WIND-DOWN AGREEMENT

WIND-DOWN AGREEMENT
among
Briarwood Family Office LLC,
Pinnacle Holdings Group LLC,
and
Greystone Realty Partners, L.P.
Dated as of ____, 2025
Executed following the Binding Term Sheet for Consensual Wind-Down dated March 14, 2025
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PREAMBLE
This Wind-Down Agreement (this "Agreement") is entered into as of ____, 2025 (the "Effective Date"), by and among:
BRIARWOOD FAMILY OFFICE LLC, a Delaware limited liability company, with its principal office and headquarters at 712 Park Avenue, 18th Floor, New York, New York 10021 ("Briarwood" or the "Limited Partner");
PINNACLE HOLDINGS GROUP LLC, a Delaware limited liability company, with its principal office and headquarters at 400 King Street, Suite 310, Wilmington, Delaware 19801 ("Pinnacle" or the "General Partner"); and
GREYSTONE REALTY PARTNERS, L.P., a Delaware limited partnership, with its principal office at 400 King Street, Suite 310, Wilmington, Delaware 19801 and its property management office at 1925 Walnut Street, Suite 600, Philadelphia, Pennsylvania 19103 (the "Partnership").
Each of Briarwood, Pinnacle, and the Partnership is sometimes referred to herein individually as a "Party" and collectively as the "Parties."
RECITALS
A. Formation of the Partnership. The Partnership was formed on June 14, 2018, under the Delaware Revised Uniform Limited Partnership Act, 6 Del. C. §§ 17-101 et seq. (the "DRULPA"), by the filing of a Certificate of Limited Partnership with the Secretary of State of the State of Delaware (File No. 7284613). The Partnership is governed by an Amended and Restated Agreement of Limited Partnership dated as of June 14, 2018, as amended by a First Amendment to the Amended and Restated Agreement of Limited Partnership dated as of March 3, 2020 (as so amended, the "LPA").
B. Partnership Interests and Capital Contributions. Under the LPA, Briarwood holds a fifty-five percent (55%) limited partner interest in the Partnership, and Pinnacle holds a forty-five percent (45%) general partner interest in the Partnership. Aggregate capital contributions to the Partnership total Eighty-Seven Million Dollars ($87,000,000), having been increased from Seventy Million Dollars ($70,000,000) pursuant to the First Amendment dated March 3, 2020. Of such aggregate capital contributions, Briarwood has contributed Forty-Seven Million Eight Hundred Fifty Thousand Dollars ($47,850,000), representing fifty-five percent (55%) of the aggregate contributions, and Pinnacle has contributed Thirty-Nine Million One Hundred Fifty Thousand Dollars ($39,150,000), representing forty-five percent (45%) of the aggregate contributions.
C. Partnership Portfolio. The Partnership holds a portfolio of seven (7) mixed-use commercial properties located in the Mid-Atlantic region of the United States, specifically in Philadelphia, Pennsylvania; Wilmington, Delaware; Baltimore, Maryland; and Arlington, Virginia (collectively, the "Properties"), with an aggregate appraised value of One Hundred Seventy-Four Million Dollars ($174,000,000) as determined by Keymark Valuation Group LLC in its Appraisal Report No. KVG-2025-0214 dated February 22, 2025 (the "Keymark Appraisal"). The Properties are more particularly described on Schedule A attached hereto.
D. Existing Indebtedness. The Partnership is the borrower under a Sixty-Eight Million Three Hundred Thousand Dollar ($68,300,000) secured term loan with Harborline Commercial Lending, LLC ("Harborline"), originated on October 15, 2020 (Loan Reference No. HCL-2020-07842), bearing interest at the Secured Overnight Financing Rate ("SOFR") plus 285 basis points, with a maturity date of October 15, 2027, pursuant to the terms and conditions of that certain Credit Agreement dated as of October 15, 2020, by and between the Partnership and Harborline (as amended, the "Credit Agreement," and the loan evidenced thereby, the "Harborline Loan"). As of February 28, 2025, the outstanding principal balance of the Harborline Loan was approximately Sixty-One Million Seven Hundred Thousand Dollars ($61,700,000).
E. Major Decision Deadlock. Section 5.02 of the LPA defines "Major Decisions" — including, without limitation, refinancings in excess of Twenty-Five Million Dollars ($25,000,000), capital calls exceeding Five Million Dollars ($5,000,000), and asset sales representing more than twenty percent (20%) of the aggregate portfolio value — as requiring the affirmative vote or written consent of Partners holding at least eighty percent (80%) of the total partnership interests. Because Briarwood holds fifty-five percent (55%) and Pinnacle holds forty-five percent (45%) of the total partnership interests, neither Party alone can authorize a Major Decision, and neither can block the other from blocking such a decision, creating a structural deadlock that has rendered the Partnership unable to take actions necessary for the efficient management and administration of its affairs.
F. The Dispute. On June 28, 2024, Pinnacle proposed a Sixty-Two Million Dollar ($62,000,000) cash-out refinancing of the Harborline Loan through Northgate Savings Bank at SOFR plus 345 basis points (the "Proposed Refinancing"). On July 15, 2024, Briarwood objected in writing to the Proposed Refinancing, citing the unfavorable interest rate spread (sixty (60) basis points above the then-current Harborline rate), the estimated three percent (3%) prepayment penalty on the Harborline Loan (estimated at One Million Eight Hundred Fifty-One Thousand Dollars ($1,851,000)), and Briarwood's concerns regarding the resulting impact on Partnership cash flows. On August 5, 2024, Pinnacle issued a capital call in the amount of Eight Million Two Hundred Thousand Dollars ($8,200,000) (Briarwood's pro rata share: Four Million Five Hundred Ten Thousand Dollars ($4,510,000); Pinnacle's pro rata share: Three Million Six Hundred Ninety Thousand Dollars ($3,690,000)) to fund deferred maintenance and tenant-improvement allowances across the Properties. On August 22, 2024, Briarwood withheld its consent to the capital call, asserting that it constituted a Major Decision under Section 5.02(d) of the LPA requiring the approval of Partners holding at least eighty percent (80%) of the total partnership interests. Between September and November 2024, the Parties participated in mediation before Tidewater Dispute Resolution Services (mediator: the Honorable Patricia Navarro (Ret.)), which mediation was unsuccessful in resolving the dispute.
