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Contract analysis Extract to table

EXECUTION VERSION

TRANSITION SERVICES AGREEMENT

dated as of

June 6, 2024

by and between

ARGYLE PROPERTY SERVICES LLC

a Delaware limited liability company

("Service Provider")

and

FAIRWATER PROPERTY MANAGEMENT LLC

a Maryland limited liability company

("Recipient")

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TRANSITION SERVICES AGREEMENT

This TRANSITION SERVICES AGREEMENT (this "Agreement") is made and entered into as of June 6, 2024 (the "Effective Date"), by and between Argyle Property Services LLC, a Delaware limited liability company ("Service Provider"), having its principal office at 3300 Peachtree Road NE, Suite 2200, Atlanta, Georgia 30326, and Fairwater Property Management LLC, a Maryland limited liability company ("Recipient"), having its principal office at 7200 Chesapeake Parkway, Suite 1150, Columbia, Maryland 21044.

RECITALS

WHEREAS, Greystone Meridian Partners Fund III, L.P., a Delaware limited partnership ("Seller"), whose sole general partner is Greystone Meridian Capital LLC, a Delaware limited liability company, was the sole member and owner of 100% of the membership interests in fourteen (14) single-purpose Delaware limited liability companies (each, a "Target Entity" and collectively, the "Target Entities"), each of which owns a logistics or office property located in the Sun Belt region of the United States, specifically in the states of Georgia, Texas, Florida, Tennessee, and North Carolina, comprising in the aggregate approximately 5,224,000 rentable square feet across ten (10) logistics properties (approximately 4,373,000 rentable square feet) and four (4) office properties (approximately 851,000 rentable square feet), encumbered by eighty-seven (87) tenant leases with a weighted-average occupancy of 93.2% as of December 31, 2023, and aggregate annual in-place base rent of approximately $74,800,000 (the "Portfolio");

WHEREAS, Fairwater Real Estate Investment Trust, a Maryland real estate investment trust listed on the New York Stock Exchange under the ticker symbol "FREIT" and headquartered at 7200 Chesapeake Parkway, Suite 1100, Columbia, Maryland 21044 ("Buyer"), entered into that certain Purchase and Sale Agreement dated as of February 28, 2024, as amended by the First Amendment thereto dated as of April 12, 2024, and the Second Amendment thereto dated as of May 28, 2024 (as so amended, the "PSA"), with Seller, pursuant to which Buyer agreed to acquire, and Seller agreed to sell, 100% of the membership interests in each of the fourteen (14) Target Entities for an aggregate purchase price of One Billion One Hundred Million Dollars ($1,100,000,000), and such acquisition was consummated on June 6, 2024 (the "Closing Date");

WHEREAS, Service Provider is an affiliate of Seller and, prior to the Closing Date, served as the property manager for all fourteen (14) properties owned by the Target Entities (the "Properties"), with Sean Kilpatrick serving as Portfolio Manager for Service Provider with day-to-day oversight responsibility for the Properties and the Portfolio;

WHEREAS, Recipient is a wholly owned subsidiary of Buyer and has been designated by Buyer as the entity responsible for assuming full property management responsibility for all fourteen (14) Properties following the transition contemplated hereby, with Leah Torrance, Senior Vice President, Asset Management, designated to oversee portfolio management for Recipient upon completion of the transition;

WHEREAS, the parties desire to provide for an orderly transition of property management operations, accounting systems, vendor relationships, tenant communications, and all related management functions from Service Provider to Recipient over a period of ninety (90) calendar days following the Closing Date, in accordance with the terms and conditions set forth herein; and

WHEREAS, this Agreement is executed in the form contemplated by Exhibit L to the PSA and in satisfaction of the obligations of the parties thereunder with respect to the provision of transition services.

NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

ARTICLE 1 — DEFINITIONS

Section 1.1 — Defined Terms. As used in this Agreement, the following terms shall have the meanings set forth below:

"Agreement" means this Transition Services Agreement, including all Schedules and exhibits attached hereto, as the same may be amended, modified, or supplemented from time to time in accordance with the terms hereof.

"Buyer" means Fairwater Real Estate Investment Trust, a Maryland real estate investment trust.

"Closing Date" means June 6, 2024, the date on which the transactions contemplated by the PSA were consummated.

"Confidential Information" has the meaning set forth in Section 9.1.

"Expiration Date" means September 4, 2024, being the date that is ninety (90) calendar days after the Closing Date, unless the Transition Services Period is earlier terminated or extended in accordance with Article 7.

"Leases" means the eighty-seven (87) tenant leases across the Portfolio, as more fully described in the rent rolls delivered pursuant to the PSA.

"Major Tenants" means those tenants occupying space in the Properties having annual base rent equal to or greater than One Million Five Hundred Thousand Dollars ($1,500,000) per annum, as further described in Section 2.6.

"Monthly Service Fee" means Three Hundred Seventy-Five Thousand Dollars ($375,000) per month, payable in accordance with Article 3.

"Operating Accounts" means the bank accounts maintained by the Target Entities at Magnolia Commerce Bank, N.A., a national banking association having its principal office at 225 Peachtree Street NE, Suite 100, Atlanta, Georgia 30303 (contact: Linda Prescott, Vice President, Commercial Banking), including all operating accounts, security deposit accounts, and reserve accounts held in the name of or for the benefit of any Target Entity.

"Properties" means the fourteen (14) real properties owned by the Target Entities, as listed and more fully described on Schedule A attached hereto, together with all improvements, fixtures, and appurtenances thereto.

"PSA" means the Purchase and Sale Agreement dated as of February 28, 2024, by and between Seller and Buyer, as amended by the First Amendment thereto dated as of April 12, 2024, and the Second Amendment thereto dated as of May 28, 2024.

"Recipient Personnel" means the employees and contractors of Recipient assigned to receive the Transition Services, including Leah Torrance, Senior Vice President, Asset Management, as Recipient's primary point of contact.

"Security Deposits" means the aggregate tenant security deposits of Four Million Two Hundred Eighty-Three Thousand Dollars ($4,283,000) held in Target Entity bank accounts as of the Closing Date.

"Seller" means Greystone Meridian Partners Fund III, L.P., a Delaware limited partnership.

"Service Contracts" means the sixty-three (63) property-level service contracts identified on Exhibit I to the PSA, including all amendments, modifications, and supplements thereto.

"Service Provider Personnel" means the employees and contractors of Service Provider assigned to provide the Transition Services, including Sean Kilpatrick (Portfolio Manager) as Service Provider's primary point of contact.

"Target Entities" means the fourteen (14) Delaware limited liability companies listed on Schedule A attached hereto, each of which is the owner of one of the Properties.

"Total Service Fee" means One Million One Hundred Twenty-Five Thousand Dollars ($1,125,000), being the aggregate of three (3) Monthly Service Fee payments of Three Hundred Seventy-Five Thousand Dollars ($375,000) each, payable over the Transition Services Period.

"Transition Completion Certificate" means a certificate executed by both parties confirming the completion of all Transition Services or identifying any remaining open items and agreed-upon remediation steps, substantially in the form contemplated by Section 5.4.

"Transition Plan" has the meaning set forth in Section 5.1.

"Transition Services" means the services to be provided by Service Provider to Recipient during the Transition Services Period, as described in Article 2 and Schedule B attached hereto.

"Transition Services Period" means the period of ninety (90) calendar days commencing on the Closing Date and expiring on the Expiration Date, unless earlier terminated or extended pursuant to Article 7.

Section 1.2 — Rules of Construction. Unless the context otherwise requires: (a) the headings and captions used in this Agreement are inserted for convenience of reference only and shall not affect the interpretation of this Agreement; (b) the word "including" (and its correlatives) means "including without limitation"; (c) references to "days" mean calendar days unless the term "business days" is expressly used; (d) references to "business days" mean days other than Saturdays, Sundays, and days on which commercial banks in New York, New York are authorized or required by law to close; (e) references to currency mean lawful money of the United States of America; (f) words in the singular include the plural and vice versa; (g) references to any agreement or document mean such agreement or document as amended, modified, or supplemented from time to time in accordance with its terms; (h) references to any law, statute, or regulation include any amendments, modifications, or successor legislation thereto; and (i) references to "Sections," "Articles," and "Schedules" are to Sections, Articles, and Schedules of this Agreement.

ARTICLE 2 — TRANSITION SERVICES

Section 2.1 — Scope of Services. During the Transition Services Period, Service Provider shall provide the Transition Services described in this Article 2 and in Schedule B attached hereto, in each case subject to the terms and conditions of this Agreement. Service Provider shall provide the Transition Services in a manner consistent with the standard of care exercised by Service Provider in managing the Properties during the twelve (12)-month period prior to the Closing Date. Service Provider shall cooperate fully and in good faith with Recipient and Recipient Personnel to ensure an orderly and efficient transition of all property management operations, accounting systems, vendor relationships, tenant communications, and related management functions from Service Provider to Recipient. Without limiting the foregoing, Service Provider shall make Sean Kilpatrick reasonably available to Recipient and Recipient Personnel throughout the Transition Services Period for purposes of consultation, coordination, knowledge transfer, and the resolution of any questions or issues arising in connection with the Transition Services.

Section 2.2 — Property Management Services. During the Transition Services Period, Service Provider shall continue to provide day-to-day property management operations for all fourteen (14) Properties, including the following:

(a) Building Operations and Maintenance. Service Provider shall continue to oversee and manage the day-to-day operations, maintenance, and repair of all buildings, structures, grounds, parking facilities, and common areas at each Property, in a manner consistent with past practice and in accordance with prudent property management standards.

(b) On-Site Personnel. Service Provider shall continue to oversee and manage all on-site personnel at each Property, including engineering, security, janitorial, and maintenance staff, and shall maintain staffing levels consistent with those maintained during the twelve (12)-month period prior to the Closing Date.

(c) Emergency Response and After-Hours Coverage. Service Provider shall maintain emergency response protocols and after-hours coverage for all Properties, consistent with past practice, and shall promptly notify Recipient of any emergency condition or event at any Property.

(d) Tenant Work Order Management. Service Provider shall continue to receive, process, and respond to tenant work orders and maintenance requests in a timely manner consistent with the terms of the applicable Leases and past practice.

(e) Common Area Maintenance. Service Provider shall continue to manage and maintain all common areas at each Property, including lobbies, hallways, restrooms, elevators, loading docks, parking areas, and landscaped areas, in a manner consistent with past practice.

(f) Service Contract Management. Service Provider shall continue to administer and manage the sixty-three (63) Service Contracts, including oversight of vendor performance, approval of invoices, and coordination of scheduled services, pending the completion of the vendor contract novation process described in Section 2.5.

(g) Tenant Billings and Collections. Service Provider shall continue to process tenant billings, rent collections, and operating expense recoveries in accordance with the terms of the Leases and applicable law, and shall remit all collected amounts to the Operating Accounts in accordance with Recipient's instructions.

(h) Lease Compliance. Service Provider shall continue to monitor tenant lease compliance and enforce lease obligations in the ordinary course of business, including monitoring of tenant insurance certificate compliance, co-tenancy requirements, and use restrictions.

(i) Vendor Coordination. Service Provider shall continue to coordinate with existing vendors and contractors in the ordinary course of business and shall facilitate introductions between such vendors and Recipient Personnel in connection with the transition.

Service Provider shall continue managing the Properties in accordance with existing management standards and past practice pending the full handover of management responsibilities to Recipient. Notwithstanding the foregoing, Service Provider shall not, without Recipient's prior written consent, (i) enter into any new leases or lease amendments, (ii) modify, amend, or terminate any existing Lease, (iii) execute any new service contracts, or (iv) authorize or commit to any capital expenditure in excess of Twenty-Five Thousand Dollars ($25,000) per Property.

Section 2.3 — Accounting Transition Services. Service Provider shall provide the following accounting and financial transition services during the Transition Services Period:

(a) Financial Records Transfer. Service Provider shall transfer and migrate all property-level financial records, general ledgers, accounts payable records, accounts receivable records, and reporting systems from Service Provider's accounting platform to Recipient's accounting platform or such other platform as Recipient may designate. Service Provider shall cooperate with Recipient's information technology personnel and third-party vendors in connection with such migration.

