consultant shall receive a monthly fee of Twenty-Two Thousand Five Hundred Dollars ($22,500) per month (the "Monthly Monitoring Fee"). The Monthly Monitoring Fee covers one (1) site inspection per calendar month, the review of one (1) Draw Request per calendar month, the preparation and delivery of the Monthly Construction Report, and the ongoing budget, schedule, and change order monitoring services described herein.
The Monthly Monitoring Fee shall be payable on the first business day of each calendar month during the construction period, commencing on July 1, 2025 and continuing through the month in which the Final Completion Report is delivered (estimated to be approximately thirty-three (33) months based on the projected Project schedule). The Monthly Monitoring Fee shall be prorated for any partial month at the beginning or end of the engagement based on the number of calendar days during the month in which this Engagement Letter is in effect divided by the total number of calendar days in such month.
5.3 Additional Services
Services beyond the scope of the services described in Sections 3.1 through 3.7 shall be billed at the hourly rates set forth in Exhibit A hereto, including, without limitation:
(a) additional site inspections requested by the Lender Parties pursuant to Section 3.2;
(b) special reports requested by the Lender Parties pursuant to Section 4.2(b);
(c) change order reviews that, in the Consultant's reasonable judgment, require analysis materially in excess of the level of effort contemplated by Section 3.6 due to the complexity or number of change orders; and
(d) expert testimony, deposition preparation, litigation support, or similar services provided in connection with any proceeding relating to the Project, which services shall be billed at the hourly rates set forth in Exhibit A, plus a premium of twenty-five percent (25%).
5.4 Reimbursable Expenses
The Borrower Parties shall reimburse the Consultant for all reasonable and documented out-of-pocket expenses incurred in connection with the performance of services under this Engagement Letter, at cost, without markup. Reimbursable expenses include, without limitation, travel (including local transportation to and from the Project Site), lodging, meals, reproduction and printing costs, courier and delivery charges, and other similar out-of-pocket costs. Itemized expense statements, together with supporting receipts for any individual expense exceeding $100.00, shall accompany each monthly invoice.
5.5 Payment Terms
All fees and expenses of the Consultant arising under this Engagement Letter shall be borne by the Borrower Parties pursuant to and in accordance with the terms of the Loan Documents. The Consultant shall submit invoices on a monthly basis, and payment shall be due within thirty (30) days following receipt of each invoice. Invoices shall be submitted to:
Hudson Yards West Mortgage LLC c/o Metropolitan Transit Development Corp. 200 South Michigan Avenue, Suite 3100 Chicago, Illinois 60604
Attention: Priya Subramanian, Chief Financial Officer
with a copy to: Connor McBride, MTDC Project Director
Any amount not paid within thirty (30) days of the date of the applicable invoice shall bear interest from the due date until paid at the rate of one and one-half percent (1.5%) per month, or, if less, the maximum rate of interest permitted by applicable law.
5.6 Fee Adjustments
The fees set forth in this Section 5 and in Exhibit A shall be subject to adjustment on each anniversary of the date of this Engagement Letter. The amount of any such adjustment shall not exceed the greater of (a) three percent (3%) and (b) the percentage change in the Consumer Price Index for All Urban Consumers (CPI-U) for the New York-Newark-Jersey City, NY-NJ-PA metropolitan statistical area, as published by the United States Bureau of Labor Statistics, for the twelve (12)-month period ending on the month preceding the applicable anniversary date. Any adjusted fee shall take effect on the first day of the month following the applicable anniversary date.
6. Term and Termination
6.1 Term. This Engagement Letter shall become effective as of the date of its countersignature by the Consultant and shall continue in full force and effect until the earliest to occur of: (a) the delivery by the Consultant of the Final Completion Report in accordance with Section 3.7; (b) the termination of this Engagement Letter in accordance with this Section 6; or (c) the repayment in full of all amounts outstanding under the Senior Loan and the Mezzanine Loan.
6.2 Termination by Lender Parties
Agent, acting on behalf of the Lender Parties, may terminate this Engagement Letter at any time, with or without cause, upon thirty (30) days' prior written notice to the Consultant and the Borrower Parties. In the event of termination pursuant to this Section 6.2, the Borrower Parties shall pay all accrued and unpaid fees and reimbursable expenses of the Consultant through the effective date of termination, together with the costs of any work-in-progress that is not susceptible to suspension without material loss or waste.