G. Chancery Court Proceeding. On December 2, 2024, Briarwood filed a Verified Petition for Judicial Dissolution in the Court of Chancery of the State of Delaware, captioned Briarwood Family Office LLC v. Pinnacle Holdings Group LLC and Greystone Realty Partners, L.P., C.A. No. 2024-1187-MTZ (the "Proceeding"), invoking 6 Del. C. § 17-802. On December 18, 2024, Vice Chancellor Marguerite T. Zimmerman held a scheduling conference and entered an expedited discovery order. On January 10, 2025, the Court entered a Stipulated Order appointing Keymark Valuation Group LLC (lead appraiser: Thomas J. Reeves, MAI) as independent appraiser for the purpose of determining the fair market value of the Properties. On February 22, 2025, Keymark delivered the Keymark Appraisal, valuing the aggregate portfolio at One Hundred Seventy-Four Million Dollars ($174,000,000). On March 7, 2025, the Court held a status conference at which the Parties reported that they were nearing a consensual resolution of the dispute.
H. Binding Term Sheet. On March 14, 2025, the Parties executed a binding Term Sheet for Consensual Wind-Down (the "Term Sheet") setting forth the principal terms and conditions of the consensual dissolution and orderly wind-down of the Partnership.
I. Purpose of This Agreement. This Agreement sets forth the definitive terms and conditions for the consensual dissolution and orderly wind-down of the Partnership, including the disposition of the Properties, the repayment of the Harborline Loan, the distribution of net proceeds to the Partners in accordance with the Distribution Waterfall set forth herein, the mutual release of claims among the Parties, and the filing of a Certificate of Cancellation with the Secretary of State of the State of Delaware. This Agreement supersedes the Term Sheet in its entirety.
J. Counsel. Briarwood is represented in connection with this Agreement and the transactions contemplated hereby by Calderwood & Harkness LLP, 599 Lexington Avenue, New York, New York 10022. Pinnacle is represented in connection with this Agreement and the transactions contemplated hereby by Ashford & Crane LLP, 1201 North Market Street, Suite 1400, Wilmington, Delaware 19801. Each Party acknowledges that it has been afforded the opportunity to obtain independent legal advice and has done so.
NOW, THEREFORE, in consideration of the mutual covenants, agreements, representations, warranties, and other good and valuable consideration set forth in this Agreement, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:
ARTICLE I — DEFINITIONS AND INTERPRETATION
Section 1.01 — Definitions
As used in this Agreement, the following terms shall have the meanings set forth below:
"Affiliate" means, with respect to any Person, any other Person that directly or indirectly controls, is controlled by, or is under common control with, such Person. For purposes of this definition, "control" (including, with correlative meanings, the terms "controlled by" and "under common control with") means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract, or otherwise.
"Agreement" means this Wind-Down Agreement, including all Exhibits and Schedules attached hereto, as the same may be amended, modified, or supplemented from time to time in accordance with Section 12.06 hereof.
"Appraisal" or "Keymark Appraisal" means that certain Appraisal Report No. KVG-2025-0214 dated February 22, 2025, prepared by Keymark Valuation Group LLC (lead appraiser: Thomas J. Reeves, MAI), as delivered to the Court of Chancery of the State of Delaware in connection with the Proceeding.
"Appraised Value" means, with respect to each Property, the fair market value assigned to such Property in the Keymark Appraisal, and with respect to the Properties in the aggregate, One Hundred Seventy-Four Million Dollars ($174,000,000).
"Briarwood Capital Contribution" means Forty-Seven Million Eight Hundred Fifty Thousand Dollars ($47,850,000), being the aggregate amount of capital contributions made by Briarwood to the Partnership.
"Business Day" means any day other than a Saturday, Sunday, or other day on which commercial banks in New York, New York or Wilmington, Delaware are authorized or required by law to close.
"Certificate of Cancellation" has the meaning set forth in Section 2.02.
"Closing" means, with respect to the sale of each Property, the consummation of the sale of such Property to the applicable purchaser, including the delivery of the deed, the payment of the purchase price, and the disbursement of proceeds through escrow.
"Concord" means Concord Title & Escrow Services, Inc., with its principal office at 300 Delaware Avenue, Suite 700, Wilmington, Delaware 19801.
"Credit Agreement" means that certain Credit Agreement dated as of October 15, 2020, by and between the Partnership, as borrower, and Harborline Commercial Lending, LLC, as lender, as the same may have been amended, restated, supplemented, or otherwise modified from time to time, governing the Harborline Loan.
"Dissolution Date" means the date on which the Certificate of Cancellation is filed with the Secretary of State of the State of Delaware.
"Distribution Waterfall" has the meaning set forth in Section 5.01.
"DRULPA" means the Delaware Revised Uniform Limited Partnership Act, 6 Del. C. §§ 17-101 et seq., as amended.
"Escrow Account" means Account No. ESC-2025-40071 established and maintained at Concord Title & Escrow Services, Inc. in accordance with the Escrow Agreement.
"Escrow Agreement" means that certain Escrow Agreement by and among the Partnership, Briarwood, Pinnacle, and Concord Title & Escrow Services, Inc., substantially in the form attached hereto as Exhibit B.
"Escrow Reserve" means One Million Five Hundred Thousand Dollars ($1,500,000), to be deposited into the Escrow Account and held in accordance with the Escrow Agreement as a reserve for contingent liabilities, post-closing adjustments, and similar matters.
"Fieldstone" means Fieldstone Accounting Partners LLP, with its principal office at 2000 Market Street, Suite 1500, Philadelphia, Pennsylvania 19103 (engagement partner: Alicia M. Tran, CPA).
"Final Distribution Date" means the date on which all distributions to the Partners under Article V have been completed, including the release and distribution of any remaining balance of the Escrow Reserve in accordance with Section 5.04.
"Harborline" means Harborline Commercial Lending, LLC, with its principal office at 225 Franklin Street, 12th Floor, Boston, Massachusetts 02110.
"Harborline Loan" means the Sixty-Eight Million Three Hundred Thousand Dollar ($68,300,000) secured term loan made by Harborline to the Partnership under Loan Reference No. HCL-2020-07842, as evidenced by the Credit Agreement.
"Harborline Payoff Amount" means the total amount required to repay the Harborline Loan in full, estimated as of June 30, 2025 at Sixty-Three Million Four Hundred Fifty-Seven Thousand Dollars ($63,457,000), comprising (i) outstanding principal of Sixty Million Nine Hundred Thousand Dollars ($60,900,000), (ii) accrued and unpaid interest of Seven Hundred Thirty Thousand Dollars ($730,000), and (iii) a prepayment premium of One Million Eight Hundred Twenty-Seven Thousand Dollars ($1,827,000) (being three percent (3%) of the outstanding principal), subject to adjustment based on the actual payoff date and the payoff letter to be delivered by Harborline.
"Keymark" means Keymark Valuation Group LLC.
"Lender Consent" means the prior written consent of Harborline to the transactions contemplated by this Agreement, as required under Section 7.04 of the Credit Agreement.
