NON-RECOURSE CARVEOUT GUARANTY
Execution Version
June 5, 2023
Loan No.: PFB-CRE-2023-05741
NON-RECOURSE CARVEOUT GUARANTY
THIS NON-RECOURSE CARVEOUT GUARANTY (this "Guaranty") is made and entered into as of June 5, 2023, by ELLIOT J. BRIARWOOD, an individual residing in the State of New York ("Guarantor"), in favor of PINNACLE FIDELITY BANK, NATIONAL ASSOCIATION, a national banking association organized and existing under the laws of the United States, with principal offices at 383 Madison Avenue, New York, NY 10179 ("Lender").
RECITALS
A. The Loan. Pinnacle Fidelity Bank, National Association ("Lender"), with principal offices at 383 Madison Avenue, New York, NY 10179, has made a loan in the original principal amount of Twenty-Six Million and 00/100 Dollars ($26,000,000.00) (the "Loan") to Gramercy Linden PropCo LLC, a New York limited liability company ("Borrower"), as evidenced by that certain Promissory Note dated as of the date hereof in the principal amount of $26,000,000.00 (the "Note") and secured by, among other things, that certain Mortgage, Assignment of Leases and Rents, Security Agreement, and Fixture Filing dated as of the date hereof (the "Mortgage") encumbering the real property commonly known as The Linden at Gramercy Park, located at 245 East 21st Street, New York, NY 10010, and designated as Block 899, Lot 42, Borough of Manhattan, City and State of New York, together with all improvements thereon and appurtenances thereto (the "Property"), which Mortgage is being recorded or is to be recorded in the Office of the City Register of the City of New York, New York County. The Loan is further governed by and subject to the terms and conditions of that certain Loan Agreement dated as of June 5, 2023, by and between Borrower and Lender (the "Loan Agreement"), and all other documents, instruments, agreements, and certificates now or hereafter evidencing, securing, guaranteeing, or otherwise relating to the Loan (collectively, together with the Note, the Mortgage, and the Loan Agreement, the "Loan Documents").
B. Non-Recourse Nature of the Loan. The Loan is made on a non-recourse basis, subject to certain exceptions and carveouts as more particularly set forth in the Loan Agreement and in this Guaranty, whereby the personal liability of the Borrower and of Borrower's members, partners, principals, managers, officers, directors, and affiliates is limited solely to the Property and other collateral pledged to secure the Loan, except to the extent that personal liability is imposed pursuant to the terms of this Guaranty and the other Loan Documents. In the absence of the carveout events and loss events described herein, Lender's sole recourse for repayment of the Loan shall be to the Property and such other collateral.
C. The Guarantor. Elliot J. Briarwood, an individual residing in the State of New York ("Guarantor"), is the Founder and Managing Principal of Briarwood Family Office LLC, a Delaware limited liability company ("Briarwood"), which is the Managing Member of Gramercy Linden JV LLC, a Delaware limited liability company (EIN: 93-4128765), the sole member of Borrower (EIN: 93-4128779). By virtue of Guarantor's ownership and control of Briarwood, and Briarwood's position as Managing Member of the sole member of Borrower, Guarantor has a direct and substantial economic interest in Borrower and will derive material financial benefit from the making of the Loan, including through the acquisition, ownership, operation, and potential disposition of the Property.
D. Inducement. As a material condition to and as an inducement to Lender to make the Loan to Borrower, Lender has required that Guarantor execute and deliver this Guaranty. Guarantor acknowledges that Lender would not have made the Loan but for the execution and delivery of this Guaranty by Guarantor.
E. Defined Terms. Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to them in the Loan Agreement.
NOW, THEREFORE, in consideration of the foregoing Recitals, the making of the Loan by Lender to Borrower, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Guarantor hereby agrees as follows:
ARTICLE 1 — DEFINITIONS
Section 1.1 — Defined Terms
As used in this Guaranty, the following terms shall have the meanings set forth below:
"Borrower" means Gramercy Linden PropCo LLC, a New York limited liability company, together with its successors and permitted assigns.
"Carveout Obligations" has the meaning ascribed to such term in Section 2.1 and Section 2.2 of this Guaranty, and collectively refers to the full recourse carveout obligations described in Section 2.1 and the loss carveout obligations described in Section 2.2.
"Environmental Laws" means all applicable federal, state, and local statutes, regulations, ordinances, rules, codes, orders, decrees, directives, and binding judicial and administrative interpretations thereof, now existing or hereinafter enacted, promulgated, or issued, relating to pollution, protection of the environment, public health and safety, or the investigation, generation, manufacture, storage, use, handling, transportation, treatment, release, emission, discharge, remediation, removal, or disposal of Hazardous Materials, including, without limitation, the Comprehensive Environmental Response, Compensation and Liability Act (42 U.S.C. §§ 9601 et seq.), the Resource Conservation and Recovery Act (42 U.S.C. §§ 6901 et seq.), the Federal Water Pollution Control Act (33 U.S.C. §§ 1251 et seq.), the Toxic Substances Control Act (15 U.S.C. §§ 2601 et seq.), the Clean Air Act (42 U.S.C. §§ 7401 et seq.), and the New York Environmental Conservation Law.
"Guaranteed Obligations" means, collectively, the Carveout Obligations and the obligations of Guarantor under Article 3 of this Guaranty, including, without limitation, all financial covenants, reporting obligations, and indemnification obligations set forth herein.
"Guarantor" means Elliot J. Briarwood, individually, together with his heirs, executors, administrators, successors, and assigns.
"Guaranty" means this Non-Recourse Carveout Guaranty, as the same may be amended, restated, supplemented, or otherwise modified from time to time in accordance with the terms hereof.
"Hazardous Materials" means any toxic or hazardous substances, materials, pollutants, contaminants, or wastes, as defined, listed, or identified under any applicable Environmental Laws, including, without limitation, petroleum and petroleum products, asbestos and asbestos-containing materials, polychlorinated biphenyls, lead-based paint, radon, mold, and per- and polyfluoroalkyl substances (PFAS).
"Lender" means Pinnacle Fidelity Bank, National Association, a national banking association, together with its successors and assigns.
"Liquidity" has the meaning ascribed to such term in Section 3.2 of this Guaranty.
