RETAINER AGREEMENT AND OUTSIDE COUNSEL GUIDELINES ACKNOWLEDGMENT
CALDERWOOD & HARKNESS LLP One Liberty Plaza, 55th Floor New York, NY 10006
February 15, 2025
Metropolitan Transit Development Corp. 200 South Michigan Avenue, Suite 3100 Chicago, IL 60604
Attention: Lydia Okafor, General Counsel
Re: Engagement of Calderwood & Harkness LLP — Hudson Yards West Mixed-Use Development Financing (C&H Matter No. 1031-00004)
Dear Ms. Okafor:
We are pleased that Metropolitan Transit Development Corp. ("MTDC" or the "Client") has selected Calderwood & Harkness LLP (the "Firm" or "C&H") to serve as borrower's counsel in connection with the financing of the Hudson Yards West mixed-use transit-oriented development project, as more particularly described in Section 1 below. This letter agreement (this "Agreement") sets forth the terms and conditions upon which the Firm has been engaged by MTDC to provide legal services in connection with the matters described herein. This Agreement supersedes any prior oral or written understandings between the parties regarding this engagement and, together with the MTDC Outside Counsel Guidelines dated January 8, 2025, as amended and in effect as of the date hereof (the "OCG"), constitutes the entire agreement between the parties concerning the scope and terms of the Firm's representation of MTDC in connection with the matters described herein.
We have enjoyed a productive working relationship with MTDC and its Office of the General Counsel, and we look forward to bringing the full resources of our Real Estate Finance practice to bear on the successful closing of this significant financing. The Firm is committed to delivering high-quality legal services in an efficient, transparent, and cost-effective manner, consistent with the standards expected by MTDC and required by the OCG.
By countersigning below, MTDC confirms its authorization of this engagement on the terms set forth herein. The Firm, by execution below, confirms its acknowledgment of and agreement to comply with the OCG in all respects, subject only to the limited exceptions specifically identified and agreed upon in Section 8 of this Agreement. No other departures from the OCG are contemplated or authorized.
The terms and conditions of the engagement are as follows:
Section 1 — Scope of Engagement
Section 1.1 — Description of the Matter
The Firm is retained to serve as borrower's counsel to MTDC in connection with the financing of the Hudson Yards West mixed-use transit-oriented development project located at 450 West 34th Street, New York, New York 10001 (Block 729, Lots 1, 5, 12, and 15, Borough of Manhattan) (the "Project"). The Project is a large-scale mixed-use transit-oriented development that will include commercial office space, retail components, public transit improvements, and ancillary infrastructure, all situated on land subject to a ground lease from the New York City Economic Development Corporation ("NYCEDC").
The engagement encompasses the legal representation of MTDC and its special-purpose subsidiaries (as more particularly described herein) in connection with the following financing facilities (collectively, the "Financing"):
• A senior mortgage loan in the aggregate principal amount of Four Hundred Seventy-Five Million Dollars ($475,000,000) (the "Senior Loan"), to be made by a syndicate of lenders led by Ironclad National Bank, N.A., as administrative agent (in such capacity, the "Agent," and together with the syndicate lenders, the "Senior Lender"); and
• A mezzanine loan in the aggregate principal amount of Two Hundred Million Dollars ($200,000,000) (the "Mezzanine Loan"), to be made by Granite Peak Capital Partners, LP (the "Mezzanine Lender");
aggregating Six Hundred Seventy-Five Million Dollars ($675,000,000) in total financing for the Project, which has a total estimated project cost of approximately Nine Hundred Twenty Million Dollars ($920,000,000). The balance of the project cost is expected to be funded by MTDC equity contributions, public infrastructure grants, and tax increment financing proceeds, the documentation for which is not within the scope of this engagement.
Section 1.2 — Specific Services
The Firm will provide the following legal services in connection with the Financing (collectively, the "Services"):
(a) Entity Formation and Organizational Structuring. Formation and organizational structuring of Hudson Yards West Mortgage LLC (the "Mortgage Borrower") and Hudson Yards West Mezzanine LLC (the "Mezzanine Borrower"), each as a Delaware limited liability company and special-purpose entity, including the preparation and filing of certificates of formation with the Delaware Secretary of State, drafting of limited liability company agreements (including special-purpose entity covenants, separateness provisions, and independent director/manager requirements), and the preparation of all necessary organizational resolutions and authorizations of MTDC and its subsidiaries.
(b) Senior Loan Documentation. Negotiation, drafting, and review of all documentation relating to the Senior Loan, including, without limitation, the mortgage loan agreement (including building loan provisions), promissory note, mortgage and security agreement (leasehold), assignment of leases and rents, environmental indemnity agreement, guaranty of recourse carveouts, completion guaranty, cash management agreement, reserve and escrow agreements (covering interest, real estate taxes, insurance premiums, tenant improvement allowances, leasing commissions, and capital expenditures), deposit account control agreements, subordination, non-disturbance and attornment agreements (as required by lenders), recognition agreement (ground lessor/NYCEDC), assignment of construction contract, assignment of property management agreement, UCC-1 financing statements, and all related ancillary documents and instruments.
(c) Mezzanine Loan Documentation. Negotiation, drafting, and review of all documentation relating to the Mezzanine Loan, including, without limitation, the mezzanine loan agreement, mezzanine promissory note, pledge and security agreement (covering the pledge of membership interests in the Mortgage Borrower), environmental indemnity agreement, guaranty of recourse carveouts, cash management agreement (if separate from the Senior Loan cash management structure), UCC-1 financing statements (Delaware — membership interests), and all related ancillary documents and instruments.