"LPA" means the Amended and Restated Agreement of Limited Partnership of the Partnership, dated as of June 14, 2018, as amended by the First Amendment to the Amended and Restated Agreement of Limited Partnership dated as of March 3, 2020, and as may be further amended, modified, or supplemented from time to time.
"Major Decision" has the meaning ascribed to such term in Section 5.02 of the LPA.
"Meridian" means Meridian Capital Advisors LLC, with its principal office at 1700 Market Street, 28th Floor, Philadelphia, Pennsylvania 19103 (lead: Nadia Kowalski, Managing Director).
"Meridian Commission" means a brokerage commission equal to one and three-quarters percent (1.75%) of the gross sale price for each Property, payable to Meridian from the proceeds of each Property Closing.
"Meridian Engagement Letter" means that certain engagement letter, Reference No. MCA-GRP-2025-001, by and between the Partnership and Meridian Capital Advisors LLC, substantially in the form attached hereto as Exhibit E.
"Mutual Release Agreement" means the Mutual Release Agreement by and among Briarwood, Pinnacle, the Partnership, and certain of their respective Affiliates and principals, substantially in the form attached hereto as Exhibit A.
"Net Distributable Proceeds" means the aggregate gross proceeds from the sale of the Properties, less (i) the Harborline Payoff Amount, (ii) Wind-Down Expenses, and (iii) the Escrow Reserve.
"Person" means any individual, corporation, limited liability company, partnership, limited partnership, association, trust, estate, joint venture, governmental authority, or other entity.
"Pinnacle Capital Contribution" means Thirty-Nine Million One Hundred Fifty Thousand Dollars ($39,150,000), being the aggregate amount of capital contributions made by Pinnacle to the Partnership.
"Pinnacle Management Fee" means the management fee payable to Pinnacle during the Wind-Down Period equal to two percent (2.0%) of gross revenues from the Properties, as more fully described in Section 3.02.
"Proceeding" means the action captioned Briarwood Family Office LLC v. Pinnacle Holdings Group LLC and Greystone Realty Partners, L.P., C.A. No. 2024-1187-MTZ, pending in the Court of Chancery of the State of Delaware before Vice Chancellor Marguerite T. Zimmerman.
"Properties" means the seven (7) mixed-use commercial properties owned by the Partnership, as more particularly described on Schedule A attached hereto.
"ROFO" means Pinnacle's right of first offer with respect to the purchase of any Property, as set forth in Section 4.03.
"ROFO Period" means the period of twenty (20) Business Days commencing on the date Pinnacle receives written notice of a bona fide third-party offer with respect to a Property in accordance with Section 4.03.
"ROFO Price Floor" means, with respect to any Property, an amount equal to ninety-seven and one-half percent (97.5%) of the Keymark Appraised Value for such Property.
"SOFR" means the Secured Overnight Financing Rate as administered by the Federal Reserve Bank of New York (or a successor administrator), as published on the Federal Reserve Bank of New York's website.
"Stipulation of Dismissal" means the joint Stipulation and [Proposed] Order of Dismissal with Prejudice to be filed in the Proceeding, substantially in the form attached hereto as Exhibit D.
"Target Dissolution Date" means December 31, 2025.
"Term Sheet" means the binding Term Sheet for Consensual Wind-Down dated March 14, 2025, executed by the Parties.
"Wind-Down Expenses" means all costs and expenses reasonably incurred by or on behalf of the Partnership in connection with the wind-down and dissolution of the Partnership, including brokerage commissions, legal fees, accounting fees, title insurance premiums, escrow fees, closing costs, filing fees, transfer taxes, recording costs, and other similar expenses, estimated in the aggregate at Four Million One Hundred Thousand Dollars ($4,100,000) as more particularly set forth on Schedule C attached hereto.
"Wind-Down Period" means the period commencing on the Effective Date and continuing until the Dissolution Date.
Section 1.02 — Interpretation
(a) The headings and captions in this Agreement are included for convenience of reference only and shall not affect the interpretation or construction of any provision hereof.
(b) Unless the context otherwise requires, (i) words in the singular include the plural and vice versa, (ii) words of one gender include each other gender, (iii) the terms "hereof," "herein," "hereto," "hereunder," and similar terms refer to this Agreement as a whole and not to any particular provision of this Agreement, (iv) the terms "include," "includes," and "including" are not limiting and shall be deemed to be followed by the phrase "without limitation," (v) the term "or" is not exclusive, and (vi) the terms "shall" and "will" have the same meaning and are both mandatory.
(c) References to Articles, Sections, Exhibits, and Schedules refer to Articles and Sections of, and Exhibits and Schedules to, this Agreement, unless otherwise indicated.
(d) References to any statute, law, or regulation shall be deemed to include all amendments, successor legislation, rules, and regulations promulgated thereunder, unless the context requires otherwise.
(e) References to a "writing" or "written" include electronic communications in portable document format (PDF) and any other form from which a complete and legible copy can be reproduced.
(f) If the last day for the giving of any notice or the performance of any act required or permitted under this Agreement falls on a day that is not a Business Day, the time for the giving of such notice or the performance of such act shall be extended to the next succeeding Business Day.
(g) All monetary amounts referenced in this Agreement are in United States Dollars unless otherwise specified.
Section 1.03 — Schedules and Exhibits
The following Exhibits and Schedules are attached hereto and incorporated herein by reference as if fully set forth in this Agreement:
Exhibits:
•  Exhibit A — Mutual Release Agreement
•  Exhibit B — Escrow Agreement
•  Exhibit C — Form of Certificate of Cancellation
•  Exhibit D — Form of Stipulation and [Proposed] Order of Dismissal with Prejudice
•  Exhibit E — Form of Meridian Engagement Letter (Ref. MCA-GRP-2025-001)
Schedules:
•  Schedule A — Property Portfolio (list of all seven Properties with addresses and Keymark Appraised Values)
•  Schedule B — Illustrative Distribution Waterfall
•  Schedule C — Estimated Wind-Down Expenses Breakdown
ARTICLE II — DISSOLUTION AND WIND-DOWN
Section 2.01 — Consent to Dissolution
(a) The Parties hereby consent to the dissolution and winding up of the Partnership in accordance with the terms and conditions of this Agreement and the applicable provisions of the DRULPA. This consent is given pursuant to the authority of each Partner under the LPA and the DRULPA and constitutes the agreement of Partners holding one hundred percent (100%) of the total partnership interests in the Partnership.