"Loan" means the loan in the original principal amount of Twenty-Six Million and 00/100 Dollars ($26,000,000.00) made by Lender to Borrower pursuant to the Loan Agreement and as evidenced by the Note.
"Loan Agreement" means that certain Loan Agreement dated as of June 5, 2023, by and between Borrower and Lender, as the same may be amended, restated, supplemented, or otherwise modified from time to time.
"Loan Documents" means, collectively, the Note, the Mortgage, the Loan Agreement, this Guaranty, and all other documents, instruments, agreements, and certificates now or hereafter evidencing, securing, guaranteeing, or otherwise relating to the Loan, as the same may be amended, restated, supplemented, or otherwise modified from time to time.
"Loss" or "Losses" means any and all claims, demands, liabilities, losses, damages, judgments, penalties, fines, costs, and expenses (including, without limitation, reasonable attorneys' fees, court costs, and disbursements, and the reasonable fees and expenses of consultants, experts, and other professionals) of any kind or nature whatsoever, whether direct or indirect, known or unknown, foreseen or unforeseen.
"Mortgage" means that certain Mortgage, Assignment of Leases and Rents, Security Agreement, and Fixture Filing dated as of the date hereof, from Borrower in favor of Lender, encumbering the Property, recorded or to be recorded in the Office of the City Register of the City of New York, New York County, as the same may be amended, restated, supplemented, or otherwise modified from time to time.
"Net Worth" has the meaning ascribed to such term in Section 3.1 of this Guaranty.
"Note" means that certain Promissory Note dated as of the date hereof, made by Borrower in favor of Lender, in the original principal amount of Twenty-Six Million and 00/100 Dollars ($26,000,000.00), as the same may be amended, restated, supplemented, or otherwise modified from time to time.
"Property" means the real property located at 245 East 21st Street, New York, New York 10010, designated as Block 899, Lot 42, Borough of Manhattan, County of New York, City and State of New York, as more particularly described in Exhibit A attached hereto and incorporated herein by this reference, together with all buildings, structures, and other improvements now or hereafter located thereon, all fixtures, equipment, and other personal property now or hereafter affixed thereto or used in connection therewith, and all easements, rights-of-way, and appurtenances thereto.
"SPE Requirements" means the single-purpose entity covenants, representations, and organizational requirements set forth in the Loan Agreement, including, without limitation, the requirements that Borrower maintain its existence as a separate legal entity, not commingle its assets or funds with those of any other person or entity, maintain separate books and records, hold itself out to the public as a separate entity, and comply with all other separateness covenants contained therein.
ARTICLE 2 — GUARANTY OF CARVEOUT OBLIGATIONS
Section 2.1 — Full Recourse Carveout Events (Springing Full Recourse)
Guarantor hereby absolutely, unconditionally, and irrevocably guarantees to Lender the full and prompt payment and performance when due of the entire outstanding principal balance of the Loan, all accrued and unpaid interest thereon, any applicable prepayment premium, yield maintenance premium, or prepayment penalty, and all other sums, fees, costs, expenses, and amounts due and payable under the Loan Documents (without any limitation whatsoever) upon the occurrence of any one or more of the following events (each, a "Full Recourse Carveout Event"):
(a) Voluntary Bankruptcy. Borrower or any constituent entity of Borrower (including, without limitation, Gramercy Linden JV LLC or any direct or indirect member, partner, or equity holder of Borrower) (i) files a voluntary petition under Title 11 of the United States Code (the "Bankruptcy Code") or any similar federal or state insolvency, reorganization, receivership, or debtor-relief law, (ii) consents to or fails to timely and diligently contest the filing of an involuntary petition against it under the Bankruptcy Code or any such similar law, (iii) applies for or consents to the appointment of, or the taking of possession by, a receiver, custodian, trustee, liquidator, or similar official for itself or for all or any substantial part of its assets, (iv) makes a general assignment for the benefit of its creditors, or (v) takes any corporate, partnership, or limited liability company action to authorize any of the foregoing.
(b) Involuntary Bankruptcy Caused by Guarantor, Borrower, or Affiliates. An involuntary petition is filed against Borrower under the Bankruptcy Code or any similar federal or state insolvency, reorganization, receivership, or debtor-relief law by or at the direction of, or with the collusion, encouragement, assistance, or cooperation of, Guarantor, Borrower, any member, partner, manager, officer, or director of Borrower, or any affiliate of Guarantor or Borrower, or any other person or entity acting at the behest of or in concert with any of the foregoing.
(c) Violation of SPE Covenants. Borrower fails to maintain its status as a single-purpose entity in accordance with the SPE Requirements set forth in the Loan Agreement, including, without limitation, any failure to maintain separateness from other entities, any commingling of funds or assets with any other person or entity, any failure to maintain separate books and records, or any other breach of the organizational or operational separateness covenants contained in the Loan Agreement.
(d) Violation of Transfer Restrictions. A sale, transfer, assignment, conveyance, pledge, mortgage, encumbrance, or other disposition (whether voluntary or involuntary, by operation of law or otherwise) of the Property or any part thereof, or any direct or indirect legal or beneficial ownership interest in Borrower (including any change in the control of Borrower), occurs in violation of the transfer and encumbrance restrictions set forth in the Loan Agreement or the Mortgage, without the prior written consent of Lender where such consent is required.
Upon the occurrence of any Full Recourse Carveout Event described in clauses (a) through (d) above, the Loan shall be deemed fully recourse to Guarantor, and Guarantor shall be personally liable for the payment and performance of all obligations of Borrower under the Loan Documents as if the Loan had been made on a full recourse basis from inception, including, without limitation, the entire outstanding principal balance of the Loan, all accrued and unpaid interest, all prepayment premiums or penalties, all late charges, default interest, and all other sums due and payable under the Loan Documents.
Section 2.2 — Loss Carveout Events (Limited Recourse Liability)
Guarantor hereby absolutely, unconditionally, and irrevocably guarantees to Lender the payment of any and all Losses actually suffered or incurred by Lender arising out of or in connection with any one or more of the following events or circumstances (each, a "Loss Carveout Event" and, together with the Full Recourse Carveout Events, the "Carveout Obligations"):
(a) Fraud or Intentional Misrepresentation. Any fraud, material misrepresentation, or intentional material omission made by or on behalf of Borrower or Guarantor in connection with the Loan or any Loan Document, including, without limitation, in any application, financial statement, rent roll, operating statement, certification, report, or other document or information delivered to Lender in connection with the origination, closing, administration, or servicing of the Loan, whether made prior to, at, or after the closing of the Loan.