(d) Intercreditor Agreement. Negotiation and review of the intercreditor agreement between the Agent (on behalf of the Senior Lender) and the Mezzanine Lender, including provisions governing cure rights, purchase options, standstill periods, subordination of remedies, casualty and condemnation proceeds, and related intercreditor matters.
(e) Ground Lease and Title Matters. Review and analysis of the ground lease between NYCEDC and MTDC, recorded at CRFN 2020000198762, Office of the City Register of the City of New York, New York County, including analysis of leasehold mortgageability provisions, required consents, and lender-protection provisions. Coordination with Sentinel Title & Escrow Company ("Sentinel Title") regarding ALTA lender's title insurance policies for both the Senior Loan (leasehold mortgagee's policy) and the Mezzanine Loan (UCC insurance or other applicable coverage), review of the title commitment (Sentinel Title Commitment No. STN-2025-MH-04178), survey review, and negotiation of title exception clearance and endorsement requests.
(f) Zoning and Land Use Coordination. Coordination with Hargrove & Linden, P.C. ("Hargrove & Linden"), which serves as MTDC's local zoning and land use counsel, regarding the zoning opinion to be delivered at closing, confirmation of ULURP approvals (Application No. C 230415 ZSM), and related land use matters affecting the Project. The Firm will review the zoning opinion and related materials to ensure consistency with lender requirements but will not itself render zoning or land use opinions.
(g) Due Diligence Review. Review of environmental reports prepared by Apex Environmental Consultants, Inc. (Project No. AEC-NY-25-0337), including the Phase I Environmental Site Assessment and any supplemental investigations, and review of the appraisal prepared by Broadstreet Appraisal Group, Inc. (File No. BAG-25-1092), including analysis of the appraised value methodology and compliance with lender appraisal requirements. Review of additional third-party reports, including the property condition assessment, ALTA/NSPS survey, and seismic risk assessment (if applicable), in each case to the extent required by the lenders or lenders' counsel.
(h) Construction and Management Agreement Review. Review and, to the extent required by the lenders, negotiation of the guaranteed maximum price construction contract with Cobalt Construction Group, Inc. (Contract No. CCG-HYW-2025-001) (the "GMP Contract") and the property management agreement with Evergreen Property Management LLC (the "Management Agreement"), in each case solely as such agreements relate to lender requirements, collateral assignments, and conditions precedent to the Financing.
(i) Insurance Review. Review of the builder's risk insurance program (Fortis Indemnity, estimated replacement cost coverage of $500,000,000) and all other lender-required insurance coverages, including commercial general liability, umbrella/excess liability, pollution liability, and workers' compensation, in coordination with Castleton Insurance Brokerage, Inc. ("Castleton"), MTDC's insurance broker.
(j) Legal Opinions. Preparation and delivery of borrower's counsel legal opinions as required by the Senior Lender and the Mezzanine Lender, including, without limitation, enforceability opinions (Senior Loan documents and Mezzanine Loan documents, respectively), due formation and authority opinions for the Mortgage Borrower and the Mezzanine Borrower, non-consolidation/SPE opinions, UCC opinions regarding perfection of security interests, and such other opinions as may be reasonably required by the lenders or lenders' counsel in connection with the closing of the Financing.
(k) Closing Coordination. Coordination of the closing of the Financing, including preparation of comprehensive closing checklists, signature packages, escrow arrangements with Sentinel Title, funds flow memoranda, closing statements, and all post-closing deliverables, including recording of security instruments, filing of UCC financing statements, delivery of final executed document sets, and preparation of post-closing opinion letters (if any).
Section 1.3 — Matters Outside Scope
The following matters are expressly excluded from the scope of this engagement and shall not be undertaken by the Firm unless a separate engagement letter or supplemental engagement agreement is executed by the parties:
(a) Tax advice beyond that directly related to SPE structuring and organizational matters described in Section 1.2(a) above. The Firm notes that Sylvia Hartwell, Partner in the Tax Department of Calderwood & Harkness LLP, may be separately engaged by MTDC for advice relating to REIT structuring, tax-exempt bond analysis, or other tax matters, in which case a supplemental engagement letter will be executed to cover such additional services.
(b) Labor and employment matters, including but not limited to prevailing wage compliance, project labor agreements, OSHA matters, and employment litigation.
(c) Litigation, arbitration, or any form of dispute resolution, whether arising out of the Financing, the Project, or otherwise.
(d) Regulatory or lobbying work before any federal, state, or local governmental authority, including any proceedings before the New York City Planning Commission, the Metropolitan Transportation Authority, or any other regulatory body.
(e) Securities law advice, including but not limited to advice relating to any public offering, private placement, or securitization of any of the Financing facilities.
(f) Any matter unrelated to the Financing as described in Section 1.1.
If MTDC requests that the Firm undertake additional services beyond the scope described in Section 1.2, the Firm will issue a supplemental engagement letter setting forth the scope, staffing, fee arrangement, and estimated budget for such additional services, which shall become effective only upon countersignature by MTDC's General Counsel.