6.3 Termination by Consultant
The Consultant may resign from this engagement upon sixty (60) days' prior written notice delivered simultaneously to Agent, Mezz Lender, and the Borrower Parties; provided, however, that such resignation shall not become effective until a successor construction consultant reasonably acceptable to Agent has been identified, engaged, and is prepared to assume the Consultant's responsibilities under a replacement engagement agreement. The Consultant shall cooperate with the transition to any such successor consultant, including providing access to all reports, files, and work product.
Notwithstanding the foregoing, the Consultant may terminate this Engagement Letter immediately upon written notice to Agent, Mezz Lender, and the Borrower Parties in the event that any fees owed to the Consultant hereunder remain unpaid for a period exceeding sixty (60) days past the applicable due date; provided, however, that the Consultant shall first deliver written notice to Agent and Mezz Lender identifying the unpaid amounts and shall afford the Borrower Parties a cure period of fifteen (15) business days from the date of such notice before any such termination may become effective.
6.4 Survival. The provisions of Section 7 (Indemnification), Section 8 (Limitation of Liability), Section 9 (Confidentiality), and Section 12 (Standard of Care) shall survive the expiration or termination of this Engagement Letter for any reason.
7. Indemnification
7.1 Consultant Indemnity
The Consultant shall indemnify, defend, and hold harmless the Borrower Parties, Agent, Mezz Lender, and each of their respective officers, directors, members, managers, employees, agents, successors, and assigns (each, an "Indemnified Party") from and against any and all losses, claims, damages, liabilities, judgments, settlements, fines, penalties, costs, and expenses (including reasonable attorneys' fees and disbursements) (collectively, "Losses") arising out of, resulting from, or related to (a) the negligence or willful misconduct of the Consultant, its employees, agents, or subconsultants in the performance of services under this Engagement Letter, or (b) any material breach by the Consultant of its obligations, representations, or warranties under this Engagement Letter, in each case except to the extent such Losses are caused by the gross negligence or willful misconduct of the Indemnified Party seeking indemnification.
7.2 Borrower Indemnity
The Borrower Parties shall, jointly and severally, indemnify, defend, and hold harmless the Consultant and its officers, directors, shareholders, employees, and agents from and against any and all Losses arising out of, resulting from, or related to: (a) conditions at the Project Site, including but not limited to hazardous materials, structural conditions, or pre-existing defects, that are not caused by or attributable to the Consultant's negligence; (b) any material breach by the Borrower Parties of their obligations under this Engagement Letter; or (c) reliance by the Borrower Parties or any third party on the Consultant's reports, recommendations, or analyses in a manner inconsistent with the limitations on reliance set forth in Section 10 of this Engagement Letter.
8. Limitation of Liability
The Consultant's aggregate liability to the Borrower Parties, Agent, Mezz Lender, and all other Indemnified Parties under this Engagement Letter, whether arising in contract, tort (including negligence), strict liability, or otherwise, shall not exceed the greater of (a) Five Million Dollars ($5,000,000) and (b) the total fees actually paid or payable to the Consultant under this Engagement Letter through the date on which the applicable claim first arises. The foregoing limitation of liability shall not apply to Losses arising from the Consultant's fraud, willful misconduct, or gross negligence.
In no event shall any party to this Engagement Letter be liable to any other party for consequential, special, punitive, or incidental damages of any kind, including but not limited to lost profits, lost revenues, loss of use, or diminution in value, regardless of whether such party has been advised of the possibility of such damages; provided, however, that this waiver shall not apply to third-party claims that are the subject of indemnification obligations under Section 7.
9. Confidentiality
The Consultant acknowledges that, in connection with the performance of its services under this Engagement Letter, it will receive and have access to non-public information regarding the Project, the Borrower Parties, the Lender Parties, and their respective affiliates, including, without limitation, financial data, construction costs and budgets, loan terms and conditions, tenant and leasing information, proprietary designs and engineering data, and business plans (collectively, "Confidential Information"). The Consultant shall maintain all Confidential Information in strict confidence and shall not disclose, publish, or disseminate any Confidential Information to any person or entity, except as expressly permitted herein.