(b) Monthly Financial Statements. Service Provider shall prepare and deliver to Recipient monthly financial statements for each Property and each Target Entity for the period from the Closing Date through the Expiration Date, in such form and detail as is consistent with Service Provider's past practice, including income statements, balance sheets, cash flow statements, rent rolls, aged accounts receivable reports, and variance analyses against approved budgets.

(c) Post-Closing Proration True-Up. Service Provider shall cooperate with Recipient and Recipient's accounting advisors, Ashford Prewitt LLP (engagement partner: Martin Ashford, CPA; tax partner: Naomi Ikeda, CPA), in connection with the preparation and finalization of the post-closing proration true-up calculations required under the PSA, including the final proration statement, which is due within ninety (90) days of the Closing Date (i.e., by September 4, 2024).

(d) CAM/OpEx Reconciliation. Service Provider shall cooperate with Recipient in the reconciliation of common area maintenance charges and operating expense pass-throughs for the current and prior calendar years, with an estimated reconciliation reserve of One Million Eight Hundred Fifty Thousand Dollars ($1,850,000).

(e) Real Property Tax Proration. Service Provider shall cooperate with Recipient in the preparation and analysis of real property tax prorations for the fourteen (14) Properties. Estimated annual real property taxes for the 2024 tax year are Fourteen Million Seven Hundred Sixty Thousand Dollars ($14,760,000). Seller's share of real property taxes, prorated through the Closing Date (June 6, 2024), is estimated at Six Million Three Hundred Thirty-Two Thousand Nine Hundred Fifty-One Dollars ($6,332,951).

(f) Security Deposit Reconciliation. Service Provider shall cooperate with Recipient in the reconciliation of all tenant security deposits, including verification that aggregate security deposits of Four Million Two Hundred Eighty-Three Thousand Dollars ($4,283,000) are properly accounted for and held in the appropriate Target Entity bank accounts.

(g) Delivery of Records. Service Provider shall transfer and deliver to Recipient all electronic and hard-copy financial records, tenant files, lease abstracts, and historical operating data in Service Provider's possession or control relating to the Properties and the Target Entities.

(h) Tax Filing Cooperation. Service Provider shall cooperate with Buyer's tax advisors in connection with state income and franchise tax filing obligations of the Target Entities in the states of Georgia, Texas, Florida, Tennessee, and North Carolina for any pre-closing or stub-period tax years.

Section 2.4 — Operating Account Transition. Service Provider shall cooperate with Recipient in transitioning signatory authority and operational control of all Operating Accounts at Magnolia Commerce Bank, N.A. to Recipient or its designees, in accordance with the following:

(a) Service Provider shall assist Recipient in preparing and submitting all documentation required by Magnolia Commerce Bank, N.A. to effect the transfer of signatory authority on all Operating Accounts, including corporate resolutions, signature cards, and beneficial ownership certifications.

(b) If Recipient elects to open new operating accounts at a different financial institution, Service Provider shall cooperate with the orderly transfer of funds from the existing Operating Accounts to such new accounts.

(c) The target completion date for the operating account transition is thirty (30) days after the Closing Date (i.e., by July 6, 2024).

(d) During the operating account transition period, Service Provider shall continue to process rent collections and pay operating expenses from the existing Operating Accounts, in each case in accordance with Recipient's written instructions and Recipient-approved budgets. Service Provider shall not make any disbursements from the Operating Accounts other than in the ordinary course of business and in accordance with such instructions, without Recipient's prior written consent.

Section 2.5 — Vendor Contract Novation. Service Provider shall cooperate with Recipient in novating, assigning, or terminating the sixty-three (63) Service Contracts, as follows:

(a) Contracts to Be Novated or Assigned. For each Service Contract that Recipient elects to continue, Service Provider shall (i) provide introductions between Recipient Personnel and the applicable vendor, (ii) deliver to Recipient copies of all such contracts and any amendments, supplements, or side letters thereto, and (iii) assist in the preparation and execution of novation agreements, assignment and assumption agreements, or such other documentation as may be necessary to effect the transfer of such contracts to Recipient or the applicable Target Entity.

(b) Contracts to Be Terminated. For each Service Contract that Recipient elects to terminate, Service Provider shall, at Recipient's direction, issue termination notices in accordance with the terms of the applicable contract. Pursuant to the Service Contract Review Memorandum prepared by Calderwood & Harkness LLP, twelve (12) Service Contracts have been recommended for post-closing termination, and Service Provider shall cooperate with Recipient in effecting such terminations in an orderly manner.

(c) Vendor Contact Information. Service Provider shall provide Recipient with a complete list of all vendor contacts, account numbers, service schedules, and relevant account history for each Property, organized by Property and service category.

(d) Target Completion. All novations, assignments, and terminations of Service Contracts shall be substantially completed by the Expiration Date.

Section 2.6 — Tenant Communication and Coordination. Service Provider shall cooperate with Recipient in implementing the tenant notification and relationship transition process, as follows:

(a) Tenant Notification Letters. Tenant notification letters, in the form and pursuant to the distribution list prepared by Calderwood & Harkness LLP, were distributed on June 7, 2024, to all eighty-seven (87) tenants, notifying each tenant of the change of ownership to Fairwater Real Estate Investment Trust and identifying Fairwater Property Management LLC as the new property management contact. Service Provider shall cooperate with Recipient in responding to any tenant inquiries arising from such notifications.

(b) Major Tenant Introductions. Service Provider shall facilitate introductions between Recipient Personnel and key tenant contacts, with particular emphasis on the Major Tenants, which include:

(i) Cascade Supply Chain Solutions Inc. — occupying approximately 624,000 rentable square feet at Westlake Distribution Hub, Houston, Texas; annual base rent of approximately $8,736,000 (representing approximately 11.7% of total Portfolio annual base rent);

(ii) Zynvaro Distribution Holdings LLC — occupying approximately 538,000 rentable square feet at Katy Freeway Logistics Park, Katy, Texas; annual base rent of approximately $7,532,000 (representing approximately 10.1% of total Portfolio annual base rent);

(iii) Thornton-Whitaker Pharmaceuticals Corp. — occupying approximately 412,000 rentable square feet at Fairfield Logistics Center I, Fairburn, Georgia; annual base rent of approximately $6,180,000 (representing approximately 8.3% of total Portfolio annual base rent);

(iv) Birchwood Technology Group Inc. — occupying approximately 218,000 rentable square feet at SouthPark Corporate Center, Charlotte, North Carolina; annual base rent of approximately $5,668,000 (representing approximately 7.6% of total Portfolio annual base rent); and

(v) Atlas Freight Logistics Corp. — occupying approximately 410,000 rentable square feet at Southport Logistics Park, Jacksonville, Florida; annual base rent of approximately $5,330,000 (representing approximately 7.1% of total Portfolio annual base rent).

(c) Pending Tenant Matters. Service Provider shall coordinate with Recipient regarding any pending tenant requests, maintenance issues, lease administration matters, or disputes, and shall provide Recipient with a comprehensive summary of all such pending matters within ten (10) business days of the Closing Date.

(d) Post-Closing SNDAs. Service Provider shall cooperate with Recipient and Seller in connection with the delivery of the four (4) remaining Major Tenant subordination, non-disturbance, and attornment agreements ("SNDAs") that had not been received as of the Closing Date. Such SNDAs are required to be delivered within thirty (30) days of the Closing Date (i.e., by July 6, 2024), and a holdback of Two Hundred Thousand Dollars ($200,000) from the purchase price is to be released to Seller upon delivery of all four (4) SNDAs in accordance with the terms of the PSA. Service Provider shall use commercially reasonable efforts to facilitate the execution and delivery of such SNDAs.

Section 2.7 — Insurance Transition. Service Provider shall cooperate with Recipient in effecting the transition of insurance coverage for the Properties from Service Provider's existing insurance programs to Recipient's new insurance policies, as follows:

(a) Recipient has procured replacement property and casualty insurance coverage for the Properties through Ironclad Indemnity Insurance Company, 500 College Road East, Princeton, New Jersey 08540, as brokered by Hartwick Gunderson & Associates, Inc. (account executive: Peter Langford), effective as of the Closing Date.

(b) Service Provider shall assist Recipient and Recipient's insurance broker with providing loss-run history, claims information, underwriting data, and property condition data as reasonably required by Recipient's insurance carrier in connection with the placement or renewal of insurance coverage for the Properties.

(c) Service Provider shall cooperate with Recipient in the orderly wind-down of any existing insurance policies maintained by Service Provider or Seller with respect to the Properties, including the submission of any final claims or the assignment of any pending claims, as applicable.

Section 2.8 — Information Technology and Systems. Service Provider shall provide the following information technology transition services during the Transition Services Period:

(a) Service Provider shall provide Recipient with access to all property management software, databases, tenant portals, building management systems, and other technology platforms used by Service Provider in managing the Properties, including user credentials and administrative access as reasonably necessary.

(b) Service Provider shall cooperate with Recipient and Recipient's information technology personnel in the migration of all data from Service Provider's systems to Recipient's designated systems, including tenant databases, financial records, work order histories, vendor records, and maintenance logs.

(c) Service Provider shall maintain access to its existing technology systems for Recipient's use during the Transition Services Period and shall not deactivate, delete, or modify any data or systems relating to the Properties without Recipient's prior written consent.

Section 2.9 — Regulatory and Compliance Transition. Service Provider shall cooperate with Recipient in connection with any regulatory filings, permits, licenses, or compliance obligations that are required to be updated to reflect the change of ownership of the Target Entities and the Properties, as follows:

(a) Service Provider shall assist Recipient in identifying and updating all business licenses, fire and safety permits, elevator certificates, occupancy permits, and other governmental approvals and registrations applicable to the Properties.

(b) Service Provider shall deliver to Recipient all environmental reports, including Phase I Environmental Site Assessment reports prepared by Trident Environmental Group LLC (senior environmental scientist: Rachel Kwan), and any ongoing environmental monitoring documentation, data, or correspondence relating to the Properties.

(c) Without limiting the generality of the foregoing, Service Provider shall deliver to Recipient all documentation relating to the two (2) Properties identified as having de minimis recognized environmental conditions ("RECs"): (i) Westlake Distribution Hub, Houston, Texas, and (ii) Lakeland Crossings Industrial, Lakeland, Florida. Service Provider shall provide Recipient with all monitoring reports, correspondence with governmental agencies, and remediation documentation, if any, relating to such conditions.

ARTICLE 3 — SERVICE FEES AND PAYMENT

Section 3.1 — Monthly Service Fee. In consideration of Service Provider's provision of the Transition Services, Recipient shall pay Service Provider a Monthly Service Fee of Three Hundred Seventy-Five Thousand Dollars ($375,000), payable in arrears on the first business day of each calendar month following the month in which services were rendered, in accordance with the payment schedule set forth on Schedule D attached hereto. The Total Service Fee for the Transition Services Period is One Million One Hundred Twenty-Five Thousand Dollars ($1,125,000), representing three (3) monthly payments of Three Hundred Seventy-Five Thousand Dollars ($375,000) each. For the avoidance of doubt, the Monthly Service Fee is a fixed fee payable for each monthly period during the Transition Services Period, commencing on the Closing Date, regardless of any partial-month proration, for a total of One Million One Hundred Twenty-Five Thousand Dollars ($1,125,000).

Section 3.2 — Payment Method. All payments due under this Agreement shall be made by wire transfer of immediately available funds to Service Provider's designated account at Magnolia Commerce Bank, N.A., in accordance with wire instructions to be provided by Service Provider to Recipient under separate cover prior to the first payment due date. Recipient shall provide Service Provider with reasonable advance notice of each wire transfer and shall include appropriate reference information to facilitate prompt identification and application of each payment.

Section 3.3 — Reimbursable Expenses. In addition to the Monthly Service Fee, Recipient shall reimburse Service Provider for reasonable, documented out-of-pocket expenses actually incurred by Service Provider in connection with the provision of the Transition Services, provided that (a) such expenses are pre-approved in writing by Recipient (or Recipient's designated representative, Leah Torrance) prior to being incurred, (b) Service Provider submits reasonably detailed invoices and supporting documentation for such expenses, and (c) such expenses are not duplicative of costs already covered by the Monthly Service Fee. For the avoidance of doubt, reimbursable expenses shall not include Service Provider's ordinary overhead, salaries, benefits, or general operating costs, all of which are deemed included in the Monthly Service Fee.