(b) The Parties acknowledge and agree that the dissolution of the Partnership contemplated by this Agreement is consensual and is not the result of a judicial order under 6 Del. C. § 17-802, although the filing of the Proceeding prompted the negotiation of the Term Sheet and this Agreement. The Parties further acknowledge that this Agreement reflects a negotiated resolution of the disputes giving rise to the Proceeding and is entered into voluntarily by each Party.
(c) The LPA is hereby amended to the extent necessary to permit and authorize the transactions contemplated by this Agreement, including the disposition of the Properties, the distribution of proceeds, and the filing of the Certificate of Cancellation. In the event of any conflict or inconsistency between the terms and conditions of this Agreement and the terms and conditions of the LPA, this Agreement shall control and govern.
Section 2.02 — Certificate of Cancellation
(a) Pinnacle, in its capacity as General Partner of the Partnership, shall execute and file (or cause to be filed) a Certificate of Cancellation for the Partnership (the "Certificate of Cancellation"), substantially in the form attached hereto as Exhibit C, with the Secretary of State of the State of Delaware pursuant to 6 Del. C. § 17-203.
(b) The Certificate of Cancellation shall be filed promptly following the completion of all wind-down activities contemplated by this Agreement, including the disposition of all Properties, the repayment of the Harborline Loan, the payment of all Wind-Down Expenses, the funding of the Escrow Reserve, and the making of all distributions to the Partners (other than distributions of the Escrow Reserve pursuant to Section 5.04), but in no event later than December 31, 2025 (the "Target Dissolution Date"), unless such date is extended by the mutual written agreement of Briarwood and Pinnacle.
(c) The Certificate of Cancellation shall reference the Partnership's name (Greystone Realty Partners, L.P.), Delaware File No. 7284613, and the original Certificate of Limited Partnership filing date of June 14, 2018.
(d) Victor A. Sandoval, as Managing Member of Pinnacle Holdings Group LLC, the General Partner, shall be the authorized signatory executing the Certificate of Cancellation on behalf of the Partnership.
Section 2.03 — Wind-Down Period
(a) The Wind-Down Period shall commence on the Effective Date and shall continue until the Dissolution Date.
(b) During the Wind-Down Period, the Partnership shall continue to exist solely for the purpose of winding up its affairs in accordance with 6 Del. C. § 17-803, including (i) disposing of the Properties, (ii) paying or making reasonable provision for the payment of all debts and liabilities of the Partnership (including the Harborline Loan), (iii) distributing the remaining assets of the Partnership to the Partners in accordance with Article V, and (iv) taking such other actions as are necessary or appropriate to wind up the affairs of the Partnership.
(c) During the Wind-Down Period, the Partnership shall not enter into any new business, make any new investments, or undertake any activities other than those described in Section 2.03(b) and ordinary-course management and disposition activities as contemplated by this Agreement.
Section 2.04 — Lender Consent
(a) The Parties shall cooperate in good faith and use commercially reasonable efforts to obtain the Lender Consent from Harborline under Section 7.04 of the Credit Agreement (Loan Reference No. HCL-2020-07842) as promptly as practicable after the Effective Date.
(b) Calderwood & Harkness LLP, acting on behalf of both Parties and the Partnership, shall prepare and deliver a written request for the Lender Consent to Harborline, addressed to Sean P. Gillespie, Relationship Manager, Harborline Commercial Lending, LLC, 225 Franklin Street, 12th Floor, Boston, Massachusetts 02110, together with a copy of this Agreement (redacted as necessary to protect commercially sensitive information). Pinnacle and Briarwood shall each execute such certificates, representations, and other documents as may be reasonably required by Harborline in connection with the Lender Consent.
(c) The Parties acknowledge and agree that obtaining the Lender Consent is a condition precedent to the commencement of property dispositions under Article IV, as more particularly set forth in Section 9.01(a). The Parties shall keep each other reasonably informed of all communications with Harborline regarding the Lender Consent.
Section 2.05 — Dismissal of the Proceeding
(a) Within five (5) Business Days following the Effective Date, the Parties shall jointly file the Stipulation and [Proposed] Order of Dismissal with Prejudice in the Court of Chancery of the State of Delaware in the Proceeding (C.A. No. 2024-1187-MTZ) before Vice Chancellor Marguerite T. Zimmerman, substantially in the form attached hereto as Exhibit D.
(b) The Stipulation of Dismissal shall provide for the dismissal with prejudice of all claims, counterclaims, and cross-claims asserted or that could have been asserted in the Proceeding, with each Party bearing its own costs and attorneys' fees incurred in connection with the Proceeding.
(c) Linda Osei of Calderwood & Harkness LLP, counsel for Briarwood, and Raymond T. Ashford of Ashford & Crane LLP, counsel for Pinnacle, shall each execute the Stipulation of Dismissal on behalf of their respective clients.
(d) Each Party shall bear its own costs, expenses, and legal fees incurred in connection with the Proceeding, including all costs incurred through the date of filing of the Stipulation of Dismissal.
Section 2.06 — Registered Agent Notification
Upon the filing of the Certificate of Cancellation with the Secretary of State of the State of Delaware, Pinnacle shall promptly provide written notice of the dissolution and cancellation of the Partnership to Capitol Registered Agents, Inc., located at 1209 Orange Street, Wilmington, Delaware 19801, which serves as the registered agent in the State of Delaware for the Partnership, Briarwood, and Pinnacle. Such notice shall include a copy of the filed Certificate of Cancellation, the Dissolution Date, and such other information as Capitol Registered Agents, Inc. may reasonably require.
ARTICLE III — MANAGEMENT DURING WIND-DOWN PERIOD
Section 3.01 — Pinnacle as Wind-Down Manager
(a) During the Wind-Down Period, Pinnacle shall continue to serve as the General Partner of the Partnership and shall act as the day-to-day property manager of the Properties. Pinnacle shall manage the Properties in a commercially reasonable manner, consistent with the standard of care applicable to a prudent property manager of comparable commercial real estate assets, with the goal of preserving the value of the Properties and facilitating their orderly disposition.
(b) Pinnacle's authority during the Wind-Down Period shall be limited to:
(i) ordinary-course property management, leasing, and maintenance of the Properties, consistent with past practice;
(ii) actions necessary or advisable to preserve and protect the value of the Properties, including responding to emergencies, maintaining compliance with applicable laws and regulations, and fulfilling the Partnership's obligations to existing tenants;
(iii) cooperation with Meridian Capital Advisors LLC in marketing and selling the Properties in accordance with Article IV; and
(iv) actions expressly authorized or required by this Agreement or as otherwise directed in writing by the mutual agreement of Briarwood and Pinnacle.