Section 1.4 — Target Timeline
The parties acknowledge the following milestone dates, which drive the timeline for the engagement and the Firm's planning of resource allocation:
The Firm will use commercially reasonable efforts to meet these target dates; however, the Firm's ability to achieve these milestones is contingent upon the timely cooperation and responsiveness of all parties to the transaction, including MTDC, the Senior Lender, the Mezzanine Lender, their respective counsel (Clearfield & Associates LLP for the Senior Lender and Van Rensselaer Braithwaite LLP for the Mezzanine Lender), title company, local counsel, and all applicable governmental authorities. The Firm shall not be liable for delays caused by circumstances beyond its reasonable control.
Section 2 — Staffing
Section 2.1 — Key Personnel
The following attorneys (collectively, "Key Personnel") will be primarily responsible for the conduct of the engagement:
Douglas Fairchild will serve as the Responsible Partner and will have primary responsibility for the strategic direction of the engagement, oversight of all work product, client communication, and relationship management. Angela Fontaine will serve as the Billing Partner and will be responsible for billing-related matters, budget monitoring, and compliance with the OCG's billing requirements. Grace Nakamura will serve as the Lead Associate and will be the primary day-to-day contact for MTDC on substantive legal matters, document drafting, and negotiation sessions. Rafael Dominguez will provide support on document production, due diligence review, entity formation, and closing coordination.
Section 2.2 — Staffing Commitments
The Firm commits that the Key Personnel identified in Section 2.1 above will be meaningfully and substantively involved throughout the duration of the engagement. Specifically:
(a) Substitution Restrictions. No substitution of the Responsible Partner (Douglas Fairchild) or the Lead Associate (Grace Nakamura) shall occur without prior written notice to, and the prior written approval of, MTDC's General Counsel. In the event of an unforeseen circumstance (such as extended illness, leave of absence, or departure from the Firm) that prevents the continued participation of a Key Personnel member, the Firm will promptly notify MTDC's General Counsel, propose a qualified replacement, and facilitate an orderly transition of responsibilities.
(b) Additional Staffing. The Firm may assign additional associates and paralegals as workload requirements dictate, consistent with the OCG's staffing efficiency requirements. The Firm shall provide MTDC with the name, experience level, and proposed hourly rate of any additional timekeeper prior to that individual's commencement of work on the engagement, and such rate shall be subject to MTDC's approval.
(c) Junior Attorney Restrictions. The Firm will not assign any attorney admitted to the bar for fewer than two (2) years to perform substantive legal work on the engagement without the prior written approval of MTDC's General Counsel. This restriction does not apply to routine ministerial tasks such as document assembly, filing, or clerical support.
(d) Efficiency. The Firm will staff the engagement in an efficient manner, avoiding duplicative effort, excessive internal conferencing, and unnecessary layering of supervision. The Firm acknowledges the OCG's emphasis on staffing efficiency and lean-team principles.
Section 2.3 — Use of Paralegals and Support Staff
Paralegals assigned to the engagement may perform due diligence coordination, document management and organization, closing coordination (including preparation of signature pages and closing binders), corporate formation filings, UCC filing coordination, and similar tasks appropriate for experienced paralegal professionals. Paralegal time is billable at the rates set forth in Exhibit B, subject to the OCG rate caps.
Secretarial services, word processing, proofreading, formatting, general administrative support, reception, and filing functions are considered part of the Firm's overhead and are not separately billable under any circumstances. Time spent by administrative support staff shall not appear on any invoice submitted to MTDC.
Section 3 — Fees and Billing
Section 3.1 — Fee Arrangement
The engagement shall be billed on an hourly basis at the rates set forth in Section 3.2 and Exhibit B, subject to the terms and conditions of the OCG and the specific accommodations described in this Agreement. No contingency fee, success fee, transaction-closing bonus, or other form of premium billing is contemplated or authorized in connection with this engagement.
The Firm acknowledges that MTDC is a government instrumentality organized under the laws of the State of Illinois, operating pursuant to the Metropolitan Transit Development Corporation Act, 70 ILCS 3615 et seq., and that all fees and expenses incurred by MTDC in connection with this engagement are subject to the Client's budgetary constraints, procurement requirements, and applicable governmental accounting standards. The Firm will cooperate with MTDC's Office of the General Counsel and Office of the Chief Financial Officer to ensure that billing and invoicing comply with all applicable requirements.
Section 3.2 — Hourly Rates
The Firm's standard 2025 hourly rates applicable to this engagement are as set forth in Exhibit B hereto. In the event that the Firm's standard rate for any timekeeper exceeds the rate cap established by the OCG for the applicable timekeeper level, the lower OCG rate cap shall apply. The rates set forth in Exhibit B reflect the agreed rates after application of any applicable OCG adjustments.
For reference, the following rate bands apply to this engagement, subject to the specific individual rates set forth in Exhibit B:
The Firm agrees that no rate increases for any timekeeper shall take effect during calendar year 2025. If the engagement extends beyond December 31, 2025, any rate increases proposed by the Firm for calendar year 2026 shall not exceed the lesser of (a) four percent (4%) over the applicable timekeeper's approved 2025 rate, or (b) the maximum rate increase permitted under the OCG. Written notice of any proposed rate increase must be provided to MTDC's General Counsel no fewer than sixty (60) days in advance of the proposed effective date, accompanied by a schedule showing the current and proposed rates for each affected timekeeper. No rate increase shall become effective without the prior written approval of MTDC's General Counsel.