(b) Misapplication or Misappropriation of Funds. Any misapplication, misappropriation, conversion, or diversion of (i) rents, revenues, income, profits, issues, or other proceeds of the Property (including, without limitation, lease termination payments, license fees, and parking revenues) received by or on behalf of Borrower after the occurrence of an Event of Default under the Loan Documents or during the pendency of any foreclosure, receivership, or other enforcement action with respect to the Property, (ii) insurance proceeds or condemnation or eminent domain awards that are required under the Loan Documents to be applied to the restoration of the Property or the repayment or reduction of the Loan, or (iii) tenant security deposits or letters of credit held by or on behalf of Borrower, in each case, to any purpose other than as required or permitted by the Loan Documents.
(c) Waste. Any act of intentional physical waste of the Property committed or permitted by Borrower, Guarantor, or any agent, contractor, or representative of either, or any removal, demolition, alteration, or impairment of any portion of the Property (including, without limitation, any building systems, fixtures, equipment, or personal property) in violation of the Loan Documents, except for removal of items that are simultaneously replaced with items of equal or greater value and utility in the ordinary course of operating the Property.
(d) Failure to Pay Taxes and Insurance. Failure by Borrower to pay when due any real estate taxes, assessments, water and sewer charges, or insurance premiums relating to the Property (to the extent such amounts are not impounded by Lender in a tax and insurance escrow account pursuant to the Loan Agreement), where such failure results in the imposition of any lien on the Property that is senior to or on parity with the lien of the Mortgage, or results in a lapse, termination, or cancellation of any insurance coverage required to be maintained under the Loan Documents.
(e) Environmental Liability. Any and all Losses arising from or relating to (i) the presence, release, threatened release, discharge, disposal, or migration of Hazardous Materials at, on, under, from, or about the Property, (ii) any violation of Environmental Laws with respect to the Property or the operations conducted thereon, or (iii) any investigation, remediation, cleanup, containment, monitoring, or removal of Hazardous Materials from, at, on, or under the Property, in each case to the extent caused by, resulting from, or attributable to the acts or omissions of Borrower, Guarantor, or their respective agents, employees, contractors, tenants, licensees, or invitees.
(f) Failure to Maintain Insurance. Failure by Borrower to obtain or maintain in full force and effect any insurance coverage required to be maintained under the Loan Documents, including, without limitation, property insurance, commercial general liability insurance, business income and extra expense insurance, flood insurance, terrorism risk insurance, and such other coverages as may be required by Lender.
(g) Forfeiture. Any forfeiture, seizure, or loss of the Property or any portion thereof arising from or in connection with any criminal activity conducted at, on, or from the Property by Borrower, Guarantor, or any agent, employee, representative, tenant, or invitee of either, or arising from the failure of Borrower or Guarantor to take reasonable steps to prevent or remediate such criminal activity after obtaining knowledge thereof.
(h) Breach of Representations. Any material breach by Borrower of any representation or warranty made by Borrower in or pursuant to the Loan Documents, to the extent Lender suffers or incurs Losses as a direct or proximate result of such breach, including, without limitation, breaches relating to the condition, title, or value of the Property, the financial condition of Borrower, or the status of any leases, tenancies, or occupancy agreements affecting the Property.
(i) Cash Management Violations. Any diversion, misapplication, or misappropriation of rents, revenues, income, or other monies derived from the Property in violation of the cash management provisions of the Loan Agreement, including, without limitation, any failure to deposit rents and other revenues into the deposit accounts designated by Lender, any violation of the soft lockbox requirements, any violation of the hard lockbox requirements following the occurrence of a Cash Sweep Trigger Event (as defined in the Loan Agreement), or any unauthorized withdrawal from or direction of funds held in any reserve, escrow, or operating account established pursuant to the Loan Documents.
(j) Unpermitted Debt. Borrower incurs, creates, assumes, guarantees, or permits to exist any indebtedness (whether secured or unsecured, direct or contingent, recourse or non-recourse, including, without limitation, any mezzanine debt, subordinate debt, preferred equity with debt-like features, or trade payables in excess of amounts permitted under the Loan Agreement) in violation of the Loan Documents without the prior written consent of Lender.
(k) Unpermitted Liens. Any mechanic's lien, materialman's lien, judgment lien, tax lien (other than liens for taxes not yet due and payable), or other lien or encumbrance is filed, recorded, or imposed against the Property and Borrower fails to cause such lien or encumbrance to be bonded over, discharged, released, or otherwise removed within the applicable cure period set forth in the Loan Documents (or, if no specific cure period is provided, within thirty (30) days after Borrower first receives notice of the filing or imposition of such lien).
For the avoidance of doubt, Guarantor's liability under this Section 2.2 with respect to any Loss Carveout Event shall be limited to the amount of the actual Losses suffered or incurred by Lender as a result of such Loss Carveout Event, and shall not extend to the full outstanding balance of the Loan unless such Loss Carveout Event also constitutes a Full Recourse Carveout Event under Section 2.1.
Section 2.3 — Nature of Obligations
The obligations of Guarantor under this Guaranty are independent of, and not conditioned or contingent upon, the obligations of Borrower under the Loan Documents. This Guaranty is a guaranty of payment and performance and not merely a guaranty of collection, and Lender shall not be required to proceed first against Borrower, any other guarantor, or any collateral securing the Loan before enforcing this Guaranty against Guarantor. Guarantor's liability hereunder is joint and several with the liability of Borrower (and any other guarantor) to the extent of the Guaranteed Obligations. Lender may enforce this Guaranty against Guarantor directly and independently, without joinder of Borrower, without first having commenced any foreclosure proceeding or other enforcement action with respect to the Property, and without first having exhausted any remedy against any other person or entity or any collateral. The obligations of Guarantor hereunder shall not be reduced, limited, impaired, or discharged by reason of the inability of Lender to enforce the obligations of Borrower under the Loan Documents for any reason whatsoever, including by reason of any bankruptcy, insolvency, reorganization, dissolution, or similar proceeding involving Borrower.