The obligations of confidentiality set forth in this Section 9 shall not apply to information that: (a) is or becomes part of the public domain through no act or omission of the Consultant; (b) is received by the Consultant from a third party that is not, to the Consultant's knowledge, subject to a confidentiality obligation with respect to such information; or (c) is required to be disclosed by applicable law, regulation, or legal process, including a subpoena, court order, or governmental investigation, provided that the Consultant shall give prompt written notice of such requirement to Agent and the Borrower Parties (to the extent legally permitted) and shall cooperate with any effort to obtain a protective order or other appropriate remedy to limit the scope of such disclosure.
The Consultant may disclose Confidential Information to its employees, subconsultants, and professional advisors who have a legitimate need to know such information in connection with the performance of services under this Engagement Letter, provided that each such person or entity is bound by obligations of confidentiality that are no less restrictive than those set forth herein. The Consultant shall be responsible for any breach of confidentiality by its employees, subconsultants, or professional advisors.
The obligations of confidentiality set forth in this Section 9 shall survive the expiration or termination of this Engagement Letter for a period of three (3) years.
10. Third-Party Reliance; Relationship of Parties
10.1 Reliance. The Consultant's reports, recommendations, analyses, and other work product prepared or delivered in connection with this Engagement Letter (collectively, "Work Product") are prepared for the sole and exclusive benefit of the Lender Parties and the Borrower Parties. No other person or entity shall be entitled to rely upon any Work Product without the prior written consent of the Consultant, which consent may be withheld in the Consultant's sole discretion.
The Work Product is advisory in nature and is intended to assist the Lender Parties in making informed decisions regarding the disbursement of Loan proceeds. The decision to fund, conditionally fund, or decline any Draw Request, or to take or refrain from taking any other action in connection with the Loan Documents, remains solely and exclusively with the Lender Parties in their independent judgment. The Consultant shall not be deemed to guarantee or warrant the work of the General Contractor, any subcontractor, material supplier, or any other party involved in the construction of the Project.
10.2 Independent Contractor
The Consultant is and shall remain an independent contractor with respect to all services performed under this Engagement Letter. Nothing in this Engagement Letter shall be construed to create any agency, partnership, joint venture, or employment relationship between the Consultant and any of the Borrower Parties, Agent, or Mezz Lender. The Consultant has no authority to act on behalf of, to bind, or to create any obligation or liability for the Borrower Parties, Agent, or Mezz Lender, or to direct or control the work of the General Contractor or any subcontractor.
10.3 No Construction Management
The parties acknowledge and agree that the Consultant is not serving as the architect, engineer of record, construction manager, or owner's representative for the Project. The Consultant shall have no responsibility for, and shall not exercise control over, the means, methods, techniques, sequences, or procedures of construction employed by the General Contractor or any subcontractor. The Consultant shall have no responsibility for the safety or security of the Project Site, the supervision of construction workers, or compliance with applicable occupational safety and health regulations, all of which responsibilities shall remain solely with the General Contractor in accordance with the GMP Contract and applicable law.
11. Insurance
The Consultant shall procure and maintain throughout the term of this Engagement Letter, at its own cost and expense, the following insurance coverages with insurance carriers rated not less than "A-" (Excellent), Financial Size Category "VII" or better, by A.M. Best Company:
(a) Commercial General Liability Insurance. Coverage on an occurrence form with limits of not less than Two Million Dollars ($2,000,000) per occurrence and Five Million Dollars ($5,000,000) in the annual aggregate, including premises and operations, products and completed operations, personal and advertising injury, and contractual liability.
(b) Professional Errors and Omissions Insurance. Coverage with limits of not less than Five Million Dollars ($5,000,000) per claim and Ten Million Dollars ($10,000,000) in the annual aggregate. The Consultant shall maintain tail coverage (extended reporting period) under such policy for a period of not less than three (3) years following the expiration or termination of this Engagement Letter.