Section 3.3 — Fee Estimate / Budget
The Firm's preliminary estimate of total professional fees for the engagement, from inception through the completion of all closing and post-closing deliverables, is in the range of $1,800,000 to $2,400,000. This estimate is non-binding and is provided in good faith based on the information currently available to the Firm, including the anticipated complexity of the multi-tranche financing structure, the number of parties involved, and the Firm's experience with comparable transactions. The actual fees incurred may be higher or lower than this range depending on numerous factors, including the complexity and duration of loan document negotiations, the number and nature of comments received from lenders' counsel, the scope of title and due diligence issues encountered, and the overall pace of the transaction.
A detailed phase-based budget (the "Budget") will be submitted by the Firm to MTDC's General Counsel and Chief Financial Officer within fifteen (15) business days following the countersignature of this Agreement. The Budget will be segmented into the following phases, each with a separate estimated fee and expense allocation:
• Phase 1: Entity Formation and Organizational Documents
• Phase 2: Due Diligence Review (title, survey, environmental, appraisal, zoning)
• Phase 3: Senior Loan Document Negotiation and Drafting
• Phase 4: Mezzanine Loan Document Negotiation and Drafting
• Phase 5: Intercreditor Agreement
• Phase 6: Construction Contract and Property Management Agreement Review
• Phase 7: Insurance Review
• Phase 8: Opinion Preparation
• Phase 9: Pre-Closing and Closing
• Phase 10: Post-Closing
A template for the Budget is attached as Exhibit C hereto.
The Firm acknowledges and agrees that any anticipated variance exceeding ten percent (10%) of any individual phase budget or ten percent (10%) of the aggregate Budget must be communicated promptly to MTDC's General Counsel, accompanied by (i) a written explanation of the reasons for the anticipated variance, (ii) a revised estimate for the affected phase(s), and (iii) a proposed plan for mitigating further overruns, if applicable. The Firm shall not continue to incur fees in excess of the aggregate Budget without the prior written approval of MTDC's General Counsel, except in circumstances requiring immediate action to protect MTDC's interests.
Section 3.4 — Billing Cycle and Invoice Requirements
Invoices shall be rendered monthly, in arrears, by the fifteenth (15th) day of the calendar month following the month in which the services were performed and expenses incurred. Invoices shall be submitted electronically via MTDC's designated e-billing platform (currently Brightwater Systems / Stonefield Data Systems, as designated by MTDC from time to time), or, if such platform is unavailable or not yet configured for this matter, in the Legal Electronic Data Exchange Standard ("LEDES") 1998B format, transmitted by secure electronic mail to the attention of the Office of the General Counsel and the Office of the Chief Financial Officer at the addresses specified in Section 14.4.
Each invoice shall comply with the OCG's billing guidelines and shall include, at a minimum, the following information:
(a) The Firm's matter number (C&H Matter No. 1031-00004) and MTDC's internal matter reference number (to be provided by MTDC upon execution of this Agreement);
(b) Itemized time entries by individual timekeeper, recorded in six-minute (0.1-hour) increments, with each entry identifying the timekeeper's name, timekeeper classification (partner, senior associate, associate, or paralegal), and applicable hourly rate;
(c) Narrative task descriptions for each time entry that are sufficiently detailed to permit MTDC to evaluate the nature, necessity, and reasonableness of the work performed. Block billing (i.e., the aggregation of multiple discrete tasks into a single time entry without individual time allocations for each task) is strictly prohibited. Each time entry shall describe a single task or a closely related group of tasks performed during a single time period;
(d) Separate line items for each disbursement or expense, with supporting documentation (receipts, invoices, or other evidence of payment) for any single disbursement exceeding Five Hundred Dollars ($500.00);
(e) A summary page showing (i) total fees and expenses for the billing period, (ii) year-to-date cumulative fees and expenses, and (iii) year-to-date fees and expenses as compared against the approved Budget, broken down by phase;
(f) Identification of any timekeeper whose time appears on the invoice for the first time, together with such timekeeper's year of admission, classification, and approved hourly rate; and
(g) LEDES Uniform Task-Based Management System ("UTBMS") codes, if required by MTDC's e-billing platform.
Invoices that do not comply with the foregoing requirements or the OCG's billing guidelines may be returned to the Firm for correction and resubmission, and the payment period set forth in Section 3.5 shall not commence until a compliant invoice is received by MTDC.
Section 3.5 — Payment Terms
Invoices are due and payable within forty-five (45) days of receipt by MTDC of a complete and compliant invoice. The Firm acknowledges that MTDC, as a government instrumentality, may be subject to fiscal-year appropriation requirements, standard government payment processing timelines, and internal approval procedures that may affect the timing of payments. MTDC will use commercially reasonable efforts to process payments within the forty-five (45) day period.
No interest or late charges shall accrue on unpaid balances during the initial forty-five (45) day payment period. In the event that any invoice remains unpaid beyond the forty-fifth (45th) day following receipt by MTDC of a compliant invoice (and such non-payment is not the result of a good-faith billing dispute), late charges shall accrue at the lesser of (a) one percent (1.0%) per month (12% per annum) on the outstanding balance, or (b) the maximum rate permitted by applicable law, commencing on the forty-sixth (46th) day after receipt. The foregoing late charge provision shall not apply to any amount that is the subject of a good-faith billing dispute, provided that MTDC notifies the Firm in writing of the dispute within the forty-five (45) day payment period.
