A03 Draft SPONSOR PAY CLEAN.docx

Section H – Special Contract Requirements (for DoD OSC Sponsor Pay Arrangements) SPONSOR PAY ARRANGEMENTS FOR CONTRACTS AWARDED IN SUPPORT OF THE DEPARTMENT OF DEFENSE OFFICE OF STRATEGIC CAPITAL (MAR 2025)

(a) This contract is a multiple award indefinite-delivery, indefinite quantity (IDIQ) contract. Work under this contract shall be accomplished through the issuance of individual task orders that clearly describe all services to be performed.

(b) Orders issued under this contract shall fall into one of two categories:

(1) At Cost to the Government: (At Cost) orders will be issued by the Federal Government, specifically, Washington Headquarters Services/ Acquisition Directorate (WHS/AD) and funded with Federal funds. The Federal Government will make payment to the Contractor for services to be performed in accordance with the terms and conditions of the issued Task Order, the Federal Acquisition Regulation (FAR) and Defense Federal Acquisition Regulation Supplement (DFARS).

(2) No Cost to the Government: (No Cost) orders will be issued by the Federal Government, specifically Washington Headquarters Services/Acquisition Directorate (WHS/AD), with $0 funding. The applicant for credit assistance (or its affiliate) will make payment directly to the Contractor for services to be performed in accordance with the terms of the sponsor payment letter/agreement executed by the applicant (or its affiliate) and the Contractor. The sponsor payment letter/agreement between the Contractor and the applicant (or its affiliate) will not be subject to the terms and conditions of the IDIQ contract.

(c) Consideration provided to the contractor under no cost orders will be paid by the applicant for credit assistance (or its affiliate). In all instances, when a Contractor is engaged to represent the Department of Defense Office of Strategic Capital (DoD OSC) on a financing transaction or other matter and is paid by the applicant (or its affiliate) (hereinafter termed an “Applicant-Pays DoD OSC Representation”), the DoD OSC is still the client of the law firm/Contractor.

(d) On each No Cost Order, wherein the Applicant pays for legal services in connection with a proposed financing transaction, the Contractor is responsible for executing a sponsor payment letter with the applicant (or its affiliate) using the template sponsor payment letter provided by the Government or one substantially similar. The Contractor will provide a draft of the sponsor payment letter to the COR and Contracting Officer for comment prior to execution. The Contractor must provide a copy of the final executed letter prior to performing any work. Such sponsor payment letter must, at a minimum:

(1) State that the applicant or the borrower or their affiliate, as applicable, will pay the Contractor’s legal fees and expenses in connection with the Applicant-Pays DoD OSC Representation and irrespective of whether the Government ultimately provides credit assistance to the borrower, and the Contractor will look only to the applicant or the borrower or their affiliate, as applicable, for any payment, and not to the DoD OSC or the Government;

(2) Acknowledge that the Contractor’s client is the Government and that duties of confidentiality and loyalty in this transaction run exclusively to the Government, and there must be no inference of confidentiality, fiduciary, or other client relationship between the Contractor and the applicant or the borrower or their affiliate, as applicable, as a result of this sponsor payment letter;

(3) State that neither the applicant or the borrower or their affiliate, as applicable, must seek reimbursement from the Government for fees and expenses of the Contractor, and the Government must not be liable to the applicant or the borrower or their affiliate, as applicable, the Contractor, or any other person for such fees and expenses;

(4) Name the attorneys expected to work on the Applicant-Pays DoD OSC Representation and designate an attorney who will have primary responsibility for such representation;

(5) State that the correctness and completeness of the fees and expenses invoiced by the Contractor must be determined through the statements submitted to and verified by the DoD OSC;

(6) Include an undertaking by the Contractor to submit bills for its fees and expenses to the applicant (or its affiliate) on a monthly basis (or other frequency of payment), with each bill including (a) a summary description of the services rendered (having due respect for maintaining attorney-client privilege), (b) the name and billing rate of each person who provided services during that period, (c) the total number of hours billed by each person for each service described in (a) and for the billing period as a whole, (d) a list of reimbursable expenses itemized by category, and (e) the total amount of fees and expenses billed by the Contractor to date on the Applicant-Pays DoD OSC Representation; and