ARTICLE 3 — FINANCIAL COVENANTS OF GUARANTOR
Section 3.1 — Minimum Net Worth
Guarantor shall maintain at all times during the term of the Loan a net worth ("Net Worth"), calculated as total assets minus total liabilities, in each case determined in accordance with generally accepted accounting principles in the United States ("GAAP") consistently applied, of not less than Fifteen Million and 00/100 Dollars ($15,000,000.00). For purposes of calculating Net Worth under this Section 3.1, the following exclusions shall apply: (i) the value of any direct or indirect ownership interest held by Guarantor in Borrower shall be excluded from total assets, (ii) the value of any direct or indirect ownership interest held by Guarantor in the Property (whether through Borrower or otherwise) shall be excluded from total assets, (iii) the value of any equity interest held by Guarantor (directly or indirectly, through Briarwood Family Office LLC or otherwise) in Gramercy Linden JV LLC that is attributable solely to the Property shall be excluded from total assets, and (iv) any asset that is subject to a lien, pledge, encumbrance, or restriction that would prevent Guarantor from realizing the value thereof shall be valued at zero for purposes of this calculation unless otherwise permitted by GAAP. All calculations of Net Worth shall be made in United States dollars.
Section 3.2 — Minimum Liquidity
Guarantor shall maintain at all times during the term of the Loan liquid assets ("Liquidity"), defined as unencumbered and unrestricted cash, cash equivalents (including, without limitation, money market funds and certificates of deposit with remaining maturities of ninety (90) days or less), and marketable securities (including publicly traded stocks, bonds, mutual fund shares, and exchange-traded fund shares) that are readily convertible to cash within five (5) business days without material loss of value, of not less than Three Million and 00/100 Dollars ($3,000,000.00). For the avoidance of doubt, Liquidity shall not include (a) any funds held in retirement accounts or pension plans to the extent subject to early withdrawal penalties or distribution restrictions, (b) any funds subject to a lock-up, vesting schedule, or other restriction on withdrawal or transfer, (c) interests in private equity funds, hedge funds, or other alternative investment vehicles that are not redeemable within five (5) business days, or (d) any funds held in escrow or otherwise restricted for the benefit of a third party.
Section 3.3 — Financial Reporting by Guarantor
(a) Annual Financial Statements. Within ninety (90) days after the end of each calendar year during the term of the Loan, Guarantor shall deliver to Lender a complete personal financial statement of Guarantor as of the last day of such calendar year, prepared in reasonable detail and in form and substance reasonably satisfactory to Lender, certified by Guarantor as true, correct, and complete in all material respects as of the date thereof, and demonstrating compliance with the minimum Net Worth requirement set forth in Section 3.1 and the minimum Liquidity requirement set forth in Section 3.2. Such annual financial statement shall be accompanied by a certificate in substantially the form of Exhibit B attached hereto (the "Financial Statement Certificate").
(b) Interim Financial Statements. In addition to the annual financial statements required under clause (a) above, Lender may request interim personal financial statements of Guarantor no more frequently than once per calendar quarter, which Guarantor shall deliver to Lender within thirty (30) days after receipt of such request. Such interim financial statements shall be in form and substance reasonably satisfactory to Lender and shall be certified by Guarantor as true, correct, and complete in all material respects as of the date thereof.
(c) Supporting Documentation. Guarantor shall deliver, together with any financial statement required hereunder, such supporting documentation as Lender may reasonably request, including, without limitation, copies of brokerage account statements, bank statements, tax returns (including all schedules and attachments thereto), and schedules of real estate and other assets and liabilities.
Section 3.4 — Breach of Financial Covenants
Any breach of Section 3.1 or Section 3.2 of this Guaranty that continues uncured for a period of thirty (30) days after written notice from Lender to Guarantor specifying such breach shall constitute a default under this Guaranty (a "Financial Covenant Default"). Upon the occurrence of a Financial Covenant Default, Lender shall be entitled to exercise all rights and remedies available to Lender under this Guaranty, under the Loan Documents, and at law or in equity, including, without limitation, declaring the occurrence of an Event of Default under the Loan Agreement and exercising all remedies available thereunder. For the avoidance of doubt, a Financial Covenant Default shall not, in and of itself, trigger full recourse liability under Section 2.1, but shall constitute a separate default under this Guaranty giving rise to the remedies described in Article 9 hereof.
ARTICLE 4 — WAIVERS
Section 4.1 — General Waivers
Guarantor hereby absolutely, unconditionally, and irrevocably waives each of the following, to the fullest extent permitted by applicable law:
(a) Notice of acceptance of this Guaranty by Lender. Guarantor acknowledges that this Guaranty is effective upon execution and delivery by Guarantor without any requirement of notice of acceptance, and that Lender may rely upon this Guaranty without any such notice.
(b) Presentment, demand for payment, protest, and notice of dishonor or nonpayment with respect to any of the Guaranteed Obligations or any instrument or agreement evidencing or relating thereto.
(c) Notice of any default or Event of Default under the Loan Documents or under this Guaranty, except to the extent expressly required by the terms of this Guaranty (including, without limitation, the notice requirement in Section 3.4).
(d) Notice of any amendment, modification, supplement, restatement, extension, renewal, or rearrangement of any of the Loan Documents, or any increase or decrease in the principal amount of the Loan, any change in the interest rate applicable to the Loan, any change in the maturity date of the Loan, or any other change in the terms or conditions of the Loan or any Loan Document.
(e) Any requirement that Lender exhaust any right, power, or remedy, or proceed against Borrower, any other guarantor or indemnitor, any other person or entity, or any collateral or security for the Loan before proceeding against Guarantor under this Guaranty. Guarantor hereby expressly waives any and all rights of marshaling, any right to require Lender to proceed in any particular order of resort, and any right to direct the application of any proceeds of any collateral or security.
(f) Any defense based upon Lender's election of remedies, including, without limitation, any defense arising under or relating to any anti-deficiency statute or law, any one-action rule, any single-satisfaction rule, or any similar law or legal principle to the extent applicable under the laws of the State of New York or any other jurisdiction, including, without limitation, Section 1301 of the New York Real Property Actions and Proceedings Law or any successor provision.