(c) Notwithstanding anything to the contrary in the LPA or this Agreement, Pinnacle shall not, without the prior written consent of Briarwood (which consent shall not be unreasonably withheld, conditioned, or delayed):
(i) incur any debt or financial obligation on behalf of the Partnership, other than trade payables incurred in the ordinary course of business in amounts consistent with historical practice;
(ii) enter into any new lease or lease amendment with a term (including renewal options) exceeding twelve (12) months;
(iii) make any capital expenditure with respect to any individual Property in excess of Two Hundred Fifty Thousand Dollars ($250,000) in the aggregate during the Wind-Down Period;
(iv) terminate or materially modify any existing material contract of the Partnership;
(v) hire any employee or engage any independent contractor with annual compensation in excess of One Hundred Fifty Thousand Dollars ($150,000); or
(vi) take any action that is a Major Decision under the LPA.
Section 3.02 — Reduced Management Fee
(a) In lieu of the three and one-half percent (3.5%) annual management fee provided under Section 4.03 of the LPA, Pinnacle shall receive a management fee during the Wind-Down Period equal to two percent (2.0%) of gross revenues from the Properties (the "Pinnacle Management Fee"). For the avoidance of doubt, "gross revenues" shall include all rental income, common area maintenance reimbursements, parking revenue, and other operating income from the Properties, but shall exclude proceeds from the sale of Properties.
(b) The reduced management fee shall be effective as of the Effective Date and shall continue until the earlier of: (i) the date on which all Properties have been disposed of and closed in accordance with Article IV, or (ii) the filing of the Certificate of Cancellation.
(c) The Pinnacle Management Fee shall be invoiced monthly by Pinnacle, in arrears, setting forth in reasonable detail the calculation of gross revenues and the resulting fee. Payment shall be made from the Partnership's operating accounts within fifteen (15) Business Days following receipt of each invoice. Briarwood shall have the right to audit the calculation of the Pinnacle Management Fee upon reasonable notice.
(d) The agreement regarding the reduced management fee shall be memorialized in a separate Side Letter Agreement between the Parties, to be executed concurrently herewith.
Section 3.03 — Reporting Obligations
(a) Pinnacle shall provide Briarwood with monthly written reports during the Wind-Down Period, to be delivered no later than the fifteenth (15th) Business Day following the end of each calendar month, covering the following:
(i) Property operations, including a summary of material events affecting the Properties;
(ii) current rent rolls for each Property, including tenant names, lease terms, rental rates, and lease expiration dates;
(iii) occupancy rates for each Property;
(iv) a summary of all capital expenditures made during the reporting period and year-to-date;
(v) a summary of material leasing activity, including new leases, lease renewals, and lease terminations;
(vi) an updated cash flow statement for the Partnership; and
(vii) such other information as Briarwood may reasonably request.
(b) Pinnacle shall cooperate with Meridian in providing all information, documentation, and access to the Properties as may be reasonably requested by Meridian for the purpose of marketing the Properties, including environmental reports, surveys, title documents, lease files, property condition reports, historical financial statements, and tenant correspondence.
Section 3.04 — Tax Returns and Accounting
(a) The Parties shall engage Fieldstone Accounting Partners LLP (engagement partner: Alicia M. Tran, CPA; 2000 Market Street, Suite 1500, Philadelphia, Pennsylvania 19103) to prepare the final-year federal and state income tax returns for the Partnership (EIN: 84-3290167), including Schedule K-1s for each Partner, and to perform wind-down accounting services, including the reconciliation of capital accounts and the preparation of a final balance sheet and statement of operations.
(b) Pinnacle shall provide Fieldstone with full access to the Partnership's books and records and shall cooperate with Fieldstone in the preparation of all tax returns and accounting work required hereunder.
(c) The cost of Fieldstone's engagement, including all fees, expenses, and disbursements, shall constitute a Wind-Down Expense and shall be paid from Partnership funds in accordance with the Distribution Waterfall.
(d) All tax returns shall be prepared consistently with past practice and in accordance with applicable tax laws, and shall be provided to Briarwood for review and comment at least thirty (30) days prior to the applicable filing deadline.
ARTICLE IV — DISPOSITION OF PROPERTIES
Section 4.01 — Engagement of Meridian Capital Advisors LLC
(a) Within thirty (30) days following the Effective Date, the Partnership (acting through Pinnacle as General Partner, with Briarwood's prior written acknowledgment) shall execute the Meridian Engagement Letter (Ref. MCA-GRP-2025-001), substantially in the form attached hereto as Exhibit E, engaging Meridian Capital Advisors LLC, 1700 Market Street, 28th Floor, Philadelphia, Pennsylvania 19103 (lead: Nadia Kowalski, Managing Director), as the exclusive disposition broker to market and sell all seven (7) Properties on behalf of the Partnership.
(b) The Meridian Commission shall be one and three-quarters percent (1.75%) of the gross sale price for each Property, payable from the sale proceeds at the Closing of each Property. The Meridian Commission shall constitute a Wind-Down Expense for purposes of the Distribution Waterfall.
(c) The Meridian Engagement Letter shall provide for an initial term of twelve (12) months from the date of execution thereof, subject to early termination upon the sale of all Properties. The Meridian Engagement Letter shall include customary provisions regarding marketing standards, cooperation by the Partnership, confidentiality, and indemnification.
Section 4.02 — Marketing and Sale Process
(a) Meridian shall commence marketing of the Properties within thirty (30) days following the execution of the Meridian Engagement Letter. Meridian shall prepare and distribute marketing materials, identify and contact potential purchasers, conduct property tours, manage the due diligence process, and otherwise use commercially reasonable efforts to market the Properties for sale at the highest reasonably obtainable prices consistent with the timeline established by this Agreement.
(b) All purchase and sale agreements for the Properties shall require the joint written approval of both Briarwood and Pinnacle, each acting reasonably and in good faith. Neither Party shall unreasonably withhold, condition, or delay its approval of any purchase and sale agreement that is on commercially reasonable terms and at a price that is consistent with or above the Keymark Appraised Value for the applicable Property.
(c) The Properties may be sold individually, in packages of two or more Properties, or as a portfolio, at the mutual agreement of Briarwood and Pinnacle, taking into account the advice of Meridian as to the marketing strategy most likely to maximize aggregate proceeds.
(d) Meridian shall provide bi-weekly written status reports to Briarwood, Pinnacle, and their respective counsel (Calderwood & Harkness LLP and Ashford & Crane LLP) regarding all marketing activities, inquiries received, offers received, due diligence status, and anticipated closing timelines.
Section 4.03 — Pinnacle Right of First Offer (ROFO)
(a) With respect to each Property, Pinnacle shall have a right of first offer (the "ROFO") to purchase such Property on the terms set forth in this Section 4.03.