(7) State that the applicant or the borrower or their affiliate, as applicable, and the Contractor agree that the sponsor payment letter must be subject to review and approval by the COR for all purposes and they will not amend, modify, alter, or change in any way this sponsor payment letter prior to notifying the COR and submitting any amendment, modification, alteration, or change to the Sponsor Payment Letter to the COR and Contracting Officer.

(e) The Contractor must provide one copy of each bill, together with a detailed description of services rendered, to the COR for concurrence prior to sending it to the applicant (or its affiliate).

(f) The Contractor assumes the credit risk and dispute risk of the applicant (or its affiliate). The Government has no obligation to pay any of the Contractor’s fees and expenses for any Applicant- Pays DoD OSC Representation.

(g) During the course of the Applicant-Pays DoD OSC Representation, the Contractor must promptly respond to inquiries from the applicant (or its affiliate) or the Government regarding past and expected fees and expenses. The Contractor must incur only reasonable expenses necessary to achieve the DoD OSC’s objectives in connection with an Applicant-Pays DoD OSC Representation.

SAMPLE SPONSOR PAYMENT LETTER

[Place on Sponsor/Borrower Letterhead]

[Date]

[Name and Address of Outside Counsel/Law Firm]

RE: Sponsor Payment Letter for the Legal Services to be Provided to the Office of Strategic Capital (OSC), an office within the Office of the Under Secretary for Research and Engineering of the U.S. Department of Defense (DoD) in Connection with the Proposed Financing of [Project Name] (the “Transaction”)

Dear [______]:

We understand that the OSC, which administers Federal Credit Programs (hereinafter “Credit Programs”) on behalf of the DoD, requires the engagement of outside legal counsel to represent it in connection with the Transaction.

We further understand that:

(1) pursuant to a series of indefinite delivery indefinite quantity contracts (the “IDIQ Contracts”), DoD has retained law firms that DoD can designate as transactional counsel to provide legal advisory services to the OSC in connection with its administration of the Credit Programs, and [Name of Outside Counsel] is one of such retained law firms;

(2) the OSC requires an outside legal counsel to represent it in the Transaction due to the complexity of the proposed financing structure and timetable on which the Transaction is expected to close;

(3) with certain exceptions, DoD requires the borrowers or sponsors seeking financing from DoD in circumstances such as those described above to pay all documented fees and expenses of the OSC’s outside counsel;

(4) DoD has selected [Name of Outside Counsel] as transactional counsel for the Transaction (the “Transaction Counsel”), and the Transaction Counsel has agreed to represent DoD and the OSC in connection with the Transaction and related matters (the “DoD Representation”); and

(5) the Transaction Counsel may require the services of other sub-contractors in connection with the DoD Representation (for example, local counsel) (each, a “Sub-contractor”, and together with the Transaction Counsel, the “DoD Counsel”).

[Name] is the sponsor of the project for which we are seeking DoD financing (the “Project Sponsor”), and [Name] will be the borrower for purposes of the Transaction (the “Borrower”).

By its execution of this Sponsor Payment Letter, each of the Project Sponsor and the Borrower [and][please include all entities who will be responsible for legal fees] (collectively, the “Responsible Parties”) agree that:

(1) it shall be jointly and severally responsible for the payment of all documented fees and expenses of the DoD Counsel in connection with the DoD Representation, regardless of (a) when incurred, (b) whether DoD ultimately provides credit assistance to the Borrower, and (c) whether Sub-contractors enter into a sponsor payment letter with the Responsible Parties;

(2) it shall not seek reimbursement from the United States of America, its departments or agencies, including DoD and the OSC, or any of their employees or agents (the “Government”), for any fees and expenses of the DoD Counsel, and the Government shall not be liable to the Responsible Parties, the DoD Counsel or any other person for such fees and expenses;