Section 3.6 — Retainer Deposit
Upon execution of this Agreement, MTDC shall pay an initial retainer deposit of One Hundred Fifty Thousand Dollars ($150,000.00) (the "Retainer Deposit") to the Firm. The Retainer Deposit shall be held in the Firm's Interest on Lawyer Account (IOLA) maintained in accordance with the New York Rules of Professional Conduct and the Judiciary Law of the State of New York. Interest, if any, earned on the Retainer Deposit shall be remitted to the Lawyers' Fund for Client Protection as required by applicable law.
The Retainer Deposit shall be applied against the final invoice or invoices for the engagement upon completion of the Services or termination of this Agreement, unless the parties otherwise agree in writing. The Retainer Deposit does not constitute a cap on fees or expenses, does not limit MTDC's obligation to pay invoices as they become due during the engagement, and does not entitle the Firm to apply the Retainer Deposit against any invoice prior to the final invoice without MTDC's prior written consent.
If the engagement terminates and the fees and expenses owed to the Firm are less than the Retainer Deposit, the Firm shall refund the excess to MTDC within fifteen (15) business days of the effective date of termination.
Section 4 — Expenses and Disbursements
Section 4.1 — Reimbursable Expenses
The Firm shall be reimbursed for reasonable, pre-approved, out-of-pocket expenses actually incurred in connection with the engagement. Reimbursable expenses include:
(a) Filing fees, recording fees, and governmental charges (including UCC filing fees, certificate of good standing fees, and recording charges for mortgages and assignments);
(b) Title search and examination costs incurred by the Firm on behalf of MTDC, to the extent not directly billed by Sentinel Title to MTDC;
(c) Overnight courier and messenger services required for the delivery of closing deliverables, original executed documents, and other time-sensitive materials;
(d) Travel expenses incurred by Firm personnel for trips to the Project site, lender offices, NYCEDC offices, or other locations reasonably necessary for the conduct of the engagement, provided that all travel shall comply with MTDC's travel reimbursement policy as set forth in the OCG, including the use of coach-class airfare for domestic flights of four (4) hours or less, standard hotel accommodations (government per diem rates preferred), and ground transportation at reasonable cost;
(e) Computerized legal research charges (Westmark Data Systems, Sundial Solutions, or equivalent), billed at actual cost incurred by the Firm with no internal markup, surcharge, or allocation of flat-rate subscription fees;
(f) Photocopying and printing charges, billed at actual cost and not to exceed $0.15 per page for black-and-white copies and $0.50 per page for color copies; and
(g) Other out-of-pocket expenses directly and reasonably attributable to the engagement, as approved in advance by MTDC's General Counsel.
Section 4.2 — Non-Reimbursable Expenses
Consistent with the OCG, the following expenses are considered part of the Firm's overhead and are not reimbursable under any circumstances:
(a) Ordinary office overhead, including rent, utilities, local telephone charges, library and database maintenance, office supplies, and furniture and equipment costs;
(b) Secretarial overtime, temporary staffing, and word processing charges;
(c) Meals and entertainment not associated with pre-approved out-of-town travel required by the engagement;
(d) First-class or business-class airfare for domestic travel of four (4) hours or less (coach or equivalent is required);
(e) Internal technology infrastructure costs, including costs of the Firm's document management system, email system, network, cybersecurity infrastructure, and desktop computing;
(f) Professional development, continuing legal education (CLE), bar association dues, and professional membership fees;
(g) Conflict check and new-matter intake processing costs;
(h) Insurance premiums (including professional liability insurance premiums); and
(i) Any expense that the Firm would ordinarily incur regardless of this engagement.
Section 4.3 — Pre-Approval Thresholds
Any single disbursement, or any category of recurring disbursements, that is expected to exceed Five Thousand Dollars ($5,000.00) in the aggregate requires the prior written approval of MTDC's General Counsel or her designee before the expense is incurred. Requests for approval shall include a description of the anticipated expense, the estimated amount, and the reason the expense is necessary for the engagement.
The engagement of any sub-consultant, local counsel, expert witness, or other third-party professional on behalf of MTDC requires the prior written approval of MTDC's General Counsel, without regard to the anticipated cost. For the avoidance of doubt, Hargrove & Linden, P.C. (zoning and land use counsel) has been separately engaged by MTDC and is not a sub-consultant of the Firm; however, the Firm will coordinate with Hargrove & Linden as described in Section 1.2(f).
Section 5 — Conflicts of Interest
Section 5.1 — Conflicts Check
The Firm has conducted a comprehensive conflicts check in accordance with the New York Rules of Professional Conduct (22 N.Y.C.R.R. Part 1200), including Rules 1.7 (Conflict of Interest: Current Clients) and 1.9 (Duties to Former Clients), and in accordance with the Firm's internal conflicts clearance policies and procedures. The conflicts check encompassed MTDC, its known affiliated entities, the key principals of the Project, and the other parties to the Financing identified in this Agreement, including Ironclad National Bank, N.A., Granite Peak Capital Partners, LP, NYCEDC, Cobalt Construction Group, Inc., Evergreen Property Management LLC, Sentinel Title & Escrow Company, and their respective known affiliates.
As of the date of this Agreement, the Firm has identified no conflict of interest that would preclude or limit its representation of MTDC in connection with the Financing, subject to the disclosures set forth in Section 5.2 below.