(c) Workers' Compensation Insurance. Coverage in the amounts required by the laws of the State of New York, together with employer's liability coverage with limits of not less than One Million Dollars ($1,000,000) per accident, One Million Dollars ($1,000,000) per employee for disease, and One Million Dollars ($1,000,000) policy limit for disease.
(d) Commercial Automobile Liability Insurance. Coverage for owned, hired, and non-owned automobiles with a combined single limit of not less than One Million Dollars ($1,000,000) per accident.
Agent, Mezz Lender, and the Borrower Parties shall be named as additional insureds on the Consultant's commercial general liability policy. Certificates of insurance evidencing the foregoing coverages shall be delivered to Agent and the Borrower Parties prior to the commencement of any services under this Engagement Letter and upon each annual renewal of such coverages. Each such policy shall provide for not less than thirty (30) days' prior written notice to Agent and the Borrower Parties of any cancellation or material modification of coverage.
12. Standard of Care
The Consultant shall perform all services under this Engagement Letter in accordance with the professional standard of care applicable to construction consultants of similar experience, expertise, and qualifications performing similar services for projects of comparable scope, scale, and complexity in the New York metropolitan area. The Consultant shall exercise the degree of skill, care, and diligence that a reasonably prudent construction consultant would exercise under similar circumstances.
The Consultant represents and warrants that it is duly organized and in good standing under the laws of the State of New York, that it is duly licensed and registered to practice professional engineering in the State of New York, and that Dr. Rajesh Banerjee, PE, holds a current and valid professional engineer license issued by the New York State Education Department. The Consultant shall maintain all licenses, registrations, and qualifications necessary for the performance of its services throughout the term of this Engagement Letter.
13. Conflicts of Interest
The Consultant represents and warrants that, as of the date hereof: (a) the Consultant has no financial interest, direct or indirect, in the Project, the Project Site, the Borrower Parties, the General Contractor, or any subcontractor, material supplier, or other party involved in the design or construction of the Project; (b) no officer, director, shareholder, or employee of the Consultant has any such financial interest; and (c) no circumstances exist that, to the Consultant's knowledge, could give rise to a conflict of interest or an appearance of a conflict of interest with respect to the Consultant's engagement hereunder.
The Consultant shall promptly disclose to Agent and the Borrower Parties any circumstances arising during the term of this Engagement Letter that could give rise to, or create the appearance of, a conflict of interest with respect to the Consultant's duties and obligations hereunder.
The parties acknowledge that the Consultant previously served as the structural engineer and provider of a Property Condition Assessment ("PCA") report in connection with the Project and the Project Site. The Consultant represents and warrants that its construction monitoring function under this Engagement Letter is and shall remain independent of its prior PCA engagement, that the scope and nature of such prior engagement do not create a disqualifying conflict of interest, and that the Consultant has implemented appropriate internal controls to ensure the objectivity and independence of its construction monitoring services.
14. Key Personnel
Dr. Rajesh Banerjee, PE, Principal Engineer, shall serve as the lead consultant and primary point of contact for all services under this Engagement Letter. Dr. Banerjee shall have direct and personal involvement in all material aspects of the Consultant's services, including the conduct of site inspections, the review of Draw Requests, and the preparation and delivery of all reports to the Lender Parties.
The Consultant shall not substitute, remove, or reassign Dr. Banerjee or any other key personnel assigned to the Project (as identified in Exhibit A hereto) without the prior written consent of Agent, which consent shall not be unreasonably withheld or delayed; provided, however, that Agent may withhold consent in its sole discretion if, in Agent's reasonable judgment, the proposed substitute does not possess qualifications and experience comparable to those of the individual being replaced. In all events, the Consultant shall maintain qualified professional staffing adequate to perform its services under this Engagement Letter in a timely and professional manner.