Section 3.4 — Taxes. All amounts payable by Recipient under this Agreement are exclusive of any applicable sales, use, value-added, or similar transactional taxes. To the extent that any such taxes are imposed on the Transition Services or the fees payable hereunder, such taxes shall be borne by Recipient and shall be invoiced by Service Provider as a separate line item, accompanied by appropriate documentation. For the avoidance of doubt, each party shall be responsible for its own income, franchise, and employment taxes.

Section 3.5 — Late Payment. Any amount due under this Agreement that is not paid when due shall bear interest from the date such payment was due until the date of actual payment at a rate equal to the lesser of (i) one and one-half percent (1.5%) per month (or any portion thereof) and (ii) the maximum rate of interest permitted by applicable law. The accrual of interest under this Section 3.5 shall not constitute a waiver of any other rights or remedies available to Service Provider with respect to such late payment.

ARTICLE 4 — SERVICE PROVIDER PERSONNEL

Section 4.1 — Key Personnel. Service Provider shall designate Sean Kilpatrick (Portfolio Manager) as the primary point of contact and project manager for the Transition Services. Mr. Kilpatrick shall be responsible for coordinating the delivery of all Transition Services, maintaining regular communication with Recipient Personnel, overseeing the work of Service Provider Personnel assigned to the Transition Services, and ensuring compliance with the milestones and deliverables set forth in the Transition Plan. Service Provider shall maintain adequate staffing levels at each Property during the Transition Services Period, consistent with the staffing levels maintained by Service Provider during the twelve (12)-month period prior to the Closing Date. Service Provider shall not reassign, transfer, or terminate any key on-site personnel (including property managers, chief engineers, and senior building engineers) without providing Recipient with at least ten (10) business days' prior written notice and an opportunity to consult with Service Provider regarding the proposed change.

Section 4.2 — Recipient's Key Personnel. Recipient designates Leah Torrance (Senior Vice President, Asset Management / Senior Vice President, Operations) as Recipient's primary point of contact for all matters relating to the Transition Services. Ms. Torrance shall be responsible for coordinating Recipient's receipt of the Transition Services, directing the activities of Recipient Personnel, and communicating Recipient's instructions and priorities to Service Provider. Recipient shall provide adequate and qualified personnel to receive knowledge transfer from Service Provider, participate in training sessions, attend on-site walkthroughs, and progressively assume management responsibilities for the Properties during the Transition Services Period.

Section 4.3 — Independent Contractor Relationship. The parties acknowledge and agree that Service Provider is an independent contractor and not an employee, agent, joint venturer, or partner of Recipient or Buyer. All Service Provider Personnel are employees or contractors of Service Provider and not of Recipient or Buyer. Service Provider shall be solely responsible for the compensation, benefits, payroll taxes, and workers' compensation coverage of Service Provider Personnel. Nothing in this Agreement shall be construed to create a joint venture, partnership, agency, or employment relationship between the parties or between either party and the personnel of the other party.

ARTICLE 5 — TRANSITION MILESTONES AND REPORTING

Section 5.1 — Transition Plan. Within five (5) business days of the Closing Date (i.e., by June 13, 2024), Service Provider and Recipient shall mutually agree on a detailed Transition Plan setting forth the specific milestones, deliverables, responsible parties, and target completion dates for each category of Transition Services described in Article 2 and Schedule B. The Transition Plan shall address the sequencing and prioritization of transition activities, identify dependencies between service categories, and establish escalation procedures for the resolution of delays or issues. Upon agreement, the Transition Plan shall be attached as an amendment to Schedule B and shall be incorporated into this Agreement by reference. The parties shall review and update the Transition Plan as necessary during the course of the Transition Services Period.

Section 5.2 — Weekly Status Reports. Service Provider shall prepare and deliver to Recipient, no later than 5:00 p.m. Eastern Time each Friday during the Transition Services Period (or the next preceding business day if Friday is not a business day), a written status report summarizing the following:

(a) progress against the milestones and deliverables set forth in the Transition Plan, including percentage completion and any deviations from the target schedule;

(b) any issues, delays, risks, or impediments identified during the preceding week, together with proposed remediation actions and revised target dates, if applicable;

(d) the status of vendor contract novations, assignments, and terminations, including the number of contracts completed, in process, and remaining;

(e) the status of tenant communications and introductions, including any tenant issues or concerns raised during the preceding week; and

(f) any other matters reasonably requested by Recipient from time to time.

Section 5.3 — Monthly Transition Meetings. The parties shall conduct monthly in-person or video conference meetings to review the overall progress of the Transition Services, discuss any open issues or concerns, and agree on priorities and action items for the following month. Such meetings shall be attended at a minimum by Sean Kilpatrick (for Service Provider) and Leah Torrance (for Recipient), together with such other personnel as either party may designate. The first such meeting shall be scheduled no later than July 8, 2024, with subsequent meetings scheduled at approximately 30-day intervals thereafter. Service Provider shall prepare and circulate an agenda and any relevant materials at least two (2) business days in advance of each meeting.

Section 5.4 — Transition Completion Certificate. Upon the completion of all Transition Services (or upon the Expiration Date, whichever is earlier), the parties shall execute a Transition Completion Certificate confirming that (a) all Transition Services have been satisfactorily completed in accordance with this Agreement, or (b) identifying any remaining open items that have not been completed as of such date, together with a mutually agreed remediation plan specifying the steps to be taken, responsible parties, and target completion dates for each open item. The execution of the Transition Completion Certificate shall not release either party from any obligation under this Agreement that by its terms survives the expiration or termination of this Agreement.

ARTICLE 6 — STANDARD OF CARE; LIMITATION OF LIABILITY

Section 6.1 — Standard of Care. Service Provider shall perform the Transition Services with the same degree of care, skill, and diligence as Service Provider exercised in managing the Properties during the twelve (12)-month period prior to the Closing Date, and in accordance with (a) applicable federal, state, and local laws, rules, regulations, and ordinances, (b) prudent and customary property management practices in the markets in which the Properties are located, (c) the terms and conditions of the Leases, and (d) the terms and conditions of the Service Contracts. Service Provider acknowledges that Recipient is relying on Service Provider's expertise, knowledge, and familiarity with the Properties in entering into this Agreement.

Section 6.2 — Indemnification by Service Provider. Service Provider shall indemnify, defend, and hold harmless Recipient, Buyer, each Target Entity, and their respective members, managers, officers, directors, employees, agents, successors, and assigns (collectively, the "Recipient Indemnified Parties") from and against any and all losses, damages, liabilities, costs, and expenses (including reasonable attorneys' fees and court costs) (collectively, "Losses") arising out of, resulting from, or relating to:

(a) the gross negligence or willful misconduct of Service Provider or any Service Provider Personnel in performing or failing to perform the Transition Services;

(b) any material breach by Service Provider of any representation, warranty, covenant, or obligation of Service Provider under this Agreement; or

(c) any act or omission of Service Provider or any Service Provider Personnel that constitutes a violation of applicable law.

Section 6.3 — Indemnification by Recipient. Recipient shall indemnify, defend, and hold harmless Service Provider and its members, managers, officers, directors, employees, agents, successors, and assigns (collectively, the "Service Provider Indemnified Parties") from and against any and all Losses arising out of, resulting from, or relating to:

(a) the gross negligence or willful misconduct of Recipient or any Recipient Personnel;

(b) any material breach by Recipient of any representation, warranty, covenant, or obligation of Recipient under this Agreement; or

(c) any actions taken by Service Provider at Recipient's express written direction, to the extent such actions are the proximate cause of such Losses and do not involve the gross negligence or willful misconduct of Service Provider.

Section 6.4 — Limitation of Liability. IN NO EVENT SHALL EITHER PARTY'S AGGREGATE LIABILITY UNDER THIS AGREEMENT EXCEED THE TOTAL SERVICE FEE OF ONE MILLION ONE HUNDRED TWENTY-FIVE THOUSAND DOLLARS ($1,125,000), EXCEPT IN CASES OF GROSS NEGLIGENCE, WILLFUL MISCONDUCT, OR FRAUD. NEITHER PARTY SHALL BE LIABLE TO THE OTHER PARTY FOR ANY CONSEQUENTIAL, INCIDENTAL, INDIRECT, SPECIAL, EXEMPLARY, OR PUNITIVE DAMAGES ARISING UNDER OR IN CONNECTION WITH THIS AGREEMENT, REGARDLESS OF WHETHER SUCH DAMAGES WERE FORESEEABLE OR WHETHER THE PARTY AGAINST WHOM SUCH DAMAGES ARE CLAIMED HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES, EXCEPT IN CASES OF GROSS NEGLIGENCE, WILLFUL MISCONDUCT, OR FRAUD.

ARTICLE 7 — TERM AND TERMINATION

Section 7.1 — Term. This Agreement commences on the Closing Date (June 6, 2024) and shall continue in full force and effect until the Expiration Date (September 4, 2024), unless earlier terminated or extended in accordance with the provisions of this Article 7.

Section 7.2 — Early Termination by Recipient. Recipient may terminate this Agreement, in whole or in part, at any time upon not less than fifteen (15) days' prior written notice to Service Provider. Such termination may be effected on a service-category basis (as described in Schedule B) or on a Property-by-Property basis, in Recipient's sole discretion. In the event of any partial termination, the Monthly Service Fee shall be equitably reduced by mutual agreement of the parties to reflect the reduced scope of Transition Services being provided by Service Provider following such partial termination. If the parties are unable to agree on the appropriate reduction within five (5) business days after Recipient's delivery of a partial termination notice, the matter shall be resolved in accordance with the dispute resolution provisions of Article 12. Upon any early termination (whether in whole or in part), Recipient shall pay Service Provider for all Transition Services rendered and reimbursable expenses incurred through the effective date of such termination.

Section 7.3 — Termination for Cause. Either party may terminate this Agreement immediately upon written notice to the other party if:

(a) the other party commits a material breach of any representation, warranty, covenant, or obligation under this Agreement and fails to cure such breach within ten (10) business days after receipt of written notice from the non-breaching party specifying the nature of such breach in reasonable detail; or

(b) the other party (i) becomes insolvent or generally fails to pay its debts as they become due, (ii) files a voluntary petition in bankruptcy or makes a general assignment for the benefit of creditors, (iii) has an involuntary petition in bankruptcy filed against it that is not dismissed within sixty (60) days of filing, or (iv) has a receiver, trustee, or similar official appointed for all or substantially all of its assets.

Section 7.4 — Extension. The Transition Services Period may be extended for up to two (2) additional periods of thirty (30) calendar days each (each, an "Extension Period") upon the mutual written agreement of the parties. During any Extension Period, Service Provider shall continue to provide such Transition Services as the parties mutually agree, and Recipient shall pay Service Provider the Monthly Service Fee of Three Hundred Seventy-Five Thousand Dollars ($375,000) for each Extension Period, payable in arrears in accordance with Section 3.1. Either party may request an extension by providing written notice to the other party not less than fifteen (15) days prior to the then-applicable Expiration Date, and the other party shall respond within five (5) business days of receipt of such notice.

Section 7.5 — Effect of Termination or Expiration. Upon the termination or expiration of this Agreement:

(a) Service Provider shall promptly (and in no event later than ten (10) business days after the effective date of termination or expiration) deliver to Recipient all records, files, documents, keys, access cards, security codes, access credentials, and any other property in Service Provider's possession or control belonging to or relating to the Target Entities or the Properties.

(b) Service Provider shall cooperate with Recipient in good faith to complete an orderly handover of all remaining management responsibilities, including participating in transition meetings, responding to questions from Recipient Personnel, and providing such other assistance as Recipient may reasonably request.

(c) The following provisions of this Agreement shall survive the termination or expiration of this Agreement and shall remain in full force and effect in accordance with their respective terms: Article 6 (Standard of Care; Limitation of Liability), Article 8 (Books, Records, and Access), Article 9 (Confidentiality), Section 3.5 (Late Payment) (with respect to any amounts accrued but unpaid as of the date of termination or expiration), Section 13.8 (No Third-Party Beneficiaries), and any other provisions that by their nature or express terms are intended to survive.