(b) Upon receipt by the Partnership of a bona fide written offer from an unaffiliated third party for the purchase of any Property (a "Third-Party Offer"), Briarwood shall cause written notice to be delivered to Pinnacle setting forth the material terms and conditions of the Third-Party Offer, including the identity of the offeror, the proposed purchase price, the proposed closing date, and any material conditions to closing (the "ROFO Notice").
(c) Pinnacle shall have a period of twenty (20) Business Days from the date of receipt of the ROFO Notice (the "ROFO Period") to exercise the ROFO by delivering written notice to Briarwood indicating Pinnacle's election to purchase the applicable Property at a purchase price no less than ninety-seven and one-half percent (97.5%) of the Keymark Appraised Value for such Property (the "ROFO Price Floor").
(d) By way of illustration, the Keymark Appraised Value for Station Square (Property No. 1 on Schedule A) is Thirty-Eight Million Two Hundred Thousand Dollars ($38,200,000); accordingly, the ROFO Price Floor for Station Square would be Thirty-Seven Million Two Hundred Forty-Five Thousand Dollars ($37,245,000) (97.5% × $38,200,000 = $37,245,000).
(e) If Pinnacle timely exercises the ROFO by delivering its written election notice within the ROFO Period, the Parties shall enter into a purchase and sale agreement on customary terms and conditions, with closing to occur within forty-five (45) days following the date of Pinnacle's election notice. The purchase price shall be the ROFO Price Floor or such higher price as Pinnacle may offer. The purchase and sale agreement shall contain representations, warranties, covenants, and closing conditions customary for transactions of this nature, and shall be subject to the approval of Briarwood (such approval not to be unreasonably withheld).
(f) If Pinnacle does not deliver its written election notice within the ROFO Period, or if Pinnacle delivers written notice declining to exercise the ROFO, the Property may be sold to the third party that submitted the Third-Party Offer (or any other third party) on terms no less favorable to the Partnership in the aggregate than those reflected in the Third-Party Offer. If the Partnership does not enter into a definitive purchase and sale agreement for such Property within one hundred twenty (120) days following the expiration of the ROFO Period, or if the material terms of a subsequent offer are less favorable to the Partnership than those of the original Third-Party Offer, the ROFO shall again apply with respect to such Property.
(g) The ROFO shall apply separately to each Property, and the exercise or non-exercise of the ROFO with respect to one Property shall not affect Pinnacle's rights with respect to any other Property.
Section 4.04 — Title and Escrow
(a) Concord Title & Escrow Services, Inc. (300 Delaware Avenue, Suite 700, Wilmington, Delaware 19801; escrow officer: Brian L. Whitfield) shall serve as the escrow agent and title insurer for all Property dispositions contemplated by this Agreement.
(b) Concord shall issue a title commitment for each Property prior to the applicable Closing, identifying all matters of record and any exceptions to coverage. The Partnership shall cooperate with Concord in clearing any title exceptions that would materially impair the marketability of title or that are objected to by the applicable purchaser.
(c) All escrow, title insurance premiums, and closing costs incurred in connection with the disposition of the Properties shall constitute Wind-Down Expenses and shall be allocated and paid in accordance with the Distribution Waterfall.
Section 4.05 — Harborline Loan Payoff
(a) Proceeds from the sale of Properties shall first be applied to the repayment in full of the Harborline Loan. The Partnership shall request a payoff letter from Harborline in advance of each Closing that may generate sufficient proceeds for partial or full prepayment.
(b) The Harborline Payoff Amount, estimated as of June 30, 2025, is Sixty-Three Million Four Hundred Fifty-Seven Thousand Dollars ($63,457,000), consisting of:
(i) Outstanding principal: Sixty Million Nine Hundred Thousand Dollars ($60,900,000);
(ii) Accrued and unpaid interest (estimated through June 30, 2025): Seven Hundred Thirty Thousand Dollars ($730,000); and
(iii) Prepayment premium (three percent (3%) of the outstanding principal balance of $60,900,000): One Million Eight Hundred Twenty-Seven Thousand Dollars ($1,827,000).
(c) The actual Harborline Payoff Amount shall be determined by Harborline's payoff letter delivered in connection with the applicable Closing. Upon receipt of such payoff letter confirming the actual payoff amount, the Partnership shall wire funds directly to Harborline at the Closing of the property sale or sales generating sufficient proceeds to repay the Harborline Loan in full.
(d) Upon receipt of full payment, Harborline shall release all liens, mortgages, deeds of trust, security interests, and other encumbrances on the Properties and shall deliver to the Partnership (or its designee) customary UCC-3 termination statements, mortgage satisfactions, releases of lien, and such other instruments as are necessary to evidence the release of all Harborline security interests of record.
(e) To the extent that any individual Property sale does not generate proceeds sufficient to repay the Harborline Loan in full, net proceeds from such sale (after payment of the Meridian Commission and direct closing costs for such Property) shall be applied to the partial prepayment of the Harborline Loan, and the remaining balance shall be repaid from the proceeds of subsequent Property sales, in each case in accordance with the terms of the Credit Agreement and the Lender Consent.
ARTICLE V — DISTRIBUTION WATERFALL
Section 5.01 — Order of Priority
All proceeds from the sale of the Properties, together with any other assets of the Partnership available for distribution, shall be applied and distributed in the following order of priority (the "Distribution Waterfall"):
(a) First Priority — Harborline Loan Payoff. Repayment in full of all amounts due and owing under the Harborline Loan, including outstanding principal, accrued and unpaid interest, the prepayment premium, and any other amounts due under the Credit Agreement (estimated in the aggregate at Sixty-Three Million Four Hundred Fifty-Seven Thousand Dollars ($63,457,000) as of June 30, 2025).
(b) Second Priority — Wind-Down Expenses. Payment of all Wind-Down Expenses, estimated in the aggregate at Four Million One Hundred Thousand Dollars ($4,100,000), including without limitation:
(i) Meridian brokerage commissions (1.75% of gross sale prices for the Properties);
(ii) Legal fees of Calderwood & Harkness LLP incurred in connection with this Agreement and the transactions contemplated hereby;
(iii) Legal fees of Ashford & Crane LLP incurred in connection with this Agreement and the transactions contemplated hereby;
(iv) Accounting fees of Fieldstone Accounting Partners LLP for the preparation of final-year tax returns and wind-down accounting;
(v) Escrow, title insurance premiums, and closing costs of Concord Title & Escrow Services, Inc.;
(vi) Transfer taxes, recording costs, filing fees, and other governmental charges; and
(vii) Any other costs and expenses reasonably incurred in connection with the wind-down and dissolution of the Partnership.