Section 5.2 — Disclosures
In the interest of full transparency, the Firm discloses the following prior and current representations involving parties to the Financing:
(a) Ironclad National Bank, N.A. The Firm has in the past represented Ironclad National Bank, N.A. and certain of its affiliates in connection with certain capital markets transactions, including the structuring of commercial mortgage-backed securities (CMBS) offerings. The Firm does not currently represent Ironclad in any matter adverse to MTDC, nor does the Firm represent Ironclad in any matter related to the Financing or the Project. In this transaction, Ironclad is represented by Clearfield & Associates LLP as lender's counsel. The Firm's prior representation of Ironclad has not provided the Firm with any confidential information of Ironclad that is material to the Financing. The Firm believes that no conflict of interest exists; however, this disclosure is made for purposes of transparency and informed consent.
(b) Granite Peak Capital Partners, LP. The Firm has not previously represented Granite Peak Capital Partners, LP or any of its known affiliates in any matter. No prior, current, or prospective attorney-client relationship exists between the Firm and Granite Peak.
(c) New York City Economic Development Corporation (NYCEDC). The Firm has previously provided legal advice to NYCEDC in connection with an unrelated waterfront development incentive program concluded in 2021. The Firm does not currently represent NYCEDC in any active matter and has not represented NYCEDC in any capacity since 2021. The Firm's prior representation of NYCEDC did not involve the Project, the ground lease, or any matter related to the Financing.
The Firm represents and confirms that its representation of MTDC in this engagement is not limited, constrained, or compromised by any of the foregoing relationships. The Firm's ability to advocate zealously and effectively on behalf of MTDC is in no way affected by the matters disclosed above.
If any actual or potential conflict of interest arises during the course of the engagement, the Firm will promptly notify MTDC's General Counsel in writing, providing sufficient detail to permit MTDC to evaluate the nature and significance of the conflict. The Firm shall not proceed in any manner that would compromise MTDC's interests without the informed written consent of MTDC's General Counsel, obtained in accordance with the New York Rules of Professional Conduct.
Section 5.3 — Advance Waiver
The Firm does not request, and MTDC does not grant, any prospective or advance waiver of future conflicts of interest. Any future conflicts that may arise will be addressed on a case-by-case basis in accordance with the applicable provisions of the New York Rules of Professional Conduct, the OCG, and this Agreement. Nothing in this Section 5.3 shall be construed to limit either party's rights or obligations under the applicable Rules of Professional Conduct.
Section 6 — Confidentiality and Information Security
Section 6.1 — Duty of Confidentiality
The Firm acknowledges and agrees to its professional and contractual obligation to maintain the confidentiality of all information received from or on behalf of MTDC in connection with the engagement. This duty of confidentiality encompasses all documents, communications, data, financial information, business strategies, proprietary materials, and other information of any kind or nature, whether written, oral, electronic, or otherwise, that is disclosed to or obtained by the Firm in connection with the Services (collectively, "Confidential Information"), as such term is further defined in the OCG.
The Firm's duty of confidentiality is in addition to, and not in lieu of, the attorney-client privilege, work-product doctrine, and any other applicable evidentiary privilege or protection. The Firm will take all steps necessary to preserve the confidentiality of Confidential Information and the attorney-client privilege with respect to all communications between the Firm and MTDC. The Firm shall not disclose Confidential Information to any third party without the prior written consent of MTDC, except as required by law, court order, or applicable rules of professional conduct, and except as reasonably necessary to perform the Services (e.g., disclosure to lenders' counsel in the course of the transaction, with MTDC's general authorization).
Section 6.2 — Data Security
The Firm will comply with the information security requirements set forth in Appendix C of the OCG, as well as any supplemental data security requirements communicated by MTDC from time to time. Without limiting the generality of the foregoing, the Firm represents and agrees to maintain the following minimum data security standards:
(a) Encryption. All Confidential Information shall be encrypted both in transit (using TLS 1.2 or higher for electronic communications and file transfers) and at rest (using AES-256 or equivalent encryption for stored data, including data stored on servers, workstations, laptops, and portable media).
(b) Multi-Factor Authentication. The Firm shall require multi-factor authentication (MFA) for all personnel accessing systems, platforms, and applications that store, process, or transmit Client data, including the Firm's document management system, email system, virtual data room, and remote access portals.
(c) SOC 2 Type II Audit. The Firm shall maintain a current SOC 2 Type II audit report (or equivalent third-party security assessment, such as ISO 27001 certification) covering the Firm's information security controls. The Firm will make such report available to MTDC upon written request, subject to the Firm's standard confidentiality protections for such reports.
(d) Incident Notification. The Firm will provide prompt written notification to MTDC's General Counsel and Chief Information Security Officer (or designee) of any actual or reasonably suspected data security incident, breach, or unauthorized access involving MTDC data, such notification to be provided within forty-eight (48) hours of the Firm's discovery of the incident. The notification shall include, to the extent known at the time, a description of the nature of the incident, the categories and approximate volume of data affected, the steps being taken to contain and remediate the incident, and a point of contact for further information.
(e) Secure Destruction or Return. Upon termination of the engagement and subject to the document retention provisions of Section 9 and the OCG, the Firm will securely destroy or return all Client data in its possession, custody, or control, in accordance with the OCG's document retention and destruction provisions. The Firm will provide written certification of destruction upon request.
Section 6.3 — Public Records
MTDC and the Firm acknowledge that MTDC, as a government instrumentality organized under the laws of the State of Illinois, may be subject to freedom-of-information and open-records laws, including the Illinois Freedom of Information Act, 5 ILCS 140/1 et seq. ("FOIA"), and may also be subject to applicable provisions of New York law in connection with matters arising in New York. The Firm will cooperate with MTDC in responding to any FOIA request or similar public records request that encompasses documents or information related to the engagement.