ARTICLE 8 — BOOKS, RECORDS, AND ACCESS

Section 8.1 — Delivery of Records. Service Provider shall deliver to Recipient, at no additional cost, complete copies (or originals, where originals are in Service Provider's possession) of all books, records, files, documents, and data relating to the Properties and the Target Entities, including the following:

(a) lease files, including originals and copies, for all eighty-seven (87) Leases, together with all amendments, guaranties, commencement date agreements, expansion agreements, and tenant correspondence;

(b) Service Contract files for all sixty-three (63) Service Contracts, together with all amendments, supplements, and related correspondence;

(c) financial records, including general ledgers, accounts payable and accounts receivable records, bank statements, check registers, and supporting documentation;

(d) tenant correspondence files, including all written communications with tenants during the twenty-four (24)-month period prior to the Closing Date;

(e) maintenance and repair records, including work order histories, preventive maintenance schedules, and equipment logs;

(f) capital improvement records, including budgets, contracts, invoices, lien waivers, warranties, and as-built drawings;

(g) insurance claims history, including all open and closed claims during the thirty-six (36)-month period prior to the Closing Date;

(h) environmental and property condition reports, including all Phase I Environmental Site Assessment reports, Phase II reports (if any), and property condition assessment reports prepared by Rampart Building Sciences, Inc., which identified aggregate immediate repair costs of approximately Two Million One Hundred Forty Thousand Dollars ($2,140,000) across four (4) Properties, specifically: Buckhead Place Office Tower ($890,000), Cool Springs Office Park ($620,000), Lakeland Crossings Industrial ($380,000), and SouthPark Corporate Center ($250,000); and

(i) all other books, records, files, data, and information in Service Provider's possession or control that are reasonably necessary or useful for the management and operation of the Properties.

Section 8.2 — Access to Service Provider's Personnel and Records. During the Transition Services Period and for a period of twelve (12) months following the expiration or termination of this Agreement, Service Provider shall make its personnel (including former employees with knowledge of the Properties) reasonably available to Recipient for questions, information requests, clarifications, and follow-up matters relating to the Properties, the Target Entities, or the Transition Services, at no additional cost to Recipient. Service Provider shall respond to reasonable requests from Recipient within five (5) business days of receipt. The parties acknowledge that this obligation is intended to facilitate the completion of a smooth and orderly transition and to ensure that Recipient has access to institutional knowledge and historical context regarding the Properties.

Section 8.3 — Cooperation with Auditors. Service Provider shall cooperate fully and in good faith with Recipient's accounting firm, Ashford Prewitt LLP, and Buyer's internal audit team in connection with any audit, review, or examination of financial records relating to the pre-closing period or the Transition Services Period. Without limiting the foregoing, Service Provider shall cooperate with the post-closing proration true-up process required under the PSA, including the preparation, review, and finalization of the final true-up statement. The final proration true-up statement was required to be agreed by September 4, 2024, and the parties acknowledge that the final true-up amount of Three Hundred Forty-Seven Thousand Two Hundred Eighteen Dollars ($347,218) (net credit to Buyer) was agreed on August 28, 2024, and paid by Seller on September 5, 2024, in accordance with the PSA.

ARTICLE 9 — CONFIDENTIALITY

Section 9.1 — Confidential Information. Each party (a "Receiving Party") shall maintain the confidentiality of all non-public, proprietary, or confidential information received from the other party (the "Disclosing Party") in connection with this Agreement and the Transition Services (collectively, "Confidential Information"). Confidential Information shall include, without limitation, tenant information, lease terms, rental rates, financial data, operating budgets, vendor pricing, bid proposals, operational data, business plans, strategic initiatives, employee information, and any other information that is marked as confidential or that a reasonable person would understand to be confidential given the nature of the information and the circumstances of disclosure. Each Receiving Party shall (a) use Confidential Information solely for the purposes of performing or receiving the Transition Services, (b) restrict disclosure of Confidential Information to those of its employees, agents, advisors, and contractors who have a need to know such information and who are bound by confidentiality obligations no less restrictive than those contained herein, and (c) exercise the same degree of care to protect the Confidential Information of the Disclosing Party as it exercises to protect its own confidential information, but in no event less than a reasonable degree of care.

Section 9.2 — Exceptions. The obligations set forth in Section 9.1 shall not apply to information that: (a) is or becomes publicly available through no fault of the Receiving Party; (b) was known to the Receiving Party prior to its disclosure by the Disclosing Party, as demonstrated by the Receiving Party's written records; (c) is independently developed by the Receiving Party without use of or reference to the Disclosing Party's Confidential Information; (d) is rightfully received by the Receiving Party from a third party without restriction on disclosure and without breach of any obligation of confidentiality; or (e) is required to be disclosed by applicable law, regulation, governmental order, or legal process, provided that the Receiving Party (to the extent legally permitted) provides the Disclosing Party with prompt written notice of such requirement and cooperates with the Disclosing Party in seeking a protective order or other appropriate remedy.

Section 9.3 — Survival. The obligations of each party under this Article 9 shall survive the expiration or termination of this Agreement for a period of two (2) years.

ARTICLE 10 — REPRESENTATIONS AND WARRANTIES

Section 10.1 — Mutual Representations. Each party represents and warrants to the other party, as of the date of this Agreement, as follows:

(a) it is duly organized, validly existing, and in good standing under the laws of its jurisdiction of formation;

(b) it has full limited liability company power and authority to execute, deliver, and perform this Agreement, and the execution, delivery, and performance of this Agreement have been duly authorized by all necessary limited liability company action;

(c) this Agreement constitutes a legal, valid, and binding obligation of such party, enforceable against it in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium, and similar laws affecting creditors' rights generally and to general principles of equity;

(d) the execution, delivery, and performance of this Agreement by such party does not and will not (i) violate or conflict with any provision of its organizational documents, (ii) violate or conflict with any applicable law, rule, regulation, or order, or (iii) breach or constitute a default under any material agreement to which it is a party or by which it is bound; and

(e) no consent, approval, authorization, or other action by, or filing with or notice to, any governmental authority or any other third party is required in connection with such party's execution, delivery, or performance of this Agreement that has not been obtained or made.

Section 10.2 — Service Provider's Representations. Service Provider further represents and warrants to Recipient, as of the date of this Agreement, as follows:

(a) Argyle Property Services LLC is a Delaware limited liability company and an affiliate of Seller;

(b) Service Provider has the necessary personnel, expertise, systems, and resources to provide the Transition Services contemplated by this Agreement in a competent and professional manner;

(c) Service Provider is not aware of any pending or threatened claims, disputes, proceedings, or litigation against Service Provider or any of its affiliates that would materially impair Service Provider's ability to perform the Transition Services; and

(d) all information, records, data, and documents to be delivered by Service Provider to Recipient pursuant to this Agreement are, to Service Provider's knowledge, complete and accurate in all material respects.

Section 10.3 — Recipient's Representations. Recipient further represents and warrants to Service Provider, as of the date of this Agreement, as follows:

(a) Fairwater Property Management LLC is a Maryland limited liability company and a wholly owned subsidiary of Fairwater Real Estate Investment Trust;

(b) Recipient has the necessary personnel, resources, infrastructure, and systems to receive the Transition Services and to progressively assume full management responsibilities for the Properties during and upon the completion of the Transition Services Period; and

(c) Recipient has designated qualified personnel, including Leah Torrance, to oversee the receipt of the Transition Services and the transition of management responsibilities.

ARTICLE 11 — INSURANCE

Section 11.1 — Service Provider's Insurance. During the Transition Services Period and for a period of one (1) year thereafter (with respect to claims-made policies), Service Provider shall maintain at its own expense the following insurance coverages:

(a) Commercial General Liability Insurance with limits of not less than Two Million Dollars ($2,000,000) per occurrence and Five Million Dollars ($5,000,000) in the aggregate, covering bodily injury, property damage, and personal and advertising injury arising out of or in connection with Service Provider's performance of the Transition Services;

(b) Workers' Compensation Insurance as required by the laws of each state in which Service Provider Personnel perform the Transition Services, with statutory limits and employer's liability coverage of not less than One Million Dollars ($1,000,000) per accident, One Million Dollars ($1,000,000) per employee for disease, and One Million Dollars ($1,000,000) policy limit for disease; and

(c) Professional Liability / Errors and Omissions Insurance with limits of not less than Two Million Dollars ($2,000,000) per occurrence, covering claims arising from errors, omissions, or negligent acts of Service Provider in the performance of the Transition Services.

Service Provider shall name Recipient, Buyer, and each Target Entity as additional insureds on its commercial general liability policy and shall provide Recipient with certificates of insurance evidencing such coverages within ten (10) business days of the Closing Date and promptly upon any renewal, replacement, or material modification of such policies. Service Provider's insurance shall be primary and non-contributory with respect to any insurance or self-insurance maintained by Recipient, Buyer, or any Target Entity.

Section 11.2 — Recipient's Insurance. Recipient (through Buyer) shall maintain property and casualty insurance covering the Properties through Ironclad Indemnity Insurance Company, 500 College Road East, Princeton, New Jersey 08540, as brokered by Hartwick Gunderson & Associates, Inc. (account executive: Peter Langford), effective as of the Closing Date and continuing throughout the Transition Services Period and thereafter. Recipient shall provide Service Provider with certificates of insurance evidencing such coverage upon reasonable request.

ARTICLE 12 — DISPUTE RESOLUTION

Section 12.1 — Escalation. Any dispute, controversy, or claim arising out of or relating to this Agreement or the Transition Services (a "Dispute") shall first be referred to the designated representatives of the parties — Sean Kilpatrick for Service Provider and Leah Torrance for Recipient — for attempted resolution through good-faith negotiations. The designated representatives shall meet (in person or by telephone or video conference) within five (5) business days of the date on which either party delivers written notice of the Dispute to the other party, and shall use good-faith efforts to resolve the Dispute within ten (10) business days of such initial meeting.

Section 12.2 — Executive Escalation. If the Dispute is not resolved within the ten (10)-business-day period described in Section 12.1, the Dispute shall be escalated to senior executive representatives of the parties for resolution. Service Provider's senior executive representatives shall be Victor Lansdell or Elise Rathborne of Greystone Meridian Capital LLC, and Recipient's senior executive representative shall be Marcus Devereaux, Executive Vice President, Acquisitions, of Fairwater Real Estate Investment Trust. Such senior executive representatives shall meet (in person or by telephone or video conference) within five (5) business days of the escalation and shall use good-faith efforts to resolve the Dispute within an additional ten (10) business days. If the Dispute is not resolved through executive escalation, either party may pursue any remedies available at law or in equity.

Section 12.3 — Governing Law and Jurisdiction. This Agreement shall be governed by and construed in accordance with the laws of the State of New York, without regard to any conflicts of law principles that would result in the application of the laws of any other jurisdiction, consistent with the governing law provision of the PSA. Each party irrevocably and unconditionally (a) submits to the exclusive jurisdiction of the federal and state courts located in the Borough of Manhattan, City and State of New York, for the purpose of any action, suit, or proceeding arising out of or relating to this Agreement, (b) waives any objection that it may have to the laying of venue of any such action, suit, or proceeding in any such court, and (c) waives any claim that any such action, suit, or proceeding has been brought in an inconvenient forum. Each party agrees that service of process may be made by delivery in accordance with Section 13.1 of this Agreement.