(g) Any and all suretyship defenses and defenses in the nature thereof, including, without limitation, any defense based upon impairment of collateral, failure of consideration, release of a co-obligor, extension of time for payment, variation of the terms of the Loan, or any other act or omission of Lender that might otherwise constitute a legal or equitable discharge or defense of a guarantor or surety.
Section 4.2 — Waivers of Subrogation, Contribution, and Reimbursement
Until such time as the Loan has been indefeasibly repaid and satisfied in full and all of the Guaranteed Obligations have been fully performed and discharged, Guarantor hereby unconditionally and irrevocably waives (a) any right of subrogation that Guarantor may have against Borrower or any other person or entity with respect to the Guaranteed Obligations, whether arising by contract, operation of law (including, without limitation, under Section 509 of the Bankruptcy Code or any comparable provision of state law), or otherwise, (b) any right of contribution that Guarantor may have against any other guarantor, co-surety, or indemnitor of the Guaranteed Obligations, (c) any right of reimbursement, indemnification, or exoneration that Guarantor may have against Borrower, any other guarantor, or any other person or entity with respect to any payment made by Guarantor hereunder, and (d) any right to enforce any remedy that Lender now has or may hereafter have against Borrower, any other guarantor, or any other person or entity, and any benefit of, and any right to participate in, any security or collateral given to or for the benefit of Lender to secure repayment of the Loan. If, notwithstanding the foregoing waivers, Guarantor shall receive any payment or distribution on account of any such subrogation, contribution, or reimbursement right, Guarantor shall hold such payment or distribution in trust for the benefit of Lender and shall promptly remit the same to Lender to be applied to the Guaranteed Obligations in such order as Lender shall determine in its sole discretion.
Section 4.3 — Waiver of Statute of Limitations
To the fullest extent permitted by applicable law, Guarantor hereby waives the benefit of any and all statutes of limitations applicable to this Guaranty, the Guaranteed Obligations, or any enforcement proceeding hereunder. Guarantor acknowledges and agrees that no lapse of time or delay in the exercise by Lender of any right or remedy hereunder shall give rise to a defense based upon any applicable statute of limitations, statute of repose, or doctrine of laches.
ARTICLE 5 — CONSENTS
Section 5.1 — Modifications to Loan Documents
Guarantor hereby irrevocably consents to, and agrees that Guarantor's obligations under this Guaranty shall not be released, diminished, impaired, reduced, or in any way affected by, any of the following, whether occurring with or without notice to or further consent of Guarantor:
(a) Any amendment, modification, supplement, restatement, extension, renewal, refinancing, or rearrangement of any of the Loan Documents, whether material or immaterial, including, without limitation, any extension of the maturity date of the Loan (including any exercise by Borrower of the two (2) one-year extension options set forth in the Loan Agreement), any increase or decrease in the interest rate applicable to the Loan, any change in the amortization schedule, any modification of the cash management, reserve, or escrow requirements, any modification of the financial covenants applicable to Borrower, or any amendment of the transfer restrictions, SPE Requirements, or any other provision of any Loan Document.
(b) Any release, surrender, exchange, subordination, impairment, deterioration in value, or substitution of any collateral or security for the Loan or any portion thereof, including, without limitation, any release of the Mortgage or any other lien securing the Loan.
(c) Any release, discharge, or settlement of the obligations of any other guarantor, surety, or indemnitor of the Loan or any portion thereof, or any waiver of any default or Event of Default by any such person or entity.
(d) Any failure or delay by Lender in exercising any right, power, or remedy under the Loan Documents, this Guaranty, or applicable law, or any course of dealing between Lender and Borrower or between Lender and Guarantor.
(e) The invalidity, illegality, irregularity, or unenforceability of any Loan Document or any provision thereof, or the cessation from any cause whatsoever (other than full payment and performance) of the liability of Borrower under any Loan Document.
(f) Any change in the ownership, organizational structure, management, or control of Borrower, including, without limitation, any change in the identity of the members, managers, or managing member of Borrower, or any merger, consolidation, conversion, or reorganization of Borrower or any constituent entity thereof.
(g) The insolvency, bankruptcy, reorganization, dissolution, liquidation, winding up, or cessation of existence of Borrower, any constituent entity of Borrower, or any other guarantor or indemnitor.
Guarantor acknowledges and agrees that the foregoing consents are given knowingly and voluntarily, and that Guarantor has been advised by independent legal counsel with respect to the nature and effect of such consents.
ARTICLE 6 — REPRESENTATIONS AND WARRANTIES OF GUARANTOR
Guarantor hereby makes the following representations and warranties to Lender as of the date hereof, each of which shall survive the execution and delivery of this Guaranty:
Section 6.1 — Capacity and Authority
Guarantor represents and warrants that Guarantor is an individual with full legal capacity to execute, deliver, and perform this Guaranty and all obligations contemplated hereby. Guarantor is not a minor, and is not subject to any guardianship, conservatorship, or other proceeding that would limit or impair Guarantor's legal capacity. No consent, approval, authorization, or order of any court, governmental agency, or other person or entity is required in connection with the execution, delivery, or performance by Guarantor of this Guaranty.
Section 6.2 — Binding Obligation
This Guaranty has been duly executed and delivered by Guarantor and constitutes the legal, valid, and binding obligation of Guarantor, enforceable against Guarantor in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance, and similar laws affecting creditors' rights generally and general principles of equity (regardless of whether enforcement is sought in a proceeding at law or in equity).
Section 6.3 — No Conflicts
The execution, delivery, and performance by Guarantor of this Guaranty and the consummation of the transactions contemplated hereby do not and will not (a) violate any provision of any applicable law, statute, regulation, rule, order, writ, injunction, judgment, or decree of any court or governmental authority to which Guarantor is subject or by which Guarantor or any of Guarantor's assets may be bound, (b) conflict with, result in a breach of, or constitute a default (with or without notice or lapse of time, or both) under, any agreement, contract, indenture, mortgage, deed of trust, lease, license, or other instrument to which Guarantor is a party or by which Guarantor or any of Guarantor's assets may be bound, or (c) result in the creation or imposition of any lien, charge, or encumbrance upon any of Guarantor's assets, other than as contemplated by the Loan Documents.