(c) Third Priority — Escrow Reserve. Deposit of One Million Five Hundred Thousand Dollars ($1,500,000) into the Escrow Account (Account No. ESC-2025-40071) at Concord Title & Escrow Services, Inc., to be held for a period of twelve (12) months following the Dissolution Date as a reserve for contingent liabilities, post-closing adjustments, and similar matters, in accordance with the terms and conditions of the Escrow Agreement attached hereto as Exhibit B.
(d) Fourth Priority — Return of Capital Contributions. Return to the Partners of their respective unreturned capital contributions, as follows:
(i) Briarwood: Forty-Seven Million Eight Hundred Fifty Thousand Dollars ($47,850,000); and
(ii) Pinnacle: Thirty-Nine Million One Hundred Fifty Thousand Dollars ($39,150,000);
for a total of Eighty-Seven Million Dollars ($87,000,000). In the event that the Net Distributable Proceeds remaining after satisfaction of priorities (a) through (c) above are insufficient to return capital contributions in full to both Partners, then distributions under this Fourth Priority shall be made to the Partners on a pro rata basis in proportion to each Partner's unreturned capital contribution.
(e) Fifth Priority — Residual Distribution. Any remaining proceeds after satisfaction of priorities (a) through (d) above (the "Residual") shall be distributed to the Partners in accordance with their respective partnership interest percentages:
(i) Briarwood: fifty-five percent (55%) of the Residual; and
(ii) Pinnacle: forty-five percent (45%) of the Residual.
Section 5.02 — Illustrative Distribution Calculations
For illustrative purposes only, assuming all Properties are sold at an aggregate gross sale price equal to the aggregate Keymark Appraised Value of One Hundred Seventy-Four Million Dollars ($174,000,000), the Distribution Waterfall would be applied as follows:
The foregoing calculations are illustrative only and are provided solely for the convenience of the Parties. Actual distributions to each Partner will depend on the actual aggregate gross sale prices realized for the Properties, the actual Harborline Payoff Amount, actual Wind-Down Expenses incurred, and such other factors as may affect the amounts available for distribution.
Section 5.03 — Timing of Distributions
(a) Distributions shall be made as promptly as practicable following the Closing of each Property sale and the satisfaction of the applicable priorities in the Distribution Waterfall. Proceeds from each Property Closing shall be applied first to the outstanding First Priority obligations (Harborline Loan Payoff) and Second Priority obligations (Wind-Down Expenses attributable to such Closing).
(b) Final distributions under the Fourth Priority (Return of Capital) and Fifth Priority (Residual) shall be made after (i) the Closing of the last Property, (ii) the payment of all outstanding Wind-Down Expenses, and (iii) the funding of the Escrow Reserve. Such final distributions shall be made by wire transfer of immediately available funds to the accounts designated in writing by Briarwood and Pinnacle, respectively.
(c) Interim distributions to the Partners may be made at such times as the Parties mutually agree, to the extent that proceeds in excess of amounts required to satisfy outstanding and anticipated First, Second, and Third Priority obligations are available.
Section 5.04 — Escrow Release
(a) The Escrow Reserve shall be held by Concord in the Escrow Account for a period of twelve (12) months following the Dissolution Date (the "Escrow Period"), in accordance with the terms and conditions of the Escrow Agreement.
(b) Upon the expiration of the Escrow Period, if no claims have been made against the Escrow Reserve, or if all claims made against the Escrow Reserve have been fully resolved or released, the entire remaining balance of the Escrow Reserve (including any interest or earnings thereon) shall be released and distributed to the Partners in accordance with the Fourth Priority and Fifth Priority of the Distribution Waterfall set forth in Section 5.01(d) and Section 5.01(e).
(c) If, upon the expiration of the Escrow Period, any claim against the Escrow Reserve remains pending and unresolved, an amount equal to the claimed amount (or such higher amount as may be determined by the Parties or by a court of competent jurisdiction) shall continue to be held in the Escrow Account until such claim is fully resolved, and the remaining balance shall be released and distributed as provided in Section 5.04(b).
ARTICLE VI — MUTUAL RELEASES
Section 6.01 — Execution of Mutual Release Agreement
Contemporaneously with the execution and delivery of this Agreement, the Parties, including their respective Affiliates, principals, officers, members, managers, directors, and agents, shall execute and deliver the Mutual Release Agreement, substantially in the form attached hereto as Exhibit A. The Mutual Release Agreement shall be held in escrow by Concord and shall become effective as provided in Section 6.04.
Section 6.02 — Scope of Releases
The Mutual Release Agreement shall provide for a full and mutual release of all claims, demands, actions, causes of action, suits, liabilities, damages, losses, costs, and expenses (including attorneys' fees), whether known or unknown, asserted or unasserted, at law or in equity, between and among Briarwood (and its Affiliates, including Elliot R. Briarwood and Margaux Briarwood-Feldstein, and their respective heirs, executors, administrators, successors, and assigns) and Pinnacle (and its Affiliates, including Victor A. Sandoval and Denise K. Hartwell, and their respective heirs, executors, administrators, successors, and assigns) arising out of or in any way related to:
(a) the Partnership, the LPA, and the operation, management, and administration of the Properties;
(b) the disputed Eight Million Two Hundred Thousand Dollar ($8,200,000) capital call issued by Pinnacle on August 5, 2024, and Briarwood's withholding of consent thereto;
(c) the rejected Proposed Refinancing through Northgate Savings Bank proposed by Pinnacle on June 28, 2024;
(d) the Proceeding (C.A. No. 2024-1187-MTZ, pending in the Court of Chancery of the State of Delaware);
(e) the failed mediation before Tidewater Dispute Resolution Services (mediator: the Honorable Patricia Navarro (Ret.)) conducted between September and November 2024; and
(f) any and all other matters arising out of or related to the Partnership and the relationship between the Parties as partners of the Partnership, from the formation of the Partnership through the Final Distribution Date.
Section 6.03 — Carve-Outs
Notwithstanding the foregoing, the releases set forth in the Mutual Release Agreement shall not apply to, and shall expressly exclude, any claims, rights, or obligations arising under:
(a) this Agreement;
(b) the Escrow Agreement;
(c) the Mutual Release Agreement itself (including any breach thereof); and
(d) any other ancillary document, instrument, or agreement delivered in connection herewith or pursuant to the terms hereof, including the Meridian Engagement Letter and any purchase and sale agreements entered into in connection with the disposition of the Properties.
Section 6.04 — Effectiveness
The Mutual Release Agreement shall become effective upon the Final Distribution Date — that is, upon the completion of all distributions to the Partners under Article V, including the release and distribution of any remaining balance of the Escrow Reserve pursuant to Section 5.04. Prior to such date, the Mutual Release Agreement shall remain in escrow with Concord, and neither Party shall have any rights or obligations thereunder until it becomes effective.