ARTICLE 13 — MISCELLANEOUS

Section 13.1 — Notices. All notices, requests, demands, consents, waivers, and other communications required or permitted to be given under this Agreement shall be in writing and shall be deemed duly given (a) when delivered by hand, (b) one (1) business day after being sent by nationally recognized overnight courier service (with tracking confirmation), or (c) when sent by email (with confirmation of receipt), to the parties at the following addresses (or at such other address as a party may designate by written notice to the other parties):

If to Service Provider:

Argyle Property Services LLC 3300 Peachtree Road NE, Suite 2200 Atlanta, Georgia 30326

Attention: Sean Kilpatrick, Portfolio Mana

EXECUTION VERSION
TRANSITION SERVICES AGREEMENT
dated as of
June 6, 2024
by and between
ARGYLE PROPERTY SERVICES LLC
a Delaware limited liability company
("Service Provider")
and
FAIRWATER PROPERTY MANAGEMENT LLC
a Maryland limited liability company
("Recipient")
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TRANSITION SERVICES AGREEMENT
This TRANSITION SERVICES AGREEMENT (this "Agreement") is made and entered into as of June 6, 2024 (the "Effective Date"), by and between Argyle Property Services LLC, a Delaware limited liability company ("Service Provider"), having its principal office at 3300 Peachtree Road NE, Suite 2200, Atlanta, Georgia 30326, and Fairwater Property Management LLC, a Maryland limited liability company ("Recipient"), having its principal office at 7200 Chesapeake Parkway, Suite 1150, Columbia, Maryland 21044.
RECITALS
WHEREAS, Greystone Meridian Partners Fund III, L.P., a Delaware limited partnership ("Seller"), whose sole general partner is Greystone Meridian Capital LLC, a Delaware limited liability company, was the sole member and owner of 100% of the membership interests in fourteen (14) single-purpose Delaware limited liability companies (each, a "Target Entity" and collectively, the "Target Entities"), each of which owns a logistics or office property located in the Sun Belt region of the United States, specifically in the states of Georgia, Texas, Florida, Tennessee, and North Carolina, comprising in the aggregate approximately 5,224,000 rentable square feet across ten (10) logistics properties (approximately 4,373,000 rentable square feet) and four (4) office properties (approximately 851,000 rentable square feet), encumbered by eighty-seven (87) tenant leases with a weighted-average occupancy of 93.2% as of December 31, 2023, and aggregate annual in-place base rent of approximately $74,800,000 (the "Portfolio");
WHEREAS, Fairwater Real Estate Investment Trust, a Maryland real estate investment trust listed on the New York Stock Exchange under the ticker symbol "FREIT" and headquartered at 7200 Chesapeake Parkway, Suite 1100, Columbia, Maryland 21044 ("Buyer"), entered into that certain Purchase and Sale Agreement dated as of February 28, 2024, as amended by the First Amendment thereto dated as of April 12, 2024, and the Second Amendment thereto dated as of May 28, 2024 (as so amended, the "PSA"), with Seller, pursuant to which Buyer agreed to acquire, and Seller agreed to sell, 100% of the membership interests in each of the fourteen (14) Target Entities for an aggregate purchase price of One Billion One Hundred Million Dollars ($1,100,000,000), and such acquisition was consummated on June 6, 2024 (the "Closing Date");
WHEREAS, Service Provider is an affiliate of Seller and, prior to the Closing Date, served as the property manager for all fourteen (14) properties owned by the Target Entities (the "Properties"), with Sean Kilpatrick serving as Portfolio Manager for Service Provider with day-to-day oversight responsibility for the Properties and the Portfolio;
WHEREAS, Recipient is a wholly owned subsidiary of Buyer and has been designated by Buyer as the entity responsible for assuming full property management responsibility for all fourteen (14) Properties following the transition contemplated hereby, with Leah Torrance, Senior Vice President, Asset Management, designated to oversee portfolio management for Recipient upon completion of the transition;
WHEREAS, the parties desire to provide for an orderly transition of property management operations, accounting systems, vendor relationships, tenant communications, and all related management functions from Service Provider to Recipient over a period of ninety (90) calendar days following the Closing Date, in accordance with the terms and conditions set forth herein; and
WHEREAS, this Agreement is executed in the form contemplated by Exhibit L to the PSA and in satisfaction of the obligations of the parties thereunder with respect to the provision of transition services.
NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:
ARTICLE 1 — DEFINITIONS
Section 1.1 — Defined Terms. As used in this Agreement, the following terms shall have the meanings set forth below:
"Agreement" means this Transition Services Agreement, including all Schedules and exhibits attached hereto, as the same may be amended, modified, or supplemented from time to time in accordance with the terms hereof.
"Buyer" means Fairwater Real Estate Investment Trust, a Maryland real estate investment trust.
"Closing Date" means June 6, 2024, the date on which the transactions contemplated by the PSA were consummated.
"Confidential Information" has the meaning set forth in Section 9.1.
"Expiration Date" means September 4, 2024, being the date that is ninety (90) calendar days after the Closing Date, unless the Transition Services Period is earlier terminated or extended in accordance with Article 7.
"Leases" means the eighty-seven (87) tenant leases across the Portfolio, as more fully described in the rent rolls delivered pursuant to the PSA.
"Major Tenants" means those tenants occupying space in the Properties having annual base rent equal to or greater than One Million Five Hundred Thousand Dollars ($1,500,000) per annum, as further described in Section 2.6.
"Monthly Service Fee" means Three Hundred Seventy-Five Thousand Dollars ($375,000) per month, payable in accordance with Article 3.
"Operating Accounts" means the bank accounts maintained by the Target Entities at Magnolia Commerce Bank, N.A., a national banking association having its principal office at 225 Peachtree Street NE, Suite 100, Atlanta, Georgia 30303 (contact: Linda Prescott, Vice President, Commercial Banking), including all operating accounts, security deposit accounts, and reserve accounts held in the name of or for the benefit of any Target Entity.
"Properties" means the fourteen (14) real properties owned by the Target Entities, as listed and more fully described on Schedule A attached hereto, together with all improvements, fixtures, and appurtenances thereto.
"PSA" means the Purchase and Sale Agreement dated as of February 28, 2024, by and between Seller and Buyer, as amended by the First Amendment thereto dated as of April 12, 2024, and the Second Amendment thereto dated as of May 28, 2024.
"Recipient Personnel" means the employees and contractors of Recipient assigned to receive the Transition Services, including Leah Torrance, Senior Vice President, Asset Management, as Recipient's primary point of contact.
"Security Deposits" means the aggregate tenant security deposits of Four Million Two Hundred Eighty-Three Thousand Dollars ($4,283,000) held in Target Entity bank accounts as of the Closing Date.
"Seller" means Greystone Meridian Partners Fund III, L.P., a Delaware limited partnership.
"Service Contracts" means the sixty-three (63) property-level service contracts identified on Exhibit I to the PSA, including all amendments, modifications, and supplements thereto.
"Service Provider Personnel" means the employees and contractors of Service Provider assigned to provide the Transition Services, including Sean Kilpatrick (Portfolio Manager) as Service Provider's primary point of contact.
"Target Entities" means the fourteen (14) Delaware limited liability companies listed on Schedule A attached hereto, each of which is the owner of one of the Properties.
"Total Service Fee" means One Million One Hundred Twenty-Five Thousand Dollars ($1,125,000), being the aggregate of three (3) Monthly Service Fee payments of Three Hundred Seventy-Five Thousand Dollars ($375,000) each, payable over the Transition Services Period.
"Transition Completion Certificate" means a certificate executed by both parties confirming the completion of all Transition Services or identifying any remaining open items and agreed-upon remediation steps, substantially in the form contemplated by Section 5.4.
"Transition Plan" has the meaning set forth in Section 5.1.
"Transition Services" means the services to be provided by Service Provider to Recipient during the Transition Services Period, as described in Article 2 and Schedule B attached hereto.
"Transition Services Period" means the period of ninety (90) calendar days commencing on the Closing Date and expiring on the Expiration Date, unless earlier terminated or extended pursuant to Article 7.
Section 1.2 — Rules of Construction. Unless the context otherwise requires: (a) the headings and captions used in this Agreement are inserted for convenience of reference only and shall not affect the interpretation of this Agreement; (b) the word "including" (and its correlatives) means "including without limitation"; (c) references to "days" mean calendar days unless the term "business days" is expressly used; (d) references to "business days" mean days other than Saturdays, Sundays, and days on which commercial banks in New York, New York are authorized or required by law to close; (e) references to currency mean lawful money of the United States of America; (f) words in the singular include the plural and vice versa; (g) references to any agreement or document mean such agreement or document as amended, modified, or supplemented from time to time in accordance with its terms; (h) references to any law, statute, or regulation include any amendments, modifications, or successor legislation thereto; and (i) references to "Sections," "Articles," and "Schedules" are to Sections, Articles, and Schedules of this Agreement.
ARTICLE 2 — TRANSITION SERVICES
Section 2.1 — Scope of Services. During the Transition Services Period, Service Provider shall provide the Transition Services described in this Article 2 and in Schedule B attached hereto, in each case subject to the terms and conditions of this Agreement. Service Provider shall provide the Transition Services in a manner consistent with the standard of care exercised by Service Provider in managing the Properties during the twelve (12)-month period prior to the Closing Date. Service Provider shall cooperate fully and in good faith with Recipient and Recipient Personnel to ensure an orderly and efficient transition of all property management operations, accounting systems, vendor relationships, tenant communications, and related management functions from Service Provider to Recipient. Without limiting the foregoing, Service Provider shall make Sean Kilpatrick reasonably available to Recipient and Recipient Personnel throughout the Transition Services Period for purposes of consultation, coordination, knowledge transfer, and the resolution of any questions or issues arising in connection with the Transition Services.
Section 2.2 — Property Management Services. During the Transition Services Period, Service Provider shall continue to provide day-to-day property management operations for all fourteen (14) Properties, including the following:
(a) Building Operations and Maintenance. Service Provider shall continue to oversee and manage the day-to-day operations, maintenance, and repair of all buildings, structures, grounds, parking facilities, and common areas at each Property, in a manner consistent with past practice and in accordance with prudent property management standards.
(b) On-Site Personnel. Service Provider shall continue to oversee and manage all on-site personnel at each Property, including engineering, security, janitorial, and maintenance staff, and shall maintain staffing levels consistent with those maintained during the twelve (12)-month period prior to the Closing Date.
(c) Emergency Response and After-Hours Coverage. Service Provider shall maintain emergency response protocols and after-hours coverage for all Properties, consistent with past practice, and shall promptly notify Recipient of any emergency condition or event at any Property.
(d) Tenant Work Order Management. Service Provider shall continue to receive, process, and respond to tenant work orders and maintenance requests in a timely manner consistent with the terms of the applicable Leases and past practice.
(e) Common Area Maintenance. Service Provider shall continue to manage and maintain all common areas at each Property, including lobbies, hallways, restrooms, elevators, loading docks, parking areas, and landscaped areas, in a manner consistent with past practice.
(f) Service Contract Management. Service Provider shall continue to administer and manage the sixty-three (63) Service Contracts, including oversight of vendor performance, approval of invoices, and coordination of scheduled services, pending the completion of the vendor contract novation process described in Section 2.5.
(g) Tenant Billings and Collections. Service Provider shall continue to process tenant billings, rent collections, and operating expense recoveries in accordance with the terms of the Leases and applicable law, and shall remit all collected amounts to the Operating Accounts in accordance with Recipient's instructions.
(h) Lease Compliance. Service Provider shall continue to monitor tenant lease compliance and enforce lease obligations in the ordinary course of business, including monitoring of tenant insurance certificate compliance, co-tenancy requirements, and use restrictions.
(i) Vendor Coordination. Service Provider shall continue to coordinate with existing vendors and contractors in the ordinary course of business and shall facilitate introductions between such vendors and Recipient Personnel in connection with the transition.
Service Provider shall continue managing the Properties in accordance with existing management standards and past practice pending the full handover of management responsibilities to Recipient. Notwithstanding the foregoing, Service Provider shall not, without Recipient's prior written consent, (i) enter into any new leases or lease amendments, (ii) modify, amend, or terminate any existing Lease, (iii) execute any new service contracts, or (iv) authorize or commit to any capital expenditure in excess of Twenty-Five Thousand Dollars ($25,000) per Property.
Section 2.3 — Accounting Transition Services. Service Provider shall provide the following accounting and financial transition services during the Transition Services Period:
(a) Financial Records Transfer. Service Provider shall transfer and migrate all property-level financial records, general ledgers, accounts payable records, accounts receivable records, and reporting systems from Service Provider's accounting platform to Recipient's accounting platform or such other platform as Recipient may designate. Service Provider shall cooperate with Recipient's information technology personnel and third-party vendors in connection with such migration.
(b) Monthly Financial Statements. Service Provider shall prepare and deliver to Recipient monthly financial statements for each Property and each Target Entity for the period from the Closing Date through the Expiration Date, in such form and detail as is consistent with Service Provider's past practice, including income statements, balance sheets, cash flow statements, rent rolls, aged accounts receivable reports, and variance analyses against approved budgets.
(c) Post-Closing Proration True-Up. Service Provider shall cooperate with Recipient and Recipient's accounting advisors, Ashford Prewitt LLP (engagement partner: Martin Ashford, CPA; tax partner: Naomi Ikeda, CPA), in connection with the preparation and finalization of the post-closing proration true-up calculations required under the PSA, including the final proration statement, which is due within ninety (90) days of the Closing Date (i.e., by September 4, 2024).
(d) CAM/OpEx Reconciliation. Service Provider shall cooperate with Recipient in the reconciliation of common area maintenance charges and operating expense pass-throughs for the current and prior calendar years, with an estimated reconciliation reserve of One Million Eight Hundred Fifty Thousand Dollars ($1,850,000).
(e) Real Property Tax Proration. Service Provider shall cooperate with Recipient in the preparation and analysis of real property tax prorations for the fourteen (14) Properties. Estimated annual real property taxes for the 2024 tax year are Fourteen Million Seven Hundred Sixty Thousand Dollars ($14,760,000). Seller's share of real property taxes, prorated through the Closing Date (June 6, 2024), is estimated at Six Million Three Hundred Thirty-Two Thousand Nine Hundred Fifty-One Dollars ($6,332,951).
(f) Security Deposit Reconciliation. Service Provider shall cooperate with Recipient in the reconciliation of all tenant security deposits, including verification that aggregate security deposits of Four Million Two Hundred Eighty-Three Thousand Dollars ($4,283,000) are properly accounted for and held in the appropriate Target Entity bank accounts.
(g) Delivery of Records. Service Provider shall transfer and deliver to Recipient all electronic and hard-copy financial records, tenant files, lease abstracts, and historical operating data in Service Provider's possession or control relating to the Properties and the Target Entities.
(h) Tax Filing Cooperation. Service Provider shall cooperate with Buyer's tax advisors in connection with state income and franchise tax filing obligations of the Target Entities in the states of Georgia, Texas, Florida, Tennessee, and North Carolina for any pre-closing or stub-period tax years.
Section 2.4 — Operating Account Transition. Service Provider shall cooperate with Recipient in transitioning signatory authority and operational control of all Operating Accounts at Magnolia Commerce Bank, N.A. to Recipient or its designees, in accordance with the following:
(a) Service Provider shall assist Recipient in preparing and submitting all documentation required by Magnolia Commerce Bank, N.A. to effect the transfer of signatory authority on all Operating Accounts, including corporate resolutions, signature cards, and beneficial ownership certifications.
(b) If Recipient elects to open new operating accounts at a different financial institution, Service Provider shall cooperate with the orderly transfer of funds from the existing Operating Accounts to such new accounts.
(c) The target completion date for the operating account transition is thirty (30) days after the Closing Date (i.e., by July 6, 2024).
(d) During the operating account transition period, Service Provider shall continue to process rent collections and pay operating expenses from the existing Operating Accounts, in each case in accordance with Recipient's written instructions and Recipient-approved budgets. Service Provider shall not make any disbursements from the Operating Accounts other than in the ordinary course of business and in accordance with such instructions, without Recipient's prior written consent.
Section 2.5 — Vendor Contract Novation. Service Provider shall cooperate with Recipient in novating, assigning, or terminating the sixty-three (63) Service Contracts, as follows:
(a) Contracts to Be Novated or Assigned. For each Service Contract that Recipient elects to continue, Service Provider shall (i) provide introductions between Recipient Personnel and the applicable vendor, (ii) deliver to Recipient copies of all such contracts and any amendments, supplements, or side letters thereto, and (iii) assist in the preparation and execution of novation agreements, assignment and assumption agreements, or such other documentation as may be necessary to effect the transfer of such contracts to Recipient or the applicable Target Entity.
(b) Contracts to Be Terminated. For each Service Contract that Recipient elects to terminate, Service Provider shall, at Recipient's direction, issue termination notices in accordance with the terms of the applicable contract. Pursuant to the Service Contract Review Memorandum prepared by Calderwood & Harkness LLP, twelve (12) Service Contracts have been recommended for post-closing termination, and Service Provider shall cooperate with Recipient in effecting such terminations in an orderly manner.
(c) Vendor Contact Information. Service Provider shall provide Recipient with a complete list of all vendor contacts, account numbers, service schedules, and relevant account history for each Property, organized by Property and service category.
(d) Target Completion. All novations, assignments, and terminations of Service Contracts shall be substantially completed by the Expiration Date.
Section 2.6 — Tenant Communication and Coordination. Service Provider shall cooperate with Recipient in implementing the tenant notification and relationship transition process, as follows:
(a) Tenant Notification Letters. Tenant notification letters, in the form and pursuant to the distribution list prepared by Calderwood & Harkness LLP, were distributed on June 7, 2024, to all eighty-seven (87) tenants, notifying each tenant of the change of ownership to Fairwater Real Estate Investment Trust and identifying Fairwater Property Management LLC as the new property management contact. Service Provider shall cooperate with Recipient in responding to any tenant inquiries arising from such notifications.
(b) Major Tenant Introductions. Service Provider shall facilitate introductions between Recipient Personnel and key tenant contacts, with particular emphasis on the Major Tenants, which include:
(i) Cascade Supply Chain Solutions Inc. — occupying approximately 624,000 rentable square feet at Westlake Distribution Hub, Houston, Texas; annual base rent of approximately $8,736,000 (representing approximately 11.7% of total Portfolio annual base rent);
(ii) Zynvaro Distribution Holdings LLC — occupying approximately 538,000 rentable square feet at Katy Freeway Logistics Park, Katy, Texas; annual base rent of approximately $7,532,000 (representing approximately 10.1% of total Portfolio annual base rent);
(iii) Thornton-Whitaker Pharmaceuticals Corp. — occupying approximately 412,000 rentable square feet at Fairfield Logistics Center I, Fairburn, Georgia; annual base rent of approximately $6,180,000 (representing approximately 8.3% of total Portfolio annual base rent);
(iv) Birchwood Technology Group Inc. — occupying approximately 218,000 rentable square feet at SouthPark Corporate Center, Charlotte, North Carolina; annual base rent of approximately $5,668,000 (representing approximately 7.6% of total Portfolio annual base rent); and
(v) Atlas Freight Logistics Corp. — occupying approximately 410,000 rentable square feet at Southport Logistics Park, Jacksonville, Florida; annual base rent of approximately $5,330,000 (representing approximately 7.1% of total Portfolio annual base rent).
(c) Pending Tenant Matters. Service Provider shall coordinate with Recipient regarding any pending tenant requests, maintenance issues, lease administration matters, or disputes, and shall provide Recipient with a comprehensive summary of all such pending matters within ten (10) business days of the Closing Date.
(d) Post-Closing SNDAs. Service Provider shall cooperate with Recipient and Seller in connection with the delivery of the four (4) remaining Major Tenant subordination, non-disturbance, and attornment agreements ("SNDAs") that had not been received as of the Closing Date. Such SNDAs are required to be delivered within thirty (30) days of the Closing Date (i.e., by July 6, 2024), and a holdback of Two Hundred Thousand Dollars ($200,000) from the purchase price is to be released to Seller upon delivery of all four (4) SNDAs in accordance with the terms of the PSA. Service Provider shall use commercially reasonable efforts to facilitate the execution and delivery of such SNDAs.
Section 2.7 — Insurance Transition. Service Provider shall cooperate with Recipient in effecting the transition of insurance coverage for the Properties from Service Provider's existing insurance programs to Recipient's new insurance policies, as follows:
(a) Recipient has procured replacement property and casualty insurance coverage for the Properties through Ironclad Indemnity Insurance Company, 500 College Road East, Princeton, New Jersey 08540, as brokered by Hartwick Gunderson & Associates, Inc. (account executive: Peter Langford), effective as of the Closing Date.
(b) Service Provider shall assist Recipient and Recipient's insurance broker with providing loss-run history, claims information, underwriting data, and property condition data as reasonably required by Recipient's insurance carrier in connection with the placement or renewal of insurance coverage for the Properties.
(c) Service Provider shall cooperate with Recipient in the orderly wind-down of any existing insurance policies maintained by Service Provider or Seller with respect to the Properties, including the submission of any final claims or the assignment of any pending claims, as applicable.
Section 2.8 — Information Technology and Systems. Service Provider shall provide the following information technology transition services during the Transition Services Period:
(a) Service Provider shall provide Recipient with access to all property management software, databases, tenant portals, building management systems, and other technology platforms used by Service Provider in managing the Properties, including user credentials and administrative access as reasonably necessary.
(b) Service Provider shall cooperate with Recipient and Recipient's information technology personnel in the migration of all data from Service Provider's systems to Recipient's designated systems, including tenant databases, financial records, work order histories, vendor records, and maintenance logs.
(c) Service Provider shall maintain access to its existing technology systems for Recipient's use during the Transition Services Period and shall not deactivate, delete, or modify any data or systems relating to the Properties without Recipient's prior written consent.
Section 2.9 — Regulatory and Compliance Transition. Service Provider shall cooperate with Recipient in connection with any regulatory filings, permits, licenses, or compliance obligations that are required to be updated to reflect the change of ownership of the Target Entities and the Properties, as follows:
(a) Service Provider shall assist Recipient in identifying and updating all business licenses, fire and safety permits, elevator certificates, occupancy permits, and other governmental approvals and registrations applicable to the Properties.
(b) Service Provider shall deliver to Recipient all environmental reports, including Phase I Environmental Site Assessment reports prepared by Trident Environmental Group LLC (senior environmental scientist: Rachel Kwan), and any ongoing environmental monitoring documentation, data, or correspondence relating to the Properties.
(c) Without limiting the generality of the foregoing, Service Provider shall deliver to Recipient all documentation relating to the two (2) Properties identified as having de minimis recognized environmental conditions ("RECs"): (i) Westlake Distribution Hub, Houston, Texas, and (ii) Lakeland Crossings Industrial, Lakeland, Florida. Service Provider shall provide Recipient with all monitoring reports, correspondence with governmental agencies, and remediation documentation, if any, relating to such conditions.
ARTICLE 3 — SERVICE FEES AND PAYMENT
Section 3.1 — Monthly Service Fee. In consideration of Service Provider's provision of the Transition Services, Recipient shall pay Service Provider a Monthly Service Fee of Three Hundred Seventy-Five Thousand Dollars ($375,000), payable in arrears on the first business day of each calendar month following the month in which services were rendered, in accordance with the payment schedule set forth on Schedule D attached hereto. The Total Service Fee for the Transition Services Period is One Million One Hundred Twenty-Five Thousand Dollars ($1,125,000), representing three (3) monthly payments of Three Hundred Seventy-Five Thousand Dollars ($375,000) each. For the avoidance of doubt, the Monthly Service Fee is a fixed fee payable for each monthly period during the Transition Services Period, commencing on the Closing Date, regardless of any partial-month proration, for a total of One Million One Hundred Twenty-Five Thousand Dollars ($1,125,000).
Section 3.2 — Payment Method. All payments due under this Agreement shall be made by wire transfer of immediately available funds to Service Provider's designated account at Magnolia Commerce Bank, N.A., in accordance with wire instructions to be provided by Service Provider to Recipient under separate cover prior to the first payment due date. Recipient shall provide Service Provider with reasonable advance notice of each wire transfer and shall include appropriate reference information to facilitate prompt identification and application of each payment.
Section 3.3 — Reimbursable Expenses. In addition to the Monthly Service Fee, Recipient shall reimburse Service Provider for reasonable, documented out-of-pocket expenses actually incurred by Service Provider in connection with the provision of the Transition Services, provided that (a) such expenses are pre-approved in writing by Recipient (or Recipient's designated representative, Leah Torrance) prior to being incurred, (b) Service Provider submits reasonably detailed invoices and supporting documentation for such expenses, and (c) such expenses are not duplicative of costs already covered by the Monthly Service Fee. For the avoidance of doubt, reimbursable expenses shall not include Service Provider's ordinary overhead, salaries, benefits, or general operating costs, all of which are deemed included in the Monthly Service Fee.