15. Notices
All notices, requests, demands, consents, approvals, and other communications required or permitted to be given under this Engagement Letter shall be in writing and shall be deemed duly given and effective upon the earliest of: (a) actual receipt, if delivered by hand; (b) one (1) business day after deposit with a nationally recognized overnight courier service, charges prepaid, for delivery on the next business day; or (c) the date of transmission by electronic mail (with written confirmation of delivery), in each case addressed to the applicable party at the address set forth in Section 4.3, and, in addition, to the following:
Consultant: Trident Structural Engineers, P.C. 32 Old Slip, 15th Floor New York, New York 10005
Attention: Dr. Rajesh Banerjee, PE
Email: rbanerjee@tridenteng.com
Borrower's Counsel: Douglas Fairchild Calderwood & Harkness LLP One Liberty Plaza, 55th Floor New York, New York 10006
Email: dfairchild@calderwoodharkness.com
Any party may change its address for notices by giving written notice of such change to each of the other parties in the manner set forth above.
16. Miscellaneous
16.1 Governing Law
This Engagement Letter shall be governed by, and construed and enforced in accordance with, the laws of the State of New York, without regard to its conflicts of law principles that would require the application of the laws of any other jurisdiction.
16.2 Dispute Resolution
Any dispute, controversy, or claim arising out of or relating to this Engagement Letter, or the breach, termination, or invalidity thereof, shall be submitted to and finally resolved by binding arbitration in New York, New York, administered by the American Arbitration Association in accordance with its Construction Industry Arbitration Rules then in effect; provided, however, that the Lender Parties shall have the right, in their sole discretion, to elect to have any such dispute resolved by litigation in the state courts of the State of New York sitting in New York County or the United States District Court for the Southern District of New York, and each party hereby irrevocably consents to the personal jurisdiction of such courts and waives any objection to venue in such courts. The prevailing party in any arbitration or litigation shall be entitled to recover its reasonable attorneys' fees, costs, and expenses from the non-prevailing party.
16.3 Assignment. The Consultant may not assign, delegate, or transfer this Engagement Letter, or any of its rights, duties, or obligations hereunder, in whole or in part, without the prior written consent of Agent, which consent may be withheld in Agent's sole discretion. Any attempted assignment without such consent shall be null and void. Agent may assign its rights under this Engagement Letter, in whole or in part, to a successor administrative agent appointed under the Senior Loan Agreement or to any purchaser, transferee, or assignee of the Senior Loan or any interest therein, without the consent of the Consultant or the Borrower Parties.
16.4 Entire Agreement; Amendment
This Engagement Letter, including Exhibit A attached hereto and incorporated herein by reference, constitutes the entire agreement among the parties hereto with respect to the subject matter hereof and supersedes all prior and contemporaneous agreements, understandings, negotiations, and discussions, whether oral or written, relating to such subject matter. No amendment, modification, supplement, or waiver of any provision of this Engagement Letter shall be effective unless set forth in a writing signed by the Consultant, Agent, and the Borrower Parties. No failure or delay by any party in exercising any right, power, or remedy hereunder shall operate as a waiver thereof.
16.5 Counterparts. This Engagement Letter may be executed in two or more counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same instrument. Signatures transmitted by electronic mail in portable document format (PDF) or by other electronic means (including DocuSign or similar platforms) shall be deemed original signatures for all purposes.
16.6 Severability. If any provision of this Engagement Letter is held to be invalid, illegal, or unenforceable by a court of competent jurisdiction or an arbitral tribunal, such invalidity, illegality, or unenforceability shall not affect any other provision hereof. To the extent permitted by applicable law, the parties hereto waive any provision of law that renders any provision of this Engagement Letter invalid, illegal, or unenforceable in any respect. The parties shall endeavor in good faith to replace any invalid, illegal, or unenforceable provision with a valid, legal, and enforceable provision that most closely approximates the intent and economic effect of the invalid, illegal, or unenforceable provision.
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We would be grateful if you would review this Engagement Letter at your earliest convenience and, if the terms set forth herein are acceptable to Trident Structural Engineers, P.C., execute a counterpart in the space provided below and return it to the undersigned at Calderwood & Harkness LLP, attention: Grace Nakamura, Senior Associate, One Liberty Plaza, 55th Floor, New York, New York 10006 (email: gnakamura@calderwoodharkness.com). The Borrower Parties look forward to working with Trident on this important project and appreciate your commitment to providing independent and thorough construction monitoring services for the benefit of all parties.
Very truly yours,
CALDERWOOD & HARKNESS LLP
By: ________
Name: Douglas Fairchild
Title: Partner