(3) it shall pay all fees and expenses charged by the DoD Counsel (a) promptly (and, in any event, no later than [30 days] after receipt of each invoice by the Responsible Parties from the DoD Counsel), (b) in U.S. dollars in immediately available funds in [New York, NY], and (c) without any deduction or withholding;

(4) the correctness, completeness and reasonableness of the fees and expenses invoiced by the DoD Counsel shall be reviewed by DoD through the statements submitted to and verified by DoD; and

(5) upon a failure by either or both of the Responsible Parties to comply with the terms and conditions of this Sponsor Payment Letter, DoD, in its sole discretion, in addition to all of its other rights, may (a) direct the Transaction Counsel to stop all work on the Transaction, and/or (b) instruct the Transaction Counsel to direct all Sub-contractors to stop all work on the Transaction. Upon a failure by the Responsible Parties to make any payment of invoiced fees and expenses as provided in this Sponsor Payment Letter, the DoD Counsel may stop all work on the Transaction, as directed by DoD.

In connection with the DoD Representation, the Transaction Counsel, by its execution of this Sponsor Payment Letter, acknowledges and agrees that:

(1) it shall only look to the Responsible Parties for any payment of fees and expenses and it does not and shall not have any expectation of payment from the Government for any of the services that it renders, or expenses that it incurs, including the fees and expenses of any Sub-contractors, in connection with the Transaction.

(2) it assumes the related credit risk of the Responsible Parties and, accordingly, shall not seek payment from the Government for such fees and expenses, and further acknowledges and agrees that the Government shall not be liable to the DoD Counsel for any such fees or expenses.

(3) it shall closely coordinate its efforts with the DoD Contracting Officer’s Representative (the “COR”), and other designated representatives of DoD and the OSC, and focus its efforts on those tasks required by DoD and the OSC to achieve their objectives, which tasks and objectives are set forth in the task order [insert the applicable task order number] issued by DoD to the Transaction Counsel under the IDIQ Contract between the Transaction Counsel and DoD (as amended from time to time, the “Task Order”);

(4) during the course of the DoD Representation, it shall promptly respond to inquiries from the Government regarding past and expected fees and expenses;

(5) it shall retain any Sub-contractors only with the prior written consent of DoD;

(6) each engagement letter or other arrangement with its Sub-contractors shall contain provisions in form and substance similar to the foregoing clauses (1) through (5);

(7) its fees and the fees of any Sub-contractors shall be based upon (a) the hourly rates agreed with DoD in the Task Order, which are listed on Appendix A, or, in the case of any Sub-contractor retained after execution of the Task Order, the hourly rates agreed with DoD as part of DoD’s consent to such retention, and notice of such rates shall be provided to the Responsible Parties by the Transaction Counsel promptly after retention of such Sub-contractor, and (b) the time it actually devotes to the DoD Representation, as reflected in the invoices of the DoD Counsel;

(8) attached hereto as Appendix B are the names of the individual attorneys and paraprofessionals who will (subject to any subsequent adjustments approved by DoD) constitute the team handling the DoD Representation (such team, the “DoD Team,” and each member of such team, a “DoD Team Member”), and the attorney who will have primary responsibility for the DoD Representation (the “Team Leader”);

(9) on a monthly basis, unless otherwise agreed to by DoD, it shall provide to the COR for concurrence, prior to sending the summary invoice statement described in paragraph (10) below to the Responsible Parties, one copy of each invoice, together with a detailed description of services rendered, fees and expenses incurred, and required supporting documents, as specified in more detail in the IDIQ Contract between the Transaction Counsel and DoD; and

(10) upon DoD’s review and verification of such monthly invoice submissions, the Transaction Counsel shall promptly submit a summary invoice statement to the Responsible Parties that consists of (a) a brief summary description of the services rendered (having due respect for maintaining attorney-client privilege), (b) a list of reimbursable expenses itemized by category, and

(c) the total amount of fees and expenses billed by the DoD Counsel on the DoD Representation for the relevant month, and all outstanding amounts, if any, for the previous billing period.