Section 3.4 — Taxes. All amounts payable by Recipient under this Agreement are exclusive of any applicable sales, use, value-added, or similar transactional taxes. To the extent that any such taxes are imposed on the Transition Services or the fees payable hereunder, such taxes shall be borne by Recipient and shall be invoiced by Service Provider as a separate line item, accompanied by appropriate documentation. For the avoidance of doubt, each party shall be responsible for its own income, franchise, and employment taxes.
Section 3.5 — Late Payment. Any amount due under this Agreement that is not paid when due shall bear interest from the date such payment was due until the date of actual payment at a rate equal to the lesser of (i) one and one-half percent (1.5%) per month (or any portion thereof) and (ii) the maximum rate of interest permitted by applicable law. The accrual of interest under this Section 3.5 shall not constitute a waiver of any other rights or remedies available to Service Provider with respect to such late payment.
ARTICLE 4 — SERVICE PROVIDER PERSONNEL
Section 4.1 — Key Personnel. Service Provider shall designate Sean Kilpatrick (Portfolio Manager) as the primary point of contact and project manager for the Transition Services. Mr. Kilpatrick shall be responsible for coordinating the delivery of all Transition Services, maintaining regular communication with Recipient Personnel, overseeing the work of Service Provider Personnel assigned to the Transition Services, and ensuring compliance with the milestones and deliverables set forth in the Transition Plan. Service Provider shall maintain adequate staffing levels at each Property during the Transition Services Period, consistent with the staffing levels maintained by Service Provider during the twelve (12)-month period prior to the Closing Date. Service Provider shall not reassign, transfer, or terminate any key on-site personnel (including property managers, chief engineers, and senior building engineers) without providing Recipient with at least ten (10) business days' prior written notice and an opportunity to consult with Service Provider regarding the proposed change.
Section 4.2 — Recipient's Key Personnel. Recipient designates Leah Torrance (Senior Vice President, Asset Management / Senior Vice President, Operations) as Recipient's primary point of contact for all matters relating to the Transition Services. Ms. Torrance shall be responsible for coordinating Recipient's receipt of the Transition Services, directing the activities of Recipient Personnel, and communicating Recipient's instructions and priorities to Service Provider. Recipient shall provide adequate and qualified personnel to receive knowledge transfer from Service Provider, participate in training sessions, attend on-site walkthroughs, and progressively assume management responsibilities for the Properties during the Transition Services Period.
Section 4.3 — Independent Contractor Relationship. The parties acknowledge and agree that Service Provider is an independent contractor and not an employee, agent, joint venturer, or partner of Recipient or Buyer. All Service Provider Personnel are employees or contractors of Service Provider and not of Recipient or Buyer. Service Provider shall be solely responsible for the compensation, benefits, payroll taxes, and workers' compensation coverage of Service Provider Personnel. Nothing in this Agreement shall be construed to create a joint venture, partnership, agency, or employment relationship between the parties or between either party and the personnel of the other party.
ARTICLE 5 — TRANSITION MILESTONES AND REPORTING
Section 5.1 — Transition Plan. Within five (5) business days of the Closing Date (i.e., by June 13, 2024), Service Provider and Recipient shall mutually agree on a detailed Transition Plan setting forth the specific milestones, deliverables, responsible parties, and target completion dates for each category of Transition Services described in Article 2 and Schedule B. The Transition Plan shall address the sequencing and prioritization of transition activities, identify dependencies between service categories, and establish escalation procedures for the resolution of delays or issues. Upon agreement, the Transition Plan shall be attached as an amendment to Schedule B and shall be incorporated into this Agreement by reference. The parties shall review and update the Transition Plan as necessary during the course of the Transition Services Period.
Section 5.2 — Weekly Status Reports. Service Provider shall prepare and deliver to Recipient, no later than 5:00 p.m. Eastern Time each Friday during the Transition Services Period (or the next preceding business day if Friday is not a business day), a written status report summarizing the following:
(a) progress against the milestones and deliverables set forth in the Transition Plan, including percentage completion and any deviations from the target schedule;
(b) any issues, delays, risks, or impediments identified during the preceding week, together with proposed remediation actions and revised target dates, if applicable;
(c) a summary of upcoming activities and priorities for the following week;
(d) the status of vendor contract novations, assignments, and terminations, including the number of contracts completed, in process, and remaining;
(e) the status of tenant communications and introductions, including any tenant issues or concerns raised during the preceding week; and
(f) any other matters reasonably requested by Recipient from time to time.
Section 5.3 — Monthly Transition Meetings. The parties shall conduct monthly in-person or video conference meetings to review the overall progress of the Transition Services, discuss any open issues or concerns, and agree on priorities and action items for the following month. Such meetings shall be attended at a minimum by Sean Kilpatrick (for Service Provider) and Leah Torrance (for Recipient), together with such other personnel as either party may designate. The first such meeting shall be scheduled no later than July 8, 2024, with subsequent meetings scheduled at approximately 30-day intervals thereafter. Service Provider shall prepare and circulate an agenda and any relevant materials at least two (2) business days in advance of each meeting.
Section 5.4 — Transition Completion Certificate. Upon the completion of all Transition Services (or upon the Expiration Date, whichever is earlier), the parties shall execute a Transition Completion Certificate confirming that (a) all Transition Services have been satisfactorily completed in accordance with this Agreement, or (b) identifying any remaining open items that have not been completed as of such date, together with a mutually agreed remediation plan specifying the steps to be taken, responsible parties, and target completion dates for each open item. The execution of the Transition Completion Certificate shall not release either party from any obligation under this Agreement that by its terms survives the expiration or termination of this Agreement.
ARTICLE 6 — STANDARD OF CARE; LIMITATION OF LIABILITY
Section 6.1 — Standard of Care. Service Provider shall perform the Transition Services with the same degree of care, skill, and diligence as Service Provider exercised in managing the Properties during the twelve (12)-month period prior to the Closing Date, and in accordance with (a) applicable federal, state, and local laws, rules, regulations, and ordinances, (b) prudent and customary property management practices in the markets in which the Properties are located, (c) the terms and conditions of the Leases, and (d) the terms and conditions of the Service Contracts. Service Provider acknowledges that Recipient is relying on Service Provider's expertise, knowledge, and familiarity with the Properties in entering into this Agreement.
Section 6.2 — Indemnification by Service Provider. Service Provider shall indemnify, defend, and hold harmless Recipient, Buyer, each Target Entity, and their respective members, managers, officers, directors, employees, agents, successors, and assigns (collectively, the "Recipient Indemnified Parties") from and against any and all losses, damages, liabilities, costs, and expenses (including reasonable attorneys' fees and court costs) (collectively, "Losses") arising out of, resulting from, or relating to:
(a) the gross negligence or willful misconduct of Service Provider or any Service Provider Personnel in performing or failing to perform the Transition Services;
(b) any material breach by Service Provider of any representation, warranty, covenant, or obligation of Service Provider under this Agreement; or
(c) any act or omission of Service Provider or any Service Provider Personnel that constitutes a violation of applicable law.
Section 6.3 — Indemnification by Recipient. Recipient shall indemnify, defend, and hold harmless Service Provider and its members, managers, officers, directors, employees, agents, successors, and assigns (collectively, the "Service Provider Indemnified Parties") from and against any and all Losses arising out of, resulting from, or relating to:
(a) the gross negligence or willful misconduct of Recipient or any Recipient Personnel;
(b) any material breach by Recipient of any representation, warranty, covenant, or obligation of Recipient under this Agreement; or
(c) any actions taken by Service Provider at Recipient's express written direction, to the extent such actions are the proximate cause of such Losses and do not involve the gross negligence or willful misconduct of Service Provider.
Section 6.4 — Limitation of Liability. IN NO EVENT SHALL EITHER PARTY'S AGGREGATE LIABILITY UNDER THIS AGREEMENT EXCEED THE TOTAL SERVICE FEE OF ONE MILLION ONE HUNDRED TWENTY-FIVE THOUSAND DOLLARS ($1,125,000), EXCEPT IN CASES OF GROSS NEGLIGENCE, WILLFUL MISCONDUCT, OR FRAUD. NEITHER PARTY SHALL BE LIABLE TO THE OTHER PARTY FOR ANY CONSEQUENTIAL, INCIDENTAL, INDIRECT, SPECIAL, EXEMPLARY, OR PUNITIVE DAMAGES ARISING UNDER OR IN CONNECTION WITH THIS AGREEMENT, REGARDLESS OF WHETHER SUCH DAMAGES WERE FORESEEABLE OR WHETHER THE PARTY AGAINST WHOM SUCH DAMAGES ARE CLAIMED HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES, EXCEPT IN CASES OF GROSS NEGLIGENCE, WILLFUL MISCONDUCT, OR FRAUD.
ARTICLE 7 — TERM AND TERMINATION
Section 7.1 — Term. This Agreement commences on the Closing Date (June 6, 2024) and shall continue in full force and effect until the Expiration Date (September 4, 2024), unless earlier terminated or extended in accordance with the provisions of this Article 7.
Section 7.2 — Early Termination by Recipient. Recipient may terminate this Agreement, in whole or in part, at any time upon not less than fifteen (15) days' prior written notice to Service Provider. Such termination may be effected on a service-category basis (as described in Schedule B) or on a Property-by-Property basis, in Recipient's sole discretion. In the event of any partial termination, the Monthly Service Fee shall be equitably reduced by mutual agreement of the parties to reflect the reduced scope of Transition Services being provided by Service Provider following such partial termination. If the parties are unable to agree on the appropriate reduction within five (5) business days after Recipient's delivery of a partial termination notice, the matter shall be resolved in accordance with the dispute resolution provisions of Article 12. Upon any early termination (whether in whole or in part), Recipient shall pay Service Provider for all Transition Services rendered and reimbursable expenses incurred through the effective date of such termination.
Section 7.3 — Termination for Cause. Either party may terminate this Agreement immediately upon written notice to the other party if:
(a) the other party commits a material breach of any representation, warranty, covenant, or obligation under this Agreement and fails to cure such breach within ten (10) business days after receipt of written notice from the non-breaching party specifying the nature of such breach in reasonable detail; or
(b) the other party (i) becomes insolvent or generally fails to pay its debts as they become due, (ii) files a voluntary petition in bankruptcy or makes a general assignment for the benefit of creditors, (iii) has an involuntary petition in bankruptcy filed against it that is not dismissed within sixty (60) days of filing, or (iv) has a receiver, trustee, or similar official appointed for all or substantially all of its assets.
Section 7.4 — Extension. The Transition Services Period may be extended for up to two (2) additional periods of thirty (30) calendar days each (each, an "Extension Period") upon the mutual written agreement of the parties. During any Extension Period, Service Provider shall continue to provide such Transition Services as the parties mutually agree, and Recipient shall pay Service Provider the Monthly Service Fee of Three Hundred Seventy-Five Thousand Dollars ($375,000) for each Extension Period, payable in arrears in accordance with Section 3.1. Either party may request an extension by providing written notice to the other party not less than fifteen (15) days prior to the then-applicable Expiration Date, and the other party shall respond within five (5) business days of receipt of such notice.
Section 7.5 — Effect of Termination or Expiration. Upon the termination or expiration of this Agreement:
(a) Service Provider shall promptly (and in no event later than ten (10) business days after the effective date of termination or expiration) deliver to Recipient all records, files, documents, keys, access cards, security codes, access credentials, and any other property in Service Provider's possession or control belonging to or relating to the Target Entities or the Properties.
(b) Service Provider shall cooperate with Recipient in good faith to complete an orderly handover of all remaining management responsibilities, including participating in transition meetings, responding to questions from Recipient Personnel, and providing such other assistance as Recipient may reasonably request.
(c) The following provisions of this Agreement shall survive the termination or expiration of this Agreement and shall remain in full force and effect in accordance with their respective terms: Article 6 (Standard of Care; Limitation of Liability), Article 8 (Books, Records, and Access), Article 9 (Confidentiality), Section 3.5 (Late Payment) (with respect to any amounts accrued but unpaid as of the date of termination or expiration), Section 13.8 (No Third-Party Beneficiaries), and any other provisions that by their nature or express terms are intended to survive.
ARTICLE 8 — BOOKS, RECORDS, AND ACCESS
Section 8.1 — Delivery of Records. Service Provider shall deliver to Recipient, at no additional cost, complete copies (or originals, where originals are in Service Provider's possession) of all books, records, files, documents, and data relating to the Properties and the Target Entities, including the following:
(a) lease files, including originals and copies, for all eighty-seven (87) Leases, together with all amendments, guaranties, commencement date agreements, expansion agreements, and tenant correspondence;
(b) Service Contract files for all sixty-three (63) Service Contracts, together with all amendments, supplements, and related correspondence;
(c) financial records, including general ledgers, accounts payable and accounts receivable records, bank statements, check registers, and supporting documentation;
(d) tenant correspondence files, including all written communications with tenants during the twenty-four (24)-month period prior to the Closing Date;
(e) maintenance and repair records, including work order histories, preventive maintenance schedules, and equipment logs;
(f) capital improvement records, including budgets, contracts, invoices, lien waivers, warranties, and as-built drawings;
(g) insurance claims history, including all open and closed claims during the thirty-six (36)-month period prior to the Closing Date;
(h) environmental and property condition reports, including all Phase I Environmental Site Assessment reports, Phase II reports (if any), and property condition assessment reports prepared by Rampart Building Sciences, Inc., which identified aggregate immediate repair costs of approximately Two Million One Hundred Forty Thousand Dollars ($2,140,000) across four (4) Properties, specifically: Buckhead Place Office Tower ($890,000), Cool Springs Office Park ($620,000), Lakeland Crossings Industrial ($380,000), and SouthPark Corporate Center ($250,000); and
(i) all other books, records, files, data, and information in Service Provider's possession or control that are reasonably necessary or useful for the management and operation of the Properties.
Section 8.2 — Access to Service Provider's Personnel and Records. During the Transition Services Period and for a period of twelve (12) months following the expiration or termination of this Agreement, Service Provider shall make its personnel (including former employees with knowledge of the Properties) reasonably available to Recipient for questions, information requests, clarifications, and follow-up matters relating to the Properties, the Target Entities, or the Transition Services, at no additional cost to Recipient. Service Provider shall respond to reasonable requests from Recipient within five (5) business days of receipt. The parties acknowledge that this obligation is intended to facilitate the completion of a smooth and orderly transition and to ensure that Recipient has access to institutional knowledge and historical context regarding the Properties.
Section 8.3 — Cooperation with Auditors. Service Provider shall cooperate fully and in good faith with Recipient's accounting firm, Ashford Prewitt LLP, and Buyer's internal audit team in connection with any audit, review, or examination of financial records relating to the pre-closing period or the Transition Services Period. Without limiting the foregoing, Service Provider shall cooperate with the post-closing proration true-up process required under the PSA, including the preparation, review, and finalization of the final true-up statement. The final proration true-up statement was required to be agreed by September 4, 2024, and the parties acknowledge that the final true-up amount of Three Hundred Forty-Seven Thousand Two Hundred Eighteen Dollars ($347,218) (net credit to Buyer) was agreed on August 28, 2024, and paid by Seller on September 5, 2024, in accordance with the PSA.
ARTICLE 9 — CONFIDENTIALITY
Section 9.1 — Confidential Information. Each party (a "Receiving Party") shall maintain the confidentiality of all non-public, proprietary, or confidential information received from the other party (the "Disclosing Party") in connection with this Agreement and the Transition Services (collectively, "Confidential Information"). Confidential Information shall include, without limitation, tenant information, lease terms, rental rates, financial data, operating budgets, vendor pricing, bid proposals, operational data, business plans, strategic initiatives, employee information, and any other information that is marked as confidential or that a reasonable person would understand to be confidential given the nature of the information and the circumstances of disclosure. Each Receiving Party shall (a) use Confidential Information solely for the purposes of performing or receiving the Transition Services, (b) restrict disclosure of Confidential Information to those of its employees, agents, advisors, and contractors who have a need to know such information and who are bound by confidentiality obligations no less restrictive than those contained herein, and (c) exercise the same degree of care to protect the Confidential Information of the Disclosing Party as it exercises to protect its own confidential information, but in no event less than a reasonable degree of care.
Section 9.2 — Exceptions. The obligations set forth in Section 9.1 shall not apply to information that: (a) is or becomes publicly available through no fault of the Receiving Party; (b) was known to the Receiving Party prior to its disclosure by the Disclosing Party, as demonstrated by the Receiving Party's written records; (c) is independently developed by the Receiving Party without use of or reference to the Disclosing Party's Confidential Information; (d) is rightfully received by the Receiving Party from a third party without restriction on disclosure and without breach of any obligation of confidentiality; or (e) is required to be disclosed by applicable law, regulation, governmental order, or legal process, provided that the Receiving Party (to the extent legally permitted) provides the Disclosing Party with prompt written notice of such requirement and cooperates with the Disclosing Party in seeking a protective order or other appropriate remedy.
Section 9.3 — Survival. The obligations of each party under this Article 9 shall survive the expiration or termination of this Agreement for a period of two (2) years.
ARTICLE 10 — REPRESENTATIONS AND WARRANTIES
Section 10.1 — Mutual Representations. Each party represents and warrants to the other party, as of the date of this Agreement, as follows:
(a) it is duly organized, validly existing, and in good standing under the laws of its jurisdiction of formation;
(b) it has full limited liability company power and authority to execute, deliver, and perform this Agreement, and the execution, delivery, and performance of this Agreement have been duly authorized by all necessary limited liability company action;
(c) this Agreement constitutes a legal, valid, and binding obligation of such party, enforceable against it in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium, and similar laws affecting creditors' rights generally and to general principles of equity;
(d) the execution, delivery, and performance of this Agreement by such party does not and will not (i) violate or conflict with any provision of its organizational documents, (ii) violate or conflict with any applicable law, rule, regulation, or order, or (iii) breach or constitute a default under any material agreement to which it is a party or by which it is bound; and
(e) no consent, approval, authorization, or other action by, or filing with or notice to, any governmental authority or any other third party is required in connection with such party's execution, delivery, or performance of this Agreement that has not been obtained or made.
Section 10.2 — Service Provider's Representations. Service Provider further represents and warrants to Recipient, as of the date of this Agreement, as follows:
(a) Argyle Property Services LLC is a Delaware limited liability company and an affiliate of Seller;
(b) Service Provider has the necessary personnel, expertise, systems, and resources to provide the Transition Services contemplated by this Agreement in a competent and professional manner;
(c) Service Provider is not aware of any pending or threatened claims, disputes, proceedings, or litigation against Service Provider or any of its affiliates that would materially impair Service Provider's ability to perform the Transition Services; and
(d) all information, records, data, and documents to be delivered by Service Provider to Recipient pursuant to this Agreement are, to Service Provider's knowledge, complete and accurate in all material respects.
Section 10.3 — Recipient's Representations. Recipient further represents and warrants to Service Provider, as of the date of this Agreement, as follows:
(a) Fairwater Property Management LLC is a Maryland limited liability company and a wholly owned subsidiary of Fairwater Real Estate Investment Trust;
(b) Recipient has the necessary personnel, resources, infrastructure, and systems to receive the Transition Services and to progressively assume full management responsibilities for the Properties during and upon the completion of the Transition Services Period; and
(c) Recipient has designated qualified personnel, including Leah Torrance, to oversee the receipt of the Transition Services and the transition of management responsibilities.
ARTICLE 11 — INSURANCE
Section 11.1 — Service Provider's Insurance. During the Transition Services Period and for a period of one (1) year thereafter (with respect to claims-made policies), Service Provider shall maintain at its own expense the following insurance coverages:
(a) Commercial General Liability Insurance with limits of not less than Two Million Dollars ($2,000,000) per occurrence and Five Million Dollars ($5,000,000) in the aggregate, covering bodily injury, property damage, and personal and advertising injury arising out of or in connection with Service Provider's performance of the Transition Services;
(b) Workers' Compensation Insurance as required by the laws of each state in which Service Provider Personnel perform the Transition Services, with statutory limits and employer's liability coverage of not less than One Million Dollars ($1,000,000) per accident, One Million Dollars ($1,000,000) per employee for disease, and One Million Dollars ($1,000,000) policy limit for disease; and
(c) Professional Liability / Errors and Omissions Insurance with limits of not less than Two Million Dollars ($2,000,000) per occurrence, covering claims arising from errors, omissions, or negligent acts of Service Provider in the performance of the Transition Services.
Service Provider shall name Recipient, Buyer, and each Target Entity as additional insureds on its commercial general liability policy and shall provide Recipient with certificates of insurance evidencing such coverages within ten (10) business days of the Closing Date and promptly upon any renewal, replacement, or material modification of such policies. Service Provider's insurance shall be primary and non-contributory with respect to any insurance or self-insurance maintained by Recipient, Buyer, or any Target Entity.
Section 11.2 — Recipient's Insurance. Recipient (through Buyer) shall maintain property and casualty insurance covering the Properties through Ironclad Indemnity Insurance Company, 500 College Road East, Princeton, New Jersey 08540, as brokered by Hartwick Gunderson & Associates, Inc. (account executive: Peter Langford), effective as of the Closing Date and continuing throughout the Transition Services Period and thereafter. Recipient shall provide Service Provider with certificates of insurance evidencing such coverage upon reasonable request.
ARTICLE 12 — DISPUTE RESOLUTION
Section 12.1 — Escalation. Any dispute, controversy, or claim arising out of or relating to this Agreement or the Transition Services (a "Dispute") shall first be referred to the designated representatives of the parties — Sean Kilpatrick for Service Provider and Leah Torrance for Recipient — for attempted resolution through good-faith negotiations. The designated representatives shall meet (in person or by telephone or video conference) within five (5) business days of the date on which either party delivers written notice of the Dispute to the other party, and shall use good-faith efforts to resolve the Dispute within ten (10) business days of such initial meeting.
Section 12.2 — Executive Escalation. If the Dispute is not resolved within the ten (10)-business-day period described in Section 12.1, the Dispute shall be escalated to senior executive representatives of the parties for resolution. Service Provider's senior executive representatives shall be Victor Lansdell or Elise Rathborne of Greystone Meridian Capital LLC, and Recipient's senior executive representative shall be Marcus Devereaux, Executive Vice President, Acquisitions, of Fairwater Real Estate Investment Trust. Such senior executive representatives shall meet (in person or by telephone or video conference) within five (5) business days of the escalation and shall use good-faith efforts to resolve the Dispute within an additional ten (10) business days. If the Dispute is not resolved through executive escalation, either party may pursue any remedies available at law or in equity.
Section 12.3 — Governing Law and Jurisdiction. This Agreement shall be governed by and construed in accordance with the laws of the State of New York, without regard to any conflicts of law principles that would result in the application of the laws of any other jurisdiction, consistent with the governing law provision of the PSA. Each party irrevocably and unconditionally (a) submits to the exclusive jurisdiction of the federal and state courts located in the Borough of Manhattan, City and State of New York, for the purpose of any action, suit, or proceeding arising out of or relating to this Agreement, (b) waives any objection that it may have to the laying of venue of any such action, suit, or proceeding in any such court, and (c) waives any claim that any such action, suit, or proceeding has been brought in an inconvenient forum. Each party agrees that service of process may be made by delivery in accordance with Section 13.1 of this Agreement.
ARTICLE 13 — MISCELLANEOUS
Section 13.1 — Notices. All notices, requests, demands, consents, waivers, and other communications required or permitted to be given under this Agreement shall be in writing and shall be deemed duly given (a) when delivered by hand, (b) one (1) business day after being sent by nationally recognized overnight courier service (with tracking confirmation), or (c) when sent by email (with confirmation of receipt), to the parties at the following addresses (or at such other address as a party may designate by written notice to the other parties):
If to Service Provider:
Argyle Property Services LLC 3300 Peachtree Road NE, Suite 2200 Atlanta, Georgia 30326
Attention: Sean Kilpatrick, Portfolio Mana

EXECUTION VERSION

TRANSITION SERVICES AGREEMENT

ARGYLE PROPERTY SERVICES LLC

FAIRWATER PROPERTY MANAGEMENT LLC

TRANSITION SERVICES AGREEMENT

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