MTDC will use commercially reasonable efforts to assert all applicable exemptions under FOIA and other applicable law to protect attorney-client privileged communications, attorney work product, and other legally exempt Confidential Information from public disclosure. The Firm will, upon MTDC's request, assist in the preparation of privilege logs and the identification of exempt materials. In the event that a governmental authority or court orders the disclosure of privileged or confidential materials over MTDC's objection, MTDC will notify the Firm promptly and will take all reasonable steps to limit the scope of such disclosure.
Section 7 — Communication and Reporting
Section 7.1 — Primary Contacts
To ensure clear and efficient communication throughout the engagement, the following individuals shall serve as the primary points of contact for each party:
The Firm shall direct all communications regarding legal strategy, significant negotiation issues, and material developments to Lydia Okafor. Routine transactional coordination may be conducted with Marcus Jennings and Connor McBride, as appropriate. All billing and budget communications shall be directed to Priya Subramanian, with a copy to Lydia Okafor.
Section 7.2 — Status Reporting
The Firm will provide written status reports to Lydia Okafor and Marcus Jennings on a bi-weekly basis throughout the engagement. As the target closing date of June 15, 2025 approaches, the frequency of status reports shall increase to weekly (or more frequently as reasonably necessary to keep MTDC informed of material developments). Each status report shall summarize:
(a) Work completed during the reporting period, including a summary of key documents drafted, negotiated, or finalized;
(b) Key open items and upcoming milestones, including a description of any items requiring MTDC action or decision;
(c) Identified risks, issues, or potential obstacles requiring MTDC's attention or decision-making, including any significant comments or positions taken by lenders' counsel that may affect MTDC's interests;
(d) Fees and expenses incurred during the reporting period and cumulative fees and expenses to date, compared against the approved Budget by phase; and
(e) An updated timeline indicating any anticipated changes to the target milestone dates set forth in Section 1.4.
Status reports may be delivered by electronic mail to the designated contacts and shall be marked "ATTORNEY-CLIENT PRIVILEGED AND CONFIDENTIAL."
Section 7.3 — Material Developments
In addition to the bi-weekly status reports, the Firm will promptly notify MTDC's General Counsel of any material development affecting the Financing or the engagement, including, without limitation:
(a) Any significant legal issue identified during due diligence that could materially affect the Financing or the Project (e.g., material title defects, environmental contamination, zoning non-compliance, or structural issues);
(b) Any material comment, request, or position taken by lenders' counsel (whether Clearfield & Associates LLP on behalf of the Senior Lender or Van Rensselaer Braithwaite LLP on behalf of the Mezzanine Lender) that could materially affect the terms of the Financing, the rights and obligations of MTDC, or the structure of the transaction;
(c) Any event, development, or circumstance that may materially impact the target closing date of June 15, 2025, including delays in document negotiation, title clearance, governmental approvals, or lender credit committee processes;
(d) Any actual or potential conflict of interest identified after the date of this Agreement; and
(e) Any other matter that a prudent borrower's counsel would consider material to the representation.
Notifications of material developments shall be made by telephone to Lydia Okafor as promptly as practicable, followed by written confirmation via electronic mail.
Section 8 — Acknowledgment of Outside Counsel Guidelines; Exceptions
Section 8.1 — General Acknowledgment
The Firm hereby acknowledges receipt of the MTDC Outside Counsel Guidelines, as amended and in effect as of January 8, 2025, a copy of which is attached hereto as Exhibit D and incorporated herein by reference. The Firm agrees to comply with all provisions of the OCG as supplemented and, in certain limited respects, modified by this Agreement.
The Firm has carefully reviewed the OCG and confirms that it understands and accepts the obligations imposed thereby, including, without limitation, the provisions relating to billing practices, staffing requirements, expense reimbursement, conflicts of interest, confidentiality, data security, diversity reporting, and document retention.
In the event of a conflict or inconsistency between any provision of this Agreement and any provision of the OCG, the terms of this Agreement shall control with respect to the specific exceptions enumerated in Section 8.2 below. In all other respects, the OCG shall govern. Where this Agreement is silent on a matter addressed by the OCG, the OCG shall apply without modification.
Section 8.2 — Agreed Exceptions to the OCG
The following specific, negotiated departures from the standard provisions of the OCG have been agreed upon by the parties:
(a) Rate Cap Exception. The OCG establishes a standard rate cap of $1,250 per hour for senior partners with twenty (20) or more years of practice experience. In recognition of the exceptional complexity and magnitude of this Financing ($675,000,000 in aggregate debt, multi-tranche structure, leasehold collateral, and government-instrumentality borrower), the parties have agreed that the rate for Douglas Fairchild (Responsible Partner) may exceed the standard OCG rate cap by up to eight percent (8%), as reflected in the specific rate set forth in Exhibit B. This exception applies solely to Douglas Fairchild and solely in connection with this engagement.
(b) Staffing Exception — Meeting Attendance. The OCG provides that no more than two (2) attorneys from outside counsel shall attend any single meeting or conference call without prior approval. Given the multi-tranche structure of the Financing and the anticipated frequency of negotiation sessions involving counsel for both the Senior Lender and the Mezzanine Lender simultaneously, the parties have agreed that up to three (3) attorneys from the Firm may attend such joint negotiation sessions without requiring prior approval. For all other meetings or calls involving only a single counterparty, the standard OCG limit of two (2) attorneys shall apply.