ARTICLE VII — REPRESENTATIONS AND WARRANTIES
Section 7.01 — Representations and Warranties of Briarwood
Briarwood hereby represents and warrants to Pinnacle and the Partnership as of the Effective Date as follows:
(a) Organization and Good Standing. Briarwood is a limited liability company duly organized, validly existing, and in good standing under the laws of the State of Delaware (File No. 5918274; EIN: 83-2174509). Briarwood has all requisite limited liability company power and authority to own its properties and to carry on its business as presently conducted.
(b) Authority; Binding Effect. Briarwood has full limited liability company power and authority to execute, deliver, and perform its obligations under this Agreement and each ancillary document to which it is or will become a party. The execution, delivery, and performance of this Agreement have been duly authorized by all necessary limited liability company action on the part of Briarwood. This Agreement has been duly executed and delivered by Briarwood and constitutes the legal, valid, and binding obligation of Briarwood, enforceable against Briarwood in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium, and similar laws affecting creditors' rights generally and subject to general principles of equity (regardless of whether enforcement is sought in a proceeding at law or in equity).
(c) No Conflict. The execution, delivery, and performance by Briarwood of this Agreement and the transactions contemplated hereby do not and will not (i) violate or conflict with Briarwood's certificate of formation, limited liability company agreement, or other organizational documents, (ii) violate or conflict with any applicable law, statute, rule, regulation, order, judgment, injunction, decree, or governmental permit applicable to Briarwood, or (iii) violate, conflict with, result in a breach of, constitute a default under, or accelerate the performance required by any material agreement, instrument, or other obligation to which Briarwood is a party or by which Briarwood or its assets are bound.
(d) No Litigation. Except for the Proceeding, there is no action, suit, proceeding, investigation, or claim pending or, to the knowledge of Briarwood, threatened against Briarwood that would reasonably be expected to materially impair or delay Briarwood's ability to perform its obligations under this Agreement.
(e) Partnership Interest. Briarwood is the lawful holder of a fifty-five percent (55%) limited partner interest in the Partnership, free and clear of all liens, pledges, encumbrances, security interests, claims, and charges of any nature, except as set forth in the LPA.
Section 7.02 — Representations and Warranties of Pinnacle
Pinnacle hereby represents and warrants to Briarwood and the Partnership as of the Effective Date as follows:
(a) Organization and Good Standing. Pinnacle is a limited liability company duly organized, validly existing, and in good standing under the laws of the State of Delaware (File No. 6103488; EIN: 81-4637821). Pinnacle has all requisite limited liability company power and authority to own its properties and to carry on its business as presently conducted.
(b) Authority; Binding Effect. Pinnacle has full limited liability company power and authority to execute, deliver, and perform its obligations under this Agreement and each ancillary document to which it is or will become a party. The execution, delivery, and performance of this Agreement have been duly authorized by all necessary limited liability company action on the part of Pinnacle. Victor A. Sandoval, as Managing Member of Pinnacle, is duly authorized to execute this Agreement on behalf of Pinnacle. This Agreement has been duly executed and delivered by Pinnacle and constitutes the legal, valid, and binding obligation of Pinnacle, enforceable against Pinnacle in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium, and similar laws affecting creditors' rights generally and subject to general principles of equity (regardless of whether enforcement is sought in a proceeding at law or in equity).
(c) No Conflict. The execution, delivery, and performance by Pinnacle of this Agreement and the transactions contemplated hereby do not and will not (i) violate or conflict with Pinnacle's certificate of formation, limited liability company agreement, or other organizational documents, (ii) violate or conflict with any applicable law, statute, rule, regulation, order, judgment, injunction, decree, or governmental permit applicable to Pinnacle, or (iii) violate, conflict with, result in a breach of, constitute a default under, or accelerate the performance required by any material agreement, instrument, or other obligation to which Pinnacle is a party or by which Pinnacle or its assets are bound.
(d) No Litigation. Except for the Proceeding, there is no action, suit, proceeding, investigation, or claim pending or, to the knowledge of Pinnacle, threatened against Pinnacle that would reasonably be expected to materially impair or delay Pinnacle's ability to perform its obligations under this Agreement.
(e) Partnership Interest. Pinnacle is the lawful holder of a forty-five percent (45%) general partner interest in the Partnership, free and clear of all liens, pledges, encumbrances, security interests, claims, and charges of any nature, except as set forth in the LPA.
(f) Properties. The Partnership is the record and beneficial owner of each of the Properties listed on Schedule A, and the Properties are owned by the Partnership free and clear of all liens, mortgages, deeds of trust, pledges, encumbrances, security interests, and other charges, except for (i) the lien of the Harborline Loan, (ii) real property taxes and assessments not yet due and payable, (iii) customary permitted encumbrances, including easements, covenants, conditions, and restrictions of record that do not materially impair the use or value of the Properties, and (iv) the rights of tenants under existing leases.
Section 7.03 — Representations and Warranties Regarding the Partnership
Briarwood and Pinnacle, jointly and severally (in their capacities as the sole partners of the Partnership), hereby represent and warrant to each other as of the Effective Date as follows:
(a) Organization and Good Standing. The Partnership is a limited partnership duly organized, validly existing, and in good standing under the laws of the State of Delaware (File No. 7284613; EIN: 84-3290167). The Partnership is duly qualified to transact business and is in good standing in each jurisdiction where the nature of its business or the character of its assets requires such qualification.
(b) LPA in Full Force and Effect. The LPA is in full force and effect and has not been amended, modified, or supplemented except as described in Recital A hereto. Each of Briarwood and Pinnacle has complied in all material respects with its obligations under the LPA, except as otherwise disclosed in the Recitals.
(c) Accurate Description of Properties. Schedule A sets forth a complete and accurate description of all Properties owned by the Partnership as of the Effective Date, including the address, property type, and Keymark Appraised Value of each Property.
(d) No Material Default Under Credit Agreement. As of the Effective Date, the Partnership is not in material default under the Credit Agreement (Loan Reference No. HCL-2020-07842) other than as may arise from the filing of the Proceeding, which the Parties believe does not constitute an event of default under the Credit Agreement.
(e) Net Operating Income. The Partnership's annual net operating income for the fiscal year ended December 31, 2024 was estimated at Thirteen Million Nine Hundred Twenty Thousand Dollars ($13,920,000), based on unaudited financial statements prepared by the General Partner.
(f) Outstanding Loan Balance. As of February 28, 2025, the outstanding principal balance under the Harborline Loan was approximately Sixty-One M