Section 6.4 — Financial Condition
(a) The personal financial statements of Guarantor heretofore delivered to Lender on or prior to the date hereof (including, without limitation, the personal financial statement dated as of March 31, 2023) are true, complete, and correct in all material respects as of the respective dates thereof and fairly present the financial condition of Guarantor as of such dates. Such financial statements have been prepared in accordance with GAAP (or, in the case of a personal financial statement, on a basis consistent with the standard of presentation for personal financial statements) consistently applied. All assets and liabilities, whether direct or contingent, of Guarantor are reflected in such financial statements or in the notes thereto, except as otherwise expressly disclosed to Lender in writing.
(b) Since the date of the most recent personal financial statements delivered to Lender, no material adverse change has occurred in the financial condition, business, assets, liabilities, operations, or prospects of Guarantor. As of the date hereof, Guarantor satisfies the minimum Net Worth requirement of Fifteen Million and 00/100 Dollars ($15,000,000.00) set forth in Section 3.1 and the minimum Liquidity requirement of Three Million and 00/100 Dollars ($3,000,000.00) set forth in Section 3.2.
Section 6.5 — Litigation
There is no action, suit, proceeding, claim, arbitration, mediation, investigation, or inquiry pending or, to Guarantor's knowledge after due inquiry, threatened against Guarantor before any court, tribunal, governmental agency, arbitrator, or other body that (a) could reasonably be expected to result in a judgment, decree, or order materially and adversely affecting Guarantor's financial condition or Guarantor's ability to perform any of Guarantor's obligations under this Guaranty, or (b) questions the validity, binding effect, or enforceability of this Guaranty or any action taken or to be taken pursuant hereto.
Section 6.6 — No Bankruptcy
Guarantor has not filed, and is not contemplating filing, any petition for relief under Title 11 of the United States Code (the Bankruptcy Code) or any similar federal or state insolvency, reorganization, receivership, or debtor-relief law. Guarantor is not insolvent and the execution and delivery of this Guaranty will not render Guarantor insolvent. Guarantor is able to pay Guarantor's debts as they become due and the fair value of Guarantor's assets exceeds Guarantor's total liabilities (including contingent liabilities).
Section 6.7 — Benefit
Guarantor acknowledges and represents that Guarantor has derived and will derive substantial direct and indirect financial benefit from the making of the Loan by Lender to Borrower. Such benefit arises from, among other things, Guarantor's role as Founder and Managing Principal of Briarwood Family Office LLC, which holds a fifty percent (50%) Percentage Interest in Gramercy Linden JV LLC, the sole member of Borrower. Briarwood Family Office LLC contributed Seven Million and 00/100 Dollars ($7,000,000.00) in equity capital toward the acquisition of the Property, and the Loan proceeds are being used to finance the balance of such acquisition and related costs. Guarantor's financial interest in the successful operation of the Property and the repayment of the Loan is substantial, and the execution and delivery of this Guaranty is a reasonable and necessary condition to the making of the Loan. Guarantor has reviewed and is familiar with the terms and conditions of the Loan Documents and has had the opportunity to consult with independent legal and financial advisors of Guarantor's choosing regarding this Guaranty and the transactions contemplated hereby.
ARTICLE 7 — COVENANTS OF GUARANTOR
Guarantor hereby covenants and agrees with Lender as follows:
Section 7.1 — Maintenance of Financial Covenants
Guarantor shall at all times during the term of the Loan maintain the minimum Net Worth of not less than Fifteen Million and 00/100 Dollars ($15,000,000.00) and the minimum Liquidity of not less than Three Million and 00/100 Dollars ($3,000,000.00) as required by, and in accordance with, Article 3 of this Guaranty, and shall deliver to Lender the financial statements and certificates required under Section 3.3 within the time periods specified therein.
Section 7.2 — Notice of Material Adverse Change
Guarantor shall promptly (and in any event within ten (10) business days of obtaining knowledge thereof) notify Lender in writing of any event, condition, or circumstance that (a) results in, or could reasonably be expected to result in, a material adverse change in the financial condition, assets, liabilities, business, operations, or prospects of Guarantor, (b) causes or could reasonably be expected to cause Guarantor to fail to satisfy the financial covenants set forth in Article 3, (c) constitutes or could reasonably be expected to constitute a default or event of default under this Guaranty, or (d) involves the filing of any action, suit, proceeding, or claim against Guarantor (or the threat thereof, to Guarantor's knowledge) that could reasonably be expected to result in a judgment, decree, or order materially and adversely affecting Guarantor's financial condition or ability to perform hereunder.
Section 7.3 — Cooperation
Guarantor shall cooperate with Lender and shall provide such information, documentation, certificates, and other materials as Lender may reasonably request from time to time in connection with this Guaranty, the Guaranteed Obligations, or the financial condition of Guarantor. Without limiting the generality of the foregoing, Guarantor shall provide, upon reasonable request by Lender, (a) copies of federal, state, and local tax returns (including all schedules and attachments) for the most recently completed fiscal year, (b) schedules of real estate owned, (c) details regarding pending or threatened litigation, and (d) such other information as Lender may reasonably require to evaluate Guarantor's ongoing compliance with this Guaranty.
Section 7.4 — No Transfers of Assets to Avoid Obligations
Guarantor shall not, directly or indirectly, sell, transfer, convey, assign, gift, pledge, mortgage, hypothecate, encumber, or otherwise dispose of any assets or property if such transfer, conveyance, or disposition is made for the purpose of, or has the effect of, avoiding, hindering, delaying, or impairing Guarantor's ability to perform the Guaranteed Obligations or any other obligation under this Guaranty. Any such transfer or disposition made in violation of this Section 7.4 shall be voidable at the election of Lender to the fullest extent permitted by applicable law, including, without limitation, under the New York Uniform Voidable Transactions Act (N.Y. Debtor & Creditor Law, Article 10) or any successor statute.