(c) Block Billing. No exception to the OCG's prohibition on block billing is granted. All time must be recorded in task-based entries of 0.1-hour (six-minute) increments, with each entry describing a single task or closely related group of tasks. This confirmation is included for the avoidance of doubt.
(d) Travel. No exception to the OCG's travel policy is requested or granted. All travel shall comply with the OCG's requirements, including the use of coach-class airfare for domestic flights, standard-rate hotel accommodations, and reasonable ground transportation. In the event that international travel becomes necessary (which is not currently anticipated), the parties will discuss and agree upon any modifications to the travel policy at that time.
No other exceptions to the OCG are contemplated or authorized. The Firm agrees to the OCG in all respects not specifically modified by the foregoing exceptions.
Section 8.3 — OCG Amendments
MTDC reserves the right to amend the OCG from time to time upon thirty (30) days' prior written notice to the Firm. Any such amendment shall apply to this engagement prospectively from the effective date of the amendment.
The Firm may, within fifteen (15) days of receipt of any proposed amendment, object in writing to any provision of the amendment that the Firm reasonably believes materially and adversely affects the terms of this engagement or imposes obligations that are commercially unreasonable in the context of this representation. Upon receipt of such objection, the parties will negotiate in good faith to resolve the objection. If the parties are unable to reach agreement within thirty (30) days of the Firm's objection, MTDC may, in its sole discretion, either (i) waive application of the disputed amendment to this engagement, (ii) withdraw the disputed amendment, or (iii) terminate the engagement in accordance with Section 11, with no further obligation other than payment of fees and expenses incurred through the date of termination.
Section 9 — Document Retention and Files
Section 9.1 — Ownership of Work Product
All work product, documents, memoranda, legal opinions, research materials, correspondence, draft and final agreements, notes, analyses, and files of any kind created by the Firm in connection with the engagement (collectively, "Work Product") are the property of MTDC. The Firm retains a right to maintain copies of Work Product for its own internal records, reference, and compliance purposes, in accordance with the New York Rules of Professional Conduct (including Rule 1.15 and related provisions), the Firm's internal document retention policies, and applicable legal and regulatory requirements. The Firm's right to retain copies shall not limit MTDC's ownership rights or the Firm's obligations under this Section 9.
Section 9.2 — Retention Period
The Firm will retain engagement files, both physical and electronic, for a period of not less than ten (10) years following the conclusion of the engagement (whether by completion of all Services, termination, or withdrawal). If the OCG specifies a retention period longer than ten (10) years, or if applicable law requires a longer retention period, the Firm will comply with the longer period. At the conclusion of the applicable retention period, the Firm will provide MTDC with not less than sixty (60) days' written notice before destroying, deleting, or disposing of any engagement files, during which period MTDC may request that some or all of the files be delivered to MTDC or its designee rather than destroyed.
Section 9.3 — Transition of Files
Upon termination or expiration of the engagement for any reason, the Firm will promptly, and in any event within fifteen (15) business days of the effective date of termination or MTDC's request (whichever is earlier), deliver or make available to MTDC or its successor counsel all Client files, including but not limited to original documents, executed agreements, work product in progress, notes, research materials, and electronic data. Delivery may be made in electronic format (on encrypted media or via secure file transfer) to the extent the files exist in electronic form, together with physical delivery of any original executed documents and other materials maintained in physical form.
The Firm shall not assert any retaining lien, charging lien, or other possessory interest over Client files on account of unpaid fees or expenses, to the maximum extent permitted by applicable law. The Firm acknowledges that MTDC's ability to access its files without delay is essential to the protection of MTDC's legal interests and the continuity of the representation by successor counsel, and agrees that the obligation to deliver files promptly shall not be conditioned upon the resolution of any billing dispute.
Section 10 — Indemnification and Limitation of Liability
Section 10.1 — Standard of Care
The Firm will perform all Services in connection with this engagement in accordance with the standard of care applicable to attorneys experienced in complex commercial real estate finance transactions in the State of New York. This includes the exercise of the knowledge, skill, and diligence that a reasonably competent attorney specializing in such matters would exercise under similar circumstances.
Section 10.2 — Limitation of Liability
Except as otherwise provided in Sections 10.3 and 10.4, neither party shall be liable to the other for consequential, indirect, incidental, special, exemplary, or punitive damages arising out of or in connection with this Agreement or the Services, regardless of whether such damages are based on contract, tort (including negligence), strict liability, or any other legal or equitable theory, and regardless of whether the party has been advised of the possibility of such damages.
Nothing in this Section 10.2 shall be construed to limit (a) the Firm's professional liability for legal malpractice, (b) the Firm's indemnification obligations under Section 10.3, (c) either party's liability for fraud, willful misconduct, or intentional misrepresentation, or (d) either party's obligations under Section 6 (Confidentiality and Information Security) with respect to a data security breach caused by that party's failure to comply with its obligations thereunder.
Section 10.3 — Firm Indemnification
The Firm shall indemnify, defend, and hold harmless MTDC and its board of directors, officers, employees, agents, and successors (collectively, the "MTDC Indemnified Parties") from and against any and all losses, damages, liabilities, judgments, settlements, costs, and expenses (including reasonable attorneys' fees and costs of investigation) (collectively, "Losses") arising out of or resulting from:
(a) The Firm's gross negligence or willful misconduct in connection with the performance of the Services;