Each of the Responsible Parties and the Transaction Counsel understands and agrees that the Government has no obligation to, and shall not, pay any of the DoD Counsel’s fees, costs and expenses for the DoD Representation. Pursuant to the terms of this Sponsor Payment Letter and in consideration of the fees that have been paid or are to be paid to the DoD Counsel by the Responsible Parties, the Transaction Counsel and Responsible Parties release and discharge the Government from all financial obligations, claims and liabilities arising out of, or in connection with, the DoD Representation.

The Responsible Parties understand that, notwithstanding their obligation to pay the fees and expenses of the DoD Counsel with regard to the services rendered and expenses incurred in respect of the DoD Representation, the attorney-client relationship is solely between the OSC and DoD, and the DoD Counsel. The Responsible Parties hereby specifically disclaim any inference of an attorney-client relationship between the DoD Counsel and the Responsible Parties as a result of this arrangement. Accordingly, the Responsible Parties acknowledge, in particular, that the DoD Counsel’s duties of confidentiality and loyalty in the Transaction run exclusively to DoD and the OSC, and there shall be no inference of confidentiality, fiduciary, or other client relationship between the DoD Counsel and the Responsible Parties as a result of this Sponsor Payment Letter. The Responsible Parties further agree that they will not interfere with DoD’s or the OSC’s relationship with the DoD Counsel. The Responsible Parties agree that the foregoing provisions of this paragraph shall apply to all Sub-contractors that are attorneys for the Transaction.

Each Sub-contractor is an intended third-party beneficiary of the Responsible Parties’ undertakings set forth in this Sponsor Payment Letter in respect of amounts owed to each such Sub-contractor.

The parties agree that this Sponsor Payment Letter shall be subject to review and approval by DoD for all purposes and shall not be amended, modified, altered, or changed in any way without DoD's prior consent. All proposed amendments, modifications, alterations, or other changes shall be submitted to the DoD’s Contracting Officer (the “CO”) and the COR identified below, or their respective successors.

All invoices, supporting documentation, and notices provided to DoD hereunder shall be sent by email to the COR at the following address: [Insert COR’s email], with a cc to the CO at: [Insert CO’s email].

This Sponsor Payment Letter shall be governed by federal law, and may be executed in counterparts, all of which together shall constitute a single instrument. Additionally, any signatory may execute this Sponsor Payment Letter by electronic means, and any counterpart so executed shall be treated for all purposes as the original signature of the relevant party.

This Sponsor Payment Letter, and the rights and obligations hereunder shall not be assignable by the Responsible Parties (or either of them) without the prior written consent of each of the Transaction Counsel and DoD, and any purported assignment in violation of this sentence shall be null and void; [provided that, with the prior written consent of the Transaction Counsel (which shall not be unreasonably withheld), the Responsible Parties shall be permitted to assign their rights and obligations hereunder to the members of the consortium that is selected as the preferred bidder by the Responsible Parties (or either of them) in connection with the competitive bidding process for the concession to design, build, finance, operate and/or maintain [Project Name]].

Please sign and return a copy of this Sponsor Payment Letter to confirm your understanding of, and agreement with, the foregoing.

Very truly yours, [Signature Page to Follow]

[NAME OF SPONSOR]

By: Name:

Title:

[NAME OF SPONSOR AFFILIATES RESPONSIBLE FOR LEGAL FEES]

By: Name:

[NAME OF BORROWER]

By: Name:

ACCEPTED AND AGREED:

[NAME OF TRANSACTION COUNSEL]

By: Name:

Attachments

Appendix A, Billing Rates Appendix B, DoD Team Members cc: [____], Contracting Officer, U.S. Department of Defense [____], Contracting Officer's Representative, U.S. Department of Defense