ARTICLE 8 — ENVIRONMENTAL INDEMNITY
Section 8.1 — Environmental Indemnification
In addition to, and without limiting, the carveout obligations set forth in Section 2.2(e) of this Guaranty, Guarantor hereby agrees to indemnify, defend (with counsel reasonably acceptable to Lender), and hold harmless Lender and its successors, assigns, participants, officers, directors, shareholders, members, managers, employees, agents, attorneys, consultants, and representatives (each, an "Indemnified Party" and collectively, the "Indemnified Parties") from and against any and all Losses arising out of, resulting from, relating to, or in connection with any of the following:
(a) The presence, existence, release, discharge, threatened release, emission, disposal, generation, manufacture, storage, treatment, transport, or migration of any Hazardous Materials at, on, under, about, or from the Property, whether occurring before, on, or after the date hereof;
(b) Any actual or alleged violation of any Environmental Laws with respect to the Property or the operations conducted thereon, whether occurring before, on, or after the date hereof;
(c) Any investigation, assessment, remediation, cleanup, containment, monitoring, abatement, removal, or other response action relating to the presence or release of Hazardous Materials at, on, under, about, or from the Property, whether conducted voluntarily or pursuant to any order, directive, or requirement of any governmental authority;
(d) Any claim, demand, action, suit, proceeding, order, or directive by any governmental authority or any third party relating to Hazardous Materials or Environmental Laws with respect to the Property; and
(e) Any diminution in value of the Property resulting from the presence, release, or threatened release of Hazardous Materials at, on, under, about, or from the Property.
For informational purposes, Lender acknowledges that a Phase I Environmental Site Assessment (Report No. REC-2023-0287), prepared by Ridgecrest Environmental Consultants LLC under the direction of Dr. Karen Ishikawa, dated March 28, 2023, and delivered to Lender in connection with the origination of the Loan, identified no recognized environmental conditions with respect to the Property as of the date of such report. Notwithstanding the foregoing, the environmental indemnification obligations of Guarantor under this Section 8.1 are not limited by the findings of such Phase I report and shall extend to any and all environmental conditions at, on, under, about, or from the Property, whether existing prior to, on, or after the date hereof, to the extent Losses arise therefrom.
Section 8.2 — Survival
The environmental indemnification obligations of Guarantor under this Article 8 shall survive (a) the repayment in full of the Loan and the satisfaction, release, or discharge of the Mortgage, (b) any foreclosure of the Mortgage or acceptance by Lender of a deed in lieu of foreclosure, (c) any transfer of the Property, (d) any release, discharge, or satisfaction of this Guaranty with respect to the Carveout Obligations (other than the environmental indemnity obligations), and (e) any bankruptcy, insolvency, reorganization, dissolution, or similar proceeding involving Borrower, Guarantor, or any other person or entity. The obligations of Guarantor under this Article 8 are in addition to, and not in lieu of, any environmental indemnification obligations of Borrower or Guarantor under any other Loan Document or any separate environmental indemnity agreement.
ARTICLE 9 — REMEDIES
Section 9.1 — Lender's Remedies
Upon the occurrence of (a) any Full Recourse Carveout Event described in Section 2.1, (b) any Loss Carveout Event described in Section 2.2, (c) any Financial Covenant Default under Section 3.4, or (d) any other breach or default by Guarantor under this Guaranty (each, a "Guaranty Default"), Lender may, at its option and without notice to or demand upon Guarantor (except as otherwise expressly required by this Guaranty), exercise any and all rights and remedies available to Lender at law, in equity, or under the Loan Documents, including, without limitation, (i) commencing one or more actions or proceedings against Guarantor to recover the Guaranteed Obligations or any portion thereof, (ii) seeking specific performance of any obligation of Guarantor hereunder, (iii) exercising any right of set-off against any deposit accounts or other property of Guarantor held by Lender or any affiliate thereof, and (iv) pursuing any other remedy available at law or in equity.
Section 9.2 — Cumulative Remedies
All rights and remedies of Lender under this Guaranty, under the Loan Documents, and at law or in equity are cumulative and not exclusive of one another, and may be exercised singly, concurrently, successively, or in any combination, as Lender may determine in its sole discretion. No exercise of any right or remedy shall be deemed a waiver of, or preclude the exercise of, any other right or remedy. No delay or omission in exercising any right or remedy shall impair, limit, or constitute a waiver of such right or remedy.
Section 9.3 — Costs and Expenses
If Lender engages attorneys, consultants, or other professionals, or incurs any other costs or expenses, in connection with (a) the enforcement or attempted enforcement of this Guaranty or any provision hereof, (b) the collection or attempted collection of any amount due from Guarantor under this Guaranty, (c) the prosecution or defense of any action, suit, or proceeding arising out of or relating to this Guaranty, or (d) the protection or preservation of Lender's rights under this Guaranty, then Guarantor shall pay to Lender, on demand, all such reasonable costs and expenses, including, without limitation, reasonable attorneys' fees, court costs, filing fees, disbursements, and the reasonable fees and expenses of consultants, experts, and other professionals retained by Lender in connection therewith, together with interest on all such amounts from the date incurred until paid at the default rate specified in the Note.
ARTICLE 10 — MISCELLANEOUS
Section 10.1 — Governing Law
This Guaranty shall be governed by, and construed and interpreted in accordance with, the laws of the State of New York, without regard to any conflicts of law principles that would require the application of the laws of any other jurisdiction. Guarantor acknowledges that the Loan is being made in the State of New York, that the Property is located in the State of New York, and that the State of New York bears a reasonable relation to this Guaranty and the transactions contemplated hereby.
Section 10.2 — Jurisdiction and Venue
Guarantor hereby irrevocably and unconditionally (a) submits to the exclusive jurisdiction of the federal courts of the United States of America sitting in the Southern District of New York and the state courts of the State of New York sitting in the County of New York, Borough of Manhattan, for the purposes of any action, suit, or proceeding arising out of or relating to this Guaranty, (b) waives any objection that Guarantor may have to the laying of venue of any such action, suit, or proceeding in any such court, and (c) waives any claim or defense that any such court is an inconvenient forum for the maintenance of any such action, suit, or proceeding. Guarantor agrees that a final judgment in any such action, suit, or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Nothing in this Section 10.2 shall limit the right of Lender to commence proceedings against Guarantor in any court of competent jurisdiction or to serve process in any manner permitted by applicable law.
Section 10.3 — Waiver of Jury Trial
GUARANTOR AND LENDER EACH HEREBY KNOWINGLY, VOLUNTARILY, AND INTENTIONALLY WAIVE, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING, CLAIM, OR COUNTERCLAIM ARISING OUT OF OR IN ANY WAY RELATING TO THIS GUARANTY, THE GUARANTEED OBLIGATIONS, OR THE TRANSACTIONS CONTEMPLATED HEREBY, WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE. THIS WAIVER IS A MATERIAL INDUCEMENT FOR EACH PARTY'S AGREEMENT TO ENTER INTO THIS GUARANTY. EACH PARTY CERTIFIES THAT NO REPRESENTATIVE, AGENT, OR ATTORNEY OF THE OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER. EACH PARTY ACKNOWLEDGES THAT THIS WAIVER HAS BEEN MADE WITH THE ADVICE OF LEGAL COUNSEL.
Section 10.4 — Notices
All notices, requests, demands, consents, and other communications under this Guaranty shall be in writing and shall be deemed to have been duly given or made (a) when delivered personally, (b) when sent by nationally recognized overnight courier service (with proof of delivery), (c) five (5) business days after being mailed by certified or registered mail, return receipt requested, postage prepaid, or (d) when sent by electronic mail (with confirmation of receipt), in each case addressed as follows:
If to Guarantor:
Elliot J. Briarwood c/o Briarwood Family Office LLC 450 Park Avenue, 31st Floor New York, NY 10022
Email: ebriarwood@briarwoodfamilyoffice.com
If to Lender:
Pinnacle Fidelity Bank, National Association 383 Madison Avenue New York, NY 10179
Attention: Sandra Kim, Vice President, Commercial Real Estate Lending
Email: skim@pinnaclefidelitybank.com
With a copy to Lender's counsel:
Whitmore & Strauss LLP One Liberty Plaza, 46th Floor New York, NY 10006
Attention: David R. Novak, Esq.
Email: dnovak@whitmorestrauss.com
Either party may change its address for purposes of notices under this Guaranty by giving written notice of such change to the other party in accordance with this Section 10.4.
Section 10.5 — Successors and Assigns
This Guaranty shall be binding upon Guarantor and Guarantor's heirs, executors, administrators, personal representatives, successors, and assigns, and shall inure to the benefit of Lender and its successors, assigns, and participants. Lender may, without notice to or consent of Guarantor, sell, assign, transfer, negotiate, grant participations in, or otherwise dispose of all or any portion of the Loan, the Loan Documents, or this Guaranty, and in connection therewith may disclose to any prospective assignee, transferee, participant, or other person any information relating to Guarantor, Borrower, the Loan, or the Property. Guarantor may not assign or delegate any of Guarantor's obligations under this Guaranty without the prior written consent of Lender.
Section 10.6 — Amendments
No amendment, modification, supplement, restatement, or waiver of any provision of this Guaranty shall be effective unless the same shall be in writing and signed by Lender and Guarantor. No oral agreement or course of dealing shall be effective to amend, modify, or waive any provision of this Guaranty.
Section 10.7 — Severability
If any provision of this Guaranty is held to be invalid, illegal, or unenforceable in any respect by a court of competent jurisdiction, such invalidity, illegality, or unenforceability shall not affect any other provision of this Guaranty, and this Guaranty shall be construed as if such invalid, illegal, or unenforceable provision had never been contained herein. In lieu of any such invalid, illegal, or unenforceable provision, there shall be added automatically as a part of this Guaranty a provision that is as similar in terms to such invalid, illegal, or unenforceable provision as may be possible and still be valid, legal, and enforceable.
Section 10.8 — Entire Agreement
This Guaranty, together with the other Loan Documents, constitutes the entire agreement between Guarantor and Lender with respect to the subject matter hereof and supersedes all prior negotiations, discussions, agreements, understandings, representations, and warranties, whether oral or written, between Guarantor and Lender with respect to the subject matter hereof. There are no representations, warranties, covenants, agreements, or conditions with respect to the subject matter hereof except as expressly set forth in this Guaranty and the other Loan Documents.
Section 10.9 — No Waiver
No failure or delay by Lender in exercising any right, power, or remedy under this Guaranty shall operate as a waiver thereof, nor shall any single or partial exercise of any right, power, or remedy preclude any other or further exercise thereof or the exercise of any other right, power, or remedy. No waiver shall be effective unless in writing and signed by Lender. Any waiver granted by Lender with respect to one occasion or instance shall not operate as a waiver with respect to any other occasion or instance.
Section 10.10 — Counterparts
This Guaranty may be executed in any number of counterparts, each of which shall be deemed an original and all of which, taken together, shall constitute one and the same instrument. Delivery of an executed counterpart of a signature page to this Guaranty by facsimile transmission, electronic mail in portable document format (.pdf), or other electronic transmission shall be as effective as delivery of a manually executed counterpart.
Section 10.11 — Captions
The article, section, and subsection captions and headings used in this Guaranty are inserted for convenience of reference only and shall not be deemed to define, limit, extend, describe, or affect the meaning, scope, or interpretation of any provision of this Guaranty.
Section 10.12 — Loan Reference
For purposes of identification and cross-reference, the following information is set forth:
[Remainder of page intentionally left blank. Signature pages follow.]
SIGNATURE PAGE TO NON-RECOURSE CARVEOUT GUARANTY
IN WITNESS WHEREOF, Guarantor has duly executed and delivered this Non-Recourse Carveout Guaranty as of the date first written above.
GUARANTOR:
________________________________________
Elliot J. Briarwood, individually
Date: June 5, 2023
ACKNOWLEDGMENT
STATE OF NEW YORK ) ) ss.: COUNTY OF NEW YORK )
On this 5th day of June, 2023, before me, the undersigned, a Notary Public in and for the State of New York, personally appeared Elliot J. Briarwood, personally known to me or proved to me on the basis of satisfactory evidence to be the individual whose name is subscribed to the within instrument, and acknowledged to me that he executed the same in his individual capacity, and that by his signature on the instrument, the individual, or the person upon behalf of which the individual acted, executed the instrument.
________________________________________
Notary Public, State of New York
Print Name: ________
Commission Expires: ________
[NOTARIAL SEAL]
ACCEPTED AND AGREED BY LENDER:
LENDER:
PINNACLE FIDELITY BANK, NATIONAL ASSOCIATION
By: ________
Name: Sandra Kim
Title: Vice President, Commercial Real Estate Lending
Date: June 5, 2023